Wrap Text
Unaudited group results and dividend declaration for the six months ended 31 March 2019
TIGER BRANDS LIMITED
Registration number: 1944/017881/06
Incorporated in the Republic of South Africa
Share code: TBS ISIN: ZAE000071080
Unaudited group results and dividend declaration for the six months ended
31 March 2019
Salient features
- Revenue of R15,4 billion from continuing operations down 2% (excluding VAMP up 4%)
- Ordinary dividend of 321 cps Special dividend of 306 cps
Total interim dividend of 627 cps
- Operating income*
R1,5 billion down 24% (excluding VAMP down 9%)
- Home and Personal Care post a strong recovery
- HEPS from continuing operations
down 12% to 762 cents (excluding Oceana impact down 2%)
- Oceana unbundling impacts like-for-like comparison
* Before IFRS 2 charges, impairments and abnormal items from continuing operations.
Commentary
Tiger Brands delivers a mixed set of results under difficult trading conditions
During the period under review, the trading environment remained difficult, with continued pressure on
consumer spending, resulting in sales volume increases in the domestic business while low price inflation
impacted margins. Group revenue of R15,4 billion from continuing operations was down 2% compared with the
corresponding period last year, which included Easter seasonal volumes. Domestic revenue excluding Value
Added Meat Products (VAMP) was 6% higher driven by 2% volume growth and 4% inflation. Revenue from Exports
and International for the period under review declined by 11% to R1,7 billion. This was primarily due to lower
Export volumes and price deflation in international markets.
Operating income before IFRS 2 charges from continuing operations decreased by 24% to R1,5 billion. This
decrease was driven largely by VAMP and Grains, but partially offset by significantly lower losses in Deli
Foods and the Deciduous Fruit business. Operating income from continuing operations, excluding VAMP, declined
by 9% to R1,8 billion.
Strong volume performances were recorded in Beverages, Home Care, Baby Care, and Groceries, offset by a 1,2%
decline in Grains volumes. All categories, except sorghum-based products, maize, pasta and Baby Care recorded
selling price inflation. However, price increases were not sufficient to fully recover cost increases,
resulting in negative operating leverage. Power outages and social unrest continued to interrupt operations.
During the period, goodwill of R100 million in respect of Davita was impaired. This arose as a result of the
consistent risks associated with key export markets, with lower sales projected for Nigeria and Mozambique,
as well as lower sales forecasted for the powdered seasoning brand, Benny.
On 24 January 2019, Tiger Brands advised shareholders that it had received and accepted a conditional but
binding offer from Brimstone Investment Corporation Limited (Brimstone) to acquire 8 000 000 shares in Oceana
(Brimstone sale). The Brimstone sale was concluded on 20 March 2019, giving rise to an after-tax capital
profit of R282 million. The total abnormal profits of R329 million recorded at the half-year, include the
after-tax profit from the Brimstone sale, as well as R100 million in insurance proceeds related to the temporary
shutdown of the VAMP facilities last year. These gains were partially offset by costs related to the delayed
re-opening of VAMP as well as retrenchment costs in other businesses.
Net financing costs of R26 million (2018: R45 million), reflect a reduction of R19 million compared to the
same period last year. This was primarily due to a lower net foreign exchange loss of R6 million in the
current period.
Income from associates decreased by 41% to R200 million. As previously reported, following the decision to
unbundle the company's investment in Oceana, the company ceased to equity account the earnings of Oceana with
effect from 1 December 2018. The unbundling was concluded on 29 April 2019, being the implementation date of
the unbundling. The total income from associates is therefore not strictly comparable with the corresponding
period last year. Excluding the contribution from Oceana in both periods, income from associates reflects an
overall improvement on the previous period. Carozzi and UAC Foods produced solid performances, with National
Foods Holdings (NFH) performing satisfactorily in the current period.
The ongoing forex liquidity challenges in Zimbabwe have intensified significantly over the last six months.
The challenge of trading sustainably in this environment for NFH has been exacerbated by the delays of
the Reserve Bank of Zimbabwe in making payments of debts to the major supplier of NFH, which were assumed
by the Reserve Bank of Zimbabwe as part of a funding agreement concluded during the period under review.
Profit before tax from continuing operations improved marginally to R1,9 billion.
Earnings per share (EPS) from continuing operations increased marginally to 864 cents (2018: 852 cents),
assisted by the abnormal capital profit from the Brimstone sale. Headline earnings per share (HEPS) from
continuing operations was down 12% to 762 cents (2018: 868 cents). The capital profit from the Brimstone
sale is excluded for headline earnings purposes. EPS from total operations increased marginally to 864 cents
(2018: 859 cents), while HEPS from total operations decreased by 12% to 762 cents (2018: 870 cents).
Adjusted earnings and headline earnings
Non-IFRS measures such as adjusted earnings and/or headline earnings are considered pro forma financial
information as per the JSE Listings Requirements. The pro forma financial information is the responsibility of
the group's board of directors and is presented for illustrative purposes only. Due to its nature, adjusted
profit should not be considered as a representation of earnings. This pro forma financial information has not
been reported on by the company's auditors.
Adjusting for the impact of VAMP, Oceana and the capital profit arising from the Brimstone sale,
attributable earnings from continuing operations declined by 15% compared to the reported increase of 3%.
At a headline earnings level, the adjusted headline earnings from continuing operations reflect a decline
of 8% compared to the reported decline of 11%.
The reconciling items between reported earnings and adjusted earnings are set out in the tables below.
Table 1: Adjusted earnings from continuing operations
Change
R'million H1 2019 H1 2018 %
Earnings as reported 1 431 1 396 3
Oceana equity-accounted earnings (31) (178)
Oceana - profit on sale of shares to Brimstone (282) -
Adjusted earnings - excluding Oceana 1 118 1 218 (8)
VAMP - after-tax trading loss/(profit) 205 (9)
VAMP - (abnormal items after tax)/recall costs (48) 289
Adjusted earnings (excluding VAMP and Oceana) 1 275 1 498 (15)
Table 2: Adjusted headline earnings from continuing operations
Change
R'million H1 2019 H1 2018 %
Headline earnings as reported 1 262 1 423 (11)
Oceana equity-accounted earnings (31) (178)
Oceana - profit on sale of shares to Brimstone - -
Adjusted headline earnings - excluding Oceana 1 231 1 245 (1)
VAMP - after-tax trading loss/(profit) 205 (9)
VAMP - (abnormal items after tax)/recall costs (54) 263
Adjusted headline earnings (excluding VAMP and Oceana) 1 382 1 499 (8)
Operating performance
Grains
Revenue in the Grains division increased by 2% to R6,7 billion, while operating income decreased by
25% to R788 million.
Milling & Baking's revenue increased by 2%, with selling prices increasing by 4% across the segment and
volumes showing an overall decline of 2%. Operating income declined by 23% to R636 million, influenced
primarily by maize, which was unable to sustain the performance of the corresponding period last year,
as well as sorghum-based products, due to lower volumes and higher conversion costs.
Higher price realisations in the wheat-to-bread value chain were not enough to recover cost increases,
particularly in distribution, and this led to some margin compression.
Other Grains grew revenue marginally to R2,1 billion. Operating income decreased by 31% to R152 million,
with Jungle, pasta and rice all showing declines. Pasta reflected a sharp decline in profitability, being
negatively impacted by significantly cheaper imports, increased promotional activity and higher
distribution costs.
Consumer Brands - Food
Consumer Brands - Food (excluding VAMP) delivered solid growth across the businesses, with Beverages
enjoying a particularly strong performance. Total revenue increased 8% to R5,4 billion, while operating
income fell by 10% to R628 million.
Groceries revenue increased by 8% to R3 billion, underpinned by volume growth of 3% and price inflation of
5%. Despite higher revenue, operating income was adversely impacted by the effect of a three-week strike at
the start of the year, which resulted in factory under recoveries. Operating income declined by 12% to
R233 million.
Revenue at Snacks & Treats increased by 7% to R1,2 billion, driven by volume growth of 5% and average price
increases of 2%. Volume growth was achieved primarily by chocolate and snacking, with encouraging growth
also recorded in key sugar brands due to product innovation. Operating income, however, decreased by 14% to
R168 million as a result of higher conversion costs and the impact of load shedding on factory efficiencies.
The Beverages business delivered strong revenue growth of 15% to R905 million, benefiting from volume growth
of 12%. However, operating income declined by 2% to R178 million mainly as a result of an unfavourable sales
mix.
VAMP's performance was impacted by challenges in managing the factory's re-opening and product launch
logistics, which affected service levels. Revenue declined by 79% to R213 million. The lower factory
throughput and delayed re-opening resulted in higher costs. This, together with higher raw material costs,
led to an operating loss of R296 million (2018: R13 million profit). Service levels and product launch
logistics have improved significantly and will result in an improved performance in the second half.
Home, Personal Care and Baby (HPCB)
HPCB's overall revenue increased by 19% to R1,5 billion and operating income increased by 50% to
R295 million.
The Home Care category delivered a strong recovery, with total volumes increasing by 11%. Revenue was
further enhanced by price inflation of 19%. Operating income increased strongly by 85% to R200 million as
result of the additional volumes, an improved product mix and reduced promotional spend, while the higher
production volumes had a positive effect on factory recoveries.
Revenue in the Personal Care category increased by 2% to R304 million, driven by inflation of 3%, partly
offset by lower volumes. Operating income increased by 6% to R27 million.
Baby Care grew revenue by 22% to R476 million, with the nutrition segment performing particularly well.
A strong volume performance was driven by baby food, which continued to grow ahead of the market and benefited
from gains in distribution, improved in-store execution and the successful launch of new variants. The benefit
of the improved volumes was partially offset by higher conversion costs. This led to an increase in operating
income of 8% to R68 million.
Exports and International
Total revenue for the Exports and International businesses declined by 11% to R1,7 billion, compared with
the corresponding period last year. The adverse performance of Exports was more than offset by the significant
reduction in operating losses from the Deciduous Fruit business and Deli Foods, resulting in operating income
increasing by 62%. This division continued to be negatively impacted by the challenging trading conditions in
key export regions, particularly Nigeria and Mozambique as well as ongoing foreign currency shortages in other
export regions impacting distributors' ability to meet demand.
The performance of Deli Foods in Nigeria improved overall. Revenue increased by 22% to R69 million, while
the operating loss declined to R10 million from R31 million in the comparable period, as a result of improved
volumes and operational efficiencies.
Chococam, which is based in Cameroon, recorded an improved sales performance on translation, due to rand
weakness. Revenue increased by 5% in rand terms but declined by 1% in constant currency terms due to lower
volumes. Operating income in constant currency terms increased by 3%, assisted by tight management of costs,
and by 11% on conversion into rand.
In the Exports business (including Davita), revenue decreased to R793 million from R898 million in the
corresponding period last year. Operating income declined by 32% to R76 million due to the reduced revenue,
compounded by an adverse product mix and higher costs.
Revenue in the Deciduous Fruit business declined by 4% to R611 million, due primarily to lower opening
stocks as a result of the drought in the Western Cape last year. The business reported a significantly reduced
operating loss of R12 million (2018: R72 million), driven by the weaker rand as well as enhanced factory
efficiencies.
Cash flow and capital expenditure
Cash generated from operations decreased to R1,4 billion (2018: R1,5 billion). This was primarily due to
a 21% decline in cash operating profit, which was largely offset by a significantly lower increase in the
investment in working capital. The net cash movement from investing activities benefited from the receipt
of the proceeds of R581 million on the Brimstone sale. Capital expenditure incurred during the period amounted
to R361 million (2018: R297 million). The group closed the half-year in a net cash position of R777 million
compared to a net borrowing position of R165 million at 31 March 2018.
Ordinary and special dividend
The company has declared an ordinary dividend of 321 cents per share for the six-month period ended 31 March
2019, which represents a 15% decrease on the interim dividend of 378 cents per share declared last year. The
lower ordinary dividend takes into account the recent change in the group's dividend policy to a cover of
1,75 times, and is calculated off the reduced headline earnings base in this period.
In addition, the company has declared a special dividend of 306 cents per share as a result of the once-off
proceeds received from the Brimstone sale. The payment of the special dividend is subject to South African
Reserve Bank approval.
Shareholders are referred to the accompanying announcement for further details.
Outlook
We continue to focus on positioning the business for the future and are confident that our strategies remain
compelling. Embedding the operating model remains a priority as is driving the cultural transformation that
will result in a more agile and flexible organisation.
In tandem with the above, we will review processes, structures and overhead costs to identify opportunities
that will improve operational efficiencies and reduce our cost base, particularly as selling price inflation
across the portfolio is expected to remain low against a backdrop of constrained consumer spending.
Listeria update
Shareholders are referred to the SENS announcement issued by the company on 17 April 2019 with regards to
the serving of the Class Action summons.
As previously confirmed, the company has product liability insurance cover appropriate for a group of its
scale. Coverage is subject to the terms and limits of the policy. Our insurers have advised that the product
liability policy does not include cover for exemplary or punitive damages, should such an award be made by the
court, and in addition, should an award be made for Constitutional damages, the product liability policy will
not cover that portion of the award which relates to exemplary or punitive damages which are not compensatory
in nature. The company reserves its rights in this regard.
On 2 May 2019, the company filed the required notice with the Registrar of the High Court, Gauteng Local
Division, Johannesburg, of its intention to defend the Class Action. When appropriate, it will issue further
communication as material milestones in the legal process are reached.
By order of the board
KDK Mokhele LC Mac Dougall
Chairman Chief Executive Officer
Bryanston
21 May 2019
Date of release: 22 May 2019
Declaration of ordinary and special dividend
The board has approved and declared an ordinary and a special dividend for the six months ended
31 March 2019, as follows:
Dividend Gross amount Withholding tax % Net amount
Ordinary 321 cents 20 256,8 cents
Special 306 cents 20 244,8 cents
Payment of the special dividend is subject to South African Reserve Bank (SARB) approval.
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 per centum);
- 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 ordinary and special dividend:
Declaration date Tuesday, 22 May 2019
Finalisation announcement in respect of the special dividend, due to
the receipt of SARB approval Tuesday, 18 June 2019
Last day to trade cum the ordinary and special dividend Tuesday, 25 June 2019
Shares commence trading ex the ordinary and special dividend Wednesday, 26 June 2019
Record date to determine those shareholders entitled
to the ordinary and special dividend Friday, 28 June 2019
Payment in respect of the ordinary and special dividend Monday, 1 July 2019
Share certificates may not be dematerialised or rematerialised between Wednesday, 26 June 2019 and
Friday, 28 June 2019, both days inclusive.
By order of the board
JK Monaisa
Company secretary
Bryanston
21 May 2019
Interim condensed consolidated income statement
Unaudited Unaudited
six months six months Audited
ended ended year ended
31 March 31 March 30 September
R'million Notes 2019 2018 2018
Continuing operations
Revenue 15 402,1 15 685,2 28 473,9
Cost of sales (10 579,8) (10 467,9) (19 229,5)
Gross profit 4 822,3 5 217,3 9 244,4
Sales and distribution expenses (2 015,2) (1 905,3) (3 675,8)
Marketing expenses (486,9) (502,1) (844,7)
Other operating expenses (804,3) (811,8) (1 485,1)
Operating income before impairments
and abnormal items 2 1 515,9 1 998,1 3 238,8
Impairments 3 (106,0) (29,7) (261,6)
Abnormal items 4 328,9 (362,9) (422,1)
Operating income after impairments and
abnormal items 1 738,8 1 605,5 2 555,1
Net finance costs and investment income 5 (26,1) (44,6) (31,7)
Income from associated companies 200,0 341,2 730,7
Profit before taxation 1 912,7 1 902,1 3 254,1
Taxation (468,5) (492,1) (837,0)
Profit for the period from
continuing operations 1 444,2 1 410,0 2 417,1
Discontinued operation
Profit for the period from
discontinued operation - 14,2 14,2
Profit for the period 1 444,2 1 424,2 2 431,3
Attributable to:
Owners of the parent 1 431,3 1 406,5 2 401,1
- Continuing operations 1 431,3 1 395,6 2 390,2
- Discontinued operation - 10,9 10,9
Non-controlling interests 12,9 17,7 30,2
- Continuing operations 12,9 14,4 26,9
- Discontinued operation - 3,3 3,3
1 444,2 1 424,2 2 431,3
Basic earnings per ordinary share (cents) 864,3 858,5 1 457,7
- Continuing operations 864,3 851,8 1 451,1
- Discontinued operation - 6,7 6,6
Diluted basic earnings per
ordinary share (cents) 860,9 853,3 1 451,2
- Continuing operations 860,9 846,7 1 444,6
- Discontinued operation - 6,6 6,6
Headline earnings per ordinary share (cents) 761,9 870,4 1 588,8
- Continuing operations 761,9 868,3 1 586,7
- Discontinued operation - 2,1 2,1
Diluted headline earnings per
ordinary share (cents) 759,0 865,3 1 581,7
- Continuing operations 759,0 863,2 1 579,6
- Discontinued operation - 2,1 2,1
Interim condensed consolidated statement of comprehensive income
Unaudited Unaudited
six months six months Audited
ended ended year ended
31 March 31 March 30 September
R'million 2019 2018 2018
Profit for the period 1 444,2 1 424,2 2 431,3
Other comprehensive loss, net of tax (133,3) (717,3) (108,5)
Net gain/(loss) on hedge of net
investment in foreign operation^ 0,7 (15,3) (7,9)
Foreign currency translation adjustments^ (29,3) (45,2) 24,0
Share of associates' other
comprehensive loss and FCTR^ (121,2) (680,3) (171,1)
Net gain/(loss) on cash flow hedges^ 13,8 (7,3) 26,5
Net gain on available for
sale/FVOCI* financial assets 2,9 32,4 8,6
Remeasurement raised in terms of IAS 19R - - 20,9
Tax effect (0,2) (1,6) (9,5)
Total comprehensive income for
the period, net of tax 1 310,9 706,9 2 322,8
Attributable to:
Owners of the parent 1 305,1 696,1 2 283,9
Non-controlling interests 5,8 10,8 38,9
1 310,9 706,9 2 322,8
^ Items that may be subsequently reclassified to profit or loss including the related tax effects.
During the current period, R26,4 million of the foreign currency translation reserve, relating to
the sale of 8 000 000 Oceana shares to Brimstone, was reclassified to profit or loss, as well as
R0,9 million (2018: R3,1 million) on the available-for-sale financial asset derecognised in terms
of the Black Managers Trust Participation Rights Scheme was reclassified to profit or loss.
* FVOCI - fair value through other comprehensive income.
Interim condensed consolidated statement of financial position
Unaudited Unaudited
six months six months Audited
ended ended year ended
31 March 31 March 30 September
R'million Note 2019 2018 2018
ASSETS
Non-current assets 10 684,6 12 570,1 13 165,4
Property, plant and equipment 4 660,8 4 551,4 4 599,2
Goodwill 1 588,7 1 761,2 1 695,4
Intangible assets 1 746,1 1 803,9 1 751,8
Investments 2 675,3 4 414,4 5 102,2
Deferred taxation asset 13,7 39,2 16,8
Current assets 10 823,6 11 029,6 10 763,0
Inventories 5 360,3 4 920,9 5 064,0
Trade and other receivables 4 574,7 4 999,9 4 117,9
Cash and cash equivalents 888,6 1 108,8 1 581,1
Assets classified as held-for-sale 6 2 000,5 - -
TOTAL ASSETS 23 508,7 23 599,7 23 928,4
EQUITY AND LIABILITIES
Total equity 17 563,8 16 469,2 17 465,2
Issued capital and reserves 17 395,9 16 312,7 17 302,0
Non-controlling interests 167,9 156,5 163,2
Non-current liabilities 1 068,6 990,7 1 062,2
Deferred taxation liability 365,3 355,3 370,4
Provision for post-retirement medical aid 628,5 633,4 617,5
Long-term borrowings 74,8 2,0 74,3
Current liabilities 4 876,3 6 139,8 5 401,0
Trade and other payables 4 287,7 4 314,2 3 841,5
Provisions 525,3 547,5 523,2
Taxation 26,8 6,7 119,4
Short-term borrowings 36,5 1 271,4 916,9
TOTAL EQUITY AND LIABILITIES 23 508,7 23 599,7 23 928,4
Net (cash)/debt (777,3) 164,6 (589,9)
Interim condensed consolidated statement of cash flows
Unaudited Unaudited
six months six months Audited
ended ended year ended
31 March 31 March 30 September
R'million 2019 2018 2018
Cash operating profit 1 871,5 2 366,2 3 857,4
Working capital changes (515,8) (894,4) (573,2)
Cash generated from operations 1 355,7 1 471,8 3 284,2
Finance income and income from investments 56,8 81,0 35,1
Finance costs (84,4) (119,8) (114,1)
Dividends received from associate companies 176,1 - 178,5
Taxation paid (550,7) (555,6) (780,6)
Cash available from operations 953,5 877,4 2 603,1
Dividends paid (1 193,2) (1 193,7) (1 854,5)
Net cash (outflow)/inflow from
operating activities (239,7) (316,3) 748,6
Purchase of property, plant and equipment (361,2) (296,9) (719,6)
Proceeds on sale of investment in associate 581,4 - -
Proceeds from insurance claims - - 11,7
Net cash on disposal of subsidiary 255,9* 103,5 103,4
Proceeds from disposal of property, plant,
equipment and intangible assets - 7,4 5,6
Net cash inflow/(outflow) from
investing activities 476,1 (186,0) (598,9)
Net cash inflow/(outflow) before
financing activities 236,4 (502,3) 149,7
Black Managers Trust (BMT) shares exercised 3,4 15,0 17,9
Shares exercised relating to equity-settled scheme (25,9) (41,6) (46,6)
Repurchase of Tiger Brands shares - (6,5) (6,5)
Long-term borrowings (repaid)/raised (2,1) - 86,3
Short-term borrowings raised/(repaid) 32,3 8,4 (52,9)
Net cash inflow/(outflow) from financing activities 7,7 (24,7) (1,8)
Net increase/(decrease) in cash and cash equivalents 244,1 (527,0) 147,9
Effect of exchange rate changes on cash
and cash equivalents (24,7) (60,4) 35,0
Cash and cash equivalents at the
beginning of the period 669,2 486,3 486,3
Cash and cash equivalents at the end of the period 888,6 (101,1) 669,2
Cash resources 888,6 1 108,8 1 581,1
Short-term borrowings regarded as
cash and cash equivalents - (1 209,9) (911,9)
888,6 (101,1) 669,2
* The second tranche received from East African Group (EAG) on the sale of East African Tiger
Brands Industries Plc. (EATBI) in 2017.
Other salient features
Unaudited Unaudited
six months six months Audited
ended ended year ended
31 March 31 March 30 September
R'million 2019 2018 2018
Capital commitments 1 408,0 1 877,5 1 876,4
- Contracted 325,7 502,5 96,5
- Approved 1 082,3 1 375,0 1 779,9
Capital commitments will be funded
from normal operating cash flows
and the utilisation of existing
borrowing facilities.
Capital expenditure 361,2 296,9 719,6
- Replacement 180,1 224,0 496,3
- Expansion 181,1 72,9 223,3
Contingent liabilities
- Guarantees and contingent liabilities 84,4 27,7 30,0
The increase relates to the unutilised portion of the corporate guarantee for the Deli Foods (Nigeria)
Limited facility.
Interim condensed consolidated statement of changes in equity
Shares held by Total
Share Non- subsidiary and Share-based attributable Non-
and capital distributable Accumulated empowerment payment to owners of controlling Total
R'million premium reserves profits entities reserve the parent interests equity
Balance at 1 October 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 period - - 1 406,5 - - 1 406,5 17,7 1 424,2
Other comprehensive loss - (710,4) - - - (710,4) (6,9) (717,3)
Total comprehensive
(loss)/income - (710,4) 1 406,5 - - 696,1 10,8 706,9
Disposal of subsidiary - (13,2) - - - (13,2) (94,5) (107,7)
Transfers between reserves - 341,2 (352,7) - 11,5 - - -
Share-based payment1 - - - - (3,8) (3,8) - (3,8)
Dividends on ordinary shares
(net of dividend on
treasury shares) - - (1 189,9) - - (1 189,9) (3,8) (1 193,7)
Sale of empowerment shares2 - - - 26,2 - 26,2 (13,4) 12,8
Repurchase of Tiger
Brands shares (6,5) - - - - (6,5) - (6,5)
Balance at 31 March 2018 142,0 2 657,6 15 408,4 (2 463,0) 567,7 16 312,7 156,5 16 469,2
Profit for the period - - 994,6 - - 994,6 12,5 1 007,1
Other comprehensive income - 578,1 15,1 - - 593,2 15,6 608,8
Total comprehensive income - 578,1 1 009,7 - - 1 587,8 28,1 1 615,9
Disposal of subsidiary - - - - - - - -
Transfers between reserves - 196,9 (197,6) - 0,7 - - -
Share-based payment1 - - - - 43,0 43,0 - 43,0
Dividends on ordinary shares
(net of dividend on
treasury shares) - - (639,4) - - (639,4) (15,9) (655,3)
Sale of empowerment shares2 - - - (2,1) - (2,1) (5,5) (7,6)
Repurchase of Tiger
Brands shares - - - - - - - -
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
Profit for the period - - 1 431,3 - - 1 431,3 12,9 1 444,2
Other comprehensive loss - (126,2) - - - (126,2) (7,1) (133,3)
Total comprehensive
(loss)/income - (126,2) 1 431,3 - - 1 305,1 5,8 1 310,9
Disposal of subsidiary - - - - - - - -
Transfers between reserves3 - 26,4 (21,0) - (5,4) - - -
Share-based payment1 - - - - 5,8 5,8 - 5,8
Dividends on ordinary shares
(net of dividend on
treasury shares) - - (1 192,1) - - (1 192,1) (1,1) (1 193,2)
Sale of empowerment shares2 - - - 1,5 - 1,5 - 1,5
Disposal of investment
in associate4 - (26,4) - - - (26,4) - (26,4)
Balance at 31 March 2019 142,0 3 306,4 15 799,3 (2 463,6) 611,8 17 395,9 167,9 17 563,8
1 Included in the movement of the share-based payment are options exercised amounting to R25,9 million
(2018: R41,6 million).
2 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, R1,5 million related to BMT I.
3 Transfer between reserves relate to the share of associates earnings and the exercised portion of IFRS 2.
4 Relates to release of the previously equity accounted FCTR on Oceana for the 8 000 000 Oceana shares
sold to Brimstone.
Interim condensed consolidated segmental information
Unaudited Unaudited
six months six months Audited
ended ended year ended
31 March 31 March 30 September
R'million 2019 2018 2018
Revenue
Domestic operations 13 724,0 13 793,1 24 706,5
Grains 6 697,3 6 594,2 12 753,5
Milling and baking1 4 566,0 4 472,7 8 889,2
Other Grains2 2 131,3 2 121,5 3 864,3
Consumer Brands - Food 5 572,2 5 978,4 9 727,4
Groceries 2 981,6 2 749,3 4 747,5
Snacks & Treats 1 204,4 1 129,0 2 060,6
Beverages 905,4 786,5 1 294,7
Value Added Meat Products 212,6 1 037,0 1 065,5
Out of Home 268,2 276,6 559,1
Home, Personal Care and Baby (HPCB) 1 454,5 1 220,5 2 225,6
Home Care 675,1 534,1 814,2
Personal Care 303,5 296,3 615,5
Baby Care 475,9 390,1 795,9
Exports and International 1 678,1 1 892,1 3 767,4
Exports 792,6 897,5 1 820,4
International operations
- Central Africa (Chococam) 463,5 440,7 881,7
- West Africa (Deli Foods) 68,8 56,5 109,2
Deciduous Fruit (LAF) 610,8 639,2 1 303,9
Other intergroup sales (257,6) (141,8) (347,8)
Continuing operations 15 402,1 15 685,2 28 473,9
Discontinued operation - East Africa - 42,9 42,9
TOTAL REVENUE 15 402,1 15 728,1 28 516,8
Operating income before impairments
and abnormal items3
Domestic operations 1 412,0 1 956,3 3 050,8
Grains 788,3 1 046,6 1 886,0
Milling and baking1 636,2 826,2 1 544,2
Other Grains2 152,1 220,4 341,8
Consumer Brands - Food 332,7 714,7 827,9
Groceries 232,5 263,6 432,4
Snacks & Treats 167,6 194,4 304,8
Beverages 178,4 182,0 212,5
Value Added Meat Products (295,7) 13,4 (252,0)
Out of Home 49,9 61,3 130,2
Home, Personal Care and Baby (HPCB) 294,8 196,4 341,4
Home Care 199,5 107,6 144,2
Personal Care 27,2 25,6 64,7
Baby Care 68,1 63,2 132,5
Other4 (3,8) (1,4) (4,5)
Exports and International 137,7 85,1 269,9
Exports 76,0 111,7 289,7
International operations
- Central Africa (Chococam) 84,2 75,7 159,0
- West Africa (Deli Foods) (10,2) (30,6) (50,5)
Deciduous Fruit (LAF) (12,3) (71,7) (128,3)
Operating income before IFRS 2 charges
from continuing operations 1 549,7 2 041,4 3 320,7
IFRS 2 charges (33,8) (43,3) (81,9)
Operating income after IFRS 2 charges
from continuing operations 1 515,9 1 998,1 3 238,8
Discontinued operation - East Africa - 11,0 11,0
TOTAL OPERATING INCOME 1 515,9 2 009,1 3 249,8
1 Comprises maize milling, wheat milling and baking, sorghum beverages and malt-based breakfast cereals.
2 Comprises rice, pasta and oat-based breakfast cereals.
3 Operating income is stated after amortisation of intangible assets.
4 Includes the corporate office and management expenses relating to international investments.
All segments operate on an arm's length basis in relation to intersegment pricing.
Notes
1. Basis of preparation and changes to the Group's accounting policies
The preparation of these results has been supervised by Noel Doyle, Chief Financial
Officer of Tiger Brands Limited.
The condensed consolidated interim results for the six months ended 31 March 2019 have been
prepared in accordance with the International Financial Reporting Standard, IAS 34 Interim Financial
Reporting, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and
Financial Pronouncements as issued by the Financial Reporting Standards Council, the requirements of
the South African Companies Act No 71 of 2008 and the Listings Requirements of the JSE Limited.
These statements have not been audited or reviewed.
The accounting policies adopted in the preparation of the condensed consolidated interim results are
consistent with those applied in preparation of the group's annual consolidated financial statements
for the year ended 30 September 2018, except for IFRS 9 Financial Instruments which was adopted
1 October 2018 and applied using a modified retrospective approach. 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.
Unaudited Unaudited
six months six months Audited
ended ended year ended
31 March 31 March 30 September
R'million 2019 2018 2018
2. Operating income before impairments and
abnormal items
Depreciation (included in cost of sales and other
operating expenses) (301,8) (294,3) (593,1)
Amortisation (4,5) (5,5) (9,8)
IFRS 2 (included in other operating expenses)
- Equity settled (31,7) (37,9) (85,8)
- Cash settled (2,1) (5,4) 3,9
3. Impairment
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 key assumptions used to determine the recoverable amount for the
different cash-generating units were disclosed in the annual consolidated financial statements for
the year ended 30 September 2018. During the current period, goodwill relating to VAMP (R6,0 million)
and Davita (R100,0 million) was impaired.
Davita is included in the Exports and International cash-generating unit. The impairment arose as a
result of the consistent risks associated with key export markets, with lower sales projected for
Nigeria and Mozambique, as well as lower sales forecasted for the powdered seasoning brand, Benny.
All assumptions have remained in line with the prior year as disclosed in the 2018 annual financial
statements, however the post-tax discount rate utilised for the purposes of the impairment testing
has been revised to 16,9% (2018: 17,9%). A +1%/-1% change in the post-tax discount rate would result
in an approximately +/-R100 million change in the valuation.
Unaudited Unaudited
six months six months Audited
ended ended year ended
31 March 31 March 30 September
R'million 2019 2018 2018
Impairment of intangible assets (106,0) (19,3) (144,3)
Impairment of property, plant and equipment - (10,4) (103,3)
Impairment of other assets - - (14,0)
(106,0) (29,7) (261,6)
4. Abnormal items
Profit on sale of shares in associate investment 281,9 - -
Proceeds from VAMP recall insurance claim 99,9 50,0 50,0
VAMP recall cost provision (25,0) (415,2) (430,0)
Restructuring and related costs (27,9) - (57,9)
Proceeds from insurance claim - - 13,5
Profit on disposal of property - 2,3 2,3
328,9 (362,9) (422,1)
5. Net finance costs and investment income
Net interest paid (22,2) (29,2) (54,7)
Net foreign exchange (loss)/profit (6,4) (17,5) 20,5
Investment income 2,5 2,1 2,5
Net financing costs (26,1) (44,6) (31,7)
6. Unbundling of Oceana
As a consequence of the decision taken to unbundle the company's investment in Oceana, the company
ceased to equity account the earnings of Oceana with effect from 1 December 2018. From this date,
the investment has been accounted for as a held-for-sale asset on the balance sheet. The Brimstone
sale was concluded on 20 March 2019. The total sale consideration amounted to R581,4 million, giving
rise to a capital profit of R281,9 million and a release of R26,4 million on FCTR. Following the
completion of the Brimstone sale, the board proceeded with the unbundling of the remaining Oceana
shareholding to Tiger Brands shareholders.
Unaudited Unaudited
six months six months Audited
ended ended year ended
31 March 31 March 30 September
R'million 2019 2018 2018
7. Reconciliation between profit for the
period and headline earnings
Continuing operations
Profit for the year attributable to
owners of the parent 1 431,3 1 395,6 2 390,2
Profit on sale of shares in associate investment (281,9) - -
Impairment of intangible assets 106,0 19,3 144,3
Impairment of property, plant and equipment - 8,5 88,8
Loss/(profit) on disposal of plant,
equipment and vehicles 0,1 0,5 (1,6)
Impairment of other assets - - 3,4
Proceeds from insurance claims - - (7,6)
Headline earnings adjustment - associates
- Impairment of assets 6,3
- Profit on sale of non-current assets - (1,2) (1,2)
- Profit on disposal of business - - (2,8)
Headline earnings for the period 1 261,8 1 422,7 2 613,5
Tax effect of headline earnings - 2,3 (9,7)
Attributable to non-controlling interest - - -
Discontinued operation
Profit for the year attributable to
owners of the parent - 10,9 10,9
Profit on disposal of subsidiary - (7,5) (7,5)
Headline earnings for the period - 3,4 3,4
8. Adoption of IFRS 9
IFRS 9 replaces IAS 39 and addresses the classification, measurement and derecognition of financial
assets and liabilities. IFRS 9 introduces new rules for hedge accounting and a new impairment model for
financial assets.
The group has adopted IFRS 9 and applied the new rules using a modified retrospective approach from
1 October 2018. Comparatives for 2018 have not been restated. In terms of IFRS 9, the group has applied
the expected credit loss (ECL) model rather than the incurred loss model. The calculation of ECLs
incorporates forward looking variables which include potential risks in the current economic environment,
historic trends and expert management judgement. The group did not present an adjustment to opening
retained earnings and its impairment losses/reversals determined in accordance with IFRS 9 separately
in the statement of profit or loss as the amounts are not material. As the remeasurement on available-
for-sale investments have previously gone through other comprehensive income, there is no change in
terms of IFRS 9 for FVOCI.
9. IFRS 16 Leases
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 commencement for all leases, except for short-term leases and leases of low
value assets. IFRS 16 will be effective for the group for the financial year commencing 1 October 2019.
IFRS 16 will impact most significantly the group's leases relating to property, plant, equipment and
vehicles. The group has elected to apply IFRS 16 using the modified retrospective approach. As prescribed
by IFRS 16, lease liabilities are measured at the present value of remaining lease payments discounted
at the incremental borrowing rate at the date of initial application. Tiger Brands has elected to measure
right-of-use assets on transition date at their carrying amounts as if IFRS 16 had applied since the lease
commencement dates, discounted using the incremental borrowing rate at the date of initial application.
Right-of-use assets relating to new leases are measured at the amount of initial measurement of the lease
liability plus initial direct costs. As part of the modified retrospective transition approach, Tiger Brands
has elected to apply the practical expedient which allows a single discount rate to be applied to a portfolio
of leases with reasonably similar characteristics.
As an accounting policy election, Tiger Brands has applied the following recognition exemptions which
allow for certain lease payments to be expensed over the lease term as opposed to recognising a
right-of-use asset and related lease liability on the lease commencement date:
- Short-term leases - these are leases with a lease term of 12 months or less; and
- Leases of low value assets - these are leases where the underlying asset is of low value.
The company has not yet determined the exact quantitative impact of applying IFRS 16, however, the operating
lease commitment disclosure provided in the September 2018 financial statements provides a good indication
to the extent of the potential impact.
10. National Foods Holdings Limited (NFH)
Given the developments in Zimbabwe since October 2018, it became necessary to reconsider the functional
currency of NFH. NFH operates in Zimbabwe and its key operations are driven by local currency transactions.
It was determined that the functional currency changed from USD to real time gross settlement (RTGS)
dollar. As a result, the RTGS equity-accounted earnings from October to March were translated at an
equivalent ZAR parallel rate as this represents the most appropriate rate when applying the guidance
in IAS 21.
11. Subsequent events
On 3 April 2019, the board formally approved the unbundling of the remaining 49 104 774 shares that the
company holds in Oceana (equating to approximately 36,2% of the issued share capital of Oceana)
(the unbundled shares) by way of a distribution in specie in terms of the company's memorandum of
incorporation. This was concluded on 29 April 2019.
Shareholders are referred to the SENS announcement issued by the company on 17 April 2019 with regards
to the Class Action summons issued against Tiger Brands. No specific amount of damages is being claimed
in the summons. The quantum of damages will be dealt with in the second stage of the Class Action,
after the court has made a ruling with regard to liability, and only if the court finds that the
company is liable.
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, MJ Bowman, CH Fernandez, GA Klintworth,
M Makanjee, TE Mashilwane, MP Nyama
Executive directors
LC Mac Dougall (chief executive officer)
NP Doyle (chief financial officer)
Company secretary
JK Monaisa
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: 22/05/2019 07:30:00 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
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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