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TBS
TIIH
TBS - Tiger Brands - Group Results and distribution declaration
TIGER BRANDS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1944/017881/06)
Share code: TBS
ISIN code: ZAE000071080
Group Results and Distribution Declaration for the six months ended 31 March
2007
- Turnover from continuing operations +27%
- Operating income from continuing operations +34%
- Headline earnings per share +25%
The abridged results have been prepared in accordance with International
Financial Reporting Standards, IAS34- Interim Financial Reporting and the
listing requirements of the JSE Limited.
Commentary
Tiger Brands achieved an increase in headline earnings per share of 25% for the
six months ended 31 March 2007 compared to that achieved in the corresponding
period last year. Earnings per share declined by 16%.
The difference between the percentage change in headline earnings per share and
earnings per share is due largely to the R417m adverse movement in abnormal
items. An abnormal loss of R61,7m has been recorded in the six months ended 31
March 2007, primarily arising from an impairment of licence rights previously
capitalised under intangible assets. The abnormal profit in the corresponding
period last year of R355,2m mainly comprised the profit on disposal of the
company`s interests in Spanish fishing company Pescanova and the Indian edible
oils company Agrotech Foods.
OVERVIEW OF RESULTS
Growth in turnover from continuing operations of 27% was positively leveraged to
a 34% growth in operating income. The increase in operating income reflects the
ongoing strong level of demand for the company`s basket of branded consumer
goods. The benefits of recent acquisitions - most notably Bromor Foods, the
Designer Group, the Nestle sugar confectionery business and ClassiClean -
together with a sustained improvement in both Fishing businesses and a strong
performance from Exports, contributed to the good results.
The strong FMCG performance was partly offset by a disappointing result from the
Company`s Healthcare interests where operating income was 3% below last year.
Net borrowings of R1 642m at 31 March 2007 compare to R934m reported at 30
September 2006. This cash outflow reflects the payments made in respect of the
acquisitions of the Nestle sugar confectionery business and the Designer Group,
and the increased funding levels in respect of working capital and capital
expenditure.
Net financing costs increased by R52m over the corresponding period last year.
However, interest cover for the current six months of 17,5 times (2006: 31,4
times) reflects the Group`s relatively low level of gearing.
The higher financing costs, together with the increase in income attributable to
minorities as a result of the improved performances in Fishing and the Deciduous
Fruit business, are the key contributors to the lower growth rate at the
headline earnings per share level compared to the growth in operating income.
The positive turnaround of R57m in the contribution from associates is distorted
by the capital losses of R42m included in the comparative period, which related
to C&T Malt. Excluding these capital items, income from associates increased
from R14m last year to R30m in the period under review. This improvement
reflects the non-recurrence of trading losses at C&T Malt (the Group`s interest
in C&T Malt was disposed of in September 2006) and an improved contribution from
Empressas Carozzi, derived largely from the strengthening of the Chilean Peso
against the Rand.
REVIEW OF OPERATIONS
FMCG
There were some very strong performances within FMCG, with consumer demand
remaining robust across most categories. With the exception of the grains based
businesses, selling price increases were well contained. The increase in
realisations in the grains based businesses was driven primarily by the
significant increase in raw material costs.
DOMESTIC FOOD increased turnover and operating income by 32% and 42%
respectively, compared to that achieved in the corresponding six months last
year. Excluding the acquisitions of Bromor and the Nestle sugar confectionery
business, turnover reflected an increase of 17%.
Within the Grains segment, the growth in operating income was driven by a
continuing high level of volume growth at Albany and the sustained improvement
in Maize Milling which recorded an operating profit compared to a loss in the
corresponding period. In Other Grains, the Rice business performed creditably,
growing volumes and operating income in difficult market conditions. The
increased contribution from the Rice business was offset by a poor performance
from the Oats category as increasing raw material costs were not fully recovered
in selling prices. In addition, volumes and customer service levels declined as
a result of the disruption caused by a major capital upgrade to the oats
facility in Maitland.
The Groceries business recorded a 30% improvement in operating income off a 13%
increase in turnover. This performance was driven by the continued strength of
the Koo and All Gold brands, particularly in canned fruit, baked beans and
tomato sauce, as well as the continued focus on costs and manufacturing
efficiencies. Pasta supply remained constrained, pending the commissioning of a
new plant in November 2007. Despite this constraint, Pasta profitability was
significantly improved as a result of the non recurrence of major plant
maintenance costs incurred in the previous year and the resultant importation of
expensive finished product over that period.
The Snacks & Treats business continued to experience very strong levels of
volume growth. Turnover, excluding that of the newly acquired Nestle sugar
confectionery business, grew by some 22%. With the benefits of the acquisition
and the continuation of the strong performances of the Beacon, Maynards,
Mmmallows and Jungle brands, operating income grew by 90%.
The Beverages business has performed ahead of expectations at the beginning of
this financial year, benefiting from a renewed focus on the consumer value
proposition and from the hot dry summer conditions. This, together with the
increased focus on promotional activities, contributed to double digit volume
growth. As a result, the market leading positions of the Energade, Oros, Hall`s
and Roses brands have been reinforced. The results also include once-off
restructuring costs of R9m.
Value Added Meat Products, which markets brands such as Enterprise, Like it
Lean, Renown and Mieliekip, produced strong volume growth with turnover
increasing by 16%. However, operating income declined by 3%, reflecting the
difficulty being experienced in this category in being able to fully recover the
increases in raw material input costs which are closely linked to the higher
maize price.
The decline in the operating income of the Out of Home businesses reflects the
supply constraints emanating from the Oats and Pasta businesses referred to
above.
Although the growth in turnover and operating income in CONSUMER HEALTHCARE, of
43% and 52% respectively, has benefited from the Designer Group acquisition, the
results reflect very positive performances in both Personal Care and Babycare.
Personal Care has benefited from the renewed focus on its core brands, with
strong performances recorded by Ingrams, Dolly Varden and Lemon Lite. The
Babycare category performed satisfactorily, with good volume growth achieved in
food nutrition. The Mother and Baby-wellbeing sub-categories also made good
progress. Notwithstanding the successful integration of ClassiClean into the
Homecare business, Homecare`s results have been somewhat disappointing,
reflecting the high reliance on the Pest business (which includes brands such as
Doom, Dyrange and Fastkill which was negatively impacted by the dry summer.
EXPORTS showed a significant step change in performance compared to the
corresponding period last year. This improvement was across the two key areas
of Tiger Brands Africa (FMCG) and Langeberg & Ashton Foods (deciduous fruit).
The most significant contributor has been Langeberg & Ashton Foods where
profitability in this period was enhanced by firmer international pricing, a
weaker rand and a significant increase in the shipment rate compared to the
corresponding period last year. The latter factor will impact negatively on the
second half results relative to the same period last year.
FISHING
The company`s fishing interests comprise Sea Harvest (74% held) and Oceana Group
Limited (44% held).
The results for Fishing reflect the sustained recovery of the Sea Harvest
operating performance which initially commenced in the second half of the 2006
financial year. Despite less than ideal catch rates and a sub-optimal sales
mix, there has been a significant improvement in operating income as a result of
firmer export prices, the weaker rand, improved processing efficiencies and
optimisation of the catch.
Proportionately consolidated Oceana, which is listed on the JSE Limited,
reported a 40% increase in headline earnings per share for the six months ended
31 March 2007. Oceana`s results were separately published on 11 May 2007.
OTHER
The main items included under this heading comprise the IFRS 2 accounting
charges associated with share options granted to Tiger Brands management and
share participation rights awarded to Black Managers in terms of the Staff
Empowerment transaction concluded in September 2005, as well as certain foreign
currency translation profits and losses. The increase over the comparative
period is largely attributable to higher IFRS 2 charges and a reversal from
profits to losses in respect of foreign currency conversions.
DISPOSAL OF DAIRYBELLE BUSINESS
The DairyBelle business, which was sold with effect from 1 May 2007, recorded an
increase in operating income of 18% for the six months ended 31 March 2007.
DairyBelle is reflected in the group income statement as a discontinued
operation. Comparative figures have been restated where appropriate.
HEALTHCARE
The PHARMACEUTICALS` result includes R14million in restructuring costs linked to
the transfer of certain production to the manufacturing joint venture with
Medreich in India. The establishment of this joint venture was announced
earlier in the year. The subdued performance at both a turnover and operating
income level reflects a combination of slowing volume growth, the impact of
price regulation in the industry and the increased cost of goods as a result of
the deterioration in the average exchange rate relative to the same period last
year.
OTC Medicines was negatively impacted by a reduction in stockholdings in the
wholesale value-chain following the merger of two of the major pharmaceutical
wholesalers and by a slow start to the winter season. This was partially offset
by a strong performance in the FMCG channel arising from the successful
restructuring of the category management teams. Three first line Anti-
retroviral products were successfully launched into the Private Sector earlier
this year and it is anticipated that the business will be in a position to fully
participate in the upcoming Government tender process.
HOSPITAL PRODUCTS recorded lower profits in most categories, with the exception
of Transfusion Therapies. The performance is reflective of the ongoing
intensification of competition in the industry. Margins have been constrained
by the inability to raise prices in both the Private and Public Sectors.
Profitability was negatively impacted by a R10m increase in depreciation as a
result of the purchase and installation of new infusion pumps, in line with the
requirements of the international principal.
STRATEGIC REVIEW OF HEALTHCARE INTERESTS
On 20 April 2007, shareholders were advised that the Board of Tiger Brands had
mandated UBS South Africa (Pty) Ltd to assist it in evaluating all options with
regard to the separation of the Company`s Healthcare interests, which would
include a potential sale, or unbundling and separate listing of the
Pharmaceutical and Hospital Products businesses, either individually or on a
combined basis.
The evaluation exercise is under way and shareholders are reminded to continue
to exercise caution in their dealings in the securities of the Company until
such time as a further announcement is made.
INTERIM CASH DISTRIBUTION
The Board has decided to declare a cash distribution of 213 cents per share out
of the Company`s share premium account in respect of the half year ended 31
March 2007. The distribution out of share premium is in lieu of the interim
dividend and represents an increase of 15% on the interim dividend declared last
year of 185 cents per share. The lower percentage increase in the payment to
shareholders, relative to the rate of increase in headline earnings per share
for the six months ended 31 March 2007, is due to the anticipated lower growth
in headline earnings per share for the full twelve months ending 30 September
2007 referred to below under "Outlook".
The declaration of the capital distribution out of share premium is subject to
shareholder approval. A copy of the shareholder circular, including notice of
general meeting, will be posted to shareholders on or about 8 June 2007.
OUTLOOK
Whilst domestic economic indicators remain positive for the second six months,
the increase in headline earnings for the first six months has been materially
influenced by the acquisition of the Bromor business which is highly seasonal
(with sales and profits heavily weighted to the first six months) and the
significant turnaround in the performances of Maize, Exports and Fishing which
turnaround had commenced in the second half of the 2006 financial year. Given
the absence of these favourable factors in the second half, it is expected that
the rate of growth in headline earnings per share for the full year ending 30
September 2007 will be well below the rate of increase reported for the first
six months.
For and on behalf of the Board
Lex van Vught Nick Dennis
Chairman Chief Executive Officer 24 May 2007
Distribution out of share premium
Notice is hereby given that an interim cash distribution out of share premium of
213 cents per share, in lieu of a dividend, has been declared, subject to the
approval of shareholders, in respect of the half year ended 31 March 2007.
In compliance with the requirements of Strate, the electronic settlement and
custody system used by the JSE Limited, the company has determined the following
salient dates for the payment of the capital distribution:
Last day to trade cum the
capital distribution Friday, 6 July 2007
Shares commence trading ex
the capital distribution Monday, 9 July 2007
Record date for payment Friday, 13 July 2007
Payment date - South Africa
and United Kingdom Monday, 16 July 2007
Shareholders are not permitted to dematerialise / rematerialise their shares
between Monday, 9 July 2007 and Friday, 13 July 2007, both days inclusive.
Shareholder approval for the capital distribution will be obtained at a general
meeting of members of the Company to be held at 10:00 on Wednesday, 27 June 2007
at 3010 William Nicol Drive, Bryanston, Sandton. A copy of the shareholder
circular, including notice of general meeting, will be posted to shareholders on
or about Friday, 8 June 2007.
By order of the Board
I W M Isdale
Secretary
24 May 2007
Directors:
Independent directors: L C van Vught (Chairman),
B L Sibiya (Deputy Chairman), D D B Band, S L Botha, B P Connellan, R M W Dunne,
U P T Johnson, A C Nissen, G N Padayachee
Executive directors: N Dennis (Chief Executive Officer) (British), N P Doyle
(Irish), C F H Vaux
Company secretary: I W M Isdale
Registered office: 3010 William Nicol Drive, Bryanston, Sandton
Postal address: PO Box 78056, Sandton, 2146, South Africa
Share registrars: Computershare Investor Services 2004 (Pty) Limited 70 Marshall
Street, Johannesburg, 2001
Tiger Brands Limited
(Registration number 1944/017881/06)
(Incorporated in the Republic of South Africa)
Share code: TBS ISIN: ZAE000071080
Group income statement
Unaudited Audited
Six Year
Months ended Change ended
31 March % 30 Sept
2007 2006 2006
Restated
Notes Rm Rm Rm
Continuing operations
Revenue 1, 6 9 518,4 7 500,6 27 15 644,4
Turnover 6 9 407,1 7 419,7 27 15 453,1
Operating income 2 1 578,1 1 179,3 34 2 610,2
before abnormal items
Abnormal items 3 (61,7) 355,2 465,0
Operating income 1 516,4 1 534,5 (1) 3 075,2
after abnormal items
Interest paid (201,2) (118,4) (70) (274,6)
Interest received 95,1 64,2 48 152,4
Dividend income 16,2 16,7 (3) 38,9
Income/(loss) from 4 29,7 (27,7) 4,4
associates
Profit before 1 456,2 1 469,3 (1) 2 996,3
taxation
Taxation (474,8) (326,2) (46) (714,9)
Profit for the 981,4 1 143,1 (14) 2 281,4
period/year from
continuing operations
Discontinued
operation
Profit after tax for 23,1 19,7 41,5
the period/year-
DairyBelle business
PROFIT FOR THE 1 004,5 1 162,8 (14) 2 322,9
PERIOD/YEAR
Attributable to:
Ordinary shareholders 981,1 1 164,4 (16) 2 303,4
Minorities 23,4 (1,6) 19,5
1 004,5 1 162,8 2 322,9
Number of ordinary 172 090 170 356 171 072
shares in issue
(000`s)
Includes 8 589 328
shares held as
treasury stock
(March 2006: 8 589
328) and 5 896 183
shares owned by
staff empowerment
entities (March 2006:
5 896 183)
Weighted average
number of ordinary
shares
(net of treasury and 156 880 155 962 156 071
empowerment shares)
on which headline
earnings and basic
earnings
per share are based
(000`s)
Headline earnings per 659,6 526,2 25 1 206,7
ordinary share
(cents)
Diluted headline 640,1 511,8 25 1 175,7
earnings per ordinary
share (cents)
Basic earnings per 625,4 746,6 (16) 1 475,9
ordinary share
(cents)
Diluted basic 607,0 726,1 (16) 1 437,9
earnings per ordinary
share (cents)
Distribution and 213 185,0 15 603,0
dividends per
ordinary share
(cents)
213 - -
Interim distribution
declared
Interim dividend - 185,0 185,0
declared
Final dividend - - 418,0
declared
Headline earnings per
ordinary share
(cents) for
continuing operations 644,8 513,6 26 1 180,1
Diluted headline
earnings per ordinary
share (cents) for
continuing operations 625,8 499,5 25 1 149,8
Basic earnings per
ordinary share
(cents) for
continuing
operations 610,7 734,0 (17) 1 449,3
Diluted basic
earnings per ordinary
share (cents) for
continuing operations 592,7 713,8 (17) 1 412,0
Reconciliation
between profit for
the period/year and
headline earnings
Profit attributable 981,1 1 164,4 (16) 2 303,4
to ordinary
shareholders
Adjusted for:
Net profit on sale of (3,5) (330,1) (346,7)
interest in
subsidiaries and
joint ventures
Loss/(profit) on sale
of property, plant
and equipment,
including
impairment charges on 59,1 (7,7) (15,2)
intangibles
Reversal of (2,0) (48,0) (93,1)
impairment of
investments,
including net profit
on sale
Associates - 42,1 42,1
Profit on sale of - (12,5) (12,5)
property, plant and
equipment
Impairment of - 54,6 54,6
property, plant and
equipment
Other - - (7,2)
Headline earnings for 1 034,7 820,7 26 1 883,3
the period/year
Group balance sheet
Unaudited Audited
as at as at
31 March 30 Sept
2007 2006 2006
Audited
Rm Rm Rm
ASSETS
Non-current assets 4 965,4 3 096,3 4 401,7
Property, plant and equipment 2 038,5 1 600,3 1 910,0
Goodwill and other intangibles 2 015,2 624,7 1 610,4
Investments 772,9 700,8 736,7
Deferred taxation asset 138,8 170,5 144,6
Current assets 6 617,3 5 697,5 5 867,4
Inventories 2 753,0 2 215,8 2 208,2
Trade and other receivables 3 377,3 2 653,2 3 089,0
Cash and cash equivalents 487,0 828,5 570,2
Assets classified as held for 344,5* 4,6 6,2
sale
TOTAL ASSETS 11 927,2 8 798,4 10 275,3
EQUITY AND LIABILITIES
Capital and reserves 4 857,6 3 575,1 4 470,5
Ordinary share capital and share 879,3 791,8 828,6
premium
Non-distributable reserves 539,3 493,6 513,7
Accumulated profits 4 844,2 3 738,2 4 554,2
Tiger Brands Limited shares held (842,0) (842,0) (842,0)
by subsidiary
Tiger Brands Limited shares held (662,0) (662,0) (662,0)
by empowerment trusts
Share-based payment reserve 98,8 55,5 78,0
Minority interest 199,9 165,3 181,7
TOTAL EQUITY 5 057,5 3 740,4 4 652,2
Non-current liabilities 1 488,4 1 713,1 1 604,6
Deferred taxation liability 224,5 301,1 231,2
Provision for post-retirement 338,3 357,0 353,7
medical aid
Long-term borrowings 817,6 934,7 911,7
Provision for Sea Harvest put 108,0 120,3 108,0
option
Current liabilities 5 182,7 3 344,4 4 017,4
Trade and other payables 3 634,6 2 988,0 3 294,2
Taxation 236,8 195,4 131,2
Short-term borrowings 1 311,3 161,0 592,0
Liabilities classified as held 198,6* 0,5 1,1
for sale
TOTAL EQUITY AND LIABILITIES 11 927,2 8 798,4 10 275,3
*Relates to the DairyBelle business
Abridged Group cash flow statement
Unaudited Audited
Six months Year
ended ended
31 March 30 Sept
2007 2006 2006
Rm Rm Rm
Cash operating profit 1 844,5 1 353,9 3 031,1
Working capital changes (608,6) (200,9) (333,0)
Net financing costs (105,1) (54,8) (121,8)
Dividends received 16,2 18,6 73,5
Taxation paid (395,7) (413,0) (865,8)
Cash available from operations 751,4 703,8 1 784,0
Dividends paid (649,0) (566,9) (864,6)
Net cash inflow from operating 102,3 136,9 919,4
activities
Net cash (outflow)/inflow from (860,9) 111,1 (1 302,5)
investing activities
Net cash (outflow)/inflow before (758,6) 248,0 (383,1)
financing activities
Net cash outflow on BEE - (723,5) (795,0)
transactions
Net cash (outflow)/inflow from (50,1) (25,2) 508,2
financing activities
Net decrease in cash and cash (808,7)* (500,7) (669,9)
equivalents
*Includes an increase of R725,6 million on short-term borrowings regarded as
cash and cash equivalents.
Statement of changes in equity
Share Non- Accumulated
capital and distributable profits
share premium reserves
Rm Rm Rm
Balance at 30 September 828,6 513,7 4 554,2
2006
Issue of share capital 50,7
and premium
Fair value adjustments (6,4)
Foreign currency 0,3
translation reserve
movement
Transfers between 29,7 (29,0)
reserves
Legal reserves and 2,0
other movements
Arising on acquisition 4,9
of subsidiaries and
joint venture
Net profit for the 981,1
period
Dividends on ordinary (667,0))
shares
Total dividends (727,5))
Less: Dividends on 60,5
treasury shares
Balance at 31 March 879,3 539,3 4 844,2
2007
Balance at 30 September 761,2 777,4 3 173,7
2005
Issue of share capital 30,6
and premium
Fair value adjustments (321,9)
- investments
Foreign currency (7,6)
translation reserve
movement
Movements in reserves 2,0
of associates
Legal reserves and 2,0 8,7
other movements
Arising on acquisition
of subsidiaries
Net profit for the 1 164,4
period
Dividends on ordinary (566,9)
shares
Total dividends (620,4)
Less: Dividends on 53,5
treasury shares
Balance at 31 March 791,8 493,6 3 738,2
2006
Statement of changes in Shares held Share-based
equity by subsi-
(continued)
diaries and payment
empowerment reserve Minorities
trusts
Rm Rm Rm
Balance at 30 September (1 504,0) 78,0 181,7
2006
Issue of share capital
and premium
Fair value adjustments
Foreign currency
translation reserve
movement
Transfers between (0,7)
reserves
Legal reserves and 20,8
other movements
Arising on acquisition
of subsidiaries and
joint venture
Net profit for the 23,4
period
Dividends on ordinary (4,5)
shares
Total dividends (4,5)
Less: Dividends on -
treasury shares
Balance at 31 March (1 504,0) 98,8 199,9
2007
Balance at 30 September (1 504,0) 38,5 138,4
2005
Issue of share capital
and premium
Fair value adjustments
- investments
Foreign currency
translation reserve
movement
Movements in reserves
of associates
Legal reserves and 17,0
other movements
Arising on acquisition 36,4
of subsidiaries
Net profit for the (1,6)
period
Dividends on ordinary (7,9)
shares
Total dividends (7,9)
Less: Dividends on -
treasury shares
Balance at 31 March (1 504,0) 55,5 165,3
2006
Segmental analysis
Unaudited
Six months ended 31 March
2007 2006*
Rm % Rm
Turnover (note 6)
FMCG 8 074,5 80 6 063,1
Domestic Food 5 834,8 58 4 406,5
Grains 2 776,2 28 2 338,2
Milling and baking 2 067,6 21 1 705,7
Other Grains 708,6 7 632,5
Groceries 901,9 9 798,9
Snacks & Treats 720,1 7 547,3
Beverages 610,3 6 4,1
Value Added Meat Products 700,5 7 602,3
Out of Home 125,8 1 115,7
Consumer Healthcare 854,0 8 597,1
Personal 292,7 3 118,8
Babycare 217,4 2 185,8
Homecare 343,9 3 292,5
Exports 523,4 5 265,6
Fishing 862,3 9 793,9
Healthcare 1 402,3 15 1 356,6
Pharmaceuticals 916,2 9 888,1
Prescription 463,2 5 449,4
OTC Medicines 453,0 4 438,7
Hospital products 486,1 6 468,5
OTHER INTERGROUP SALES (69,7) (1) -
CONTINUING OPERATIONS 9 407,1 94 7 419,7
DISCONTINUED OPERATION (DairyBelle) 589,4 6 546,9
TOTAL TURNOVER 9 996,5 100 7 966,6
*restated (refer Note 6)
Operating income before abnormal
items
FMCG 1 096,9 68 682,3
Domestic Food 793,5 49 559,2
Grains 375,8 23 300,9
Milling and baking 289,6 18 213,5
Other Grains 86,2 5 87,4
Groceries 157,6 10 121,3
Snacks & Treats 116,4 7 61,3
Beverages 73,8 5 N/A
Value Added Meat Products 59,3 3 60,9
Out of Home 10,6 1 14,8
Consumer Healthcare 217,1 13 143,0
Perrsonal 92,0 5 34,7
Babycare 58,6 4 44,8
Homecare 66,5 4 63,5
Exports 47,8 3 (12,6)
Fishing 75,3 5 11,2
Other (36,8) (2) (18,5)
Heallthcare 481,2 30 497,0
Pharmaceuticals 372,8 23 378,9
Prescription 173,4 11 186,3
OTC Medicines 199,4 12 192,6
Hospital products 108,4 7 118,1
CONTINUING OPERATIONS 1 578,1 98 1 179,3
DISCONTINUED OPERATION (DairyBelle) 31,6 2 26,7
TOTAL OPERATING INCOME BEFORE
ABNORMAL ITEMS 1 609,7 100 1 206,0
Segmental analysis (continued)
Audited
Year ended 30 September
% 2006
% Change Rm %
Turnover (note 6)
FMCG 76
Domestic Food 54
Grains 29 19 4 803,2 29
Milling and baking 21 21 3 594,1 22
Other Grains 8 12 1 209,1 7
Groceries 10 13 1 534,3 9
Snacks & Treats 7 32 1 129,4 7
Beverages 0 N/A 133,3 1
Value Added Meat Products 8 16 1 218,0 7
Out of Home 1 9 237,0 1
Consumer Healthcare 7 43 1 129,7 7
Personal 1 146 256,7 2
Babycare 2 17 388,5 2
Homecare 4 18 484,5 3
Exports 3 97 774,3 5
Fishing 11 9 1 664,0 10
Healthcare 17 3 2 829,9 17
Pharmaceuticals 11 3 1 874,2 11
Prescription 6 3 923,9 5
OTC Medicines 5 3 950,3 6
Hospital products 6 4 955,7 6
OTHER INTERGROUP SALES -
CONTINUING OPERATIONS 93 27 15 453,1 93
DISCONTINUED OPERATION 7 8 1 060,8 7
TOTAL TURNOVER 100 25 16 513,9 100
*restated (refer Note 6)
Operating income before abnormal
items
FMCG 56 61 1 551,1 58
Domestic Food 46 42 1 208,3 45
Grains 25 25 686,6 26
Milling and baking 18 36 528,3 20
Other Grains 7 (1) 158,3 6
Groceries 10 30 242,4 9
Snacks & Treats 5 90 134,3 5
Beverages N/A N/A (1,4) 0
Value Added Meat Products 5 (3) 119,5 4
Out of Home 1 (28) 26,9 1
Consumer Healthcare 12 52 261,1 10
Personal 3 165 80,8 3
Babycare 4 31 90,5 4
Homecare 5 5 89,8 3
Exports (1) N/A 35,1 1
Fishing 1 572 98,7 4
Other (2) (99) (52,1) (2)
Heallthcare 42 (3) 1 059,1 40
Pharmaceuticals 31 (2) 796,8 30
Prescription 15 (7) 387,5 15
OTC Medicines 16 4 409,3 15
Hospital products 11 (8) 262,3 10
CONTINUING OPERATIONS 98 34 2 610,2 98
DISCONTINUED OPERATION 2 18 55,5 2
TOTAL OPERATING INCOME BEFORE
ABNORMAL ITEMS 100 33 2 665,7 100
Other group salient features
Unaudited Audited
Six months Year
ended ended
31 March 30 September
2007 2006 2006
Net worth per ordinary share 3 082 2 294 2 855
(cents)
Net debt to equity (%) 32,5% 7,1% 20,1%
Interest cover - net (times)- 17,5 31,4 31,3
continuing operations
Current ratio (:1) 1,3 1,7 1,5
Capital expenditure (R million) 302,5 209,3 487,8
- replacement 177,7 132,4 264,1
- expansion 124,8 76,9 223,7
Capital commitments (R million) 522,8 502,1 761,0
- contracted 187,5 148,3 303,3
- approved 335,3 353,8 457,7
Capital commitments will be funded
from normal operating cash flows
and the utilisation
of existing borrowing facilities,
Contingent liabilities (R million)
Guarantees and contingent 7,0 7,0 7,0
liabilities*
*excludes any potential liability
that may arise from the
Competition Commission
Investigation as set out in Note 8
Carrying and fair value of 772,9 700,8 736,7
investments (R million)
Listed 32,7 27,3 26,3
Unlisted 297,1 86,8 297,4
Associates 443,1 586,7 413,0
Notes
Unaudited Audited
Six months Year
ended ended
31 March 30 September
2007 2006 2006
Restated Restated
Rm Rm Rm
1. Revenue
Turnover 9 407,1 7 419,7 15 453,1
Interest received 95,1 64,2 152,4
Dividend income 16,2 16,7 38,9
9 518,4 7 500,6 15 644,4
2. Operating income before
abnormal item
Operating income before abnormal
items is reflected after
charging:
Cost of sales 5 689,2 4 511,5 9 275,3
Sales and distribution expenses 1 276,9 1 021,1 2 168,2
Marketing expenses 301,3 256,1 574,5
Other operating expenses 561,6 451,7 824,9
Depreciation (included in cost 145,0 116,1 241,4
of sales and other operating
expenses)
3. Abnormal items
(Loss)/profit on sale of
property, plant and equipment,
including impairment
charges on intangibles (59,3) 6,5 16,4
Net profit on sale of interest 3,8 330,1 362,4
in subsidiaries and joint
venture
Reversal of impairment of 1,5 48,0 109,5
investments, including profit on
sale
Fair value adjustment - Sea - (12,3) -
Harvest put option
Empowerment transaction costs - - 0,7
Pension fund surplus - 129,9 129,9
apportionment
Provision in respect of (7,7) (142,8) (156,5)
utilisation of pension fund
surplus
Other - (4,2) 2,6
Abnormal (loss)/profit before (61,7) 355,2 465,0
taxation
Taxation 4,1 5,8 (5,6)
(57,6) 361,0 459,4
Minorities 2,6 - (3,1)
Abnormal (loss)/profit (55,0) 361,0 456,3
attributable to shareholders in
Tiger Brands Limited
4. Income/(loss) from associates
Normal trading 29,7 14,4 46,5
Abnormal items - (42,1) (42,1)
Profit on sale of property, - 12,5 12,5
plant and equipment
Impairment of property, plant - (54,6) (54,6)
and equipment
29,7 (27,7) 4,4
5. Changes in accounting policies
The accounting policies adopted are consistent with those of the previous
financial year except as follows:
(a) The Group has adopted the following new IFRIC interpretation during the
period under review.
- IFRIC 4 Determining whether an Arrangement contains a Lease.
The Group adopted IFRIC Interpretation 4 as of 1 January 2006. IFRIC 4 provides
guidance in determining whether arrangements contain a lease to which lease
accounting must be applied. This change in accounting policy has not had a
significant impact on the Group as at 31 March 2007 or 31 March 2006.
Consequently, no adjustments have been made to previously reported figures.
6. Changes to comparative figures
In accordance with Circular 09/06 issued by SAICA in May 2006, March 2006
figures have been restated to show turnover net of settlement discounts and
rebates allowed. The turnover for the year ended 30 September 2006 has not been
restated as this was originally reported in accordance of the requirements of
Circular 09/06.
March
2006
Turnover as previously stated 8 011,9
Adjusted for net settlement discounts and (45,3)
rebates
Restated 7 966,6
Less: discontinued operation (546,9)
Continuing turnover as restated 7 419,7
7. Business combinations
7.1 The Designer Group (Pty) Ltd
On 1 October 2006, the Group acquired 100% of the issued share capital of The
Designer Group (Pty) Limited, an unlisted company based in South Africa
specialising in the manufacture and distribution of personal care products.
The fair value of the identifiable assets and liabilities of The Designer Group
(Pty) Limited as at the date of acquisition were:
Rm Rm
Recognised on Carrying
acquisition value
Property, plant and 16,7 16,7
equipment
Intangible assets 33,1 10,7
Deposits, cash and cash 9,1 9,1
equivalents
Debtors 40,9 40,9
Inventories 44,8 44,8
144,6 122,2
Long-term borrowings (3,7) (3,7)
Short-term borrowings (3,4) (3,4)
Creditors and provisions (39,0) (39,0)
Receiver of revenue (0,2) (0,2)
Deferred taxation liability (3,7) (3,7)
(50,0) (50,0)
Fair value of net assets 94,6 72,2
Goodwill arising on 300,4 -
acquisition
395,0 72,2
Of the total purchase consideration of R395,0 million, payment of R40,0 million
has been deferred to 30 September 2007. This deferred portion of the purchase
price, which has been fully provided for in the Group balance sheet, is subject
to the achievement of certain performance conditions. The initial cash cost of
acquisition of R355,0 million was funded from internal cash resources.
Cash outflow on acquisition:
Net cash acquired with the subsidiary (9,1)
Cash paid to sellers 355,0
Net cash outflow 345,9
From the date of acquisition, The Designer Group (Pty) Ltd has contributed
R144,5 million to revenue from continuing operations and R34,4 million to Group
operating income after amortisation.
7.2 Nestle Confectionery business
On 1 October 2006, the Group acquired the sugar confectionery business of Nestle
South Africa, a company incorporated in South Africa, specialising in the
manufacturing and distribution of food products.
The purchase price allocation included below is indicative only, as the
allocation had not been finalised as at 31 March 2007.The fair value of the
identifiable assets and liabilities of the Nestle confectionery business at the
date of acquisition were:
Property, plant and equipment 7,5 7,5
Trademarks 40,0 40,0
Inventories 12,1 12,1
Fair value of net assets 59,6
Related capital cost 0,4
Goodwill arising on acquisition 80,0
Cash paid to seller 140,0
The total cost of the acquisition was R140,0 million and was funded from
internal cash resources. From the date of acquisition, the Nestle confectionery
business has contributed R52,6 million to revenue from continuing operations and
R17,9 million to group operating income after amortisation.
7.3 Soyatech (Pty) Limited
On 3 December 2006, the Group acquired the property, plant and equipment of
Soyatech (Pty) Limited, an unlisted company based in South Africa specialising
in the production and distribution of ready-prepared meals. The fair value of
the identifiable assets as at the date of acquisition were:
Property, plant and equipment 14,0 14,0
Fair value of net assets 14,0 14,0
The total cost of the acquisition was R14,0 million and was funded from internal
cash resources.
From the date of acquisition, the assets acquired of Soyatech (Pty) Limited have
contributed a loss before interest and tax of
R2,1 million.
8. Competition Commission Investigation
The Competition Commission has referred the Albany Bakeries division of Tiger
Consumer Brands Limited (formerly Tiger Food Brands Limited) to the Competition
Tribunal in respect of alleged collusive activity by employees of Albany
Bakeries in the Western Cape.
The Company has initiated discussions with the Competition Commission with the
objective of resolving the matter after advising the Competition Commission that
it intended extending its internal investigations to cover its milling and
baking activities on a national basis.
As the matter is currently under discussion between the appropriate parties, the
Company is not in a position to give any indication of a possible outcome.
http://www.tigerbrands.com
24 may 2007
Sponsor:JPMorgan
Date: 24/05/2007 16:42:02 Produced by the JSE SENS Department.
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