group results and dividend declaration for the 2018
Salient features* Tiger Brands has a slow start to the year under difficult trading conditions Revenue declined 4% to R15,7 billion Operating income* declined 8% to R2,0 billion Gross profit margin expands by 80bps to 33,3% Core domestic food businesses deliver a steady performance Rehabilitation work continues at Value Added Meat Products (VAMP) facilities VAMP recall and related costs amount to R365 million net of initial insurance claims HEPS down 16% to 868 cents Interim dividend unchanged at 378cps * From continuing operations Operating income before asset impairments, abnormal items and IFRS 2 charges
Commentary Overview With the exception of VAMP, the group s core domestic food businesses delivered a steady performance in the six-month period 2018, notwithstanding intense competition and ongoing pressure on pricing as consumers continually search for value. The group s overall performance was negatively affected by the Home and Personal Care division, as well as Deciduous Fruit (LAF) and VAMP. Group revenue from continuing operations declined by 4% to R15,7 billion, while operating income* decreased by 8% to R2,0 billion. Revenue was negatively impacted by price deflation of 2,7% and an overall volume decline of 1,6%. The consolidated gross profit margin percentage of 33,3% improved by 80 basis points (bps) compared with the corresponding period last year, benefiting from a stronger Rand and lower raw material costs. However, lower volumes across the majority of businesses had a negative effect on operating leverage. Despite lower revenue, marketing investment increased by 7% to R502 million in line with strategy to invest in and support our core brands, which further impacted profitability. Total revenue from domestic operations decreased by 3% to R13,8 billion. Overall, volumes in the domestic business were in line with the previous year. Operating income declined by 4% to R2,0 billion, with the total operating margin remaining unchanged at 14,2%. Revenue in Exports and International declined by 11% to R1,9 billion, while operating income decreased by 56% to R85 million, driven primarily by LAF. Costs associated with the VAMP product recall, amounting to R365 million (net of insurance claims submitted to date), have been included in abnormal items. These costs exclude ongoing trading losses and are calculated on the basis that VAMP s facilities are * From continuing operations Operating income before asset impairments, abnormal items and IFRS 2 charges reopened by 30 September 2018. Note 4 on page 16 makes reference to the residual value of stock amounting to R183 million where future utilisation is dependent on ongoing test results and the reopening of the facilities. Net financing costs of R45 million (: R118 million), reflect a reduction of R74 million compared to the same period last year. This was primarily due to lower average debt levels compared to last year. Income from associates increased by 43% to R341 million, with all associates contributing to the improved performance. Oceana benefited from a once-off R161 million deferred tax adjustment in Daybrook Fisheries following the reduction in the Federal corporate tax rate in the United States from 35% to 21%, effective after 31 December. A bl tax rate of 25% was accordingly applied in calculating the deferred tax adjustments in this period. Tiger Brands equity accounted share of this benefit amounts to R79 million with a 5% impact on headline earnings per share. Profit before tax from continuing operations decreased by 18% to R1,9 billion. Excluding the VAMP recall costs of R365 million, profit before tax from continuing operations decreased by 2% to R2,3 billion. Haco Tiger Brands (E.A) Limited (Haco), which was reflected as an asset held-for-sale at 30 September, was disposed of with effect from 14 December. Its results for the current period to the date of disposal are included in the consolidated income statement as discontinued operations. Earnings per share from continuing operations decreased by 18% to 852 cents (: 1 036 cents), while headline earnings per share from continuing operations was down 16% to 868 cents (: 1 036 cents). Earnings per share from total operations declined by 17% to 859 cents (: 1 036 cents) and headline earnings per share from total operations decreased by 16% to 870 cents. group results and dividend declaration for the 2018 1
Commentary continued Operating performance Grains The revenue decline of 5% in the Grains division reflects the significant price deflation of 6% as overall volume grew by 2%. Operating income increased by 3% to R1,0 billion. Milling and Baking s revenue declined by 8%, driven by price deflation in maize. Operating income improved by 4% to R826 million, with improved performances from maize and sorghum. Notwithstanding intense competitor activity in the wheat-to-bread value chain, this segment delivered a steady performance. Other Grains grew revenue by 4% to R2,1 billion, underpinned by a 10% volume increase, driven primarily by rice. Operating income decreased by 3% to R220 million, with procurement benefits in rice being invested behind the brand to recover market share. Consumer Brands Food Consumer Brands Food was negatively impacted by the cessation of activities at the company s VAMP operations in March 2018, as well as a disappointing performance in Groceries. However, this was offset by strong performances from the Snacks & Treats and Beverages businesses. Total revenue was unchanged at R6,0 billion, reflecting flat volumes and pricing for the period, while operating income grew by 5%. The management of margins and volumes proved difficult in the Groceries business, following intense competition in core product segments. Revenue increased 2% to R2,7 billion, in line with volume growth of 2%. Operating income declined by 15% to R264 million, principally due to increased levels of promotional spend and an unfavourable product mix. Revenue in Snacks & Treats was unchanged at R1,1 billion. This was due to the containment of selling prices in order to remain competitive on shelf. Operating income, however, increased by 20% to R194 million as a result of improved factory efficiencies and aggressive cost control. The Beverages business increased volumes and revenue by 13%, with operating income growth of 95% reflecting the positive volume leverage and sound management of costs. VAMP s performance was impacted by the closure of its facilities in early March 2018. As a consequence, revenue declined by 9% to R1,0 billion and operating income fell by 78% to R13 million. An update on Listeria is provided separately in this SENS announcement. Home, Personal Care and Baby (HPCB) HPCB s revenue declined by 14% to R1,2 billion and operating income decreased by 43% to R196 million. Revenue in the Personal Care category increased by 2% to R296 million, following strong volume growth of 8%. This was offset by significant investment in promotional activity and an adverse product mix. As a consequence, operating income declined by 61% to R26 million. In Baby Care, pouch volume growth of 15% was offset by a decline in the cereals and jarred baby food segments, as consumers down-traded in favour of more affordable options. Revenue decreased by 10% to R390 million, while operating income fell by 33%. The trading performance was negatively affected by an unfavourable product mix in the baby food segment. 2 group results and dividend declaration for the 2018
Revenue in the Home Care category declined by 23% to R534 million. This was due to a decrease in volumes of 22% as a result of a poor pest season. The impact of this volume decline is reflected in lower operating income of R108 million. Exports and International Total revenue for the Exports and International businesses was down 11% to R1,9 billion compared with the corresponding period last year. Operating income declined by 56%, driven by LAF. Notwithstanding the ongoing foreign currency shortages in the group s export markets, which resulted in tighter credit terms and the slower replenishment of stock by distributors, the Export business delivered a satisfactory result with revenue increasing by 2% to R898 million and operating income being in line with the previous year. The International operations performance was mixed. A strong performance from Chococam was offset by the impact of the ongoing challenges at Deli Foods. LAF s revenue decreased by 23% to R639 million, mainly due to volume declines driven by muted demand for its products and competitive pricing pressure. Fruit quality and availability in the current period have been affected by the prolonged drought in the Western Cape. This resulted in significant factory under-recoveries. The combination of these factors led to an operating loss of R72 million compared with an operating profit of R30 million in the corresponding period last year. Cash flow and capital expenditure Cash generated from operations decreased to R1,5 billion (: R3,1 billion). This was primarily due to a net increase in working capital of R0,9 billion (: net decrease of R0,5 billion). The strategic procurement of certain raw materials contributed to higher stock holdings, while customer payments were impacted by the half year closing on the Easter long weekend. Capital expenditure incurred during the period amounted to R297 million (: R383 million). Interim dividend The company has declared an unchanged interim dividend of 378 cents per share for the six-month period 2018. Shareholders are referred to the accompanying dividend announcement for further details. Outlook The outlook for the balance of the year remains challenging, with intense competitor activity in the domestic market and no meaningful recovery expected in international markets. The VAMP facilities are likely to remain closed for a large part of the second half as we complete remedial work on our facilities and await guidance from the Department of Health. Shareholders are referred to the SENS announcement issued on 19 April 2018 on the financial impact of the suspension of operations. Change in directorate Mr Clive Vaux retired as executive director of the company, with effect from the conclusion of its annual general meeting held on 20 February 2018. Listeria update Shareholders are referred to the SENS announcements issued by the company on 5, 9, 19, 29 March 2018 and on 25 April 2018. Looking ahead, the company is considering a number of initiatives aimed at rebuilding trust with consumers. The initiatives will focus on facilitating a national group results and dividend declaration for the 2018 3
Commentary continued solution to a national crisis and ensuring sustainable food safety into the future. Some of the initiatives include: A multi-stakeholder forum to ensure a sustainable and inclusive response to the current challenges; Leveraging our corporate social investment programme to support initiatives aimed at improved food hygiene and awareness; and Partnering with relevant stakeholders to drive world-class food safety research. The company is carefully considering the best approach to ensure that the recently launched class actions are handled sensitively and responsibly having regard to all the facts. The application for certification of the Classes is in progress, while our legal representatives are in discussion to explore further collaboration. Given that these discussions are in progress, we will communicate our approach as soon as a decision has been reached. Tiger Brands has at all times had measures in place to ensure compliance with the prevailing standards and best practices and it remains committed to food safety and placing consumers health and safety above all else. Considerable effort and time are being exp to ensure that these objectives are met across the portfolio, including an assessment of current processes and practices as they relate to production, quality assurance and reporting lines. standards. We are engaging openly and transparently with relevant government departments, regulators and all other stakeholders. As one of South Africa s leading food manufacturers, with a long and proud heritage in the country, it is our duty to rebuild trust through our actions and deal with this crisis honestly and with integrity. Tiger Brands remains resolute in addressing the social and reputational consequences of the Listeriosis outbreak. The board and management are deeply saddened that people have fallen ill and that some have lost their lives as a result of Listeriosis. Our heartfelt condolences are ext to those who suffered the loss of a loved one. By order of the board KDK Mokhele Chairman Bryanston 23 May 2018 Date of release: 24 May 2018 LC Mac Dougall Chief executive officer The detection of the presence of Listeria ST6 in our factory in Polokwane was disappointing to us given our compliance with best practices and prevailing 4 group results and dividend declaration for the 2018
Declaration of interim dividend The board has approved and declared an interim dividend of 378 cents per ordinary share (gross) in respect of the 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 per centum) effective 22 February ; The gross local dividend amount is 378 cents per ordinary share for shareholders exempt from the dividends tax; The net local dividend amount is 302,40 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 interim dividend: Last day to trade cum the interim dividend Tuesday, 26 June 2018 Shares commence trading ex the interim dividend Wednesday, 27 June 2018 Record date to determine those shareholders entitled to the interim dividend Friday, 29 June 2018 Payment in respect of the interim dividend Monday, 2 July 2018 Share certificates may not be dematerialised or rematerialised between Wednesday, 27 June 2018 and Friday, 29 June 2018, both days inclusive. By order of the board JK Monaisa Company secretary Bryanston 24 May 2018 group results and dividend declaration for the 2018 5
Interim condensed consolidated income statement R million Notes 2018 Audited year 30 September Continuing operations Revenue 15 685,2 16 394,4 31 297,9 Cost of sales (10 467,9) (11 067,3) (20 856,4) Gross profit 5 217,3 5 327,1 10 441,5 Sales and distribution expenses (1 905,3) (1 840,1) (3 596,4) Marketing expenses (502,1) (471,1) (771,4) Other operating expenses (811,8) (846,6) (1 549,7) Operating income before impairments and abnormal items 2 1 998,1 2 169,3 4 524,0 Impairments 3 (29,7) (559,9) Abnormal items 4 (362,9) 22,6 (23,4) Operating income after impairments and abnormal items 1 605,5 2 191,9 3 940,7 Net finance costs and investment income 7 (44,6) (118,3) (206,6) Income from associated companies 341,2 238,5 533,3 Profit before taxation 1 902,1 2 312,1 4 267,4 Taxation (492,1) (613,8) (1 234,4) Profit for the period from continuing operations 1 410,0 1 698,3 3 033,0 Discontinued operations Profit for the period from discontinued operations 6 14,2 (1,1) 105,0 Profit for the period 1 424,2 1 697,2 3 138,0 Attributable to: Owners of the parent 1 406,5 1 686,6 3 119,3 Continuing operations 1 395,6 1 686,4 3 011,0 Discontinued operations 10,9 0,2 108,3 Non-controlling interests 17,7 10,6 18,7 Continuing operations 14,4 11,9 22,0 Discontinued operations 3,3 (1,3) (3,3) 1 424,2 1 697,2 3 138,0 6 group results and dividend declaration for the 2018
Interim condensed consolidated income statement continued R million 2018 Audited year 30 September Basic earnings per ordinary share (cents) 858,5 1 035,9 1 914,9 Continuing operations 851,8 1 035,8 1 848,4 Discontinued operations 6,7 0,1 66,5 Diluted basic earnings per ordinary share (cents) 853,3 1 012,8 1 877,3 Continuing operations 846,7 1 012,7 1 812,1 Discontinued operations 6,6 0,1 65,2 Headline earnings per ordinary share (cents) 870,4 1 035,6 2 161,0 Continuing operations 868,3 1 035,7 2 154,7 Discontinued operations 2,1 (0,1) 6,3 Diluted headline earnings per ordinary share (cents) 865,3 1 012,6 2 118,4 Continuing operations 863,2 1 012,7 2 112,3 Discontinued operations 2,1 (0,1) 6,1 Interim condensed consolidated statement of comprehensive income R million 2018 Audited year 30 September Profit for the period 1 424,2 1 697,2 3 138,0 Other comprehensive loss, net of tax (717,3) (213,6) (104,9) Net (loss)/gain on hedge of net investment in foreign operation^ (15,3) 4,6 3,8 Foreign currency translation adjustments^ (45,2) (57,0) (122,7) Share of associates other comprehensive loss and FCTR related to translation of investments in associates (680,3) (177,9) (86,2) Net (loss)/gain on cash flow hedges^ (7,3) (4,7) 25,0 Net gain on available-for-sale financial assets^ 32,4 20,2 13,0 Remeasurement raised in terms of IAS 19R 81,4 Tax effect (1,6) 1,2 (19,2) Total comprehensive income for the period, net of tax 706,9 1 483,6 3 033,1 Attributable to: Owners of the parent 696,1 1 494,6 3 025,2 Non-controlling interests 10,8 (11,0) 7,9 706,9 1 483,6 3 033,1 ^ Items that may be subsequently reclassified to profit or loss. During the current period, R13,2 million of the foreign currency translation reserve, relating to Haco, was reclassified to profit or loss, as well as R3,1 million ( : R0,9 million) on the available-for-sale financial asset derecognised in terms of the Black Managers Trust Participation Rights Scheme and was reclassified to profit or loss. group results and dividend declaration for the 2018 7
Interim condensed consolidated segmental information R million Revenue 2018 Audited year 30 September Domestic operations 13 793,1 14 270,9 27 109,0 Grains 6 594,2 6 909,1 13 309,4 Milling and baking 1 4 472,7 4 877,9 9 519,7 Other Grains 2 2 121,5 2 031,2 3 789,7 Consumer Brands Food 5 978,4 5 940,3 11 148,0 Groceries 2 749,3 2 695,4 5 008,4 Snacks & Treats 1 129,0 1 134,6 2 157,2 Beverages 786,5 698,1 1 203,6 Value Added Meat Products 1 037,0 1 141,6 2 243,1 Out of Home 276,6 270,6 535,7 Home, Personal Care and Baby (HPCB) 1 220,5 1 421,5 2 651,6 Personal Care 296,3 291,6 682,5 Baby Care 390,1 434,1 888,0 Home Care 534,1 695,8 1 081,1 Exports and International 1 892,1 2 123,5 4 188,9 Exports 897,5 876,6 1 747,3 International operations - Central Africa (Chococam) 440,7 395,6 821,3 - West Africa (Deli Foods) 56,5 184,8 280,3 Deciduous Fruit (LAF) 639,2 829,0 1 620,1 Other intergroup sales (141,8) (162,5) (280,1) Continuing operations 15 685,2 16 394,4 31 297,9 Discontinued operations East Africa 42,9 387,1 561,2 Total revenue 15 728,1 16 781,5 31 859,1 8 group results and dividend declaration for the 2018
Interim condensed consolidated segmental information continued R million Operating income before impairments and abnormal items 3 2018 Audited year 30 September Domestic operations 1 956,3 2 029,7 4 235,5 Grains 1 046,6 1 020,2 2 361,2 Milling and baking 1 826,2 792,4 1 858,9 Other Grains 2 220,4 227,8 502,3 Consumer Brands Food 714,7 681,5 1 280,2 Groceries 263,6 309,7 588,6 Snacks & Treats 194,4 161,6 323,5 Beverages 182,0 93,3 144,0 Value Added Meat Products 13,4 60,8 104,2 Out of Home 61,3 56,1 119,9 Home, Personal Care and Baby (HPCB) 196,4 341,3 622,6 Personal Care 25,6 65,9 138,6 Baby Care 63,2 94,3 207,7 Home Care 107,6 181,1 276,3 Other 4 (1,4) (13,3) (28,5) Exports and International 85,1 193,6 398,8 Exports 111,7 112,6 272,9 International operations Central Africa (Chococam) 75,7 65,6 147,2 West Africa (Deli Foods) (30,6) (14,8) (34,5) Deciduous Fruit (LAF) (71,7) 30,2 13,2 Total operating income before IFRS 2 charges 2 041,4 2 223,3 4 634,3 IFRS 2 charges (43,3) (54,0) (110,3) Total operating income after IFRS 2 charges 1 998,1 2 169,3 4 524,0 Discontinued operations East Africa 11,0 (0,2) 14,0 Total operating income 2 009,1 2 169,1 4 538,0 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 inter-segment pricing. group results and dividend declaration for the 2018 9
Interim condensed consolidated statement of financial position R million 2018 Audited year 30 September ASSETS Non-current assets 12 570,1 13 050,6 12 949,5 Property, plant and equipment 4 551,4 4 351,8 4 588,4 Goodwill 1 761,2 2 070,7 1 774,2 Intangible assets 1 803,9 1 831,9 1 822,8 Investments 4 414,4 4 773,5 4 720,1 Deferred taxation asset 39,2 22,7 44,0 Current assets 11 029,6 10 698,3 10 665,0 Inventories 4 920,9 5 117,8 4 812,0 Trade and other receivables 4 999,9 4 473,7 4 631,6 Cash and cash equivalents 1 108,8 1 106,8 1 221,4 Assets classified as held-for-sale 837,2 364,7 Total assets 23 599,7 24 586,1 23 979,2 EQUITY AND LIABILITIES Total equity 16 469,2 16 295,8 17 061,2 Issued capital and reserves 16 312,7 15 849,0 16 803,8 Non-controlling interests 156,5 446,8 257,4 Non-current liabilities 990,7 1 999,5 968,8 Deferred taxation liability 355,3 275,3 347,7 Provision for post-retirement medical aid 633,4 676,1 619,1 Long-term borrowings 2,0 1 048,1 2,0 Current liabilities 6 139,8 6 146,8 5 776,1 Trade and other payables 4 314,2 4 296,5 4 278,2 Provisions 547,5 555,3 614,9 Taxation 6,7 93,3 94,4 Short-term borrowings 1 271,4 1 201,7 788,6 Liabilities directly associated with assets classified as held-for-sale 144,0 173,1 Total equity and liabilities 23 599,7 24 586,1 23 979,2 Net debt/(cash) 164,6 1 143,0 (430,8) 10 group results and dividend declaration for the 2018
Interim condensed consolidated statement of cash flows R million 2018 Reclass* Reclass* Audited year 30 September Cash operating profit 2 366,2 2 631,3 5 388,1 Working capital changes (894,4) 475,4 745,4 Cash generated from operations 1 471,8 3 106,7 6 133,5 Finance income and income from investments 81,0 111,5 34,8 Finance costs (119,8) (222,2) (203,4) Dividends received from associate companies 203,9 350,2 Taxation paid (555,6) (583,0) (1 195,9) Cash available from operations 877,4 2 616,9 5 119,2 Dividends paid (1 193,7) (1 182,1) (1 834,1) Net cash (outflow)/inflow from operating activities (316,3) 1 434,8 3 285,1 Purchase of property, plant and equipment (296,9) (383,0) (919,0) Net cash on disposal of subsidiary 103,5 23,8 Proceeds from disposal of property, plant, equipment and intangible assets 7,4 0,3 92,2 Net cash outflow from investing activities (186,0) (382,7) (803,0) Net cash (outflow)/inflow before financing activities (502,3) 1 052,1 2 482,1 Repurchase of Tiger Brands shares (6,5) Black Managers Trust (BMT) shares exercised 15,0 19,5 24,0 Shares exercised relating to equity-settled scheme (41,6) (74,4) (77,8) Reduction in non-controlling interest in empowerment shares (22,4) (22,4) Long-term borrowings raised/(repaid) 1,8 (1 056,2) Short-term borrowings raised/(repaid) 8,4 (7,2) Net cash outflow from financing activities (24,7) (75,5) (1 139,6) Net (decrease)/increase in cash and cash equivalents (527,0) 976,6 1 342,5 Effect of exchange rate changes on cash and cash equivalents (60,4) (21,3) 18,8 Cash and cash equivalents at the beginning of the period 486,3 (875,0) (875,0) Cash and cash equivalents at the end of the period (101,1) 80,3 486,3 Cash resources 1 108,8 1 206,2 1 221,4 Short-term borrowings regarded as cash and cash equivalents (1 209,9) (1 125,9) (735,1) (101,1) 80,3 486,3 * For the 2018 interim reporting, the group has reviewed the JSE Report on the Proactive Monitoring of Financial Statements issued in February 2018. As a consequence of this review 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 schemes (March : R74,4 million and September : R77,8 million) has been reclassified out of operating activities and proceeds from BMT shares exercised (March : R19,5 million and September : R24,0 million) has been reclassified from investing activities. group results and dividend declaration for the 2018 11
Interim condensed consolidated statement of changes in equity R million Share capital and premium Non-distributable reserves Accumulated profits Balance at 1 October 2016 148,5 3 046,1 14 373,4 Profit for the period 1 686,6 Other comprehensive loss (192,0) Total comprehensive (loss)/income (192,0) 1 686,6 Transfers between reserves 3 34,6 (85,1) Share-based payment 2 Dividends on ordinary shares (net of dividend on treasury shares) (1 176,1) Reduction in non-controlling interest in empowerment shares Sale of empowerment shares 1 Balance at 148,5 2 888,7 14 798,8 Profit for the period 1 432,7 Other comprehensive income 39,2 58,7 Total comprehensive income 39,2 1 491,4 Disposal of subsidiary Transfers between reserves 3 112,1 (113,2) Share-based payment 2 Dividends on ordinary shares (net of dividend on treasury shares) (632,5) Sale of empowerment shares 1 Balance at 30 September 148,5 3 040,0 15 544,5 Profit for the period 1 406,5 Other comprehensive loss (710,4) Total comprehensive (loss)/income (710,4) 1 406,5 Disposal of subsidiary (13,2) Transfers between reserves 3 341,2 (352,7) Share-based payment 2 Dividends on ordinary shares (net of dividend on treasury shares) (1 189,9) Sale of empowerment shares 1 Repurchase of Tiger Brands Shares 4 (6,5) Balance at 2018 142,0 2 657,6 15 408,4 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, R12,8 million related to BMT II and R13,4 million to Brimstone SPV. 2 Included in the movement of the share-based payment are options exercised amounting to R41,6 million (: R74,4 million). 3 Transfer between reserves relate to the share of associates earnings and equity-settled options exercised. 4 Tiger Brands Limited repurchased 2 250 942 of its own shares from Black Managers Trust 2 and Brimstone. 12 group results and dividend declaration for the 2018
Shares held by subsidiary and empowerment entities Share-based payment reserve Total attributable to owners of the parent Non-controlling interests Total equity (2 508,9) 488,5 15 547,6 486,3 16 033,9 1 686,6 10,6 1 697,2 (192,0) (21,6) (213,6) 1 494,6 (11,0) 1 483,6 50,5 (31,7) (31,7) (31,7) (1 176,1) (1 176,1) (22,4) (22,4) 14,6 14,6 (6,1) 8,5 (2 494,3) 507,3 15 849,0 446,8 16 295,8 1 432,7 8,1 1 440,8 97,9 10,8 108,7 1 530,6 18,9 1 549,5 (188,9) (188,9) 1,1 51,6 51,6 51,6 (632,5) (16,6) (649,1) 5,1 5,1 (2,8) 2,3 (2 489,2) 560,0 16 803,8 257,4 17 061,2 1 406,5 17,7 1 424,2 (710,4) (6,9) (717,3) 696,1 10,8 706,9 (13,2) (94,5) (107,7) 11,5 (3,8) (3,8) (3,8) (1 189,9) (3,8) (1 193,7) 26,2 26,2 (13,4) 12,8 (6,5) (6,5) (2 463,0) 567,7 16 312,7 156,5 16 469,2 group results and dividend declaration for the 2018 13
Other salient features R million 2018 Audited year 30 September Capital commitments 1 877,5 649,8 2 174,4 Contracted 502,5 54,7 476,3 Approved 1 375,0 595,1 1 698,1 Capital commitments will be funded from normal operating cash flows and the utilisation of existing borrowing facilities. Capital expenditure 296,9 383,0 919,0 Replacement 224,0 294,1 457,1 Expansion 72,9 88,9 461,9 Contingent liabilities Guarantees and contingent liabilities 27,7 12,7 11,5 14 group results and dividend declaration for the 2018
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 2018 have been prepared in accordance with IAS 34: Interim Financial Reporting as issued by the IASB, 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 30 September. 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. Goodwill and indefinite useful life intangible assets are tested for impairment annually (as at 30 September) and when circumstances arise 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 30 September. There will be a reclassification of financial assets and the measurement of provisions against receivables will be revised using the expected credit loss method, the impact of which is being quantified and an impact assessment will be completed by 30 September 2018. The effective date will be 1 October 2018 and the modified retrospective method will be used. R million 2018 Audited year 30 September 2. Operating income before impairments and abnormal items Depreciation (included in cost of sales and other operating expenses) (294,3) (280,5) (552,5) Amortisation (5,5) (6,1) (11,4) IFRS 2 (included in other operating expenses) Equity settled (37,9) (42,7) (97,7) Cash settled (5,4) (11,3) (12,6) 3. Impairment During the current period, R19,3 million relating to Hercules indefinite useful life intangible assets and R10,4 million plant and equipment were impaired. Impairment of intangible assets (19,3) (309,9) Impairment of property, plant and equipment (10,4) Impairment of associate investment (250,0) (29,7) (559,9) group results and dividend declaration for the 2018 15
Notes continued R million 2018 Audited year 30 September 4. Abnormal items Net costs associated with VAMP product recall* (415,2) Initial insurance claim 50,0 85,7 85,7 Profit on disposal of property 2,3 73,0 Proceeds from warranty claim settlement 28,4 28,4 Once-off consulting fees (91,5) (132,0) Restructuring provision (78,5) (362,9) 22,6 (23,4) 5. Reconciliation between profit for the period and headline earnings Continuing operations Profit for the year attributable to owners of the parent 1 395,6 1 686,4 3 011,0 Loss/(profit) on disposal of plant, equipment and vehicles 0,5 (52,5) Impairment of intangible assets 19,3 309,9 Impairment of property, plant and equipment 8,5 Impairment of associate investment 250,0 Headline earnings adjustment associates Profit on sale of non-current assets (1,2) (0,1) (8,5) Headline earnings for the period 1 422,7 1 686,3 3 509,9 Tax effect of headline earnings 2,3 15,5 Attributable to non-controlling interest Discontinued operations Profit for the year attributable to owners of the parent 10,9 0,2 108,3 Profit on disposal of subsidiary (7,5) (98,1) Profit on sale of property, plant and equipment (0,4) Headline earnings for the period 3,4 0,2 10,2 Tax effect of headline earnings 0,2 Attributable to non-controlling interest (0,3) * These costs exclude ongoing trading losses and are calculated on the assumption that the VAMP facilities are likely to have reopened by 30 September 2018. The testing of the frozen pork raw materials stock is ongoing and only expected to be concluded within the next three months. All frozen stock tested to date has proved negative for Listeria monocytogenes. The remaining carrying value of frozen stock exposed to potential future write-offs is R80 million. All other stock of product, raw materials, packaging and ingredients, which is expected to be utilised following a recommencement of operations amounts to R103 million at 2018. 16 group results and dividend declaration for the 2018
Notes continued R million 2018 Audited year 30 September 6. Analysis of profit/(loss) from discontinued operations Profit/(loss) for the period from discontinued operations (attributable to owners of the company) Revenue 42,9 387,1 561,2 Expenses (31,9) (387,3) (547,2) Operating income/(loss) before impairments and abnormal items 11,0 (0,2) 14,0 Impairments Abnormal items 7,5 (1,2) 97,9 Operating income/(loss) after impairments and abnormal items 18,5 (1,4) 111,9 Finance costs (0,4) (0,3) (0,2) Profit/(loss) before taxation 18,1 (1,7) 111,7 Taxation (3,9) 0,6 (6,7) Profit/(loss) for the period from discontinued operations 14,2 (1,1) 105,0 Attributable to non-controlling interest (3,3) 1,3 3,3 Attributable to owners of parent 10,9 0,2 108,3 Cash flows from discontinued operations Net cash inflows from operating activities 7,7 68,3 138,6 Net cash (outflows)/inflows from investing activities (13,2) (12,7) 1,4 Net cash inflows/(outflows) from financing activities 5,8 (3,6) (80,8) Net cash inflows 0,3 52,0 59,2 7. Net finance costs and investment income Net interest paid (29,2) (110,4) (179,7) Net foreign exchange loss (17,5) (9,9) (30,2) Investment income 2,1 2,0 3,3 Net financing costs (44,6) (118,3) (206,6) 8. Subsequent events With the exception of the Enterprise product recall and related Listeria update reflected on page 3, there are no other material events that occurred during the period subsequent to 2018, but prior to these financial results being authorised for issue. group results and dividend declaration for the 2018 17
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, M Makanjee, TE Mashilwane, RD Nisbet, MP Nyama, YGH Suleman, BS Tshabalala 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 18 group results and dividend declaration for the 2018
Head office South Africa Physical address Tiger Brands Limited, 3010 William Nicol Drive, Bryanston Postal address PO Box 78056, Sandton, 2146, South Africa