Trading update and trading statement for the six months ending 31 March 2020
TIGER BRANDS LIMITED
(“Tiger Brands” or “the Company”)
(Incorporated in the Republic of South Africa)
(Registration number 1944/017881/06)
Share code: TBS
Trading update and trading statement for the six months ending 31
March 2020, including update on Value Added Meat Products
In accordance with paragraph 3.4(b) of the Listings Requirements
of the JSE Limited ("JSE"), Tiger Brands is required to publish a
trading statement as soon as it is satisfied that a reasonable
degree of certainty exists that its financial results for the six
months ending 31 March 2020 will differ by more than 20% compared
to the corresponding period last year.
As previously reported, operations at Deli Foods in Nigeria were
closed with effect from 22 October 2019. It has therefore been
accounted for as a discontinued operation in the current period,
with the comparative information restated accordingly.
VAMP has been treated as a continuing operation for purposes of
the earnings disclosed below.
Shareholders are accordingly advised that:
- Earnings per share (EPS) from total operations is expected
to be at least 36% (or 311 cents) lower than the 864 cents
reported for the same period last year.
- Headline earnings per share (HEPS) from total operations is
expected to be between 533 cents and 478 cents, which is
between 30% and 37% lower than the 762 cents reported for
the corresponding period last year.
- EPS from continuing operations (including VAMP) is expected
to be at least 35% (or 306 cents) lower than the 875 cents
reported for the corresponding period last year.
- HEPS from continuing operations (including VAMP) is expected
to be between 552 cents and 497 cents, which is between 29%
and 36% lower than the 773 cents reported for the
corresponding period last year.
The information above reflects:
. A challenging first quarter, where revenue from continuing
operations, amounting to R8.4 billion, was in line with the
comparable period last year, driven by selling price
inflation of 4% offset by an overall volume decline of 4%.
Lower volumes generally, coupled with the inability to fully
recover input costs, have adversely impacted profitability.
The quarter’s performance was significantly impacted by the
ongoing challenges within the Grains portfolio, particularly
affecting Bakeries, Pasta and Rice. In addition, the Export
division was significantly impacted by a legal dispute with
a former distributor in Nigeria, resulting in virtually no
sales into that country. The negative export performance
was further exacerbated by ongoing foreign exchange
liquidity issues in other export markets.
- A continuation of the difficult trading conditions is
anticipated in the second quarter, with ongoing volume and
pricing pressures within Grains, whilst indications are that
the quarter will be challenging for Groceries. The
performance of the Export division will continue to be
affected by the aforesaid legal dispute in Nigeria. A court
hearing on the matter was held at the end of January but was
adjourned to mid-March 2020 to allow the parties more time
to amicably resolve the matter. However, a resolution, if
reached, is unlikely to have a positive effect on trading in
the second quarter.
- The previous comparable period included two months of equity
accounted earnings from Oceana, amounting to R31 million.
- The EPS reduction is driven by the negative factors referred
to above, as well as the abnormal after-tax capital profit
of R282 million recorded in the first half of last year,
arising from the sale of Oceana shares to Brimstone.
As announced on 8 November 2019, the Company had received several
non-binding indicative offers for its VAMP business and, as a
result, a formal due diligence process commenced in respect of
certain bidders. Good progress has been made in this regard,
however, several issues are subject to clarification and
discussion between the various parties and, as such, no
definitive agreements have been concluded at this stage. A
further update will be issued as soon as a definitive Sale and
Purchase Agreement is concluded, incorporating the financial
impact of the disposal as well as the key conditions precedent to
the successful conclusion of the transaction.
It is more than likely that the effective date of the VAMP
transaction will be after 31 March 2020. Should a Sale and
Purchase Agreement be concluded prior to the release of the
Company’s interim results in May 2020, this will necessitate a
change in classification of VAMP from a continuing operation to a
discontinued operation in the upcoming results.
The information has not been reviewed or reported on by the
The Company’s results for the six months ending 31 March 2020 are
expected to be released on SENS on or about 25 May 2020.
Class Action Update
As previously disclosed, the class action against the Company
relating to the outbreak of listeriosis, was certified by the
High Court on 3 December 2018 and a summons was issued on 16
The parties are continuing with pre-trial preparation, whilst
subpoenas have been issued for the disclosure of information by
third parties, which is pertinent to the outbreak. Some of the
third parties have declined to disclose the information in their
possession. The High Court will hear various applications on 13 –
15 May 2020 to either enforce or set aside the subpoenas.
12 February 2020
JP Morgan Equities South Africa Proprietary Limited
Date: 12-02-2020 08:56:00
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