TIGER BRANDS LIMITED - Audited group results and dividend declaration for the year ended 30 September 2018

Release Date: 22/11/2018 07:30
Code(s): TBS
 
Wrap Text
Audited group results and dividend declaration for the year ended 30 September 2018

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 2018

Salient features*

Tiger Brands' full year performance was impacted by the suspension of operations at 
Value Added Meat Products (VAMP) and a challenging trading environment

- Revenue declined by 9% to R28,5 billion
- Group operating income** declined by 28% to R3,3 billion
- Group operating margin** down 310bps to 11,7%
- HEPS down 26% to 1 587 cents per share
- Dividend unchanged at 1 080cps
- Dividend cover reduced to 1,75x based on HEPS
- Oceana Group Limited (Oceana) stake to be unbundled

*  From continuing operations.
** Before IFRS 2 charges.

Commentary
Overview
Tiger Brands' results reflect the depressed consumer environment, which deteriorated further in the second
half of the year. South Africa slipped into a technical recession during the second quarter of 2018 and the
rand weakened significantly adding to the pressure on consumer spending. At the same time, input costs started 
to increase significantly. Despite this cost push, the market was characterised by manufacturer restraint on
pricing in an attempt to minimise consumer inflation and maximise volumes. In addition, the group's VAMP division
had a material impact on the results following the suspension of operations for the entire second half of the
financial year. 

The increase in VAT and further increases in the cost of transport and essential services weakened consumer
demand in all categories except maize, where increased supply and price deflation stimulated demand. Domestic
revenue fell by 9%, with volumes down 5% and price deflation of 4%. The suspension of operations at VAMP
contributed 4% to the volume decline. The balance of the volume decline reflected a worse than expected 
performance in Groceries and Home and Personal Care. This was partially offset by volume and market share 
growth in Grains. Disappointingly, the positive volume performance in Grains was not reflected in operating 
income due to category deflation and increases in the cost of essential services resulting in margin pressure. 
Domestic operating income therefore declined by 28% to R3,0 billion. 

The impact of volume declines and pricing pressures on the group's gross margins was partially offset by
another year of record savings in procurement and ongoing supply chain efficiencies. Gross margins declined 
by 90 basis points (bps) to 32,5%. 

Total revenue for the Exports and International businesses declined by 10% to R3,8 billion, whilst operating
income reduced by 32% to R270 million. This result was influenced by a positive performance from our African
exports, which grew both revenue and profit. The Deciduous Fruit business had a disappointing year, with lower
fruit yields and declining volumes, resulting in an operating loss for the year.

During the year, asset impairments of R262 million were accounted for. These were recognised following a
detailed evaluation of intangible assets within the Personal Care division, as well as a review of the carrying
value of Deli Foods' operating assets in view of its loss making position. 

The abnormal losses of R422 million include the significant impact of the VAMP product recall in the current
year of R380 million (net of insurance recoveries). 

Income from associates increased by 37% to R731 million, with all associates reporting improved performances
in local currency. Particularly strong performances were delivered by Oceana and Carozzi. Oceana benefited
from a once-off deferred tax adjustment following the reduction in the Federal Corporate Tax rate from 35% to
21% in the United States, effective 1 January 2018. Tiger Brands' equity accounted share of this benefit
amounted to R79 million for the year. 

Net financing costs of R34 million benefited from a reduction in net interest costs of R125 million, due to
lower average debt levels. A net foreign exchange gain of R21 million was realised compared to a loss of 
R30 million in the previous year, due to the weakening of the rand in the latter part of the year.

The effective tax rate before abnormal items, impairments and income from associates increased to 30,2% 
from 28,9% largely due to the non-recurrence of investment allowances claimed on qualifying capital projects 
in 2017. 

Headline earnings per share (HEPS) from continuing operations declined by 26% to 1 587 cents 
(2017: 2 155 cents), while earnings per share (EPS) from continuing operations decreased by 21% to 
1 451 cents (2017: 1 848 cents). 

HEPS from total operations decreased by 26% to 1 589 cents (2017: 2 161 cents).

EPS from total operations reduced by 24% to 1 458 cents (2017: 1 915 cents). 

Excluding VAMP's trading results and the product recall costs from the current and prior year, HEPS from
continuing operations declined by 11% to 1 881 cents (2017: 2 109 cents). Similarly, EPS from continuing
operations declined by 2% to 1 760 cents (2017: 1 802 cents).

Operating performance
Grains 
Revenue declined by 4% to R12,8 billion, reflecting significant price deflation of 7% while overall volumes
grew by 3%. The increase in volumes was not sufficient to offset the impact of margin pressures, with
operating income declining by 20% to R1,9 billion. The operating margin reduced to 14,8%. In one of its most
challenging years yet, the Grains division managed to maintain overall market share and improved its share 
in a number of categories, including flour, bread and rice. 

Revenue in Milling and Baking decreased by 7%, influenced by price deflation across the entire segment, and
particularly in maize (24%). Operating income declined by 17% to R1,5 billion. The wheat-to-bread value chain,
which maintained overall volumes for the year, was unable to sustain its first half performance due to market
dynamics restricting cost push recovery in the second half. 

Other Grains recorded revenue growth of 2% to R3,9 billion, including 9% volume growth. The strong growth in
volumes in this segment was driven by an outstanding performance in rice, with Tastic reflecting improved
market share. Pasta and noodles also delivered a solid performance. However, the operating income decline of 
32% to R342 million reflects the intensity of competition in the main meal carbohydrate segment. 

Consumer Brands - Food
Excluding the significant impact of the suspension of the VAMP operations, revenue in Consumer Brands - Food
declined by 3%, in line with volume declines, and with virtually no inflation in this segment. Excluding
VAMP, operating income declined by 8% to R1,1 billion.

At Groceries, the impact of the volume declines and competitive market pricing, resulted in an operating
income decline of 27% to R432 million. Contributing factors were supply constraints in condiments and spreads 
and the growth of private label on the back of extremely competitive import pricing.

Snacks & Treats' volumes slowed significantly in the second half, particularly in channels servicing lower
income groups. Despite share gains in chocolate (slabs and countlines), revenue declined by 4% to R2,1 billion. 
The lower volumes, coupled with an adverse product mix, resulted in operating income decreasing by 6% to 
R305 million. 

The Beverages business continued to perform strongly throughout FY18, with revenue increasing by 8% and
operating income by 48% to R213 million, benefiting from the previous year's investments in cost containment
initiatives and improved factory efficiencies. 

VAMP's performance was severely impacted by the well-publicised closure of its facilities in early March
2018. As a consequence, revenue declined 52% to R1,1 billion, while an operating loss of R252 million was
incurred. The cessation of operations at VAMP allowed us to undertake refurbishments at our production 
facilities and allocate dedicated time for employee training and education, which culminated in the 
re-opening of our Germiston facility on 12 October 2018. The Clayville abattoir will supply the raw 
material requirements for the Germiston facility, as well as fresh meat cuts to the market. In addition, 
it will continue to contract slaughter on behalf of approved pig suppliers. The Enterprise meat canning 
operation, which is a separate unit on the Polokwane site, re-commenced production on 12 September 2018. 

Structural refurbishments have been completed at the Polokwane facility and it is currently being assessed
by the Capricorn Municipality. Full production will commence once we have received all the required regulatory
approvals. 

Home, Personal Care and Baby (HPCB)
The poor performance of HPCB continued through the second half, with overall revenue down by 16% to 
R2,2 billion. All three categories were affected by price deflation and volume declines. The deleveraging 
impact of this volume loss was primarily responsible for the 45% reduction in operating income to R341 million.

Revenue in Personal Care declined by 10% to R616 million. An intensely competitive trading environment
resulted in operating income decreasing by 53% to R65 million. 

Revenue in Baby declined by 10% to R796 million, while operating income fell by 36% to R133 million. This
performance was impacted by lower sales volumes, an unfavourable sales mix and the concomitant pressure on
factory overhead recoveries. The new baby food pouch line was successfully commissioned in June 2018, 
contributing to volume growth of 30%.

Despite market share gains in key segments of the Home Care division, lower consumer demand resulted in
higher than expected trade stocks going into the peak pest season. This resulted in revenue and operating 
income declines of 25% and 48%, respectively. Lower production levels had an adverse effect on factory 
recoveries, while competitor pricing put pressure on margins.

Exports and International
Total revenue for the Exports and International businesses declined by 10% to R3,8 billion, while operating
income reduced by 32% to R270 million. 

The Deciduous Fruit business was the major contributor to the reduction in operating income. Revenue
declined by 20% due to lower volumes and a drop in fruit yields following the severe drought in the 
Western Cape. An operating loss of R128 million was incurred in the year (2017: R13 million operating 
income).

The Exports business produced a good performance with revenue increasing by 4% to R1,8 billion. This growth
was achieved despite ongoing macro-economic headwinds, including foreign currency shortages, weak consumer
demand, as well as regulatory changes in the group's core markets. Operating income increased by 6% to 
R290 million. 

In an increasingly challenging environment, Chococam recorded 3% growth in revenue in local currency terms.
Revenue in rand terms increased by 7% to R882 million. Operating income increased by 8% in rand terms to 
R159 million (4% in local currency), assisted by growth from innovation, tight cost management and favourable
procurement positions.

Deli Foods recorded a further operating loss of R51 million, following a reduction in revenue of 61% reflecting 
ongoing market challenges. Several cost-saving initiatives have been implemented and management changes made 
in the second half.

Cash flow and capital expenditure
Cash generated from operations decreased by 46% to R3,3 billion. Working capital was predominantly impacted
by strategic raw material purchases coupled with higher inventory holdings, reflective of challenges with
forecasting due to constrained consumer demand. Capital expenditure disbursed during the year amounted to 
R720 million. 

Final dividend
Taking into account the company's strong balance sheet and the once-off impact of the cessation of
operations at VAMP, including the costs of the product recall, a gross final cash dividend of 702 cents 
per share has been declared for the year ended 30 September 2018. This, together with the interim dividend 
of 378 cents per share, brings the total dividend for the year to 1 080 cents, which is unchanged from 
last year. 

Shareholders are referred to the accompanying dividend announcement for further details.

Dividend policy 
In recognition of the company's low gearing levels and strong cash generating capabilities, the board 
has decided to change the company's dividend policy, from a 2x cover (based on HEPS) to 1,75x 
for the foreseeable future, in the absence of any significant corporate activity. 

Change in directorate
Ms Swazi Tshabalala resigned as an independent non-executive director on 15 August 2018, following 
her appointment as vice president of finance and chief financial officer for the African Development 
Bank. She also stepped down as a member of the Risk and Sustainability Committee. 

Ms Gail Klintworth became an independent non-executive director on 16 August 2018. Her knowledge and
experience in sustainability matters in our industry are important additions to the skills set of the 
board, and we look forward to her future contributions. 

Mr Rob Nisbet resigned as an independent non-executive director on 7 September 2018. He also 
stepped down as chairman of the Audit Committee, as well as a member of the Investment and Risk and 
Sustainability Committees. Ms Emma Mashilwane, a current member of the Audit Committee, replaced 
Rob as chairman and Mr Mark Bowman joined the committee as an independent non-executive director 
on 2 November 2018.

Mr Yunus Suleman resigned as independent non-executive director effective 22 November 2018. He also 
steps down as a member and chairman of the Risk and Sustainability Committee, as well as a member 
of the Audit and Investment Committees.
 
Listeria update
The National Listeria crises was devastating for Tiger Brands as a company, for our people, but 
most importantly for the affected families.

Our deepest and heartfelt thoughts remains with those who lost their loved ones and who are 
otherwise affected by this crisis. 

Tiger Brands launched the country's first Centre for Food Safety in collaboration with Stellenbosch 
University, setting aside R10m for the Centre's operations. The Centre will conduct food science and 
food safety research to provide expert opinion and academic support to the industry, and to help 
government ensure that food safety regulations are based on sound scientific evidence. It will also 
play a leading role in consumer education on food-related issues. 

The Listeria Class Action referred to in the company's SENS announcement dated 14 August 2018 has not 
yet been certified.

Following the certification of the claim and the members of the classes, it is anticipated that a 
quantified claim will be instituted against the company. 

The company has product liability insurance cover appropriate for a group of its scale. Coverage has 
been confirmed by the Insurers, subject to the terms and limits of the policy. The policy will accordingly 
respond to the claim within its term in the event that the company is held liable. 

Strategy update 
Notwithstanding the noted challenges in the review period, we believe the approved strategy is compelling 
and relevant. 
 
During the year, we continued to build a sound foundation for future growth by improving internal processes 
and enhancing capability and capacity to execute our strategy. New executive leadership has joined our 
team with the appointment of a chief growth officer for Africa, a new chief marketing officer, chief 
strategy officer and a new chief human resources officer. 
 
Areas of focus in 2019 will include embedding the new operating model and implementation of the group's 
Africa strategy. This compliments the group's South Africa strategy and supports the local operations, 
our current Exports business and the operations in Cameroon and Nigeria. 
 
We are confident that the strategy will unlock the full potential of Tiger Brands and create value for 
all stakeholders. 

Unbundling of Oceana
The company's investment in associates formed an integral part of the strategic review. To this end, 
the Tiger Brands board has decided to pursue an unbundling of its entire shareholding in Oceana Group 
Limited (Oceana). The decision was taken following a review of Oceana's fit with the group's core 
business undertakings. The approximate implementation date of the unbundling is April 2019. The detailed 
terms of the unbundling are expected to be published shortly before the implementation date.

Outlook
The economic outlook for 2019 remains challenging with no signs of a significant recovery in economic 
growth or consumer confidence.  

We remain committed to the growth of our power brands, with a relentless focus on driving our cost 
conscious culture and developing a great place to work for all our employees, which we believe will 
result in superior returns and a beneficial outcome for all our stakeholders. 

By order of the board

KDK Mokhele             LC Mac Dougall
Chairman                Chief executive officer

Bryanston
21 November 2018
Date of release: 22 November 2018

Declaration of final dividend
The board has approved and declared a final gross cash dividend of 702 cents per ordinary share in respect
of the year ended 30 September 2018.

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 189 818 926 ordinary shares in issue (which includes 10 326 758 treasury shares); and
- 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:

Declaration date                                                 Thursday, 22 November 2018    
Last day to trade cum the final dividend                            Tuesday, 8 January 2019    
Shares commence trading ex the final dividend                     Wednesday, 9 January 2019    
Record date to determine those shareholders entitled 
to the final dividend                                               Friday, 11 January 2019    
Payment date in respect of the final dividend                       Monday, 14 January 2019    

Share certificates may not be dematerialised or re-materialised between Wednesday, 9 January 2019 
and Friday, 11 January 2019, both days inclusive.

By order of the board

JK Monaisa
Secretary

Bryanston
21 November 2018


Condensed consolidated income statement
                                                                       Audited year       Audited year     
                                                                              ended              ended    
                                                                       30 September       30 September    
R'million                                                Notes                 2018               2017    
Continuing operations                                                                                     
Revenue                                                                    28 473,9           31 297,9    
Cost of sales                                                             (19 229,5)         (20 856,4)    
Gross profit                                                                9 244,4           10 441,5    
Sales and distribution expenses                                            (3 675,8)          (3 596,4)    
Marketing expenses                                                           (844,7)            (771,4)    
Other operating expenses                                                   (1 485,1)          (1 549,7)    
Operating income before impairments and abnormal items       2              3 238,8            4 524,0    
Impairments                                                  3               (261,6)            (559,9)    
Abnormal items                                               4               (422,1)             (23,4)    
Operating income after impairments and abnormal items                       2 555,1            3 940,7    
Net finance costs and investment income                      5                (31,7)            (206,6)   
Income from associated companies                                              730,7              533,3    
Profit before taxation                                                      3 254,1            4 267,4    
Taxation                                                     6               (837,0)          (1 234,4)   
Profit for the year from continuing operations                              2 417,1            3 033,0    
Discontinued operations                                                                                   
Profit for the year from discontinued operations             7                 14,2              105,0    
Profit for the year                                                         2 431,3            3 138,0    
Attributable to:                                                                                          
Owners of the parent                                                        2 401,1            3 119,3    
- Continuing operations                                                     2 390,2            3 011,0    
- Discontinued operations                                                      10,9              108,3    
Non-controlling interests                                                      30,2               18,7    
- Continuing operations                                                        26,9               22,0    
- Discontinued operations                                                       3,3               (3,3)    
                                                                            2 431,3            3 138,0    
Basic earnings per ordinary share (cents)                                   1 457,7            1 914,9    
- Continuing operations                                                     1 451,1            1 848,4    
- Discontinued operations                                                       6,6               66,5    
Diluted basic earnings per ordinary share (cents)                           1 451,2            1 877,3    
- Continuing operations                                                     1 444,6            1 812,1    
- Discontinued operations                                                       6,6               65,2    
Headline earnings per ordinary share (cents)                                1 588,8            2 161,0    
- Continuing operations                                                     1 586,7            2 154,7    
- Discontinued operations                                                       2,1                6,3    
Diluted headline earnings per ordinary share (cents)                        1 581,7            2 118,4    
- Continuing operations                                                     1 579,6            2 112,3    
- Discontinued operations                                                       2,1                6,1    
                                                                                                          

Condensed consolidated statement of comprehensive income
                                                                       Audited year       Audited year     
                                                                              ended              ended    
                                                                       30 September       30 September    
R'million                                                                      2018               2017    
Profit for the year                                                         2 431,3            3 138,0    
Other comprehensive loss, net of tax                                         (108,5)            (104,9)    
Net (loss)/gain on hedge of net investment in foreign operation1               (7,9)               3,8    
Foreign currency translation (FCTR) adjustments1                               24,0             (122,7)    
Share of associates other comprehensive losses and FCTR1                     (171,1)             (86,2)    
Net gain on cash flow hedges1                                                  26,5               25,0    
Net gain on available for sale financial assets1                                8,6               13,0    
Remeasurement raised in terms of IAS 19R2                                      20,9               81,4    
Tax effect                                                                     (9,5)             (19,2)    
                                                                                                          
Total comprehensive income for the year, net of tax                         2 322,8            3 033,1    
Attributable to:                                                                                          
Owners of the parent                                                        2 283,9            3 025,2    
Non-controlling interests                                                      38,9                7,9    
                                                                            2 322,8            3 033,1    
1 Items that may be subsequently reclassified to profit or loss including the related tax effects, with 
  the exception of R24,3 million (2017: R7,3 million) relating to the share of associates' other 
  comprehensive income. During the current year, R13,2 million of the foreign currency translation 
  reserve relating to Haco, was reclassified to profit or loss, as well as R4,9 million (2017: R1,9 million) 
  on the available-for-sale financial asset derecognised in terms of the Black Managers Trust Participation 
  Rights Scheme.                                                      
2 Comprises a net actuarial gain of R24,5 million (2017: R65,0 million) and unrecognised loss due to asset 
  ceiling of R3,6 million (2017: R16,4 million gain).


Condensed consolidated segmental information
                                                                       Audited year       Audited year           
                                                                              ended              ended          
                                                                       30 September       30 September          
R'million                                                                      2018               2017          
Revenue                                                                                                         
Domestic operations                                                        24 706,5           27 109,0          
 Grains                                                                    12 753,5           13 309,4          
  Milling and Baking                                                        8 889,2            9 519,7          
  Other Grains                                                              3 864,3            3 789,7          
 Consumer Brands - Food                                                     9 727,4           11 148,0          
  Groceries                                                                 4 747,5            5 008,4          
  Snacks & Treats                                                           2 060,6            2 157,2          
  Beverages                                                                 1 294,7            1 203,6          
  Value Added Meat Products                                                 1 065,5            2 243,1          
  Out of Home                                                                 559,1              535,7          
 Home, Personal Care and Baby (HPCB)                                        2 225,6            2 651,6          
  Personal Care                                                               615,5              682,5          
  Baby Care                                                                   795,9              888,0          
  Home Care                                                                   814,2            1 081,1          
                                                                                                                
 Exports and International                                                  3 767,4            4 188,9          
  Exports                                                                   1 820,4            1 747,3          
  International operations - Central Africa (Chococam)                        881,7              821,3          
  International operations - West Africa (Deli Foods)                         109,2              280,3          
  Deciduous Fruit (LAF)                                                     1 303,9            1 620,1          
  Other intergroup sales                                                     (347,8)            (280,1)         
Continuing operations                                                      28 473,9           31 297,9          
Discontinued operations - East Africa                                          42,9              561,2          
Total revenue                                                              28 516,8           31 859,1          
                                                                                       
Operating income before impairments and abnormal items                                                          
 Domestic operations                                                        3 050,8            4 235,5          
  Grains                                                                    1 886,0            2 361,2          
   Milling and Baking                                                       1 544,2            1 858,9          
   Other Grains                                                               341,8              502,3          
 Consumer Brands - Food                                                       827,9            1 280,2          
   Groceries                                                                  432,4              588,6          
   Snacks & Treats                                                            304,8              323,5          
   Beverages                                                                  212,5              144,0          
   Value Added Meat Products                                                 (252,0)             104,2          
   Out of Home                                                                130,2              119,9          
  Home, Personal Care and Baby (HPCB)                                         341,4              622,6          
   Personal Care                                                               64,7              138,6          
   Baby Care                                                                  132,5              207,7          
   Home Care                                                                  144,2              276,3          
  Other*                                                                       (4,5)             (28,5)         
Exports and International                                                     269,9              398,8          
  Exports                                                                     289,7              272,9          
  International operations - Central Africa (Chococam)                        159,0              147,2          
  International operations - West Africa (Deli Foods)                         (50,5)             (34,5)         
  Deciduous Fruit (LAF)                                                      (128,3)              13,2          
Total operating income before ifrs 2 charges                                3 320,7            4 634,3          
IFRS 2 charges                                                                (81,9)            (110,3)         
Total operating income after ifrs 2 charges                                 3 238,8            4 524,0          
Discontinued operations - East Africa                                          11,0               14,0          
Total operating income                                                      3 249,8            4 538,0          
* Includes the corporate office and management expenses relating to international investments.
All segments operate on an arm's length basis in relation to inter-segment pricing.


Condensed consolidated statement of financial position                                
                                                                       Audited year       Audited year     
                                                                              ended              ended    
                                                                       30 September       30 September    
R'million                                                                      2018               2017    
Assets                                                                                                    
Non-current assets                                                         13 165,4           12 949,5    
Property, plant and equipment                                               4 599,2            4 588,4    
Goodwill                                                                    1 695,4            1 774,2    
Intangible assets                                                           1 751,8            1 822,8    
Investments                                                                 5 102,2            4 720,1    
Deferred taxation asset                                                        16,8               44,0    
Current assets                                                             10 763,0           10 665,0    
Inventories                                                                 5 064,0            4 812,0    
Trade and other receivables                                                 4 117,9            4 631,6    
Cash and cash equivalents                                                   1 581,1            1 221,4    
Assets classified as held for sale                                                -              364,7    
Total assets                                                               23 928,4           23 979,2    
Equity and liabilities                                                                                    
Total equity                                                               17 465,2           17 061,2    
Issued capital and reserves                                                17 302,0           16 803,8    
Non-controlling interests                                                     163,2              257,4    
Non-current liabilities                                                     1 062,2              968,8    
Deferred taxation liability                                                   370,4              347,7    
Provision for post-retirement medical aid                                     617,5              619,1    
Long-term borrowings                                                           74,3                2,0    
Current liabilities                                                         5 401,0            5 776,1    
Trade and other payables                                                    3 841,5            4 278,2    
Provisions                                                                    523,2              614,9    
Taxation                                                                      119,4               94,4    
Short-term borrowings                                                         916,9              788,6    
Liabilities directly associated with                                                  
assets classified as held for sale                                                -              173,1    
Total equity and liabilities                                               23 928,4           23 979,2    
Net cash                                                                      589,9              430,8    


Condensed consolidated statement of cash flows
                                                                                              Reclass*    
                                                                       Audited year       Audited year     
                                                                              ended              ended    
                                                                       30 September       30 September    
R'million                                                                      2018               2017    
Cash operating profit                                                       3 857,4            5 388,1    
Working capital changes                                                      (573,2)             745,4    
Cash generated from operations                                              3 284,2            6 133,5    
Finance cost net of dividends received                                         99,5              181,6    
Taxation paid                                                                (780,6)          (1 195,9)    
Cash available from operations                                              2 603,1            5 119,2    
Dividends paid                                                             (1 854,5)          (1 834,1)    
Net cash inflow from operating activities                                     748,6            3 285,1    
Purchase of property, plant, equipment and intangibles                       (719,6)            (919,0)    
Net cash on disposal of subsidiaries                                          103,4               23,8    
Proceeds from disposal of property, plant and equipment                         5,6               92,2    
Proceeds on insurance claims                                                   11,7                  -    
Net cash outflow from investing activities                                   (598,9)            (803,0)    
Net cash inflow before financing activities                                   149,7            2 482,1    
Repurchase of Tiger Brands shares                                              (6,5)                 -    
Black Managers Trust (BMT) shares exercised                                    17,9               24,0    
Shares exercised relating to equity-settled scheme                            (46,6)             (77,8)    
Reduction in non-controlling interest in empowerment shares                       -              (22,4)    
Long-term borrowings raised/(repaid)                                           86,3           (1 056,2)    
Short-term borrowings repaid                                                  (52,9)              (7,2)    
Net cash outflow from financing activities                                     (1,8)          (1 139,6)    
Net increase in cash and cash equivalents                                     147,9            1 342,5    
Effect of exchange rate changes on cash and cash equivalents                   35,0               18,8    
Cash and cash equivalents at the beginning of the year                        486,3             (875,0)    
Cash and cash equivalents at the end of the year                              669,2              486,3    
Cash resources                                                              1 581,1            1 221,4    
Short-term borrowings regarded as cash and cash equivalents                  (911,9)            (735,1)    
                                                                              669,2              486,3    
* As part of the annual assessment of all disclosure and presentation, the JSE Report on Proactive Monitoring 
  of Financial Statements issued in February 2018 was reviewed. As a consequence, the group has restated its 
  cash flow treatment relating to equity-settled share option schemes as financing activities. The presentation 
  of comparative figures has therefore been adjusted to conform to the presentation of the current period. 
  The cash flow related to equity-settled share scheme (September 2017: R77,8 million) has been reclassified 
  out of operating activities and proceeds from BMT shares exercised (September 2017: R24,0 million) has been 
  reclassified from investing activities.


Condensed consolidated statement of changes in equity
                                                                                     Shares
                                       Share                                        held by    Share-           Total
                                     capital            Non-                 subsidiary and     based    attributable          Non-                
                                         and   distributable   Accumulated     empowerment    payment       to owners   controlling       Total    
R'million                            premium        reserves       profits         entities   reserve   of the parent     interests      equity    
Balance at 1 October 2016              148,5         3 046,1      14 373,4         (2 508,9)    488,5        15 547,6         486,3    16 033,9    
Profit for the year                        -               -       3 119,3                -         -         3 119,3          18,7     3 138,0    
Other comprehensive (loss)/income                                                                                                    
for the year2, 3                           -          (152,8)         58,7                -         -           (94,1)        (10,8)     (104,9)    
Total comprehensive (loss)/income          -          (152,8)      3 178,0                -         -         3 025,2           7,9     3 033,1    
Disposal of subsidiary                     -               -             -                -         -               -        (188,9)     (188,9)    
Transfers between reserves                 -           146,7        (198,3)               -      51,6               -             -           -    
Share-based payment4                       -               -             -                -      19,9            19,9             -        19,9    
Dividends on ordinary shares               -               -      (1 808,6)               -         -        (1 808,6)        (16,6)   (1 825,2)    
  Total dividends                          -               -      (1 968,1)               -         -        (1 968,1)        (16,6)   (1 984,7)    
  Less: Dividends on    
  empowerment shares                       -               -         159,5                -         -           159,5             -       159,5    
Reduction in                       
non-controlling interest                                                                                                
in empowerment shares                                      -             -                -         -               -         (22,4)      (22,4)    
Sale of shares by                  
empowerment entity1                        -               -             -             19,7         -            19,7          (8,9)       10,8    
Balance at 30 September 2017           148,5         3 040,0      15 544,5         (2 489,2)    560,0        16 803,8         257,4    17 061,2    
Profit for the year                        -               -       2 401,1                -         -         2 401,1          30,2     2 431,3    
Other comprehensive (loss)/income                                                                                                    
for the year2, 3                           -          (132,3)         15,1                -         -          (117,2)          8,7      (108,5)    
Total comprehensive (loss)/income          -          (132,3)      2 416,2                -         -         2 283,9          38,9     2 322,8    
Disposal of subsidiary                     -           (13,2)            -                -         -           (13,2)        (94,5)     (107,7)    
Transfers between reserves                 -           538,1        (550,3)               -      12,2               -             -           -    
Share-based payment4                       -               -             -                -      39,2            39,2             -        39,2    
Dividends on ordinary shares               -               -      (1 829,3)               -         -        (1 829,3)        (19,7)   (1 849,0)    
  Total dividends                          -               -      (1 990,2)               -         -        (1 990,2)        (19,7)   (2 009,9)    
  Less: Dividends on               
  empowerment shares                       -               -         160,9                -         -           160,9             -       160,9    
Sale of shares by                  
empowerment entity1                        -               -             -             24,1         -            24,1         (18,9)        5,2    
Repurchase of Tiger Brands Shares5      (6,5)              -             -                -         -            (6,5)            -        (6,5)    
Balance at 30 September 2018           142,0         3 432,6      15 581,1         (2 465,1)    611,4        17 302,0         163,2    17 465,2    
Notes
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). In the current year, R10,7 million related to BMT I and 
  R13,4 million to Brimstone SPV.
2 During the current period, R13,2 million (2017: R110,7 million) of the foreign currency translation 
  reserve was reclassified to profit or loss, relating to Haco.
3 The other comprehensive loss and FCTR includes the amounts related to the associates of R171,1 million 
  (2017: R86,2 million), of which R117,4 million gain (2017: R70,8 million loss) relates to Oceana.
4 Included in the movement of the share-based payment is options exercised amounting to R46,5 million 
  (2017: R77,8 million).
5 Tiger Brands Limited repurchased 2 250 942 of its own shares from BMT II and Brimstone SPV.

Other salient features
                                                                       Audited year       Audited year     
                                                                              ended              ended    
                                                                       30 September       30 September    
R'million                                                                      2018               2017    
Capital commitments                                                         1 876,4            2 174,4    
- contracted                                                                   96,5              476,3    
- approved                                                                  1 779,9            1 698,1    
Capital commitments will be funded from normal operating                              
cash flows and the utilisation of existing borrowing                                  
facilities. Additional capital commitments of R109,0 million                          
are expected to be approved in 2019.                                                             
Capital expenditure                                                           719,6              919,0    
- replacement                                                                 496,3              457,1    
- expansion                                                                   223,3              461,9    
Contingent liabilities                                                                                    
- guarantees and contingent liabilities                                        30,0               11,5    
Inventory related items                                                                                   
Inventories carried at net realisable value                                    37,6              119,4    
Inventories written down and recognised in cost of sales as an expense        132,7              105,3    


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 provisional reports and the requirements of the Companies Act of 
    South Africa. The Listings Requirements require provisional 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.    

    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 auditors' 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 auditors' audit report together with the accompanying financial information 
    from the issuer's registered office.

    Revenue is recorded in terms of IFRS 15. 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.

    IFRS 9 brings together all the aspects of accounting for financial instruments: classification, measurement, 
    impairment and hedge accounting. IFRS 9 is effective for annual periods beginning on or after 1 January 2018, 
    with early application permitted. The group will apply the new rules using a modified restrospective 
    approach from 1 October 2018. Comparatives for 2018 will not be restated in the 2019 financial statements.

    The adoption of IFRS 9 will impact on the provisions for receivables as IFRS 9 applies the expected credit 
    loss model rather than the incurred loss model. The new hedge accounting rules will align the accounting 
    for hedging instruments more closely with the group's risk management practices.

    The group has reviewed its financial assets and financial liabilities and the impact on the 2018 financial 
    statements is assessed to be immaterial.

    IFRS 16 introduces significant changes to lessee accounting as it removes the distinction between operating 
    and finance leases under IAS 17 and requires a lessee to recognise a right-of-use asset and a lease liability 
    at lease commencement for all leases, except for short-term leases and leases of low value assets. The impact 
    of this is being quantified and an impact assessment will be completed by 30 September 2019. The effective 
    date will be 1 October 2019.

                                                                       Audited year       Audited year     
                                                                              ended              ended    
                                                                       30 September       30 September    
    R'million                                                                  2018               2017    
2.  Operating income before impairments and abnormal items
    Depreciation (included in cost of sales and
    other operating expenses)                                                (593,1)            (552,5)    
    Amortisation                                                               (9,8)             (11,4)    
    IFRS 2 (included in other operating expenses)                                                          
    - Equity settled                                                          (85,8)             (97,7)    
    - Cash settled                                                              3,9              (12,6)    

3.  Impairments
    Goodwill and indefinite useful life intangible assets are tested for impairment annually (as at 30 September) 
    and when circumstances that indicate the carrying value may be impaired. The group's impairment tests for 
    goodwill and intangible assets with indefinite useful lives are based on the value-in-use calculations. 
    The impairments recognised in the current year relate mainly to the Personal Care category within HPCB 
    business (R125,0 million) as well as the full impairment of the goodwill and intangible assets of the 
    Hercules business (R19,3 million). The impairment on property, plant and equipment relates mainly to 
    Deli Foods, LAF and group infrastructure assets.    
                                                                       Audited year       Audited year     
                                                                              ended              ended    
                                                                       30 September       30 September    
    R'million                                                                  2018               2017    
    Impairment of intangible assets                                          (144,3)            (309,9)    
    Impairment of property, plant and equipment                              (103,3)                 -    
    Impairment of other assets                                                (14,0)                 -    
    Impairment of investment in associate                                         -             (250,0)    
                                                                             (261,6)            (559,9)    

4.  Abnormal items                                                                                        
    Costs associated with VAMP product recall                                (430,0)                 -    
    Restructuring and related costs                                           (57,9)             (78,5)    
    Proceeds from insurance claims                                             63,5               85,7    
    Profit on disposal of property                                              2,3               73,0    
    Proceeds from warranty claim settlement                                       -               28,4    
    Once-off consulting fees                                                      -             (132,0)    
                                                                             (422,1)             (23,4)    

5.  Net finance costs and investment income                                                               
    Net interest paid                                                         (54,7)            (179,7)    
    Net foreign exchange profit/(loss)                                         20,5              (30,2)    
    Investment income                                                           2,5                3,3    
    Net financing costs                                                       (31,7)            (206,6)    

                                                                       Audited year       Audited year     
                                                                              ended              ended    
                                                                       30 September       30 September    
                                                                               2018               2017    
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            25,7               28,9    
    Impairment of goodwill and intangibles                                     (1,8)              (3,7)    
    Expenses and provisions not allowed for taxation                           (0,7)              (0,9)    
    Non-recognition of other current year timing differences                   (0,6)              (0,2)    
    Additional investment allowances                                            0,2                0,5    
    Prior year adjustments                                                      0,1                0,6    
    Withholding taxes                                                          (0,8)              (1,0)    
    Income from associates                                                      6,3                3,5    
    Effect of differing rates of foreign taxes                                 (0,3)              (0,1)    
    Other sundry adjustments                                                   (0,1)               0,4    
    Rate of South African company taxation                                     28,0               28,0    

7.  Analysis of profit from discontinued operations                       R'million          R'million   
    Profit for the year from discontinued operations                                   
    (attributable to owners of the company)                                            
    Revenue                                                                    42,9              561,2    
    Expenses                                                                  (31,9)            (547,2)    
    Operating income before impairments and abnormal items                     11,0               14,0    
    Abnormal items                                                              7,5               97,9    
    Operating income after impairments and abnormal items                      18,5              111,9    
    Finance costs                                                              (0,4)              (0,2)    
    Profit before taxation                                                     18,1              111,7    
    Taxation                                                                   (3,9)              (6,7)    
    Profit for the year from discontinued operations                           14,2              105,0    
    Attributable to non-controlling interest                                   (3,3)               3,3    
    Attributable to owners of parent                                           10,9              108,3    

                                                                       Audited year       Audited year     
                                                                              ended              ended    
                                                                       30 September       30 September    
    R'million                                                                  2018               2017    
7.  Analysis of profit from discontinued operations (continued)                                           
    Cash flows from Discontinued operations                                                               
    Net cash inflow from operating activities                                   7,7              138,6    
    Net cash (outflow)/inflow from investing activities                       (13,2)               1,4    
    Net cash inflow/(outflow) from financing activities                         5,8              (80,8)    
    Net cash inflow                                                             0,3               59,2    

8.1 Reconciliation between profit for the year and headline earnings                                      
    Weighted average number of shares in issue                          164 714 348        162 815 504
    Continuing operations                                                                                 
    Profit for the year attributable to owners of the parent                2 390,2            3 011,0    
    Impairment of intangible assets                                           144,3              309,9    
    Impairment of property, plant and equipment                                88,8                  -    
    Profit on disposal of property, plant and equipment                        (1,6)             (52,5)    
    Impairment of investment in associate                                         -              250,0    
    Proceeds from insurance claims                                             (7,6)                 -    
    Impairment of other assets                                                  3,4                  -    
    Headline earnings adjustment - Associates                                     -                  -    
    - Profit on sale of non-current assets                                     (1,2)              (8,5)    
    - Profit on disposal of business                                           (2,8)                 -    
    Headline earnings for the year                                          2 613,5            3 509,9    
    Tax effect of headline earnings                                            (9,7)              15,5    
    Attributable to non-controlling interest                                      -                  -    
    Discontinued operations                                                                               
    Profit for the year attributable to owners of the parent                   10,9              108,3    
    Profit on disposal of subsidiary                                           (7,5)             (98,1)    
    Headline earnings for the year                                              3,4               10,2    

8.2 Reconciliation of headline earnings excluding VAMP                                                    
    Headline earnings - as reported (continuing operations)                 2 613,5            3 509,9    
    VAMP - operating loss/(profit) (net of taxation)                          181,4              (75,0)   
    VAMP - abnormal items (net of taxation)                                   302,9                  -    
    Headline earnings excluding VAMP                                        3 097,8            3 434,9    

9. Subsequent events
   With the exception of the Listeria litigation update reflected on page 4 and the decision to pursue an 
   unbundling of its shareholding in Oceana as reflected on page 5, there are no material events that 
   occurred during the period subsequent to 30 September 2018, but prior to these financial results 
   being authorised for issue.

Corporate information

TIGER BRANDS LIMITED
Registration number: 1944/017881/06
Incorporated in the Republic of South Africa
Share code: TBS ISIN: ZAE000071080

Independent non-executive directors
KDK Mokhele (chairman), MO Ajukwu, MJ Bowman, GA Klintworth (appointed 16 August 2018),
M Makanjee, TE Mashilwane, MP Nyama, YGH Suleman

Executive directors
LC Mac Dougall (chief executive officer)
NP Doyle (chief financial officer)

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
Computershare Investor Services (Pty) Limited
Rosebank Towers, 15 Biermann Avenue, Rosebank, 2196
PO Box 61051, Marshalltown 2107, South Africa
Telephone (011) 370 5000

http://www.tigerbrands.com

Date: 22/11/2018 07:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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