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TBS
TIIH
TBS - Tiger Brands - Group Results and dividend declaration for the six months
ended 31 March 2008
Tiger Brands
(Registration number 1944/017881/06)
(Incorporated in the Republic of South Africa)
Share code: TBS ISIN: ZAE000071080
Group Results and dividend declaration for the six months ended 31 March 2008
Turnover from continuing operations +18%
Operating income from continuing operations +15%
Headline earnings per share +15%
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 headline earnings per share (HEPS) of
756,6 cents for the six months ended 31 March 2008, which is an increase of
14,7% on that achieved in the six months ended
31 March 2007 ("the comparative period"). Earnings per share ("EPS") increased
by 10,5% to 690,8 cents per share for the same period.
Headline earnings for the six months ended 31 March 2008 have been adversely
impacted by the inclusion of a provision of R53,5 million, being the cost of the
settlement reached with the Competition Commission as a consequence of
contraventions of the Competition Act in the Hospital Products business.
Excluding this provision, headline earnings per share would have reflected an
increase of 19,8% compared to the same period in the previous year.
The difference between the percentage change in HEPS and EPS is mainly due to
the inclusion in abnormal items, in the current period, of an amount of R112,3
million relating to the impairment of the carrying value of the goodwill
associated with the Beverages business. The comparative period included an
abnormal charge of R55,9 million relating to the impairment of certain licence
rights in the Pharmaceutical business. Both these items are excluded for the
purposes of determining headline earnings per share in the respective reporting
periods.
SETTLEMENT WITH THE COMPETITION COMMISSION
As announced on 9 May 2008, an agreement was reached with the Competition
Commission relating to contraventions of the Competition Act by the Company`s
Hospital Products subsidiary Adcock Ingram Critical Care (Pty) Ltd ("AICC"). In
terms of the agreement, AICC has agreed to pay an administrative penalty of
R53,5 million. The agreement is required to be confirmed by the Competition
Tribunal in terms of the Competition Act. The amount of the penalty has been
fully provided for and disclosed as an abnormal item in note 5 of the Group
income statement (Discontinued Operations - Healthcare).
OVERVIEW OF RESULTS
On 6 November 2007, the Company announced its intention to unbundle its
Healthcare interests. The process, which was expected to have been completed by
31 March 2008, was delayed as a result of the investigation by law firm Edward
Nathan Sonnenbergs, conducted at the request of the Tiger Brands board, in
response to the allegations of collusive tendering and market allocation made
against AICC by the Competition Commission. It is now anticipated that the
unbundling will be completed by 30 September 2008.
As a consequence of the decision to unbundle and in terms of IFRS 5, the results
of the Healthcare interests are required to be disclosed as a discontinued
operation in the Group income statement, whilst the related assets and
liabilities are classified in the Group balance sheet as assets and liabilities
held for sale. Similarly, the results of the Dairy business which was disposed
of with effect from 1 May 2007, have also been disclosed as a discontinued
operation in the comparative period. Reference in the commentary below to
continuing operations relates only to the Company`s FMCG business.
High global price increases in food commodities and in fuel costs continue to
impact negatively on both food processors and consumers, creating a difficult
trading environment.
On a like-for-like basis, turnover from continuing operations for the six months
ended 31 March 2008 increased by 18% compared with the same period last year.
The increase is driven by a significant level of selling price inflation,
together with good volume growth across most of the Company`s FMCG basket.
Whilst selling price inflation in the balance of the business was contained to
single digits, the substantial increases in global soft commodity prices
resulted in exceptional cost pressures in the Grains businesses with a
concomitant impact on selling prices.
The contraction in the operating margin, from 13,9% last year to 13,6% in the
current period, reflects the challenges encountered in recovering raw material
cost increases in the Milling and Baking operations, as well as the impact of
the cool and wet summer conditions on the Beverages business. This margin
pressure was largely offset by the significant margin expansion experienced in
the Export and Out of Home businesses, as well as margin improvements in the
Other Grains, Perishables and Consumer Healthcare operations. Overall growth in
operating income of 15% was negatively impacted by the significant decline in
operating income recorded by Beverages and the below inflationary increase in
profits recorded by Milling and Baking.
Net financing costs from continuing operations decreased by R17,6 million to
R30,5 million notwithstanding higher interest rates, inflationary pressures on
working capital and significant levels of capital expenditure. The reduction in
financing costs reflects the strong cash generating capabilities of the business
with total net debt (including discontinued operations) reflecting a reduction
of R693 million to R949 million at 31 March 2008, compared to net debt of R1 642
million at 31 March 2007. Net interest cover, including discontinued operations,
remains at a healthy level of 22,8 times (2007: 17,6 times).
Earnings from associates for the half year reflect the improved contribution
from Chilean based Empresas Carozzi.
The increased share of income attributable to minorities is largely due to the
improved levels of profitability of the Deciduous Fruit business.
The lower rate of increase in the tax charge, compared to the growth in profit
before tax, reflects the 1% reduction in the corporate tax rate announced in the
recent budget together with a reduced STC charge resulting from a portion of the
2007 final dividend being distributed as a payment of capital out of share
premium in January 2008.
Discontinued operations comprise the profit after tax attributable to the
Company`s Healthcare interests both for the six months ended 31 March 2008 and
the comparative period, as well as the profit after tax attributable to the
Dairy business in the previous year.
REVIEW OF OPERATIONS
FMCG
Notwithstanding an increasingly challenging economic environment, consumer
demand remained robust across most FMCG categories. Volume growth was a key
contributor to the good operating performance and has helped to offset margin
declines resulting from an under recovery in certain businesses (particularly
Milling and Baking) of the significant raw material cost increases experienced
in the past six months. There were some exceptions to the positive trend on
volume growth and these are covered in the detailed commentary below.
DOMESTIC FOOD increased turnover and operating income by 19% and 9%
respectively. Strong performances in most categories were offset by the
significant decline in the contribution from Beverages and a moderate increase
in operating income in Milling and Baking.
Within the Grains segment, Maize continued to make good progress. This was
offset by disappointing results from the Wheat Milling, Baking and Sorghum
operations. Whilst Golden Cloud and Albany recorded significant volume growth,
flour price increases in the current six month period lagged the extraordinarily
high increases in the cost of wheat. Sorghum volumes declined significantly as
prices increased in response to rising input costs, highlighting the price
sensitivity for lower LSM (Living Standards Measurement) consumers.
Other Grains reflected good growth in operating income from both the Rice and
Oats categories. The Oats performance should be viewed relative to the loss
recorded in the comparative period due to difficulties experienced with a major
plant upgrade. The Rice business benefited from strong volume growth in both the
Tastic and Aunt Caroline brands, however, recent extreme upward movement in
global rice pricing is likely to make the second half of the year more
challenging.
The Groceries business achieved a 15% growth in operating income off a 16%
increase in turnover.
Good volume growth was recorded by the KOO, All Gold and Black Cat brands. An
otherwise good performance was partly offset by a sharp decline in the
profitability of Pasta, where certain key product lines of Fatti`s & Moni`s were
out of stock due to a delay in the commissioning of the new pasta plant. The new
plant is now in full production. The canned meats category also experienced
significant margin compression.
As would be expected in a category strongly influenced by impulse buying, volume
growth in the Snacks & Treats business slowed appreciably in the current period
reflecting the general pressure on discretionary consumer spending. The
improvement in operating income of 11% was satisfactory in a period also
characterised by rising raw material costs.
The Beverages category experienced an extremely challenging six months with
turnover down 6% and operating income down 70% compared to the same period last
year. The cool and wet summer had a significant negative impact on consumer
demand. This was exacerbated by a build up of stock ahead of summer which then
had to be sold into a sluggish market, with a concomitant negative impact on
pricing.
Due to these factors and a slightly more prudent view being taken as a result of
the impact on the business of cyclical weather patterns, it has been deemed
prudent to raise an abnormal impairment provision of R112,3 million against the
carrying amount of goodwill associated with this business.
Whilst volumes declined marginally within Value Added Meat Products, the
business increased operating income by 22% off a growth in turnover of 5%. The
increase in profitability was primarily attributable to a pricing correction in
order to recover the high raw material cost increases experienced over the past
eighteen months. The Out of Home business achieved a pleasing improvement in
profitability off a low prior year base. The entry into prepared meals with a
major customer should help sustain this improvement.
Consumer Healthcare saw operating income grow by 16% with turnover increasing by
9%. The result was impacted by a virtually stagnant Personal Care category where
the greatest impact of pressure on consumer discretionary expenditure is felt.
This category also experienced significant increases in raw material costs. On
the other hand, Babycare and Homecare recorded increases in operating income of
27% and 28% respectively, reflecting strong consumer demand for the leading
brands in these categories. Within Babycare, the Purity and Elizabeth Anne`s
brands continued to perform strongly, whilst the Homecare category benefited
from good performances from leading brands such as Doom, Airoma, Jeyes and
BioClassic.
The Exports business sustained its recent improvements with operating income and
turnover increasing by 91% and 18% respectively. Operating income benefited from
higher foreign currency denominated pricing for the Group`s premium deciduous
fruit range, as well as from a slightly weaker average Rand exchange rate for
the period. The strong performance was also assisted by good volume growth in
the Tiger Brands Africa portfolio as well as rigorous overhead control.
FISHING
The Company`s fishing interests comprise Sea Harvest (74% held) and Oceana Group
Limited (45% held).
Proportionately consolidated Oceana, which is separately listed on the JSE
Limited, reported a 63% increase in headline earnings per share for the six
months ended 31 March 2008. The major contributing factors to the improved
results were increased sales of canned fish, improved export realisations and
higher cold store occupancy levels. Oceana`s results for the period were
separately published on 8 May 2008.
Sea Harvest recorded a decline in operating income despite strong turnover
growth. Results were negatively impacted by lower catch rates and increased
costs, particularly in relation to fuel and cold storage.
HEALTHCARE
The results achieved by the Company`s Healthcare interests are disclosed under
discontinued operations in line with the requirements of IFRS 5. The improved
performance for the six months ended 31 March 2008 indicates that measures put
in place to respond to the challenging healthcare environment are starting to
take effect.
The Pharmaceutical business increased operating income by 4%, with turnover
rising by 8%. Turnover growth in the Prescription business is entirely volume
related as this business has not had the benefit of any price increases in the
current period. The OTC category achieved a turnover growth of 13%, driven by
high volume increases in key brands such as Adco-Dol, Alcophyllex, Corenza C,
Panado and Bioplus.
Hospital Products grew operating income by 15%, slightly ahead of turnover
growth of 14%. This reflects a positive performance across all categories,
including the Scientific Group which experienced strong demand for some of its
products.
UNBUNDLING OF HEALTHCARE INTERESTS
On 6 May 2008, the Company renewed its cautionary announcement relating to the
proposed unbundling and separate listing of Adcock Ingram. The Company remains
committed to the strategic imperatives of the unbundling and is proceeding with
the required formalities. Tiger Brands expects to complete the listing of Adcock
Ingram on the JSE Limited before the end of the current financial year.
Africa Expansion
As part of its stated strategy of seeking growth opportunities in Africa, the
Company has concluded an agreement to acquire a controlling interest in Haco
Industries Kenya (Pty) Limited, a leading branded personal care and consumer
products company based in Kenya. The agreement is conditional upon the
fulfillment of certain conditions precedent.
The Company is currently investigating a number of other interesting
opportunities in West and Central Africa.
INTERIM DIVIDEND
The directors have decided to declare an interim dividend of 245,0 cents per
share, which represents an increase of 15% on the interim capital distribution
of 213 cents per share declared last year.
OUTLOOK
The FMCG business continues to face challenges in the form of ongoing pressure
on consumer spending and rising global prices for soft commodities and other key
raw materials. It is likely therefore, that the growth in operating income for
the full year ending 30 September 2008 will be lower than that recorded for the
first six months.
Adcock Ingram is expected to sustain its current performance for the remainder
of the year, assisted by the recently legislated single exit price increase of
6,5% on pharmaceutical products, effective from May 2008.
Including the full year results for Adcock Ingram, and notwithstanding the
difficult trading environment, it is expected that headline earnings for the
full year ending 30 September 2008 will show growth in real terms.
For and on behalf of the Board
Lex van Vught Peter Matlare
Chairman Chief Executive Officer
19 May 2008
Declaration of Ordinary Dividend No 127
Notice is hereby given that an interim dividend of 245,0 cents per ordinary
share has been declared in respect of the half-year ended, 31 March 2008.
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 dividend:
Last day to trade cum-dividend Friday 27 June 2008
Shares commence trading ex-dividend Monday, 30 June 2008
Record date Friday, 4 July 2008
Payment of dividend Monday, 7 July 2008
Shareholders will not be permitted to dematerialise/rematerialise their shares
between Monday, 30 June 2008 and Friday, 4 July 2008, both days inclusive.
By order of the Board
I W M Isdale
Secretary 19 May 2008
Income statement
Unaudited Audited
six months ended Year-end
31 March 30 Sept
2008 2007 Change 2007
Notes Rm Rm % Rm
Continuing
operations
Revenue 1 9 511,2 8 116,0 17 16 476,5
Turnover 9 412,5 8 007,1 18 16 209,9
Operating income 2 1 278,3 1 110,7 15 2 245,7
before abnormal
items
Abnormal items 3 (103,0) 7,1 203,6
Operating income 1 175,3 1 117,8 5 2 449,3
after abnormal
items
Interest paid (116,4) (143,2) 19 (305,1)
Interest received 85,9 95,1 (10) 227,2
Dividend income 12,8 13,8 (7) 39,4
Income from 4 35,9 29,7 21 57,1
associates
Profit before 1 193,5 1 113,2 7 2 467,9
taxation
Taxation (355,6) (347,3) (2) (741,4)
Profit for the 837,9 765,9 9 1 726,5
period from
continuing
operations
Discontinued 5
operations
Profit after tax - 23,1 33,9
for the period -
DairyBelle
business
Profit after tax 281,7 215,5 531,9
for the period -
Healthcare
business
PROFIT FOR THE 1 119,6 1 004,5 11 2 292,3
PERIOD
Attributable to:
Ordinary 1 090,7 981,1 11 2 242,8
shareholders
Minorities 28,9 23,4 49,5
1 119,6 1 004,5 2 292,3
Headline earnings 756,6 659,7 15 1 283,0
per ordinary
share (cents)
Diluted headline 739,5 640,2 16 1 261,7
earnings per
ordinary share
(cents)
Basic earnings 690,8 625,4 10 1 425,7
per ordinary
share (cents)
Diluted basic 675,2 607,0 11 1 402,0
earnings per
ordinary share
(cents)
Dividends and 245,0 213,0 15 660,0
distributions per
ordinary share
(cents)
Capital - 213,0 213,0
distribution
declared 24 May
2007
Interim dividend 245,0 - -
declared
Capital - - 290,0
distribution
declared 19
November 2007
Final dividend - - 157,0
declared
Headline earnings 580,7 467,8 24 878,0
per ordinary
share (cents) -
for continuing
operations
Diluted headline
earnings per
ordinary share
(cents)
for continuing 567,6 454,1 25 863,4
operations
Basic earnings 514,9 475,4 8 1 070,9
per ordinary
share (cents) for
continuing
operations
Diluted basic
earnings per
ordinary share
(cents)
for continuing 503,3 461,4 9 1 053,1
operations
Headline earnings
per ordinary
share (cents)
- for 175,9 191,8 (8) 405,0
discontinuing
operations
Diluted headline
earnings per
ordinary share
(cents)
for discontinued 171,9 186,1 (8) 398,3
operations
Basic earnings 175,9 150,1 17 354,8
per ordinary
share (cents) for
discontinued
operations
Diluted basic 171,9 145,6 18 348,9
earnings per
ordinary share
(cents) for
discontinued
operations
Balance sheet
Unaudited Audited
as at as at
31 March 30 Sept
2008 2007 2007
Notes Rm Rm Rm
ASSETS
Non-current assets 4 551,7 4 965,4 4 528,4
Property, plant and 7 2 023,0 2 038,5 1 915,7
equipment
Goodwill and other 8 1 655,5 2 015,2 1 770,7
intangibles
Investments 757,3 772,9 727,6
Deferred taxation asset 115,9 138,8 114,4
Current assets 6 426,2 6 617,3 5 767,2
Inventories 2 906,7 2 753,0 2 488,1
Trade and other receivables 3 104,3 3 377,3 2 789,2
Cash and cash equivalents 415,2 487,0 489,9
Assets classified as held 5 1 879,3 344,5 1 724,8
for sale
TOTAL ASSETS 12 857,2 11 927,2 12 020,4
EQUITY AND LIABILITIES
Capital and reserves 6 225,6 4 857,6 5 785,0
Ordinary share capital and 41,8 879,3 536,9
share premium
Non-distributable reserves 597,5 539,3 526,7
Accumulated profits 6 860,2 4 844,2 6 074,8
Tiger Brands Limited shares (799,0) (842,0) (823,6)
held by subsidiary
Tiger Brands Limited shares (632,4) (662,0) (649,5)
held by empowerment trusts
Share-based payments 157,5 98,8 119,6
reserve
Minority interest 224,8 199,9 213,6
TOTAL EQUITY 6 450,4 5 057,5 5 998,6
Non-current liabilities 778,2 1 380,4 959,6
Deferred taxation liability 227,6 224,5 272,3
Provision for post- 331,4 338,3 322,4
retirement medical aid
Long-term borrowings 219,1 817,6 364,9
Current liabilities 4 399,9 5 290,7 3 671,0
Trade and other payables 3 570,0 3 634,6 3 358,5
Taxation 198,5 236,8 182,5
Provision for Sea Harvest 81,4 108,0 81,4
put option
Short-term borrowings 550,0 1 311,3 48,6
Liabilities classified as 5 1 228,7 198,6 1 391,2
held for sale
TOTAL EQUITY AND 12 857,2 11 927,2 12 020,4
LIABILITIES
Segmental analysis
Uunadited
six months ended
31 March
2008 2007
Rm % Rm
Turnover
FMCG - CONTINUING OPERATIONS 9 412,5 86 8 007,1
Domestic Food 6 917,6 61 5 837,1
Grains 3 587,1 32 2 778,4
Milling and baking 2 681,7 24 2 069,8
Other Grains 905,4 8 708,6
Groceries 1 135,0 10 974,9
Snacks and Treats 814,9 7 720,1
Beverages 576,3 5 610,3
Value Added Meat Products 659,0 6 627,6
Out of Home 145,3 1 125,8
Consumer Healthcare 934,8 9 854,0
Personal 292,0 3 292,7
Babycare 257,0 2 217,4
Homecare 385,8 4 343,9
Exports 618,9 6 523,4
Fishing 1 008,4 9 862,3
OTHER INTERGROUP SALES - FMCG (67,2) (1) (69,7)
DISCONTINUED OPERATIONS 1 544,1 14 1 991,7
HEALTHCARE 1 544,1 14 1 402,3
Pharmaceuticals 990,2 9 916,2
Prescription 476,9 4 463,2
OTC Medicines 513,3 5 453,0
Hospital products 553,9 5 486,1
DairyBelle - - 589,4
INTER-SEGMENT SALES - HEALTHCARE TO (2,0) - (2,2)
CONSUMER
TOTAL TURNOVER 10 954,6 100 9 996,6
Operating income before abnormal
items
FMCG - CONTINUING OPERATIONS 1 278,3 72 1 110,7
Domestic Food 867,6 48 793,4
Grains 444,9 25 375,7
Milling and baking 305,6 17 289,5
Other Grains 139,3 8 86,2
Groceries 191,7 11 166,4
Snacks and Treats 128,8 7 116,4
Beverages 22,5 1 73,8
Value Added Meat Products 61,5 3 50,5
Out of Home 18,2 1 10,6
Consumer Healthcare 252,6 14 217,1
Personal 92,7 5 92,0
Babycare 74,6 4 58,6
Homecare 85,3 5 66,5
Exports 91,5 6 47,8
Fishing 85,2 5 75,3
Other - FMCG (18,6) (1) (22,9)
DISCONTINUED OPERATIONS 502,2 28 498,7
HEALTHCARE 510,6 28 481,1
Pharmaceuticals 386,3 21 372,7
Prescription 165,9 9 173,3
OTC Medicines 220,4 12 199,4
Hospital products 124,3 7 108,4
DairyBelle - - 31,6
Other - Healthcare (8,4) - (14,0)
TOTAL OPERATING INCOME BEFORE 1 780,5 100 1 609,4
ABNORMAL ITEMS
Segmental analysis (continued)
Unaudited
Audited
Year ended
30 Sept 2007
Change
% % Rm %
Turnover
FMCG - CONTINUING OPERATIONS 80 18 16 209,9 82
Domestic Food 58 19 11 713,9 59
Grains 28 29 5 918,3 30
Milling and baking 21 30 4 518,2 23
Other Grains 7 28 1 400,1 7
Groceries 9 16 1 762,8 9
Snacks and Treats 7 13 1 412,7 7
Beverages 6 (6) 1 010,2 5
Value Added Meat Products 6 5 1 360,0 7
Out of Home 1 16 249,9 1
Consumer Healthcare 8 9 1 602,0 8
Personal 3 - 596,5 3
Babycare 2 18 450,7 2
Homecare 3 12 554,8 3
Exports 6 18 1 105,4 6
Fishing 9 17 1 923,9 10
OTHER INTERGROUP SALES - FMCG (1) (4) (135,3) (1)
DISCONTINUED OPERATIONS 20 (22) 3 556,9 18
HEALTHCARE 15 10 2 878,9 15
Pharmaceuticals 10 8 1 865,8 10
Prescription 5 3 908,9 5
OTC Medicines 5 13 956,9 5
Hospital products 5 14 1 013,1 5
DairyBelle 5 (100) 678,0 3
INTER-SEGMENT SALES - HEALTHCARE - (9) (61,5) -
TO CONSUMER
TOTAL TURNOVER 100 10 19 705,3 100
Operating income before abnormal
items
FMCG - CONTINUING OPERATIONS 69 15 2 245,7 69
Domestic Food 49 9 1 601,5 49
Grains 23 18 894,4 27
Milling and baking 18 6 724,3 22
Other Grains 5 62 170,1 5
Groceries 10 15 299,2 9
Snacks and Treats 7 11 206,3 6
Beverages 5 (70) 83,8 3
Value Added Meat Products 3 22 96,4 3
Out of Home 1 72 21,4 1
Consumer Healthcare 14 16 382,7 12
Personal 6 1 171,7 5
Babycare 4 27 114,8 4
Homecare 4 28 96,2 3
Exports 3 91 104,2 3
Fishing 4 13 198,0 6
Other - FMCG (1) 19 (40,7) (1)
DISCONTINUED OPERATIONS 31 - 993,2 31
HEALTHCARE 30 6 972,8 30
Pharmaceuticals 23 4 727,1 22
Prescription 11 (4) 323,9 10
OTC Medicines 12 11 403,2 12
Hospital products 7 15 245,7 8
DairyBelle 2 (100) 35,9 1
Other - Healthcare (1) 40 (15,5) -
TOTAL OPERATING INCOME BEFORE 100 11 3 238,9 100
ABNORMAL ITEMS
Other group salient features (INCLUDING DISCONTINUED OPERATIONS)
Unaudited
Six Audited
months
ended Year ended
31 March 30 Sept
2008 2007
Net worth per ordinary share 3 942 3 082 3 665
(cents)
Net debt to equity (%) 14,7 32,5 12,1
Interest cover - net (times) 22,8 17,6 17,5
Current ratio (:1) 1,5 1,3 1,5
Capital expenditure (R million) 306,8 302,5 597,6
- replacement 128,1 177,7 302,5
- expansion 178,8 124,8 295,1
Capital commitments (R million) 691,8 522,8 534,4
- contracted 330,7 187,5 197,2
- approved 361,1 335,3 337,2
Capital commitments will be funded from
normal operating cash flows and the
utilisation of existing borrowing
facilities.
Contingent liabilities (R
million)
Guarantees and contingent 41,0 7,0 41,0
liabilities
Carrying and fair value of 757,3 772,9 727,6
investments (R million)*
Listed 23,9 32,7 31,8
Unlisted 266,0 297,1 264,3
Associates 467,4 443,1 431,5
*Excludes discontinued operations
Abridged cash flow statement (INCLUDING DISCONTINUED OPERATIONS)
Unaudited Audited
six months ended Year ended
31 March 30 Sept
2008 2007 2007
Rm Rm Rm
Cash operating profit 2 026,0 1 844,5 3 745,8
Working capital changes (553,4) (608,6) (806,8)
Interest received 157,1 96,4 227,2
Interest paid (235,7) (201,5) (414,8)
Dividends received 15,5 16,2 58,3
Taxation paid (489,8) (395,7) (904,0)
Cash available from operations 919,7 751,4 1 905,7
Capital distributions and (724,1) (649,0) (1 000,0)
dividends paid
Net cash inflow from operating 195,6 102,4 905,7
activities
Net cash outflow from investing (422,1) (860,9) (783,8)
activities
Net cash (outflow)/inflow before (226,5) (758,6) 121,9
financing activities
Net cash inflow/(outflow) from 51,2 (50,1) (141,5)
financing activities
Net decrease in cash and cash (175,3)* (808,7) (19,6)
equivalents
*Includes an increase of R148,7 million (March 2007: R725,6 million) on short-
term borrowings regarded as cash and cash equivalents.
Statement of changes in equity
Accu- Shares
mulated held by
profits subsidiary
and em-
powerment
trusts
Share Non-
capital distri-
and butable
premium reserves
Rm Rm Rm Rm
Balance as at 30 828,6 513,7 4 554,2 (1 504,0)
September 2006
Fair value adjustments (13,6)
recognised in equity
Foreign currency (10,9)
translation reserve
Profit for the year 2 242,5
828,6 489,2 6 796,7 (1 504,0)
Issue of share capital 75,3
and share premium
Capital distribution out (367,0) 30,9
of share premium
Share-based payment
Dividends on ordinary (656,3)
shares
Total dividends (715,9)
Less: Dividends on 59,6
treasury shares
Arising on changes in and (10,4)
acquisition of
subsidiaries and joint
ventures
Transfers between 37,5 (37,5)
reserves
Goodwill adjustment - (17,7)
IFRS 3
Balance as at 30 536,9 526,7 6 074,8 (1 473,1)
September 2007
Balance as at 30 536,9 526,7 6 074,8 (1 473,1)
September 2007
Fair value adjustments 25,8
recognised in equity
Foreign currency 9,1
translation reserve
Profit for the six month 1 090,7
period
536,9 561,6 7 165,5 (1 473,1)
Issue of share capital 4,7
and share premium
Capital distribution out (499,8) 41,7
of share premium
Share based payment
Dividends on ordinary (248,5)
shares
Total dividends (271,2)
Less: Dividends on 22,7
treasury shares
Arising on changes in and (20,9)
acquisition of
subsidiaries and joint
ventures
Transfers between 35,9 (35,9)
reserves
Balance as at 31 March 41,8 597,5 6 860,2 (1 431,4)
2008
Statement of changes in equity (continued)
Share- Total Attri- Total
based attributable butable
payment to ordinary To mi-
reserve shareholders norities
Rm Rm Rm Rm
Balance as at 30 78,0 4 470,5 181,7 4 652,2
September 2006
Fair value (13,6) (13,6)
adjustments
recognised in equity
Foreign currency (10,9) (10,9)
translation reserve
Profit for the year 2 242,5 50,0 2 292,5
78,0 6 688,5 231,7 6 920,2
Issue of share 75,3 75,3
capital and share
premium
Capital distribution (336,1) (336,1)
out of share premium
Share-based payment 41,6 41,6 41,6
Dividends on (656,3) (18,1) (674,4)
ordinary shares
Total dividends (715,9) (18,1) (734,0)
Less: Dividends 59,6 59,6
on treasury shares
Arising on changes (10,4) (10,4)
in and acquisition
of subsidiaries and
joint ventures
Transfers between - -
reserves
Goodwill adjustment (17,7) (17,7)
- IFRS 3
Balance as at 119,6 5 784,9 213,6 5 998,6
30 September 2007
Balance as at 119,6 5 784,9 213,6 5 998,6
30 September 2007
Fair value 25,8 25,8
adjustments
recognised in equity
Foreign currency 9,1 9,1
translation reserve
Profit for the six 1 090,7 28,9 1 119,6
month period
119,6 6 910,5 242,5 7 153,1
Issue of share 4,7 4,7
capital and share
premium
Capital distribution (458,1) (458,1)
out of share premium
Share based payment 37,9 37,9 37,9
Dividends on (248,5) (17,7) (266,2)
ordinary shares
Total dividends (271,2) (17,7) (288,9)
Less: Dividends 22,7 22,7
on treasury shares
Arising on changes (20,9) (20,9)
in and acquisition
of subsidiaries and
joint ventures
Transfers between - -
reserves
Balance as at 31 157,5 6 225,6 224,8 6 450,4
March 2008
Notes
Unaudited Audited
six months ended Year ended
31 March 30 Sep
2008 2007 2007
Rm Rm Rm
1. Revenue
Turnover 9 412,5 8 007,1 16 209,9
Interest received 85,9 95,1 227,2
Dividend income 12,8 13,8 39,4
9 511,2 8 116,0 16 476,5
2. Operating income
Operating income before abnormal
items is reflected after
charging:
Cost of sales 6 258,9 5 102,4 10 303,4
Sales and distribution expenses 1 229,0 1 122,3 2 277,0
Marketing expenses 223,4 226,5 483,3
Other operating expenses 422,9 445,2 900,5
Depreciation (included in cost of 137,1 121,1 263,3
sales and other operating
expenses)
3. Abnormal items
(Loss)/proft on sale of (100,0) 11,0 51,5
property, plant and equipment
including impairment charges and
reversals
Net profit on sale of interest in - 3,8 305,2
subsidiaries and associates
Fair value adjustment - Sea - - 26,6
Harvest put option
Provision in respect of (3,0) (7,7) (20,4)
utilisation of pension fund
surplus
Competition Commission penalty* - - (98,8)
Provision for Healthcare - - (58,4)
unbundling costs
Other - - (2,1)
Abnormal (loss)/profit before (103,0) 7,1 203,6
taxation
Taxation 0,6 0,7 (37,3)
(102,4) 7,8 166,3
Minorities (1,9) 2,6 (6,7)
Abnormal (loss)/income (104,3) 10,4 159,6
attributable to shareholders in
Tiger Brands Limited
*Competition Commission penalty amounting to R53,5 m, payable by
Adcock Ingram Critical Care (Pty) Limited, is reflected separately
in Note 5 below.
4. Income from associates
Normal trading 35,9 29,7 57,1
35,9 29,7 57,1
5. Discontinued operations
Healthcare
In April 2007, the Board of Tiger Brands took an in-principle
decision to divest of its Healthcare interests. This followed a
detailed strategic review of the Company`s Healthcare business,
which resulted in the Board concluding that Tiger Brands was best
positioned to maximise shareholder value in the future by focusing
on its core FMCG operations. The Company thereafter embarked on a
process which entailed evaluating all available options with regard
to the separation of its Healthcare interests, including a
potential sale or unbundling. On 6 November 2007, Tiger Brands
publicly announced its decision to unbundle its Healthcare
interests. The Healthcare interests to be unbundled comprise the
two major divisions, namely a Pharmaceutical division selling a
range of both prescription and OTC products, and a Hospital
Products and services division. The unbundling is expected to be
completed by 30 September 2008.
The Healthcare interests have been classified as a disposal group
as at 31 March 2008.
Healthcare
The results of the Healthcare business for the period are presented
below:
March March Sept
2008 2007 2007
Turnover 1 544,1 1 402,3 2 878,9
Operating income before abnormal 502,2 467,1 957,3
items*
Abnormal item (53,5) (68,8) (53,1)
Interest paid (119,3) (58,3) (117,6)
Interest received 71,2 0,3 7,7
Dividend income 2,7 2,4 -
Profit before tax from a 403,3 342,7 794,3
discontinued operation
Taxation (121,6) (127,2) (262,4)
Profit for the period from a 281,7 215,5 531,9
discontinued operation
*Includes the normal allocation of central overhead costs from
Tiger Corporate Office.
The major classes of assets and liabilities of the Healthcare
business disclosed as held for sale as at 31 March 2008 are as
follows:
Assets
Property, plant and equipment 331,0 - 260,0
Goodwill and other intangibles 223,5 - 234,8
Investments 30,3 - 28,8
Deferred taxation asset 9,6 - 16,9
Cash and cash equivalents 131,3 - 83,3
Inventory 423,8 - 433,0
Trade and other receivables 706,8 - 668,0
Taxation receivable 23,0 - -
Assets classified as held for 1 879,3 - 1 724,8
sale
Liabilities
Interest-bearing liabilities 726,4 - 886,2
(long and short-term borrowings)
Deferred taxation liability 24,3 - 7,2
Provision for post-retirement 13,3 - 12,8
medical aid
Trade and other payables 464,7 - 476,8
Taxation - - 8,2
Liabilities directly associated 1 228,7 - 1 391,2
with assets classified as held
for sale
Net assets directly associated 650,6 - 333,6
with disposal group
DairyBelle
DairyBelle was disposed of
effective 1 May 2007.
The results of the DairyBelle business for the half year ended
31 March 2007 and the seven months ended 30 April 2007 are
presented below:
Turnover - 589,4 678,0
Operating income before abnormal - 31,6 35,9
items
Interest received - 1,0 -
Profit before tax from a - 32,6 35,9
discontinued operation
Taxation - (9,5) (2,0)
Profit for the period from a - 23,1 33,9
discontinued operation
The major classes of assets and liabilities of the DairyBelle
business disclosed as held for sale as at 31 March 2007 are as
follows:
Assets
Property, plant and equipment - 57,0 -
Deferred taxation asset - 18,2 -
Inventory - 69,6 -
Trade and other receivables - 199,7 -
Assets classified as held for - 344,5 -
sale
Liabilities
Provision for post-retirement - (27,0) -
medical aid
Trade and other payables - (165,2) -
Taxation - (6,4) -
Liabilities directly associated - (198,6) -
with assets classified as held
for sale
Net assets directly associated - 145,9 -
with disposal group
6. Changes in accounting policies
The accounting policies adopted are consistent with those of the
previous financial year except as follows:
The Group has adopted the following new and amended IFRS statement
and IFRIC interpretation during the period under review.
Adoption of these revised standards and interpretations did not
have any effect on the interim financial statements of the Group.
They will however give rise to additional disclosures at year end.
- IFRS 7 Financial Instruments: Disclosures
- IAS 1 Amendment-Presentation of Financial Statements
- IFRIC 10 Interim Financial Reporting and Impairment
The principal effects of these changes are as follows:
IFRS 7 Financial Instruments: Disclosures
The Group has adopted IFRS 7, which requires disclosures that
enable users to evaluate the significance of the Group`s financial
instruments and the nature and extent of risks arising from those
financial instruments.
IAS 1 Presentation of Financial Statements
This amendment requires the Group to make new disclosures to enable
users of the financial statements to evaluate the Group`s
objectives, policies and processes for managing capital.
IFRIC 10 Interim Financial Reporting and Impairment
The Group adopted IFRIC Interpretation 10 as of 1 October 2007,
which requires that an entity must not reverse an impairment loss
recognised in a previous interim period in respect of goodwill or
an investment in either an equity instrument or a financial asset
carried at cost.
The interpretation had no impact on the financial position or
performance of the Group.
7. Property, plant and equipment
The additions for the period amounted to R306,8 million (March
2007: R302,5 million) and the net book value of disposals totalled
R6,1 million (March 2007: R6,7 million).
8. Impairment of intangibles
Included in abnormal items from continuing operations, is the
impairment of goodwill relating to the Bromor acquisition.
The impairment amounts to R112,3 million and is largely
attributable to the expected reduction in the future profit stream,
as well as an increase in the discount rate applied to the future
cash flows of the business.
9. Shares
Number of ordinary shares in 172 423 172 090 172 347
issue (000`s)
Includes 8 589 328 shares held as
treasury stock
(March 2007: 8 589 328) and 5 896
183 shares owned by staff
empowerment entities (March 2007:
5 896 183)
Weighted average number of 157 882 156 880 157 311
ordinary shares (net of treasury
and empowerment shares) on which
headline earnings and basic
earnings per share are based
(000`s)
10. Reconciliation between profit Rm Rm Rm
for the period and headline
earnings
Profit attributable to ordinary 1 090,7 981,2 2 242,8
shareholders
Adjusted for:
Net profit on sale of interest in - (3,5) (270,6)
subsidiaries and joint ventures
Loss on sale of property, plant 103,8 59,1 64,4
and equipment, including
impairment charges on intangibles
Reversal of impairment of - (2,0) (14,4)
investments, including net profit
on sale
Associates profit on sale of - - (2,4)
property, plant and equipment
Other - - (1,5)
Headline earnings for the period 1 194,5 1 034,8 2 018,3
11. Reconciliation between profit
for the period and headline
earnings - Discontinued
operations
Profit attributable to ordinary 277,7 235,4 558,1
shareholders
Adjusted for:
Loss on sale of property, plant & - 65,4 79,0
equipment, including impairment
charges on intangibles
Headline earnings for the period 277,7 300,8 637,1
Directors:
Non executive: L C van Vught (Chairman),
B L Sibiya (Deputy Chairman), D D B Band, S L Botha, R M W Dunne (British), U P
T Johnson, K D K Mokhele,
A C Nissen, G N Padayachee, A C Parker
Executive: P B Matlare (Chief Executive Officer), 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) Limited70 Marshall
Street, Johannesburg, 2001
Tiger Brands Limited
(Registration number 1944/017881/06)
(Incorporated in the Republic of South Africa)
Share code: TBS ISIN: ZAE000071080
http://www.tigerbrands.com
Date: 19/05/2008 16:37:20 Produced by the JSE SENS Department.
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