20
23

Tiger Brands unaudited group results and dividend declaration

for the six months ended 31 March 2023

FINANCIALS

INTERIM CONDENSED CONSOLIDATED INCOME STATEMENT

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R'million Notes   Unaudited
six months
ended
31 March
2023
Unaudited
six months
ended
31 March
2022
Audited
year ended
30 September
2022
Total revenue     19 380,6 16 758,1 34 028,9
Revenue     19 380,6 16 758,1 34 030,6
Impact of product recall 2   (1,7)
Total cost of sales     (14 139,1) (11 870,3) (23 713,1)
Cost of sales     (14 139,1) (11 870,3) (23 708,2)
Impact of product recall 2   (4,9)
Gross profit     5 241,5 4 887,8 10 315,8
Sales and distribution expenses     (2 426,6) (2 164,1) (4 350,3)
Marketing expenses     (540,7) (507,0) (906,9)
Other operating expenses     (958,8) (886,2) (1 834,2)
Sundry income 2,3   32,2 171,7 218,8
Expected credit loss reversed/(raised)     8,7 (8,8) (12,5)
Operating income before impairments and non-operational items 4   1 356,3 1 493,4 3 430,7
Impairments and fair value losses 5   (15,9)
Operating income after impairments     1 356,3 1 493,4 3 414,8
Non-operational items 6   33,0 10,7 28,3
Profit including non-operational items     1 389,3 1 504,1 3 443,1
Finance costs     (115,0) (44,2) (89,1)
Finance income     21,2 10,3 14,2
Foreign exchange (loss)/profit     (14,8) 5,1 45,7
Investment income     12,4 11,6 22,7
Income from associated companies     274,7 181,7 478,0
Profit before taxation     1 567,8 1 668,6 3 914,6
Taxation     (379,0) (439,3) (1 019,5)
Profit for the year     1 188,8 1 229,3 2 895,1
Attributable to:          
Owners of the parent     1 170,7 1 214,8 2 864,5
Non-controlling interests     18,1 14,5 30,6
      1 188,8 1 229,3 2 895,1
Weighted average number of shares in issue     156 374 568 165 676 335 162 552 439
Basic earnings per ordinary share (cents)     748,7 733,2 1 762,2
Diluted basic earnings per ordinary share (cents)     735,3 722,9 1 737,7
Headline earnings per ordinary share (cents)     731,0 728,8 1 702,4
Diluted headline earnings per ordinary share (cents)     718,0 718,5 1 678,7

INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

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R'million Unaudited
six months
ended
31 March
2023
Unaudited
six months
ended
31 March
2022
Audited
year ended
30 September
2022
Profit for the period 1 188,8 1 229,3 2 895,1
Other comprehensive income/(loss), net of tax 851,4 (77,3) (92,8)
Foreign currency translation reserve (FCTR) adjustments1 77,5 (56,8) 14,8
Share of associates other comprehensive gain/(loss) and FCTR1 708,7 (23,5) (90,8)
Net gain/(loss) on cash flow hedges1 5,9 37,8 (18,8)
Net gain/(loss) on FVOCI2 financial assets 59,3 (34,8) (55,4)
Remeasurement raised in terms of IAS 19R 63,0
Tax effect (5,6)
Total comprehensive income for the period, net of tax 2 040,2 1 152,0 2 802,3
Attributable to:    
Owners of the parent 2 005,3 1 146,5 2 774,0
Non-controlling interests 34,9 5,5 28,3
  2 040,2 1 152,0 2 802,3
1 Items that may be subsequently reclassified to profit or loss including the related tax effects, with the exception of R3,1 million loss (2022: R5,8 million loss) relating to the share of associates’ other comprehensive loss, and fair value losses on equity instruments measured at FVOCI.
2 FVOCI – fair value through other comprehensive income.

INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

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R'million Notes     Unaudited
six months
ended
31 March
2023
  Unaudited
six months
ended
31 March
2022
Audited
year ended
30 September
2022
 
ASSETS                
Non-current assets       12 650,1   11 382,0 11 616,3  
Property, plant and equipment*       5 720,1   5 498,0 5 695,4  
Goodwill                                5     1 184,0   1 177,7 1 179,4  
Intangible assets                            5     1 723,1   1 721,0 1 719,8  
Investments       3 980,1   2 954,5 2 987,4  
Investments in associated companies       3 377,2   2 341,3 2 421,2  
Other investments       552,1   568,9 515,8  
Loans       50,8   44,3 50,4  
Deferred taxation asset       42,8   30,8 34,3  
Current assets       13 250,4   10 760,5 12 402,5  
Inventories       7 614,9   6 529,0 7 331,0  
Trade and other receivables       4 977,6   3 613,3 3 955,6  
Cash and cash equivalents       657,9   618,2 1 115,9  
TOTAL ASSETS       25 900,5   22 142,5 24 018,8  
EQUITY AND LIABILITIES                
Total equity       16 635,3   15 326,6 15 692,8  
Issued capital and reserves       16 458,6   15 174,6 15 550,5  
Non-controlling interests       176,7   152,0 142,3  
Non-current liabilities       1 814,9   1 240,7 890,1  
Deferred taxation liability       246,4   181,6 240,7  
Post-retirement medical aid obligation       303,6   422,8 322,9  
Long-term borrowings1**       1 264,9   636,3 326,5  
Current liabilities       7 450,3   5 575,2 7 435,9  
Trade and other payables       5 530,4   4 870,9 5 677,7  
Employee-related accruals       352,8   415,5 464,4  
Taxation       46,2   110,8 126,6  
Short-term borrowings2**       1 520,9   178,0 1 167,2  
TOTAL EQUITY AND LIABILITIES       25 900,5   22 142,5 24 018,8  
Net (debt)/cash**       (1 664,3)   318,2 143,1  
* Right-of-use assets are included within property, plant and equipment amounting to R411,9 million (2022: R465,2 million).
** The lease liabilities have been included in the long and short-term borrowings respectively. The lease liabilities have been excluded from the net (debt)/cash as these are non-cash in nature. Total lease liabilities amount to R463,6 million (2022: R514,3 million).
1 Includes the utilisation of the revolving credit facility amounting to R1,0 billion (2022: R300,0 million).
2 Includes the utilisation of borrowing facilities with the group’s banking partners amounting to R1,3 billion (2022: Rnil).

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

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R'million Unaudited
six months
ended
31 March
2023
  Unaudited
six months
ended
31 March
2022
Audited
year ended
30 September
2022
Cash operating profit 1 999,7   2 088,2 4 271,0
Working capital changes (1 695,1)   (1 571,5) (1 630,2)
Cash generated from operations 304,6   516,7 2 640,8
Finance income and income from investments received 33,6   22,0 44,7
Finance costs paid (107,4)   (44,2) (105,8)
Dividends received from associated companies and subsidiaries 27,4   222,8 372,0
Taxation paid (462,2)   (476,6) (961,5)
Cash (utilised in)/available from operations (204,0)   240,7 1 990,2
Dividends paid (1 049,0)   (859,0) (1 386,4)
Net cash (outflow)/inflow from operating activities (1 253,0)   (618,3) 603,8
Purchase of property, plant and equipment (448,4)   (419,1) (961,0)
Funds held in escrow 22,7   (41,8) (46,2)
Proceeds from disposal of property, plant, equipment and vehicles 19,7   3,1
Insurance proceeds on property, plant and equipment received relating to civil unrest   28,3
Proceeds on disposal of investment   1,9 2,4
Purchase of investment   (5,4) (5,4)
Loans advanced   (19,0)
Cash outflow from investing activities (406,0)   (464,4) (997,8)
Net cash outflow before financing activities (1 659,0)   (1 082,7) (394,0)
Black Managers Trust (BMT) shares exercised 1,9   1,8 5,0
Shares exercised relating to equity-settled scheme (37,7)   (1,0) (1,0)
Repayment of principal portion of lease liabilities (99,4)   (104,6) (178,6)
Short-term borrowings raised 1 222,2   972,8
Short-term borrowings repaid (880,0)  
Long-term borrowings raised 1 000,0   300,0
Repurchase of shares   (675,7) (1 453,1)
Net cash inflow/(outflow) from financing activities 1 207,0   (479,5) (654,9)
Net decrease in cash and cash equivalents (452,0)   (1 562,2) (1 048,9)
Effect of exchange rate changes on cash and cash equivalents 8,6   18,6 90,7
Reclassification of cash and cash equivalents to other receivables1 (14,6)   (87,7)
Cash and cash equivalents at the beginning of the period 1 115,9   2 161,8 2 161,8
Cash and cash equivalents at the end of the period 657,9   618,2 1 115,9
Cash resources 613,0   618,2 1 072,3
Cash relating to venture capital initiatives2 44,9   43,6
  657,9   618,2 1 115,9
1 During the year ended September 2022, a garnishee order was served against the Chococam subsidiary resulting in several of Chococam’s bank accounts being blocked with an additional account being blocked in the current year. 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 R44,9 million (2022: Rnil) held specifically for venture capital initiatives.

OTHER SALIENT FEATURES

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R'million Unaudited
six months
ended
31 March
2023
  Unaudited
six months
ended
31 March
2022
Audited
year ended
30 September
2022
Capital commitments 1 260,0   1 191,0 1 615,2
– Contracted 486,4   635,7 403,2
– Approved 773,6   555,3 1 212,0
Capital commitments will be funded from normal operating cash flows and the utilisation of existing borrowing facilities.        
Capital expenditure 448,4   419,1 961,0
– Replacement 142,6   267,9 439,8
– Expansion 305,8   151,2 521,2
Replacement capital expenditure in line with approved capex plan.        
Guarantees        
– Guarantees (unutilised) 24,0   23,1 35,3

INTERIM CONDENSED 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 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 period 1 214,8 1 214,8   14,5 1 229,3  
Other comprehensive loss (68,3) (68,3)   (9,0) (77,3)  
Total comprehensive (loss)/income (68,3) 1 214,8 1 146,5   5,5 1 152,0  
Transfers between reserves (41,1) 41,1    
Share buy-back transaction3 (123,4) (552,3)   (675,7)   (675,7)  
Share-based payments1 4,4 4,4   4,4  
Dividends on ordinary shares (net of dividend on treasury shares) (858,1) (858,1)   (0,9) (859,0)  
Sale of empowerment shares2 2,5 2,5   2,5  
Balance at 31 March 2022 18,6 2 985,0 13 658,1 (2 191,0) 703,9 15 174,6   152,0 15 326,6  
Profit for the period 1 649,7 1 649,7   16,1 1 665,8  
Other comprehensive (loss)/income (68,4) 46,2 (22,2)   6,7 (15,5)  
Total comprehensive (loss)/income (68,4) 1 695,9 1 627,5   22,8 1 650,3  
Transfers between reserves 147,1 (147,6) 0,5    
Share buy-back transaction3 (0,6) (776,8) (777,4)   (777,4)  
Share-based payments1 48,2 48,2   48,2  
Dividends on ordinary shares (net of dividend on treasury shares) (526,1) (526,1)   (32,5) (558,6)  
Sale of empowerment shares2 3,7 3,7   3,7  
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  
Profit for the period 1 170,7 1 170,7   18,1 1 188,8  
Other comprehensive income 834,6 834,6   16,8 851,4  
Total comprehensive income 834,6 1 170,7 2 005,3   34,9 2 040,2  
Transfers between reserves 247,3 (251,2) 3,9    
Share-based payments1 (51,9) (51,9)   (51,9)  
Dividends on ordinary shares (net of dividend on treasury shares) (1 048,5) (1 048,5)   (0,5) (1 049,0)  
Sale of empowerment shares2 3,2 3,2   3,2  
Balance at 31 March 2023 18,0 4 145,6 13 774,5 (2 184,1) 704,6 16 458,6   176,7 16 635,3  
1 Included in the movement of the share-based payment are options of R33,9 million (2022: R1,0 million) exercised.
2 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, R3,2 million (2022: R2,5 million) related to BMT I.
3 During the prior year, 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. The shares were issued at an original par value of R0,1 per share.

INTERIM CONDENSED CONSOLIDATED SEGMENTAL INFORMATION

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R'million   Unaudited
six months
ended
31 March
2023
  Unaudited
six months
ended
31 March
2022
Audited
year ended
30 September
2022
 
REVENUE            
Domestic operations   17 269,4   14 836,1 29 769,5  
   Grains   8 958,9   7 350,8 15 495,6  
      Milling and Baking1   6 068,4   4 945,9 10 642,2  
      Other Grains2   2 890,5   2 404,9 4 853,4  
   Consumer Brands   7 036,9   6 390,7 12 415,2  
      Groceries   3 413,6   3 400,8 6 376,9  
      Snacks & Treats   1 388,6   1 069,1 2 391,8  
      Beverages   1 220,5   1 033,3 1 841,5  
      Baby   585,3   577,8 1 135,9  
      Out of Home   428,9   309,7 669,1  
   Home and Personal Care (HPC)   1 273,6   1 094,6 1 858,7  
      Personal Care   371,8   279,3 671,8  
      Home Care   901,8   815,3 1 186,9  
   Exports and International   2 111,2   1 922,0 4 261,1  
      Exports3   1 217,1   954,4 2 039,9  
      International operation            
     – Central Africa (Chococam)   682,5   542,2 1 109,9  
      Deciduous Fruit (LAF)   439,3   697,8 1 598,3  
      Other intergroup sales   (227,7)   (272,4) (487,0)  
Total revenue from operations – before the product recall   19 380,6   16 758,1 34 030,6  
Impact of product recall (refer note 2)     (1,7)  
Total revenue   19 380,6   16 758,1 34 028,9  
All segments operate on an arm’s-length basis in relation to inter-segment pricing.
 
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 37% (2022: 41%); Zambia at 11% (2022: 6%); Zimbabwe at 10% (2022: 10%); and Nigeria at 3% (2022: 2%).
R'million   Unaudited
six months
ended
31 March
2023
  Unaudited
six months
ended
31 March
2022
Audited
year ended
30 September
2022
 
OPERATING INCOME BEFORE IMPAIRMENTS AND NON–OPERATIONAL ITEMS
           
Domestic operations   1 162,3   1 283,7 2 955,0  
   Grains   342,5   422,9 1 272,1  
      Milling and Baking1   267,7   272,2 803,0  
      Other Grains2   74,8   150,7 469,1  
   Consumer Brands   554,7   653,8 1 412,8  
      Groceries   126,4   290,8 597,4  
      Snacks & Treats   108,7   55,6 262,9  
      Beverages   196,2   175,1 268,9  
      Baby   45,7   65,1 147,2  
      Out of Home   77,7   67,2 136,4  
   Home and Personal Care (HPC)   255,8   212,2 307,7  
      Personal Care   14,6   (14,2) 16,1  
      Home Care   241,2   226,4 291,6  
   Other3   9,3   (5,2) (37,6)  
   Exports and International   163,2   63,5 350,4  
      Exports   76,4   29,2 143,3  
      International operation            
      – Central Africa (Chococam)   102,6   88,4 181,3  
      Deciduous Fruit (LAF)   (15,8)   (54,1) 25,8  
Total from operations before the following items   1 325,5   1 347,2 3 305,4  
Impact of the civil unrest (refer note 3)   20,0   143,8 137,5  
Impact of product recall (refer note 2)     17,4 35,8  
IFRS 2 charges   10,8   (8,5) (55,8)  
Restructuring and related costs     (6,5) 7,8  
Total operating income   1 356,3   1 493,4 3 430,7  
All segments operate on an arm’s-length basis in relation to inter-segment pricing.
 
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.

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 directors take full responsibility for the preparation of these condensed consolidated interim results.

The condensed consolidated interim results for the six months ended 31 March 2023 have been prepared in accordance with the International Financial Reporting Standard, (IAS 34) Interim Financial Reporting, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by the Financial Reporting Standards Council, the requirements of the South African Companies Act No 71 of 2008 and the Listings Requirements of the JSE Limited. These statements have not been audited or reviewed by the group’s auditors.

The accounting policies adopted in the preparation of the condensed consolidated interim results are consistent with those applied in preparation of the group’s annual consolidated financial statements for the year ended 30 September 2022. There have been no assets held for sale or discontinued operations during the period.

The going concern basis has been used in preparing these condensed consolidated interim results as the directors have a reasonable expectation that the group will continue as a going concern for the foreseeable future. The condensed consolidated interim results have been prepared on the historical cost basis, except for the measurement of certain financial instruments at fair value or at amortised cost.

2. IMPACT OF PRODUCT RECALL

Last 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.

The total impact of the recall has been accounted for on the income statement as follows:

R’million Unaudited
six months
ended
31 March
2023
Unaudited
six months
ended
31 March
2022
Audited
year ended
30 September
2022
Revenue impact 1,7
Cost of sales impact 4,9
Associated costs included in sales and distribution expenses 6,8
Associated costs included in marketing expenses 3,0
Insurance proceeds received included in sundry income (17,4)
Total cost of product recall (17,4) 16,4

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, R20,0 million (net of Value Added Tax) was received from the group’s insurers relating to the Snacks & Treats business. During the year ended September 2022, the group received insurance claims relating to the civil unrest from the South African Special Risks Insurance Association (SASRIA). In total, R161 million (net of Value Added Tax) was received, of which R28,3 million relates to insurance proceeds on the fixed assets written off following the civil unrest. The remaining insurance proceeds of R137,5 million which relate to stock write-offs, repairs to damaged property, plant and equipment, cleaning and security costs, have been accounted for as sundry income.

4. OPERATING INCOME BEFORE IMPAIRMENTS AND NON-OPERATIONAL ITEMS

R’million Unaudited
six months
ended
31 March
2023
Unaudited
six months
ended
31 March
2022
Audited
year ended
30 September
2022
Operating income has been determined after charging/(crediting)      
Depreciation (included in cost of sales and other operating expenses) 462,5 419,7 852,7
Amortisation 4,1 3,7 8,1
IFRS 2 (included in other operating expenses)      
– Equity settled (14,2) 5,4 54,1
– Cash settled 3,4 3,1 1,7

5. IMPAIRMENTS

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 in the prior year due to the downturn in the LAF business, which is predominantly an export business. In the prior year an impairment in Davita (which is included in the Exports and International cash-generating unit) of R9,0 million was also recognised on specific plant and equipment.

Based on management’s assumptions, no impairments have been recorded at 31 March 2023.

R’million Unaudited
six months
ended
31 March
2023
Unaudited
six months
ended
31 March
2022
Audited
year ended
30 September
2022
Impairment of property, plant and equipment (12,9)
Fair value loss on unlisted investment (3,0)
  (15,9)

6. NON-OPERATIONAL ITEMS

  Unaudited
six months
ended
31 March
2023
Unaudited
six months
ended
31 March
2022
Audited
year ended
30 September
2022
Proceeds on disposal of property, plant, equipment and vehicles 33,0
Insurance proceeds on civil unrest 10,7 28,3
  33,0 10,7 28,3

7. RECONCILIATION BETWEEN PROFIT FOR THE PERIOD AND HEADLINE EARNINGS

  Unaudited
six months
ended
31 March
2023
Unaudited
six months
ended
31 March
2022
Audited
year ended
30 September
2022
Total operations      
Profit for the year attributable to owners of the parent 1 170,7 1 214,8 2 864,5
(Profit)/loss on disposal of property, plant, equipment and vehicles (27,6) 0,4 2,7
Insurance proceeds on property, plant and equipment (7,8) (20,4)
Impairment of property, plant and equipment 9,3
Headline earnings adjustment – associates      
   Profit on disposal of investment (88,5)
   Profit on disposal of property, plant and equipment (0,3)
Headline earnings for the period 1 143,1 1 207,4 2 767,3
Tax effect of headline earnings 4,8 2,9 15,6
 

8. FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair value hierarchy

Financial instruments measured at fair value are grouped into the following levels based on the significance of the inputs used in determining fair value:

Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities.

Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly.

Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data.

As at 31 March 2023, the group held the following financial instruments measured at fair value:

  Unaudited six months ended
31 March 2023
Unaudited six months ended
31 March 2022
Audited year ended
30 September 2022
(R’million) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
Assets measured at fair value                        
Financial assets                        
Other investments 312,3 0,3 11,7 324,3 279,8 0,3 10,3 290,4 253,5 0,3 11,7 265,5
Derivatives 47,5 47,5 16,5 16,5
Liabilities                        
Derivatives (29,5) (29,5) (19,8) (19,8)

9. SUBSEQUENT EVENTS

There are no material events that occurred during the period subsequent to 31 March 2023 and prior to these financial results being authorised for issue.