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TBS
TIIH
TBS - Tiger Brands - Group Results And Capital Distribution For The Year Ended
30 September 2009
Tiger Brands
(Registration number 1944/017881/06)
(Incorporated in the Republic of South Africa)
Share code: TBS
ISIN: ZAE000071080
GROUP RESULTS AND CAPITAL DISTRIBUTION FOR THE YEAR ENDED 30 SEPTEMBER 2009
CONTINUING OPERATIONS:
- Turnover up 8% to R20,4 billion
- Operating income up 24% to R3,1 billion
- Group approves R561 million investment in new wheat mill
- Headline earnings per share from continuing operations up 20%
- Total dividend and capital distribution for the year 704 cents per share
Domestic Food
Most categories achieved pleasing performances
Rice profitability declined as consumers switched into more affordable
carbohydrate categories, benefiting the Milling business
Beverages reflects a sound recovery
Home & Personal Care (HPC)
Baby and Personal Care categories show modest growth
Homecare performance improves after a disappointing pest season in the first
half
Exports and International
Deciduous fruit exports were adversely impacted by a strong Rand exchange rate
in the second half
Central and East African acquisitions successfully bedded down during 2009
Exports into African markets continue to perform well
Fishing
Oceana delivers 18% headline earnings growth
Sea Harvest treated as a discontinued operation for the eight months prior to
disposal
Sea Harvest was disposed of on 28 May 2009.
With effect from 1 April 2009 Oceana was reclassified from a joint venture to
an associate.
Introduction
These 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.
The unbundling and separate listing of the Company`s Healthcare interests on
29 August 2008, and the disposal of the Company`s interest in Sea Harvest on
28 May 2009, have given rise for the need to distinguish between earnings from
continuing operations, which exclude both the Healthcare and Sea Harvest
results, and total Group earnings. Total Group earnings include the Healthcare
results for the eleven months ended 29 August 2008 in the comparative period
as well as the results of Sea Harvest for the eight months ended 28 May 2009
in the current period and for the full twelve months of the comparative
period.
Earnings from continuing operations
Tiger Brands achieved headline earnings per share (HEPS) from continuing
operations of 1 382,1 cents for the twelve months ended 30 September 2009,
representing a 20% increase on that achieved in the prior year.
Earnings per share (EPS) from continuing operations increased by 45% to 1
556,8 cents per share.
The higher percentage improvement in EPS compared to HEPS is primarily due to
the inclusion in 2009, of an abnormal amount of R201,1 million (relating to
the capital profit of R234,3 million arising from the disposal of the Group`s
residual shareholding in Adcock Ingram Holdings Limited, net of taxation of
R33,2 million) as well as the inclusion of a capital profit of R62,1 million
from the disposal of the Group`s 73,16% interest in Sea Harvest.
Furthermore, the comparative period included a charge of R112,3 million
relating to the impairment of the carrying value of the goodwill associated
with the Beverages business. These three items were excluded for the purposes
of determining HEPS in the respective reporting periods.
Total Group earnings
Total Group headline earnings for the year amounted to R2 209,8 million (2008:
R2 406,5 million).
On a per share basis, total Group headline earnings decreased by 8% to 1 407,4
cents compared to the prior year, whilst total Group earnings per share
increased by 10% to 1 583,0 cents. For the reasons outlined in the
introductory statement above, total Group headline earnings per share and
total Group earnings per share for the current year are not directly
comparable with the previous year.
Overview of results
As the Company no longer has joint control of Oceana, it has ceased to
proportionately consolidate its results with effect from the end of March
2009. Accordingly, although Oceana`s results are included for the full year,
the first six months to 31 March 2009 are shown on a proportional
consolidation basis, whereas the results for the second six months to 30
September 2009 have been equity accounted as an associate company. This change
in the basis of accounting for Oceana makes meaningful comparison of the
Group`s results difficult and hence, to assist shareholders in comparing the
performance of the Company with the previous year, comparative information in
the commentary below excludes Oceana`s results (which have been commented on
separately under the Group`s Fishing interests). Also see Note 11 of the
accompanying results for further information in this regard.
The commentary below therefore relates only to the Group`s FMCG businesses.
Turnover from continuing operations (excluding Oceana) amounted to R19,7
billion, reflecting an increase of 12% on the previous year. This rate of
growth is lower than the 24% increase recorded at the half year.This reflects
the impact of the significant price deflation in food commodities and a weaker
trading environment. The full year improvement in turnover has benefited from
the inclusion of the turnover of the African businesses, Haco Industries
(Kenya) and Chococam (Cameroon), in which the Company acquired a 51,0% and
74,7% stake on 1 June 2008 and 1 August 2008 respectively.
Operating income for the year (excluding Oceana) rose by 28% to R3 054,9
million. The group operating margin from continuing operations improved from
13,5% last year to 15,5%, benefiting from a recovery in selling prices of
certain raw material cost increases which were partially absorbed by the Group
in the prior year, as well as a normalised Beverages performance after this
category was adversely impacted in the prior year by cool and wet summer
conditions. The Milling & Baking, Groceries, Snacks & Treats and Value Added
Meat Products businesses produced exceptional operating performances while
Other Grains, Home & Personal Care (HPC) and Out of Home recorded single digit
operating income growth. Within Exports & International, the sustained
strength of the rand negatively impacted the performance of the Deciduous
Fruit business, but pleasing results were achieved by Haco, Chococam and the
Tiger Brands Export division.
Abnormal items (excluding Oceana) reflect a net abnormal profit of R342,4
million in 2009. The current year composition of abnormal items primarily
includes a capital profit of R234,3 million relating to the sale of the
Group`s residual shareholding in Adcock Ingram Holdings Limited; a capital
profit of R62,1 million relating to the disposal of the Group`s 73,16%
interest in Sea Harvest; the release to income of an amount of R81,4 million
relating to the Sea Harvest put option provision which is no longer required;
and the costs of R29,8 million incurred in the current year relating to the
unsuccessful attempt by Tiger Brands to acquire the entire issued share
capital of AVI Limited.
Net financing costs from continuing operations (excluding Oceana) of R256,5
million (2008: R87,7 million) rose sharply over the prior year, reflecting the
increased level of gearing of the FMCG business as a consequence of the
unbundling of Adcock Ingram, as well as the impact of higher working capital
demands, particularly during the first six months of the year.
Group net debt from continuing operations has reduced to
R377,4 million at 30 September 2009 from a peak of
R2 104,4 million at 31 March 2009. Net borrowing levels in the second half
benefited from the gross proceeds of R578,1 million received on 28 May 2009
for the disposal of Sea Harvest, as well as the net proceeds of R465,6 million
relating to the sale of the shares in Adcock Ingram Holdings Limited received
on 30 September 2009. Net interest cover for the year of 12,4 times remains at
a sound level and is likely to improve in the year ahead given the lower
levels of debt and the more favourable interest rate environment.
Income from associates reflects a significant increase compared to the prior
year. This is due to the inclusion for the first time of the Company`s share
of the after tax earnings of Oceana (for the second half as noted above), as
well as the inclusion of a capital profit of R16,6 million arising on the part
disposal of a subsidiary by Chilean-based Empresas Carozzi. A stronger trading
performance by Empresas Carozzi also contributed to the improvement.
The average tax rate, before abnormal items, increased to 32,4% (2008: 30,7%).
This was primarily due to a reduced STC charge in 2008 as a result of a
portion of the 2007 final dividend being distributed as a payment of capital
out of share premium in January 2008.
The lower share of income attributable to minorities is largely due to the
declining profitability in the Group`s Deciduous Fruit business, partially
offset by a full twelve month contribution by the two partly owned African
subsidiaries, Haco and Chococam, which were acquired during the second half of
2008.
Review of operations
FMCG
Strong performances were experienced in most FMCG categories, however,
underlying consumer demand weakened marginally in the second half of the
financial year compared to the first six months. An encouraging trend of a
reduction in the rate of inflation in the second half of the year extended
across most categories.
DOMESTIC FOOD increased turnover and operating income by 10% and 38%
respectively.
Within the Grains segment, the higher growth in operating income relative to
turnover was primarily as a result of falling soft commodity prices which
benefited the Milling & Baking business in particular. The prior year results
were also adversely affected by the substantial increases in raw material
commodity costs which were not fully recovered in selling prices. The Board
has recently approved a significant capital investment to replace and increase
the capacity of the wheat mill in Hennenman at a total cost of approximately
R561 million over the next three years. Ace instant porridge continues to be a
very successful innovation in which the Group continues to invest, both in the
form of marketing and additional production capacity. Notwithstanding the
difficult trading environment, the Albany brand recovered both volumes and
market share in the second half. The capital project to increase the capacity
of the Pietermaritzburg bakery involving leading edge technology, at a total
cost of approximately R200 million, is scheduled for commissioning in July
2010. Tastic and Aunt Caroline rice volumes were negatively impacted by some
consumers switching from rice to maize products, primarily as a result of the
impact of high raw material rice prices.
Demand for Jungle oats was particularly strong with the oats category
continuing to reap the benefits of the previously reported major upgrade to
its manufacturing facility in Maitland. The Sorghum beverages business
continued to disappoint with both volumes and margins remaining under
pressure.
The Groceries business recorded a 27% improvement in operating income off a
19% increase in turnover. Strong volume growth was achieved by Fatti`s &
Moni`s with the new state-of-the-art pasta manufacturing facility operational
for the full twelve month period compared to six months in the prior year. The
KOO, All Gold and Black Cat brands grew sales volumes, albeit at a much slower
rate than in the prior year, as consumer demand remained sluggish particularly
during the second half. The well known Crosse & Blackwell mayonnaise brand,
acquired from Nestle on 1 October 2009, will be integrated into the Groceries
business in the year ahead.
Snacks & Treats recorded a pleasing growth of 14% in operating income off an
increase in turnover of 9%. This performance was achieved despite pressure on
consumer discretionary spending, which was particularly evident in the
chocolate category.
The performance of the Beverages business reflected a marked improvement on
the prior year with operating income of R89,5 million being R78,4 million
ahead of last year. The prior year result had been negatively impacted by
unfavourable weather conditions.
HOME & PERSONAL CARE (HPC) grew operating income by 8% compared to an increase
in turnover of 7%.
Personal Care achieved a modest improvement in operating income in a category
where pressure on consumer discretionary spending is particularly noticeable.
In Baby care, both the Nutrition and Well-Being categories recorded acceptable
results, with the Purity and Elizabeth Anne`s brands feeling the impact of the
slowing economy as consumers came to grips with the tighter economic
realities. The Homecare category was negatively affected by a poor pest season
in the first six months, which impacted the performance of the Doom brand in
particular. However, the category ended the year with a 6% increase in
operating income, primarily due to an improved performance by the Jeyes
portfolio.
EXPORTS & INTERNATIONAL
Tiger Brands International, comprising the Tiger Brands Export division, the
Decidious Fruit division Langeberg & Ashton Foods (67% held), Haco Industries
(Kenya) and Chococam (Cameroon), reflected a combined decrease in operating
income of 3% for the year.
This reduction in profitability was attributable to a significant decline in
the contribution from the Deciduous Fruit business as a result of softer
global demand arising from the global financial crisis and a stronger rand
exchange rate. The Tiger Brands Export division produced an excellent result.
This was assisted by its enhanced distribution capabilities and heightened in-
country sales focus, particularly in Zambia, Angola, Mozambique and Zimbabwe.
With regard to Haco and Chococam, 2009 has been a year of bedding down the two
African acquisitions concluded during 2008. Haco has performed well during the
year under review and, in addition, made a good contribution to the
distribution of Tiger Brands` products in the East African region. The overall
performance of Chococam was satisfactory despite the business being challenged
with significant cost increases in certain major raw materials and an
underperformance in its key export market of Gabon.
Fishing
The Company`s interest in Sea Harvest was sold to a consortium led by
Brimstone Investment Corporation Limited, for R578,1 million on 28 May 2009.
The results of Sea Harvest up to the date of sale have been reflected as a
discontinued operation in the Group income statement in terms of International
Financial Reporting Standards - IFRS 5.
The Company`s remaining fishing interest is its investment in Oceana Group
Limited (45% held). Oceana is separately listed on the JSE Limited and
reported a 18% increase in headline earnings per share for the year ended 30
September 2009. Oceana`s results were separately published on 12 November
2009.
The Group`s share of Oceana`s turnover and operating income for the six months
to 31 March 2009, which have been proportionately consolidated, amounted to
R730,6 million and R78,5 million respectively.
The equity accounted earnings of Oceana for the second six months to 30
September 2009 amounted to R76,5 million.
Other corporate activities
Acquisition of Crosse & Blackwell
On 1 October 2009, the Company acquired the Crosse & Blackwell business from
Nestle. This encompassed the full range of mayonnaise brands, inventories, the
manufacturing facility located in Bellville, Cape Town and the factory staff.
The acquisition is in line with Tiger Brands` strategy of expanding into
adjacent categories with well established brands such as Crosse & Blackwell.
Tiger Brands Phase II Black Economic Empowerment Transaction
As announced on SENS on 12 October 2009, the Company listed a further 16 322
520 new shares on the JSE Limited on 20 October 2009 in terms of its Phase II
BEE transaction. The transaction was approved by shareholders at a general
meeting of the Company held on 12 October 2009. In terms of the Phase II BEE
transaction, 9,09% of Tiger Brands` enlarged issued share capital has been
allocated as follows:
Brimstone Investment Corporation Limited (1,01%)
The Tiger Brands Black Managers Trust No II (1,58%)
The Tiger Brands General Staff Share Trust (0,44%)
The Thusani Trust (1,01%)
The Tiger Brands Foundation (5,05%)
CAPITAL REDUCTION OUT OF SHARE PREMIUM IN LIEU OF FINAL DIVIDEND
At the general meeting of shareholders of the Company held on 12 October 2009,
the board of directors was given the general authority to make payments to
shareholders out of the Company`s share premium account. Pursuant to this
authority, the directors have decided to declare a capital distribution (in
lieu of the final dividend) out of share premium of 459 cents per share, for
the year ended 30 September 2009. This, together with the interim dividend of
245 cents per share, will therefore amount, in aggregate, to a total payment
to shareholders of 704 cents per share (2008: 786 cents per share, comprising
the interim and final dividend). The total payment of 704 cents per share
represents a decrease of 10% on the total dividend of 786 cents per share
declared in respect of the previous year, primarily as a result of the
unbundling of Adcock Ingram. The Tiger Brands final dividend in respect of
2008 of 541 cents per share took into account the earnings of Adcock Ingram up
to the date of the unbundling on 29 August 2008.
Shareholders are referred to the more detailed announcement relating to the
capital reduction that has been issued today.
The Company`s stated policy of paying an annual dividend/distribution, based
on a headline earnings cover of 2 times, remains in place.
Outlook
Tiger Brands expects trading conditions to remain difficult, particularly
during the first half of the new financial year as consumer spending remains
under pressure despite falling food inflation and a stronger rand exchange
rate. Headline earnings per share is, however, expected to show satisfactory
growth in real terms for the financial year ending 30 September 2010. The
above outlook has neither been reviewed nor reported on by the Company`s
auditors.
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 2009.
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
23 November 2009
Income statement
Year ended 30 September
2009 2008
Reviewed Change Audited
Notes Rm % Rm
Continuing operations
Revenue 1 20 642,5 8 19 169,7
Turnover 1 20 430,4 8 18 954,0
Operating income before 2 3 133,4 24 2 522,6
abnormal items
Abnormal items 3 343,9 4,3
Operating income after 3 477,3 38 2 526,9
abnormal items
Interest paid (436,3) 51 (289,7)
Interest received 181,6 (12) 206,6
Dividend income 30,5 235 9,1
Income from associates 4 203,6 183 72,0
Profit before taxation 3 456,7 37 2 524,9
Taxation (977,7) 24 (791,6)
Profit for the year from 2 479,0 43 1 733,3
continuing operations
Discontinued operations 5
Profit after tax for the 55,0 (46) 101,0
year - Sea Harvest
Profit after tax for the - 510,6
year - Healthcare business
PROFIT FOR THE YEAR 2 534,0 8 2 344,9
Attributable to:
Ordinary shareholders 2 485,5 9 2 273,7
Minorities 48,5 (32) 71,2
2 534,0 8 2 344,9
Headline earnings per 1 407,4 (8) 1 524,1
ordinary share (cents)
Diluted headline earnings 1 398,4 (8) 1 517,0
per ordinary share (cents)
Basic earnings per ordinary 1 583,0 10 1 440,0
share (cents)
Diluted basic earnings per 1 572,9 10 1 433,3
ordinary share (cents)
Dividends and distributions 704,0 (10) 786,0
per ordinary share (cents)
Interim dividend declared 245,0 245,0
Final dividend declared - 541,0
Capital distribution 459,0 -
declared 23 November 2009
Headline earnings per 1 382,1 20 1 149,5
ordinary share (cents) for
continuing operations
Diluted headline earnings 1 373,3 20 1 144,1
per ordinary share (cents)
for continuing operations
Basic earnings per ordinary 1 556,8 45 1 074,1
share (cents) for
continuing operations
Diluted basic earnings per 1 546,9 45 1 069,0
ordinary share (cents) for
continuing operations
Headline earnings per 25,3 (93) 374,6
ordinary share (cents) for
discontinued operations
Diluted headline earnings 25,1 (93) 372,9
per ordinary share (cents)
for discontinued operations
Basic earnings per ordinary 26,2 (93) 365,9
share (cents) for
discontinued operations
Diluted basic earnings per 26,0 (93) 364,3
ordinary share (cents) for
discontinued operations
Balance sheet
As at 30 September
2009 2008
Reviewed Audited
Rm Rm
ASSETS
Non-current assets 5 439,8 5 651,0
Property, plant and equipment 2 202,7 2 369,2
Goodwill and other intangibles 1 669,1 1 713,9
Investments 1 509,8 1 478,7
Deferred taxation asset 58,2 89,2
Current assets 6 247,5 7 025,9
Inventories 3 059,9 3 364,7
Trade and other receivables 2 681,4 3 102,5
Cash and cash equivalents 506,2 558,7
TOTAL ASSETS 11 687,3 12 676,9
EQUITY AND LIABILITIES
Capital and reserves 6 983,7 5 760,7
Ordinary share capital and share premium 70,8 41,8
Non-distributable reserves 788,7 713,6
Accumulated profits 7 309,8 6 203,5
Tiger Brands Limited shares held by (817,7) (817,7)
subsidiary
Tiger Brands Limited shares held by (502,2) (502,2)
empowerment entities
Share-based payment reserve 134,3 121,7
Minority interest 301,0 458,3
TOTAL EQUITY 7 284,7 6 219,0
Non-current liabilities 965,3 1 141,9
Deferred taxation liability 156,1 316,5
Provision for post-retirement medical aid 326,4 327,9
Long-term borrowings 482,8 497,5
Current liabilities 3 437,3 5 316,0
Trade and other payables 2 684,1 3 546,3
Provisions 300,1 299,8
Provision for Sea Harvest put option - 81,4
Taxation 52,3 54,6
Short-term borrowings 400,8 1 333,9
TOTAL EQUITY AND LIABILITIES 11 687,3 12 676,9
Abridged cash flow statement
Year ended 30 September
2009 2009 2008
Reviewed Reviewed Audited
Pro forma Group Group
Continuing
Rm Rm Rm
Cash operating profit 3 472,5 3 566,1 4 008,3
Working capital changes (470,7) (424,7) (914,1)
Cash generated from 3 001,8 3 141,4 3 094,2
operations
Net financing costs (254,7) (247,1) (196,4)
Dividends received 79,2 86,7 55,2
Taxation paid (1 007,6) (1 033,2) (1 059,1)
Dividends received from 21,9 - -
discontinued operation - Sea
Harvest
Payment of Competition - - (152,3)
Commission administrative
penalties
Cash available from 1 840,6 1 947,8 1 741,6
operations
Dividends and capital (1 258,9) (1 267,8) (1 121,2)
distributions paid
Net cash inflow from 581,7 680,0 620,4
operating activities
Net cash inflow/(outflow) 172,3 132,5 (2 240,9)
from investing activities
Net cash inflow from 100,3 100,1 458,7
financing activities
Net cash inflow from 290,2 - -
discontinued operation
Net increase/(decrease) in 1 144,5 912,6 (1 161,8)
cash and cash equivalents
Cash and cash equivalents at (957,3) (725,4) 436,4
the beginning of the year
Cash and cash equivalents at 187,2* 187,2 (725,4)
the end of the year
*Includes a decrease of R950,0 million on short-term borrowings regarded as
cash and cash equivalents.
Statement of changes in equity
Shares
held by
Share Subsidia-
ries and
Capital Non distri- Accu- Empower-
and butable mulated ment
premium reserves profits trusts
Rm Rm Rm Rm
Balance at 30 536,9 526,5 6 074,8 (1 473,1)
September 2007
Net profit for the 2 273,7
year
Fair value 164,4
adjustments
recognised in equity
Foreign currency (18,7)
translation reserve
movement
536,9 672,2 8 348,5 (1 473,1)
Issue of share 46,2
capital and premium
Capital distribution (499,8) 42,0
out of share premium
Distribution in (41,5) (1 450,5)
specie in respect of
unbundling of Adcock
Ingram Holdings
Limited
Minority interest
arising from
unbundling of Adcock
Ingram Holdings
Limited
Movement in treasury 370,8
shares as a result
of unbundling of
Adcock Ingram
Holdings Limited
Share buyback (259,6)
Transfers between 41,4 (41,4)
reserves
Other reserve
movements
Dividends on (636,3)
ordinary shares
Total dividends (694,5)
Less: Dividends on 58,2
treasury and
empowerment shares
Arising on changes (16,8)
in and acquisition
of subsidiaries and
joint ventures
Balance at 30 41,8 713,6 6 203,5 (1 319,9)
September 2008
Net profit for the 2 485,5
year
Fair value (43,1)
adjustments
recognised in equity
Foreign currency (36,4)
translation reserve
movement
41,8 634,1 8 689,0 (1 319,9)
Issue of share 29,0
capital and premium
Adjustment due to
finalisation of
African acquisitions
Transfers between 157,4 (157,4)
reserves
Other reserve 14,8
movements
Re-classification 2,3
from joint venture
to associate
Dividends on (1 244,8)
ordinary shares
Total dividends (1 362,7)
Less: Dividends on 117,9
treasury and
empowerment shares
Adjustment due to (2,8) 5,9
sale of Sea Harvest
Balance at 30 70,8 788,7 7 309,8 (1 319,9)
September 2009
Statement of changes in equity (continued)
Total
Share- Attribut-
based able to
payment ordinary Minori-
reserve shareholders ties Total
Rm Rm Rm Rm
Balance at 30 119,9 5 785,0 213,6 5 998,6
September 2007
Net profit for the 2 273,7 71,2 2 344,9
year
Fair value 164,4 164,4
adjustments
recognised in
equity
Foreign currency (18,7) (18,7)
translation reserve
movement
119,9 8 204,4 284,8 8 489,2
Issue of share 46,2 46,2
capital and premium
Capital (457,8) (457,8)
distribution out of
share premium
Distribution in (33,3) (1 525,3) (25,8) (1 551,1)
specie in respect
of unbundling of
Adcock Ingram
Holdings Limited
Minority interest - 138,0 138,0
arising from
unbundling of
Adcock Ingram
Holdings Limited
Movement in 370,8 370,8
treasury shares as
a result of
unbundling of
Adcock Ingram
Holdings Limited
Share buyback (259,6) (259,6)
Transfers between - -
reserves
Other reserve 35,1 35,1 35,1
movements
Dividends on (636,3) (23,5) (659,8)
ordinary shares
Total dividends (694,5) (23,5) (718,0)
Less: Dividends on 58,2 - 58,2
treasury and
empowerment shares
Arising on changes (16,8) 84,8 68,0
in and acquisition
of subsidiaries and
joint ventures
Balance at 30 121,7 5 760,7 458,3 6 219,0
September 2008
Net profit for the 2 485,5 48,5 2 534,0
year
Fair value (43,1) (43,1)
adjustments
recognised in
equity
Foreign currency (36,4) (36,4)
translation reserve
movement
121,7 8 166,7 506,8 8 673,5
Issue of share 29,0 29,0
capital and premium
Adjustment due to - (2,5) (2,5)
finalisation of
African
acquisitions
Transfers between - -
reserves
Other reserve 28,2 43,0 43,0
movements
Re-classification (12,8) (10,5) (13,7) (24,2)
from joint venture
to associate
Dividends on (1 244,8) (14,1) (1 258,9)
ordinary shares
Total dividends (1 362,7) (23,7) (1 386,4)
Less: Dividends on 117,9 9,6 127,5
treasury and
empowerment shares
Adjustment due to (2,8) 0,3 (175,5) 175,2
sale of Sea Harvest
Balance at 30 134,3 6 983,7 301,0 7 284,7
September 2009
Other Group salient features
Reviewed Reviewed Audited
Year Year Year
ended ended ended
30 Sept 30 Sept 30 Sept
2009 2009 2008
Continuing
operations Group Group
Net worth per ordinary share 4 439 4 439 3 673
(cents)
Net debt to equity (%) 5,2 5,2 20,5
Interest cover - net (times) 12,4 12,8 30,5
Current ratio (:1) 1,8 1,8 1,3
Capital expenditure (R million) 561,1 603,9 641,8
- replacement 320,7 363,5 298,8
- expansion 240,4 240,4 343,0
Capital commitments (R million) 1 006,1 1 006,1 435,3
- contracted 336,8 336,8 168,5
- approved 669,3 669,3 266,8
Capital commitments will be funded
from normal operating cash flows
and
the utilisation of existing
borrowing facilities.
Contingent liabilities (R million)
Guarantees and contingent 54,6 54,6 31,3
liabilities
Inventories carried at net 89,6 89,6 68,9
realisable value
Carrying and fair value of 1 509,8 1 509,8 1 478,7
investments (R million)
Listed 303,2 303,2 738,0
Unlisted 160,3 160,3 268,1
Associates (carrying value) 1 046,3 1 046,3 472,6
Segmental analysis
Year ended 30 September
2009 2008
Reviewed Audited Change
Rm % Rm % %
Turnover
FMCG - CONTINUING 19 699,8 94 17 589,7 77 12
OPERATIONS
Domestic Food 15 922,3 76 14 446,8 63 10
Grains 8 793,4 42 7 959,7 35 10
Milling and Baking 6 266,8 30 5 948,9 26 5
Other Grains 2 526,6 12 2 010,8 9 26
Groceries 2 651,6 13 2 223,0 10 19
Snacks and Treats 1 746,9 8 1 605,6 7 9
Beverages 1 056,3 5 1 015,6 4 4
Value Added Meat Products 1 413,2 7 1 340,5 6 5
Out of Home 260,9 1 302,4 1 (14)
HPC 1 883,7 9 1 765,8 8 7
Personal 681,2 3 630,5 3 8
Babycare 560,8 3 517,0 2 8
Homecare 641,7 3 618,3 3 4
Exports and International 2 030,6 10 1 519,3 7 34
OTHER INTERGROUP SALES - (136,8) (1) (142,2) (1) (4)
FMCG
Fishing - Oceana* 730,6 3 1 364,3 6 (46)
TOTAL CONTINUING 20 430,4 18 954,0 8
OPERATIONS
DISCONTINUED OPERATIONS 605,5 3 3 861,3 17 (84)
Sea Harvest 605,5 3 934,4 4 (35)
Healthcare - - 2 926,9 13 (100)
TOTAL TURNOVER 21 035,9 100 22 815,3 100 (8)
*With effect from 1 April 2009 Oceana was reclassified from a joint venture to
an associate.
Year ended 30 September
2009 2008
Reviewed Audited Change
Rm % Rm % %
Operating income before
abnormal items
FMCG - CONTINUING 3 054,9 96 2 378,3 67 28
OPERATIONS
Domestic Food 2 408,3 76 1 740,6 50 38
Grains 1 414,1 44 1 004,6 29 41
Milling and Baking 1 157,7 36 764,9 22 51
Other Grains 256,4 8 239,7 7 7
Groceries 471,7 15 372,6 11 27
Snacks and Treats 282,4 9 246,8 7 14
Beverages 89,5 3 11,1 - 706
Value Added Meat Products 113,1 4 70,0 2 62
Out of Home 37,5 1 35,5 1 6
HPC 485,0 15 450,0 12 8
Personal 197,9 6 185,2 5 7
Babycare 166,0 5 150,6 4 10
Homecare 121,1 4 114,2 3 6
Exports and International 214,0 7 219,8 6 (3)
Other (52,4) (2) (32,1) (1) (63)
Fishing - Oceana* 78,5 2 144,3 4 (46)
TOTAL CONTINUING 3 133,4 2 522,6 24
OPERATIONS
DISCONTINUED OPERATIONS 56,8 2 1 004,8 29 (94)
Sea Harvest 56,8 2 105,3 3 (46)
Healthcare - - 899,5 26 (100)
TOTAL OPERATING INCOME
BEFORE
ABNORMAL ITEMS 3 190,2 100 3 527,4 100 (10)
*With effect from 1 April 2009 Oceana was reclassified from a joint venture to
an associate.
Notes
Year ended 30 September
2009 2008
Reviewed Audited
Rm Rm
1. Revenue - continuing operations
Turnover 20 430,4 18 954,0
Interest received 181,6 206,6
Dividend income 30,5 9,1
20 642,5 19 169,7
2. Operating income - continuing
operations
Operating income before abnormal
items is reflected after charging:
Cost of sales 13 282,5 12 574,6
Sales and distribution expenses 2 506,0 2 471,7
Marketing expenses 529,8 472,7
Other operating expenses 978,7 912,4
Depreciation (included in cost of 261,9 245,5
sales and other operating expenses)
3. Abnormal items - continuing
operations
Loss on sale of property, plant and (11,7) (129,5)
equipment, including impairment
charges on intangibles
Net profit on sale of interest in 62,7 10,6
subsidiaries and joint ventures
Loss on sale of investments (4,3) -
Profit on sale of investments, 234,3 3,8
including reversal of impairment
Costs relating to the unsuccessful (29,8) -
attempt to acquire AVI Limited
Empowerment transaction costs (12,0) -
Release of provision for Sea Harvest 81,4 -
put option
Release of provision for Healthcare 1,1 2,1
unbundling costs
Recognition of pension fund surpluses 27,5 127,0
Other (5,3) (9,7)
Abnormal profit before taxation 343,9 4,3
Taxation (36,7) (39,7)
307,2 (35,4)
Minorities - -
Abnormal profit attributable to 307,2 (35,4)
shareholders in Tiger Brands Limited
4. Income from associates - continuing
operations
Normal trading 187,0 72,0
Abnormal item - profit on partial 16,6 -
sale of interest in subsidiary
203,6 72,0
5. Discontinued operations
5.1 Sea Harvest
On 28 May 2009 the Group disposed of Sea Harvest. The results
of Sea Harvest for the eight months to 28 May 2009 (2008: 12
months to 30 September 2008), which are included in the Group
results, are presented below:
Turnover 605,5 934,4
Operating income before abnormal 56,8 105,3
items
Abnormal items 2,1 8,9
Interest paid (0,5) (1,0)
Interest received 8,2 11,5
Dividends received 7,5 10,3
Profit before tax from a discontinued 74,1 135,0
operation
Taxation (19,1) (34,0)
Profit for the year from a 55,0 101,0
discontinued operation
Attributable to minorities 13,9 25,6
The net cash flows
generated/(incurred) by the Sea
Harvest business are as follows:
Operating activities 98,3 47,1
Investing activities (39,6) (43,0)
Financing activities (0,2) (0,7)
Net cash inflow 58,5 3,4
The major classes of assets and liabilities of Sea Harvest
were not classified as held for sale as at 30 September 2008
as the decision taken to discontinue the operation was made
during the current financial year.
Assets
Property, plant and equipment - 288,0
Goodwill and other intangibles - 17,7
Investments - 22,0
Deferred taxation asset - 0,6
Cash and cash equivalents - 231,9
Inventory - 151,3
Trade and other receivables - 200,3
Assets classified as held for sale - 911,8
Liabilities
Interest-bearing liabilities (long- - 4,7
and short-term borrowings)
Deferred tax liability - 57,8
Provision for post-retirement medical - 19,2
aid
Trade and other payables - 171,9
Taxation - 10,0
Liabilities directly associated with - 263,6
assets classified as held for sale
Net assets directly associated with - 648,2
disposal group
5.2 Healthcare interests
On 25 August 2008 the unbundling of Adcock Ingram Holdings
Ltd was completed.
The results of Adcock Ingram Holdings Ltd for the 11 months
to 24 August 2008, which were included in the 2008 Group
results, are presented below:
Turnover - 2 926,9
Operating income before abnormal - 899,5
items
Abnormal items - (71,4)
Interest paid - (171,5)
Interest received - 47,7
Dividends received - 5,2
Profit before tax from a discontinued - 709,5
operation
Taxation - (198,9)
Profit for the year from a - 510,6
discontinued operation
The net cash flows
generated/(incurred) by the
Healthcare business are as follows:
Operating activities - 342,2
Investing activities - (1 429,5)
Financing activities - 1 312,9
Net cash inflow - 225,6
6. Business combinations
2009
6.1 Crosse & Blackwell
On 1 October 2009 Tiger Brands acquired the Crosse &
Blackwell mayonnaise business from Nestle. The sale included
both the mayonnaise production plant and staff in Bellville,
Cape Town, as well as inventory and intangible assets.
The purchase consideration to be accounted for from
1 October 2009 comprises the following:
Rm
Trademarks 250,0
Land and buildings 50,0
Plant and equipment 37,2
Inventories 74,5
Fair value of assets acquired 411,7
Goodwill 62,8
Purchase consideration 474,5
Apart from plant & equipment and inventories, where the
carrying value approximated fair value, the carrying values
of the remaining assets at the date of acquisition, being
trademarks and land and buildings, are not disclosed as these
values were not made available to the company during the sale
transaction.
Since the effective date of the transaction was subsequent to
30 September 2009, the acquisition has not contributed any
revenue or operating income to the 2009 group results.
Goodwill represents the difference between the purchase
consideration and the fair value of the net assets acquired
as there are no further separately identifiable intangible
assets.
2008
6.2 African acquisitions
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 functional currency of Haco is the Kenyan Shilling,
whilst Chococam is the Cameroon Franc.
The fair value of the identifiable assets and liabilities of
the African acquisitions were:
Re- Pre- Carrying
stated viously value
Recog- Recog- at date
nised nised of
on acqui- on acqui- Acqui-
sition sition sition
Rm Rm Rm
Property, plant and equipment 147,3 145,6 145,6
Trademarks 53,3 54,1 0,8
Deferred taxation asset 1,5 1,5 1,5
Deposits, cash and cash 12,1 12,1 12,1
equivalents
Debtors 111,0 111,0 111,0
Inventories 116,3 126,5 126,5
Fair value of assets acquired 441,5 450,8 397,5
Creditors and provisions 98,4 94,8 94,8
Long-term and short-term 76,6 76,6 76,6
borrowings
Provision for post-retirement 4,8 4,8 4,8
medical aid
Taxation payable 2,3 2,3 2,3
Deferred taxation liability 14,3 14,3 14,3
Fair value of liabilities 196,4 192,8 192,8
acquired
Fair value of net assets 245,1 258,0 204,7
acquired
Minority interest (79,5) (82,0)
Goodwill arising on 32,6 17,9
acquisition
Purchase consideration 198,2 193,9
During the course of 2009, certain adjustments were made to
the amounts recognised on acquisition, as permitted by IFRS3
- Business Combinations.
The effect of the adjustments resulted in a reclassification
between trademarks and property, plant and equipment, as well
as a restatement of property, inventories and creditors and a
corresponding adjustment to goodwill.
In addition, the deferred purchase price was finalised
resulting in a final adjustment to goodwill and the purchase
consideration.
The total cost of the acquisition was R198,2 million (2008:
R193,9 million) and was funded out of external resources.
Cash outflow on acquisition:
Net cash acquired on (12,1) (12,1)
acquisition
Cash paid 198,2 184,2
Net cash outflow 186,1 172,1
From the date of acquisition to September 2008, the African
acquisitions 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 to 30 September 2008, 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 was R15,4 million.
The significant factors that contributed to the recognition
of goodwill included, but were 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.
7. Property, plant and equipment
The additions for the year amounted to R561,1 million (2008:
R641,8 million) and the net book value of disposals totalled
R4,0 million (2008: R5,4 million).
8. Impairment of intangibles
Included in abnormal items from continuing operations is an
amount of R4,0 million relating to the impairment of goodwill
and trademarks in respect of the pre-prepared meals division
of the Out Of Home business. The impairment is attributable
to the expected reduction in the future profit stream of the
business.
Included in the September 2008 abnormal items from continuing
operations was the impairment of goodwill relating to the
Bromor Foods acquisition in August 2006. The impairment
amounted to R112,3 million and was 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.
Year ended 30 September
2009 2008
Reviewed Audited
9. Shares
Number of ordinary shares in 173 560 173 043
issue (000`s)
Includes 10 326 758 (2008:10
326 758) shares held as
treasury stock and 5 896 140
(2008: 5 896 140) shares owned
by staff empowerment entities
Weighted average number of 157 012 157 893
ordinary shares (net of
treasury and empowerment
shares) on which headline
earnings and basic earnings
per share are based (000`s)
Weighted average diluted 158 022 158 637
number of ordinary shares (net
of treasury and empowerment
shares) on which diluted
headline earnings and basic
earnings per share are based
(000`s)
10. Reconciliation between profit Rm Rm
for the year and headline
earnings
Profit attributable to 2 485,5 2 273,7
ordinary shareholders
Adjusted for:
Net profit on sale of interest (62,7) (8,7)
in subsidiaries and joint
ventures
Loss on sale of property, 3,5 141,7
plant and equipment, including
impairment charges on
intangibles
Profit on sale of investments (201,1) -
Loss on sale of investments 4,3 -
Associates (16,6) 1,4
Profit on sale of property, - (1,3)
plant and equipment
Profit on partial sale of (16,6) -
interest in subsidiary
Impairment of property, plant - 2,7
and equipment
Other (3,1) (1,6)
Headline earnings for the year 2 209,8 2 406,5
Reconciliation between profit
for the year and headline
earnings - discontinued
operations
Profit attributable to 41,1 577,8
ordinary shareholders
Adjusted for:
Profit on sale of property, (1,4) 17,2
plant and equipment, including
impairment charges on
intangibles
Net profit on sale of interest - (3,5)
in subsidiaries
Headline earnings for the year 39,7 591,5
11. Oceana
On 1 April 2009 the Group ceased proportional consolidation
of Oceana and commenced equity accounting. The results of
Oceana for the six months to 31 March 2009
(2008: 12 months to 30 September 2008), which are included in
the Group results, are presented below:
Turnover 730,6 1,364,3
Operating income before 78,5 144,3
abnormal items
Abnormal items 1,5 5,3
Interest paid (3,7) (3,0)
Interest received 5,5 7,6
Dividends received 5,2 8,7
Profit before tax 87,0 162,9
Taxation (28,4) (47,3)
Profit for the year 58,6 115,6
12. Changes in accounting policies
The accounting policies adopted and methods of computation
are consistent with those of the previous financial year
except for the adoption of the following new and amended
IFRS and IFRIC interpretations during the year:
- IFRIC 12 Service Concession
Arrangements
- IFRIC 13 Customer Loyalty Programmes
- IFRIC 16 Hedges of a Net Investment in a Foreign Operation
- IAS 39 Amended Financial Instruments: Recognition and
Measurement - Reclassification of financial assets
- IFRS 7 Amended Financial Instruments: Disclosures -
Reclassification of financial assets
The application of these standards and interpretations did
not have a significant impact on the Group`s reported results
and cash flows for the year ended 30 September 2009 and the
financial position at 30 September 2009.
Non-executive 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 Parker, P M Roux
Executive directors: P B Matlare (Chief Executive Officer),
N G Brimacombe, M Fleming, B N Njobe, 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
www.tigerbrands.com
Date:
24 November 2009
Sponsor:
J.P. Morgan Equities Limited
Date: 24/11/2009 07:05:01 Produced by the JSE SENS Department.
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