20
22

Tiger Brands Limited audited group results and dividend declaration

for the year ended 30 September 2022

FINANCIALS

CONSOLIDATED INCOME STATEMENT

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(R'million) Notes   Audited
year ended
30 September
2022
Audited
year ended
30 September
2021
Continuing operations        
Total revenue     34 028,9 30 953,9
Revenue     34 030,6 31 208,8
Impact of product recall 2   (1,7) (254,9)
Total cost of sales     (23 713,1) (22 143,7)
Cost of sales     (23 708,2) (21 750,2)
Impact of product recall 2   (4,9) (308,3)
Impact of civil unrest 3   (85,2)
Gross profit     10 315,8 8 810,2
Sales and distribution expenses     (4 350,3) (4 047,8)
Marketing expenses     (906,9) (905,5)
Other operating expenses     (1 834,2) (1 673,1)
Sundry income 2, 3   218,8
Expected credit loss (raised)/reversed     (12,5) 51,7
Operating income before impairments and non-operational items 4   3 430,7 2 235,5
Impairments and fair value losses 5   (15,9) (154,2)
Operating income after impairments     3 414,8 2 081,3
Non-operational items 6   28,3 27,2
Profit including non-operational items     3 443,1 2 108,5
Finance costs     (89,1) (57,0)
Finance income     14,2 2,8
Foreign exchange profit/(loss)     45,7 (8,7)
Investment income     22,7 17,8
Income from associated companies     478,0 345,9
Loss on disposal of investment in associated company     (10,8)
Profit before taxation     3 914,6 2 398,5
Taxation     (1 019,5) (596,7)
Profit for the year from continuing operations     2 895,1 1 801,8
Discontinued operations        
Profit for the year from discontinued operations 8   119,8
Profit for the year     2 895,1 1 921,6
Attributable to:        
Owners of the parent     2 864,5 1 893,1
– Continuing operations     2 864,5 1 773,3
– Discontinued operations     119,8
Non-controlling interests     30,6 28,5
– Continuing operations     30,6 28,5
      2 895,1 1 921,6
Basic earnings per ordinary share (cents)     1 762,2 1 142,3
– Continuing operations     1 762,2 1 070,0
– Discontinued operations     72,3
Diluted basic earnings per ordinary share (cents)     1 737,7 1 130,0
– Continuing operations     1 737,7 1 058,5
– Discontinued operations     71,5
Headline earnings per ordinary share (cents)     1 702,4 1 126,8
– Continuing operations     1 702,4 1 127,3
– Discontinued operations     (0,5)
Diluted headline earnings per ordinary share (cents)     1 678,7 1 114,8
– Continuing operations     1 678,7 1 115,3
– Discontinued operations     (0,5)

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

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(R'million) Audited
year ended
30 September
2022
Audited
year ended
30 September
2021
Profit for the year 2 895,1 1 921,6
Other comprehensive loss, net of tax (92,8) (329,3)
Net loss on hedge of net investment in foreign operation1 (8,7)
Foreign currency translation reserve (FCTR) adjustments1 14,8 (180,2)
Share of associates other comprehensive loss and FCTR1 (90,8) (156,0)
Net (loss)/gain on cash flow hedges1 (18,8) 5,8
Net (loss)/gain on FVOCI3 financial assets1 (55,4) 20,3
Remeasurement raised in terms of IAS 19R2 63,0 (30,3)
Tax effect (5,6) 19,8
Total comprehensive income for the year, net of tax 2 802,3 1 592,3
Attributable to:    
Owners of the parent 2 774,0 1 584,7
Non-controlling interests 28,3 7,6
  2 802,3 1 592,3
1 Items that may be subsequently reclassified to profit or loss including the related tax effects, with the exception of R0,1 million loss (2021: R19,3 million loss) relating to the share of associates’ other comprehensive loss, and fair value losses on equity instruments measured at FVOCI.
2 Includes a net actuarial gain of R59,0 million (2021: R21,2 million loss) and unrecognised loss due to asset ceiling of R4,0 million (2021: R9,1 million).
3 FVOCI – Fair value through other comprehensive income.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

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(R'million) Audited
year ended
30 September
2022
Audited
year ended
30 September
2021
ASSETS    
Non-current assets 11 616,3 11 470,3
   Property, plant and equipment* 5 695,4 5 481,3
   Goodwill 1 179,4 1 179,9
   Intangible assets 1 719,8 1 728,7
   Investments 2 987,4 3 046,8
   Deferred taxation asset 34,3 33,6
Current assets 12 402,5 11 361,6
   Inventories 7 331,0 5 904,7
   Trade and other receivables 3 955,6 3 295,1
   Cash and cash equivalents 1 115,9 2 161,8
Total assets 24 018,8 22 831,9
EQUITY AND LIABILITIES    
Total equity 15 692,8 15 702,4
   Issued capital and reserves 15 550,5 15 555,0
   Non-controlling interests 142,3 147,4
Non-current liabilities 890,1 1 145,9
   Deferred taxation liability 240,7 183,1
   Post-retirement medical aid obligations 322,9 563,8
   Long-term borrowings** 326,5 399,0
Current liabilities 7 435,9 5 983,6
   Trade and other payables 5 677,7 5 131,5
   Employee-related accruals 464,4 527,1
   Taxation 126,6 156,7
   Short-term borrowings** 1 167,2 168,3
Total equity and liabilities 24 018,8 22 831,9
Net cash** 143,1 2 161,8
* Right-of-use assets are included within property, plant and equipment.
** The lease liabilities have been included in the long and short-term borrowings respectively. The lease liabilities have been excluded from the net cash as these are non-cash in nature. Also included is R973 million relating to the utilisation of a borrowing facility with the group’s primary banking partner.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

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(R'million) Share
capital and
premium
Non-
distributable
reserves
Accumulated
profits
Shares
held by
subsidiary
and
empowerment
entities
Share-
based
payment
reserve
Total
attributable
to owners
of the parent
Non-
controlling
interests
Total
equity
Balance at 1 October 2020 142,0 3 173,4 13 825,1 (2 199,8) 687,4 15 628,1 159,3 15 787,4
Profit for the year 1 893,1 1 893,1 28,5 1 921,6
Other comprehensive loss for the year 1 (297,7) (10,7) (308,4) (20,9) (329,3)
Total comprehensive (loss)/income (297,7) 1 882,4 1 584,7 7,6 1 592,3
Transfers between reserves 218,7 (211,3) (7,4)
Share-based payment2 19,5 19,5 19,5
Dividends on ordinary shares (net of dividend on treasury shares) (1 683,6) (1 683,6) (19,5) (1 703,1)
Sale of empowerment shares3 6,3 6,3 6,3
Balance at 30 September 2021 142,0 3 094,4 13 812,6 (2 193,5) 699,5 15 555,0 147,4 15 702,4
Profit for the year 2 864,5 2 864,5 30,6 2 895,1
Other comprehensive (loss)/income for the year (136,7) 46,2 (90,5) (2,3) (92,8)
Total comprehensive (loss)/income (136,7) 2 910,7 2 774,0 28,3 2 802,3
Transfers between reserves 106,0 (106,5) 0,5
Share-based payment2 52,6 52,6 52,6
Dividends on ordinary shares (net of dividend on treasury shares) (1 384,2) (1 384,2) (33,4) (1 417,6)
Sale of empowerment shares3 6,2 6,2 6,2
Share buy-back transaction4 (124,0) (1 329,1) (1 453,1) (1 453,1)
Balance at 30 September 2022 18,0 3 063,7 13 903,5 (2 187,3) 752,6 15 550,5 142,3 15 692,8
1 Following the closure of Deli Foods Nigeria Limited (Deli Foods) and the disposal of the UAC Foods Nigeria (UAC) associate investment, the FCTR have been released/charged to the income statement. This is in line with IAS 21, which requires the cumulative amount of the exchange differences recognised in other comprehensive income and accumulated in the separate component of equity, to be reclassified from equity to profit or loss (as a reclassification adjustment) when the gain or loss on disposal of foreign operation is recognised.
2 Included in the movement of the share-based payment are options exercised amounting to R1,0 million (2021: R17,9 million).
3 Relates to the exercising of options vested post the December 2014 lock-in period in terms of the Black Managers Participation Right Scheme (BMT). In the current year, R6,2 million (2021: R6,3 million) related to BMT I.
4 During the year ended 30 September 2022, the group embarked on a share buy-back programme, in which 9 490 946 of the listed Tiger Brands shares were repurchased at an average price of R152,62 per share. These shares have been cancelled and reverted back to authorised status. The shares were issued at an original par value of R0,1 per share.

CONSOLIDATED STATEMENT OF CASH FLOWS

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(R'million) Audited
year ended
30 September
2022
Audited
year ended
30 September
2021
Cash operating profit 4 271,0 3 845,0
Working capital changes (1 630,2) 109,8
Cash generated from operations 2 640,8 3 954,8
Finance income and income from investments received 44,7 30,6
Finance costs paid (105,8) (68,4)
Dividends received from associated companies and subsidiaries 372,0 115,4
Taxation paid (961,5) (735,4)
Cash available from operations 1 990,2 3 297,0
Dividends paid (1 386,4) (1 684,3)
Net cash inflow from operating activities 603,8 1 612,7
Purchase of property, plant and equipment (961,0) (1 013,7)
Proceeds on disposal of investment in associated company 139,9
Cash on disposal of division 153,0
Proceeds on disposal of intangible assets 56,0
Proceeds on disposal of property, plant, equipment and vehicles 3,1 30,8
Proceeds on disposal of investments 2,4 0,3
Loans advanced (19,0) (26,0)
Funds held in escrow (46,2) (196,1)
Insurance proceeds on property, plant and equipment received relating to civil unrest 28,3
Purchase of investment (5,4)
Net cash outflow from investing activities (997,8) (855,8)
Net cash (outflow)/inflow before financing activities (394,0) 756,9
Black Managers Trust (BMT) shares exercised 5,0 3,5
Shares exercised relating to equity-settled scheme (1,0) (17,9)
Repayment of principal portion of lease liabilities (178,6) (216,7)
Repurchase of shares (1 453,1)
Short-term borrowings raised/(repaid) 972,8 (14,2)
Net cash outflow from financing activities (654,9) (245,3)
Net (decrease)/increase in cash and cash equivalents (1 048,9) 511,6
Effect of exchange rate changes on cash and cash equivalents 90,7 (129,3)
Reclassification of cash and cash equivalents to other receivables1 (87,7)
Cash and cash equivalents at the beginning of the period 2 161,8 1 779,5
Cash and cash equivalents at the end of the period 1 115,9 2 161,8
Cash resources 1 072,3 2 161,8
Cash relating to venture capital initiatives2 43,6
  1 115,9 2 161,8
1 A garnishee order was served against the Chococam subsidiary resulting in several of Chococam’s bank accounts being blocked. The amounts seized were reclassified to other receivables and not disclosed as cash and cash equivalents on the basis that the cash is not readily available.
2 In June 2021, the Tiger Brands Venture Capital Fund was launched with the aim of driving growth for Tiger Brands by investing in innovative businesses based in sub-Saharan Africa which offer healthier eating options in line with emerging consumer trends in health and nutrition, snackification and economical food options. Included in the group’s cash balance is R43,6 million held specifically for venture capital initiatives.

CONSOLIDATED SEGMENTAL INFORMATION

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(R'million)   Audited
year ended
30 September
2022
Audited
year ended
30 September
2021
   
Revenue          
Domestic operations   29 769,5 27 620,6    
Grains   15 495,6 14 589,5    
   Milling and Baking1   10 642,2 10 118,7    
   Other Grains2   4 853,4 4 470,8    
Consumer Brands   12 415,2 11 080,4    
   Groceries   6 376,9 5 532,6    
   Snacks & Treats   2 391,8 2 297,7    
   Beverages   1 841,5 1 656,1    
   Baby   1 135,9 1 096,7    
   Out of Home   669,1 497,3    
Home and Personal Care (HPC)   1 858,7 1 950,7    
   Personal Care   671,8 643,3    
   Home Care   1 186,9 1 307,4    
Exports and International   4 261,1 3 588,2    
   Exports3   2 039,9 1 795,5    
   International operation          
   – Central Africa (Chococam)   1 109,9 1 010,2    
   Deciduous Fruit (LAF)   1 598,3 1 210,6    
   Other inter-group sales   (487,0) (428,1)    
Total revenue from continuing operations before the product recall   34 030,6 31 208,8    
Impact of product recall (refer note 2)   (1,7) (254,9)    
Total revenue from continuing operations   34 028,9 30 953,9    
Discontinued operation – Value Added Meat Products   119,9    
Total revenue   34 028,9 31 073,8    
1 Comprises maize milling, wheat milling and baking and sorghum-based products.
2 Comprises rice, pasta and oat-based breakfast cereals.
3 The key markets contributing to Exports revenue is Mozambique at 44% (2021: 43%); Zambia at 10% (2021: 10%); Zimbabwe at 10% (2021: 9%); and Nigeria at 3% (2021: 2%).
(R'million)   Audited
year ended
30 September
2022
Audited
year ended
30 September
2021
   
Operating income before impairments and non-operational items          
Domestic operations   2 955,0 2 915,0    
Grains   1 272,1 1 369,4    
   Milling and Baking1   803,0 1 016,0    
   Other Grains2   469,1 353,4    
Consumer Brands   1 412,8 1 131,1    
   Groceries   597,4 396,5    
   Snacks & Treats   262,9 233,8    
   Beverages   268,9 260,5    
   Baby   147,2 143,0    
   Out of Home   136,4 97,3    
Home and Personal Care (HPC)   307,7 432,6    
   Personal Care   16,1 46,9    
   Home Care   291,6 385,7    
Other3   (37,6) (18,1)    
Exports and International   350,4 96,2    
   Exports   143,3 71,3    
   International operations          
   – Central Africa (Chococam)   181,3 172,3    
   Deciduous Fruit (LAF)   25,8 (147,4)    
Total operating income from continuing operations before the following items:   3 305,4 3 011,2    
Impact of product recall (refer note 2)   35,8 (646,8)    
Impact of the civil unrest (refer note 3)   137,5 (85,2)    
Restructuring and related costs (reversed)/raised   7,8 (2,4)    
IFRS 2 charges   (55,8) (41,3)    
Total operating income from continuing operations   3 430,7 2 235,5    
Discontinued operation – Value Added Meat Products (VAMP)   19,1    
Total operating income   3 430,7 2 254,6    
1 Comprises maize milling, wheat milling and baking and sorghum-based products.
2 Comprises rice, pasta and oat-based breakfast cereals.
3 Includes the corporate office and management expenses relating to international investments.

All segments operate on an arm’s length basis in relation to inter-segment pricing.

OTHER SALIENT FEATURES

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(R'million) Audited
year ended
30 September
2022
Audited
year ended
30 September
2021
Capital commitments 1 615,2 1 783,6
   Contracted 403,2 277,0
   Approved 1 212,0 1 506,6
Capital commitments will be funded from normal operating cash flows and the utilisation of existing borrowing facilities.    
Capital expenditure 961,0 1 013,7
   Replacement 439,8 762,2
   Expansion 521,2 251,5
Replacement capital expenditure in line with approved capex plan.    
Guarantees    
   Guarantees (unutilised) 35,3 23,4

Notes

1 BASIS OF PREPARATION AND CHANGES TO THE GROUP’S ACCOUNTING POLICIES

The preparation of these results has been supervised by Deepa Sita, chief financial officer of Tiger Brands Limited.

The summarised consolidated preliminary financial statements are prepared in accordance with the requirements of the JSE Limited Listings Requirements for preliminary reports and the requirements of the Companies Act of South Africa. The Listings Requirements require preliminary financial statements to be prepared in accordance with the conceptual framework, the measurement and recognition requirements of International Financial Reporting Standards (IFRS), the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and also, as a minimum, to contain the information required by IAS 34 Interim Financial Reporting.

The directors take full responsibility for the preparation of the preliminary report and that the summarised consolidated financial statements have been correctly extracted from the underlying annual financial statements. The accounting policies applied in the preparation of these financial statements are consistent with those applied in the previous financial statements.

The accounting policies applied in the preparation of the summarised consolidated financial statements from which the summary financial statements were derived are in terms of IFRS and are consistent with those accounting policies applied in the preparation of the previous consolidated financial statements. The majority of the group’s financial instruments that are measured at fair value in terms of IFRS 13 Fair Value Measurement, are noted as level 1 hierarchy, which are valued based on quoted market prices.

Ernst & Young Inc., Tiger Brands Limited’s independent auditors, have audited the consolidated financial statements of Tiger Brands Limited from which the summarised consolidated financial results have been derived. The auditors have expressed an unmodified audit opinion on the consolidated annual financial statements. Any reference to future financial performance included in this announcement has not been audited or reported on by the group’s external auditors. The auditors’ audit report does not necessarily report on all the information contained in this announcement or financial results. Shareholders are therefore advised that in order to obtain a full understanding of the nature of the auditors’ engagement they should obtain a copy of the auditors’ audit report together with the accompanying financial information from the issuer’s registered office.

2 IMPACT OF PRODUCT RECALL

During the fourth quarter of the 2022 financial year, a product recall was initiated on certain Baby powder products as a precautionary measure. Trace levels of asbestos were detected in test samples from a batch of pharmaceutical-grade talc powder used as raw material in the production of finished powder products. The defective raw material was identified in August 2022. The decision was made, in the best interest of consumers, to recall all Baby talc powder products from store shelves and from consumers. Approximately 281,9 thousand units are estimated to be destroyed, of which 68,5 thousand units are estimated to be recalled from the trade.

During the second half of the 2021 financial year, a product recall was initiated on selected canned vegetable products within the Groceries business over safety concerns linked to defective cans. The details of the recall are disclosed in the 2021 financial statements. Insurance proceeds of R52,2 million (net of Value Added Tax) have been received to date and accounted for as sundry income.

For clarity, the total impact of both recalls has been accounted for on the income statement as follows:

(R’million) Audited
year ended
30 September
2022
Audited
year ended
30 September
2021
Revenue impact 1,7 254,9
Cost of sales impact 4,9 308,3
Associated costs included in sales and distribution expenses 6,8 68,7
Associated costs included in marketing expenses 3,0 10,0
Associated costs included in other operating expenses 4,9
Total cost of product recalls 16,4 646,8

3 IMPACT OF CIVIL UNREST

The July 2021 civil unrest in KwaZulu-Natal (KZN) particularly impacted the Rice and Snacks & Treats businesses. This resulted in inventory write-offs across the two businesses, as well as physical damage to and loss of property, plant and equipment. The unrest also resulted in lost sales across the business up to 31 August 2021. During the current year, the group has received insurance claims relating to the civil unrest from the South African Special Risks Insurance Association (SASRIA). In total, R165,8 million (net of Value Added Tax) has been received to date, of which R28,3 million relates to insurance proceeds on the property, plant and equipment written off following the civil unrest. The remaining insurance proceeds of R137,5 million which relate to inventory write-offs, repairs to damaged property, plant and equipment, cleaning and security costs, have been accounted for as sundry income.

(R’million) Audited
year ended
30 September
2022
Audited
year ended
30 September
2021
Cost of sales impact 85,2
Associated costs included in non-operational items (refer note 6) 15,8
  101,0

4 OPERATING INCOME BEFORE IMPAIRMENTS AND NON-OPERATIONAL ITEMS

(R’million) Audited
year ended
30 September
2022
Audited
year ended
30 September
2021
Operating income has been determined after charging    
Depreciation (included in cost of sales and other operating expenses) 852,7 799,0
Amortisation 8,1 8,6
IFRS 2 (included in other operating expenses)    
– Equity settled, including BEE-related IFRS 2 charges 54,1 37,5
– Cash settled 1,7 3,8

5 IMPAIRMENTS AND FAIR VALUE LOSSES

Goodwill and indefinite useful life intangible assets are tested for impairment annually (as at 30 September) and when circumstances that indicate the carrying value may be impaired. The group’s impairment tests for goodwill and intangible assets with indefinite useful lives are based on the value in use calculations. The key assumptions used to determine the recoverable amount for the different cash-generating units are disclosed in the annual consolidated financial statements for the year ended 30 September 2022. Property, plant and equipment in the Deciduous Fruit business (LAF) was impaired by R3,5 million (2021: R139,1 million). In the prior year, a significant impairment on property, plant and equipment was recognised due to the downturn in the LAF business, which is predominantly an export business. An impairment in Davita (which is included in the Exports and International cash-generating unit) of R9 million was recognised on specific plant and equipment.

(R’million) Audited
year ended
30 September
2022
Audited
year ended
30 September
2021
Impairment of property, plant and equipment (12,9) (154,2)
Fair value loss on unlisted investment (3,0)
  (15,9) (154,2)

6 NON-OPERATIONAL ITEMS

(R’million) Audited
year ended
30 September
2022
Audited
year ended
30 September
2021
Insurance proceeds on civil unrest 28,3
Profit on disposal of intangible asset 43,0
Civil unrest asset write-offs (15,8)
  28,3 27,2

7 RECONCILIATION BETWEEN PROFIT FOR THE YEAR AND HEADLINE EARNINGS

(R’million) Audited
year ended
30 September
2022
Audited
year ended
30 September
2021
Continuing operations    
Profit for the year attributable to owners of the parent 2 864,5 1 773,3
Impairment of property, plant and equipment 9,3 111,1
Loss/(profit) on disposal of property, plant and equipment 2,7 (1,4)
Insurance proceeds on property, plant and equipment (20,4)
Civil unrest asset write-offs 11,3
Loss on disposal of investment in associated company 10,8
Profit on disposal of intangible assets (35,3)
Headline earnings adjustment – associate    
– Profit on disposal of property, plant and equipment (0,3)
– Profit on disposal of investment (88,5) (1,4)
Headline earnings for the year 2 767,3 1 868,4
Tax effect of headline earnings 15,6 (39,3)
Discontinued operations    
Profit for the year attributable to owners of the parent 119,8
Profit on disposal of property, plant and equipment (7,5)
Profit on disposal of intangible assets (20,5)
Release of FCTR on closure of foreign subsidiary (92,7)
Headline earnings for the year (0,9)

8 ANALYSIS OF PROFIT FROM DISCONTINUED OPERATIONS

Profit for the period from discontinued operations (attributable to owners of the company)

The comparative periods reflect the results of the discontinued operations Deli Foods Nigeria Limited (Deli Foods) and VAMP, a division of Tiger Consumer Brands Limited. These are stated below.

(R’million) Audited
year ended
30 September
2022
Audited
year ended
30 September
2021
Revenue 119,9
Expenses (100,8)
Operating profit before impairments and non-operational items 19,1
Non-operational items 122,0
Operating profit after impairments and non-operational items 141,1
Finance costs (0,5)
Profit before taxation 140,6
Taxation (20,8)
Profit for the year from discontinued operations 119,8
Attributable to non-controlling interest
Attributable to owners of parent 119,8
Cash flows from discontinued operations    
Net cash outflow from operating activities (5,9)
Net cash inflow from investing activities 21,9
Net cash outflow from financing activities (6,7)
Net cash inflow 9,3

9 SUBSEQUENT EVENTS

There are no material events that occurred during the year subsequent to 30 September 2022 and prior to these financial results being authorised for issue.