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TBS
TIIH
TBS - Tiger Brands Limited - Group results and dividend declaration for the
six months ended 31 March 2011
Tiger Brands Limited
Registration number 1944/017881/06
(Incorporated in the Republic of South Africa)
Share code: TBS
ISIN: ZAE000071080
GROUP RESULTS AND DIVIDEND DECLARATION FOR THE SIX MONTHS ENDED 31 MARCH 2011
Headline earnings per share excluding once-off empowerment transaction costs
-2%
Earnings per share +13%
Interim dividend +4%
Cash flow remains strong and acquisitions successfully completed
Commentary
Introduction
These abridged results for the six months ended 31 March 2011 have been
prepared in accordance with International Financial Reporting Standards, IAS
34 - Interim Financial Reporting - and the Listings Requirements of the JSE
Limited.
Tiger Brands achieved headline earnings per share (HEPS) of 747,9 cents for
the six months ended 31 March 2011, representing an increase of 12% compared
to that achieved for the six months ended 31 March 2010. Headline earnings for
the six months ended 31 March 2011 amounted to R1 186,0 million (2010: R1
056,9 million). Earnings per share (EPS) increased by 13% to 748,1 cents per
share.
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 in the six months to 31 March 2010 of R150,7 million after tax, which
was disclosed as an abnormal item in the income statement. There was no
corresponding charge in the six months to 31 March 2011. After excluding the
impact of this once-off charge from the prior period results, HEPS for the six
months ended 31 March 2011 reflects a decrease of 2% compared to that achieved
in the corresponding period last year.
Overview of results
Operating income for the six months ended 31 March 2011 declined by 3% on a 1%
increase in turnover. The modest increase in turnover was influenced by price
deflation in certain food commodities relative to pricing levels for the same
period last year, the impact of promotional discounting in certain categories
to restore volume growth, and a continuation of the difficult trading
conditions experienced in the previous financial year.
The Group operating margin reduced to 15,0% from 15,7% for the same period
last year. The Rice, Sorghum and Babycare businesses, as well as International
& Exports (excluding Deciduous Fruit), achieved good operating results, while
the Milling & Baking and Beverages businesses produced a moderate improvement
in operating income. The remaining businesses recorded declines in operating
income, with Snacks & Treats and Personal Care producing disappointing
results. Within International & Exports, the sustained strength of the Rand
continued to negatively impact the performance of the Deciduous Fruit
business. The strong Rand also impacted on the translation of the results of
the foreign operations Haco (Kenya) and Chococam (Cameroon).
The reduction in net financing costs to R11,9 million (2010: R48,4 million),
was due to the continuing lower interest rate environment and a further
decrease in Group borrowing levels. Good working capital management has
enabled the Group to close the period in a net cash position of R166,0 million
(2010: net debt of R888,6 million).
Income from associates reflected an improvement of 28% compared to the
corresponding period last year. Both Empresas Carozzi (24,4% held) and Oceana
Group Limited ("Oceana") (44,8% held) contributed to this improvement, with
Empresas Carozzi increasing its contribution to Tiger Brands` headline
earnings by some 26% and Oceana by 10%.
Oceana is separately listed on the JSE Limited and on 11 May 2011, reported a
10% increase in headline earnings per share for the six months ended 31 March
2011.
The average tax rate, before abnormal items, increased to 31,9% (2010: 29,7%).
The lower tax rate for the same period in 2010 was primarily due to a reduced
STC charge as a result of the full distribution to shareholders in that period
(i.e. the 2009 final distribution to shareholders, paid in January 2010) being
effected by way of a reduction of capital out of share premium. In the current
reporting period, only a portion of the 2010 final distribution to
shareholders was paid out of share premium in January 2011, with the remaining
portion paid out of distributable reserves.
The net loss attributable to non-controlling interests of R9,7 million is
largely due to the loss incurred by the Group`s Deciduous Fruit business,
partially offset by the non-controlling interests` share of income for the
current six months in respect of the two non-South African subsidiaries, Haco
and Chococam.
Review of operations
Continued weak consumer demand coupled with rising cost pressures, including
higher fuel and utility costs, were largely responsible for the subdued
results recorded by most categories. Margins were negatively impacted by
increased competitor pricing pressure in some categories, while the ability to
fully recover cost increases was constrained by weak consumer demand. In
addition, with Easter being approximately three weeks later in the current
year compared to the prior year, some retailers delayed a portion of their
Easter buy-in to April which negatively impacted some business segments.
DOMESTIC FOOD turnover grew by 1%, while operating income declined by 3%.
The Grains segment increased operating income by 5%, notwithstanding a
decrease in turnover of 2%. This was driven primarily by the Rice business
which benefited from relatively stable dollar-based raw material prices and a
stronger Rand.
The Wheat Milling business, as well as the Albany bakery business, experienced
a reduction in volumes due to the difficult trading environment, which was
exacerbated by significant price discounting by competitors in the market
place. However, the loss of volume was minimised as a result of the inherent
strength of the Albany brand. The recently introduced range of Albany buns has
been readily accepted by consumers. The previously announced upgrade of the
Durban bakery, at a cost of approximately R109 million, is scheduled for
completion in September 2011. The expansion of the Hennenman flour mill, at an
estimated cost of R561 million, is proceeding according to schedule and is
expected to be fully commissioned by the end of 2012. The Maize business was
adversely affected by increased competitor activity as well as reduced
consumption. Tastic, the Company`s premium rice brand, improved its market
share, whilst Aunt Caroline rice volumes benefited from the lower cost of
imported rice and the stronger Rand. The King Food business performed well,
benefiting from lower sorghum raw material costs and a strong performance from
Ace Instant porridge.
Volumes achieved by the Groceries business reflected a pleasing recovery
compared to the same period last year. This was driven by lower net
realisations in an effort to rebuild market share. Snacks & Treats`
performance continued to disappoint with operating income declining by 42%
compared to 2010, as pressure on consumer discretionary spending continued.
The results were negatively impacted as pricing was adjusted to defend market
share. In addition, an adverse sales mix in favour of lower margin products, a
significant increase in marketing investment and the cost of restructuring due
to changes in the sales and customer structure, contributed to the poor
result. Good volume growth was achieved by the Smoothies, Jungle Energy Bar
and TV Bar product lines. The Beverages category experienced a reduction in
sales volumes, although operating income was marginally ahead of the
comparative period as a result of the ongoing focus on costs. Energade
continued to gain market share and remains the leading brand in the sports
drinks sector.
A reduction in core business volumes, caused by aggressive pricing on dealer
owned brands and competition from low priced regional offerings, negatively
impacted the Value Added Meat Products business. Despite this, the Enterprise
brand was able to maintain its market share. The Out of Home business improved
volumes significantly during the current six months, although selling prices
were negatively affected by competitors increasing imports as a result of the
strong Rand.
HOME, PERSONAL AND BABYCARE (HPCB) produced a disappointing overall result,
with operating income declining by 4% on a 4% increase in turnover. The
performance at an operating income level was adversely affected by an increase
in overhead costs, higher marketing spend and once-off restructuring costs.
The Personal Care business experienced a decline in volumes due to aggressive
competitor activity and pricing. Turnover grew by 1%, while operating income
declined by 20%. This negative operating leverage was driven by the lower
volumes, pressure on realisations and an under-recovery of increases in
material input costs. In addition, there was a substantial increase in
marketing spend which should stimulate volumes in the second half of the year.
The Home Care business delivered strong volume growth, benefiting from
competitive pricing and favourable weather conditions which assisted the
performance of the household insecticides category. The DOOM and Peaceful
Sleep brands were the primary drivers of volume growth during the period.
Given the challenging environment, the Babycare business performed well during
the period as mothers continued to place their trust in the Purity brand.
INTERNATIONAL & EXPORTS comprises the Company`s Foreign Operations, Exports,
as well as the Deciduous Fruit business. Their respective performances are
reported on separately in the accompanying segmental analysis forming part of
the interim results.
Exports achieved a pleasing performance, continuing to benefit from the
focused expansion drive into the rest of Africa.
With regard to the Foreign Operations, the continuing strength of the Rand
negatively affected the conversion of the results of Haco and Chococam, into
Rand. Chococam`s performance was disappointing, with significant increases in
raw material and packaging costs, as well as regional supply disruptions
negatively impacting its results. However, Haco produced an impressive result
for the period and achieved significant volume growth. Haco recently rebranded
its corporate identity to Haco Tiger Brands (East Africa) to mark Tiger`s
successful integration into Kenya and East Africa.
Operating losses incurred by the Deciduous Fruit business, Langeberg & Ashton
Foods (67% held), amounted to R44,5 million (2010: R30,4 million loss) as the
strong Rand severely affected profitability notwithstanding an improvement in
international selling prices.
International expansion: Africa
The following is a brief update on the various corporate actions which were
reported to shareholders at the time of release of the Company`s final results
in November 2010.
- The acquisition 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, was finalised with effect from 4 April 2011 for a
purchase consideration of R275,8 million.
- The transaction 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, was completed with effect from 29 April 2011,
resulting in a cash injection by Tiger Brands Limited of R112,8 million for a
51% shareholding in the new company. The principal activities of the joint
venture comprise the manufacture and marketing of various home and personal
care products, biscuits, flour and pasta, which categories previously formed
part of the East African Group`s operations.
The above two acquisitions are expected to generate a combined turnover of
approximately R500 million in the first full year.
- The acquisition of a 49% interest in the food and beverage operations of UAC
of Nigeria Plc (UAC) was completed with effect from 6 May 2011 for a purchase
consideration of R417,2 million. The joint venture company, known as UAC
Foods, holds food interests primarily in the branded savoury, snacks, dairy
and beverages categories. The UAC businesses which constitute the joint
venture, reported total turnover for the financial year ended 31 December 2010
of Naira 10,5 billion, which equates to R477 million at the prevailing
exchange rate.
These acquisitions will have no material impact on the Company`s headline
earnings or net asset value per share in the short term.
In addition, and as announced on SENS on 15 February 2011, the Company
concluded an agreement to acquire the entire issued share capital of Davita
Trading (Pty) Limited. Davita is a South African manufacturer and exporter of
powdered seasonings and beverage products with a presence in 28 countries
across Africa and the Middle East. It achieved sales of R600 million for the
twelve months ended 20 February 2011.
Shareholders are advised that the Davita transaction was unconditionally
approved by the Competition Tribunal on 26 May 2011. Following this approval
and the fulfilment of all remaining suspensive conditions, the acquisition
will become effective on 31 May 2011. The equity purchase price of R1 504,3
million is subject to a working capital adjustment based on the closing
audited balance sheet of Davita as at 31 May 2011.
The acquisition of Davita is expected to be earnings accretive with immediate
effect. However, in the short term the impact on Tiger Brands` earnings,
headline earnings and net asset value per share will not be significant.
Interim dividend
The directors have declared an interim dividend of 281 cents per share, which
represents an increase of 4% compared to the capital distribution of 270 cents
per share declared on 17 May 2010.
The Company`s stated policy of paying a total annual dividend based on a
headline earnings cover of 2 times, remains in place.
Outlook
Tiger Brands expects trading conditions to continue to remain challenging for
the remainder of the current financial year. Nevertheless, the Company is
anticipated to benefit in the second six months from the efficiency
improvements and other performance enhancing measures which have been
implemented by management.
In line with its strategy, the Company continues to pursue value enhancing
opportunities which will further increase its manufacturing and distribution
footprint outside of South Africa.
For and on behalf of the Board
Lex van Vught Peter Matlare
Chairman Chief Executive Officer
30 May 2011
Declaration of Ordinary Dividend No 133
The Board has approved an interim dividend of 281 cents per share for the six
month period ended 31 March 2011. Shareholders are advised of the following
dates in respect of the interim dividend:
Last day the shares trade cum the
interim dividend Friday, 24 June 2011
Shares trade ex the interim dividend Monday, 27 June 2011
Record date to determine those
shareholders entitled to the
interim dividend Friday, 1 July 2011
Payment in respect of the interim
Dividend Monday, 4 July 2010
Share certificates may not be dematerialised or re-materialised between
Monday, 27 June 2011 and Friday, 1 July 2011, both days inclusive.
By order of the Board
IWM Isdale Sandton
Secretary 30 May 2011
Consolidated income statement
Unaudited Audited
Six months ended
Year
ended
31 March 31 March 30 Sept
2011 Change 2010 2010
Rm % Rm Rm
Revenue 1 10 450,3 1 10 313,3 19 554,7
Turnover 1 10 339,4 1 10 187,4 19 316,0
Operating income 2 1 551,4 (3) 1 594,4 3 015,1
before abnormal
items
Abnormal items 3 - (187,3) (187,6)
Operating income 1 551,4 10 1 407,1 2 827,5
after abnormal items
Interest paid (112,7) 31 (163,7) (302,3)
Interest received 100,8 (13) 115,3 220,1
Dividend income 10,1 (5) 10,6 18,6
Income from 4 121,0 28 94,4 251,7
associates
Profit before 1 670,6 14 1 463,7 3 015,6
taxation
Taxation (494,1) (16) (427,3) (840,1)
PROFIT FOR THE 1 176,5 14 1 036,4 2 175,5
PERIOD
Attributable to:
Owners of the parent 1 186,2 13 1 046,3 2 192,3
Non-controlling (9,7) (9,9) (16,8)
interests
1 176,5 14 1 036,4 2 175,5
Basic earnings per 748,1 13 662,2 1 385,9
ordinary share
(cents)
Diluted basic 736,6 13 650,5 1 363,6
earnings per
ordinary share
(cents)
Consolidated statement of financial position
Unaudited Audited
as at
as at
31 March 31 March 30 Sept
2011 2010 2010
Rm Rm Rm
ASSETS
Non-current assets 6 394,0 6 154,2 6 288,6
Property, plant and equipment 2 698,8 2 581,4 2 585,6
Goodwill and other intangibles 1 982,2 1 988,1 1 985,8
Investments 1 713,0 1 584,7 1 717,2
Current assets 7 081,0 6 168,2 6 695,3
Inventories 3 038,9 3 108,2 2 898,7
Trade and other receivables 2 949,8 2 854,3 2 875,3
Taxation receivable - 39,8 -
Cash and cash equivalents 1 092,3 165,9 921,3
TOTAL ASSETS 13 475,0 12 322,4 12 983,9
EQUITY AND LIABILITIES
Capital and reserves 8 714,3 7 553,8 8 315,9
Ordinary share capital and 51,7 974,2 481,4
share premium
Non-distributable reserves 944,1 864,7 957,3
Accumulated profits 10 115,3 8 330,0 9 366,5
Tiger Brands Limited shares (718,1) (770,3) (742,4)
held by subsidiary
Tiger Brands Limited shares (1 957,6) (2 064,1) (1 998,5)
held by empowerment entities
Share based payment reserve 278,9 219,3 251,6
Non-controlling interests 271,2 304,5 285,5
TOTAL EQUITY 8 985,5 7 858,3 8 601,4
Non-current liabilities 876,4 856,1 878,0
Deferred taxation liability 119,9 109,9 123,5
Provision for post-retirement 366,2 337,5 350,7
medical aid
Long-term borrowings 390,3 408,7 403,8
Current liabilities 3 613,1 3 608,0 3 504,5
Trade and other payables 2 625,1 2 658,9 2 578,9
Provisions 388,8 303,3 387,3
Taxation 63,2 - 62,3
Short-term borrowings 536,0 645,8 476,0
TOTAL EQUITY AND LIABILITIES 13 475,0 12 322,4 12 983,9
Consolidated statement of comprehensive income
Unaudited Audited
Six months ended
Year
ended
31 March March 30 Sept
2011 2010 2010
Rm Rm Rm
Profit for the period 1 176,5 1 036,4 2 175,5
Net gain on hedge of net 0,8 18,4 29,8
investment
Foreign currency translation (5,8) (13,8) (37,4)
adjustments
Net loss on cash flow hedges (3,3) (1,1) (19,9)
Net (loss)/gain on available for (47,2) 55,9 91,3
sale financial assets
Tax effect (0,5) (9,5) (17,6)
Other comprehensive income, net (56,0) 49,9 46,2
of tax
Other comprehensive income, net - - -
of tax for associates
Total comprehensive income for 1 120,5 1 086,3 2 221,7
the period, net of tax
Attributable to:
Owners of the parent 1 130,2 1 096,2 2 238,5
Non-controlling interests (9,7) (9,9) (16,8)
1 120,5 1 086,3 2 221,7
Condensed consolidated cash flow statement
Unaudited Audited
Six months ended
Year
ended
31 March 31 March 30 Sept
2011 2010 2010
Rm Rm Rm
Cash operating profit 1 772,3 1 825,2 3 492,6
Working capital changes (124,7) (212,0) (112,6)
Cash generated from operations 1 647,6 1 613,2 3 380,0
Net financing costs (11,9) (48,4) (82,2)
Dividends received 88,3 79,0 149,2
Taxation paid (497,5) (511,0) (821,5)
Cash available from operations 1 226,5 1 132,8 2 625,5
Capital distributions and (771,9) (742,4) (1 179,5)
dividends paid
Net cash inflow from operating 454,6 390,4 1 446,0
activities
Net cash outflow from investing (338,2) (923,0) (1 100,4)
activities
Net cash (outflow)/inflow from (21,5) (6,1) 1,2
financing activities
Net increase/(decrease) in cash 94,9 (538,7) 346,8
and cash equivalents
Effects of exchange rate changes - 15,1 (10,7)
Cash and cash equivalents at the 508,2 172,1 172,1
beginning of the period
Cash and cash equivalents at the 603,1 (351,5) 508,2
end of the period
Cash resources 1 092,3 165,9 921,3
Short-term borrowings regarded (489,2) (517,4) (413,1)
as cash and cash equivalents
603,1 (351,5) 508,2
Other group salient features
Unaudited Audited
Six months ended
Year
ended
31 March 31 March 30 Sept
2011 2010 2010
Rm Rm Rm
Net worth per ordinary share 5 493 4 772 5 247
(cents)
Net (cash)/debt to equity (%) (1,8) 11,3 (0,5)
Interest cover - net (times) 131,2 33,2 36,9
Current ratio (:1) 2,0 1,7 1,9
Capital expenditure (R million) 291,4 463,3 634,2
- replacement 207,1 184,3 363,1
- expansion 84,3 279,0 271,1
Capital commitments (R million) 699,9 818,8 817,0
- contracted 467,6 431,4 546,7
- approved 232,3 387,4 270,3
Capital commitments will be
funded from normal operating
cash flows and the utilisation
of existing borrowing
facilities.
Contingent liabilities
(R million)
- guarantees and contingent 324,9 308,8 318,4
liabilities
Inventories carried at net 158,6 191,9 134,1
realisable value
Write-down of inventories 25,7 25,6 21,0
recognised as an expense
Carrying and fair value of 1 713,0 1 584,7 1 717,2
investments (R million)
Listed (fair value) 339,6 354,3 388,6
Unlisted (fair value) 163,1 158,0 161,1
Associates (carrying value) 1 210,3 1 072,4 1 167,5
Segmental analysis
Unaudited six months ended
31 March 31 March
2011 2010 Change
Rm % Rm % %
Turnover
Domestic Operations 9 455,5 91 9 325,7 92 1
Food 8 440,5 81 8 356,5 82 1
Grains 4 119,1 40 4 185,3 41 (2)
Milling and Baking 2 919,9 28 2 905,3 29 1
Other Grains 1 199,2 12 1 280,0 12 (6)
Groceries 1 880,6 18 1 750,6 18 7
Snacks & Treats 922,2 9 919,6 9 -
Beverages 639,5 6 642,1 6 -
Value Added Meat 737,6 7 721,3 7 2
Products
Out of Home 141,5 1 137,6 1 3
HPCB 1 015,0 10 972,2 10 4
Personal 304,1 3 300,2 3 1
Babycare 325,7 3 300,6 3 8
Homecare 385,2 4 371,4 4 4
Domestic intergroup - - (3,0) - 100
sales
International & Exports 883,9 9 861,7 8 3
Exports 243,6 3 189,5 2 29
Foreign operations 249,3 3 249,8 2 -
Deciduous Fruit 456,9 4 495,8 5 (8)
Other intergroup sales (65,9) (1) (73,4) (1) 10
TOTAL TURNOVER 10 339,4 100 10 187,4 100 1
Segmental analysis (continued)
Audited year ended
30 Sept
2010
Rm %
Turnover (continued)
Domestic Operations 17 493,6 91
Food 15 715,0 82
Grains 8 085,5 42
Milling and Baking 5 849,1 30
Other Grains 2 236,4 12
Groceries 3 166,5 17
Snacks & Treats 1 726,0 9
Beverages 1 083,5 6
Value Added Meat Products 1 384,8 7
Out of Home 268,7 1
HPCB 1 786,7 9
Personal 596,7 3
Babycare 591,3 3
Homecare 598,7 3
Domestic intergroup sales (8,1) -
International & Exports 1 822,4 9
Exports 370,4 2
Foreign operations 504,0 3
Deciduous Fruit 1 086,1 5
Other intergroup sales (138,1) (1)
TOTAL TURNOVER 19 316,0 100
Segmental analysis (continued)
Unaudited six months ended
31 March 31 March
2011 2010 Change
Rm % Rm % %
Operating income
before abnormal
items
Domestic Operations 1 535,8 99 1 569,8 98 (2)
Food 1 353,3 88 1 399,7 88 (3)
Grains 823,7 53 781,6 49 5
Milling and Baking 587,9 38 581,5 36 1
Other Grains 235,8 15 200,1 13 18
Groceries 257,4 17 275,4 17 (7)
Snacks & Treats 90,3 6 155,0 10 (42)
Beverages 80,9 5 80,0 5 1
Value Added Meat 72,4 5 77,0 5 (6)
Products
Out of Home 28,6 2 30,7 2 (7)
HPCB 233,5 14 243,5 15 (4)
Personal 70,3 4 87,8 6 (20)
Babycare 96,3 6 86,8 5 11
Homecare 66,9 4 68,9 4 (3)
Other* (51,0) (3) (73,4) (5) 31
International & Exports 15,6 1 24,6 2 (37)
Exports 36,3 2 29,8 2 22
Foreign operations 23,8 2 25,2 2 (6)
Deciduous Fruit (44,5) (3) (30,4) (2) (46)
TOTAL OPERATING INCOME 1 551,4 100 1 594,4 100 (3)
BEFORE ABNORMAL ITEMS
Segmental analysis (continued)
Audited year ended
30 Sept
2010
Rm %
Operating income before abnormal items
(continued)
Domestic Operations 2 989,4 99
Food 2 681,1 89
Grains 1 677,4 55
Milling and Baking 1 363,7 45
Other Grains 313,7 10
Groceries 445,9 15
Snacks & Treats 235,1 8
Beverages 112,3 4
Value Added Meat Products 147,0 5
Out of Home 63,4 2
HPCB 459,3 15
Personal 169,9 6
Babycare 167,9 5
Homecare 121,5 4
Other* (151,0) (5)
International & Exports 25,7 1
Exports 53,6 2
Foreign operations 56,6 2
Deciduous Fruit (84,5) (3)
TOTAL OPERATING INCOME BEFORE ABNORMAL ITEMS 3 015,1 100
*Includes the corporate office and management expenses relating to
international investments. Also included are cash settled IFRS2 income of R0,8
million (2010: R41,4 million expense) and IFRS2 charges relating to the Phase
I and II Black Economic Empowerment transactions of R27,7 million (2010: R22,0
million). September 2010 includes IFRS2 charges relating to the Phase I and
II Black Economic Empowerment transactions of R56,1 million and cash settled
options of R62,6 million.
Consolidated statement of changes in equity
Share
capital Non-dis- Other
and tributable capital
premium reserves reserves
Rm Rm Rm
Balance at 30 September 2009 70,8 628,7 84,8
Profit for the period - - -
Other comprehensive income for - - -
the period
70,8 628,7 84,8
Issue of share capital and 1 765,6 - -
premium
Capital distributions out of (1 355,0) - -
share premium
BEE Phase II capital - - -
contribution
Transfers between reserves - 121,2 1,2
Share-based payment expense - - -
Sale of shares by empowerment - - -
entity
Dividends paid to empowerment - - -
entities and minorities
Balance at 30 September 2010 481,4 749,9 86,0
Profit for the period - - -
Other comprehensive income for - - -
the period
481,4 749,9 86,0
Issue of share capital and 7,9 - -
premium
Capital distribution out of (437,6) - -
share premium
Sale of shares by empowerment - - -
entity
Transfers between reserves - 42,8 -
Share-based payment expense - - -
Dividends on ordinary shares - - -
Total dividends - - -
Less:
Dividends on treasury and - - -
empowerment shares
Balance at 31 March 2011 51,7 792,7 86,0
Consolidated statement of changes in equity (continued)
Foreign
Cash flow Available- currency
hedge for-sale translation
reserve reserve reserve
Rm Rm Rm
Balance at 30 September 2009 (13,4) 148,1 (59,5)
Profit for the period - - -
Other comprehensive income for (19,9) 87,6 (21,5)
the period
(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 expense - - -
Sale of shares by empowerment - - -
entity
Dividends paid to empowerment - - -
entities and minorities
Balance at 30 September 2010 (33,3) 235,7 (81,0)
Profit for the period - - -
Other comprehensive income for (3,3) (45,5) (7,2)
the period
(36,6) 190,2 (88,2)
Issue of share capital and - - -
premium
Capital distribution out of - - -
share premium
Sale of shares by empowerment - - -
entity
Transfers between reserves - - -
Share-based payment expense - - -
Dividends on ordinary shares - - -
Total dividends - - -
Less:
Dividends on treasury and - - -
empowerment shares
Balance at 31 March 2011 (36,6) 190,2 (88,2)
Consolidated statement of changes in equity (continued)
Shares
held by
subsidiary Share-
Accu- and em- based
mulated powerment payment
profits entities reserve
Rm Rm Rm
Balance at 30 September 2009 7 309,8 (1 319,9) 134,3
Profit for the period 2 192,3 - -
Other comprehensive income for - - -
the period
9 502,1 (1 319,9) 134,3
Issue of share capital and - (1 625,0) -
premium
Capital distributions out of - 199,6 -
share premium
BEE Phase II capital contribution - - -
Transfers between reserves (122,4) - -
Share-based payment expense - - 117,3
Sale of shares by empowerment - 4,4 -
entity
Dividends paid to empowerment (13,2) - -
entities and minorities
Balance at 30 September 2010 9 366,5 (2 740,9) 251,6
Profit for the period 1 186,2 - -
Other comprehensive income for - - -
the period
10 552,7 (2 740,9) 251,6
Issue of share capital and - - -
premium
Capital distribution out of share - 64,9 -
premium
Sale of shares by empowerment - 0,3 -
entity
Transfers between reserves (42,8) - -
Share-based payment expense - - 27,3
Dividends on ordinary shares (394,6) - -
Total dividends (461,1) - -
Less:
Dividends on treasury and 66,5 - -
empowerment shares
Balance at 31 March 2011 10 115,3 (2 675,7) 278,3
Consolidated statement of changes in equity (continued)
Total
attribut-
able to
owners Non-
of the controlling
parent interests Total
Rm Rm Rm
Balance at 30 September 2009 6 983,7 301,0 7 284,7
Profit for the period 2 192,3 (16,8) 2 175,5
Other comprehensive income for 46,2 - 46,2
the period
9 222,2 284,2 9 506,4
Issue of share capital and 140,6 - 140,6
premium
Capital distributions out of (1 155,4) (8,9) (1 164,3)
share premium
BEE Phase II capital - 13,4 13,4
contribution
Transfers between reserves - - -
Share-based payment expense 117,3 - 117,3
Sale of shares by empowerment 4,4 (1,2) 3,2
entity
Dividends paid to empowerment (13,2) (2,0) (15,2)
entities and minorities
Balance at 30 September 2010 8 315,9 285,5 8 601,4
Profit for the period 1 186,2 (9,7) 1 176,5
Other comprehensive income for (56,0) - (56,0)
the period
9 446,1 275,8 9 721,9
Issue of share capital and 7,9 - 7,9
premium
Capital distribution out of (372,7) - (372,7)
share premium
Sale of shares by empowerment 0,3 - 0,3
entity
Transfers between reserves - - -
Share-based payment expense 27,3 - 27,3
Dividends on ordinary shares (394,6) (4,6) (399,2)
Total dividends (461,1) (4,6) (465,7)
Less:
Dividends on treasury and 66,5 - 66,5
empowerment shares
Balance at 31 March 2011 8 714,3 271,2 8 985,5
Notes
Unaudited Audited
Six months ended
Year
ended
31 March 31 March 30 Sept
2011 2010 2010
Rm Rm Rm
1. Revenue
Turnover 10 339,4 10 187,4 19 316,0
Interest received 100,8 115,3 220,1
Dividend income 10,1 10,6 18,6
10 450,3 10 313,3 19 554,7
2. Operating income
Operating income before abnormal
items is reflected after
charging:
Cost of sales 6 544,6 6 418,3 12 037,0
Sales and distribution expenses 1 375,5 1 325,3 2 606,6
Marketing expenses 295,7 276,8 576,8
Other operating expenses 572,2 572,6 1 080,5
Depreciation (included in cost 175,0 150,9 309,9
of sales and other operating
expenses)
3. Abnormal items
Net profit on sale of property, - - 0,4
plant and equipment
Profit on sale of investments - - 1,0
Empowerment transaction costs - - (185,3) (188,4)
BEE Phase II
Recognition of pension fund - - 1,2
surpluses
Other - (2,0) (1,8)
Abnormal loss before taxation - (187,3) (187,6)
Taxation - 35,0 35,7
- (152,3) (151,9)
Non-controlling interests - - -
Abnormal loss attributable to
shareholders in
Tiger Brands Limited - (152,3) (151,9)
4. Income from associates
Normal trading 121,0 94,4 260,4
Goodwill impairment - Oceana - - (8,7)
121,0 94,4 251,7
5. Business combinations
2011
5.1 Deli Foods
On 4 April 2011, Tiger Brands acquired 100% of the issued share
capital of Deli Foods Nigeria Limited, a company engaged in the
manufacturing and marketing of biscuits for the Nigerian market.
The acquisition is in line with Tiger Brands` strategy to expand
into the African continent and is seen as a first step in entering
into this important market.
The purchase consideration is accounted for as follows:
Acquisition Carrying
Rm value value
Land and buildings 26,4 26,4
Plant and equipment 69,7 69,7
Deferred taxation asset 7,7 7,7
Inventories 27,6 27,6
Trade receivables 14,5 14,5
Fair value of assets acquired 145,9 145,9
Trade payables (22,7) (22,7)
Short-term borrowings including bank (23,5) (23,5)
overdraft
Long-term borrowings (27,7) (27,7)
Fair value of the liabilities (73,9) (73,9)
acquired
Fair value of net assets acquired 72,0 72,0
Goodwill and other intangibles 203,8
Purchase consideration 275,8
Goodwill represents the difference between the purchase
consideration and the fair value of the net assets acquired. A
formal allocation between goodwill and other separately
identifiable assets is currently being conducted.
Since the effective date of the transaction was subsequent to 31
March 2011, the acquisition has not contributed any revenue,
operating income or profit after tax to the 2011 Group interim
results.
5.2 East Africa Tiger Brands Industries
Effective 29 April 2011, a transaction was finalised with the East
African Group of Companies of Ethiopia relating to the formation
of a new food and HPC company which will operate in the Ethiopian
market. The company, known as East Africa Tiger Brands
Industries, is held 51% by Tiger Brands and the balance of 49% by
East African Group (Eth) Plc and its associate companies.
The provisional allocation of the purchase price is as follows:
Acquisition Carrying
Rm value value
Buildings 68,4 68,4
Plant and equipment 49,1 49,1
Inventories 42,9 42,9
Cash and cash equivalents 109,7 109,7
Fair value of assets acquired 270,1 270,1
Trade payables (7,2) (7,2)
Short-term borrowings including bank (49,3) (49,3)
overdraft
Fair value of the liabilities (56,5) (56,5)
acquired
Fair value of net assets acquired 213,6 213,6
Non-controlling interest (104,7)
Goodwill and other intangibles 3,9
Purchase consideration 112,8
Since the effective date of the transaction was subsequent to 31
March 2011, the acquisition has not contributed any revenue,
operating income or profit after tax to the 2011 Group interim
results.
Goodwill represents the difference between the purchase
consideration and the fair value of the net assets acquired.
A formal allocation between goodwill and other separately
identifiable assets is currently being conducted.
5.3 Davita Trading (Pty) Limited
As announced on SENS on 15 February 2011, the Company is in the
process of acquiring the entire issued share capital of Davita
Trading (Pty) Limited. Davita is a South African manufacturer and
exporter of powdered seasonings and beverage products with a
presence in 28 countries across Africa and the Middle East. On 26
May 2011, the Competition Tribunal approved the transaction.
Following this approval and the fulfilment of all remaining
suspensive conditions, the acquisition will become effective on 31
May 2011.
The information presented below is for indicative purposes only as
it is based on information available as at 31 March 2011 and is
therefore subject to finalisation as at the effective date. A
formal allocation between goodwill and other separately
identifiable assets is currently being conducted.
Acquisition Carrying
Rm value value
Land and buildings 23,0 23,0
Plant and equipment 7,7 7,7
Deferred taxation asset 1,8 1,8
Inventories 47,5 47,5
Trade receivables 117,4 117,4
Cash and cash equivalents 56,8 56,8
Fair value of assets acquired 254,2 254,2
Trade payables (17,0) (17,0)
Long-term borrowings (200,6) (200,6)
Taxation payable (7,8) (7,8)
Fair value of the liabilities (225,4) (225,4)
acquired
Fair value of net assets acquired 28,8 28,8
Goodwill and other intangibles 1 475,5 620,3
Purchase consideration 1 504,3
Since the effective date of the transaction will be subsequent to
31 March 2011, the acquisition has not contributed any revenue,
operating income or profit after tax to the 2011 Group interim
results.
2010
5.4 Crosse & Blackwell
On 1 October 2009, Tiger Brands acquired the Crosse & Blackwell
mayonnaise business from Nestle. The acquisition was 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, comprised the following:
Unaudited Audited
Six months ended
Year
ended
31 March 31 March 30 Sept
2011 2010 2010
Trademarks - 250,0 250,0
Land and buildings - 50,0 50,0
Plant and equipment - 27,7 27,7
Inventories - 74,5 74,5
Fair value of assets acquired - 402,2 402,2
Goodwill - 72,3 72,3
Purchase consideration - 474,5 474,5
From the date of acquisition to 31 March 2010, the Crosse &
Blackwell business contributed R372,7 million to Group revenue and
R35,5 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.
6. Property, plant and equipment
The additions for the period amounted to R291,4 million (2010:
R463,3 million) and the net book value of disposals totalled R0,4
million (2010: R2,8 million).
7. Tax effect of other comprehensive income
The tax effect of the items reflected in other comprehensive
income is as follows:
Unaudited Audited
Six months ended
Year
ended
31 March 31 March 30 Sept
2011 2010 2010
Net gain on hedge of net (0,2) (5,2) (8,4)
investment
Foreign currency translation (2,0) (2,2) (5,5)
adjustments
Net gain/(loss) on available 1,7 (2,1) (3,7)
for sale financial assets
(0,5) (9,5) (17,6)
8. Shares
Number of ordinary shares in
issue (000`s)
Includes 10 326 758 shares held
as treasury stock
(March 2010: 10 326 758) and 21 190 355 190 043 190 200
371 686 shares owned by
empowerment entities (March
2010: 21 426 860)
Weighted average number of
ordinary shares (net of
treasury and empowerment
shares) on which headline
earnings and
basic earnings per share are 158 568 158 014 158 193
based (000`s)
Weighted average diluted number 161 038 160 844 160 780
of ordinary shares (net of
treasury and empowerment
shares) on which diluted
headline earnings and basic
earnings per share are based
(000`s)
9. Headline earnings per share
Headline earnings per ordinary 747,9 668,9 1 393,0
share (cents)
Diluted headline earnings per 736,5 657,1 1 370,6
ordinary shares (cents)
10. Reconciliation between Rm Rm Rm
profit for the period and
headline earnings
Profit attributable to ordinary 1 186,2 1 046,3 2 192,3
shareholders
Adjusted for:
(Profit)/loss on sale of (0,2) 1,9 3,5
property, plant and equipment,
including impairment charges on
intangibles
Profit on sale of investments - - (1,0)
Associates - goodwill - 8,7 8,7
impairment
Headline earnings for the 1 186,0 1 056,9 2 203,5
period
Tax effect on headline earnings - - -
adjustments
11. Capital distributions and
dividends per share
Capital distributions and 281,0 270,0 746,0
dividends per ordinary share
(cents)
Capital distribution declared - 270,0 270,0
17 May 2010
Capital distribution declared - - 235,0
23 November 2010
Dividend declared 23 November - - 241,0
2010
Dividend declared 27 May 2011 281,0 - -
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) (21,0)
items - IFRS 2 charge
Abnormal items - (185,3) (188,4)
Taxation - 34,6 35,7
Dividends paid - - (11,9)
Cash and cash equivalents - 4,7 1,1
Taxation receivable - 22,2 22,5
Deferred taxation asset - 12,4 12,9
Ordinary share capital and - (1 748,4) (1 659,2)
share premium
Tiger Brands Limited shares - 1 625,0 1 543,6
held by empowerment entities
Share-based payment reserve - (67,1) (82,9)
Non-controlling interests - (13,4) (12,4)
13. 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 standards and
IFRIC interpretations during the current year:
- IFRS 1 (Amendment) - Limited exemption from comparative IFRS 7 disclosures
for first-time adopters
- IFRS 2 (Amendment) - Group cash-settled share-based payment arrangements
- IAS 32 (Amendment) - Classification of rights issues
- IFRIC 19 - Extinguishing financial liabilities with equity instruments
- April 2009 Improvements to IFRS (improvements effective for the current
financial year)
- May 2010 Improvements to IFRS (improvements effective for the current
financial year)
Where necessary, disclosures have been updated in accordance with these
standards, amendments or interpretations. The adoption thereof did not have a
material impact on the results, cash flows or financial position of the Group
in the current period.
TIGER BRANDS LIMITED
Non-executive directors:
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 directors:
P B Matlare (Chief Executive Officer), 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
Sponsor:
J.P. Morgan Equities Limited
Date: 30/05/2011 07:05:10 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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