Wrap Text
Audited group results and dividend declaration for the year ended 30 September 2017
TIGER BRANDS LIMITED
Registration number: 1944/017881/06
Incorporated in the Republic of South Africa
Share code: TBS ISIN: ZAE000071080
Audited group results and dividend declaration for the year ended 30 September 2017
Salient features
- Tiger Brands' domestic business delivers a strong performance in a tough trading
environment with operating margins* increasing to 15,6%
- Group operating income* up 11% to R4,6 billion
- Group operating margin* UP 110 bps to 14,8%
- Cash from operations up 43% to R6,1 billion benefiting from working capital improvements
- HEPS+ up 2% to 2 155 cents
*Before IFRS 2 charges and from continuing operations.
+From continuing operations.
Commentary
Overview
Tiger Brands is reporting a relatively strong set of results driven by revenue growth of 2% to R31,3 billion and 11%
operating income growth, before IFRS 2 charges, to R4,6 billion. Operating margins increased by 110 basis points (bps)
to 14,8%. This improvement was due to improved pricing strategies enhanced by good procurement and better cost control.
Intense competitor pricing activity and declining consumer confidence resulted in volumes declining by 3%. Cash
generated from operations is up 43% to R6,1 billion, benefiting from improved working capital management. Headline
earnings per share increased by 2% driven by the domestic performance and diluted by a disappointing performance from
associates and the Deciduous Fruit business.
As previously reported, the disposal of EATBI has been concluded with an effective date of 4 April 2017. With regards
to the Haco disposal, all suspensive conditions have been fulfilled and the transaction is expected to close within
the next two weeks. Consequently, both businesses have been treated as discontinued operations in these results, with
the comparative information restated accordingly.
The revenue performance in the second half is indicative of a significant slowdown in the rate of price increases, due
largely to declining commodity prices and a stronger rand. Gross margins benefited from improved pricing and procurement
strategies, which helped to offset other inflationary increases in raw material costs. Well-controlled conversion costs
and efficiency enhancements contributed to further positive leverage in gross margins.
Revenue in the domestic business increased by 4% to R27,1 billion (2016: R26,2 billion), driven primarily by Grains and
Groceries. Operating income, in the domestic business, before IFRS 2 charges grew by 15% to R4,2 billion (2016: R3,7 billion),
whilst the operating margin increased from 14,1% to 15,6%. The deteriorating economic environment continued to put pressure
on consumer demand. This, coupled with the strategy of recovering cost push from the previous year, resulted in volume
contraction of 3%.
The group's overall operating performance was negatively impacted by the underperformance of the Exports and International
division. Revenue in this division was down 5% to R4,2 billion while operating income declined by 20% to R399 million,
driven primarily by the performance of the Deciduous Fruit business, which was severely impacted by a stronger rand. Although
the Export business continued to face a challenging environment, with no improvement in foreign currency liquidity, trading
improved in the second half of the year with core markets benefiting from improved distribution and product availability.
During the year, investments, goodwill and intangibles with a total value of R560 million (2016: R335 million) were
impaired. This related mainly to the impairment of goodwill of R300 million in Davita, as well as the impairment of
R250 million against the investment in Nigerian associate, UAC Foods. These impairments arose as a result of the
continual assessment of risks associated with these businesses amid ongoing difficulties experienced across our key
markets on the African continent. These are primarily as a result of deteriorating macro-economic factors, largely
linked to falling commodity prices and exacerbated by currency devaluations in Nigeria and Mozambique. In addition,
the lack of foreign exchange liquidity required trade credit to be managed tightly, inhibiting revenue growth.
The abnormal loss of R23 million comprises costs relating to the recent strategic review and related restructuring
provisions, partially offset by the profit on disposal of property as well as income in respect of insurance claim
proceeds and certain warranty claims.
Net financing costs of R207 million (2016: R162 million) benefited from a reduction in interest charges of R117 million
to R180 million, due to lower debt levels. A net foreign exchange loss of R30 million was realised compared with a gain
of R129 million in the comparative period, of which R153 million related to a gain on the settlement of debt in Nigeria,
which was of a non-recurring nature.
Income from associates decreased by 38% to R533 million (2016: R861 million). The comparative period included capital
profits of R117 million arising from certain asset disposals. After adjusting for this, associate headline earnings
decreased by 29%. This reflects challenging operating conditions for Oceana, in particular, as well as Carozzí and
UAC Foods.
A 2% improvement in the effective tax rate before abnormal items, impairments and associates, to 28,9% (2016: 30,9%)
was largely due to investment allowances received on qualifying major capital projects.
HEPS from continuing operations was up 2% to 2 155 cents (2016: 2 119 cents). The deleverage between operating income
growth of 11% and HEPS growth of 2% is primarily due to a significantly lower contribution from associates, costs
reflected in abnormal items and the non-recurrence of the once-off forex gain in the prior year. Earnings per share
(EPS) from continuing operations decreased by 7% to 1 848 cents (2016: 1 996 cents), driven primarily by the increased
level of impairments in the current year.
EPS from total operations decreased by 6% to 1 915 cents (2016: 2 034 cents), while HEPS from total operations
increased by 2% to 2 161 cents.
Operating performance
Grains
The Grains division delivered 5% revenue growth, while operating income reflected a strong increase of 18% to R2,4
billion. The operating margin improved by 200bps to 17,7%.
Revenue in Milling and Baking rose by 4%, benefiting from volume growth, partly diluted by price deflation in maize
and sorghum in the second half. Operating income rose by 16% to R1,9 billion. The wheat-to-bread value chain benefited
from good volume growth and increased realisations in the first half. Managing the balance between margin and volumes
in the second six months required significant focus as competitor activity intensified.
Other Grains recorded revenue growth of 6% to R3,8 billion and strong operating income growth of 24% to R502 million.
The stronger rand and favourable procurement strategies contributed positively to the expansion of margins particularly
in rice.
Consumer Brands - Food
With the exception of Groceries, Consumer Brands - Food experienced a number of challenges during the year. As a result,
overall revenue increased marginally to R11,1 billion, while operating income grew by 7% to R1,3 billion. The overall
operating margin improved by 60bps to 11,5%.
The Groceries business had another strong year, delivering revenue growth of 7% and operating income growth of 26%
to R589 million. Operating margins improved by 190bps to 11,8% on the back of improved pricing and productivity
initiatives.
Snacks & Treats' sales volumes were impacted by industrial action, a contracting market, aggressive competition and
a product rationalisation exercise which was completed in the first half of the year. Revenue declined by 5% to
R2,2 billion. However, an improvement in gross margins resulted in operating income increasing marginally to
R324 million. The new Heavenly aerated chocolate slabs were launched in the second half of the year and were well
received by both consumers and customers. Snacks & Treats will focus on volume recovery in the year ahead.
The Beverages business recovered in the second half following the impact of industrial action, drought-related water
restrictions and electricity disruptions in the first six months. The second half recovery was insufficient to offset
the difficult start to the year. Revenue declined by 9%, while operating income reduced by 8% to R144 million. The
outlook for this business is encouraging with the launch of Oros ready-to-drink gaining momentum.
Value-added Meat Products' performance was impacted by lower sales volumes. This was primarily due to selling price
increases and aggressive competitor activity. Revenue increased marginally to R2,2 billion, while operating income
declined by 34% due to lower volumes and selling price increases being insufficient to recover significant raw material
inflation.
Home, Personal Care and Baby (HPCB)
HPCB's performance was positively influenced by another strong contribution from the Home Care category, with overall
revenue increasing by 9% to R2,7 billion. There was positive operating leverage due to a strong focus on cost
containment, with overall operating income growing by 17% to R623 million.
Despite volumes in the Personal Care category being negatively impacted by price increases, as well as constrained
consumer spending, revenue remained unchanged at R683 million. Operating income increased by 3% to R139 million,
benefiting from the strong focus on costs. Innovation, driven mainly by Ingram's triple glycerine, Ingram's tissue
oil and pet jelly, contributed 19% to revenue.
Revenue in Baby Care was up 3% to R888 million. This was attributable to growth in pouches, medicinal and toiletries
categories. Operating income declined by 2% due to an unfavourable product mix, together with lower production volumes.
The Home Care category produced another strong performance with revenue growth of 23% and an improvement in operating
income of 48%. This was due to sustained demand in the pest category, assisted by effective in-store execution and
optimal pricing. Innovation contributed 7% to revenue, driven by Doom automatic dispensers and the Peaceful Sleep family
range.
Exports and International
Exports and International reported lower revenue and operating income largely due to the Deciduous Fruit business,
which was adversely affected by the strengthening of the rand, with revenue declining by 4%. This was aggravated
by an unfavourable customer mix. These factors resulted in a 91% reduction in operating income to R13 million.
Chococam recorded 3% growth in revenue in constant currency terms. The successful introduction of new products contributed
to a 9% increase in volumes. Revenue in rand terms declined by 7% to R821 million due to the strength of the rand.
Operating income increased by 9% in constant currency, assisted by tight cost management, but decreased by 2% on translation
due to the stronger rand.
A decline in volumes at Deli Foods was driven by low consumer demand as well as the impact of price increases taken
during the year to recover significant input cost inflation. This, together with higher conversion costs, resulted in
a higher operating loss in constant currency, which was reduced on translation by the impact of the naira's devaluation
against the rand.
In the Exports business, revenue increased by 7% to R1,7 billion. This was attributable to increased sales into the
Democratic Republic of Congo (DRC) and Mozambique in the current year. Operating income increased by 10% to R273 million,
despite foreign currency liquidity challenges. Trading improved in the second half of the year with core markets
benefiting from improved distribution and product availability.
Cash flow and capital expenditure
Improved cash generation resulted in a positive net cash position of R431 million as at 30 September 2017. Cash generated
from operations increased by 43% to R6,1 billion, benefiting primarily from working capital improvements. Capital
expenditure disbursed during the year amounted to R919 million (2016: R945 million).
Final dividend
The company has declared an unchanged gross final cash dividend of 702 cents per ordinary share for the year ended
30 September 2017. This, together with the interim dividend of 378 cents per share, brings the total dividend for
the year to 1 080 cents. This is an increase of 1% on last year's total dividend of 1 065 cents.
Shareholders are referred to the accompanying dividend announcement for further details.
Outlook
The economic outlook for 2018 is muted, with no current signs of a recovery in consumer spending while growth levels
are likely to remain low. There is therefore little evidence of volume uplift in the year ahead. To this end, competition
for market share is expected to intensify further.
Having largely been successful in enhancing margins, the group is well positioned to navigate this environment and
pursue volume growth. This will be achieved by improving our market shares through enhanced and focused brand support, a
re-energised approach to innovation, as well as by investing and growing with our customers. We will continue to focus on
driving efficiencies and cost savings to provide the fuel for our growth.
Strategy implementation
In the review period, Tiger Brands completed the groundwork for the strategy that will guide us through to 2022, the
detail of which was disclosed as part of the interim results announcement earlier this year. We have made significant
progress in terms of implementation, with the following key milestones having been achieved:
- The new operating model has been implemented with effect from 1 October 2017. Capability gaps have been mapped and
the recruitment process to fill these is well progressed.
- Zero-based budgeting has been embedded in the 2018 budget process.
- Good momentum has been achieved in terms of key capital projects that will help improve manufacturing efficiencies
and provide additional capacity to achieve the required growth.
- The supply chain transformation is well underway with governance structures in place to create visibility of progress,
issues and risks.
- Subsequent to the portfolio review, work continues to determine opportunities that will strengthen and refine the core
portfolio and drive sustainable growth.
- Work is also underway to identify and evaluate suitable M&A opportunities that will leverage our core capabilities.
We have put in place the foundations for a sustainable future, with a compelling strategy and clear targets that will
allow us to win with consumers and grow the strength of our brands. With the successful execution of our strategy, the
group will be positioned to create predictable value and will be recognised by all stakeholders as the best fast-moving
consumer goods (FMCG) company in South Africa. Fundamental to achieving our vision is attracting the best talent, on
the basis of being recognised as a great place to work.
By order of the board
KDK Mokhele LC Mac Dougall
Chairman Chief executive officer
Bryanston
24 November 2017
Date of release: 27 November 2017
Declaration of final dividend
The board has approved and declared a final cash dividend of 702 cents per ordinary share (gross) in respect of the
year ended 30 September 2017.
The dividend will be subject to the Dividends Tax that was introduced with effect from 1 April 2012.
In accordance with paragraphs 11.17 (a) (i) to (x) and 11.17 (c) of the JSE Listings
Requirements the following additional information is disclosed:
- The dividend has been declared out of income reserves
- The local Dividends Tax rate is 20% (twenty percent) effective 22 February 2017
- The gross local dividend amount is 702 cents per ordinary share for shareholders exempt from the Dividends
Tax
- The net local dividend amount is 561,60 cents per ordinary share for shareholders liable to pay the Dividends
Tax
- Tiger Brands has 192 069 868 ordinary shares in issue (which includes 10 326 758 treasury shares)
- Tiger Brands Limited's income tax reference number is 9325/110/71/7.
Shareholders are advised of the following dates in respect of the final dividend:
Last day to trade cum the final dividend Tuesday, 9 January 2018
Shares commence trading ex the final dividend Wednesday, 10 January 2018
Record date to determine those shareholders entitled to the final dividend Friday, 12 January 2018
Payment in respect of the final dividend Monday, 15 January 2018
Share certificates may not be dematerialised or re-materialised between Wednesday, 10 January 2018 and Friday,
12 January 2018, both days inclusive.
By order of the board
JK Monaisa
Company secretary
Bryanston
27 November 2017
Condensed consolidated income statement
Audited year
Audited year ended
ended 30 September
30 September 2016
R'million 2017 Restated*#
Continuing operations
Revenue 31 297,9 30 588,2
Cost of sales (20 856,4) (20 869,6)
Gross profit 10 441,5 9 718,6
Sales and distribution expenses (3 596,4) (3 465,0)
Marketing expenses (771,4) (765,2)
Other operating expenses (1 549,7) (1 385,2)
Operating income before impairments and abnormal items 2 4 524,0 4 103,2
Impairments 3 (559,9) (334,8)
Abnormal items 4 (23,4) 11,0
Operating income after impairments and abnormal items 3 940,7 3 779,4
Net finance costs and investment income 5 (206,6) (162,1)
Income from associated companies 533,3 860,7
Profit before taxation 4 267,4 4 478,0
Taxation 6 (1 234,4) (1 209,2)
Profit for the year from continuing operations 3 033,0 3 268,8
Discontinued operations
Profit for the year from discontinued operations 7 105,0 52,9
Profit for the year 3 138,0 3 321,7
Attributable to:
Owners of the parent 3 119,3 3 305,6
- Continuing operations 3 011,0 3 243,1
- Discontinued operations 108,3 62,5
Non-controlling interests 18,7 16,1
- Continuing operations 22,0 25,7
- Discontinued operations (3,3) (9,6)
3 138,0 3 321,7
* Restated for the early adoption of IFRS 15 Revenue from Contracts with Customers.
Refer note 9 for further details.
# Restated as required by IFRS 5 in relation to the treatment of East Africa Tiger
Brands Industries Plc. (EATBI) and Haco Tiger Brands (E.A.) Limited (Haco) as
discontinued operations.
Condensed consolidated income statement continued
Audited year
Audited year ended
ended 30 September
30 September 2016
R'million 2017 Restated*#
Basic earnings per ordinary share (cents) 1 914,9 2 034,4
- Continuing operations 1 848,4 1 996,0
- Discontinued operations 66,5 38,4
Diluted basic earnings per ordinary share (cents) 1 877,3 1 991,5
- Continuing operations 1 812,1 1 953,9
- Discontinued operations 65,2 37,6
Headline earnings per ordinary share (cents) 2 161,0 2 127,1
- Continuing operations 2 154,7 2 119,2
- Discontinued operations 6,3 7,9
Diluted headline earnings per ordinary share (cents) 2 118,4 2 082,2
- Continuing operations 2 112,3 2 074,4
- Discontinued operations 6,1 7,8
* Restated for the early adoption of IFRS 15 Revenue from Contracts with Customers.
Refer note 9 for further details.
# Restated as required by IFRS 5 in relation to the treatment of East Africa Tiger
Brands Industries Plc. (EATBI) and Haco Tiger Brands (E.A.) Limited (Haco) as
discontinued operations.
Condensed consolidated statement of comprehensive income
Audited year Audited year
ended ended
30 September 30 September
R'million 2017 2016
Profit for the year 3 138,0 3 321,7
Other comprehensive loss, net of tax (104,9) (86,9)
Net gain/(loss) on hedge of net investment in foreign operation1 3,8 (42,9)
Foreign currency translation (FCTR) adjustments1, 2 (122,7) (147,7)
Share of associates other comprehensive (loss)/income and FCTR1 (86,2) 127,7
Net gain/(loss) on cash flow hedges1 25,0 (45,6)
Net gain on available-for-sale financial assets1, 2 13,0 15,7
Remeasurement raised in terms of IAS 19R3 81,4 (1,2)
Tax effect (19,2) 7,1
Total comprehensive income for the year, net of tax 3 033,1 3 234,8
Attributable to:
Owners of the parent 3 025,2 3 252,4
Non-controlling interests 7,9 (17,6)
3 033,1 3 234,8
1 Items that may be subsequently reclassified to profit or loss including the related tax effects,
with the exception of R7,3 million (2016: R0,9 million) relating to the share of associate other
comprehensive income and FCTR.
2 During the current year, R110,7 million (2016: R99,1 million) of the foreign currency translation
reserve relating to the disposal of subsidiaries, as well as R1,9 million (2016: R19,4 million)
on the available-for-sale financial asset derecognised in terms of the Black Managers Trust
Participation Rights Scheme were reclassified to profit or loss.
3 Comprises a net actuarial gain of R65,0 million (2016: net actuarial gain of R6,5 million) and
unrecognised gain/(loss) due to asset ceiling of R16,4 million (2016: R7,7 million).
Condensed consolidated segmental information
Audited year
Audited year ended
ended 30 September
30 September 2016
R'million 2017 Restated*
Revenue
Domestic operations 27 109,0 26 160,1
Grains 13 309,4 12 724,8
Milling and Baking 9 519,7 9 161,1
Other Grains 3 789,7 3 563,7
Consumer Brands - Food 11 148,0 10 999,7
Groceries 5 008,4 4 698,7
Snacks & Treats 2 157,2 2 263,0
Beverages 1 203,6 1 321,3
Value Added Meat Products 2 243,1 2 215,0
Out of Home 535,7 501,7
Home, Personal Care and Baby (HPCB) 2 651,6 2 435,6
Personal Care 682,5 682,4
Baby Care 888,0 862,1
Home Care 1 081,1 891,1
Exports and International 4 188,9 4 428,1
Exports 1 747,3 1 625,7
International operations
- Central Africa (Chococam) 821,3 883,8
- West Africa (Deli Foods) 280,3 476,7
Deciduous Fruit (LAF) 1 620,1 1 683,3
Other intergroup sales (280,1) (241,4)
Continuing operations 31 297,9 30 588,2
Discontinued operations - East Africa** and TBCG 561,2 2 556,8
Total revenue 31 859,1 33 145,0
* Restated for the early adoption of IFRS 15 Revenue from Contracts with Customers.
Refer note 9 for further details.
** Previously reported "International operations" - East Africa segment has now been
classified as discontinued operations.
Condensed consolidated segmental information continued
Audited year
Audited year ended
ended 30 September
30 September 2016
R'million 2017 Restated*
Operating income before impairments and abnormal items
Domestic operations 4 235,5 3 695,8
Grains 2 361,2 2 001,9
Milling and Baking 1 858,9 1 596,2
Other Grains 502,3 405,7
Consumer Brands - Food 1 280,2 1 194,8
Groceries 588,6 465,6
Snacks & Treats 323,5 316,0
Beverages 144,0 156,8
Value Added Meat Products 104,2 158,0
Out of Home 119,9 98,4
Home, Personal Care and Baby (HPCB) 622,6 533,7
Personal Care 138,6 134,2
Baby Care 207,7 211,3
Home Care 276,3 188,2
Other*** (28,5) (34,6)
Exports and International 398,8 496,3
Exports 272,9 247,0
International operations
- Central Africa (Chococam) 147,2 150,2
- West Africa (Deli Foods) (34,5) (48,5)
Deciduous Fruit (LAF) 13,2 147,6
Total operating income before IFRS 2 charges 4 634,3 4 192,1
IFRS 2 charges (110,3) (88,9)
Total operating income after IFRS 2 charges 4 524,0 4 103,2
Discontinued operations - East Africa** and TBCG 14,0 114,1
Total operating income 4 538,0 4 217,3
* Restated for the early adoption of IFRS 15 Revenue from Contracts with Customers.
Refer note 9 for further details.
** Previously reported "International operations" - East Africa segment has now been
classified as discontinued operations.
*** Includes the corporate office and management expenses relating to international
investments.
Condensed consolidated statement of financial position
Audited year Audited year
ended ended
30 September 30 September
R'million 2017 2016
ASSETS
Non-current assets 12 949,5 13 429,8
Property, plant and equipment 4 588,4 4 541,9
Goodwill 1 774,2 2 098,6
Intangible assets 1 822,8 1 841,9
Investments 4 720,1 4 904,8
Deferred taxation asset 44,0 42,6
Current assets 10 665,0 11 099,1
Inventories 4 812,0 5 769,8
Trade and other receivables 4 631,6 4 592,3
Cash and cash equivalents 1 221,4 737,0
Assets classified as held-for-sale 364,7 -
Total assets 23 979,2 24 528,9
EQUITY AND LIABILITIES
Total equity 17 061,2 16 033,9
Issued capital and reserves 16 803,8 15 547,6
Non-controlling interests 257,4 486,3
Non-current liabilities 968,8 1 988,8
Deferred taxation liability 347,7 253,5
Provision for post-retirement medical aid 619,1 666,0
Long-term borrowings 2,0 1 069,3
Current liabilities 5 776,1 6 506,2
Trade and other payables 4 278,2 4 157,1
Provisions 614,9 525,3
Taxation 94,4 128,1
Short-term borrowings 788,6 1 695,7
Liabilities directly associated with assets
classified as held-for-sale 173,1 -
Total equity and liabilities 23 979,2 24 528,9
Net (cash)/debt (430,8) 2 028,0
Condensed consolidated statement of cash flows
Audited year Audited year
ended ended
30 September 30 September
R'million 2017 2016
Cash operating profit 5 388,1 4 836,8
Working capital changes 667,6 (604,0)
Cash generated from operations 6 055,7 4 232,8
Finance cost net of dividends received 181,6 109,1
Taxation paid (1 195,9) (1 107,4)
Cash available from operations 5 041,4 3 234,5
Dividends paid (1 834,1) (1 661,1)
Net cash inflow from operating activities 3 207,3 1 573,4
Purchase of property, plant, equipment and intangibles (919,0) (945,4)
Net cash on disposal of subsidiary 23,8 1 075,7
Acquisition of business - (69,7)
Black Managers Trust (BMT) shares exercised 24,0 38,7
Proceeds from disposal of property, plant and equipment 92,2 15,4
Decrease in other loans - 0,2
Net cash (outflow)/inflow from investing activities (779,0) 114,9
Reduction in non-controlling interest in empowerment shares (22,4) -
Long and short-term borrowings repaid (1 063,4) (562,2)
Net cash outflow from financing activities (1 085,8) (562,2)
Net increase in cash and cash equivalents 1 342,5 1 126,1
Effect of exchange rate changes on cash and cash equivalents 18,8 125,7
Cash and cash equivalents at the beginning of the year (875,0) (2 126,8)
Cash and cash equivalents at the end of the year 486,3 (875,0)
Cash resources 1 221,4 737,0
Short-term borrowings regarded as cash and cash equivalents (735,1) (1 612,0)
486,3 (875,0)
Condensed consolidated statement of changes in equity
Shares
Share held by
capital Non- subsidiary and
and distributable Accumulated empowerment
R'million premium reserves profits entities
Balance at 1 October 2015 148,5 2 644,1 13 152,9 (2 538,9)
Profit for the year - - 3 305,6 -
Other comprehensive loss for the year2, 3 - (52,3) (0,9) -
Total comprehensive income - (52,3) 3 304,7 -
Disposal of subsidiary - - - -
Transfers between reserves - 454,3 (454,3) -
Share-based payment4 - - - -
Dividends on ordinary shares - - (1 629,9) -
Total dividends - - (1 777,7) -
Less: Dividends on empowerment shares - - 147,8 -
Sale of shares by empowerment entity1 - - - 30,0
Balance at 30 September 2016 148,5 3 046,1 14 373,4 (2 508,9)
Profit for the year - - 3 119,3 -
Other comprehensive (loss)/income for the year2, 3 - (152,8) 58,7 -
Total comprehensive income - (152,8) 3 178,0 -
Disposal of subsidiary - - - -
Transfers between reserves - 146,7 (198,3) -
Share-based payment4 - - - -
Dividends on ordinary shares - - (1 808,6) -
Total dividends - - (1 968,1) -
Less: Dividends on empowerment shares - - 159,5 -
Reduction in non-controlling interest in empowerment shares - - - -
Sale of shares by empowerment entity1 - - - 19,7
Balance at 30 September 2017 148,5 3 040,0 15 544,5 (2 489,2)
Condensed consolidated statement of changes in equity continued
Share- Total
based attributable Non-
payment to owners controlling Total
R'million reserve of the parent interests equity
Balance at 1 October 2015 423,5 13 830,1 (52,5) 13 777,6
Profit for the year - 3 305,6 16,1 3 321,7
Other comprehensive loss for the year2, 3 - (53,2) (33,7) (86,9)
Total comprehensive income - 3 252,4 (17,6) 3 234,8
Disposal of subsidiary - - 587,6 587,6
Transfers between reserves - - - -
Share-based payment4 65,0 65,0 - 65,0
Dividends on ordinary shares - (1 629,9) (19,7) (1 649,6)
Total dividends - (1 777,7) (19,7) (1 797,4)
Less: Dividends on empowerment shares - 147,8 - 147,8
Sale of shares by empowerment entity1 - 30,0 (11,5) 18,5
Balance at 30 September 2016 488,5 15 547,6 486,3 16 033,9
Profit for the year - 3 119,3 18,7 3 138,0
Other comprehensive (loss)/income for the year2, 3 - (94,1) (10,8) (104,9)
Total comprehensive income - 3 025,2 7,9 3 033,1
Disposal of subsidiary - - (188,9) (188,9)
Transfers between reserves 51,6 - - -
Share-based payment4 19,9 19,9 - 19,9
Dividends on ordinary shares - (1 808,6) (16,6) (1 825,2)
Total dividends - (1 968,1) (16,6) (1 984,7)
Less: Dividends on empowerment shares - 159,5 - 159,5
Reduction in non-controlling interest in empowerment shares - - (22,4) (22,4)
Sale of shares by empowerment entity1 - 19,7 (8,9) 10,8
Balance at 30 September 2017 560,0 16 803,8 257,4 17 061,2
1 Relates to the exercising of options vested post the December 2014 lock-in period in terms of the Black
Managers Participation Right Scheme (BMT).
2 During the current period, R110,7 million (2016: R99,1 million) of the foreign currency translation
reserve was reclassified to profit or loss.
3 The other comprehensive income within FCTR includes amounts related to associates of R86,2 million
(2016: R127,7 million).
4 Included in the movement of the share-based payment are options exercised amounting to R77,8 million
(2016: R5,9 million).
Other salient features
Audited year Audited year
ended ended
30 September 30 September
R'million 2017 2016
Capital commitments 2 174,4 1 133,7
- Contracted 476,3 92,0
- Approved 1 698,1 1 041,7
Capital commitments will be funded from normal
operating cash flows and the utilisation of
existing borrowing facilities. Additional
capital commitments of R434,9 million are
expected to be approved in 2018.
Capital expenditure 919,0 945,4
- Replacement 457,1 638,9
- Expansion 461,9 306,5
Contingent liabilities
- Guarantees and contingent liabilities 11,5 12,8
Inventory-related items
Inventories carried at net realisable value 119,4 137,2
Inventories written down and recognised in
cost of sales as an expense 105,3 100,6
Notes
1. Basis of preparation and changes to the group's accounting policies
The preparation of these results has been supervised by N Doyle, Chief Financial Officer of Tiger
Brands Limited.
The condensed consolidated financial statements are prepared in accordance with the requirements
of the JSE Limited Listings Requirements for preliminary reports and the requirements of the
Companies Act of South Africa. The Listings Requirements require preliminary reports to be
prepared in accordance with the framework concepts and the measurement and recognition requirements
of International Financial Reporting Standards (IFRS) and the SAICA Financial Reporting Guides as
issued by the Accounting Practices Committee and Financial Pronouncements as issued by Financial
Reporting Standards Council and to also, as a minimum, contain the information required by IAS 34
Interim Financial Reporting. The accounting policies applied in the preparation of the condensed
consolidated financial statements are in terms of IFRS and are consistent with those applied in
the previous consolidated annual financial statements, with the exception of the early adoption
of IFRS 15.
Ernst & Young Inc., Tiger Brands Limited's independent auditors, have audited the consolidated
financial statements of Tiger Brands Limited from which the condensed consolidated financial
results have been derived. The auditors have expressed an unmodified audit opinion on the
consolidated annual financial statements. Any reference to future financial performance included
in this announcement has not been audited or reported on by the group's external auditors. The
auditor's audit report does not necessarily report on all the information contained in this
announcement/financial results. Shareholders are therefore advised that in order to obtain a full
understanding of the nature of the auditors' engagement they should obtain a copy of the auditor's
audit report together with the accompanying financial information from the issuer's registered
office.
The majority of the group's financial instruments measured at fair value in terms of IFRS 13 are
noted as level 1 hierarchy, which are valued based on quoted market prices.
Audited year
Audited year ended
ended 30 September
30 September 2016
R'million 2017 Restated#
2. Operating income before impairments and abnormal items
Depreciation (included in cost of sales and other operating expenses) 552,5 524,5
Amortisation 11,4 11,6
IFRS 2 (included in other operating expenses)
- Equity settled 97,7 70,9
- Cash settled 12,6 18,0
# Restated as required by IFRS 5 in relation to the treatment of East African Tiger Brands Industries
Plc (EATBI) and Haco Tiger Brands (E.A.) Limited (Haco) as discontinued operations.
3. Impairments
Goodwill and indefinite useful life intangible assets are tested for
impairment annually (as at 30 September) and when circumstances
indicate the carrying value may be impaired. The group's impairment
test for goodwill and intangible assets with indefinite lives is based
on the value-in-use calculations. During the current year R300,0 million
of Davita, R4,9 million of Groceries and R5,0 million of Beacon goodwill
and indefinite life intangible assets have been impaired. The investment
in UAC Foods has been impaired by R250,0 million.
Impairment of intangible assets (309,9) (300,0)
Impairment of investment in associate (250,0) -
Impairment of property, plant and equipment - (34,8)
(559,9) (334,8)
4. Abnormal items
Once-off consulting fees (132,0) -
Restructuring provision (78,5) -
Proceeds from insurance claim 85,7 -
Profit on disposal of property 73,0 11,0
Proceeds from warranty claim settlement 28,4 -
(23,4) 11,0
5. Net finance costs and investment income
Net interest paid (179,7) (297,0)
Investment income 3,3 6,3
Net foreign exchange (losses)/profit (30,2) 128,6
Net financing costs (206,6) (162,1)
# Restated as required by IFRS 5 in relation to the treatment of East African Tiger Brands
Industries Plc (EATBI) and Haco Tiger Brands (E.A.) Limited (Haco) as discontinued operations.
6. Taxation
Tax rate reconciliation
The reconciliation of the effective rate of taxation
with the statutory taxation rate is as follows: % %
Taxation for the year as a percentage of income before taxation 28,9 27,0
Impairment of goodwill and intangibles (3,7) (1,9)
Expenses and provisions not allowed for taxation (0,9) (0,9)
Non-recognition of other current year timing differences (0,2) (0,4)
Non-recognition of other prior year timing differences - (0,4)
Additional investment allowances 0,5 0,4
Prior year adjustments 0,6 -
Withholding taxes (1,0) (1,2)
Income from associates 3,5 5,4
Effect of differing rates of foreign taxes (0,1) (0,2)
Other sundry adjustments 0,4 0,2
Rate of South African company taxation 28,0 28,0
# Restated as required by IFRS 5 in relation to the treatment of East African Tiger Brands
Industries Plc (EATBI) and Haco Tiger Brands (E.A.) Limited (Haco) as discontinued operations.
7. Analysis of profit from discontinued operations
In the current year, the results of the discontinued
operation (EATBI) and the results of the held-for-sale
business (Haco) were included in the profit for the year
as set out below. EATBI and Haco were previously accounted
for within the segment referred to as "International
operations - East Africa". The prior year includes the
results of the discontinued Tiger Branded Consumer Goods
(TBCG).
Profit for the year from discontinued operations
(attributable to owners of the company)
Revenue 561,2 2 556,8
Expenses (547,2) (2 442,7)
Operating income before impairments and abnormal items 14,0 114,1
Impairments - -
Abnormal items 97,9 49,7
Operating income after impairments and abnormal items 111,9 163,8
Finance costs (0,2) (99,5)
Profit before taxation 111,7 64,3
Taxation (6,7) (11,4)
Profit for the year from discontinued operations 105,0 52,9
Attributable to non-controlling interest 3,3 9,6
Attributable to owners of parent 108,3 62,5
Cash flows from discontinued operations
Net cash inflows from operating activities 138,6 363,6
Net cash inflows/(outflows) from investing activities 1,4 (65,9)
Net cash (outflows)/inflows from financing activities (80,8) 90,5
Net cash inflows 59,2 388,2
# Restated as required by IFRS 5 in relation to the treatment of East African
Tiger Brands Industries Plc (EATBI) and Haco Tiger Brands (E.A.) Limited
(Haco) as discontinued operations.
8. Reconciliation between profit for the year and headline earnings
Continuing operations
Profit for the year attributable to owners of the parent 3 011,0 3 243,1
Profit on disposal of property, plant and equipment (52,5) (8,3)
Impairment of intangible assets 309,9 300,0
Impairment of investment in associate 250,0 -
Impairment of property, plant and equipment - 25,3
Headline earnings adjustments - associates
- Profit on sale of non-current assets (8,5) (116,9)
Headline earnings for the year 3 509,9 3 443,2
Tax effect of headline earnings 15,5 (7,0)
Attributable to non-controlling interest - -
Discontinued operations
Profit for the year attributable to owners of the parent 108,3 62,5
Profit on disposal of subsidiary (98,1) (49,7)
Loss on disposal of property, plant and equipment - 0,1
Headline earnings for the year 10,2 12,9
Tax effect of headline earnings - -
Attributable to non-controlling interest - -
# Restated as required by IFRS 5 in relation to the treatment of East African Tiger Brands Industries
Plc (EATBI) and Haco Tiger Brands (E.A.) Limited (Haco) as discontinued operations.
Audited year
Audited year ended
ended 30 September
30 September 2016
R'million 2017 Restated#
9. Early adoption of IFRS 15 Revenue from Contracts with Customers
The group has early adopted IFRS 15 Revenue from Contracts with
Customers and therefore restated the comparatives applying the
full retrospective transition method. The policies were changed
in accordance with the transitional provisions, but without
making use of any of the practical expedients available during
the first-time adoption of the standard. The impact of early
adopting IFRS 15 resulted in a reallocation of costs in
September 2016 from selling and distribution of R105,6 million,
marketing of R41,3 million and cost of sales of R4,1 million to
turnover, totalling R151,0 million. There has been no impact on
the basic earnings per share or basic headline earnings per share.
The reconciliation of the adjustments to the revenue comparatives
are as follows:
As previously reported 31 697,5
Reclassified to discontinued operations in terms of IFRS 5 (958,3)
Reallocation of costs due to early adoption of IFRS 15 (151,0)
Restated revenue after reclassification 30 588,2
10. Subsequent events
On 23 November 2017, Tiger Brands was notified that the transaction regarding the disposal of Haco Tiger
Brands (E.A.) Limited ("Haco") had been approved by the Competition Authorities in Kenya. The estimated
profit or loss on disposal is not expected to be material.
# Restated as required by IFRS 5 in relation to the treatment of East African Tiger Brands
Industries Plc (EATBI) and Haco Tiger Brands (E.A.) Limited ("Haco") as discontinued
operations.
CORPORATE INFORMATION
Head office: South Africa
Physical address
Tiger Brands Limited, 3010 William Nicol Drive, Bryanston
Postal address
PO Box 78056, Sandton, 2146, South Africa
Independent non-executive directors
KDK Mokhele (chairman), MO Ajukwu, SL Botha, MJ Bowman, M Makanjee,
TE Mashilwane (appointed 1 December 2016), RD Nisbet, MP Nyama,
YGH Suleman, BS Tshabalala (appointed 26 May 2017)
Executive directors
LC Mac Dougall (chief executive officer)
NP Doyle (chief financial officer)
CFH Vaux
Company Secretary
JK Monaisa (appointed 1 November 2017)
Investor Relations
N Catrakilis-Wagner (011) 840 4841
Postal address
PO Box 78056, Sandton, 2146, South Africa
Telephone (011) 840 4000
Sponsor
JP Morgan Equities South Africa (Pty) Limited
1 Fricker Road, Corner Hurlingham Road, Illovo, 2196
Share registrars
Rosebank Towers, 15 Biermann Avenue, Rosebank, 2196
PO Box 61051, Marshalltown 2107, South Africa.
Telephone (011) 370 5000
Date: 27/11/2017 07:13:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
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