Financial review

Chief financial officer

Deepa Sita
Chief financial officer


Acting chief financial officer

Pamela Padayachee
Acting chief financial officer

The preparation of these results has been supervised by Pamela Padayachee CA(SA) (acting chief financial officer) and Deepa Sita CA(SA), chief financial officer of Tiger Brands Limited.

  +4% y-o-y



2019: R28,6 billion

  -18% y-o-y


Operating income

2019: R3,2 billion

*   From continuing operations.
** Before impairments and abnormal items.

Read more in the full annual financial statements 2020

Tiger Brands’ earnings for the year ended 30 September 2020 were impacted by the ongoing difficulty of maintaining margins in a tough trading environment compounded by the challenges of Covid-19.


In a year that has been catastrophic for many businesses in South Africa, Tiger Brands has been in the fortunate position of playing a pivotal role in ensuring food supply during the initial lockdown periods. This allowed the company to support the livelihoods of its employees even when sites were temporarily closed in line with lockdown regulations. This resulted in strong cash flow generation further supporting the company’s healthy balance sheet and allowing management to focus on operational execution.

Notwithstanding this, the results for the year have been disappointing, reflecting the challenges faced by the company in maintaining margins in what was an already difficult consumer environment before the onset of the Covid-19 pandemic.

The second half of the year was affected by the closure of non-essential facilities in Home Care and Sorghum beverages, the cost of complying with the Consumer and Customer Protection and National Disaster Regulations (pricing regulations) as well as the cost of health and safety measures. Furthermore, supply chain efficiencies were adversely impacted by temporary disruptions from Covid-19 infections at site level and within the supply chain.

Lockdown measures created favourable tailwinds from a volume perspective in certain businesses including Wheat, Milling, Bread, oat-based breakfast offerings (Jungle), Pasta and Groceries. However, there were corresponding headwinds in terms of consumer demand in Snacks & Treats, Beverages, Out of Home and Baby. A dispute with a former distributor in Nigeria continued to adversely impact the performance of Exports. These developments had a negative effect on profitability from continuing operations in the second half. However, enhanced efficiencies, cost reduction measures as well as the revised operating model resulted in a significantly lower year-on-year decline compared with the year-on-year decline reported in the first half.

As previously reported, Deli Foods and VAMP have been treated as discontinued operations with the comparative information restated accordingly. The acquisition of the abattoir business at Olifantsfontein by Molare Proprietary Limited became effective on 28 September 2020, while the disposal of the VAMP processing facilities was successfully concluded post-year-end.

Revenue from continuing operations increased by 4%, underpinned by price inflation of 6% driven largely by currency weakness for most of the year, partially offset by an overall volume decrease of 2%. A decline in volumes in certain categories, coupled with the inability to fully recover significant raw material cost push, placed gross margins under pressure, resulting in group operating income declining by 18% to R2,6 billion (2019: R3,2 billion).

Income from associates decreased by 5% to R352 million. A strong underlying performance from Carozzi as well as a commendable performance from National Foods in a very difficult economic climate, which has been accounted for in line with IAS 29 Financial Reporting in Hyperinflationary Economies, was partly offset by weak results from UAC Foods. In addition, income from associates last year included three months’ earnings from Oceana which was unbundled in April 2019.

Net financing costs for the year increased by R96 million. The reclassification of operating leases into short- and long-term lease liabilities in accordance with IFRS 16 accounted for R28 million of this increase, while higher average debt levels during the year had a further R31 million impact.

The effective tax rate before abnormal items, impairments and income from associates, increased from 29,5% to 31,0%, largely due to the lower pre-tax profit before abnormal items, impairments and income from associate companies, and a reduced benefit in respect of special investment allowances claimed on qualifying capital projects in the current year.

Earnings per share (EPS) from continuing operations decreased by 66% to 886 cents (2019: 2 617 cents). This was principally due to the fact that earnings in the previous financial year benefited from the capital surplus of R2 billion arising from the fair value gain relating to the unbundling of the company’s interest in Oceana, including the capital profit realised on the disposal of the company’s residual shareholding in Oceana. Headline earnings per share (HEPS) from continuing operations declined by 23% to 1 196 cents (2019: 1 556 cents). The lower rate of decrease in HEPS relative to the rate of decrease in EPS, is mainly due to the exclusion in the prior year of the aforesaid capital surplus as well as the cost of impairments in both 2019 (R213 million) and 2020 (R547 million) from the calculation of headline earnings.

EPS from total operations decreased by 74% to 612 cents (2019: 2 333 cents), while HEPS from total operations decreased by 29% to 940 cents (2019: 1 322 cents). The total after tax loss for the period from discontinued operations amounted to R453 million (2019: R470 million).

Segmental operating performance

Domestic revenue increased by 4% to R26,4 billion underpinned by price inflation of 6%, less the impact of an overall volume decline of 2%. The mixed topline performance, together with the impact of higher raw material input costs and additional Covid-19 related costs, led to a decline in operating income to R2,6 billion (2019: R3,0 billion).

Total revenue for the Exports and International businesses increased by 4% to R3,4 billion. This was driven by an improved second half performance from our business in Cameroon as well as a better second half in Exports. Operating income, however, reduced by 51% to R103 million.

Further details of the performance of our operations are provided in our Operational review.

Cash flow and capital expenditure

Cash generated from operations declined by 15% to R3,0 billion, in line with the decline in cash operating profit. With the FY20 interim dividend withheld and a special dividend paid in the prior year, net cash inflow from operating activities increased to R1,6 billion (2019: R617 million). Although overall capital expenditure levels declined 15% to R937 million, replacement capex increased 10% to R659 million. The group ended the year in a net cash position of R1,8 billion compared with a net cash position of R1,2 billion in the previous year.

Ordinary and special dividend

An ordinary final dividend of 537 cents per share has been declared for the year ended 30 September 2020. The total ordinary dividend for the year of 537 cents per share aligns the distribution with Tiger Brands’ dividend policy of 1,75x cover based on full year headline earnings per share.

Given the company’s healthy balance sheet and the fact that there are no imminent acquisitions or exceptional capex requirements, the company has also declared a special dividend of 133 cents per share as a result of the once-off proceeds received from the disposal of its VAMP business. The payment of the special dividend is subject to South African Reserve Bank approval.

The special dividend, together with the gross final cash dividend, brings the total distribution for the year to 670 cents per share (2019: 1 061 cents per share).

Shareholders are referred to the Declaration of final dividend for further details.


Looking ahead, it is likely that the current significant economic downturn will persist over the near and medium term. The anticipated volatility of the rand and increasing levels of unemployment will negatively impact both the supply and demand dynamics of our business. The continuing pressure on consumer disposable income highlights the need for an enhanced focus on value offerings, as well as cost reduction initiatives and operating efficiencies.

Despite the challenging environment, the reconfiguration of our operating model, clear plans to compete effectively in a value economy as well as the successful execution of key strategic initiatives should position the group favourably to reverse the trend of declining profitability from continuing operations.


Thank you to our local and international shareholders for your continued investment in the company and to the broader investment community for your interest and engagement. We acknowledge our colleagues in the finance department who constantly strive towards best practice and improved disclosure and extend thanks to the audit committee for their guidance throughout the year.