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TBS
TIIH
TBS - Tiger Brands - Preliminary annual results and declaration of capital
reduction and final dividend for the year ended 30 September 2010
Tiger Brands Limited
Registration number 1944/017881/06)
(Incorporated in the Republic of South Africa)
Share code: TBS
ISIN: ZAE000071080
Preliminary annual results and declaration of capital reduction and final
dividend for the year ended 30 September 2010
CONTINUING OPERATIONS: FMCG
Turnover down 2% to R19,3 billion
Operating income down 1% to R3,0 billion
Total dividend and capital distribution for the year up 6% to 746 cents per
share
Headline earnings per share up 6% excluding once-off empowerment costs
Cash available from operations up 35% to R2,6 billion
INTRODUCTION
These abridged results for the year ended 30 September 2010 have been prepared
in accordance with International Financial Reporting Standards, IAS 34 - Interim
Financial Reporting - and the Listings 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.
Tiger Brands achieved headline earnings per share (HEPS) of 1 393,0 cents for
the year ended 30 September 2010, representing a decline of 1% on that achieved
in the prior year.
Earnings per share (EPS) declined by 12% to 1 385,9 cents per share. Headline
earnings for the year amounted to R2 203,5 million (2009: R2 209,8 million).
As advised previously to shareholders, Tiger Brands implemented its BEE Phase II
transaction in October 2009. This transaction gave rise to a once-off charge
amounting to R152,7 million after tax, which is disclosed as an abnormal item in
the income statement for the year ended 30 September 2010. Excluding this
amount, HEPS reflected an increase of 6% compared to that achieved in the
previous financial year.
OVERVIEW OF RESULTS
Turnover and operating income from continuing operations (excluding Oceana)
declined by 2% and 1% respectively. The decline in turnover was driven
primarily by the impact of the significant price deflation in food commodities
and a weaker trading environment.
Oceana`s results are included as Income from Associates for the financial year
ended 30 September 2010, whereas in the comparative period, Oceana`s results
were proportionately consolidated for the first six months and reflected as
Income from Associates in the second six months. The Group`s share of Oceana`s
results is consequently included in HEPS and EPS in both years for the full 12
month periods. This change in the basis of accounting for Oceana makes
meaningful comparison of the Group`s results at both a revenue and operating
income level difficult and, to assist shareholders in comparing the performance
of the Group with the previous year, comparative information in the commentary
excludes Oceana`s results (which have been commented on separately under the
Group`s Fishing interests). Also see Note 14 of the accompanying results for
further information in this regard. The operational commentary below therefore
relates only to the Group`s FMCG businesses.
The Group operating margin from continuing operations improved from 15,5% last
year to 15,6%, benefiting from lower soft commodity prices during 2010. The
Milling & Baking, Other Grains, Beverages, Out of Home and Value Added Meat
Products businesses produced good operating performances while Groceries, Snacks
& Treats and Personal Care recorded disappointing declines in operating income.
Within Exports & International, the sustained strength of the Rand negatively
impacted the performance of the Deciduous Fruit business, as well as the
translation of the results of Haco (Kenya) and Chococam (Cameroon) into Rands.
The positive momentum of the Tiger Brands Export division continued, resulting
in a pleasing performance for the year.
Abnormal items reflect a net abnormal charge of R187,6 million before tax in
2010. The current year composition of abnormal items primarily comprises the
IFRS 2 empowerment transaction costs associated with the Company`s BEE Phase II
transaction implemented in October 2009.
Net financing costs (excluding Oceana) of R82,2 million (2009: R256,5 million)
fell sharply from the prior year, reflecting the benefits of a lower interest
rate environment combined with reduced debt levels in the current year. The
strong cash flows generated during the second half of the year enabled the group
to turn a net debt position of R888,6 million at 31 March 2010, into a net cash
position of R41,5 million as at 30 September 2010.
Income from associates reflects a significant increase compared to the prior
year due to the inclusion in 2010 of the full 12 months of the Company`s share
of the after tax earnings of Oceana (whereas the prior year only included six
months as noted above). A strong trading performance by Empresas Carozzi was
partially offset by the effect of the strengthening of the Rand against the
Chilean Peso. In addition, the prior year results included a capital profit of
R16,6 million arising on the part disposal by Empresas Carozzi of a subsidiary.
The average tax rate, before abnormal items, decreased to 29,7% (2009: 32,3%).
This was primarily due to a reduced STC charge in 2010 as a result of
distributions to shareholders being made during the year by way of a reduction
of capital out of share premium, in lieu of the 2009 final dividend and the 2010
interim dividend. The net loss attributable to non-controlling interests
(minority shareholders in subsidiaries) is largely due to the loss incurred in
the Group`s 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
FMCG
Mixed performances were evident within the FMCG categories as consumer demand
remained weak.
DOMESTIC FOOD increased operating income by 11%, while turnover declined by 1%
primarily due to food deflation.
Within the Grains segment, the strong growth in operating income compared to the
deflationary decrease in turnover was primarily as a result of low soft
commodity prices which benefited the Milling & Baking and Rice businesses in
particular.
Despite the difficult trading environment, the Albany brand ended the year with
a marginal growth in volumes, assisted by the launch of its Smooth Wholegrain
Loaf. The capital project to increase the capacity of the Pietermaritzburg
bakery, which involved the use of leading edge technology, was successfully
completed at a cost of R187 million and commissioned during September 2010. The
Board has approved an upgrade of the Durban bakery in order to meet consumer
demand and address capacity constraints, at a total cost of approximately R109
million. This upgrade will be completed during 2011. Tastic and Aunt Caroline
rice volumes responded positively to lower selling prices which resulted from
the lower cost of imported rice due to the stronger Rand. The Jungle Oats,
Morvite and Ace Instant brands performed well, growing volumes and market share
in the ready-to-eat porridge segment.
The newly acquired Crosse & Blackwell mayonnaise business was successfully
integrated into the Groceries division and produced an excellent result for the
year. The core Groceries business saw some recovery in volumes during the second
half of the year as a consequence of lower selling prices in an effort to defend
market shares in key categories. The sustained high cost of cans and glass
packaging containers continued to place pressure on margins in the Groceries
categories. The performance of the Snacks & Treats business was disappointing
with operating income declining by 17%, primarily due to pressure on consumer
discretionary spending. In addition, a fire at the Gums and Jellies
manufacturing unit adversely impacted sales and service levels during the second
half of the year. The Beverages category achieved volume growth on its core
product offerings which, combined with factory and logistics efficiencies,
lifted operating income by 25% to R112,3 million.
The Value Added Meat Products business benefited from increased marketing
support as well as a reduction in raw material prices. The Group`s Out of Home
business managed to improve operating income, which was assisted by the
contribution of the Crosse & Blackwell brand as well as the decision to close
the loss-making pre-prepared meals business in the prior year.
HOME & PERSONAL CARE (HPC) produced a disappointing result, with both turnover
and operating income declining by 5%.
A number of unexpected challenges were experienced with the integration of the
Designer Group into Tiger Brands` Personal Care business. This contributed
significantly to Personal Care`s decline in turnover and operating income for
the year. The rationalisation benefits of the integration have subsequently
started to materialise and these should have a positive impact in the 2011
financial year.
Purity - the Babycare motherbrand - continued to meet the needs of both mothers
and babies with an expanded product range. The Homecare category did well to
maintain operating income in line with the prior year after being adversely
affected by a poor pest season during the first six months of the year.
EXPORTS & INTERNATIONAL recorded a decline in operating income of 88% compared
to the prior year.
The Deciduous Fruit business, Langeberg & Ashton Foods (67% held), incurred a
significant operating loss of R84,6 million (2009: R118,8 million operating
profit) for the year primarily due to the strong rand exchange rate and the
impact of significant price increases on cans in 2010. The Tiger Brands Export
division delivered an outstanding result as the Group`s expansion programme into
Africa continued its momentum. The results of the African subsidiaries, Haco and
Chococam, were negatively affected, on translation into Rand, as a result of the
strengthening of the rand exchange rate throughout the year. Haco performed well
during the year under review and continued to benefit from the expansion of its
distribution of Tiger Brands` products in the East African region. The overall
performance of Chococam was satisfactory, with good progress being made on the
strengthening of the brand propositions and in the improvement of operational
efficiencies.
FISHING
Following the disposal of Sea Harvest in the prior year, 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 13% increase in
headline earnings per share for the year ended 30 September 2010. Oceana`s
results were separately published on 11 November 2010.
The equity accounted earnings of Oceana for the year ended 30 September 2010
amounted to R132,1 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, amounted to R730,6 million and R78,5 million respectively. In
addition, the equity accounted earnings of Oceana for the second six months
ended 30 September 2009 amounted to R76,5 million.
OTHER CORPORATE ACTIVITIES
ACQUISITION OF CROSSE & BLACKWELL
On 1 October 2009, the Group 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.
INTERNATIONAL EXPANSION: AFRICA
As one of its key strategic thrusts, the Company continues to seek growth
opportunities on the rest of the African continent. Good progress has been made
in this regard with the recent conclusion of two acquisition agreements.
An agreement has been signed with the East African Group of Companies of
Ethiopia relating to the formation of a new food and HPC joint venture which
will operate in the Ethiopian market. Ethiopia, which has a population of
approximately 85 million, has experienced high GDP growth rates for a number of
years. Most categories in the packaged consumer goods sector are enjoying good
growth, stimulated by the fast growing economy. The principal activities of the
joint venture will comprise the manufacture and marketing of various home and
personal care products, biscuits, flour and pasta, which categories currently
form part of the East African Group`s existing operations. The East African
Group is the largest manufacturer of detergents in Ethiopia and this business
will also form part of the joint venture.
The shareholding in the new company will be held as to 51% by Tiger Brands and
the balance of 49% by East African Group (Eth) Plc and its associate companies.
Tiger Brands is very pleased to be associated with a highly respected Ethiopian
partner.
The second agreement relates to the purchase of the entire issued share capital
of Deli Foods Nigeria Limited, a company engaged in the manufacturing and
marketing of biscuits for the Nigerian market. With its large population and a
strong and growing consumer market, Nigeria offers excellent growth
opportunities for FMCG companies. The Deli Foods acquisition is therefore seen
as a first step in entering this important market.
Both acquisitions are subject to the fulfilment of various conditions precedent,
including regulatory approvals where appropriate, and are expected to be
completed early in the new calendar year.
These acquisitions are expected to generate a combined annualised turnover of
approximately R500 million in the first year. The acquisitions will have no
material impact on the Company`s headline earnings or net asset value per share
in the short term.
In addition, an agreement in principle has been reached between UAC of Nigeria
Plc (UAC) and Tiger Brands in terms of which Tiger Brands would acquire a 49%
interest in the Nigerian food and beverage interests of UAC. The acquisition
specifically excludes the franchised quick service restaurants of UAC.UAC is a
well respected company which is listed on the Nigerian Stock Exchange. The
company has been a leading private enterprise champion in the economic
advancement of Nigeria and holds food interests primarily in the branded
savoury, snacks, dairy and beverage categories.
The agreement in principle is subject to approval by UAC shareholders at an
Extraordinary General Meeting of the company, scheduled to take place in
December 2010. Thereafter, the proposed transaction will be subject to the
necessary Nigerian and South African regulatory approvals as well as the
conclusion of appropriate agreements relevant to the joint venture arrangement.
Tiger Brands believes that the proposed transaction with UAC will provide the
two partners with a sound strategic platform in Nigeria, which will benefit from
the respective parties` experience, skill and expertise in the manufacture,
marketing and distribution of branded food and beverage products in emerging
markets.
The affected UAC businesses reported a total turnover for the financial year
ended 31 December 2009 of Naira 9.8 billion which equates to approximately R 477
million, based on the current exchange rate.
In addition to the above transactions, the Company is currently pursuing other
opportunities on the continent, which if successful, will further increase its
manufacturing and distribution footprint outside of South Africa.
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 BEE Phase II
transaction. This represented 9,09% of Tiger Brands` enlarged issued share
capital at the time and has assisted the Company in achieving a level 3 BEE
rating in terms of the BEE codes as at 30 September 2010.
FINAL DISTRIBUTION INCORPORATING A CAPITAL REDUCTION OUT OF SHARE PREMIUM AND AN
ORDINARY DIVIDEND OUT OF DISTRIBUTABLE RESERVES
The Board has decided to declare a final distribution of 476 cents per share for
the year ended 30 September 2010, which will comprise a capital reduction out of
share premium of 235 cents per share and an ordinary dividend of 241 cents per
share. The general authority to make payments to shareholders out of the
Company`s share premium account was granted by shareholders on 21 June 2010.
These payments, together with the interim capital reduction of 270 cents per
share, will therefore amount, in aggregate, to a total payment to shareholders
of 746 cents per share (2009: 704 cents per share). The total payment of 746
cents per share represents an increase of 6% on the total payment of 704 cents
per share declared in respect of the previous year.
Shareholders are referred to the more detailed announcement relating to the
capital reduction and dividend 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
There has been a steady increase in the Group`s branded sales volumes in recent
months, however,Tiger Brands remains cautious and expects trading conditions to
continue to be challenging, particularly during the first half of the new
financial year. This 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 2010.
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
2010
Consolidated income statement
Year ended 30 September
2010 2009
Reviewed Change Audited
Notes Rm % Rm
Continuing operations
Revenue 1 19 554,7 (5) 20 642,5
Turnover 1 19 316,0 (5) 20 430,4
Operating income before 2 3 015,1 (4) 3 133.4
abnormal items
Abnormal items 3 (187,6) 343,9
Operating income after 2 827,5 (19) 3 477,3
abnormal items
Interest paid (302,3) 31 (436,3)
Interest received 220,1 21 181,6
Dividend income 18,6 (39) 30,5
Income from associates 4 251,7 24 203,6
Profit before taxation 3 015,6 (13) 3 456,7
Taxation (840,1) 14 (977,7)
Profit for the year from 2 175,5 (12) 2 479,0
continuing operations
Discontinued operations
Profit after tax for the 5 - 55,0
year - Sea Harvest
PROFIT FOR THE YEAR 2 175,5 (14) 2 534,0
Attributable to:
Owners of the parent 2 192,3 (12) 2 485,5
Non-controlling (16,8) 48,5
interests
2 175,5 (14) 2 534,0
Headline earnings per 1 393,0 (1) 1 407,4
ordinary share (cents)
Diluted headline 1 370,6 (2) 1 398,4
earnings per ordinary
share (cents)
Basic earnings per 1 385,9 (12) 1 583,0
ordinary share (cents)
Diluted basic earnings 1 363,6 (13) 1 572,9
per ordinary share
(cents)
Headline earnings per 1 393,0 1 1 382,1
ordinary share (cents)
for continuing
operations
Diluted headline 1 370,6 (0) 1 373,3
earnings per ordinary
share (cents) for
continuing operations
Basic earnings per 1 385,9 (11) 1 556,8
ordinary share (cents)
for continuing
operations
Diluted basic earnings 1 363,6 (12) 1 546,9
per ordinary share
(cents) for continuing
operations
Headline earnings per - 25,3
ordinary share (cents)
for discontinued
operations
Diluted headline - 25,1
earnings per ordinary
share (cents) for
discontinued operations
Basic earnings per - 26,2
ordinary share (cents)
for discontinued
operations
Diluted basic earnings - 26,0
per ordinary share
(cents) for discontinued
operations
Statement of other comprehensive income
Year ended 30 September 2010
2010 2009
Rm Rm
Note Reviewed Audited
Profit for the year 2 175,5 2 534,0
Net gain on hedge of net investment 29,8 16,1
Foreign currency translation (37,4) (34,6)
adjustments
Net loss on cash flow hedges (19,9) (22,6)
Net gain/(loss) on available for 91,3 (24,9)
sale financial assets
Tax effect 6 (17,6) 1,0
Other comprehensive income, net of 46,2 (65,0)
tax
Other comprehensive income, net of - (14,5)
tax for associates
Total comprehensive income for the 2 221,7 2 454,5
year, net of tax
Attributable to:
Owners of the parent 2 238,5 2 406,0
Non-controlling interests (16,8) 48,5
2 221,7 2 454,5
Consolidated statement of financial position
As at 30 September
2010 2009
Reviewed Audited
Rm Rm
ASSETS
Non-current assets 6 288,6 5 381,6
Property, plant and equipment 2 585,6 2 202,7
Goodwill and other intangibles 1 985,8 1 669,1
Investments 1 717,2 1 509,8
Current assets 6 695,3 6 237,3
Inventories 2 898,7 3 059,9
Trade and other receivables 2 875,3 2 671,2
Cash and cash equivalents 921,3 506,2
TOTAL ASSETS 12 983,9 11 618,9
EQUITY AND LIABILITIES
Capital and reserves 8 315,9 6 983,7
Ordinary share capital and share premium 481,4 70,8
Non-distributable reserves 957,3 788,7
Accumulated profits 9 366,5 7 309,8
Tiger Brands Limited shares held by (742,4) (817,7)
subsidiary
Tiger Brands Limited shares held by (1 998,5) (502,2)
empowerment entities
Share-based payment reserve 251,6 134,3
Non-controlling interests 285,5 301,0
TOTAL EQUITY 8 601,4 7 284,7
Non-current liabilities 878,0 907,1
Deferred taxation liability 123,5 97,9
Provision for post-retirement medical 350,7 326,4
aid
Long-term borrowings 403,8 482,8
Current liabilities 3 504,5 3 427,1
Trade and other payables* 2 578,9 2 643,3
Provisions* 387,3 330,7
Taxation 62,3 52,3
Short-term borrowings 476,0 400,8
TOTAL EQUITY AND LIABILITIES 12 983,9 11 618,9
*Certain reclassifications were made during 2010.
Abridged cash flow statement
Year ended 30 September
2010 2009
Reviewed Audited
Rm Rm
Cash operating profit 3 492,6 3 566,1
Working capital changes (112,6) (424,7)
Cash generated from operations 3 380,0 3 141,4
Net financing costs (82,2) (247,0)
Dividends received 149,2 86,7
Taxation paid (821,5) (1 033,2)
Cash available from operations 2 625,5 1 947,9
Capital distributions and dividends paid (1 179,5) (1 267,8)
Net cash inflow from operating 1 446,0 680,1
activities
Net cash (outflow)/inflow from investing (1 100,4) 132,4
activities
Net cash inflow from financing 1,2 100,1
activities
Net increase in cash and cash 346,8 912,6
equivalents
Effects of exchange rate changes (10,7) (15,1)
Cash and cash equivalents at the 172,1 (725,4)
beginning of the year
Cash and cash equivalents at the end of 508,2 172,1
the year
Cash resources 921,3 506,2
Short-term borrowings regarded as cash (413,1) (334,1)
and cash equivalents
508,2 172,1
Other Group salient features
Year ended 30 September
2010 2009
Reviewed Audited
Rm Rm
Net worth per ordinary share (cents) 5 247 4,439
Net debt to equity (%) n/a 5,2
Interest cover - net (times) 36,9 12,4
Current ratio (:1) 1,9 1,8
Capital expenditure (R million) 634,2 561,1
- replacement 363,1 320,7
- expansion 271,1 240,4
Capital commitments (R million) 817,0 1 006,1
- contracted 546,7 336,8
- approved 270,3 669,3
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 318,4 308,8
Inventories carried at net realisable value 134,1 89,6
Write-down of inventories recognised as an 21,0 34,1
expense
Carrying and fair value of investments (R 1 717,2 1 509,8
million)
Listed 388,6 303,2
Unlisted 161,1 160,3
Associates (carrying value) 1 167,5 1 046,3
Segmental analysis
Year ended 30 September
2010 2009
Reviewed Audited Change
Rm % Rm % %
Turnover
FMCG - CONTINUING 19 316,0 100 19 699,8 94 (2)
OPERATIONS
Domestic Food 15 715,0 82 15 922,3 76 (1)
Grains 8 085,5 42 8 793,4 42 (8)
Milling and Baking 5 849,1 30 6 266,8 30 (7)
Other Grains 2 236,4 12 2 526,6 12 (11)
Groceries 3 166,5 17 2 651,6 13 19
Snacks and Treats 1 726,0 9 1 746,9 8 (1)
Beverages 1 083,5 6 1 056,3 5 3
Value Added Meat Products 1 384,8 7 1 413,2 7 (2)
Out of Home 268,7 1 260,9 1 3
HPC 1 786,7 9 1 883,7 9 (5)
Personal care 596,7 3 681,2 3 (12)
Babycare 591,3 3 560,8 3 5
Homecare 598,7 3 641,7 3 (7)
Exports and International 1 960,5 10 2 030,6 10 (3)
Other intergroup sales - (146,2) (1) (136,8) (1) (7)
FMCG
Fishing - Oceana** - - 730,6 3 (100)
TOTAL CONTINUING 19 316,0 100 20 430,4 97 (5)
OPERATIONS
DISCONTINUED OPERATIONS - - - 605,5 3 (100)
Sea Harvest
TOTAL TURNOVER 19 316,0 100 21 035,9 100 (8)
Year ended 30 September
2010 2009
Reviewed Audited Change
Rm % Rm % %
Operating income before
abnormal items
FMCG - CONTINUING 3 015,1 100 3 054,9 96 (1)
OPERATIONS
Domestic Food 2 681,1 89 2 408,3 76 11
Grains 1 677,4 55 1 414,1 44 19
Milling and Baking 1 363,7 45 1 157,7 36 18
Other Grains 313,7 10 256,4 8 22
Groceries 445,9 15 471,7 15 (5)
Snacks and Treats 235,1 8 282,4 9 (17)
Beverages 112,3 4 89,5 3 25
Value Added Meat Products 147,0 5 113,1 4 30
Out of Home 63,4 2 37,5 1 69
HPC 459,3 15 485,0 15 (5)
Personal care 169,9 6 197,9 6 (14)
Babycare 167,9 5 166,0 5 1
Homecare 121,5 4 121,1 4 -
Exports and International 25,7 1 214,0 7 (88)
Other* (151,0) (5) (52,4) (2) (188)
Fishing - Oceana** - - 78,5 2 (100)
TOTAL CONTINUING 3 015,1 3 133,4 98 (4)
OPERATIONS 100
DISCONTINUED OPERATIONS - - 56,8 2 (100)
- Sea Harvest
TOTAL OPERATING INCOME 3 015,1 100 3 190,2 100 (5)
BEFORE ABNORMAL ITEMS
*includes IFRS 2 charges relating to the Phase I and II Black
Economic Empowerment transactions of R56,1 million (2009: R30,4
milion) and the cash settled options of R61,1 million (2009: R18,0
million).
**With effect from 1 April 2009 Oceana was reclassified from a
joint venture to an associate.
Consolidated statement of changes in equity
Share Non- Other
capital distributable capital
and premium reserves reserves
Rm Rm Rm
Balance at 30 September 41,8 473,8 82,3
2008
Net profit for the year - - -
Other comprehensive - - -
income for the year
41,8 473,8 82,3
Issue of share capital 29,0 - -
and premium
Adjustment due to - - -
finalisation of African
acquisitions
Transfers between - 154,9 2,5
reserves
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
2009
Net profit for the year - - -
Other comprehensive - - -
income for the year
70,8 628,7 84,8
Issue of share capital 1 765,6 - -
and premium
Capital distributions out (1 355,0) - -
of share premium
BEE Phase II capital - - -
contribution
Transfers between - 121,2 1,2
reserves
Share-based payment - - -
reserve
Sale of shares by - - -
empowerment entity
Dividends paid to - - -
empowerment entities and
minorities
Balance at 30 September 481,4 749,9 86,0
2010
Consolidated statement of
changes in equity
(continued)
Foreign
Cash flow Availabe currency
hedge for sale translation
reserve reserve reserve
Rm Rm Rm
Balance at 30 September 17,4 163,2 (23,1)
2008
Net profit for the year - - -
Other comprehensive (30,8) (12,3) (36,4)
income for the year
(13,4) 150,9 (59,5)
Issue of share capital - - -
and premium
Adjustment due to - - -
finalisation of African
acquisitions
Transfers between - - -
reserves
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 - (2,8) -
Sea Harvest
Balance at 30 September (13,4) 148,1 (59,5)
2009
Net profit for the year - - -
Other comprehensive (19,9) 87,6 (21,5)
income for the year
(33,3) 235,7 (81,0)
Issue of share capital - - -
and premium
Capital distributions out - - -
of share premium
BEE Phase II capital - - -
contribution
Transfers between - - -
reserves
Share-based payment - - -
reserve
Sale of shares by - - -
empowerment entity
Dividends paid to - - -
empowerment entities and
minorities
Balance at 30 September (33,3) 235,7 (81,0)
2010
Consolidated statement of
changes in equity
(continued)
Shares
held by
subsidiaries Share-
and em- based
Accumulated powerment payment
profits trusts reserve
Rm Rm Rm
Balance at 30 September 6 203,5 (1 319,9) 121,7
2008
Net profit for the year 2 485,5 - -
Other comprehensive - - -
income for the year
8 689,0 (1 319,9) 121,7
Issue of share capital - - -
and premium
Adjustment due to - - -
finalisation of African
acquisitions
Transfers between (157,4) - -
reserves
Other reserve movements 14,8 - 28,2
Re-classification from 2,3 - (12,8)
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 of 5,9 - (2,8)
Sea Harvest
Balance at 30 September 7 309,8 (1 319,9) 134,3
2009
Net profit for the year 2 192,3 - -
Other comprehensive - - -
income for the year
9 502,1 (1 319,9) 134,3
Issue of share capital - (1 625,0) -
and premium
Capital distributions out - 199,6 -
of share premium
BEE Phase II capital - - -
contribution
Transfers between (122,4) - -
reserves
Share-based payment - - 117,3
reserve
Sale of shares by - 4,4 -
empowerment entity
Dividends paid to (13,2) - -
empowerment entities and
minorities
Balance at 30 September 9 366,5 (2 740,9) 251,6
2010
Consolidated statement of
changes in equity
(continued)
Total
attributable Non-
to owners of controlling Total
the parent interests equity
Rm Rm Rm
Balance at 30 September 5 760,7 458,3 6 219,0
2008
Net profit for the year 2 485,5 48,5 2 534,0
Other comprehensive (79,5) - (79,5)
income for the year
8 166,7 506,8 8 673,5
Issue of share capital 29,0 - 29,0
and premium
Adjustment due to - (2,5) (2,5)
finalisation of African
acquisitions
Transfers between - - -
reserves
Other reserve movements 43,0 - 43,0
Re-classification from (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 117,9 9,6 127,5
treasury and empowerment
shares
Adjustment due to sale of 0,3 (175,5) (175,2)
Sea Harvest
Balance at 30 September 6 983,7 301,0 7 284,7
2009
Net profit for the year 2 192,3 (16,8) 2 175,5
Other comprehensive 46,2 - 46,2
income for the year
9 222,2 284,2 9 506,4
Issue of share capital 140,6 - 140,6
and premium
Capital distributions out (1 155,4) (8,9) (1 164,3)
of share premium
BEE Phase II capital - 13,4 13,4
contribution
Transfers between - - -
reserves
Share-based payment 117,3 - 117,3
reserve
Sale of shares by 4,4 (1,2) 3,2
empowerment entity
Dividends paid to (13,2) (2,0) (15,2)
empowerment entities and
minorities
Balance at 30 September 8 315,9 285,5 8 601,4
2010
Notes
Year ended 30 September
2010 2009
Reviewed Audited
Rm Rm
1. Revenue - continuing operations
Turnover 19 316,0 20 430,4
Interest received 220,1 181,6
Dividend income 18,6 30,5
19 554,7 20 642,5
2. Operating income - continuing operations
Operating income before abnormal items is
reflected after charging:
Cost of sales 12 037,0 13 282,5
Sales and distribution expenses 2 606,6 2 506,0
Marketing expenses 576,8 529,8
Other operating expenses 1 080,5 978,7
Depreciation (included in cost of sales and 309,9 261,9
other operating expenses)
3. Abnormal items - continuing operations
Net profit/(loss) on sale of property, plant 0,4 (11,7)
and equipment, including impairment charges
on intangibles
Net profit on sale of interest in - 62,7
subsidiaries and joint ventures
Loss on sale of investments - (4,3)
Profit on sale of investments 1,0 234,3
Costs relating to the unsuccessful attempt to - (29,8)
acquire AVI Limited
Empowerment transaction costs - BEE Phase II (188,4) (12,0)
Release of provision for Healthcare - 1,1
unbundling costs
Release of provision for Sea Harvest put - 81,4
option
Recognition of pension fund surpluses 1,2 27,5
Other (1,8) (5,3)
Abnormal (loss)/profit before taxation (187,6) 343,9
Taxation 35,7 (36,7)
(151,9) 307,2
Non-controlling interests - -
Abnormal (loss)/profit attributable to (151,9) 307,2
shareholders in Tiger Brands Limited
4. Income from associates - continuing
operations
Normal trading 260,4 187,0
Goodwill impairment - Oceana (8,7) -
Abnormal item - profit on partial sale of - 16,6
interest in subsidiary
251,7 203,6
5. Discontinued operations - 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 - 605,5
Operating income before abnormal items - 56,8
Abnormal items - 2,1
Interest paid - (0,5)
Interest received - 8,2
Dividends received - 7,5
Profit before tax from a discontinued - 74,1
operation
Taxation - (19,1)
Profit for the year from a discontinued - 55,0
operation
Attributable to non-controlling interests - 13,9
The net cash flows generated/(incurred) by
the Sea Harvest business were as follows:
Operating activities - 98,3
Investing activities - (39,6)
Financing activities - (0,2)
Net cash inflow - 58,5
6. Tax effect of other comrehensive income
The tax effect of the items reflected in the
statement of other comprehensive income is as
follows:
Net gain on hedge of net investment (8,4) (4,5)
Foreign currency translation adjustments (5,5) (7,1)
Net gain/(loss) on available for sale (3,7) 12,6
financial assets
(17,6) 1,0
7. Business combinations
Crosse & Blackwell
On 1 October 2009 Tiger Brands acquired the Crosse & Blackwell
mayonnaise business from Nestle. The acquisition is in line with
Tiger Brands` strategy of expanding into adjacent categories with
well established brands. The purchase 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:
Rm Rm
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 30 September 2010, the Crosse &
Blackwell business has contributed R618,8 million to Group revenue
and R56,3 million to profit after tax after accounting for
acquisition financing costs.
Apart from plant and 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.
The purchase consideration was financed out of operating cash flows
8. Property, plant and equipment
The additions for the year amounted to R634,2 million (2009: R561,1
million) and the net book value of disposals totalled R8,6 million
(2009: R4,0 million).
9. Impairment of intangibles
Included in abnormal items from continuing operations in respect of
the 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.
Year ended 30 September
2010 2009
Reviewed Audited
10. Shares
Number of ordinary shares in issue (000`s) 190 200 173 560
Includes 10 326 758 (2009: 10 326 758) shares
held as treasury stock and 21 375 586 (2009:
5 896 140) shares owned by empowerment
entities
Weighted average number of ordinary shares 158 193 157 012
(net of treasury and empowerment shares) on
which headline earnings and basic earnings
per share are based (000`s)
Weighted average diluted number of ordinary 160 780 158 022
shares (net of treasury and empowerment
shares) on which diluted headline earnings
and basic earnings per share are based
(000`s)
11. Reconciliation between profit for the Rm Rm
year and headline earnings
Profit attributable to owners of the parent 2 192,3 2 485,5
Adjusted for:
Net profit on sale of interest in - (62,7)
subsidiaries and joint ventures
Loss on sale of property, plant and 3,5 3,5
equipment, including impairment charges on
intangibles
Profit on sale of investments (1,0) (201,1)
Loss on sale of investments - 4,3
Associates 8,7 (16,6)
Profit on partial sale of interest in - (16,6)
subsidiary
Goodwill impairment 8,7 -
Other - (3,1)
Headline earnings for the year 2 203,5 2 209,8
Reconciliation between profit for the year
and headline earnings - discontinued
operations
Profit attributable to owners of the parent - 41,1
Adjusted for:
Profit on sale of property, plant and - (1,4)
equipment, including impairment charges on
intangibles
Headline earnings for the year - 39,7
12. Capital distributions and dividends per
share
Capital distributions and dividends per share 746,0 704,0
(cents)
Interim dividend declared - 245,0
Capital distribution declared 23 November - 459,0
2009
Capital distribution declared 17 May 2010 270,0 -
Capital distribution declared 23 November 235.0 -
2010
Dividend declared 23 November 2010 241.0 -
13. Impact of BEE Phase II transaction
The impact of the implementation of the BEE
Phase II transaction as at 30 September is as
follows:
Operating loss before abnormal items - IFRS 2 (21,0) -
charge
Abnormal items (188,4) (12,0)
Taxation 35,7 -
Dividends paid (11,9) -
Cash and cash equivalents 1,1 -
Taxation receivable 22,5 -
Deferred taxation asset 12,9 -
Ordinary share capital and share premium (1 659,2) -
Tiger Brands Limited shares held by 1 543,6 -
empowerment entities
Share-based payment reserve (82,9) -
Non-controlling interests (12,4) -
Trade and other payables - (12,0)
14. 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
proportionately consolidated in the Group
results, are presented below:
Turnover - 730,6
Operating income before abnormal items - 78,5
Abnormal items - 1,5
Interest paid - (3,7)
Interest received - 5,5
Dividends received - 5,2
Profit before tax - 87,0
Taxation - (28,4)
Profit for the year - 58,6
15. 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:
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
IAS1 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
May 2008 Improvements to IFRS (improvements effective for the
current financial year)
April 2009 Improvements to IFRS (improvements effective for the
current financial year)
AC 504 and 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
financial impact on the results of the Group in the current year.
The comparative figures have not been restated due to the adoption
of the new and amended IFRS and IFRIC interpretations.
TIGER BRANDS LIMITED
Non-executive: L C van Vught (Chairman), B L Sibiya (Deputy Chairman), S L
Botha, R M W Dunne (British), M P Nyama, M Makanjee, K D K Mokhele, R D Nisbet,
A C Parker
Executive: 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
Date: 24/11/2010 07:14:31 Produced by the JSE SENS Department.
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