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7
INTEGRATED ANNUAL REPORT 2017
WE NOURISH AND NURTURE
MORE LIVES EVERY DAY
CONTENTS
W Group profile
E
I
V
R
E
V
O
S
S
E
N
I
S
U
B
About this report
How we did
Our markets and operating
environment
Managing our business
2
3
4
6
8
W Chairman’s review
E
I
V
E
R
C
I
G
E
T
A
R
T
S
Chief executive officer’s review
Risk management
Strategic review
Changing the way we work
Our material issues
Our business model
Our key relationships
Our competitive advantages
and market position
Chief financial officer’s review
9
11
14
18
21
22
24
26
32
34
W Grains
Consumer Brands – Food
Home, Personal Care and Baby
Exports and International
Associates
E
I
V
E
R
L
A
N
O
I
T
A
R
E
P
O
W Sustainability review
E
I
V
E
R
L
A
I
C
N
A
N
I
F
-
N
O
N
Our people
Health and safety
Transformation
Our communities
Our customers and consumers
Environment
38
39
40
41
42
44
45
50
52
56
62
66
WE NOURISH AND NURTURE MORE LIVES EVERY DAY
Tiger Brands is one of Africa’s largest, listed manufacturers of fast-moving
consumer goods (FMCG). Our core business is manufacturing,
marketing and distributing everyday branded food to middle-income
consumers. We also distribute leading brands in the home, personal
care and baby sectors.
In South Africa, Tiger Brands has prominent market shares in a broad
range of categories, growing for almost a century through acquisitions
and developing its brands.
W Corporate governance
Audit committee report
Social, ethics and transformation
committee report
Remuneration report
E
I
V
E
R
E
C
N
A
N
R
E
V
O
G
70
82
85
88
Declaration of dividend
N Shareholders’ diary
O
I
T
A
M
R
O
F
N
Analysis of registered shareholders
and company schemes
Company information
I
’
S
R
E
D
L
O
H
E
R
A
H
S
103
104
105
107
FOR MORE INFORMATION
SEE PAGES IN THIS REPORT
VISIT OUR WEBSITE FOR
ADDITIONAL INFORMATION
Tiger Brands Limited Integrated annual report 2017
1
Group profile
Tiger Brands has strong, iconic brands such as Albany, KOO and All Gold, with
market-leading positions in most categories. Our brands are well entrenched
with consumers.
Division
Category
Annual
category value (Rm)
Tiger Brands
value share %
Key Tiger Brands
Rank
Baked goods (bread)
Maize
Rice
Pasta
Breakfast
Sugar lines
Camphor cream
and lotions
Beans
Mayonnaise
Peanut butter
Tomato sauce
Canned vegetables
Jam
Tomato products
Chakalaka
Canned processed
meat
Concentrates
Sports drinks
GRAINS
SNACKS
& TREAT
PERSONAL
CARE
GROCERIES
VALUE
ADDED MEAT
PRODUCTS
BEVERAGES
HOME
CARE
BABY
Insecticides
Sanitary cleaners
Homogenised food
Baby care
Source: Nielsen.
6 285
3 712
4 887
1 581
1 082
4 685
298
1 863
1 808
1 456
928
742
740
555
494
5 318
2 632
1 151
1 392
1 014
813
872
32
13
30
40
38
27
63
50
40
70
59
33
22
87
19
23
35
49
19
86
15
1
2
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
2
1
2
1
2
In addition to our core South African business, we have operations in Nigeria and Cameroon. In recent years, we have
built a sizeable exports business for our products throughout Africa.
Tiger Brands prides itself on being a world-class manufacturer and marketer of everyday branded goods. Our success is
underpinned by the strength of these brands and continuous improvement initiatives. We support our core brands, backed
by consumer and shopper research that provides comprehensive insights into our chosen categories and markets.
We also hold 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
Tiger Brands Limited Integrated annual report 2017
About this report
This integrated annual report provides a consolidated
view of Tiger Brands Limited’s performance for the year to
30 September 2017, and follows a similar report for the
year to 30 September 2016.
For further information, please contact the investor
relations director, Nikki Catrakilis-Wagner
T: +27 11 840 4000 E: investorrelations@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 environmental, social and governance
(ESG) aspects, we are guided by:
• King IV report
• 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 and, as
appropriate, how these affect the six capitals proposed
in this framework
• We no longer apply the principles and guidelines of
the Global Reporting Initiative (GRI G4), which will be
discontinued in July 2018. For Tiger Brands, the
comprehensive King IV is more applicable and
appropriate.
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 and its subsidiaries, with
limited disclosure on associate companies, for the review
period. There were no changes to the boundary or any
measurement techniques in 2017.
The only significant change in our size, structure or
ownership during the year was the disposal of our 51%
interest in Ethiopia (East African Tiger Brands Industries).
On 23 November 2017, Tiger Brands was notified that
the transaction regarding the disposal of Haco Tiger
Brands (Haco) has been approved by the Competition
Authorities in Kenya. The estimated profit or loss on
disposal is not expected to be material. These disposals
reflect the refined approach to our Africa strategy of
exiting non-core categories.
In the risk report (page 14), we identify external threats,
opportunities and outcomes with a significant potential
effect on our ability to create value. In our strategic review
(page 18), we identify the most material issues for the
group and outline our response.
Supplementary information
This report should be read with the annual financial
statements on our website for a full understanding of
the group.
Assurance
Our current combined assurance model is set out below:
Business process
Nature of assurance
Assurance provider
In this report
Annual financial
statements
Risk management
and internal controls
Environmental risk
assessments
Social responsibility
and sustainability
External audit
Ernst & Young Inc.
Internal audit
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 report.
Risk management, page 14.
Audit committee report, page 82.
External audit
Marsh Proprietary Limited
Pages 66 to 69.
External audit
FTSE Russell
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.
In future, we will also publish a social return on investment (SROI)
review of our socio-economic development projects.
BBBEE
External verification
EmpowerLogic
Proprietary Limited
Transformation, page 52.
Approval
The audit committee and board acknowledge their joint responsibility for ensuring the integrity of the integrated 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.
Khotso Mokhele
Chairman
Board
28 November 2017
Rob Nisbet
Chairman
Audit committee
Tiger Brands Limited Integrated annual report 2017
3
BUSINESS OVERVIEW How we did
Financial capital
Domestic business delivers a strong performance in a
tough trading environment with operating margins
up to 15,6%
(2016: 14,1%)
Group operating income** up 11% to
R4,6 billion
(2016: R4,2 billion)
Group operating** margin up 110 basis points to
Cash from operations up 43% to
14,8%
(2016: 13,7%)
R6,1 billion benefiting from
working capital improvements
(2016: R4,2 billion)
HEPS* up 2% to 2 155
cents
(2016: 2 119 cents)
* From continuing operations.
** From continuing operations, before impairments and abnormal items.
Our measures of success
Met
Partially met
Not met
Key performance indicator
Five-year target (2021)
Net sales (R billion)
Gross margin
Category growth +1 – 2% pa
+150 – 180bps*
Marketing investment (% of net sales)
+100 – 160bps
Operating margin (before IFRS 2 charges) +100 – 160bps
Return on net assets
>35%
FY17
31,3
33,4%
2,5%
14,8%
35,3%
FY16
restated†#
Progress
30,6
31,8%
2,5%
13,7%
30,4%
* bps – basis points.
† Restated for early adoption of IFRS 15 Revenue from Contracts with Customers. Refer note 6 in the condensed consolidated financial statements.
# Restated as required by IFRS 5 for treatment of East Africa Tiger Brands Industries plc and Haco Tiger Brands Limited as discontinued operations.
Human capital
Invested in our people R57 million (2016: R67 million)
4
Tiger Brands Limited Integrated annual report 2017
Natural capital
Water use intensity 2,12kℓ/ton (2016: 2,32kℓ/ton)
Intellectual capital
Innovation as % of revenue 4,3% (2016: 4,5%)
Manufactured capital
Invested in facilities R919 million (2016: R945 million)
Social capital
Invested in communities R35 million (2016: R23 million)
Social capital
Beneficiaries reached 104 000 (2016: 101 000)
Tiger Brands Limited Integrated annual report 2017
5
BUSINESS OVERVIEW Our markets and operating environment
We summarise key issues and trends in our operating environment for further
insight on our performance.
CAMEROON
Chococam
Nigeria
Global growth
• Relatively steady growth as key global
economies recover – reflecting rising employment
and benign inflation
Cameroon
Ave % y/y
2015a 2016a 2017f
2018f
South Africa
US
Eurozone
Japan
China
South Africa
2,6
2,0
1,2
6,9
1,3
1,6
1,6
1,0
6,7
0,3
2,0
1,9
1,5
6,5
0,7
2,0
1,7
1,0
6,3
1,1
SOUTH AFRICA
Tiger Brands Limited
a Actual f Forecast
South African economy
NIGERIA
Deli Foods
ON-SHORE
MANUFACTURING
• Zimbabwe
• South Africa
• Cameroon
• Nigeria
EXPORT TERRITORIES
OUR DISTRIBUTION NETWORK
SPANS
25
AFRICAN
COUNTRIES
• South Africa out of sync with global recovery,
and briefly slipped into recession in 2017
(first time since 2009)
• SA current business cycle downswing has lasted
four years, marking the second longest downturn
in its history
• Fiscus under extreme pressure: lower tax
collections (estimate – R51 billion), higher
contingent liabilities from treasury
guarantees on borrowings by state-owned entities
(R689 billion), sovereign credit rating downgrades
(with further downgrades likely)
• Angola
• Burkina Faso
• DRC
• Equatorial
Guinea
• Ethiopia
• Ghana
• Kenya
• Liberia
• Madagascar
• Malawi
• Mali
• Mauritius
• Mozambique
• Namibia
• Niger
• Nigeria
• Rwanda
• Reunion
• Seychelles
• Sierra Leone
• Sudan
• Tanzania
• Uganda
• Zambia
• Zimbabwe
6
Tiger Brands Limited Integrated annual report 2017
USD/ZAR and EUR/USD
• Unemployment reaches highest level in over a decade
2,0
1,5
1,0
0,5
20
15
10
5
0
0
0
2
1
0
0
2
2
0
0
2
3
0
0
2
4
0
0
2
5
0
0
2
6
0
0
2
7
0
0
2
8
0
0
2
9
0
0
2
0
1
0
2
1
1
0
2
2
1
0
2
3
1
0
2
4
1
0
2
5
1
0
2
6
1
0
2
7
1
0
2
—
—
EUR/USD
USD/ZAR
• Despite broadly strengthening in 2017, rand
extremely vulnerable to negative domestic political
and economic news
• Inflation of 6,3% vs 0,2% real growth in personal
income in 2016 keeping household expenditure under
extreme pressure
Growth in household incomes remains relatively modest
(Rand)
15 000
12 000
9 000
6 000
3 000
(%)
8
7
6
5
4
3
2
1
0
(1)
(2)
(3)
9
9
9
1
0
0
0
2
1
0
0
2
2
0
0
2
3
0
0
2
4
0
0
2
5
0
0
2
6
0
0
2
7
0
0
2
8
0
0
2
9
0
0
2
0
1
0
2
1
1
0
2
2
1
0
2
3
1
0
2
4
1
0
2
5
1
0
2
6
1
0
2
Compensation of South African employees
Disposable income of households (rhs)
—
—
Source: SARB bulletins
• Overall consumer spending environment expected to
remain weak over the near term (weaker exchange
rate, higher taxes + fuel levies (some R25 billion from
consumers’ pockets), higher fuel price (at 2014 peaks)
Long-term trends in real income per person since 2011
R0 – R12 700
R12 701 – R51 000
R51 001 – R111 000
R111 001 – R240 000
R240 001 – R382 000
R382 001 – R787 000
R787 001 – R1 698 000
R1 698 001 +
Average
Source: BMR, Standard Bank Research.
%
2011 – 2016
22,7
6,0
(1,9)
(4,9)
(6,8)
(15,4)
(19,7)
(30,6)
0,4
Unemployment (%)
30
25
20
0
1
0
2
1
1
0
2
2
1
0
2
3
1
0
2
4
1
0
2
5
1
0
2
6
1
0
2
7
1
0
2
8
1
0
2
Political climate
• Knock-on effects of political uncertainty evident
across economic sectors
• Significant economic risk from political developments
ahead of ANC elective conference in December
2017 and run-up to 2019 elections
Retail sector
• Slowdown in consumer spending has significant
impact on JSE-listed consumer goods companies
• Year-on-year food price inflation at two-year low of
5,7% in August after averaging 8,4% in the first half.
Forecast of 3,2% by early 2018
• Deflation in key raw material prices
Key commodity price changes
Brent crude (US$/bb)
US wheat (US cents/bu)
SA white maize (R/t)
SA yellow maize (R/t)
SA wheat (R/t)
End-
September
%
y/y
57,0
21,6
461,5
(3,5)
1 830
(49,0)
1 953
(35,4)
4 063
(3,3)
• Record maize crop estimated at over 16 million
metric tonnes in the 2017 season more than double
a year earlier, when the worst drought in over a
century reduced the harvest to a nine-year low
Source: StatsSA, SARB, economic reports.
Tiger Brands Limited Integrated annual report 2017
7
BUSINESS OVERVIEW
Managing our business
Tiger Brands is committed to the highest standards of corporate governance.
The board sets the tone and standards, particularly in terms of ethical and moral
business behaviour, which filter down to executive management and all employees.
Board
Audit
Remuneration
Nominations
Risk and
sustainability
Social, ethics
and
transformation
Investment
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
Benchmarks were an important component of our strategic
review (page 18). In 2017, Tiger Brands was again
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 quartile (77%), but indicates that more needs
to be done. On the measured pillars, we scored
2,6 (â, primarily through inclusion of biodiversity from
our associate Oceana) on environmental, 3,7 (á) on
social and 3,9 (á) on governance, with the full scorecard
on our website. Pleasingly, our scores improved for
human rights and community, customer responsibility
and anti-corruption.
Managing our business sustainably
Sustainability (encompassing social, environmental and
economic issues) is managed centrally by Tiger Brands’
corporate affairs team and embedded in the group’s
strategy to create shared value for all our stakeholders
through real benefits and constructive partnerships that
secure our social licence to operate.
After thorough review, we have crystallised the key
elements of Tiger Brands in society and what constitutes
good corporate citizenship in creating shared value as:
• Moving from compliance to leadership in social
development
• Tiger Brands as a force for good
• From charitable giving to sustainable social impact
and shared value
• Constructive and strategic stakeholder engagement
• Employees as our ambassadors.
Importantly, given the pace of change in our key markets
and our industry, our corporate affairs team is a central
source of expertise in effective communication,
government relations, stakeholder engagement and
compliance in terms of BBBEE regulations to promote
inclusive economic development. This team has the
capacity to anticipate trends and changes in legislation,
regulation and stakeholder needs, and the ability to plan
and deliver appropriate responses.
8
Tiger Brands Limited Integrated annual report 2017
Chairman’s review
Towards a shared vision
Tiger Brands has produced commendable results in a year where the macro-
environment has arguably been a greater impediment to corporate
performance than in recent memory.
Introduction
In South Africa, four years of anaemic GDP growth are
mirrored in unprecedented unemployment levels, which
have led to deteriorating socio-economic conditions
and heightened the risk of social upheaval. The policy
certainty that is a prerequisite to turn national fortunes
around is sadly eluding us, driven mainly by the mutually
reinforcing twin factors of discord within the governing
political party and massive corruption in state and
parastatal institutions. Levels of alleged corruption have
become almost endemic in certain key entities of
governance, and attracted the attention of global
authorities. These factors have combined to place South
Africa on a slippery slope of negative business
confidence and sovereign credit rating downgrades.
Recent scandals that have unmasked private sector
collusion with state corruption could mark a tipping point
that will energise the citizenry and civil society to arrest
and even reverse many of the negative trends that have
challenged our young and immature democracy.
It is thus serendipitous that the new and globally
acclaimed benchmark in corporate governance, King IV,
takes effect at this time, highlighting the importance of
creating value for all stakeholders by managing public
and private entities responsibly, ethically and
Khotso Mokhele, Chairman
transparently. It is therefore crucial that compliance
with King IV is not approached bureaucratically, but rather
used to inspire activism in driving the values espoused
in the code, not just within a particular company or entity
but throughout society.
Governance
There were several changes to the board of Tiger Brands
in the review period. My tenure as chairperson began on
21 February 2017 on the retirement of my predecessor,
André Parker. Two long-serving directors, Bheki Sibiya
and Santie Botha, also retired from the board in line with
its succession plan. Two dynamic and competent
directors, Emma Mashilwane and Swazi Tshabalala,
were appointed to replace these experienced directors.
Prior to his retirement, Mr Parker had commissioned
an externally facilitated and far-reaching review of the
performance of the board. This yielded a number of
recommendations which were implemented to strengthen
board performance. Key among these was to strengthen
the role of the board in setting the strategic direction
of the company. Greater focus was also placed on
strengthening the role of the investment committee to
enhance the vigour with which potential mergers and
acquisitions (M&A) will be assessed.
Tiger Brands Limited Integrated annual report 2017
9
STRATEGIC REVIEW Chairman’s review continued
The depth of expertise and experience on the board is
summarised on pages 74 and 75; we believe this is a
very solid base of knowledge and thinking to guide Tiger
Brands towards its strategic goals. Changes during the
year are part of a rolling succession plan to capitalise on
existing expertise while introducing fresh thinking, and
fully comply with the requirements of King IV.
Strategic progress
A major strategic review of the group was completed in
the review period.
The group strategy (page 18) for the next five years is built
around a clear purpose: to nourish and nurture more lives
every day. Our vision sets out how we will achieve that
purpose. This illustrates the integrated thinking that our new
executive team, headed by CEO Lawrence Mac Dougall,
has introduced. By considering the needs of all our
stakeholders, we can build a sustainable group that
consistently creates real value for all. To honour this purpose,
we have set measurable targets. To reach these targets, we
have refined the organisational structure for a simpler way
of working, ensuring the correct skills are in place through
internal development or external recruitment, and that
people are accountable for their targets. The CEO
elaborates on this process (page 11) and the remuneration
report details our reward philosophy (page 88).
We also conducted a stakeholder engagement survey
(page 26). Key insights from this and similar future
exercises will be incorporated into our ongoing strategic
development and remuneration processes. Equally, we
listened carefully to issues raised by shareholders when
they voted on our 2016 remuneration report, summarised
by that committee’s chair (page 94).
We are determined to unlock the full potential of Tiger
Brands for the benefit of all. We understand that we will
be measured and judged on every step we take towards
our strategic vision. We have started that journey with
more balanced reporting and improved disclosure to give
stakeholders better insight into our ability to create value.
We also understand that the proof of our determination
rests on our performance and that a focused, energised
Tiger team will deliver.
Performance
Our financial performance over the last two years has
placed the group on a stronger footing to deliver on its
strategic vision. Please see pages 34 to 43.
Responsible citizenship
Non-financial aspects of business have become
imperative for the long-term sustainability of companies,
and are integral to strong performance. Specific to Tiger
Brands, climate change and its impact on food security
have a direct impact on our ability to operate, as do
socio-economic imbalances. As a natural scientist by
profession, I consider these vital issues that will need the
concentrated efforts of the public and private sectors, as
well as individuals, to effect any lasting improvements.
We are determined to unlock
the full potential of Tiger
Brands for the benefit of all.
The proof of our determination
rests on our performance.
Outlook
The CEO details the operational outlook for Tiger Brands.
As the only consumer goods company in the JSE’s top
40, our group has an important societal role to play. To
honour the responsibilities inferred by this role, we are
working with stakeholders at every level to address
immediate concerns such as water supply and food
security and, longer term, towards creating a more
equitable, sustainable economy that benefits all the
country’s citizens.
Given the political tipping point we have reached in
South Africa, and the broader implications, it is pertinent
for me to comment on this sphere.
The elective conference of the governing party scheduled
for December 2017 is likely to mark a critical milestone
in the journey towards maturing our young democracy.
For this journey to lead to a robust democracy, all
stakeholders, including the private sector, will have to play
their constructive part to ensure the values enshrined in our
globally respected and admired constitution are defended
and allowed to flourish.
South Africa Inc can no longer operate with the mixed
messages and signals from major stakeholder groupings.
Understanding that we are going to have to carry the cost
for government failures across a broad front, it is time for
business to fully commit to a sustainable democracy and
display courage in ensuring that the political and public
sectors live up to their constitutional obligations.
Appreciation
With the full support of the board, the new Tiger Brands is
unfolding. Change on this scale, however, is seldom easy
and we deeply appreciate the commitment evident at
every level. I am also grateful for the counsel and insight
of my fellow directors, the dedication of the executive
team and willing engagement from our key stakeholders.
Together, we are working towards a shared vision.
We are sincerely grateful for the contributions of André
Parker, Santie Botha and Bheki Sibiya during their tenure.
As a board, we appreciated the wisdom they added to
proceedings.
Khotso Mokhele
Chairman
28 November 2017
10
Tiger Brands Limited Integrated annual report 2017
Chief executive officer’s review
Achieving our true
potential
Key strategic objectives
• Achieving our true potential by growing the core and expanding into adjacent
categories and geographies, while delivering top tier financial results
• Deploy an operating model that provides the capabilities needed to deliver on
our growth objectives
• Build distinctive capabilities required to win with consumers, customers and
business partners
• Build a world-class integrated supply chain to leverage scale and create fuel
for growth
• Investing in our communities and sustainable supply.
The head and the heart of our strategy
When I addressed the Tiger Brands team on the first day
of our new financial year, it was with a sense of pride for
the organisation we are and excitement for the significant
opportunities ahead.
Lawrence Mac Dougall, Chief executive officer
In the review period, we completed the groundwork
for the strategy that will guide us to 2022, detailed on
page 18. This required much work and, arguably,
an unprecedented level of support, collaboration and
commitment, all while delivering a strong operating result
for the year. This was indeed an achievement and source
of pride for the entire group.
Tiger Brands Limited Integrated annual report 2017
11
STRATEGIC REVIEW Chief executive officer’s review continued
Essentially, 1 October 2017 was the start of our new
five-year strategy and the first step towards our 2022
ambition to achieve our true potential. When we started
this journey, almost a year ago, we agreed that our
historical performance had not met expectations. We
also had feedback from all levels of the organisation
that our ways of working were not entirely conducive to
leveraging our scale as one Tiger team resulting in
an agile, lean organisation that responds quickly.
We therefore set about creating a new strategy and a
new operating model that would unlock our true growth
potential and deliver a sustainable, top-tier performance.
We started by defining our higher purpose, our reason
for being: to nourish and nurture more lives every day:
• In the workplace, by creating meaningful opportunities
for professional development and growth; committing to
working safely; living our values; caring for each other
and creating a great place to work
• Focusing on our communities and minimising our
environmental footprint.
We then agreed a clear and compelling vision that
encapsulates the head (financial targets) and heart (our
stakeholders, beginning with our people) of our strategy:
• Deliver top-tier financial results and be recognised by
all stakeholders as the best FMCG company in South
Africa as well as the most desirable growth company
on the continent. Fundamental to achieving our vision is
attracting the best talent because we are recognised as
a great place to work.
With a clear purpose and vision, we were able to focus
on the growth plans to reach these goals:
• Realise maximum growth from our core business and
brands in South Africa – by harnessing existing
capabilities while building skills for the longer term,
and managing costs while capitalising on
organisational opportunities
• Expand our presence in developing markets, with the
immediate priority of expanding the footprint of our
power brands into Africa.
While we prepared for a sustainable future, we clearly
still had to navigate the present by delivering against
our FY17 targets. The operating environment remained
intensely challenging, exacerbated by a highly
competitive market. The level of political turmoil and
social unrest escalated sharply as the economy
deteriorated. For the group, social unrest manifested in
strikes at two operating units (beverages, and snacks and
treats). While lost production clearly had a bottom-line
cost for the group, improving our relationship with
organised labour is more important. We are focused on
strengthening both lines and means of communication to
ensure we address concerns timeously and in a way that
benefits all.
Our response to material issues within our control and
those outside our control is detailed on page 22, but key
for the executive team is to correctly manage the scale of
change under way in our group needed to support our
strategy. Essentially, this is a process that begins with
refreshed values that, in turn, elicit the behaviours that
support the key metrics or KPIs that mark our progress
towards our strategic goals. We keenly understand that
our people are fundamental to our strategy and as
important as our brands, and we use periodic employee
surveys to track their satisfaction and ensure we anticipate
their changing needs.
While key factors in our market are summarised on
pages 6 and 7, the state of South Africa highlights the
need for companies to honour their commitments as
responsible corporate citizens and deploy their resources
most effectively to assist their own people, communities
and broader society. We take this responsibility very
seriously, investing in our people and communities during
the year (detailed on pages 45 to 61), and against clear
strategies to deliver tangible and growing benefits for
all in years to come.
Overall, as detailed in the financial review on page 34,
Tiger Brands delivered strong operating results in FY17,
driven by our domestic business, particularly our flagship
Grains and Groceries divisions, under difficult conditions.
Importantly, these results reflect our focus on balancing
trade-offs, for example managing absolute growth in
profitability against volume and market share movements,
while driving the efficiencies that will create the fuel for
our future. Similar trade-offs are being made to better
manage our environmental footprint, for example by
investing in the security of water supply through various
water stewardship initiatives. While this benefits specific
manufacturing units, it is vital for affected communities.
These and other environmental initiatives are detailed
on pages 68 and 69.
12
Tiger Brands Limited Integrated annual report 2017
New operating model
Throughout this review process, we benchmarked
ourselves against best-in-class, locally and internationally,
and we learned from detailed talent mapping where the
capability gaps are, as well as where efficiency could be
improved. This enabled us to craft an operating model
that is truly specific to Tiger Brands, one that defines the
capabilities we need to win and ensures the most
effective trade-offs.
Implementing this new model is a complex project in a
sizeable group with distinct operating units and a legacy
spanning decades. It is founded on integration and the
process has been facilitated by maximising available
resources, such as pockets of excellence in specific
disciplines or divisions, across the group. A good
example of this approach is the progress made in scaling
up centralised procurement into a hub that covers
manufacturing, procurement itself and logistics or
distribution. Our aim is to channel 80% of all procurement
through the central hub over the medium term, from 50%
at present. The hub has been appropriately staffed and
targets set to maximise the scale of our group and simplify
processes.
A vital component in the collaborative operating model
is corporate culture. This, in turn, is a function of ways of
working, ways of rewarding and ways of governing.
We are simplifying our ways of working and reducing
management levels while improving individual
development and accountability. To attract the talent we
need and retain existing capabilities, and after feedback
from stakeholders, we have reviewed our remuneration
structures (page 88) and strengthened the link to
performance. Governance has been strengthened at
board and executive level, with clear rotation and
succession plans for the optimum balance between fresh
insight and continuity. The new executive team is working
well, and the group is benefiting from the experience and
insight of external appointments to head grains, company
secretariat and corporate affairs. We are also recruiting a
new head of marketing as the incumbent retires in March
2018, a new head of human resources and a chief
strategy officer, a new resource in the group. The
executive team enters the new financial year well
positioned to execute our strategy.
Transforming the corporate culture is a lengthy process,
and one we have just begun. The progress and
commitment to date are, however, deeply encouraging.
Outlook
We have a compelling strategy and clear targets that will
allow us to win with consumers and grow the strength of
our brands sustainably. These results also underscore the
capability of our team in a period when much of our
focus was internal. In the year ahead, our focus will be
more external as we concentrate on incorporating the
insights from our broad stakeholder engagement.
The economic outlook for 2018 is muted and we expect
the operating environment to remain highly competitive.
The group is, however, well positioned to navigate this
environment and our focus will be on recovering volumes
and market share while remaining committed to a
cost-conscious culture.
In addition, we will pay significant attention to growing
our core portfolio, increasing market penetration through
our customer strategy and unlocking much greater value
through a world-class, integrated supply chain. We will
also drive far more focused innovation and marketing
excellence through distinctive new marketing capabilities,
directing our capital expenditure and marketing investment
to our power brands to improve returns. These strategic
aims will support our broader growth ambitions outside
South Africa.
Appreciation
The commitment of Tiger teams across levels, divisions
and geographies has been both humbling and inspiring.
In return, unleashing the power of our people and
creating a great place to work remains our priority and
strategic lever for success.
Our board has been a source of great counsel and
support throughout the year. We are deeply grateful.
The contributions of our strategic partners and ongoing
support from our service providers, suppliers and
customers is equally valued. We will continue to listen
to you, and work together towards mutual goals.
Lawrence Mac Dougall
Chief executive officer
28 November 2017
Tiger Brands Limited Integrated annual report 2017
13
STRATEGIC REVIEW
Risk management
Effective risk management is fundamental to our business activities and supports
our strategic goals (page 18). By identifying and proactively addressing risks and
opportunities, we aim to generate sustained value for stakeholders while protecting
our business operations, reputation and the well-being of our employees.
Tiger Brands recognises that risk in business is a complex
and diverse concept, and that many parts of the group
focus on managing risk exposures. Our intention is that
these parts work together in a consistent and integrated
manner to manage and reduce risk appropriately.
Ultimately, the function of risk management is to help
Tiger Brands achieve its objectives and ensure a safer,
healthier work environment for employees while
preserving assets and earnings for the benefit of
stakeholders.
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 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, tolerance and velocity (time taken
to feel the impact of a risk after it materialises) of the
group is set by the risk and sustainability committee and
approved by the board annually.
t i o n
a
n ti f c
e
Ris k i d
Gain a full understanding of
any risk we face that might
create, prevent, accelerate
or delay achieving group
objectives
Current control id
e
ntif c
Establish whether our
existing controls adequately
mitigate the risk
a
ti
o
n
1
2
w
e
i
v
e
r
d
n
a
r
o
t
i
n
o
M
Ensure planned
risk response
actions are
implemented
and remain
effective
6
RISK APPETITE AND
TOLERANCE
Rank risks in
order of their
potential impact
and likelihood
of occurrences
3
P
r
i
o
r
i
t
i
s
e
r
i
s
k
s
5
4
Inform decisions and ensure
the Tiger Brands risk profile
is adequately managed
Risk reporting
14
Tiger Brands Limited Integrated annual report 2017
Proactively managing risks
considered unacceptably
high and that require
additional treatment
n s e pla n ning
o
p
s
e
r
s k
R i
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 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, tolerance and velocity (time taken
to feel the impact of a risk after it materialises) of the
group is set by the risk and sustainability committee and
approved by the board annually.
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, followed by divisional consolidation to
culminate in risk reporting at group level.
the group’s operating territories. 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. Divisional and business unit risk registers
are updated quarterly and the risk and sustainability
committee meets three times a year.
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
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
below reflect the significant inherent and residual risks
for Tiger Brands.
Impact
5
4
3
2
1
5
4
3
2
1
5
4
3
2
1
Inherent risk
R1
R2
R3
R6
R7
R8
R9
R5
R4
1
1
1
2
Residual risk
3
R1
R3
R4
R5
R6
R7
R8
R9
2
Future risk state (1 – 3 years)
R3
R4
R5
R9
R8
2
3
R1
R6
3
R7
4
R2
4
R2
4
Likelihood
R1 – Threats to employee safety
R3 – Exposure to cyber threats
R5 – Regulatory and statutory non-compliance
R7 – Fraud, theft, crime and corruption
R9 – Product quality
R2 – Adverse macro-economic outlook
R4 – Business continuity vulnerabilities
R6 – Risk of earnings decline from associates
R8 – Ageing infrastructure
Tiger Brands Limited Integrated annual report 2017
15
STRATEGIC REVIEW Risk management continued
The future state of group risks represents the executive
committee’s view based on information available at the
time of compiling this report. The group risk profile is
reviewed quarterly and may be revised after considering
changes to the local and macro-economic environment,
crime, political developments, legislative and regulatory
changes, socio-economic challenges and technological
advancements. The Tiger Brands risk management
process is therefore not a static view of risks facing
the organisation.
Significant risks
Significant exposures 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 with its impact on Tiger
Brands. A risk is regarded as significant when its score
exceeds the risk tolerance set by the board. The link
between risks and material issues is complex, but we
have noted how key risks relate to material issues below.
The following risks are regarded as significant to Tiger
Brands:
Safety (Material issue: people – training and
development, health and wellness)
At Tiger Brands, there is zero compromise on employee
safety. Safety procedures aligned to the global
OHSAS 18001 standard are embedded across all our
manufacturing facilities, with restricted access controls
at all production facilities.
Ongoing risk assessments, facilitated by an external
security specialist, are focused on developing a strategy
to reduce the safety risk to employees in certain
businesses. A tailored risk response was developed from
detailed risk assessments across these businesses, leading
to a 90% year-on-year reduction in safety incidents.
In FY18, we will appoint a group safety manager and
group security manager to coordinate and support these
initiatives across the group.
While rigorous security risk assessments will be
completed to establish clear priorities for an overarching
group safety and security programme, a key focus in
2018 will be route to market security that poses a
significant risk to Albany bakeries. Our health and safety
performance for the review period is on page 50.
Adverse macro-economic outlook (Material issues: weak
macro economy and job creation, effectively executing
our strategy, people, innovation, food security)
As outlined on pages 6 and 7, our operating environment
remains intensely challenging. We are focusing on the
significant opportunities for efficiency improvements that
have been identified in developing our new operating
model. These will enable us to channel scarce resources
to activities that drive the greatest impact.
Exposure to cyber threats (Material issues: effectively
executing our strategy, people, innovation)
While technology introduces greater variety and
convenience for consumers and more efficiency for
businesses, it also opens more avenues for people to be
targeted by cyber criminals. The threat of cyber crime has
been managed by establishing regular communication
across Tiger Brands to all staff. The latest anti-virus
software has been installed on all desktops and servers,
and appropriate network security controls are in place.
Group IT will continue to monitor the cyber security
landscape with a view to implementing the latest security
solutions and revising existing controls to safeguard the
group against cyber crime.
Regulatory and statutory compliance (Material issues:
effectively executing our strategy, people, innovation)
Tiger Brands is committed to complying with all legislative
and regulatory requirements. Ongoing training
programmes and articles in our in-house publication raise
awareness about compliance and continuously provide
guidance to all staff.
The governance forum, established to facilitate policy
implementation aligned to the legal and risk environment,
is attended by senior management across the business as
well as support functions.
During the year, all levels of management, as well as
sales and procurement staff, were trained in competition
law. A better understanding of competition law aids
employees in their day-to-day decision making and
professional conduct.
Online ethics, anti-bribery and corruption training began
in the latter part of the review period, reinforcing the
ethical behaviour expected from all employees.
Business continuity (Material issues: effectively executing
our strategy, people, innovation)
Loss of life, reputational damage and business
performance can all be compromised by a catastrophic
event or unplanned disruption. Complete business-
continuity plans are already in place for high-priority
packaging and raw materials across the business.
To manage this risk holistically, we are rolling out a
formal business-continuity management process for the
group’s manufacturing facilities over the next two years,
ensuring a systematic and consistent approach to
16
Tiger Brands Limited Integrated annual report 2017
business continuity. This risk is managed with appropriate
group insurance cover, reviewed annually, and disaster-
recovery plans that include replicating core business
applications and services, with maintenance and
support services agreements in place with key vendors.
We are also reviewing and investing in fire water
systems at all plants to lower the dependency on
municipal water supply.
Water restrictions imposed by municipalities in the
Western Cape have had a significant impact on our
manufacturing processes. This spans the supply chain,
from sourcing agricultural raw materials to water-
dependent manufacturing processes. Low water pressure
also poses a risk. Accordingly, all Western Cape
manufacturing sites have implemented fit-for-purpose
solutions, including water-recovery and treatment, while
water-storage facilities have been installed where viable.
As a strategic focus area, efficient use of water at all our
manufacturing operations has yielded results, although the
protracted drought requires ongoing initiatives to optimise
and reduce water use.
Risk, control and environmental audits are performed
by an external specialist annually. Results 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 supply meets demand requirements.
Exposure to the loss of power generation at all facilities is
regularly reviewed, both at site level and head office
from a centralised perspective. Although not an
immediate or escalating risk, power-generating capacity
is in place to cover key manufacturing processes where
applicable. Our energy strategies are summarised on
pages 66 to 69.
Fraud, theft, corruption and crime (Material issues:
effectively executing our strategy, people, innovation)
Internal controls are continuously reviewed to guard
against fraud and crime through employee awareness
campaigns, strict access control at all facilities, and
working with the local police in investigating syndicated
crime.
Our people are annually required to acknowledge
compliance to key group policies on anti-bribery and
corruption, ethics, and gifts and entertainment. 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.
Access-control violations linked to fraud risks were
significantly remediated across the group during the year.
Risk of earnings decline from associates (Material issues:
effectively executing our strategy)
Oceana has significantly diversified its portfolio through
the Daybrook acquisition in the US to reduce the level
of reliance on fishing rights in South Africa and
neighbouring countries. In recent years, the risk of fishing
licences being allocated on increasingly stringent
empowerment credentials has risen materially.
However, the strengthening of the rand against the dollar,
slowdown in consumer demand and softer global markets
for fishmeal and fish oil have had a marked impact on
Oceana’s earnings in the review period. Earnings from
Oceana represent over 40% of total earnings from
associates. The performance of our associate companies
are summarised on pages 42 and 43.
Ageing infrastructure (Material issues: effectively
executing our strategy, people, innovation)
A new maintenance management system is being rolled
out across the group to ensure appropriate and consistent
planning and scheduling. In support, manufacturing
optimisation studies will be conducted in FY18.
Total productive maintenance (TPM) has been
implemented. This is a system of maintaining and
improving the integrity of production systems through
equipment, processes and employees. Significant capital
expenditure investments have been completed or are
currently under way across the group to align assets with
innovation and capacity demands.
Product quality (Material issues: effectively executing
our strategy, innovation)
Tiger Brands is committed to producing quality
products that are aligned with our superior brand equity.
To support this commitment, a central auditing body
has been appointed and introduced to all sites in
South Africa.
Good manufacturing practice (GMP) standards and the
food safety system certification 22000 (FSSC 22000)
have also been revised and are being implemented
across the group. Our manufacturing, group legal and
compliance functions collaborate effectively to ensure our
products comply with all regulatory standards and meet
consumer preferences.
Tiger Brands Limited Integrated annual report 2017
17
STRATEGIC REVIEW Strategic review
Achieving our true potential
In the review period, Tiger Brands completed the groundwork for the strategy that
will guide us to 2022 (
strategic review), detailed on page 20.
Developing a strategy for sustainable, profitable growth
Portfolio growth and strategy
• Rejuvenate domestic operations
to profitable growth
• International strategy accretive
to domestic performance
Cost and investment strategy
• Build a capable and cost-
=
conscious culture with capacity
to grow
Growth
Operating model and
organisational design
• Winning through a high-
performance culture
Cost
Capability
We are focused on driving sustainable growth by:
Growing the core and expanding into
adjacent categories and geographies
Adopting a category-based approach
in the rest of Africa
Building sustainable capabilities
required to win with consumers,
customers and business partners
Deploying an operating model that
provides the right capabilities
Fuelling growth through indirect
spend excellence (zero-based spend)
and zero-based budgeting
Building a world-class integrated
supply chain to leverage scale
18
Tiger Brands Limited Integrated annual report 2017
Tiger Brands 2022 – achieving our true potential
PURPOSE
We nourish
and nurture
more lives every day
VISION
Deliver top-tier financial results and be recognised
by all stakeholders as the best FMCG company in South Africa
and most desirable growth company on the continent.
We attract the best talent and are recognised as a great place to work
FINANCIAL MEASURE
Drive top-line growth ahead of category growth and improve operating margin in line
with top-tier industry benchmark
OUR MISSION
Unleash the
power of
our people
Accelerate
growth from
our core
Achieve selling
and channel
ubiquity
Drive efficiency
to fuel our
growth
Create a
world-class
integrated
supply chain
As a good
corporate
citizen, build a
renewable and
sustainable
future
NO COMPROMISE TO QUALITY, SAFETY AND INTERNAL CONTROLS
VALUES
Our consumers
are our business
We act with
integrity in
everything we do
We have passion
for excellence
We continue
to reinvest in our
society
We value our
people and treat
them with dignity
Tiger Brands Limited Integrated annual report 2017
19
STRATEGIC REVIEW Strategic review continued
We have defined Tiger Brands’ core as manufacturing, marketing and distributing everyday branded food to middle-
income consumers (summarised below).
Everyday
Branded
FMCG
LSM 5 – 8
• Goods that command
leading positions
(number one or two)
in their segments
• Not commodity items,
eg bulk, unbranded,
business-to-business
categories
• Food consumer staples is
the core – part of key
eating and snacking
occasions
• Bulk of food shopping
basket
• Adjacencies to leverage
and protect the core
• Mass market, average
consumer
• Growing middle of
South Africa
• Metropolitan or urban
• Fairly homogenous
• Mostly employed
• Brand loyal
• Part of the basket of
goods bought for
everyday use
• Could be part of a
segment that makes up
something used every
day – chutney (through
condiments and
ingredients, rice and
pasta (through
carbohydrates)
• One of the eating
occasions – breakfast,
lunch, supper, snacks
• Luxury goods not part
of every day
• Not cyclical goods
Our core already accounts for 70% of current sales. Middle-income consumers are a growing proportion of the South
African market, are more brand loyal, have similar shopping destinations and use media in a similar way. Food is a
large, attractive core with strong growth potential, allowing us to build on our established positions and good
adjacencies.
Measures of success
We plan to generate significant savings over the next five years, primarily from improving gross margin and driving
efficiencies through zero-based spend. These savings will be reinvested in the core to capitalise on growth opportunities.
The net impact is an anticipated increase in the operating margin (before IFRS 2 charges) of 100 to 160 basis points
over the five-year period to 2022.
Strategy implementation
We have made significant progress over the year, with the following key milestones already achieved:
• The new operating model was implemented from 1 October 2017. Capability gaps have been mapped and
the recruitment process to fill these is well advanced
• Zero-based budgeting has been embedded in the 2018 budget process
• Good momentum on key capital projects that will help improve manufacturing efficiencies and provide additional
capacity to achieve the required growth
• The supply chain transformation is well under way, with governance structures in place to enhance visibility of progress,
issues and risks
• Ongoing work subsequent to the portfolio review to determine opportunities that will strengthen and refine the core
portfolio and drive sustainable growth
• Work is also under way to identify and evaluate suitable M&A opportunities that will leverage our core capabilities.
We have put in place the foundations for a sustainable future, with a compelling strategy and clear targets that will allow
us to win with consumers and grow the strength of our brands. This in turn will enable the group to create predictable
value by delivering top-tier financial results and be recognised by all stakeholders as the best fast-moving consumer goods
(FMCG) company in South Africa, as well as the most desirable growth company on the continent. Fundamental to
achieving our vision is attracting the best talent, on the basis of being recognised as a great place to work.
20
Tiger Brands Limited Integrated annual report 2017
Changing the way we work
Our new operating model will refocus on the consumer, reignite innovation and
leverage our scale as one Tiger Team – resulting in an agile, lean organisation that
responds quickly and is aided by simple ways of working. A key enabler will be
improved processes and enhanced systems.
Operating model vision
Consumer obsessed
Putting the consumer at the
heart of every decision
Integrated
Having one face to
our customers and
suppliers and using our
scale to win
Performance driven
Uncompromising and
commercially savvy,
with the best talent in
the industry
Ambitious
Relentlessly innovating
and growing in SA and
beyond
M
A
E TIGER TE
H
T
Agile
Responding to the
market through fast
decision making and
simple ways of working
B
E
T
T
E
R
T
OGETHER –
Cost consciousness
Rigorously challenging our bottom-line to
unlock fuel for growth
Tiger Brands Limited Integrated annual report 2017
21
STRATEGIC REVIEW Our material issues
Our material issues are the culmination of a comprehensive process that begins with
reviewing our risks, assessing our operating environment and engaging with our
stakeholders – all as part of crystallising our strategy.
Effectively executing our strategy
People - critical skills to deliver our
strategy
MATERIAL ISSUE
Innovation - both to to address unmet
needs and emerging trends, and ahead
of potential legislation/regulation
STRATEGIC RESPONSE
RELATED RISKS
STRATEGIC OBJECTIVES
KEY STAKEHOLDERS AFFECTED
READ MORE
A weak macro-economic environment*
Food security and security of supply
• Optimising efficiencies while minimising costs
• Influencing mutually beneficial policy development
Increased regulation
Higher reliance on the private sector to deliver national
infrastructure and services
Job creation
* This material issue applies equally to the rest of the continent
Job creation – consequence of low-growth
environment*
We will be measured on the effectiveness of our enterprise
and supplier development programmes, as well as our
succession planning and skills development programme
* This issue spans the value chain, lack of skills affects supplier
delivery, which then impacts growth
• Build an agile group to create employment through growth; work
with government to optimise vertical integration opportunities to
protect and create jobs in our supply chain
• Meet our skills development targets as part of the BBBEE scorecard
• Maximise opportunities for extending our smallholder farmer
development initiatives
Effectively executing our strategy
• Aggressively manage variable vs fixed costs to maintain and
• Inability to react to growing
• Portfolio growth and strategy
• Shareholders
Understanding that we will be judged annually on how well
we execute this five-year strategy, we will focus on building
market confidence that we are incrementally delivering on
our strategy – key measures include innovation rates as
a percentage of revenue over a three-year period, cost
targets, gross margin expansion, market share growth,
marketing investment, net working capital and employee
engagement
improve affordability
• Adopting a centralised procurement strategy to maximise scale and
drive efficiency of spend
• Grow market share through brand building, relevant innovation and
value offerings
People – critical skills to deliver our strategy
• Organisational structures redesigned to ensure a responsive
• Inadequate human resource
• Creating cost-conscious,
We will be judged by the speed and effectiveness of
execution, preferred employer status and measuring
employee feedback via our employee pulse surveys that
monitor satisfaction
People - critical skills to deliver our
strategy
Effectively executing our strategy
company, aided by simple and interdependent ways of working
• Recruiting and resourcing essential roles to address identified gaps
• Revised remuneration philosophy linked to strategic plan
• Training and developing our people
Effectively executing our strategy
Innovation – address unmet consumer needs
and emerging trends; ahead of potential
legislation/regulation
Effectively executing our strategy
Innovation - both to to address unmet
needs and emerging trends, and ahead
People - critical skills to deliver our
of potential legislation/regulation
strategy
Effectively executing our strategy
People - critical skills to deliver our
strategy
Food security and security of supply
Innovation - both to to address unmet
Current regulatory issues include packaging waste, and
Innovation - both to to address unmet
needs and emerging trends, and ahead
pending sugar tax. In addition to legislative compliance,
needs and emerging trends, and ahead
of potential legislation/regulation
Job creation
of potential legislation/regulation
Innovation - both to to address unmet
we will be measured by market share, brand equity and
needs and emerging trends, and ahead
of potential legislation/regulation
operating margin
People - critical skills to deliver our
strategy
Food security and security of supply
Food security and security of supply
• Centralised R&D/innovation hub to create a sustainable pipeline
• Improved procedures to enhance speed and success by better
understanding consumers
• Ongoing initiatives on product affordability through manufacturing
optimisation/efficiency and alternative pack sizes
Food security and security of supply
Job creation
Food security and security of supply
Job creation
Job creation
We will be measured by the effectiveness of our climate-
change and “green” initiatives, waste reduction (as a
manufacturer), uninterrupted supply to our customers and
consumers, quality of our products and broader impact
on society
22
Tiger Brands Limited Integrated annual report 2017
• Establish an integrated, dynamic supply chain that can deliver the
required growth while unlocking cash. Where necessary and
practical, this could include global sourcing
• Procurement processes regularly reviewed to ensure compliance to
best practice in ethical sourcing, and to identify and capture cost
savings. We also review our pricing strategies and pack sizes to
ensure consumers have affordable pack-size choices
• Increased industrial action and
• Adjusting our portfolio to address
• All
social unrest
affordability and increase market
• Increased regulation increases the
share, supported by a cost-
cost and administrative burden of
conscious culture and world-class
doing business
integrated supply chain
• Invest in and support our brands
to maintain strong brand equity
and grow market share
• Chairman’s report, 9
• CEO review, 11
• Strategic review, 18
• Customer and consumer
strategy, 62
• Business continuity vulnerabilities
• Portfolio growth and strategy
• Inadequate human resource
• Operating model and
organisational design
• Employees
• Trade unions
• Government and regulatory
• Non-compliance to revised BBBEE
• Unleashing the power of our
bodies
• Our people, 45
• Preferential procurement,
enterprise development, 53
• Our communities, 56
management
codes
people
• As a good corporate citizen,
build a renewable and
sustainable future
• Creating a cost-conscious
culture and world-class
integrated supply chain
• Operating model and
organisational design
• Analysts
• Media
• Customers and consumers
• Governments and regulatory
bodies
• Chairman’s report, 9
• CEO’s review, 11
• Risk report, 14
• Strategic review, 18
competition
• Failing to anticipate/respond to
changing consumer preferences
• Inability to maintain cost
competitiveness
• Failing to successfully execute
business transformation
programmes
• Managing input cost inflation
poorly
management
• Employee health and wellness
• Threats to employee safety
• Employees
• Trade unions
• Our people, 45
• Remuneration policy, 88
high-performance culture and
world-class integrated supply
chain
• Operating model and
organisational design
• Inability to react to intensifying
• Portfolio growth and
• Customers and consumers
• Stakeholder engagement, 26
competition and changing
competitive landscape
contribution to net sales from
• Suppliers and service providers
• Preferential procurement, 53
innovation
• Government and regulatory
• Our customers and
• Failure to respond to changing
• Creating a cost-conscious
bodies
consumer preferences
• Regulatory non-compliance
culture and a world-class
integrated supply chain
consumers, 62
• Regulatory issues, 64
• Business continuity vulnerabilities
• Climate change – sustainably
• Creating a cost-conscious
culture and a world-class
securing quality raw materials is
integrated supply chain
being affected by environmental
• As a good corporate citizen,
bodies
factors, eg protracted drought
build a renewable and
(Western Cape) and new pests
sustainable future
• Suppliers and service providers
• Supplier development
• Customers and consumers
• Government and regulatory
programme, 54
• Our customers and
consumers, 62
(army worm blighting maize crops)
• Failure to protect and preserve the
reputation of Tiger Brands
• Product quality
Effectively executing our strategy
People - critical skills to deliver our
strategy
MATERIAL ISSUE
Innovation - both to to address unmet
needs and emerging trends, and ahead
STRATEGIC RESPONSE
of potential legislation/regulation
A weak macro-economic environment*
Food security and security of supply
• Optimising efficiencies while minimising costs
• Influencing mutually beneficial policy development
Increased regulation
Higher reliance on the private sector to deliver national
Job creation
infrastructure and services
* This material issue applies equally to the rest of the continent
Job creation – consequence of low-growth
• Build an agile group to create employment through growth; work
environment*
We will be measured on the effectiveness of our enterprise
and supplier development programmes, as well as our
succession planning and skills development programme
* This issue spans the value chain, lack of skills affects supplier
delivery, which then impacts growth
with government to optimise vertical integration opportunities to
protect and create jobs in our supply chain
• Meet our skills development targets as part of the BBBEE scorecard
• Maximise opportunities for extending our smallholder farmer
development initiatives
Effectively executing our strategy
• Aggressively manage variable vs fixed costs to maintain and
Understanding that we will be judged annually on how well
we execute this five-year strategy, we will focus on building
market confidence that we are incrementally delivering on
our strategy – key measures include innovation rates as
a percentage of revenue over a three-year period, cost
targets, gross margin expansion, market share growth,
marketing investment, net working capital and employee
engagement
• Adopting a centralised procurement strategy to maximise scale and
• Grow market share through brand building, relevant innovation and
improve affordability
drive efficiency of spend
value offerings
People – critical skills to deliver our strategy
• Organisational structures redesigned to ensure a responsive
We will be judged by the speed and effectiveness of
execution, preferred employer status and measuring
Effectively executing our strategy
• Recruiting and resourcing essential roles to address identified gaps
company, aided by simple and interdependent ways of working
• Revised remuneration philosophy linked to strategic plan
• Training and developing our people
employee feedback via our employee pulse surveys that
People - critical skills to deliver our
monitor satisfaction
strategy
Effectively executing our strategy
Innovation – address unmet consumer needs
Effectively executing our strategy
Innovation - both to to address unmet
needs and emerging trends, and ahead
People - critical skills to deliver our
and emerging trends; ahead of potential
of potential legislation/regulation
People - critical skills to deliver our
strategy
Effectively executing our strategy
legislation/regulation
strategy
Current regulatory issues include packaging waste, and
strategy
Innovation - both to to address unmet
needs and emerging trends, and ahead
Food security and security of supply
People - critical skills to deliver our
Innovation - both to to address unmet
pending sugar tax. In addition to legislative compliance,
needs and emerging trends, and ahead
of potential legislation/regulation
Job creation
we will be measured by market share, brand equity and
needs and emerging trends, and ahead
Innovation - both to to address unmet
of potential legislation/regulation
operating margin
of potential legislation/regulation
Food security and security of supply
Food security and security of supply
Food security and security of supply
Job creation
Job creation
Food security and security of supply
Job creation
We will be measured by the effectiveness of our climate-
change and “green” initiatives, waste reduction (as a
manufacturer), uninterrupted supply to our customers and
consumers, quality of our products and broader impact
on society
• Centralised R&D/innovation hub to create a sustainable pipeline
• Improved procedures to enhance speed and success by better
understanding consumers
• Ongoing initiatives on product affordability through manufacturing
optimisation/efficiency and alternative pack sizes
• Establish an integrated, dynamic supply chain that can deliver the
required growth while unlocking cash. Where necessary and
practical, this could include global sourcing
• Procurement processes regularly reviewed to ensure compliance to
best practice in ethical sourcing, and to identify and capture cost
savings. We also review our pricing strategies and pack sizes to
ensure consumers have affordable pack-size choices
RELATED RISKS
STRATEGIC OBJECTIVES
KEY STAKEHOLDERS AFFECTED
READ MORE
• Increased industrial action and
social unrest
• Increased regulation increases the
cost and administrative burden of
doing business
• All
• Adjusting our portfolio to address
affordability and increase market
share, supported by a cost-
conscious culture and world-class
integrated supply chain
• Invest in and support our brands
to maintain strong brand equity
and grow market share
• Chairman’s report, 9
• CEO review, 11
• Strategic review, 18
• Customer and consumer
strategy, 62
• Business continuity vulnerabilities
• Inadequate human resource
management
• Portfolio growth and strategy
• Operating model and
organisational design
• Employees
• Trade unions
• Government and regulatory
• Non-compliance to revised BBBEE
• Unleashing the power of our
bodies
• Our people, 45
• Preferential procurement,
enterprise development, 53
• Our communities, 56
codes
people
• As a good corporate citizen,
build a renewable and
sustainable future
• Portfolio growth and strategy
• Creating a cost-conscious
culture and world-class
integrated supply chain
• Operating model and
organisational design
• Shareholders
• Analysts
• Media
• Customers and consumers
• Governments and regulatory
bodies
• Chairman’s report, 9
• CEO’s review, 11
• Risk report, 14
• Strategic review, 18
• Inability to react to growing
competition
• Failing to anticipate/respond to
changing consumer preferences
• Inability to maintain cost
competitiveness
• Failing to successfully execute
business transformation
programmes
• Managing input cost inflation
poorly
• Inadequate human resource
• Creating cost-conscious,
management
• Employee health and wellness
• Threats to employee safety
• Inability to react to intensifying
competition and changing
competitive landscape
• Failure to respond to changing
consumer preferences
• Regulatory non-compliance
high-performance culture and
world-class integrated supply
chain
• Operating model and
organisational design
• Portfolio growth and
contribution to net sales from
innovation
• Creating a cost-conscious
culture and a world-class
integrated supply chain
• Employees
• Trade unions
• Our people, 45
• Remuneration policy, 88
• Customers and consumers
• Suppliers and service providers
• Government and regulatory
bodies
• Stakeholder engagement, 26
• Preferential procurement, 53
• Our customers and
consumers, 62
• Regulatory issues, 64
• Creating a cost-conscious
culture and a world-class
integrated supply chain
• As a good corporate citizen,
build a renewable and
sustainable future
• Suppliers and service providers
• Customers and consumers
• Government and regulatory
bodies
• Supplier development
programme, 54
• Our customers and
consumers, 62
• Business continuity vulnerabilities
• Climate change – sustainably
securing quality raw materials is
being affected by environmental
factors, eg protracted drought
(Western Cape) and new pests
(army worm blighting maize crops)
• Failure to protect and preserve the
reputation of Tiger Brands
• Product quality
Tiger Brands Limited Integrated annual report 2017
23
STRATEGIC REVIEW Our business model
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 by ensuring we replenish our
capitals most appropriately.
Innovation
By focusing on fewer, bigger innovations
through a centralised facility, we will
develop products that add value.
INTELLECTUAL CAPITAL
Consistent investment behind key brands to
drive profitable growth
Knowledge drives our ability to
compete and, in FY17, we invested
R771 million (FY16: R765 million) for
deep insight into ensuring our brands
meet 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 4,3% of
revenue in FY17
(FY16: 4,5%).
Partnerships
We partner with stakeholders on common goals
such as environmentally neutral agricultural processes.
Our increased investment in enterprise development is
focused on small-scale farming (page 54).
SOCIAL AND
RELATIONSHIP CAPITAL
Adding real value
We add value to society through numerous initiatives
– 53% of value created is distributed to
community stakeholders annually (FY16: 53%).
Innovation
Partnerships
Procurement
Manufacturing
Consumer insights
We invest in research and
consumer marketing for deep
insight into the changing needs
of our consumers such as value
offerings (page 64).
Tiger Brands aims for a virtuous circle of growth:
We drive growth by investing in innovation and brands to deliver
products to millions of people every day. Leveraging our size, we
are focused on spreading fixed costs and improving profitability.
This will allow us to invest further, growing free cash flow and
reinvesting in the business through innovation and marketing to
sustain the strength of our brands. This drives growth and the
virtuous circle continues.
Consumer insights
Sales
Marketing
Logistics
Sales
We work closely with retailers to ensure that our brands are always
available and properly displayed, in all channels from top-end
grocers to informal traders. Five strategic growth drivers will
ensure we reach full potential: availability and fair share; price;
pack size/format; unmet needs and trends; brand strength.
HUMAN CAPITAL
People underpin our progress
In FY17, we invested over R56 million in their well-being
and skills, striving for a consumer-focused, high-performance
culture based on our core values (FY16: R67 million).
24
Tiger Brands Limited Integrated annual report 2017
Procurement
In FY17 we saved a further R220 million through customised sourcing strategies that ensure supply continuity, capacity
for growth and rigorous compliance to food safety protocols. An expanded global sourcing programme has been
instrumental in addressing domestic crop and ingredients shortages related to drought and disease. Key partnerships
with suppliers continue to deliver value through joint cost savings plans and shared innovation objectives. We remain
committed to supporting BBBEE and small business spending R12,1 billion and R1,9 billion in these categories. Our
ambition to play a leading role in developing the agricultural sector remains a key priority with R73 million of fresh
produce sourced from black emerging farmers in FY17. Through our partnership with government, we have spent
R30 million on enterprise and supplier development, focused primarily on emerging farmers.
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 1% to 1 080 cents
per share. (FY16: +12% to 1 065cps)
MANUFACTURING CAPITAL
Improved efficiency
and flexibility
We continuously invest ahead of depreciation to
maintain and enhance our manufacturing sites
across sub-Saharan Africa. We will continue to
invest in improving our facilities and enhancing
flexibility.
Innovation
Partnerships
Procurement
Manufacturing
Tiger Brands aims for a virtuous circle of growth:
We drive growth by investing in innovation and brands to deliver
products to millions of people every day. Leveraging our size, we
are focused on spreading fixed costs and improving profitability.
This will allow us to invest further, growing free cash flow and
reinvesting in the business through innovation and marketing to
sustain the strength of our brands. This drives growth and the
virtuous circle continues.
Manufacturing
Tiger Brands operates
47 factories across Africa and
has invested R2,7 billion over
the last three years in
equipment to increase capacity
and drive efficiencies across
various sites. Notable highlights
include increased capacity in
Bakeries and significant savings
in the consumer business. Other
operations were modernised to
increase capacity and
efficiencies.
Consumer insights
Sales
Marketing
Logistics
Marketing
We generate consumer-led
growth through a marketing
spend of R771 million in FY17,
which is a three-year cumulative
spend of R2,3 billion.
Logistics
We continue to refine our logistics network with selected partners to achieve cost
effciency and the highest standards of customer service. In FY17 our logistics
improvement programme focused on leveraging our scale by introducing a
logistics control tower and further integrating disparate networks to deliver cost
savings of R79 million. Joint business planning with our customers and a
relentless drive to expand our reach remain key thrusts to achieving our objective
of having our iconic brands on the shelf at all times.
NATURAL CAPITAL
Focused on responsible growth
While our supply chain draws on most of our capitals, its key impact is on
natural capital. Our procurement strategies focus on ethical sourcing and the
long-term sustainability of our processes. Over the past three years, we have
focused on reducing this impact through specific initiatives (page 66).
Tiger Brands Limited Integrated annual report 2017
25
STRATEGIC REVIEW Our key relationships
We understand that sustainable relationships with key stakeholders are essential
to our long-term growth. Shareholders, employees, consumers, customers and
suppliers are all part of the chain that creates value.
We also understand that we depend on 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 reliably 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.
Our aim is to maintain our social licence to operate and
protect the reputation of Tiger Brands as a trusted,
strategic partner.
Stakeholder engagement survey
In the review period, we concluded a survey to develop
a baseline understanding of how stakeholders perceive
the group’s engagement with them. This aligns with our
strategic goal of increased stakeholder inclusivity, and
meets the requirements of King IV.
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 our
immediate value chain.
Stakeholder relations at Tiger Brands is, therefore,
a strategic function. It is focused on constructive
engagement to build positive reputational capital for
the group as the principal mechanism underpinning
our growth and sustainability (licence to trade).
We do this by acknowledging and understanding the role
we play in society through multiple stakeholder lenses (the
key issues and expectations our stakeholders have of us),
using these expectations to inform our business strategy
and decisions, and communicating these decisions back
to our stakeholders. In this way, we build long-term value
by establishing trust, good reputation and legitimacy.
Key elements of our stakeholder relations strategy include:
• Consistent approaches to engagement throughout the
group
• Mechanism to anticipate risk and opportunities
• Coordinated framework for stakeholder management
• Leadership actively engaging with stakeholders
• Values-based engagement
• Stakeholder-focused as opposed to compliance-based
engagement.
The survey was used as a listening exercise to generate
valuable insights that will inform and strengthen
stakeholder engagement and ultimately relationships.
Results will be used to refine our stakeholder engagement
strategy and to inform and guide future planning,
and proactively manage stakeholder-related risks by
addressing their material issues and concerns.
Key results of the survey are summarised on the opposite
page.
Key facts about the survey – conducted
by external stakeholder management consultants
• Multiple methods of qualitative and quantitative
data collection
• Target population included government (national
and local)*, shop stewards, suppliers, shareholders,
pressure groups*, community members, media,
beneficiaries
• Stakeholders around ten Tiger Brands operations
across South Africa were surveyed
• Final sample statistically significant at 70% of target
population
* Poor response, with provincial government citing insufficient direct
interaction with the group. Customers and employees are surveyed
in separate initiatives (page 46 and 63)
26
Tiger Brands Limited Integrated annual report 2017
Key results
Based on these results, we are developing and training relationship owners across the group, and developing specific
plans to address particular issues, which we will report on in FY18.
Performance metric
Score
Detail
Quality of
engagement
72%
International
benchmark
Government 73%
Communities 65%
75%
Suppliers
60%
Media
Government: national government 75%, local government 74%
Communities 74%
Suppliers 66%
Shop stewards 65%
Media 61%
36% of stakeholders “know very little” about Tiger Brands as a
JSE-listed company. Their relationship (mainly local government and
community members) is with one of our operations
Relationship health
(relational capital)
70%
High: footprint communities 73%, beneficiaries of CSI projects and
Tiger Brands Foundation 89%
Reasonable: national government 66%, shareholders 68%, local
government 68%, suppliers 69%
Low: media 58%, shop stewards 60%
Stakeholders who scored Tiger Brands low cited engagement with
the group as being too sporadic
Local government cited its experience of the quality of our
engagement as generally good, but asked for improved
responsiveness on issues it regards as important
Responsiveness on
issues
67%
Plotting Tiger Brands’ stakeholders on the exchange-communal continuum
• In exchange relationships, the company gives benefits to stakeholders but expects to almost immediately receive
benefits of comparable value “in exchange”. These relationships are conducive to commercial-type relationships.
• In communal relationships, the company’s motivation to provide a benefit is the welfare of the stakeholder, or long-term
greater good of the collective. Communal relationships are important for sustainability, social relevance and shared
value.
How we fared
Exchange
relationship
National government
Shop stewards
Communities
46%
61%
80%
Communal
relationship
33%
49%
71%
Suppliers
Local government
Beneficiaries
Tiger Brands Limited Integrated annual report 2017
27
STRATEGIC REVIEW Our key relationships continued
Key insights per stakeholder group
National government:
While engagement was
generally of high quality,
we will focus on improving
access to Tiger Brands’
information. As part of
developing a track record
of communal relationships,
we will enhance the
degree of stakeholder
inclusivity.
Local government:
Officials welcome the
regional economic
opportunity our activities
support. As part of our
more structured, continuous
engagement in future, we
will consider the real
imperatives for sustainable
socio-economic
development and the
negative impacts of our
operations in certain
instances, while ensuring
we follow through on our
commitments.
Our footprint communities
welcome their engagement
with the group and are
confident of our ability
to make a positive
contribution. We will
ensure we improve
accessibility at some
operations, and respond
more to real community
needs, particularly in rural
areas.
The media believes Tiger
Brands engages
professionally and makes
a positive contribution to
food security, as do our
peers. To build
relationships based on
satisfaction, trust and
considering their legitimate
interests, we are improving
our rate of response and
ensuring journalists have
access to our leadership
as required.
Our shareholders appreciate the
high quality and transparency of their
engagement with Tiger Brands. We
are focused on improving this further
by providing adequate disclosure
on key issues while considering
their feedback.
We agree with shop stewards that
work is still needed to achieve and
maintain “preferred employer” status.
Creating a great place to work is
a strategic target, given intense
competition for specific skills in our
market. In considering the legitimate
interests, priorities and realities of
organised labour, we are ensuring
that management communication
across our sites is consistent and
transparent.
There is a high level of commitment
and trust between the group and its
suppliers. Given the scale of our
supplier base, we are considering
the different legitimate interests and
engagement needs of different
groups. This will include more
continuous engagement, for example
timely notification and effective
handover when role players in Tiger
Brands change. Together, we are
focused on developing sustainable
and mutually beneficial solutions,
with inclusive growth opportunities.
28
Tiger Brands Limited Integrated annual report 2017
What are we are doing with the information
Results were reviewed by the executive committee, social,
ethics and transformation committee and the board. We
have created a portfolio of dedicated managers to
develop the strategy for stakeholder management,
supported by relationship owners. Guided by metrics for
each stakeholder group, we will develop an appropriate
engagement plan for material stakeholders.
A key facet of our strategy to drive better engagement,
resolve issues and co-create solutions for matters of mutual
interest lies in developing relationship owners across the
business. These are business leaders who have been
identified and will be trained to manage and report on
stakeholder health. This will bolster our relational value
and provide additional governance and insight on issues
before they become risks.
Our response – by stakeholder
National
government
Local
government
Footprint
communities
Media
Shareholders
Quarterly executive engagements with key government ministries
Operating sites’ relationship owners will implement engagement plans at local
level
Socio-economic development champions at each site will be the points of contact
and engagement
At least two media roundtable discussions with the executive team of Tiger Brands
Shareholder and investor engagement planned for 2018 includes individual and
group meetings
Shop stewards
Regional engagements with union leadership planned for 2018
Suppliers
Centralised management of key suppliers, with dedicated relationship owners
Tiger Brands Limited Integrated annual report 2017
29
STRATEGIC REVIEW Our key relationships continued
Stakeholder issues in 2017
While the stakeholder survey becomes our benchmark for improving our engagements, we still need to address issues as
they arise. Issues raised during the year are summarised below.
Key issues in 2017
Our response
Read more
Customers (retailers/wholesalers)
• Increased competition amid
muted consumer demand
• Joint business planning initiatives and growth workshops with
customers to stimulate shopper offtake and repeat purchase
62
• 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
Employees
• New operating model and
organisational redesign
• Performance and rewards
• Talent and career
development
• Teamwork and collaboration
• Enhanced internal
communications
• Wage negotiations
• Regular, high-impact employee engagement sessions, one-on-one
consultations and the recruitment of an in-house change
management specialist
• The revised operating model and corresponding people strategy
has directly considered and addressed these issues. Monitoring
of existing and new issues have been included in the updated
HR processes for example, pulse (satisfaction) survey and a
dedicated employee relations centre of excellence
• Wage negotiations were settled while regular regional
leadership engagements will be introduced
Consumers
• Product affordability
• Value proposition
• Commitment and
compliance to issues
regulated by government
(eg labelling, salt and sugar)
Community
• Mitigate inflationary pressures through cost-saving initiatives and
operational efficiencies
• Evaluate need for smaller pack sizes and/or alternative, more
affordable packaging formats
• Ensure our product quality meets consumer expectations and the
brand proposition represents value
• Proactive communication on complying to regulation
• Food security and related
• Maintain strong partnerships with governments and
nutrition issues
developmental agencies to support initiatives that promote
nutrition, health and education, and contribute to the
development of local communities and eradication of poverty
• Conduct social return on investment (SROI) review to assess the
impact of our development initiatives
21
45
62
64
56
64
30
Tiger Brands Limited Integrated annual report 2017
Key issues in 2017
Our response
Read more
Investors
• Lacklustre macro-economic
outlook and its impact on
the consumer
• Lack of volume growth
• Self-help initiatives
• Strategy execution
• Earnings growth and return
on capital
Government
• Disclosed the outcome of the strategic review
• Clearly defined core as manufacturing, marketing and
18
21
distributing everyday branded food to middle-income consumers
• Identified growth drivers and self-help strategies in terms of a
cost-conscious culture
• Implemented optimal operating model to facilitate strategy and
growth ambitions
• Provided five-year targets for key performance indicators
• Improved communication plan
• Regulations on sodium
• Complying with all relevant regulations; actively participating
reduction; proposed tax on
sugar-sweetened beverages
• Promoting awareness of
nutrition education
• Food security
• Growth and development of
in dialogue before legislation is promulgated
• Keeping abreast of emerging issues
• Active partnerships to promote agri-sector development and
greater inclusion of smallholder farmers
• Nutrition education programme with the Department of Basic
Education
local agricultural sector
• In-school breakfast programme in partnership with Tiger Brands
54
57
60
64
Foundation
Media
• Access to management and
information
• Swift response to queries
• Fair treatment of consumers
Suppliers
• Impact of currency volatility
• Industrial pollution
restrictions in China
impacting costs of
chemicals/acids
• Disease (avian flu, citrus
shortages, tomato leaf
miner, etc)
• Crop shortages amid
adverse local and global
weather conditions
• 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
• Greater access to the CEO and CFO for editors and journalists
• Increased participation in industry-related issues
• Media management focus – we will appoint the relevant skills
to deepen and broaden our engagement with the media
• Leveraging Tiger Brands’ procurement scale to step change input
costs (supplier production efficiencies and throughputs)
• Augmenting supplies by identifying new global supply sources
34
53
54
and alternative ingredients for recipes
• Actively researching and expanding sourcing programmes in
SADC (Southern African Development Community)
• Focused savings programme expanded to all procurement
overheads to dilute impact of currency-related cost increases
• Continued support to develop domestic farmers
Tiger Brands Limited Integrated annual report 2017
31
STRATEGIC REVIEW Our competitive advantages and market position
The power of leading brands
In line with our strategy to have the first or second-placed brand in our chosen
categories, we have built a solid portfolio of leading brands over the years.
This was again reinforced in the 2017 Sunday Times Top
Brands Awards. In the prestigious Grand Prix category, All
Gold and KOO were among the top five favourite brands
in South Africa. Tastic was voted the number 1 essential
food brand for the second consecutive year, followed by
Albany (number 2) and Fatti’s & Moni’s (number 5).
KOO was also voted number 1 in the Ask Afrika
Icon Brands Survey 2016/2017 (page 33).
Essential food brand:
Rice
Tastic
“We find that, despite the pressures that consumers
face in this economy, they tend to purchase brands
and products that guarantee them consistency and
value for money. Albany is one of those brands that
is trusted to deliver on its promises.”
Pieter Spies, head of Tiger Brands Grains division, Sunday Times
Top Brands survey, September 2017.
The common thread they
[All Gold Tomato Sauce, Crosse & Blackwell
Mayonnaise and Mrs Ball’s Chutney – three Tiger
Brands products in the top five in the condiments and
sauces category] all enjoy is how long families have
had them in their cupboards and on their tables.
Sunday Times Top Brands survey, September 2017.
Our brands also feature prominently in their categories:
TINNED FOODS
No 1
KOO
No 3
All Gold
No 5
Enterprise
ESSENTIAL FOODS
No 1
Tastic
No 2
Albany
No 4
Fatti’s & Moni’s
CONDIMENTS &
SAUCES
No 1
All Gold Tomato Sauce
No 2
Crosse & Blackwell
Mayonnaise
No 4
Mrs Ball’s Chutney
FRUIT JUICES
No 4
Oros
No 6
Halls
CEREALS
No 3
Jungle Oats
No 6
Morvite
No 9
Jungle Oatso Easy
CHILLED
PROCESSED MEATS
No 1
Enterprise
No 4
Renown
No 5
Mielie-Kip
PERSONAL CARE
No 5
Ingram’s
2017 Sunday Times Top Brands Awards.
32
Tiger Brands Limited Integrated annual report 2017
Category
Bread
Winner
Albany
Cake/baking mixes
Golden Cloud
Cereal bars
Jungle Energy Bar
Condiments: mayonnaise
Crosse & Blackwell
Condiments: tomato sauce
All Gold
Maize meal and samp
Ace
Meat products: bacon
Meat products: polony
Pasta
Enterprise
Enterprise
Fatti’s & Moni’s
Prepared and cook-in sauces/
pastes/gravies
Rice and couscous
Sport drinks
Spreads: peanut butter
Tinned fruit
Tinned vegetables
Tinned beans
n Key icon brands
All Gold
Tastic
Energade
Black Cat
KOO
KOO
KOO
2017 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 more categories while
five of our brands were awarded prestigious
icon brand status.
Condiments/sauces:
tomato sauce
Condiments/sauces:
salad dressing category
Cook-in/prepared sauces
and marinades
Spreads:
marmalade
E
N
O
R
E
B
M
U
Chilli/hot sauces1N
1N
E
N
O
R
E
B
M
U
KOO
Tinned vegetables
KOO
Tinned fruit
1N
Peanut butter
Black Cat
E Spreads:
N
O
R
E
B
M
U
KOO
Tinned beans
Tiger Brands Limited Integrated annual report 2017
33
STRATEGIC REVIEW
Chief financial officer’s review
Successful margin
improvement
Tiger Brands reported a relatively strong set of results driven by revenue growth of
2% to R31,3 billion and 11% operating income growth, before IFRS 2 charges, to
R4,6 billion. Operating margins increased to 14,8%.
Cash generated from operations
rose 43% to R6,1 billion,
benefiting from improved
working capital management.
Noel Doyle, Chief financial officer
This improvement was due to improved pricing strategies
enhanced by good procurement and better cost control.
Intense competitor pricing activity and declining consumer
confidence resulted in volumes decreasing by 3%. Cash
generated from operations rose 43% to R6,1 billion,
benefiting from improved working capital management.
Headline earnings per share increased by 2% driven by
the domestic performance and diluted by a disappointing
performance from associates and the Deciduous Fruit
business.
As previously reported, the disposal of East Africa Tiger
Brands Industries (Ethiopia) was concluded, effective
4 April 2017 while all suspensive conditions have been
fulfilled with regards to the disposal of Haco.
34
Tiger Brands Limited Integrated annual report 2017
Consequently, both have been treated as discontinued
operations in these results, with the comparative
information restated accordingly.
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
Group revenue growth from continuing operations
increased by 2%. The revenue performance in the second
half is indicative of a significant slowdown in the rate of
price increases, due largely to declining commodity
prices and a stronger rand. Gross margins benefited from
improved pricing and procurement strategies, which
helped offset other inflationary increases in raw material
costs. Well-controlled conversion costs and efficiency
enhancements contributed to further positive leverage
in gross margins.
Group revenue growth
R30,6 billion
7% price/mix
(3%) volume
(2%) forex
R31,3 billion
Total
growth
Price/
mix
Total
volume
Domestic operations
International (including exports)
Total continuing operations
4%
(5%)
2%
7%
7%
7%
(3%)
(3%)
(3%)
Forex
–
(9%)
(2%)
FY16
FY17
During the year, investments, goodwill and intangible
assets totalling R560 million (2016: R335 million) were
impaired. This related mainly to an impairment of the
goodwill in the Exports division of R300 million, and an
impairment of R250 million against the investment in
Nigerian associate, UAC Foods. These impairments
reflect the continual assessment of risks associated with
these businesses amid ongoing difficulties faced across
our key markets in Africa. These are primarily the result
of deteriorating macro-economic factors, largely linked to
falling commodity prices and exacerbated by currency
devaluations in Nigeria and Mozambique. In addition,
the lack of foreign exchange liquidity required trade
credit to be managed tightly, inhibiting revenue growth.
The abnormal loss of R23 million (2016: abnormal gain
of R11 million) comprises once-off costs for the recent
strategic review and related restructuring provisions,
partially offset by the profit on disposal of property
as well as income from insurance claim proceeds and
certain warranty claims.
Net financing costs of R207 million (2016: R162 million)
benefited from a reduction in interest charges of
R117 million to R180 million, due to lower debt levels.
A net foreign exchange loss of R30 million was realised
compared to a gain of R129 million in the prior year, of
which R153 million related to a gain on the settlement of
non-recurring debt in Nigeria.
Income from associates decreased 38% to R533 million
(2016: R861 million). The comparative period included
capital profits of R117 million from asset disposals. After
adjusting for this, associate headline earnings decreased
by 29%. This reflects challenging operating conditions for
Oceana, in particular, as well as Carozzí and UAC
Foods.
A 2% improvement in the effective tax rate before
abnormal items, impairments and associates, to 28,9%
(2016: 30,9%) was largely due to investment allowances
received on qualifying major capital projects.
Tiger Brands Limited Integrated annual report 2017
35
STRATEGIC REVIEW
Chief financial officer’s review continued
HEPS from continuing operations was up 2% to
2 155 cents (2016: 2 119 cents). The deleverage
between operating income growth of 11% and HEPS
growth of 2% primarily reflects a significantly lower
contribution from associates, costs associated with the
strategic review and related restructuring provisions as
well as the once-off forex gain in the prior year.
Earnings per share (EPS) from continuing operations
decreased 7% to 1 848 cents (2016: 1 996 cents),
driven primarily by higher impairments in the current year.
EPS from total operations decreased by 6% to
1 915 cents (2016: 2 034 cents), while HEPS from
total operations increased 2% to 2 161 cents.
HEPS growth impacted by associates and once-off forex gains in FY16 (cents)
70
271
42
(4)
(13)
2 393
(88)
(59)
2 119
(5)
13%
44
5
2 155
(134)
(94)
2 500
2 300
2 100
1 900
1 700
1 500
S
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H
Segmental performance
The domestic business delivered operating income growth of 15% while an improved performance from Exports and
International was offset by Deciduous Fruit.
Volume
Turnover
Operating income**
Grains
▲ 1%
R13,3bn
▲ 5%
R2,4bn
▲ 18%
Consumer
Brands Food
▼ 9%
R11,1bn
▲ 1%
R1,3bn
▲ 7%
HPCB
▲ 2%
R2,7bn
▲ 9%
R0,6bn
▲ 17%
Exports and
International
▼ 3%
R4,2bn
▼ 5%
R0,4bn
▼ 20%
Group*
▼ 3%
R31,3bn
▲ 2%
R4,6bn
▲ 11%
Operating margin**
▲ 17,7%
▲ 11,5%
▲ 23,5%
▼ 9,5%
▲ 14,8%
* From continuing operations.
** Before IFRS 2 charges, impairments and abnormal items.
Revenue in the domestic business increased 4% to
R27,1 billion (2016: R26,2 billion), driven primarily
by Grains and Groceries. Operating income before
IFRS 2 charges grew 15% to R4,2 billion (2016:
R3,7 billion), while the operating margin increased
from 14,1% to 15,6%. The deteriorating economic
environment continued to put pressure on consumer
demand, resulting in volume contraction of 3%.
The group’s overall operating performance was impacted
by the underperformance of the Exports and International
division. Revenue for this division was down 5% to
R4,2 billion while operating income declined 20% to
R399 million, driven primarily by the Deciduous Fruit
business where performance was severely impacted by
the stronger rand. Although the Export business continued
to face a challenging environment, with no improvement
in foreign currency liquidity, trading improved in the
second half of the year and core markets benefited from
improved distribution and product availability.
36
Tiger Brands Limited Integrated annual report 2017
Shareholders are referred to the accompanying dividend
announcement for further details, see page 104.
Outlook
The economic outlook for 2018 is muted, with no current
signs of a recovery in consumer spending and growth
levels likely to remain low. As such, there is little
likelihood of volume uplift in the year ahead and
competition for market share is expected to intensify.
Having largely been successful in enhancing margins,
the group is well positioned to navigate this environment
and pursue volume growth. This will be achieved by
improving our market shares through enhanced and
focused brand support, a re-energised approach to
innovation focused on the consumer, and by investing in
and growing with our customers. We will continue to
focus on driving efficiencies and cost savings to provide
the fuel for our growth.
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.
Noel Doyle
Chief financial officer
28 November 2017
Detailed segmental disclosures appear on pages 88 and
89 of the annual financial statements and operational
reviews on pages 38 to 43.
Statement of financial position
Improved cash generation resulted in a positive net cash
position of R431 million at 30 September 2017. Cash
generated from operations increased by 43% to
R6,1 billion, benefiting primarily from working capital
improvements. Capital expenditure during the year
totalled R919 million (2016: R945 million).
Balance sheet positioned for growth
FY17*
FY16
Cash generated from
operations (Rm)
Net cash/(debt) (Rm)
Net (cash) debt/
equity (%)
Net debt/EBITDA*
RONA (%)*
Net interest cover*
Working capital per
R1 of turnover
* From continuing operations.
6 056
431
(3)
n/a
35
25x
21,8
4 233
(2 028)
13
0.4x
30
14x
23,6
The strength of the balance sheet facilitates a significant
capital expenditure programme of some R5 billion over
the next three to five years while maintaining a dividend
cover ratio of 2,0 times, based on headline earnings
per share. This programme is focused on enhancing the
infrastructure behind our core brands, research and
development, and the meaningful innovation that is a
key differentiator in our competitive industry. In addition,
our balance sheet enables us to build a pipeline of
opportunities intended to support value-enhancing growth.
Final dividend
The company has declared an unchanged gross final
cash dividend of 702 cents per share for the year ended
30 September 2017. This, together with the interim
dividend of 378 cents per share, brings the total
dividend for the year to 1 080 cents. This is 1% above
last year’s total dividend of 1 065 cents.
Tiger Brands Limited Integrated annual report 2017
37
STRATEGIC REVIEW Operational review
Full results announcement on web.
Grains
SALIENT FEATURES
STRONG INCREASE IN OPERATING
MARGIN TO
17,7%
REVENUE GROWTH OF
5%
OPERATING INCOME UP 18% TO
R2,4 billion
Brands
Milling and baking – Albany, Golden Cloud, Ace
Sorghum beverages and 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
38
Tiger Brands Limited Integrated annual report 2017
Operating margin improved 200 basis
points to 17,7% benefiting from
favourable procurement positions.
Performance
The Grains division delivered 5% revenue growth,
and a strong increase in operating income of 18% to
R2,4 billion.
Revenue in Milling and Baking rose 4% benefiting from
volume growth, partly diluted by price deflation in maize
and sorghum in the second half. Operating income rose
16% to R1,9 billion. The wheat-to-bread value chain
benefited from good volume growth and increased
realisations in the first half. The balance between margin
and volumes in the second half required significant focus
as competitor activity intensified.
Other Grains (Breakfast, Pasta and Rice) grew revenue
6% to R3,8 billion with strong operating income growth
of 24% to R502 million. The stronger rand and improved
procurement strategies contributed to margin expansion.
Consumer Brands – Food
SALIENT FEATURES
EXCEPTIONAL PERFORMANCE
FROM GROCERIES, WITH OPERATING
INCOME UP
26%
CONSUMER BRANDS – FOOD’S
OPERATING MARGIN IMPROVED
60 BASIS POINTS TO
11,5%
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 – Enterprise, Renown,
Mielie-Kip, Bokkie
Marginal increase in revenue and
7% increase in operating income
reflect a number of challenges during
the year, but strong performance
from Groceries.
Performance
With the exception of the Groceries business, Consumer
Brands – Food faced several challenges during the
year, noted below. As a result, revenue increased
marginally to R11,1 billion, operating income grew 7%
to R1,3 billion and the operating margin improved from
10,9% to 11,5%.
The Groceries business recorded revenue growth of
7% while operating income rose 26% to R589 million.
Operating margins improved to 11,8% from 9,9% on
improved pricing and cost reductions.
Sales volumes in Snacks and Treats were affected by
industrial action, a contracting market with aggressive
competition and product rationalisation in the first half.
Revenue declined 5% to R2,2 billion, but improved gross
margins contributed to operating income rising 2% to
R324 million. This business will focus on volume recovery
in the year ahead.
Although the Beverages business recovered in the second
half after significant challenges in the first half (industrial
action, drought-related water restrictions and electricity
disruptions), full-year revenue declined 9% and operating
income by 8% to R144 million. The outlook for this
business is, however, encouraging as the launch of
Oros ready-to-drink gains momentum.
In our Value-Added Meat Products business, lower sales
volumes reflect higher selling prices and aggressive
competition. Revenue rose marginally to R2,2 billion,
while operating income dropped 34% despite initiatives
to counter significant raw material inflation.
Tiger Brands Limited Integrated annual report 2017
39
OPERATIONAL REVIEW Operational review continued
Home, Personal Care
and Baby (HPCB)
SALIENT FEATURES
STRONG PERFORMANCE FROM HOME
CARE BUSINESS – OPERATING INCOME
UP 48%
GOOD CONTRIBUTION FROM
INNOVATION, FUELLING MARGIN
GROWTH OF 160BPS
Brands
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
Sustained demand and well-received
innovation in pest category contributed
to strong Home Care performance.
Performance
Divisional performance was boosted by a strong
contribution from the Home Care category, with overall
revenue increasing 9% to R2,7 billion. The strong focus
on cost containment saw operating income rise 17% to
R623 million.
Although volumes in the Personal Care category were
affected by price increases and constrained consumer
spending, revenue was unchanged at R683 million.
Operating income increased by 3% to R139 million,
benefiting from the strong focus on costs. Innovation,
driven mainly by Ingram’s triple glycerine, tissue oil and
petroleum jelly, contributed 19% to revenue.
Revenue in Baby Care was up 3% to R888 million,
reflecting growth in the pouches, medicinal and toiletries
categories, but a decline in jarred baby foods. Operating
income was down 2% due to an unfavourable product
mix and lower production volumes.
The Home Care category recorded revenue growth of
23% and a 48% improvement in operating income due to
sustained demand in the pest category, effective in-store
execution and optimal pricing. Innovation contributed
7% to revenue, driven by Doom automatic dispensers
and the Peaceful Sleep family range.
40
Tiger Brands Limited Integrated annual report 2017
Exports and
International
SALIENT FEATURES
LOWER REVENUE AND OPERATING
INCOME LARGELY DUE TO
UNDERPERFORMANCE OF DECIDUOUS
FRUIT BUSINESS
IMPACT OF STRONGER RAND AND
DEPRECIATING AFRICAN CURRENCIES
Brands
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
Central Africa
Chococam (Cameroon) (74,7%) – Arina, Big Gum,
Kola, Mambo, Matinal, Tartina, Tutoux, Chococroc
West Africa
Deli Foods (Nigeria) (100%) – Deli, Igloo, Nutribix
A challenging year amid rand strength,
depreciating African currencies, and
an unfavourable customer mix.
Performance
Total divisional revenue declined 5% to R4,2 billion, while
operating income reduced 20% to R399 million, primarily
due to the Deciduous Fruit business.
Chococam recorded 3% revenue growth in constant
currency and new products contributed to a 9% increase
in volumes. Rand revenue declined 7% to R821 million,
reflecting the strength of that currency. Operating income
rose 9% in constant currency, assisted by tight cost
management, but dropped 2% on translation due to
the stronger rand.
Lower volumes at Deli Foods reflect subdued consumer
demand and price increases to recover significant input
cost inflation. Together with higher conversion costs, this
resulted in a greater operating loss in constant currency
offset by the impact of the naira devaluation against
the rand.
In the Exports business, revenue rose 7% to R1,7 billion
on higher sales into Mozambique and Democratic
Republic of the Congo (DRC), and operating income was
up 10% to R273 million. The Deciduous Fruit business
was affected by rand strengthening and an unfavourable
customer mix, with revenue declining 4%. These factors
reduced operating income by 91% to R13 million.
Tiger Brands Limited Integrated annual report 2017
41
OPERATIONAL REVIEW Operational review continued
Associates
Chile: Empresas Carozzí
Empresas Carozzí is a leading branded food business
in South America, based in Santiago, Chile. It also has
significant manufacturing operations in Lima, Peru and
an operation in Argentina.
The company recorded a satisfactory consolidated
performance for the review period, with profit similar
to the prior year and a 3% increase in its operating
margin.
The performance of the businesses in Chile and Peru
improved year on year despite the weak economic
situation in these countries.
Underlying performance was again affected by the
agro-industrial division, which faced lower global prices
in tomato paste, fruit purees and apple juice concentrate,
and a revaluation of the Chilean peso against the
American dollar.
The populist policy changes implemented by the Chilean
government continue to impact local consumer demand
and business confidence. Similarly, political and
economic challenges in Brazil and Venezuela are
constraining regional export opportunities.
The hallmarks of Carozzí’s success include its exceptional
innovation capability, strong number 1 or number 2
brands in the relevant categories, depth of market
penetration and efficient manufacturing capability. The
business is therefore well placed to continue competing
effectively.
Nigeria: UAC Foods
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, specifically snacks,
dairy products and beverages.
Associates
Oceana Group (South Africa) (42,1% held)
Empresas Carozzí (Chile) (24,4% held)
National Foods Holdings (Zimbabwe) (37,4% held)
UAC Foods (Nigeria) (49,0% held)
15%
CONTRIBUTION TO
HEADLINE EARNINGS*
(FY16: 25%)
* From continuing operations.
Chile
42
Tiger Brands Limited Integrated annual report 2017
Nigeria
Zimbabwe
South Africa
The snacks category comprises Gala sausage roll, the
category leader in Nigeria, Funtime cupcakes and
coconut chips. The dairy category comprises the Supreme
range of ice-cream products. Brands in the beverage
category include Swan natural spring water.
Given the weaker Nigerian economy, competitors
continue to use aggressive pricing strategies to maintain
volume and factory throughput amid suppressed consumer
demand.
Cost increases from 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.
from proceeds on the disposal of Lamberts Bay Foods
and the CCS fruit business.
Headline earnings for the year ended 30 September
2017 decreased by 44% after a 42% reduction in
operating profit.
Zimbabwe: National Food Holdings Limited
National Foods is a leading branded food manufacturing
company in Zimbabwe. The country continues to be
impacted by macro-economic weaknesses, particularly
foreign currency shortages that create challenges for
importers in settling foreign creditors. National Foods was
largely able to manage these challenges during the year
with the assistance of the Reserve Bank, as it was
accorded priority as a producer of basic commodities.
Challenging macro-economic conditions are likely to
persist into FY18, resulting in a muted outlook for this
business.
South Africa: Oceana
Oceana is a leading fishing company, listed on the JSE.
Volume performance and profitability were affected by
a very poor result from the maize division where volumes
declined by 39% on last year after more subsidised maize
was provided to consumers by the government following
the disappointing 2015/16 harvest. Excluding maize,
the group grew volumes by over 7%.
Oceana’s financial performance has primarily been
impacted by the negative effect of a stronger rand on
export and foreign revenues, lower global fishmeal and
oil prices, and slowing South African consumer spend on
non-staple foods. The decrease in operating profit was
exacerbated by the adverse movement in net foreign
exchange, from a gain of R73 million in 2016 to a loss
of R61 million in the current year. These movements were
primarily due to the effects of forward exchange contracts
to cover the cost of imported frozen fish from the canned
fish business. In addition, improvements in the cost base
due to group-wide procurement efficiencies have been
offset by reduced pilchard landings, and lower
Commercial Cold Storage (CCS) occupancies in
Gauteng. Prior-year operating profit also benefited
During the year, National Foods disposed of its depot
network to a third party, which will convert these stores to
fully fledged wholesale outlets. This will allow the group
to focus on growing its core light manufacturing activities.
The outlook for the Zimbabwean economy is increasingly
challenging. Foreign currency constraints are expected to
persist for some time making the operating environment
even more difficult.
Tiger Brands Limited Integrated annual report 2017
43
OPERATIONAL REVIEW
Sustainability review
Against national and global guidelines, we are steadily improving the way we
manage and report the key elements of sustainability as an integrated aspect of
our business strategy.
This section has been prepared against the requirements of the FTSE4Good index, IIRC framework and King IV, as well
as governance guidelines in the JSE Listings Requirements. Tiger Brands fully supports the principles of the United Nations
Global Compact which recognise the positive contribution business can make to a more sustainable planet.
In developing an integrated sustainability strategy, we are concentrating on the constituent pillars that will enable us to
reach our goal of creating shared value for all stakeholders:
Key pillars
Environmental stewardship
Social responsibility
Economic sustainability
• Corporate communications –
internal and external
• Government relations and
stakeholder engagement
• Sustainable socio-economic
development
Plan
Build trust, reputation and legitimacy with all our stakeholders by leveraging
opportunities to build relationship capital through:
• One source of truth for Tiger Brands’ messages
• Public relations
• Media (traditional and social)
• Consistent communication
• Portfolio communication
Constructively engage with stakeholders to effectively manage reputational
risk and build long-term value, using:
• Consistent approach to engagement throughout Tiger Brands
• Mechanism to anticipate risk and opportunities
• Coordinated framework for stakeholder management
• Leadership visibility in stakeholder engagement
• Value-based stakeholder engagement
• Stakeholder-focused not compliance-based engagement
Become an acknowledged leader in inclusive economic growth and social
impact through:
• Moving beyond compliance
• Programmes aligned to our operations
• Food security and nutrition
• Green economy
• Transformation of enterprise supplier development
• Tiger Brands Foundation
• Our employees as our ambassadors
• Comply with BBBEE regulations in
promoting inclusive economic
development
With compliance as a minimum target, entrench Tiger Brands as a
responsible corporate citizen that contributes meaningfully to society and
creates shared value
44
Tiger Brands Limited Integrated annual report 2017
Our people
The people in our organisation are a key competitive differentiator in our markets –
the talent we have and how we engage and lead them (individually and
collectively) has a direct impact on our business performance.
Highlights
227 leaders attended development programmes
Invested R57 million or 2,08% of total payroll on training
Challenge
Protracted labour disruptions at two sites
The importance of our people is evident throughout our
strategy – from being part of our vision (recognised as
a great place to work) to the first pillar of our mission
(unleash the power of our people) and our values (we
value our people and treat them with dignity).
People strategy
Strengthen Tiger Brands’ competitive position by
attracting and retaining the right people with the right
capabilities, enabled by inspiring leaders in a great
place to work.
The role of the human resources (HR) function is to ensure
that Tiger Brands has appropriate people in the right roles
who are fully engaged to act on our strategy and deliver
high quality to our customers every day.
We focus on the acquisition, management and
development of our employees and deliver the reward
and recognition models that enhance individual and
business performance.
We partner with the leaders of our businesses to create
and execute the function or business area’s specific
people agenda and to support them in becoming
engaging and inspiring role models for our employees.
We shape organisational effectiveness and employee
engagement across all levels, aiming to sustain strong
relationships with bargaining councils/unions and
improve employee health and wellness across the
company.
We champion the organisational values and behaviours
that we believe will deliver our strategy and contribute to
our purpose to nourish and nurture more lives every day.
We administer employee information in the most efficient
way and provide business leadership with people-related
reports and analytics to ensure decision-making based on
facts.
Our operating model and, in turn, the HR function are
fundamental enablers to unleashing the power of our
people now and in the future. Accordingly, the HR
function has been completely transformed and now
comprises three core areas:
• The HR business partner network: strategic HR partners
in each business area who lead all related activities
and are accountable for executing the HR agenda in
a way that is relevant and practical to that business
• The HR shared service centre executes all transactional
activities that can be delivered remotely, creating
efficiency and consistency in how we transact on
people-related activities across the group
• The centres of excellence (CoE) analyse the business
and design tools, processes and solutions that are
benchmarked and relevant to respond to challenges or
opportunities encountered by our businesses, with the
sole intent of driving the Tiger Brands people strategy.
Tiger Brands Limited Integrated annual report 2017
45
NON-FINANCIAL REVIEW Our people continued
We are committed to ensuring we are able to attract and retain the best talent – people who are engaged and
committed to sustainably delivering impressive business performance and ensuring Tiger Brands is recognised internally
and externally as a great place to work.
Our metrics: how we measure our success
To achieve our strategic objectives, we must track and monitor our performance, summarised below:
Metric
Why?
Top employer rating
Ensuring we position ourselves as a desirable employer to attract and retain the
best talent
% of employee pulse score
Ensuring our employees are engaged and the environment is conducive to
delivering exceptional performance
BBBEE level (management/skills
development/employment equity)
Ensuring processes are in place to meet agreed target levels for a diverse
workforce while removing all forms of discrimination and providing employment
opportunities for disadvantaged individuals
Attrition
Time to fill positions
Ensuring that we retain our best people and reducing business continuity risk
related to high turnover
Ensuring our company has the critical skills and sufficient capacity available
when needed
Promotions vs external hires
Ensuring we provide growth and development opportunities for our employees
while allowing sufficient external talent inflow to facilitate innovation and growth
Overall performance rating
improvement
Ensuring organisational practices, HR activities and leadership guide our people
to improved individual performance that will strengthen our business
HR effectiveness
Ensuring HR activities address corporate priorities and lead to the desired results
Workforce
Workforce profile
Outside of
South Africa
African
Indian
Coloured
White
Disabled Permanent Temporary
Total Permanent Temporary
Total staff
2017
2016
2015
2014
2013
8 485
8 437
7 648
6 536
6 178
701
720
698
726
739
1 083
1 120
1 189
1 153
1 192
780
831
844
838
881
37
72
53
69
68
11 049
11 109
10 379
9 253
8 990
5 246
16 295
3 689
14 798
4 222
14 601
4 537
13 790
1 500
10 490
1 426
2 012
3 841
3 673
3 770
364
18 085
4 664
21 474
2 149
20 591
1 671
19 134
788
15 048
Our businesses use seasonal and casual workers for expected increases in production, such as processing ripe crops.
We also encounter unanticipated spikes in demand from large orders or other less predictable events. To meet these
customer requirements, we hire temporary staff. In 2017, our temporary workforce represented 31% of our staff
complement (2016: 39%).
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.
46
Tiger Brands Limited Integrated annual report 2017
Key indicators
2017
2016
2015
Employee headcount*
Female employees
Learnership participants
Skills development (Rm)
Total training as % of
payroll
Overall staff turnover rate
Retention rate of key
talent (target 80%)
18 085 21 474 20 591
3 696
3 910
264
324
57,3
66,8
3 532
417
56,7
2,08
9,1
2,05
7,1
1,00
7,9
91%
91%
87%
* Includes international operations but excludes seasonal and
casual workers.
Labour relations
To ensure a constructive, safe and fair working
environment for all our people, we work closely with
employee bargaining units to ensure everyone has a
voice in matters that affect them daily.
Regrettably, during the year we recorded protracted
labour disruptions at two units (beverages, and snacks
and treats). Although this affected results for the year
through lost production, our focus is on restoring these
relationships and addressing the issues raised where
possible, supported by clear and timely communication.
Our employees have full freedom of association, with
over 55% belonging to unions (including three major
industry unions). Site management and shop stewards
meet monthly.
At each site, unions are represented on forums that
monitor employment equity, skills development and other
issues requiring management’s attention.
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.
Tiger Brands complies with South African legislation
covering Labour Relations Act and basic conditions of
employment, the International Labour Organisation
conventions, and relevant regulations in operating areas
in Africa. In 2017, there were no instances of non-
compliance with labour standards.
Talent management
External hires vs internal promotions
14%
12%
10%
8%
6%
4%
2%
0%
2015
2016
2017
■ Average external hires ■ Average internal promotions
We are building talent sustainably by concentrating on
internal appointments and promotions while increasing
our investment in training and development to build
capability and strengthen the talent pipeline. Regular
talent reviews ensure high-potential individuals are
identified, development plans are agreed, and progress
against agreed targets is tracked. These employees are
commensurately rewarded.
Key initiatives include a focused management trainee
and leadership development programme. In FY17, seven
graduates joined Tiger Brands as trainees in various
disciplines.
Our aim is to deliver qualified talent to the business ahead
of demand, preferably by finding the right people with the
right capabilities within the group.
Tiger Brands Limited Integrated annual report 2017
47
NON-FINANCIAL REVIEW Our people continued
Leadership development
Our aim is to have leaders with the right capabilities to
inspire people to deliver exceptional performance.
To ensure we have leaders who can drive our strategy,
we introduced a new leadership competency model two
years ago aimed at developing great leaders who are
committed to creating a great place to work while leading
our people through challenges. The new operating model
will require a significant change in behaviour that will, in
turn, require high levels of collaboration, influencing both
the capability and ability to lead through ambiguity.
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, in total, 14 flagship programmes were run
in 2016 and 2017, attended by 227 leaders. We are
confident the benefit of these programmes and other
initiatives will soon be evident.
High-performance and engaging culture
This pillar of our strategy aims for high performance
through careful performance management, paired with
strong reward and recognition structures. We believe this
will drive an engaged and committed workforce and
contribute to our success. Similar to our leadership
development initiatives, it is too early to comment on
measurable outcomes.
Developing skills and capability
Developing the full potential of 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. Related objectives and
targets are detailed in our statutory workplace skills plan
and annual training report.
In 2017, we invested R56,7 million (2016: R66,8 million)
or 2,08% of total payroll on in-house training in South
Africa, through the Tiger Brands Academy, as well as
learnerships.
Tiger Brands Academy
This internal facility has separate academies for the
disciplines of supply chain, leadership, finance, customer,
human resources and marketing. It also offers learnerships
in manufacturing, logistics, supply chain and management.
To ensure we develop the right strategic skills, we recently
revised the course content of two key disciplines:
• Supply chain: In 2016, the required skills were profiled
and harmonised across the group and new learning
plans and development programmes rolled out.
Following the success of the manufacturing excellence
programme for unit managers in 2016, a similar
programme for production managers was launched
and 41 production managers will complete this
12-month programme in early 2018.
In 2016 we launched programmes for employees to
be certified in planning and procurement. To date, six
employees have been certified and 75 enrolled.
• Shopfloor development project: the first learnerships
were completed in 2017 and 41 learners graduated
(33 with an NQF 3 certificate in food and beverage
packaging and eight with an NQF 3 certificate in
stores and warehousing). Another seven sites launched
formal learnerships in 2017, with these learners due to
complete in 2018. Three sites completed assessments
in 2017, and will launch learnerships in early FY18.
At other targeted sites, assessments are under way
before implementing the next phase of learning plans.
• Customer: After the final year of our School of Mastery
programme in 2016, 27 learners were awarded
national qualifications in FY17.
48
Tiger Brands Limited Integrated annual report 2017
Workplace experience project
Unemployment is a significant challenge in South Africa,
particularly among the country’s youth. Tiger Brands
creates 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: 469 people have
completed the programme since 2008 and 125 have
been employed by the business.
External programmes
We provide bursaries for the children of qualifying black
employees. In 2017, we spent R4,7 million on bursaries
for 198 students (2016: R3,5 million and 291
respectively). A total of 343 students have graduated from
tertiary institutions since 2007 with the trust’s support, and
264 graduated in 2016.
We provided bursaries for seven (2016: seven) engineering
students. After graduating, they are incorporated into our
talent pool. This year, our first graduates join Tiger Brands
in the management trainee programme.
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.
The key focus over the year has been on designing
the new operating model and the organisational structure
required to execute the model. Understanding that
successfully implementing both the model and
organisational structure means new ways of working,
a carefully considered change-management programme
is helping our people adjust.
Tiger Brands Limited Integrated annual report 2017
49
NON-FINANCIAL REVIEW Health and safety
The safety of our workers, visitors and the public is key to our long-term success.
We strive to achieve our goal of zero harm by managing our activities to eliminate
incidents, minimise risk and promote excellent performance.
Highlight
90% year-on-year reduction in safety incidents
Challenge
Route to market security
We believe a safe and healthy workplace is both the
fundamental right of every person and a business
imperative.
Over three years, there has been a significant and
sustained improvement in the safety performance of
contractors undertaking civil and construction work at
Tiger Brands’ sites after implementing our enhanced
contract management guidelines. Clear communication
upfront ensures service providers and their leadership
teams are fully aligned with our safety policy and
guidelines. Instead of acting as enforcers, we facilitate
by providing assistance and support to service providers,
and creating the space for effective safety collaboration
and learning. This engagement takes place at both
relationship and contractual levels.
Analysing lost-time injuries at our manufacturing units
highlights that behaviour-based incidents are our key
challenge. We are focused on strengthening the
organisational safety culture to change mindsets and
habits, and eliminate risky behaviours.
Our group health and safety policy stipulates our
responsibility for maintaining productive workplaces
by minimising the risk of accidents, injury and
exposure to health hazards for our own people,
associates and contractors. This responsibility is
defined in operating standards throughout the group.
Our manufacturing facilities follow the requirements
and principles of the internationally recognised
Occupational Health and Safety Assessment Series
(OHSAS) 18001 standard as the framework of an
effective system.
The group chief executive officer is ultimately responsible
for the safety of employees. He reports to the risk and
sustainability committee as well as the audit committee
on these matters. Dedicated committees, led by supply
chain executives and site management, are responsible
for implementing health and safety measures at
manufacturing sites.
Rigorous operational controls manage known risks and
align with international best practice. An accredited
independent risk management company assesses
implementation and adherence, and provides third-party
verification. Any identified non-conformance is assessed
and risk mitigation implemented. In addition, compliance
audits are conducted annually – spanning applicable
laws and regulations as well as the group’s occupational
health and safety guidelines – at each manufacturing
operation.
50
Tiger Brands Limited Integrated annual report 2017
Activities to improve health and safety
Management commitment and leadership continue to
make a difference in achieving sustainable improvements
in preventing injury and illness. Key initiatives in FY17
include:
• Identifying the root cause of safety incidents in a
disciplined process
• Further integrating safety into business processes, with
line management held personally responsible for safety
• Including line employees in safety incident investigations
and facilitating their participation on audit teams and
safety awareness campaigns
• Relaunching the SHE pillar in line with our
manufacturing excellence customs and practices journey
• Safety skills development programmes and role-based
competence matrixes 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.
Our on-site clinic services include occupational health
support, and 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.
Training
Key employees are trained and coached on the job to
build the required levels of safety expertise. Programmes
run by internal or external safety, health and environment
(SHE) specialists are focused on building capability
development in this field. Suitable programmes have been
agreed for employees, supervisors, SHE coordinators,
management and internal audit teams.
To supplement formal training, we have self-auditing
and peer-auditing processes to advance our safety
programme.
Safety performance
With a renewed focus on safety, the lost-time injury
frequency rate (LTIFR) again declined and no operation
recorded an unplanned shutdown for health and safety
issues in the reporting period.
Over the years the group has made significant progress in
improving safety. LTIFR has declined from 0,67 in FY13 to
0,30 in FY17 while fatalities have declined from two in
FY13 to zero in FY17. Similarly, lost-time injuries have
declined from 135 to 123.
The group LTIFR target is 0,25 for FY18. In FY17, 29% of
our manufacturing sites achieved zero LTIFR, while 43%
beat their targets (FY16: 31% and 42% respectively).
Focus in FY18 will be on underperforming sites to ensure
their safety performance improves in line with the rest of
the group.
Route to market security
This remains a focus area for our industry. Pleasingly,
in FY17, we recorded zero fatalities (FY16: four). In
collaboration with other companies and provincial
authorities, we share best practice and build sustainable
solutions for route risk management. We continue to
emphasise route risk assessments and comprehensive
defensive driver training. This ensures our drivers are
aware of identifiable risks they may encounter and
understand how to avoid collisions or incidents.
Tiger Brands Limited Integrated annual report 2017
51
NON-FINANCIAL REVIEW Transformation
In South Africa, we promote social transformation in the interest of nation
building, most notably by advancing broad-based black economic empowerment
(BBBEE) initiatives.
Highlight
Significant progress with smallholder producer programme (case study, page 54)
Challenge
Managing the impact of new sector-specific BEE codes
The revised agri-BEE codes against which Tiger Brands will be assessed in future were passed by parliament on
1 November 2017. These codes will have to be gazetted before they are officially legislated. The current Tiger Brands
BBBEE certificate is valid until December 2018.
As the revised codes are still to be legislated, the company was assessed against the old codes and retained its level 3
rating for the year as shown below.
We will begin work to migrate the group’s verification to the new agri-BEE codes in preparation for impending legislation.
Our internal assessment indicates that the group will temporarily drop to level 7 (discounted to level 8) given the new
minimum requirements for priority elements (ownership, skills development, enterprise and supplier development).
Tiger Brands BBBEE scorecard
Ownership
Management control
Employment equity
Skills development
Preferential procurement
Enterprise development
Socio-economic development
Total
Level
Available
points
2017*
20
10
10
20
20
10
10
100
2017
2016
2015
19,7
5,8
5,8
17,0
16,6
2,3
10,0
77,0
3
17,6
5,0
5,8
15,7
18,7
3,4
10,0
76,1
3
20,3
7,6
5,6
12,9
19,2
7,0
10,0
82,6
3
* Tiger Brands is measured against agriculture sector codes gazetted on 28 December 2012.
52
Tiger Brands Limited Integrated annual report 2017
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
2,2
0,1
2,0
35,3
6,3
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 procurement
policy now includes preferential procurement
commitments. As part of our execution strategy for FY18,
our preferential procurement policy will be reviewed and
updated in line with the new BBBEE codes.
Our ambition to play a leading role in developing the
agriculture sector remains a key priority, with R73 million
of fresh produce sourced from black emerging farmers in
FY17. Through our partnership with the Department of
Agriculture, Forestry and Fisheries, we have earmarked
R30 million for enterprise and supplier development,
focused primarily on emerging farmers.
Compliance under the revised BBBEE codes is expected
to be a longer-term process as suppliers 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 black-owned and small
businesses, spending R4,3 billion and R1,9 billion in
these categories during the year. 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 BBBEE strategy roadmap is being reviewed
against the new agri-BBBEE codes which are likely to
be legislated in 2018.
Enterprise and supplier development
We have projects in place across our value chain,
focusing on growing small businesses that we can
support over the longer term. In FY17, we spent
R15,0 million on enterprise and supplier development,
exceeding planned expenditure for the period. As
example, we mentor farmers producing tomatoes for
the group in Limpopo (case study, page 54) and have
extended this to other commodities such as wheat.
Creating shared value
Our purpose is to nourish and nurture more lives every
day. How we bring this purpose to life for our employees,
for our communities and for the planet illustrates how we
create shared value for all stakeholders by generating
sustainable economic value while addressing society’s
needs.
Tiger Brands is a large consumer of agricultural products
– some 2 million tons per annum, with 65% bought
locally. In the past, only 23 000 tons of agricultural
produce was procured from smallholder farmers, or just
1% of produce sourced. We have focused on redesigning
our procurement and supply value chain to ensure a
sustainable portion is opened up to farmers who have
not previously participated.
We have initiated a programme to transform our supply
chain and increase the volume of produce purchased
from local smallholder producers. As a result, new jobs
are being created and sustained by our emerging
suppliers backed by the security of offtake agreements
with Tiger Brands (case study, page 54).
We have already made significant progress and will
build on these early successes to expand the programme.
Tiger Brands Limited Integrated annual report 2017
53
NON-FINANCIAL REVIEW
Transformation continued
The intensive support programme in Limpopo for tomato farmers is proving successful
under the mentorship of Technoserve, supported by our Groceries business. This will
provide a platform for Tiger Brands to extend similar programmes to other provinces
and crops in future, using a combination of own and external funding.
CASE STUDY
Smallholder producer programme
25 000 tons,
92 farmers
Limpopo (Tiger Brands 2017 investment
R9,3m; total R14,6m)
• Tomatoes – 70 farmers producing 20 000 tons
(revenue R23m)
• 37 farmers, now stable producers, managed directly by
Tiger Brands
• Special programme for 30 farmers including training,
mentoring and agricultural support in place with
Technoserve
• On track to increase production by
5 000 tons in 2017
• Documentary being produced
to track the progress from land
preparation to planting,
Limpopo
North West
Gauteng
Mpumalanga
Free State
KwaZulu-Natal
Northern Cape
Eastern Cape
Western Cape
harvesting, pulping and
final product on shelf
• Beans – 14 farmers;
600 tons contracted
for 2018 (new
farmers introduced
through mentorship
programme)
• Wheat – 600 tons
contracted for winter
production with
offtake agreements
from Tiger Brands
North West
(2018)
• Sorghum
(Potchefstroom)
• Maize (Gauteng)
Western Cape
• Butternuts and figs –
4 farmers, 500 tons
• Pears, apricots and
peaches – 22 farmers,
3 000 tons
• Tomatoes – 5 farmers,
660 tons
Background to the programme
Technoserve completed an in-depth study of our manufacturing footprint, crop requirements and the availability of
emerging farmers who could meet these requirements. Key criteria included quality specifications, farmer ability and
economical radius to the factory. Farmers who met these requirements were then formally evaluated.
The programme spans vegetables over three 18-month phases, focusing on Limpopo, Highveld/Gauteng and North
West provinces. As a parallel track, grain crops (maize, sorghum and soya) are being explored, but timing will depend
on specific requirements.
Through this programme, our vision is to increase smallholder production from 23 000 tons to 35 000 tons by 2021.
Revenue paid to these producers is expected to increase from about R23 million in FY18 to R100 million by 2021.
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Tiger Brands Limited Integrated annual report 2017
Key highlights
Phase 1 of the smallholder farmer programme
focuses on tomatoes. The 30 participating
farmers are equally split between men and
women, and five are classified as youth (under
35). Salient features to date include:
• All farmers trained in Technoserve best
agronomy practice model covering business
economics, land preparation and planting
practices, fertilisation, irrigation, pest and
disease control. As a result, yields almost
doubled to 58 tons per hectare
• Tiger Brands allocated R9,3 million to fund this
technical support as part of our commitment to
enterprise and supplier development
• 100 hectares under production, with over
5 800 tons delivered to Tiger Brands (total
sales revenue of over R9 million, with almost
R3 million accruing to farmers after deducting
input costs prefunded by Tiger Brands. Some
86% of input loans are currently being
recovered)
• Selling to other markets generated a further
R1 million for the farmers
• 191 new permanent jobs and 500 seasonal
jobs created.
Winter wheat cluster
The initial plan with the Marble Hall/Burgersfort
farmers was to produce beans on 500 hectares.
Due to challenges with input funding, we missed
the planting season for beans and postponed this
programme to January 2018.
To keep the farmers engaged, they were
encouraged to experiment with a winter wheat
crop on 73 hectares. Production is on track and
harvesting was completed in November in time to
prepare land for bean production which will start in
December. Salient features include:
• Five businesses with a total of 18 members
(14 men and four women)
• Five key members in each enterprise completed
Technoserve training modules.
The tomato value chain explained
1
Offtake
agreement
signed
2
Farmer
plants
goods
3
Crops
harvested
4
5
6
Crops delivered
to local Tiger
depot
Tiger uses tomatoes
to produce puree
(Musina)
Puree
transported to
Boksburg
7
Puree
used to
produce
Tiger
products
Looking forward
• Tomatoes: The project with the Nwanedi farmers will continue next season, anticipating that our supply chain will
increase volumes from this source if group quality standards are met. The farmers will continue to receive technical
support, although this will taper off so that they are able to manage with reduced technical and input support by the third
season. We anticipate planting 300 hectares which will yield 18 000 tons with a value of R30 million (depending on
offtake agreements with our supply chain).
• Beans (Marble Hall/Burgersfort/Veeplaas): Production preparations will start in December and seedlings will be planted
in January 2018. Seeds have already been bought and are being stored. Some 500 hectares of beans will be planted
with an expected yield of 1 250 tons and revenue of R14 million.
Tiger Brands Limited Integrated annual report 2017
55
NON-FINANCIAL REVIEW
Our communities
Our success and our sustainability are directly linked to the well-being of our
communities. They are the source of our most valuable asset – our employees –
and support our businesses by buying our products.
Highlights
Committed R35 million (up from R23 million in FY16) to socio-economic development (SED) initiatives
First annual Tiger Brands SED partner workshop, hosting all our NGO partners across South Africa
Launch of the Tiger Brands household and community food garden initiative
Challenge
Gaps in the existing SED monitoring and evaluation framework
Key indicators
Total SED spend
Tiger Brands Foundation spend
Beneficiaries reached
* For the foundation’s financial year to end-February.
2017
Rm
35,0
23,9*
104 215
2016
Rm
23,0
19,0*
100 977
2015
Rm
24,2
15,3
118 443
2014
Rm
24,0
22,4
107 000
Our approach
We honour our responsibility to contribute to the welfare of our communities through our socio-economic development
(SED) strategy.
To ensure this strategy is integrated into our business objectives and focused on real – and changing – community needs,
we critically reviewed our past approach to corporate social investment (CSI) to determine our future actions, illustrated on
the next page. We also incorporated insights from the 2017 stakeholder survey (page 26).
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Tiger Brands Limited Integrated annual report 2017
Tiger Brands socio-economic
development strategy: 2017 and beyond
Where we’ve come from
• Over ten years of CSI
• Distributing food parcels
• Food donations
What has guided us
Our approach in action
While food security remains our overarching goal, our
core SED programmes address the key goals of South
Africa’s national development plan (NDP) and UN
Sustainable Development Goals.
Food and nutrition support programme
• We provide nutritionally balanced food parcels to the
most in-need beneficiaries across South Africa through
partnerships with food-focused NGOs and universities
• Through these partners, over 30 000 community
• BBBEE codes of good practice for socio-economic
members are reached monthly
development
• National Development Plan (NDP)
• UN Sustainable Development Goals (SDGs) – particularly
no poverty, no hunger, good jobs and economic growth
• King IV
Employee
volunteering
Food and
nutrition
support
programme
Customer
stakeholder and
brand CSI
Community
enterprise
development
Beneficiary
capacity
building
Household and
community food
garden initiative
• Supported communities include Soweto (Gauteng),
Katlehong (Gauteng), Delmas (Mpumalanga),
Plettenberg Bay (Western Cape), Stellenbosch (Western
Cape), Ikageng (North West), Port Elizabeth (Eastern
Cape), Potchefstroom (North West), Claremont
(KwaZulu-Natal), Mohlakeng (Gauteng), Cape Town
(Western Cape), Nwmitwa (Limpopo) and
Braamfontein (Gauteng)
• Supported partners include four universities: Nelson
Mandela University, Wits, Northwest University and
University of the Western Cape.
CASE STUDY
University nutrition support programme
For thousands of students across South Africa, meals are
a daily challenge. In response, Tiger Brands launched the
university nutrition support programme in 2017, partnering
with tertiary institutions to provide much-needed nutritional
support to struggling students. In June 2017, the University
of the Western Cape (UWC) became our fourth partner.
Almost 80% of students at UWC depend on some form of
financial assistance, and an estimated 1 500 students are
unsure about where their daily meals will come from. These
students may be living on campus, in nearby community
housing or travelling in daily from surrounding communities.
The Tiger Brands programme forms part of UWC’s new
student support centre, and will be driven by the leaders
of the student representative council (SRC), who plan to
augment our food parcels with student-led food gardens.
Tiger Brands has committed to providing nutrient-dense and
fortified student food hampers to hundreds of students at
UWC, Wits, Nelson Mandela University and North-West
University. We are also providing support to establish and
maintain food gardens at all campuses.
Tiger Brands Limited Integrated annual report 2017
57
NON-FINANCIAL REVIEW Our communities continued
Customer, stakeholder and brand initiatives
Tiger Brands implements customer and brand-aligned initiatives with a meaningful social impact, including ad hoc
stakeholder support during crises:
• Initiatives included support to fire victims in Hout Bay and the Western Cape disasters, as well as support for the patients of
Life Esidimeni Hospitals during their relocation
• The Department of Agriculture, Forestry and Fisheries (DAFF) remains a supported government entity, as does the Nelson
Mandela Children’s Hospital (we contributed R5 million to the hospital’s capital campaign)
• The successful roll out of the Spar “Home-cooked Happiness” campaign, through which 1 000 Wonderbags (non-electric
portable slow cookers) were distributed to communities and schools across South Africa
• Collaborations with Albany and Status reached over 1 000 children through the “Sarmies for Smiles” campaign; and two
entrepreneurs were trained and mentored in the Status “Hustle Den” promotion
• We continue to support the Shoprite Soup Kitchen initiative across the country.
Beneficiary capacity building
We focus on targeted community-based training in nutrition, food handling, health, food security and sustainability.
Key initiatives during the year included:
• In February 2017, we hosted all our NGO partners from across South Africa at the first annual Tiger Brands socio-economic
development partner workshop. We shared our strategy for the next few years and, along with experts from different fields,
engaged our partners in discussions and workshops on enterprise development, nutrition education, eco-friendly cooking,
sustainable food gardening, and NGO sustainability and financial management
• We partnered with the Department of Basic Education and the Tiger Brands Foundation to advance nutrition education in selected
schools. Through this partnership, nutrition education placemats were rolled out to 25 000 learners in schools across the country.
In August 2017, this programme was expanded to include accredited food-handler training for in-school kitchen staff. In
partnership with the Tiger Brands Foundation, 36 food handlers, four programme coordinators, three school officials and four
district monitors completed accredited training.
Community and household food-garden initiative
Through partnerships with Food and Trees for Africa and Wits Siyakhana initiative, we provide training, support
and mentorship to establish sustainable community and household food gardens
• 8 communities across South Africa participating in the Trees for Homes and Food for Homes programme
• 4 universities starting campus food gardens linked to their facilities
• 174 community members trained in permaculture food gardening
• 20 community educators trained about tree planting and climate change
• 500 fruit trees and 500 indigenous trees planted in Mohlakeng, with 80 shade and fruit trees planted across the eight
community food gardens.
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Tiger Brands Limited Integrated annual report 2017
Community enterprise development
This pillar of our strategy provides training, support and
mentorship to identify and establish viable community
enterprises for food security and a green economy.
Our partnership in enterprise development with the NGO
Mosaic Community Development in Ikageng focuses on
supporting Mosaic’s community bakery, which creates jobs
for the foster mothers of children who rely on Tiger Brands’
monthly food parcels.
Employee volunteers
We provide opportunities for our people to participate in social causes that are close to their hearts and in the
communities in which they live and work. In the review period, these included:
• Santa’s Shoebox Campaign
• Donating toiletries to Life Esidimeni for the mental health patient relocation programme
• Clothing and blanket collections for Western Cape disaster victims
• Country-wide Mandela Day initiatives.
FY17 snapshot
In the review period, we committed 1,5% of net profit after tax, or R35 million, to community development, achieving
several milestones:
• Over 78 000 high-quality, nutrient dense and fortified food packages distributed (FY16: 13 200)
• 38 000 beneficiaries reached monthly via the Tiger Brands food and nutrition support programme (FY16: 41 000)
• Over 10 000 beneficiaries in crisis supported through our CSI and employee volunteerism programmes
• 25 000 learners received nutrition education material
• 194 community members trained in food gardening and community education.
2017 investments
Provinces
Food and nutrition support
programme
Gauteng, Mpumalanga, Western
Cape, KZN, Limpopo, Eastern
Cape, North West
Nature of support
Food donations
Customer, stakeholder and brand CSI
All provinces
Employee volunteerism
Beneficiary capacity building,
household and community food
garden initiative
All provinces
All provinces
Food and supplies
Food and supplies
Capacity building, training,
garden infrastructure and
supplies
Site-specific community support
Western Cape
Training and supplies
Total
R000
25 543
6 726
85
1 400
1 760
35 514
Tiger Brands Limited Integrated annual report 2017
59
NON-FINANCIAL REVIEW Our communities continued
Commitments for FY18
In the year ahead, we plan to accelerate the move from
philanthropy to sustainable community investment. While
we will continue to provide food packages, nutrition
support is now backed by greater focus on creating
food-secure communities with better health through:
• Nutrition education, food-handling training, health
training and food security
• Training and mentorship on establishing and
maintaining household and community food gardens
• Training, support and mentorship in identifying and
establishing viable community enterprises concentrating
on food security and the green economy
• Establishing a Tigers For Good network of champions
across sites and operations
Our operating model
• Tracking the impact of initiatives by implementing a
robust monitoring and evaluation system, supported
by appropriate NGO partner training.
Tiger Brands Foundation
The Tiger Brands Foundation was established in 2010
to enhance our community impact and assist a broader
range of underprivileged people in South Africa. It is
managed by an independent board of trustees which
establishes the criteria and procedures governing
resource allocation.
Through the foundation, we develop partnerships with
disadvantaged communities with whom we interact most.
TBF national
office
• Central planning
• Operational oversight and control
• Real-time monitoring and evaluation
• Leverages mobile technologies
Food manufacturing
Warehousing
Logistics
Serving
Leveraging strategic
food manufacturing
partners’ existing capacity
to gain benefits of
economies of scale
Leveraging existing
national warehousing
structures for cost effective
storage of products, prior
to delivery at schools
Risk managed enterprise
and SME development
model utilised to
further enhance local
benefits
Trained and coached food
handlers and monitors
placed in schools to ensure
feeding occurs as defined in
the foundation’s standards,
processes and procedures
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 (NSNP). From six primary schools in
Alexandra, this has expanded to over 90 schools in all
provinces, providing the essential breakfast meal to over
63 600 learners. To date, over 51 million breakfasts
have been served to our country’s most vulnerable
learners.
The programme is funded by a “trickle dividend” equal
to 30% of dividends received from the foundation’s
5% shareholding in Tiger Brands.
Practically, the foundation will build the capabilities to
support its objectives. These include effective monitoring
and evaluation (primarily by formally assessing social
return on investment, and disclosing results in FY18),
developing packaged and replicable solutions, and
enhancing the capacity of key staff.
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Tiger Brands Limited Integrated annual report 2017
Flagship: Breakfast programme
WE’VE COME A LONG WAY SINCE 2011
R145m*
spent on the
programme to date
91
9
no-fee schools across
all nine provinces
included in the
programme
project coordinators
oversee smooth
running at provincial
level
33
kitchens constructed/
upgraded
(five to be built
by February 2018)
63 699
learners receive a
nutritious breakfast
every school morning
45,2m
warm nutritious
breakfasts served
since 2011
360+
jobs sustained for the
community as food
handlers, monitors
and provincial
coordinators
* Approximately 2011 – 2017
The foundation partners with multiple stakeholders:
• 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 investing in food-security and
school-nutrition programmes
• Tiger Brands group, public and shareholders.
Enhancing capacity
The foundation introduced a food-handlers skills training
programme accredited by the South African Qualifications
Authority (SAQA) and welcomed by the Department of
Basic Education. It was piloted in the Free State province
with the support of the provincial education department,
and aims to:
• Empower food handlers with appropriate knowledge
about food preparation, safety and hygiene
• Extend the scope of SAQA-accredited training to give
volunteer food handlers skills that will enhance their
employability or opportunities for entrepreneurship after
completing the nutrition programme
• Incorporate components of the national schools nutrition
programme to ensure uniform food-preparation safety
and hygiene standards.
Although food handlers are employed by the Department
of Basic Education, they are paid a stipend by the
foundation.
Commitments for FY18
• Given positive results from our public-private partnership
model for in-school nutrition, we will expand this to
more schools in South Africa
• We will continue to sponsor the first prize in the
Department of Basic Education’s annual NSNP awards
for best school and best district. For the best school,
this means 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 R80 000 towards equipment for
the NSNP office
• Provide a stipend of R550 per month for food handlers
• The foundation will also donate at least four more
school kitchens (for schools identified by the
department) in FY18. Two of these will be built in
partnership with a corporate funder.
Tiger Brands Limited Integrated annual report 2017
61
NON-FINANCIAL REVIEW Our customers and consumers
Given that satisfied customers and consumers ensure our sustained and profitable
growth, 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.
Highlights
Maintained strength of core brands
Consumer complaints declined by 10%
On-shelf availability increased from 96% to 97%
Challenges
No evidence of a recovery in consumer spending
Competition for market share to intensify
Our approach
Our customers are the retailers and wholesalers we
distribute to in South Africa. We segment our major
customers by:
• Channel (modern trade, general trade and pharmacy)
• Chain (major retailers, cash-and-carry shops)
• Format (including hypermarkets, supermarkets and
spazas – informal stores mostly in townships).
To sustain strong relationships and a growth mindset,
dedicated customer executives and shopper managers
work in functional teams to serve each customer and their
shoppers directly.
Our consumer-focused 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 areas of the FMCG market. Key features include:
• Maintaining the number 1 or 2 position in our
categories by investing to support our power brands
• Investing in marketing support and innovation to drive
our organic and new business growth plans
• Continually evaluating new or adjacent category
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 marketing strategies to better satisfy their needs
• Continually striving to encourage healthier eating by
our consumers
• In prevailing economic conditions, providing greater
value for money through a portfolio strategy based on
affordability.
ALL CONSUMERS IN
SOUTH AFRICA USE OUR
PRODUCTS DAILY AND
OUR PRODUCTS ARE SOLD IN
25 COUNTRIES ACROSS
AFRICA, AS WELL AS ASIA
AND EUROPE THROUGH OUR
DECIDUOUS FRUIT BUSINESS
CONSUMERS SPEND 10% OF
THEIR ANNUAL TOTAL ON
TIGER PRODUCTS
Source: Nielsen, company data.
In our international strategy, we aim to nurture and grow
the businesses we currently own in the rest of Africa, and
strengthen our exports from South Africa by evolving the
distributor model, determining optimal coverage and
improving in-market visibility.
Customer strategy
Our operating landscape is undergoing significant and
ongoing changes that affect the way consumers are
shopping and, therefore, the way we go to market and
meet in-store execution demands. Key elements of the
retail landscape include:
• A crowded trading arena
• Shifting route to market, including the growth of
independent channels, while hybrid stores blur the
lines between retail and cash-and-carry formats
• Continued rise of private label
• Resilient independent trade
• The increasing role of data and technology
• Retailers seeking margin and growth opportunities
• Targeted collaboration/joint business planning
• Modern trade expanding into the rest of Africa.
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Tiger Brands Limited Integrated annual report 2017
Given these factors and building on our progress to date, our strategy is based on
five priorities:
GROWING WITH
CUSTOMERS
Continued focus on growing
channels, customers and formats
through tailor-made offerings and
measured by top-line growth with
customers and market share
GREAT PLACE
TO WORK
Building capability by attracting top
talent to meet retailer needs and
capitalise on shopper marketing data
and insight generation
GROWING DISTRIBUTION
AND REACH IN GENERAL
TRADE Delivering relevant customer
marketing activity for general trade
retailers with specific activation such
as stokvel drives
Growing in-store
Actively engaging retailers
to improve on-shelf
availability, promotional
effectiveness and brand
exposure at point of
purchase
PENETRATION IN AFRICA
Continue to leverage Tiger Brands’ basket through stronger distributor
management and trade channel development
General trade remains a critical success factor and modern trade
continues to grow in Africa
Underpinned by key enablers:
• Continue to focus on growing channels, chains and outlets • Optimise retailer data mining and insight generation
• Joint business planning and collaboration
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 continue to focus on in-store execution and have
exceeded the 50 basis point improvement target set
in FY16 on a basket of strategic products.
2017 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. Our ongoing progress
is tracked through the independent advantage survey.
Our consumer services division manages all consumer
interaction, including compliments, suggestions, product
enquiries and complaints. Staffed by Tiger Brands
employees, the call centre has now transitioned into a
contact centre, assisting consumers via telephone, SMS,
email, Facebook and WhatsApp.
In FY17, the contact centre had an average call answer
time of 25 seconds and managed 73 056 consumer
calls, while consumer complaints showed a 10%
decrease, year on year.
Our customer relationship management (CRM) system
allows us to capture and store all consumer engagement.
These interactions are classified, prioritised and
channelled to the appropriate quality and senior
management teams. For all consumer complaints,
company feedback is given after an investigation and
independent analysis, when necessary.
Consumers are also compensated for the value of their
defective product(s) – this is managed case by case with
vouchers issued via SMS. An additional claims process is
also available for consumers.
The contact centre is governed by an internal standard
operating procedure, which includes processes to engage
with consumers and customers as well as facilitate product
recalls, when necessary. We are also able to assist with
consumer insights. Our processes are aligned to the
consumer goods and services ombudsman, Consumer
Protection Act and Protection of Personal Information Act.
Tiger Brands Limited Integrated annual report 2017
63
NON-FINANCIAL REVIEW Our customers and consumers continued
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
• Nielsen research tracks product market share by value
and volume, distribution, pricing and product movement
(see page 2).
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 2017,
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, on page 62.
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 Organisation (WHO) and South African
Department of Health public health concerns.
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.
Guideline daily amounts and Eat Well, Live Well: 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 make better food
choices. The Eat Well, Live Well system has its own icon
– only featured on products that constitute better food
choices for overall health – and website, where
consumers can learn about incorporating healthy eating
into their lifestyle (www.ewlw.co.za). Consumers also
have access to our nutritionist for further information or
assistance.
Eat Well, Live Well is also active on social media such as
Facebook, where consumers can interact with others on
the site and with the nutritionist. To date, we have over
118 000 followers. We continue to evaluate and
develop products to meet the “better for you” option,
in line with the Eat Well, Live Well programme.
In 2017, we launched the Be Nutrient Wise system on
the front of each pack. The Be Nutrient Wise logo alerts
consumers to be mindful of guideline daily amounts
(available in the GDA table) and thus monitor nutrients
in their diet that increase the risk of a lifestyle or non-
communicable disease.
Fortification: In line with South African regulations, we
fortify staple foods such as wheat flour (for bread) and
maize meal with key vitamins and minerals. These include
vitamins A, B1, B2, B3, B6, B9 (folic acid), iron and
zinc. Under pending changes to these regulations, cake
flour will also need to be fortified for the benefit of
consumers. Our Golden Cloud product range has already
been reformulated.
In addition, we voluntarily enrich other products including
breakfast cereals such as Morvite, certain Jungle cereals
and Ace Instant with micronutrients. Products are
specifically developed to target certain requirements, for
example Jungle Energy bars are enriched with B vitamins
that assist in releasing energy, while Morvite has been
specifically developed with micronutrients to assist the
immune system.
64
Tiger Brands Limited Integrated annual report 2017
Sodium/salt reduction: Tiger Brands reduced salt levels
in 2016 in affected food categories: bread, breakfast
cereals, processed meats, savoury snacks, instant noodles
and stock concentrates, to comply with South African
regulations. We support the efforts of government to
improve the health of South Africans, and will continue to
work towards even lower sodium levels for the 2019
deadline.
Taxation of sugar-sweetened beverages: In February
2016, the South African minister of finance announced
a tax on sugar-sweetened beverages. There have since
been many interactions with National Treasury, including
comprehensive written submissions and presentations to
parliament’s standing committee on finance by Tiger
Brands. We have also interacted through our industry
bodies, BevSA and the Consumer Goods Council.
Comments on the policy paper were submitted to
National Treasury. Tiger Brands concurs with 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.
While comments and parliamentary hearings have led
to changes in the tax model and rate of tax, the intention
remains to tax sugar-sweetened beverages as a “health
promotion levy”, based on the amount of sugar in the
product. The latest deliberations in parliament resulted
in a request for treasury to again review related issues,
specifically job losses and labour impact. We await the
outcomes of this process but note treasury’s indication that
the implementation date has moved from April 2017 to
April 2018.
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 the Consumer Protection Act, we have made
the required changes and conducted training across our
business to ensure compliance. Our staff at the consumer
services unit, which addresses consumer complaints, have
also been trained on effectively managing consumer
complaints.
In addition, we subscribe to the consumer goods and
services industry code, enforced by that ombud, and
adhere to the Advertising Standards Authority code on
responsible advertising to consumers. We also adhere
to the Cosmetics, Toiletries and Fragrances Association
(CTFA) compendium, an industry code on the composition
and labelling of personal care products.
Tiger Brands is a member of the Marketing Association of
South Africa and our chief marketing officer is active on
the board of this industry body.
Looking ahead
In designing the optimal operating model as part of
the strategic review process, we identified the required
capabilities to enable our strategy and growth ambitions.
The process determined a need for upskilling, and in
the case of consumers, specific capability gaps were
identified in terms of understanding the price elasticity of
our brands and digital marketing. The recruitment process
is under way. These skills will be supported by enhanced
processes and systems as well as an integrated operating
model.
The new operating model will refocus on the consumer,
reignite innovation by introducing concentrated innovation
capabilities while engagement with Tiger Brands will
become easier through a unified sales team and an
integrated supply chain. With a deeper understanding of
our consumers, better engagement with our customers and
a renewed focus on R&D, we will be able to respond
quickly by creating a forward-looking innovation portfolio.
Tiger Brands Limited Integrated annual report 2017
65
NON-FINANCIAL REVIEW
Environment
Our environmental policy commits 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.
Highlight
ISO 14001 certifications retained
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 focus areas
Manufacturing
operations
Packaging and finished
goods
Supply
chain
Environmental
sustainability culture
Reduce the impact of
our manufacturing
operations by improving
energy efficiency and
water conservation,
reducing GHG
emissions, and
minimising waste
Reduce the environmental
impact of our products and
packaging through design,
sustainable sourcing and
responsible disposal initiatives
Collaborate with our
logistics and manufacturing
vendors to assist in
reducing the environmental
impact of our supply chain
Continually engage our
employees, consumers and
communities to promote a
culture of environmental
sustainability
Since FY12, we have exceeded most of our key targets of a 5% reduction per annum.
• Excellent reduction in energy performance and waste
• Water intensity has been kept largely flat – this is an area of focus going forward
• The CO2 emissions reflect an increased scope measurement over this period
• We have sustained our performance in the last two years
Performance – steady progress over the last five years (FY12 to FY17)
Metric
Energy (kWh)/ton)
Packaging (ton/ton)
Waste (ton/ton)
Water (kℓ/ton)
Carbon emission (CO2 emission/ton)
FY12
0,43
0,94
0,04
1,88
0,1571
FY17
0,128
0,31
0,005
2,12
0,2363
Change
70% ê
67% ê
88% ê
(13%) é
(50%) é
66
Tiger Brands Limited Integrated annual report 2017
Looking ahead FY17 to FY22 (baseline (FY16)
New targets have been set in line with our strategy (page 18), particularly focused on water consumption and carbon
emissions.
Energy
Waste
Water
Packaging
Carbon emission
Improve energy
efficiency by 15%
Reduce waste for
disposal by 12%
Reduce water
consumption and
discharges per ton of
product produced by
15%
Reduce packaging
use by 9%
Eliminate carbon
emissions and GHG
as far as practically
possible
Tiger Brands participates in the CDP programme for the Climate Change Disclosure and Water Disclosure programmes.
CDP provides a single score that assesses progress towards environmental stewardship as reported by the CDP response.
The score assesses the level of detail and comprehensiveness of the content, as well as the awareness of climate change
issues, management methods and progress towards action taken on climate change as reported in the response.
CDP strengthened their scoring criteria this year which has an impact on comparability over time. Tiger Brands maintained
a C- performance in 2017 given the stringent scoring newly introduced for the climate change responses. For the Water
Disclosure programme, a result of B- performance was achieved.
Environmental governance
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. Executing the
strategy and managing the environmental system rests with the group manufacturing excellence department.
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.
After changes to the policy and procedures, related training takes place site by site. Training is also part of each
site’s induction programme, highlighting requirements and responsibilities, and ensuring employees know how to
access policies and documents.
Tiger Brands Limited Integrated annual report 2017
67
NON-FINANCIAL REVIEW
Environment continued
Our initiatives that drive strategic outcomes
Priorities
Strategic outcomes
Initiatives
Resource
efficiency
and cleaner
production
(RECP)
Reducing
carbon
emissions
ISO 14001
certification
Lifecycle
assessments
(LCAs) – cradle
to grave
Promote
resource
and waste
management
RECP programmes implemented through
the National Cleaner Production Centre
(NCPC) – CSIR and Tiger Brands
partnership. RECP accelerates
application of preventative environmental
strategies to processes, products and
services, leading to increased
operational efficiency and performance
excellence
Implementing energy management system
(EnMS) in line with ISO 50001. We
have prioritised our top seven heavy
energy-user sites
• RECP and selective Energy Systems Optimisation
(ESO) assessments have been completed at our
manufacturing facilities
• These sites received a detailed technical report
with process gaps. Recommendations are being
implemented
• UNIDO and CSIR energy experts conducted EnMS
audits at pilot sites
• EnMS will be implemented progressively across all
our sites
ISO 140001 standard assists Tiger
Brands in protecting the environment and
responding changing environmental
conditions
• All South African manufacturing sites
are ISO 140001 certified
• Surveillance audits conducted annually
• ISO 14001 certification will be rolled out to
The LCA is a technique to assess
environmental impacts associated with all
stages of a product's life from cradle to
grave (from raw material extraction
through materials processing,
manufacture, distribution, use, repair and
maintenance, disposal or recycling)
distribution centres and offices
• LCAs have been completed for major products such
as KOO baked beans, Albany bread and Beacon
chocolate
• Corrective actions are being implemented across
the supply chain
We plan to reduce our waste impact
through the following initiatives:
• Reduce solid, hazardous and
electronic waste
• Reduce amount of non-recyclable
packaging on site
• Site waste segregation intensified, realising better
recycling opportunities
• Designing consumer-preferred, resource-efficient
packaging and sustainably sourced raw material
for our products
• Using materials that can be recycled, used as
• Decrease total volume of waste
waste-to-energy, or for composting
removed from site
• Delivering more value with less virgin material in
• Achieve a closed on-site compost loop
the packaging
from our organic waste to reduce
spending on fertilizers for maintaining
vegetable gardens (head office) and
other gardening activities
• Reducing volatile organic compounds in packaging
with R&D
Logistics impact We intend to reduce carbon emissions
from transporting raw and packaging
materials and distributing finished goods
We have reduced logistics-related carbon emissions
over 20% in the last two years by:
• Continually consolidating our fragmented
Procurement
management
In addition to driving ethical and
sustainable sourcing, we have engaged
our suppliers on their environmental
sustainability plans
distribution network
• Increased transport back-hauling: raw and
packaging materials on one trip, and finished
goods on the return trip
• Increased direct loads from 55% to 75%
We monitor our suppliers’ plans using a balanced
scorecard:
• All suppliers we have engaged with have
environmental sustainability plans
• Most of our suppliers have reduced their carbon
emissions
• We share best practices
68
Tiger Brands Limited Integrated annual report 2017
Priorities
Strategic outcomes
Initiatives
Drive water
stewardship
As a business, it is crucial to
understand the risks of water scarcity
and pollution. Equally important is taking
action to ensure water is managed
sustainably as a shared, public resource.
Stewardship goes beyond being an
efficient water user
Curb energy
consumption
Our aim is to reduce the intensity of
energy consumption and investigate
alternative sources of energy for our
facilities
• Measuring our water footprint (ie water use and
waste-water discharge) throughout our value chain,
including suppliers and product use
• Treating waste water and effluent for appropriate
reuse
• Using recycled and grey water at some facilities
while water-storage facilities have been installed
where viable
• Water-saving schemes have reduced the volume
of municipal water used each year
• Borehole water applications are being explored
for sites in areas with a high water table
• Participating in the CDP water disclosure
programme. This global standard allows us to
benchmark our performance against global peers
and to learn from best practices
• Member of the CEO Water Mandate for access to
strategic frameworks, good-practice guidance and
enabling tools to advance our water-stewardship
practices
• Refurbished and upgraded most of the group’s
boilers
• Retrofitting energy-saving LED lights using the
replacement method, ie replacing old energy-
intensive lights with LED bulbs
• Ongoing installation of variable-speed drives for
motors, fans and compressors
• Optimising energy systems for significant energy
users – boilers, compressors, equipment
• Studies undertaken for alternative sources of energy
for manufacturing facilities – solar and biomass
Legislative developments
In the review period, we began preparing for expected
legislative changes in South Africa:
• Department of Minerals and Energy: submission of
five-year company 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
• Department of Environmental Affairs: request for
mandatory or voluntary industry waste management
plans or being part of a submission
Carbon tax
We continue to engage extensively with external parties
to establish holistic, practical and affordable solutions on
how to reduce our carbon emissions.
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.
While these regulations have not yet been legislated, we
are proactively developing draft plans given the proposed
three-month window between promulgation and
submission to the minister. These legislative amendments
will also require Tiger Brands to submit annual progress
reports against submitted plans.
In addition to addressing our own emissions, we are
encouraging suppliers to improve the fuel efficiency of
their operations and reduce their GHG emissions.
Tiger Brands Limited Integrated annual report 2017
69
NON-FINANCIAL REVIEW Corporate governance
Corporate governance
Sound corporate governance is an integral part of the group’s success in achieving
its strategic objective to create sustainable value, as per the strategy on page 18.
OUR BOARD SETS THE ETHICAL
LEADERSHIP TONE WHICH IS EMBODIED
IN TIGER BRANDS’ VALUES. THESE IN
TURN DIRECT OUR DAILY ACTIVITIES.
During the year, the board was guided by the
principles in the King IV Code on Corporate
Governance, JSE Listings Requirements, Companies
Act 2008 and other relevant laws and regulations.
OUR GOVERNANCE STRUCTURES,
POLICIES AND STANDARD OPERATING
PROCEDURES WERE REVIEWED AND
ALIGNED TO KING IV PRINCIPLES TO
SUPPORT OUR NEW OPERATING MODEL
AND STRATEGY.
The Tiger Brands board comprises directors who
bring a diverse range of industry knowledge and
experience to the board and exercise their
judgement freely and independently. The board
sets strategic objectives, monitors and reviews
management’s performance, and embeds a culture
of ethical leadership in the group.
THE BOARD OF DIRECTORS
Met six times in 2017
The board has delegated certain functions to committees to assist in meeting its oversight responsibilities in line with the
board charter. Every committee has terms of reference and a work plan that are reviewed annually, and the directors
confirm that all committees functioned in line with these terms of reference during the year. Committee members have the
required skills to execute each mandate and all board committees are chaired by independent non-executive directors.
70
Tiger Brands Limited Integrated annual report 2017
AUDIT
COMMITTEE
Met three times in 2017
Members
RD Nisbet (chairman)
YGH Suleman
KDK Mokhele (resigned 21 February 2017)
EM Mashilwane (appointed 21 February 2017)
Invitees
LC Mac Dougall
NP Doyle
CFH Vaux
The audit committee has, on the board’s behalf, among
other things:
• Reviewed the integrated report and annual financial
statements
• Reviewed the provisional results and financial
information
• Reviewed internal financial controls and the internal
audit function’s empowerment, support and effectiveness
• Proposed the external auditors, the quantum of non-audit
»
services and fees for both sets of services
• Monitored performance of the audit, finance, tax and
treasury reporting functions
• Monitored the solvency and liquidity of the company
and recommended the interim and final dividend
• Monitored all matters relating to the financial assistance
policy
• Monitored elements of the combined assurance plan
• Performed its statutory duties as set out in section 97(4)
of the Companies Act.
The committee chairman’s report is set out on page 82.
RISK AND SUSTAINABILITY
COMMITTEE
Met three times in 2017
Members
YGH Suleman (chairman) (appointed as chairman
21 February 2017)
MO Ajukwu
RD Nisbet
MJ Bowman (appointed 21 February 2017)
(resigned 19 September 2017)
KDK Mokhele (resigned 21 February 2017)
BS Tshabalala (appointed 19 September 2017)
»
Invitees
NP Doyle
CFH Vaux
AG Kirk
PW Spies
The risk and sustainability committee has, on the board’s
behalf:
• Monitored information technology (IT) governance and
approved the IT strategy
• Monitored material group risks through the enterprise
risk management framework and ensured that all risks
have been identified through a comprehensive bottom-
up and top-down process and continue to be effectively
managed
• Monitored the governance of risk and compliance and
IT governance, and reported to the audit committee
• Monitored elements of the combined assurance plan
and internal audit report.
The risk management report is set out on page 14.
Tiger Brands Limited Integrated annual report 2017
71
GOVERNANCE REVIEW Corporate governance continued
INVESTMENT
COMMITTEE
Met four times in 2017
Members
KDK Mokhele (chairman) (appointed
21 February 2017)
RD Nisbet
YGH Suleman
MJ Bowman (appointed 21 February 2017)
AC Parker (resigned 21 February 2017)
Invitees
LC Mac Dougall
NP Doyle
CFH Vaux
REMUNERATION
COMMITTEE
Met four times in 2017
Members
SL Botha (chairman) (stepped down as
chairman 19 September 2017)
MJ Bowman (appointed chairman
19 September 2017)
M Makanjee (appointed 21 February 2017)
KDK Mokhele (appointed 21 February 2017)
MP Nyama
AC Parker (resigned 21 February 2017)
YGH Suleman (resigned 21 February 2017)
Invitees
LC Mac Dougall
CFH Vaux
TE Kodisang
The investment committee has, on the board’s behalf:
• Assessed investment opportunities as set out in the
group’s strategic objectives
• Recommended acquisition, investment and divestment
opportunities
• Monitored post-investment reviews of historical strategic
investments.
»
In 2017, this committee was aligned to the strategy and
value-creation intent of the board and recommended:
• The disposal of the company’s interests in Kenya
and Ethiopia
• Approved further investment in Deli Foods.
The remuneration committee is responsible for assisting the
board to ensure the group’s reward and remuneration
policies are aligned to its objective of value creation and
benchmarked to ensure fairness and competitiveness.
The committee has, on the board’s behalf:
• Approved remuneration strategies and policies designed
»
to attract, motivate and retain employees, senior
management and directors in achieving the group
strategy to create value
• Recommended the remuneration policy and
implementation reports to shareholders
• Recommended non-executive directors’ fees for approval
by shareholders.
Refer to the report by the chairman of the remuneration
committee on page 88.
72
Tiger Brands Limited Integrated annual report 2017
NOMINATIONS
COMMITTEE
Met three times in 2017
Members
KDK Mokhele (chairman)
(appointed 21 February 2017)
SL Botha
MJ Bowman (appointed 19 September 2017)
M Makanjee
MP Nyama
AC Parker (resigned 21 February 2017)
Invitees
LC Mac Dougall
TE Kodisang
SOCIAL, ETHICS
AND TRANSFORMATION COMMITTEE
Met three times in 2017
Members
M Makanjee (chairman)
KDK Mokhele (appointed 21 February 2017)
MP Nyama
BL Sibiya (resigned 30 June 2017)
LC Mac Dougall
Invitees
TE Kodisang
MJ Morifi
T Naidoo
PD Sithole
EXECUTIVE
COMMITTEE
See pages 79 and 80
The nominations committee has, on the board’s behalf:
• Ensured the board and its committees were
appropriately structured, skilled and staffed to execute
their mandates
• Monitored execution of the diversity policy
• Completed an evaluation of the board chairman,
evaluated the independence of all directors including
those serving for longer than nine years, and evaluated
retiring directors
• Completed the evaluation of the performance of the
CEO
• Proposed the re-election of retiring directors after a
satisfactory performance review
• Ensured a succession plan and formal processes are in
place for appointing new directors, CEO, CFO and
executive management
• Monitored a formal induction programme for new
directors and ongoing board development programme
for all directors
• Monitored execution of the talent management pipeline
in delivering the group strategy.
The social, ethics and transformation committee has, on
the board’s behalf:
• Monitored development of the code of ethics and a
culture of ethical leadership in the group
• Ensured that the group remained a good corporate
citizen
• Reviewed policies for transformation and sustainability
• Monitored the performance of social and economic
development of employees and relevant stakeholders
• Monitored consumer experiences with product and
compliance to consumer protection laws
• Monitored engagement with key stakeholders in line
with group strategy
• Monitored adherence by the group to the governance
and compliance framework.
The committee’s report is on page 85.
Group chief executive officer
The CEO, Lawrence Mac Dougall, reports to the board.
He is responsible for overseeing execution of the board-
approved strategic direction and objectives of Tiger
Brands. He chairs the group executive committee which
comprises 11 members who assist him in managing the
day-to-day affairs of the group. The CEO is not a member
of the remuneration, audit or nominations committees, but
attends meetings by invitation. He does not participate in
discussions on his own remuneration.
»
»
»
Tiger Brands Limited Integrated annual report 2017
73
GOVERNANCE REVIEW Corporate governance continued
BOARD PROFILE
Khotso
Mokhele
Michael
Ajukwu
Santie
Botha
Mark
Bowman
Maya
Makanjee
Rob
Nisbet
Makhup
Nyama
Yunus
Suleman
Emma
Mashilwane
Swazi
Tshabalala
External
directorships
EXPERIENCE
Auditing and
accounting
Business
intelligence
Corporate
finance
Finance
FMCG
General
management
Governance
Human
resources
ICT
Marketing
Mergers and
acquisitions
Regional
Remuneration
Risk
Sales
Stakeholder
relations
Strategy
Intafact Beverages
(subsidiary of
SABMiller in
Nigeria), Novotel:
Port Harcourt,
Nigeria (member of
Accor Hotels group)
Telkom, Liberty
Holdings, Famous
Brands (chair),
Curro Holdings
(chair), chancellor
of Nelson Mandela
Metropolitan
University
African Oxygen,
Mapitso Consortium,
Hans Merensky
Holdings, Kenosi
Investment Holdings.
Special adviser to
minister of science
and technology,
chancellor of
University of the Free
State
Dis-Chem, Distell,
Mr Price Group
Mpact, AIG South
Africa and AIG Life
South Africa, trustee
of Nelson Mandela
Foundation
✓
✓
✓
✓
✓
✓
✓
West Africa
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
Africa
✓
✓
✓
✓
✓
✓
✓
Africa
✓
✓
Xon Holdings,
Liberty Holdings and
Nkonki
SAA, Standard Bank
BDO Inc, Makhup
Group, Albaraka
Incorporated,
Properties, Kapela
Bank, Gold Fields,
Murray & Roberts
Holdings
Enctus South Africa
Group, Kupanua
Investments and
Barbican Advisory
Group
(chair), Sulfam
Holdings (chair)
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
Africa telecoms
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
74
Tiger Brands Limited Integrated annual report 2017
Khotso
Mokhele
Michael
Ajukwu
Santie
Botha
Mark
Bowman
Maya
Makanjee
Rob
Nisbet
Makhup
Nyama
Yunus
Suleman
Emma
Mashilwane
Swazi
Tshabalala
External
directorships
African Oxygen,
Intafact Beverages
Telkom, Liberty
Dis-Chem, Distell,
Mpact, AIG South
Holdings, Famous
Mr Price Group
Mapitso Consortium,
Hans Merensky
(subsidiary of
SABMiller in
Holdings, Kenosi
Nigeria), Novotel:
Brands (chair),
Curro Holdings
Investment Holdings.
Port Harcourt,
(chair), chancellor
Special adviser to
Nigeria (member of
of Nelson Mandela
minister of science
Accor Hotels group)
Metropolitan
University
Africa and AIG Life
South Africa, trustee
of Nelson Mandela
Foundation
Xon Holdings,
BDO Inc, Makhup
Properties, Kapela
Holdings
Liberty Holdings and
Group, Albaraka
Bank, Gold Fields,
Enctus South Africa
(chair), Sulfam
Holdings (chair)
Nkonki
Incorporated,
Murray & Roberts
SAA, Standard Bank
Group, Kupanua
Investments and
Barbican Advisory
Group
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
Africa telecoms
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
Tiger Brands Limited Integrated annual report 2017
75
and technology,
chancellor of
University of the Free
State
✓
EXPERIENCE
Auditing and
accounting
Business
intelligence
Corporate
finance
Finance
FMCG
General
management
Governance
Human
resources
ICT
Marketing
Mergers and
acquisitions
Regional
Remuneration
Risk
Sales
Stakeholder
relations
Strategy
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
West Africa
Africa
Africa
GOVERNANCE REVIEW Corporate governance continued
Independent non-executive directors
Member attendance:
Board
6/6
Appointed:
1 August
2007
DR KHOTSO
MOKHELE
(62)
Chairman of the board
BSc (agriculture),
MSc (food science),
PhD (microbiology)
Audit
1/1
Resigned from
committee on
21 February
2017 and
attended 1/1
meetings
during his
tenure
Risk and
sustainability
1/1
Resigned from
committee on
21 February
2017 and
attended 1/1
meetings
during his
tenure
Investment
Remuneration Nominations
4/4
2/2
Joined
committee on
21 February
2017 and
attended 2/2
meetings
during his
tenure
1/1
Joined
committee
on
21 February
2017 and
attended
1/1
meetings
during his
tenure
Board
6/6
Audit
Risk and
sustainability
3/3
Investment
Remuneration Nominations
Appointed:
31 March
2015
MICHAEL
AJUKWU
(61)
BSc (finance), MBA
Social, ethics
and
transformation
1/1
Joined
committee on
21 February
2017 and
attended
1/1 meetings
during his
tenure
Social, ethics
and
transformation
Board
6/6
Appointed:
18 August
2004
SANTIE
BOTHA (53)
BEcon (hons)
Audit
Risk and
sustainability
Investment
Remuneration Nominations
4/4
3/3
Social, ethics
and
transformation
76
Tiger Brands Limited Integrated annual report 2017
Independent non-executive directors
Member attendance:
Board
6/6
Audit
Appointed:
1 June
2012
MARK
BOWMAN
(51)
BCom, MBA
Risk and
sustainability
2/2
Joined
committee on
21 February
2017 and
attended 2/2
meetings
during his
tenure
Investment
Remuneration Nominations
Social, ethics
and
transformation
2/2
Joined
committee
on 21
February
2017
and
attended
2/2
meetings
during his
tenure
Audit
Risk and
sustainability
Investment
Remuneration Nominations
Social, ethics
and
transformation
Board
6/6
Appointed:
1 August
2010
MAYA
MAKANJEE
(55)
BA (fine arts), BCom,
MBL (cum laude)
EMMA
MASHILWANE (42)
BCompt, BCom
(hons), CA(SA)
Appointed:
1 December
2016
Board
Audit
5/5
Joined the
board on
1 December
2016 and
attended
5/5
meetings
during her
tenure
2/2
Joined
committee on
21 February
2017 and
attended 2/2
meetings
during her
tenure
3/3
3/3
2/2
Joined
committee on
21 February
2017 and
attended 2/2
meetings
during her
tenure
Risk and
sustainability
Investment
Remuneration Nominations
Social, ethics
and
transformation
Tiger Brands Limited Integrated annual report 2017
77
GOVERNANCE REVIEW Corporate governance continued
Independent non-executive directors
Member attendance:
Board
6/6
Audit
3/3
Risk and
sustainability
Investment
Remuneration Nominations
Social, ethics
and
transformation
3/3
4/4
Appointed:
1 August
2010
ROB
NISBET
(62)
BCom, BAcc, CA(SA)
MAKHUP
NYAMA
(60)
BCom, MBA,
diploma in
marketing
management
YUNUS
SULEMAN
(60)
CA(SA), BCom,
BCompt (hons),
leadership
programmes
Audit
Risk and
sustainability
Investment
Remuneration Nominations
Social, ethics
and
transformation
3/4
2/3
2/3
Board
6/6
Appointed:
1 August
2010
Board
6/6
Audit
3/3
Appointed:
13 July
2015
Risk and
sustainability
1/2
Joined
committee on
21 February
2017 and
attended 1/2
meetings
during his
tenure
Investment
Remuneration Nominations
Social, ethics
and
transformation
4/4
2/2
Resigned from
committee on
21 February
2017 and
attended 1/2
meetings
during his
tenure
Board
Audit
Risk and
sustainability
Investment
Remuneration Nominations
Social, ethics
and
transformation
Appointed:
26 May
2017
SWAZI
TSHABALALA
(51)
BA (economics),
MBA)
1/2
Appointed
to board
on
26 May
2017
and
attended
1/2
meetings
during her
tenure
78
Tiger Brands Limited Integrated annual report 2017
Executive directors
Member attendance*:
Board
6/6
Audit
3/3
Risk and
sustainability
Investment
Remuneration
Nominations
Social, ethics
and
transformation
4/4
4/4
3/3
3/3
Board
6/6
Audit
3/3
Risk and
sustainability
Investment
Remuneration
Nominations
Social, ethics
and
transformation
3/3
4/4
Board
6/6
Audit
3/3
Risk and
sustainability
Investment
Remuneration
Nominations
3/3
4/4
4/4
Social, ethics
and
transformation
LAWRENCE
MAC DOUGALL
(60)
Chief executive
officer
NOEL
DOYLE
(51)
Chief financial
officer
FCA, CA(SA)
Appointed:
10 May 2016
Area of expertise and
contribution:
General management,
strategy execution,
fast-moving consumer
goods, Africa,
developing markets
External appointment:
Oceana Group
Limited
Appointed:
To the board in July
2015, joined Tiger
Brands in July 2012
Area of expertise and
contribution:
Accounting and
auditing, governance,
fast-moving consumer
goods, corporate
finance, mergers and
acquisitions
External appointment:
Oceana Group
Limited
CLIVE
VAUX
(66)
Corporate
finance director
CA(SA)
Appointed:
16 February 2000
Area of expertise and
contribution:
Accounting and
auditing, corporate
finance, mergers and
acquisitions
* Executive directors attend board committee meetings by invitation. However, Lawrence Mac Dougall is a member of the social, ethics and
transformation committee (SET).
THIROSHNEE
NAIDOO
(44)
Group company
secretary and legal
adviser
BProc, EDP
Appointed:
15 May 2015
Experience:
Admitted attorney with
over 16 years’
experience as corporate
counsel, mostly in
FMCG industry and
particularly in African
operations
Company secretary
The company secretary is critical to the proper governance of Tiger Brands. It is the
responsibility of the board to ensure that the company secretary remains empowered to fulfil the
function for which she has been appointed. See report of audit committee on page 82 for
further details.
Tiger Brands Limited Integrated annual report 2017
79
GOVERNANCE REVIEW
Corporate governance continued
Executive committee
MARC EYRES (58)
Group executive: Customer
and Tiger Brands International portfolio
BSocSci
Appointed: 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.
GRATTAN KIRK (53)
Business executive: Consumer
Brands – Foods and HPCB
FCA, CA(SA)
Appointed: July 2013
Experience: Seventeen years in retail and 13 years at Deloitte, former
CEO of JD Group Limited and Connection Group Holdings. He is a board
member of Consumer Goods Council of South Africa and consumer goods
and services ombud.
TSWELO KODISANG (44)
Chief HR officer
BCom, postgraduate diploma in
labour law, HR management
Appointed: May 2014
Experience: Twenty-five years in FMCG, including as global HR
vice-president at Unilever.
BRENDA KOORNNEEF (65)
Group executive: marketing
and corporate strategy
BCom
Appointed: January 2011
Experience: Thirty-two years in FMCG, including 17 years at Unilever,
marketing and business across Africa, general management at SABC,
Moribo Limited and Tiger Brands.
MARY-JANE MORIFI (56)
Group executive: Corporate affairs
and sustainability
BSocSci, Honours in Sociology
Appointed: December 2016
Experience: Twenty-one years in extractive industries (SA and UK) in
various roles, including six years as executive for corporate affairs at
Anglo American Platinum.
PATRICK SITHOLE (50)
Group executive: Supply chain
BSc (chem eng)
Appointed: August 2012
Experience: Over 25 years in FMCG, including as supply chain
vice-president for Unilever South Africa.
PIETER SPIES (52)
Business executive: Grains division
BCom, IMM, diploma in logistics
Appointed: February 2017
Experience: Over 25 years in FMCG and agriculture, former CEO of
GWK Group and executive roles at Cadbury, Diageo, Telkom. Board
member of National Foods Zimbabwe.
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Tiger Brands Limited Integrated annual report 2017
Composition
of the board —
Changes
to the board —
Rotation
of the board —
At 30 September 2017, the board comprised 13 directors: 10 independent non-executive directors and
three executive directors. The board assessed the independence of non-executive directors against the
criteria in King IV and the JSE Listings Requirements, and taking into account all relevant factors,
considered them truly independent.
The positions of board chairman and chief executive officer (CEO) have been clearly defined and are
separated.
On 1 December 2016, Emma Mashilwane and Kevin Hedderwick joined the board as independent
non-executive directors. Emma brings risk management, governance, auditing and financial management
expertise. Khotso Mokhele became board chairman on 21 February 2017, after serving as an independent
non-executive director of Tiger Brands since August 2007. He brings extensive knowledge in business
leadership, risk, strategy and governance. On 26 May 2017, Swazi Tshabalala was appointed
independent non-executive director. She has over 20 years of professional experience in risk management,
finance, investments and general management.
These appointments were conducted through a formal and transparent process, as set out in the Tiger Brands
policy governing appointments to the board of directors.
Kevin Hedderwick resigned from the board on 14 February 2017. On 21 February 2017, André Parker
resigned from the board. He was appointed in August 2007 and served as board chairman from August
2012. Bheki Sibiya resigned from the board and as deputy chairman on 30 June 2017.
In line with the company’s memorandum of incorporation, one-third of directors are required to retire by
rotation at each AGM. The retiring directors, if eligible and available, may offer themselves for re-election,
subject to a performance review by the board. New directors are also subject to election by shareholders
at the first AGM after their appointment. Brief profiles of directors retiring by rotation are on page 76 of the
integrated report and page 10 of the notice of AGM. Clive Vaux was due for rotation; however, he is not
available for re-election as he will be retiring at the conclusion of the annual general meeting scheduled for
20 February 2018.
Board
tenure
—
Non-executive directors who have served on the board for longer than nine years may continue in office
after independence and performance assessments by the board. In the review period, the board
concluded that KDK Mokhele and SL Botha, who have served on the board for longer than nine years,
exercised objective judgement not biased by their length of service. Santie Botha retired from the board
with effect from 24 November 2017.
Diversity
—
During the year, the board adopted a group policy on gender diversity, which aims to promote gender
diversity at board level. At present, 31% of the board are women and 54% are black. The board
acknowledges that diversity brings the benefit of different perspectives and ideas, and continues to
monitor its progress in achieving voluntary targets. The board determined a target of 50% of women
and black representation respectively, by 30 September 2022.
Gender
● Female (4)
● Male (9)
Race
● Black (7)
● White (6)
Tenure
● 0–3 years (6)
● 3–6 years (1)
● 6–9 years (3)
● 9+ years (3)
Board independence
● Executive directors (3)
● Independent non-executive directors (10)
Succession
planning
—
The board keenly understands the importance of succession plans. In 2017, the board, through its
nominations committee, reviewed the group’s succession plans for non-executive directors, executive
directors and executive management positions and approved the company’s talent management practices
and processes.
Directors’
induction
programme
and
continuous
development
—
A comprehensive directors’ induction programme was successfully implemented in the review period. This
comprises a corporate and statutory update, led by the group company secretary and corporate sponsors;
a business update comprising meetings with the board chairman, executive management team; and a
business context update that includes visits to manufacturing sites, meeting senior leadership as well as
visits to certain trade hubs in modern, traditional or informal trade to give directors a business and
contextual understanding of the industry, manufacturing capability and competitive set while also
understanding relevant business and legislative trends in the context of company policies.
Assessment —
The effectiveness and performance of the board, individual directors and the chairman was internally
assessed this financial year. The results indicated that board processes are working effectively and the
chairman’s performance is satisfactory.
Tiger Brands Limited Integrated annual report 2017
81
GOVERNANCE REVIEW
Audit committee report
Rob Nisbet, Chairman
This report is provided by the audit committee appointed for FY17 in compliance
with the Companies Act No 71 of 2008, as amended. The committee’s activities
are guided by a detailed charter informed by the Companies Act and King IV, and
approved by the board.
The committee has executed its duties and responsibilities
for the group’s accounting, internal control, external
auditing and financial reporting practices for the review
period in line with its terms of reference.
Structure
The committee comprises three independent non-executive
directors, and its chairman is not the chairman of the
board. Members and attendance are on pages 71 and
76 to 78.
Biographical details of members are on pages 74 and
75, while fees are noted in the remuneration report on
pages 100 and 101.
The review period
External audit
The committee, among other matters:
• Nominated Ernst & Young Inc to shareholders for
appointment as the external auditor, with Warren
Kinnear as the designated auditor, for the financial
year ended 30 September 2017. 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. Fees paid to the auditor are
detailed in note 3 of the group annual financial
statements
• Reviewed the audit, evaluated the effectiveness of the
auditor and its independence, and evaluated the
external auditor’s internal quality control procedures
82
Tiger Brands Limited Integrated annual report 2017
• Obtained an annual written statement from the auditor
• Considered accounting treatments, significant unusual
that its independence was not impaired
• Considered the reports of the external auditor on the
group’s systems of internal control, including financial
controls
• Determined the nature and extent of all non-audit
services provided by the external auditor and
pre-approved all non-audit services
• 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 No 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 by Ernst & Young Inc to the 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 before submission to and
approval by the board
• Ensured the annual financial statements fairly present
the financial position of the company and group at the
end of the financial year and the results of operations
and cash flows for that period, and considered the
basis on which the company and group were
determined to be a going concern
transactions and accounting judgements
• Considered the appropriateness of accounting policies
adopted and any changes
• Reviewed the external auditor’s audit report
• Reviewed the representation letter on the group
financial statements signed by management
• 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 systems
safeguarded assets against unauthorised use or
disposal
• Reviewed significant issues raised by internal and
forensic audit processes and the adequacy of corrective
action
• 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 in
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.
Tiger Brands Limited Integrated annual report 2017
83
GOVERNANCE REVIEW Audit committee report continued
For sustainability issues, the committee:
• Considered 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 impact 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 risks facing
the business.
There is an enterprise-wide system of internal control and
risk management in all key operations to manage and
mitigate risks. The combined assurance approach is
integrated with the risk management process to assess
assurance activities across the various lines of defence.
While the committee is satisfied with the level of
assurance provision for significant group risks, the
combined assurance approach will be enhanced in
FY18 to include the efficient delivery of assurance
activities aligned to the revised operating model.
Chief financial officer expertise and experience
The committee considered the expertise, resources and
experience of the chief financial officer, Noel Doyle, and
concluded these were appropriate. Biographical details
appear on page 79.
Company secretary
The board assessed group company secretary Thiroshnee
Naidoo’s competency, skills, experience and whether
she maintains an arm’s length relationship with the board.
For the review period, the board is satisfied that
Thiroshnee is suitably qualified. Biographical details are
on page 79.
After year end, the board announced the appointment
of Advocate Kgosi Monaisa as group company secretary
from 1 November 2017. The board is satisfied that
Kgosi has the necessary skills and experience for this
position. Biographical details appear on the website.
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 also ensures the proper
administration of proceedings and matters relating to
the board, the company and shareholders in line with
applicable legislation and procedures. He is 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 nor 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 2017, 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 on the integrity of the remainder
of this integrated annual report 2017.
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 2017, which will be open
for discussion at the upcoming annual general meeting.
On behalf of the committee
Rob Nisbet
Chairman – Audit Committee
28 November 2017
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Tiger Brands Limited Integrated annual report 2017
Social, ethics and transformation committee report
Maya Makanjee, Chairman
During the review period, this committee made significant progress in refocusing
Tiger Brands on its societal capital and the shared value we create for our
stakeholders. As a starting point, we commissioned our baseline stakeholder
engagement survey for an informed view on perceptions, needs and expectations
of all material stakeholders as we plan for the coming year.
This study, detailed on page 26, has highlighted some
areas that will need concerted focus in the next year
and which will inform our longer-term stakeholder
engagement strategy and plans. In general, stakeholders
are satisfied with the quality of our engagement but would
like to see more structured, responsive, purposeful and
continuous interaction. We will pay particular attention
to this in FY18.
Our socio-economic development strategy was revised
to move Tiger Brands further from our historical charitable
approach, mainly providing food hampers to needy
communities, to sustainably developing our beneficiaries
through capacity building, community enterprise
development and community and household food
gardens. We believe these programmes will take
beneficiaries closer to reaching food security and
becoming self-sustaining. They also provide a solid
potential for creating viable and flourishing communities.
The Tiger Brands Foundation, supported through dividends
from Tiger Brands, continues to deliver excellent results
from what is fast becoming an international flagship
project – the in-school breakfast programme. This is
recognised by the Global Child Nutrition Forum and the
Department of Basic Education as the best model for
school nutrition programmes. We will continue to work
with these entities to see how best to share this model with
the rest of the continent. Engagements are currently taking
place with neighbouring countries.
An ongoing concern for the committee is the safety of our
bakery drivers. Experts have reviewed the effectiveness of
existing driver safety initiatives and we will continue to
investigate possible solutions for a cashless bread delivery
system to reduce the number of incidents.
In the new year, we will focus on embedding programmes
that will contribute to creating a great place to work,
including diversity and inclusion. We will implement
recommendations from the gender commission and
continue to train and develop our employees to their fullest
potential.
Tiger Brands Limited Integrated annual report 2017
85
GOVERNANCE REVIEW Social, ethics and transformation committee report
continued
As a statutory committee of the board, the social, ethics
and transformation committee fulfils its duties against the
requirements of sections 72(4) and (5) of the Companies
Act 2008 and regulation 43 of the Companies
Regulations 2011. In addition to ensuring legislative
compliance, the committee applies the principles of good
corporate governance as per King IV in fulfilling its
functions. King IV asks companies to adopt a mindset of
self-regulation rooted in broader socio-economic
consciousness. Accordingly, the committee oversees the
company’s performance in terms of mindful adoption of
good corporate citizenship as the mechanism to create
value for all stakeholders, while generating growth for the
business. The committee oversees the company’s social
and ethical performance through its monitoring and
reporting function to the board, and provides guidance to
the CEO and directors on improving performance in these
domains.
Particular areas of oversight include:
• Social and economic development activities
• Organisational ethics
• Transformation
• Responsible corporate citizenship
• Environment, health and safety
• Labour and employee relations
• Consumer relations.
In the review period, the committee comprehensively
reviewed its terms of reference to align with King IV.
Key revisions included:
• Roles, duties and authority of the committee
• Management of meetings and resolutions
• Reporting procedures
• Evaluating performance.
These amendments ensure the committee’s optimal
performance in discharging its duties appropriately, and
eliminate duplication between its oversight role relative to
the responsibilities of the operational ethics committee and
risk and audit committees.
Membership and attendance
See pages 73 and 77 to 79.
Outline of activities
For the review period, the committee:
• Conducted a stakeholder engagement survey to
measure the health of the company’s engagement with
its material stakeholders (page 26)
• Reviewed and monitored implementation of initiatives
to comply with the Broad-Based Black Economic
Empowerment Act
– We expanded the inclusion of small-scale farmers
into our supply chain and made progress on our
smallholder farmer programme, implemented with the
Department of Agriculture, Forestry and Fisheries in
2016 (see page 54)
• Monitored the adoption of good governance practices
and policies to ensure the elimination of corruption in
line with Organisation of Economic Cooperation and
Development (OECD) anti-corruption principles
– Provided oversight on the roll out of compulsory
competition law, as well as anti-bribery and
corruption, training for employees. The latter two
topics will extend to board members
• Reviewed relevant policies to support and respect
internationally proclaimed human rights laws and ensure
the group is not complicit in human rights abuses (United
Nations Global Compact (UNGC) principles 1 and 2)
• Monitored the group’s activities to promote equality and
eliminate unfair discrimination in its business dealings:
– The diversity and inclusion programme monitors
progress on gender representation and inclusion
of people with disabilities
– Management hosted disability sensitisation and
voluntary disclosure workshops, attended by
359 employees, with 32 voluntarily disclosing
disabilities
• Reviewed and monitored the group’s contribution
to developing communities:
– Promoting sustainable community development
through the socio-economic development strategy
– Food and nutrition security programmes and their
reach and impact
– Monitoring the impact of the Tiger Brands Foundation
through the in-school breakfast feeding programme
• Monitored the record of sponsorships, donations and
charitable giving
• Monitored the company’s initiatives in reducing carbon
emissions
• Reviewed and monitored the group’s standing in terms
of the International Labour Organisation’s protocol on
decent work
• Monitored the adequacy of group mechanisms in
eliminating forced and compulsory labour as well
as child labour (UNGC principles 4 and 5)
86
Tiger Brands Limited Integrated annual report 2017
• Reviewed the company’s position and engagement
approach in terms of the Tiger Brands submission to
National Treasury on proposed taxation of sugar-
sweetened beverages
• Reviewed the group’s code of ethics, which has been
amended to include members of the Tiger Brands board
• Considered and approved updated policies:
– Group code of ethics
– Anti-bribery and anti-corruption
– Gifts, entertainment and hospitality
– Declaration of interests
– Group stakeholders management.
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. It is satisfied it has considered and
discharged its responsibilities for the financial year in line
with its terms of reference, King IV and the Companies
Act.
On behalf of the committee
Maya Makanjee
Chairman – Social, ethics and transformation committee
28 November 2017
• Reviewed and monitored the group’s industrial relations
climate and union engagement (UNGC principle 3)
– Received satisfactory updates on workshops to build
capacity in industrial relations negotiations
– Received updates on the industrial relations
environment at all sites to identify and manage
related risks by understanding the levels of union
representation at each site
– Received updates on the progress of wage
negotiations. These have been concluded successfully
– Ensured comprehensive management plans were in
place to safeguard employees at sites where strike
action was under way. There were no incidents of
damage to property or equipment, and employees
were unharmed
• Reviewed and monitored elimination of unfair
discrimination in employment and occupation (UNGC
principle 6)
• Reviewed and monitored compliance with the
Employment Equity Act
• Reviewed and monitored training and development
of employees
• Monitored compliance with consumer protection laws
• Reviewed the company’s approach to preventing,
detecting and responding to fraud and corruption
• Reviewed the regulatory and compliance universe
relevant to its areas of responsibility
• Engaged with the risk committee on the matters
monitored by that committee on its behalf
– Safety and health focused on the reduction of safety
incidents involving our bakery drivers by exploring
initiatives to remove cash from bread delivery
vehicles
– Received reports on the behaviour-based safety
programme designed to reduce LTIFR at our
manufacturing sites
– As part of the environmental sustainability oversight,
received reports on programmes to reduce the
impact of our operations on energy efficiency, water
consumption, waste minimisation and reduction
of greenhouse gas emissions
Tiger Brands Limited Integrated annual report 2017
87
GOVERNANCE REVIEW Remuneration report
Strategic remuneration decisions to attract, motivate and retain talent have become
critical to support the delivery of our business strategy.
Mark Bowman, Chairman – Remuneration Committee
PART 1: BACKGROUND STATEMENT
In recent years, the challenging socio-political landscape
and fluctuating rand have significantly influenced the internal
and external environment in which Tiger Brands operates.
In response, we have focused on reorganising the group to
create greater efficiencies and reduce operating costs,
providing the necessary fuel for growth. In addition, we
have refocused our strategic and financial targets to ensure
long-term sustainable growth (page 18).
In this context, strategic remuneration decisions to attract,
motivate and retain talent have become critical to support
the delivery of our business strategy. We also drew on key
elements of our human resources development initiatives to
further this aim.
Focus areas
We continued to consolidate and simplify remuneration
structures in 2017. This included creating one recognition
programme under the umbrella of Tiger Stripes.
Underpinning these focus areas, we sought to ensure that
our key financial performance measures were clearly defined
so that, if met, we would achieve our business strategy and
employees would be rewarded for the value created.
In addition, specifically for key black managers in critical
positions, and with no further shares being available for
allocation in terms of the two black managers schemes, the
current policy of granting restricted shares has been adjusted
to also allow for the use of restricted shares as an attract-and-
retain mechanism.
Shareholder feedback
In addition to internal imperatives, remuneration decisions
in the review period were influenced by the outcome of the
non-binding advisory shareholder vote on our 2016
remuneration policy. Key concerns from shareholders
included the removal of strategic objectives from the
short-term incentive scheme, the rationale for additional cash
payments to the group CEO and CFO, the perceived
relaxation of performance conditions/targets in various
instruments under the long-term incentive (LTI) scheme,
and the use of a single measure of headline earnings per
share (HEPS) in the short-term incentive (STI) scheme for
executive directors.
Meeting objectives
We trust that our various engagements with shareholders
to address these issues and our concerted effort to improve
disclosure in this year’s report will demonstrate that we have
considered shareholder feedback.
Future focus areas
We have commenced our journey to comply with King IV
and will be fully compliant in our next report.
To ensure that our remuneration offering is competitive, fair,
ethical and transparent, we periodically enlist the services of
PwC South Africa to assess specific aspects of this offering.
The committee is satisfied that PwC is independent.
Mark Bowman
Chairman – Remuneration Committee
28 November 2017
PART 2: OVERVIEW OF REMUNERATION POLICY
The purpose of our remuneration policy is to:
• Attract, engage and retain high-performing employees
• Inspire and motivate people to outperform against the
business strategy, goals and targets
• Drive, reward and recognise performance excellence
and innovation by significantly differentiating reward
for top performers, ie pay for performance.
Page 18 of the integrated report details how the
company drives growth and hence sustainable value
creation. In addition to ensuring that our remuneration
policy and its implementation is fair and responsible,
we set and deliver sustainable business goals and results
that are relevant to the socio-economic environment in
which we operate.
Our approach to remuneration is simple; we adopt a
holistic remuneration philosophy. We have implemented
a balanced design with monetary and non-monetary
components as shown below. This allows us to integrate
our remuneration offering with other benefits outlined in
our human resources development policies to create a
compelling, well-rounded offering to our employees.
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Tiger Brands Limited Integrated annual report 2017
Guaranteed
package
Engaging
work
environment
Short-term
incentive (STI)
Employee
growth and
development
OUR APPROACH TO
REMUNERATION
Long-term
incentive (LTI)
Performance
management
Recognition
(Tiger Stripes)
Summary of our remuneration elements
The monetary components of our remuneration offering
comprise fixed remuneration in the form of a guaranteed
package, and variable remuneration in the form of
short-term and long-term incentive schemes.
Guaranteed package (GP) (excluding bargaining
unit employees)
• Comprises base pay and benefits
• Benefits include retirement fund contributions, funeral
cover, permanent health insurance, death-in-service
cover and travel allowances (where applicable)
• Reviewed annually as per the factors below
• Factors determining GP: personal performance (KPIs
based on balanced scorecard which includes financial
and non-financial metrics), business performance
(budget) and market competitiveness (national and
sector benchmarks)
• Market benchmark for executive management and
prescribed officers – bespoke survey of public data of
South African companies listed on the JSE, based on
market capitalisation and sector-appropriate peer
companies
• Anchor point for market competitiveness
• Premium paid for high performance, high potential
and scarce/key skills.
Short-term incentives (for employees in
management and above)
• Paid annually in cash
• Primary intention – improve business performance
by focusing participants’ attention on key financial,
strategic, functional and personal performance
objectives (KPIs based on a balanced scorecard)
for sustainable value creation
• By incorporating personal performance, the STI:
– Drives achievement of our short-term and long-term
strategic goals
– Allows for differentiation in rewarding high
performers
• The on-target percentage is benchmarked against the
South African market to ensure we are aligned with
market practice. It is based on affordability and the
STI payment is based on achieving the objectives
noted earlier
• Non-financial strategic measures are included in the
personal performance objectives. Personal performance
is incorporated through the personal performance
multiplier, a discretionary percentage ranging from
0% to 175%. This facilitates the appropriate focus
on the non-financial and strategic drivers that are key
to sustainably achieving the business’s long-term
goals, particularly since the personal performance
multiplier can significantly impact the quantum of an
employee’s STI
• Changes for FY18
– Based on shareholder feedback and an internal
review, primary financial KPIs for executive directors
have been revised to include HEPS (35%), earnings
before interest and taxation (EBIT) (35%), sales
volume growth (15%) and working capital
management (15%).
Long-term incentive
Management and above
• Long-term sustainable performance is enabled by
granting annual allocations of share appreciation rights
(SARs) and bonus matching shares under the Tiger
Brands Limited 2013 Share Plan (LTIP). In addition,
ownership in the company’s shares is encouraged by
permitting a portion of the STI to be deferred. Key
elements of the LTIP are summarised below:
– Annual awards of SARs, with a performance vesting
condition of real HEPS growth, combined with an
overarching condition that the company’s return on
capital must exceed its weighted average cost of
capital. Targeted HEPS growth is equal to CPI and
the annual growth in GDP. Vesting is on a
sliding scale
– Annual awards of bonus matching shares are linked
directly to achieving the short-term incentive bonus
(STI) in the prior financial year. If no bonus is earned,
bonus shares are not awarded
Tiger Brands Limited Integrated annual report 2017
89
GOVERNANCE REVIEW Remuneration report continued
– A performance differentiation tool (PDT) is used to
modify the standard quantum of SARs and bonus-
matching shares, based on an individual’s personal
performance, leadership and ability. This is a
discretionary percentage ranging from 0% to 200%
– Executive management and other senior management
may voluntarily defer a portion (25%, 33% or 50%)
of STI into company shares (deferred bonus shares),
which are then matched 1:1 by the company
(company matching shares)
• Vesting periods
– Bonus matching, deferred bonus shares and
company matching shares: these are subject to
continued tenure for three years after being granted
– SARs: these 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 conditions, as set
out above, measured over a three, four and five-year
period, respectively
BEE schemes
Two schemes were previously established as part of the
company’s empowerment initiatives:
• Tiger Brands Black Managers Trust (BMT I)
– Established in 2005 to attract and retain talent
– Rights allocated – Tiger Brands shares. Rights are
settled after making the required capital contributions
to BMT I at any time after the specified lock-in period,
ie from 1 January 2015. For all rights allocated after
31 July 2010, the lock-in date varies depending on
the date of allocation
• Tiger Brands Black Managers Trust II (BMT II)
– Established in 2009
– As a mechanism to attract and retain talent, black
managers received a once-off allocation of shares
which vest on termination of the scheme on
31 December 2017 (after Tiger Brands has
exercised its right to repurchase a certain number
of shares from BMT II under an agreed formula).
Periodically, new allocations were made to new
joiners and top-up allocations were made to existing
participants promoted to higher grades as shares
became available after forfeitures
– As part of the company’s plans to retain black talent,
the remuneration committee has approved a specific
retention allocation at 30 September 2017 to a
select group of black managers (37), including two
executive committee members. The lock-in period will
run from 1 October 2017 to 30 September 2020.
Participants defined as bad leavers during this period
(eg resignation) will forfeit their allocation of shares.
For those who remain employed until 1 October
2020, the shares will vest fully
• Thusani Trust
– Established in 2005 as part of the company’s BEE
phase I empowerment initiative. The trust’s resources
were enhanced in 2009 in terms of the company’s
BEE phase II transaction
– As part of our social investment initiatives, the trust
provides bursaries for tertiary education to
dependants of permanently employed black
employees who might not otherwise be able to
afford this cost
• Changes for FY18
– Given the success of the two black manager schemes
in attracting and retaining key talent, and with no
further shares available for allocation, the current
policy of granting restricted shares has been adjusted
to allow for the use of restricted shares as an
attract-and-retain mechanism.
Historical LTI information
The last award of performance shares was made in
May 2016.
Vesting of performance shares is determined by the
company’s comparative total shareholder return (TSR)
relative to the TSR of the constituent members of the FINDI
30 index over the three-year vesting period as follows:
• Position 15 out of 30: the targeted number (one-third of
maximum number) of performance shares awarded will
vest
• Position 7 or better: the maximum number (three times
targeted number) of performance shares awarded will
vest
• Position 23 or worse: all performance shares awarded
will be forfeited
• Between position 7 and 15, or between 15 and 23: a
pro-rated number of performance shares will vest.
Any performance shares that do not vest at the end of the
three-year period will be forfeited.
Performance conditions for SARs allocated before
December 2016
For outstanding SARs allocated before December 2016,
the performance vesting conditions are 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%
• Dilution
– Under the rules of the Tiger Brands Phantom Cash Option scheme (which has been replaced by the LTIP), at any
point the aggregate number of unexercised phantom options is limited to 10% of the total issued share capital of
the company. As at 30 September 2017, aggregate outstanding options under the scheme represented 0,06%
(2016: 0,18%) of the company’s 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 2017, the aggregate
number of shares that may be acquired by participants under the various schemes was 1 742 012 (2016: 1 515 298).
90
Tiger Brands Limited Integrated annual report 2017
Remuneration framework
The tables below summarise our remuneration elements and show how they are integrated as part of the company’s total
remuneration offering for FY17:
Guaranteed package (GP)
Key performance indicators linked to group strategy include:
Top tier financial results
Top Tier Financial Results
Market performance
Market Performance
Revenue
Gross margin
Market share
On-shelf availability
Compliance
Compliance
Quality
Safety
Productivity/cost savings
Innovation rate
BBBEE implementation
Brand health measure
People
People
Improved employee
engagement
Employee development
plans in place
Outcome = Performance rating
Performance rating influences annual increase and STI
Short-term incentive (STI)
STI
=
GP
X
On-target %
X
Business multiplier
X
Personal performance
multiplier
Based on: below threshold – 0%, threshold – 50%,
on-target – 100%, stretch – 150%
Performance
rating
Range
Level
Measure 1
Measure 2
Measure 3
50%
Executive directors
HEPS (100%)
27,5%
to 50%
Executive committee
EBIT
(70%)
Sales volume
growth (10%)
Working
Capital
Management
(20%)
5
4
3
2
1
150% to 175%
120% to 130%
85% to 115%
15% to 50%
0%
STI outcome influences bonus matching, deferred bonus shares and company matching shares
Long-term incentive (LTI)
Instruments
Share appreciation rights (SARs)
Award
mechanism
Multiple of GP:
CEO – 151%, CFO – 145%, prescribed officers – 110%
Bonus matching shares
(full value shares)
50% of actual STI
Deferred bonus shares and
company matching shares
(full value shares)
Based on percentage of
actual STI deferred:
25%, 33% or 50%
Calculation
(GP*SARs multiple/share price) PDT# multiplier
(Actual STI* 50%/share
price) *PDT multiplier
(Actual STI deferred *2/
share price)
Vesting on third anniversary of allocation
PDT#
multiplier
Vesting
SARs
performance
conditions
Share price
Discretionary multiplier based on personal performance rating,
leadership and ability
Five-year vesting based on anniversary of allocation
year 3 – 1/3, year 4 – 1/3, year 5 – 1/3
1 Full vesting: HEPS = > CPI + rate of growth in GDP (measured
on an annual compound basis over the applicable period)
2 Pro rata vesting: HEPS growth > CPI but below
CPI + GDP rate, pro rata vesting on a linear scale
3 Further vesting condition: Average annual return on
capital over the relevant performance period must exceed
company’s weighted average cost of capital (WACC)
Based on the company’s volume weighted average price
(VWAP) calculated for the 10-day period ending immediately
prior to the date of allocation.
# Performance differentiation tool (PDT).
Tiger Brands Limited Integrated annual report 2017
91
GOVERNANCE REVIEW Remuneration report continued
Total remuneration potential for members of executive management for the year ended 30 September 2017
CEO
R000
Chief executive officer
Minimum
On-target
Stretch
GP
8 547
8 547
8 547
STI
2 153
4 305
6 458
LTI
4 841
5 809
6 778
Total
15 541
18 661
21 783
Stretch
On-target
Minimum
CFO
R000
Chief financial officer
Stretch
On-target
Minimum
0
■ GP ■ STI ■ LTI
Other executives (average)
R000
Other executives (average)
Stretch
On-target
Minimum
0
■ GP ■ STI ■ LTI
5 000
10 000
15 000
20 000
25 000
Minimum
On-target
Stretch
GP
6 156
6 156
6 156
STI
1 538
3 075
4 613
LTI
3 370
4 062
4 754
Total
11 064
13 293
15 523
5 000
10 000
15 000
20 000
Minimum
On-target
Stretch
GP
3 785
3 785
3 785
STI
937
1 875
2 812
LTI
1 659
2 081
2 502
Total
6 381
7 741
9 099
0
■ GP ■ STI ■ LTI
2 000
4 000
6 000
8 000
10 000
Minimum shareholding policy
We have introduced 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 GP (for the CEO) and 100% of GP for other executive
committee members. Executives have six years to build up these holdings and may use a portion of their STI, any vesting
LTIs or their own resources, to acquire these shares.
Name
LC Mac Dougall
NP Doyle
CFH Vaux
PW Spies
AG Kirk
GP*
Value**
% of GP
Target %
8 610 000
6 150 000
4 963 351
4 600 000
4 590 107
245 278
3 282 190
–
–
929 790
3%
53%
–
–
20%
150%
100%
–
100%
100%
Years remaining
to meet target
5
5
–
6
5
* GP as at 30 September 2017.
** Value calculated with reference to the closing price of a Tiger Brands share as at 29 September 2017, ie R377,35.
92
Tiger Brands Limited Integrated annual report 2017
Recognition
The Tiger Stripes programme has been refreshed and
consolidated to focus on acknowledging the efforts of
individuals and business teams in meeting business goals
and to reinforce the behaviours aligned to our values and
leadership principles.
The new programme also includes an on-the-spot
recognition mechanism to enable line managers to reward
employees immediately via cash awards (gift cards) for
their efforts in successfully completing a specific project,
a significant task or for sustained high achievement.
Executive service contracts
Senior executives are employed full-time under standard
agreements with a notice period of three months. The
current retirement age is 63, although a retirement age
of 65 applies to two members.
We strive to bind all senior executives by a restraint-of-
trade agreement. To the extent that executives have
access to proprietary business insights and intellectual
property, Tiger Brands will enforce the agreement should
they join a competitor. The restraint comprises a three-
month notice period and three months’ special leave (paid
as a three-month lump sum (based on guaranteed
package) on termination.
For terminations due to retirement or retrenchment,
contractual entitlements include a pro rata short-term
incentive payment (based on the extent of achieving
specified financial and strategic targets for the period and
a personal performance agreement being in place at the
date of exit). No pro rata bonus is paid to employees
who leave for other reasons, eg resignation or dismissal.
The termination rules for awards made under the Tiger
Brands Limited 2013 Share Plan specify that, if an
individual’s employment is terminated on a no fault basis,
depending on the nature of the unit (ie whether it is SARs,
bonus matching shares, deferred bonus shares or
company matching shares) and reasons for termination,
a participant may retain all units or a pro rata portion
thereof. Accelerated vesting and settlement of retained
units may apply in certain circumstances. In the case of
a fault termination, all unvested units (other than certain
deferred bonus shares) will be forfeited.
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
encourages our executives to broaden their skills base
and experience.
Under a formal policy, an executive is limited to one
substantive outside directorship. The chairman of the
Tiger Brands board, the chairman of the nominations
committee, and the chairman of the remuneration
committee are required to authorise these appointments
based on a recommendation from the CEO. Directors’
fees under this policy may be retained by the individual.
Other than associate companies, Tiger Brands currently
has no executive members serving as non-executive
directors on the main boards of external companies.
Non-executive directors
Appointment and contractual arrangements
Non-executive directors are appointed to the board of
Tiger Brands in line with related policy and procedures.
These are formal, transparent and a matter for the board
as a whole, based on a recommendation by the
nominations committee. The letter of appointment confirms
the terms and conditions for the tenure of this appointment
and includes reappointment by rotation. In terms of the
company’s memorandum of incorporation, one-third of
directors are required to retire by rotation at each AGM;
their reappointment is contingent on being re-elected to
serve on the board by shareholders.
Executive directors are subject to standard terms and
conditions of employment and are required to retire from
the board by rotation in line with the company’s
memorandum of incorporation. Any executive and
non-executive director appointed to fill a vacant position
during the year must be subject to re-election at the first
annual general meeting following the appointment.
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 an annual retainer that
reflects their overall contribution and input to the company,
and not just for attendance at board and committee
meetings.
Fees are reviewed annually and increases are
implemented in March after approval at the AGM.
A bespoke survey is conducted to benchmark these fees
against a global/local comparator group comprising
companies of similar size and operating in similar
industries. The measurement criteria include turnover,
total assets and number of employees.
The chairman does not receive any additional
remuneration for participating in committees of the board.
Non-executive directors who perform services outside the
scope of their ordinary duties may receive additional
remuneration. Shareholder approval will be sought for
increasing non-executive directors’ fees, including fees
paid for attending special board meetings and for
additional work. Details of proposed increases for 2018
appear on page 102 as well as in the notice of AGM of
shareholders to be held on 20 February 2018.
Details of non-executive directors’ fees paid in the review
period appear in part 3 on pages 100 and 101.
Shareholder engagement
We take our shareholder feedback seriously and aim to
keep the lines of communication open. The remuneration
committee is committed to shareholder engagement and
will take the following steps if 25% or more of total votes
exercised by shareholders at the upcoming AGM are
against the remuneration policy or implementation report:
• The company will issue a SENS announcement inviting
dissenting shareholders to note their specific concerns
and to engage with the company, and
• The company will consider these concerns and report
on the outcome of this engagement, and measures
taken, in its next integrated report.
Details of executive committee members serving on the
boards of associate companies appear on page 79.
For our full remuneration policy, please see
www.tigerbrands.com
Tiger Brands Limited Integrated annual report 2017
93
GOVERNANCE REVIEW
Remuneration report continued
PART 3: REMUNERATION IMPLEMENTATION REPORT
The implementation report addresses the following:
• Feedback received from shareholders on the previous remuneration report and our response
• How the remuneration policy was implemented for the financial year under review
Summary of feedback from shareholders and responses
The following common themes of concern were noted by shareholders:
Shareholder feedback
Response by Tiger Brands
Vesting criteria for performance
shares were perceived as being
overly generous. In addition,
restricted shares are not subject
to performance conditions
From December 2016, performance shares no longer form part of annual
allocations.
All regular annual LTI awards are subject to performance conditions, either in the
form of “performance on the way in” (bonus matching shares/deferred bonus
shares and company matching shares), which are linked to the achievement of
a short-term incentive bonus or during the vesting period (SARs).
The absence of a return metric
across incentive schemes
For SARs (from December 2016), a further condition for vesting to occur is that the
average of Tiger Brands’ annual returns on capital over the relevant performance
period must exceed its weighted average cost of capital (WACC) for the same
period. From FY18, KPI targets for executive management will include a targeted
return on net assets (RONA).
The vesting criteria of 3% HEPS
growth for share appreciation
rights (SARs) being perceived
as low
Performance conditions for SARs are usually viewed as an underpin, with the
embedded condition of share price growth being the primary objective. Market
benchmarks for SARs targets are usually more moderate than those for full-value
share awards (CPI or CPI +2% pa compared to vesting targets for full-value shares
which are CPI +5% to 10% pa).
Additional cash payments made
to the CEO and CFO without
specific substantiation
Executive directors’ STI targets
being reduced to a single
measure of targeted group
(HEPS)
The removal of strategic
objectives, as a primary metric,
from the short-term incentive
scheme
Sign-on bonuses are considered only in exceptional circumstances and may be
required to compensate a prospective executive for unvested LTIs granted by
his/her current employer. The company will only consider retention awards in
exceptional circumstances, which was the case in 2016 after restructuring the
executive committee and appointing a new CEO.
This has been changed. From FY18, primary financial STI targets for executive
directors will comprise HEPS (35%), earnings before interest and taxation (EBIT)
(35%), sales volume growth (15%) and working capital management (15%).
We have enhanced disclosure on the STI scheme and executive management’s
KPIs, which include financial and non-financial measures.
The STI scheme is a multiplier scheme, aligned with global best practice, using
a “business multiplier” which primarily focuses on financial metrics to ensure
alignment with shareholder outcomes, as well as a personal performance multiplier,
which differentiates based on the achievement of an individual’s KPIs. This ensures
that there is personal accountability for both the financial and strategic aspects of
our business.
94
Tiger Brands Limited Integrated annual report 2017
For the review period, in addition to the HEPS financial KPI, the following KPIs applied to the CEO and CFO. The level of
achievement is reflected for each KPI:
KPIs scorecard
Top tier financial results
Market performance
Compliance
People
Revenue
Gross margin
Market share
On-shelf availability
Quality
Safety
Productivity/cost savings
Innovation
BBBEE implementation
Brand health
Met
Partially met
Not met
Improved employee
engagement
Employee development
plans in place
Total remuneration of executive directors and prescribed officers
The total remuneration of executive directors and prescribed officers on a single-figure basis, as required by King IV and
in line with guidance from the Institute of Directors and South African Reward Association is shown below.
Total remuneration of executive directors and prescribed officers for the financial year ended September 2017
Name
Salary
Benefits
GP
Other
STI*
LTI
2017
total
LC Mac Dougall**
8 058 719
488 424
8 547 143
5 211 772
943 704
6 155 476
4 531 406
398 030
4 929 436
–
–
–
–
–
–
4 596 025 13 143 168
5 334 903 11 490 379
–
4 929 436
3 955 010
593 883
4 548 893
– 2 320 310
2 192 882
9 062 085
2 343 743
490 568
2 834 311 1 740 154 1 782 738
1 586 233
7 943 436
NP Doyle**
CFH Vaux**
AG Kirk**
PW Spies***
* Value of STI includes the value of bonus deferrals, if any, given the LTI was allocated on 11 December 2017.
** Expected LTI value based on award as at 7 December 2016 at R395,97 per share.
*** Expected LTI value based on award as at 5 September 2017 at R403,56 per share.
Other: sign-on bonus for PW Spies.
Total remuneration of executive directors and prescribed officers for the financial year ended September 2016
Name
Salary
Benefits
GP
Other
STI*
LTI**
2016
total
LC Mac Dougall***
3 053 378
215 745 3 269 123 20 000 000
256 250
7 119 518 30 644 891
NP Doyle
CFH Vaux
AG Kirk
4 716 246
923 254 5 639 500 10 000 000
417 993
4 402 954 20 460 447
4 118 660
622 064 4 740 724
–
709 050
–
5 449 774
3 582 427
731 803 4 314 230 4 028 000
433 151
2 212 504 10 987 885
NG Brimacombe
3 624 920
940 083 4 565 003
–
–
1 015 413
5 580 416
* Value of STI excludes the value of bonus deferrals, if any.
** Expected LTI value based on award as at 9 February 2016 at R291,71 per share.
*** Expected LTI value based on award on 24 May 2016 at R341,68 per share
Other: sign-on bonus for LC Mac Dougall and retention payments for NP Doyle and AG Kirk.
Tiger Brands Limited Integrated annual report 2017
95
GOVERNANCE REVIEW
Remuneration report continued
2017 short-term incentive outcomes
The graphics below show the outcomes of the business multiplier component as well as the personal performance
multiplier component relative to the targets for the respective executive directors and prescribed officers’ schemes.
Executive directors
Measure
HEPS
Actual business multiplier for executive directors
Actual
multiplier
achieved
0%
Weight
100%
Weighted
multiplier %
0%
0%
HEPS
0%
Below
threshold
50%
Threshold
100%
Target
150%
Stretch
The individual outcomes for the executive directors are shown below.
Name
LC Mac Dougall
NP Doyle
CFH Vaux
GP*
8 610 000
6 150 000
4 963 351
* Annual GP as at 30 September 2017.
** Includes the value of bonus deferrals.
Prescribed officers
Measure
EBIT
Working capital management
Sales volume growth
Actual business modifier for prescribed officers
Sales volume growth
Working capital management
EBIT
0%
Below
threshold
Actual
business
multiplier
%
Actual
personal
performance
multiplier
%
0%
0%
0%
100%
130%
100%
On-
target
%
50%
50%
50%
2017
STI
2016
STI**
0
0
0
512 500
835 985
709 050
Actual
multiplier
achieved
130%
50%
0%
Weight
70%
20%
10%
Weighted
multiplier %
91,1%
10,0%
0,0%
101,1%
50%
Threshold
100%
Target
150%
Stretch
The individual outcomes for prescribed officers are shown below.
On-
target
%
50%
50%
Actual
business
multiplier
%
101,1%
101,1%
Actual
personal
performance
multiplier
%
2017
STI**
2016
STI**
100%
115%
2 320 310
1 782 738
646 494
N/A
Name
AG Kirk
PW Spies***
GP*
4 590 107
4 600 000
* Annual GP as at 30 September 2017.
** Includes the value of bonus deferrals.
*** STI prorated as the start date was 1 February 2017.
96
Tiger Brands Limited Integrated annual report 2017
Short-term incentives for FY17
Name
LC Mac Dougall
NP Doyle
CFH Vaux
AG Kirk
PW Spies***
* Annual GP as at 30 September 2017.
** Includes the value of bonus deferrals.
*** STI prorated as the start date was 1 February 2017.
GP*
2017 STI**
8 610 000
6 150 000
4 963 351
4 590 107
4 600 000
–
–
–
2 320 310
1 782 738
%
of GP
–
–
–
51%
39%
Long-term incentives
Awards
The long-term incentive awards made during the year to executive directors and prescribed officers are set out below.
The 10-day volume weighted average price at award date was R395,97 per share, on 7 December 2016 and
R403,56 as at 5 September 2017.
PDT
multiplier
Award
%
GP
SARs
Face
value
Bonus matching shares
Deferred bonus shares and
company matching shares
Number
STI***
Award
%
Face
value Number
Match
%
Face
value Number
100%
150%
100%
–
100%
8 610 000
6 150 000
4 963 351
4 600 000
4 590 107
151% 13 003 655
145% 13 375 867
–
110% 5 287 443
110% 5 052 577
–
32 840
33 780
–
13 102
12 760
512 500
835 985
709 050
–
646 494
50% 257 381
50% 629 592
–
–
50%
–
50% 324 695
650
1 590
–
–
820
100% 514 761
100% 839 456
–
100%
100%
–
100% 427 648
1 300
2 120
–
–
1 080
Expected value (based on fair value)
SARS
3 901 097
4 012 760
–
1 586 233
1 515 773
Bonus
matching
shares
231 643
566 633
–
–
292 226
Deferred bonus shares and
company matching shares
463 285
755 510
–
–
384 883
Name
LC Mac Dougall*
NP Doyle*
CFH Vaux*
PW Spies**
AG Kirk*
Name
LC Mac Dougall*
NP Doyle*
CFH Vaux
PW Spies**
AG Kirk*
* Allocated on 7 December 2016 at a VWAP of R395,97.
** Allocated on 5 September 2017 at a VWAP of R403,56.
*** STI in respect of the year ended 30 September 2016.
Vesting
The outcome for awards due to vest in FY17, and whose performance conditions end by 30 September 2017, are
shown below:
LTI allocation
Performance vesting shares granted in February 2014.
Vested in February 2017
Phantom cash options granted in 2013 – third tranche*
Share appreciation rights granted in 2013 – third tranche
Share appreciation rights granted in 2014 – second tranche
Share appreciation rights granted in 2015 – first tranche
*Only 50% of which were subject to performance conditions.
Met
Partially met
Not met
LTI measures
Total
shareholder
return
Real HEPS
growth
Performance
condition result
(% vesting)
n/a
n/a
n/a
n/a
n/a
300%
–
–
100%
27%
Tiger Brands Limited Integrated annual report 2017
97
GOVERNANCE REVIEW
Remuneration report continued
Schedule of LTI awards
Unvested awards and cash flow from settling LTI awards for the CEO and CFO are tabulated below.
Name and awards
Award date
LC Mac Dougall
2016 deferred bonus shares
2016 company matching shares
2016 bonus matching shares
2016 performance shares
2016 SARs
07/12/2016
07/12/2016
07/12/2016
26/05/2016
24/05/2016
2016 SARs
07/12/2016
Total
NP Doyle
2015 company matching shares
2015 deferred bonus shares
2016 company matching shares
2016 deferred bonus shares
2015 bonus matching shares
2016 bonus matching shares
2016 bonus matching shares
2014 performance shares
2015 performance shares
2016 performance shares
2012 Phantom Cash Share Options
03/12/2015
03/12/2015
07/12/2016
07/12/2016
04/02/2015
09/02/2016
07/12/2016
28/02/2014
04/02/2015
09/02/2016
07/02/2012
2013 Phantom Cash Share Options
13/02/2013
2014 SARs
28/02/2014
2015 SARs
2016 SARs
2016 SARs
Total
04/02/2015
09/02/2016
07/12/2016
Vesting
date
Opening
number
Granted
during
the year
Grant price
ZAR
Performance
Forfeited
during year
condition
Settled during
achieved
the year
Closing
number
Cash
received
ZAR
Value of
shares
acquired
ZAR
Closing
fair value
vesting
ZAR
07/12/2019
07/12/2019
07/12/2019
24/05/2019
24/05/2019
24/05/2020
24/05/2021
07/12/2019
07/12/2020
07/12/2021
03/12/2018
03/12/2018
07/12/2019
07/12/2019
04/02/2018
09/02/2019
07/12/2019
28/02/2017
04/02/2018
09/02/2019
07/02/2015
07/02/2016
07/02/2017
13/02/2016
13/02/2017
13/02/2018
28/02/2017
28/02/2018
28/02/2019
04/02/2018
04/02/2019
04/02/2020
09/02/2019
09/02/2020
09/02/2021
07/12/2019
07/12/2020
07/12/2021
–
–
–
8 160
12 000
12 000
12 000
–
–
–
44 160
2 688
2 688
–
–
2 320
1 330
–
2 790
2 490
5 720
5 000
5 000
10 000
5 000
10 000
10 000
6 067
6 067
6 066
3 846
3 847
3 847
7 623
7 623
7 624
–
–
–
117 636
650
650
650
–
–
–
–
10 946
10 947
10 947
34 790
–
–
1 060
1 060
–
–
1 590
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
11 260
11 260
11 260
37 490
–
–
–
–
341,68
341,68
341,68
395,97
395,97
395,97
–
–
–
–
–
–
–
–
–
–
252,01
252,01
252,01
299,83
299,83
299,83
254,45
254,45
254,45
385,33
385,33
385,33
291,71
291,71
291,71
395,97
395,97
395,97
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(5 000)
(5 000)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
650
650
650
8 160
12 000
12 000
12 000
10 946
10 947
10 947
78 950
2 688
2 688
1 060
1 060
2 320
1 330
1 590
2 490
5 720
5 000
5 000
5 000
5 000
5 000
10 000
6 067
6 067
6 066
3 846
3 847
3 847
7 623
7 623
7 624
11 260
11 260
11 260
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
230 874
230 874
230 874
5 209 752
1 175 280
1 270 080
1 334 760
894 945
966 182
1 051 131
12 594 752
981 846
981 846
376 501
376 501
867 054
483 309
564 752
–
567 820
3 807 518
640 250
640 250
640 250
432 000
432 000
864 000
799 570
808 852
849 786
203 415
257 672
295 603
934 504
984 053
1 021 331
920 618
993 808
1 081 185
5 580
(8 370)
–
1 440 384
2 058 276
(10 000)
5 580
(8 370)
142 336
1 440 384
2 058 276
21 806 294
A full analysis of the annual movement in phantom cash-settled options, performance shares, bonus matching, deferred
bonus shares, company matching shares and share appreciation rights held by executive directors, prescribed officers
and other members of the executive committee is set out on pages 68 to 74 of Annexure C to the annual financial
statements.
98
Tiger Brands Limited Integrated annual report 2017
Schedule of LTI awards
Unvested awards and cash flow from settling LTI awards for the CEO and CFO are tabulated below.
Award date
Vesting
date
Opening
number
Granted
during
the year
Grant price
ZAR
Forfeited
during year
Performance
condition
achieved
Settled during
the year
Closing
number
Cash
received
ZAR
Value of
shares
acquired
ZAR
Closing
fair value
vesting
ZAR
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(5 000)
–
(5 000)
–
–
–
–
–
–
–
–
–
–
–
–
–
A full analysis of the annual movement in phantom cash-settled options, performance shares, bonus matching, deferred
bonus shares, company matching shares and share appreciation rights held by executive directors, prescribed officers
and other members of the executive committee is set out on pages 68 to 74 of Annexure C to the annual financial
117 636
(10 000)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
5 580
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
5 580
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(8 370)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
650
650
650
8 160
12 000
12 000
12 000
10 946
10 947
10 947
78 950
2 688
2 688
1 060
1 060
2 320
1 330
1 590
–
2 490
5 720
5 000
5 000
5 000
5 000
5 000
10 000
6 067
6 067
6 066
3 846
3 847
3 847
7 623
7 623
7 624
11 260
11 260
11 260
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1 440 384
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2 058 276
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
230 874
230 874
230 874
5 209 752
1 175 280
1 270 080
1 334 760
894 945
966 182
1 051 131
12 594 752
981 846
981 846
376 501
376 501
867 054
483 309
564 752
–
567 820
3 807 518
640 250
640 250
640 250
432 000
432 000
864 000
799 570
808 852
849 786
203 415
257 672
295 603
934 504
984 053
1 021 331
920 618
993 808
1 081 185
(8 370)
142 336
1 440 384
2 058 276
21 806 294
Tiger Brands Limited Integrated annual report 2017
99
Name and awards
LC Mac Dougall
2016 deferred bonus shares
2016 company matching shares
2016 bonus matching shares
2016 performance shares
2016 SARs
2016 SARs
Total
NP Doyle
07/12/2016
07/12/2019
07/12/2016
07/12/2019
07/12/2016
07/12/2019
26/05/2016
24/05/2019
24/05/2016
24/05/2019
24/05/2020
24/05/2021
07/12/2019
07/12/2020
07/12/2021
07/12/2016
2015 company matching shares
2015 deferred bonus shares
03/12/2015
03/12/2018
03/12/2015
03/12/2018
2016 company matching shares
07/12/2016
07/12/2019
2016 deferred bonus shares
2015 bonus matching shares
2016 bonus matching shares
2016 bonus matching shares
2014 performance shares
2015 performance shares
2016 performance shares
07/12/2016
07/12/2019
04/02/2015
04/02/2018
09/02/2016
09/02/2019
07/12/2016
07/12/2019
28/02/2014
28/02/2017
04/02/2015
04/02/2018
09/02/2016
09/02/2019
2012 Phantom Cash Share Options
07/02/2012
2013 Phantom Cash Share Options
13/02/2013
2014 SARs
28/02/2014
07/02/2015
07/02/2016
07/02/2017
13/02/2016
13/02/2017
13/02/2018
28/02/2017
28/02/2018
28/02/2019
04/02/2018
04/02/2019
04/02/2020
09/02/2019
09/02/2020
09/02/2021
07/12/2019
07/12/2020
07/12/2021
04/02/2015
09/02/2016
07/12/2016
2015 SARs
2016 SARs
2016 SARs
Total
statements.
–
–
–
–
–
–
–
–
–
8 160
12 000
12 000
12 000
44 160
2 688
2 688
2 320
1 330
2 790
2 490
5 720
5 000
5 000
10 000
5 000
10 000
10 000
6 067
6 067
6 066
3 846
3 847
3 847
7 623
7 623
7 624
–
–
–
650
650
650
10 946
10 947
10 947
34 790
1 060
1 060
1 590
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
11 260
11 260
11 260
37 490
–
–
–
–
–
–
–
–
–
–
–
–
–
–
341,68
341,68
341,68
395,97
395,97
395,97
252,01
252,01
252,01
299,83
299,83
299,83
254,45
254,45
254,45
385,33
385,33
385,33
291,71
291,71
291,71
395,97
395,97
395,97
GOVERNANCE REVIEW Remuneration report continued
Interests of directors and prescribed officers in BEE schemes
No executive directors or prescribed officers qualify to participate in either of the company’s BEE schemes.
Non-executive directors’ fees
Total emoluments to non-executive directors for the year ended 30 September 2017, inclusive of VAT from
1 June 2017, were:
MO Ajukwu
SL Botha
MJ Bowman
K Hedderwick1
M Makanjee
E Mashilwane2
Dr KD Mokhele6
BL Sibiya3
RD Nisbet
MP Nyama
AC Parker4
YGH Suleman
BS Tshabalala5
Board fees
Carozzi board meeting
Audit committee fees
Investment committee fees
Remuneration committee fees
Nominations committee fees
Social, ethics and transformation
committee fees
Risk committee fees
Extraordinary fees
Ad hoc work/meetings
612 707
–
–
–
–
–
–
199 680
–
–
812 387
368 491
–
–
–
201 729
7 560
–
–
–
–
368 491
–
–
41 805
–
–
–
67 172
–
–
90 316
–
–
–
–
–
–
–
–
–
577 780
477 468
90 316
368 491
–
–
–
47 096
7 560
164 046
–
–
25 200
612 393
278 175
–
81 988
–
–
–
–
–
–
–
360 163
1 Appointed on 1 December 2016 and resigned on 14 February 2017.
2 Appointed on 1 December 2016.
3 Resigned on 30 June 2017.
4 Resigned as chairman on 21 February 2017.
5 Appointed on 26 May 2017.
6 Appointed as chairman on 21 February 2017.
Annual fees payable to non-executive directors for the period beginning 1 March 2017 were approved
by shareholders on 21 February 2017.
Total emoluments to non-executive directors for the year ended 30 September 2016 were:
MO Ajukwu
SL Botha
MJ Bowman
K Hedderwick
M Makanjee E Mashilwane
Dr KD Mokhele
BL Sibiya
RD Nisbet
MP Nyama
AC Parker
YGH Suleman
BS Tshabalala
Directors’ fees
Carozzi board meeting
Audit committee fees
Investment committee fees
Remuneration committee fees
Nominations committee fees
Social, ethics and transformation
committee fees
Risk committee fees
Extraordinary fees
Ad hoc work/meetings
352 664
–
–
–
–
–
–
86 641
–
36 200
352 664
–
–
–
194 995
12 413
–
–
–
68 600
352 664
–
–
–
–
–
–
–
–
36 200
# Appointed during the 2017 financial year, thus not applicable for the year ended 30 September 2016.
475 505
628 672
388 864
–
–
–
–
–
–
–
–
–
–
#
352 664
–
–
–
–
12 413
152 351
–
–
79 400
596 828
–
–
–
–
–
–
–
–
–
–
#
352 664
846 393
352 664
352 664
1 637 770
352 664
76 020
138 947
3 780
97 052
–
–
–
–
–
97 052
12 413
76 175
57 800
268 024
3 780
86 641
139 100
850 209
36 200
882 593
36 200
32 400
596 103
1 782 390
171 500
763 943
1 053 045
658 948
368 491
368 491
368 491
93 929
280 052
58 815
153 811
41 805
48 526
112 357
132 369
95 621
7 560
82 022
–
–
–
–
–
–
838 858
218 010
22 680
658 948
819 715
553 694
1 079 548
745 002
93 929
71 823
11 340
96 617
47 880
1 280 705
–
–
–
–
–
–
–
–
–
–
138 947
3 780
186 077
139 100
820 569
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
#
100
Tiger Brands Limited Integrated annual report 2017
Interests of directors and prescribed officers in BEE schemes
No executive directors or prescribed officers qualify to participate in either of the company’s BEE schemes.
Total emoluments to non-executive directors for the year ended 30 September 2017, inclusive of VAT from
Non-executive directors’ fees
1 June 2017, were:
Board fees
Carozzi board meeting
Audit committee fees
Investment committee fees
Remuneration committee fees
Nominations committee fees
Social, ethics and transformation
committee fees
Risk committee fees
Extraordinary fees
Ad hoc work/meetings
1 Appointed on 1 December 2016 and resigned on 14 February 2017.
2 Appointed on 1 December 2016.
3 Resigned on 30 June 2017.
4 Resigned as chairman on 21 February 2017.
5 Appointed on 26 May 2017.
6 Appointed as chairman on 21 February 2017.
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
#
Annual fees payable to non-executive directors for the period beginning 1 March 2017 were approved
by shareholders on 21 February 2017.
Total emoluments to non-executive directors for the year ended 30 September 2016 were:
352 664
352 664
352 664
352 664
Directors’ fees
Carozzi board meeting
Audit committee fees
Investment committee fees
Remuneration committee fees
Nominations committee fees
Social, ethics and transformation
committee fees
Risk committee fees
Extraordinary fees
194 995
12 413
86 641
Ad hoc work/meetings
36 200
68 600
36 200
475 505
628 672
388 864
# Appointed during the 2017 financial year, thus not applicable for the year ended 30 September 2016.
–
–
–
–
–
–
12 413
152 351
79 400
596 828
–
–
–
–
–
–
–
–
–
–
#
MO Ajukwu
SL Botha
MJ Bowman
K Hedderwick1
M Makanjee
E Mashilwane2
Dr KD Mokhele6
BL Sibiya3
RD Nisbet
MP Nyama
AC Parker4
YGH Suleman
BS Tshabalala5
612 707
368 491
368 491
90 316
368 491
278 175
41 805
201 729
7 560
199 680
67 172
–
–
–
–
–
47 096
7 560
164 046
25 200
81 988
–
–
–
–
–
–
–
–
1 053 045
–
71 823
11 340
–
–
–
96 617
–
47 880
658 948
–
–
–
–
–
–
–
–
–
812 387
577 780
477 468
90 316
612 393
360 163
1 280 705
658 948
368 491
–
280 052
58 815
–
–
–
112 357
–
–
819 715
368 491
–
–
–
95 621
7 560
82 022
–
–
–
838 858
218 010
–
–
–
–
–
–
–
22 680
553 694
1 079 548
368 491
–
153 811
41 805
48 526
–
–
132 369
–
–
745 002
93 929
–
–
–
–
–
–
–
–
–
93 929
MO Ajukwu
SL Botha
MJ Bowman
K Hedderwick
M Makanjee E Mashilwane
Dr KD Mokhele
BL Sibiya
RD Nisbet
MP Nyama
AC Parker
YGH Suleman
BS Tshabalala
352 664
–
138 947
3 780
–
–
–
186 077
–
139 100
820 569
846 393
–
–
–
–
–
–
–
–
36 200
882 593
352 664
–
268 024
3 780
–
–
–
86 641
–
139 100
850 209
352 664
–
–
–
97 052
12 413
76 175
–
–
57 800
1 637 770
76 020
–
–
–
–
–
–
36 200
32 400
596 103
1 782 390
352 664
–
138 947
3 780
97 052
–
–
–
–
171 500
763 943
–
–
–
–
–
–
–
–
–
–
#
Tiger Brands Limited Integrated annual report 2017
101
GOVERNANCE REVIEW Remuneration report continued
Proposed non-executive directors’ fees for 2018
The proposed fees from 1 March 2018, excluding VAT, to be approved at the AGM on 20 February 2018.
Capacity
Chairman
Deputy chairman
Member
Chairman
Member
Chairman
Member
Chairman
Member
Chairman
Member
Forum
Main board
Audit
Remuneration and
nominations
Risk
Social, ethics and
transformation
Hourly fees
Extraordinary meetings
* Not applicable
Current rate
effective
March 2017
1 744 825
901 719
375 717
285 543
163 976
208 463
94 191
264 737
134 343
172 025
86 012
3 931
19 765
Proposed rate
resident board
members –
effective
March 2018
1 849 515
*
398 260
302 676
173 815
220 971
99 842
280 621
142 404
182 347
91 173
4 167
20 951
Proposed fees
for non-resident
board members –
effective
March 2018
*
*
915 998
*
*
*
*
*
327 528
*
*
9 584
48 187
Non-binding advisory vote
Shareholders are requested to cast an advisory vote on the remuneration policy and implementation report in parts 2 and
3 of this report.
102
Tiger Brands Limited Integrated annual report 2017
Shareholders’ diary
Financial year end
Annual general meeting
Reports and accounts
Announcement of interim results and dividend for the six months ending
31 March 2018
Announcement of annual results and final dividend for the year ending
30 September 2018
Integrated annual report
Dividends 2018
Ordinary shares
Interim dividend
Final dividend
30 September
20 February 2018
May 2018
November 2018
December 2018
Declaration
Payment
May 2018
July 2018
November 2018
January 2019
Tiger Brands Limited Integrated annual report 2017
103
SHAREHOLDERS’ INFORMATION Declaration of final dividend number 146
The board has approved and declared a final cash dividend of 702 cents per ordinary share (gross) in respect of the
year ended 30 September 2017.
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 dividend tax rate is 20% (twenty percent) effective 22 February 2017
• The gross local dividend amount is 702 cents per ordinary share for shareholders exempt from the dividends tax
• The net local dividend amount is 561,60 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, 9 January 2018
Wednesday, 10 January 2018
Friday, 12 January 2018
Monday, 15 January 2018
Share certificates may not be dematerialised or rematerialised between Wednesday, 10 January 2018, and
Friday, 12 January 2018, both days inclusive.
By order of the board
JK Monaisa
Company secretary
24 November 2017
104
Tiger Brands Limited Integrated annual report 2017
Analysis of registered shareholders
and company schemes
Registered shareholder spread
In accordance with the JSE Listings Requirements, the following table confirms the spread of registered shareholders as
detailed in the annual report and accounts dated 29 September 2017:
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 share
issued capital
16 885
2 840
632
149
35
20 541
82,20
3 989 001
13,82
8 675 034
3,08
19 469 329
46 053 296
0,73
0,17 113 883 208
2,08
4,52
10,14
23,97
59,29
100,00
192 069 868
100,00
Public and non-public shareholdings
Within the shareholder base, we are able to 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
Number
of holders
% of total
shareholders
Number
of shares
% of share
issued capital
11
6
1
2
2
20 530
0,05
0,04
–
0,01
–
29 270 625
18 711 115
10 326 758
226 581
6 171
99,95 162 799 243
15,24
9,74
5,38
0,12
–
84,76
Tiger Brands Limited Integrated annual report 2017
105
SHAREHOLDERS’ INFORMATION Analysis of registered shareholders
and company schemes continued
Substantial investment management and beneficial interests above 3%
Through regular analysis of STRATE registered holdings, and pursuant to the provisions of section 56 of the Companies
Act, the following shareholders held directly and indirectly equal to or in excess of 3% of the issued share capital as at
29 September 2017:
Investment management shareholdings
Investment manager
PIC
Colonial First State Global Asset Management
BlackRock Inc
Coronation Asset Management Proprietary Limited
Janus Henderson Investors
The Vanguard Group Inc
Total
Beneficial shareholdings
Government Employees Pension Fund (PIC)
Tiger Consumer Brands Limited
Tiger Brands Foundation SPV
Total
Total
shareholding
21 816 247
8 892 849
6 954 447
6 814 354
6 601 012
6 146 961
57 225 870
Total
shareholding
25 583 368
10 326 758
9 668 067
45 578 193
%
11,35
4,63
3,62
3,55
3,44
3,20
29,79
%
13,32
5,38
5,03
23,73
106
Tiger Brands Limited Integrated annual report 2017
Company information
Tiger Brands Limited
Registration number: 1944/017881/06
Company secretary
JK Monaisa (appointed 1 November 2017)
Registered office
3010 William Nicol Drive
Bryanston
Sandton
Postal address
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 South Africa Proprietary Limited
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
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
Tiger Brands Limited Integrated annual report 2017
107
SHAREHOLDERS’ INFORMATION 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.
108
Tiger Brands Limited Integrated annual report 2017
HEAD OFFICE: SOUTH AFRICA
PHYSICAL ADDRESS
Tiger Brands Limited, 3010 William Nicol Drive, Bryanston
POSTAL ADDRESS
PO Box 78056, Sandton, 2146, South Africa
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