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TBS
TIIH
TBS - Tiger Brands - Group Results And Declaration Of Final Dividend For The
Year Ended 30 September 2008
Tiger Brands Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1944/017881/06)
JSE share code: TBS
ISIN: ZAE000071080
("Tiger Brands" or the "company")
GROUP RESULTS AND DECLARATION OF FINAL DIVIDEND FOR THE YEAR ENDED 30 SEPTEMBER
2008
Turnover from continuing operations +23%
Operating income before abnormal items from continuing operations +17%
Headline earnings per share from continuing operations +36%
Total dividend 786 cents per share +19%
DOMESTIC FOOD
- Most categories achieved pleasing performances which were partially offset by:
- Milling and Baking which absorbed significant raw material cost increases
- A cold and wet summer season negatively impacting profitability in Beverages
CONSUMER HEALTHCARE
- Babycare and Homecare categories deliver strong operating results
- Personal Care shows modest growth in a discretionary spend category
EXPORTS
- Deciduous fruit exports benefit from improved international prices and a
weaker Rand
- Acquisitions in East and Central Africa create platform for growth
FISHING
- The benefits of a weaker Rand and better hake fishing conditions improve
profitability in Sea Harvest
- Oceana achieves a 34% increase in operating income
INTRODUCTION
The abridged results have been prepared in accordance with International
Financial Reporting Standards, IAS 34 - Interim Financial Reporting - and the
listing requirements of the JSE Limited.
The condensed financial information has been reviewed by Ernst & Young Inc.,
whose unqualified review opinion is available for inspection at the Company`s
registered office. It is anticipated that an unqualified audit opinion will be
issued once the detailed financial statements have been finalised.
COMMENTARY
The unbundling and separate listing of the Company`s Healthcare interests has
given rise to the need to distinguish between the Company`s continuing
operations, which excludes the Healthcare performance and the total earnings
which includes the Healthcare performance.
EARNINGS FROM CONTINUING OPERATIONS
Tiger Brands achieved headline earnings per share (HEPS) from continuing
operations of 1 194,7 cents for the twelve months ended 30 September 2008,
representing a 36% increase on that achieved in the prior year. The recognition
of pension fund surpluses following regulatory approval of the relevant surplus
apportionment schemes, accounts for 6,6 percentage points of the aforesaid
increase. Excluding the impact of the pension fund surpluses in the current year
and the impact, in the prior year, of both the administrative penalty of R98,8
million relating to the Baking and Milling division and the Adcock Ingram
unbundling costs of R58,4 million, HEPS would have reflected an increase of
16,2%.
Earnings per share (EPS) from continuing operations increased by 5% to 1 121,8
cents per share.
The lower percentage improvement in EPS compared to HEPS is primarily due to the
inclusion in abnormal items, in March 2008, of an amount of R112,3 million which
related to the impairment of the carrying value of the goodwill associated with
the Beverages business. The comparative period included the gain of R270,4
million arising on the disposal of the Company`s dairy business. These two items
are excluded for the purposes of determining HEPS in the respective reporting
periods.
TOTAL EARNINGS
Total Group headline earnings for the year of R2 406,5 million, inclusive of the
results of recently unbundled Adcock Ingram for the eleven months ended August
2008, were adversely impacted by the inclusion of the administrative penalty of
R53,5 million paid in terms of the Competition Act relating to the Hospital
Products business. As a result of the unbundling of Adcock Ingram Holdings
Limited on 29 August 2008, the 2008 consolidated Group results include only
eleven months of trading of Adcock Ingram compared to a full year`s trading in
2007. For this reason, both total Group headline earnings per share and total
Group earnings per share are not directly comparable with the previous year.
Total Group headline earnings per share increased by 19% to 1 524,1 cents
compared to the prior year, whilst total Group earnings per share increased by
1% to 1 440,0 cents.
OVERVIEW OF RESULTS
The Group unbundled its Healthcare interests to shareholders on 29 August 2008
and, accordingly, the results of the Healthcare operations for the eleven months
have been reflected as a discontinued operation in the Group income statement,
in terms of International Financial Reporting Standards - IFRS 5. The prior year
discontinued operations include the profit attributable to the unbundled
Healthcare interests for the full year ended 30 September 2007, as well as the
profit attributable to the Dairy business for the seven months ended 30 April
2007. Reference in the commentary below to continuing operations relates only to
the Company`s FMCG business.
Turnover growth from continuing operations for the year of 23% is higher than
the 18% recorded at the half year. This increase reflects the impact of the
significant global price increases in food commodities and in fuel costs, giving
rise to a difficult trading environment. The improved turnover also includes the
turnover of the recently acquired African businesses, Haco Industries and
Chococam, in which the company acquired a 51,0% and 74,7% stake respectively.
Operating income for the year rose by 17%. The contraction in the operating
margin from 13,9% last year to 13,2% primarily reflects the challenges
encountered in recovering raw material cost increases in the Milling and Baking
and Value Added Meat Products operations, as well as the impact of the cool and
wet summer conditions on the Beverages business. As a consequence, these
businesses performed well below expectations. However, pleasing results were
achieved in Exports, Fishing, Consumer Healthcare and the balance of the
Domestic Food businesses.
Abnormal items decreased by R190,4 million compared to the prior year,
reflecting a net abnormal profit of R13,2 million in 2008. The prior year
largely consisted of the net gain on the disposal of the Dairy business, partly
offset by the administrative penalty of R98,8 million paid to the Competition
Authorities, relating to the Baking and Milling operations. The current year
composition of abnormal items predominantly reflects the release to income of
R127 million relating to the recognition of pension fund surpluses, offset by
the goodwill impairment of R112,3 million relating to the Company`s Beverages
business.
Net financing costs were more or less in line with the prior year,
notwithstanding the higher interest rate environment, increased capital
expenditure levels, additional share repurchases during the year, recent
acquisitions and higher levels of working capital throughout the past twelve
months.
The increase in working capital levels was primarily due to rising raw material
input costs, partially offset by lower inventory holdings in response to slowing
consumer demand. Notwithstanding the higher working capital levels, net interest
cover from continuing operations remained at a healthy level of 36,5 times
(2007: 29,3 times). Net interest cover is expected to reduce in the year ahead
due to the larger part of the above capital investment expenditure having
occurred in the latter part of 2008.
Income from associates reflects an improved contribution from Chilean-based
Empresas Carozzi.
The overall taxation charge reflects an increase of 11% compared to the increase
in profit before taxation of 8%. This is largely due to the impact of abnormal
items which decreased from a net abnormal profit of R203,6 million in 2007 to a
profit of R13,2 million in 2008. The bulk of the abnormal items in both years
have no tax effect. Excluding the effect of abnormal items and associates, the
average tax rate from continuing operations reduced from 31,6% in 2007 to 30,5%
in the year under review.
The share of income attributable to minority shareholders from continuing
operations increased from R41,9 million in the prior year to R62,9 million in
2008, reflecting the improved profitability levels in both the Deciduous Fruit
and Fishing businesses.
REVIEW OF OPERATIONS
FMCG
Strong performances were experienced in most FMCG categories where the
underlying consumer demand weakened marginally compared to the first six months
of the financial year. The trend of increasing cost push inflation accelerated
in the second half of the year across all categories.
The inflationary impact of rising raw material, labour and distribution costs
necessitated the implementation of phased price increases in order to soften the
negative impact on consumers.
DOMESTIC FOOD increased turnover and operating income by 23% and 9%
respectively.
Within the Grains segment, the lower growth in operating income relative to
turnover was primarily as a result of significant raw material cost increases
which were partially absorbed by the Milling and Baking business.
Notwithstanding the difficult trading environment, the Albany brand continued to
gain market share. The Tastic and Aunt Caroline rice brands sustained their
positive first half performance despite the global pressures on raw material
costs and freight rates.
The Oats category enjoyed the full benefits of the major upgrade of its
manufacturing facility in Maitland, which was completed in 2007. The Sorghum
beverages business continued to disappoint with both volumes and margins
remaining under pressure.
The Groceries business recorded a 19% improvement in operating income off a 16%
increase in turnover. Strong volume growth was achieved on the core KOO, All
Gold and Black Cat brands in the face of rising input cost pressures. Pasta
profitability and the supply of Fatti`s & Moni`s product normalised in the
second half of the year following the commissioning of the new state of the art
pasta manufacturing facility in Isando.
Snacks & Treats posted a pleasing growth of 20% in operating income off an
increase in turnover of 14%. Despite the pressure on consumer discretionary
spending, volumes on key brands such as Beacon, mmmMallows and Smoothies
continued to show growth.
The performance of the Beverages business was extremely disappointing with
operating income 87% below last year. Consumer demand remained sluggish during
the second half following the negative impact on the business of the cold and
wet summer in the first six month period.
Raw materials costs continued to escalate rapidly in the Value Added Meat
Products category.
A highly competitive and challenging environment resulted in the business being
unable to raise selling prices sufficiently, resulting in a compression in
operating margins.
The Out of Home business recorded a 66% improvement in operating income off a
21% increase in turnover despite a disappointing performance by the Prepared
Meals division.
Consumer Healthcare grew operating income by 18% compared to an increase in
turnover of 10%. Personal Care achieved a modest improvement in operating income
in a category where pressure on consumer discretionary spending is particularly
noticeable. In Babycare, both the Nutrition and Well Being categories recorded
pleasing results with the Purity and Elizabeth Anne`s brands continuing to drive
profitable top line growth. The Homecare category benefited from a good pest
season supported by the successful launch of new products under the Doom brand.
The Bio Classic brand, acquired in 2006, continues to contribute strongly to the
performance of the Homecare category.
EXPORTS
Exports achieved a significant improvement on the prior year, with operating
income increasing by R115,6 million to R219,8 million. Langeberg & Ashton Foods
(67% held), the Deciduous Fruit business, was the primary contributor to the
improvement in profitability as a result of higher international prices, a
weaker rand and improved volumes. The Tiger Brands Africa division has enhanced
its distribution capabilities and has benefited from heightened in-country sales
focus, particularly in Zambia and Angola.
As part of its stated strategy of seeking growth opportunities in Africa, the
Company has concluded two acquisitions during the past six months. The Company
acquired a 51,0% stake in Haco Industries (Kenya) Limited, a leading branded
personal care and consumer products company in Kenya, with effect from 1 June
2008, and a 74,7% interest in Chocolaterie Confiserie Camerounaise (Chococam), a
branded confectionery business in the Cameroon, effective 1 August 2008. These
two acquisitions provide strategic in-country presence in the East and Central
Africa regions from which Tiger Brands will continue to expand its horizons in
efforts to grow a branded business on the rest of the African continent. The two
companies performed in line with expectations for the period to 30 September
2008.
FISHING
The Company`s fishing interests comprise Sea Harvest (74% held) and Oceana Group
Limited (45% held).
Higher winter catch rates and a larger average fish size mix, combined with the
benefits of a weaker rand exchange rate, contributed to a much improved
performance by Sea Harvest after a disappointing first half. The improvement in
profitability was achieved despite significant increases in fuel and cold
storage costs.
Proportionately consolidated Oceana, which is separately listed on the JSE
Limited, reported a 46% increase in headline earnings per share for the year
ended 30 September 2008. Oceana`s results were separately published on 13
November 2008.
UNBUNDLING OF HEALTHCARE INTERESTS
Shareholders approved the unbundling of the Group`s Healthcare interests at a
general meeting held on 14 August 2008, resulting in Adcock Ingram being
separately listed on the JSE Limited on 25 August 2008. Shareholders of Tiger
Brands Limited, registered as such on the record date of 29 August 2008,
received one ordinary Adcock Ingram share for every one ordinary Tiger Brands
share held. In terms of the unbundling, the shares in Adcock Ingram were
distributed as a dividend in specie in accordance with section 90 of the
Companies Act. The distribution, which amounted to R1 551,1 million, was
effected by reducing the Tiger Brands share premium account at the record date
to nil and thereafter by reducing accumulated profits.
The results achieved by the Company`s Healthcare interests for the 11 months
ended August 2008 are disclosed under discontinued operations in line with the
requirements of International Financial Reporting Standards - IFRS 5.
OTHER CORPORATE ACTIVITIES
DISPOSAL OF SEA HARVEST
On 29 October 2008, Tiger Brands shareholders were advised that a consortium led
by Brimstone Investment Corporation Limited, which includes key members of Sea
Harvest management, submitted an offer to purchase the entire shareholding of
Sea Harvest held by Tiger Brands, being
78 753 841 ordinary shares, representing 73,16% of the total number of Sea
Harvest ordinary shares in issue. The offer was accepted by Tiger Brands
subsequent to year end and is subject to certain conditions precedent as
outlined in the joint announcement by Tiger Brands and Brimstone. The purchase
consideration for the transaction is R541 million, to be settled in cash, which
amount will escalate at a pre-determined rate from the effective date of 1
October 2008 until payment is made upon fulfillment of all conditions precedent.
SHARE REPURCHASES
During the year, a wholly-owned subsidiary acquired 1 737 430 shares in the
Company for a total consideration of R259,6 million in terms of the mandate
received from shareholders at the Company`s annual general meeting held on 19
February 2008.
POTENTIAL OFFER FOR AVI LIMITED
On 17 November 2008, Tiger Brands shareholders were advised that the Company is
considering making a cash and share offer for AVI Limited ("AVI") of R24,00 per
share, implying a total equity value for AVI of R8,0 billion. This represents a
62% premium to AVI`s share price on the last trading day prior to the
announcement as well as to the 30 day volume weighted average price. Tiger
Brands has acquired 15,85 million shares in AVI, representing approximately 4,6%
of AVI`s entire issued share capital.
The proposed offer price of R24,00 per share would be settled as to R14,40 in
cash for every 1 AVI share and 6,989 Tiger Brands shares for every 100 AVI
shares (based on an issue price of R137,35 per Tiger Brands share), allowing AVI
shareholders to realise a substantial portion of their holding in cash and still
providing the opportunity to participate in the benefits of the combined entity.
The proposed offer price will be increased by a notional interest amount based
on the publicly quoted basic prime overdraft rate of interest per annum
calculated from 31 January 2009 to 30 April 2009 and at prime plus 200 basis
points from 1 May 2009 up until the date of payment.
Tiger Brands believes the rationale for combining the two companies is
compelling and, if implemented, will benefit both Tiger Brands and AVI
shareholders. The combination will create a focused and balanced Fast Moving
Consumer Goods company and will result in a more efficient and effective
platform from which to position the combined entity for accelerated growth.
Furthermore, it will allow the combined entity to improve its global
competitiveness for the benefit of consumers, customers and other stakeholders
and will provide a stronger base to expand further into the rest of Africa.
Shareholders are referred to the announcement made on 17 November 2008 relating
to this possible offer in which shareholders were advised to exercise caution in
dealing in their respective securities.
FINAL DIVIDEND
Based on a total headline earnings figure of 1 524,1 cents per share (which
includes the Healthcare results until its unbundling in August 2008), the Board
has decided to declare a final dividend for the year of 541 cents per share.
This, together with the interim dividend of 245 cents per share, brings the
total dividend for the year to 786 cents per share (2007: 660 cents per share,
comprising interim and final capital distributions and a final dividend). The
total dividend for the year represents an increase of 19% on the total amount of
660 cents per share declared in respect of the previous year.
OUTLOOK
Tiger Brands will continue to experience difficult trading conditions in 2009,
underpinned by continued pressure on consumer spending. Notwithstanding this,
headline earnings per share is expected to show growth in real terms in the year
ahead.
ANNUAL REPORT
The annual report will be posted to certificated shareholders and those
shareholders with dematerialised shares who have requested a copy of the annual
report through their CSDP`s, during December 2008.
Salient features of the annual report will be available on the Company`s website
(www.tigerbrands.com) shortly after the annual report is posted.
For and on behalf of the Board
Lex van Vught Peter Matlare
Chairman Chief Executive Officer
24 November 2008
INCOME STATEMENT
Year ended 30 September
2008 2007
Reviewed Change Audited
Notes Rm % Rm
Continuing operations
Revenue 1 20 125,9 22 16 476,5
Turnover 1 19 888,4 23 16 209,9
Operating income before 2 2 627,9 17 2 245,7
abnormal items
Abnormal items 3 13,2 (94) 203,6
Operating income after 2 641,1 8 2 449,3
abnormal items
Interest paid (290,7) (5) (305,1)
Interest received 218,1 (4) 227,2
Dividend income 19,4 (51) 39,4
Income from associates 4 72,0 26 57,1
Profit before taxation 2 659,9 8 2 467,9
Taxation (825,6) 11 (741,4)
Profit for the year from 1 834,3 6 1 726,5
continuing operations
Discontinued operations 5
Profit after tax for the - 33,9
year - DairyBelle
business
Profit after tax for the 510,6 (4) 531,9
year - Healthcare
business
PROFIT FOR THE YEAR 2 344,9 2 2 292,3
Attributable to:
Ordinary shareholders 2 273,7 1 2 242,8
Minorities 71,2 44 49,5
2 344,9 2 2 292,3
Headline earnings per 1 524,1 19 1 283,0
ordinary share (cents)
Diluted headline earnings 1 517,0 20 1 261,7
per ordinary share
(cents)
Basic earnings per 1 440,0 1 1 425,7
ordinary share (cents)
Diluted basic earnings 1 433,3 2 1 402,0
per ordinary share
(cents)
Distributions and 786,0 (63) 660,0
dividends per ordinary
share (cents)
Capital distribution - 213,0
declared 24 May 2007
Interim dividend declared 245,0 -
Capital distribution - 290,0
declared 19 November 2007
Final dividend declared 541,0 157,0
Headline earnings per 1 194,7 36 878,0
ordinary share (cents)
for continuing operations
Diluted headline earnings 1 189,1 38 863,4
per ordinary share
(cents) for continuing
operations
Basic earnings per 1 121,8 5 1 070,9
ordinary share (cents)
for continuing operations
Diluted basic earnings 1 116,6 6 1 053,1
per ordinary share
(cents) for continuing
operations
Headline earnings per 329,5 (19) 405,0
ordinary share (cents)
for discontinued
operations
Diluted headline earnings 327,9 (18) 398,3
per ordinary share
(cents) for discontinued
operations
Basic earnings per 318,2 (10) 354,8
ordinary share (cents)
for discontinued
operations
Diluted basic earnings 316,7 (9) 348,9
per ordinary share
(cents) for discontinued
operations
BALANCE SHEET
As at 30 September
2008 2007
Reviewed Audited
Rm Rm
ASSETS
Non-current assets 5 651,0 4 528,4
Property, plant and equipment 2 369,2 1 915,7
Goodwill and other intangibles 1 713,9 1 770,7
Investments 1 478,7 727,6
Deferred taxation asset 89,2 114,4
Current assets 7 025,9 5 767,2
Inventories 3 364,7 2 488,1
Trade and other receivables 3 102,5 2 789,2
Cash and cash equivalents 558,7 489,9
Assets classified as held for sale - 1 724,8
TOTAL ASSETS 12 676,9 12 020,4
EQUITY AND LIABILITIES
Capital and reserves 5 760,7 5 785,0
Ordinary share capital and share premium 41,8 536,9
Non-distributable reserves 713,6 526,5
Accumulated profits 6 203,5 6 074,8
Tiger Brands Limited shares held by (817,7) (823,6)
subsidiary
Tiger Brands Limited shares held by (502,2) (649,5)
empowerment trusts
Share-based payments reserve 121,7 119,9
Minority interest 458,3 213,6
TOTAL EQUITY 6 219,0 5 998,6
Non-current liabilities 1 141,9 959,6
Deferred taxation liability 316,5 272,3
Provision for post-retirement medical 327,9 322,4
aid
Long-term borrowings 497,5 364,9
Current liabilities 5 316,0 3 671,0
Trade and other payables 3 546,3 2 911,9
Provisions 299,8 446,6
Provision for Sea Harvest put option 81,4 81,4
Taxation 54,6 182,5
Short-term borrowings 1 333,9 48,6
Liabilities classified as held for sale - 1 391,2
TOTAL EQUITY AND LIABILITIES 12 676,9 12 020,4
ABRIDGED CASH FLOW STATEMENT
Year ended 30 September
2008 2008 2007
Reviewed Reviewed Audited
pro forma Group Group
Continuing
Operations
Rm Rm Rm
Cash operating profit 2 973,7 4 008,3 3 745,8
Working capital changes (547,5) (914,1) (806,8)
Cash generated from operations 2 426,2 3 094,2 2 939,0
Net financing costs (72,6) (196,4) (187,6)
Dividends received 50,0 55,2 58,3
Taxation paid (944,7) (1 059,1) (904,0)
Payment of Competition Commission (98,8) (152,3) -
fine
Cash available from operations 1 360,1 1 741,6 1 905,7
Dividends and capital (1 121,2) (1 121,2) (1 000,0)
distributions paid
Net cash inflow from operating 238,9 620,4 905,7
activities
Net cash outflow from investing (811,4) (2 240,9) (783,8)
activities
Net cash (outflow)/inflow from (854,1) 458,8 (141,5)
financing activities
Net cash inflow from discontinued 225,6 - -
operation
Net decrease in cash and cash (1 201,0)* (1 161,7) (19,6)
equivalents
Cash and cash equivalents at the 475,7 436,4 456,0
beginning of the year
Cash and cash equivalents at the (725,3) (725,3) 436,6
end of the year
*Includes an increase of R904.8m on short-term borrowings regarded as cash and
cash equivalents
OTHER GROUP SALIENT FEATURES
Year ended 30 September
Reviewed
Reviewed Pro forma Audited
Year ended Year ended Year ended
30 September 30 September 30
September
2008 2007 2007
Continuing Continuing
operations operations Group
Net worth per ordinary share 3 673 3 453 3 665
(cents)
Net debt to equity (%) 20,5 (1,3) 12,1
Interest cover - net (times) 36,5 29,3 17,5
Current ratio (:1) 1,3 1,6 1,5
Capital expenditure (R million) 641,8 523,4 597,6
- replacement 298,8 292,2 302,5
- expansion 343,0 231,2 295,1
Capital commitments (R million) 435,3 434,9 534,4
- contracted 168,5 141,8 197,2
- approved 266,8 293,1 337,2
Capital commitments will be funded
from normal operating cash flows
and the utilisation of existing
borrowing facilities.
Contingent liabilities (R million)
Guarantees and contingent 31,3 28,5 41,0
liabilities
Inventories carried at net 68,9 34,7 34,7
realisable value
Carrying and fair value of 1 478,7 727,6 727,6
investments (R million)
Listed 738,0 31,8 31,8
Unlisted 268,1 264,3 264,3
Associates 472,6 431,5 431,5
STATEMENT OF CHANGES IN EQUITY
Share capital Non- Accumulated
distributable
and premium reserves profits
Rm Rm Rm
Balance at 30 September 2006 828,6 513,7 4 554,2
Profit for the year 2 242,5
Foreign currency translation (10,9)
reserve
Fair value adjustments (13,8)
recognised in equity
Total income and expenses for 828,6 489,0 6 796,7
the period
Issue of share capital and 75,3
premium
Capital distribution out of (367,0)
share premium - interim
Transfers between reserves 37,5 (37,5)
Other reserve movements
Dividends on ordinary shares (656,3)
Total dividends (715,9)
Less: Dividends on treasury and 59,6
empowerment shares
Goodwill adjustment - IFRS 3 (17,7)
Arising on changes in and (10,4)
acquisition of subsidiaries and
joint ventures
Balance at 30 September 2007 536,9 526,5 6 074,8
Profit for the year 2 273,7
Foreign currency translation (18,7)
reserve
Fair value adjustments 164,4
recognised in equity
Total income and expenses for 536,9 672,2 8 346,5
the period
Issue of share capital and 46,2
premium
Capital distribution out of (499,8)
share premium
Dividend in specie regarding (41,5) (1 450,5)
unbundling of Adcock Ingram
Holdings Limited
Minority interest arising from
unbundling of Adcock Ingram
Holdings Limited
Movement in treasury shares as a
result of unbundling of Adcock
Ingram Holdings Limited
Share buy-back
Transfers between reserves 41,4 (41,4)
Other reserve movements
Dividends on ordinary shares (636,3)
Total dividends (694,5)
Less: Dividends on treasury and 58,2
empowerment shares
Arising on changes in and (16,8)
acquisition of subsidiaries and
joint ventures
Balance at 30 September 2008 41,8 713,6 6 203,5
STATEMENT OF CHANGES IN EQUITY (CONTINUED)
Shares held Share-based Total
by sub- payment attributable
sidiaries and reserve to ordinary
empowerment shareholders
trusts
Rm Rm Rm
Balance at 30 September 2006 (1 504,0) 78,0 4 470,5
Profit for the year 2 242,5
Foreign currency translation (10,9)
reserve
Fair value adjustments (13,8)
recognised in equity
Total income and expenses for (1 504,0) 78,0 6 688,3
the period
Issue of share capital and 75,3
premium
Capital distribution out of 30,9 (336,1)
share premium - interim
Transfers between reserves -
Other reserve movements 41,9 41,9
Dividends on ordinary shares (656,3)
Total dividends (715,9)
Less: Dividends on treasury and 59,6
empowerment shares
Goodwill adjustment - IFRS 3 (17,7)
Arising on changes in and (10,4)
acquisition of subsidiaries and
joint ventures
Balance at 30 September 2007 (1 473,1) 119,9 5 785,0
Profit for the year 2 273,7
Foreign currency translation (18,7)
reserve
Fair value adjustments 164,4
recognised in equity
Total income and expenses for (1 473,1) 119,9 8 204,4
the period
Issue of share capital and 46,2
premium
Capital distribution out of 42,0 (457,8)
share premium
Dividend in specie regarding (33,3) (1 525,3)
unbundling of Adcock Ingram
Holdings Limited
Minority interest arising from -
unbundling of Adcock Ingram
Holdings Limited
Movement in treasury shares as a 370,8 370,8
result of unbundling of Adcock
Ingram Holdings Limited
Share buy-back (259,6) (259,6)
Transfers between reserves -
Other reserve movements 35,1 35,1
Dividends on ordinary shares (636,3)
Total dividends (694,5)
Less: Dividends on treasury and 58,2
empowerment shares
Arising on changes in and (16,8)
acquisition of subsidiaries and
joint ventures
Balance at 30 September 2008 (1 319,9) 121,7 5 760,7
STATEMENT OF CHANGES IN EQUITY (CONTINUED)
Minorities Total
Rm Rm
Balance at 30 September 2006 181,7 4 652,2
Profit for the year 50,0 2 292,5
Foreign currency translation (10,9)
reserve
Fair value adjustments (13,8)
recognised in equity
Total income and expenses for 231,7 6 920,0
the period
Issue of share capital and 75,3
premium
Capital distribution out of (336,1)
share premium - interim
Transfers between reserves -
Other reserve movements 41,9
Dividends on ordinary shares (18,1) (674,4)
Total dividends (18,1) (734,0)
Less: Dividends on treasury and - 59,6
empowerment shares
Goodwill adjustment - IFRS 3 - (17,7)
Arising on changes in and - (10,4)
acquisition of subsidiaries and
joint ventures
Balance at 30 September 2007 213,6 5 998,6
Profit for the year 71,2 2 344,9
Foreign currency translation (18,7)
reserve
Fair value adjustments 164,4
recognised in equity
Total income and expenses for 284,8 8 489,2
the period
Issue of share capital and 46,2
premium
Capital distribution out of (457,8)
share premium
Dividend in specie regarding (25,8) (1 551,1)
unbundling of Adcock Ingram
Holdings Limited
Minority interest arising from 138,0 138,0
unbundling of Adcock Ingram
Holdings Limited
Movement in treasury shares as a 370,8
result of unbundling of Adcock
Ingram Holdings Limited
Share buy-back (259,6)
Transfers between reserves -
Other reserve movements 35,1
Dividends on ordinary shares (23,5) (659,8)
Total dividends (23,5) (718,0)
Less: Dividends on treasury and - 58,2
empowerment shares
Arising on changes in and 84,8 68,0
acquisition of subsidiaries and
joint ventures
Balance at 30 September 2008 458,3 6 219,0
SEGMENTAL ANALYSIS
Year ended 30 September
Reviewed Audited Change
2008 2007
Rm % Rm % %
Turnover
FMCG - CONTINUING 19 888,4 87 16 209,9 83 23
OPERATIONS
Domestic Food 14 446,8 63 11 713,9 59 23
Grains 7 959,7 35 5 918,3 30 34
Milling and Baking 5 948,9 26 4 518,2 23 32
Other Grains 2 010,8 9 1 400,1 7 44
Groceries 2 223,0 10 1 911,8 10 16
Snacks and Treats 1 605,6 7 1 412,7 7 14
Beverages 1 015,6 4 1 010,2 5 1
Value Added Meat 1 340,5 6 1 211,0 6 11
Products
Out of Home 302,4 1 249,9 1 21
Consumer Healthcare 1 765,8 8 1 602,0 8 10
Personal 630,5 3 596,5 3 6
Babycare 517,0 2 450,7 2 15
Homecare 618,3 3 554,8 3 11
Exports 1 519,3 7 1 105,4 6 37
Fishing 2 298,7 10 1 923,9 10 19
OTHER INTERGROUP SALES (142,2) (1) (135,3) (1) 5
- FMCG
DISCONTINUED OPERATION 2 926,9 13 3 495,4 17 (16)
Healthcare 2 926,9 13 2 817,4 14 4
DairyBelle - - 678,0 3 (100)
TOTAL TURNOVER 22 815,3 100 19 705,3 100 16
Year ended 30 September
Reviewed Audited %
2008 2007
Rm % Rm % Change
Operating income before
abnormal items
FMCG - CONTINUING 2 627,9 74 2 245,7 69 17
OPERATIONS
Domestic Food 1 740,6 50 1 601,5 49 9
Grains 1 004,6 29 894,4 27 12
Milling and Baking 764,9 22 724,3 22 6
Other Grains 239,7 7 170,1 5 41
Groceries 372,6 11 313,9 9 19
Snacks and Treats 246,8 7 206,3 6 20
Beverages 11,1 - 83,8 3 (87)
Value Added Meat 70,0 2 81,7 3 (14)
Products
Out of Home 35,5 1 21,4 1 66
Consumer Healthcare 450,0 12 382,7 12 18
Personal 185,2 5 171,7 5 8
Babycare 150,6 4 114,8 4 31
Homecare 114,2 3 96,2 3 19
Exports 219,8 6 104,2 3 111
Fishing 249,6 7 198,0 6 26
Other (32,1) (1) (40,7) (1) 21
DISCONTINUED OPERATION 899,5 26 993,2 31 (9)
Healthcare 899,5 26 957,3 30 (8)
DairyBelle - - 35,9 1 (100)
TOTAL OPERATING INCOME 3 527,4 100 3 238,9 100 9
BEFORE ABNORMAL ITEMS
NOTES
Year ended 30 September
2008 2007
Reviewed Audited
Rm Rm
1. Revenue - continuing operations
Turnover 19 888,4 16 209,9
Interest received 218,1 227,2
Dividend income 19,4 39,4
20 125,9 16 476,5
2. Operating income - continuing operations
Operating income before abnormal items is
reflected after charging:
Cost of sales 13 241,4 10 303,4
Sales and distribution expenses 2 572,7 2 277,0
Marketing expenses 480,2 483,3
Other operating expenses 966,2 900,5
Depreciation (included in cost of sales 295,1 268,9
and other operating expenses)
3. Abnormal items - continuing operations
(Loss)/profit on sale of property, plant (124,1) 17,8
and equipment, including impairment
charges on intangibles
Net profit on sale of interest in 10,6 305,2
subsidiaries and joint ventures
Reversal of impairment of investments, 3,8 25,9
including profit on sale
Fair value adjustment - Sea Harvest put - 26,6
option
Empowerment transaction costs - 0,3
Competition Commission penalty - (98,8)
Release of provision/(provision) for 2,1 (58,4)
Healthcare unbundling costs
Recognition/(utilisation) of pension fund 127,0 (17,1)
surpluses
Other (6,2) 2,1
Abnormal profit before taxation 13,2 203,6
Taxation (39,7) (37,4)
(26,5) 166,2
Minorities (2,1) (6,7)
Abnormal loss/(profit) attributable to (28,6) 159,5
shareholders in Tiger Brands Limited
4. Income from associates - continuing
operations
Normal trading 72,0 57,1
5. Discontinued operations
5.1 Healthcare
On 25 August 2008 the unbundling of Adcock
Ingram Holdings Limited was completed.
The results of Adcock Ingram Holdings
Limited for the 11 months to 24 August
2008, which are included in the Group
results, are presented below:
Turnover 2 926,9 2 817,4
Operating income before abnormal items 899,5 957,3
Abnormal items (71,4) (53,1)
Interest paid (171,5) (117,6)
Interest received 47,7 7,7
Dividend received 5,2 -
Profit before tax from a discontinued 709,5 794,3
operation
Taxation (198,9) (262,4)
Profit for the period from a discontinued 510,6 531,9
operation
The major classes of assets and
liabilities of Adcock Ingram Holdings
Limited classified as held for sale as at
30 September 2007 are as follows:
Assets
Property, plant and equipment - 260,0
Intangibles - 234,8
Investments - 28,8
Deferred tax asset - 16,9
Cash and cash equivalents - 83,3
Inventory - 433,0
Accounts receivable - 668,0
Assets classified as held for sale - 1 724,8
Liabilities -
Interest-bearing liabilities (long- and - 886,2
short-term borrowings)
Deferred tax liability - 7,2
Provision for post-retirement medical aid - 12,8
Trade and other payables - 476,8
Taxation - 8,2
Liabilities directly associated with - 1 391,2
assets classified as held for sale
Net assets directly associated with - 333,6
disposal group
The net cash flows incurred by the
Healthcare business are as follows:
Operating 342,2 715,4
Investing (1 429,5) (95,5)
Financing 1 312,9 (825,5)
Net cash inflow/(outflow) 225,6 (205,6)
5.2 DairyBelle
DairyBelle was disposed of effective 1 May
2007. The results for the seven months
ended 30 April 2007 are presented below:
Turnover - 678,0
Operating income before abnormal items - 35,9
Profit before tax from a discontinued - 35,9
operation
Taxation - (2,0)
Profit for the period from a discontinued - 33,9
operation
6. Changes in accounting policies
The accounting policies adopted and methods of computation are
consistent with those of the previous financial year except as
follows:
The Group has adopted the following new and amended IFRS statements
and IFRIC interpretations during the year:
Adoption of the revised standards and interpretations did not have
any effect on the financial statements of the Group, other than
additional disclosures in the annual report.
- IFRS 7 - Financial Instruments: Disclosures
- IAS 1 - Amendment - presentation of Financial Statements
- IFRIC 10 - Interim Financial Reporting and Impairment
- IFRIC 11 - IFRS 2 - Group and Treasury Share Transactions
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 effective 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 performance of the
Group.
IFRIC 11 - IFRS 2 - Group and Treasury Share Transactions
The Group has adopted IFRIC Interpretation 11 effective 1 October
2007, insofar as it applies to consolidated financial statements.
This interpretation requires arrangements whereby an employee is
granted rights to an entity`s equity instruments to be accounted for
as an equity-settled scheme, even if the entity buys the instruments
from another party, or the shareholders provide the equity
instruments needed.
7. Business combinations
On 1 June 2008 the Group acquired 51,0% of Haco Industries (Kenya)
Limited ("Haco") and on 1 August 2008 the Group acquired 74,7% of
Chocolaterie Confiserie Camerounaise Sa ("Chococam"), collectively
referred to as the "African acquisitions".
The fair value of the identifiable assets and liabilities of the
African acquisitions were:
Recognised Carrying
on
acquisition value
Rm Rm
Property, plant and equipment 145,6 145,6
Trademarks 54,1 0,8
Deferred taxation asset 1,5 1,5
Deposits, cash and cash equivalents 12,1 12,1
Debtors 111,0 111,0
Inventories 126,5 126,5
Fair value of assets acquired 450,8 397,5
Creditors and provisions 94,8 94,8
Long-term and short-term borrowings 76,6 76,6
Provision for post-retirement medical aid 4,8 4,8
Taxation payable 2,3 2,3
Deferred taxation liability 14,3 14,3
Fair value of liabilities acquired 192,8 192,8
Fair value of net assets acquired 258,0 204,7
Minority interest (82,0)
Goodwill arising on acquisition 17,9
Purchase consideration 193,9
Of the total purchase consideration of R193,9 million, a payment of
R9,7 million has been deferred.
The 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 significant factors that contributed to the recognition of
goodwill include, but are not limited to, the establishment of a
presence within the Central and East African markets, with local
management and distribution capabilities to drive the Group`s product
sales into the various channels and customers that exist within those
markets.
The total cost of the acquisition was R193,9 million and was funded
out of external resources.
Cash outflow on acquisition:
Net cash acquired on acquisition (12,1)
Cash paid 184,2
Net cash outflow 172,1
From the date of acquisition, the African acquisitions have
contributed R126,6 million to revenue from continuing operations and
R7,6 million to Group operating income.
Should the African acquisitions have been included from 1 October
2007, their contributions are estimated to have been R536,2 million
to revenue and R21,4 million to profit after tax before accounting
for acquisition financing costs. Should the African acquisitions have
been included from 1 October 2007, their contributions are estimated
to have been R536.2 million to revenue and R21.4 million to profit
after tax before accounting for acquisition financing costs. The
Group`s share of the R21.4 million profit after tax before accounting
for acquisition financing costs is R15.4 million.
8. Property, plant and equipment
The additions for the year amounted to R641,8 million (2007: R597,6
million) and the net book value of disposals totalled R5,1 million
(2007: R23,6 million).
9. Impairment of intangibles
Included in abnormal items from continuing operations is the
impairment of goodwill relating to the Bromor acquisition in August
2006.
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.
10. Shares
Number of ordinary shares in issue 173 043 172 347
(000`s)
Includes 10 326 758 shares held as
treasury stock (September 2007: 8
589 328) and 5 896 140 shares owned
by staff empowerment entities
(September 2007: 5 896 183).
Weighted average number of ordinary 157 893 157 311
shares (net of treasury and
empowerment shares) on which
headline earnings and basic
earnings per share are based
(000`s)
Diluted number of shares (000`s) 158 637 159 970
11. Reconciliation between profit for Rm Rm
the year and headline earnings
Profit attributable to ordinary 2 273,7 2 242,8
shareholders
Adjusted for:
Net profit on sale of interest in (8,7) (270,6)
subsidiaries and joint ventures
Loss on sale of property, plant and 141,7 64,4
equipment, including impairment
charges on intangibles
Reversal of impairment of - (14,4)
investments, including net profit
on sale
Associates 1,4 (2,4)
Profit on sale of property, plant (1,3) (2,4)
and equipment
Impairment of property, plant and 2,7 -
equipment
Other (1,6) (1,5)
Headline earnings for the year 2 406,5 2 018,3
Reconciliation between profit for
the year and headline earnings -
discontinued operations
Profit attributable to ordinary 502,4 558,1
shareholders
Adjusted for:
Loss on sale of property, plant and 17,8 79,0
equipment, including impairment
charges on intangibles
Headline earnings for the year 520,2 637,1
DECLARATION BY TIGER BRANDS LIMITED OF A FINAL DIVIDEND IN RESPECT OF THE YEAR
ENDED 30 SEPTEMBER 2008
Notice is hereby given that a final dividend of 541 cents per ordinary share has
been declared in respect of the year ended 30 September 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, 9 January 2009
Shares commence trading ex-dividend Monday, 12 January 2009
Record date Friday, 16 January 2009
Payment of dividend Monday, 19 January 2009
Shareholders will not be permitted to dematerialise / rematerialise their shares
between Monday, 12 January 2009 and Friday, 16 January 2009, both days
inclusive.
On behalf of the Board
I W M Isdale
Group Secretary
Sandton
24 November 2008
Directors: Independent directors: L C van Vught (Chairman), B L Sibiya (Deputy
Chairman), S L Botha, R M W Dunne (British), U P T Johnson, K D K Mokhele, A C
Nissen, A C Parker
Executive directors: P B Matlare (Chief Executive Officer),
N G Brimacombe, B N Njobe, P M Roux, C F H Vaux
Company secretary: I W M Isdale
Registered office: 3010 William Nicol Drive, Bryanston, Sandton, 2021
Postal address: PO Box 78056, Sandton, 2146, South Africa
Share registrars: Computershare Investor Services (Pty) Limited, 70 Marshall
Street, Johannesburg, 2001
Postal address: PO Box 61051, Marshalltown, 2107, South Africa.
Telephone: (011) 370 5000
Sponsor: J.P. Morgan Equities Limited
Date: 25/11/2008 07:05:01 Produced by the JSE SENS Department.
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