Adding value to life
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INTEGRATED ANNUAL REPORT AND
CONSOLIDATED FINANCIAL STATEMENTS 2016
Adding value
to life
Our reputation as a
good corporate citizen is
essential in our evolution.
Understanding the diverse
needs of all our stakeholders
– our people, communities,
shareholders, governments,
suppliers and others –
guides our strategies for
building mutually beneficial
relationships that add real
value.
For more information
see pages within the report
Visit our website
for additional
information
For further information visit our website:
www.tigerbrands.com
1 2016 at a glance
Introduction
Contents
Business overview
2 Group profile
3 Our organisational structure
6 Our footprint
10 Managing our business
11 Our leadership
14 Chairman’s review
16 Chief executive officer’s review
20 Strategic review
22 Creating a virtuous growth cycle
Key factors driving our strategy
24 Our key relationships
26 Our operating environment
28 Our competitive advantages and market position
29 2016 awards and accolades
Financial review
30 Chief financial officer’s review
33 Five-year review
34 Value-added statement
35 Segment report
37 Summary of ratios and statistics
Operational review
40 Grains
42 Consumer Brands – food
46 Home, Personal Care and Baby
48 International (including Exports)
51 Associates
Non-financial review
54 Sustainability review
56 Our people
60 Health and safety
63 Transformation
65 Our communities
69 Our customers and consumers
74 Environment
Governance review
82 Governance review
87 Committee reports
92 Remuneration report
102 Risk management report
107 Preparation of annual financial statements
107 Directors’ approval
107 Certificate by company secretary
108 Report of the independent auditor
109 Consolidated financial statements
119 Notes to the consolidated financial statements
Shareholders’ information
186 Shareholders’ diary
186 Declaration of final dividend 144
187 Analysis of registered shareholders and company schemes
188 Definitions
190 Company information
Introduction
About
this report
This integrated annual report provides a consolidated view of Tiger Brands Limited’s
performance for the year ended 30 September 2016, and follows a similar report for
the financial year to 30 September 2015.
For further information, please contact the company secretary, Thiroshnee Naidoo
T: +27 11 840 4000 E: companysecretary@tigerbrands.com
Reporting principles and approach
By integrating financial, social and environmental performance,
this report gives stakeholders a full understanding of our
business, prospects and strategy in the context of our operating
environment.
The annual financial statements have been prepared in
accordance with International Financial Reporting Standards
(IFRS) and the South African Companies Act.
In reporting on non-financial aspects, we are guided by:
•• King III report – the key principles have been applied and
material non-adherence explained
•• Listings Requirements of the JSE Limited
•• Standards and codes governing specific areas, including
the Department of Trade and Industry’s broad-based black
economic empowerment (BBBEE) codes of good practice
•• Guiding principles of the International Integrated Reporting
Committee (IIRC) framework (2013) – Tiger Brands reports
against strategic goals (currently under review) and, as
appropriate, how these affect the six capitals proposed in
this framework (page 22 and 23)
•• Principles and guidelines from the Global Reporting
Initiative and the relevant sector supplement (collectively
GRI G4) in line with the core level of application.
Boundary and scope
While this report is aimed primarily at providers of capital,
we believe financial and non-financial disclosure will interest
all stakeholder groups. The report covers the operations of
Tiger Brands Limited (Tiger Brands) and its subsidiary and
associate companies for the review period. The only
significant change in our size, structure or ownership during
the year was the disposal of Tiger Branded Consumer
Goods plc (TBCG) (formerly Dangote Flour Mills).
In the operating environment section (pages 26 and 27) and
risk report starting on page 102, we identify external threats,
opportunities and outcomes with a significant effect on our
ability to create value. In elaborating on the strategic review
currently under way (pages 20 and 21), we identify the
most material issues for the group and outline our response:
•• Allocation of capital – identify categories with the best
potential for growth, margin enhancement and requisite
return on investment in South Africa while refining the
international strategy to be accretive to domestic
performance
•• People and talent – the current operating environment
demands the right calibre, capability and capacity of
human resources to stabilise the business in the short term
and grow in the long term. This in turn will require a
leadership mix of strategic and entrepreneurial thinking,
coupled with sound execution capabilities
•• Optimum organisational structure – that leverages group
functions to deliver optimal operating efficiency
•• Managing sustainability and reputation – building on our
current strong brands and reputation while protecting our
licence to operate through rigorous governance and
engaging with stakeholders.
There were no changes to the boundary or any
measurement techniques in 2016.
Supplementary information
This report forms part of a suite of reports to stakeholders. It
should be read with the reports on our website for a full
understanding of the group:
•• Annual financial statements
•• Supplementary report
•• GRI G4 Index
•• King III application register.
Assurance
Our current combined assurance model is set out below:
Business process
Nature of
assurance
Assurance provider
In this report
Annual financial
statements
External
audit
Ernst & Young Inc
Risk management
and internal
controls
Internal
audit
KPMG Services
Proprietary
Limited
The scope of this audit is
limited to information in
the annual financial
statements and does not
extend to any financial
or operating indicators
in the integrated annual
report.
Risk management, page
102.
Audit committee report,
page 87.
Environmental risk
assessments
External
audit
Marsh Proprietary
Limited
Pages 74 to 79.
Social
responsibility and
sustainability
External
audit
JSE Limited
National
Business
Initiative (NBI)
Tiger Brands ranks well
on the FTSE ESG ratings
(part of the FTSE4Good
series), a multi-
dimensional measure of
environmental, social
and governance
exposure and practice.
The group reports
annually on its carbon
emissions under the
global CDP. Refer to
website.
BBBEE
External
verification
EmpowerLogic
Proprietary Limited
Transformation, page 63 to
64.
Approval
The audit committee and board acknowledge their joint
responsibility for ensuring the integrity of the integrated
annual report. Appropriate judgement and rigour have been
applied in preparing this report and we conclude that it is
presented in accordance with the IIRC framework.
Chairman
Board
22 November 2016
Chairman
Audit committee
2016 at a glance
for the year ended 30 September 2016
Key performance indicators*
Turnover
up 11% to
R31,7 billion
Operating income**
up 5% to
R4,2 billion
Group volumes
up 1%, with domestic
volumes up 2%
1
Income from
associates
up 43% to
R861 million
Grains operating
income at
R2 billion
amid
high inflation
in raw materials
Groceries operating income up 13%
and operating margin of 9,9%
*From continuing operations.
**Before impairment, abnormal items and IFRS 2 charges.
Tiger Brands LimitedIntegrated annual report 2016
Group profile
Tiger Brands is one of Africa’s largest, listed FMCG
manufacturers and distributes brands spanning food, home
and personal care and baby products. In South Africa,
it has leading market shares across a broad range of
categories and has grown over the years through
acquisitions and by developing its brands.
In addition to our core South African business, we also have
operations in West, East and Central Africa and have built
a sizeable exports business for our products throughout
Africa.
Tiger Brands prides itself on being a world-class
manufacturer and marketer of fast-moving consumer goods
(FMCG). Our success is underpinned by the strength of our
brands and continuous improvement initiatives. Marketing
investment in support of our core brands has increased over
recent years while consumer and shopper research provides
comprehensive insights into the categories and markets
in which we operate.
In addition to controlled operations, Tiger Brands holds
meaningful minority interests in associate companies:
•• South Africa: JSE-listed Oceana Group Limited (42,1%)
(fishing)
•• Chile: Empresas Carozzí (24,4%) (FMCG)
•• Nigeria: UAC Foods Limited (49,0%) (FMCG)
•• Zimbabwe: Listed National Foods Holdings Limited
(37,4%) (FMCG).
2
Salient features
Financial
Earnings per share (EPS)
from total operations
2 034 cents
Headline EPS (HEPS)
from total operations
2 127 cents
Final dividend
702 cents per share
(2015: 1 068 cents)
(2015: 1 786 cents)
(2015: 611 cents)
EPS from continuing
operations
2 007 cents
HEPS from continuing
operations
2 130 cents
Total dividend
1 065 cents per share
(2015: 1 930 cents)
(2015: 2 091 cents)
(2015: 950 cents)
Tiger Brands LimitedIntegrated annual report 2016Business overview Non-financial
Market-leading brands
Well rated under FTSE ESG, a
multi-dimensional measure of
environmental, social and
governance exposure and
practice, and part of the
FTSE4Good series
Voluntary participation in CDP
(global standard for disclosure
on carbon emissions and water
management)
Certified as a top employer in
the FMCG sector by South
African Graduate Employer’s
Association
Our organisational structure
3
Grains
Consumer Brands
International (including
Exports)
Associates
Consolidated
Equity accounted
Tiger Brands LimitedIntegrated annual report 2016 Our organisational structure continued
Operating segments
Grains
Consumer Brands
International (including Exports)
Associates
41%
of group turnover*
42%
of group turnover*
17%
of group turnover*
26%
of group profit after tax*
Brands
Milling and Baking – Albany, Golden Cloud, Ace
Sorghum Beverages & Breakfast – King Korn, Mabela,
Morvite, Ace Instant, Jungle Oats, Taystee Wheat, Oatso
Easy, Jungle Energy Crunch, Crunchalots
Rice – Tastic, Aunt Caroline, Surprise, Cresta
Pasta – Fatti’s & Moni’s
4
Brands
Groceries – KOO, All Gold, Crosse & Blackwell, Black Cat,
Mrs Ball’s, Hugo’s, Colmans
Snacks, Treats and Beverages – MMMallows, Beacon,
Maynards, Allsorts, Jelly Tots, Jungle Energy Bar, Wilsons,
Toff-O-Luxe, XXX, Fizzpop, Damascus, Smoothies, Oros,
Energade, Hall’s, Rose’s, Monis, Game
Value Added Meat Products (VAMP) – Enterprise, Renown,
Mielie-Kip, Bokkie, canned meats
Home, Personal Care and Baby (HPCB) – Purity, Ingram’s
Camphor Cream, Doom, Elizabeth Anne’s, Jeyes, Perfect
Touch, Dolly Varden, Status, Lemon Lite, Kair, Protein Feed,
Airoma, Peaceful Sleep, Bio Classic
Manufacturing
plants:
20
Workforce:
4 549
Manufacturing
plants:
19
Workforce:
4 729
Grains – % contribution to turnover
Consumer Brands – % contribution to turnover
International (including Exports) – % contribution
Associates – % contribution income from
4%
5%
12%
19%
8%
* From continuing operations.
18%
35%
Maize
Mill bake
King Food
Rice
Jungle
Pasta
4%
16%
Groceries
Snacks and treats
Beverages
VAMP
Out of home
HPCB
52%
10%
17%
Deciduous Fruit (Langeberg & Ashton Foods (LAF))
Oceana Group (South Africa)
(South Africa) – Gold Reef, Silverleaf
Tiger Brands International exports the group’s branded
products into the rest of Africa
Empresas Carozzí (Chile)
National Foods Holdings (Zimbabwe)
Davita Trading (South Africa) (Exports) – Jolly Jus,
UAC Foods (Nigeria)
Benny, Davita
East Africa
Haco Tiger Brands (Kenya) (51%) – Ace, BIC, Jeyes, Miadi,
Motions, TCB, Bloo, SoSoft
East African Tiger Brands Industries (Ethiopia) (51%)
– Peacock, Crown, Solar, Micky, Miracle, Florida
Chococam (Cameroon) (74,7%) – Arina, Big Gum, Kola,
Mambo, Matinal, Tartina, Tutoux, Chococroc
Central Africa
West Africa
Deli Foods (Nigeria) (100%) – Deli, Igloo, Nutribix
Manufacturing
Workforce:
plants:
6
to turnover
29%
9%
18%
28%
3 329
East Africa
Central Africa
Deciduous Fruit
West Africa
Exports
associated companies
3%
9%
Oceana
Carozzí
National foods
UAC foods
16%
35%
53%
Tiger Brands LimitedIntegrated annual report 2016Business overview Operating segments
Grains
Consumer Brands
International (including Exports)
Associates
41%
of group turnover*
42%
of group turnover*
17%
of group turnover*
26%
of group profit after tax*
Brands
Brands
Milling and Baking – Albany, Golden Cloud, Ace
Groceries – KOO, All Gold, Crosse & Blackwell, Black Cat,
Sorghum Beverages & Breakfast – King Korn, Mabela,
Mrs Ball’s, Hugo’s, Colmans
Morvite, Ace Instant, Jungle Oats, Taystee Wheat, Oatso
Snacks, Treats and Beverages – MMMallows, Beacon,
Easy, Jungle Energy Crunch, Crunchalots
Rice – Tastic, Aunt Caroline, Surprise, Cresta
Pasta – Fatti’s & Moni’s
Maynards, Allsorts, Jelly Tots, Jungle Energy Bar, Wilsons,
Toff-O-Luxe, XXX, Fizzpop, Damascus, Smoothies, Oros,
Energade, Hall’s, Rose’s, Monis, Game
Value Added Meat Products (VAMP) – Enterprise, Renown,
Mielie-Kip, Bokkie, canned meats
Home, Personal Care and Baby (HPCB) – Purity, Ingram’s
Camphor Cream, Doom, Elizabeth Anne’s, Jeyes, Perfect
Touch, Dolly Varden, Status, Lemon Lite, Kair, Protein Feed,
Airoma, Peaceful Sleep, Bio Classic
plants:
20
4%
5%
12%
19%
8%
Manufacturing
Workforce:
Manufacturing
Workforce:
4 549
plants:
19
4 729
Groceries
Snacks and treats
Beverages
VAMP
Out of home
HPCB
18%
35%
Maize
Mill bake
King Food
Rice
Jungle
Pasta
4%
16%
52%
10%
17%
Oceana Group (South Africa)
Empresas Carozzí (Chile)
National Foods Holdings (Zimbabwe)
UAC Foods (Nigeria)
5
Deciduous Fruit (Langeberg & Ashton Foods (LAF))
(South Africa) – Gold Reef, Silverleaf
Tiger Brands International exports the group’s branded
products into the rest of Africa
Davita Trading (South Africa) (Exports) – Jolly Jus,
Benny, Davita
East Africa
Haco Tiger Brands (Kenya) (51%) – Ace, BIC, Jeyes, Miadi,
Motions, TCB, Bloo, SoSoft
East African Tiger Brands Industries (Ethiopia) (51%)
– Peacock, Crown, Solar, Micky, Miracle, Florida
Central Africa
Chococam (Cameroon) (74,7%) – Arina, Big Gum, Kola,
Mambo, Matinal, Tartina, Tutoux, Chococroc
West Africa
Deli Foods (Nigeria) (100%) – Deli, Igloo, Nutribix
Manufacturing
plants:
6
Workforce:
3 329
Grains – % contribution to turnover
Consumer Brands – % contribution to turnover
International (including Exports) – % contribution
to turnover
Associates – % contribution income from
associated companies
3%
9%
East Africa
Central Africa
Deciduous Fruit
West Africa
Exports
16%
35%
53%
Oceana
Carozzí
National foods
UAC foods
29%
9%
18%
28%
* From continuing operations.
Tiger Brands LimitedIntegrated annual report 2016 Our footprint
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South Africa
Tiger Brands Limited
Estimated population 55 million
GDP US$313 billion
GDP per capita US$5 692
Kenya
Haco Tiger Brands
Estimated population 46 million
GDP US$63,4 billion
GDP per capita US$1 333
Nigeria
Deli Foods
Estimated population 182 million
GDP US$481 billion
GDP per capita US$2 640
Cameroon
Chococam
Estimated population 23 million
GDP US$29 billion
GDP per capita US$1 251
Ethiopia
EATBI
Estimated population 99 million
GDP US$61,5 billion
GDP per capita US$619
Business overview
Export territories
• Angola
• Botswana
• Burkina Faso
• Chad
• Chile
• DRC
• Ghana
• Guinea
• Ivory Coast
• Liberia
• Madagascar
• Mali
• Equatorial Guinea
• Mozambique
• Namibia
• Malawi
• Sierra Leone
• Tanzania
• Uganda
• Zambia
• Zimbabwe
KEy BRANDS (for export)
7
Core categories
• Beverages
• Condiments and ingredients
• Personal care
• Snacks and treats
• Home care
On-shore manufacturing
Nigeria
Cameroon
Ethiopia
Kenya
Zimbabwe
South Africa
Tiger Brands LimitedIntegrated annual report 2016 8
Tiger Brands LimitedIntegrated annual report 2016Business overview 9
Albany is the market
leader in bread and
despite increased
competition, has retained
its leading position
in its core markets of
KwaZulu-Natal and
Gauteng. Similarly, it has
successfully maintained its
premium pricing. The
promise of quality,
represented by freshness,
is a promise the Albany
brand has held for years
through its superior
offering. Albany has also
taken the lead in satisfying
consumer needs through
innovation with products
such as Best of Both (white
and brown bread), Low GI,
Ultima health range and
now D’Lite, the indulgent
range.
Tiger Brands LimitedIntegrated annual report 2016 Managing our business
Tiger Brands is committed to the highest standards of
corporate governance, and ethical and moral business
behaviour.
Board
Audit
Remuneration
Nominations
Risk and
sustainability
Social, ethics
and
transformation
Investment
10
The board sets the tone and standards, which filter down to
executive management and all employees.
Directors and management understand their responsibilities
as custodians of the company and its assets, and manage
these on behalf of shareholders, who are the true owners
of the company.
Managing our business against global benchmarks
During the review period, Tiger Brands was assessed on its
environmental, social and governance (ESG) exposure and
risk. This multi-dimensional measure, conducted on behalf of
the FTSE for all companies included in the FTSE4Good index
series, evaluates the ESG risk and performance of companies
worldwide to give market participants a useful tool for
portfolio design and management against related criteria, or
as a framework for corporate engagement and stewardship.
Our absolute score of 3,4 out of 5 positions Tiger Brands in
the upper quintile (84%), but indicates that more needs to
be done. On the measured pillars, we scored 3,4 on
environmental, 3,3 on social and 3,6 on governance,
with the full scorecard on our website.
Managing our business sustainably
Sustainability (encompassing social, environmental and
economic issues) is managed centrally by Tiger Brands’
corporate affairs function and is therefore built into the
group’s corporate affairs strategy. We reviewed this
strategy in 2015, building on a facilitated dialogue with
85 leaders from across the group. These individuals provided
a cross-functional perspective and input on what world-class
corporate affairs and sustainability management should entail
as well as actions required to close any gaps.
The outcome was a series of short and long-term actions that
we believe will help the group to better create and capture
value from conducting business sustainably.
Accordingly, our strategic priority is supported by seven key
aspirations or aims that are underpinned by our commitment
to being an admired corporate citizen and a demonstrated
business case for adding value, as shown below.
Tiger Brands is
the “go-to”
company on
public policy
issues
The Tiger Brands
voice that
inspires and
protects
Proactive
shaping and
influencing of
key business
changers
Tiger Brands
valued and
experienced as
a responsible,
caring corporate
citizen
Aligned and
socialised
Tiger Brands’
position on
critical industry
matters
Admired
stakeholder
engagement
programme
Respected
corporate Tiger
Brands identity
Ignite, inspire and influence the experience of Tiger Brands as an admired corporate citizen
Demonstrate business value add
Tiger Brands LimitedIntegrated annual report 2016Business overview Our leadership
Independent non-executive directors
André Parker (65)
Chairman of the board
MCom
Appointed: 1 August 2007
Board committee membership
Chairman: Nominations, investment
Member: Remuneration
External appointments
Independent non-executive director of Distell, Empresas
Carozzí and Standard Bank Group.
Area of expertise and contribution
Strategy, business intelligence, sales and distribution, Africa.
Bheki Sibiya (59)
Deputy chairman
BAdmin, MBA
Appointed: 14 March 2003
Board committee membership
Member: Social, ethics and transformation
External appointments
Non-executive director of Famous Brands, chairman of Cape
Africa and executive chairman of Smartvest Investments.
Area of expertise and contribution
Governance, stakeholder engagement, Africa.
Michael Ajukwu (60)
BSc (finance), MBA
Appointed: 31 March 2015
Board committee membership
Member: Risk and sustainability
External appointments
Non-executive director of Intafact Beverages, a subsidiary of
SABMiller in Nigeria, and Novotel: Port Harcourt, Nigeria, a
member of Accor Hotels group.
Area of expertise and contribution
Stakeholder engagement, risk, general management, corporate
finance, West Africa.
Santie Botha (52)
BEcon (hons)
Appointed: 18 August 2004
Board committee membership
Chairman: Remuneration
Member: Nominations
External appointments
Non-executive director of Telkom and Liberty Holdings Group,
chairman of Famous Brands and Curro Holdings, Chancellor
of Nelson Mandela Metropolitan University.
Area of expertise and contribution
Marketing, sales, strategy, business intelligence, governance,
HR and remuneration.
Mark Bowman (50)
BCom, MBA
Appointed: 1 June 2012
External appointments
Non-executive director of Dis-Chem.
Area of expertise and contribution
Strategy, Africa, general management, fast-moving consumer
goods.
Maya Makanjee (54)
BA (fine arts), BCom, MBL (cum laude)
Appointed: 1 August 2010
Board committee membership
Chairman: Social, ethics and transformation
Member: Nominations
External appointments
Non-executive director of Mpact, AIG South Africa and AIG
Life South Africa, trustee of Nelson Mandela Foundation.
Area of expertise and contribution
Africa, general management, governance, strategy, stakeholder
relations, reputation management, corporate communication,
human resources, fast-moving consumer goods.
11
Khotso Mokhele (61)
BSc (agriculture), MSc (food science), PhD (microbiology)
Appointed: 1 August 2007
Board committee membership
Chairman: Risk and sustainability
Member: Audit, investment
External appointments
Director of African Oxygen, Mapitso Consortium, Hans
Merensky Holdings, Kenosi Investment Holdings. Special adviser
to the Minister of Science and Technology and chancellor of the
University of the Free State. Former chairman of ArcelorMittal
South Africa, Impala Platinum and Adcock Ingram.
Area of expertise and contribution
General management, risk, auditing and accounting,
governance.
Rob Nisbet (61)
BCom, BAcc, CA(SA)
Appointed: August 2010
Board committee membership
Chairman: Audit
Member: Risk and sustainability, investment
Area of expertise and contribution
Finance, mergers and acquisitions, risk, general management,
strategy.
Tiger Brands LimitedIntegrated annual report 2016 Our leadership continued
Independent non-executive directors continued
Makhup Nyama (59)
BCom, MBA, diploma in marketing management
Appointed: 1 August 2010
Board committee membership
Member: Remuneration, nominations, social, ethics and
transformation
External appointments
Director of Xon Holdings, BDO Inc, Makhup Properties,
Kapela Holdings and its subsidiaries.
Areas of expertise and contribution
General management, HR and remuneration, governance,
information and communication technology.
yunus Suleman (59)
CA(SA), BCom, BCompt (hons), leadership programmes
Appointed: 13 July 2015
Board committee membership
Member: Audit, remuneration, investment
External appointments
Independent non-executive director of Liberty Holdings,
Liberty Group, Albaraka Bank and Gold Fields, chairman
of Enactus South Africa and Sulfam Holdings.
Areas of expertise and contribution
Accounting, fast-moving consumer goods and
telecommunications in Africa.
Executive directors (and executive management committee members)
12
Lawrence Mac Dougall (59)
Chief executive officer
Appointed: 10 May 2016
Board committees
Audit, remuneration, nominations, social, ethics and
transformation and investment.
External appointments
Non-executive director of Oceana Group.
Areas of expertise and contribution
General management, strategy execution, fast-moving
consumer goods, Africa, developing markets.
Noel Doyle (50)
Chief financial officer
FCA, CA(SA)
Appointed: July 2015 (member of executive committee from
July 2012)
Board committees
Audit, risk and sustainability, investment.
Clive Vaux (65)
Corporate finance director
CA(SA)
Appointed: 16 February 2000
Board committees
Audit, risk and sustainability, remuneration, nominations and
investment.
External appointments
Non-executive director of Oceana Group and National Foods
Holdings (Zimbabwe).
External appointments
Non-executive director of Group Risk Holdings
Proprietary Limited.
Areas of expertise and contribution
Accounting and auditing, governance, fast-moving consumer
goods, corporate finance, mergers and acquisitions.
Areas of expertise and contribution
Accounting and auditing, corporate finance, mergers and
acquisitions.
Tiger Brands LimitedIntegrated annual report 2016Business overview Executive management committee continued
Neil Brimacombe (52)
Business executive: International (including Exports, excluding
Nigeria); Home, Personal Care and Baby
BCom (hons), MBL
Appointed in September 2000
Experience
Twenty-eight years in FMCG.
Grattan Kirk (52)
Business executive: Consumer Brands – Foods
Tswelo Kodisang (43)
Chief human resources (HR) officer
FCA, CA(SA)
Appointed in July 2013
Experience
Seventeen years in retail and 13 years at Deloitte, former chief
executive officer of JD Group Limited and Connection Group
Holdings and current board member of Consumer Goods Council
of South Africa and consumer goods and services ombud.
BCom, postgraduate diploma in labour law, HR management
Appointed in May 2014
Experience
Twenty-one years in FMCG, including as global HR
vice-president at Unilever.
Brenda Koornneef (64)
Group executive: marketing and corporate strategy
Thiroshnee Naidoo (43)
Group company secretary and legal adviser
BProc, EDP
Appointed in May 2015
13
Patrick Sithole (49)
Group executive: supply chain
BSc (chem eng)
Appointed in August 2012
Experience
Admitted attorney, with over 16 years’ experience as corporate
counsel, mostly in the FMCG industry, and particularly in
African operations.
Experience
Twenty-seven years in FMCG, including as supply chain
vice-president for Unilever South Africa.
BCom
Appointed in January 2011
Experience
Thirty-one years in FMCG, including 17 years at Unilever.
Marc Eyres (57)
Group executive: customer
BSocSci
Appointed in April 2015
Experience
Senior FMCG sales and customer marketing roles across
Africa, south Asia and Australia, including customer vice-
president for Unilever South Africa and India.
Bridgitte Backman held the position of group executive: corporate affairs and resigned on 30 September 2016. Mary-Jane Morifi has been
appointed to this position effective 1 December 2016.
Tiger Brands LimitedIntegrated annual report 2016 Chairman’s review
After a challenging few years, Tiger Brands is being placed
on a stronger footing. This will enable the group to create
predictable value in the form of stable financial returns to
those who provide our capital, and tangible value for all our
stakeholder groups through real benefits and constructive
partnerships.
14
Tiger Brands is successfully emerging from a challenging
period. The board is confident that under the leadership of
Lawrence Mac Dougall, the new management team will
effect the requisite turnaround that will position the group
to successfully compete in its markets.
A comprehensive strategy review is under way and during
the course of FY17, the plans for sustainable growth
in South Africa and further afield, supported by key metrics
and clear targets, will be outlined. In this integrated annual
report, we have concentrated on providing stakeholders
with a fuller understanding of the key drivers behind the
strategic review, as well as the group’s performance for
the year under review.
The board has given management a clear mandate, which
is to position Tiger Brands for sustainable, profitable growth.
While we understand that there are opportunities for
short-term improvements, we are taking a longer-term view
to capitalise on the group’s inherent strengths which include
its portfolio of leading brands, a sound manufacturing
architecture and people skills. We expect the entire process
to take approximately 18 months.
We recognise that additional opportunities for sustainable
growth lie outside our core markets in South Africa, and we
remain optimistic about opportunities on the balance of the
continent. Valuable lessons have been gained from our
recent experiences which will facilitate future corporate
activity in Africa and further afield.
Given the group’s strong balance sheet, we continue to
evaluate potential acquisitions against strict criteria. These
include disciplined benchmarks for capital allocation. Any
acquisition will only be considered if it is at the right price,
fits into our risk parameters and is value enhancing. This
will not be easy as there is a scant supply of potential
acquisitions that fit our portfolio, but we remain open to
opportunities. Our growth strategy will be guided by our
core capabilities, and will be focused on key categories
in which we wish to participate.
The group’s capital programme will be geared towards
investing for future growth and enhancing its manufacturing
capabilities and efficiencies. To facilitate this flexibility, we
will maintain our dividend policy of 2x cover, based on
headline earnings per share. This will be reviewed from
time to time based on the required levels of capital
expenditure and the group’s other corporate activities.
Operating environment
In South Africa, poor economic growth and high food
inflation, caused in part by the severe drought, have
increased the pressure on consumer spending, forcing food
manufacturers and retailers to aggressively compete for their
fair share of the constrained spending levels. We discuss
the operating environment in further detail on pages 26 and
27 of the integrated annual report.
After disposing of our interest in Tiger Branded Consumer
Goods plc (formerly Dangote Flour Mills) in February 2016,
the group is less exposed to economic fluctuations in
Nigeria. Ongoing electricity disruptions and the devaluation
of the local currency continue to affect the performance of
our remaining operations in that country.
The Nigerian sale has freed up management time to
concentrate on challenges presented by little to no economic
growth in South Africa. This is a mature market with aggressive
competition and shifting consumer trends in a time of political
uncertainty. Our response to these and other material risks is
detailed in the risk report.
Performance
Against this background, Tiger Brands has done well to
maintain its leading positions in its key categories, as noted
on pages 28 and 29, reflecting the benefits of greater
operational focus and increased marketing investment
behind its brands. We have made good progress in
reducing our environmental impact and managing our
natural and human resources more effectively, as set out
later in this report.
The group’s financial results for the year under review
are discussed in detail on pages 30 to 37. I believe these
results reflect stability and discipline in the face of the
macro-economic headwinds which are being experienced.
The 19% increase in total headline earnings per share
was achieved amid rising inflation in a highly competitive
market, which highlights the strength of our brands, as well as
the blend of fresh insight and experience in our management
teams and the ongoing commitment of our employees.
Tiger Brands LimitedIntegrated annual report 2016Business overview Responsible citizenship
Stagnant GDP growth rates in South Africa are
compounding the challenges faced by millions of
marginalised citizens looking for social and economic
upliftment. As a leading food producer, Tiger Brands
continues to play its part alongside government, non-
governmental organisations (NGOs) and other businesses.
We clearly understand both the risks and opportunities
presented by the income inequalities that exist in South
Africa. In the review period, Tiger Brands invested directly
and indirectly R42 million through various corporate
social investment projects primarily focused on food
security and nutrition education, benefiting in excess of
100 000 people. These achievements are outlined later
in the report.
Governance
Tiger Brands is committed to governance standards that
reflect best practice. Throughout the group, appropriate
structures and controls ensure that compliance to these
standards is maintained.
A new executive management team is now in place
following the resignations of chief executive officer (CEO),
Peter Matlare, in December 2015, and chief financial
officer, Funke Ighodaro, effective July 2016. On behalf of
the board, I thank them both for their valuable contributions
to the group.
After a rigorous five-month process, we were pleased to
announce the appointment of Lawrence Mac Dougall as chief
executive officer of Tiger Brands. With over 25 years’ FMCG
experience across Africa, the Middle East, Eastern Europe
and Russia, Lawrence brings sound commercial and strategic
acumen, a proven ability to lead extensive growth and
turnaround strategies and the leadership skills to develop
strong integrated teams that deliver sustainable performance.
We are most grateful to experienced Tiger Brands
executive, Noel Doyle, who ably stepped in as acting chief
executive pending the appointment of the new CEO. During
this period, Noel enjoyed the full support of both our
management teams and the board. In August 2016, he
was appointed chief financial officer of the company.
I believe the new executive team is a strong combination of
industry and institutional experience, and will benefit from the
fresh insights brought to the team with the appointment of
the new CEO.
After nine years on the board, of which four were served as
chairman, I will retire at the annual general meeting. It has
been a real privilege to serve on the board of such an
iconic South African champion, and leave with the
knowledge that Tiger Brands is well placed on the road to
recovery and future success. I am pleased to announce that
I will be succeeded as chairman by Dr Khotso Mokhele, a
respected past chairman of listed South African entities, and
currently chairman of our risk and sustainability committee
and a member of the audit and investment committees, I am
confident that Khotso brings the skills and knowledge that
this role demands.
15
Post-year-end, we appointed Emma Mashilwane and Kevin
Hedderwick as non-executive directors. We look forward to
their input in their respective fields of expertise, detailed in
the notice of annual general meeting.
Outlook
After a challenging few years, Tiger Brands is being placed
on a stronger footing. This will enable the group to create
predictable value in the form of stable financial returns to
those who provide our capital, and tangible value for all
our stakeholder groups through real benefits and constructive
partnerships.
The board is satisfied that solid progress in transforming
Tiger Brands into a sustainable company, with long-term
benefits for all our stakeholders, is under way.
Appreciation
On behalf of the board, I thank our strategic partners
in Nigeria, Chile, Kenya, Cameroon, Ethiopia and
Zimbabwe, whose valued input supports our sustained
operations in these countries.
The continued support of our customers and business
partners is deeply appreciated, and we will continue to
focus on meeting your needs.
We also thank our management teams and all our people
for their dedication and willingness to go beyond the
expected. In return, the company will continue to work with
you to assist in realising your full potential.
On a personal note, I thank my fellow board members for
their support over the past nine years, particularly during the
recent period of management changes, and for their
counsel that always enriched our deliberations. I have
enjoyed working with you.
André Parker
Chairman
22 November 2016
Tiger Brands LimitedIntegrated annual report 2016 Chief executive officer’s review
Given its winning brands, diversified portfolio, extensive
manufacturing footprint and integrated supply chain,
Tiger Brands has all the elements required to succeed in
this dynamic market. The measure of success will lie in how
effectively we harness our strengths and correct areas of
weakness to achieve top-tier financial performance.
16
Building the Tiger Brands of the future
I have joined Tiger Brands at an exciting time in the global
FMCG industry – one where the challenges presented by
significant shifts in consumer and shopper trends have
spurred equally significant changes in the retail sector.
Around the world, manufacturers are reviewing their
portfolios, processes and strategies to prepare for these
emerging trends. We discuss the salient features of our
operating environment in more detail on pages 26 and 27,
with arguably the most important trends and inherent
opportunities being the consumer search for value,
convenience and healthier options and the evolving trade
environment, with the emerging strength of informal traders.
Given its winning brands, diversified portfolio, extensive
manufacturing footprint and integrated supply chain,
Tiger Brands has all the elements required to succeed
in this dynamic market.
Global FMCG strategic themes
• Macro-economic and political challenges
• Changing consumer consumption patterns
• Growing competition with acquisitive expansion
in emerging markets
• Changing trade environment
• Focus on entire consumer pyramid
• Innovation is driving growth
• Digital marketing more pervasive
• Supply chain and other cost efficiencies
• Expanding flagship brands to new markets
The measure of our success, however, will lie in how
effectively we harness our strengths and correct areas
of weakness to achieve top-tier financial performance.
We operate in an intensely competitive industry where
increasing market share against well-funded and established
participants requires the full commitment of an experienced
and expert team working towards a clear strategy.
I am mandated by the board to continue to grow our
business by focusing on profitable brands. The first step is a
thorough review of our strategy and underlying capabilities.
In recent months, I have had many frank conversations with
people at every level that highlighted the depth of
experience and expertise in our group. The insights from
these discussions have fuelled a common goal – together,
we can create a winning team and a cost-conscious culture
that will recover ground with both our customers and
consumers through focus and accountability.
This commitment underpins the process of reviewing our
strategy and setting the targets that will measure our
progress against corporate goals. On pages 20 and 21,
we set out our thinking and our progress to date on
improving the basics. We expect to finalise this review in
the new financial year, setting a clear framework for the
group over the next five years.
Our brands
The group produced solid results, given the difficult trading
environment and significant input cost pressure driven by
the prolonged drought in South Africa and sizeable
currency movements. Based on continuing operations,
group turnover increased by 11% and operating income
(before impairments, abnormal items and IFRS 2 charges) by
5%. Headline earnings per share from continuing operations
increased 2% to 2 130 cents per share while headline
earnings per share from total operations (including TBCG)
increased 19% to 2 127 cents per share.
We invested R866 million supporting our core brands and
a further R945 million in capital expenditure to build
capacity for growth and improve efficiencies.
Tiger Brands LimitedIntegrated annual report 2016Business overview In our Grains division, we maintained our leadership in the
bread market, although operating income was marginally
constrained by responsible pricing decisions. Our pasta and
oats businesses delivered strong results.
In the Consumer Brands division, the Groceries business
maintained its operating margin and market leadership in
core categories. The Home, Personal Care and Baby
business delivered another strong performance with excellent
growth and improved margins.
Results from our International division were mixed.
Operating results were affected by macro-economic issues,
including currency devaluations and foreign-exchange
shortages. Cameroon delivered a solid performance,
however, and continued to record profitable growth.
Associates made significant contributions to our earnings,
with a 43% increase in income to R861 million driven by
Oceana and Empresas Carozzí.
Our people
People are the heart of our organisation, which makes it
imperative to retain their skills while developing their full
potential:
•• We continue to invest in preparing our teams to win in this
challenging macro-environment and are proud to have
retained our level 3 BBBEE rating in 2016
•• Tiger Brands again achieved Top Employer status with a
better year-on-year score, and was ranked among the top
three preferred employers in the FMCG sector by
graduates
•• Regrettably, four colleagues were killed in armed robbery
attempts, despite the focus on route to market security.
Another colleague was accidentally electrocuted in our
Ethiopian operation. We extend our sincere condolences
to their families and reiterate our commitment to zero
harm. Reflecting our focus on eliminating recurring
behaviour-based incidents, the group reduced lost-time
injuries by 13% in FY16
•• Group talent processes were entrenched to ensure a solid
pipeline of skills on page 56. Our remuneration structures
were reviewed and adjusted where necessary to retain
the skills on which our business depends on pages 94
and 97.
Our communities
We invested R23 million (over 1% of net profit after tax) in
socio-economic development initiatives. In addition, our
breakfast programme, facilitated by the Tiger Brands
Foundation, ensured 60 000 school children per day did
not start their lessons hungry. In just five years, this translates
to over 40 million meals served. Our initiatives are detailed
on page 66.
17
Environmental commitments
The review period was the last year of a rolling three-year
programme focused on reducing our key environmental
impacts. This targeted approach proved constructive and new
targets have been set. Understanding that a concerted
approach will have a broader impact, we also strive to build
on a culture where our supply chain is engaged, empowered
and supported in improving environmental sustainability
practices. Please refer to pages 74 to 79 for more
information.
Outlook
Tiger Brands enters the new financial year on a stronger
footing, energised by the progress made in 2016 as well
as the new thinking in our group. While we understand that
trading conditions are likely to remain difficult, we are
excited about the many opportunities for profitable growth
in our core markets.
Supported by a strong balance sheet, capable and
committed teams, as well as the strength and leading
positions of our brands, we are focused on establishing a
solid foundation for future growth based on an appropriate
business model and cost structure.
Appreciation
I greatly appreciate the welcome and support I have
received from the Tiger Brands teams. I believe the
collective commitment encountered across our group bodes
well for our sustained growth and I thank every member of
our many teams for their contribution. I also thank our loyal
service providers, suppliers and customers for their
continued support.
Lawrence Mac Dougall
Chief executive officer
22 November 2016
Tiger Brands LimitedIntegrated annual report 2016
18
Tiger Brands LimitedIntegrated annual report 2016Business overview 19
Purity is South Africa’s
leading baby
homogenised nutrition
brand and has successfully
maintained market share of
around 90% in the baby
nutrition market for the past
decade. As a result, over
115 000 South African
mothers follow the Purity
Promise page on Facebook.
Tiger Brands LimitedIntegrated annual report 2016 Strategic review
Tiger Brands operates in a rapidly changing
industry. Globally, the FMCG market is
undergoing change on a scale that demands
an innovative approach to every element of the
value chain – the successful companies of
tomorrow will be those able to quickly capitalise
on the opportunities presented today while
anticipating and managing the risks through
effective strategies underpinned by market
insight.
Several factors are driving this need to reassess the
way we do business:
•• Global macro-economic challenges – constrained
economies amid low to no economic growth
•• Consumer demand trends and opportunities – health
and wellness, value, convenience and sustainability
•• Growing competition – focused and entrepreneurial
local competitors and expanding multinational
companies, plus the development of private label
brands by retailers
•• Changing trade environment – relationship with
retailers, retail consolidation and growth, stronger
non-traditional channels
•• Meeting the needs of low-income consumers – better
nutrition, value and convenience through innovation.
Our strategic review is underpinned by a
comprehensive and regular scan of trends (political,
economic, social and consumer, technology and
supply chain, legal and regulatory, environmental,
customers and competitors) that will affect Tiger Brands
over the next five years, providing insights into:
•• Significant trends affecting our operating
environment
•• Key threats
•• Opportunities that can be leveraged
•• Implications for Tiger Brands.
We fully understand that “business as usual” is not an
option in this world. As such, the management team
assessed the company’s performance over the last five
years in the context of internal targets and external
benchmarks to develop a sustainable strategy to
achieve our vision. The medium-term corporate
strategy will seek to achieve:
•• A rejuvenated domestic business that delivers
sustainable profitable growth
•• An international strategy accretive to domestic
performance
•• A capable and cost-conscious culture with the
capacity to grow
•• A great place to work.
20
VISION
To be the most admired,
branded, FMCG company
in emerging markets
STRATEGIC THRUSTS
TO DRIVE DEMAND THAT GENERATES
GROWTH, WE FIRST NEED TO DECIDE:
WHERE TO PLAy
HOW TO WIN
The steps below will inform these decisions.
1 Optimal portfolio with focused investment in our core
growth categories to drive top and bottom-line growth
2 Define the core brand portfolio and drive targeted
investment in brand building and innovation to
enhance number one and two category positions
3 Reignite growth in the rest of Africa, focusing on our
core categories and key selected geographies
4 Review operating model and unlock efficiencies across
the value chain
5 Seek further growth opportunities in new categories/
geographies through innovation and/or acquisitions
6 Clear investment choices in selected associate
companies to enhance growth and earnings
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Adding value to life for all th
DESIR
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Tiger Brands LimitedIntegrated annual report 2016Business overview
Adding value to life for all th
DESIR
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KEy ENABLERS
1 Competitive route to market capability and
winning customer strategies
2 Strong portfolio of leading brands and enhanced
innovation capability
3 Competitive supply chain delivering growth,
enhanced margin and cash
4
Integrated architecture and enabling IT capability
5 Ensured sustainability through competitive BBBEE
position, and strong governance and risk
management
6 Efficient operating model and structure to deliver
competitive cost base
7 Motivated, high-performance culture; competitive
competencies in key areas; and strong talent
pool to support growth
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olders of Tiger Brands
The aim of the reviewed strategy is to:
•• Stabilise the business in the short term
•• Re-establish a sound foundation for future
profitable growth
•• Fundamentally restructure and re-engineer towards
a competitive cost base and provide savings for
reinvestment
•• Establish a competitive organisational structure fit
for growth over the medium and long term
•• Re-establish a strong and profitable growth trend
in the rest of Africa.
We have adopted a phased approach to
delivering an executable strategy and during
the course of FY17, the plans for sustainable
growth in South Africa and further afield,
supported by key metrics and clear targets,
will be outlined.
PHASE 1 – PERFORMANCE ASSESSMENT
COMPLETED
PHASE 2 – SET FOUNDATION FOR FUTURE
GROWTH (Fy17)
21
PHASE 3 – PLAN TO ACTION
OUR VALUES
•• Our consumers are our business
•• We act with integrity in everything
we do
•• We have a passion for excellence
•• We value our people and treat
them with dignity
•• We continue to reinvest in our
society
Tiger Brands LimitedIntegrated annual report 2016
Creating a virtuous growth cycle
We have adjusted the six capitals in the IIRC’s integrated
reporting framework to better suit our business model.
By understanding what each capital contributes to our business,
we balance the necessary trade-offs while ensuring we
replenish our capitals in the most appropriate way.
22
PROFITABLE,
RESPONSIBLE
GROWTH
CONSUMER
INSIGHT
Human capital –
people underpin our progress
In Fy16, we invested R25 million in
their well-being and skills, striving for a
consumer-focused, high-performance
culture based on our core values.
EFFECTIVE
SUPPLy
CHAIN
R&D
COLLABORATION
INNOVATION
SOURCING
AND
MANUFACTURING
Tiger Brands LimitedIntegrated annual report 2016Business overview Financial capital –
profitable growth
We aim to deliver consistent value for stakeholders wherever we operate, firstly
by remaining a profitable company that rewards shareholders appropriately.
Total dividend increased by 12% to 1 065 cents per share.
Social and relationship capital –
adding real value
We add value to society through various initiatives – 53,3% of value created
is distributed to a number of stakeholders annually.
23
Intellectual capital –
consistent investment behind key brands to drive profitable growth
In Fy16, we invested R866 million in research and consumer marketing for
deep insight into the changing needs of our consumers. We use our R&D
capability and networks to deliver the innovation that supports the equity of
our brands. Innovation accounted for 4,5% of turnover in Fy16.
Manufactured capital –
improved efficiency and flexibility
We continuously invest ahead of depreciation to maintain and enhance
45 manufacturing sites across sub-Saharan Africa. We will continue to invest
to further improve our facilities and enhance flexibility.
Natural capital –
focused on responsible growth
While our supply chain draws on most of our capitals, its key impact is on
the natural capital. Our procurement strategies focus on the long-term
sustainability of our processes. Over the past three years, we have focused
on reducing this impact through specific initiatives.
Tiger Brands LimitedIntegrated annual report 2016 Our key relationships
The Tiger Brands group recognises that positive relationships
with key stakeholders are essential to its sustainability.
Shareholders, employees, consumers, customers and suppliers
are all part of the chain that creates value.
24
Additionally, we understand that we depend on the broader
society – not only stakeholders in our immediate value chain
– to provide a conducive operating environment, and a
consumer and talent base that we can sustainably draw
from in future.
As such, stakeholders in our broader socio-economic
environment – law-makers, regulators, industry groups, the
media and communities – all hold a stake in our licence
to operate.
We develop key insights to inform our strategic choices for
sustained growth through:
•• A deep understanding of requirements for sustainable
socio-economic development
•• Considering the interests and expectations of material
stakeholders
•• Establishing relationships with stakeholders beyond those
in our immediate value chain.
Stakeholder relations at Tiger Brands is, therefore, a
strategic function that centres on the quality and consistency
of our relationships with all interested and affected parties.
Our approach to stakeholder relations directs the
organisation on how it behaves, interacts, collaborates,
influences and transacts with external parties, regardless of
the platform, to ensure we uphold our principles and core
values, and to ensure the consistency of our messages.
Different management functions assume responsibility for
analysing the needs, interests and expectations of
stakeholders in various categories, while the group
stakeholder relations function provides strategic leadership
and direction. Ultimately, the governance goal of managing
stakeholder relations is trust, good reputation and legitimacy.
In 2016, we implemented an integrated stakeholder
communications plan that:
•• Acknowledges the critical roles media and social media
play in driving perception, and uses these platforms to
build our social and relationship capital (reputation)
•• Drives internal communication to enhance employee
alignment with the group’s emerging purpose, vision
and strategy
•• Proactively manages stakeholder perceptions of Tiger
Brands as a group
•• Adheres to standards and processes for developing
content and sharing information on all communication
platforms
•• Systematically gathers and analyses information
emanating from communication platforms to assess
reputational risks
•• Offers process and mechanisms to develop appropriate
responses and standard operating procedures to deal
appropriately with any required crisis communication.
Our approach to managing issues was revised and a
media protocol developed to bolster internal capacity in
responding to issues raised by stakeholders. Dispute
resolution mechanisms for employees, investors, the media
and consumers are in place and used effectively. Any
stakeholder with a complaint or issue can approach the
group through the website (www.tigerbrands.com). Internal
systems to address these issues are well managed with strict
timelines for response, resolution and feedback.
Tiger Brands LimitedIntegrated annual report 2016 Key issues in 2016
Our response
Read more
Customers (retailers/wholesalers)
•• Increased competition amid muted
consumer demand
Employees
•• Performance and rewards
•• Talent and career development
•• Teamwork and collaboration
•• Internal communications
Consumers
•• Product affordability
•• Value proposition
•• Commitment and compliance to issues
regulated by government (eg labelling,
salt and sugar)
Community
•• Food security and related nutritional
issues
Investors
•• Strategic direction post-appointment
of new leadership and recent disposals
•• Outcome of strategic review
•• Stabilising the business
•• Earnings growth and return on capital
Government
•• Regulations on sodium reduction;
proposed tax on sugar-sweetened
beverages
•• Promoting awareness of nutrition
education
•• Food security
•• Growth and development of local
agricultural sector
Media
•• Access to management and information
•• Swift response to queries
•• Fair treatment of consumers
Suppliers
•• Impact of currency volatility on input
costs
•• Crop shortages due to persistent
drought
•• Joint business planning initiatives and growth workshops with
customers to stimulate shopper offtake and repeat purchase
•• Driving in-store activation, on-shelf availability and general trade
distribution to improve visibility and availability
•• Increasing use of category management data to support
innovation and new mobile platforms to develop insights and
improve efficiencies at store level
•• In-depth engagement with employees to co-create solutions
to challenges
•• Benchmarking rewards and benefits to ensure market
competitiveness; obtaining employee commitment through
appropriate performance incentives
•• Mitigate inflationary pressures through cost-saving initiatives
and operational efficiencies
•• Proactive communication on complying to regulation
For more information
see pages 69 to 73
For more information
please see
www.tigerbrands.com
For more information
see pages 56 to 59
For more information
please see
www.tigerbrands.com
For more information
see pages 69 to 73
For more information
please see
www.tigerbrands.com
•• Maintain strong partnerships with governments and
developmental agencies to support initiatives that promote
nutritional health and education, and contribute to the
development of local communities and eradication of poverty
For more information
see pages 65 to 68
25
For more information
please see
www.tigerbrands.com
•• Conducted thorough assessment of business
•• Identified gaps and opportunities
•• Initiatives to strengthen the business and create a solid platform
for growth
•• Clear communication plan
•• Complying with all relevant regulation; active participation
in dialogue before promulgation of legislation
•• Keeping abreast of emerging issues
•• Active partnership to promote agri-sector development and
greater inclusion of smallholder farmers
•• Specific website for media enquiries
•• Enhanced one-on-one media engagements
•• Respond to all enquiries within specified period
•• Respond to media on all consumer-related enquiries
•• Partnering with suppliers to drive innovation and continuous
improvement
•• Focused savings programme that interrogates all costs to dilute
the impact of currency-related cost increases
•• Continued support to develop domestic farmers
•• Flexible global sourcing strategies to augment domestic crop
shortages
For more information
please see
www.tigerbrands.com
For more information
see pages 64, 72 and 73
For more information
please see
www.tigerbrands.com
For more information
please see
www.tigerbrands.com
For more information
please see page 64
Tiger Brands LimitedIntegrated annual report 2016Key factors driving our strategy Our operating environment
Tiger Brands is the largest constituent by market capitalisation
of the R147 billion JSE Food Producers Index. Listed and
unlisted food producers in turn supply a R474 billion food
market, ranging from national supermarket chains to
informal outlets.
South Africa
SA food market
6%
18%
8%
26
R474 billion*
68%
Major and branded
superettes
Formal outlets and
route to market
Independent outlets and
route to market
Direct from supplier
Source: Trade Intelligence: Retail trends 2016
*Trade Intelligence estimate
With over 80% of the group’s turnover and almost 90% of
its operating income generated in South Africa, conditions
in this market have a large bearing on our performance.
South Africa GDP annual growth rate
(%)
3,0
2,5
2,0
1,5
1,0
0,5
0,0
(0,5)
3
1
l
u
J
4
1
n
a
J
4
1
l
u
J
5
1
-
n
a
J
5
1
l
u
J
6
1
n
a
J
6
1
l
u
J
F
7
1
0
2
Source: www.tradingeconomics.com | Statistics South Africa| JP Morgan
Economic growth in South Africa was barely positive for
most of the reporting period, with GDP growth forecasts
for calendar 2016 at around 0,4% and just 1% for FY17.
These poor forecasts reflect weak private consumption, in
turn an indicator of rising unemployment, high household
debt and food inflation spiralling up amid South Africa’s
worst drought in a century.
South African food inflation impacted
by severe drought
R/t
6 000
5 000
4 000
3 000
2 000
1 000
0
%
20
15
10
5
0
2009
2010
2011
2012
2013
2014
2015
2016
SA food and non-alcohol beverages year-on-year (%)
SA white maize (R/t)
Source: Bloomberg
Any improvement in these forecasts will depend on
satisfactory resolutions of some major political issues to
restore business confidence to more acceptable levels.
In contrast to significant depreciation in recent years,
including at the start of our financial year, the rand
subsequently appreciated over 16% against the US dollar
in 2016 to date. The caveat to this remains political risk
which remains difficult to quantify and any adverse
developments could easily spark a new round of
depreciation. The currency volatility of recent years has
exerted major inflationary pressure on input costs and
pricing, increasing the pressure on consumers and
reducing demand.
Tiger Brands LimitedIntegrated annual report 2016
Currency volatility exerts inflationary pressure
on input costs
US$/R
18
15
12
9
6
3
0
2012
Source: Factset
2014
2016
Collectively, these factors continue to affect consumer
confidence and constrain household consumption levels.
Consequently, consumers are adjusting their consumption
habits, favouring lower-priced products where necessary
and deferring purchases of discretionary items.
Household consumption expenditure growth
(%)
2,5
2,0
1,5
1,0
0,5
0,0
(0.5)
(1,0)
(1,5)
(2,0)
4
1
n
a
J
4
1
b
e
F
4
1
r
a
M
4
1
r
p
A
5
1
n
a
J
5
1
b
e
F
5
1
r
a
M
5
1
r
p
A
6
1
n
a
J
6
1
b
e
F
Key trends over the next five years
Demand
•• Strong population growth in Africa – with the highest
global proportion of people under 30, future consumers
looking for a modern shopping experience. Africa has
one of the fastest-growing middle-class segments in the
world
•• Rapid urbanisation continues, with increased income
changing consumer patterns despite the challenges
presented by urbanisation
•• While slowing household expenditure is forecast,
economic pressure supports the growth of value segments
and highlights the importance of affordable quality.
Supply trends
•• Food markets reflect volatile commodity prices and rising
input costs
•• Skills shortages make talent management critical for
business success
•• Streamlined value chain will be imperative to manage
efficiencies and costs in a competitive environment
•• Shifting route to market (new markets, formats, channels
and categories such as liquor stores and pharmacies)
critical to create accessibility for urban and rural
consumers
•• Extended distribution footprint to service growing number
of general (informal) trade stores.
External factors
•• Domestic economic and infrastructure constraints, as well
as political uncertainty, suppress South African GDP
growth
•• Moderate growth in developed economies and slowing
growth in emerging market economies, particularly China,
continue to affect Africa.
Rest of Africa
In sub-Saharan Africa, economic growth has weakened
markedly. Low commodity prices continue to weigh heavily
on public finances, not just in oil-dependent states like
Nigeria, but also in more diversified economies like Ghana.
In addition, widespread drought is significantly affecting
agricultural productivity and local food markets.
Fundamentally, however, the region already enjoys strong
mining, agriculture and oil production. A growing pool of
young and well-educated people is poised to enter the
workplace. Investments in infrastructure, and the wider
adoption of new technologies such as mobile and internet,
could accelerate the growth of a consumer and service-led
economy.
Admittedly, the region faces significant challenges. Even
as democracy spreads across its constituent countries, there
are still logistical bottlenecks; poor governance; threats of
increased terrorism and social unrest caused by rising urban
unemployment; vulnerability to commodity price shocks and
economic downturns in key trading partners, indicating risk
to the region’s transformation.
Based on our continual market scans and consensus
insight, we believe the outlook remains encouraging for
Africa to gather momentum and create greater opportunities
for its rapidly growing population. This, in turn, creates
opportunities for retailers and manufacturers such as
Tiger Brands.
27
Tiger Brands LimitedIntegrated annual report 2016Key factors driving our strategy
Our competitive advantages and market position
The power of leading brands
In line with our strategy to have the first or second brand in our chosen categories, we have built a solid portfolio of leading
brands over the years.
This was again reinforced in the 2016 Sunday Times Top Brands Awards. In the prestigious Grand Prix category, KOO took
first place as South Africa’s favourite brand, while Tastic was voted the number one essential food brand, both for the second
consecutive year. KOO was also voted number one in the Ask Afrika Icon Brands Survey 2016/2017 (page 29).
Our brands also featured prominently in their categories:
TINNED FOODS
No 1: KOO
No 3: All Gold No 5: Enterprise No 7: Hugo’s
ESSENTIAL FOODS
No 1: Tastic
No 2: Albany
No 5: Fatti’s &
Moni’s
No 7: Ace
No 8: Aunt
Caroline
28
FRUIT JUICES
No 4: Oros
No 6: Halls
CEREALS (NEW CATEGORy)
No 3: Jungle
Oats
No 6: Morvite
No 9: Jungle
Oatso Easy
CHILLED PROCESSED MEATS (NEW CATEGORy)
No 1: Enterprise No 4: Renown No 7: Mielie-Kip No 8: Bokkie
PERSONAL CARE
No 5: Ingram’s
Tiger Brands LimitedIntegrated annual report 2016 2016 awards and accolades
Ask Afrika Icon Brands 2016/2017
This annual benchmark survey identifies the brands most loved and used by South African consumers. Tiger Brands again
featured prominently, winning numerous categories. Six of our brands were awarded prestigious icon brand status, while KOO
was voted number one favourite brand overall.
Number one favourite
brand
Tinned/canned beans*
Tinned fruit*
Tinned vegetables*
Spreads:
jams
Condiments/sauces:
tomato sauce*
Condiments/sauces:
salad dressing category
Cook-in/prepared sauces
and marinades
Spreads:
marmalade
Chilli/hot sauces
* Icon brand and category winner
Category winner
Non-alcoholic drinks:
energy sport drinks*
Spreads:
peanut butter*
Pasta*
Vienna meats*
Polony meat
Russians meat
29
Category winner:
bread
Category winner:
Condiments/sauces:
chutney
Category winner:
Condiments/sauces:
mayonnaise
Category winner:
rice
Category winner:
Cake mixes:
including muffins/scones/
cupcakes/breads
Category winner:
Sweets:
cereal bars
Category winner:
Household
products:
drain cleaners
Tiger Brands LimitedIntegrated annual report 2016Key factors driving our strategy 30
Chief financial officer’s review
Despite a challenging operating environment, our resilient
brands drove strong volume growth, particularly in the
domestic market with total group turnover from continuing
operations up 11% to R31,7 billion while operating income*
was up 5% to R4,2 billion.
Introduction
The year under review was characterised by an
unpredictable external environment. Consumer confidence
remained weak, resulting in competition intensifying as
retailers and manufacturers continued to compete for their
share of constrained consumer spending. In addition, the
prolonged drought and significant currency volatility led to
high inflation in raw material input costs. The impact of this
was felt across the domestic portfolio, most notably in the
Grains and Groceries divisions. The operating environment
is discussed in more detail on pages 26 and 27 of
this report.
Analysis of financial performance
The following review of the group’s financial performance
should be read together with the annual financial statements
(www.tigerbrands.com).
Income statement
Notwithstanding a challenging operating environment, our
resilient brands drove strong volume growth, particularly
in the domestic market, with total group turnover from
continuing operations increasing by 11% to R31,7 billion
(2015: R28,7 billion), while operating income before
IFRS 2 charges increased by 5% to R4,2 billion (2015:
R4,1 billion). Despite a marginal decline in the Grains
division’s operating income, driven primarily by drought-
related cost increases in maize and sorghum, the
performance of the balance of the domestic portfolio
reflects the strength of our brands, with particularly strong
performances from Groceries, Beverages and Home Care.
The overall operating margin before IFRS 2 charges
declined to 13,4% from 14,1% influenced by responsible
pricing to protect our brand franchises.
Income from associates rose 43% to R861 million, driven
primarily by Oceana Group and Chile-based Empresas
* Before impairment, abnormal items and IFRS 2 charges.
Carozzí. The contribution from associates includes capital
profits of R117 million (2015: R3 million) after certain asset
disposals.
The 13% reduction in net financing costs resulted from a net
foreign gain of R121 million (2015: R21 million), including
a once-off foreign exchange gain of R153 million, following
the settlement of a naira-denominated loan assumed as part
of the exit from Tiger Brands Consumer Goods plc (TBCG),
partly offset by the impact of higher domestic interest rates
in the current year.
Profit before tax from continuing operations increased by
10% to R4,5 billion (2015: R4,1 billion), after accounting
for R335 million in impairment charges. These impairments
related primarily to goodwill and other intangible assets in
the Personal Care business.
A higher effective tax rate (before abnormal items and
associate income) of 30,9% (2015: 25,6%) resulted in
attributable earnings from continuing operations rising by
4% to R3,3 billion.
The group’s interest in TBCG, formerly Dangote Flour Mills,
was disposed of with effect from 25 February 2016.
Consequently, TBCG has been treated as a discontinued
operation in these results, and comparative information
restated accordingly.
Earnings per share from continuing operations increased
4% to 2 007 cents (2015: 1 930 cents), while headline
earnings per share from continuing operations rose 2%
to 2 130 cents (2015: 2 091 cents).
Total earnings per share, including discontinued
operations (TBCG), increased 90% to 2 034 cents
(2015: 1 068 cents). Total headline earnings per share,
including discontinued operations (TBCG), increased by
19% to 2 127 cents (2015: 1 786 cents).
Tiger Brands LimitedIntegrated annual report 2016 Headline earnings per share
Total HEPS up 19%
1 786
2 127
(cents)
2 500
2 000
1 500
1 000
500
0
FY15
FY16
Segmental performance
Domestic operations
Turnover rose by 11%, driven by volume growth of 2% and
price inflation of 9%. However, operating income grew at
a slower rate of 3% to R3,7 billion. Strong growth in
operating income was recorded by Groceries, Beverages
and Home Care, with a marginal decline in the Grains
division’s performance, driven largely by a significant
reduction in the profitability of the maize business. Ongoing
cost management programmes have proven successful, with
savings of R380 million during the year. However, these
savings, coupled with higher realisations, were insufficient
to counter inflationary pressures in soft commodities.
Consequently, the overall domestic operating margin
declined from 15,2% to 14,0%.
International (including Exports)
Total turnover rose 7% to R5,4 billion (2015: R5,0 billion),
while operating income increased by 19% to R547 million
(2015: R462 million). The operating margin widened from
9,2% to 10,2%. Overall volumes decreased by 5% as a
result of the significantly lower volumes recorded by the
Exports division. Exports’ performance was impacted by
currency devaluations and foreign exchange shortages in
major export regions including Nigeria, Mozambique,
Zimbabwe and Zambia. This in turn affected the ability of
key customers to stay within their credit limits and replenish
stocks. In addition, import permit regulations imposed in
Zimbabwe significantly impacted performance in the fourth
quarter.
31
Continuous improvement programme generated
cost savings of R380 million in FY16 (Rm)
Detailed segmental disclosures appear on pages 35 and
36 and operational reviews on pages 40 to 51.
211
91
36
42
Manufacturing
efficiencies
IT platform
Financial shared
service centre
Procurement saving
Statement of financial position
Key ratios
2016*
2015
Cash generated from
operations (Rm)
Net (debt)/cash (Rm)
Net debt/equity (%)
Net debt/EBITDA (x)
Return on net assets (%)
Net interest cover (times)
4 233
(2 028)
13
0,4
31
14
3 585
(3 788)
28
0,8
26
18*
Tiger Brands’ net debt decreased by R1,8 billion, benefiting
largely from the disposal of TBCG. The net debt to EBITDA
ratio decreased to 0,4 times (2015: 0,8 times), well within
the group’s covenant limit of 2,5 times. The strength of the
balance sheet allows the company to take advantage of
opportunities that may arise.
* From continuing operations
Tiger Brands LimitedIntegrated annual report 2016Financial review Cash flow and capital expenditure
Cash generated from operations increased 18% to
R4,2 billion (2015: R3,6 billion). The improvement was
primarily due to the disposal of TBCG in February 2016.
Capital expenditure during the year was R945 million
(2015: R882 million). Net debt for the group was
reduced by R1,8 billion also benefiting largely from the
disposal of TBCG.
Capital expenditure has consistently been ahead of
depreciation and future investment will target growth,
efficiency and flexibility. An amount of R1,9 billion has
been budgeted for FY17.
Capital expenditure consistently
ahead of depreciation
(Rm)
1 500
1 000
500
0
32
1,45
983
1,33
882
679
662
1,69
945
559
FY14
FY15
FY16
● Capex ● Depreciation Capex/depreciation
Outlook
The difficult trading environment is expected to persist with
inflation levels remaining high. The anticipated benefit of
lower soft commodity prices is only likely to be felt in the
latter part of the ensuing financial year.
Given the solid performance in 2016, Tiger Brands is
well positioned to counter potential headwinds. The focus
will be on optimising margins without sacrificing market
share. Our leading positions will be supported with
accretive innovation, while sustaining the strength of our
brands through targeted investment. As input cost inflation
is expected to persist, cost-saving initiatives will receive
renewed and more assertive focus to drive profitability.
The creation of a high-performance culture will underpin
our efforts.
Acknowledgements
Thank you to our local and international shareholders for
your continued investment in our group and to members of
the broader investment community for their interest and
engagement. I also thank my colleagues in the finance
department who constantly strive to ensure the group
achieves best practice standards in reporting and
disclosure.
Final dividend
The company has declared a final dividend of 702 cents
per share (2015: 611 cents) for the year ended
30 September 2016. This, together with the interim
dividend of 363 cents per share, brings the total dividend
for the year to 1 065 cents. This is 12% higher than last
year’s total dividend of 950 cents.
Noel Doyle
Chief financial officer
22 November 2016
Chief financial officer’s review continuedTiger Brands LimitedIntegrated annual report 2016 Five-year review
for the year ended 30 September 2016
Rm
Consolidated income statements
Revenue
Profit before taxation, income from
associates, abnormal items and impairments
Income from associates
Abnormal items and impairments
Profit before taxation
Taxation
Profit for the year from continuing
operations
Attributable to (continuing operations):
Owners of the parent
Non-controlling interests
Consolidated statements of financial
position
Property, plant and equipment
Goodwill and intangible assets
Investments
Current assets
Assets classified as held for sale
Total assets
Issued capital and reserves before
share-based payment reserve
Share-based payment reserve
Non-controlling interests
Deferred taxation liability/(asset)
Provision for post-retirement medical aid
Long-term borrowings
Current liabilities
Liabilities classified as held for sale
Total equity and liabilities
Consolidated cash flow statements
Cash operating profit after interest
and taxation
Working capital changes
Dividends received
Cash available from operations
Dividends and capital distributions paid
Net cash flow from operating activities
Net cash flow from investing activities
Net cash flow before financing activities
Net cash flow from financing activities
Net increase/(decrease) in cash and
cash equivalents
2016
Restated*#
2015
2014**
Restated^**
2013
2012**
31 738
28 690
30 126
27 065
22 771
3 978
861
(324)
4 515
(1 221)
3 823
603
(339)
4 087
(977)
3 155
597
(1 056)
2 696
(832)
2 721
515
(2)
3 234
(837)
3 356
416
5
3 777
(1 029)
3 294
3 110
1 864
2 397
2 748
3 261
33
3 122
(12)
1 991
(127)
2 516
(119)
2 718
30
4 542
3 941
4 905
11 099
–
24 487
15 059
489
487
211
666
1 069
6 506
–
24 487
3 432
(604)
406
3 234
(1 661)
1 573
115
1 688
(562)
4 641
4 233
4 312
11 617
–
5 868
4 527
3 422
10 728
–
5 499
5 424
3 413
9 486
1 281
3 359
4 012
2 655
7 783
–
24 803
24 545
25 103
17 809
33
13 407
424
(53)
150
643
1 215
9 017
–
12 753
425
770
(28)
626
627
9 372
–
12 423
364
1 028
225
581
1 453
8 330
699
24 803
24 545
25 103
2 841
(812)
326
2 355
(1 643)
712
(1 056)
(344)
76
3 168
(348)
287
3 107
(1 467)
1 640
(415)
1 225
(1 109)
2 915
(337)
301
2 879
(1 426)
1 453
(3 282)
(1 829)
426
10 970
332
393
250
407
235
5 222
–
17 809
3 048
(592)
176
2 632
(1 318)
1 314
(732)
582
(297)
1 126
(268)
116
(1 403)
285
* The 2015 comparatives have been restated for the retrospective reclassification relating to the treatment of foreign exchange profits and
losses on foreign cash and bank balances previously included in operating income/(loss) and now reclassified to net finance costs. Refer to
annual financial statements for further details.
** Not restated for the exclusion of TBCG.
# Income statement restated as required by IFRS 5 in relation to the treatment of Tiger Branded Consumer Goods plc (TBCG) as a
discontinued operation.
^ The amounts have been restated due to the adoption of IAS 19R.
Tiger Brands LimitedIntegrated annual report 2016Financial review Value-added statement
Value added is a measure of the wealth the group has been able to create. The following statement shows how this wealth has
been distributed:
Rm
Turnover
Less: Net cost of products and services
Value added
Add: Income from investments and associates
Wealth created
Applied to:
Employees
Salaries, wages and other benefits
Providers of capital
Interest on borrowings (net of foreign exchange profit/(losses))
Dividends and capital distributions to non-controlling interests and
preference shareholders
Dividends to ordinary shareholders
Government
Taxation (refer to note 1)
Retained in the group
34
Note 1
Income taxation (excluding deferred tax)
Skills development levy
Rates and taxes paid to local authorities
Customs duties, import surcharges and excise taxes
Gross contribution to government
2016
%
Restated*#
2015
%
31 697,5
23 098,7
8 598,8
887,4
9 486,2
3 736,3
1 852,6
203,0
19,7
1 629,9
1 298,2
2 599,1
9 486,2
1 160,5
27,0
28,0
82,7
1 298,2
100,0
28 660,0
100,0
72,9
20 540,4
27,1
2,8
29,9
8 119,6
619,9
8 739,5
39,4
19,5
2,1
0,2
17,2
3 422,6
1 814,3
220,3
19,4
1 574,6
13,7
27,4
1 128,0
2 374,6
71,7
28,3
2,2
30,5
39,2
20,7
2,5
0,2
18,0
12,9
27,2
100,0
8 739,5
100,0
998,3
26,6
24,9
78,2
1 128,0
The payments to government exclude taxation deducted from employees’ remuneration of R530,6 million (2015: R479,1 million),
net VAT of R515,1 million (2015: R494,2 million), excise duty on revenue and UIF payments.
Rm
2016
%
Restated#
2015
%
2014
%
2013
%
2012
%
Trend of value
added
Employees
Providers of capital
Government
Retained in the
group
3 736,3
1 852,6
1 298,2
2 599,1
39
20
14
27
3 422,6
1 814,3
1 128,0
39
21
13
3 307,2
1 896,2
1 472,8
38
22
17
2 860,2
1 825,5
1 346,1
38
24
18
2 530,1
1 509,2
1 189,1
36
21
17
2 374,6
27
1 952,5
23
1 539,3
20
1 822,7
26
9 486,2
100
8 739,5
100
8 628,7 100
7 571,1 100
7 051,1 100
* The comparatives have been restated for the retrospective reclassification relating to the treatment of foreign exchange profits and losses on
foreign cash and bank balances previously included in operating income/(loss) and now reclassified to net finance costs. Refer to note 7 for
further details.
# Restated as required by IFRS 5 in relation to the treatment of Tiger Branded Consumer Goods plc (TBCG) as a discontinued operation.
Tiger Brands LimitedIntegrated annual report 2016
Segment report
for the year ended 30 September 2016
Turnover1
Operating income2
Depreciation and
amortisation
Rm
2016
Restated
2015
Domestic operations
26 311,1
23 630,6
2016
3 695,8
2 001,9
1 596,2
405,7
1 728,5
465,6
316,0
156,8
158,0
98,4
533,7
134,2
211,3
188,2
(34,6)
547,2
247,0
150,2
50,9
(48,5)
147,6
Restated*
2015
3 593,2
2 060,8
1 680,5
380,3
1 539,5
410,6
314,9
137,8
146,3
86,3
443,6
129,7
214,2
99,7
(7,1)
461,7
338,0
115,8
(46,5)
(38,2)
92,6
2016
448,3
152,8
130,6
22,2
240,2
116,6
49,3
18,4
35,0
–
20,9
4,4
11,1
5,4
55,3
Restated
2015
419,3
147,1
126,6
20,5
226,9
110,1
51,2
17,0
31,1
–
17,5
3,8
9,0
4,7
45,3
122,4
16,9
122,3
11,4
21,8
34,6
25,4
23,7
20,1
35,1
34,4
21,3
35
12 845,2
9 208,5
3 636,7
13 465,9
4 700,8
2 270,8
1 326,4
2 229,6
501,7
2 436,6
682,4
862,1
892,1
11 375,4
8 160,5
3 214,9
12 255,2
4 265,4
2 137,1
1 166,8
2 095,1
443,7
2 147,1
630,9
803,0
713,2
–
–
5 386,4
1 625,7
5 029,4
1 872,4
883,8
959,8
476,7
1 683,3
(242,9)
706,5
762,6
412,0
1 434,0
(158,1)
Grains
Milling and Baking3
Other Grains4
Consumer Brands
Groceries
Snacks & Treats
Beverages
Value Added Meat
Products
Out of Home
HPCB
Personal Care
Baby Care
Home Care
Other5
International (including
Exports)
Exports
International operations
– Central Africa
– East Africa
– West Africa**
Deciduous Fruit (LAF)
Other intergroup sales
Total from continuing
operations – before IFRS 2
charges
IFRS 2 charges
Total from continuing
operations – after IFRS 2
charges
31 697,5
28 660,0
4 243,0
(88,9)
4 054,9
(29,2)
570,7
541,6
31 697,5
28 660,0
4 154,1
4 025,7
Discontinued operation**
1 598,5
2 897,6
63,2
(392,5)
Total group
33 296,0
31 557,6
4 217,3
3 633,2
570,7
4,8
575,5
541,6
144,3
685,9
* The comparatives have been restated for the retrospective reclassification relating to the treatment of foreign exchange profits and losses on
foreign cash and bank balances previously included in operating income/(loss) and now reclassified to net finance costs. Refer to note 7
for further details.
** Previously reported Nigeria segment included TBCG which is now disclosed as a discontinued operation, with the remaining segment
shown as International operations – West Africa.
1 Refer to note 3.2 of the financial statements for further information on geographical split.
2 Operating income is stated after amortisation of intangible assets.
3 Comprises maize milling, wheat milling and baking, sorghum beverages and malt-based breakfast cereals.
4 Comprises rice, pasta and oat-based breakfast cereals.
5 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.
Tiger Brands LimitedIntegrated annual report 2016Financial review
Segment report continued
for the year ended 30 September 2016
Total assets
Accounts payable,
provisions and accruals
and taxation
Capital expenditure
Rm
2016
2015
2016
2015
2016
Domestic operations
19 056,9
17 654,1
4 082,4
3 731,8
847,0
Grains
Milling and Baking1
Other Grains2
Consumer Brands
Groceries
Snacks & Treats
Beverages
Value Added Meat Products
HPCB
Other3
International (including Exports)
Exports
International operations
– Central Africa
36
– East Africa
– West Africa**
5 550,3
4 649,7
1 429,7
1 301,1
346,7
3 867,6
1 682,7
3 222,6
1 427,1
931,1
498,6
924,8
329,9
376,3
16,8
9 509,2
9 312,5
2 276,8
2 091,3
439,0
4 304,4
1 384,1
1 483,5
975,7
1 361,5
3 997,4
5 429,4
2 535,4
648,8
854,0
146,4
4 115,8
895,6
1 989,6
811,6
1 499,9
3 691,9
7 149,7
2 899,4
638,8
824,5
1 680,9
880,4
423,2
237,6
282,5
453,1
375,9
728,1
119,3
834,4
127,4
365,7
225,8
257,6
78,6
67,5
33,2
407,8
132,3
339,4
61,3
1 661,7
191,4
98,4
(8,3)*
227,5
231,7
21,6
82,4
54,7
74,1
948,0
27,7
20,8
Deciduous Fruit (LAF)
1 244,8
1 106,1
244,2
216,5
36,6
Total
24 486,3
24 803,8
4 810,5
5 393,5
945,4
* Capex spend is net of a government grant received during the year.
** Previously reported Nigeria segment has now been disclosed as West Africa. 2015 includes the TBCG discontinued operation.
1 Comprises maize milling, wheat milling and baking, sorghum beverages and malt-based breakfast cereals.
2 Comprises rice, pasta and oat-based breakfast cereals.
3 Includes the corporate office.
2015
520,3
148,0
133,5
14,5
280,4
146,3
37,4
15,2
34,3
47,2
91,9
361,3
83,8
52,5
29,8
152,2
43,0
881,6
Rm
Split of non-current assets
South Africa
Outside South Africa
Total
Rm
Reconciliation of total assets
Total assets per statements of financial position
Deferred taxation asset
Total assets
2016
2015
5 898,5
2 583,9
8 482,4
5 139,4
3 734,8
8 874,2
2016
2015
24 528,9
24 854,3
(42,6)
(50,5)
24 486,3
24 803,8
Tiger Brands LimitedIntegrated annual report 2016 Summary of ratios and statistics
Ordinary share performance
Number of ordinary shares upon which headline earnings
per share is based (000)2
Headline earnings per ordinary share (cents)
Dividends per ordinary share (cents)1
Dividend cover (times)1
Net worth per ordinary share (cents)
Profitability and asset management
Asset turnover (times)
Working capital per R1 000 turnover (R)
Operating margin (%)#
Effective taxation rate (%)#
Return on equity (%)
Return on average net assets (%)
Financing
Current ratio
Net interest cover (times)#
Net debt/(cash) to net funding (%)
Total liabilities to total shareholders‘ funds (%)
Cash flow to net liabilities (%)
Employee statistics
Number of employees at year end3 #
– permanent#
– seasonal#
Revenue per employee (R000)#
Value added per employee (R000)#
Operating profit per employee (R000)#
2016
2015
2014
Restated^
2013
2012
162 480
2 127
1 065
2,0
9 553
161 693
1 786
950
1,9
8 507
160 127
1 816
940
1,9
8 221
159 755
1 629
865
1,9
7 998
159 263
1 689
850
2,0
7 086
2,4
23,3
13,1
27,0
23,4
30,8
1,7
14
11
47
50
2,3
22,3
14,0
23,9
24,8
26,4
1,3
18
22
74
31
2,1
22,1
11,8
30,9
22,7
24,6
1,1
9
20
72
36
2,2
23,2
11,4
25,9
19,7
24,6
1,1
8
24
71
32
2,6
22,5
15,3
27,0
24,1
33,8
1,5
25
9
47
60
14 180
13 121
1 059
2 238
606
293
15 163
12 800
2 363
1 892
541
265
16 884
12 925
3 959
1 784
474
211
15 048
12 760
2 288
1 798
466
159
12 739
10 878
1 861
1 788
515
216
37
Economic indicators
Consumer price index (September on September)
Key closing exchange rates at 30 September vs ZAR
– USD
– GBP
– EUR
Stock exchange statistics
Market price per share (cents)
– year end
– highest
– lowest
Number of transactions
Number of shares traded (000)
Value of shares traded (Rm)
Number of shares traded as a percentage of total
issued shares
Dividend yield at year end (%)
Earnings yield at year end (%)
Price earnings ratio at year end
Market capitalisation at year end (Rm)
Market capitalisation to shareholders’ equity at year end (times)
6,5%
4,5%
5,9%
6,0%
5,5%
13,80
17,92
15,47
13,87
21,05
15,52
11,32
18,35
14,28
10,05
16,23
13,60
8,29
13,38
10,69
38 024
40 152
26 958
854 893
179 123
60 448
30 479
40 086
26 732
873 519
179 732
57 859
31 543
32 200
24 444
508 975
139 926
39 468
29 911
33 499
26 700
553 725
140 315
41 357
27 312
29 321
20 252
418 955
150 973
38 662
93,3
2,8
5,6
18
73 033
4,7
93,6
3,1
5,9
17
58 541
4,2
72,9
3,0
5,9
17
60 546
4,6
73,3
2,9
5,5
18
57 294
4,5
79,0
3,1
6,2
16
52 219
4,6
1 Based on the sum of the interim dividend paid in the current year and the final dividend declared post-year-end.
2 Net of treasury and empowerment shares.
3 Includes employees of international operations.
# Restated as required by IFRS 5 in relation to the treatment of Tiger Branded Consumer Goods plc (TBCG) as a discontinued operation.
^ The amounts have been restated due to the adoption of IAS 19R.
Tiger Brands LimitedIntegrated annual report 2016Financial review
38
Tiger Brands LimitedIntegrated annual report 2016 39
Two manufacturing
plants process
95 000 tons of
tomato crop per
year to produce All
Gold tomato sauce.
Tiger Brands LimitedIntegrated annual report 2016Operational review Operational review
Turnover in the Grains division increased 13% to R12,8 billion
while operating income declined marginally. In a challenging
and high inflation environment, volumes were maintained
despite lower volumes in maize and sorghum.
Grains
Salient features
•• High raw material inflation driven by drought
•• Operating income marginally down at R2 billion
•• Market leadership maintained in bread category
Segment overview
This division houses the group’s milling and baking and other
grains businesses, and includes brands such as Albany
(bread), Tastic (rice), Ace (maize), Jungle (breakfast)
and Fatti’s & Moni’s (pasta).
40
The review period was characterised by significant inflation
in raw material input costs. Turnover, driven entirely by
inflation, increased 13% to R12,8 billion while operating
income declined marginally to R2 billion. The decline of
operating margins by 2,5 percentage points to 15,6% was
adversely affected by high levels of input cost inflation.
Despite growth in all other categories, overall volumes were
flat due to significant declines in maize. The marketing
investment increased by 13%, after a 16% increase in the
prior year, to support sustainable performance in this division.
Integrated approach to sustainability
Performance
(Rm)
15 000
12 000
9 000
6 000
3 000
0
11 375
12 845
18,1%
15,6%
2 061
2 002
2015
2016
*Before abnormal items.
■ Turnover
■ Operating income*
Operating margin
The performance of our Grains division is driven by raw
material costs and price/volume management. Equally, it is
sensitive to exchange rate volatility, wheat tariffs, Safex maize
prices (shown below) and, of course, increased competition.
Rm
September
2016
September
2015
%
change
US wheat price (USD)
Exchange rate (R/USD)
US wheat price (R)
Duty
Safex maize
194
13,56
2 631
1 591
4 202
250
12,07
3 018
461
3 479
(22)
12
(13)
245
21
People
In an industry competing for scarce
skills, robust engagement is key to
creating shared value
Safety and health
Route to market security remains a
focus area. In FY16, we recorded four
fatalities. Tiger Brands is working with
other industry players and provincial
authorities to build sustainable solutions
Visit our website for
additional information
Environment
To guide our sustainable manufacturing
journey, group targets are set for key
areas. Each business unit is responsible
for its performance against key
indicators
Communities
R23 million (1% of net profit after tax)
invested in socio-economic development
(page 65), including breakfasts for
almost 60 000 school children
Tiger Brands LimitedIntegrated annual report 2016 Safex wheat price
(R/t)
6 000
4 500
3 000
5
1
t
c
O
1
5
1
v
o
N
6
2
6
1
n
a
J
5
2
6
1
r
a
M
1
2
6
1
y
a
M
6
1
6
1
l
u
J
1
1
6
1
p
e
S
5
6
1
p
e
S
0
3
Maize price
(R/t)
5 500
4 500
3 500
2 500
During the review period, a capex programme was initiated
to improve the Western Cape bakery, which will come
online in the latter part of FY17.
While international wheat prices declined during the year,
this was offset by the increase in the local wheat tariff. This
tariff has increased eightfold between 2014 and 2016,
from R157 per ton to R1 591 per ton. This has meant a
significant increase in local wheat prices. The wheat tariff
formula is being reviewed by the International Trade
Administration Commission of South Africa and an outcome
is expected in due course. Despite these developments, the
wheat milling business delivered a satisfactory performance.
The maize price peaked at R5 280 per ton in January
2016 due to widespread and severe drought. As a result,
maize milling reported significantly lower operating income
as volumes were impacted by exceptional levels of inflation.
Margins were affected by the inability to fully recover costs
amid aggressive competition.
5
1
t
c
O
1
5
1
t
c
O
9
2
5
1
v
o
N
6
2
5
1
c
e
D
5
2
6
1
n
a
J
2
2
6
1
b
e
F
9
1
6
1
r
a
M
8
1
6
1
r
p
A
5
1
6
1
y
a
M
3
1
6
1
n
u
J
0
1
6
1
l
u
J
8
6
1
g
u
A
5
6
1
p
e
S
2
6
1
p
e
S
0
3
The performance of the sorghum and maize breakfast and
beverage business was constrained by high raw material
costs, new entrants and aggressive pricing by regional
competitors.
41
Other grains
The rice business reported strong turnover growth and good
volume growth. Lower international prices were offset by
rand weakness.
The pasta business recorded another strong operating
performance, with strong volume growth as increased
marketing investment continues to benefit the brand. During
the year, the division expanded the Fatti’s & Moni’s brand into
the fast-growing convenience segment with instant noodles.
Early indications show encouraging growth.
The oats business delivered good results, driven by the
resilience of the core Jungle range and boosted by
innovation, such as the single-serve Jungle cups that leverage
on the trend of convenience and breakfast-on-the-go.
Outlook
Although improved weather conditions are forecast, the
business may benefit from lower raw material costs in the
final quarter of the new financial year. Competition in bread
is likely to intensify as additional capacity comes on stream,
while the benefits of the new bread plant in the Western
Cape are only likely to be felt at the end of FY17. The
focus will remain on protecting market share through
increased brand investment and in manufacturing efficiency
and flexibility.
Milling and Baking
Overall volumes in these categories were unchanged
despite a significant decline in maize volumes. Fuelled
by inflation, turnover increased by 13% to R9,2 billion
(2015: R8,2 billion). A disappointing performance from
maize and sorghum resulted in operating income declining
5% to R1,6 billion from R1,7 billion in the prior year. This
contributed to a lower operating margin of 17,3%
compared with the prior year of 20,6%. The wheat-to-bread
value chain performed credibly in an increasingly
competitive environment in both baking and wheat milling.
Except in the Western Cape, where volumes declined
significantly in bread, positive volume growth reflected a
measured response to increased competition, focused on
the attributes of the Albany brand, supported by tactical
pricing initiatives.
Tiger Brands LimitedIntegrated annual report 2016Operational review
Turnover increased 9% to R11,0 billion and operating income
was up 9% to R1,2 billion, despite aggressive competitor
activity. The operating margin was maintained at 10,8%.
Consumer Brands – food
Salient features
•• Groceries achieves margin of 9,9% while maintaining
brand leadership in core categories
•• KOO maintains leading position in top awards on
page 29
Performance
Turnover increased 9% to R11,0 billion, driven by 3%
volume growth and 6% inflation. Operating income was
up 9% to R1,2 billion, despite aggressive competitor activity
and above-inflation increases in input costs. The operating
margin was maintained at 10,8%.
•• Improved manufacturing performance across all divisions
Performance
42
Segment overview
This division houses many of the group’s iconic brands and
includes Groceries, Snacks & Treats, Beverages, Value
Added Meat Products and Out of Home.
Strategy
Entrench brand leadership and recover operating margin
in specific categories through strategic pricing, improved
operating performance, innovation, cost efficiency and
enhanced manufacturing performance.
(Rm)
12 000
10 000
8 000
6 000
4 000
2 000
0
10 108
11 029
10,8%
10,8%
1 096
1 195
2015
2016
*Before abnormal items.
■ Turnover
■ Operating income*
Operating margin
Integrating sustainability into operations
People
Recognised as top and preferred
employer in separate surveys
(page 56)
Safety and health
13% improvement in lost-time injuries
in FY16
Environment
Water scarcity and drought are
key risks at present. Targets set for
reducing consumption by at least
5% per annum, increased recycling
and reuse
Transformation
Tiger Brands maintained its level 3
BBBEE rating and has proactively
revised its strategy in anticipation of
new codes. For more information
refer to page 63.
Visit our website for
additional information
Operational review continuedTiger Brands LimitedIntegrated annual report 2016 HAPPy 90TH BIRTHDAy BLACK CAT – AND
MANy MORE NuTTy yEARS AHEAD!
Open up the world’s pantries and you will find one
product in almost all of them, peanut butter. Ask
a South African which brand they associate with
peanut butter and their answer is likely to be Black
Cat. In consumer research, Black Cat is mentioned
by 91% of people asked to name a peanut butter.
We are celebrating 90 years of peanut buttery
goodness with Black Cat, the nutty spread that
changed South African sandwiches forever.
•• 1926 – Black Cat developed in South Africa by
a company in Mokopane (formerly Potgietersrus)
to quickly become a household staple through
word-of-mouth support for its quality
•• 1946 – Tiger Oats acquired Black Cat, investing
in the brand through modern manufacturing
techniques as well as extensive advertising and
marketing campaigns
•• 1967 – Professional golfer and local icon, Gary
Player, endorsed Black Cat and appeared in
many adverts
•• 1973 – Tiger Oats sponsored the children’s radio
programme The Adventures of Jet Jungle on
Springbok Radio, heralding a new era for Black
Cat and countering rising competition from private
label brands
43
•• 1980 – Does the name Felix Swart sound
familiar? It should. Black Cat gave him
supernatural strength in the popular TV programme
Die Swart Kat.
Black Cat quickly became a household staple in
South Africa and remains the brand choice of peanut
butter among parents to feed their children. Although
Black Cat is a firm favourite for children, the target
audience includes adults (young and old) too,
making it the number one selling peanut butter and
a firm favourite for healthier snacks.
We remain ahead in continual innovation as well,
such as plastic 600g tubs, and meeting health trends
with our no-added sugar, no-added salt smooth and
crunchy variants.
Tiger Brands LimitedIntegrated annual report 2016Operational review Operational review continued
Consumer Brands – food continued
44
Groceries
Groceries continues its recovery and produced an improved
performance driven by its portfolio of consumer-preferred
brands including KOO, All Gold, Crosse & Blackwell,
Black Cat and Mrs Ball’s. Turnover rose 10% to R4,7 billion
(2015: R4,3 billion) while operating income increased
by 13% to R466 million (2015: R411 million). As a result,
the operating margin improved from 9,6% to 9,9% in line
with guidance.
The division’s supply chain continues to focus on
manufacturing excellence. The mayonnaise operation, which
is now located in Boksburg (Gauteng), is now stable and
performing to expectation after experiencing some initial
challenges. Despite difficulties presented by the ongoing
drought, the adverse impact on raw material availability
was kept to a minimum. Although this was well managed,
the drought and foreign currency volatility raised raw
material and packaging costs significantly. We therefore
implemented an appropriate pricing strategy, focused on
price/volume management in a trading environment
marked by aggressive competition and constrained
consumer spending.
Innovation included the launch of successful flavour
extensions to Mrs Ball’s, KOO’s expanded range of
vegetable products and KOO Lite fruit products, as well
as the domestic introduction of Benny stock flavouring.
Groceries continues to invest in its market-leading brands.
The All Gold range was relaunched with a new brand
advertising campaign. KOO continues to benefit from its
current award-winning campaign, with the TV advert voted
among Millward Brown’s Top 10 Best-liked Ads of 2015
(published July 2016). In addition, KOO was voted by
consumers as South Africa’s favourite brand in the
Sunday Times 2016 survey for a second consecutive year
ahead of leading international brands.
Snacks & treats
This business is a market leader in sugar confectionery
through brands including Maynards, Beacon Allsorts,
MMMallows and Smoothies. It also markets chocolate slabs
(Beacon) where it enjoys the number 2 position, chocolate
bars (TV bar, Nosh, Nikki) as well as the snacking category
through Jungle.
During the review period, turnover grew 6% to R2,3 billion,
reflecting slight volume share gains in a contracting market.
Operating income of R316 million was maintained, despite
significant input cost increases on major ingredients such as
sugar, glucose, cocoa and nuts.
Good progress was made in 2016 on key factory issues
that affected supply and customer service levels. We also
made progress in product streamlining the portfolio by
eliminating non-value-adding product lines. The category
optimisation process that started this year will pave the
way for greater innovation in FY17.
Building on the recent capacity investment in gums and
jellies manufacturing, the business has invested in additional
chocolate manufacturing capability to accelerate current
momentum in chocolate slabs.
Beverages
With key brands including Oros, Energade, Rose’s and
Hall’s, the business recorded strong volume growth in the
period, driven by focused investment in core brands.
Tiger Brands LimitedIntegrated annual report 2016 Both turnover and operating income grew by 14% to
R1,3 billion (2015: R1,2 billion) and R157 million
(2015: R138 million), respectively. Despite significant
pressure on input costs, the operating margin
was maintained at 11,8% through various cost-saving
initiatives and mix management.
Investment continued during the year, building on the
successful manufacturing architecture consolidation initiated
in 2014. A state-of-the-art ready-to-drink production line
was installed, paving the way for further innovation and
productivity improvements.
Value-added meat products
The value-added meats category has moved from declining
growth in the previous year to a moderately positive
position, driven mainly by the polony segment. The
market-leading Enterprise brand has held up well against
this competition and has continued to gain share from other
major national brands.
Turnover increased by 6% to R2,2 billion (2015: R2,1 billion)
and operating income by 8% to R158 million (2015:
R146 million) despite significant cost increases in pork, driven
indirectly by higher maize prices, particularly in the second
half. The business achieved an operating margin of 7,1%.
The rate of innovation remains well above historical levels,
further widening the gap against its main competitors.
During the year, the business acquired Hercules Cold Storage
Proprietary Limited. Its core business is processed meats,
focused on the economy segment. The facility will be
converted into a Halaal-certified plant providing access to
identified new channels, including the independently owned
wholesale channel.
Out of home
Key drivers for the year included optimising product and
customer mix, with focus on higher-profit categories and
customers. The business grew volume by optimising the
entire Tiger Brands basket and focusing on combined
profitability. Improved service levels on key categories
contributed to an improved overall performance.
The food services market benefits when macro-economic
conditions deteriorate and people trade down from fine
dining to fast food.
For FY16, turnover increased 13% to R502 million
(2015: R444 million) and operating income 14% to
R98 million (2015: R86 million). Out of home sells all
Tiger Brands’ products to food services customers such
as caterers and restaurants, and is uniquely able to tailor
solutions for these customers. This is a distinct competitive
advantage in difficult trading conditions where customers
face immense cost pressures.
Outlook
Trading conditions are expected to remain challenging in
the year ahead, given widespread pressure on consumer
spending, cost increases and aggressive competition.
Accordingly, we will focus on increasing margins by driving
cost savings and efficiencies and prioritising marketing
efforts. In a highly competitive market, we will continue to
focus on innovation to reinforce our core brands while
optimising the price elasticity of our brands.
45
Tiger Brands LimitedIntegrated annual report 2016Operational review The division is now in the second year of the rebase and rebuild strategy
and has responded positively to various initiatives. Turnover increased
13% to R2,4 billion and operating income 20% to R534 million resulting
in an operating margin of 21,9%.
46
Home, Personal Care and Baby (HPCB)
Salient features
•• Turnover growth of 13% with operating income growth
of 20%
•• Key efficiency benchmarks achieved
•• Exceptional performance in major categories, with body
care and pest recording strong growth
Segment overview
This division houses a portfolio of entrenched brands, many
with a heritage and pedigree built over years.
Strategy
The division is focused on supporting the long-term
competitiveness of its brands with appropriate investment
in marketing, research and new product development.
The division is now in the second year of the rebase and
rebuild strategy and has responded positively to various
initiatives.
Integrating sustainability into operations
People
Group talent processes entrenched to
ensure the right skills in the right place
Customers and consumers
Intensified focus on market insight
and operational efficiency to counter
changes in consumer behaviour and
increasing competition
Performance
The success of the strategy is reflected in turnover increasing
13% to R2,4 billion (2015: R2,1 billion), driven in part
by 6% volume growth. Operating income rose 20% to
R534 million, with an operating margin of 21,9%.
Performance
(Rm)
2 500
2 000
1 500
1 000
500
0
2 147
2 437
20,7%
21,9%
444
534
2015
2016
*Before abnormal items.
■ Turnover
■ Operating income*
Operating margin
Home care
Consumer-relevant innovation and excellent in-store
execution underpinned a solid performance from the home
enhancement segment. In the pest segment, significant share
gains, as well as innovation into new segments, supported
Preferential procurement
73% of our discretionary procurement
benefits BBBEE suppliers
Communities
Good corporate citizenship is
intrinsic to Tiger Brands – our
reputation depends on it
Visit our website for
additional information
Operational review continuedTiger Brands LimitedIntegrated annual report 2016 an excellent performance. Focused customer and marketing
activities contributed to good growth in the sanitation
segment, particularly the Jeyes brand.
Personal care
Growth in this category slowed, reflecting the pressure on
consumer income exacerbated by key competitors investing
aggressively in pricing strategies and brand support. The
business countered these challenges to some extent by
focusing on innovation (for example, Ingram’s Triple
Glycerine and tissue oil creams) and specific propositions
for key channels. The business recorded strong
performances from core brands in the body care category
such as Ingram’s, Dolly Varden and Skin Clinic.
Baby care
This business faced a difficult year as economic conditions
affected homogenised baby food consumption, and
consumers shifted from branded food to more affordable
home cooking and general food brands. Marketing
investment rose by 5%. Since launching in July 2015, the
new pouch format has grown exponentially, with Purity’s
share of this format reaching 70%.
During the period, the business leveraged off the strength
of the Purity brand with a number of launches, including
growing-up milk and Purity Junior. The launch of growing-up
milk provides entry into a category with 7% annual volume
growth while Purity Junior is a range of delicious and
nutritious snacks, meals and drinks for pre-schoolers. Since
launch, the range has driven incremental growth for the
baby snacks portfolio. In baby well-being, a baby-friendly
insect repellent and fabric conditioner were launched under
Purity & Elizabeth Anne’s while the vitamin supplements
range under the Vi-daylin brand was extended to toddlers
and older children.
Outlook
In FY17, the focus remains on cost reductions, continued
innovation in line with strategy and improving efficiencies,
especially in the nutrition manufacturing units and Isando
reconfiguration project, which was fully commissioned in
November 2016. In the longer term, we are confident the
Baby division is well positioned, with the leading brand
Purity to drive sustained market and share growth by
offering consumers affordable pack sizes, value-added
promotions and innovation that meets their needs for
convenience and time-saving solutions. We will continue
to focus on innovation across all categories in Home and
Personal Care to reinforce our core brands.
MANGWANANI AND AIROMA COLLABORATION
Mangwanani is an
award-winning proudly
South African day spa
with 26 branches in
Gauteng, Western Cape
and KwaZulu-Natal.
The brand is well known
among urban women in
the upper-income segment,
synonymous with rest and relaxation, and acknowledged
as originating in and inspired by Africa. As such, it
provided a unique platform for an air-care range.
The common ground of the Airoma/Mangwanani
collaboration is fragrance, combining Mangwanani’s
credibility in “African fragrances” with Airoma’s heritage
in “home fragrances”. In a spa environment, fragrance
enhances the ambiance – a consumer need that Airoma
aims to address.
This co-branded opportunity is founded on the global
trend of collaboration but with local flavour. As a form of
marketing, it provides a unique competitive advantage for
Airoma and an opportunity to elevate the air-care category
in the retail trade out of sanitation and into the home.
INGRAM’S INNOVATION A HIT WITH CONSuMERS
Ingram’s has been a household
brand for decades. Based on
a deep understanding of local
consumer behaviour, we launched
Ingram’s Triple Glycerine. In
just three years and in a hotly
contested market, it has overtaken
established competitors to become
one of the best-selling items in its category in key retail
outlets, second only to the 500mℓ pack of Ingram’s
Camphor Cream.
The rationale for this innovation stemmed from home
visits with the people who buy our products (noting
that consumers already decanted glycerine into their
creams) and complemented the Ingram’s brand strategy
of launching body care products that have unique
functional benefits based on relevant local ingredients/
behaviours.
The success of this and other launches (such as Ingram’s
Tissue Oil Cream) proves our ability to effectively
compete given our intimate understanding of the
needs and wants of South African consumers. These
deep insights guide the development of relevant and
unique local products by a very capable new product
development team.
47
Tiger Brands LimitedIntegrated annual report 2016Operational review
Our export basket into southern Africa includes brands such
as Benny stock powder, Crosse & Blackwell, Ingram’s,
Doom, All Gold and KOO.
48
International (including Exports)
Performance
(Rm)
6 000
5 000
4 000
3 000
2 000
1 000
0
5 029
5 386
9,2%
10,2%
462
547
2015
2016
*Before abnormal items.
■ Turnover
■ Operating income*
Operating margin
The performance of the Exports division (including Davita
which exports Benny seasoning ingredients, Jolly Jus and
Davita powdered soft drinks to 33 countries across Africa)
was below the previous year.
Macro-economic issues in Nigeria, Mozambique,
Zimbabwe and Zambia resulted in currency devaluations
and foreign exchange shortages, in turn affecting key
customers’ ability to stay within their credit limits and
replenish stocks. In addition, import permit regulations
imposed in Zimbabwe significantly affected performance
in the fourth quarter.
Integrating sustainability into operations
People
Focus on leadership programmes
to support revised strategy
Safety and health
Focus on eliminating recurring
behaviour-based incidents, and
route to market safety
The Tiger Brands export basket into southern Africa,
particularly Mozambique, Zambia and Zimbabwe, includes
brands such as Benny stock powder, Crosse & Blackwell
mayonnaise, Ingram’s Camphor Cream, Doom, All Gold
and KOO. Demand for these brands remains robust, despite
challenging economic conditions in these countries. The
division continues to invest in these core brands to ensure
sustained visibility and awareness.
Two major capex projects totalling R138 million were
commissioned at the Davita factory in the review period to
enhance capacity and overall compliance. This will ensure
adequate ongoing supply to address local and export
demand as well as enhanced compliance to safety, health,
environment and quality standards.
Despite external challenges in the current year, the outlook
for the new financial year is positive with renewed focus on
existing and new markets to drive growth.
Environment
To achieve global benchmarks,
discrete three-year targets set with
full accountability on page 76.
Enterprise development
Financial support of R24 million
augmented by mentorship and skills
transfer
Visit our website for
additional information
Operational review continuedTiger Brands LimitedIntegrated annual report 2016 Central Africa
Cameroon: Chococam (74,7% held)
Chococam, which manufactures chocolate bars, chocolate
spread, candy, gum and powdered beverages, recorded
a seventh consecutive year of solid growth in turnover and
operating income despite difficult economic conditions.
These included protracted low oil prices (affecting all six
countries in Central Africa), the insecurity created by
regional conflict, and recent naira devaluation which
generated a high increase in cheap imported goods
from Nigeria.
East Africa
Ethiopia: East Africa Tiger Brands Industries (EATBI)
(51% held)
EATBI’s disappointing performance in FY16 was affected
by severe drought in the eastern and northern parts of the
country and ongoing protest action and unrest which
impacted trading.
In June 2016, Tiger Brands announced its decision to
dispose of its 51% shareholding in this company to its
Ethiopian partner and minority shareholder.
Strong volume growth in FY16 was driven by the chocolate
bar and spreads categories in particular. Other key drivers
of this performance include the continued investment in
brands through traditional and digital media support,
trade and consumer activations, and improved coverage
of the informal retail universe from 70% to 80%. Customer
service levels remained high at 97%. The contribution to
turnover from export markets (including Gabon, Chad,
Congo-Brazzaville and Equatorial Guinea) improved despite
trade disruptions created by presidential elections in
Gabon, Chad and Congo-Brazzaville during the year.
Another important growth driver is the company’s innovation
strategy which allowed it to accelerate top-line growth and
reinforce its strong market positions in all categories.
Innovation contributed 7,2% to turnover from 6,5% in the
prior year. During the period, innovations in powdered
beverages, spreads, candy and chocolate bars were
successfully taken to market.
Chococam’s strong performance is reinforced by its selective
investment in capital projects to drive capacity enhancements
and a safer working environment, including employee
well-being and productivity. As a result, it is well positioned
for growth and the outlook for the new year remains positive.
Given the uncertainty of the timing of completing the
transaction, this business has not been reflected as an asset
held for sale at 30 September 2016. Both parties remain
committed to the sale and will continue to work together to
fulfil all remaining suspensive conditions.
Kenya: Haco Tiger Brands (51% held)
Haco Tiger Brands is a leading consumer goods
manufacturer and distributor of stationery, shaving, hair
care, skin care, home care and food products in the East
African region (Kenya, Uganda, Ethiopia, Tanzania,
Rwanda and Burundi).
The main objective in 2016 was to stabilise the business
following revenue recognition issues in FY14, which had
a significant negative impact on FY15 performance. This
objective was achieved as sales volumes recovered in line
with expectations despite tough regional economic
conditions, including foreign currency shortages in Ethiopia,
foreign exchange volatility in Uganda and Rwanda, and
civil unrest in Burundi.
Key drivers behind this performance reflect the focus on
end-to-end excellence in execution for priority brands from
product listing, trade visibility to consumer engagement.
The contribution to turnover by export markets (Uganda,
Ethiopia, Rwanda, Burundi, Tanzania and Congo)
increased from 44% last year to 53% driven by successful
and targeted marketing campaigns. Defending and growing
sales and market shares in the Kenyan market is key to
ensure sustained growth.
49
Tiger Brands LimitedIntegrated annual report 2016Operational review International (including Exports) continued
West Africa
Deli Foods
The performance of wholly owned Deli Foods was affected
by currency devaluation and its impact on the cost of wheat
imports. In addition, ongoing power outages and the
introduction of value-added tax on biscuits have had a
further adverse effect on the business.
Turnover increased 16% to R477 million (2015: R412 million).
The inability to recover significant increases in key raw
materials, resulted in losses rising 27% to R49 million
(2015: R38 million).
Economic conditions and intense competition, exacerbated
by electricity shortages, will continue to make trading in
Nigeria challenging in the short term.
Performance in FY17 is expected to be based on the key
priorities of continuous cost reductions, improving efficiencies
across the value chain, an expanding presence in the
modern trade and continued innovation. With ongoing work
on its growth strategy, the business will be well placed to
drive profitable growth through expansion in current and
new categories.
Deciduous Fruit (LAF)
Given its export volumes, this company is sensitive to
currency exchange rates and low economic growth rates in
developed markets where it competes. To counter this, the
business focused on increasing margins through geographic
and product optimisation, and operating efficiencies.
50
Operating income increased by 59% to R148 million,
driven by favourable exchange rates, volume growth into
the Far East and Australasia, ongoing manufacturing
efficiencies from improved yields, and cost containment.
In 2016, LAF won the National Productivity Award for
the most productive manufacturing company in the Western
Cape region. Run by Productivity SA, this award was
established by the government to enhance the productive
capacity of the country and criteria included the facility’s
approach to productivity, its sustainability strategy in terms
of social impact, safety and working environment,
environmental impact, quality as well as growth and
development.
In line with its growth strategy, expansion into related
value-added products continued, with additional sales of
dried fruit and tomato paste. A number of commercial trials
of new products were successfully completed, with product
launches planned for the coming season.
As agricultural output normalises, communication between
the company and grower representatives to address issues
affecting farmers remains a priority.
The global industry remains highly competitive and financial
instability in Greece, the largest canned-fruit exporter in the
world, directly affects the market given the pricing leverage
enjoyed by Greek manufacturers. Despite this, prospects for
the business remain positive with the continuous shift to
higher-growth markets. The business has significantly increased
sales to China over the past four years and continues to focus
on growth markets, such as China and Russia, to replace
more saturated and mature markets like Europe.
Operational review continuedTiger Brands LimitedIntegrated annual report 2016 Associates
Nigeria: UAC Foods (49,0% held by Tiger Brands)
UAC Foods is a leading manufacturer and marketer of
convenience foods in Nigeria. Its brands span a broad
spectrum of the country’s food market, with specific focus
on snacks, dairy products and beverages.
The snacks category consists of Gala Sausage Roll, which
is the number one sausage roll in Nigeria, Funtime cup
cakes and coconut chips. The dairy category comprises the
Supreme range of ice-cream products. Brands in the
beverage category include Swan natural spring water and
the carbonated, fruit-flavoured Swan soft drink.
The weaker Nigerian economy has intensified competition,
with competitors using aggressive pricing strategies to
increase volume and factory throughput amid suppressed
consumer demand.
The hallmarks of Carozzí’s success include its exceptional
innovation capability, strong number one or number two
brands in the relevant categories, depth of market
penetration and efficient manufacturing capability. The
business is therefore well placed to continue competing
effectively.
Zimbabwe: National Foods Holdings Limited
(37,4% held by Tiger Brands)
National Foods is a leading branded food company
operating in Zimbabwe through an infrastructure of
factories, depots and agencies. Zimbabwe was impacted
by macro-economic weaknesses, including foreign
exchange shortages, exacerbated by import permit
regulations. Despite these challenges, volumes
increased driven primarily by maize and, to a lesser
extent, cattle feed.
Cost increases following a weakening Nigerian naira
have been significant, and only some of these could be
recovered through price increases. Despite this, gross
margins were maintained by adjusting the Gala sausage
roll price and pack-size architecture.
During the year, National Foods concluded two acquisitions.
It acquired 40% of Pure Oils, a vegetable oil business, and
100% of Breathaway Food Caterers, a snacks and biscuits
business. The acquisitions complement the existing portfolio
and are likely to provide synergies on integration.
51
Challenging macro-economic conditions are likely to persist
into FY17, resulting in a muted outlook for this business.
Chile: Empresas Carozzí (24,4% held by
Tiger Brands)
Empresas Carozzí is a leading branded food business
in South America, based in Santiago, Chile. It also has
significant manufacturing operations in Lima, Peru.
The company recorded a satisfactory consolidated
performance for the review period, with results boosted by
the disposal of 50% of its beverages assets by way of a
joint venture with Compania Cervecerias Unidas SA, Chile’s
largest brewer.
Underlying performance was affected by the agro-industrial
division, which faced lower global pricing in tomato paste
and fruit purees although prices firmed somewhat in the
second half of 2016. The division in Peru was also affected
by weak macro-economic fundamentals weighing on
consumer sentiment.
The populist policy changes implemented by government in
2014 continue to impact local consumer demand as well
as overall business confidence. Similarly, political and
economic challenges in Brazil and Venezuela are
constraining regional export opportunities.
Foreign currency shortages in Zimbabwe are expected to
intensify. The company’s position has been strengthened by
its acquisitions and focus in the year ahead will be on
successfully integrating these businesses.
Oceana (42,1% held by Tiger Brands)
Oceana is a leading fishing company, listed on the JSE.
Headline earnings for the year ended 30 September 2016
increased by 34%, driven by a 69% increase in operating
income.
The strong growth in operating income reflects the
performance of its African operations, primarily driven
by volume growth in canned fish, fishmeal and hake,
underpinned by a favourable exchange rate and record
occupancy levels in the Commercial Cold Storage (CCS)
business. The inclusion of the Daybrook and Foodcorp
assets, acquired in 2015, for the full period contributed
to the rise in operating income. Daybrook’s strong
performance was driven by increased landings and a
material improvement in oil yields compared with the
2015 fishing season.
Included in operating income are profits on the disposal
of Lamberts Bay Foods and the CCS fruit business in the
review period, in line with Oceana’s strategy of focusing
on its core strengths.
Tiger Brands LimitedIntegrated annual report 2016Operational review 52
Tiger Brands LimitedIntegrated annual report 2016 53
Golden Cloud is one of
Tiger Brands‘ leading
brands and ranks
second* in the flour
category. In response
to consumer trends,
Golden Cloud
launched a range of
ready mixes. The
recent introduction of
new variants will
continue to drive
growth ahead of
the category.
*Nielson
Tiger Brands LimitedIntegrated annual report 2016Non-financial review Sustainability review
This section has been prepared against the core level of
disclosure of GRI G4 principles and guidance (GRI G4 index
can be found on our website), the requirements of the
FTSE4Good index, as well as governance guidelines in the JSE
Listings Requirements and King III. Tiger Brands fully supports
the principles of the United Nations Global Compact which
recognises the positive contribution business can make to a
more sustainable planet.
Against this background, we are incrementally improving our management and reporting of the key elements of sustainability as
an important and integrated aspect of our strategy.
Our approach to managing sustainability is set out on page 55 and underpinned by our core values, summarised below:
People
Consumers
Performance
The world we live in
Integrity
Our values
•• We value our
people and
treat them with
dignity
54
•• Our consumers
are our business
•• We have a
passion for
excellence
•• We continue to
reinvest in our
society
How we
live our
values
•• Treat all with
care, concern
and respect
•• Produce quality
products
•• Value flawless
execution
•• Respond to the
needs of society
whenever we can
•• We act with
integrity at
all times in
everything we
do
•• What we say
on the outside
is what is on
the inside
•• Develop,
•• Understand
•• Zero tolerance for
•• Committed
•• Never
empower and
enable our
people
and satisfy our
consumers’ needs
mediocrity
corporate social
investment
compromise the
safety of our
consumers
•• Promote
workplace
diversity
•• Invest in the
safety of our
products
•• Act with a sense
•• Business practices
•• Never do
of urgency
guided by our desire
to sustain our
environment
anything we
would be
ashamed of
if the facts
became public
•• Work hard and
•• Attend to every
play hard
together
consumer request
or complaint
•• Deliver on time
every time
•• Help our people
thrive
•• Encourage
innovative
thinking
•• Recognise and
reward
excellence
Tiger Brands LimitedIntegrated annual report 2016 Tiger Brands believes in
a holistic approach to
building and enhancing its reputation
The case for sustainability
We support the philosophy that:
Good corporate
citizenship is intrinsic
to Tiger Brands
Doing good is good business
Tiger Brands does not operate in a
vacuum nor in a static
environment of “business as usual”
55
Robust
stakeholder
relationships and
engagement, both within
and outside the
organisation, are key to
creating and unlocking
real stakeholder and
shared value
Reputational and social capital can be tracked and
measured to enhance performance,
returns and drive improvement year-on-year
The communities in which we
operate must be better
off because we are there
To thrive as a corporate organisation in a global context, Tiger Brands
will be responsive to and influence/shape the many environments it faces
Central to achieving our financial and market share
objectives is managing sustainability and reputation. Key
elements include:
•• Building our reputation internally and externally
•• Promoting our corporate identity to all stakeholder groups
•• Adding value to society with integrity
•• Driving internal communication, aligned to company goals
•• Protecting our licence to trade through proper governance
and engaging with stakeholders
•• An integrated sustainability approach.
Tiger Brands LimitedIntegrated annual report 2016Non-financial review Our people
Highlights
Group talent processes entrenched
Top Employer status retained with improved year-on-year score
Again ranked in the top three of FMCG sector by graduates (South African Graduate
Employers Association survey)
Challenge
The current operating environment demands the right calibre, capability and capacity of
human resources (HR). Accordingly, in 2016, we continued to implement our strategy on
transforming the HR function to be more responsive to business requirements underpinned by
implementing a different HR operating model and integrated HR information management
system
56
Strategic intent
Winning through people, organisation and being a great place to work
Skills and capability
development
•• Implement capability-
building framework
•• Build business-critical
capabilities
•• Refine functional
academies
Organisational
development and
effectiveness
•• Organisational
design to enable
business performance
•• Drive benchmark
productivity
•• Enable collaboration
•• Build mission-critical
and teamwork
skills
•• Role and
responsibilities clarity
Talent management
Leadership development High-performance and
engaging culture
•• Leadership
•• Enhance performance
•• Workforce
planning
development model
•• Enhance employer
•• Leadership
development
programmes
•• Leadership pipeline
benchmarking
•• Key roles and key
people alignment
brand
•• Management
trainee programme
•• Embed integrated
talent management
process and
practices
•• Talent acquisition
and integration
•• People
management
capability
•• Career
management and
development
management
approach
•• Drive plans to
address key findings
from employee Pulse
survey
•• Implement culture
change programme
•• Build a great place
to work
•• Deliver valued reward
and recognition
programme
•• Impactful industrial
relations/employee
relations approach
Brilliant HR basics and one aligned HR team
•• Enterprise-wide HR information management system in support of HR value chain
•• Harmonise, standardise and simplify HR policy, processes, systems and HR data
•• HR operating model and structure, ie focused HR business partnering, centres of expertise and shared services teams
•• HR governance
•• HR roles and skills, capabilities and knowledge management
•• HR environment (great place to work)
Tiger Brands LimitedIntegrated annual report 2016 Workforce
In 2016, the group employed 11 109 permanent
staff and 3 689 temporary staff in South Africa,
excluding 1 059 seasonal and casual workers.
Outside South Africa, we employ 2 012 permanent
staff and 4 664 temporary staff, bringing the total group
workforce to 21 474 (excluding seasonal and casual
workers) (2015: 20 591). The total salary bill for the year
was R3,7 billion, compared to R3,4 billion in 2015.
Our businesses use seasonal and casual workers for
expected increases in production. For example, when
peaches ripen, we employ additional staff to assist in
picking and processing the crop timeously.
In other instances, we face unanticipated spikes in demand
from large orders or other less predictable events. To meet
these customer requirements, we hire the necessary
temporary staff. In 2016, our temporary workforce
represented 39% of our total staff complement.
Long term, we intend to convert temporary workers doing
regular and ongoing work to permanent positions in the
group.
While no formal commitment to local hiring is in place, in
practice the vast majority of our workers are drawn from
areas around our operations.
Key indicators
Employee headcount*
Female employees
Learnership participants
Total training spend (Rm)
Overall staff turnover rate
Retention rate of key talent (target 80%)
* Includes international operations but excludes seasonal and casual workers.
** Restated.
2016
21 474
3 910
324
24,7
7,1
91%
2015
2014
20 591
19 134**
3 696
3 555
264
10,8
7,9
87%
285
7,7
9,6
86%
57
Talent management
Our goal is to be able to deliver qualified talent to the
business ahead of demand. This means finding the right
people with the right capabilities, sourced internally.
identify any gaps and focus on development plans to address
these. These reviews take place at a business, functional and
group level where talent is identified, development plans and
actions are agreed and then tracked.
Tiger Brands is building talent sustainably by concentrating
on internal appointments and promotions while increasing
the investment in training and development to build
capability and strengthen the talent pipeline. Key initiatives
include a focused management trainee and leadership
development programme. During the reporting period,
15 graduates joined Tiger Brands as trainees in various
disciplines.
Regular talent reviews at appropriate levels ensure high-
potential individuals are identified, development plans are
agreed, and progress against agreed targets is tracked.
In 2016, we continued to embed our approach to enable
Tiger Brands to outperform competitors and to strengthen our
talent pipeline and leadership pool via the talent framework
and high-potential process. This includes a group talent policy
and review process for a group-wide view that will also
Identified high-potential employees, whose talent Tiger
Brands can leverage for business-critical issues, receive
commensurate benefits.
Leadership development
Our aim is to have leaders in place with the right
capabilities to inspire people to deliver exceptional
performance.
In line with our revised approach to talent management,
and to ensure we have leaders who can drive our strategy,
a new leadership competency model was introduced in
2015. Leaders are assessed against this framework to
ensure we set the correct parameters for development
programmes. Four flagship leadership programmes were
launched in 2016 and the offering will be enhanced in
FY17. In total, 11 flagship programmes were held in 2016
attended by 120 leaders.
Tiger Brands LimitedIntegrated annual report 2016Non-financial review Our people continued
High-performance and engaging culture
This pillar of our strategy aims to drive high performance
through careful performance management, paired with
strong rewards and recognition structures. We believe this
drives an engaged and committed workforce and
contributes to our success.
Tiger Brands complies with South Africa’s Labour Relations
Act and Basic Conditions of Employment Act, the
International Labour Organisation conventions, and all
relevant regulations in the areas where it operates. In
2016, there were no instances of non-compliance with
labour standards.
In 2016, our turnover rate was 7,1% (2015: 7,9%),
marginally lower than the previous year. We are pleased
with the progress and are developing metrics to track and
reduce the loss of key talent.
Employee benefits
Given our strategic intent to attract and retain talent, we
regularly track market trends, legislation and best practice to
ensure our employee benefits are relevant and competitive
to support our people strategy.
Labour relations
To ensure a constructive, safe and fair working environment
for all our people, we work closely with employee
bargaining units to ensure that everyone has a voice in
matters that affect them daily.
Our employees have full freedom of association. Some 62%
of employees belong to 18 unions (including three1 major
unions), with site management and shop stewards meeting
monthly. The three biggest unions collectively represent 66%
of unionised employees.
At each site, unions are represented on forums that monitor
employment equity, skills development and other issues
requiring management’s attention. We continue to work
closely with the unions to build productive relationships.
Clear communication between staff and management helps
ensure disputes are resolved and grievances dealt with
appropriately by all parties. Our disciplinary code is a
guideline for all managers and employees to:
•• Create a fair and equitable structure for dealing with
misconduct
•• Encourage timely corrective action if an employee’s
behaviour or conduct is unsatisfactory or unacceptable.
As part of our workplace culture, scheduled meetings are
held daily at production sites. These focus on pertinent
issues that improve productivity and safety, and provide
an opportunity for feedback from our employees.
Skills and capability development
Training and developing all employees is a prerequisite to
creating a competitive advantage. Our people have the
opportunity to continually develop themselves through
workplace qualifications and shorter, function-specific
programmes. Documented objectives and targets are
submitted to the sector education and training authority
(FoodBev Seta) in our workplace skills plan and annual
training report.
In 2016, we invested R24,7 million (2015: R10,8 million)
on in-house training in South Africa, led through the
Tiger Brands Academy, as well as learnerships. A total
of 1 151 employees (2015: 524) participated in over
11 733 (2015: 4 036) training days during the year.
Tiger Brands Academy
This internal facility comprises separate academies for the
disciplines of supply chain, leadership, finance, customer,
human resources and marketing. It also offers learnerships in
relevant fields for the group such as manufacturing, logistics,
supply chain and management.
To ensure we develop the right strategic skills, we recently
revised the course content of two key academies:
•• Supply chain: After the required skills were profiled and
harmonised across the group, new learning plans were
rolled out. In 2016, 29 unit managers were trained in
a manufacturing excellence programme, four planning
managers and 11 planning specialists were enrolled for
the APICS2 (CSCP) (Certified Supply Chain Professional)
and APICS (CPIM) (Certified in Production and Inventory
Management programmes), respectively. In procurement,
six employees were enrolled for the Chartered Institute
Procurement and Supply (CIPS) diploma. The shopfloor
development project is well under way: two sites have
launched formal learnerships and another three sites have
completed assessments with learnerships planned for
launch in early FY17. At other targeted sites, assessments
continue ahead of implementing the next phase of
learning plans.
58
1 South African Commercial, Catering and Allied Workers Union (SACCAWU), Food and Allied Workers Union (FAWU) and African Meat Industry and
Allied Trade Union (AMITU).
2 APICS – premier international professional association for supply chain management.
Tiger Brands LimitedIntegrated annual report 2016 •• Customer: Our School of Mastery completed its fifth
and final year in the current format in 2016. To date,
201 learners have completed three-year programmes
as sales representatives, field sales managers, customer
managers or shopper managers under this programme.
The second intake of 70 learners received national
qualifications in 2016, and the third intake will complete
their national qualifications at the end of 2016 and will
be awarded their qualifications in FY17. In the review
period, professional customer skills were reviewed and a
new skills dictionary developed. Following assessments
against revised skills criteria and external benchmarking,
a new customer academy curriculum is being developed
to advance skills to the next level.
Workplace experience project
Unemployment is a significant challenge in South Africa,
particularly among the country’s youth. Tiger Brands is
committed to creating opportunities by providing workplace
experience for selected candidates in food technology,
engineering, marketing, production and operations. These
students become a feeder pool for the graduate programme
and other entry-level appointments. Around 384 people
have completed the programme since 2008 and, where
possible, are employed by the business.
Adult Basic Education and Training (ABET)
We have an established ABET programme to
promote literacy in the group and in 2016 we spent
R0,3 million (2015: R0,9 million). As existing employees
complete the ABET programme, the need for this training
is diminishing.
External programmes
Thusani Trust provides bursaries to qualifying black
employees’ children. In 2016, we spent R3,5 million
on bursaries for 291 students (2015: R3,1 million and
158 respectively). A total of 371 students have graduated
from tertiary institutions since 2007 with the trust’s support,
and 26 graduated in 2015.
We provided bursaries for seven (2015: nine) engineering
students. After graduating, they are incorporated into our
talent pool.
Organisational development and effectiveness
Tiger Brands is striving to create an organisational
environment that enables performance, motivating
employees to contribute to the group’s success.
Human rights
As a signatory to the United Nations Global Compact,
Tiger Brands supports the protection of internationally
proclaimed human rights and endeavours to ensure the
group is not complicit in any related abuses. Our human
rights policy outlines our stance, namely that we do not
tolerate discrimination of any kind, nor any form of forced
or child labour. This policy is overseen by the HR
department and reported to the social and ethics
committee. There were no reported incidents of human
rights violations in 2016.
59
Tiger Brands LimitedIntegrated annual report 2016Non-financial review Health and safety
Highlight
13% year-on-year reduction in lost-time injuries
Challenge
Eliminating recurring behaviour-based incidents
To integrate our approach and raise awareness across the
group, we launched the Tiger Brands health and safety
forum in November 2015. Participants included risk
managers and safety officers from all our manufacturing
units, as well as external health and safety experts who
shared best practice standards.
Supported by an analysis of lost-time injuries reported by
our manufacturing units in FY15, participants agreed that
our business units are dealing with multiple and repetitive
behaviour-based incidents. Eliminating these has been
escalated to our highest priority.
Against this focus, key outcomes of the inaugural forum
included:
•• Sign-off of the health and safety strategic plan
•• Framework defined
•• Non-negotiable FY16 standards for each manufacturing
unit
•• Training plans for manufacturing employees
•• FY16 lost-time injury targets reviewed and ratified.
60
Behavioural safety through visible leadership (predict and prevent)
Achieving safety excellence
•• Step change in safety performance
•• Drive behavioural safety programme
•• Robust governance
•• Manage key risks
•• Leadership accountability and responsibility
•• Occupational health and safety
•• Achieve a major shift in leadership thinking on safety culture
•• Effective auditing to ensure process safety management is implemented properly.
Tiger Brands LimitedIntegrated annual report 2016 The safety of our workers, visitors to our operations and
assesses implementation and adherence, and provides
the public is key to our long-term success. We believe a
third-party verification. Any non-conformance is identified
safe and healthy workplace is both the fundamental right
and assessed, and risk mitigation and corrective actions
of every person and a business imperative.
are implemented. In addition, compliance audits on
applicable laws and regulations as well as the group’s
As such, our group health and safety policy stipulates our
occupational health and safety requirements are conducted
responsibility for maintaining productive workplaces across
biannually at each manufacturing operation.
the company by minimising the risk of accidents, injury
and exposure to health hazards for our own people,
Training
associates and contractors.
To meet the milestones in our strategic plan, key employees
are being trained and coached on the job to build on the
Our policies and standards for managing safety, the
required levels of safety expertise. The programmes are
environment and quality are defined in operating
facilitated by an external specialist, and focused on
requirements throughout the group. Our manufacturing
developing careers in the safety, health and environment
facilities follow the requirements and principles of the
(SHE) field. Appropriate programmes have been agreed
internationally recognised Occupational Health and Safety
for employees, supervisors, SHE coordinators and safety
Assessment Series (OHSAS) 18001 standard as the
officers, management, internal audit, and SHE practitioners.
framework of an occupational health and safety
management system.
To supplement formal training, we have implemented
self-auditing and peer-auditing processes to drive the safety
The group chief executive officer is ultimately responsible for
programme.
the safety of employees. He reports to the risk and sustainability
committee as well as the audit committee on these matters.
Our safety programmes include training at induction and
Health and safety committees, led by supply chain executives
periodic refresher training for employees and contractors.
and site management, are responsible for implementing health
In addition, on-the-job risk assessments are regularly
and safety measures at manufacturing sites.
performed to identify safety risks.
61
The Tiger Brands environmental, health and safety risk
With a renewed focus on these safety programmes and
management programme has been implemented at all
initiatives, injury rates declined over the reporting period.
business units. Rigorous operational controls manage
known risks and align with international best practice.
An accredited independent risk management company
Safety performance
Key performance
indicators
Fatalities
Lost-time injury frequency
Target
0
2016
5
2015
2
2014
1
2013
2
2012
0
rate (LTIFR)
0,78*
0,36
0,36
0,74
0,67
0,78
* The group target is the average of the Grains, Consumer Brands – including Food, Home, Personal and Baby care and International divisions,
and considers individual site targets set at an 8,5% to 11% improvement on actual performance in the reporting period.
Tiger Brands LimitedIntegrated annual report 2016Non-financial review Activities to improve health and safety
Health and safety is a priority for all managers and
executives. Key initiatives introduced in FY16 include:
•• Developing a workplace health improvement plan for
implementation next year
•• Further integration of safety into business processes,
understanding that safety should be a core business and
strategic value
•• Extensively improving management commitment and
leadership and employee participation as these are key
to safety management
•• Safety skills development programmes and role-based
competence matrixes are being defined and launched
for our business units.
Employee wellness
Our employee wellness support programme offers a
24-hour telephonic counselling service, and face-to-face
professional counselling. Users can access psychologists,
social workers, dieticians, biokineticists, and financial and
legal advisers.
Two years ago, we invested almost R8 million in on-site
clinic services. These include occupational health support,
as well as limited primary healthcare, free to all permanent
and temporary employees on site. Our clinic in Ashton
(Western Cape, South Africa) is also open to the
community. Contracted services include an HIV/Aids
management programme and a free advisory and
counselling service for all permanent and temporary
employees.
We also offer all South African employees voluntary
membership to our in-house medical scheme that offers
cost-effective comprehensive health cover.
We have a comprehensive HIV/Aids framework that
includes support for HIV-positive employees. In 2016,
372 employees were voluntarily counselled and tested
(2015: 331) and 95% of employees who tested positive
have enrolled in the programme. Our recorded prevalence
rate in South Africa is 1,6% (2015: 1,8%).
Health and safety continued
Route to market security remains a focus area for our
industry. In FY16, we recorded four fatalities in Gauteng
and the Western Cape. We extend our sincere
condolences to the family and friends of Herman
Mokaleng, Michael Mbesi, Bafana Amos Mtsweni and
Mduduzi Joseph Ntuli and their colleagues at Albany
Bakeries. Tiger Brands is working with other industry
players and provincial authorities to share best practice,
and build sustainable solutions in areas including route risk
management, driver training, vehicle inspection and
maintenance.
In our Ethiopian operation, Legesse Kassahun was
accidentally electrocuted while conducting routine
maintenance on a packing line. The appropriate remedial
steps were taken and we offer our heartfelt condolences to
his family and colleagues.
As shown below, first aid and lost-time injuries account for
a significant portion of the total recorded during the year.
Accordingly, we continue to deliver safety toolbox talks
in multidisciplinary team meetings, conduct safety-critical
equipment inspections and deliver process safety-related
training to raise awareness on injuries recorded and share
lessons learned. No operation recorded an unplanned
shutdown due to health and safety issues in 2016.
Depending on the nature of each plant, our manufacturing
sites have annual LTIFR improvement targets ranging from
8,5% to 11%. The group LTIFR target is 0,33 for FY17. In
FY16, 31% of our manufacturing sites achieved zero LTIFR,
while 42% beat their targets (FY15: 18% and 63%
respectively).
62
5
fatalities
116
first aid
0
major
incident
22
medical
treatment
157
lost-time
injuries
Tiger Brands LimitedIntegrated annual report 2016
Transformation
Highlight
Retain level 3 status for 2017
Challenge
Allocation of resources
In South Africa, we promote social transformation in the interest of nation building, most notably by advancing broad-based
black economic empowerment (BBBEE) initiatives. Compliance with BBBEE and employment equity legislation is a business
imperative and our BBBEE data and reporting is independently assured.
To the extent that the revised BBBEE codes of good practice have not been adopted by the agriculture sector, which is the
sector against which Tiger Brands is measured, the group has retained its level 3 rating for the year, as shown below. In
anticipation of the revised codes, we have proactively revised our strategy which aims to optimise associated investment while
maximising the economic empowerment benefit by concentrating on skills development, enterprise and supplier development.
Tiger Brands BBBEE scorecard
Available
points
2016* 2016
Ownership
Management control
Employment equity
Skills development
Preferential
procurement
Enterprise
development
Socio-economic
development
Total
Level
20 17,6
5,0
10
10
5,8
20 15,7
2015 2014
20,3
7,6
5,6
12,9
19,7
7,6
5,1
11,2
20 18,7
19,2
18,8
10
3,4
7,0
7,5
10
10
10,0
10,0
100 76,1
82,6
79,9
3
3
3
* Tiger Brands is measured against agriculture sector codes
gazetted on 28 December 2012.
63
BBBEE ownership
Brimstone (a black empowerment investment
company)
Tiger Brands Foundation
Employees Black Managers Trusts (BMT I and
BMT II)
General staff trust
Thusani trusts (beneficiaries are children of black
employees)
Effective black ownership (using the exclusion
and modified flow through principle)
Total black women
%
1,0
5,0
2,5
0,1
2,0
30,4
4,8
Our board includes five black directors (as defined
by the BBBEE codes), one of whom is female.
Management control is driven at group level by the
board and chief executive officer.
In South Africa, 93% of our employees are black (African,
Indian and coloured), of whom 30% are women, and
1% are people with disabilities on page 64.
73% of our discretionary procurement is with BBBEE
suppliers on page 64.
1,1% of net profit after tax is invested in enterprise
development on page 64.
Tiger Brands LimitedIntegrated annual report 2016Non-financial review 64
Transformation continued
Tiger Brands’ workforce profile
African
Indian Coloured White Disabled Permanent Temporary
Total
Permanent Temporary
Outside of South Africa
Total
staff
2016
8 437
2015 7 648
2014 6 536
2013 6 178
2012 6 260
720
698
726
739
777
1 120
1 189
1 153
1 192
1 027
831
844
838
881
938
72
53
69
68
76
11 109
3 689
14 798
10 379
9 253
8 990
9 002
4 222 14 601
4 537 13 790
1 500 10 490
1 079 10 081
2 012
3 841
3 673
3 770
1 876
4 664 21 474
2 149 20 591
1 671 19 134
788 15 048
782 12 739
International employees are accounted for only where Tiger
Brands is the majority shareholder.
The increase in permanent employees is largely due to
the conversion of temporary contractors to permanent
employees. We remain committed to growing our black
management talent pool. We realise that employment equity
is a long-term challenge and we are investing in junior and
middle management levels to develop a pipeline of future
black leaders at senior and executive level.
Preferential procurement
In our supply chain, we monitor environmental, social and
governance performance through a questionnaire distributed
annually to our highest-risk suppliers. The results are
collaboratively reviewed by the procurement and safety,
health and environment teams. Our revised procurement
policy has been updated to include preferential procurement
commitments. As part of our execution strategy for FY17,
our preferential procurement policy will be reviewed and
updated in line with the new BBBEE codes.
Tiger Brands procured agricultural commodities,
ingredients, packaging, consumables and services
totalling R13,2 billion from BBBEE suppliers in 2016
(2015: R16,5 billion). This represents 73% of our
discretionary procurement.
Preferential procurement is embedded in our sourcing process
in South Africa, and developing and supporting BBBEE
suppliers remains a key element of our procurement strategy.
Compliance under the revised BBBEE codes is expected to
be a longer-term process as suppliers come to terms with
new targets and implement the required steps to improve
their scorecard levels. Our procurement team is working
closely with suppliers to understand their scorecard
trajectories and inform our sourcing strategies.
We remain focused on supporting small and medium
black-owned businesses, especially in our core spend. As
detailed below, we regard this as a business imperative
that will contribute to a vibrant and competitive supply
landscape in South Africa in the longer term. Our five-year
BBBEE strategy outlines a roadmap to deliver this goal and
forms part of our performance targets for FY17.
Enterprise development
We have projects in place across our value chain, focusing
on growing small businesses that we can support over the
longer term. While financial support of R24,0 million
(2015: R39,4 million) is a cornerstone of our contribution,
the sustainability of these initiatives is driven by the specialist
support of our staff to mentor and develop skills where
required. As example, we mentor farmers producing
tomatoes for the group in Limpopo. While this is not a
formal programme, it is part of the farm extension service
we provide to farmers from which they benefit.
Our annual investment in enterprise development equates to
1,1% of FY16 net profit after tax, spread over most of our
businesses. Albany’s owner-driver scheme is at present the
main contributor (at R17,6 million), although the revised
codes may affect the status of this scheme. The balance
comprises donations and loans to organisations that
presently supply Tiger Brands.
As part of our strategy to comply with the revised codes, we
are increasing our investment in enterprise development to
meet requirements within the next two years. While the
scope of our investment is broad, the first phases will focus
on emerging farmers to play a greater role in our supply
chains. As examples, we will spend over R9 million to fund
formal technical support and mentoring for tomato farmers
in Nwanedi, pea farmers in Marble Hall and small white
bean farmers. The bulk of this will be with farmers in
Nwanedi to help them increase their yields by up to 30% in
the next 12 months. These farmers will be exposed to world-
class farming techniques, and enjoy increased revenue from
higher yields. As part of this initiative, market leaders in soil
preparation and fertiliser technology will join the mentoring
group. This programme is expected to generate increased
employment opportunities in the next four years.
To support this initiative, we signed a memorandum of
understanding with the Department of Agriculture, Forestry
and Fisheries in 2015.
Practically, supporting emerging farmers is a complex issue.
We have approached this by drawing on in-depth research
that aligns our supply needs with the availability of emerging
farmers who require support. We provide technical support,
firm offtake agreements and financial loans (totalling around
R15 million for the first 18 months). Once the project is
established, we will assess what other opportunities exist to
support the farmers through entrepreneurial business training.
Tiger Brands LimitedIntegrated annual report 2016 Our communities
Highlight
Allocated R23 million (over 1% of net profit after tax) to socio-economic development
initiatives
Key indicators
Rm
Total CSI spend
Tiger Brands Foundation spend
Beneficiaries reached
*2013 beneficiary data not available.
2016
23,0
19,0**
2015
24,2
15,3
2014
24,0
22,4
100 977
118 443
107 000
2013
22,9
12,2
*
**For the foundation’s financial year (1 March 2015 to 29 February 2016).
Our approach
Our success as a group is inextricably linked with the
well-being of our communities. They are not only the source
of our most valuable asset – our employees – but also sustain
our businesses by buying our products. It is therefore our
responsibility to contribute to their welfare. We honour this
commitment through our corporate social investment (CSI).
Our core CSI programmes address some of the key goals
of South Africa’s national development plan (NDP) and
the United Nations Sustainability Development Goals by
contributing to the fight against food and nutrition insecurity
through key focus areas:
•• Food security: nutritional support programme
•• Sustainability: green environment (carbon footprint,
Our CSI approach is rooted in the belief that Tiger Brands can
add value to people’s lives and reflected by our investments in
surrounding communities. Through socio-economic upliftment,
we believe we build a sustainable legacy, and help to weave
a constructive social fabric in each country where we operate.
Tiger Brands contributed food parcels to 15 non-profit
organisations (NPOs), community-based organisations and
beneficiary organisations. We also support requests for ad
hoc donations or specific requests from organisations in
crisis. This includes partnering with the Department of
Agriculture, Forestry and Fisheries on a major drought-relief
initiative which will provide support via boreholes, water,
fodder and food parcels to identified villages and towns.
We also partnered with our customer, Shoprite, in a separate
drought-relief programme, distributing 2 200 food parcels
to destitute communities in Greytown, KwaZulu-Natal,
while Shoprite provided water. This coincided with national
water week.
packaging recycling).
We encourage employee involvement in community-related
initiatives that benefit the vulnerable, including orphans,
children, youth, women, people infected with HIV/Aids,
the disabled and the disadvantaged.
Our CSI strategy is executed through established policies
and procedures, overseen by the social, ethics and
transformation committee. We regularly review beneficiary
organisations to ensure the most effective impact on our
communities.
2016 overview
The group committed over 1% of net profit after tax, or
R23 million, to community development in 2016, achieving
several milestones:
•• Over 13 200 food parcels distributed
•• 41 000 beneficiaries reached via the Tiger Brands
nutrition support programme.
65
Tiger Brands LimitedIntegrated annual report 2016Non-financial review Our communities continued
2016 CSI investments
Project type
Geographical presence
Impact
NGOs providing social support
to communities
Gauteng, Western Cape, Eastern Cape,
KwaZulu-Natal, Mpumalanga, Limpopo
Humanitarian support/ad hoc
donation
Goodwill building
Cause-related marketing
Employee volunteerism
School holiday food distribution
Total
All provinces
Western Cape
Gauteng
All provinces
Gauteng, Western Cape, Eastern Cape,
KwaZulu-Natal, Mpumalanga, North West
Food provision and
cash donation
Food provision and
cash donation
Capacity building
Cash donation
Supplies donation
Food provision
R000
18 347
2 767
250
845
502
382
23 093
Food security
Food security is a natural fit with Tiger Brands, as much
of our business stems from the sale of food. We are
therefore keenly aware of the critical role our products
play in supporting the well-being of the population in
sub-Saharan Africa.
Our valuable partnerships with NGOs and other community
organisations are critical to achieving our goals in terms of
our beneficiaries. Key beneficiaries of FY16 are summarised
below.
66
Buhle Farmers Academy
Buhle Farmers Academy was established in 2000 to
provide practical skills training to farmers on crop, livestock,
vegetable, poultry production and farm management. Its
purpose is to support and empower new farmers to start
profitable farming activities. The academy also provides
post-training support to assist farmers in setting up and
expanding their farms.
It enrols over 500 students per annum, with some
5 000 students trained over the past 16 years.
Tiger Brands has supported farmer development through
this academy since 2009 by supplying dry foodstuffs for
students’ meals. Buhle Farmers has been able to invest the
equivalent value into subsidising students who cannot afford
the full cost of training.
Love to Give Stellenbosch
Love to Give’s primary focus is nutrition. It aims to fight
malnutrition, prevent stunted growth and address obesity by
giving children in need a nutritious meal that enables them
to concentrate and learn better in school. It works with
other NGOs in Kayamandi, Stellenbosch, on after-school
care programmes, providing food that ensures good
attendance and productivity on the programmes for
almost 2 100 young beneficiaries who are all black.
Nelson Mandela Metropolitan University (NMMU)
community project
In 2008, NMMU and Tiger Brands collaborated to ensure
needy students and communities received vital nutrition.
NMMU provides meals to over 680 students to ensure they
have the nutritional support to complete their studies and
enter the world of work. This way, with Tiger Brands’
support, NMMU endeavours to break the cycle of
unemployment and poverty.
The NMMU community project also uses our products to
support surrounding communities with food, including
60 orphans from Sinethemba Children’s Home and
Laphumilanga HIV/Aids home-based care centre for
children affected by the disease. It also provides 100 daily
meals to the community through a soup kitchen in Malabar,
while Noxolo Preschool benefits from food products for
40 learners daily.
Cotlands
Early childhood development (ECD) is a critical focus area
in the national development plan and Cotlands specialises
in the delivery of a holistic model on non-centre-based ECD.
This includes education, nutritional support, health and
psychosocial intervention and support.
Commitments for Fy17
Building on a new strategy developed in FY16, the CSI
team will focus on the tiered approach by investing in:
•• Annual projects aligned to CSI strategy
•• Employee volunteerism
•• Brand-related CSI
•• Site and operations-related CSI.
The Tiger Brands Great South African Student
Chef Cookout
Tiger Brands proudly partnered with the Nelson
Mandela Foundation to sponsor the first Great South
African Cookbook – a celebration of South African
cuisine from top local chefs, cooks and food artisans.
In addition to the sponsorship, we facilitated a
national competition among culinary students at
technical and vocational education and training
colleges.
Tiger Brands LimitedIntegrated annual report 2016 Tiger Brands Foundation
The Tiger Brands Foundation owns an effective 5% of Tiger
Brands Limited and was established in 2010 to enhance
our community impact and assist a broader range of
underprivileged people in South African society. It enables
the group to develop partnerships with those disadvantaged
communities with which we interact most. It is managed by
an independent board of trustees that establishes the criteria
and procedures governing resource allocation.
The foundation implemented the first in-school breakfast
feeding programme in 2011 in partnership with the
Department of Basic Education’s national school nutrition
programme. From six primary schools in Alexandra, this has
expanded to 89 schools in all provinces, providing the
essential breakfast meal to almost 60 000 learners. To
date, over 40 million breakfasts have been served
to our country’s most vulnerable learners.
Tiger Brands Foundation snapshot
•• 59 977 learners receive breakfast daily
•• 2 514 educators and food handlers
•• 52 000 holiday food parcels
•• 89 schools
•• 30 kitchens
•• 9 provinces
The in-school breakfast feeding programme is funded by a
“trickle dividend” equal to 30% of dividends received from
the foundation’s shareholding in Tiger Brands. Given the
success of the current feeding programme, the foundation
expanded its activities to significantly more schools across
the country earlier this year.
In 2016, the Tiger Brands Foundation adopted a new
strategy for 2022, aimed at becoming a highly effective,
impactful and recognised industry leader in vulnerable child
nutrition and wellness, with a sustainable financial position.
To reach this goal, we will focus on:
•• Financial sustainability
•• Continued direct impact
•• Targeted advocacy
•• Strategic partnerships
•• Positive reputation.
Practically, the foundation will build the necessary capabilities
to support its objectives. These include specifying, measuring
and managing its impact through effective monitoring and
evaluation, developing packaged and replicable solutions
and enhancing the capacity of key staff.
From January 2016, the foundation has added 24 schools
(translating to roughly 20 000 beneficiaries). It also
provided infrastructural support by donating two school
kitchens. Ongoing training includes support for the senior
management teams of schools where the breakfast
programme has been implemented.
Since inception, the programme has demonstrated the
significant difference an effective public-private partnership
can make to learners via an in-school feeding programme.
The breakfast menus were specifically developed by an
independent nutritionist to offer optimum nutrition to learners,
in turn improving attendance, class participation and
performance while supporting physical development. This
was confirmed in recent research conducted by the Centre
for Social Development in Africa: the 2015 study indicated
that the combination of our feeding programme and the
lunch meal from the Department of Basic Education has
contributed to a reduced occurrence of wasting or stunting
and obesity in learners and improved learner performance
(see case study on page 68).
The foundation fulfils its mission by partnering with multiple
stakeholders, including:
•• The Department of Basic Education at national, provincial
and local level
•• Academic and research institutions (such as University of
Johannesburg – Centre for Social Development in Africa)
•• Beneficiary schools, parents and community leaders
•• Community-based agencies (food delivery partners)
•• Funders/donors wishing to invest in food security and
school nutrition programmes
•• Tiger Brands, the public and shareholders.
The programme has also been instrumental in supporting
310 jobs for food handlers who prepare breakfasts
provided by the foundation. Although food handlers are
employed by the Department of Basic Education, they are
offered a stipend by the foundation.
Commitments for Fy17
•• Given the positive results from our public-private
partnership model for in-school nutrition, we will continue
to expand this initiative to more schools in South Africa
•• In line with this commitment, Tiger Brands Foundation will
continue sponsoring the first prize in the Department of Basic
Education’s annual NSNP awards in the categories best
school and best district. For the best school, this means a
donation of R450 000 towards a school kitchen and
adoption onto our in-school breakfast feeding programme
for a minimum of three years. The best district will receive a
donation of R80 000 towards office equipment for the
NSNP office
•• The foundation will also donate at least one more school
kitchen (for a school identified by the department) in FY17.
67
Tiger Brands LimitedIntegrated annual report 2016Non-financial review Our communities continued
ADDING VALuE TO LIFE
In South Africa, around one-third of 18 million children
(0 to 18) have inadequate or severely inadequate
access to food. The worst cases were found in the North
West, Northern Cape and Eastern Cape provinces, with
the Eastern Cape recording the worst prevalence of food
insecurity at 39% – that translates into two of every five
children facing hunger.
Recognising the long-term impact on physical and mental
development, ability to learn and, ultimately, the
economically active population, the government has
implemented several programmes, including the National
School Nutrition Programme or NSNP. The Tiger Brands
Foundation joined this initiative in 2011 with the
in-school breakfast programme.
In 2015, the Centre for Social Development in Africa
evaluated the combined impact on learners who receive
breakfast (Tiger Brands programme) and lunch (NSNP)
at school daily in the Lady Frere district of the Eastern
Cape. As background, over 50% of households in this
district live in poverty, while 36% experience hunger –
making services such as government grants and
nutritional initiatives especially important.
The results were unequivocal:
•• Very low levels of children being underweight (a cause
of stunting)
•• Dramatic reduction in the rate of overweight and
obese learners (at some 11% versus combined national
rate of 28%)
•• Learner performance improved by 10%
•• Highest zero absenteeism rate at schools providing
breakfast.
Childhood obesity is strongly associated with adult
obesity and non-communicable (lifestyle) diseases such as
type II diabetes and heart disease. The study indicated
that the protective effects of the NSNP and breakfast
programme may therefore translate into longer-term
economic benefits from a healthier population, more
economically productive and less burden on the
healthcare system.
68
Tiger Brands LimitedIntegrated annual report 2016 Our customers and consumers
Highlights
Maintained leading market shares in core categories
New mobile platforms provide insights and improve efficiencies at store level
Challenge
Changing consumer behaviour and increasing competitive landscape
Our approach
Our customers are the retailers and wholesalers we
distribute to in South Africa. We segment our major
customers by channel (ie modern trade, general trade and
pharmacy), by chain (ie major retailers, cash-and-carry
shops) and by format (including hypermarkets, supermarkets
and spazas – informal stores mostly in townships). To sustain
strong customer relationships and a growth mindset,
dedicated customer executives and shopper managers work
in functional teams to serve each customer and their
shoppers directly.
Major and
branded superettes
R324 billion
68% 8%
69
Formal hybrid/
wholesale
route to market
R37 billion
R474 billion*
SA food market
6%
18%
Independent hybrid/
wholesale and
route to market
R85 billion
Direct from supplier
R28 billion
Source: Trade Intelligence: Retail trends 2016
* Trade Intelligence estimate.
Tiger Brands LimitedIntegrated annual report 2016Non-financial review Our customers and consumers continued
Our consumers are individuals who use our products: 95%
of households in South Africa use our products daily, and
our products are sold in over 33 countries across Africa.
Given that satisfied customers and consumers ensure the
sustained and profitable growth of our company, we take
our engagement with both groups of stakeholders seriously.
In particular, consumers shape our business strategy and
underpin our brand innovation and marketing strategy. This
consumer-centric approach adds value to our company by
offering a positive consumer experience that builds brand
loyalty, the key to our continued success.
Consumer strategy
Our marketing strategy is driven by our focus on consumers
– and how to satisfy their needs better in our specific
product areas of the FMCG market. Key features of our
strategy include:
•• The renovation and innovation of our leading brands to
maintain the number one or two position in our categories
•• Investing in marketing support and innovation to drive our
organic and new business growth plans
•• Continually evaluating new or adjacent category entry
opportunities, either through acquisition or innovation
– particularly where we are able to drive expansion
based on our leading brands
•• Keeping abreast of key consumer trends and adapting our
brand marketing strategies to better satisfy their needs
•• Continually striving to encourage healthier eating by our
consumers
•• Given prevailing economic conditions, we provide
greater value for money through a portfolio strategy
premised on affordability.
In our international strategy, we aim to nurture and grow
the businesses we currently own in the rest of Africa, and
to strengthen our exports from South Africa by driving
growth through focus and evolving the distributor model,
determining optimal coverage and improving in-market
visibility.
Customer strategy
Our operating landscape is undergoing significant changes
that affect the way we go to market and in-store execution.
Key changes to the retail landscape include:
•• An increasingly crowded trading arena
•• Shifting route to market, including independent channel
growth
•• Continued rise of the private-label brand
•• Increasingly resilient independent trade
•• Sub-channel development in retail
•• Focus on margin
•• The increasing role of data and technology
•• Retailers operating for less
•• Targeted collaboration/joint business planning
•• Modern trade expanding into the rest of Africa.
As a result of these factors and building on our progress to date, our strategy is based on five priorities:
70
GROWING WITH
CUSTOMERS
Focusing on channel,
customer and format
strategy as measured
by top-line growth
with customers.
GROWING
DISTRIBUTION AND
REACH IN GENERAL
TRADE
Focusing on next-
generation field sales
and trade category
management as
measured by in-store
shelf health, market
share and sales
through the till by store
and cluster.
GROWING
IN-STORE
GREAT PLACE
TO WORK
GROWING
IN AFRICA
Actively engaging
new route to market
models and creative
ways to support the
independent trade.
Focusing on customer,
shopper and
operational capability
as measured by talent
attraction and career
progression of our
teams and
independent research
for identifying
capability gaps and
trade feedback.
Leveraging the
repeatable general
trade model and
driving the Tiger
Brands distributor
management
capability, data and
rate of sale systems,
resource to optimise
coverage and improve
market visibility and
growth.
Underpinning these priorities are four strategic enablers:
•• Harmonising customer operations in the field across all categories
•• Customer IT and insight system
•• Joint business planning
•• Building a growth culture in customer teams.
Tiger Brands LimitedIntegrated annual report 2016 • 70 000 spazas
generating R42 billion
in annual turnover
on daily essentials
• 30 000 spazarettes
generating R36 billion annual
turnover where consumers top up
weekly groceries
• There are 100 000
informal stores in
South Africa
• The informal economy:
50 000 Kasi-Kos outlets
(informal food vendors) = over
R80 billion in value
employing between 200 000
and 300 000 people
The informal
market
(Source: Minanawe
Marketing)
• 7% cheaper than formal
retailers on a R1 000 basket
of branded groceries – saving
increases to 11% if transport
costs considered
• 150 000 hair salons,
hair sellers, braiders,
barbers: R10 billion in
value
Our performance is tracked against three key metrics:
customer growth, market share and service levels, including
on-shelf availability, promotional and pricing activity. We set
service level targets, which are agreed with customers and
consistently perform within this range. We are strengthening
our ability to track on-shelf availability and have set a target
of a 50 basis point improvement on a basket of strategic
products.
2016 overview
Customer and consumer engagement
Tiger Brands engages with customers in South Africa and
our other operating countries using a number of channels.
We talk to our customers about category strategy, value
chain efficiencies, trading terms, as well as pricing and
promotional activities. These engagements take place on
regular call cycles as per the industry standard and as
requested by trade customers. Complaints are handled
directly by the sales and/or manufacturing unit.
Our consumer services division manages feedback and
complaints. Our in-house consumer services centre is the
primary channel for this feedback and addresses all
complaints and queries on any of our products. Staffed by
Tiger Brands employees, the call centre aims to answer all
calls within 30 seconds. We have systems for managing all
types of complaints, including food and health safety. These
are elevated to the appropriate management levels and
prioritised. For all consumer complaints, company feedback
is given after an investigation and independent analysis
when necessary. When consumer complaints are reported
through the customer, we follow up directly with the
consumer. Incidents that require a recall of the product or
further quality checks are reported immediately to the
respective quality managers.
Consumer insights
We value consumer insights and invest in ongoing research
surveys such as the brand health tracker and Nielsen market
share research:
•• Brand health gauges the degree of brand recognition,
consumers’ likelihood of choosing our products and how
well we satisfy the needs of the market. We track brands
across 21 categories and, in most of these, the health of
our brand is far above our nearest competitor. In nearly
all categories, we have widened the gap in recent years
•• Nielsen research tracks product market share by value
and volume, distribution, pricing and product movement.
In addition, consumer research enables us to identify
consumer needs and preferences for current and new
products and innovation. This enables us to harness
consumer insights that inform the marketing mix accordingly.
Typical consumer research projects conducted within our
business include:
•• Product testing: testing the “likeability” and evaluating the
performance of actual products with consumers
•• Concept testing: testing a product idea or proposition with
consumers to gauge appeal and potential
•• Use and attitude studies: profiling the consumer to
understand patterns of use and attitudes to products and
brands
•• Volumetric/simulated test market studies: volumetric
modelling (forecasting) used to aid innovation by
simulating real-world consumer purchasing behaviour
•• Immersions: spending time with consumers in their homes
to better understand how products are used and their role
in daily lives
•• Pricing elasticity: determining the minimum, maximum and
optimal selling price for a product to generate a
favourable return.
71
Tiger Brands LimitedIntegrated annual report 2016Non-financial review Our customers and consumers continued
We use these insights to improve category understanding,
pinpoint consumer needs, develop productive market
segmentation models and identify potential market
opportunities. They are vital in enabling us to continually
refresh our brands, position our pricing, innovate and
develop our marketing strategies. In 2016, key trends from
our research included the role of foreign traders in the
independent trade, the importance of growing in-store, the
need for strong category management tools and the ability
to track promotional investments. These trends have been
incorporated into our customer strategy, which is on
page 70.
Tiger Brands commits significant investment to researching
and understanding changing consumer needs. Research
and development (R&D) for renovating existing products or
designing new products is based on this understanding
and insight. Our investment in R&D and new product
development ensures we remain abreast of new
technological developments that are used to better satisfy
consumer needs.
Consumer nutrition and food safety
As a leading manufacturer, we are aware of the significant
impact Tiger Brands has on the nutrition and thus health
of its consumers. We monitor advances in nutrition and
broader health issues, including World Health Organization
(WHO) and South African Department of Health public
health concerns.
We are dedicated to helping consumers make better food
choices so that healthy living becomes easier. In 2009, we
were the first South African company to voluntarily initiate
the Eat Well, Live Well system that includes the guideline
daily amount (GDA) table on all Tiger Brands’ products.
The GDA notes the five nutrients that have an impact on
non-communicable and lifestyle diseases, such as heart
disease, type 2 diabetes, obesity and some cancers. The
GDA table allows the consumer to balance high-risk
nutrients for the day, and thus make better food choices. The
Eat Well, Live Well system has its own icon – this is only
featured on products that constitute better food choices for
overall health – and website, where consumers can
learn about the system and incorporate healthy eating into
their lifestyle (www.ewlw.co.za). Consumers also have
access to our nutritionist for further information or assistance.
With malnutrition affecting a significant proportion of the
populations we serve, we understand the important
responsibility that comes with manufacturing staple foods
like bread and maize meal, particularly to people in
lower-income categories.
In line with South African regulations, we fortify staple foods
such as wheat flour (for bread manufacture) and maize meal
with key vitamins and minerals. These include vitamin A,
B1, B2, B3, B6, B9 (folic acid), iron and zinc.
In addition, we voluntarily enrich other products including
breakfast cereals such as Morvite, certain Jungle cereals
and Ace Instant with micronutrients that fulfil a specific
consumer need. Products are specifically developed to
target certain requirements, for example Jungle Energy bars
are enriched with B vitamins that assist in releasing energy
from food consumed.
After the South African minister of health regulated the
maximum levels of sodium in certain food categories,
manufacturers had to reduce salt by June 2016. Tiger
Brands supports the efforts of government to improve the
health of South Africans and we worked hard to achieve
compliance on our affected categories (bread, breakfast
cereals, processed meats, savoury snacks, instant noodles
and stock concentrates). We will work as hard to meet the
2019 deadline for an even lower sodium level, reflecting
our commitment to improving the nutrition of our products.
In February 2016, the South African minister of finance
announced a tax on sugar-sweetened beverages to be
implemented in April 2017. The policy paper on the
proposed tax was published for comment on 8 July 2016,
stating that the tax would address obesity in South Africa.
Although the policy paper noted a few models of taxation
that were considered, it recommended a model where
every gram of sugar in a sweetened beverage would be
taxed at 2,29 cents and determined from the product label.
Comments on the policy paper were submitted to National
Treasury. Tiger Brands also aligns to the stance of BevSA,
our industry body, that a tax would have far-reaching
socio-economic repercussions without a substantial effect in
reducing obesity. As such, the tax should be withdrawn and
existing collaborative efforts to address obesity between the
Department of Health and industry should continue.
National Treasury is conducting a socio-economic study. The
outcome of this study and consultation requests are awaited
by industry, including Tiger Brands.
72
Tiger Brands LimitedIntegrated annual report 2016 In addition, we subscribe to the consumer goods and
services industry code, which is enforced by the consumer
goods services ombudsman, and adhere to the Advertising
Standards Authority code that ensures responsible
advertising to consumers.
Tiger Brands is a member of the Marketing Association
of South Africa and our group marketing executive
serves actively on the board of this industry body. The
association primarily focuses on:
•• Regulatory matters
•• Education and transformation of marketing skills in
South Africa
•• Media research
•• Advertising self-regulation through the Advertising
Standards Authority.
Tiger Brands complies to current labelling regulations and
continuously engages with government authorities through
industry associations on new or amended labelling
regulations.
Generally accepted food manufacturing standards are
rigorously applied and food safety at all facilities is regularly
audited by independent assurance providers.
Responsible selling
Tiger Brands is dedicated to responsible advertising and
marketing and committed to upholding the Advertising
Standards Authority code on advertising. We fully comply
with all regulatory requirements on marketing and labelling
for foods, beverages, personal and home care and baby
products.
All aspects of responsible selling skills are addressed in
our business units and supported by secretarial and legal
services. In addition, the Tiger Brands Customer School of
Mastery, an internal training programme, covers all key
competencies and skills in a market and customer-related
curriculum.
Commitments for Fy17
The retail landscape has changed significantly in recent
years due to poor economic growth. As a result, we have
had to adapt our approach and engage differently with our
customers and consumers.
Consumers want additional value from supermarket
purchases and we have to ensure that our products, many
of which are the preferred consumer choice, are available
at all points of purchase at a price that represents value to
shoppers. This requires a strong focus on cost efficiency
throughout our value chain, appropriate promotional activity
in-store, and affordable pricing.
As we seek to empower our consumers to make better
decisions about their nutritional habits, we aim to form
strategic relationships with public sector and non-profit
partners. Together, we hope to educate children and
consumers on healthy eating habits through effective use
of the Eat Well, Live Well system and GDA table.
73
Tiger Brands introduced its Eat Well, Live Well system
in 2009 to encourage consumers to eat healthier,
balanced meals. Products carrying this logo conform
to strict nutritional criteria, which are annually and
independently reviewed by the Nutrition Information
Centre of the University of Stellenbosch.
The quick-reference Eat Well, Live Well logo and
concise GDA information enables consumers to instantly
recognise the healthiest options for their meals.
Currently, products such as Tastic Rice, Jungle Oats
and some Albany bread variants carry the logo after
conforming to the strict Eat Well, Live Well criteria. Our
nutritionist works closely with product managers to help
them formulate new and existing products in line with
the criteria.
For more information on Eat Well, Live Well
Visit our
website link to
www.ewlw.co.za
Consumer regulatory compliance and industry
participation
Tiger Brands ensures a high standard of compliance to
consumer legislation and codes. We comply with the
Consumer Protection Act, Foodstuffs, Cosmetics and
Disinfectants Act and other laws that ensure consumer
protection. Areas of compliance refer to aspects of product
labelling, pricing policies, product liability and safety,
returns policies, marketing, standard terms and conditions
and promotional competitions.
In terms of Consumer Protection Act requirements, we have
made the required changes across our business to ensure
compliance. These included revising processes for running
promotional competitions. We have also conducted training
to ensure our personnel are familiar with both the provisions
and applications of the act. This included training staff at
our existing consumer services unit, which addresses
consumer complaints.
Tiger Brands LimitedIntegrated annual report 2016Non-financial review Environment
Highlights
ISO 14001 certification retained
Lifecycle assessment
Challenges
Significant capital expenditure to improve efficiency and flexibility of manufacturing architecture
Water scarcity and drought have a direct impact on the agriculture industry on which our
business depends and on our manufacturing processes
Environmental sustainability
Absolute use
Intensity (per ton)
FY15
Fy16
Improvement Measure
FY15
Fy16
325 523 087 316 659 244 é (2,72%) Energy – kWh
5 155 728
1 209 649
14 608
5 115 464 é (0,78%) Water – kℓ
1 060 154 é (12,36%) Packaging – ton
12 498 é (14,44%) Waste – ton
122,34
2,46
0,46
0,0055
127,96
2,32
0,43
0,0051
Improvement
é 4,59%
é(5,69%)
é(6,52%)
é(7,27%)
Measure
Energy – kWh
Water – kℓ
Packaging – ton
Waste – ton
FY15
Fy16
Production output – ton
0,22 Carbon emissions – CO2e
2 474 705
588 382,18
0,24
74
Production output – ton
Carbon emissions – CO2e
2 660 727
587 047,84
Sustainability vision
Integrate sustainability
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Environmental sustainability
strategy framework
The Tiger Brands supply
chain sustainability
strategy is represented
by this framework, and
delivers on:
•• Energy consumption
•• Resource and waste
management
•• Water use
•• Biodiversity and
ecosystems.
Ongoing initiatives
support the core elements
of this framework.
Tiger Brands LimitedIntegrated annual report 2016Tiger Brands supply chain sustainability vision
Our approach
Sustainable manufacturing
Tiger Brands is committed to operating as an
environmentally responsible company and our operations
adhere to all relevant environmental regulations. Managing
operations in an environmentally and socially responsible
way – sustainable manufacturing – is a business imperative.
As a manufacturing company, we rely on energy and water
for production, and water quality in particular is vital to
product quality and consumer safety.
We envision sustainable manufacturing as minimising the
business risks inherent in any manufacturing operation while
maximising the opportunities that arise from improving our
processes and products.
Collaborating and engaging with stakeholders
The desire to contribute to a more sustainable world requires
understanding, collaboration and action at many levels by
governments, companies, brands and customers. This drive
also comes from consumers themselves, who want to
understand the environmental impacts of their choices. In
addition to our initiatives to reduce and manage our
environmental impacts, we have intensified our participation
in industry forums to help shape sustainable consumption
standards, tools and best practices.
Each year, Tiger Brands voluntarily discloses its performance
under the CDP for carbon emissions and water
management. This global standard allows us to benchmark
our performance against international peers and learn from
best practices.
In addition, the group is a signatory to We Mean Business,
committing to three categories flagged by CDP as most
relevant to our business:
•• Adopt a science-based emissions reduction target
•• Responsible corporate engagement on climate policy
•• Disclose climate change information in mainstream reports
as a fiduciary duty.
We are also working with South Africa’s Council for
Scientific and Industrial Research (CSIR) on assessments
by the National Cleaner Production Centre to enhance
manufacturing industry competitiveness through resource
efficiency and cleaner production.
Tiger Brands is a member of the National Business Initiative,
Manufacturing Circle, Business Leadership South Africa,
Consumer Goods Council of South Africa, South African
Agricultural Processors Association, South African Fruit
and Vegetable Export Council, South African Fruit Juice
Association and Business Unity South Africa. Through these
bodies, we support engagements with government on a
variety of issues including environmental legislation and
sustainability.
In line with our desire for self-regulation, Tiger Brands is a
founding member of the Multilayer Packaging Forum, which
is developing recycling initiatives for multilayer packaging.
Finally, we engage with government departments that have
a bearing on the business and upcoming legislative
changes through facilitated discussion forums such as the
World Wildlife Fund for Nature (WWF) and manufacturing
industry debates.
Environmental management
At board level, the risk and sustainability committee provides
strategic guidance and leadership on climate change and
environmental issues and oversees the implementation and
revision of the environmental policy. Operational execution
of the strategy and management of the environmental system
rests with the group manufacturing excellence department.
Our environmental policy was approved two years ago.
In it, we commit to identifying environmental and climate
change risks, taking action to address weaknesses, forging
strong relationships with relevant stakeholders, developing
and implementing a sustainability strategy, striving for
continuous improvement, and reporting to the board through
relevant committees. We also commit to set targets, and
monitor, measure and report on our environmental scorecard
against key performance indicators. The policy is available
on the Tiger Brands intranet and website and communicated
internally to relevant stakeholder forums. Our manufacturing
and distribution operations conduct policy training for all
relevant employees.
Our environmental strategy is focused on improving
environmental performance in key areas, shown below, and
forms the framework for addressing identified priorities in
our current organisational and external environment. By
improving our environmental and social sustainability
performance, we will generate economic benefits for
stakeholders.
Our environmental control system covers:
•• Policies and procedures
•• Responsibilities and accountabilities for environmental
management
•• Reporting
•• Environmental legal compliance
•• Waste, water, energy, pollution, recycling, climate
change management
•• Continuous improvement
•• Monitoring and performance measurement of systems.
Related training is conducted site by site after changes
to the policy and procedures. In addition, training is
part of each site’s induction programme, highlighting the
requirements and responsibilities, and informing employees
how to access policies and documents.
75
Tiger Brands LimitedIntegrated annual report 2016Non-financial review Environmental sustainability – continuous improvement
Products
•• Develop products using sustainably sourced materials
•• Reduce volatile organic compounds
•• Green procurement
•• Regulate chemical content in products
•• Small, lighter systems
•• Save electric power in production process
Offices and plants
Zero emissions •
Risk management •
Reduce noise pollution •
Reduce air emissions •
Prevent global warming •
Online metering for recording, monitoring and •
managing utilities (energy, steam system and water)
Renewable energy (biofuel, waste-to-energy, solar) •
CONTINUOUS IMPROVEMENT
Management systems
•• Environmental audits
•• Environmental accounting
•• Aligned to ISO 50001
•• ISO 14001 certification retained
Communication
Environmental education •
Environmental disclosure (FTSE index •
CDP energy and water)
Environmental targets
Our performance is shown on page 74. FY16 was the last year of the three-year rolling environmental sustainability targets.
These targets were based on the following measures:
76
Target
Water
Energy
Packaging
Waste
Reduce water consumption and water discharges per ton of product produced by 15%
Improve energy efficiency by 15%
Reduce packaging use by 9%
Reduce waste for disposal by 12%
Carbon emissions
Ultimately, eliminate emissions and GHG as far as practically possible
Environmental targets Fy17 to Fy20
Energy
Improve efficiency by
15% per year
Water*
Reduce water
consumption and
discharges per ton of
product produced by 15%
Waste
Reduce waste for
disposal by 10%
per annum
Packaging
Reduce packaging use
by 10% per year
Carbon emissions reduction remains a key business deliverable and a scientific target will be
developed for the organisation with the assistance of National Business Initiative.
* In the short term, Gauteng municipalities have mandated an immediate 15% month-on-month reduction in water consumption due to water shortages.
Environment continuedTiger Brands LimitedIntegrated annual report 2016 While our primary focus is on the five most material aspects
of our environmental strategy (water, energy, packaging,
waste and carbon emissions), our manufacturing operations
also test air emissions from boilers, ventilation areas,
disposed dust, noise, carbon monoxide and carbon dioxide
levels in line with legislation.
Our primary certification process in our manufacturing
operations is the stringent global ISO 14001 standards.
At year end, 95% of South African sites were certified.
Subsequently, ISO 14001 has been amended in line with
Annex SL, which is the new high-level structure for ISO
management system standards. The transition deadline
to meet the new standard is September 2018, and
appropriate plans are being considered and implemented.
As we pursue our key targets, we measure indicators as two
categories:
•• Primary measure indicators: readily available measures
to track current performance
•• Secondary measure indicators: targets or activities that
relate to a gap analysis or benchmark. These may be
used to improve primary measure indicators.
Our manufacturing sites submit monthly performance data
on these environmental scorecard indicators. They also
provide air emissions testing reports from boilers, ventilation
areas, dust, noise, carbon monoxide and carbon dioxide
levels.
2016 overview
Our environmental performance in 2016 was a mix of
challenges and successes. We significantly improved our
use of packaging and waste, while the energy efficiency
and carbon intensity of our operations was constant.
Legislative developments
During the review period, we began preparing for
unanticipated legislative changes in South Africa:
•• Department of Minerals and Energy: companies have
to submit five-year energy reduction plans
•• Department of Environmental Affairs: notification that
companies will need to submit a five-year pollution
prevention plan for approval by the minister. While this
regulation has not yet been legislated, we are proactively
developing a draft plan given the proposed three-month
window between promulgation and submission to the
minister. This change in legislation will also require
companies to submit annual progress reports on their
approved plans.
Water
Global water scarcity is expected to increase substantially in
coming decades. In South Africa, this trend is likely to affect
the availability, cost and quality of water – a critical input in
our manufacturing processes. We use water to process
products and as a key ingredient in many products
themselves. In addition, given that most of our products are
for human consumption, water quality in turn affects the
quality and safety of these products.
South Africa is classified as a water-stressed region, which
elevates water management to both a risk and critical
success factor for Tiger Brands. We have several initiatives
under way to improve our direct use of water, including the
possible use of recycled and grey water at some facilities
and water-saving schemes that have reduced the volume of
municipal water used each year.
Most of our water comes from municipal sources, and we
monitor consumption, water availability and reliability by
river basin and water management area source. We also
interact with the government, Department of Trade and
Industry, municipalities and water boards. This enables the
group to influence legislation, build partnerships in the
industry and to learn from organisations using sustainable
best practices that we can apply to internal processes.
We recognise our responsibility to promote responsible
water use throughout our operations, and to encourage our
suppliers to do the same. We have focused on enhancing
agricultural water efficiency programmes with suppliers,
specifically for water-intensive crops, such as tomatoes,
beans, fruits and sugarcane.
In 2016, Tiger Brands again participated in the CDP’s
water disclosure programme. Our response – and further
detail on our approach to water stewardship – is available
on our website.
We are committed to using water efficiently across our
operations and ensuring our operations do not compromise
local communities’ right to water. We conduct water
resource reviews across existing and new factory sites and
focus our interventions in priority watersheds.
Water management initiatives
Online water metering
Online water metering enables more accurate reading
and understanding of high-consumption areas in the
Boksburg facility and our bakery sites, and ensures
monthly charges from municipality readings are
correct.
Water reuse
A project to reuse bottle-washer water for external
cleaning, preparation areas and all structural cleaning
and staff facilities is helping to reduce water use.
Packaging
Packaging plays a vital role in delivering products to our
consumers in a way that preserves the integrity of the
product and protects consumers’ health and safety.
77
Tiger Brands LimitedIntegrated annual report 2016Non-financial review Over recent years, the cost of raw materials has escalated
significantly. This has affected the costs of packaging and
motivated more efficient and sustainable packaging
management. Extraction, location and processing can also
contribute significantly to carbon emissions and the overall
footprint of a product. Where possible, by lightweighting
our packaging (a complex research process to ensure that
lighter materials will achieve the same product protection
goals), we are significantly reducing carbon emissions and
costs, while directly improving the lifecycle assessment of
products (see page 79).
Waste
Waste management is important to Tiger Brands because,
when done successfully, it can reduce input costs, lower
the cost of waste disposal and improve our standing as
a good corporate citizen. In our operations, most waste is
generated either in our manufacturing processes or as
a by-product of these processes.
Globally, waste management practices differ between
developed and developing nations, urban and rural areas,
and residential and industrial producers. Consequently, while
our standards are influenced by the South African regulatory
environment, we always consider local conditions and that
regulatory environment when applying our standards.
Our ambition is to send zero waste to landfill and to build
a culture of waste segregation. To achieve these goals, we
are focused on reducing, reusing and recycling waste
generated in our production processes. When all reasonable
options have been exhausted to realise this, we ensure that
any remaining wastes are disposed of responsibly. We do
not currently produce any hazardous waste.
Energy and carbon emissions
Energy is at the core of any manufacturing process, and
reducing the energy intensity of our operations is a critical
element of our response to climate change. In addition,
South Africa faces a period of energy shortage, and smart
energy management is now strategically important.
agricultural sector on which we rely, and in our
manufacturing operations.
The diverse sources of GHG emissions include:
•• Direct emissions from sources owned or controlled by the
group (scope 1)
•• Indirect emissions from generating electricity, heating and
cooling, or steam generated off-site but purchased by the
group (scope 2)
•• Indirect emissions (not included in scope 2) from sources
not owned or directly controlled by the group but related
to our activities (scope 3).
As part of raising awareness in our operations, last year we
appointed champions in manufacturing units with the highest
impact on carbon emissions and water use.
We also enrolled engineering managers, site services
(utilities) managers and technical/artisan employees in
national cleaner production training offered by the CSIR.
This includes courses on energy management systems, and
system optimisation for fans, compressed air and steam.
Attendees have now launched focused optimisation projects
at their individual business units.
In addition, we participate in the National Cleaner
Production Centre programme aimed at introducing
cleaner production processes through partnerships,
advocacy, technology transfers, tools and capacity
building. Multiple assessments were conducted across a
number of manufacturing facilities during the year and
recommendations are being implemented.
Measuring energy consumption alone is not an accurate
measure of improvement because, as the group grows, our
consumption requirements and patterns change. To ensure
improvements and GHG reductions, we focus on energy
and emissions intensity, which shows the reduction in the
ratio of energy consumed or emissions produced per ton of
product produced. If we are successful, despite a growing
business, our intensity levels should decline.
Tiger Brands has identified the climate change risks with the
greatest potential to affect the company and consolidated
these into our top risks for mitigation and action as part of
our internal risk processes (see the risk management section
starting on page 102). Among these climate change-linked
risks are the availability of water, an essential input for the
The group’s scope 1, 2 and 3 emissions for the year
are shown below. The data covers our South African
manufacturing sites, in line with our strategy to initially
focus on these operations and extend the programme to
international operations in the rest of Africa over the next
three to five years.
2016
Change (%)
2015 Change (%)
2014
78
Direct GHG emissions (scope 1)
Electricity indirect GHG emissions (scope 2)
Other indirect GHG emissions (scope 3)*
CO2e (tons)
Carbon intensity (tons CO2e/ton of product produced)
* In 2014, scope 3 emissions were limited to air travel. In 2015, we expanded our reporting to include elements of our road logistics
258 392
321 439
7 099
587 047
253 909
326 159
31 519
588 382
(0,17)
11,4
2 599
7,2
(1,7)
1,5
343
0,2
0,02
0,22
0,24
258 834
288 515
263
547 611
0,22
–
network. In 2016, the reporting was expanded further to include our broader logistics network making year-on-year comparison difficult.
Environment continuedTiger Brands LimitedIntegrated annual report 2016 LIFECyCLE ASSESSMENT
The lifecycle assessment (LCA) evaluates the environmental impacts of all stages of a product’s life from cradle to grave
(ie from raw material extraction through materials processing, manufacture, distribution, use, repair and maintenance, and
disposal or recycling). They help prevent a narrow outlook on environmental concerns by:
•• Compiling an inventory of relevant energy and material inputs and environmental releases
•• Evaluating potential impacts of identified inputs and releases
•• Interpreting the results to help make a more informed decision.
In FY15, we completed LCAs for KOO Baked Beans and All Gold Tomato Sauce (750mℓ and squeeze bottle). As a result,
we have changed glass packaging where possible, and sourced and trialled an alternative can – all of which reduces the
amount of input materials required.
In the review period, two further LCAs were commissioned:
•• The cocoa LCA report was finalised. This study found that soil erosion due to lack of crop rotation, fertilisation and
pesticides were the key environmental sustainability focus areas. The LCA was not focused on the chocolate production
process and this would be the next focus area for identifying any internal GHG emission reduction opportunities
•• A bread LCA review using existing data from the industry is under way and expected to be finalised in FY17.
79
We have participated in the carbon disclosure project (run
by CDP) annually since 2010. Our response – and further
detail on our carbon approach and performance – is
available on our website.
Visit our website
Carbon tax
Given the imminent introduction of carbon tax, we continue
to engage extensively with external parties to establish
holistic, practical and affordable solutions on how to reduce
our carbon emissions. With the published framework, and
proposed carbon tax at R120 per ton of CO2e above the
suggested thresholds, the expected impact to the business
is substantial.
To ensure we are adequately prepared, we are
considering:
•• The extent of our potential liability, taking into account
proposed tax-free thresholds
•• The effect on suppliers that may be directly liable to pay
the carbon tax and seek to pass on these costs.
In addition to addressing our own emissions, we are
encouraging suppliers to improve the fuel efficiency of their
operations and reduce their GHG emissions.
Other emissions
We are committed to exceeding legislative requirements
on air emissions and will continue to find practical and
cost-effective solutions to reduce or eliminate all forms
of air emissions.
From every test and analysis conducted on atmospheric air
quality, our manufacturing operations receive a detailed
report and must develop appropriate plans for any
indicated deviations.
Tiger Brands prides itself on accurate impartial emissions
testing at our manufacturing facilities – our service providers
also compile atmospheric emissions reports under the
requirements of the Air Quality Act, as well as our
specifications. To the business, the aim of air quality
management is to protect public health and the environment
from the damaging effects of air pollution, and to eliminate
or minimise human exposure to hazardous pollutants.
In terms of our environmental control system, boiler stack
emissions are measured at all business units that operate
boilers, although only two of our boilers fall under amended
legislation (November 2013, controlled emitters). We
measure sulphur dioxide, nitrous oxide, carbon dioxide
and particulate matter (soot) to ensure legal compliance.
Independent annual performance audits are conducted
at all business units to monitor compliance levels.
Commitments for Fy17
In 2016, we continued to work with our suppliers on
lifecycle assessments to reduce the environmental impact of
our products. In particular, we will be looking at the overall
impact of cocoa, a key ingredient for our snacks & treats
businesses.
Furthermore, we will partner with our small and medium
suppliers to help them align with ISO 14001. This will
include third-party packaging and ingredients suppliers.
At the same time, we hope to sustain and build on our own
ISO 14001 certifications.
Tiger Brands LimitedIntegrated annual report 2016Non-financial review 80
Tiger Brands LimitedIntegrated annual report 2016 81
KOO sources 7 500 tons
of sweetcorn per year from
established farmers with
decades of experience and
expertise.
Tiger Brands LimitedIntegrated annual report 2016Governance review Governance review
The Tiger Brands board of directors is committed to integrity
through effective corporate governance.
The board has directed and controlled the affairs of
Tiger Brands in a responsible, fair and transparent manner.
Executive and senior management assist the board to ensure
the group complies with the dynamic regulatory landscape
in which it operates to underpin its sustainability.
The group has applied the principles of King III, and a
detailed register is on our website.
The board is supported by committees that have an
oversight role and ensure the activities of the company
are managed in a manner that is consistent with ethical
leadership and the values of Tiger Brands. The roles and
responsibilities of each board committee are set out in terms
of reference and reviewed annually by the board.
The board has applied the governance principles in King III,
the JSE Listings Requirements, and the requirements of the
Companies Act No 71 of 2008 in the review period.
The governance structures in Tiger Brands ensure proper
oversight of significant strategic and operational matters.
Governance processes have been reviewed and reinforced
to amplify alignment with legislative and regulatory changes
as well as industry best practice. In line with the
recommendations of King III, board and committee charters
as well as annual work plans were reviewed, revised and
adopted at the beginning of the financial year. Agendas for
each meeting include integrated responsibilities from annual
work plans.
The affairs of the group have been conducted to ensure the
interests of all stakeholders are safeguarded.
Tiger Brands’ code of ethics, available on our website,
mandates all employees to strictly comply with relevant legal
requirements and regulations. During the year, acceptable
behaviours and conduct dealing with conflict of interest
and bribery and corruption were formulated into separate
policies to provide the necessary guidance to employees.
A zero-tolerance approach towards fraud and corruption
has been adopted, setting out appropriate consequences
for inappropriate and wrongful behaviour, where necessary.
Governance structure
Regulators
Board
Nominations
committee
Remuneration
committee
Investment
committee
Social, ethics and
transformation
committee
Risk committee
Shareholders
Audit committee
Executive
committee
Directors have unrestricted access to all company
information, and access to the advice and services of the
group company secretary. Directors are also entitled to seek
independent professional advice, at the company’s expense
(after consulting with the chairman of the board), as
required in fulfilling their duties. No director exercised this
right in the period under review.
At 30 September 2016, the board comprised 13 directors,
including three executive directors.
The nominations committee, in compliance with section
3.84 of the JSE Listings Requirements, ensures all
appointments to the board follow a formal and transparent
process as prescribed by the policy and procedures
determined by the board, which are reviewed annually.
Directors are appointed, subject to re-election by shareholders
at the company’s annual general meeting (AGM) and to
Companies Act provisions relating to their removal.
The responsibilities of the chairman and chief executive
officer have been clearly defined and are separate with
a clear division of authority between various roles in the
company’s corporate governance structure.
The board terms of reference show the clear division of
responsibilities and authority at board level, proving that no
individual director has unfettered powers of decision-making
or influence over the board, which allows for participative
decisions. In the board’s opinion, and as tested by the
independent board effectiveness survey, there is no business
or other relationship within the current structure that could
materially interfere with the impartial judgement of any
non-executive directors.
The board exercises full control over significant matters
including strategy, finance and compliance.
Biographical details of all directors appear on pages 11
and 12.
82
Tiger Brands LimitedIntegrated annual report 2016 Non-executive directors bring a diverse range of skills and
experience to the board and it is their responsibility to
ensure their judgement is exercised freely and
independently.
The nominations committee ensures that the board’s
composition reflects demographic and gender diversity
and the appropriate mix of skills and expertise.
The code of ethics, board terms of reference and various
Tiger Brands policies prescribe how directors should
conduct themselves. This includes guidance on the vigilance
required to ensure no conflicts arise between their own
interests and those of Tiger Brands. Members are required
to disclose all potential conflicts of interest at the start of
every board and committee meeting and, once disclosure
is made, the process prescribed by the Companies Act is
followed. This includes recusal from that part of the meeting
when a matter that is the subject of a conflict is discussed.
The directors recognise their fiduciary duty to exercise due
care and skill in fulfilling their mandate as members of the
board. In doing so, they ensure they act in the best interest
of Tiger Brands at all times, and do not derive any profit
from their fiduciary relationship with the group.
Director development will form part of the 2017 board
agenda to create an evolving understanding of the business,
governance and compliance environment in which the
board and Tiger Brands operate. Specific time has been
allocated in the board’s annual plan for this purpose.
All new directors complete a formal induction programme
which includes past board meeting minutes and relevant
prior-reading material, guidance on their responsibilities as
well as a rigorous programme of manufacturing site visits
and visits to the retail trade to enhance their understanding
of Tiger Brands and the environment in which it operates.
In the review period, the board approved the strategy and
budget for the 2016 financial year. Material issues on
executing strategy were considered.
The board approved the interim and year-end financial
results and the 2016 integrated annual report and is
satisfied it has discharged its duties in terms of the
Companies Act, the JSE Listings Requirements and its
terms of reference.
During the year under review, the board, through the
nominations committee, conducted an independence
assessment of directors in office for longer than nine years
and were satisfied that they retained their independence.
The nominations committee also reviewed the skill set of the
board to ensure that it reflects the required capability to deliver
the long-term objectives of the group. It was decided that the
composition of the board would be amended in FY17.
83
Gender of directo rs
= 11
= 2
= 7
Mix of
3
Executive
directors
d
ir
e
c
t
o
r
s
10
Independent
non-executive
directors
One to five years = 3
Six to nine years = 5
D
i
v
= 6
> nine years = 2
e
r
sity
e : I n
r
u
n
e
t
Le n g t h o f
s
r
o
ct
e
e dir
d e p e n dent non-executiv
Tiger Brands LimitedIntegrated annual report 2016Governance review
Governance review continued
Accountability and responsibility
Delegation of authority
Tiger Brands’ delegation of authority policy, which is
reviewed annually, provides an approval framework
to ensure the company is optimally managed in a
decentralised environment. The board delegates the power
to run the day-to-day affairs of the company to the chief
executive officer, who in turn delegates some of these
powers in line with this framework.
Chairman
The chairman is an independent non-executive director
who is principally responsible for the effective operation
of the board.
Chief executive officer
The chief executive officer reports to the board. He is
responsible for overseeing execution of the strategic
direction of the company as approved by the board.
Board committees
These committees assist the board in the discharging of
its duties. Ultimate accountability and responsibility rests
with the board, which does not abdicate any of its
responsibilities to the committees.
The committees report to the board on material aspects of
their remit as dictated by their annual work plans. Despite
delegating certain functions to its committees, the board
remains ultimately accountable for the proper execution
of these matters.
Board balance
There is an appropriate balance of power and authority on
the board. There is a closed-session agenda item at the end
of every board meeting which non-executive directors can
use to discuss issues with the chairman and other directors.
Board evaluation
The 2016 external evaluation included an effectiveness
assessment of the board itself, an appraisal of its committees
and the chairman, and a peer-to-peer evaluation. The
evaluations found no significant matters or material concerns
on the board or committee performance. The results
indicated that core board processes were working well and
the board was well balanced. The directors believe board
meetings were well organised and efficiently run, and that
all relevant aspects of the company’s business were
effectively dealt with by the board and its committees. In the
84
spirit of continuous improvement, the board is developing
an action plan to align to certain enrichment
recommendations from the survey.
The nominations committee informally reviews all directors
standing for re-election at the AGM well in advance
and this is reported to the board. After considering the
performance of all directors standing for election at
the AGM in February 2017, the board supports their
re-election.
Dealing in securities
In line with the JSE Listings Requirements, Tiger Brands has
adopted a policy that sets out the procedure directors must
follow before they, or any of their associates, deal in the
company’s securities.
Directors and the company secretary must obtain prior
written authorisation from the chairman to deal in company
securities. This has been extended to employees who are
exposed to price-sensitive information. Tiger Brands
employees, who are share scheme participants, are
restricted from trading in securities during the company’s
closed periods.
Sustainability matters
The social, ethics and transformation committee convenes
three times per year and reports directly to the board. Its
remit includes human capital, the extent of the company’s
transformation, ethical, safety, health and environmental
policies and practices. The committee report is on
pages 90 and 91.
Legal compliance
Tiger Brands acknowledges the importance of complying with
the regulatory framework affecting its operations, and its
associated accountability to all stakeholders. Given the
quantum of regulatory promulgations and amendments,
legislative compliance was a key area of focus in the review
period. The approach to governance emanates from the
Tiger Brands code of ethics and values detailed on page 54.
The compliance function has scaled up to screen the
external environment to identify applicable legislation,
inform business of material and pertinent regulatory changes
and requirements, and facilitate controls that will ensure
compliance.
Tiger Brands LimitedIntegrated annual report 2016 For increased effectiveness, the legal compliance function
collaborates with other risk assurance providers and legal
firms where necessary. In implementing the governance
framework, a risk-based approach is adopted. In addition,
Tiger Brands complies with all mandatory industry codes. In
terms of non-mandatory industry codes, Tiger Brands adopts
those that enhance good governance and effectiveness.
Board and committee structure
The board has delegated specific functions to committees
to assist it in meeting its oversight responsibilities. Every
committee has terms of reference and an annual work plan,
which is reviewed annually, and the directors confirm that
all committees have functioned in line with these terms of
reference during the year. All board committees are chaired
by independent non-executive directors.
The board met eight times at scheduled meetings in FY16. It
met once every quarter and held a strategy meeting in July
to approve the strategic direction of the company. It also
met to approve the budget and held two extraordinary
meetings during the year. Details of attendance at board
and committee meetings are shown below:
Board
Audit Remuneration Nominations
Risk and
sustainability
Social,
ethics and
transformation
Investment
8
8/8
8/8
7/8
7/8
8/8
8/8
8/8
8/8
7/8
7/8
4/4
8/8
8/8
3/3
6/6
4
–
–
–
–
–
4/4
4/4
–
–
4/4
2/2
4/4
4/4
2/2
3/3
4
4/4
–
4/4
–
–
–
–
4/4
4/4
2/2
–
4/4
1/1
–
4
4/4
–
4/4
4/4
–
–
4/4
–
–
2/2
–
4/4
1/1
–
3
3/3
–
–
–
3/3
3/3
–
–
–
–
3/3
3/3
–
2/2
3
–
–
–
–
3/3
–
–
3/3
3/3
–
1/1
–
–
1/1
–
6
6/6
–
–
–
–
6/6
6/6
–
–
6/6
1/1
6/6
6/6
5/5
6/6
85
Number of
meetings
AC Parker
MO Ajukwu
SL Botha
MJ Bowman
M Makanjee
KDK Mokhele
RD Nisbet
MP Nyama
BL Sibiya
YGH Suleman
LC Mac Dougall2
NP Doyle
CFH Vaux
PB Matlare1
O Ighodaro3
1 Resigned effective 31 December 2015.
2 Appointed 10 May 2016.
3 Resigned effective 31 July 2016.
Appointment and resignation of directors
Peter Matlare resigned as chief executive officer,
effective 31 December 2015, after eight years. Lawrence
Mac Dougall joined Tiger Brands as chief executive officer,
effective 10 May 2016. Olufunke (Funke) Ighodaro
resigned as chief financial officer on 31 July 2016, and
Noel Doyle was appointed in that capacity on the same
date. Noel has been chief operating officer of the
company since 13 July 2015 and served as an interim
chief executive officer from 1 January to 9 May 2016.
Tiger Brands LimitedIntegrated annual report 2016Governance review Governance review continued
Board committees
Audit committee
The committee’s report is on pages 87 to 89.
appropriate individual and group targets governs the
eligibility of executives for annual performance bonuses and
the vesting of their long-term incentive awards.
Risk and sustainability committee
The risk and sustainability committee assists the board in
fulfilling its governance (from a risk and control perspective),
compliance and risk management responsibilities. The
committee is responsible for ensuring that all significant risks
are identified, evaluated and effectively managed, and that
there is adequate oversight of Tiger Brands’ own risk
assessment and internal processes. Compliance with relevant
laws and regulations is integral to the group’s risk
management process and monitored continuously. The
committee operates against terms of reference and an annual
work plan, which is reviewed by the board each year.
The functions of the risk and sustainability committee includes
assisting the board in ensuring that:
•• The company has implemented an effective policy and
plan for risk management that will enhance its ability to
achieve its strategic objectives
•• The maturity and effectiveness of risk management
processes and activities are continuously monitored,
maintained and improved
•• The overall risk profile and significant risks Tiger Brands
faces are monitored and reviewed and the response to
address key risks is appropriately defined and resolved
by management
•• Disclosure on risk is comprehensive, timely and relevant.
The committee is satisfied it has fulfilled its responsibility as
per its terms of reference and has adequately reported to
the audit committee in the financial year. It is satisfied of the
adequacy of governance, compliance and risk management
structures and processes in place at Tiger Brands.
The risk management report can be found starting on
page 102.
Remuneration committee
This committee comprises only non-executive directors. The
chief executive officer and certain members of management
attend meetings by invitation but excuse themselves at the
appropriate times.
The committee is responsible for the development and
implementation of the group’s remuneration philosophy,
among others. The total reward of executives is designed
to ensure a substantial portion depends on performance;
both company and individual performance. Reaching
The committee is responsible for and has the authority to
consider and make recommendations on specific matters,
including:
•• Determining and approving the general remuneration
policy to be tabled at each AGM for a non-binding
advisory vote by shareholders
•• Preparing an annual remuneration report for inclusion in
the company’s integrated annual report
•• Developing the remuneration strategy for executive
directors and members of the executive committee
•• Developing short-term incentive plans for board approval.
It sets annual targets, monitors progress towards targets
and reviews the incentive plans regularly to ensure a
strong link with performance is maintained
•• Developing long-term incentive schemes for board
approval. It sets individual and group performance
hurdles, as well as guidelines for annual allocations.
It regularly reviews the structure of these schemes
•• Developing, monitoring and testing appropriate
performance drivers for short-term and long-term incentives
•• Individual remuneration packages for executive directors
and executive committee members including incentive
schemes and increases to ensure these are appropriate
•• Remuneration of non-executive directors of the board and
its committees. Proposals are made to the board for final
approval by shareholders at the AGM
•• Succession planning
•• Human capital imperatives.
The committee is satisfied it has fulfilled its responsibilities in
line with its terms of reference for the year. As per King III
recommendations, the company’s remuneration policy will
be tabled to shareholders for a non-binding advisory vote
at the AGM. This vote enables shareholders to express their
views on remuneration policies and their implementation.
The remuneration report can be found on pages 92
to 101.
Nominations committee
The nominations committee considers board succession
and recommends candidates for vacancies based on skill,
experience and the need to ensure diversity and balance
in the board’s composition. The committee comprises only
non-executive directors and is chaired by the chairman of
the board. The chief executive officer attends meetings
by invitation. The committee is satisfied it has fulfilled its
responsibilities in line with its terms of reference for the
review period.
86
Tiger Brands LimitedIntegrated annual report 2016 Audit committee report
This report is provided by the audit committee appointed for
FY16 in compliance with the Companies Act 71 of 2008,
as amended. The committee’s operation is guided by
a detailed charter informed by the Companies Act and
King III, and approved by the board.
The committee has executed its duties and responsibilities
for the review period in line with its terms of reference
relating to the group’s accounting, internal control, external
auditing and financial reporting practices.
Structure
The committee comprises three independent non-executive
directors.
The chairman of the audit committee is not the chairman of
the board. The following directors served on the committee
in FY16:
•• Rob Nisbet (chairman)
•• Khotso Mokhele
•• Yunus Suleman.
Biographical details of committee members appear on
pages 11 and 12. Fees paid to committee members are
outlined in the remuneration report on page 101.
The year under review
External audit
The committee, among other matters:
•• Nominated Ernst & Young Inc to shareholders for
appointment as the external auditor, and Warren Kinnear
as the designated auditor, for the financial year ended
30 September 2016. It ensured that the appointment
complied with all applicable legal and regulatory
requirements, and that the auditor and designated auditor
are accredited by the JSE Limited
•• Approved the external audit engagement letter, plan and
budgeted audit fees payable to the external auditor. Fees
paid to the auditor are detailed in note 4.1 of the group
annual financial statements
•• Determined the nature and extent of all non-audit services
provided by the external auditor and pre-approved all
non-audit services to be undertaken
•• Obtained assurances from the external auditor that
adequate accounting records were being maintained
•• Considered whether any reportable irregularities were
identified and reported by the external auditor in terms of
the Auditing Profession Act 26 of 2005, and determined
that there were none
•• Nominated the external auditor and designated
independent auditor for the company.
Independence of the external auditor
The audit committee is satisfied that Ernst & Young Inc is
independent of the group after considering the following
factors:
•• Representations made by Ernst & Young Inc to the audit
committee
•• The auditor does not, except as external auditor or in
rendering permitted non-audit services, receive any
remuneration or other benefit from the company
•• The auditor’s independence was not impaired by any
consultancy, advisory or other work undertaken
•• The auditor’s independence was not prejudiced by
any previous appointment as auditor
•• Criteria specified for independence by the Independent
Regulatory Board for Auditors and international regulatory
bodies.
Financial statements
In respect of the financial statements, the committee:
•• Confirmed the going concern requirement as the basis
of preparing interim and annual financial statements
•• Reviewed compliance with the financial conditions of loan
covenants and determined that the capital and debt
facilities of the group are adequate
•• Examined and reviewed the interim and annual financial
statements, as well as all financial information disclosed
to the public prior to submission to and approval by the
board
87
•• Reviewed the audit, evaluated the effectiveness of the
•• Ensured the annual financial statements fairly present the
auditor and its independence, and evaluated the external
auditor’s internal quality control procedures
•• Obtained an annual written statement from the auditor
that its independence was not impaired
•• Considered the reports of the external auditor on the
group’s systems of internal control, including financial
controls
financial position of the company and group at the end of
the financial year and the results of operations and cash
flows for that financial year, and considered the basis on
which the company and group were determined to be a
going concern
•• Considered accounting treatments, significant unusual
transactions and accounting judgements
•• Considered the appropriateness of accounting policies
adopted and any changes
Tiger Brands LimitedIntegrated annual report 2016Governance review Audit committee report continued
•• Reviewed the external auditor’s audit report
•• Reviewed the representation letter on the group financial
In respect of sustainability issues, the committee:
•• Considered the findings and recommendations of the risk
statements signed by management
and sustainability committee
•• Considered any problems identified and reviewed any
significant legal and tax matters that could have a
material impact on the financial statements
•• Met separately with management and external audit
to review and discuss the annual financial statements
•• Received and considered reports from the internal
auditors.
Internal controls and internal audit
For internal controls and internal audit, including forensic
audit, the committee:
•• Reviewed and approved the internal audit charter and
annual audit plan and evaluated the independence,
effectiveness and performance of the internal audit
function and compliance with its charter
•• Considered reports of the internal auditor on the group’s
systems of internal control including financial controls,
business risk management and maintaining effective
internal control systems
•• Received assurance that proper and adequate accounting
records were maintained and that the systems
safeguarded assets against unauthorised use or disposal
•• Reviewed significant issues raised by internal and forensic
audit processes and the adequacy of corrective action in
response to significant internal and forensic audit findings
•• Assessed the performance of the internal audit function
and found it satisfactory
•• The committee confirms it has no reason to believe there
were any material breakdowns in the design and
operating effectiveness of internal financial controls during
the period that have not been addressed or are not being
addressed by management.
In terms of risk management and information technology
relevant to its functions, the committee:
•• Reviewed the group’s policies on risk assessment and
management, including fraud risks and information
technology risks as they relate to financial reporting and
the going concern assessment, and found them sound
•• Considered and reviewed the findings and
recommendations of the risk and sustainability committee.
•• Met with senior management to consider findings on
assurance, and made appropriate enquiries from
management. Through this process, it has received the
necessary assurances that material disclosures are reliable
and do not conflict with financial information.
For legal and regulatory requirements, to the extent that
these may have an impact on the financial statements, the
committee:
•• Reviewed, with management, legal matters that could
have a material impact on the group
•• Reviewed, with the company’s internal counsel, the
adequacy and effectiveness of the group’s procedures
to ensure compliance with legal and regulatory
responsibilities
•• Monitored concerns on accounting matters, internal audit,
internal accounting controls, contents of the financial
statements, potential violations of the law and
questionable accounting or auditing matters
•• Considered reports provided by management, internal
auditor and external auditor on compliance with legal
and regulatory requirements.
In terms of coordinating assurance activities, the committee
reviewed the plans and work outputs of the external and
internal auditors and concluded these were adequate to
address all significant financial risks facing the business.
Chief financial officer expertise and experience
The committee also considered the expertise, resources and
experience of the chief financial officer, Noel Doyle, and
concluded these were appropriate. Biographical details
appear on page 12.
Company secretary
In terms of section 3.84 of the JSE Listings Requirements, the
committee considered the competence, qualifications and
experience of Thiroshnee Naidoo to hold the position of
company secretary and concluded these were appropriate.
Biographical details appear on page 13.
88
Tiger Brands LimitedIntegrated annual report 2016 All directors have unlimited access to the services of the
company secretary, who is responsible to the board for
ensuring proper corporate governance principles are
applied.
The company secretary is also responsible for ensuring the
proper administration of proceedings and matters relating
to the board, the company and shareholders in line with
applicable legislation and procedures. She is also
responsible for director training and induction, as well as
the annual board evaluation.
The committee confirms that the company secretary
maintains an arm’s length relationship with the board and
directors, taking into account that the company secretary
is not a director of the company and is not related to any
of the directors.
Annual financial statements
Following its review of the annual financial statements of
Tiger Brands Limited for the year ended 30 September
2016, the committee believes that, in all material respects,
these comply with the relevant provisions of the Companies
Act and IFRS and fairly present the consolidated and
separate financial position of the company at that date
and the results of its operations and cash flows for that year.
The committee has also satisfied itself of the integrity of the
remainder of this integrated annual report 2016.
Having achieved its objectives, the audit committee
recommended the annual financial statements and
integrated annual report for approval by the board. The
board has since approved the annual financial statements
and integrated annual report 2016, which will be open
for discussion at the upcoming annual general meeting.
On behalf of the committee
Robert Nisbet
Chairman
22 November 2016
89
Tiger Brands LimitedIntegrated annual report 2016Governance review Social, ethics and transformation committee report
Terms of engagement
The board delegates oversight of the company’s ethics and
transformation management to this committee, through which
the CEO is held accountable for the company’s ethics and
transformation performance. As a statutory committee of the
company and its subsidiaries, the committee fulfils its duties
in terms of sections 72(4) and (5) of the Companies Act
2008 and regulation 43 of the Companies Regulations
2011. Its activities are also guided by King III.
Together with the risk and sustainability committee, it ensures
the company conducts its business sustainably and ethically
by developing and reviewing policies and practices to
guide Tiger Brands’ approach to social and ethics-related
challenges as per its terms of reference.
Its purpose is to drive the Tiger Brands approach to good
corporate citizenship by ensuring the group’s activities have
a positive impact on its many stakeholders including
consumers, employees, communities, shareholders and
members of the public, and to report on this to shareholders
annually at the AGM.
As a committee of the board, it assists the board in
discharging its duties and makes recommendations to the
board on social and economic development, sustainability,
ethics, good corporate citizenship, environment, health and
public safety, consumer-related matters, stakeholder
management, issues management as applicable, and
labour and employment issues.
During the review period, the committee’s terms of reference
were revised and updated to outline its comprehensive
remit.
Membership and attendance
Member
Designation
Attendance
Maya Makanjee
Bheki Sibiya
Makhup Nyama
Chair, non-executive
director
Deputy chair of
Tiger Brands board,
non-executive
director
Non-executive
director
Lawrence Mac Dougall Ex officio member,
CEO
3/3
3/3
3/3
1/1
90
Relevant executive managers attend committee meetings as
required:
Executive
management
Patrick Sithole
Tswelo Kodisang
Bridgitte Backman
Portfolio
Attendance
Supply chain, health,
safety and environment
Human resources
Corporate affairs and
sustainability
3/3
3/3
3/3
3/3
Thiroshnee Naidoo
Legal and compliance
Outline of activities
The committee’s oversight role has matured to ensure the
group plays a strong corporate citizenship role primarily in
South Africa. Since May 2016, and after establishing an
operational ethics committee, a comprehensive ethics report
is tabled and discussed at meetings.
For the review period, the committee:
•• Monitored the company’s activities against international
and local standards:
– The 10 principles in the United Nations Global
Compact
– Organisation of Economic Cooperation and
Development (OECD) recommendations on corruption
– Employment Equity Act No 55 1998, as amended
– BBBEE and agri-sector code five-year plan compliance
and progress against objectives approved by the
board in July 2015
•• Reviewed its framework of policies and processes to
manage activities against ethical and social standards
•• Met with the chairs of audit and risk and sustainability
committees to review focus areas and any overlaps in
the remit of these committees
•• Monitored progress on the FTSE4Good index, where
Tiger Brands is a top 30 performer
•• Monitored progress on a key public-private partnership
(a first for the company), after Tiger Brands signed a
memorandum of understanding with the Department of
Agriculture, Forestry and Fisheries to develop black
smallholder farmers
•• Reviewed the group’s carbon disclosure submission for
CDP
•• Reviewed and discussed the role of the newly formed
operational ethics committee
Tiger Brands LimitedIntegrated annual report 2016 Tiger Brands is committed to ensuring that its principles on
ethics are implemented across the company. The committee
will continue to monitor processes and policies to ensure
compliance.
The committee is satisfied it has considered and discharged
its responsibilities for the financial year in line with its terms
of reference, King III and the Companies Act.
On behalf of the committee
Maya Makanjee
Chairman
22 November 2016
91
•• Reviewed progress against socio-economic development
plans and processes:
– CSI strategy, key performance indicators and objectives
– Engaged interns for the Great South African Cookbook,
in partnership with the Nelson Mandela Foundation
– Tiger Brands Foundation progress report. The
Foundation is on track to deliver its 40 millionth meal
towards the end of 2016. In terms of good
governance principles, the foundation is a trust with
independent trustees. For more information refer to
page 67
•• A group CSI steering committee has been constituted and
met in July 2016, fulfilling a management oversight role
for sustainable socio-economic development in the
company. Reports and minutes from this steering
committee now form part of the social and ethics
committee reports
•• Reviewed the company’s issues management approach
•• Reviewed progress against management plans for
stakeholder relationships and stakeholder mapping
•• Reviewed the company’s ethics policies and processes,
including those for anti-bribery and corruption
•• Reviewed and considered consumer care line reports.
After a thorough review of this process, recommended
changes are being implemented
•• Agreed the following in terms of human resources and
labour-related matters:
– The social impact of wage negotiations and fatalities
are considered with respect to the well-being of
employees and their families
– HIV statistics are explored in terms of employee
wellness and the progress of HIV programmes. The aim
is to improve internal communication and reporting on
progress
•• Going forward, the committee will consider certain
matters as agenda items in more detail:
– Unfair or inappropriate discrimination
– Fair labour practices
– Emolument attachment orders (garnishee orders).
Tiger Brands LimitedIntegrated annual report 2016Governance review Remuneration report
Report from the remuneration committee chairperson
Our vision
To be the most admired, branded, FMCG company in emerging markets.
Achieving our vision depends, in large part, on our people.
Together, they are our most sustainable source of competitive
advantage in a volatile and technology-driven economy.
Accordingly, the purpose of our reward philosophy, strategy,
policy and practices is to:
•• Contribute to attracting, retaining and engaging high-
performing employees
•• Inspire and motivate people to outperform against our
business strategy, goals and targets
•• Drive, reward and recognise performance excellence and
innovation by significantly differentiating reward for top
performers, ie pay for performance.
We have adjusted our remuneration report this year to align
with the best practice recommendations of integrated reporting
and structured the report in two sections. Part 1 deals with
why and how we pay our executive directors and prescribed
officers, while part 2 details the various financial components
of remuneration.
This report should be considered against the overview of
company performance in 2016 on pages 34 to 37 to
provide the context to remuneration outcomes set out later.
Part 1: Remuneration policy
92
The war for talent is at an all-time high and, led by our
new CEO, we have reviewed all our pay offerings in a
benchmark exercise against the top 100 JSE listed
organisations. This has resulted in a fit-for-purpose model
to ensure we continue to deliver on our shareholder value
proposition and only reward in terms of our differentiated
pay-for-performance framework.
While this review confirmed that our reward structure is in
line with best practice, we have made certain adjustments
to both our short-term and long-term incentives to simplify,
focus and align these with our business and people strategy.
In line with leading practice, we have also adopted a
minimum shareholding policy for our executives, with our
top team undertaking to build up their personal
shareholdings in the company to target levels.
Santie Botha
Chairperson
22 November 2016
Remuneration policy
The remuneration policy, to be approved by shareholders in a non-binding advisory vote at the annual general meeting on
21 February 2017, is set out below.
Governance and the remuneration committee
The remuneration policy is reviewed annually by the remuneration and nominations committee to ensure that the design of
directors’ remuneration reflects best practice and is competitive. The policy also needs to ensure that payment is aligned with the
company’s growth objectives and financial performance for the review period. The committee’s membership, responsibilities and
meetings held in the year appear in the corporate governance section on pages 85 and 86.
Remuneration policy
Objective
The Tiger Brands remuneration policy aims to ensure the group attracts and retains key and critical talent required to deliver its
business goals and results.
The policy, in conjunction with the remuneration philosophy and strategy, is based on the following key principles:
•• Remuneration should support our vision by attracting and retaining the right talent
•• It should directly correlate with the growth plans and financial performance of our businesses and the group
•• It should be reviewed and benchmarked annually through professional in-country service providers to ensure we remain
competitive in diverse markets: never applying percentiles rigidly but considering industry type, skills scarcity, performance
and legislative structures and requirements
•• Remuneration must support the group’s strategy, and be consistent with its culture of fairness and equity
•• It should motivate, drive deeper engagement and allow for differentiation in rewarding high performers
•• Individual contributions based on role and responsibilities should have a direct bearing on levels of remuneration
•• Variable remuneration (short and long-term incentives) practices should be tested periodically through external service
providers to ensure these support our objective of reward for achieving short-term and long-term growth, and retaining talent.
The remuneration committee actively participates in this process.
Tiger Brands LimitedIntegrated annual report 2016 Remuneration mix, recognition and reward
Elements of executive management and prescribed officers’ remuneration
Total remuneration package
Comprises base pay and benefits,
annually benchmarked internally
and externally, and differentiated on
performance, size and complexity
of the business
Cash salary
Compulsory benefits
Discretionary benefits
Short-term incentive
Incentive bonus plan
Remuneration
Phantom cash-settled
option scheme
Long-term incentive
Tiger Brands Limited
2013 Share Plan
Bonus deferred
Last options granted
13 February 2013
Share appreciation rights
Performance shares
Restricted shares
Bonus shares
B
o
n
u
s
m
a
t
c
h
n
g
i
93
Short-term incentive (STI) scheme
The incentive bonus plan
Purpose and link to key
remuneration principles
The STI drives achieving short-term performance targets which correlate to the growth plans
and financial performance of our businesses and the group. This is one of our key
remuneration principles.
By incorporating personal performance through the personal multiplier, the STI is consistent with
our culture of fairness and equity, allowing for differentiation in rewarding high performers.
Performance measures
The target for the STI comprises a financial component and a number of strategic components.
In 2016, the STI scheme for the Tiger Brands executive committee carried a 70% weighting
for the financial component and a 30% weighting for the strategic component.
The financial performance component is based on growth in profits, as measured by headline
earnings per share (HEPS) from continuing operations. Measures and targets are set and
reviewed annually by the remuneration committee.
In 2016, the strategic element of the bonus focused on the following areas (weighting in brackets):
•• Turnaround of Africa businesses – achieve approved budgets (8%)
•• Drive operational excellence by focusing on in-store shelf health (3,5%)
•• Meaningful increase in group/business innovation rate – minimum of 0,5% increase as
a percentage of net sales at group level versus 2015 (5%)
•• Ensure the group’s domestic operating margin and overall value market share for its defined basket
are maintained in line with 2015 (5%)
•• Achieve budgeted net savings of R200 million in FY16 – in the areas of financial shared services
centre, IT, procurement and manufacturing efficiencies (3,5%)
•• Drive the talent management process across all senior management to deliver organisation-wide
and cross-functional succession (5%).
Performance against individual targets and objectives is also considered in the final bonus
determination.
Tiger Brands LimitedIntegrated annual report 2016Governance review
Short-term incentive (STI) scheme continued
The incentive bonus plan continued
On-target and maximum
value of cash incentive
(annual or subject to
deferral)
All participants are able to earn an annual STI of up to 112,5% of their total remuneration
package, rising progressively from 50% to 112,5% for performance above the on-target level,
achieving all strategic objectives and attaining the maximum personal multiplier for exceptional
performance.
The maximum STI is paid only when the company achieves stretch business performance
targets, all strategic targets are achieved and the maximum personal multiplier is attained.
Operation
The following formula is applied to determine the final result:
STI formula financial = TRP x on-target % x BM (0% – 150%) x PM (0% – 150%) x 70%
STI formula strategic = TRP x on-target % x BM (0% – 150%) x PM (0% – 150%) x 30%
x strategic outcome
Where:
TRP = total remuneration package
BM = business multiplier
PM = personal multiplier
Voluntary deferral and
matching
Executives and prescribed officers may defer a portion (25%, 33% or 50%) of their STI
payment into restricted shares under the Tiger Brands Limited 2013 Share Plan, which are
then matched by the company in a 1:1 ratio. All restricted shares will vest after three years.
94
We believe these deferrals demonstrate commitment to the company’s long-term success and
an appropriate alignment with shareholders’ interests. We therefore support our executives
and prescribed officers’ efforts to increase their shareholding in the company through this
process.
Further detail on restricted shares appears in part 2 (long-term incentive scheme) on page 95
and 96.
Changes for Fy17
•• New executive directors’ scheme to be introduced, based on targeted group HEPS
•• Strategic objectives for FY17 will no longer form part of the incentive bonus but become
an element in individual performance assessments
•• As such, the STI for Tiger Brands executive members (excluding executive directors) will now
be based on the following group financial metrics (weighting in brackets):
– Profit before interest and tax (70%)
– Net working capital (20%)
– Volume growth (10%).
Remuneration report continuedTiger Brands LimitedIntegrated annual report 2016 Long-term incentive (LTI) scheme
Tiger Brands Limited 2013 Share Plan (LTIP)
Purpose
The aim of the LTIP is to attract, retain, motivate and reward executives and managers who are
able to influence the performance of Tiger Brands and its subsidiaries on a basis that aligns
their interest with the company’s shareholders.
The LTIP supports the company’s vision by attracting and retaining the right talent and correlating
with the long-term growth plans and financial performance of the group.
The combined, weighted implementation of the various elements (below) of the LTIP will allow
Tiger Brands to remain competitive in annual and share-based incentives, and ensure executives
share a significant level of personal risk with the company’s shareholders.
Operation and
instruments
The LTIP was implemented in February 2013 and is in line with global best practice and
emerging South African practice, as it recognises the required attributes of shareholder
alignment, retaining key talent and sustained performance.
Under the LTIP, executives and selected managers of the company and its subsidiaries will
annually be offered a weighted combination of:
•• Allocations of share appreciation rights
•• Conditional awards of full-value performance shares
•• Grants of full-value restricted shares.
The correlation between share price and company financial performance is often hampered by
exogenous factors that can override executive performance. The LTIP focuses executive attention
and reward on performance by combining a growth-oriented element (share appreciation right)
with two full-value elements, the one rewarding future company performance (performance
share) and the other rewarding actual individual performance and retaining key talent (restricted
share).
95
Performance shares
Performance shares closely align the interests of shareholders and executives by rewarding
superior shareholder and financial performance in future. Performance shares will be awarded
annually, predominantly to senior executives who can influence and affect long-term strategic
performance.
Restricted shares
Restricted shares provide for share-based retention of senior managers who have demonstrated
their value to the company through their annual performance. Restricted shares will be mostly
granted to high-performing senior managers to retain their skills. The restricted share element of
the plan will also enable executives to electively waive a portion (25%, 33% or 50%) of their
annual cash incentive bonus, and to use this to invest in Tiger Brands shares which are matched
by the company with additional shares.
Share appreciation rights (SARs)
Annual allocations of SARs will be made to executives and selected managers, subject to
performance vesting criteria, as described below.
Allocations of performance shares, restricted shares and SARs may be settled in cash or shares,
but the company intends to settle in shares.
Tiger Brands LimitedIntegrated annual report 2016Governance review Restricted shares
Restricted shares are subject
to continued tenure for a
period of three years after
they are granted and are not
subject to any further
performance conditions.
The value of restricted shares
granted will be linked to the
annual cash incentive
scheme and, more
specifically, will be a fixed
percentage of the actual
bonus that accrued to the
participant for the prior
financial year.
SARs
A sliding scale in applying
performance vesting
conditions based on a
targeted rate of 3% per
annum real growth in HEPS
over three, four and five-year
periods.
Percentage threshold levels
for real HEPS growth and
corresponding percentage
of allocation to vest:
>0% and <0,5%
≥0,5% and <1,0%
≥1,0% and <1,5%
≥1,5% and <2,0%
≥2,0% and <2,5%
≥2,5% and <3,0%
≥3,0%
5%
10%
16%
27%
44%
75%
100%
Long-term incentive (LTI) scheme continued
Tiger Brands Limited 2013 Share Plan (LTIP) continued
Performance measures
96
Performance shares
The board will determine the
performance criteria for each
award. For awards made in
February 2016, it was
agreed that vesting will be
determined by the company’s
comparative total shareholder
return (TSR) relative to
constituent members of the
FINDI 30 index.
The vesting of 2016
performance shares will thus
be based on Tiger Brands’
relative TSR position over the
three-year period:
•• 15 out of 30: the targeted
number (one-third of
maximum number) of
performance shares
awarded will vest
•• 7 or better: the maximum
number (three times
targeted number) of
performance shares
awarded will vest
•• 23 or worse: all
performance shares
awarded will be forfeited
•• Between 7 and 15, or
between 15 and 23:
a pro-rated number of
performance shares
will vest.
No retesting against the
performance criteria will be
allowed. Any performance
shares that do not vest at the
end of the three-year period
will be forfeited.
Remuneration report continuedTiger Brands LimitedIntegrated annual report 2016 Long-term incentive (LTI) scheme continued
Tiger Brands Limited 2013 Share Plan (LTIP) continued
Vesting periods
Dilution
Changes for Fy17
Performance shares
Performance shares will vest on the third anniversary of their award, to the extent that the
company has met specified performance criteria over the period. The value per share that vests
is the full value of the share on the vesting date (there is no strike price) and the number of
shares vesting will depend on the company’s performance relative to specified performance
conditions measured over a three-year period.
Restricted shares
Restricted shares are subject to continued tenure for three years after they are granted.
SARs
They will be available to be settled in equal thirds on the third, fourth and fifth anniversaries of
the date of allocation, but need not be exercised until the sixth anniversary, when they must be
exercised or lapse. Vesting will depend on the company’s performance relative to specified
performance conditions measured over a three, four and five-year period, respectively.
In terms of the rules of the Tiger Brands Phantom Cash Option Scheme, at any point, the
aggregate number of phantom shares relating to all unexercised options in terms of the scheme,
is limited to 10% of the total issued share capital of the company. As at 30 September 2016,
the aggregate number of all outstanding options under the scheme represented 0,18%
(2015: 0,36%) of the company’s total issued share capital.
The maximum aggregate number of shares that may be acquired by participants under the
LTIP and any other share plan may not exceed 5,5 million shares; and for any one
participant 550 000 shares. In determining these limits, shares acquired through the JSE
and transferred to participants are not considered. As at 30 September 2016, actual shares
that may be acquired by participants under the LTIP is, in aggregate, 1 515 298 shares
(2015: 1 824 026).
97
The review of our LTI plan confirmed that the instruments used and the quantum and
performance conditions applied to awards are in line with best practice, but that it is unusual to
make annual awards based on all the instruments described above. This leads to a complex set
of awards that is challenging for both participants and investors to understand and appreciate.
It has thus been decided that the 2017 award will comprise restricted shares and share
appreciation rights, although the number awarded will be calibrated so that the total expected
value will be similar to awards in prior years. The co-investment plan, with matching shares
used to reward voluntary deferral of the STI into company shares, will also be retained.
In line with leading practice, the company will introduce a minimum shareholding policy, where
senior executives are expected to build up their personal shareholding in the company to a
minimum level of 150% of TRP (for the CEO) and 100% of TRP for other executive committee
members. Executives have six years to build up these holdings and may use a portion of their
STI or any vesting LTIs, or their own resources, to acquire these shares.
Tiger Brands LimitedIntegrated annual report 2016Governance review 98
BEE schemes
Three members of the Tiger Brands executive committee also
participate in one or both of the company’s black manager
empowerment schemes.
The Tiger Brands Black Managers Trust (BMT I) was
established in 2005 as part of the company’s phase I staff
empowerment transaction. In terms of this, allocating
participation rights to black managers entitles them to
receive the underlying Tiger Brands shares (and shares in
Adcock Ingram on a one-for-one basis) – after making the
required capital contributions to BMT I – at any time after
the specified lock-in period, ie from 1 January 2015.
However, for all shares allocated after 31 July 2010, the
lock-in date varies depending on the date of allocation.
The Tiger Brands Black Managers Trust II (BMT II) was
established as part of our phase II empowerment
transaction implemented in 2009. In terms of this,
allocating participation rights to black managers entitles
them to receive a specified number of Tiger Brands
shares from 31 December 2017 (after Tiger Brands
has exercised its right to repurchase a certain number of
shares from BMT II under an agreed repurchase formula).
Retirement benefits
During the year, the group contributed on behalf of executive
directors to an umbrella retirement scheme operated by
Investment Solutions. This is a defined contribution retirement
plan, with the company contributing 13,2% (2015: 15,7%)
of gross pensionable remuneration. The cost of these
contributions is a component of directors’ TRPs. The two
prescribed officers are also members of this umbrella
retirement scheme.
In addition, seven other members of the executive committee
participated in this umbrella retirement scheme. The two
remaining members of the executive committee belong to
the Tiger Brands Management Provident Fund, a defined
contribution plan. The company contributed on average
16,4% (2015: 16,5%) of gross pensionable remuneration
to the provident fund for retirement funding.
Details of contributions in the review period on behalf of
executive directors, prescribed officers and other members
of the executive committee appear in Annexure C of the
annual financial statements.
Other benefits
Executive directors, prescribed officers and other members
of the executive committee enjoy various benefits, including
medical aid cover, permanent health insurance, death-in-
service and funeral cover, as well as a travel allowance,
where applicable.
The total value of other benefits paid is set out in
Annexure C of the annual financial statements.
Executive service contracts
Executive directors, prescribed officers and other members
of the executive committee are not employed on fixed-term
contracts and have standard employment agreements with
current notice periods of either one or three months. The
current retirement age is 63, although a retirement age
of 65 applies to three members.
Contractual entitlements on terminating employment include,
for those who leave due to retirement or retrenchment, a
pro rata short-term incentive payment, subject to the extent
of achieving the relevant financial and strategic
performance targets at the end of the period and the
necessary individual performance agreement being in place
at the date of exit. This pro rata incentive payment is subject
to the employee being in service for a minimum of three
months in that financial year. No pro rata bonus is paid for
employees who leave for other reasons.
The termination rules for options issued under the
Tiger Brands Limited 2013 Share Plan are on page 99.
External board appointments
Tiger Brands encourages members of the executive
committee to consider accepting appropriate opportunities
to serve as non-executive directors on the main board or
committees of external companies. We believe this policy
encourages our executives to broaden their skills base
and experience. Under our formal policy, an executive
member is limited to one substantive outside directorship.
The chairman of Tiger Brands, as chairman of the
nominations committee, and the chairman of the
remuneration committee, are required to authorise these
appointments based on a recommendation from the chief
executive officer. Directors’ fees paid to executive members
by outside companies under this policy may be retained
by the individual. Tiger Brands currently has no executive
committee members serving as non-executive directors on
the main boards of external companies.
Remuneration report continuedTiger Brands LimitedIntegrated annual report 2016 Vesting of SARs and full-value shares on terminating employment – Tiger Brands 2013 Share Plan
If an individual’s employment is terminated, vesting of any outstanding (unvested) share options or full-value shares under the LTIP
depends on the reasons for termination. The group’s termination rules are aligned with recommendations in King III. In summary,
the principles applied for units awarded under the LTIP include:
Type of termination
Definition/treatment
No-fault
termination
No-fault termination is defined as terminating the employment of a participant by the company or
applicable employer company by reason of:
•• Death
•• Injury, disability or ill health
•• Dismissal based on operational requirements as contemplated in the Labour Relations Act No 66 of
1995
•• Retirement on or after the normal retirement date
•• Voluntary early retirement under the rules of the retirement plan of which the participant is a member
•• The relevant employer company ceasing to be a member of the Tiger Brands group
•• Mutual agreement between the company and participant
•• The undertaking in which the participant is employed being transferred to an entity that is not a
member of Tiger Brands.
Under the circumstances above, if employment is terminated on a no-fault basis then, depending on the
nature of the unit (ie whether it is a share appreciation right, performance share or restricted share) and
reasons for termination, a participant may retain all units or only a pro rata portion. Accelerated vesting
and settlement of retained units may apply in certain circumstances.
Fault termination
•• A fault termination is defined as terminating the employment of a participant by reason of:
– Dismissal for misconduct or poor performance or resignation by the participant. If employment
is terminated on a fault basis, the units will be cancelled.
99
Non-executive directors
Appointment and contractual arrangements
Non-executive directors are appointed to the board of Tiger
Brands in line with the policy and procedures for appointments
which are formal, transparent and a matter for the board as a
whole, assisted by the nominations committee. In terms of the
company’s memorandum of incorporation, no directors have
fixed-term appointments. Executive directors are subject to
standard terms and conditions of employment and are
required to retire from the board by rotation on the same basis
as non-executive directors. Any director appointed to fill a
vacant position during the year must be subject to election at
the first annual general meeting following the appointment.
Directors are subject to retirement every three years.
There are no contractual arrangements for compensation due
to loss of office. Non-executive directors do not receive short-
term incentives or participate in any long-term incentive plan.
Fees and approval process
Non-executive directors are paid a retainer that reflects their
overall contribution and input to the company, and not just
their attendance at board and committee meetings. The
chairman and deputy chairman do not receive any additional
remuneration for participating in committees of the board.
Consistent non-attendance at meetings will be appropriately
handled as part of the company’s board evaluation process.
In addition to standard fees, non-executive directors are
currently paid R19 005 for each special meeting of the
board and R3 780 per hour for any additional work they
undertake, provided that payment for this work is approved
by the remuneration and nominations committees and chief
executive officer.
In determining fees payable to non-executive directors, market
benchmarks for similar-sized companies are considered in a
benchmarking exercise every two years. Fees payable to
non-executive directors are considered by the board and
approved by shareholders at the annual general meeting.
Fee proposals are prepared by the executive committee
for consideration by the remuneration and nominations
committees, after which a final recommendation is made to
the board for its consideration before being presented to
shareholders for approval. Non-executive directors who
perform services outside the scope of their ordinary duties may
receive additional remuneration, with a reasonable maximum
fixed by a disinterested quorum of directors.
Shareholder approval will be sought for increasing non-
executive directors’ fees, including fees paid for attending
special board meetings and additional work undertaken.
Details of the proposed increases appear in the notice of
AGM of shareholders to be held on 21 February 2017.
Details of non-executive directors’ fees paid in the review
period appear in part 2 on page 101.
Non-binding advisory vote
The remuneration policy, as set out above, will be subject
to approval by shareholders, by way of a non-binding
advisory vote at the AGM of the company to be held on
21 February 2017.
Tiger Brands LimitedIntegrated annual report 2016Governance review Part 2: Implementation of policies for the
review period
Summary of remuneration activities/decisions during
the year
•• Appointment of the new CEO, with a special LTIP
allocation and sign-on bonus awarded
•• Retention bonuses were awarded to certain members of
the executive team to ensure stability as we began the
process of appointing a new CEO
•• Retention share allocations were made to certain key
employees considered critical to the business
•• Review of the current short-term and long-term incentive
schemes, with new proposals summarised in this
remuneration report.
Short-term incentive for exco Fy2016
Percentage increase in TRP for FY16
(%)
10
8
6
4
2
0
Executives
Managers
Staff
Labour
● Average increase ● Market
Name
LC Mac Dougall
NP Doyle
AG Kirk
CFH Vaux
NG Brimacombe
100
STI
December 2016
Percentage
of TRP
512 500
835 985
646 494
709 050
340 158
6,25
13,59
15,00
15,00
7,50
Directors’ emoluments and share scheme allocations are detailed in Annexure C of the annual financial statements.
Remuneration report continuedTiger Brands LimitedIntegrated annual report 2016 Non-executive directors’ fees
Total emoluments to non-executive directors for the year ended 30 September 2016 were:
R000
AC Parker – chairman
MO Ajukwu
SL Botha
MJ Bowman
M Makanjee
Dr KDK Mokhele
RD Nisbet
MP Nyama
BL Sibiya – deputy chairman
YGH Suleman
Total
Board
1 638
353
342
353
353
353
353
353
846
353
5 297
Invest-
ment
–
–
–
–
–
4
4
–
–
4
12
Audit
–
–
–
–
–
139
268
–
–
139
546
Risk and
sustain-
ability
Remuneration
and
nominations
Social,
ethics and
trans-
formation
Special
meetings
–
87
–
–
–
186
–
–
–
–
273
–
–
218
–
12
–
–
109
–
97
436
–
–
–
–
152
–
87
76
–
–
315
145
36
69
36
79
139
139
58
36
172
909
Total
1 783
476
629
389
596
821
851
596
882
765
7 788
Annual fees payable to non-executive directors for the period beginning 1 March 2016 were approved by shareholders on
16 February 2016.
A market review of non-executive directors’ remuneration was undertaken in 2015 and this formed the basis for increases
effective from 1 March 2016.
101
Interests of executive directors and prescribed officers in share capital
Executive directors and prescribed officers do not hold any interest in the share capital of the company.
Interests of directors and prescribed officers in BEE schemes
No executive directors or prescribed officers qualify for participation in either of the company’s BEE schemes.
Outstanding LTI awards held by executive directors, prescribed officers and other members of the executive
committee
A full analysis of the annual movement in phantom cash-settled options, performance shares, restricted shares and share
appreciation rights held by executive directors, prescribed officers and other members of the executive committee is set out
on pages 170 to 174 per Annexure C to the notes of the annual financial statements.
Tiger Brands LimitedIntegrated annual report 2016Governance review Risk management report
Effective risk management is fundamental to the business
activities of Tiger Brands. By identifying and proactively
addressing risks and opportunities, the group aims to generate
sustained value for stakeholders while protecting its business
operations, reputation and the well-being of its employees.
102
Tiger Brands recognises that risk in business is a complex
and diverse concept and that there are many parts of the
organisation working at managing risk exposures. Our
intention is that these parts will work together in a consistent
and integrated manner to manage and reduce risk
appropriately. Ultimately, the function of risk management
is to assist Tiger Brands in achieving its objectives and to
ensure a safer, healthier work environment for employees
while preserving assets and earnings for the benefit of
stakeholders.
During the review period, our risk reporting process was
revised to consolidate similar risks into broader categories
that amplify the impact:
•• Intensifying competition now relates to innovation, the
relationship with retailers and our response to a changing
competitive landscape
•• The risk of inadequate human resource management is
now a consolidation of management’s ability to further
mitigate against labour unrest, develop key talent and
attract the appropriate resources to deliver against the
group’s strategy
•• Maintaining cost competitiveness is addressed through
appropriate procurement strategies as well as securing
raw material supply
•• Business continuity is a consolidation of IT systems failure,
catastrophic loss to manufacturing facilities and the
availability of water and electricity.
Risk velocity, which is the time taken for Tiger Brands to feel
the impact of a risk after it materialises, has been introduced
into the risk assessment process as an additional indicator
for management to consider during risk management and
mitigation.
Tiger Brands is currently reviewing its strategy. While risk
management is integral to this process, the work-in-progress
nature of the strategic review precludes linking specific risks
to strategic objectives in this report. In future reports, we will
be able to disclose this detail, with metrics and targets for
key risks.
Approach
Tiger Brands effectively identifies, manages and reports on
risk across the organisation. Risk management activities are
embedded in daily operations through processes, resources
and structures. The group has adopted an enterprise-wide
approach, meaning that every identified material risk is
included in a structured and systematic process of risk
management.
Risk appetite and tolerance
Risk appetite – the level of risk management is prepared to
absorb before mitigating actions are implemented – has
been determined by setting exposure limits at three tiers:
•• Tier 1: any calculated risk exposure that requires no
further management mitigation, ie does not present
a catastrophic threat to Tiger Brands
•• Tier 2: a threshold zone where any risk exposure that
exceeds our risk appetite, but remains within the risk
tolerance, may be acceptable but management must
make a conscious decision about risk tolerance versus
risk mitigation
•• Tier 3: All risk exposure above our risk tolerance will be
considered a significant risk and must be supported by
a comprehensive mitigation plan and timeline for
implementation.
Exposure limits are determined after assessing residual risk.
The risk appetite and tolerance of the group is set by the
risk and sustainability committee and approved by the
board.
Tiger Brands LimitedIntegrated annual report 2016 to strategic objectives in this report. In future reports, we will
be able to disclose this detail, with metrics and targets for
key risks.
Approach
Tiger Brands effectively identifies, manages and reports on
risk across the organisation. Risk management activities are
embedded in daily operations through processes, resources
and structures. The group has adopted an enterprise-wide
approach, meaning that every identified material risk is
included in a structured and systematic process of risk
management.
Risk appetite and tolerance
Risk appetite – the level of risk management is prepared to
absorb before mitigating actions are implemented – has
been determined by setting exposure limits at three tiers:
•• Tier 1: any calculated risk exposure that requires no
further management mitigation, ie does not present
a catastrophic threat to Tiger Brands
•• Tier 2: a threshold zone where any risk exposure that
exceeds our risk appetite, but remains within the risk
tolerance, may be acceptable but management must
make a conscious decision about risk tolerance versus
risk mitigation
•• Tier 3: All risk exposure above our risk tolerance will be
considered a significant risk and must be supported by
a comprehensive mitigation plan and timeline for
implementation.
Exposure limits are determined after assessing residual risk.
The risk appetite and tolerance of the group is set by the
risk and sustainability committee and approved by the
board.
nd review
nitor a
o
M
6
Ensure planned
risk response
actions are
implemented and
remain effective
5
R
i
s
k
r
e
p
o
r
ti
n
g
Inform decisions
and ensure the
Tiger Brands risk
profile is
adequately
managed
R i s k identifi cation
1
Gain a full understanding
of any risk we face that
might create, prevent,
accelerate or delay
achieving group
objectives
4
Proactively managing risks
considered unacceptably
high and that require
additional treatment
Risk response plan n i n g
C
u
rr
e
n
t
c
o
n
t
r
o
l
i
d
e
2
Establish whether
our existing
controls
adequately
mitigate the risk
n
t
i
fi
c
a
t
i
o
n
3
Rank risks in order
of their potential
impact and
likelihood of
occurrence
Prioritise risks
103
This process complements existing risk management
processes and aims to ensure Tiger Brands effectively
identifies, manages and reports on risk across all operations
and all territories. The underlying reporting structure starts at
site level and rolls up into the relevant business unit. After
that, divisional consolidation among business units
culminates in risk reporting at group level.
Governance
The board of directors is ultimately responsible for oversight
of the group’s risk management processes. The risk and
sustainability committee assists the board by ensuring that
the risk management process complies with the relevant
standards and governance requirements in all the group’s
operating territories. Divisional and business unit risk
registers are updated quarterly and the risk and
sustainability committee meets three times in the year.
Senior management in each division and business unit is
responsible for managing risks in its area. Oversight of risk
management at divisional level rests with the relevant
executive committees.
To prioritise risks, each risk is evaluated in terms of
likelihood and impact on an inherent (actual impact) and
residual (after mitigating action) basis. The heat maps on the
following page reflect the significant inherent and residual
risks for Tiger Brands.
Tiger Brands LimitedIntegrated annual report 2016Governance review
Risk management report continued
T
C
A
P
M
I
T
C
A
P
M
I
5
4
3
2
1
5
4
3
2
1
104
TIER 3 INHERENT RISKS
R1
R3
R6
R2
R5
R4
R1 Safety
R2
R3
Human resource
management
Operating
environment
R4 Regulatory compliance
R5 Business continuity
R6 Fraud, theft and crime
1
2
3
4
LIKELIHOOD
TIER 3 RESIDUAL RISKS
R2
R1
R3
R4
R5
R6
R1 Safety
R2
R3
Human resource
management
Operating
environment
R4 Regulatory compliance
R5 Business continuity
R6 Fraud, theft and crime
1
2
3
4
LIKELIHOOD
Tiger Brands LimitedIntegrated annual report 2016
Significant risks
Significant risks are determined by analysing business
unit risks, divisional risks and group risks. The score for
each risk is determined by multiplying the likelihood of
the risk occurring to the impact of the risk to Tiger Brands.
A risk is regarded as significant when its score exceeds
the risk tolerance set by the board. The following risks are
regarded as significant to Tiger Brands:
Safety
Maintaining a safe working environment is non-negotiable
as this supports our commitment to ensuring that the safety of
our employees is a priority. Safety procedures aligned to the
global OHSAS 18001 standard are embedded across all
our manufacturing facilities, with restricted access controls
at all production facilities. The nature of certain businesses
increases the risk of safety to employees. Robust plans are
in place to manage and further mitigate the risk to
employee safety in the long term. The results of annual
independent safety audits are used to inform the
improvement plan for each site. Our health and safety
performance for the review period is on pages 60 to 62.
Human resource management
Employees are at the centre of Tiger Brands’ success, and
our ability to effectively manage human capital is integral
to the sustainability of our business. Failing to develop a
high-performance culture by setting clear expectations,
defining employees’ roles, creating a trusting environment,
and encouraging individual growth and development will
have a detrimental effect on the group’s performance in a
dynamic environment. An enterprise-wide talent review is
under way and employees with high potential are being
identified by business unit and function. In addition, a
management trainee scheme is being implemented to ensure
the future supply of talent and more holistic and richer
personal development plans for employees are in place.
The group people strategy has been amended to address
human resource-related risks on pages 56 to 59.
Operating environment
As outlined on pages 26 and 27, the operating
environment remains challenging. In addition, volatility in the
South African rand against major foreign currencies will
impact raw material pricing and therefore input costs, which
may not always be recovered through price increases. This
risk is managed under various strategies. Tiger Brands has a
centralised procurement model to capitalise on economies
of scale and efficiently manage the procurement of price-
sensitive raw materials. Evaluating brand and product mix
leads the decision-making process of all customer and
marketing teams to ensure consumer needs based on
prevailing trends and behaviour are continually addressed.
Product innovation is another important driver for every
brand and appropriate funding has been allocated to
achieve this objective.
Regulatory compliance
Tiger Brands is committed to complying with all legislative
and regulatory requirements. In South Africa, we are
complying with new salt legislation (reducing the salt content
in several foodstuffs) by making appropriate changes to
internal processes. We will take a similar approach if the
proposed sugar tax is legislated. Ongoing training
programmes raise awareness about compliance and ensure
guidance is continuously available to all staff. We have
also established a governance forum to facilitate the process
of adapting to the legal environment through policy
implementation. This forum is attended by senior
management from across the business, information
technology, group legal and internal audit.
Business continuity
Loss of life, reputational damage and business performance
can all be compromised by a catastrophic event or
unplanned disruption. To manage this risk holistically and
systematically, a formal business continuity management
process is being piloted at our largest groceries
manufacturing site, and will be rolled out across the group
in FY17. Presently, we manage this risk with appropriate
group insurance cover, reviewed annually, and disaster
recovery plans that include replicating core business
applications and services. Maintenance and support
services agreements are in place with key vendors.
Risk, control and environmental audits are performed by an
external specialist annually. The results of this review are
used to improve business continuity planning and disaster
recovery processes. Comprehensive preventative
maintenance plans are in place and regularly reviewed at
all manufacturing sites to ensure a continuous supply of
product to consumers. Power-generating capacity has been
105
Tiger Brands LimitedIntegrated annual report 2016Governance review Risk management report continued
installed to cover key manufacturing processes where
applicable, and exposure to the loss of power generation at
all facilities is regularly reviewed both at site level and head
office from a centralised perspective. Our energy and
carbon emissions strategies are set out on pages 74 to 79.
Fraud, theft and crime
Fraud, theft and crime are realities of doing business.
Following previous incidents, our internal controls have been
reviewed and significantly improved to continuously guard
against incidents of fraud and crime through employee
awareness campaigns, strict access control enforcement at
all our facilities, and working with the local police to assist
in investigating syndicated crime. In addition, an anti-
bribery and corruption policy has been implemented and
employees are required to acknowledge compliance
annually. The Tiger Brands ethics line is available to all
employees, suppliers and customers to confidentially report
unethical business practices without fear or victimisation.
The ethics committee independently validates the effective
finalisation of all reports. Fraud risk registers have been
documented for each business unit. Key controls to mitigate
fraud risks are identified, and where controls are assessed
as inadequate, they have been improved. We have also
invested in technology to manage and remediate access
control violations.
106
Tiger Brands LimitedIntegrated annual report 2016 Preparation of annual financial statements
Annual
financial
statements
The preparation of the annual financial statements for the year ended 30 September 2016, which appear on pages 33 to
37, 100 and 101 of the integrated annual report and pages 109, 110 to 186 of the annual financial statements, has been
supervised by Noel Doyle, chief financial officer of Tiger Brands Limited.
Responsibility for annual financial statements
The directors of Tiger Brands Limited are responsible for the integrity of the annual financial statements of the company,
consolidated subsidiaries, associates and the objectivity of other information presented in the integrated annual report.
The fulfilment of this responsibility is discharged through the establishment and maintenance of sound management and accounting
systems, the maintenance of an organisation structure which provides for delegation of authority and establishes clear responsibility,
together with the constant communication and review of the operations’ performance measured against approved plans and
budgets.
Management and employees operate in terms of a code of ethics approved by the board. The code requires compliance with
all applicable laws and maintenance of the highest integrity in the conduct of all aspects of the business.
The annual financial statements, prepared in terms of International Financial Reporting Standards, are audited by our auditors in
conformity with International Standards on Auditing.
An audit committee of the board of directors, composed entirely of independent non-executive directors, meets periodically with
our internal and external auditors and management to discuss internal accounting controls and auditing and financial reporting
matters. The auditors have unrestricted access to the audit committee.
The directors have no reason to believe that the group’s operations will not continue as going concerns in the year ahead, other
than where closures or discontinuations are anticipated, in which case provision is made to reduce the carrying cost of the
relevant assets to net realisable value.
107
Directors’ approval
The annual financial statements for the year ended 30 September 2016, which appear on pages 33 to 37, 100 and 101 of
the integrated annual report and pages 109, 110 to 186 of the annual financial statements, which are in agreement with the
books of account at that date were approved by the board of directors on 22 November 2016 and signed on its behalf by:
André Parker
Chairman
22 November 2016
Lawrence Mac Dougall
Chief executive officer
Certificate by company secretary
Certified in terms of section 88(2)(e) that the company has filed required returns and notices in terms of the Companies Act
No 71 of 2008, and that all such returns and notices appear to be true, correct and up to date.
T Naidoo
Company secretary
22 November 2016
Tiger Brands LimitedAnnual financial statements 2016
Report of the independent auditor
To the shareholders of Tiger Brands Limited
Report on the consolidated and separate financial
statements
We have audited the consolidated and separate financial
statements of Tiger Brands Limited set out on pages 35 and
36 (segment report), pages 110 to 186, which comprise
the statements of financial position as at 30 September 2016,
and the income statements, statements of comprehensive
income, statements of changes in equity and statements of
cash flows for the year then ended, and the notes,
comprising a summary of significant accounting policies
and other explanatory information.
Directors’ responsibility for the consolidated and
separate financial statements
The company’s directors are responsible for the preparation
and fair presentation of these consolidated and separate
financial statements in accordance with International
Financial Reporting Standards and the requirements of the
Companies Act of South Africa, and for such internal control
as the directors determine is necessary to enable the
preparation of consolidated and separate financial
statements that are free from material misstatement, whether
due to fraud or error.
Auditor’s responsibility
Our responsibility is to express an opinion on these
consolidated and separate financial statements based on
our audit. We conducted our audit in accordance with
International Standards on Auditing. Those standards require
that we comply with ethical requirements and plan and
perform the audit to obtain reasonable assurance about
whether the consolidated and separate financial statements
are free from material misstatement. An audit involves
performing procedures to obtain audit evidence about the
amounts and disclosures in the financial statements. The
procedures selected depend on the auditor’s judgement,
including the assessment of the risks of material misstatement
of the financial statements, whether due to fraud or error. In
making those risk assessments, the auditor considers internal
control relevant to the entity’s preparation and fair
presentation of the financial statements in order to design
audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the
effectiveness of the entity’s internal control. An audit also
includes evaluating the appropriateness of accounting
108
policies used and the reasonableness of accounting
estimates made by management, as well as evaluating the
overall presentation of the financial statements. We believe
that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated and separate financial
statements present fairly, in all material respects, the
consolidated and separate financial position of Tiger Brands
Limited as at 30 September 2016, and its consolidated
and separate financial performance and consolidated and
separate cash flows for the year then ended in accordance
with International Financial Reporting Standards, and the
requirements of the Companies Act of South Africa.
Other reports required by the Companies Act
As part of our audit of the consolidated and separate
financial statements for the year ended 30 September
2016, we have read the directors’ report, the audit
committee’s report and the company secretary’s certificate
for the purpose of identifying whether there are material
inconsistencies between these reports and the audited
consolidated and separate financial statements. These
reports are the responsibility of the respective preparers.
Based on reading these reports we have not identified
material inconsistencies between these reports and the
audited consolidated and separate financial statements.
However, we have not audited these reports and
accordingly do not express an opinion on these reports.
Report on other legal and regulatory requirements
In terms of the IRBA Rule published in the Government
Gazette Number 39475 dated 4 December 2015, we
report that Ernst & Young Inc. has been the auditor of Tiger
Brands Limited for 13 years.
Ernst & young Inc.
Director – Warren Kinnear
Registered Auditor
Chartered Accountant (SA)
102 Rivonia Road
Sandton
Johannesburg
22 November 2016
Tiger Brands LimitedAnnual financial statements 2016 Statutory information
Authorised and issued share capital
Details of authorised and issued share capital are set out
in note 22 on page 146 of the annual financial statements
and in the statement of changes in equity on pages 116 to
118.
Share purchase and share option schemes
Tiger Brands (1985) Share Option Scheme
Details of the directors’ shareholding (direct and indirect
beneficial) are reflected below.
2016
2015
Direct
number
of shares
Indirect
number
of shares
Direct
number
of shares
Indirect
number
of shares
Name of director
SL Botha
1 221
–
1 221
–
Shares under option at the
beginning of the year
Exercised and paid in full
Shares under option at the
end of the year
2016
2015
–
–
–
106 600
(106 600)
–
Subsidiaries, associates and investments
Financial information concerning the principal subsidiaries,
associates and investments of Tiger Brands Limited is set out
in Annexure A and B of the annual financial statements.
Dividends
Details of dividends declared and paid during the year
are outlined in note 12 to the annual financial statements.
Major shareholders
Details of the registered and beneficial shareholders of the
company are outlined on page 187.
Directors
The following movements in the directorate were recorded
during the year under review:
Resignations
31 December 2015
31 July 2016
Peter Matlare
Funke Ighodaro
Appointments
10 May 2016
Lawrence Mac Dougall
All retiring directors are eligible and offer themselves for
re-election.
The names of the directors who presently hold office are
set out on pages 11 and 12 of the integrated annual
report.
No director holds 1% or more of the ordinary shares of the
company. The directors of the company beneficially hold,
directly and indirectly, 1 221 ordinary shares of its issued
ordinary shares.
The register of interests of directors in shares of the company
is available to the members on request.
There were no changes to the direct and indirect beneficial
interests of directors from 30 September 2016 to the date
the integrated annual report was released.
American Depository Receipt facility
With effect from 9 September 1994, a sponsored
American Depository Receipt (ADR) facility was established.
This ADR facility is sponsored by the Bank of New York
Mellon and details of the administrators are reflected under
administration on page 190.
Special resolutions
Special resolutions were passed on 22 June 2016
relating to the adoption of the revised Memorandum of
Incorporation (MoI) by subsidiary companies.
No special resolutions were passed during the year under
review that would have affected the capital structure,
borrowing powers or any other material matter that affects
the understanding of the group were passed by subsidiary
companies during the year under review.
109
Retirements funds
Details in respect of the retirement funds of the group are
set out in note 30 and 31 and Annexure E and F of the
annual financial statements.
Insurance and risk management
The group’s practice regarding insurance includes an annual
assessment, in conjunction with the group’s insurance
brokers, of the risk exposure relative to assets and possible
liabilities arising from business transactions. In addition, the
group’s insurance programme is monitored by the risk and
sustainability committee.
All risks are considered to be adequately covered, except
for political risks in the case of which as much cover as is
reasonably available has been arranged. In respect of the
group’s assets programme, cover of R6 billion per individual
loss is purchased. Self-insurance programmes are in
operation covering primary levels of risk at a cost more
advantageous than open-market premiums. Regular risk
management audits are conducted by the group’s risk
management consultants, whereby improvement areas
are identified and resultant action plans implemented
accordingly. Assets are insured at current replacement
values.
Tiger Brands LimitedAnnual financial statements 2016Annual financial statements
Income statements
for the year ended 30 September 2016
COMPANy
GROUP
2016
2015
Restated*^
(R’million)
Notes
2016
2015
Restated*#^
2 471,0
2 235,3
Continuing operations
Revenue
Turnover
Cost of sales
Gross profit
Sales and distribution expenses
Marketing expenses
(1,8)
(1,8)
–
1,2
4,6 Other operating (expenses)/income
4,6
(678,8)
(106,9)
Operating income/(loss) before impairments
and abnormal items
Impairments
Abnormal items
(0,6)
110,7
2 343,4
(781,1)
123,3
2 099,3
Operating income/(loss) after impairments
and abnormal items
Net (finance costs)/interest received
Investment income
Income from associated companies
110
2 453,5
(48,1)
1 441,5
(42,5)
Profit before taxation
Taxation
2
3
4
5
6
8
9
16
10
31 737,5
28 690,1
31 697,5
(21 498,6)
10 198,9
(3 612,1)
(866,0)
(1 566,7)
28 660,0
(18 980,5)
9 679,5
(3 425,7)
(809,5)
(1 418,6)
4 154,1
(334,8)
11,0
3 830,3
(182,6)
6,3
860,7
4 514,7
(1 220,6)
4 025,7
(319,8)
(18,7)
3 687,2
(204,0)
0,8
602,8
4 086,8
(977,3)
2 405,4
1 399,0
Profit for the year from continuing operations
3 294,1
3 109,5
Discontinued operation
Profit/(loss) for the year from discontinued
operation
Profit for the year
Attributable to:
Owners of the parent
– Continuing operations
– Discontinued operation
Non-controlling interests
– Continuing operations
– Discontinued operation
2 405,4
1 399,0
2 405,4
1 399,0
Basic earnings per ordinary share (cents)
– Continuing operations
– Discontinued operation
Diluted basic earnings per ordinary share (cents)
– Continuing operations
– Discontinued operation
Headline earnings per share is disclosed in
note 11.
35
27,6
(2 167,5)
3 321,7
942,0
3 305,6
3 261,2
44,4
16,1
32,9
(16,8)
3 321,7
2 034,4
2 007,1
27,3
1 991,5
1 964,8
26,7
1 727,1
3 121,4
(1 394,3)
(785,1)
(11,9)
(773,2)
942,0
1 068,1
1 930,4
(862,3)
1 050,9
1 899,3
(848,4)
* The comparatives have been restated for the retrospective reclassification relating to the treatment of foreign exchange profits and losses
on foreign cash balances and loans of a funding nature previously included in operating income/(loss) and now reclassified to net finance
costs. Refer to note 7 for further details.
# Restated as required by IFRS 5 in relation to the treatment of Tiger Branded Consumer Goods plc (TBCG) as a discontinued operation.
^ Historically, impairments have been disclosed as part of total abnormal items on the face of the income statement with a supporting note
specifying the respective detail. For better clarity, impairments are now disclosed separately on the face of the income statement, with the
comparative information being restated accordingly.
Tiger Brands LimitedAnnual financial statements 2016
Statements of comprehensive income
for the year ended 30 September 2016
COMPANy
GROUP
2016
2015
(R’million)
2 405,4
1 399,0
(0,7)
(1,6)
(0,7)
(1,6)
Profit for the year
Other comprehensive (loss)/income, net of
tax
Net (loss)/gain on hedge of net investment in
foreign operation1
Foreign currency translation (FCTR)
adjustments1, 2
Share of associates other comprehensive
income and FCTR1
Net (loss)/gain on cash flow hedges1
Net gain/(loss) on available-for-sale
financial assets1, 2
Remeasurement raised in terms of IAS 19R3
Tax effect
2 404,7
1 397,4
Total comprehensive income for the year,
net of tax
2 404,7
1 397,4 Owners of the parent
Non-controlling interests
Attributable to:
2 404,7
1 397,4
Note
2016
3 321,7
2015
942,0
(86,9)
299,2
(42,9)
(147,7)
127,7
(45,6)
15,7
(1,2)
7,1
7,6
90,5
281,7
7,0
(91,3)
(14,5)
18,2
3 234,8
1 241,2
3 252,4
(17,6)
3 234,8
1 995,1
(753,9)
1 241,2
24
1 Items that may be subsequently reclassified to profit or loss including the related tax effects.
2 During the current year, R99,1 million (2015: Rnil) of the foreign currency translation reserve relating to TBCG, as well as R19,4 million
(2015: R95,0 million) on the available-for-sale financial asset derecognised in terms of the Black Managers Trust Participation Rights Scheme
were reclassified to profit or loss.
3 Comprises a net actuarial gain of R6,5 million (2015: net actuarial gain of R6,9 million) and unrecognised loss due to asset ceiling of
R7,7 million (2015: R21,4 million).
111
Tiger Brands LimitedAnnual financial statements 2016Annual financial statements
Statements of financial position
at 30 September 2016
COMPANy
GROUP
2016
2015
(R’million)
Notes/
Annexures
2016
2015
ASSETS
Non-current assets
Property, plant and equipment
Goodwill
Intangible assets
2 931,5
2 686,7
2 931,5
2 606,8
Interest in subsidiary companies
Amounts owed by subsidiaries
4 033,1
1 388,7
2 065,6
578,8
17,2
830,2
48,6
499,5
282,1
112
Investments
Investments in associated companies
3 872,9
1 388,7
2 030,7 Other investments
Loans
453,5
18,1
645,3
18,7
499,5
127,1
Deferred taxation asset
Current assets
Inventories
Trade and other receivables
Amounts owed by subsidiaries
Cash and cash equivalents
10 498,7
10 074,6
Total assets
13
14
14
A
34
16
17
18
19
20
21
34
9 821,0
148,5
2 941,6
6 255,0
9 214,0
EqUITy AND LIABILITIES
Issued capital and reserves
148,5 Ordinary share capital and share premium
22
2 942,3 Non-distributable reserves
5 680,6
Accumulated profits
Tiger Brands Limited shares held by
subsidiary
Tiger Brands Limited shares held by
empowerment entities
Share-based payment reserve
Non-controlling interests
475,9
442,6
9 821,0
9 214,0
Total equity
508,0
556,7 Non-current liabilities
Deferred taxation liability
Provision for post-retirement medical aid
Long-term borrowings
Amounts owed to subsidiaries
Current liabilities
Trade and other payables
Provisions
Taxation
Short-term borrowings
Amounts owed to subsidiaries
98,5
458,2
303,9
22,4
–
194,9
86,6
51,0
457,0
169,7
21,7
–
47,2
100,8
23
23
29
19
31
27
34
25
26
27
34
4 541,9
2 098,6
1 841,9
4 641,2
2 239,1
1 993,9
4 904,8
4 732,7
168,9
3,2
42,6
11 099,1
5 769,8
4 592,3
4 312,3
4 150,7
158,2
3,4
50,5
11 617,3
5 670,0
4 895,7
737,0
1 051,6
24 528,9
24 854,3
15 547,6
148,5
3 046,1
14 373,4
13 830,1
148,5
2 644,1
13 152,9
(718,0)
(718,0)
(1 790,9)
488,5
486,3
(1 820,9)
423,5
(52,5)
16 033,9
13 777,6
1 988,8
253,5
666,0
1 069,3
6 506,2
4 157,1
525,3
128,1
1 695,7
2 059,2
200,3
643,1
1 215,8
9 017,5
4 796,8
523,3
73,4
3 624,0
10 498,7
10 074,6
Total equity and liabilities
24 528,9
24 854,3
Tiger Brands LimitedAnnual financial statements 2016 Statements of cash flows
for the year ended 30 September 2016
COMPANy
2016
(0,6)
8,4
7,8
127,6
(16,9)
2 116,9
201,7
(57,9)
2 379,2
(1 831,0)
2015
Restated* (R’million)
(5,1) Cash operating profit/(loss)
8,7 Working capital changes
3,6 Cash generated from operations
136,0
(12,7)
1 916,2
Interest received and income from investments
Finance costs
Dividends received from associate companies
and subsidiaries
173,9 Dividends received from empowerment entities
(52,4)
Taxation paid
2 164,6 Cash available from operations
(1 785,6) Dividends paid
548,2
379,0 Net cash inflow from operating activities
Purchase of property, plant and equipment
Net cash on disposal of subsidiary
(refer note 35)
Acquisition of business (refer note 36)
Black Managers Trust (BMT) shares exercised
Proceeds from disposal of property, plant and
equipment
Decrease/(increase) in loans to subsidiaries,
associates and others
Investment acquired
Proceeds received on insurance claims
(193,4)
–
(116,5)
(525,4)
–
Proceeds received on empowerment available-
for-sale financial assets
0,4
(193,4)
(641,5)
Net cash inflow/(outflow) from investing
activities
354,8
–
(195,2)
–
(262,5)
Net cash inflow/(outflow) before financing
activities
9,1 Proceeds from issue of share capital
F
–
110,5
Long and short-term borrowings repaid
Long and short-term borrowings raised
(195,2)
119,6
Net cash (outflow)/inflow from financing
activities
159,6
(4,6)
127,1
282,1
(142,9)
Net increase/(decrease) in cash and cash
equivalents
– Effect of exchange rate changes
270,0
Cash and cash equivalents at the beginning
of the year
127,1 Cash and cash equivalents at the end of the year
Notes
A
B
C
D
E
GROUP
2016
4 836,8
(604,0)
4 232,8
26,7
(324,0)
2015
Restated*
4 396,4
(811,6)
3 584,8
17,1
(413,8)
406,4
326,0
(1 107,4)
3 234,5
(1 661,1)
1 573,4
(945,4)
1 075,7
(69,7)
38,7
(1 158,8)
2 355,3
(1 643,0)
712,3
(881,6)
–
–
285,7
15,4
53,7
113
0,2
–
–
–
–
(525,4)
7,5
4,2
114,9
(1 055,9)
1 688,3
–
(573,5)
11,3
(343,6)
9,1
(955,1)
1 022,0
(562,2)
76,0
1 126,1
125,7
(267,6)
66,7
* The comparatives have been restated for the retrospective reclassification relating to the treatment of foreign exchange profits and losses on
foreign cash balances and loans of a funding nature previously included in operating income/(loss) and now reclassified to net finance costs.
Refer to note 7 for further details.
G
H
(2 126,8)
(1 925,9)
(875,0)
(2 126,8)
Tiger Brands LimitedAnnual financial statements 2016Annual financial statements Notes to the cash flow statements
for the year ended 30 September 2016
COMPANy
2016
2015
Restated*
(R’million)
A
B
C
(1,8)
4,6
1,2
(0,6)
9,1
(0,7)
8,4
(9,7)
(5,1)
8,4
0,3
8,7
–
(1,8)
(48,1)
(42,5)
0,9
(8,1)
(10,7)
(57,9)
–
(52,4)
114
Cash operating profit/(loss)
Operating profit/(loss) before abnormal
items and impairments – continuing
operations
Add back:
Depreciation
Share-based payment expenses
Provision for post-retirement medical aid
Amortisation
Loss on disposal of plant, equipment
and vehicles
Other non-cash items
GROUP
2016
2015
Restated*
4 154,1
3 633,2
558,8
88,9
22,9
11,9
0,2
–
662,1
29,2
16,7
23,8
4,4
27,0
Cash operating profit/(loss)
4 836,8
4 396,4
Working capital changes
Increase in inventories
(Increase)/decrease in trade and other
receivables
Increase/(decrease) in trade and other
payables
Working capital changes
Taxation paid
Amounts payable at the beginning
of the year, net
Income statement charge – continuing
operations
Income statement charge – discontinued
operation
Deferred tax
Exchange rate difference and other
non-cash items
Amounts payable/(receivable) at the
end of the year, net
(518,7)
(917,9)
(282,0)
(77,4)
196,7
(604,0)
183,7
(811,6)
(38,9)
(193,5)
(1 220,6)
(977,3)
–
67,1
11,5
73,5
(230,9)
201,0
3,0
38,9
Total taxation paid
(1 107,4)
(1 158,8)
* The comparatives have been restated for the retrospective reclassification relating to the treatment of foreign exchange profits and losses
on foreign cash balances and loans of a funding nature previously included in operating income/(loss) and now reclassified to net finance
costs. Refer to note 7 for further details.
Tiger Brands LimitedAnnual financial statements 2016 COMPANy
GROUP
2016
2015
Restated*
(R’million)
Note
2016
2015
Restated*
(1 831,0)
(1 785,6)
(1 831,0)
(1 785,6)
–
–
9,1
9,1
127,1
270,0
–
–
127,1
270,0
282,1
127,1
–
282,1
–
127,1
D
E
F
G
H
Dividends paid
Per statement of changes in equity
Dividends paid to outside shareholders
Total dividends paid
Purchase of property, plant,
equipment
Replacement
Expansion
Increase in shareholder funding
Proceeds from issue of share capital
Cash and cash equivalents at the
beginning of the year
Cash resources
Short-term borrowings regarded as cash
and cash equivalents
Cash and cash equivalents at the
end of the year
Cash resources
Short-term borrowings regarded as
cash and cash equivalents
(1 629,9)
(31,2)
(1 574,6)
(68,4)
(1 661,1)
(1 643,0)
(638,9)
(306,5)
(945,4)
–
–
(677,8)
(203,8)
(881,6)
9,1
9,1
1 051,6
1 160,3
27.5
(3 178,4)
(3 086,2)
(2 126,8)
(1 925,9)
115
737,0
1 051,6
27.5
(1 612,0)
(3 178,4)
(875,0)
(2 126,8)
* The comparatives have been restated for the retrospective reclassification relating to the treatment of foreign exchange profits and losses
on foreign cash balances and loans of a funding nature previously included in operating income/(loss) and now reclassified to net finance
costs. Refer to note 7 for further details.
Tiger Brands LimitedAnnual financial statements 2016Annual financial statements Statements of changes in equity
for the year ended 30 September 2016
Non-distributable reserves
(R’million)
GROUP
Balance at 1 October 2014
Profit for the year
Other comprehensive income for the year3
Total comprehensive income
Issue of share capital and premium
Subsidiary – legal reserve transfer
Transfers between reserves
Share-based payment
Dividends on ordinary shares
Total dividends
Less: Dividends on empowerment shares
Purchase of Tiger shares by empowerment
entity
Sale of shares by empowerment entity1
Share
capital
and
premium
Share
of net
earnings
of associates
139,4
–
–
1 483,4
–
–
–
9,1
–
–
–
–
–
–
–
–
–
–
–
276,8
–
–
–
–
–
–
(7,2)
–
–
–
–
3,3
–
–
–
–
–
–
–
Balance at 30 September 2015
148,5
1 760,2
(3,9)
116
Profit for the year
Other comprehensive income for the year2, 3
Total comprehensive income
Disposal of subsidiary
Transfers between reserves
Share-based payment5
Dividends on ordinary shares
Total dividends
Less: Dividends on empowerment shares
Sale of shares by empowerment entity1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
454,3
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Balance at 30 September 2016
148,5
2 214,5
(3,9)
Refer to note:
22
16
Other
capital
reserves4
Cash flow
hedge
reserve
Available-
for-sale
reserve
Foreign
currency
translation
Accumulated
empowerment
reserve
profits
entities
payment
reserve
and
Share-based
Total
attributable
to owners
of the parent
Non-
controlling
interests
Total
equity
Shares
held by
subsidiary
8,4
–
7,0
7,0
–
–
–
–
–
–
–
–
–
15,4
–
(45,5)
(45,5)
–
–
–
–
–
–
–
(30,1)
151,6
–
(88,2)
(88,2)
–
–
–
–
–
–
–
–
–
63,4
–
10,6
10,6
–
–
–
–
–
–
–
74,0
450,1
13 198,8
(2 671,9)
424,8
13 177,4
769,8
13 947,2
–
1 727,1
358,9
358,9
(9,7)
1 717,4
–
(3,3)
(185,4)
–
(1 574,6)
(1 732,9)
158,3
–
3 305,6
(17,4)
(17,4)
(0,9)
3 304,7
(454,3)
–
–
(1 629,9)
(1 777,7)
147,8
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(91,4)
90,1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
65,0
1 727,1
268,0
1 995,1
9,1
–
–
90,1
(1 574,6)
(1 732,9)
158,3
(71,0)
204,0
3 305,6
(53,2)
3 252,4
–
–
65,0
(1 629,9)
(1 777,7)
147,8
30,0
(785,1)
31,2
942,0
299,2
(753,9)
1 241,2
–
–
–
–
–
–
(19,4)
(19,4)
(49,0)
16,1
(33,7)
(17,6)
587,6
–
–
(19,7)
(19,7)
–
(11,5)
9,1
–
–
90,1
(1 594,0)
(1 752,3)
158,3
(71,0)
155,0
3 321,7
(86,9)
3 234,8
587,6
–
65,0
(1 649,6)
(1 797,4)
147,8
18,5
–
–
(71,0)
204,0
809,0
13 152,9
(2 538,9)
423,5
13 830,1
(52,5)
13 777,6
791,6
14 373,4
(2 508,9)
488,5
15 547,6
486,3
16 033,9
–
30,0
23
29
1 Relates to the exercising of options vested post the December 2014 lock-in period in terms of the Black Managers Participation Rights
Scheme (BMT).
2 During the current period, R99,1 million of the FCTR relating to TBCG was reclassified to profit and loss.
3 The other comprehensive income for the FCTR includes the amounts related to the associates of R127,7 million (2015: R281,7 million).
4 Included in other capital reserves are legal reserve transfers of African subsidiaries due to statute in the respective foreign countries.
5 Included in the movement of the share-based payment are options exercised amounting to R5,9 million (2015: Rnil).
Tiger Brands LimitedAnnual financial statements 2016 Non-distributable reserves
Share
capital
and
Share
of net
earnings
premium
of associates
Other
capital
reserves4
Cash flow
Available-
hedge
reserve
for-sale
reserve
Foreign
currency
translation
reserve
Accumulated
profits
Share-based
payment
reserve
Total
attributable
to owners
of the parent
Non-
controlling
interests
Shares
held by
subsidiary
and
empowerment
entities
(2 671,9)
–
–
–
–
–
–
–
–
–
–
13 198,8
1 727,1
(9,7)
1 717,4
–
(3,3)
(185,4)
–
(1 574,6)
(1 732,9)
158,3
450,1
–
358,9
358,9
–
–
–
–
–
–
–
–
–
424,8
–
–
–
–
–
(91,4)
90,1
–
–
–
13 177,4
1 727,1
268,0
1 995,1
9,1
–
–
90,1
(1 574,6)
(1 732,9)
158,3
Total
equity
13 947,2
942,0
299,2
1 241,2
9,1
–
–
90,1
(1 594,0)
(1 752,3)
158,3
(71,0)
155,0
769,8
(785,1)
31,2
(753,9)
–
–
–
–
(19,4)
(19,4)
–
–
(49,0)
–
–
(71,0)
204,0
–
–
(71,0)
204,0
Balance at 30 September 2015
148,5
1 760,2
(3,9)
809,0
13 152,9
(2 538,9)
423,5
13 830,1
(52,5)
13 777,6
–
(17,4)
(17,4)
–
–
–
–
–
–
–
3 305,6
(0,9)
3 304,7
–
(454,3)
–
(1 629,9)
(1 777,7)
147,8
–
–
–
–
–
–
–
–
–
–
30,0
–
–
–
–
–
65,0
–
–
–
–
3 305,6
(53,2)
3 252,4
–
–
65,0
(1 629,9)
(1 777,7)
147,8
30,0
16,1
(33,7)
(17,6)
587,6
–
–
(19,7)
(19,7)
–
(11,5)
3 321,7
(86,9)
3 234,8
587,6
–
65,0
(1 649,6)
(1 797,4)
147,8
18,5
117
Balance at 30 September 2016
148,5
2 214,5
(3,9)
(30,1)
74,0
791,6
14 373,4
(2 508,9)
488,5
15 547,6
486,3
16 033,9
22
16
23
29
(R’million)
GROUP
Balance at 1 October 2014
Profit for the year
Other comprehensive income for the year3
Total comprehensive income
Issue of share capital and premium
Subsidiary – legal reserve transfer
Transfers between reserves
Share-based payment
Dividends on ordinary shares
Total dividends
Less: Dividends on empowerment shares
Purchase of Tiger shares by empowerment
entity
Sale of shares by empowerment entity1
Profit for the year
Other comprehensive income for the year2, 3
Total comprehensive income
Disposal of subsidiary
Transfers between reserves
Share-based payment5
Dividends on ordinary shares
Total dividends
Less: Dividends on empowerment shares
Sale of shares by empowerment entity1
139,4
1 483,4
(7,2)
8,4
–
7,0
7,0
151,6
–
(88,2)
(88,2)
3,3
276,8
9,1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
454,3
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
15,4
–
(45,5)
(45,5)
63,4
–
10,6
10,6
Refer to note:
Scheme (BMT).
1 Relates to the exercising of options vested post the December 2014 lock-in period in terms of the Black Managers Participation Rights
2 During the current period, R99,1 million of the FCTR relating to TBCG was reclassified to profit and loss.
3 The other comprehensive income for the FCTR includes the amounts related to the associates of R127,7 million (2015: R281,7 million).
4 Included in other capital reserves are legal reserve transfers of African subsidiaries due to statute in the respective foreign countries.
5 Included in the movement of the share-based payment are options exercised amounting to R5,9 million (2015: Rnil).
Tiger Brands LimitedAnnual financial statements 2016Annual financial statements Statements of changes in equity continued
for the year ended 30 September 2016
Non-distributable reserves
Share
capital
and
premium
Non
distribu-
table
reserves
Other
capital
reserves
Cash
flow
hedge
reserve
Available-
for-sale
reserve
Accumu-
lated
profits
Share-
based
payment
reserve
Total
attribu-
table to
owners of
the parent
139,4 2 918,6
19,3
–
6,0
6 067,2
1 399,0
398,3
9 548,8
1 399,0
–
9,1
–
–
–
–
–
–
–
–
–
–
148,5 2 918,6
19,3
–
–
–
–
–
–
–
–
–
–
–
–
148,5 2 918,6
19,3
(1,6)
(1,6)
(1,6)
1 399,0
–
1 397,4
–
–
–
–
(1 785,6)
–
44,3
9,1
44,3
(1 785,6)
4,4
5 680,6
442,6
9 214,0
2 405,4
2 405,4
(0,7)
(0,7)
(0,7)
2 405,4
–
2 404,7
–
–
–
–
–
(1 831,0)
–
33,3
–
–
33,3
(1 831,0)
3,7
6 255,0
475,9
9 821,0
–
–
–
–
–
–
–
–
–
–
(R’million)
COMPANy
Balance at 1 October 2014
Profit for the year
Other comprehensive
expense for the year
Total comprehensive income
Issue of share capital and
premium
Share-based payment
Dividends on ordinary shares
Balance at
30 September 2015
Profit for the year
Other comprehensive
income for the year
Total comprehensive income
Issue of share capital and
premium
Share-based payment
Dividends on ordinary shares
Balance at
30 September 2016
118
Tiger Brands LimitedAnnual financial statements 2016 Notes to the financial statements
for the year ended 30 September 2016
Accounting policies
Corporate information
The consolidated financial statements of Tiger Brands
Limited (the company) and the Tiger Brands group (the
group) for the year ended 30 September 2016 were
authorised for issue in accordance with a resolution of the
directors on 22 November 2016. Tiger Brands Limited is
incorporated and domiciled in South Africa, where the
shares are publicly traded.
Basis of preparation
The consolidated financial statements have been prepared
on the historical cost basis, except for items measured at
fair value as indicated below. The consolidated financial
statements are stated in rand millions.
Statement of compliance
The consolidated financial statements have been prepared
in accordance with International Financial Reporting
Standards (IFRS), IFRIC Interpretations (IFRS Interpretations
Committee) and the Companies Act No 71 of 2008.
Basis of consolidation
The consolidated financial statements include the financial
statements of the company and its subsidiaries (as well as
structured entities controlled by the group or company). The
financial statements of the subsidiaries are prepared for the
same reporting period using consistent accounting policies.
Where the financial year end of a subsidiary is not
coterminous with that of the group or the accounting policies
adopted by the subsidiary differ from the group’s accounting
policies, the financial statements of the subsidiary are
adjusted in accordance with the group’s accounting policies
and year end.
In assessing control (direct or de facto control) the following
is considered:
•• Power over the investee
•• Exposure, or rights, to variable returns from its involvement
with the investee
•• The ability to use its power over the investee to affect the
amount of the investor’s returns.
A change in the ownership interest of a subsidiary, without
a change of control, is accounted for as an equity
transaction.
Losses are attributed to the non-controlling interest even
if that results in a deficit balance.
If the group loses control over a subsidiary, it:
•• Derecognises the assets (including goodwill) and liabilities
of the subsidiary
•• Derecognises the carrying amount of any non-controlling
interest
•• Recognises the fair value of the consideration received
•• Recognises the fair value of any investment retained
•• Recognises any surplus or deficit in profit or loss
•• Reclassifies to the income statement the amounts
recognised in other comprehensive income in relation to
the subsidiary on the same basis as would be required if
the parent had directly disposed of the related assets and
liabilities.
Foreign currencies
Foreign currency transactions
The consolidated financial statements are presented in
South African rand, which is the company’s functional and
presentation currency. Each foreign entity in the group
determines its own functional currency. Transactions in
foreign currencies are initially recorded in the functional
currency at the rate of exchange ruling at the date of the
transaction.
Translation of foreign currency transactions
Monetary assets and liabilities denominated in foreign
currencies are retranslated at the functional currency rate of
exchange ruling at the reporting date. Exchange differences
are taken to profit or loss, except for differences arising on
foreign currency borrowings that provide a hedge against a
net investment in a foreign entity. These are taken directly to
other comprehensive income, in the consolidated annual
financial statements, until the disposal of the net investment,
at which time they are recognised in profit or loss. Tax
charges and credits attributable to such exchange
differences are also accounted for in other comprehensive
income.
If non-monetary items measured in a foreign currency are
carried at historical cost, the exchange rate used is the rate
applicable at the initial transaction date. If they are carried
at fair value, the rate used is the rate at the date when the
fair value was determined. The gain or loss arising on
retranslation of non-monetary items is treated in line with the
recognition of gain or loss on change in fair value of the
item (ie translation differences on items whose fair value
gain or loss is recognised in other comprehensive income
or profit or loss is also recognised in other comprehensive
income or profit or loss respectively).
Foreign operations
At the reporting date, the assets and liabilities of the foreign
operations are translated into the presentation currency of
the group (rand) at the exchange rate ruling at the reporting
date. The income statement is translated at the weighted
average exchange rate for the year. Exchange differences
are taken directly to a separate component of other
comprehensive income. On disposal of a foreign operation,
the deferred cumulative amount recognised in other
comprehensive income relating to that particular foreign
operation is recognised in the income statement.
Goodwill and fair value adjustments to the carrying amounts
of assets and liabilities arising on the acquisition of a
foreign operation are treated as assets and liabilities of that
foreign operation, and are translated at the closing rate.
119
Tiger Brands LimitedAnnual financial statements 2016Annual financial statements 120
Notes to the financial statements continued
for the year ended 30 September 2016
Interest in group companies
Business combinations
Business combinations are accounted for using the
acquisition method. The value of an acquisition is measured
as the aggregate of the consideration transferred, measured
at acquisition date fair value and the amount of any
non-controlling interest in the acquiree. For each business
combination, the acquirer measures the non-controlling
interest in the acquiree either at fair value or at the
proportionate share of the acquiree’s identifiable net assets.
Acquisition costs incurred are expensed.
If the business combination is achieved in stages, the
acquisition date fair value of the acquirer’s previously held
equity interest in the acquiree is remeasured to fair value
as at the acquisition date through profit or loss.
Any contingent consideration to be transferred by the
acquirer is recognised at fair value at the acquisition date.
Subsequent changes to the fair value of the contingent
consideration which is deemed to be an asset or liability,
are recognised in accordance with IFRS 3.58 where the
acquirer shall account for changes in the fair value of
contingent consideration that are not measurement period
adjustments as follows:
(a) Contingent consideration classified as equity shall not
be remeasured and its subsequent settlement shall be
accounted for within equity
(b) Other contingent consideration that:
(i) is within the scope of IAS 39 shall be measured
at fair value at each reporting date and changes
in fair value shall be recognised in profit or loss
in accordance with that IFRS
(ii) is not within the scope of IAS 39 shall be measured
at fair value at each reporting date and changes
in fair value shall be recognised in profit or loss.
The company carries its investments in subsidiaries and
associate companies at cost less accumulated impairment
losses.
Associates
An associate is an entity over which the group has
significant influence through participation in the financial
and operating policy decisions. The entity is neither a
subsidiary nor a joint arrangement.
Associates are accounted for using the equity method of
accounting. Goodwill relating to an associate is included
in the carrying amount of the investment and is not tested
separately for impairment.
The income statement reflects the group’s share of the
associate’s profit or loss. However, an associate’s losses
in excess of the group’s interest are not recognised. Where
an associate recognises an entry directly in other
comprehensive income, the group in turn recognises its
share in the consolidated other comprehensive income.
Profits and losses resulting from transactions between the
group and associates are eliminated to the extent of the
interest in the underlying associate.
After application of the equity method, each investment is
assessed for indicators of impairment. If applicable, the
impairment is calculated as the difference between the
current carrying value and the higher of its value in use
or fair value less cost of disposal. Impairment losses are
recognised in profit or loss.
Where an associate’s reporting date differs from the
group’s, the associate prepares financial statements as
of the same date as the group. If this is impracticable,
financial statements are used where the date difference is
no more than three months. Adjustments are made for
significant transactions between the relevant dates. Where
the associate’s accounting policies differ from those of the
group, appropriate adjustments are made to conform the
accounting policies.
Segment reporting
The group has reportable segments that comprise the structure
used by the chief operating decision-maker (CODM) to make
key operating decisions and assess performance. The group’s
reportable segments are operating segments that are
differentiated by the activities that each undertakes and the
products they manufacture and market (referred to as business
segments).
The group evaluates the performance of its reportable
segments based on operating profit. The group accounts for
intersegment sales and transfers as if the sales and transfers
were entered into under the same terms and conditions as
would have been entered into in a market-related transaction.
The financial information of the group’s reportable segments
is reported to the CODM for purposes of making decisions
about allocating resources to the segment and assessing its
performance.
A number of segments comprising international entities are
included in the portion of International (including Exports)
as they individually do not meet the qualitative thresholds
indicated in IFRS 8 Operating Segments.
Property, plant and equipment
Property, plant and equipment are stated at cost, excluding
the costs of day-to-day servicing, less accumulated
depreciation and accumulated impairment losses. Expenditure
incurred on major inspection and overhaul, or to replace an
item, is accounted for as separate components if the
recognition criteria are met.
Depreciation is calculated on a straight-line basis, on the
difference between the cost and residual value of an asset,
over its useful life. Depreciation starts when the asset is
available for use. An asset’s residual value, useful life and
depreciation method is reviewed at least at each financial
year end. Any adjustments are accounted for prospectively.
Tiger Brands LimitedAnnual financial statements 2016
Not depreciated
The following useful lives have been estimated:
Freehold land
Freehold buildings
– general purpose
– specialised
Leasehold improvements
40 years
20 – 50 years
Shorter of the lease term
or useful life
Vehicles and computer equipment 3 – 5 years
5 – 15 years
Plant and equipment
An item of property, plant and equipment is derecognised
upon disposal or when no future economic benefits are
expected from its use. Any gain or loss arising on
derecognition of the asset (calculated as the difference
between the net disposal proceeds and the carrying amount
of the asset) is included in profit or loss in the year the asset
is derecognised.
Goodwill and intangible assets
Goodwill
Goodwill is initially measured at cost being the excess of
the consideration transferred over the group’s net identifiable
assets acquired and liabilities assumed. If this consideration
is lower than the fair value of the net assets of the subsidiary
acquired, the difference in profit or loss is recognised as
a “gain on bargain purchase”. Goodwill relating to
subsidiaries is recognised as an asset and is subsequently
measured at cost less accumulated impairment losses.
Goodwill is reviewed annually for impairment, or more
frequently if there is an indicator of impairment. Goodwill is
allocated to cash-generating units expected to benefit from the
synergies of the combination. When the recoverable amount
of a cash-generating unit is less than its carrying amount, an
impairment loss is recognised in profit or loss. The impairment
loss is allocated first to any goodwill assigned to the unit, and
then to other assets of the unit pro rata on the basis of their
carrying values. Impairment losses recognised for goodwill
cannot be reversed in subsequent periods.
Intangible assets
Intangible assets acquired separately are measured on initial
recognition at cost. The cost of an intangible asset acquired
in a business combination is the fair value at the date of
acquisition. Subsequently, intangible assets are carried at
cost less any accumulated amortisation and accumulated
impairment losses. Unless internally generated costs meet the
criteria for development costs eligible for capitalisation in
terms of IAS 38 (refer to research and development costs
accounting policy below), all internally generated intangible
assets are expensed as incurred.
The useful lives of intangible assets are either finite or
indefinite.
Intangible assets with finite lives are amortised over their
useful life and assessed for impairment when there is an
indication that the asset may be impaired.
The amortisation period and method are reviewed at each
financial year end. Changes in the expected useful life or
pattern of consumption of future benefits are accounted for
prospectively.
The following useful lives have been estimated:
Trademarks and other
Customer and supplier-related intangibles
1 – 20 years
5 – 15 years
Intangible assets with indefinite useful lives are not amortised
but are tested annually for impairment either individually or
at the cash-generating level. The useful lives are also
reviewed each period to determine whether the indefinite
life assessment continues to be supportable. If not, the
change in the useful life assessment to a finite life is
accounted for prospectively.
Certain trademarks have been assessed to have indefinite
useful lives, as presently there is no foreseeable limit to the
period over which the assets can be expected to generate
cash flows for the group.
Research and development costs
Research costs, being the investigation undertaken with the
prospect of gaining new knowledge and understanding,
are recognised as an expense in profit or loss as they
are incurred.
Development costs arise on the application of research
findings to plan or design for the production of new or
substantially improved materials, products or services,
before the start of commercial production. Development
costs are only capitalised when the group can demonstrate
the technical feasibility of completing the project, its
intention and ability to complete the project and use or sell
the materials, products or services flowing from the project,
how the project will generate future economic benefits, the
availability of sufficient resources and the ability to measure
reliably the expenditure during development. Otherwise
development costs are recognised as an expense in profit
or loss.
During the period of development, the asset is tested
annually for impairment. Following the initial recognition
of the development costs, the asset is carried at cost less
accumulated amortisation and accumulated impairment
losses. Amortisation begins when development is complete.
The development costs are amortised over the period of
expected future sales.
Derecognition of intangible assets
An intangible asset is derecognised on disposal; or when
no future economic benefits are expected from its use.
Gains or losses arising from derecognition of an intangible
asset are measured as the difference between the net
disposal proceeds and the carrying amount of the asset
and are recognised in profit or loss when the asset is
derecognised.
121
Tiger Brands LimitedAnnual financial statements 2016Annual financial statements
122
Impairment of non-financial assets
The group assesses tangible and intangible assets,
excluding goodwill, development assets not yet available
for use and indefinite life intangible assets, at each
reporting date for an indication that an asset may be
impaired. If such an indication exists, the recoverable
amount is estimated as the higher of the fair value less cost
of disposal and the value in use. If the carrying value
exceeds the recoverable amount, the asset is impaired and
is written down to the recoverable amount. Where it is not
possible to estimate the recoverable amount of an individual
asset, the recoverable amount of the cash-generating unit to
which the asset belongs is estimated.
In assessing value in use, the estimated future cash flows
are discounted to their present value using an appropriate
pre-tax discount rate that reflects current market assessments
of the time value of money and the risks specific to the
asset. In determining fair value less cost of disposal, the fair
value is determined in terms of IFRS 13. This is measured
using the assumptions that market participants would use
when pricing the asset, assuming that market participants
act in their economic best interest. A fair value measurement
of a non-financial asset takes into account a market
participant’s ability to generate economic benefits by using
the asset in its highest and best use or by selling it to
another market participant that would use the asset in
its highest and best use.
For assets excluding goodwill, an assessment is made at
each reporting date as to whether there is any indication
that previously recognised impairment losses may no longer
exist or may have decreased. If such an indication exists,
the group estimates the asset’s or cash-generating unit’s
recoverable amount. A previously recognised impairment
loss is reversed only if there is a change in the estimates
used to determine the asset’s recoverable amount since the
last impairment loss was recognised. If this is the case, the
carrying amount of the asset is increased to the revised
recoverable amount, but not in excess of what the carrying
amount would have been had there been no impairment.
A reversal of an impairment loss is recognised directly in
profit or loss.
Financial instruments
Financial instruments are initially recognised when the group
becomes a party to the contract. The group has adopted
trade date accounting for “regular way” purchases or sales
of financial assets. The trade date is the date that the group
commits to purchase or sell an asset.
Financial instruments are initially measured at fair value plus
transaction costs, except that transaction costs in respect of
financial instruments classified at fair value through profit or
loss are expensed immediately. Transaction costs are the
incremental costs that are directly attributable to the
acquisition of a financial instrument, ie those costs that
would not have been incurred had the instrument not been
acquired.
Classification
The group’s classification of financial assets and financial
liabilities are as follows:
Description of asset/liability
Classification
Investments
Derivatives
Available-for-sale
Financial instruments at fair
value through profit or loss
Loans and advances receivable Loans and receivables
Loans and receivables
Loans to subsidiaries
Loans and receivables
Trade and other receivables
Cash and cash equivalents
Loans and receivables
Loans payable and borrowings Financial liabilities at
Trade and other payables
Loans from subsidiaries
amortised cost
Financial liabilities at
amortised cost
Financial liabilities at
amortised cost
Available-for-sale financial assets
These are non-derivative financial assets that are designated
as available-for-sale or are not classified as loans and
receivables or held-to-maturity investments or financial assets
at fair value through profit or loss.
Available-for-sale financial assets are subsequently measured
at fair value with unrealised gains or losses recognised
directly in other comprehensive income. When such a
financial asset is disposed of, the cumulative gain or loss
previously recognised in other comprehensive income is
recognised in profit or loss. Interest earned on the financial
asset is recognised in profit or loss using the effective
interest rate method. Dividends earned are recognised in
profit or loss when the right of receipt has been established.
Loans and receivables
Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an
active market. After initial recognition, loans and receivables
are measured at amortised cost, using the effective interest
rate method, less impairment losses.
Gains and losses are recognised in profit or loss when the
loans and receivables are derecognised or impaired, as well
as through the amortisation process.
Financial liabilities at amortised cost
After initial recognition, liabilities that are not carried at fair
value through profit or loss are measured at amortised cost
using the effective interest rate method.
Gains and losses are recognised in profit or loss when the
liabilities are derecognised as well as through the
amortisation process.
Notes to the financial statements continuedfor the year ended 30 September 2016Tiger Brands LimitedAnnual financial statements 2016 Fair value
The fair value of listed investments is the quoted market bid
price at the close of business on the reporting date. For
unlisted investments, the fair value is determined using
appropriate valuation techniques. The group uses valuation
techniques that are appropriate in the circumstances and for
which sufficient data are available to measure fair value,
maximising the use of relevant observable inputs and
minimising the use of unobservable inputs. Such techniques
include using recent arm’s length market transactions,
reference to the current market value of similar instruments,
discounted cash flow analysis and option-pricing models.
An analysis of fair values of financial instruments and further
details as to how they are measured are provided in note 33.
Impairment of financial assets
The group assesses at each reporting date whether there is
objective evidence indicating that a financial asset, or
group of financial assets, is impaired.
Available-for-sale financial assets
In the case of equity investments classified as available-for-
sale, objective evidence would include a significant or
prolonged decline in the fair value of the investment below
its cost. “Significant” is to be evaluated against the original
cost of the investment and “prolonged” against the period
in which the fair value has been below its original cost.
Factors taken into consideration would include external
market and economic outlook reports, observable trends
and cyclicality.
If an available-for-sale asset is impaired, the respective other
comprehensive income amount is transferred to profit or loss.
Reversals in respect of equity instruments classified as
available-for-sale are not recognised in profit or loss.
Reversals of impairment losses on debt instruments are
reversed through profit or loss.
Loans and receivables
If there is objective evidence that an impairment loss has
been incurred, the amount of the loss is measured as the
difference between the asset’s carrying amount and the
present value of the estimated future cash flows (excluding
future expected credit losses) discounted at the asset’s original
effective interest rate.
The group assesses whether there is objective evidence of
impairment. In relation to trade receivables, a provision for
impairment is made when there is objective evidence (such
as the probability of insolvency or significant financial
difficulties of the debtor) that the group will not be able to
collect all of the amounts due under the original terms of the
sale. The carrying amount of the asset is reduced through the
use of an allowance account, and is recognised in profit or
loss. Impaired debts are derecognised when they are
assessed as uncollectible.
If, in a subsequent period, the amount of the impairment
decreases and the decrease relates objectively to an event
occurring after the impairment, it is reversed to the extent that
the carrying value does not exceed the amortised cost. Any
subsequent reversal of an impairment loss is recognised in
profit or loss.
Derivative instruments
Derivatives are financial instruments whose value changes
in response to an underlying factor, require little or no net
investment and are settled at a future date. Derivatives, other
than those arising on designated hedges, are measured at
fair value with changes in fair value being recognised in
profit or loss.
Hedge accounting
At the inception of a hedge relationship, the group formally
designates and documents the hedge relationship to which the
group wishes to apply hedge accounting and the risk
management objective and strategy for undertaking the hedge.
The documentation includes identification of the hedging
instrument, the hedged item or transaction, the nature of the risk
being hedged and how the entity will assess the hedging
instrument’s effectiveness in offsetting the exposure to changes
in the hedged item’s fair value or cash flows attributable to the
hedged risk. Such hedges are expected to be highly effective
in achieving offsetting changes in fair value or cash flows and
are assessed on an ongoing basis to determine that they
actually have been highly effective throughout the financial
reporting periods for which they were designated.
Fair value hedges
Fair value hedges cover the exposure to changes in the fair
value of a recognised asset or liability, or an unrecognised
firm commitment (except for foreign currency risk). Foreign
currency risk of an unrecognised firm commitment is
accounted for as a cash flow hedge.
The gain or loss on the hedged item adjusts the carrying
amount of the hedged item and is recognised immediately
in profit or loss. The gain or loss from remeasuring the
hedging instrument at fair value is also recognised in profit
or loss.
When an unrecognised firm commitment is designated as
a hedged item, the change in the fair value of the firm
commitment is recognised as an asset or liability with a
corresponding gain or loss recognised in profit or loss. The
change in the fair value of the hedging instrument is also
recognised in profit or loss in the “Operating income/(loss)
before abnormal items” line in the income statement.
The group discontinues fair value hedge accounting if
the hedging instrument expires or is sold, terminated or
exercised, the hedge no longer meets the criteria for hedge
accounting or the group revokes the designation.
123
Tiger Brands LimitedAnnual financial statements 2016Annual financial statements 124
Cash flow hedges
Cash flow hedges cover the exposure to variability
in cash flows that are attributable to a particular risk
associated with:
•• A recognised asset or liability
•• A highly probable forecast transaction
•• The foreign currency risk in an unrecognised firm
commitment.
The portion of the gain or loss on the hedging instrument
that is determined to be an effective hedge is recognised
directly in other comprehensive income, while any
ineffective portion is recognised in profit or loss.
Amounts taken to other comprehensive income are
transferred to profit or loss when the hedged transaction
affects profit or loss, such as when the hedged income or
financial asset or liability is recognised or when the forecast
sale or purchase occurs. Where the hedged item is the cost
of a non-financial asset or liability, the amount deferred in
other comprehensive income is transferred to the initial
carrying amount of the non-financial asset or liability.
If the forecast transaction is no longer expected to occur,
amounts previously recognised in other comprehensive
income are transferred to profit or loss. If the hedging
instrument expires or is sold, terminated or exercised without
replacement or rollover, or if its designation is revoked,
amounts previously recognised in other comprehensive
income remain in other comprehensive income until the
forecast transaction occurs. If the related transaction is not
expected to occur, the amount is taken to profit or loss.
Hedges of a net investment in a foreign operation
Hedges of a net investment in a foreign operation, including
a hedge of a monetary item that is accounted for as part of
the net investment, are accounted for similarly to cash flow
hedges. On consolidation, gains or losses on the hedging
instrument relating to the effective portion of the hedge are
recognised in other comprehensive income, while any gains
or losses relating to the ineffective portion are recognised in
profit or loss. On disposal of the foreign operation, the
cumulative gain or loss recognised in other comprehensive
income is transferred to profit or loss.
Derecognition of financial assets and financial liabilities
Financial assets or parts thereof are derecognised when:
•• The right to receive the cash flows have expired
•• The right to receive the cash flows is retained, but an
obligation to pay them to a third party under a “pass-
through” arrangement is assumed
•• The group transfers the right to receive the cash flows,
and also transfers either all the risks and rewards, or
control over the asset.
Financial liabilities are derecognised when the obligation
is discharged, cancelled or expired.
Non-current assets held for sale and discontinued
operations
An item is classified as held for sale if its carrying amount
will be recovered principally through a sale transaction
rather than through continuing use. This condition is
regarded as met only when the sale is highly probable and
the asset or disposal group is available for immediate sale
in its present condition. For a sale to be highly probable,
management must be committed to the sale at a price
that is reasonable to its current fair value and an active
programme to locate a buyer and complete the plan
must be initiated. This should be expected to qualify for
recognition as a completed sale within one year from
the date of classification.
Assets classified as held for sale are not subsequently
depreciated and are held at the lower of their carrying
value and fair value less cost to sell.
A discontinued operation is a separate major line of
business, separate component or geographical area of
operation that has been disposed of, or classified as held
for sale, as part of a single coordinated plan. A subsidiary
acquired exclusively with a view to resale and that meets
the criteria of a non-current asset held for sale is also
defined as a discontinued operation.
In the consolidated income statement of the reporting period
and of the comparable period, income and expenses from
discontinued operations are reported separate from income
and expenses from continuing activities down to the level of
profit after taxes, even when the group retains a non-
controlling interest in the subsidiary after the sale. The
resulting profit or loss (after taxes) is reported separately
in the income statement.
Inventories
Inventories are stated at the lower of cost or net realisable
value. Costs incurred in bringing each product to its present
location and conditions are accounted for as follows:
Raw materials:
Finished goods and
work in progress:
Purchase cost on a first-in first-out
basis.
Cost of direct material and labour
and a proportion of manufacturing
overheads based on normal
operating capacity but excluding
borrowing costs.
Consumables are written down with regard to their age,
condition and utility.
Costs of inventories include the transfer from other
comprehensive income of gains and losses on qualifying
cash flow hedges in respect of the purchases of raw
materials.
Notes to the financial statements continuedfor the year ended 30 September 2016Tiger Brands LimitedAnnual financial statements 2016 Net realisable value is the estimated selling price in the
ordinary course of business, less estimated completion and
selling costs.
Provisions
Provisions are recognised when the group has a present
legal or constructive obligation, as a result of past events,
for which it is probable that an outflow of economic benefits
will be required to settle the obligation, and a reliable
estimate can be made of the amount of the obligation.
Leases
Group as a lessee
At inception date an arrangement is assessed to determine
whether it is, or contains, a lease. An arrangement is
accounted for as a lease where it is dependent on the use
of a specific asset and it conveys the right to use that asset.
Leases are classified as finance leases where substantially
all the risks and rewards associated with ownership of an
asset are transferred from the lessor to the group as lessee.
Finance lease assets and liabilities are recognised at the
lower of the fair value of the leased assets or the present
value of the minimum lease payments. Finance lease
payments are allocated, using the effective interest rate
method, between the lease finance cost, which is included
in financing costs, and the capital repayment, which
reduces the liability to the lessor.
Capitalised lease assets are depreciated in line with the
group’s stated depreciation policy for each asset. If there is
no reasonable certainty that the group will obtain ownership
by the end of the lease term, the asset is depreciated over
the shorter of its estimated useful life and lease term.
Operating leases are those leases which do not fall within
the scope of the definition of a finance lease. Operating
lease rentals are charged against trading profit on a
straight-line basis over the lease term.
Group as a lessor
Leases in which the group does not transfer substantially all
the risks and benefits of ownership as an asset are classified
as operating leases. Initial direct costs incurred in
negotiating an operating lease are added to the carrying
amount of the leased asset and recognised over the lease
term on the same basis as rental income. Contingent rents
are recognised as revenue in the period in which they are
earned.
Revenue
Revenue comprises turnover, rental income, dividend income
and interest income. Revenue is measured at the fair value
of the consideration received/receivable excluding value
added tax, normal discounts, rebates, settlement discounts,
promotional allowances, and internal revenue which is
eliminated on consolidation.
Sale of goods
Turnover from the sale of goods is recognised when the
significant risks and rewards of ownership have passed
to the buyer, usually on dispatch of the goods.
Dividend income
Dividend income is recognised when the group’s right to
receive payment is established. Non-resident shareholders’
taxation is provided in respect of foreign dividends
receivable, where applicable.
Interest received
For all financial instruments measured at amortised cost,
interest received or expensed is recorded using the effective
interest rate, which is the rate that exactly discounts the
estimated future cash payments or receipts through the
expected life of the financial instrument or a shorter period,
where appropriate, to the net carrying amount of the
financial asset or liability. Interest received is included in
finance income in the income statement.
Borrowing costs
Borrowing costs directly attributable to the acquisition,
construction or production of an asset that necessarily takes
a substantial period of time to get ready for its intended use
or sale are capitalised as part of the cost of the respective
assets. All other borrowing costs are expensed in the period
they occur. Borrowing costs consist of interest and other
costs that an entity incurs in connection with the borrowing
of funds.
Abnormal items
Abnormal items are items of income and expenditure which
are not directly attributable to normal operations or where
their size or nature are such that additional disclosure is
considered appropriate.
Taxation
The income tax expense represents the sum of current tax
payable (both current and deferred).
Normal tax – current
The normal tax is based on taxable profit for the year.
Taxable profit differs from profit as reported in the income
statement because it excludes items of income or expense
that are taxable or deductible in other years, and it further
excludes items that are never taxable or deductible. Normal
tax may include under or overprovisions relating to prior year
taxation. The group’s liability for normal tax is calculated
using tax rates that have been enacted or substantively
enacted by the reporting date.
Normal tax relating to items recognised outside profit or loss
is recognised outside profit or loss. Normal tax items are
recognised in correlation to the underlying transaction either
in other comprehensive income or directly in equity.
125
Tiger Brands LimitedAnnual financial statements 2016Annual financial statements Normal tax – deferred
Deferred tax is calculated on the liability method.
•• Receivables and payables that are stated with the amount
of value added tax included.
Deferred tax liabilities are recognised for taxable temporary
differences except:
•• Where the “initial recognition exception” applies
•• In respect of outside temporary differences relating
to subsidiaries, associates and joint arrangements.
Deferred tax assets are recognised for all deductible
temporary differences, carry forward of unused tax credits
and unused tax losses, where it is probable that the asset
will be utilised in the foreseeable future except:
•• Where the “initial recognition exception” applies
•• In respect of outside temporary differences relating
to subsidiaries, associates and joint arrangements.
The carrying amount of deferred tax assets is reviewed at
each reporting date and reduced to the extent that it is
no longer probable that sufficient taxable profits will be
available to allow all or part of the asset to be recovered.
Unrecognised deferred tax assets are reassessed at each
reporting date and recognised to the extent it has become
probable that future taxable profit will allow the asset to be
utilised.
126
Deferred tax is calculated at the tax rates that are expected
to apply in the period when the liability is settled or the asset
realised based on tax rates and tax laws that have been
enacted or substantively enacted by the reporting date.
Deferred tax relating to items recognised outside profit or loss
is recognised outside profit or loss. Deferred tax items are
recognised in correlation to the underlying transaction either
in other comprehensive income or directly in equity.
Deferred tax assets and deferred tax liabilities are offset, if
a legally enforceable right exists to set off current tax assets
against current income tax liabilities and the deferred taxes
relate to the same taxable entity and the same taxation
authority.
Dividend withholding tax
A dividend withholding tax of 15% is withheld on behalf
of the taxation authority on dividend distributions where
applicable. The net amount payable to the taxation authority
is included as part of trade and other payables at the time
a dividend is declared.
Value added tax
Revenues, expenses and assets are recognised net of the
amount of value added tax except:
•• Where the value added tax incurred on a purchase of
assets or services is not recoverable from the taxation
authority, in which case the value added tax is recognised
as part of the cost of acquisition of the asset or as part of
the expense item as applicable
The net amount of value added tax recoverable from, or
payable to, the taxation authority is included as part of
receivables or payables in the statement of financial
position.
Employee benefits
A liability is recognised when an employee has rendered
services for benefits to be paid in the future, and an
expense when the entity consumes the economic benefit
arising from the service provided by the employee.
In respect of defined contribution plans, the contribution
paid by the company is recognised as an expense.
In respect of defined benefit plans, the company’s
contributions are based on the recommendations of
independent actuaries and the liability is measured using
the projected unit credit method.
Remeasurements, comprising actuarial gains and losses, the
effect of the asset ceiling, excluding amounts included in net
interest on the net defined benefit liability and the return on
plan assets (excluding amounts included in net interest on
the net defined benefit liability), are recognised immediately
in the statement of financial position with a corresponding
debit or credit to retained earnings through other
comprehensive income in the period in which they occur.
Remeasurements are not reclassified to profit or loss in
subsequent periods.
Past service costs are recognised in profit or loss on the
earlier of:
•• The date of the plan amendment or curtailment
•• The date that the group recognises related restructuring
costs.
Net interest is calculated by applying the discount rate
to the net defined benefit liability or asset. The group
recognises the following changes in the net defined benefit
obligation under “cost of sales”, “administration expenses”
and “selling and distribution expenses” in the consolidated
statement of profit or loss (by function):
•• Service costs comprising current service costs, past service
costs, gains and losses on curtailments and non-routine
settlements
•• Net interest expense or income.
Post-retirement medical obligations
The group provides post-retirement healthcare benefits to
certain of its retirees based on the qualifying employee
remaining in service up to retirement age in the form of a
defined benefit medical plan. The expected costs of these
benefits are accrued over the period of employment, using
the projected unit credit method. Valuations are based on
Notes to the financial statements continuedfor the year ended 30 September 2016Tiger Brands LimitedAnnual financial statements 2016 assumptions which include employee turnover, mortality
rates, discount rates based on current bond yields of
appropriate terms, healthcare inflation costs and rates of
increase in salary costs. Valuations of these obligations are
carried out by independent qualified actuaries.
Actuarial gains or losses are recognised in the same manner
as those of defined benefit pension obligations noted in the
previous accounting policy.
Share-based payments
Certain employees (including senior executives) of the group
receive remuneration in the form of share-based payment
transactions, whereby employees render services as
consideration for equity instruments (equity-settled
transactions) or share appreciation rights (that are classified
as cash-settled transactions).
Equity-settled and cash-settled share options
Equity-settled transactions
Under the scheme, executives and selected managers
of Tiger Brands Limited and its subsidiaries is offered,
on an annual basis, a weighted combination of share
appreciation rights, performance shares, restricted shares
linked to the annual cash bonus scheme (bonus matching)
and restricted shares linked to a deferred portion of bonuses
received by these employees. All these components are
accounted for as equity-settled share-based payments in
addition to the general employee share option plan portion
and the black managers participation right scheme.
Shares awarded to employees in terms of the rules of the
Tiger Brands Long-Term Incentive Plan (LTIP) are measured
by reference to the fair value at the date on which they are
granted. The fair value is determined by an external valuer
using a modified version of the Black-Scholes model or
Monte-Carlo simulation, further details of which are given
in note 29.
The cost of equity-settled transactions is recognised, together
with a corresponding increase in equity, over the period in
which the service conditions are fulfilled, ending on the date
on which the relevant employees become fully entitled to
the ward (the vesting date). The cumulative expense
recognised reflects the extent to which the vesting period
has expired and the group’s best estimate of the number
of equity instruments that will ultimately vest. The income
statement charge for a period represents the movement in
the cumulative expense at the beginning and end of that
period.
No expense is recognised for awards that do not ultimately
vest, except for equity-settled transactions where vesting is
conditional upon a market or non-vesting condition, which
are treated as vesting irrespective of whether or not the
market or non-vesting condition is satisfied, provided that all
other performance and/or service conditions are satisfied.
Where an equity-settled award is cancelled (other than
forfeiture), it is treated as if it had vested on the date
of cancellation, and any unrecognised expense recognised
immediately. If a new award is substituted and designated
as a replacement for the cancelled award, the cancelled
and new awards are treated as if they were a modification
of the original award, as described above.
The dilutive effect of outstanding equity-settled options is
reflected as additional share dilution in the computation of
earnings and headline earnings per share.
Cash-settled transactions
The cost of cash-settled transactions such as the general
employee share option plan portion is measured initially at
fair value at the grant date using a modified version of the
Black-Scholes model, taking into account the terms and
conditions upon which the instruments were granted (see
note 29). This fair value is expensed over the period until
vesting with recognition of a corresponding liability. The
liability is remeasured at each reporting date up to and
including the settlement date with changes in fair value
recognised in profit or loss.
Accounting for BEE transactions
Where equity instruments are issued to a black economic
empowerment (BEE) party at less than fair value, the
instruments are accounted for as share-based payments
in terms of the stated accounting policy.
A restriction on the BEE party to transfer the equity instrument
subsequent to its vesting is not treated as a vesting
condition, but is factored into the fair value determination
of the instrument.
Treasury shares
Shares in Tiger Brands Limited held by the group are
classified within total equity as treasury shares. The shares
acquired by the Black Managers Trust (I and II), Thusani
Trust, Brimstone SPV and The Tiger Brands Foundation
are accounted for as treasury shares in line with the
consolidation requirement for special-purpose entities.
Treasury shares are treated as a deduction from the issued
and weighted average number of shares for earnings per
share and headline earnings per share purposes, and the
cost price of the shares is reflected as a separate
component of capital and reserves in the statement of
financial position. Dividends received on treasury shares are
eliminated on consolidation. No gain or loss is recognised
in the income statement on the purchase, sale, issue or
cancellation of treasury shares. Consideration received or
paid in respect of treasury shares is recognised in equity.
127
Tiger Brands LimitedAnnual financial statements 2016Annual financial statements 128
Contingent assets and contingent liabilities
A contingent asset is a possible asset that arises from past
events and whose existence will be confirmed by the
occurrence or non-occurrence of one or more uncertain
future events not wholly within the control of the company.
Contingent assets are not recognised as assets, but
disclosed.
A contingent liability is a possible obligation that arises from
past events and whose existence will be confirmed by the
occurrence or non-occurrence of one or more uncertain
future events not wholly within the control of the company.
Alternatively, it may be a present obligation that arises from
past events but is not recognised because an outflow of
economic benefits to settle the obligation is not probable,
or the amount of the obligation cannot be measured with
sufficient reliability. Contingent liabilities are not recognised
as liabilities unless they are acquired as part of a business
combination, but disclosed.
Events after the reporting date
Recognised amounts in the financial statements are adjusted
to reflect significant events arising after the reporting date,
but before the financial statements are authorised for issue,
provided there is evidence of conditions that existed at the
reporting date. Events after the reporting date that are
indicative of conditions that arose after the reporting date
are dealt with by way of a note.
Significant accounting judgements and estimates
Judgements
In the process of applying the group’s accounting policies,
management has made the following judgements, apart
from those involving estimations, which have the most
significant effect on the amounts recognised in the financial
statements:
Consolidation of structured entities
The structured entities established in terms of the BEE
transaction implemented in October 2005 and October
2009 have been consolidated in the group results. The
substance of the relationship between the company and
these entities has been assessed and the decision made that
they are controlled entities, mainly due to the fact that they
have been formed to carry out specific objectives and that
they will operate in terms of the autopilot principles as set
out in IFRS 12.
Assessing control (direct and de facto) of associates
The conclusion regarding control or significant influence
relating to associates is reassessed on an annual basis. In
performing this assessment, the directors determine whether
or not the group has control over the respective investee
based on whether the group has the practical ability to
direct the significant activities unilaterally.
In making this assessment, the following factors are
considered:
•• The group’s shareholding in the investee relative to other
investors
•• The relative size of and concentration of other
shareholders
•• The inability of the group to unilaterally appoint the
majority of board members of the investee
•• The absence of related key management between the
group and the investee
•• Composition of the investee’s board and board
appointees of the group
•• The lack of any contractual or legal rights conferred upon
the group by the investee or any other shareholder of the
investee to direct its activities.
Detailed disclosures of non-controlling interests
The group does not have subsidiaries that have a material
non-controlling interest in the context of the group and
accordingly detailed non-controlling interest disclosure is not
required in the current year in terms of IFRS 12 Disclosure of
Interests in Other Entities. In determining whether or not any
non-controlling interests are material, the group considered
the share of the individual non-controlling interests in the
consolidated net assets of the group. In addition, the total
non-controlling interest is below 10% of the group’s
consolidated net assets and hence considered not to
be material to the group.
Detailed disclosures of investment in associates
The group does have associate interests that are, in
aggregate, material in the context of the group and
accordingly detailed disclosure requirements in terms
of IFRS 12 Disclosure of Interests in Other Entities is
assessed on an annual basis. In determining whether or not
any individual associate is material, the group considers a
combination of the share of the individual associate
interest in the operating income before impairments and
abnormal items, other comprehensive income, headline
earnings as well as total assets of the group. A 10%
threshold is used to assess the above mentioned factors.
Deferred tax assets
Deferred tax assets are recognised for all unused tax losses
to the extent that it is probable that taxable profit will be
available against which the losses can be utilised.
Management judgement is required to determine the amount
of deferred tax assets that can be recognised, based upon
the likely timing and level of future taxable profits together
with future tax planning strategies. Further details are
contained in note 19.
IFRS 5
The group has applied judgement in assessing whether or
not the EATBI business should be classified as held for sale.
Given the terms and conditions attached to the deal,
management has applied judgement in assessing IFRS 5
and concluding that the sale is not highly probable as
defined at 30 September 2016. This is due to the
uncertainty as to whether or not the sale will conclude within
12 months after the reporting period or the date of the
announcement.
Estimates and assumptions
The key assumptions concerning the future and other key
sources of estimation uncertainty at the reporting date, that
have a significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities within the next
financial year, are discussed on the following page.
Notes to the financial statements continuedfor the year ended 30 September 2016Tiger Brands LimitedAnnual financial statements 2016 Outside basis adjustments
Judgement is applied in assessing the probability of the
reversal of temporary differences on undeclared reserves of
associates and subsidiaries within the foreseeable future and
the group’s ability to control the timing of the reversal.
Impairment assessment of goodwill, tangible and
intangible assets
Goodwill and indefinite life intangible assets are tested
for impairment annually or more frequently if there is an
indicator of impairment. Tangible assets and finite life
intangible assets are tested when there is an indicator
of impairment. When identifying impairment indicators,
management considers the impact of changes in
competitors, technological obsolescence, discontinuance
of products, market changes, legal changes, operating
environments and other circumstances that could indicate
that impairment exists. This requires management to make
significant judgements concerning the existence of
impairment indicators, identification of cash-generating units
and estimates of projected cash flows and fair value less
costs of disposal.
The group applies the impairment assessment to its cash-
generating units. Management’s analysis of cash-generating
units involves an assessment of a group of assets’ ability to
independently generate cash inflows and involves analysing
the extent to which different products make use of the same
assets.
The calculation of the recoverable amount requires the use of
estimates and assumptions concerning the future cash flows
which are inherently uncertain and could change over time.
Recoverable amount is calculated using the discounted
cash flow valuation method when determining value in use.
Key assumptions on which management has based its
determination of recoverable amount include the weighted
average cost of capital, projected revenues and gross
margins. In addition, changes in economic factors, such as
discount rates, could also impact this calculation. Further
details are given in note 13 and note 14.
Residual values and useful lives of tangible and
intangible assets
Residual values and useful lives of tangible and intangible
assets are assessed on an annual basis. Estimates and
judgements in this regard are based on historical experience
and expectations of the manner in which assets are to be
used, together with expected proceeds likely to be realised
when assets are disposed of at the end of their useful lives.
Such expectations could change over time and therefore
impact both depreciation charges and carrying values of
tangible and intangible assets in the future. Further details
are given in note 13 and note 14.
Fair value of share allocations
In calculating the amount to be expensed as a share-based
payment, the group was required to calculate the fair value
of the equity instruments granted to participants. This fair
value was calculated by applying a valuation model which is
in itself judgemental and takes into account certain inherently
uncertain assumptions (detailed in note 29).
Pension and other post-employment benefits
The cost of defined benefit pension plans and other
post-employment medical benefits is determined using
actuarial valuations. The actuarial valuation involves making
assumptions about discount rates, expected rates of return
on assets, future salary increases, mortality rates and future
pension increases. Due to the long-term nature of these
plans, such estimates are subject to significant uncertainty.
Further details are given in note 30 and note 31.
Provisions
Best estimates, being the amount that the group would
rationally pay to settle the obligation, are recognised as
provisions at the reporting date. Risks, uncertainties and
future events, such as changes in law and technology,
are taken into account by management in determining
the best estimates. Where the effect of discounting is
material, provisions are discounted. The discount rate
used is the pre-tax rate that reflects current market
assessments of the time value of money and, where
appropriate, the risks specific to the liability, all of which
requires management estimation.
The establishment and review of the provisions requires
significant judgement by management as to whether or
not a reliable estimate can be made of the amount of the
obligation.
129
The group is required to record provisions for legal or
constructive contingencies when the contingency is probable
of occurring and the amount of the loss can be reasonably
estimated. Liabilities provided for legal matters require
judgements regarding projected outcomes and ranges of
losses based on historical experience and recommendations
of legal counsel. Litigation is, however, unpredictable and
actual costs incurred could differ materially from those
estimated at the reporting date. Further details are given
in note 32.
Net investment in foreign operations
Certain loans with the group’s foreign investments are
designated as part of the group’s net investment as they are
not expected to be repaid in the foreseeable future. This
results in the foreign exchange differences on the portion
of the loans that are viewed as “capital contributed” being
recorded in equity under the foreign currency translation
reserve as required per IAS 21 The Effects of Changes in
Foreign Exchange Rates, as opposed to being recognised in
the statement of profit or loss. This designation is reassessed
on an annual basis.
Changes in accounting policies
The accounting policies adopted are consistent with those
of the previous financial year.
Tiger Brands LimitedAnnual financial statements 2016Annual financial statements Standards and interpretations not yet effective
The group has not applied the following applicable IFRS and IFRIC Interpretations that have been issued but are not yet effective
and will be adopted by the group as and when they become effective. These are as follows:
Standard
Effective date*
Impact
IAS 1 Disclosure Initiative – Amendments to IAS 1
1 January 2016
These amendments are expected to impact the
presentation and disclosure.
IAS 27 Equity Method in Separate Financial
Statements – Amendments to IAS 27
AIP IFRS 7 Financial Instruments: Disclosures
– Servicing contracts
AIP IFRS 7 Financial Instruments: Disclosures –
Applicability of the offsetting disclosures to
condensed interim financial statements
IAS 12 Recognition of Deferred Tax Assets for
Unrealised Losses – Amendments to IAS 12
1 January 2016
This amendment is not expected to impact the group.
1 January 2016
The amendments will have no impact on Tiger Brands
as no servicing contracts are entered into.
1 January 2016
These amendments are not expected to have any
material impact to the group.
1 January 2016
These amendments are not expected to have any
material impact to the group.
IFRS 15 Revenue from Contracts with Customers
1 January 2018
IFRS 9 Financial Instruments
1 January 2018
The group is currently assessing the impact and will
adopt the new standard at the required effective date.
The group is currently assessing the impact and will
adopt the new standard at the required effective date.
IFRS 16 Leases
1 January 2019
The group is currently assessing the impact and will
adopt the new standard at the required effective date.
* Effective for annual periods beginning on or after the specified date.
130
COMPANy
2016
2015
(R’million)
127,6
2 343,4
–
2 471,0
136,0
2 099,3
–
2 235,3
2
3
3.1
3.2
Revenue
Turnover
Interest received (refer note 8)
Investment income (refer note 9)
Rental income, fee income and other
Turnover
Turnover comprises:
Non-South African turnover
South African turnover
Refer to the segmental analysis on pages 35
and 36 of the integrated annual report for
details of the segmental split.
Turnover by major customer
Customer 1
Customer 2
Customer 3
Customer 4
Customer 5
All other customers
Customers 1 to 5 relate to domestic
operations.
GROUP
2016
2015
Restated#
31 697,5
20,4
6,3
13,3
28 660,0
16,3
0,8
13,0
31 737,5
28 690,1
5 386,4
26 311,1
4 920,0
23 740,0
31 697,5
28 660,0
5 202,2
3 563,9
3 097,5
2 884,5
412,0
16 537,4
4 473,9
3 089,1
2 566,1
2 317,3
407,8
15 805,8
31 697,5
28 660,0
# Restated as required by IFRS 5 in relation to the treatment of Tiger Branded Consumer Goods plc (TBCG) as a discontinued operation.
Notes to the financial statements continuedfor the year ended 30 September 2016Tiger Brands LimitedAnnual financial statements 2016 COMPANy
2016
2015
Restated*
(R’million)
GROUP
2016
2015
Restated*#
4
4.1
Operating income/(loss) before
impairments and abnormal items
Operating income/(loss) has been
determined after charging/(crediting):
External auditors’ remuneration
– Audit fees
– Other fees and expenses
Internal auditors’ remuneration
Depreciation
– On buildings
– On plant, equipment and vehicles
– On capitalised leased assets
Amortisation
– On trademarks, licence agreements and
other intangibles
– On customer lists
Operating lease charges
– On land and buildings
– On plant, equipment and vehicles
Loss on disposal of plant, equipment
and vehicles
Research, development and related
expenditure
IFRS 2 charges
– Cash settled
– Equity settled, including BEE-related
IFRS 2 expenses
Staff costs
Employer’s contribution to retirement funding
Employer’s contribution to medical aid
5,7
(10,4)
Foreign exchange loss/(profit)
4.2
Directors’ emoluments
Executive directors
– Salaries and bonuses
– Retirement, medical and other benefits
Non-executive directors
– Fees
Total directors’ emoluments
Less: Paid by subsidiaries
6,7
6,7
6,7
Emoluments paid by company
For more details refer to Annexure C.
7,8
7,8
7,8
131
34,5
29,8
4,7
14,0
558,8
61,0
495,8
2,0
11,9
11,4
0,5
198,2
71,2
127,0
0,2
15,6
88,9
18,0
31,0
27,2
3,8
10,8
517,8
55,0
460,0
2,8
23,8
19,2
4,6
169,8
60,3
109,5
1,1
23,6
29,2
(60,9)
70,9
3 318,1
243,3
90,9
27,3
90,1
3 019,9
217,7
88,2
(63,5)
18,8
49,3
7,8
75,9
(68,1)
7,8
18,2
8,9
6,7
33,8
(27,1)
6,7
* The comparatives have been restated for the retrospective reclassification relating to the treatment of foreign exchange profits and losses
on foreign cash balances and loans of a funding nature previously included in operating income/(loss) and now reclassified to net finance
costs. Refer to note 7 for further details.
# Restated as required by IFRS 5 in relation to the treatment of Tiger Branded Consumer Goods plc (TBCG) as a discontinued operation.
Tiger Brands LimitedAnnual financial statements 2016Annual financial statements
COMPANy
2016
2015
Restated^
(R’million)
5
6
–
(678,8)
(678,8)
–
(69,5)
–
–
7,0
(44,2)
(0,2)
(106,9)
12,4
(94,5)
Impairments
Impairment of property, plant and equipment
(refer note 15)
Impairment of intangible assets/investments
(refer note 15)
Abnormal items
Profit/(loss) on disposal of property, plant
and equipment
Write-off of other related assets
Profit on sale of empowerment
available-for-sale financial assets
Insurance claim income
Historical statutory liabilities
Exchange rate translation of Mauritian loan
Other
Abnormal profit/(loss) before taxation
Income tax expense
Attributable to shareholders in Tiger Brands
Limited
–
–
–
–
–
–
–
–
1,2
–
1,2
(0,3)
0,9
GROUP
2016
2015
Restated#^
(34,8)
(39,8)
(300,0)
(334,8)
(280,0)
(319,8)
11,0
–
–
–
–
–
–
11,0
(2,5)
(7,3)
(72,9)
47,0
7,5
7,0
–
–
(18,7)
(8,1)
8,5
(26,8)
# Restated as required by IFRS 5 in relation to the treatment of Tiger Branded Consumer Goods plc (TBCG) as a discontinued operation.
^ Historically, impairments have been disclosed as part of total abnormal items on the face of the income statement with a supporting note
specifying the respective detail. For better clarity, impairments are now disclosed separately on the face of the income statement, with the
comparative information being restated accordingly.
132
Notes to the financial statements continuedfor the year ended 30 September 2016Tiger Brands LimitedAnnual financial statements 2016 COMPANy
2016
2015
Restated*
(R’million)
GROUP
2016
2015
Restated*#
7
(771,1)
–
(10,0)
(781,1)
8
(22,7) 8.1
(13,0)
(9,7)
–
–
136,0 8.2
29,4
106,6
10,0
8.3
10,0
123,3
9
(14,6)
(11,9)
(2,7)
–
–
127,6
38,3
89,3
(2,3)
(2,3)
110,7
2 141,7
201,7
–
2 343,4
1 925,4
173,9
–
2 099,3
Reclassification of foreign exchange
profits and losses
All foreign exchange profits and losses
relating to revaluation of foreign cash
balances and loans of a funding nature have
been accounted for as finance-related costs
(refer note 8.3) and thus reclassified from
operating income and into finance costs
(retrospective application with comparatives
restated to reflect the reclassification). The
impact on the comparatives is as follows:
Operating income/(loss) after impairments
and abnormal items
As previously reported
Discontinued operation
Reclassification to finance costs
Restated operating income/(loss) after
impairments and abnormal items after
reclassification of finance costs from
continuing operations
Net (finance costs)/interest received
Interest paid
Long-term borrowings
Bank and other short-term borrowings
Other – financial liabilities
Other – non-financial liabilities
Interest received
From subsidiary companies
From cash and cash equivalents
Net foreign exchange profit/(loss)
Profit/(loss) on cash balances and loans
of a funding nature
133
1 944,1
1 763,6
(20,5)
3 687,2
(240,8)
(50,2)
(178,4)
(10,1)
(2,1)
16,3
–
16,3
20,5
(324,0)
(21,7)
(283,3)
(18,6)
(0,4)
20,4
–
20,4
121,0
121,0
20,5
Net (finance costs)/interest received
(182,6)
(204,0)
Investment income
From subsidiary companies and associate
companies
From BEE empowerment entities
From other investments
–
–
6,3
6,3
–
–
0,8
0,8
* The comparatives have been restated for the retrospective reclassification relating to the treatment of foreign exchange profits and losses
on foreign cash balances and loans of a funding nature previously included in operating income/(loss) and now reclassified to net finance
costs. Refer to note 7 for further details.
# Restated as required by IFRS 5 in relation to the treatment of Tiger Branded Consumer Goods plc (TBCG) as a discontinued operation.
Tiger Brands LimitedAnnual financial statements 2016Annual financial statements COMPANy
GROUP
2016
2015
(R’million)
10
37,8 10.1
13,1
Taxation
South African current taxation
Withholding and foreign taxes
2016
1 046,1
119,3
1 165,4
59,7
1 225,1
(4,9)
–
7,4
1 227,6
(7,0)
–
1 220,6
%
27,0
(1,9)
–
(1,0)
(0,7)
0,4
(0,1)
(1,1)
5,3
(0,2)
0,3
28,0
2015
Restated#
1 057,4
63,0
1 120,4
15,7
1 136,1
(129,6)
7,5
(30,9)
983,1
8,8
(14,6)
977,3
%
23,9
(2,0)
–
(1,4)
–
–
4,0
(0,7)
4,1
(0,1)
0,2
28,0
10.2
Deferred taxation – temporary differences
Adjustments in respect of previous years
– Current taxation
– Foreign taxation
– Deferred taxation
Taxation on abnormal items and impairments
– Current
– Deferred
The reconciliation of the effective rate of
taxation with the statutory taxation rate is
as follows:
Taxation for the year as a percentage of
income before taxation
Impairment of goodwill and intangibles
Dividend income
Expenses and provisions not allowed for
taxation
Non-recognition of other timing differences
Additional investment allowances
Prior year adjustments
Withholding taxes
Income from associates
Effect of differing rates of foreign taxes
Other sundry adjustments
Rate of South African company taxation
(R’million)
Tax effect of losses available to reduce future
taxable income
5,3
27,2
10.3
Reconciliation of movement on deferred
taxation
Movement recognised in the income
statement for the year
Current year charge
Adjustments in respect of previous years
Deferred tax on abnormal items
Movement per deferred tax accounts
Decrease/(increase) in deferred taxation asset
Increase/(decrease) in deferred taxation
liability
59,7
7,4
–
67,1
34,0
33,1
67,1
15,7
(30,9)
(14,6)
(29,8)
(27,5)
(2,3)
(29,8)
# Restated as required by IFRS 5 in relation to the treatment of Tiger Branded Consumer Goods plc (TBCG) as a discontinued operation.
134
31,4
16,1
47,5
0,6
48,1
(0,3)
–
–
47,8
–
0,3
48,1
%
2,0
–
26,7
(0,2)
–
–
–
(0,6)
–
–
0,1
28,0
0,6
–
0,3
0,9
0,9
–
0,9
50,9
4,3
55,2
(0,3)
–
–
54,9
–
(12,4)
42,5
%
2,9
–
38,9
(12,9)
–
–
–
(0,9)
–
–
–
28,0
4,3
–
(12,4)
(8,1)
(12,4)
4,3
(8,1)
Notes to the financial statements continuedfor the year ended 30 September 2016Tiger Brands LimitedAnnual financial statements 2016 11
Calculation of weighted average number of shares for basic earnings
per share and headline earnings per share purposes
11.1 Opening balance of number of ordinary shares
Weighted number of ordinary shares – issued
Weighted number of shares held for BEE deal
Weighted average number of shares in issue
11.2 Weighted average number of shares in issue
Share options dilution
Adjusted number of ordinary shares for diluted earnings per share and diluted
headline earnings per share purposes
11.3 Headline earnings
– Continuing operations
– Discontinued operation
11.4 Headline earnings per share
Headline earnings per ordinary share (cents)
– Continuing operations
– Discontinued operation
Diluted headline earnings per ordinary share (cents)
– Continuing operations
– Discontinued operation
GROUP
2016
2015
Restated#
181 743 110
–
(19 262 646)
181 621 510
85 180
(20 013 710)
162 480 464
161 692 980
162 480 464
3 503 902
161 692 980
2 652 190
165 984 366
164 345 170
R’million
R’million
3 456,1
3 461,3
(5,2)
2 127,1
2 130,3
(3,2)
2 082,2
2 085,3
(3,1)
2 887,0
3 381,0
(494,0)
1 785,5
2 091,0
(305,5)
1 756,7
2 057,3
(300,6)
135
# Restated as required by IFRS 5 in relation to the treatment of Tiger Branded Consumer Goods plc (TBCG) as a discontinued operation.
11.5
Reconciliation between profit for the year and headline earnings
(R’million)
2016
Continuing operations
Profit for the year attributable to owners of the parent
Adjusted for:
Profit on disposal of property, plant and equipment
Impairment of intangible assets
Impairment of property, plant and equipment
Headline earnings adjustments – associates
– Profit on sale of non-current assets
Headline earnings for the year
Discontinued operation
Profit for the year attributable to owners of the parent
Adjusted for:
Loss on disposal of property, plant and equipment
Profit on disposal of subsidiary
Headline earnings for the year
Gross
Taxation
Non-
controlling
interest
(10,8)
300,0
34,8
(116,9)
207,1
0,1
(49,7)
(49,6)
2,5
–
(9,5)
–
(7,0)
–
–
–
–
–
–
–
–
–
–
–
Net
3 261,2
(8,3)
300,0
25,3
(116,9)
3 461,3
44,4
0,1
(49,7)
(5,2)
Tiger Brands LimitedAnnual financial statements 2016Annual financial statements Notes to the financial statements continued
for the year ended 30 September 2016
11
11.5
Calculation of weighted average number of shares for basic earnings per share and headline earnings
per share purposes continued
Reconciliation between profit for the year and headline earnings continued
(R’million)
Gross
Taxation
2015 – restated#
Continuing operations
Profit for the year attributable to owners of the parent
Adjusted for:
Loss on disposal of property, plant and equipment
Impairment of intangible assets
Impairment of property, plant and equipment
Profit on sale of empowerment shares
Write-off of other assets
Insurance claim income
Headline earnings adjustments – associates
– Profit on sale of non-current assets
Headline earnings for the year
Discontinued operation
Loss for the year attributable to owners of the parent
Adjusted for:
Impairment of property, plant and equipment
Headline earnings for the year
136
Non-
controlling
interest
–
–
(3,4)
–
(1,5)
–
Net
3 121,4
9,8
269,6
32,9
(39,1)
(5,2)
(5,4)
–
(3,0)
(4,9)
3 381,0
(1 394,3)
11,7
280,0
39,8
(47,0)
(3,7)
(7,5)
(3,0)
270,3
(1,9)
(10,4)
(3,5)
7,9
–
2,1
–
(5,8)
1 371,1
1 371,1
–
–
(470,8)
900,3
(470,8)
(494,0)
# Restated as required by IFRS 5 in relation to the treatment of Tiger Branded Consumer Goods plc (TBCG) as a discontinued operation.
COMPANy
GROUP
2016
2015
(R’million)
2016
2015
1 831,0
1 785,6 12.1 Dividends on ordinary shares – paid
12
Dividends
–
–
1 148,6
682,4
1065
–
–
363
702
1 148,3
637,3
Dividend by empowerment trusts
Dividend No 140 of 611 cents per share
Dividend No 141 of 339 cents per share
Dividend No 142 of 611 cents per share
Dividend No 143 of 363 cents per share
950 12.2 Dividends per ordinary share (cents)
339
611
Dividend No 141 – paid
Dividend No 142 – paid
Dividend No 143 – paid
Dividend No 144 – declared
22 November 2016
1 574,6
45,4
980,6
548,6
950
339
611
1 629,9
47,2
–
–
992,6
590,1
1065
–
–
363
702
Tiger Brands LimitedAnnual financial statements 2016
GROUP
(R’million)
Freehold
land and
buildings
Leasehold
land and
buildings
Plant,
vehicles and
equipment
Capitalised
leased
assets
Total
13
Property, plant and equipment
13.1 Movement of the group property,
plant and equipment
2016
Carrying value at the beginning
of the year
Cost
Accumulated depreciation and
impairment
Net balance at the beginning of
the year
Current year movements – cost
Additions
Acquisition of business (refer note 36)
Disposals
Disposal of TBCG
Exchange rate adjustments
Cost movements for current year
Current year movements –
accumulated depreciation and
impairment
Depreciation
Disposals
Disposal of TBCG
Impairment (refer note 15)
Exchange rate adjustments
Accumulated depreciation and
impairment movement for current year
Carrying value at the end of the year
Cost
Accumulated depreciation and
impairment
1 607,7
665,7
9 272,6
19,9
11 565,9
(396,4)
(105,7)
(6 408,9)
(13,7)
(6 924,7)
1 211,3
560,0
2 863,7
6,2
4 641,2
74,5
30,0
(3,7)
–
(35,1)
65,7
(51,9)
2,9
–
–
4,2
1,7
–
–
(481,8)
(2,9)
869,2
22,0
(106,9)
(2 729,1)
(78,8)
(483,0)
(2 023,6)
–
–
–
–
–
–
945,4
52,0
(110,6)
(3 210,9)
(116,8)
(2 440,9)
137
(9,1)
–
62,0
–
1,1
(495,8)
103,1
2 733,9
(34,8)
28,0
(2,0)
–
–
–
–
(558,8)
106,0
2 795,9
(34,8)
33,3
(44,8)
54,0
2 334,4
(2,0)
2 341,6
1 673,4
182,7
7 249,0
19,9
9 125,0
(441,2)
(51,7)
(4 074,5)
(15,7)
(4 583,1)
Net balance at the end of the year
1 232,2
131,0
3 174,5
4,2
4 541,9
Tiger Brands LimitedAnnual financial statements 2016Annual financial statements Notes to the financial statements continued
for the year ended 30 September 2016
GROUP
(R’million)
13
Property, plant and equipment
continued
13.1 Movement of the group property,
plant and equipment continued
2015
Carrying value at the beginning of
the year
Cost
Accumulated depreciation and
impairment
Net balance at the beginning of
the year
Current year movements – cost
Additions
Disposals
Exchange rate adjustments
Cost movements for current year
Current year movements –
accumulated depreciation and
impairment
Depreciation
Disposals
Impairments
Exchange rate adjustments
Accumulated depreciation and
impairment movement for current year
Carrying value at the end of the year
Cost
Accumulated depreciation and
impairment
138
Freehold
land and
buildings
Leasehold
land and
buildings
Plant,
vehicles and
equipment
Capitalised
leased
assets
Total
1 521,1
625,9
9 000,7
28,4
11 176,1
(355,7)
(105,2)
(4 830,2)
(17,4)
(5 308,5)
1 165,4
520,7
4 170,5
11,0
5 867,6
98,2
(11,8)
0,2
86,6
(48,7)
8,2
–
(0,2)
16,2
–
23,6
39,8
766,7
(156,0)
(338,8)
271,9
0,5
(6,4)
(2,6)
(8,5)
881,6
(174,2)
(317,6)
389,8
(15,3)
–
–
14,8
(595,3)
95,5
(1 410,9)
332,0
(2,8)
5,1
–
1,4
(662,1)
108,8
(1 410,9)
348,0
(40,7)
(0,5)
(1 578,7)
3,7
(1 616,2)
1 607,7
665,7
9 272,6
19,9
11 565,9
(396,4)
(105,7)
(6 408,9)
(13,7)
(6 924,7)
Net balance at the end of the year
1 211,3
560,0
2 863,7
6,2
4 641,2
13.2
Land and buildings and plant and machinery having a book value of R96,4 million (2015: R1,2 billion) are
mortgaged/pledged as security for long-term loans of R38,3 million (2015: R397,4 million) included in note 27.1
and capitalised finance leases of R3,2 million (2015: R5,2 million) as per note 27.3. Borrowing costs amounting to
R5,3 million relating to plant was capitalised during the year (2015: Rnil).
The fair value of property, plant and equipment is not materially different from the carrying amount.
Tiger Brands LimitedAnnual financial statements 2016 GROUP
(R’million)
Trademarks,
licence
agreements
and other
Goodwill
Customer
lists
Total
Goodwill and intangible assets
14
14.1 Movement of group goodwill and intangible assets
2016
Carrying value at the beginning of the year
Cost
Accumulated amortisation and impairment
3 343,7
(1 104,6)
1 834,7
(308,4)
Net balance at the beginning of the year
2 239,1
1 526,3
538,0
(70,4)
467,6
5 716,4
(1 483,4)
4 233,0
–
4,5
(0,2)
4,3
–
(0,5)
–
–
(0,5)
(848,7)
20,9
(1,5)
(829,3)
848,7
(11,9)
(300,0)
–
536,8
139
(761,8)
10,4
(0,9)
(752,3)
761,8
–
(150,0)
–
611,8
(86,9)
6,0
(0,4)
(81,3)
86,9
(11,4)
(150,0)
–
(74,5)
Current year movements – cost
Disposal of TBCG
Acquisition of business (refer note 36)
Exchange rate adjustments
Cost movements for current year
Current year movements – accumulated amortisation
and impairment
Disposal of TBCG
Amortisation
Impairment (refer note 15)
Exchange rate adjustments
Accumulated amortisation and impairment
movement for current year
Carrying value at the end of the year
Cost
Accumulated amortisation and impairment
2 591,4
(492,8)
1 753,4
(382,9)
542,3
(70,9)
4 887,1
(946,6)
Net balance at the end of the year
2 098,6
1 370,5
471,4
3 940,5
2015
Carrying value at the beginning of the year
Cost
Accumulated amortisation and impairment
3 337,1
(925,9)
1 831,2
(236,8)
538,0
(16,9)
5 706,3
(1 179,6)
Net balance at the beginning of the year
2 411,2
1 594,4
521,1
4 526,7
Current year movements – cost
Exchange rate adjustments
Cost movements for current year
Current year movements – accumulated amortisation
and impairment
Amortisation
Impairment
Exchange rate adjustments
Accumulated amortisation and impairment
movement for current year
Carrying value at the end of the year
Cost
Accumulated amortisation and impairment
6,6
6,6
3,5
3,5
–
–
10,1
10,1
–
(178,7)
–
(178,7)
(19,2)
(52,4)
–
(71,6)
(4,6)
(48,9)
–
(53,5)
(23,8)
(280,0)
–
(303,8)
3 343,7
(1 104,6)
1 834,7
(308,4)
538,0
(70,4)
5 716,4
(1 483,4)
Net balance at the end of the year
2 239,1
1 526,3
467,6
4 233,0
Tiger Brands LimitedAnnual financial statements 2016Annual financial statements 14
Goodwill and intangible assets continued
Trademarks comprise well-established and growing brands, except for trademarks with a carrying value of
R194,0 million (2015: R195,0 million) which are amortised, the brand portfolio is considered to have indefinite
useful lives and is therefore not amortised. Refer to the accounting policies for further details on amortisation.
(R’million)
2016
2015
2016
2015
Goodwill
Indefinite useful life
intangible assets
14.2
The carrying value is allocated to cash-generating
units as follows:
Exports
Central Africa
East Africa
Beverages
Snacks & Treats
Groceries
Value Added Meat Products
HPCB
1 056,6
32,2
25,7
580,5
–
72,3
16,4
314,9
2 098,6
1 056,6
32,6
26,2
580,5
–
72,3
6,0
464,9
473,8
45,3
–
194,6
119,6
729,9
–
74,1
473,8
45,3
–
194,6
119,6
729,9
–
224,1
2 239,1
1 637,3
1 787,3
15
Impairment testing of non-financial assets
If there is an indication of impairment, or at least annually, all indefinite life intangible assets and goodwill are assessed
for impairment unless stated otherwise. Goodwill acquired through business combinations, trademarks, licence agreements,
supplier relationships and customer lists have been allocated to cash-generating units to facilitate this assessment.
140
The key assumptions disclosed below are based on management’s experience and expectations. Based on this
experience and the well-established brands the group owns, management considers forecast cash flow periods in
excess of five years to be appropriate.
15.1 Methods and assumptions
The group applies a discounted cash flow methodology (value in use) to assess goodwill and certain indefinite life
intangible assets for impairment. Where this results in a value lower than the carrying amount, the higher of this value or
the fair value less cost of disposal is used. For the current year, all recoverable amounts were based on the value in use,
being the higher value. This methodology entails a calculation of the present value of future cash flows generated by
applicable cash-generating units over a period of five to 10 years and incorporates a terminal growth rate.
These cash flows have been based on the approved budget for the 2017 financial year which include assumptions
on profit before interest and tax, depreciation, working capital movements, capital maintenance expenditure, an
appropriate discount rate and a terminal growth rate. The terminal growth rate used is 1% (2015: 1%); however,
it is dependent on the industry and maturity of the cash-generating unit.
15.2 Discount rates
The group has calculated a weighted average cost of capital (WACC) which is utilised as a basis for performing the
value-in-use calculation. In cases where the CGU is deemed to be of greater risk than the group as a whole, a risk
premium has been included within the discount rate applied. The discount rate utilised for the purposes of the
impairment testing was between 11,5% and 17,0% (2015: 11,5% and 19,7%).
15.3 Growth rates
In determining the growth rate, consideration is given to the growth potential of the respective CGU. As part of this
assessment, a prudent outlook is adopted that mirrors an inflationary increase in line with the consumer price index
and real growth expected within the specific market. Based on these factors, the nominal price growth rates applied
for the purposes of the impairment testing ranges between 6% and 9%. Volume growth assumptions are based on
management’s best estimates of known strategies and future plans to grow the business. The terminal growth rate
applied was 1% (2015: 1% and 8%).
Notes to the financial statements continuedfor the year ended 30 September 2016Tiger Brands LimitedAnnual financial statements 2016 15
15.4
Impairment testing of non-financial assets continued
Specific impairments in the current year
The table below reflects the detail of the respective impairments for the year, with the comparatives noted.
(R’million)
HPCB – Goodwill and indefinite life intangible assets*
Grains – Property, plant and equipment**
Consumer Brands – Property, plant and equipment**
Nigeria – DFM property, plant and equipment
Nigeria – Deli Foods goodwill and intangible assets
Nigeria – Deli property, plant and equipment
International operations – Eastern Africa property, plant and equipment
Total
2016
(300,0)
(22,8)
(12,0)
–
–
–
–
(334,8)
2015
(29,6)
(22,4)
–
(1 371,1)
(250,4)
(11,8)
(5,6)
(1 690,9)
* This impairment was recognised as a result of the annual impairment assessment performed on goodwill and indefinite useful life
intangible assets. These assets relate to the Personal care category where growth in the current year slowed, reflecting the pressure
on consumer income exacerbated by competitors investing aggressively in pricing strategies and brand support. Given this, the
specific goodwill and intangible assets were written down to their total recoverable amount of R213,4 million (R158,4 million
for goodwill and R55,0 million on indefinite life intangible assets), being their value in use.
** As a result of the ongoing portfolio analysis and category optimisation processes, these assets were fully impaired down to a
recoverable amount of Rnil, being their value in use. This is also representative of fair value less cost to sell given the nature of
these assets.
The impairments recognised in the prior year within the TBCG business arose as a result of the annual impairment
assessments performed on goodwill and other intangible assets. These related impairments arose mainly as a result of
macro-economic factors as well as a decline in volumes within the respective segments. Furthermore, the carrying value
of the company’s investment in TBCG had also been evaluated and an impairment of R678,8 million was recognised
at a company level in the prior year.
141
15.5 Changes in key assumptions
The determined value in use of each CGU is most sensitive to the discount rate. No reasonably probable change
in any of the above key valuation assumptions would cause the carrying amount of CGUs to materially exceed their
recoverable amounts.
COMPANy
GROUP
2016
2015
(R’million)
2016
2015
967,6
421,1
967,6
421,1
1 388,7
6 598,4
1 388,7
6 570,6
16
16.1
Investments in associated companies
(For more detail refer Annexure B)
Listed, at cost
Unlisted, at cost less amounts written off
Share of accumulated other comprehensive
income
Share of accumulated profits since acquisition
Fair value of listed investments
The trading results of the associate companies
whose results are equity accounted in the
consolidated financial statements are as
follows:
Revenue (100%)
Turnover (100%)
Profit for the year (100%)
1 472,1
1 005,8
409,4
1 845,4
4 732,7
6 598,4
1 472,1
1 005,8
281,7
1 391,1
4 150,7
6 570,6
30 164,0
29 573,6
2 425,2
23 408,0
23 397,4
1 662,3
Tiger Brands LimitedAnnual financial statements 2016Annual financial statements 16
16.2
Investments in associated companies continued
Reconciliation of associates income
(R’million)
2016
Profit attributable to ordinary shareholders
of Tiger Brands before abnormal items
Abnormal items
Profit attributable to ordinary shareholders
of Tiger Brands
Less: Total dividends
Total share of associated companies‘
income less dividends received
2015
Profit attributable to ordinary shareholders
of Tiger Brands before abnormal items
Abnormal items
Profit attributable to ordinary shareholders
of Tiger Brands
Less: Total dividends
Total share of associated companies‘
income less dividends received
Oceana
Empresas
Carozzí
UAC Foods
National
Foods
Holdings
Limited
402,1
47,2
233,1
69,2
29,2
–
79,4
0,5
449,3
302,3
29,2
79,9
Total
743,8
116,9
860,7
(406,4)
454,3
308,7
0,7
207,1
–
32,7
–
56,6
(3,0)
605,1
(2,3)
309,4
207,1
32,7
53,6
602,8
(326,0)
276,8
16.3
The annual assessment of the criteria as noted in the accounting policies resulted in Oceana Fishing Limited being concluded
as a material associate of Tiger Brands for the current year and thus further disclosure relating to the associate is noted in
Annexure B.
142
Notes to the financial statements continuedfor the year ended 30 September 2016Tiger Brands LimitedAnnual financial statements 2016 COMPANy
GROUP
2016
2015
(R’million)
2016
2015
6,4
4,7
1 610,4
1 610,4
448,8
415,6
17
Other investments
Listed, at fair value*
Unlisted, at fair value
Employer controlled reserve invested by
pension fund on behalf of Tiger Brands
Limited
– Defined contribution
– Defined benefit (refer note 30)
BEE Phase II empowerment entities preference
shares (SPVs)
Notional investment in subsidiary companies
in terms of IFRS 2
* Listed investments include Adcock Ingram Holdings
Limited, Spar Limited and JSE Limited.
107,0
8,5
102,2
6,9
2,3
51,1
2,1
47,0
2 065,6
2 030,7
168,9
158,2
18
Loans
Loans to empowerment entities (refer note 18.1)
– Tiger Brands Foundation (SPV)
– Thusani II (SPV)
Other
485,2
91,3
2,3
578,8
378,5
72,9
2,1
453,5
3,2
3,2
3,4
3,4
143
18.1
19
19.1
Loans to empowerment entities (SPVs)
Loans to empowerment entities consist of
accrued dividends receivable on the investment
in preference shares in connection with the
BEE Phase II empowerment transaction (refer
note 17). Preference dividends are calculated
based on 93,5% of the prime interest rate
prevailing from time to time.
Deferred taxation
Reconciliation of deferred taxation
Balance at the beginning of the year
Adjustment in respect of currency profits/
(losses) taken directly to non-distributable
reserves
Fair value adjustments – investments
Adjustment taken directly to retained income
IAS 19 adjustments taken to other
comprehensive income
Exchange rate translation reserve
Income statement movement – continuing
operations
Adjustment in respect of currency (losses)/
profits taken directly to other comprehensive
income
Adjustment in respect of disposal of
investment in Adcock Ingram Holdings Limited
18,1
10,0
(0,9)
8,1
17,2
18,1
Balance at the end of the year
(149,8)
27,8
12,0
(5,1)
–
0,3
(1,1)
(4,3)
(0,5)
5,5
4,8
1,3
(67,1)
(201,0)
(0,1)
–
(210,9)
12,4
4,2
(149,8)
Tiger Brands LimitedAnnual financial statements 2016Annual financial statements
COMPANy
GROUP
2016
2015
(R’million)
2016
2015
17,2
17,2
18,1
18,1
17,2
18,1
144
37,9
18,7
10,7
48,6
48,6
19
Deferred taxation continued
19.2 Analysis of deferred taxation
Property, plant and equipment
Liability in respect of intangibles raised on
acquisition of businesses
Withholding taxes
Retirement fund surpluses
Fair value adjustments – investments
Prepayments
Provisions
Losses available for offset against future
taxable income
Income received in advance
Revaluation of loans
Other temporary differences
Disclosed on the statement of financial
position as follows:
Deferred tax asset
Deferred tax liability
20
Inventories
Raw materials
Partially processed goods
Finished goods and merchandise
Consumable stores and spares
Other
Inventory value, net of provisions
Inventories carried at net realisable value
Inventories written down and recognised in
cost of sales as an expense
Inventory provision deducted in arriving at
total inventories net of provisions
21
Trade and other receivables
21.1 Analysis of trade and other receivables
Trade receivables
VAT receivable
Sundry receivables
Prepayments
Defined benefit pension surplus (refer note 30)
Tax receivable
Rebates
18,7
Total gross receivables
Impairment provision – trade receivables*
18,7
Total net receivables
Trade receivables, which generally have
30 to 60-day terms, are non-interest-bearing
and are recognised and carried at original
invoice amount less an allowance for any
uncollectible amounts. Included within trade
receivables is derivative assets of R1,3 million
(2015: R18,9 million) which are carried at
fair value. Refer to note 33.7 for further
details.
* R468,1 million of the total movement from 2015
relates to the disposal of TBCG.
(471,7)
(426,4)
(150,9)
(29,7)
(30,9)
(10,2)
(5,2)
454,5
–
3,9
31,0
(1,7)
(152,8)
(37,6)
(28,9)
(5,1)
(0,8)
443,9
27,2
–
27,9
2,8
(210,9)
(149,8)
42,6
(253,5)
50,5
(200,3)
2 617,4
95,0
2 825,3
215,3
16,8
5 769,8
137,2
100,6
182,4
3 996,7
247,6
165,6
105,4
57,1
54,6
38,3
4 665,3
(73,0)
4 592,3
2 480,6
98,8
2 717,6
295,2
77,8
5 670,0
126,5
97,4
119,4
4 459,1
229,4
446,4
131,0
54,2
34,5
96,2
5 450,8
(555,1)
4 895,7
Notes to the financial statements continuedfor the year ended 30 September 2016Tiger Brands LimitedAnnual financial statements 2016 COMPANy
GROUP
2016
2015
(R’million)
2016
2015
21
21.2
21.3
Trade and other receivables continued
Impairment provisions
Balance at the beginning of the year
Utilised during the year
Reversed during the year*
Raised during the year
Balance at the end of the year
* R468,1 million of the total movement from 2015
relates to the disposal of TBCG.
Past due analysis
As at 30 September, the ageing of trade
receivables was as follows:
Not past due
Past due
Current to 60 days
61 to 90 days
91 to 180 days
> 180 days
(555,1)
22,3
481,5
(21,7)
(73,0)
(479,5)
–
6,8
(82,4)
(555,1)
3 559,1
2 898,8
367,6
17,6
37,4
15,0
912,0
112,7
39,3
496,3
Total
3 996,7
4 459,1
37,9
18,7
As at 30 September, the ageing of other
receivables, excluding tax receivable and
prepayments, was as follows:
Not past due
Past due
Current to 60 days
61 to 90 days
91 to 180 days
> 180 days
37,9
18,7
Total
21.4
Trade receivable analysis
Industry spread of trade receivables:
Retail
Wholesale/distributors
Export
Other
Total
Geographical spread of trade receivables:
South Africa
Rest of Africa
Europe
Rest of the world
Total
21.5 Collateral held
145
474,3
344,2
27,5
0,2
1,5
5,1
508,6
2 060,4
1 229,4
644,6
62,3
3 996,7
3 141,0
706,4
35,0
114,3
3 996,7
117,7
336,6
27,7
–
826,2
1 789,2
1 877,9
729,5
62,5
4 459,1
2 791,2
1 499,6
61,1
107,2
4 459,1
Fair value of collateral held
19,1
13,5
Collateral held represents hawker deposits
which may be applied against accounts
which are in default.
Tiger Brands LimitedAnnual financial statements 2016Annual financial statements COMPANy
GROUP
2016
2015
(R’million)
2016
2015
22
Share capital
22.1 Authorised share capital
250 000 000 (2015: 250 000 000)
ordinary shares of 10 cents each
Issued share capital
192 069 868 (2015: 192 069 868)
ordinary shares of 10 cents each
22.3
Share premium
Balance at the beginning of the year
Issues of shares
19,2
19,2 22.2
19,2
129,3
129,3
–
148,5
19,2
129,3
120,2
9,1
148,5
53 926 059
53 926 059 23
23.1
23.2
Unissued shares
Tiger Brands Limited shares held by subsidiary
10 326 758 (2015: 10 326 758) shares
are held as treasury stock.
Tiger Brands Limited shares held by
empowerment entities
18 994 458 (2015: 19 161 698) shares
are owned by empowerment entities.
19,2
19,2
19,2
129,3
129,3
–
148,5
19,2
129,3
120,2
9,1
148,5
53 926 059
53 926 059
146
4 004 073
4 004 073
23.3 Number of shares under the control of the
directors for purposes of the Tiger Brands
(1985) Share Purchase Scheme and the
Tiger Brands (1985) Share Option Scheme
4 004 073
4 004 073
24
Tax effect of other comprehensive
income
The tax effect of the items reflected in the
statement of comprehensive income is as
follows:
Net loss/(gain) on hedge of net investment
in foreign operations1
Foreign currency translation adjustments1
Net loss/(gain) on cash flow hedges1
Net (gain)/loss on available-for-sale
financial assets1
Remeasurement raised in terms of IAS 19R
1 Items that may be subsequently reclassified to
profit and loss. During the current year,
R10,3 million (2015: R7,0 million) was
reclassified to profit or loss.
12,0
(0,2)
0,1
(5,1)
0,3
7,1
(2,1)
12,4
–
3,1
4,8
18,2
Notes to the financial statements continuedfor the year ended 30 September 2016Tiger Brands LimitedAnnual financial statements 2016 COMPANy
GROUP
2016
2015
(R’million)
2016
2015
25
Trade and other payables
Trade payables
Rebates and incentives
Accruals
VAT payable
Other creditors
Defined benefit pension fund liability
(refer note 30)
21,7
22,4
21,7
22,4
2 291,3
713,6
507,1
177,9
464,1
2 176,3
628,8
745,9
185,1
1 058,0
3,1
2,7
4 157,1
4 796,8
Trade payables are non-interest-bearing and
are normally settled within 30 to 45-day
terms. Included within trade payables is
derivative liabilities of R29,1 million
(2015: R9,2 million) which are carried at fair
value. Refer to note 33.7 for further details.
26
Provisions
(R’million)
2016
Balance at the beginning of the year
Arising during the year
Utilised during the year
Balance at the end of the year
2015
Balance at the beginning of the year
Arising during the year
Utilised during the year
Balance at the end of the year
Leave pay
Other
Total
324,3
179,9
(171,8)
332,4
307,9
146,9
(130,5)
324,3
199,0
129,4
(135,5)
192,9
356,7
437,8
(595,5)
199,0
523,3
309,3
(307,3)
525,3
664,6
584,7
(726,0)
523,3
147
Leave pay is provided on accumulated leave balances at year end based on expected settlement amounts. Included
in other is a provision for cash-settled share-based payments of R44,8 million (2015: R64,2 million). Other provisions
include employee-related benefits of R104,8 million (2015: R141,0 million).
Tiger Brands LimitedAnnual financial statements 2016Annual financial statements
148
COMPANy
GROUP
2016
2015
(R’million)
2016
2015
27
Borrowings
In terms of the company’s articles of association
the group’s borrowings are unlimited. The secured
and unsecured loans are all at floating rates
unless otherwise mentioned.
27.1
Secured loans
Year of
repay-
ment Denomination
149,8
98,2
142,3
98,2
142,3
Interest rate
9,5% per annum
6,9% per annum
6,8% per annum
7,0% per annum
12,0% per annum
0% per annum
4,0% per annum
16,0% per annum
17,0% per annum
16,5% per annum
7,0% per annum
16,0% per annum
2017 Ethiopian birr
2017 South African rand
2018 CAF franc
2018 Nigerian naira
2020 Kenyan shilling
2056 Ethiopian birr
2016 Euro
2016 Nigerian naira
2016 Nigerian naira
2016 Nigerian naira
2021 Nigerian naira
2017 Nigerian naira
98,2
142,3
98,2
142,3
Analysis of secured loans by nature of security:
Pledge of shares (Chocolaterie Confiserie
Camerounaise, note 32)
Property, plant and equipment
Put option against Tiger Brands
11,3
13,3
98,2
3,8
22,0
1,2
–
–
–
–
–
–
98,2
38,3
13,3
149,8
613,3
–
73,6
142,3
11,1
35,3
1,2
2,9
138,8
23,2
47,5
53,0
84,4
142,3
397,4
73,6
613,3
Refer also to notes 13 and 33 for details of
security.
27.2 Unsecured loans
Year of
repay-
Interest rate
ment Denomination
8,1% per annum
14,5% per annum
8,0% per annum
** South African rand
2016 Kenyan shilling
2016 Nigerian naira
** Repayable on a 13-month notice period.
27.3 Capitalised finance leases
Repayment during the next year
Repayments later than one year and no later than
five years
Refer to note 28.4.
Liabilities under capitalised finance leases bear
interest at 9,5% (2015: 9,5%) per annum.
Capitalised finance leases relate to plant and
equipment with a book value of R4,2 million
(2015: R6,2 million) as per note 13.
1 000,0
1 000,0
–
–
3,2
2,2
1,0
1 042,9
1 000,0
20,6
22,3
5,2
2,1
3,1
98,2
142,3
1 153,0
1 661,4
Notes to the financial statements continuedfor the year ended 30 September 2016Tiger Brands LimitedAnnual financial statements 2016
COMPANy
GROUP
2016
2015
(R’million)
2016
2015
47,2
51,0
98,2
47,2
–
47,2
27.4
Instalments disclosed as:
Short-term borrowings
Long-term borrowings
43,8
98,5
142,3
194,9 27.5
151,1
Short-term borrowings
Bank overdrafts
43,8
Current portion of long-term borrowings
Group commitments
28
28.1 Approved capital expenditure, which will be
financed from the group’s own resources, is as
follows:
Contracted
Approved
83,7
1 069,3
1 153,0
1 695,7
1 612,0
83,7
445,6
1 215,8
1 661,4
3 624,0
3 178,4
445,6
92,0
1 041,7
1 133,7
148,5
970,9
1 119,4
28.2
Additional commitments
Additional capital requirements of R1,3 billion are expected to be approved in 2017.
The capital commitments noted above include various capital efficiency and expansion projects and will be funded from
normal operating cash flows and the utilisation of existing borrowing facilities.
149
28.3 Commitments in respect of operating leases
GROUP
(R’million)
2016
During 2017
During 2018
During 2019
During 2020
During 2021 and thereafter
2015
During 2016
During 2017
During 2018
During 2019
During 2020 and thereafter
Land and
buildings
Motor
vehicles
Property,
plant and
equipment
Total
commitments
35,1
19,0
6,0
–
–
82,2
66,5
49,8
33,4
26,0
35,9
153,2
3,6
2,3
1,7
1,5
89,1
58,1
35,1
27,5
60,1
257,9
45,0
363,0
60,5
44,4
21,6
12,5
4,3
51,5
35,7
26,5
15,5
10,8
4,0
4,4
2,9
1,2
0,7
116,0
84,5
51,0
29,2
15,8
143,3
140,0
13,2
296,5
With the exception of the lease described below, operating leases are generally three to six years in duration, without
purchase options and in certain instances have escalation clauses of between 7,0% and 10,0% or are linked to the
prime rate of interest or Consumer Price Index (CPI). Other contingent rentals are generally not applicable. One lease,
relating to fruit processing equipment, has a remaining contract period of one year, contingent rental linked to tonnes of
fruit processed and escalates based on the American CPI, amounts to R5,8 million (2015: R5,6 million).
Tiger Brands LimitedAnnual financial statements 2016Annual financial statements 28
Group commitments continued
28.4 Commitments in respect of finance leases
The group has finance leases for various items of plant and machinery. These leases have terms of renewal with a
purchase option and are linked to the prime interest rate. Renewals are at the option of the specific entity that holds
the lease. Future minimum lease payments under finance leases, together with the present value of the net minimum
lease payments, are as follows:
GROUP
(R’million)
Within one year
After one year but not more than five years
Total minimum lease payments
Less: Amounts representing finance charges
Total
Please refer to note 27.3 for further details.
28.5 Commitments in respect of inventories
2016
2015
Minimum
payments
Present value
of payments
Minimum
payments
Present value
of payments
2,7
1,0
3,7
(0,5)
3,2
2,2
1,0
3,2
–
3,2
2,6
3,4
6,0
(0,8)
5,2
2,1
3,1
5,2
–
5,2
In terms of its normal business practice, certain group operations have entered into commitments to purchase certain
agricultural inputs over their respective seasons.
28.6 Commitments in respect of transport
150
The group maintains long-term contracts, including certain minimum payments, with various transport companies for the
distribution of its products.
29
Share-based payment
The total expense recognised for employee services received during the year to 30 September 2016 is R88,9 million
(2015: R29,2 million). No expense was recognised in the current or previous financial year relating to the previous
equity-settled share-based scheme. Of the total expense recognised, the portion arising from the share appreciation
rights, performance shares and restricted shares option schemes amounted to R2,6 million, R18,0 million and
R17,0 million (2015: R17,8 million, R18,1 million and R9,9 million) respectively. The remaining expense relates to the
cost associated with the BMT I of R16,4 million and BMT II of R16,9 million (2015: R22,7 million and R21,6 million)
respectively.
Detailed disclosure of each scheme and the respective assumptions and valuation inputs have been included in
Annexure D.
Notes to the financial statements continuedfor the year ended 30 September 2016Tiger Brands LimitedAnnual financial statements 2016
(R’million)
2016
2015
30
Pension obligations
Movement in the net asset/(liability) recognised in the statement of financial position
Balance at the beginning of the year
Contributions paid
Other movements (net expense in the income statement)
Interest cost
Current service cost
Interest on plan assets
Interest on limit
Settlement cost
Remeasurements recognised in other comprehensive income
Net actuarial gains released in terms of IAS 19R
Unrecognised due to paragraph 65 limit
Balance at the end of the year
The net asset is included in the statement of financial position as follows:
Investments – refer note 17
Other receivables – refer note 21
Other payables – refer note 25
98,5
243,3
(239,1)
(26,2)
(246,1)
35,1
(1,9)
–
2,4
10,1
(7,7)
105,1
51,1
57,1
(3,1)
105,1
103,8
228,1
(218,9)
(26,2)
(227,7)
33,9
–
1,1
(14,5)
6,9
(21,4)
98,5
47,0
54,2
(2,7)
98,5
Detailed disclosure and the respective assumptions and valuation inputs have been
included in Annexure E.
151
31
Post-retirement medical aid obligations
Balance at the end of the year
Present value of obligations
Liability at reporting date
Movement in the liability recognised in the statement of financial position:
Balance at the beginning of the year
Contributions paid
Other expenses included in staff costs
Current service cost
Interest cost
Actuarial losses released in terms of IAS 19R
Balance at the end of the year
(666,0)
(666,0)
(643,1)
(643,1)
(643,1)
(626,4)
41,1
(64,0)
(3,9)
(56,5)
(3,6)
38,4
(55,1)
(3,5)
(51,5)
(0,1)
(666,0)
(643,1)
The employer’s estimate of contributions expected to be paid for the 2017 financial year is R44,9 million
(2016: R41,0 million).
Detailed disclosure and the respective assumptions and valuation inputs have been included in Annexure F.
Tiger Brands LimitedAnnual financial statements 2016Annual financial statements
(R’million)
32
Guarantees and contingent liabilities
Guarantees and contingent liabilities
GROUP
2016
2015
12,8
16,9
COMPANy
Guarantees exist against the company for the obligations of certain subsidiaries amounting to R3,5 million at
30 September 2016 (2015: R91,3 million).
Shares in Chocolaterie Confiserie Camerounaise SA (Chococam), acquired on 1 August 2008 have been pledged
as security for the foreign loan utilised to acquire the subsidiary. Refer to note 27.1.
33
Financial instruments
The group’s objective in using financial instruments is to reduce the uncertainty over future cash flows arising principally
as a result of commodity price, currency and interest rate fluctuations. The use of derivatives for the hedging of firm
commitments against commodity price, foreign currency and interest rate exposures is permitted in accordance with
group policies, which have been approved by the board of directors. Where significant finance is taken out, this is
approved at board meetings.
The foreign exchange contracts outstanding at year end are marked-to-market at closing spot rate.
The group finances its operations through a combination of retained surpluses, bank borrowings and long-term loans.
The group borrows short-term funds with fixed or floating rates of interest through a subsidiary company, Tiger Consumer
Brands Limited.
152
The main risks arising from the group’s financial instruments are, in order of priority, procurement risk, foreign currency
risk, interest rate risk, liquidity risk and credit risk as detailed below.
33.1
Procurement risk (commodity price risk)
Commodity price risk arises from the group being subject to raw material price fluctuations caused by supply
conditions, weather, economic conditions and other factors. The strategic raw materials acquired by the group include
wheat, maize, rice, oats and sorghum.
The group uses commodity futures and options contracts or other derivative instruments to reduce the volatility of
commodity input prices of strategic raw materials. These derivative contracts are only taken out to match an underlying
physical requirement for the raw material. The group does not write naked derivative contracts.
The group has developed a comprehensive risk management process to facilitate, control and monitor these risks. The
procurement of raw materials takes place in terms of specific mandates given by executive management. Position
statements are prepared on a monthly basis and these are monitored by management and compared to the mandates.
The board has approved and monitors this risk management process, inclusive of documented treasury policies,
counterparty limits, controlling and reporting structures.
Notes to the financial statements continuedfor the year ended 30 September 2016Tiger Brands LimitedAnnual financial statements 2016
33
33.1
Financial instruments continued
Procurement risk (commodity price risk) continued
At year end, the exposure to derivative contracts relating to strategic raw materials is as follows:
(R’million)
2016
Maize and wheat
Futures
2015
Maize and wheat
Futures
GROUP
Derivative contracts expiring
within 0 – 3 months
Unrealised
(profit)/
loss at
30 September
Hedged value
12,7
332,6
(3,4)
128,1
Commodity price sensitivity analysis
The following table details the sensitivity of the group’s profit to a 10% increase and decrease in the price of wheat,
rice, maize, sorghum and other commodities, excluding the impact of cash flow hedges. A +10% increase would result
in an outflow whereas a –10% decrease would result in an inflow.
The 10% stringency is the sensitivity rate used when reporting the commodity price risk internally to key management
personnel and represents management’s assessment of the possible change in the relevant commodity prices.
153
(R’million)
Milling and Baking
Other grains
Other*
Total
* Other includes tomato paste, sugar, pork, soya and sundry other items.
Commodity price sensitivity is not applicable to the company.
GROUP
Profit/(loss) after tax
2016
2015
(+10%)/–10%
(+10%)/–10%
63,0
137,0
76,1
276,1
256,0
126,8
46,7
429,5
Tiger Brands LimitedAnnual financial statements 2016Annual financial statements
33
33.2
Financial instruments continued
Foreign currency risk
The group enters into various types of foreign exchange contracts as part of the management of its foreign exchange
exposures arising from its current and anticipated business activities.
As the group operates in various countries and undertakes transactions denominated in foreign currencies, exposures
to foreign currency fluctuations arise. Exchange rate exposures on transactions are managed within approved policy
parameters utilising forward exchange contracts or other derivative financial instruments in conjunction with external
consultants who provide financial services to group companies as well as contributing to the management of the
financial risks relating to the group’s operations.
The group does not hold foreign exchange contracts in respect of foreign borrowings, as its intention is to repay these
from its foreign income stream or subsequent divestment of its interest in the operation. Foreign exchange differences
relating to investments, net of their related borrowings, where this is viewed as part of one investment, are reported as
translation differences in the group’s net other comprehensive income until the disposal of the net investment, at which
time exchange differences are recycled through profit or loss.
Forward exchange contracts are mainly entered into to cover net import exposures, after setting off anticipated export
proceeds on an individual currency basis. The fair value is determined using the applicable foreign exchange spot rates
at 30 September 2016.
The exposure and concentration of foreign currency risk is included in the table below.
GROUP
(R’million)
2016
Financial assets
South
African
rand
US
dollar
Pound
sterling
Nigerian
naira
Euro
Other*
Total
154
Accounts receivable
4 013,1
148,8
Cash and cash equivalents
121,4
403,8
10,7
1,1
Financial liabilities
Borrowings**
Accounts payable
2015
Financial assets
(2 628,4)
–
–
(4 300,9)
(29,4)
(10,7)
17,4
17,6
–
(9,7)
13,2
7,3
334,5
4 537,7
185,8
737,0
(3,8)
(132,8)
(2 765,0)
(54,5)
(275,3)
(4 680,5)
Accounts receivable
3 631,3
Cash and cash equivalents
386,7
245,5
390,3
12,5
4,1
18,8
8,5
617,5
113,5
335,6
4 861,2
148,5
1 051,6
Financial liabilities
Borrowings**
Accounts payable
(2 918,9)
–
–
–
(1 551,3)
(369,6)
(4 839,8)
(3 880,5)
(185,5)
(10,3)
(28,5)
(927,4)
(284,7)
(5 316,9)
* Other includes the Australian dollar, Canadian dollar, Japanese yen, Swiss franc, New Zealand dollar, Cameroon franc and
Kenyan shilling.
** In 2016, R98,2 million (2015: R270,7 million) is held by the company.
Notes to the financial statements continuedfor the year ended 30 September 2016Tiger Brands LimitedAnnual financial statements 2016 33
33.2
Financial instruments continued
Foreign currency risk continued
The following spot rates were used to translate financial instruments denominated in foreign currency:
GROUP
US dollar
Pound sterling
Euro
2016
2015
Assets
Liabilities
Average
Assets
Liabilities
Average
13,79
17,91
15,46
13,81
17,93
15,48
13,80
17,92
15,47
13,87
21,04
15,52
13,88
21,05
15,53
13,87
21,05
15,52
Forward exchange contracts outstanding at the reporting date all fall due within 12 months. A summary of forward
exchange contract positions bought to settle group foreign liabilities and sold to settle group foreign assets is shown
below.
2016
2015
Foreign
currency
(in million)
Average
rate
Rand
(in million)
Foreign
currency
(in million)
Average
rate
Rand
(in million)
GROUP
Foreign currency sold
US dollar
Pound sterling
Euro
Other currencies
Foreign currency purchased
US dollar
Pound sterling
Euro
Other currencies
1,6
0,2
0,3
13,85
17,96
15,54
39,3
3,5
3,8
13,87
18,15
15,64
22,3
3,1
4,6
10,7
545,0
62,9
58,8
16,2
4,5
0,2
0,4
13,94
21,11
15,60
14,5
2,0
7,3
13,96
21,14
15,96
62,9
3,2
6,7
7,4
202,0
42,5
116,1
6,2
155
2016
2015
Foreign
currency
(in million)
Average
rate
Rand
(in million)
Foreign
currency
(in million)
Average
rate
Rand
(in million)
GROUP
Unhedged foreign currency monetary assets
US dollar
Pound sterling
Euro
Other currencies
Unhedged foreign currency monetary
liabilities
US dollar
Pound sterling
Euro
Other currencies
16,3
0,7
2,2
13,79
17,90
15,46
0,4
–
0,1
13,82
17,89
15,52
224,3
11,8
33,6
19,7
5,7
0,2
2,1
0,2
21,3
0,7
1,4
13,87
21,03
15,52
0,5
–
0,1
14,62
17,91
15,14
295,6
15,3
22,3
12,3
7,0
0,2
2,1
0,2
Tiger Brands LimitedAnnual financial statements 2016Annual financial statements 33
33.2
Financial instruments continued
Foreign currency risk continued
Cash flow hedges
At 30 September 2016, the group had foreign exchange contracts outstanding designated as hedges of future
purchases from suppliers outside South Africa for which the group has firm commitments or highly likely forecast
transactions.
A summary of these contracts are:
2016
2015
Foreign
currency
(in million)
Average
rate
Rand
(in million)
Foreign
currency
(in million)
Average
rate
Rand
(in million)
GROUP
Foreign currency bought
US dollar
Euro
Pound sterling
Other currencies
25,1
3,1
3,0
13,88
18,06
14,38
348,5
56,3
43,9
16,2
10,7
5,8
1,9
13,97
16,07
21,15
150,1
93,6
40,1
6,2
The terms of the forward currency contracts have been negotiated to match the terms of the commitments.
The cash flow hedge of expected future purchases was assessed to be effective and an unrealised profit of R13,6 million
(2015: profit of R13,8 million) relating to the hedging instrument was included in other comprehensive income.
156
Timing of cash flows relating to foreign currency is as follows:
Foreign currency (in millions)
US dollar
Pound sterling
Euro
Japanese yen
GROUP
1 – 6
months
25,1
3,1
3,0
107,6
7 – 12
months
–
–
–
–
These are expected to affect the income statement in the following year.
During the year, R30,1 million (2015: R13,1 million) was released from other comprehensive income and included
in the carrying amount of the non-financial asset or liability (highly probable forecast transactions).
There are no forecast transactions for which hedge accounting was previously used but is no longer expected to occur.
Ineffective hedges to the value of R12,4 million (2015: Rnil) have been recognised in profit or loss.
Notes to the financial statements continuedfor the year ended 30 September 2016Tiger Brands LimitedAnnual financial statements 2016 33
33.2
Financial instruments continued
Foreign currency risk continued
Foreign currency sensitivity
The following table details the group and company’s sensitivity to a 10% weakening/strengthening in the ZAR against
the respective foreign currencies.
This sensitivity analysis includes only material outstanding foreign currency denominated monetary items and adjusts their
translation at the reporting date for a 10% change in foreign currency rates. A positive number indicates an increase in
profit and other comprehensive income.
(R’million)
GROUP
USD +10%
USD –10%
Pound sterling +10%
Pound sterling –10%
EUR +10%
EUR –10%
Other +10%
Other –10%
Total +10%
Total –10%
COMPANy
USD +10%
USD –10%
Other +10%
Other –10%
Total +10%
Total –10%
Other comprehensive income
P&L
2016
2015
2016
2015
(34,0)
34,0
(6,3)
6,3
(6,8)
6,8
(2,9)
2,9
(50,0)
50,0
–
–
–
–
–
–
(13,2)
13,2
(3,7)
3,7
(10,5)
10,5
0,2
(0,2)
(27,2)
27,2
–
–
–
–
–
–
(24,2)
24,2
(0,5)
0,5
(0,3)
0,3
–
–
(25,0)
25,0
7,0
(7,0)
9,8
(9,8)
16,8
(16,8)
–
–
–
–
–
–
–
–
–
–
12,7
(12,7)
6,6
(6,6)
19,3
(19,3)
157
33.3
Interest rate risk management
Interest rate risk results from the cash flow and financial performance uncertainty arising from interest rate fluctuations.
Financial assets and liabilities affected by interest rate fluctuations include bank and cash deposits as well as bank
borrowings. At the reporting date, the group cash deposits were accessible immediately or had maturity dates up
to six months.
The interest rates earned on these deposits closely approximate the market rates prevailing.
Interest rate sensitivity
The sensitivity analysis addresses only the floating interest rate exposure emanating from the net cash position. The
interest rate exposure has been calculated with the stipulated change taking place at the beginning of the financial
year and held constant throughout the reporting period.
If interest rates had increased/(decreased) by 1% and all other variables were held constant, the profit for the year
ended would increase/(decrease) as detailed in the table below due to the use of the variable interest rates applicable
to the long-term borrowings and short-term borrowings. The fixed interest rate on the borrowings would not affect the
financial performance. Any gain or loss would be unrealised and consequently the notional impact is not presented.
COMPANy
GROUP
2016
2015
(R’million)
2016
2015
0,4
1,8
2,2
1,4
1,9
3,3
Profit or (loss) after tax
ZAR borrowings
(+1%)/–1%
Foreign borrowings
(+1%)/–1%
Total
(+1%)/–1%
25,4
2,3
27,7
35,8
10,1
45,9
Tiger Brands LimitedAnnual financial statements 2016Annual financial statements 33
33.4
Financial instruments continued
Liquidity risk management
Liquidity risk arises from the seasonal fluctuations in short-term borrowing positions. A material and sustained shortfall
in cash flows could undermine investor confidence and restrict the group’s ability to raise funds.
The group manages its liquidity risk by monitoring weekly cash flows and ensuring that adequate cash is available
or borrowing facilities maintained. In terms of the articles of association, the group’s borrowing powers are unlimited.
Other than the major loans disclosed in note 27 to these annual financial statements which are contracted with various
financial institutions, the group has no significant concentration of liquidity risk with any other single counterparty.
The group’s liquidity exposure is represented by the aggregate balance of financial liabilities as indicated in the
categorisation table in note 33.7.
Contractual maturity for non-derivative financial liabilities
The following tables detail the group and company’s remaining contractual maturity for non-derivative financial liabilities.
The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date
on which the group and company will be required to pay. The table includes both interest and principal cash flows.
The “finance charge” column represents the possible future cash flows attributable to the instrument included in the
maturity analysis, which are not included in the carrying amount of the financial liability.
Carrying
amount
Finance
charge
0 – 6
months
7 – 12
months
1 – 5
years
> 5 years
(R’million)
GROUP
2016
Trade and other payables
Borrowings (long and short term)*
Guarantees and future commitments
not on the statement of financial
position
158
3 004,9
1 153,0
–
(324,0)
3 001,1
342,1
3,8
65,6
–
1 068,1
–
–
12,8
–
–
Total
4 157,9
(324,0)
3 356,0
69,4
1 068,1
2015
Trade and other payables
Borrowings (long and short term)*
Guarantees and future commitments
not on the statement of financial
position
2 805,1
1 661,4
–
(252,3)
2 804,0
262,4
1,1
356,8
–
1 293,3
–
–
289,5
–
–
Total
4 466,5
(252,3)
3 355,9
357,9
1 293,3
* Excludes bank overdrafts of R1 612,0 million (2015: R3 178,4 million) and cash of R737,0 million (2015: R1 051,6 million).
These are repayable on demand and subject to annual review.
Carrying
amount
Finance
charge
0 – 6
months
7 – 12
months
1 – 5
years
> 5 years
(R’million)
COMPANy
2016
Borrowings (long and short term)
Intergroup loan accounts
Guarantees not on the statement
of financial position
Total
2015
Borrowings (long and short term)
Intergroup loan accounts
Guarantees not on the statement
of financial position
98,2
557,8
(12,3)
(237,1)
–
–
656,0
(249,4)
–
–
3,5
3,5
59,5
–
–
51,0
794,9
–
59,5
845,9
270,7
544,8
(22,7)
(204,3)
151,1
–
43,8
–
98,5
749,1
–
–
91,3
–
–
Total
815,5
(227,0)
242,4
43,8
847,6
Refer to notes 28.3 and 28.4 for disclosure relating to operating and finance lease commitments.
–
1,2
–
1,2
–
1,2
–
1,2
–
–
–
–
–
–
–
–
Notes to the financial statements continuedfor the year ended 30 September 2016Tiger Brands LimitedAnnual financial statements 2016 Financial instruments continued
33
33.5 Credit risk management
GROUP
Credit risk arises from the risk that a counterparty may default or not meet its obligations timeously.
The group limits its counterparty exposure arising from financial instruments by only dealing with well-established
institutions of high credit standing. The group does not expect any counterparties to fail to meet their obligations given
their high credit ratings.
Credit risk in respect of the group’s customer base is controlled by the application of credit limits and credit monitoring
procedures. Certain significant receivables are monitored on a daily basis. Where appropriate, credit guarantee
insurance is obtained.
The group’s credit exposure, in respect of its customer base, is represented by the net aggregate balance of amounts
receivable. Concentrations of credit risk are disclosed in note 21.4.
Credit risk exposure at 30 September 2016 in respect of guarantees amounted to R12,8 million (2015: R16,9 million).
Refer to note 32.
COMPANy
Credit risk exposure at 30 September 2016 relating to guarantees amounted to R3,5 million (2015: R91,3 million).
Refer to note 32.
33.6 Capital management
The primary objective of the company and group’s capital management is to ensure that it maintains a strong credit
rating and healthy capital ratios in order to support its business and maximise shareholder value.
The company and group manages their capital structure, calculated as equity plus net debt, and make adjustments to
it, in light of changes in economic conditions. To maintain or adjust the capital structure, the company and group may
adjust the dividend payment to shareholders, return capital to shareholders, issue new shares or increase or decrease
levels of debt. No changes were made in the objectives, policies or processes during the years ended 30 September
2016 and 30 September 2015.
159
The company and group monitor capital using a gearing ratio, which is net debt divided by total equity.
The company and group target a long-term gearing ratio of 30% to 40%, except when major investments
are made where this target may be exceeded.
COMPANy
GROUP
2016
(282,1)
51,0
47,2
(183,9)
9 821,0
(1,9)
2015
(127,1)
98,5
194,9
166,3
9 214,0
(R’million)
Cash and cash equivalents
Long-term borrowings
Short-term borrowings
Net debt/(cash)
Total equity
2016
2015
(737,0)
1 069,3
1 695,7
2 028,0
16 033,9
(1 051,6)
1 215,8
3 624,0
3 788,2
13 777,6
1,8
Net debt/(cash) to equity (%)
12,6
27,5
Tiger Brands LimitedAnnual financial statements 2016Annual financial statements
Financial instruments continued
33
33.7 Categorisation of financial assets and liabilities
Loans and
receivables
Amortised
cost
Financial
assets
available
for sale
Fair value
Other
liabilities
Amortised
cost
Financial
instruments
at
fair value
through
profit or loss
Non-
financial
items
Total book
value
(R’million)
GROUP
2016
Assets
Other investments
Loans
Trade and other receivables
Cash and cash equivalents
Total
Shareholders’ equity and liabilities
Long-term borrowings
Trade and other payables
Short-term borrowings
160
Total
2015
Assets
–
53,4
3,2
4 183,4
737,0
4 977,0
–
–
–
–
–
–
–
115,5
–
–
–
115,5
–
–
–
–
–
–
Other investments
Loans
Trade and other receivables
Cash and cash equivalents
49,1
109,1
3,4
4 034,6
1 051,6
–
–
–
Total
5 138,7
109,1
Shareholders’ equity and liabilities
Long-term borrowings
Trade and other payables
Short-term borrowings
Total
–
–
–
–
–
–
–
–
–
–
Refer to the accounting policies for further details on the above classifications.
–
–
–
–
–
–
–
(1 069,3)
(3 008,0)
(1 695,7)
–
–
–
1,3
–
19 027,5
19 027,5
–
–
168,9
3,2
407,6
4 592,3
–
737,0
1,3
19 435,1
24 528,9
–
–
(17 606,8)
–
(17 606,8)
(1 069,3)
(29,1)
(1 120,0)
(4 157,1)
–
–
(1 695,7)
(5 773,0)
(29,1)
(18 726,8)
(24 528,9)
–
–
–
–
–
–
–
(1 215,8)
(2 807,8)
(3 624,0)
–
18 745,4
18 745,4
–
–
–
–
158,2
3,4
18,9
842,2
4 895,7
–
–
1 051,6
18,9
19 587,6
24 854,3
– (15 217,7) (15 217,7)
(1 215,8)
–
–
(9,2)
(1 979,8)
(4 796,8)
–
–
(3 624,0)
(7 647,6)
(9,2) (17 197,5) (24 854,3)
Notes to the financial statements continuedfor the year ended 30 September 2016Tiger Brands LimitedAnnual financial statements 2016 Financial instruments continued
33
33.7 Categorisation of financial assets and liabilities continued
Loans and
receivables
Amortised
cost
Financial
assets
available
for sale
Fair value
Other
liabilities
Amortised
cost
Financial
instruments
at
fair value
through
profit or loss
Non-
financial
items
Total book
value
(R’million)
COMPANy
2016
Assets
Other investments
Loans
Trade and other receivables
Cash and cash equivalents
Total
Shareholders’ equity and liabilities
Long-term borrowings
Trade and other payables
Short-term borrowings
Total
2015
Assets
Other investments
Loans
Trade and other receivables
Cash and cash equivalents
499,5
2 059,2
3 265,5
36,5
282,1
6 142,8
–
–
–
–
–
499,5
2 026,0
3 060,3
16,6
127,1
–
6,4
–
–
–
6,4
–
–
–
–
–
–
4,7
–
–
–
–
–
–
–
–
–
(557,8)
(51,0)
(21,7)
(47,2)
(677,7)
–
–
–
–
–
–
Total
5 729,5
4,7
Shareholders’ equity and liabilities
Long-term borrowings
Trade and other payables
Short-term borrowings
Total
–
–
–
–
–
–
–
–
–
–
(544,8)
(98,5)
(22,4)
(194,9)
(860,6)
Refer to the accounting policies for further details on the above classifications.
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
4 337,4
–
–
12,1
–
4 836,9
2 065,6
3 265,5
48,6
282,1
4 349,5
10 498,7
(9 821,0)
–
(10 378,8)
(51,0)
–
–
(21,7)
(47,2)
(9 821,0)
(10 498,7)
4 338,3
4 837,8
–
–
2 030,7
3 060,3
2,1
18,7
–
127,1
4 340,4
10 074,6
(9 214,0)
–
(9 758,8)
(98,5)
–
–
(22,4)
(194,9)
(9 214,0) (10 074,6)
161
Tiger Brands LimitedAnnual financial statements 2016Annual financial statements 33
33.8
Financial instruments continued
Fair value hierarchy
Financial instruments are normally held by the group until they close out in the normal course of business. The fair
values of the group’s financial instruments, which principally comprise put, call and futures positions with SAFEX,
forward exchange contracts and listed investments, approximate their carrying values. The maturity profile of these
financial instruments fall due within 12 months. The maturity profile of the group’s long-term liabilities is disclosed in
note 27.1 of these annual financial statements.
There are no significant differences between carrying values and fair values of financial assets and liabilities, except for
intercompany loans at a company level, which are eliminated on consolidation.
Trade and other receivables, investments and loans, and trade and other payables carried on the statement of financial
position approximate the fair values thereof except for amounts owed by subsidiaries where the fair value is R2,0 billion
(2015: R2,1 billion) calculated using the effective interest rate method linked to market-related interest rates of 5,75%
(2015: 4,75%) and is disclosed as level 2.
Long-term and short-term borrowings are measured at amortised cost using the effective interest rate method and the
carrying amounts approximate their fair value.
The group used the following hierarchy for determining and disclosing the fair value of financial instruments by valuation
technique:
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.
162
As at 30 September, the group held the following financial instruments measured at fair value:
2016
2015
Level 1
Level 2
Level 3**
Total
Level 1
Level 2
Level 3**
Total
GROUP
Assets measured at
fair value
Available-for-sale
financial assets
Other investments
Derivatives
Liabilities measured
at fair value
107,0
–
3,3
1,3
5,2
–
115,5
1,3
102,2
–
2,5
18,9
4,4
–
109,1
18,9
Derivatives
–
(29,1)
–
(29,1)
–
(9,2)
–
(9,2)
COMPANy
Assets measured at
fair value
Available-for-sale
financial assets
Other investments
Derivatives
Liabilities measured
at fair value
Derivatives
–
–
–
1,2
–
5,2
–
6,4
–
–
–
0,3
–
4,4
–
4,7
–
–
–
–
–
–
–
–
** The value of the investment in Group Risk Holdings is based on Tiger Brands’ proportionate share of the net asset value of the company.
There are no other significant inputs that are used in the valuation and any changes in these inputs would not result in a significant
fair value change.
Notes to the financial statements continuedfor the year ended 30 September 2016Tiger Brands LimitedAnnual financial statements 2016
34
Related-party disclosures
The board of directors of Tiger Brands Limited has given general declarations in terms of section 75 of the Companies
Act on directors’ personal financial interests. These declarations indicate that certain directors hold positions of influence
in other entities which are suppliers, service providers, customers and/or competitors of Tiger Brands Limited.
Transactions conducted with these director-related customers and suppliers were on an arm’s length basis.
The sales to and purchases from related parties are made at normal market prices. Outstanding balances at the
year end are unsecured and settlement occurs in cash. For the year ended 30 September 2016, the group has not
recorded any impairment of receivables relating to amounts owed by related parties (2015: Rnil). This assessment is
undertaken at each financial year through examining the financial position of the related party and the market in which
the related party operates.
Details of material transactions with related parties not disclosed elsewhere in the financial statements are as follows:
(R’million)
2016
GROUP
Related party – associates
Oceana Group Limited
Empresas Carozzí (Chile)
National Foods Holdings Limited
UAC Foods
2015
GROUP
Related party – associates
Oceana Group Limited
Empresas Carozzí (Chile)
National Foods Holdings Limited
UAC Foods
(R’million)
Other related parties
Key management personnel**
Short-term employee benefits
Post-employment and medical benefits
Share-based payments
Total compensation paid to key management personnel
Management
fees
Directors‘
fees
Amounts
owed by
related parties
163
–
–
3,4
10,9
–
–
2,9
9,5
0,5
4,7
–
–
0,6
–
–
–
–
–
19,1
25,9
–
0,3
1,1
18,9
GROUP
2016
2015
147,8
9,1
18,4
175,3
108,6
10,4
28,7
147,7
** Key management personnel comprises the top tier of the organisation and the managing executives of the individual businesses.
Tiger Brands LimitedAnnual financial statements 2016Annual financial statements 34
35
164
(R’million)
2016
2015
Amounts
owed
by/(to)
related
parties
Dividends
received
Amounts
owed
by/(to)
related
parties
Dividends
received
–
900,0
–
–
–
–
–
–
–
33,0
(100,8)
(239,0)
0,4
702,4
(201,6)
499,5
18,9
0,2
33,0
(86,6)
(240,2)
0,4
702,4
(201,6)
499,5
18,9
0,2
–
1 230,0
–
–
–
–
–
–
–
Related-party disclosures continued
COMPANy
Related party – intergroup
Subsidiaries1
Durban Confectionery Works Proprietary Limited
Tiger Consumer Brands Limited
Tiger Brands (Mauritius) Limited
Enterprise Foods Proprietary Limited
Langeberg Holdings Limited
Langeberg Foods Africa Proprietary Limited
Langeberg & Ashton Foods Proprietary Limited
The Duntulum Trust
Gloriande NV
Tiger Food Brands Intellectual Property Holding
Company Proprietary Limited
Pharma I Holdings Proprietary Limited
Investment and dormant companies
Chocolaterie Confiserie Camerounaise
Deli Foods Nigeria Limited
East Africa Tiger Brands Industries
Davita Trading Proprietary Limited
Empowerment entities
Tiger Brands Foundation (SPV)
Thusani II (SPV)
Associates
Oceana Group Limited
National Foods Holdings Limited
UAC Foods
1 Interest-free with no fixed repayment terms. Not repayable before 30 September 2017 except for the amount owing by Langeberg &
Ashton Foods Proprietary Limited, and the amount owing to Tiger Consumer Brands Limited that bear interest as may be agreed upon
from time to time and are repayable on demand. East Africa Tiger Brands Industries’ loan is interest bearing and has a fixed
repayment schedule.
381,1
1 227,6
149,1
–
31,2
46,5
–
413,6
1 227,6
149,1
–
31,1
94,1
–
325,0
–
–
43,4
–
8,8
75,0
700,0
–
–
58,2
–
–
210,0
188,9
24,5
29,8
211,9
54,1
7,5
–
1,1
18,9
–
19,1
25,9
145,0
28,9
378,5
72,9
168,4
33,3
485,2
91,3
(R’million)
Analysis of profit/(loss) from discontinued operations
The combined results of the discontinued operation (TBCG) included in the profit
for the year are set out below.
Profit/(loss) for the year from discontinued operations (attributable to owners
of the company)
Turnover
Expenses
Operating income/(loss) before impairments and abnormal items
Impairments
Profit on disposal of subsidiary
Operating income/(loss) after impairments and abnormal items
Finance costs
Profit/(loss) before taxation
Taxation
Profit/(loss) for the year from discontinued operation
Attributable to non-controlling interest
Attributable to owners of parent
GROUP
2016
2015
1 598,5
(1 535,3)
63,2
–
49,7
112,9
(85,3)
27,6
–
27,6
16,8
44,4
2 897,6
(3 290,1)
(392,5)
(1 371,1)
–
(1 763,6)
(173,0)
(1 936,6)
(230,9)
(2 167,5)
773,2
(1 394,3)
Notes to the financial statements continuedfor the year ended 30 September 2016Tiger Brands LimitedAnnual financial statements 2016 (R’million)
35
Analysis of profit/(loss) from discontinued operations continued
Cash flows from discontinued operation
Net cash inflows/(outflows) from operating activities
Net cash outflows from investing activities
Net cash inflows from financing activities
Net cash inflows/(outflows)
Cash flow on disposal of subsidiary
“Cash and cash equivalents” disposed
Proceeds received on disposal
Total cash inflow on disposal of subsidiary
Statement of financial position disposed of
(R’million)
Summarised statement of financial position
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Net asset value
GROUP
2016
2015
(57,3)
(116,8)
33,5
(140,6)
271,1
(38,6)
89,0
321,5
(1 075,7)
–
(1 075,7)
February
2016
September
2015
722,9
1 538,7
(148,4)
(2 651,3)
(538,2)
525,9
1 089,3
(180,7)
(1 963,3)
(528,8)
165
36
Business combination
Hercules Cold Storage Proprietary Limited
On 1 August 2016, Tiger Brands acquired 100% of the net assets of the Hercules Cold Storage Proprietary Limited
business, a company based in Pretoria, South Africa, and engaged in the manufacture of processed meats focused on
the consumer segment. Product segments are polony, viennas, russians and hampers.
The purchase consideration was accounted for as follows:
(R’million)
Intangibles
Property, plant and equipment
Inventories
Accounts payable
Fair value of net assets acquired
Goodwill
Purchase consideration
GROUP
Acquisition
value
10,5
52,0
4,7
(7,9)
59,3
10,4
69,7
From date of acquisition to 30 September 2016, the Hercules business contributed R24,5 million to group revenue and
Rnil to profit after tax. Had the business been consolidated from 1 October 2015 to 30 September 2016, the
contribution to group revenue would have amounted to R154,7 million and a negative profit contribution of R5,1
million (loss) would have been made to profit after taxation.
Goodwill represents the difference between the purchase consideration and the fair value of the net assets acquired
and provides Tiger Brands with access to new markets and improved synergies.
The purchase consideration was financed out of operating cash flows.
37
Subsequent events
There are no material events that occurred during the period subsequent to 30 September 2016, but prior to these
financial statements being authorised for issue.
Tiger Brands LimitedAnnual financial statements 2016Annual financial statements Annexure A
Interest in subsidiary companies
Principal place
of business
Functional currency
Effective
percentage holding
(R’million)
2016
%
2015
%
Company’s interest
Shares at cost
(net of impairment)
2016
2015
Designer Group
South Africa
South African rand
100,0
100,0
132,1
132,1
South Africa
South African rand
100,0
100,0
63,4
63,4
Langeberg Holdings Limited
South Africa
South African rand
South Africa
South African rand
100,0
100,0
100,0
49,7
49,7
100,0
190,8
190,8
South Africa
South African rand
100,0
100,0
85,8
85,8
South Africa
South African rand
100,0
100,0
17,3
17,3
South Africa
South African rand
100,0
100,0
0,1
0,1
Durban Confectionery Works
Proprietary Limited
Enterprise Foods Proprietary
Limited
Langeberg & Ashton Foods
Proprietary Limited
Tiger Food Brands Intellectual
Property Holding Company
Proprietary Limited
Tiger Consumer Brands
Limited
Tiger Brands (Mauritius)
Limited
Mauritius
US dollar
166
Haco Industries Kenya Limited Kenya
Kenyan shilling
Chocolaterie Confiserie
Camerounaise2
Cameroon
CAF franc
Deli Foods Nigeria Limited
Nigeria
Nigerian naira
100,0
51,0
74,7
100,0
100,0
337,9
337,9
51,0
45,5
45,5
74,7
152,7
100,0
213,2
152,7
213,2
East Africa Tiger Brands
Industries
Davita Trading Proprietary
Limited
Pharma I Holdings Proprietary
Limited1
Tiger Branded Consumer
Goods plc (TBCG)3
Ethiopia
Ethiopian birr
51,0
51,0
121,4
121,4
South Africa
South African rand
100,0
100,0
1 521,6
1 521,6
South Africa
South African rand
100,0
100,0
Nigeria
Nigerian naira
–
65,7
–
–
–
–
2 931,5
2 931,5
1 Previously Adcock Ingram Holdings Proprietary Limited.
2 All year ends are 30 September, except for Chocolaterie Confiserie Camerounaise which has a 31 December year end.
3 Disposed of during the current year.
All rand amounts of less than R100 000 are shown as nil in the above table.
Tiger Brands LimitedAnnual financial statements 2016 Annexure B
Interest in associated companies
Principal
place of
business
Currency
Financial
reporting
date
Percentage
holding
2016
2015
Nature of
business
Listed/
unlisted
(%)
Oceana Group Limited
National Foods Holdings
Limited
Empresas Carozzí
UAC Foods
South Africa
South African rand
September
42,1*
42,1
Fishing
Listed
Zimbabwe
Chile
Nigeria
US dollar
Chilean peso
Nigerian naira
June
December
December
37,4
24,4
49,0
37,4
24,4
49,0
Food processing
Listed
Food processing Unlisted
Food processing Unlisted
* Taking treasury shares into account, the voting rights are 43,8% (2015: 43,8%). After accounting for the treasury and empowerment shares,
the earnings are equity-accounted at 49,0% (2015: 49,0%).
Detailed disclosure of Oceana Fishing Limited is noted below, as per note 16.3.
Summarised statement of comprehensive income
(R’million)
Revenue
Profit after taxation
Attributable to shareholders of Oceana
Other comprehensive (loss)/income, net of taxation
Total comprehensive income for the year
Attributable to shareholders of Oceana
Dividends received from Oceana
Summarised statement of financial position
(R’million)
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Net asset value
Reconciliation of the summarised financial information presented to
the carrying amount of Tiger Brands’ interest in Oceana
(R’million)
Tiger Brands effective share of Oceana’s NAV
Goodwill on acquisition
Equity-accounted carrying value
Fair value of investment in Oceana#
# Measured at fair value and noted as level 1 hierarchy, which is valued based on quoted market prices.
167
September
2016
8 244,0
958,3
916,5
(69,4)
888,9
847,1
211,9
September
2016
6 735,7
4 371,1
(5 121,8)
(1 977,3)
4 007,7
September
2016
1 913,5
238,8
2 152,3
6 511,1
September
2015
6 168,8
642,2
611,2
454,1
1 096,3
1 065,3
188,9
September
2015
6 824,1
3 989,3
(5 301,0)
(1 948,1)
3 564,3
September
2015
1 707,1
238,8
1 945,9
5 504,9
Tiger Brands LimitedAnnual financial statements 2016Annual financial statements Annexure C
Directors’ emoluments
Table of directors’ emoluments for the year ended 30 September 2016
(R’000)
Fees Cash salary
Bonus
GROUP
Retirement
fund
contributions
Other
benefits
Gains on
options
exercised Total 2016
168
Executive directors
LC Mac Dougall – note 1
O Ighodaro – note 2
PB Matlare – note 3
NP Doyle – note 4
CFH Vaux
Total A
Non-executive directors
AC Parker (chairman)
MO Ajukwu
SL Botha
MJ Bowman
M Makanjee
KDK Mokhele
RD Nisbet
MP Nyama
BL Sibiya (deputy chairman)
YGH Suleman
Total B
Total A + B
Details of remuneration paid
to prescribed officers of the
company are set out hereunder:
N Segoale – note 5
NG Brimacombe
AG Kirk – note 6
Total
Aggregated details of
remuneration paid to members
(six) of the executive committee,
excluding executive directors
and prescribed officers above,
are set out hereunder:
–
–
–
–
–
–
3 053
3 630
1 187
4 716
4 119
513
–
–
836
718
20 088
4 260
6 506
10 134
107
128
337
209
789
515
16 705
2 067
41 095
1 978
–
2 742
786
–
2 778
6 306
23 782
10 969
8 688
16 475
8 237
68 151
1 638
440
560
353
517
682
712
538
846
593
6 879
6 879
EFs
145
36
69
36
79
139
139
58
36
172
909
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1 783
476
629
389
596
821
851
596
882
765
7 788
17 614
2 067
41 095
1 978
6 306
75 939
–
–
–
–
261
3 625
3 582
7 468
10
349
646
1 005
2 811
191
4 315
7 317
49
749
445
3 415
979
–
6 546
5 893
8 988
1 243
4 394
21 427
Total
–
15 488
2 300
4 514
2 296
1 676
26 274
Note 1 – Appointed 10 May 2016. Other benefits include a sign on bonus of R20 000 000.
Note 2 – Resigned effective 31 July 2016. Other benefits includes notice pay, leave encashment and R500 000 ex gratia
payment relating to the swift execution of the TBCG disposal.
Note 3 – Resigned effective 31 December 2015. Other benefits include notice pay, severance pay and leave encashment.
Note 4 – Other benefits include a retention bonus of R10 000 000.
Note 5 – Resigned effective 30 October 2015. Other benefits include notice pay and leave encashment.
Note 6 – Other benefits include a retention bonus of R4 028 000.
EFs – Fees paid to the chairman for his attendance at meetings of the board of directors of Empresas Carozzí (R76 020), an
associate of Tiger Brands. Also includes fees paid to non-executive directors in respect of their attendance at special
board meetings of the company.
Tiger Brands LimitedAnnual financial statements 2016 Directors’ emoluments continued
Table of directors’ emoluments for the year ended 30 September 2015
(R’000)
Fees Cash salary
Bonus
GROUP
Retirement
fund
contributions
Other
benefits
Gains on
options
exercised Total 2015
–
–
–
–
–
3 893
4 753
753
967
949
3 639
1 843
1 447
60
323
18
43
648
832
159
737
–
6 099
5 354
12 974
–
–
2 969
5 866
13 234
5 010
444
2 376
6 099
27 163
1 557
194
530
335
614
431
644
595
433
805
105
EFs
91
54
54
–
–
54
54
54
–
54
–
6 243
415
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1 648
248
584
335
614
485
698
649
433
859
105
6 658
169
6 243
13 649
5 010
444
2 376
6 099
33 821
–
–
–
–
3 490
–
198
717
2 847
3 221
–
1 319
9 558
1 319
54
240
492
476
567
1 760
–
–
–
–
4 405
3 377
5 347
13 129
Executive directors
O Ighodaro
PB Matlare
NP Doyle (13 July 2015
– 30 September 2015) – note 1
CFH Vaux
Total A
Non-executive directors
AC Parker (chairman)
MO Ajukwu (31 March 2015
– 30 September 2015)
SL Botha
MJ Bowman
RMW Dunne (1 October 2014
– 31 May 2014)
M Makanjee
KDK Mokhele
RD Nisbet
MP Nyama
BL Sibiya (deputy chairman)
YGH Suleman (13 July 2015
– 30 September 2015)
Total B
Total A + B
Details of remuneration paid to
prescribed officers of the
company are set out hereunder:
NG Brimacombe – note 2
NP Doyle (1 October 2014 –
12 July 2015) – note 1
AG Kirk
Total
Aggregated details of
remuneration paid to members
(six) of the executive committee,
excluding executive directors and
prescribed officers above, are
set out hereunder:
Total
–
13 598
4 858
1 150
2 496
3 623
25 725
Note 1 – NP Doyle was appointed as an executive director on 13 July 2015.
Note 2 – The value of R71 480 was paid to NG Brimacombe for 15 years for long service awards in December 2014.
EFs – Fees paid to the chairman for his attendance at meetings of the board of directors of Empresas Carozzí (R36 200), an
associate of Tiger Brands. Also includes fees paid to non-executive directors in respect of their attendance at special
board meetings of the company.
Directors’ service contracts
No directors have service contracts with notice periods of more than three months.
Tiger Brands LimitedAnnual financial statements 2016Annual financial statements 170
Annexure C continued
Directors’ emoluments continued
Phantom cash-settled option scheme
Executive directors
Details of phantom cash-settled options held by executive directors under this scheme at 30 September 2016 appear below:
Holding at
1 October
2015
Granted
2016
Exercised
2016
Forfeited
2016
Number
of options
vested at
30 September
2016
Number
of
options
subject to
retention
Holding at
30 September
2016
Number
of
options
subject
to per-
formance
targets
Grant
price
(Rand)
Fair
market
value of
vested
options at
30 September
2016
(R’000)
30 000
25 000
55 000
3 400
15 750
14 568
33 718
4 400
27 333
11 767
36 600
80 100
3 700
17 167
14 734
45 400
81 001
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
567
6 300
10 926
5 000
5 000
10 000
2 833
9 450
3 642
17 793
15 925
–
–
–
–
–
–
–
–
22 699
1 762
7 950
5 982
36 600
52 294
616
3 433
3 684
22 701
22 699
30 434
25 000
20 000
45 000
5 000
10 000
10 000
5 000
10 000 299,8
5 000 252,0
15 000
15 000
15 000
–
–
–
–
2 638
19 383
5 785
–
27 806
3 084
13 734
11 050
–
27 868
–
–
–
–
714
10 817
5 785
–
17 316
617
6 866
11 050
–
18 533
–
–
–
–
962
4 283
–
–
5 245
1 234
3 434
–
–
4 668
– 299,8
– 253,2
– 187,0
–
962 299,8
4 283 253,2
– 189,1
– 172,1
5 245
1 233 299,8
3 434 253,2
– 189,1
– 172,1
4 667
510
1 377
1 887
–
–
–
73
1 453
1 109
–
2 635
63
922
2 118
–
3 103
Date of
grant
Feb 13
Jul 12
Feb 13
Feb 12
Jun 11
Feb 13
Feb 12
Feb 11
Feb 10
Feb 13
Feb 12
Feb 11
Feb 10
Name
NP Doyle
Total
O Ighodaro**
Total
PB Matlare*
Total
CFH Vaux
Total
*Early retirement 31 December 2015.
**Resigned 31 July 2016.
Prescribed officers
Details of phantom cash-settled options held by prescribed officers under the Tiger Brands phantom cash option scheme as
30 September 2016 appear below:
Name
Date of
grant
Holding at
1 October
2015
Granted
2016
Exercised
2016
Forfeited
2016
Number
of options
vested at
30 September
2016
Number
of
options
subject to
retention
Holding at
30 September
2016
Number
of
options
subject
to per-
formance
targets
Grant
price
(Rand)
Fair
market
value of
vested
options at
30 September
2016
(R’000)
NG Brimacombe Feb 13
NG Brimacombe Feb 12
NG Brimacombe Feb 11
NG Brimacombe Feb 10
Total
3 600
16 500
10 650
30 266
61 016
–
–
–
–
–
–
–
–
7 565
600
3 300
3 550
22 701
7 565
30 151
3 000
13 200
7 100
–
23 300
600
6 600
7 100
–
14 300
1 200
3 300
–
–
4 500
1 200 299,8
3 300 253,2
189,1
172,1
–
–
4 500
61
886
1 361
–
2 308
Executive committee members (excluding executive directors and prescribed officers)
Aggregated details of phantom cash options held by members of the executive committee, other than executive directors and
prescribed officers above, at 30 September 2016 appear below:
Date of
grant
Holding at
1 October
2015
Granted
2016
Exercised
2016
Forfeited
2016
Number
of options
vested at
30 September
2016
Number
of
options
subject to
retention
Holding at
30 September
2016
Number
of
options
subject
to per-
formance
targets
Grant
price
(Rand)
Fair
market
value of
vested
options at
30 September
2016
(R’000)
Various
157 491
–
55 633
69 076
32 782
19 551
6 001
7 230 Various
3 236
Name
Total
Tiger Brands LimitedAnnual financial statements 2016 Directors’ emoluments continued
Tiger Brands Limited 2013 Share Plan
Executive directors
Details of share appreciation rights allocated to executive directors under this plan at 30 September 2016 are set out below:
Granted
2016
Exercised
2016
Forfeited
2016
Holding at
30 September
2016*
Name
NP Doyle
Note 1
Total
O Ighodaro
Note 1
Total
Total
PB Matlare
Total
CFH Vaux
Note 1
Total
Date
of grant
Feb 16
Feb 15
Feb 14
Feb 14
Holding at
1 October
2015
–
11 540
12 950
5 250
22 870
–
–
–
29 740
22 870
Feb 15
Feb 14
Feb 14
Sept 13
Feb 13
11 800
13 290
5 390
21 200
9 500
61 180
–
–
–
–
–
–
–
–
36 000
36 000
Feb 15
Feb 14
Feb 13
Feb 15
Feb 14
Feb 14
Feb 13
17 640
20 540
16 300
54 480
9 060
12 880
5 220
10 300
37 460
–
–
–
–
–
–
–
–
–
Grant
price
(Rand)
291,7
385,3
254,5
254,5
385,3
254,5
254,5
298,7
299,8
341,7
385,3
254,5
299,8
385,3
254,5
254,5
299,8
171
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
11 800
13 290
5 390
21 200
9 500
61 180
–
–
13 418
10 708
9 250
33 376
–
–
–
3 433
3 433
22 870
11 540
12 950
5 250
52 610
–
–
–
–
–
–
36 000
36 000
4 222
9 832
7 050
21 104
9 060
12 880
5 220
6 867
34 027
LC Mac Dougall
May 16
Note 1 – a special retention allocation of share appreciation rights was made on 28 February 2014. These are subject to
normal performance and vesting conditions.
* All options are subject to performance targets. There are no share appreciation rights vested at 30 September 2016.
Tiger Brands LimitedAnnual financial statements 2016Annual financial statements Annexure C continued
Directors’ emoluments continued
Tiger Brands Limited 2013 Share Plan continued
Executive directors continued
Details of performance shares awarded to executive directors under the Tiger Brands Limited 2013 Share Plan as at
30 September 2016:
Name
NP Doyle
Total
O Ighodaro
Total
Date
of grant
Feb 16
Feb 15
Feb 14
Feb 15
Feb 14
Feb 13
LC Mac Dougall
May 16
172
Total
PB Matlare
Total
CFH Vaux
Total
Feb 15
Feb 14
Feb 13
Feb 15
Feb 14
Feb 13
Holding at
1 October
2015
Granted
2016
Exercised
2016
Forfeited
2016
Holding at
30 September
2016*
10-day
VWAP share
price on
grant date
–
2 490
2 790
5 280
2 540
2 860
2 000
7 400
–
–
4 410
5 140
4 100
13 650
1 950
2 780
2 200
6 930
5 720
–
–
5 720
–
–
–
–
8 160
8 160
–
–
–
–
–
–
–
–
–
–
–
–
–
–
250
250
–
–
337
2 356
–
2 693
–
–
275
275
–
–
–
–
2 540
2 860
1 750
7 150
–
–
4 073
2 784
4 100
10 957
–
–
1 925
1 925
5 720
2 490
2 790
11 000
–
–
–
–
8 160
8 160
–
–
–
–
1 950
2 780
–
4 730
291,7
385,3
254,5
385,3
254,5
299,8
341,7
385,3
254,5
299,8
385,3
254,5
299,8
* All options are subject to performance targets. There are no performance shares vested at 30 September 2016.
Details of restricted shares granted to executive directors under the Tiger Brands Limited 2013 Share Plan as at
30 September 2016:
Date
of grant
Feb 16
Dec 15
Feb 15
Dec 15
Feb 15
Feb 15
Holding at
1 October
2015
Granted
2016
Exercised
2016
Forfeited
2016
Holding at
30 September
2016*
10-day
VWAP share
price on
grant date
–
–
2 320
2 320
2 380
2 380
1 850
1 850
1 330
5 376
–
6 706
2 198
–
–
–
–
–
1 099
–
2 198
1 099
–
–
–
–
–
–
–
–
1 099
2 380
3 479
–
–
1 330
5 376
2 320
9 026
–
–
–
1 850
1 850
291,7
342,9
385,3
342,9
385,3
385,3
Name
NP Doyle
Total
O Ighodaro
Total
CFH Vaux
Total
* There are no restricted shares vested at 30 September 2016.
Tiger Brands LimitedAnnual financial statements 2016 Directors’ emoluments continued
Tiger Brands Limited 2013 Share Plan continued
Prescribed officers
Details of share appreciation rights allocated to prescribed officers under the Tiger Brands Limited 2013 Share Plan at
30 September 2016 are set out below:
Name
NG Brimacombe
NG Brimacombe
NG Brimacombe – note 1
NG Brimacombe
NG Brimacombe
NG Brimacombe
AG Kirk
AG Kirk
AG Kirk
Date
of grant
Holding at
1 October
2015
Granted
2016
Exercised
2016
Forfeited
2016
Holding at
30 September
2016
Grant price
(Rand)
Feb 16
Feb 15
Feb 14
Feb 14
Sept 13
Feb 13
Feb 16
Feb 15
Feb 14
–-
8 890
5 120
12 640
20 100
10 000
–
8 260
11 800
6 150
–
–
–
–
–
11 680
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
6 700
3 333
–
–
–
6 150
8 890
5 120
12 640
13 400
6 667
11 680
8 260
11 800
291,7
385,3
254,5
254,5
298,7
299,8
291,7
385,3
254,5
* All options are subject to performance targets. There are no share appreciation rights vested at 30 September 2016.
Note 1 – a special retention allocation of share appreciation rights was made on 28 February 2014. These are subject to
normal performance and vesting conditions.
Details of performance shares awarded to prescribed officers under the Tiger Brands Limited 2013 Share Plan
at 30 September 2016 are set out below:
Name
NG Brimacombe
NG Brimacombe
NG Brimacombe
NG Brimacombe
AG Kirk
AG Kirk
AG Kirk
Date
of grant
Feb 16
Feb 15
Feb 14
Feb 13
Feb 16
Feb 15
Feb 14
Holding at
1 October
2015
–
1 920
2 720
2 200
–
1 780
2 540
Granted
2016
Exercised
2016
Forfeited
2016
1 330
–
–
–
2 520
–
–
–
–
–
275
–
–
–
–
–
–
1 925
–
–
–
Holding at
30 September
2016*
10-day
VWAP share
price on
grant date
173
1 330
1 920
2 720
–
2 520
1 780
2 540
291,7
385,3
254,5
299,8
291,7
385,3
254,5
* All options are subject to performance targets. There are no performance shares vested at 30 September 2016.
Details of restricted shares granted to prescribed officers under the Tiger Brands Limited 2013 Share Plan at
30 September 2016:
Name
NG Brimacombe
AG Kirk
AG Kirk
AG Kirk
AG Kirk
Date
of grant
Feb 15
Feb 16
Dec 15
Feb 15
Dec 14
Holding at
1 October
2015
1 810
–
–
1 690
7 084
Granted
2016
Exercised
2016
Forfeited
2016
Holding at
30 September
2016*
10-day
VWAP share
price on
grant date
–
1 090
3 848
–
–
–
–
–
–
–
–
–
–
–
–
1 810
1 090
3 848
1 690
7 084
385,3
291,7
342,9
385,3
382,5
* There are no restricted shares vested at 30 September 2016.
Tiger Brands LimitedAnnual financial statements 2016Annual financial statements Annexure C continued
Directors’ emoluments continued
Tiger Brands Limited 2013 Share Plan continued
Executive committee members (excluding executive directors and prescribed officers)
Aggregated details of share appreciation rights allocated to members of the executive committee, other than executive directors
and prescribed officers above, as at 30 September 2016, are set out below:
Total for Fy
2016
2015
2014
2013
Date
of grant
Feb 16
Feb 15
Feb 14
Feb 13
Holding at
1 October
2015
–
25 860
54 446
30 036
Granted
2016
42 790
–
–
–
Exercised
2016
Forfeited
2016
Holding at
30 September
2016*
–
–
–
–
5 450
7 080
12 820
17 092
37 340
18 780
41 626
12 944
Grant
price
(Rand)
291,7
385,3
254,5
299,8
* All options are subject to performance targets. There are no share appreciation rights vested at 30 September 2016.
Aggregated details of performance shares awarded to members of the executive committee, other than executive directors and
prescribed officers above, at 30 September 2016, are set out below:
Total for Fy
2016
2015
2014
2013
174
Date
of grant
Feb 16
Feb 15
Feb 14
Feb 13
Holding at
1 October
2015
–
4 710
5 650
4 400
Granted
2016
Exercised
2016
Forfeited
2016
7 790
–
–
–
–
–
275
990
1 290
2 760
4 125
Holding at
30 September
2016*
6 800
3 420
2 890
–
10-day
VWAP
share price
on grant
date
291,7
385,3
254,5
299,3
* All options are subject to performance targets. There are no performance shares vested at 30 September 2016.
Aggregated details of restricted shares granted to members of the executive committee, other than executive directors and
prescribed officers above, as at 30 September 2016:
Total for Fy
2016
2015
Date
of grant
Various
Holding at
1 October
2015
Granted
2016
Exercised
2016
Forfeited
2016
Holding at
30 September
2016*
–
7 152
Various
6 324
–
–
–
440
–
6 712
6 324
* There are no restricted shares vested at 30 September 2016.
10-day
VWAP
share price
on grant
date
317,3
340,8
Tiger Brands LimitedAnnual financial statements 2016 Annexure D
Share-based payment plans
The information noted below summarises all key assumptions, valuation inputs and key disclosures relating to the Tiger Brands
share-based payment plans.
1
General employee share option plan
Certain senior employees are entitled to receive options based on merit. Options are issued annually by the board of
directors of the company.
Between January 2006 and March 2013, a cash-settled option scheme was applied by the company, which replaced
the previous equity-settled share option scheme. During March 2013, a hybrid scheme was introduced where executives
and managers of the company and its subsidiaries are offered a weighted combination of:
•• Allocations of share appreciation rights
•• Conditional awards of full value performance shares
•• Grants of full value restricted shares (bonus matching and deferral element).
This hybrid scheme is regarded as an equity-settled share option scheme.
Equity settled
All outstanding options under this scheme were fully exercised in the 2015 financial year (106 600 shares at a
weighted average exercise prices (WAEP) of R75,13).
Share appreciation rights
The following table illustrates the number and WAEP of and movements in, share appreciation rights during the year:
2016
2015
Outstanding at the beginning of the year
Granted during the year
Forfeited during the year
Exercised during the year
Outstanding at the end of the year
Exercisable at the end of the year
Weighted average remaining
contractual life (years)
Weighted average fair value of options
granted (per option)
Range of exercise prices outstanding at
the end of the year (per option)
Number
1 185 560
376 004
(493 489)
(3 292)
1 064 783
175
Number
955 159
292 850
(62 449)
_
1 185 560
WAEP
301,3
297,2
300,2
282,0
301,4
–
4,2 years
R93,9
WAEP
274,8
385,3
284,7
_
301,3
_
4,3 years
R95,7
R254,5 – R385,3
R254,5 – R385,3
Options were valued using a modified Black-Scholes model taking into account the dividend cover, expected exercise
pattern and volatility of the Tiger Brands share price. Subject to certain performance conditions, one-third of the equity-
settled share options vest on each of the third, fourth and fifth anniversary dates from the date of the original grant date.
All equity-settled options mature six years after the grant date.
Tiger Brands LimitedAnnual financial statements 2016Annual financial statements Annexure D continued
1
General employee share option plan continued
The following inputs were used:
Date of grant
13/02/2013
30/09/2013
13/02/2014
02/05/2014
02/06/2014
04/02/2015
02/09/2016
31/03/2016
24/05/2016
Strike price
of option (Rand)
299,8
299,8
254,5
272,9
298,3
385,3
291,7
322,4
341,7
Expiry date
12/02/2019
29/09/2019
12/02/2020
01/05/2020
01/06/2020
04/02/2020
09/02/2021
31/03/2021
24/05/2021
Market price
of the underlying
stock at grant
date (Rand)
Expected volatility
of the stock over
the remaining life
of the option (%)
Expected
dividend
cover (times)
289,5
299,1
250,0
279,5
299,8
394,9
302,9
325,2
337,0
24,5
23,2
21,5
21,8
21,8
21,3
25,5
25,7
25,7
2,0
2,0
3,0
3,0
2,9
2,9
3,0
3,0
2,9
Volatilities are based on the historical volatility of the Tiger Brands share price matching the remaining life of each option.
Performance shares
The following table illustrates the number of, and movements in, performance shares during the year:
176
Outstanding at the beginning of the year
Granted during the year
Forfeited during the year
Exercised during the year
Outstanding at the end of the year
Exercisable at the end of the year
Weighted average remaining contractual life (years)
Weighted average fair value of options granted (per option)
2016
Number
170 890
70 580
(76 158)
(8 462)
156 850
–
1,5 years
R481,8
2015
Number
128 261
56 230
(13 601)
–
170 890
–
1,5 years
R611,3
Options were valued using the Monte-Carlo simulation approach to estimate the price of the options that are subject to
TSR market performance conditions using 50 000 simulations taking into account the dividend cover, expected exercise
pattern and volatility of the Tiger Brands share price.
The following inputs were used:
Date of grant
13/02/2013
28/02/2014
04/02/2015
09/02/2016
24/05/2016
Market price
of the underlying
stock at grant
date (Rand)
Expected volatility
of the stock over
the remaining life
of the option (%)
Expected
dividend
cover (times)
289,5
244,4
394,9
302,9
337,0
20,8
22,4
23,6
27,5
27,0
2,0
3,0
2,9
3,0
2,9
Expiry date
12/02/2016
27/02/2017
04/02/2018
04/02/2019
24/05/2019
Volatilities are based on the historical volatility of the Tiger Brands share price matching the remaining life of each option.
Tiger Brands LimitedAnnual financial statements 2016 1
General employee share option plan continued
Restricted shares
The following table illustrates the number of, and movements in, restricted shares during the year:
Outstanding at the beginning of the year
Granted during the year
Forfeited during the year
Exercised during the year
Outstanding at the end of the year
Exercisable at the end of the year
Weighted average remaining contractual life (years)
Weighted average fair value of options granted (per option)
2016
Number
130 122
79 560
(13 875)
(3 429)
192 378
–
1,6 years
R286,5
2015
Number
26 950
108 842
(5 670)
–
130 122
–
2,1 years
R359,7
Options were valued using a modified Black-Scholes model taking into account the dividend cover, expected exercise
pattern and volatility of the Tiger Brands share price.
The following inputs were used:
Date of grant
13/02/2013
28/02/2014
03/12/2014
28/02/2014
04/02/2015
03/12/2015
09/02/2016
31/03/2016
Market price
of the underlying
stock at grant
date (Rand)
Expected volatility
of the stock over
the remaining life
of the option (%)
Expected
dividend
cover (times)
289,5
244,4
367,9
319,0
394,9
320,0
302,9
325,2
20,8
22,4
23,4
23,0
23,6
26,3
27,5
27,4
177
2,0
3,0
2,9
3,0
2,9
3,0
3,0
3,0
Expiry date
12/02/2016
27/02/2017
03/12/2017
10/09/2017
04/02/2018
03/12/2018
09/02/2019
31/03/2019
Volatilities are based on the historical volatility of the Tiger Brands share price matching the remaining life of each option.
Cash settled
The following table illustrates the number and weighted average exercise prices (WAEP) of, and movements in, cash-
settled options during the year:
Outstanding at the beginning of the year
Granted during the year
Forfeited during the year
Exercised during the year
Outstanding at the end of the year
Exercisable at the end of the year
Weighted average remaining
contractual life (years)
Range of exercise prices outstanding at
the end of the year (per option)
Weighted average share price at the
date of exercise (per option)
2016
2015
Number
696 622
–
(160 441)
(265 105)
271 076
155 031
WAEP
238,2
–
251,6
195,0
249,5
195,0
Number
1 764 355
–
(785 498)
(282 235)
696 622
267 042
WAEP
207,9
–
226,1
187,3
238,2
204,5
1,4 years
2,0 years
R280,0 – R399,9
R281,0 – R399,3
R316,8
R367,0
Cash options were valued using a modified Black-Scholes model taking into account the dividend cover, expected
exercise pattern and volatility of the Tiger Brands share price. Subject to certain performance conditions, one-third of the
cash-settled share options vest on each of the third, fourth and fifth anniversary dates from the date of the original grant
date. All cash-settled options mature six years after the grant date.
Tiger Brands LimitedAnnual financial statements 2016Annual financial statements Annexure D continued
1
General employee share option plan continued
The following inputs were used:
Date of grant
13/02/2013
01/10/2012
02/07/2012
03/02/2012
02/02/2011
Strike price
of option (Rand)
299,8
265,4
252,0
253,2
189,1
Expiry date
12/02/2019
30/09/2018
01/07/2018
02/02/2018
01/02/2017
Market price
of the underlying
stock at grant
date (Rand)
Expected volatility
of the stock over
the remaining life
of the option (%)
Expected
dividend
cover (times)
289,5
272,4
247,0
255,0
188,2
30,4
31,3
31,3
31,3
31,3
2,9
2,9
2,9
2,9
2,9
The average volatility was 31,1% (2015: 24,6%) and the risk-free rate was approximately 7,5% (2015: 6,7% to 7,4%)
during the year.
The carrying amount of the liability relating to the cash-settled options at 30 September 2016 is R36,4 million
(2015: R37,9 million) – refer to note 29. Cash-settled options exercised during the year amounted to R35,6 million
(2015: R52,5 million).
Volatilities are based on the historical volatility of the Tiger Brands share price matching the remaining life of each option.
2
Black Managers Participation Rights Scheme (equity settled)
In terms of the BEE transaction implemented on 17 October 2005, 4 381 831 Tiger Brands shares were acquired by
the Tiger Brands Black Managers Trust.
178
The allocation of vested rights entitles beneficiaries to receive Tiger Brands shares (after making capital contributions to
the Black Managers Trust) at any time after the lock-in period. In respect of options allocated on or before 31 July 2010,
the lock-in period ends on 31 December 2014. In respect of allocations made after 31 July 2010, the lock-in date will
be the latter of 31 December 2014 or, in respect of one-third of the allocations, three years after the allocation, the next
third, four years and the last third, five years after the allocation. These vested rights are non-transferable.
After the lock-in date, the beneficiaries may exercise their vested rights, in which event the beneficiary may:
•• Instruct trustees to sell all of their shares and distribute the proceeds to them, net of the funds required to pay the capital
contributions, taxation (including employees’ tax), costs and expenses
•• Instruct the trustees to sell sufficient shares to fund the capital contributions, pay the taxation (including employees’ tax),
costs and expenses, and distribute to them the remaining shares to which they are entitled or
•• Fund the capital contributions, taxation (including employees’ tax) costs and expenses themselves and receive the shares
to which they are entitled.
The expense recognised for employee services received during the year to 30 September 2016 is R16,4 million
(2015: R22,7 million).
The following table illustrates the number of, and movements in, share participation rights during the year:
Outstanding at the beginning of the year
Granted during the year
Forfeited during the year
Shares sold (death of employees)
Outstanding at the end of the year
Exercisable at the end of the year
Weighted average remaining contractual life (years)
Weighted average fair value of options granted during the year (per option)
No weighted average exercise price has been calculated as there were no
participation rights exercised
2016
Number
1 330 442
65 000
(97 135)
(296 023)
2015
Number
3 081 442
48 000
(78 086)
(1 720 914)
1 002 284
1 330 442
627 060
11,0 years
R293,9
773 441
12,0 years
R292,0
R101,49
R86,15
Tiger Brands LimitedAnnual financial statements 2016 2
Black Managers Participation Rights Scheme (equity settled) continued
Participation rights were valued using the Monte-Carlo simulation approach to estimate the average, optimal payoff of
the participation rights using 5 000 permutations. The payoff of each random path was based on the projected Tiger
Brands share price, outstanding debt projections and optimal early exercise conditions.
Volatility is measured as the annualised standard deviation of the daily price changes in the underlying share under the
assumption that the share price is log-normally distributed. Historical daily share price data was used to estimate the
expected volatility.
The following inputs were used:
Initial strike
price of
participation
rights (Rand)
85,84
85,87
81,91
82,47
79,01
Expiry date
30/09/2027
30/09/2027
30/09/2027
30/09/2027
30/09/2027
Market price
of the underlying
stock at grant
date (Rand)
Expected volatility
of the stock over
the remaining
life of the
participation
right (%)
266,0
308,8
394,2
284,9
291,0
25,3
25,3
25,3
25,3
25,8
Date of grant
31/01/2014
31/07/2014
31/01/2015
31/07/2015
31/01/2016
Expected
dividend yield
of the stock
over the
remaining
life of the
participation
right (%)
3,8
3,8
3,8
3,8
3,8
The risk-free interest rate was obtained from constructed ZAR swap curves on the valuation dates using key inputs being
South African money-market rates and swap rates as published by Bloomberg.
179
In terms of the BEE Phase II transaction implemented on 20 October 2009, 2 835 427 Tiger Brands shares were
acquired by the Black Managers Trust II and 1 813 613 shares by Brimstone Investment Corporation Limited (Brimstone).
3
Black Managers Trust II and Brimstone participation right schemes (equity settled)
Brimstone
Brimstone is required to hold its shares via Brim Tiger SPV Proprietary Limited (previously, Business Venture Investments
No 1323 Proprietary Limited (Brimstone SPV). Brimstone and the Brimstone SPV may not sell or encumber such
shares until 31 December 2017 (the end date). The IFRS 2 charge of R61,9 million relating to Brimstone has been
expensed upfront.
At the end date, Tiger Brands will be entitled to repurchase a certain number of shares from Brimstone at the subscription
price of R7,40. The number of shares will be calculated in terms of a repurchase formula, whose inputs are:
•• the total discounted value of the shares (being an amount equal to R148,07 per share) less the initial equity contribution
by Brimstone, increased over the transaction term by a hurdle rate (being 85% of the prevailing prime rate);
•• an amount equal to 85% of the distributions declared by Tiger Brands but not received by Brimstone SPV as a result
of the condition attaching to the issue of the shares increased over the transaction term by the hurdle rate;
•• the market value of a Tiger Brands ordinary share at the end date; and
•• the subscription price of R7,40 per share.
Tiger Brands LimitedAnnual financial statements 2016Annual financial statements Annexure D continued
3
Black Managers Trust II and Brimstone participation right schemes (equity settled) continued
Black Managers Trust II
Originally allocations of vested rights to these shares were made to a total number of 484 black managers and are
non-transferable.
The effective dates of these allocations were 31 January 2010 and 31 July 2010.
With effect from 31 December 2017, the black managers may elect to take delivery of the full benefit of a portion of
the shares allocated to them in accordance with their vested rights (after Tiger Brands has exercised its right to repurchase
a certain number of the shares from the Black Managers Trust II at the subscription price of 10 cents per share).
The number of shares to be repurchased by Tiger Brands will be calculated in terms of a repurchase formula, the inputs
of which are similar to those as disclosed under the Brimstone heading above, other than for the fact that 90% of any
distributions declared by Tiger Brands are not received by the Black Managers Trust II (as opposed to 85% in the case of
Brimstone SPV) and the subscription price is 10 cents per share (as opposed to R7,40 in the case of the Brimstone SPV).
Upon termination of the trust on 31 December 2018, the black managers shall take delivery of all benefits due to them,
failing which these will be forfeited, and the trustees shall transfer those benefits and any unallocated Tiger Brands
ordinary shares, or the net proceeds thereof, to the black managers who are beneficiaries of the Black Managers
Trust II at that time.
In calculating the IFRS 2 charge, the following input parameters were utilised to determine the fair value of the rights
granted to the beneficiaries of the Black Managers Trust II in terms of the BEE Phase II transaction:
•• The allocation date
•• The maturity date of the rights
•• The market price of the underlying equity as at the valuation date
•• The strike price of the rights
•• The expected volatility of the underlying equity over the life of the rights
•• The expected dividend yield on the underlying equity over the life of the rights
•• The risk-free interest rates over the life of the rights
•• The prime interest rates over the life of the rights.
Volatility is measured as the annualised standard deviation of the daily price changes in the underlying share on the
assumption that the share price is log-normally distributed. Historical daily share price data was used to estimate the
expected volatility.
Participation rights were valued using the Monte-Carlo simulation approach with the “market variable” being the Tiger
Brands share price. The path dependency of the option results from the relationship between the Tiger Brands share price
and the strike price of the option, by virtue of the impact on the strike price of dividends paid by Tiger Brands during the
life of the BEE Phase II transaction.
The expense recognised for employee services received during the year to 30 September 2016 is R16,9 million
(2015: R21,6 million).
180
Tiger Brands LimitedAnnual financial statements 2016 3
Black Managers Trust II and Brimstone participation right schemes (equity settled) continued
Black Managers Trust II continued
The following table illustrates the number of, and movements in, share participation rights during the year:
Outstanding at the beginning of the year
Granted during the year
Forfeited during the year
Shares sold (death of employees)
Outstanding at the end of the year
Exercisable at the end of the year
Weighted average remaining contractual life (years)
Weighted average fair value of options granted during the year (per option)
Notional average exercise price (per option)
2016
Number
2 783 305
111 000
(199 412)
(16 521)
2015
Number
2 682 356
212 000
(109 663)
(1 388)
2 678 372
2 783 305
–
2,3 years
R158,7
R190,3
–
3,3 years
R153,0
R181,2
No weighted average exercise price has been calculated as there were no participation rights exercised.
A risk-free rate was constructed using a zero-coupon ZAR swap interest rate curve as at the valuation date using a raw
interpolation bootstrapping algorithm, with inputs from South African money-market rates (interbank acceptance rates and
Forward Rate Agreement (FRA) rates) and swap rates, as published by Bloomberg.
The following inputs were used:
181
Initial strike
price of
participation
rights (Rand)
168,0
173,8
169,9
174,3
206,3
99,7
104,3
193,1
Expiry date
31/12/2018
31/12/2018
31/12/2018
31/12/2018
31/12/2018
31/12/2018
31/12/2018
31/12/2018
Market price
of the underlying
stock at grant
date (Rand)
Expected volatility
of the stock over
the remaining
life of the
participation
right (%)
317,0
264,8
266,0
308,8
394,2
284,9
291,0
389,9
25,4
25,4
25,4
25,4
25,4
25,4
27,6
29,8
Expected
dividend yield
of the stock
over the
remaining
life of the
participation
right (%)
2,0
2,0
2,0
2,0
2,0
2,0
2,4
1,8
Date of grant
31/07/2013
01/01/2014
31/01/2014
31/07/2014
31/01/2015
31/07/2015
31/01/2016
31/07/2016
4
Tiger Brands Limited shares held by subsidiary and empowerment entities
On 19 September 2005, shareholders approved a scheme of arrangement (section 311 of the Companies Act No 61 of
1973) in terms of which Tiger Brands would facilitate the acquisition of a 4% direct ownership interest in its issued ordinary
share capital by a broad base of staff employed within the group. The court order sanctioning the scheme was registered
by the Registrar of Companies on 29 September 2005, being the effective date of acquisition of the scheme shares.
The total value of the staff empowerment transaction was R723,5 million, based on the closing price of the company’s
shares on the JSE Limited on 13 July 2005 of R112 per share. The transaction was implemented on 17 October 2005
through a number of trusts and a special purpose vehicle. The acquisition of 5 896 140 Tiger Brands shares by the
Black Managers Trust and Thusani Empowerment Investment Holdings Proprietary Limited in terms of the scheme, at an
aggregate cost of R649,5 million was shown as a deduction from equity in the group statement of financial position. This
reduced to R502,2 million in 2008 as a result of the Adcock Ingram unbundling. As from 2008 such shares in Adcock
Ingram are reflected as listed investments classified as available-for-sale.
The cost of the Tiger Brands shares acquired by the general staff trust (547 733 shares), together with the total expenses
of the BEE transaction, was reflected as an abnormal item of R69,4 million in the group income statement in 2005.
Tiger Brands LimitedAnnual financial statements 2016Annual financial statements Annexure E
Pension obligations
This information noted below summarises all key assumptions, valuation inputs and key disclosures relating to the Tiger Brands
pension obligations.
The company and its subsidiaries contribute to retirement plans that cover all employees. The retirement plans are either defined
benefit plans or defined contribution plans and are funded. The assets of the funds are held in independent trustee administered
funds, administered in terms of the Pension Funds Act No 24 of 1956, as amended. In terms of the Pension Funds Act, certain
of the retirement funds are exempt from actuarial valuation. Those funds not exempt from valuation must, in terms of the Pension
Funds Act, be valued at least every three years. For purposes of these disclosures, and in order to comply with the requirements
of IAS 19, valuations have been performed by independent actuaries, using the projected unit credit method. Where valuations
were not possible due to the limited availability of complete data, roll-forward projections of prior completed actuarial valuations
were used, taking account of actual subsequent experience.
Within the company’s group of subsidiaries, there are a total of 23 retirement plans, three of which are defined benefit pension
funds, five are defined contribution pension funds, two are defined benefit provident funds and nine are defined contribution
provident funds. There are a further four schemes of insurance into which the company and its subsidiaries contribute. Certain
companies within the group sponsor external death, funeral and disability benefit insurance policies. These insurance costs have
been allowed for in the disclosures provided. All of the funds above are funded with one exception.
The actual return on plan assets for the period 1 October 2015 to 30 September 2016 was R31,3 million (2015: R32,1 million).
This compares with the expected return for the same period of R35,1 million (2015: R33,9 million).
The value of contributions expected to be paid by group companies for the year ending 30 September 2017 amounts to
R266,9 million (2016 actual: R243,3 million).
As at 30 September 2016, there were no properties occupied by, or other assets used by, group companies which formed part
of the fair value of plan assets (2015: Rnil).
182
As at 30 September 2016, the percentage of the fair value of plan assets in respect of defined benefit arrangements invested
in Tiger Brands Limited shares amounted to 0% (2015: 0%).
Major categories of plan assets in respect of defined benefit arrangements as at 30 September:
(%)
Equities
Bonds
Cash
Property
International
Other
(R’million)
Balance at the end of the year
Present value of defined benefit obligations
Fair value of plan assets in respect of defined benefit obligations
Funded status of defined benefit plans
Unrecognised due to paragraph 65 limit
Asset at reporting date
GROUP
2016
3,9
27,4
64,1
0,8
3,2
0,6
100,0
2015
4,0
38,4
53,4
0,7
3,0
0,5
100,0
GROUP
2016
2015
(314,6)
450,7
136,1
(31,0)
105,1
(305,7)
425,6
119,9
(21,4)
98,5
The disclosure of the funded status is for accounting purposes only, and does not necessarily indicate any assets available to the
company or its subsidiaries. Once a surplus apportionment exercise is completed, and approved by the Registrar of Pension
Funds in terms of the provisions of the Pension Funds Second Amendment Act, 2001, only at that stage would it be appropriate
for the company or its subsidiaries to recognise any assets in respect of the retirement funds, to the extent that they are
apportioned such assets. The surplus apportionment schemes for the Tiger Brands Defined Benefit Pension Fund and the Beacon
Products Staff Pension Fund were approved by the Registrar in 2008. The surplus apportionment scheme for the ICS Pension
Fund was approved in 2011. Where appropriate, surplus apportioned to the company has been recognised on the statement
of financial position. This legislation is not applicable to arrangements not registered in terms of the Pension Funds Act, such as
special purpose entities established for purposes of providing disability benefits.
Tiger Brands LimitedAnnual financial statements 2016 Pension obligations continued
(%)
Actuarial assumptions
The principal actuarial assumptions used for accounting purposes were:
Discount rate
Tiger Brands Defined Benefit Pension Fund
Tiger Oats Benefit Foundation
Nestlé Pension Fund
ICS Pension Fund
Future salary increases
Post-retirement discount rate
Tiger Brands Defined Benefit Pension Fund
Nestlé Pension Fund
Future pension increases
Nestlé Pension Fund
(R’million)
Reconciliation of the defined benefit obligation
Defined benefit obligation at the beginning of the year
Current service cost
Member contributions
Interest cost
Actuarial gain
Benefits paid
Settlement cost
Risk premiums (Group Life and Permanent Health)
Defined benefit obligation at the end of the year
Reconciliation of fair value of plan assets
Assets at fair market value at the beginning of the year
Interest on plan assets
Contributions
Risk premiums (Group Life and Permanent Health)
Benefits paid
Settlement cost
Actuarial loss
Assets at fair market value at the end of the year
Reconciliation of asset ceiling
Unrecognised due to paragraph 65 limit
Asset ceiling at the end of the year
Asset balance at the end of the year
GROUP
2016
2015
Full yield
curve
7,90
10,80
7,90
9,40
3,00
3,82
6,72
Full yield
curve
6,90
9,70
6,90
8,20
3,00
3,73
5,76
2016
2015
(305,7)
(4,0)
(0,9)
(26,2)
14,0
7,9
–
0,3
(314,6)
425,6
35,1
2,1
(0,3)
(7,9)
–
(3,9)
450,7
(31,0)
(31,0)
105,1
(319,2)
(3,6)
(1,0)
(26,2)
8,8
29,1
6,1
0,3
(305,7)
423,0
33,9
2,8
(0,3)
(26,9)
(5,0)
(1,9)
425,6
(21,4)
(21,4)
98,5
183
Tiger Brands LimitedAnnual financial statements 2016Annual financial statements Annexure E continued
Pension obligations continued
The risks faced by the group as a result of pension obligations can be summarised as follows:
Inflation: The risk that future CPI inflation is higher than expected and uncontrolled.
Longevity: The risk that pensioners live longer than expected and thus their pension benefit is payable for longer than expected.
Open-ended, long-term liability: The risk that the liability may be volatile in the future and uncertain.
Future changes in legislation: The risk that changes to legislation with respect to the post-employment liability may increase the
liability for the company.
Future changes in the tax environment: The risk that changes in the tax legislation governing employee benefits may increase
the liability for the company.
Administration: Administration of this liability poses a burden to the company.
Sensitivity analysis
The sensitivity analysis has been prepared for the Tiger Brands Defined Benefit Pension Fund and the Nestlé Pension Fund. The
liabilities of the Tiger Brands PRDBS Provident Fund and the ICS Pension Fund are not sensitive to changes in either the discount
rate or the inflation rate.
Discount rate
Defined benefit obligation (R’million)
Change (%)
Inflation rate
Defined benefit obligation (R’million)
Change (%)
184
Balance
2016
Rm
(263,8)
(263,8)
+1%
Rm
(257,6)
(2,4)
(270,7)
2,6
-1%
Rm
(271,2)
2,8
(257,9)
(2,3)
Tiger Brands LimitedAnnual financial statements 2016 Annexure F
Post-retirement medical aid obligations
This information noted below summarises all key assumptions, valuation inputs and key disclosures relating to the Tiger Brands
post-retirement medical aid obligations.
The company and its subsidiaries operate post-employment medical benefit schemes that cover certain of their employees and
retirees. This practice has since been stopped for new employees. The liabilities are valued annually using the projected unit
credit method. The latest actuarial valuation was performed on 30 September 2016.
(%)
The principal actuarial assumptions used for accounting purposes were:
Discount rate
Medical inflation
Future salary increases
Post-retirement mortality tables
2016
2015
10,00
9,00
9,00
PA(90)
ultimate rated
down 2 years
plus 1%
improvement
per annum
from 2006
9,10
8,40
8,40
PA(90)
ultimate rated
down 2 years
plus 1%
improvement
per annum
from 2006
The risks faced by the group as a result of the post-retirement medical aid obligation can be summarised as follows:
Inflation: The risk that future CPI inflation and healthcare cost inflation are higher than expected and uncontrolled.
Longevity: The risk that pensioners live longer than expected and thus their healthcare benefit is payable for longer than expected.
Open-ended, long-term liability: The risk that the liability may be volatile in the future and uncertain.
Future changes in legislation: The risk that changes to legislation with respect to the post-employment liability may increase the
liability for Tiger Brands.
Future changes in the tax environment: The risk that changes in the tax legislation governing employee benefits may increase the
liability for Tiger Brands.
Perceived inequality between current employees: The risk of dissatisfaction of current employees who are not eligible for a
post-employment healthcare subsidy.
Administration: Administration of this liability poses a burden to Tiger Brands.
Enforcement of eligibility criteria and rules: The risk that eligibility criteria and rules are not strictly or consistently enforced.
185
Sensitivity analysis
Key assumption
Accrued liability 30 September
(R’million)
% change
Current service cost plus interest cost
(R’million)
% change
Key assumption
Present value of obligations 30 September
(R’million)
% change
Key assumption
Present value of obligations
30 September 2016
(R’million)
% change
2016
2015
Base case
Medical inflation
Base case
Medical inflation
9,00%
(1,0%)
1,0%
8,40%
(1,0%)
1,0%
666,0
67,2
602,0
(9,6)
60,2
(10,4)
2016
742,6
11,5
75,5
12,5
643,1
60,4
720,4
12,0
68,5
13,4
578,9
(10,0)
53,8
(11,0)
2015
Base case
Discount rate
Base case
Discount rate
10,00%
(1,0%)
1,0%
9,10%
(1,0%)
1,0%
666,0
746,0
12,0
600,2
(9,9)
643,1
724,1
12,6
576,9
(10,3)
2016
2015
Base case
Expected retirement age
Base case
Expected retirement age
60/63/65
years
One year
younger
One year
older
60/63/65
years
One year
younger
One year
older
666,0
669,0
0,4
661,6
(0,7)
643,1
647,0
0,6
639,7
(0,5)
The duration of the liability at 30 September 2016 is 12,4 years (2015: 12,9 years).
Tiger Brands LimitedAnnual financial statements 2016Annual financial statements Shareholders’ diary
Financial year end
Annual general meeting
Reports and accounts
Announcement of interim report and dividend for half-year ending 31 March 2017
Announcement of annual results and final dividend for the year ended
30 September 2017
Integrated annual report
Dividends 2017
Ordinary shares
Interim dividend
Final dividend
30 September
21 February 2017
25 May 2017
27 November 2017
December 2017
Declaration
Payment
May 2017
July 2017
November 2017
January 2018
Declaration of final dividend number 144
186
The board has approved and declared a final dividend of 702 cents per ordinary share (gross) in respect of the year ended
30 September 2016.
The dividend will be subject to the dividends tax that was introduced with effect from 1 April 2012. In accordance with
paragraphs 11.17(a)(i) to (x) and 11.17(c) of the JSE Listings Requirements, the following additional information is disclosed:
•• The dividend has been declared out of income reserves.
•• The local dividends tax rate is 15% (fifteen per centum).
•• There are no secondary tax on companies (STC) credits utilised.
•• The gross local dividend amount is 702 cents per ordinary share for shareholders exempt from the dividends tax.
•• The net local dividend amount is 596,70 cents per ordinary share for shareholders liable to pay the dividends tax.
•• Tiger Brands has 192 069 868 ordinary shares in issue (which includes 10 326 758 treasury shares).
•• Tiger Brands Limited’s income tax reference number is 9325/110/71/7.
Shareholders are advised of the following dates in respect of the final dividend:
Last day to trade cum the final dividend
Shares commence trading ex the final dividend
Record date to determine those shareholders entitled to the final dividend
Payment in respect of the final dividend
Tuesday, 10 January 2017
Wednesday, 11 January 2017
Friday, 13 January 2017
Monday, 16 January 2017
Share certificates may not be dematerialised or rematerialised between Wednesday, 11 January 2017, and Friday, 13 January 2017,
both days inclusive.
By order of the board
T Naidoo
Company secretary
22 November 2016
Tiger Brands LimitedIntegrated annual report 2016 Analysis of registered shareholders and company schemes
Registered shareholder spread
In line with the JSE Listings Requirements, the table below confirms the spread of registered shareholders dated 30 September
2016 was:
Shareholder spread
1 – 1 000 shares
1 001 – 10 000 shares
10 001 – 100 000 shares
100 001 – 1 000 000 shares
1 000 001 shares and above
Total
Number
of holders
% of total
shareholders
Number
of shares
% of
issued capital
15 265
2 909
625
160
34
18 993
4 116 731
80,4
8 745 692
15,3
19 438 305
3,3
46 075 187
0,8
0,2 113 693 953
2,1
4,6
10,1
24,0
59,2
100,0 192 069 868
100,0
Public and non-public shareholdings
Within the shareholder base, we confirm the split between public shareholdings and directors/company-related schemes
as being:
Shareholder type
Non-public shareholders
•• Empowerment holdings
•• Own holding
•• Share trusts
•• Directors and associates
Public shareholders
Total
Number
of holders
% of total
shareholders
Number
of shares
% of
issued capital
10
6
1
2
1
18 983
18 993
0,05
0,03
0,01
0,01
0,01
29 567 101
18 997 241
10 326 758
241 881
1 221
99,95 162 502 767
15,4
9,9
5,4
0,1
0,0
84,6
100,00 192 069 868
100,0
187
Substantial investment management and beneficial interests above 3%
Through regular analysis of STRATE registered holdings, and in line with the provisions of section 56 of the Companies Act, the
following shareholders held directly and indirectly equal to or over 3% of the issued share capital as at 30 September 2016:
Investment management shareholdings
Investment manager
PIC
Colonial First State Global Asset Management
Investec Asset Management
Tiger Consumer Brands Limited
Tiger Brands Foundation SPV
Sprucegrove Investment Management
BlackRock Inc
Prudential Investment Managers
Total
Beneficial shareholdings
Government Employees Pension Fund
Tiger Consumer Brands Limited
Tiger Brands Foundation SPV
First State Global Emerging Markets Fund
Total
Total
shareholding
21 609 168
17 281 331
12 705 066
10 326 758
9 068 067
6 664 128
6 089 943
6 007 628
89 752 089
Total
shareholding
23 317 219
10 326 758
9 068 067
7 864 592
50 576 636
%
11,3
9,0
6,6
5,4
4,7
3,5
3,2
3,1
46,8
%
12,1
5,4
4,7
4,1
26,3
Tiger Brands LimitedIntegrated annual report 2016Shareholders’ information Definitions
Headline earnings per share
Headline earnings divided by the weighted average number of ordinary shares in
issue during the year (net of treasury and empowerment shares).
Dividend cover
Headline earnings per share divided by the total ordinary dividend per share for
the year, comprising the interim dividend paid and final dividend declared
post-year end. Where applicable the denominator includes the capital distribution
paid out of share premium.
Net worth per ordinary share
Interest of ordinary shareholders after deducting the cost of treasury and
empowerment shares divided by the number of ordinary shares in issue at the
year end, excluding treasury and empowerment shares.
Asset turnover
Turnover divided by the average of net assets, excluding cash resources, short-term
and long-term borrowings, taxation, shareholders for dividends and the carrying
value of investments, at the beginning and end of the financial year.
Working capital per R1 000 revenue
The average of inventory and receivables less payables, excluding dividends
payable to shareholders and taxation, at the beginning and end of the financial
year divided by turnover (R000).
Operating margin
Operating profit as a percentage of turnover.
Abnormal items
Items of income and expenditure which are not directly attributable to normal
operations or where their size or nature are such that additional disclosure is
considered appropriate.
188
Effective taxation rate
Taxation charge in the income statement as a percentage of profit before taxation.
Return on equity
Profit attributable to ordinary shareholders excluding abnormal items divided by
issued capital and reserves.
Return on average net assets employed
Operating profit as a percentage of the average of net assets, excluding cash
resources, short-term and long-term borrowings, taxation, shareholders for
dividends and the carrying value of investments, at the beginning and end of the
financial year.
Current ratio
Ratio of current assets to current liabilities.
Net interest cover
Operating profit plus dividend income divided by net finance costs.
Net funding
Net debt
Total liabilities
Capital and reserves, non-controlling interests and long-term and short-term
borrowings net of cash.
Cash and cash equivalents less long-term borrowings and short-term borrowings.
Long-term borrowings and current liabilities.
Tiger Brands LimitedIntegrated annual report 2016 Total equity
Total equity includes ordinary share capital and share premium, less treasury
shares and shares held by empowerment entities, plus reserves and non-controlling
interests.
Cash flow to net liabilities
Cash generated from operations after interest and taxation as a percentage of
total liabilities less cash resources.
Dividend yield
Dividends and capital distributions as a percentage of year-end market price
per share.
Earnings yield
Headline earnings per share as a percentage of year-end market price per share.
Price:earnings ratio
Year end market price per share as a multiple of headline earnings per share.
189
Tiger Brands LimitedIntegrated annual report 2016Shareholders’ information Investor relations
Nikki Catrakilis-Wagner
Telephone: +27 11 840 4000
Website address
www.tigerbrands.com
Contact details
Companysecretary@tigerbrands.com
Investorrelations@tigerbrands.com
Tigercsd@tigerbrands.com
Consumer help line: 0860 005342
Company information
Tiger Brands Limited
Registration number: 1944/017881/06
Company secretary
T Naidoo
Registered office
3010 William Nicol Drive
Bryanston
Sandton
PO Box 78056, Sandton, 2146
Telephone: +27 11 840 4000
Facsimile: +27 11 514 0477
Auditors
Ernst & Young Inc
Principal banker
Nedbank Limited
Sponsor
JP Morgan Equities Limited
190
South African share transfer secretaries
Computershare Investor Services Proprietary Limited
Rosebank Towers, 15 Biermann Avenue
Rosebank
2196
American Depository Receipt (ADR) facility
ADR Administrator
The Bank of New York Mellon
Forward-looking information
This integrated annual report contains forward-looking statements that, unless otherwise indicated, reflect the company’s
expectations at the time of finalising the report. Actual results may differ materially from these expectations if known and
unknown risks or uncertainties affect the business, or if estimates or assumptions prove inaccurate. The company cannot
guarantee that any forward-looking statement will materialise and, accordingly, readers are cautioned not to place undue
reliance on these statements. The company assumes no obligation to update or revise any forward-looking statements,
even if new information becomes available as a result of future events or for any other reason, save as required by
legislation or regulation.
Tiger Brands LimitedIntegrated annual report 2016 191
Tiger Brands LimitedIntegrated annual report 2016 192
Tiger Brands LimitedIntegrated annual report 2016 BASTION GRAPHICS
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