| Tue 18 May 2010, 7:05 | | TBS - Tiger Brands Limited - Group results and capital distribution for the |
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TBS
TIIH
TBS - Tiger Brands Limited - Group results and capital distribution for the
six months ended 31 March 2010
Tiger Brands Limited
(Registration number 1944/017881/06)
(Incorporated in the Republic of South Africa)
Share code: TBS ISIN: ZAE000071080
Group results and capital distribution for the six months ended 31 March 2010
Headline earnings per share excluding once-off empowerment transaction costs
+22%
Headline earnings per share +7%
Interim cash distribution +10%
COMMENTARY
INTRODUCTION
These abridged results have been prepared in accordance with International
Financial Reporting Standards, IAS 34 - Interim Financial Reporting - and the
Listings Requirements of the JSE Limited. In terms of International Financial
Reporting Standards - IFRS 5, the prior period discontinued operations
reflect the profit attributable to the Company`s interest in Sea Harvest
which was disposed of with effect from 28 May 2009.
Tiger Brands achieved headline earnings per share (HEPS) of 668,9 cents for
the six months ended 31 March 2010, representing a 7% increase on that
achieved in the six months ended 31 March 2009. Earnings per share (EPS)
increased by 5% to 662,2 cents per share. Headline earnings of R1 056,9
million and profit attributable to ordinary shareholders of R1 046,3 million
increased by 7% and 6% respectively.
As previously advised, the Company`s BEE Phase II transaction which was
approved by shareholders on 12 October 2009, became effective on 20 October
2009. Arising from this transaction, a once-off charge amounting to R150,7
million after tax has been included in abnormal items for the six months
ended 31 March 2010. Excluding this once-off abnormal charge, HEPS and EPS
for the half year ended 31 March 2010, reflect an increase of 22% and 20%
respectively compared to that achieved in the corresponding period last year.
OVERVIEW OF RESULTS
In the prior year, the Company ceased to proportionately consolidate the
results of Oceana with effect from the end of March 2009 as, from that date,
the Company no longer had joint control of Oceana. Accordingly, Oceana`s
results are included in the comparative six month period on a proportional
consolidation basis, whereas its results for the six months to 31 March 2010
are equity accounted in line with the accounting policy for associate
companies. The Group`s share of Oceana`s results is consequently included in
HEPS and EPS in both periods. This change in the basis of accounting for
Oceana makes meaningful comparison of the Group`s operational results
difficult and hence, to assist shareholders in comparing the performance of
the Group with the same period last year, the comparative information in the
commentary below excludes Oceana`s results (which have been commented on
separately under the Group`s Fishing interests). Also refer to Note 13 of the
accompanying results for further information in this regard. The commentary
below therefore relates only to the Group`s FMCG businesses.
The trading environment for the period under review was characterised by
price deflation on the Group`s staple product categories such as wheat, rice
and maize, as well as an overall market contraction which resulted in a
general decline in sales volumes. Turnover from continuing operations
(excluding Oceana) amounted to R10,2 billion, reflecting a decrease of 2% on
the previous period.
Operating income for the half year (excluding Oceana) rose by 5% to R1 594,4
million. The Group operating margin improved from 14,6% last year to 15,7%,
benefiting from the decline in soft commodity prices. The Grains, Snacks &
Treats, Beverages and Value Added Meat Products businesses all contributed to
the operating margin improvement.
Abnormal items reflect a net abnormal charge of R187,3 million before tax for
the six month period. The current period composition of abnormal items
primarily comprises the Share-based Payment - IFRS 2 empowerment transaction
costs associated with the Company`s BEE Phase II transaction implemented in
October 2009.
Net financing costs (excluding Oceana) of R48,4 million (2009 : R165,7
million) reflect the benefits of a lower interest rate environment combined
with reduced net debt levels in the current six month period relative to the
same period last year. Group net debt rose from R377,4 million at 30
September 2009 to R888,6 million at 31 March 2010, primarily due to the
acquisition of the Crosse & Blackwell business. Net interest cover remains at
a sound level of 33,2 times.
Income from associates reflects a significant increase compared to the prior
period due to the inclusion in the current period of the Company`s share of
the after tax earnings of Oceana. A strong trading performance by Chilean-
based Empresas Carozzi was partially offset by the effect of the depreciation
of the Chilean Peso against the Rand. In addition, the prior year result
included a capital profit of R16,8 million.
The average tax rate, before abnormal items, reduced to 29,7% (2009: 32,6%).
This was primarily due to a reduced STC charge as a result of the 2009 final
dividend being distributed as a payment of capital out of share premium in
January 2010.
The negative amount attributable to non-controlling interests (minority
shareholders in subsidiaries) is mainly due to the loss incurred in the
Deciduous Fruit business, partially offset by the minorities` share of
current year income in respect of the two African subsidiaries, Haco and
Chococam.
REVIEW OF OPERATIONS
Good performances compared to the first six months of the prior year were
experienced in most of the Group`s businesses despite underlying consumer
demand having weakened.
DOMESTIC FOOD turnover decreased by 1% as food inflation declined rapidly
during the period under review.
Within the Grains segment, the strong growth in operating income relative to
the deflationary decrease in turnover was primarily as a result of falling
grain prices which benefited the Milling & Baking and Rice businesses in
particular. The Albany brand achieved volume and market share growth,
assisted by the launch of its Smooth Wholegrain Loaf. The Group`s breakfast
cereal brands such as Jungle Oats, Morvite and Ace Instant continued to gain
market share in the Ready-to-Eat porridge segment.
The Crosse & Blackwell mayonnaise business was successfully integrated into
the Groceries division and produced a good performance. Core Groceries
volumes and margins, however, were negatively impacted by abnormally high
cost increases in respect of cans and glass packaging containers. These cost
increases have been partially absorbed by the Groceries business as a result
of the tight economic conditions.
Snacks & Treats recorded an increase in operating income of 9% off a turnover
growth of 5% in a discretionary consumer spend category which remains under
pressure. Notwithstanding the cooler summer conditions, the Beverages
category achieved a 20% improvement in operating income as the business
benefited from further improvements to the business model.
The Value Added Meat Products category benefited from a reduction in raw
material prices as well as from the significant product rationalisation
initiatives undertaken in the prior year. Out of Home consumption continued
to decline, however, the Company`s Out of Home business managed to improve
operating income, which was aided by the decision to close the loss-making
pre-prepared meals business in the prior year.
HOME & PERSONAL CARE (HPC)
The performance of the HPC business was disappointing with both turnover and
operating income declining by 6%. The integration of Designer Group into
Tiger Brands` Personal Care business provided a number of challenges,
contributing to a significant decline in turnover and operating income during
the current six month period. The consolidation of the two Personal Care
businesses has now been successfully completed. The newly focussed Personal
Care business is expected to see the benefits of the integration in the
medium term.
The Purity and Elizabeth Anne`s brands performed satisfactorily in the
recessionary environment with the Baby Care category showing a 10%
improvement in operating income. Home Care experienced a poor pest season,
which contributed to a decline in turnover and operating income of 7% and 10%
respectively.
EXPORTS & INTERNATIONAL saw a decline in operating income of 84% compared to
the prior year. The Deciduous Fruit business, Langeberg & Ashton Foods,
incurred an operating loss of R30,4 million for the six months to 31 March
2010, primarily as a result of the strong Rand exchange rate and high price
increases on cans. Tiger Brands International`s enhanced distribution
capability contributed to increased sales, particularly in Zambia, Zimbabwe
and Malawi. The Company`s African subsidiaries, Haco and Chococam, performed
satisfactorily but the translation of their results was negatively impacted
by the strong Rand exchange rate.
FISHING
The Company`s remaining fishing interest comprises its investment in Oceana
Group Limited (45% held). Oceana is separately listed on the JSE Limited and
reported a 5% increase in headline earnings per share for the half year ended
31 March 2010. Oceana`s interim results were separately published on 6 May
2010. The equity accounted earnings of Oceana for the six months to 31 March
2010 amounted to R47,9 million after tax. The Group`s share of Oceana`s
turnover and operating income for the six months to 31 March 2009, which was
proportionately consolidated in that period, amounted to R736,5 million and
R79,2 million respectively.
CORPORATE ACTIVITIES
Acquisition of Crosse & Blackwell
On 1 October 2009, the Company acquired the Crosse & Blackwell mayonnaise
business from Nestle. This encompassed the full range of 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.
TIGER BRANDS PHASE II BLACK ECONOMIC EMPOWERMENT TRANSACTION
As previously announced on SENS on 12 October 2009, the Company listed a
further 16 322 520 new ordinary shares on the JSE Limited with effect from 20
October 2009 in terms of its BEE Phase II transaction. In terms of the
transaction, 9,09% of Tiger Brands` enlarged issued share capital was
allocated to the following empowerment entities:
- 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%)
The financial impact of the BEE Phase II transaction is included in note 12
of the accompanying results.
CAPITAL REDUCTION OUT OF SHARE PREMIUM IN LIEU OF INTERIM DIVIDEND
The Board has decided to declare a capital reduction distribution (in lieu of
the interim dividend) out of share premium of 270 cents per share, for the
six months ended 31 March 2010, which represents an increase of 10% on the
2009 interim dividend declared last year of 245 cents per share.
The declaration of the capital reduction distribution out of share premium is
subject to shareholder approval. A copy of the shareholder circular,
including notice of general meeting, will be posted to shareholders on or
about 1 June 2010. Shareholders are referred to the more detailed
announcement relating to the capital reduction that has been issued today.
The interim capital distribution takes cognisance of the Company`s previously
stated intention to correct, over time, the historical imbalance between the
interim and final distribution relative to headline earnings per share.
Consistent with past practice, it is intended that the Company will continue
to maintain an annual dividend/distribution cover of 2 times. In respect of
the 2010 financial year, the two times annual dividend/distribution cover
will be based on headline earnings per share before taking into account the
once-off IFRS 2 costs relating to the Company`s BEE Phase II transaction
referred to above.
OUTLOOK
On 16 February 2010 the Company advised shareholders that due to the current
market contraction, there had been an overall decline in sales volumes which
was only expected to reverse in the second half of the 2010 calendar year. In
addition, the Company advised that headline earnings per share, before taking
into account the once-off IFRS 2 charges relating to the Company`s BEE Phase
II transaction, were expected to show satisfactory growth in real terms for
the year ended 30 September 2010.
The Company continues to experience difficult trading conditions as consumer
spending remains under pressure. After due consideration, the Company expects
headline earnings per share for the year ending 30 September 2010 (excluding
the once-off IFRS 2 charges relating to the Company`s BEE Phase II
transaction) to show an increase compared to the figure of 1 407,4 cents per
share reported in respect of the previous financial year, albeit that the
rate of increase is anticipated to be at a lower level than previously
indicated to shareholders on 16 February 2010.
The following key assumptions have been considered in arriving at the above
general forecast which has been compiled using the Group`s accounting
policies as set out in Tiger Brands` 2009 annual report, including the
adoption of a number of new and amended IFRS statements and IFRIC
interpretations during 2010, as indicated in note 14 of the accompanying
results:
- Consumer spending will remain under pressure during the remaining period of
the current financial year
- Soft commodity prices will remain relatively stable at their current levels
- The Rand/Dollar exchange rate will remain fairly stable within a range of
R7,20 to R7,60 to the United States Dollar
- Interest rates will not vary materially from their current level
- The price of crude oil will remain fairly stable at around USD80 per barrel
The above outlook statement has neither been reviewed nor reported on by the
Company`s auditors.
For and on behalf of the Board
Lex van Vught Peter MatlareChairman
Chief Executive Officer
18 May 2010
TIGER BRANDS LIMITED
Non-executive directors: L C van Vught (Chairman), B L Sibiya (Deputy
Chairman), S L Botha, R M W Dunne (British), 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
CONSOLIDATED INCOME STATEMENT
Audited
Unaudited Year
Six months ended ended
31 March 31 March 30 Sept
2010 Change 2009 2009
Rm % Rm Rm
Continuing operations
Revenue 1 10 313,3 (9) 11 276,3 20 642,5
Turnover 1 10 187,4 (9) 11 154,0 20 430,4
Operating income before 2 1 594,4 - 1 601,8 3 133,4
abnormal items
Abnormal items 3 (187,3) (50,6) 343,9
Operating income after abnormal 1 407,1 (9) 1 551,2 3 477,3
items
Interest paid (163,7) 40 (273,3) (436,3)
Interest received 115,3 5 109,4 181,6
Dividend income 10,6 (18) 12,9 30,5
Income from associates 4 94,4 63 57,8 203,6
Profit before taxation 1 463,7 - 1 458,0 3 456,7
Taxation (427,3) 9 (470,3) (977,7)
Profit for the period from 1 036,4 5 987,7 2 479,0
continuing operations
Discontinued operations
Profit after tax for the period 5 - 43,1 55,0
- Sea Harvest
PROFIT FOR THE PERIOD 1 036,4 1 1 030,8 2 534,0
Attributable to:
Owners of the parent 1 046,3 6 990,1 2 485,5
Non-controlling interests (9,9) 40,7 48,5
1 036,4 1 1 030,8 2 534,0
Headline earnings per ordinary 668,9 7 627,3 1 407,4
share (cents)
Diluted headline earnings per 657,1 5 624,5 1 398,4
ordinary share (cents)
Basic earnings per ordinary 662,2 5 631,2 1 583,0
share (cents)
Diluted basic earnings per 650,5 4 628,4 1 572,9
ordinary share (cents)
Headline earnings per ordinary 668,9 10 607,1 1 382,1
share (cents) for continuing
operations
Diluted headline earnings per 657,1 9 604,5 1 373,3
ordinary share (cents) for
continuing operations
Basic earnings per ordinary 662,2 8 610,7 1 556,8
share (cents) for continuing
operations
Diluted basic earnings per 650,5 7 608,0 1 546,9
ordinary share (cents) for
continuing operations
Headline earnings per ordinary - 20,1 25,3
share (cents) for discontinued
operations
Diluted headline earnings per - 20,1 25,1
ordinary share (cents) for
discontinued operations
Basic earnings per ordinary - 20,5 26,2
share (cents) for discontinued
operations
Diluted basic earnings per - 20,4 26,0
ordinary share (cents) for
discontinued operations
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Audited
as at as at
31 March 31 March 30 Sept
2010 2009 2009
Rm Rm Rm
ASSETS
Non-current assets 6 253,0 5 482,0 5 439,8
Property, plant & equipment 2 581,4 2 045,4 2 202,7
Goodwill and other intangibles 1 988,1 1 652,5 1 669,1
Investments 1 584,7 1 710,8 1 509,8
Deferred taxation asset 98,8 73,3 58,2
Current assets 6 168,2 6 420,1 6 247,5
Inventories 3 108,2 3 455,9 3 059,9
Trade and other receivables 2 854,3 2 755,1 2 681,4
Taxation receivable 39,8 70,2 -
Cash and cash equivalents 165,9 138,9 506,2
Assets classified as held for sale - 898,6 -
TOTAL ASSETS 12 421,2 12 800,7 11 687,3
EQUITY AND LIABILITIES
Capital and reserves 7 553,8 5 924,9 6 983,7
Ordinary share capital and share premium 974,2 51,7 70,8
Non-distributable reserves 864,7 784,4 788,7
Accumulated profits 8 330,0 6 286,0 7 309,8
Tiger Brands Limited shares held by (770,3) (817,7) (817,7)
subsidiary
Tiger Brands Limited shares held by (2 (502,2) (502,2)
empowerment entities 064,1)
Share based payment reserve 219,3 122,7 134,3
Non-controlling interests 304,5 457,9 301,0
TOTAL EQUITY 7 858,3 6 382,8 7 284,7
Non-current liabilities 954,9 1 068,7 965,3
Deferred taxation liability 208,7 227,3 156,1
Provision for post-retirement medical aid 337,5 316,8 326,4
Long-term borrowings 408,7 524,6 482,8
Current liabilities 3 608,0 5 115,7 3 437,3
Trade and other payables 2 658,9 3 024,4 2 684,1
Provisions* 303,3 291,2 300,1
Provision for Sea Harvest put option - 81,4 -
Taxation - - 52,3
Short-term borrowings 645,8 1 718,7 400,8
Liabilities classified as held for sale - 233,5 -
TOTAL EQUITY AND LIABILITIES 12 421,2 12 800,7 11 687,3
*March 2009: certain accruals and provisions were reclassified due to
stricter application of IAS 37.
ABRIDGED CASH FLOW STATEMENT
Unaudited Audited
Six months ended Year ended
31 March 31 March 30 Sept
2010 2009 2009
Group Group Group
Rm Rm Rm
Cash operating profit 1 825,2 1 842,0 3 566,1
Working capital changes (212,0) (512,7) (424,7)
Cash generated from operations 1 613,2 1 329,3 3 141,4
Net financing costs (48,4) (158,3) (247,0)
Dividends received 79,0 18,1 86,7
Taxation paid (511,0) (599,6) (1 033,2)
Cash available from operations 1 132,8 589,5 1 947,9
Capital distributions and dividends (742,4) (877,2) (1 267,8)
paid
Net cash inflow/(outflow) from 390,4 (287,7) 680,1
operating activities
Net cash (outflow)/inflow from (923,0) (343,3) 132,4
investing activities
Net cash (outflow)/inflow from (6,1) 79,3 100,1
financing activities
Net decrease in cash and cash (538,7) (551,7) 912,6
equivalents
Cash and cash equivalents at the 187,2 (725,4) (725,4)
beginning of the period
Cash and cash equivalents at the end (351,5)* (1 277,1) 187,2
of the period
*Includes an increase of R97,8 million on short-term borrowings regarded as
cash and cash equivalents
STATEMENT OF COMPREHENSIVE INCOME
Unaudited Audited
Six months ended Year ended
31 March March 30 Sept
2010 2009 2009
Rm Rm Rm
Profit for the period 1 036,4 1 030,8 2 534,0
Net gain on hedge of net investment 18,4 (13,0) 16,1
Foreign currency translation (13,8) 17,2 (34,6)
adjustments
Net loss on cash flow hedges (1,1) (21,4) (22,6)
Net gain on available for sale 55,9 21,7 (24,9)
financial assets
Tax effect (9,5) (2,3) 1,0
Other comprehensive income, net of 49,9 2,2 (65,0)
tax
Other comprehensive income, net of - - (14,5)
tax for associates
Total comprehensive income for the 1 086,3 1 033,0 2 454,5
period, net of tax
Attributable to:
Owners of the parent 1 096,2 992,3 2 406,0
Non-controlling interests (9,9) 40,7 48,5
1 086,3 1 033,0 2 454,5
OTHER GROUP SALIENT FEATURES
Unaudited Audited
Six months ended Year ended
31 March 31 March 30 Sept
2010 2009 2009
Group Group Group
Rm Rm Rm
Net worth per ordinary share (cents) 4 772 3 773 4 439
Net debt to equity (%) 11,3% 33,0% 5,2%
Interest cover - net (times) 33,2 9,9 12,4
Current ratio (:1) 1,7 1,3 1,8
Capital expenditure (R million) 463,3 252,4 561,1
- replacement 184,3 129,6 320,7
- expansion 279,0 122,8 240,4
Capital commitments (R million) 818,8 497,4 1 006,1
- contracted 431,4 139,3 336,8
- approved 387,4 358,1 669,3
Capital commitments will be funded
from normal operating
cash flows and the utilisation of
existing borrowing facilities.
Contingent liabilities (R million)
Guarantees and contingent liabilities 15,2 31,3 54,6
Inventories carried at net realisable 191,9 95,3 89,6
value
Carrying and fair value of 1 584,7 1 710,8 1 509,8
investments (R million)
Listed 354,3 604,3 303,2
Unlisted 158,0 146,7 160,3
Associates (carrying value) 1 072,4 959,8 1 046,3
SEGMENTAL ANALYSIS
Unaudited six months ended Audited year ended
31 March 31 March 30 Sept
2010 2009 Change 2009
Rm % Rm % % Rm %
Turnover
FMCG - CONTINUING 10 187,4 10 417,5 90 (2) 19 699,8 94
OPERATIONS 100
Domestic Food 8 356,5 82 8 480,5 73 (1) 15 922,3 76
Grains 4 185,3 41 4 681,8 40 (11) 8 793,4 42
Milling and baking 2 905,3 29 3 158,3 27 (8) 6 266,8 30
Other Grains 1 280,0 12 1 523,5 13 (16) 2 526,6 12
Groceries 1 750,6 18 1 419,1 13 23 2 651,6 13
Snacks & Treats 919,6 9 877,2 8 5 1 746,9 8
Beverages 642,1 6 623,1 5 3 1 056,3 5
Value Added Meat 721,3 7 740,6 6 (3) 1 413,2 7
Products
Out of Home 137,6 1 138,7 1 (1) 260,9 1
HPC 972,2 10 1 030,9 9 (6) 1 883,7 9
Personal 300,2 3 344,8 3 (13) 681,2 3
Babycare 300,6 3 286,3 2 5 560,8 3
Homecare 371,4 4 399,8 4 (7) 641,7 3
Exports and 935,1 9 969,2 9 (4) 2 030,6 10
International
OTHER INTERGROUP (76,4) (63,1) (21) (136,8)
SALES - FMCG (1) (1) (1)
Fishing - Oceana* - - 736,5 6 (100) 730,6 3
TOTAL CONTINUING 10 187,4 11 154,0 96 (9) 20 430,4 97
OPERATIONS 100
DISCONTINUED
OPERATIONS -
Sea Harvest - - 465,8 4 (100) 605,5 3
TOTAL TURNOVER 10 187,4 11 619,8 (12) 21 035,9
100 100 100
Unaudited six months ended Audited year ended
31 March 31 March 30 Sept
2010 2010 Change 2009
Rm % Rm % % Rm %
Operating income
before abnormal
items
FMCG - CONTINUING 1 594,4 1 522,6 93 5 3 054,9 96
OPERATIONS 100
Domestic Food 1 399,7 88 1 131,0 69 24 2 408,3 76
Grains 781,6 49 600,9 37 30 1 414,1 44
Milling and baking 581,5 36 439,9 27 32 1 157,7 36
Other Grains 200,1 13 161,0 10 24 256,4 8
Groceries 275,4 17 250,3 15 10 471,7 15
Snacks & Treats 155,0 10 141,7 9 9 282,4 9
Beverages 80,0 5 66,4 4 20 89,5 3
Value Added Meat 77,0 5 55,7 3 38 113,1 4
Products
Out of Home 30,7 2 16,0 1 92 37,5 1
HPC 243,5 15 259,9 16 (6) 485,0 15
Personal 87,8 6 104,5 6 (16) 197,9 6
Babycare 86,8 5 79,2 5 10 166,0 5
Homecare 68,9 4 76,2 5 (10) 121,1 4
Exports and 24,6 2 155,9 9 (84) 214,0 7
International
Other (73,4) (24,2) (203) (52,4)
(5) (1) (2)
Fishing - Oceana* - - 79,2 4 (100) 78,5 2
TOTAL CONTINUING 1 594,4 1 601,8 97 - 3 133,4 98
OPERATIONS 100
DISCONTINUED
OPERATIONS -
Sea Harvest - - 47,1 3 (100) 56,8 2
TOTAL OPERATING 1 594,4 1 648,9 (3) 3 190,2
INCOME BEFORE 100 100 100
ABNORMAL ITEMS
*With effect from 1 April 2009 Oceana was reclassified from a joint venture
to an associate.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share
capital Non-dis- Other Cash flow
and tributable capital hedge
premium reserves reserves reserve
Rm Rm Rm Rm
Balance at 30 September 41,8 473,8 82,3 17,4
2008
Net profit for the period
Other comprehensive income (30,8)
for the period
41,8 473,8 82,3 (13,4)
Issue of share capital and 29,0
premium
Adjustment due to
finalisation of African
acquisitions
Transfers between reserves 154,9 2,5
Other reserve movements
Re-classification from
joint venture to associate
Dividends on ordinary
shares
Total dividends
Less: Dividends on treasury
and empowerment shares
Adjustment due to sale of
Sea Harvest
Balance at 30 September 70,8 628,7 84,8 (13,4)
2009
Net profit for the period
Other comprehensive income - (1,1)
for the period
70,8 628,7 84,8 (14,5)
Issue of share capital and 1 756,3
premium
Capital distribution out of (852,9)
share premium- final
BEE Phase II capital
contribution
Transfers between reserves 26,1
Share-based payment reserve
Balance at 31 March 2010 974,2 654,8 84,8 (14,5)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Shares
held by
Foreign subsidiary
Available- currency Accu- and
for-sale translation mulated empowerment
reserve reserve profits trusts
Rm Rm Rm Rm
Balance at 30 September 163,2 (23,1) 6 203,5 (1 319,9)
2008
Net profit for the 2 485,5
period
Other comprehensive (12,3) (36,4)
income for the period
150,9 (59,5) 8 689,0 (1 319,9)
Issue of share capital
and premium
Adjustment due to
finalisation of African
acquisitions
Transfers between (157,4)
reserves
Other reserve movements 14,8
Re-classification from 2,3
joint venture to
associate
Dividends on ordinary (1 244,8)
shares
Total dividends (1 362,7)
Less: Dividends on 117,9
treasury and empowerment
shares
Adjustment due to sale (2,8) 5,9
of Sea Harvest
Balance at 30 September 148,1 (59,5) 7 309,8 (1 319,9)
2009
Net profit for the 1 046,3
period
Other comprehensive 53,7 (2,7)
income for the period
201,8 (62,2) 8 356,1 (1 319,9)
Issue of share capital (1 625,0)
and premium
Capital distribution out 110,5
of share premium- final
BEE Phase II capital
contribution
Transfers between (26,1)
reserves
Share-based payment
reserve
Balance at 31 March 2010 201,8 (62,2) 8 330,0 (2 834,4)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Total
attribut-
Share- able to
based ordinary Non-
payment share- controlling
reserve holders interests Total
Rm Rm Rm Rm
Balance at 30 September 121,7 5 760,7 458,3 6 219,0
2008
Net profit for the period 2 485,5 48,5 2 534,0
Other comprehensive income (79.5) (79,5)
for the period
121,7 8 166,7 506,8 8 673,5
Issue of share capital and 29,0 29,0
premium
Adjustment due to - (2,5) (2,5)
finalisation of African
acquisitions
Transfers between reserves - -
Other reserve movements 28,2 43,0 43,0
Re-classification from (12,8) (10,5) (13,7) (24,2)
joint venture to associate
Dividends on ordinary (1 244,8) (14,1) (1 258,9)
shares
Total dividends (1 362,7) (23,7) (1 386,4)
Less: Dividends on treasury 117,9 9,6 127,5
and empowerment shares
Adjustment due to sale of (2,8) 0,3 (175,5) (175,2)
Sea Harvest
Balance at 30 September 134,3 6 983,7 301,0 7 284,7
2009
Net profit for the period 1 046,3 (9,9) 1 036,4
Other comprehensive income 49,9 49,9
for the period
134,3 8 079,9 291,1 8 371,0
Issue of share capital and 131,3 131,3
premium
Capital distribution out of (742,4) (742,4)
share premium- final
BEE Phase II capital - 13,4 13,4
contribution
Transfers between reserves - -
Share-based payment reserve 85,0 85,0 85,0
Balance at 31 March 2010 219,3 7 553,8 304,5 7 858,3
NOTES
Audited
Unaudited Year
Six months ended ended
31 March 31 March 30 Sept
2010 2009 2009
Rm Rm Rm
1. Revenue - continuing operations
Turnover 10 187,4 11 154,0 20 430,4
Interest received 115,3 109,4 181,6
Dividend income 10,6 12,9 30,5
10 313,3 11 276,3 20 642,5
2. Operating income - continuing
operations
Operating income before abnormal
items is reflected after
charging:
Cost of sales 6 418,3 7 459,1 13 282,5
Sales and distribution expenses 1 325,3 1 323,0 2 506,0
Marketing expenses 276,8 263,3 529,8
Other operating expenses 572,6 506,8 978,7
Depreciation (included in cost of 150,9 131,2 261,9
sales and other operating
expenses)
3. Abnormal items - continuing
operations
Loss on sale of property, plant - (10,2) (11,7)
and equipment, including
impairment charges on intangibles
Net (loss)/profit on sale of - (0,5) 62,7
interest in subsidiaries and
joint ventures
Loss on sale of investments - (4,3) (4,3)
Profit on sale of investments, - - 234,3
including reversal of impairment
Costs relating to the - (32,6) (29,8)
unsuccessful attempt to acquire
AVI Limited
Empowerment transaction costs - (185,3) - (12,0)
BEE Phase II
Release of provision for - 0,8 1,1
Healthcare unbundling costs
Release of provision for Sea - - 81,4
Harvest put option
Recognition of pension fund - 5,7 27,5
surpluses
Other (2,0) (9,5) (5,3)
Abnormal (loss)/profit before (187,3) (50,6) 343,9
taxation
Taxation 35,0 2,0 (36,7)
(152,3) (48,6) 307,2
Non-controlling interests - - -
Abnormal (loss)/profit (152,3) (48,6) 307,2
attributable to shareholders in
Tiger Brands Limited
4. Income from associates -
continuing operations
Normal trading 94,4 41,0 187,0
Abnormal item - profit on partial - 16,8 16,6
sale of interest in subsidiary
94,4 57,8 203,6
5. Discontinued Operations
5.1 Sea Harvest
On 28 May 2009 the Group disposed of its interest in Sea Harvest. The
results of Sea Harvest for the eight months to 28 May 2009, which
were included in the 2009 Group results, are presented below:
Turnover - 465,8 605,5
Operating income before abnormal - 47,1 56,8
items
Abnormal items - 1,0 2,1
Interest paid - (0,4) (0,5)
Interest received - 6,0 8,2
Dividends received - 5,2 7,5
Profit before tax from a - 58,9 74,1
discontinued operation
Taxation - (15,8) (19,1)
Profit for the period from a - 43,1 55,0
discontinued operation
Attributable to non-controlling - 10,9 13,9
interests
The major classes of assets and
liabilities of Sea Harvest
classified as held for sale as at
31 March 2009 were as follows:
Unaudited Audited
as at as at
31 March 31 March 30 Sept
2010 2009 2009
Rm Rm Rm
Assets
Property, plant and equipment - 298,0 -
Goodwill and other intangibles - 16,7 -
Investments - 26,1 -
Cash and cash equivalents - 254,0 -
Inventory - 118,1 -
Trade and other receivables - 185,7 -
Assets classified as held for - 898,6 -
sale
Liabilities
Interest-bearing liabilities - 4,9 -
(long- and short-term borrowings)
Deferred taxation liability - 57,2 -
Provision for post-retirement - 19,4 -
medical aid
Trade and other payables - 151,7 -
Taxation - 0,3 -
Liabilities directly associated - 233,5 -
with assets classified as held
for sale
Net assets directly associated - 665,1 -
with disposal group
The net cash flows generated/(incurred) by the Sea Harvest business
were as follows:
Audited
Unaudited Year
Six months ended ended
31 March 31 March 30 Sept
2010 2009 2009
Rm Rm Rm
Operating activities - 57,3 98,3
Investing activities - (34,6) (39,6)
Financing activities - (0,7) (0,2)
Net cash inflow - 22,0 58,5
6. Business combinations
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
accounted for from 1 October 2009 comprises the following:
Trademarks 250,0 - -
Land and buildings 50,0 - -
Plant and equipment 27,7 - -
Inventories 74,5 - -
Fair value of assets acquired 402,2 - -
Goodwill 72,3 - -
Purchase consideration 474,5 - -
From date of acquisition to 31 March 2010, the Crosse & Blackwell
business has contributed R372,7 million to group revenue and R35,5
million to profit after tax after accounting for acquisition
financing costs.
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.
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.
7. Property, plant & equipment
The additions for the period amounted to R463,3 million (2009: R252,4
million) and the net book value of disposals totalled R2,8 million
(2009: R2,2 million).
8. Impairment of intangibles
Included in abnormal items from continuing operations in respect of
the six month period ended 31 March 2009 and year ended 30 September
2009, 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 was attributable to the
expected reduction in the future profit stream of the business..
Unaudited Audited
Six months Year
ended ended
31 March 31 March 30 Sept
2010 2009 2009
9. Shares
Number of ordinary shares in
issue (000`s)
Includes 10 326 758 shares held 190 043 173 243 173 560
as treasury stock (Mar 2009: 10
326 758) and 21 426 860 shares
owned by staff empowerment
entities (Mar 2009: 5 896 140)
Weighted average number of 158 014 156 863 157 012
ordinary shares (net of treasury
and empowerment shares) on which
headline earnings and basic
earnings per share are based
(000`s)
Weighted average diluted number 160 844 157 554 158 022
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 for Rm Rm Rm
the period and headline earnings
Profit attributable to ordinary 1 046,3 990,1 2 485,5
shareholders
Adjusted for:
Net profit on sale of interest in - - (62,7)
subsidiaries and joint ventures
Loss on sale of property, plant & 1,9 7,4 3,5
equipment, including impairment
charges on intangibles
Profit on sale of investments - - (201,1)
Loss on sale of investments 4,3 4,3
Associates 8,7 (16,8) (16,6)
Profit on partial sale of - (16,8) (16,6)
interest in subsidiary
Goodwill impairment 8,7 - -
Other - (1,0) (3,1)
Headline earnings for the period 1 056,9 984,0 2 209,8
Reconciliation between profit for
the period and headline earnings
- discontinued operations
Profit attributable to ordinary - 32,2 41,1
shareholders
Adjusted for:
Profit on sale of property, plant - (0,6) (1,4)
& equipment, including impairment
charges on intangibles
Headline earnings for the period - 31,6 39,7
11. Capital distribution and
dividends per share
Capital distribution and 270,0 245,0 704,0
dividends per ordinary share
(cents)
Interim dividend declared - 245,0 245,0
Capital distribution declared 23 - - 459,0
November 2009
Capital distribution declared 17 270,0 - -
May 2010
12. Impact of BEE Phase II
transaction
The impact of the implementation
of the BEE Phase II transaction
is as follows:
Operating loss before abnormal (5,2) - -
items - IFRS 2 charge
Abnormal items (185,3) - (12,0)
Taxation 34,6 - -
Cash and cash equivalents 4,7 - -
Taxation receivable 22,2 - -
Deferred taxation asset 12,4 - -
Ordinary share capital and share (1,748,4) - -
premium
Tiger Brands Limited shares held 1,625,0 - -
by empowerment trusts
Share-based payment reserve (67,1) - -
Non-controlling interests (13,4) - -
Trade and other payables - - (12,0)
13. 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, which were included in the Group results,
are presented below:
Turnover - 736,5 730,6
Operating income before abnormal - 79,2 78,5
items
Abnormal items - 1,5 1,5
Interest paid - (3,7) (3,7)
Interest received - 5,5 5,5
Dividends received - 5,2 5,2
Profit before tax - 87,7 87,0
Taxation - (28,7) (28,4)
Profit for the period - 59,0 58,6
14. 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 period:
- Amendment to IFRS 2 Share-based payment - Vesting Conditions and
Cancellations
- IFRS 3 Business Combinations
- Amendment to IFRS 7 Financial Instruments: Disclosures - Improving
Disclosures about Financial Instruments
- IFRS 8 Operating Segments
- IAS 1 Presentation of Financial Statements
- IAS 23 Borrowing Costs
- IAS 27 Consolidated and Separate Financial Statements
- Amendment to IAS 32 Financial Instruments: Presentation and IAS1
Presentation of Financial Statements - Puttable Financial Instruments
and Obligations Arising on Liquidation
- Amendment to IAS 39 - Financial Instruments: Recognition and
Measurement - Eligible hedged Items
- Amendment to IAS 39 - Financial Instruments: Recognition and
Measurement - Eligible Hedged Items
- April 2009 Improvements to IFRS (improvements effective for the
current financial year)
- AC 504 IAS 19 - The limit on a defined benefit, minimum funding
requirements and their interaction in a South African pension fund
environment
Disclosures have been updated in accordance with these standards and
interpretations, and adoption thereof has not had a material impact
on the results of the group in the current period. The comparative
numbers have not been restated.
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Date: 18/05/2010 07:05:01 Produced by the JSE SENS Department.
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