Integrated annual report
2019
We nourish and nurture more lives every day
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WHO WE ARE
Overview
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 products to middle-income consumers. We also distribute leading brands
in the Home, Personal Care and Baby sectors.
OUR PURPOSE
OUR VISION
OUR OPERATING MODEL
We nourish and
nurture more
lives every day.
To deliver top-tier financial results
and be recognised by all
stakeholders as the best
fast-moving consumer goods
(FMCG) company in South Africa
and most desirable growth
company on the continent.
WE NOURISH
AND NURTURE
MORE LIVES
EVERY DAY
We focus on the consumer,
reigniting innovation and
leveraging our scale as one Tiger
Team, resulting in an agile, lean
organisation that responds quickly
and is aided by simple ways of
working. We attract the best
talent, and we are recognised as a
great place to work.
OUR STRATEGY FOR SUSTAINABLE PROFITABLE GROWTH IS SUPPORTED BY FOUR
STRATEGIC PILLARS, UNDERPINNED BY OUR CORE VALUES.
OUR STRATEGY
DRIVE GROWTH
BE EFFICIENT
GREAT PEOPLE
Winning category,
channel and customer
strategies
Cost-conscious and an
integrated supply chain
A winning mindset and
great place to work
SUSTAINABLE
FUTURE
Sustainable company,
community and planet
OUR VALUES
We treat each
other with care
and respect
We deliver with
passion and
excellence
Safety and
quality are non-
negotiable for us
We embrace
diversity and
inclusivity
We act with integrity
and accountability
in all we do
WINNING BEHAVIOURS
CONSUMER OBSESSION
TEAMWORK
EMPOWERED ACCOUNTABILITY
FOCUSED EXECUTION
TIGER BRANDS’ 2019 INTEGRATED
REPORTING SUITE
Our 2019 integrated reporting process comprises
the following reports:
›
› Consolidated annual financial statements 2019
› Sustainable development report 2019
Integrated annual report 2019
These are all available at www.tigerbrands.com
Annual financial statements
2019
Integrated annual report
2019
Sustainable development report
Supplement to the integrated annual report
30 September 2019
2019
We nourish and nurture more lives every day
We nourish and nurture more lives every day
We nourish and nurture more lives every day
NAVIGATION
Further reading within this report
Reference to further online disclosure
Tiger Brands Limited Integrated annual report 2019
1
CONTENTS
OVERVIEW
Who we are
About this report
Our value contribution in 2019
OUR BUSINESS
Group profile
Chairman’s review
Chief executive officer’s review
Our business model
Our external environment
Addressing material stakeholder interests
Managing our risks
OUR STRATEGY
Drive growth
Be efficient
Great people
Sustainable future
OUR PERFORMANCE
Chief financial officer’s review
Grains
Consumer Brands – Food
Home, Personal Care and Baby (HPCB)
Exports and International
Associates
OUR GOVERNANCE
Who governs us
Creating value through good governance
Remuneration report
Interview with the chairman of the social,
ethics and transformation (SET) committee
ADMINISTRATION
Shareholders’ diary
Declaration of final dividend number 150
Company information
IFC
2
3
4
6
10
14
18
20
23
27
30
32
34
38
42
44
46
48
49
50
54
57
83
86
87
88
UNITED NATIONS SUSTAINABLE DEVELOPMENT GOALS (SDGs)
The United Nations Sustainable Development Goals (UN SDGs) set a long-term agenda to end poverty, protect the planet and ensure prosperity
for all by 2030. In fulfilling our core purpose – to nourish and nurture more lives every day – Tiger Brands is committed to playing its role in
delivering on these goals. As part of our strategic pillar on Sustainable Future (see page 34), we have developed a set of commitments and targets
relating to three key focus areas: health and nutrition, enhanced livelihoods, and environmental stewardship. In meeting these commitments and
targets we believe we will provide a meaningful contribution to the following eleven SDGs:
Our approach to responding to these goals is reviewed in our accompanying sustainable development report 2019.
2
Tiger Brands Limited Integrated annual report 2019
ABOUT THIS REPORT
REPORT BOUNDARY AND AUDIENCE
This integrated report reviews Tiger Brands’ business
model and strategy, the risks and opportunities in our
operating environment, and our operational and
governance performance for the financial year ended
30 September 2019. This is our primary annual report,
written for investors and any other stakeholder who has an
interest in our ability to create value over the short, medium
and long term. This report should be read in conjunction
with the supplementary sustainable development report
and our annual financial statements, published on our
website, www.tigerbrands.com.
REPORTING FRAMEWORKS
Our reporting process has been guided by the principles
and requirements contained in the International Financial
Reporting Standards (IFRS), the International Integrated
Reporting Council’s (IIRC) International Framework,
the King Code on Corporate Governance 2016
(King IV™*), the JSE Listings Requirements, the South
African Companies Act No 71 of 2008 as amended, and
the GRI’s Sustainability Reporting Standards.
MATERIALITY AND SCOPE
This report provides information aimed at assisting readers
to make an informed assessment of Tiger Brands’ capacity
to create value over time. To enable this assessment,
we believe that all of the following information is material:
who we are and what we do (pages IFC to 4); how we
create value (pages 3 to 13); our interaction with the six
capitals (pages 14 to 17); our external environment
(pages 18 and 19); the interests of our key stakeholders
(pages 20 to 22); the top 10 risks that have a significant
impact on value (pages 23 to 25); and our strategy,
performance and governance practices (pages 26 to 85).
Additional information not material to this report, but of
interest for other purposes, is provided in other reports
on our website. In assessing those issues that materially
impact value creation we have looked beyond the
conventional financial reporting boundary to provide
for the relevant interests of key stakeholders; we have also
considered the most significant risks, opportunities and
impacts associated with our activities over the short term
(less than 12 months), medium term (one to three years)
and long term (beyond three years).
COMBINED ASSURANCE
We have adopted a combined assurance model
comprising assurance obtained from management and
from internal and external assurance providers:
› Ernst & Young Inc. audited our consolidated annual
financial statements; from which extracts have been
included in this integrated report. The auditor’s audit
report does not necessarily report on all the information
included in this integrated report.
› EmpowerLogic Proprietary Limited provided external
verification of our BBBEE activities.
› The group’s internal audit team, overseen by the audit
committee, provides annual assurance to the board on
the execution of the combined assurance plan.
BOARD APPROVAL
As a board, we have applied our collective mind to the
preparation and presentation of the information in this
report. We believe that the report addresses all material
matters and that it presents a balanced and fair account
of Tiger Brands’ performance for the financial year ended
30 September 2019, as well as an accurate reflection of
our strategic commitments. On the advice of the audit
committee, the board approved the integrated report
and the consolidated annual financial statements on
21 November 2019.
Khotso Mokhele
Emma Mashilwane
* Copyright and trademarks are owned by the Institute of Directors
Southern Africa NPC and all of its rights are reserved.
Integrated reporting boundary
Integrated annual report
Sustainable development report
OUR REPORTING BOUNDARIES
OUR EXTERNAL
ENVIRONMENT
Page 18
MANAGING OUR RISKS
Page 23
STAKEHOLDER INTERESTS
CONSIDERED INCLUDE:
Page 20
Financial reporting boundary
Annual financial statements
TIGER BRANDS
Grains
Consumer
Brands
Home, Personal
Care and Baby
Exports and
International
Associates
(equity-accounted)
› Employees
› Consumers
› Government
› Investors
› Suppliers
› Communities
› Media
Overview OUR VALUE CONTRIBUTION IN 2019
Tiger Brands Limited Integrated annual report 2019
3
Revenue
R29,2 billion 3%
Group operating income
R2,6 billion 20%
Group operating margin
9,0% 260 basis points
(2018: R28,4 billion)
(2018: R3,3 billion)
(2018: 11,6%)
Total dividend**
1 061cps 2%
(2018: 1 080 cents per share)
** Includes special dividend of 306 cents per
share declared on 22 May 2019.
HEPS
1 349cps 17%
(2018: 1 633 cents per share)
R
PROVIDERS OF
FINANCIAL CAPITAL
> R2,3 billion paid in dividends includes, R581 million in special dividends, ˆ 23%
(2018: R1,9 billion)
EMPLOYEES
> R4,2 billion paid in salaries and benefits to 10 543 permanent employees
(2018: R3,9 billion to 11 348 permanent employees)
> R127 million invested in employee training and development (2018: R61 million)
> Recognised by Top Employers Institute as a Top Employer 2019
> One work-related employee fatality (2018: one)
> 100% penetration in South Africa; every household buys at least one
Tiger Brands product
> 31% of net sales fortified with micronutrient enrichment
CONSUMERS
> 100% compliance with current sodium targets
> 11% reduction in sugar across the portfolio in past five years
> 25% of net sales from wholegrain, fibre-rich grains, vegetables and fruit
> R21,3 billion total spend on suppliers
SUPPLIERS
> R14,3 billion spent with BBBEE-verified suppliers (2018: R12 billion)
> R3,5 billion spent with black-owned enterprises (2018: R2 billion)
> R1,9 billion spent with black women-owned suppliers (2018: R1,5 billion)
COMMUNITIES AND
ENVIRONMENT
> R27,4 million total socio-economic development spend (2018: R32 million)
> 72 000 learners provided with breakfast meals by Tiger Brands Foundation
(2018: 67 500)
All results are from continuing operations.
4
Tiger Brands Limited Integrated annual report 2019
GROUP PROFILE
Our core business is providing everyday branded food to large and growing markets through a
unified customer sales team and integrated supply chain that leverages the group’s scale.
We target best-in-class profitability, underpinned by a cost-conscious culture and
environmental, social and governance principles to create and share value.
Grains
Consumer Brands – food
45%
45%
35%
34%
2019 %
contribution
54%
2018 %
contribution
56%
2019 %
contribution
18%
2018 %
contribution
25%
■ Revenue
■ Operating income (before IFRS 2)
■ Revenue
■ Operating income (before IFRS 2)
Revenue
R13,2bn 4%
Operating income
R1,4bn 24%
(2018: R12,8 billion)
(2018: R1,9 billion)
Revenue
R10,1bn 4%
Operating income
R494m 40%
(2018: R9,7 billion)
(2018: R828 million)
Milling and baking
Baking
Milling:
› Flour
› Maize
› Sorghum*
* Includes breakfast and beverages
Other grains
Pasta
Breakfast
Rice
Groceries
Condiments and
ingredients
Spreads
Canned fruit
and vegetables
Snacks and
Treats
Sugar
Chocolate
Beverages
Concentrates
Sports drinks
Ready-to-drink
Value Added
Meat
Products
(VAMP)
Market share (%)
Market share (%)
Grains
Maize
Flour
Bread
Cereals
Pasta
Rice
12
29
30
24
33
35
43
Consumer Brands – food
Spread
Condiments
Canned fruit and vegetable
Snacks and Treats
Chocolate
Sugar
Beverages
Concentrates
Sports drinks
Ready to drink
20
12
19
41
39
45
47
37
34
38
36
Our business Tiger Brands Limited Integrated annual report 2019
5
We have leading positions in most categories and our iconic brands are well-entrenched
across consumers in South Africa, as illustrated by the percentage share of market.
Home, Personal Care and Baby
Exports and International
9%
8%
11%
13%
2019 %
contribution
20%
10%
2018 %
contribution
8%
2019 %
contribution
10%
2018 %
contribution
■ Revenue
■ Operating income (before IFRS 2)
■ Revenue
■ Operating income (before IFRS 2)
Revenue
R2,7bn 20%
Operating income
R546m 60%
Revenue
R3,2bn 11%
Operating income
R212m 34%
(2018: R2,2 billion)
(2018: R341 million)
(2018: R3,7 billion)
(2018: R320 million)
Home Care
Personal Care
Baby
Exports
Sanitary cleaners
Insecticides
Camphor cream
and lotions
Hair care
Nutrition and
wellbeing
International
operations
Central Africa
(Chococam)
Deciduous fruit
Langeberg and
Ashton Food (LAF)
Market share (%)
Home Care
Personal Care
Camphor cream
Baby
Wellbeing
9
Nutrition
Homogenised baby food
39
37
66
56
92
87
Market share: Nielsen value share 12-month moving as at September 2019 (South Africa only).
* From continuing operations.
Camphor
6
Tiger Brands Limited Integrated annual report 2019
Our business
CHAIRMAN’S REVIEW
“The headwinds faced this year have highlighted the need for a sustained focus on driving
efficiencies and focusing the product portfolio, maintaining the strength of existing brands
and key relationships underpinned by a clear commitment to delivering broader societal value.
These are all key elements of Tiger Brands’ strategy, which I believe lays a strong foundation for
the company’s ability to deliver long-term value.” Khotso Mokhele Chairman
A CHALLENGING OPERATING
ENVIRONMENT
This has been a particularly tough year for consumers and
retailers in South Africa and across our markets. In South
Africa, consumer spending has been constrained by
lacklustre GDP and wage growth, high unemployment and
debt levels, and increasing fuel, transport and utility costs,
with the South African consumer spending less, consuming
less, and shopping smarter. Although we have seen higher
levels of economic growth in most of our markets across
Africa, consumers have faced similar constraints as a result
of volatile exchange rates, subdued commodity markets
and the impacts of political uncertainty and extreme
weather patterns in certain regions.
This reduced consumer spend has been accompanied by
rising input costs and heightened competition among food
producers and retailers, all of which are placing strong
pressure on both margins and volumes. Not surprisingly,
the impact of this very challenging context is reflected
in Tiger Brands’ results. Although group revenue from
continuing operations was up 3%, group operating income
before impairments and abnormal items was down 20%,
with rising input costs and declining volumes outweighing
any efficiency gains in supply chain management.
Collectively, these headwinds have highlighted the need
for a sustained focus on driving efficiencies and focusing
the product portfolio, delivering product and process
innovation, maintaining the strength of existing brands
and key relationships, and ensuring a fit-for-purpose
organisational culture, underpinned by a clear commitment
to delivering broader societal value. These are all key
elements of Tiger Brands’ strategy, which I believe lays
a strong foundation for the company’s ability to deliver
long-term value.
CLASS ACTION UPDATE
As has been previously disclosed, the class action against
the company arising from the outbreak of listeriosis was
certified by the High Court on 3 December 2018 and a
summons was issued on 16 April 2019. A plea was filed
by Tiger Brands on 8 August 2019. The parties are now
engaged in pre-trial preparation while subpoenas have been
issued for the disclosure of information by third parties,
Tiger Brands Limited Integrated annual report 2019
7
which is pertinent to the outbreak. Tiger Brands remains
committed to the matter being resolved as soon as possible
and will continue to conduct its defence in a responsible
manner.
STRENGTHENING OUR FOCUS ON FOOD
SAFETY
Last year in my annual statement, and in response to the
tragic listeriosis incident, I highlighted the need to improve
the central oversight of food safety and quality, and to
further enhance the quality of risk reporting to the board
and its committees. Food safety is a standing item on the
risk and sustainability committee’s agenda, underpinned by
clear reporting lines and regular internal assessments and
data management processes aligned with the Global Food
Safety Initiative (GFSI). We also introduced an integrated
short-term incentive scorecard – applicable to the CEO,
CFO, executive directors and prescribed officers – that
makes specific provision for food safety and quality as a key
performance indicator.
This year, external food safety and quality audits were
undertaken at selected high-risk sites by an independent
international auditing body, with all of Tiger Brands’
manufacturing sites achieving a GFSI-aligned external
certification. In addition, quarterly self-assessments and
gap closeouts were completed across the company’s
operations, and unannounced hygiene audits were
undertaken by the group’s microbiologist to ensure
compliance and embed the company’s newly introduced
standards. All new raw material and packaging suppliers
are now subject to supplier quality assurance processes,
and relevant factory teams at all high-risk sites have been
provided with training, including in basic microbiology and
sampling techniques. We have also been leveraging our
partnership with the University of Stellenbosch through
the Centre for Food Safety, particularly in terms of
microbiological investigations and research.
Although this renewed effort has contributed to a
significant reduction in marketplace incidents and ensured
that there were zero public product recalls over the year,
we recognise the need to maintain an unrelenting focus on
food safety and quality. Tiger Brands has defined and will
be implementing a centralised food safety and quality
verification schedule for manufacturing units. We will be
driving self-assessments to deliver a step-change
improvement in performance, using international hygienic
engineering and design guidelines as a manufacturing
hygiene standard, and developing and implementing
metrics and processes for supplier performance
measurement. We will continue to engage actively with
regulatory authorities to enhance the development and
implementation of industry standards for food safety.
MAINTAINING GOOD GOVERNANCE
My role as chairman is to ensure that as a board, we
provide an independent oversight function, ensuring that
the management team delivers on its responsibilities to
use the resources entrusted to it to protect the best
interests of the company. Our job on the board is to foster
accountability and ethical conduct, engaging with the
executive team on its strategic decisions, approving the
capital and resources needed to achieve the identified
strategic objectives, and holding them to account in
ensuring the most efficient and effective execution of
strategy.
In fulfilling this function, it is important that the board
maintains its independence, and that we bring sufficient
diversity of opinion and perspective, finding the right
balance between depth of industry and company
experience, and the benefits of new insight. We have made
some important new appointments to the board this year
that have assisted us in meeting this responsibility.
In November 2018, Yunus Suleman resigned as non-
executive director after four years of service. In March
2019, Cora Fernandez joined the board as an independent
non-executive director, with Donald Wilson and Monwabisi
Fandeso appointed to the board in June and July 2019
respectively. Subsequent to year end, the board appointed
Advocate Mahlape Sello with effect from 1 October 2019.
These new appointments bring valuable new skills and
perspectives, further strengthening both the board’s
diversity and its levels of independence.
This year, we commissioned an independent external
effectiveness review that assessed the board’s overall
performance in 2019 and identified strengths and
improvement areas. The overall feedback was generally
positive, with the board assessed as having skilled,
professional and experienced members, good levels of
diversity, and a culture of frank discussion in addressing
the company’s various recent challenges, supported by
strong leadership and effective board processes and
structures. The review identified various opportunities for
improvement. These include strengthening the board’s
support of current efforts to build a performance-based
culture with more robust accountability mechanisms,
improving clarity on Tiger Brands’ long-term strategic
goals with more ambition in driving innovation, and
increasing oversight of the company’s talent management
activities, at and below executive level. We have taken
these various recommendations on board and are
implementing appropriate measures to address these
improvement areas.
8
Tiger Brands Limited Integrated annual report 2019
CHAIRMAN’S REVIEW CONTINUED
DEFINING AN AMBITIOUS GROWTH
STRATEGY
Following feedback from our stakeholders, this year’s
integrated report includes a more explicit review of
Tiger Brands’ strategy, outlining the company’s various
commitments and reviewing the progress it has made
within each of its four strategic focus areas: Drive Growth,
Be Efficient, Great People and Sustainable Future.
In September this year, the board spent two days with the
executive team reviewing the company’s updated strategic
roadmap. Developed in response to the challenging
operating environment – which is seeing dynamic changes
in consumer behaviour, heightened competition, and the
potentially disruptive impacts of digital technology – the
board believes that this revised roadmap sets the company
up well to deliver on its growth ambitions.
To realise its vision of driving growth through winning
category, channel and customer strategies, the company
has identified, and begun to deliver on, clear commitments
to optimise its product portfolio, deliver innovations to
meet changing consumer needs and expectations, and
drive growth at the point of purchase. In response to the
increasing competitive pressure from private label, Tiger
Brands has been working to reinforce the strength of its
existing brands, leveraging its position as category leader
in more than half of the categories it operates in, and
evaluating opportunities to stretch its brands within and
across product categories. Our recent decisions on
optimising the product portfolio are reviewed further
below.
In terms of Tiger Brands’ Africa growth strategy,
following a very challenging year in Mozambique, Nigeria
and Zimbabwe, the company is looking to deliver organic
growth by driving category growth through targeted brand
investments, developing superior routes to markets and
investing in necessary capabilities. The strategy is defined
by a clear approach to market segmentation in our
established and untested markets, and a structured
approach to winning in trade in prioritised product
categories in our identified key markets.
In an effort to expand and protect margins in the subdued
market, there is a heightened focus on being efficient,
with specific commitments to drive productivity and secure
cost efficiencies across its value chain through improved
procurement and logistics practices, various plant and
process improvements, and the development of integrated
IT and information solutions. To maintain the capacity for
long-term growth, various capital expenditure projects
have been approved to upgrade older facilities, improve
production capacity, and provide for product and process
innovations, safety and sustainability.
The strategic growth initiatives are underpinned by the
company’s undertaking to develop great people, by
deepening the skills set and diversity of its talent base,
strengthening the leadership and commercial capabilities
across the organisation and creating a strong
performance-based, purpose-driven culture that inspires
innovation and enables the company to attract and retain
talent. As part of this commitment, the board has agreed
a robust succession plan for key leadership positions,
including the CEO, with clear development plans in place
that are regularly reviewed at board level.
This year, Tiger Brands has clarified its commitment
to promoting a sustainable future, agreeing some
ambitious targets in three priority focus areas: health
and nutrition, enhanced livelihoods and environmental
stewardship. Through this strategic pillar, Tiger Brands has
detailed commitments to enable consumers to improve
their health and wellbeing by developing best-in-class
nutritional standards, providing more nutritious, affordable
food products, and leveraging the company brand and
marketing activities to promote consumer nutrition; to
improve the livelihoods of thousands of people, by
providing opportunities across our value chain for inclusive
economic participation, including through a deliberate
focus on supporting black/black-women farmers and
enterprises; and to significantly reduce its environmental
impact through innovative solutions. These three areas are
where Tiger Brands believes it can meaningfully intervene,
through its business activities as Africa’s largest food
company, in contributing to the UN Sustainable
Development Goals and addressing some of the significant
socio-economic and environmental challenges facing our
markets.
OPTIMISING TIGER BRANDS’ PRODUCT
PORTFOLIO
During the year, following the strategic review conducted
by the board in 2017, we approved several changes to the
company’s portfolio. In April 2019, Tiger Brands divested
its entire interest in Oceana Group Limited (Oceana), then
equating to approximately 42,1% of the issued share
capital of Oceana. Following a thorough review of
Deli Foods in Nigeria, and an assessment of all options for
the loss-making company, the board approved the closure
of the business; we expect the process to be concluded in
the next few months.
As part of the same strategic review, the role of VAMP
within the group’s portfolio was earmarked for further
evaluation. The unfortunate events of 2018, which led to
the temporary closure of the manufacturing facilities,
delayed this evaluation. Following the reopening of the
VAMP business, the board initiated the review, which
confirmed that the VAMP business was not an ideal fit
Our business Tiger Brands Limited Integrated annual report 2019
9
within the Tiger Brands portfolio, given the business’s
unique value chain and the perishable nature of its
underlying products. In November 2019, following receipt
of several indicative offers, the board approved
commencement of a formal due diligence process.
Upon completion of this process, all disposal options will
be further evaluated. The company will be issuing further
communication as the process reaches key milestones.
This development does not, in any way, affect Tiger
Brands’ commitment to the class action process currently
under way.
OUTLOOK
Addressing the profound economic challenges that South
Africa faces will require resolute and committed leadership.
The national general election that took place earlier this
year raised great hopes that the political leadership would
inject serious energy into confronting these challenges.
Unfortunately, the political developments in the months
that followed the election have not inspired much
confidence that the sorely needed injection of energy will
materialise as soon as is required. The challenge thus
remains for all spheres of leadership, including within the
private sector, to continue to engage to ensure an
increased level of confidence in the future.
APPRECIATION
After what has been a challenging year for all of us, I would
like to thank my colleagues on the board for their valuable
support and insight in fulfilling our governance
responsibilities. I also deeply appreciate the hard work and
dedication of the Tiger Brands executive team, and all the
company’s employees, in striving to deliver value in this
particularly trying environment. The ongoing engagement
of our key stakeholders – including our shareholders,
suppliers, customers and those in government and
industry – continues to play a critically supportive role in
our activities. Working together, I am confident that Tiger
Brands will successfully execute its strategy for long-term
growth and value creation and deliver on its purpose of
nourishing and nurturing more lives every day.
Khotso Mokhele
Chairman
21 November 2019
10 Tiger Brands Limited Integrated annual report 2019
Our business
CHIEF EXECUTIVE OFFICER’S REVIEW
“Our priority this year has been to continue work on our group
strategic commitments and to accelerate the implementation of each of our
four strategic focus areas, namely Drive Growth, Be Efficient, Great People
and Sustainable Future.” Lawrence Mac Dougall Chief executive officer
The company’s performance this year reflects the impact
of a challenging trading environment, characterised by a
flat economy, significant pressure on consumer disposable
income, and low levels of business and investor
confidence. The combination of reduced consumer spend,
rising input costs and increased competitive pressure,
contributed to a 20% decline in group operating income
before impairments and abnormal items, down from
R3,3 billion to R2,6 billion. Total revenue was up by 3%,
aided by price inflation of 5%, but offset by volume
declines of 2% at a group level. The South African
domestic business grew revenue by 5%. Excluding VAMP,
domestic revenue grew by 7%, with a positive 2% volume
growth and 5% price inflation. The international and VAMP
businesses declined overall. The price inflation and
valuable supply chain efficiencies achieved were not
sufficient to counter above-inflation input costs and
declining volumes, all of which negatively impacted
margins.
Given these challenging market conditions, it was pleasing
to see the strong performance delivered this year by
Beverages, Snacks and Treats, Home, Personal Care and
Baby, all of which saw growth in revenue and operating
income, fuelled by strong volume growth and increased
market share in key categories. This performance reflects
the continuing strength of our brands, customer
relationships and distribution capabilities, which together
provide a critical foundation for long-term growth.
The performance in these divisions was unfortunately
offset by the slow recovery of the VAMP division, margin
compression across the Grains segment, and tough
trading conditions in the group’s primary export markets.
Despite VAMP’s strong brand equity and consistent
improvements in brand health metrics, revenue was down
39% to R654 million, as a result of delays with the
factories’ reopening, lower factory throughput and higher
raw material costs. In the Grains division, lower volumes
Tiger Brands Limited Integrated annual report 2019 11
and margin pressure resulted in a disappointing year.
Overall margins declined to 10,9%, reflecting increased
pressure on Maize, Pasta and Rice volumes, aggressive
pricing from competitors, and the impact in particular of
low-price pasta imports. In the Exports and International
businesses total revenue was down 11%, driven mainly by
challenges in key export markets. Exports into Nigeria,
Mozambique and Zimbabwe suffered from foreign
currency shortages and slow economic recovery. This was
partially offset by a significant recovery in the Deciduous
Fruit business. Cameroon delivered another good year in
very difficult political and economic conditions increasing
revenue and operating margins.
A TOUGH MARKET ENVIRONMENT
Our performance needs to be seen in the context of the
tough operating context, which has placed significant
pressure on consumer-packaged goods companies and
retailers across the region. Consumers generally are facing
particularly tough times, with rising costs and high levels
of consumer debt. In South Africa, an estimated 62%
of South Africans live on less than R60/day, with many
families trapped in poverty due to the high unemployment
levels. We have also seen increasing levels of social unrest
this year, with a further rise in service delivery protests and
industrial action, and a regrettable return of violent
instances of xenophobia. This rising social stress had a
direct impact on our business activities, with industrial
action in one of our grocery facilities and two of our
Pretoria bakeries, attacks on retail stores and our delivery
vehicles, and a backlash against South African retailers in
some of our African markets.
In addition to reduced consumer spend, we are seeing
some broader changes in consumer behaviour, including
a growing focus on health and wellness, an increased
focus on shopping on promotion, and greater consumer
pressure for corporate transparency and improved social
and environmental performance. Collectively, these
developments increase the need to secure greater
efficiencies and improved product and process innovation,
while increasing our efforts to achieve our sustainability
goals.
EXECUTING AN AMBITIOUS GROWTH
STRATEGY
This year we undertook a comprehensive refresh and
update of our five-year growth strategy, building on our
activities last year in introducing a new operating model
and implementing our culture development programmes.
Our priority this year has been to continue work on our
group strategic commitments and to accelerate the
implementation of each of our four strategic focus areas,
namely Drive Growth, Be Efficient, Great People and
Sustainable Future. We made good progress this year in
each of these areas, laying the foundation for our longer-
term growth ambitions.
As part of our strategic commitment to optimise our
product portfolio, we have made various changes this year
to the company’s portfolio. In addition to divesting Tiger
Brands’ entire interest in Oceana Group Limited in April
2019, we have more recently approved the closure of the
loss-making Deli Foods business in Nigeria. We expect the
closure process to be concluded over the next couple of
months. In November 2019, after a detailed evaluation of
the VAMP business and following the receipt of several
indicative offers, we approved a formal due diligence
process for disposal of the business. This does not in any
way affect our commitment to responding to the class
action.
In response to changing consumer expectations for
convenience, affordability and healthier foods, we have
delivered some successful product innovations this year
across our product portfolio, including in particular in
health and nutrition where we foresee significant
commercial opportunities. Many of our anticipated new
product launches will extend into new categories and
consumer spaces as we look to accelerate our overall
innovation rate across the business.
Recognising the increasing pressure from private label,
we are reinforcing the strength of our existing brands,
maintaining our marketing spend and introducing targeted
marketing strategies to build on our position as the
category leader. In the context of the growing bargaining
power of retailers and increasing competitive intensity,
we are also taking measures to increase our product
penetration and enhance on-shelf availability, including
by strengthening our customer relationships.
In terms of our Africa growth strategy, we have identified
opportunities to drive category growth through targeted
brand investments, both in our existing markets and in
prioritised new markets. This will be supported by superior
routes to markets and local investment in key capabilities.
We have achieved some significant cost-saving targets
this year across our value chain, delivering efficiencies
in packaging and ingredients, centralised procurement,
enhanced plant and process practices. We also made
good progress against our customer service excellence
targets, with an 18% reduction in consumer complaints.
I am particularly pleased with the progress made in
delivering on our people strategy. The new appointments
12 Tiger Brands Limited Integrated annual report 2019
CHIEF EXECUTIVE OFFICER’S REVIEW CONTINUED
continue to build our focus on quality, with the aim of
delivering a step-change improvement, accompanied by
full transparency on our performance.
On employee safety, I am saddened to report that this year
one of our employees was killed. In April 2019, Mr Aubrey
Tornado Skosana, a driver at Albany Pretoria, died
following a multi-collision vehicle accident while on a
delivery. I extend my sincere condolences to Mr Skosana’s
family and friends. The family has been given support and
counselling, and we have implemented appropriate
response measures to minimise the potential for future
such incidents. We continue to seek an industry solution
for the concerning number of violent route-to-market
incidents, while ensuring all our Bakery delivery routes are
risk assessed and enabled with tailored response
measures to enhance employee safety.
CLASS ACTION UPDATE
In April 2019, Tiger Brands received a class action
summons following last year’s tragic national listeriosis
incident. In August, the company filed a plea in response
to this summons. Tiger Brands remains committed to
having the matter determined as soon as possible and will
continue to conduct its defence in a responsible manner.
OUTLOOK
The sobering Medium-Term Budget Policy Statement,
given by the South African Minister of Finance in October
2019, suggests that the country faces some significant
macro-economic challenges for the foreseeable future.
In the context of continuing policy and political uncertainty,
structural unemployment, high debt levels, and ongoing
concerns with state-owned enterprises, investor and
business sentiment is understandably subdued.
I believe that the strength of our heritage brands, the
diversity of our product portfolio across a range of income
groups, our long-standing distribution networks and
customer relationships, and our strong balance sheet, will
enable us to absorb potential future headwinds. I am also
confident that we have the right strategy in place to
respond to these difficult and dynamic market conditions
and ensure our long-term growth.
to the executive and senior management team have
brought valuable additional skills, experience and insights.
We have introduced a standardised talent management
framework, improved our succession planning, and
invested in developing leadership and commercial
capabilities. Although we have begun to make our reward
mechanisms more competitive, instilling a purpose-led
performance-based culture that inspires innovation and
drives performance remains a top priority.
In terms of our recently revised Sustainable Future pillar –
which includes ambitious commitments on health and
nutrition, enhanced livelihoods, and environmental
stewardship – we have seen some pleasing initial results.
We have driven micronutrient enrichment across 30,7% of
our net sales, fortifying staple foods such as bread, maize
meal and cake flour with key vitamins and minerals, and
certain breakfast cereals and instant porridges with
micronutrients. This year, we set up a “market access
accelerator” that has already successfully supported seven
black-owned enterprises in logistics opportunities, trained
more than 50 aspiring black entrepreneurs, and provided
58 black smallholder farmers with both financial and
non-financial support. On our environmental performance,
we have seen some positive initial results in addressing our
most material environmental impacts, namely improving
energy and water efficiency, reducing greenhouse gas
emissions, and reducing operational as well as
packaging waste.
MAINTAINING OUR STRATEGIC ENABLERS
Delivery of our priority focus areas is dependent on
continuing strong performance in various strategic
enablers, such as good governance practices, effective
internal processes, food quality, occupational health and
safety, and stakeholder responsiveness. Our activities in
each of these areas are reviewed in more detail in this
report. In these opening comments I wish to focus in
particular on the issues of food safety and quality, as well
as employee safety.
This year, we have placed a particular priority on driving
the food safety and quality agenda across the company,
investing heavily in ensuring that we have trained and
talented people integrated across functions, a robust and
integrated set of processes and tools, and a culture and
passion for quality that permeates across the organisation.
We have strengthened our internal and external audit and
assessment processes, improved supplier quality
assurance measures, and completed hazard analysis and
critical control point (HACCP) training for all high-risk sites.
Through our various quality initiatives, we have achieved
external certification for all our manufacturing sites. We will
Our business Tiger Brands Limited Integrated annual report 2019 13
APPRECIATION
Our ability to deliver value in this tough year is thanks to
the continuing energy and hard work that I have seen
first-hand across the company. I would like to express my
deep appreciation to all of Tiger Brands’ employees for
their contribution in working towards our strategic
ambitions, as well as my colleagues on the executive team
for their active support. The Tiger Brands’ board, under
the strong leadership of our chairman, Dr Khotso Mokhele,
has once again been an invaluable source of advice and
counsel as we have developed and implemented our
strategic roadmap. Although we are not yet showing the
levels of growth that we aspire to, I believe that the
company is well positioned for the future.
LC Mac Dougall
Chief executive officer
21 November 2019
14 Tiger Brands Limited Integrated annual report 2019
OUR BUSINESS MODEL
Tiger Brands creates value and delivers on its purpose by producing, marketing and
distributing everyday branded food, home and personal care products, predominantly
in South Africa with a growing market presence across Africa.
KEY CAPITAL INFLOWS
SOCIAL AND RELATIONSHIP
Committed workforce
Investor confidence
Constructive relationship with
government and regulators
Positive supplier and customer relations
Trusted brand and reputation with
consumers and society
Stable operating context contributing
to sustained market demand
OUR EXTERNAL ENVIRONMENT
› Sustained macro-economic
pressure on consumer spending
› Heightened competition and
changing retail and consumer
dynamics
› Growing consumer and policy
focus on nutrition, health and
environmental stewardship
WHEAT
RICE
MAIZE
OUR PEOPLE
Strong and diverse board
Experienced executive team
10 543 employees (2018: 11 348
permanent)
Enabling environment
Adequate governance systems
Improved reward and personal
development opportunities
OUR BRAND AND REPUTATION
Strong brand and reputation
Unique product formulations and trusted
recipes
Research and development capacity
Governance and business systems
MANUFACTURED CAPITAL
41 manufacturing facilities
160 packing lines
24 distribution centres
FINANCIAL CAPITAL
Borrowings
Low gearing levels and strong cash
generation
Cash generated from operations
NATURAL RESOURCES
Local and imported raw material
ingredients
Water and energy for production
Fuel (diesel and petrol) for distribution
Fertile soil and conducive agricultural
conditions
OATS
SORGHUM
Throughput
of primary
agricultural products
transformed
into branded
food items
TOMATOES
& BEANS
FRUIT &
NUTS
SUGAR
COCOA
MEAT
g including:
sin
s
e
c
o
r
p
d
n
a
g
n
i
r
u
t
c
a
f
u
n
a
M
OUR TOP 10 RISKS
1.
Operating
environment
2.
Albany
route-to-
market
3.
Food safety
and product
quality
4.
Occupational
health and
safety
5.
Cybercrime
and
information
security
6.
Business
continuity
vulnerabilities
7.
Data and
information
risk
C
R
e
s
e
arc
h a
n
d
Proc
ure
m
e
ntr
e
s
o
f
e
d
e
v
e
l
o
p
e
n
t
a
n
d
x
c
e
ll
e
m
e
n
t
n
c
e
b
u
l
k
t
r
a
n
s
p
o
r
t
S ervice providers/suppliers
G • C O NSU M ABLES • OTHER
GIN
A
K
C
A
P
Our business
g including:
sin
s
e
c
o
r
p
d
n
a
g
n
i
r
u
t
c
a
f
u
n
a
M
Tiger Brands Limited Integrated annual report 2019 15
Our core target consumers are middle-income consumers, the largest and fastest
growing segment. Our core category is food with immediate adjacencies
in beverages, snacks and treats.
OUR REVENUE STREAM
OUTFLOWS
C
R
e
s
e
arc
h a
n
Proc
ure
m
e
e
ntr
e
s
o
f
e
d
d
e
v
e
l
o
p
x
c
e
ll
e
m
e
n
t
n
c
e
n
t
a
n
d
b
u
l
k
t
r
a
n
s
p
o
r
t
RETAILERS
WHOLESALERS
GENERAL
TRADE
PACKAGING
DISTRIBUTION
Economic/Process performance
‘ Profitable operations
‘ Efficient resource use
‘ Financial resilience
‘ Optimised product portfolio
G • C O NSU M ABLES • OTHER
S ervice providers/suppliers
GIN
A
K
C
A
P
8.
Attract and
retain critical
skills
9.
Fraud, theft,
crime and
corruption
10.
Ageing
infrastructure
Snacks and Treats
Sugar
Chocolate
Beverages
Concentrates
Sports drinks
Ready-to-drink
Value Added Meat
Products (VAMP)
Home, Personal
Care and Baby
Milling and baking
Baking
Milling:
– Flour
– Maize
– Sorghum
Other grains
Pasta
Breakfast
Rice
Groceries
Condiments and
ingredients
Spreads
Canned fruit and
vegetables
OUR COST STREAM
Our most significant cost streams include:
› Raw material procurement
› Employee wages and benefits
› Sales and distribution expenses
› Electricity and fuel
› Marketing expenses
› Regulatory compliance costs
› Maintenance and upgrading of plant and equipment
› Other administered costs
Most of these costs have been rising in recent years,
many of them above inflation, driven by various external
economic, social and environmental factors beyond our
control. We have a strong focus on securing cost savings
on those issues within our control, through our established
cost-conscious culture and a track record of delivering
procurement savings and supply chain efficiencies.
We are continuing to identify opportunities for further
efficiencies in our manufacturing operations and our sales
and administrative activities. In terms of exchange rate
volatility, a substantial portion of our costs are directly
or indirectly exposed to foreign exchange volatility.
Material cost differentiators
› Our ability to leverage a centralised procurement hub
› Standardisation and simplification of group
processes, systems and practices
SOCIAL AND RELATIONSHIP
Provision of affordable nutrition
Economic opportunities across value chain
Community impact of operations
Contribution to non-communicable disease
Impact of unsafe food products
(outcomes on page 16)
OUR PEOPLE
Investment in employee skills and motivation
Investment in employee health and safety
Enhanced employee and board diversity
✓
✓
✓
✗
✗
✓
✓
✓
✗
Some negative health and safety incidents
(outcomes on page 16)
OUR BRAND AND REPUTATION
✓
✓
Investment in maintaining brand equity
Innovation launches including in health and
nutrition, value and convenience
(outcomes on page 16)
MANUFACTURED CAPITAL
✓
Investment in modernising plant and
equipment
✗
General wear and tear/depreciation
(outcomes on page 17)
✓
✓
✓
✓
✓
✗
✗
✗
✗
✗
FINANCIAL CAPITAL
Return on equity
Return on invested capital (ROIC)
Favourable funding terms
(outcomes on page 17)
NATURAL RESOURCES
Investments in numerous mitigation
measures
Innovation in products, processes and
consumption
Raw material extraction
Energy use and GHG emissions across
value chain
Water use and potential contamination
Habitat impacts across supply chain
Environmental incidents
(outcomes on page 17)
The majority of our revenue is generated in South Africa from our Grains (45%) and Consumer Brands (34%) divisions, with the balance coming from the Exports and International division (11%), followed by Home, Personal Care and Baby (9%). Material revenue differentiators ›The group’s long-standing market-leading position in branded food and beverages ›Our power brands, most of which are rated first or second in their product categories ›A robust marketing strategy to ensure our brands remain relevant and top-of-mind ›Far-reaching distribution capabilities ›The strength and quality of our relationships with our customers
16 Tiger Brands Limited Integrated annual report 2019
OUR BUSINESS MODEL CONTINUED
SOCIAL AND RELATIONSHIP
OUR PEOPLE
OUR BRAND AND REPUTATION
Material inputs
Committed workforce
Investor confidence
Constructive relationship with
government and regulators
Positive supplier and customer relations
Trusted brands and reputation with
consumers and society
Stable operating context contributing
to sustained market demand
Our actions to sustain value
› Strong drive on people strategy
(see page 32), and on developing
positive employee relations
› Regular investor communication
› Structured engagement with
regulators, continued focus on
compliance and ensuring a societal
contribution
› Active engagement with suppliers and
customers (retailers and wholesalers)
› Product and process innovation
including on health, convenience and
value
› Delivering societal value through
our core business, supported by
Tiger Brands Foundation
Outcomes
of our activities
Generally positive relations across
key stakeholder groups
✓ 18% reduction in consumer
complaints and 35% reduction
in marketplace incidents
✓ 31% of net sales fortified with
micronutrient enrichment
✓ R14,3 billion BBBEE supplier spend
✓ R12,3 million spend to support black
farmers and small businesses
Continuing concerns in certain areas
✘ Concerns around the company’s ability
to recover cost push in a challenging
consumer environment
✘ Listeria class action lawsuit
✘ Labour unrest (Groceries and Bakeries)
Capital trade-offs
› Our success as a business
depends ultimately on the quality
of our relationships with key
stakeholders. These stakeholders
have different and sometimes
conflicting priority interests
(page 20); balancing these
competing interests requires
trade-offs as we prioritise certain
investments over others.
› Investing in social and relationship
capital also often requires short to
medium-term financial capital
inputs, but generally generates
positive return across most capitals
over the longer term.
Material inputs
Strong and diverse board
Experienced executive team
10 543 employees (2018: 11 348)
Enabling environment
Adequate governance systems
Improved reward and personal
development opportunities
Our actions to sustain value
Three-pillar people strategy focusing
on building a diverse talent base,
developing leadership capacity, and
creating a great place to work
› Sustained focus on promoting
diversity and employment equity
› Appropriate succession plans in
place
Outcomes
of our activities
Generally improved employee skills
and motivation
✓ 40% of leadership appointments
were internal
✓ Recognised as a Top Employer 2019
✓ Management trainee programme
ranked second in SA Graduate and
Employee Association
✓ R4,2 billion on wages and benefits
✓ R127 million invested in skills
development
Board diversity:
✓ 62% black and 38% female
Employee diversity:
✓ 93% black and 30% female
✘ Industrial action at some of our
operations
✘ One fatality (2018: one)
✘ 0,38 lost-time injury frequency rate
(2018: 0.27)
Capital trade-offs
› As labour is one of our most
significant costs, there has been a
strong drive to identify
opportunities for further labour
efficiencies and productivity gains
across our operations. While
reducing labour costs has benefits
in terms of financial capital, it has
potentially significant negative
implications in human and social
capital.
› Investing, attracting, retaining and
developing executive talent is a
material cost, depleting financial
capital in the short term, but
resulting in returns in most capital
stocks in the longer term.
Material inputs
Strong brand and reputation
Unique product formulations and
trusted recipes
Research and development capacity
Governance and business systems
Our actions to sustain value
› Strong focus on ensuring a clear
purpose and strong personality
behind our master brands
across different media
› More diversified marketing spend
› Investment in innovation and R&D,
including in health and wellness
Outcomes
of our activities
Sustained brand presence
✓ 100% penetration in South Africa,
with every household having at least
one Tiger Brands product
✓ Category leader in over 50% of the
categories we operate in from a
brand equity perspective
✓ Brands compete head-on with the
leading brand in almost a third of
categories
✓ We can disrupt categories, being a
challenger in over 15% remaining
categories
Innovation launches, including:
✓ Health and nutrition: Albany BoB
Genius, Ace+Fibre, Jungle Plus+
✓ Value: Tastic variants; Benny
seasoning; Morvite strip pack
✓ Convenience: Purity pouches
✓ Other: 100% durum pasta; new Oros
flavours
Capital trade-offs
› Tiger Brands’ legacy is built on the
strength of our brands and the
quality of our products, which in
turn depends on our proprietary
product recipes, our capacity to
innovate in response to changing
consumer preferences, our robust
food quality and safety systems,
and our innovative marketing and
consumer engagement.
Maintaining our leadership in these
areas is key to long-term growth,
but often has short-term cost
implications.
Our business Tiger Brands Limited Integrated annual report 2019 17
MANUFACTURED CAPITAL
FINANCIAL CAPITAL
NATURAL RESOURCES
Material inputs
41 manufacturing facilities
160 packing lines
24 distribution centres
Our actions to sustain value
› R1,1 billion capital expenditure in
manufacturing and distribution
capability and technology
Outcomes
of our activities
✓ Investment in Oats Mill, Beverages
✓ 97% on-shelf availability
Some challenges remain
✘ Supply chain difficulties at
Groceries impacted profitability
✘ Higher conversion costs at Snacks
and Treats
Capital trade-offs
› Investing in plant and equipment is
beneficial for longer-term growth
but can impair short-term financial
performance.
› The modernising of facilities may
also lead to job losses, negatively
impacting social and human
capital; any job losses generally
contribute to reduced consumer
spend and undermine market
growth.
14 Tiger Brands Limited Integrated annual report 2019
Our business
Tiger Brands Limited Integrated annual report 2019 15
OUR BUSINESS MODEL
Tiger Brands creates value and delivers on its purpose by producing, marketing and
distributing everyday branded food, home and personal care products, predominantly
in South Africa with a growing market presence across Africa.
Our core target consumers are middle-income consumers, the largest and fastest
growing segment. Our core category is food with immediate adjacencies
in beverages, snacks and treats.
Material inputs
Borrowings
Low gearing and strong cash generation
Cash generated from operations
efficiency
execution
Our actions to sustain value
› Strategy supported by focused
› Continued drive on operational
› Prudent approach to capex
› Operating model embedded
through revitalised ways of
working
approvals
› Strong corporate governance
› Deliberate working capital
structures
management
Outcomes
of our activities
✓ 21,6% return on net assets
(RONA) (2018: 26,6%)
✓ Net interest paid R10,6 million
(2018: R41,8 million)
✓ R3,5 billion cash generated from
operations (2018: R3,3 billion)
✓ Savings of R616 million
✓ Working capital cents per
R1 turnover 21,4 (2018: 21,6)
✘ Total dividend per share declared:
1 061 cents (1 080 cents)
✘ 14,1% return on equity (2018:
16,7%)
✘ ROIC 14,2% > weighted average
cost of capital (WACC) 12,5%
(2018: ROIC 17,3% > WACC
12,5%)
Capital trade-offs
› Ensuring sustainable growth in
financial capital often involves
making significant capital
investments in the short term.
› Our strategic direction informs the
allocation of capital to balance the
short-term interests of certain
stakeholders with long-term
growth objectives.
Material inputs
Local and imported raw material
ingredients for our products
Water for production facilities,
comprising municipal supply and own
borehole sources
Energy to fuel our manufacturing,
primarily Eskom electricity
Fuel (diesel and petrol) for distribution
Fertile soil and conducive agricultural
conditions
Our actions to sustain value
› Continued energy and water
efficiency measures, with
supporting mitigating plans to
ensure continuity of production
› Investment in innovations to
optimise packaging and reduce
waste
› Partnerships in place to reduce
food waste and packaging waste
Outcomes
of our activities
Some progress in mitigating impacts
✓ Absolute water use down 7,2%;
water intensity down 5,4%
✓ Total carbon emissions down 6,5%
year-on-year
✓ Absolute energy use down 8,5%;
energy intensity down 5,0%
✓ Achieved a 10% reduction in body
plate thickness by light-weighting
aerosol and food cans
Capital trade-offs
› Natural capital is a critical input
for all of our activities. Generating
value across all the other capitals
often involves some negative
impact on natural capital.
› We strive to minimise these
impacts across our value chain,
by investing in mitigating
measures in our processes,
products and packaging.
KEY CAPITAL INFLOWS
SOCIAL AND RELATIONSHIP
Committed workforce
Investor confidence
Constructive relationship with
government and regulators
Positive supplier and customer relations
Trusted brand and reputation with
consumers and society
Stable operating context contributing
to sustained market demand
OUR EXTERNAL ENVIRONMENT
› Sustained macro-economic
pressure on consumer spending
› Heightened competition and
changing retail and consumer
dynamics
› Growing consumer and policy
focus on nutrition, health and
environmental stewardship
WHEAT
RICE
MAIZE
OATS
SORGHUM
Throughput
of primary
agricultural products
transformed
into branded
food items
TOMATOES
& BEANS
FRUIT &
NUTS
SUGAR
COCOA
MEAT
g including:
sin
s
e
c
o
r
p
d
n
a
g
n
i
r
u
t
c
a
f
u
n
a
M
OUR PEOPLE
Strong and diverse board
Experienced executive team
10 543 employees (2018: 11 348
permanent)
Enabling environment
Adequate governance systems
Improved reward and personal
development opportunities
OUR BRAND AND REPUTATION
Strong brand and reputation
Unique product formulations and trusted
recipes
Research and development capacity
Governance and business systems
MANUFACTURED CAPITAL
41 manufacturing facilities
160 packing lines
24 distribution centres
FINANCIAL CAPITAL
Borrowings
Low gearing levels and strong cash
generating capabilities
Cash generated from operations
NATURAL RESOURCES
Local and imported raw material
ingredients
Water and energy for production
Fuel (diesel and petrol) for distribution
Fertile soil and conducive agricultural
conditions
OUR REVENUE STREAM
OUTFLOWS
C
R
e
s
e
arc
h a
n
Proc
ure
m
e
e
ntr
e
s
o
f
e
d
d
e
v
e
l
o
p
x
c
e
ll
e
m
e
n
t
n
c
e
n
t
a
n
d
b
u
l
k
t
r
a
n
s
p
o
r
t
RETAILERS
WHOLESALERS
GENERAL
TRADE
PACKAGING
DISTRIBUTION
Economic/Process performance
‘ Profitable operations
‘ Efficient resource use
‘ Financial resilience
‘ Optimised product portfolio
G • C O NSU M ABLES • OTHER
S ervice providers/suppliers
GIN
A
K
C
A
P
Snacks and treats
Sugar
Chocolate
Beverages
Concentrates
Sports drinks
Ready-to-drink
Value Added Meat
Products (VAMP)
Home, Personal
Care and Baby
Milling and baking
Baking
Milling:
– Flour
– Maize
– Sorghum
Other grains
Pasta
Breakfast
Rice
Groceries
Condiments and
ingredients
Spreads
Canned fruit and
vegetables
OUR COST STREAM
Our most significant cost streams include:
› Raw material procurement
› Employee wages and benefits
› Sales and distribution expenses
› Electricity and fuel
› Marketing expenses
› Regulatory compliance costs
› Maintenance and upgrading of plant and equipment
› Other administered costs
Most of these costs have been rising in recent years,
many of them above inflation, driven by various external
economic, social and environmental factors beyond our
control. We have a strong focus on securing cost savings
on those issues within our control, through our established
cost-conscious culture and a track record of delivering
procurement savings and supply chain efficiencies.
We are continuing to identify opportunities for further
efficiencies in our manufacturing operations and our sales
and administrative activities. In terms of exchange rate
volatility, a substantial portion of our costs are directly
or indirectly exposed to foreign exchange volatility.
Material cost differentiators
› Our ability to leverage a centralised procurement hub
› Standardisation and simplification of group
processes, systems and practices
SOCIAL AND RELATIONSHIP
Provision of affordable nutrition
Economic opportunities across value chain
Community impact of operations
Contribution to non-communicable disease
Impact of unsafe food products
(outcomes on page 16)
OUR PEOPLE
Investment in employee skills and motivation
Investment in employee health and safety
Enhanced employee and board diversity
✓
✓
✓
✗
✗
✓
✓
✓
✗
Some negative health and safety incidents
(outcomes on page 16)
OUR BRAND AND REPUTATION
✓
✓
Investment in maintaining brand equity
Innovation launches including in health and
nutrition, value and convenience
(outcomes on page 16)
MANUFACTURED CAPITAL
✓
Investment in modernising plant and
equipment
✗
General wear and tear/depreciation
(outcomes on page 17)
✓
✓
✓
✓
✓
✗
✗
✗
✗
✗
FINANCIAL CAPITAL
Return on equity
Return on invested capital (ROIC)
Favourable funding terms
(outcomes on page 17)
NATURAL RESOURCES
Investments in numerous mitigation
measures
Innovation in products, processes and
consumption
Raw material extraction
Energy use and GHG emissions across
value chain
Water use and potential contamination
Habitat impacts across supply chain
Environmental incidents
(outcomes on page 17)
OUR TOP 10 RISKS
1.
Operating
environment
2.
Albany
route-to-
market
3.
Food safety
and product
quality
4.
Occupational
health and
safety
5.
Cybercrime
and
information
security
6.
Business
continuity
vulnerabilities
7.
Data and
information
risk
8.
Attract and
retain critical
skills
9.
Fraud, theft,
crime and
corruption
10.
Ageing
infrastructure
The majority of our revenue is generated in South Africa from our Grains (45%) and Consumer Brands (34%) divisions, with the balance coming from the Exports and International division (11%), followed by Home, Personal Care and Baby (9%). Material revenue differentiators ›The group’s long-standing market-leading position in branded food and beverages ›Our power brands, most of which are rated first or second in their product categories ›A robust marketing strategy to ensure our brands remain relevant and top-of-mind ›Far-reaching distribution capabilities ›The strength and quality of our relationships with our customers
18 Tiger Brands Limited Integrated annual report 2019
Our business
OUR EXTERNAL ENVIRONMENT
This has been another dynamic year for consumer packaged goods (CPG) companies in
South Africa, during which we have felt the impact of a very constrained consumer
environment, an increasingly competitive food and retail environment, and changing consumer
and regulatory expectations regarding nutrition, health and environmental responsibility.
This challenging external context presents both risks and commercial opportunities,
and has informed the development of our growth strategy.
PROCUREMENT
MANUFACTURING
LOGISTICS
CUSTOMERS
CONSUMERS
› ZAR volatility
› BBBEE
› Unreliable and
expensive
electricity
› Labour costs
› Employee
relations
› Water scarcity
› Increasing
storage costs
› Higher fuel
prices
› Squeezed
customers
pushing for
discounts
and trade terms
› Constrained
consumer
shopping on
promotion
SUSTAINED MACRO-ECONOMIC PRESSURE ON CONSUMER SPENDING
› Consumer spending in South Africa continues to be constrained by lacklustre GDP
and wage growth, high unemployment and high consumer debt, compounded by
increasing fuel, transport and utility costs, and continuing rand/dollar volatility.
An estimated 62% of South Africans live on less than R60/day, with many families
trapped in poverty due to the 29% unemployment rate.
› In August 2019, South Africa’s consumer inflation rate reached 4,3%, driven by price
increases in food and non-alcoholic beverages, fuel and electricity, and miscellaneous
goods and services. Food inflation reached its highest levels in 18 months, off the back
of increases in bread and cereal, maize meal prices and oil-based food items.
› Consumers are buying less, spending less and shopping smarter: 65% of shoppers
are actively comparing prices across brands, 57% are choosing retailers with better
prices, and 70% trading up to bigger packs on promotion if value is offered.1 Despite
this tough environment, for the most part we have continued to benefit from our
premium and heritage brands and the nature of our food basket, with our share of
the market at 25,3%.2
› The economic outlook in South Africa remains subdued for the foreseeable future,
weighed down by continuing policy and political uncertainty, high unemployment and
debt levels, and ongoing challenges with the bailout of state-owned enterprises.
Our response
Strategy
› Given the constrained consumer environment, and in an effort to expand and protect margins in the subdued
market, we have placed a heightened focus on driving productivity and securing cost efficiencies across the
value chain (page 30).
› We continually review consumer trends to guide the optimisation of our product portfolio and to identify
opportunities for product and process innovation. We have an exciting product pipeline across a range
of categories that specifically includes innovations for value-seeking consumers (page 27).
› Our recently approved sustainability strategy includes a strategic focus on improving the livelihoods of thousands
of people by providing opportunities across our value chain for inclusive economic participation, including
through a deliberate focus on supporting black/black-women farmers and owned enterprises in our value chain
(page 34).
1 Nielsen Basket and Shoppergraphics F’19 Q1; In perspective for Tiger Brands March 2019.
2 Nielsen 12mm volume share as at 30 September 2019.
Our business Tiger Brands Limited Integrated annual report 2019 19
HEIGHTENED COMPETITION AND CHANGING RETAIL AND CONSUMER DYNAMICS
› There have been new entrants in the food producer sector in South Africa, some of whom are building potential contender brands.
This is contributing to excess capacity in a low volume growth environment, resulting in aggressive pricing strategies.
› Competition in food retail has also intensified, with the growth of e-commerce business and general traders, driving the
rationalisation of SKUs*, the uptake of private labels and prompting more aggressive procurement, all of which is placing further
pressure on food producers.
› Consumer behaviour generally is changing, driven by various trends including rapid urbanisation,
an increasing number of single households, crowded transport, and greater digital connectivity.
These trends have contributed to an uptake in convenient on-the-go meals and snacks,
increased demand for purpose-led brands and greater corporate transparency, and a growing
consumer focus on health and wellness.
› Cumulatively, the heightened competition and changing dynamics in the consumer and retail
space, are challenging some of the traditional approaches that have driven top-line growth in
CPG companies, driving innovation in products, sales and distribution.
Our response
Strategy
› Our strategic commitment to drive growth has been developed to mitigate the risks and realise the opportunities
associated with the changing retail and consumer dynamics. We have identified opportunities to optimise our
product portfolio, respond to the growth in private label brands, and win at the point of purchase (page 27).
› We made further progress this year in new product launches to address consumer expectations for quality,
convenience, healthier foods and affordable pack sizes. Despite the heightened competition we retained the
lead in packaged food in 2019, with a 25,3% volume share.
› We have been implementing channel-specific category management methodologies and will be continuing
to embed appropriate digital technologies that enhance the monitoring of the return on investment of our
promotional activity, while meeting customers’ needs, and we have been using new pricing expertise to help
drive brand growth and customer support.
› Through the diversity of our portfolio we are able to address the full range of consumers’ shopping needs,
particularly those in the middle-income bracket (living standards measure 5 to 8).
GROWING CONSUMER AND POLICY FOCUS ON NUTRITION, HEALTH AND
ENVIRONMENTAL STEWARDSHIP
› South Africa has been assessed as one of the least healthy countries globally, with high levels of obesity and
lifestyle-induced non-communicable disease. This has contributed to greater regulatory intervention in the
food sector, with the introduction of a sugar tax and sodium regulations, as well as a rapidly growing
appreciation among consumers of the benefits of healthier and more nutritious food products.
› There has similarly been an increased consumer and regulatory focus on environmental issues, with
heightened activism in particular on issues such as climate change, plastics pollution, and increasing
consumer demand for food products that are seen to be “green” and organic.
› Globally, there has been a significant uptake recently in plant-based protein, characterised by the marked
success of recently listed companies in this area, and the growing adoption of alternative meat products
in leading global quick service restaurants.
Our response
Strategy
› We believe that there is a sizeable commercial opportunity in the health and nutrition sector, and have been
driving innovation in nutrition, for example through our vitamin-enriched Best of Both Genius bread that adds
nutrients for school children, adding fibre to Ace maize meal porridge that assists with a healthy gut, and
launching new flavours in our Crunchalots breakfast that are low in sugar compared to competitors (page 28).
› In terms of our recently approved Sustainable Future strategy we have committed to enabling consumers to
improve their health and well-being by developing best-in-class nutritional standards, providing more nutritious,
affordable food products, and leveraging our brand and marketing activities to promote consumer nutrition and
health (page 34).
› This year, we have invested in driving the quality agenda across the company. We completed quarterly self-
assessments and gap closeouts across our operations, achieved external certification (FSSC 22000) for all our
manufacturing sites, implemented supplier quality assurance processes for all new raw material and packaging
suppliers, and made new appointments to enhance our quality team (sustainable development report).
› We have also committed to significantly reduce our environmental impact through innovative solutions, including
optimising energy and water usage, developing innovative products and packaging, leveraging our brand and
marketing, and implementing circular economy initiatives that stimulate economic opportunities (sustainable
development report).
* Stock keeping units
20 Tiger Brands Limited Integrated annual report 2019
Our business
ADDRESSING MATERIAL STAKEHOLDER INTERESTS
This year has been an important milestone in our journey of promoting stakeholder
inclusivity and ensuring effective management of material stakeholder interests
as a means of promoting sustainable competitiveness.
KEY ELEMENTS OF OUR STAKEHOLDER RELATIONS STRATEGY INCLUDE:
Consistent
approaches
to
engagement
throughout
the group
Mechanism
to anticipate
risk and
opportunity
Coordinated
framework
for
stakeholder
management
Leadership
actively
engaging
with
stakeholders
Stakeholder-
focused as
opposed to
compliance-
based
engagement
Values-
based
engagement
Our journey began in 2017 where we undertook a
dedicated engagement process to develop a baseline
appreciation of how our stakeholders perceive our existing
engagements, and to identify opportunities to foster
increased inclusivity for sustainable competitiveness.
We have been encouraged by the positive response from
various stakeholders who have supported us in our
activities. Since October 2018, we have been working with
various stakeholder groups within our host communities
to develop and implement site-specific stakeholder
engagement plans. During 2019, we spent more time in
host communities undertaking social-mapping exercises,
the results of which have allowed us to be responsive to
specific community needs, and enabled us to co-create
impact programmes with communities to bring about the
required change.
In the table on pages 21 and 22, we briefly identify those
stakeholder groups that have a substantive impact on our
ability to create value, outlining their contribution to value
creation, our means of engaging with them, and each
stakeholder group’s primary interests relating to our
business activities.
Although we appreciate that there is often substantial
diversity of perspective and interest within each group,
we believe that the interests listed below are a sufficiently
accurate reflection of each group’s most material interests
regarding Tiger Brands’ activities and performance.
Tiger Brands Limited Integrated annual report 2019 21
HOW WE ENGAGE
MATERIAL INTERESTS
OUR ACTIVITIES
PAGE
EMPLOYEES – provide the experience, productivity and skills that are the foundation for delivering our strategy
› Internal website
› Newsletters and email
› Employee hotline
› Employee engagement
sessions and culture
dialogues
› One-on-one consultations
› Remuneration and rewards
› Talent and career development
› Strong internal engagement
› Teamwork and collaboration
› Diversity and representativeness
› Our recently revised people strategy and operating
model seeks to directly address each of these
issues
› Employee experience improvement is managed
through our culture transformation journey, talent
development practices and through our employee
engagement survey
32
CONSUMERS – provide the basis for revenue growth by purchasing our products and believing in our brand
› Dedicated media and
consumer section on
website for major issues
› Packaging information
› Consumer care line
› Food safety
› Product quality
› Robust systems in place to ensure that our
food complies with all regulatory requirements
› Founding member of Centre for Food Safety
at University of Stellenbosch
› Consumer awareness campaigns on food safety
› Strong focus on ensuring that product quality meets
or exceeds consumer expectations
› Product affordability
› Health and nutrition
› Strive to mitigate inflationary pressures through
cost-saving initiatives and operational efficiencies
› Alternative, more affordable packaging formats
› Enable consumers to improve their health by
providing affordable good nutrition and promoting
consumer nutrition and health awareness
Sustainable
development
report
Sustainable
development
report
27
28
GOVERNMENT – provides the regulatory framework and informs the socio-economic context essential for
› One-on-one engagements
› Engagements on draft
regulations
› Public forums
› Industry consultative
bodies
› Parliamentary processes
our activities
› Food safety and quality
› Robust safety systems in place supported by
academic partnerships and consumer campaigns
› Consumer nutrition and health
› Regulations on sodium; tax on
sugar-sweetened beverages
› Engage on draft policy and legislation
› Nutrition education programme with the Department
of Basic Education
› In-school breakfast programme in partnership with
Tiger Brands Foundation
› Growth and development of
local agricultural sector
› Active partnerships to promote agri-sector
development and smallholder farmers
Sustainable
development
report
28
34
22 Tiger Brands Limited Integrated annual report 2019
ADDRESSING MATERIAL STAKEHOLDER INTERESTS CONTINUED
HOW WE ENGAGE
MATERIAL INTERESTS
OUR RESPONSE
PAGE
R INVESTORS – provide the financial capital needed for long-term growth
› Annual and interim reports
› One-on-one meetings,
roadshows and
conferences
› SENS announcements
› Dedicated investor relations
› Website
› Margin compression and
earnings regression due to
increased sector capacity
in key segments
› Risk of private label
› Execution of strategic priorities; dedicated resource
to drive strategic portfolio decisions
› Reinforcing the strength of our purpose-led brands
through world-class marketing
› Realising opportunities to stretch our brands within
and across product categories
› Driving product innovation including explicitly for
value-seeking consumers
› Remuneration policy and
› Improved percentage votes in favour of the
practice
› Succession pipeline
remuneration policy
› Board engagement with shareholders on
remuneration
› Revised people strategy in place, prioritises
succession and leadership capacity development
› Robust succession plan for key leadership positions
including the CEO with clear development plans;
reviewed by the board at least twice a year
SUPPLIERS – provide the services and raw materials that form the basis of our products and activities
› Supplier forums
› Site visits
› Supplier assessments
› Timely payment and fair terms
› BEE/SME supplier development
› Negotiate with strategic suppliers to secure
requirements at reasonable cost
› Strong drive in place to promote supplier and
enterprise development, investing in smaller
suppliers to diversify the supply base
› Health and safety standards
› Engage with relevant suppliers on appropriate health
and safety standards
27
27
57
32
34
34
Sustainable
development
report
COMMUNITIES – provide us with our social licence to operate, and with the social capital needed for business
to flourish
› Community social mapping
to identify opportunities to
share value
› Community mobilisation
and interaction on SED
projects
› Food security and related
› Partner with government and developmental
nutrition issues
› Stimulate economic activity to
support and sustain community
enterprise development and job
creation
agencies to promote nutrition, health and education,
and contribute to community development and
poverty eradication
› Initiatives in place on enterprise and supplier
development, and community investment
34
34
MEDIA – provide us with the reputation and stakeholder awareness of our products, services and performance
› CEO/CFO engagement
as appropriate
› Dedicated media section
on our website
› Media releases
› Social media presence
› Increase access to management
› All queries on consumer-related enquiries addressed within specified
and information
› Media governance
› Fair treatment of consumers
timeframes
› Strengthened media governance and protocols
› Enhanced media monitoring and analysis
› See earlier responses on consumers on page 21
Our business
MANAGING OUR RISKS
Tiger Brands Limited Integrated annual report 2019 23
The board of Tiger Brands has ultimate responsibility for
overseeing the group’s risk management processes. The
board is assisted by the risk and sustainability committee
who are responsible for ensuring that the risk management
process complies with relevant standards and governance
requirements. Senior management in each division and
business unit is responsible for managing risks in their
respective areas. Oversight of risk management at
divisional level rests with the relevant executive
committees. Divisional and business unit risk registers are
updated quarterly and reviewed on an annual basis at the
group executive committee risk workshop. The risk and
sustainability committee meets three times a year.
RISK APPETITE AND TOLERANCE
Risk appetite refers to the level of risk that Tiger Brands’
management is prepared to absorb before mitigating
actions are implemented; risk tolerance refers to the
company’s strategic capacity to accept or absorb the
risk. The operational risk committee will assess the risk
management evaluation criteria on an annual basis.
Any changes to the evaluation criteria, including the risk
appetite and tolerance are recommended for adoption
by the risk and sustainability committee.
The group executive committee determines the risk
appetite, tolerance evaluation criteria and velocity (the time
taken to feel the impact of a risk after it materialises) and is
presented to the risk and sustainability committee for
recommendation to the board. The board reviews and
approves this annually, ensuring that the company
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 and division, culminating in risk reporting at a
group level.
Each risk is evaluated in terms of its likelihood and impact,
both on an inherent (actual impact) and residual (after
mitigating action) basis. The current group residual risk
tolerance score is set at nine, as highlighted in the heat
maps below that reflect the scoring of our top 10 risks.
The group risk profile is reviewed quarterly and may be
revised after considering changes to the local and regional
macro-economic environment, recent political and
legislative developments, socio-economic challenges and
technological advancements. Through our combined
assurance model, the risk and sustainability committee
evaluates and approves the level of assurance provided
for all group risks.
OUR TOP 10 RISKS
The following heat maps reflect the top 10 inherent and
residual risks for Tiger Brands in the 2019 financial year,
identified as having the most material implications for
Tiger Brands and its employees.
INHERENT RISK SNAPSHOT
RESIDUAL RISK SNAPSHOT
T
C
A
P
M
I
5
4
3
2
1
1
2
3
4
5
8
9
10
6
7
T
C
A
P
M
I
5
4
3
2
1
2
3
5
6
4
8
9
10
1
7
1
2
3
4
1
2
3
4
PROBABILITY
PROBABILITY
24 Tiger Brands Limited Integrated annual report 2019
MANAGING OUR RISKS CONTINUED
The following table briefly reviews the implications and mitigation measures for each of the top 10 risks.
MATERIAL RISKS
IMPLICATIONS FOR VALUE
MITIGATING ACTIONS
1. Operating
environment
› Weakened consumer demand off the back of
lower economic growth negatively impacts
volumes, and heightened consumer focus on
shopping on promotion, negatively impacts
profitability.
› Similarly, the rising cost of utilities, labour, general
input costs and regulatory requirements, is
increasing the cost base at a higher rate than
inflation, weighing on margins.
2. Albany route-
to-market
3. Food safety
and product
quality
Increasing levels of violent crime against drivers
in the bakery route-to-market can result in:
› employee and service provider loss of life
› distribution disruptions
› reputational and brand damage
› potential loss of market share.
Challenges with food safety and product quality
can have significant implications in terms of:
› loss of life
› reputational and brand damage
› loss of market share
› disruptions to production
› expensive product recall
› potential litigation.
4. Occupational
health and
safety
Occupational health and safety incidents can
result in:
› loss of life of employees and service providers
› reputational and brand damage
› regulatory non-compliance costs
› loss of market share.
5. Cybercrime
and information
security
Increasing interconnectivity, globalisation and
“commercialisation” of cybercrime are driving
greater frequency and severity of cyber incidents,
including data breaches.
› This can compromise the confidentiality, integrity
and availability of information and technology
resources, leading to disclosure of commercially
sensitive information, intellectual property and/or
disruption to operations.
› In addition to non-compliance risks, the release
of any personal information also has negative
reputational and brand implications.
› Driving growth through customer strategies focused
on winning at the point of purchase.
› Creation of a health and nutrition strategy.
› Being efficient by unlocking costs and cash through
incremental supply chain savings and driving
continuous improvement efficiencies, fuelling growth
and continuing to build an advantaged and agile
supply chain.
› A people strategy focused on talent, leadership
and creating a great place to work.
› A sustainability strategy is aimed at health and
nutrition, enhanced livelihoods and environmental
stewardship.
› All delivery routes are risk assessed, and tailored
response measures developed.
› Security assessment reports have been compiled for
all facilities to address security-related improvement
opportunities.
› Rationalisation of security service providers.
› Exploring technological solutions for more effective
security provision at a reduced cost.
› Revised good manufacturing practice (GMP)
standards and food safety system certification
standard (FSSC 22000) implemented across the
group, supported by standardised quality self-
assessments for all our manufacturing sites, training
of quality teams, and a robust supplier quality
management process.
› Manufacturing, group legal and regulatory
compliance functions collaborate to ensure products
comply with regulatory standards and meet
consumer preferences.
› Entrenched partnership with Stellenbosch University
to remain at the forefront of scientific trends; through
the Centre for Food Safety.
› Adoption of European Hygienic Engineering and
Design Guidelines (EHEDG) in terms of
manufacturing hygiene standards.
› Robust safety programme implemented across the
group, supported by self-audits, annual independent
audits, and behavioural safety and awareness
initiatives, reinforced with disciplinary action.
› Safety improvement targets signed off annually
for each division and manufacturing site.
› Standardised occupational health and hygiene
programme and fitness to work standards have been
operationalised at all manufacturing sites.
› An external support model is being evaluated to
further strengthen compliance to occupational health
and safety.
› Various external security specialist providers are
utilised to ensure that we enhance our security
posture.
› Penetration testing is part of the standard project
lifecycle approach.
› The new Cyber Security Bill has been drafted and is
out for public comment. The conditions and impact
of the Bill need to be assessed against our current
processes and controls.
› IT policies have been established to support the
group’s approach to managing information security.
› The cybersecurity landscape is monitored with a
view to implementing the latest security practices
and revising existing controls to safeguard the group
against cybercrime and maintaining cyber resilience.
Our business Tiger Brands Limited Integrated annual report 2019 25
MATERIAL RISKS
IMPLICATIONS FOR VALUE
MITIGATING ACTIONS
6. Business
continuity
vulnerabilities
Disruption at our facilities – for example, following
a significant technical breakdown, floods or fire,
political or labour unrest, and/or interruption of
IT services, energy or water supply – can lead to:
› interruptions in production, resulting in lost sales,
and reduced market share and reputation
› damage to plant and equipment
› increased production costs.
› Business continuity plans are in place for all
high-priority packaging and raw materials across
the business; a formal management process for the
group’s manufacturing facilities is in place. This
includes IT business continuity and annual technical
testing of the IT disaster recovery environment.
› A network upgrade project is currently under way
to implement secondary network links at all Tiger
Brands sites.
› Annual external risk, control and environmental
audits inform improved business-continuity planning
and disaster-recovery processes.
› Appropriate insurance cover is reviewed annually,
and disaster-recovery plans are in place.
› Suboptimal information management could lead
› A holistic data and information strategy is being
7. Data and
information
risk
to inconsistent data quality, compromising
decisions and contributing to privacy/identity
management and information security risks.
› Increased regulation is placing additional demand
on system capabilities and IT teams and presents
implications in terms of compliance and potential
non-compliance costs.
8. Attract and
retain critical
skills
› A loss of critical skills can negatively impact our
ability to deliver our strategy and maintain
business viability and profitability.
› An inability to ensure sufficient level of diversity in
the executive team and across the employee base
also undermines our effectiveness and has
reputational implications.
9. Fraud, theft,
crime and
corruption
› Instances of fraud, theft, crime and corruption can
result in loss of life, financial loss, reduced profit
margin and negative impact on reputation.
10. Ageing
infrastructure
› Ageing plant and equipment has implications in
terms of increased maintenance costs, inefficient
operations and variable production quality, and
cost of product recall and replacement.
developed in FY20 to manage this risk across the
organisation.
› Advanced information capabilities are being
explored in a prioritised manner in order to ensure
that Tiger Brands is able to take advantage of the
upcoming data science and engineering capabilities
which will result in proactive decision-making,
efficient operations and lead to competitive
advantage.
Comprehensive people strategy is in place to attract,
develop, reward and retain talent, with provision for:
› performance management and incentive structures
aligning performance to group objectives
› proactive talent mapping and engagement plans
by role and function to drive talent acquisition
› skills development and leadership initiatives
› robust induction and onboarding programme.
› Internal controls are in place and are reviewed to
guard against fraud and crime through employee
awareness, strict access control, and working with
local police in investigating syndicated crime.
› Each business completes quarterly self-
assessments, independently assessed by internal
audit.
› Tiger Brands’ ethics line is available to employees,
suppliers and customers to confidentially report
unethical business practice; the ethics committee
validates the close out of all ethics reports.
› Replacement and maintenance capital expenditure
is implemented annually; this year R1,1 billion was
disbursed in capital expenditure, with R1,5 billion
planned for FY20.
› A total productive maintenance system is in place to
maintain and improve the integrity of production
systems; a maintenance management system is in
place at all sites across the group to ensure proper
and consistent application of maintenance planning
and scheduling.
26 Tiger Brands Limited Integrated annual report 2019
OUR STRATEGY
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 products to middle-income consumers.
We also distribute leading brands in the Home, Personal Care and Baby sectors.
WE NOURISH
AND NURTURE
MORE LIVES
EVERY DAY
DRIVE GROWTH
BE EFFICIENT
GREAT PEOPLE
Winning category,
channel and customer
strategies
Cost-conscious and an
integrated supply chain
A winning mindset and
great place to work
SUSTAINABLE
FUTURE
Sustainable company,
community and planet
› Optimising our
product portfolio
› Responding to the
growth in private label
› Realising commercial
opportunities in
health and nutrition
› Delivering growth
through our innovation
pipeline
› Unlocking costs
›
›
and cash
Fuelling growth
through customer
service excellence
Leveraging scale and
increasing
responsiveness to be
‘advantaged and
agile’
› Building a diverse
talent base to deliver
our growth strategy
› Developing leadership
capability to inspire
winning performance
› Creating a great place
to work to energise a
consumer-obsessed
agile team
› Enabling consumers
›
to improve their health
and well-being
Improving the
livelihoods of
thousands of people
› Significantly reducing
our environmental
footprint
› Winning at the point
of purchase
› Driving growth in Africa
› Realising opportunities
for inorganic growth
› Delivering digital
optimisation
OUR VALUES
We treat each
other with care
and respect
We deliver with
passion and
excellence
Safety and
quality are non-
negotiable for us
We embrace
diversity and
inclusivity
We act with integrity
and accountability
in all we do
WINNING BEHAVIOURS
CONSUMER OBSESSION
TEAMWORK
EMPOWERED ACCOUNTABILITY
FOCUSED EXECUTION
Our strategy DRIVE GROWTH
Tiger Brands Limited Integrated annual report 2019 27
WINNING CATEGORY, CHANNEL AND CUSTOMER STRATEGIES
To deliver on our growth ambition through winning category, channel and customer
strategies, we will be optimising our product portfolio, driving an innovation pipeline,
realising commercial opportunities in health and nutrition, and winning at the point
of purchase. This will be accompanied by our strategy to drive growth in Africa and
to realise opportunities for mergers and acquisitions.
Performance summary 2019
> Strong performance in Snacks and Treats, Beverages and HPCB
> Innovation launches, including: extending the variants in
Purity pouches; Albany Best-of-Both Genius; Ace + Fibre;
Tastic variants; new Oros flavours; and the introduction of
100% Durum pasta in Fattis & Monis – Bellisimo range
> Share gains in Sugar lines, Chocolate, Baby Nutrition, Flour,
Maize, Beverages, Jam
> Portfolio optimisation progressed – Deli Foods, Oceana
and VAMP
OPTIMISING OUR PRODUCT PORTFOLIO
Over the last three years, despite some top-line growth, we have seen margin contraction across many of our product
lines. To deliver longer-term growth we have followed a structured approach to evaluate and optimise our product
portfolio, identifying those categories with high attractiveness and competitive strength that should be protected,
invested in and grown, and those to be evaluated further for possible exit through a carefully structured process.
Informed by this assessment we see particular potential for further growth and profitability in Baby (Food and
Wellbeing), Breakfast (Jungle and King Food), Snacks and Treats, Beverages and Home Care, Baked Goods, Rice,
Pasta, Condiments and Spreads. These are areas in which we are investing in product and process innovation, driving
further process efficiencies and/or expand production capacity.
Similarly, firm decisions have been made in respect of VAMP and Deli Foods. Following a thorough evaluation of all
alternatives, the board approved the cessation of operations at Deli Foods, which are expected to be concluded within
the next few months. In terms of VAMP, following receipt of several indicative offers for the business, the board
approved commencement of a formal due diligence process. Upon completion of this process, including the
submission of binding offers by potential buyers, all disposal options will be further evaluated. Further updates will be
given as key milestones are reached.
DELIVER GROWTH THROUGH OUR INNOVATION PIPELINE
Product and process innovation lies at the heart of our growth agenda. Robust innovations
were launched in the second half of FY19. Successful examples of these product innovations
include: Albany Best-of-Both Genius nutrient-enriched bread; extending Purity pouches
variants, containing top-selling jar variants of Purity baby food; Purity instant cream of maize
porridge in two flavour variants; our nutritionally enhanced maize meal (Ace + Fibre); new
flavours in KOO beans in tomato sauce as well as a new range of KOO black beans and
expanding our Oros range of flavours.
Building on the early success of these offerings we have an exciting product pipeline across
a range of categories, including in health and nutrition, on-the-go, and value. Many of the
anticipated product launches will extend into new categories and consumer spaces as we
look to accelerate our overall innovation rate across the business.
28 Tiger Brands Limited Integrated annual report 2019
DRIVE GROWTH CONTINUED
REALISING THE COMMERCIAL OPPORTUNITIES IN HEALTH AND NUTRITION
Recent studies suggest that there is a sizeable commercial opportunity in the health and nutrition sector. Globally,
health and nutrition packaged foods are growing faster than other packaged foods, and some estimates suggest that
the sector is worth R65 billion in South Africa1. Our recently agreed health and nutrition strategy seeks to realise these
significant commercial opportunities, and deliver on our core purpose of nourishing and nurturing more lives every day.
We will renovate our existing product range to make more of our products compliant with our Eat Well Live Well
standards, while striving towards global best practice. We will be driving innovation within our existing brands and
categories to develop more nutritious, affordable food products, and we will be working in partnership with
government, academia and NGOs, through Eat Well Live Well, to educate consumers in a manner that allows them
to make better informed decisions about their well-being.
We have already made progress in our product portfolio in line with this strategy. In addition to ensuring full compliance
with government’s 2019 targets for sodium reduction:
Achieved a
37%
reduction in
sugar across our
sugar sweetened
beverages
Achieved a
1 505 ton
sugar reduction in
Bakeries and
Milling
Driven
micronutrient
enrichment across
30,7%
of our net sales
Compliance
with our Eat Well
Live Well nutritional
profile criteria across
25,3%
of net sales
Maintained
strong sales in whole
grains, fibre rich
grains and fruit and
vegetables
LEVERAGING THE STRENGTH OF OUR BRANDS
In the context of the challenging market conditions, we have seen material growth in sales of private label products
in South Africa, including in some of our priority product categories. We have developed a strategic response to the
competitive threat of private label that builds explicitly on the strength of our existing
brands. From a brand equity perspective, Tiger Brands is the category leader in more than
half of the categories we operate in. Recent studies show that historically strong brands
consistently outperform other brands over time, and that after tough times they return to
growth faster2.
We will be reinforcing the strength of our existing brands through world-class marketing,
leveraging technology to measure our marketing effectiveness, ensuring that we become
closer to individual consumers by focusing on their specific individual interests, and that
our brands are more clearly imbued with purpose. In addition, we will realise opportunities
to stretch our brands within and across product categories, as well as implementing
price-ladder opportunities within specific brands and categories. To consolidate our
leadership position, we will be aggressively driving continuous improvement of existing
products and processes, by fostering a culture of “value improvement projects” within
R&D, and fast-tracking these projects for priority categories, with the aim of reducing
wastage, driving down costs and optimising packaging. Given the very constrained
consumer environment, we are developing and will provide products explicitly for value-
seeking consumers, using a bottom-up target-costing methodology to value engineer
low-cost products and capture market share in identified priority categories.
1 Euromonitor 2017.
2 https://brandz.com/admin/uploads/files/BZ_Global_2019_WPP.pdf.
Our strategy Tiger Brands Limited Integrated annual report 2019 29
WINNING AT THE POINT OF PURCHASE
During the year we made some progress in driving growth at the point of purchase
in a very tough operating environment. We reviewed our sales structure, improved
our category focus and customer relationships and optimised pricing capabilities.
We have also embedded jointly developed business plans with our key customers,
developed various shopper propositions, and rolled out our commercial analytics
tool (CAT) across our activities.
Despite these various initiatives, we have continued to face internal and external challenges associated with the
increasing competitive intensity and growing bargaining power of retailers. To address these challenges, we will be
looking to deliver growth in our existing and new channels by: strengthening our route-to-market and expanding the
reach of our portfolio in the general trade; building an enhanced online presence and leveraging other non-traditional
shopping destinations, as well as developing a consolidated and focused approach to customer promotions. These
activities will be supported by a strong focus on driving efficiencies and ROI on promotional activity, while using
Big Data to deepen our understanding of in-store behaviour and enhance our ability to realise opportunities at store
level. Finally, we will be deepening the skills set and diversity of our sales force, building people capability and
developing a programme specifically to attract, develop and retain women.
DRIVING GROWTH IN AFRICA
We intend to deliver substantial organic growth in our Africa business by driving category growth through targeted
brand investments, developing superior routes to markets, and investing in key capabilities. Our Africa growth strategy
is defined by a clear approach to market segmentation, and a structured approach to winning in trade in the identified
key markets:
> In terms of market segmentation, in our existing established markets, we will leverage our existing presence and
capability, and invest to reach full potential and grow market share. In those countries where we currently have
multi-category presence, we will invest in people, brands and infrastructure to increase our ability to win and grow
market share. In currently untested markets that present attractive in-country and category opportunities, we will
validate the opportunity and our ability to win, and we will develop a business case indicating the best market-entry
approach.
> In looking to win trade in the identified key markets, we will be prioritising
product categories to drive volume growth, invest in focus brands and
develop new products. We have engaged selected partners to ensure an
optimised and effective route-to-market, underpinned by clear standards
processes and measurements with each partner. We plan to optimise our
value chains to drive competitive responsible sourcing, where relevant and
we will be appointing targeted marketing resources in key countries, to
ensure a tailored approach to local market conditions as needed.
REALISING OPPORTUNITIES FOR INORGANIC GROWTH
While our focus remains primarily on driving organic growth by driving the initiatives outlined above, we will also be
exploring possible opportunities for mergers and acquisitions. These include opportunities that are core and/or near
adjacencies to our current business, as well as opportunities that are aligned with our core activities in new markets
where we do not currently have a local presence.
30 Tiger Brands Limited Integrated annual report 2019
BE EFFICIENT
COST-CONSCIOUS AND AN INTEGRATED SUPPLY CHAIN
To expand and protect margins in the subdued market, we have specific
commitments to unlock costs and cash, fuel growth through customer service
excellence, and leverage our scale and responsiveness, underpinned by digital
transformation.
Performance summary 2019
> Centralised procurement hub delivering savings of R233 million
> Warehouse network consolidation on track
> Lowered logistics costs by 4% per ton on the FY17 base
> Improved forecast accuracy in key product categories
> Capex accelerated to R1,1 billion (2018: R720 million)
> Consumer complaints down 18% and marketplace incidents down 35%,
with zero public recalls
> Manufacturing Excellence Customs and Practices (MECP) deployed across
all manufacturing sites in South Africa
We made some progress this year on our strategic ambitions and milestone targets to unlock costs and cash and
UNLOCKING COSTS AND CASH
deliver cost leadership and optimal working capital. By delivering efficiencies in packaging and
ingredients, we secured procurement savings of R233 million. We delivered R193 million in
manufacturing savings through plant and process improvements, as well as R15 million in logistics
savings. Improvements in indirect spend resulted in savings of R53 million.
We have agreed ambitious savings and efficiency targets for FY20, underpinned by a range
of activities to deliver on these targets across our supply chain. We will continue optimising
centralised procurement, realising manufacturing savings, optimising our inventories to reduce
working capital, extending payment terms to worldclass benchmarks, and driving zero-based
spend initiatives across the supply chain.
FUELLING GROWTH THROUGH CUSTOMER SERVICE EXCELLENCE
Progress was made this year in terms of customer service. We achieved on-shelf availability of 97% and progressed in
embedding a common profit, sales and operations planning (PS&OP) process by improving capabilities and
entrenching systems across the business. We have streamlined
demand planning to a single planning process and introduced
product management review processes.
For the year ahead, we have prioritised various activities and
milestone targets aimed at further optimising our processes,
ensuring product on-shelf availability at all times, embedding
a customer service mindset across the business, and meeting
speed-to-market deadlines for innovation execution.
We are investing in manufacturing sites and will be engaging with
key customers to implement collaborative forecasting and joint
business planning. We will further embed our planning processes
with the aim of ensuring more accurate forecasting.
Our strategy Tiger Brands Limited Integrated annual report 2019 31
LEVERAGING SCALE AND INCREASING RESPONSIVENESS TO BE ADVANTAGED AND AGILE
We have implemented various initiatives this year aimed at leveraging our scale and increasing our responsiveness.
These include investments across the group’s portfolio with various projects aimed at
PRINT AD - 200X313
efficiency improvements and increasing capacity. For example, commissioning a new oat
mill as part of Jungle’s capacity expansion and automation of Jolly Jus lines in Exports.
For FY20, numerous capital expenditure projects have been approved to upgrade
manufacturing facilities, expand production capacity, deliver enhanced efficiencies, and/or
provide for product and process innovations, safety and sustainability to support brand
growth. These include product and packaging innovation across the portfolio, a generator
project to provide business continuity during load shedding, and various automation projects
to increase efficiency and reduce costs.
DELIVERING DIGITAL OPTIMISATION
We are committed to delivering digital optimisation and providing integrated IT and information solutions to meet our
growth ambitions and realise our vision of developing an integrated supply chain recognised as best in our industry.
We are developing a digital roadmap that will harness artificial intelligence, real time data, IoT (Internet of Things) and
big data analytics to boost productivity, deliver operational efficiencies, ensure compliance and enable more informed
data-driven decisions. We have agreed a digital roadmap that will assist at delivering improvements in stock availability
and inventory modelling, ensure better traceability across the supply chain, enhance forecast accuracy, and improve
customer collaboration.
32 Tiger Brands Limited Integrated annual report 2019
GREAT PEOPLE
A WINNING MINDSET AND GREAT PLACE TO WORK
To unleash the power of our people we are building a diverse talent base,
developing leadership capability to inspire winning performance, and creating
a great place to work, supported by our commitment to execution excellence.
Performance summary 2019
> Implemented a standardised talent management framework
> Established a “One Tiger” onboarding framework
> Embedded talent reviews and accelerated talent mobility
> Developed an executive leadership succession plan
> Implemented a leadership capability assessment methodology
> Developed a long-term HR enabling technology and digitisation roadmap
BUILDING A DIVERSE TALENT BASE TO DELIVER OUR GROWTH STRATEGY
We undertook numerous initiatives this year to further strengthen our diverse talent base and develop our core
capabilities to deliver on our growth strategy. We reviewed management structures to improve efficiency and
effectiveness, and we developed and implemented a standardised talent management framework, supported by
targeted talent strategies for core functions and growth
categories. We reviewed our learning and development
framework, established a long-term workforce plan, and
developed an employer brand and employee value
proposition aimed at attracting and retaining talent.
To provide a compelling work environment that recognises
and rewards talent, we have embedded action-based
talent reviews and accelerated talent mobility. Recognising
the critical importance of driving diversity across all
management levels, we have developed and approved
a five-year employment equity plan, as well as a gender
equity strategy.
10 543
permanent
employees
GREAT PEOPLE
R127m
investment in skills
development
Employee diversity
93%
black and
30%
female
To attract talent for our Africa operations, we have
developed a talent sourcing strategy that includes
partnerships with LinkedIn, in-country distributors and
tertiary institutions. We have developed a customised
Africa management trainee programme, and this year we
sourced management trainees from Mozambique, Zambia
and Nigeria. A priority talent focus area for the year ahead
is to continue to build commercial and supply chain
capability. We will also continue to work on embedding
a fit-for-future organisational structure, drive digital learning,
and execute clear career development and appropriate
learning and skills development.
40%
leadership
appointments were
internal
214
culture dialogues
across sites
Our strategy Tiger Brands Limited Integrated annual report 2019 33
DEVELOPING LEADERSHIP CAPABILITY TO INSPIRE WINNING PERFORMANCE
The current FMCG environment is experiencing a shift in leadership focus away from functional specialised teams,
towards purpose-driven cross-functional teams that leverage the broader ecosystem. This shift has informed the
work that we are doing to develop the right leadership capability to lead the company into the future.
Guided by this understanding, we focused our leadership development
efforts this year on developing a focused executive leadership succession
plan, undertaking leadership capability assessments for key successors,
and reviewing the leadership development framework. Informed by the
benchmark assessment of our senior leadership team, we have prioritised
various focus areas for leadership development in FY20, including driving
winning business performance, and a culture of consumer obsession.
To improve our talent pipeline and strengthen business performance,
we continue to ramp up leadership development and rotation. We are
embedding coaching and mentoring practices as part of the Tiger
development approach, implementing a company-wide multi-rater tool
to enable feedback on leadership behaviour, and we are embedding the
outcomes of our women in leadership programme.
CREATING A GREAT PLACE TO WORK TO ENERGISE AN AGILE “ONE TIGER” TEAM
Providing a “great place to work” is critical both to attracting and retaining talent, and to ensuring that we have an agile
culture that inspires innovation and drives winning performance. This year, we established a strong foundation to
enable the “one Tiger” winning culture transformation journey. Key activities included embedding our refreshed values
and winning behaviours, developing and commencing execution of a diversity and inclusion framework, an employee
relations strategy, and an employee well-being strategy. Although progress has been made in making our reward
strategy more competitive, we recognise the need to improve business performance to address the retention risk
presented by the resulting state of the short- and long-term incentives for key talent. We will be further executing our
reward mechanisms to ensure that we are able to attract and retain talent, and to appropriately recognise and reward
winning performance. We will be undertaking a Tiger-wide employee engagement survey, executing an
employer brand campaign, and further embedding the reward and recognition strategy as well as the well-being
programme, “THRIVE”.
34 Tiger Brands Limited Integrated annual report 2019
SUSTAINABLE FUTURE
SUSTAINABLE COMPANY, COMMUNITY AND PLANET
To optimise our societal-value proposition and enhance social and natural capital,
we will deliver on our strategic commitments to: enable consumer health and
nutrition; enhance livelihoods; and significantly reduce our environmental impact.
These are underpinned by our strategic anchors relating to: robust food safety and
food quality; occupational health, safety and security; ethical supply chain
practices; and transparency, stakeholder responsiveness and partnerships.
Performance summary 2019
> One employee fatality
> Lost-time injury frequency rate of 0,38 (2018: 0,27)
> R14,3 billion spend on BBBEE verified suppliers
> Strong enterprise and supplier development drive, sourcing wheat, maize, oats and beans from
black farmers
> R27,4 million committed to socio-economic development, reaching around 100 000 beneficiaries
> 78 million meals delivered, and 72 000 learners supported per day through the Tiger Brands
Foundation
> 6,5% reduction in GHG emissions intensity
> 5,4% reduction in water intensity
Additional detail on our sustainability strategy and performance is available in our sustainability report.
ENABLING CONSUMERS TO IMPROVE THEIR HEALTH AND NUTRITION
We will enable consumers to improve their health and well-being by providing affordable good nutrition. We are
reviewing and updating our nutritional standards for our products to meet or exceed globally recognised guidelines,
and we are developing more nutritious, affordable food products,
including through the fortification of new and existing products. We are
committed to leveraging our brand and marketing activities to promote
consumer nutrition and health awareness and to inspire positive
behaviour change, and to playing a leadership role in modern food
labelling practices.
Driven
micronutrient
enrichment across
30,7%
of our net sales
Eat Well
Live Well nutritional
profile criteria across
25,3%
of net sales
We have made some valuable progress on these commitments.
As part of the Tiger Brands Foundation’s in-school breakfast
programme, this year we donated five school kitchens in vulnerable
communities, with three of these schools winning top honours at the
National School Nutrition Programme (NSNP) run by the Department
of Basic Education. During the year we sponsored three new schools
on our in-school breakfast programme, bringing the total up to
101 schools on the programme across all provinces. Since its launch,
Achieved a
1 505 ton
sugar reduction in
Bakeries and
Milling
Achieved a
37%
reduction in
sugar across our
sugar sweetened
Beverages
we have served more than 78 million breakfasts to the country’s most
vulnerable learners, and creating over 390 jobs as food handlers, monitors
and regional coordinators. Independent studies undertaken to assess the
social return on investment (SROI) of the in-school breakfast programme in
Limpopo and the Northern Cape have shown significant positive benefits.9
9 These studies are available at www.thetigerbrandsfoundation.com
Our strategy Tiger Brands Limited Integrated annual report 2019 35
IMPROVING THE LIVELIHOODS OF THOUSANDS OF PEOPLE
We are committed to improving the livelihoods of thousands of people by providing opportunities across our value
chain for inclusive economic participation. We will continue to create sustainable livelihood opportunities by providing
financial and non-financial support to black-owned and black women-owned enterprises and smallholder farmers,
through our supplier and farmer development programmes, and our preferential procurement policies. In addition,
we will continue on an annual basis to contribute at least 1,5% of net profit after tax towards socio-economic
development activities that promote sustainable thriving communities.
This year, we set up a “market access accelerator” to support those black-owned
enterprises that need intensive business development assistance by providing support
to enable them to access Tiger Brands’ supply chain opportunities, build their products
or services offerings, and assist in ensuring compliance. The accelerator has already
successfully supported seven black-owned enterprises to secure logistics opportunities
and trained more than 50 aspiring black entrepreneurs. We also provided 58 black
smallholder farmers with both financial and non-financial support, including agronomics
and agrarian advice, business mentorship and interest-free loans, helping them to
participate within our procurement chain. In addition, we spent R14,3 billion with
BBBEE-verified suppliers, including R3,5 billion with black-owned enterprises, of which
R1,9 billion spent with black women-owned businesses.
In line with our recently revised socio-economic development strategy, we invested
R28,5 million on community development, achieving several milestones including:
distributing over 89 000 high-quality, nutrient dense and fortified food packages;
reaching 30 000 direct and indirect beneficiaries each month through the Tiger Brands
food and nutrition support programme; training 396 community members in food
gardening and community skills development.
SIGNIFICANTLY REDUCING OUR ENVIRONMENTAL IMPACT
We will significantly reduce our environmental impact by implementing innovative solutions that optimise energy and
water consumption in our operations, reduce the negative impacts of packaging, and minimise waste, effluent and
emissions. We are exploring opportunities to develop innovative product offerings that are “good for you” and “kind to the
environment”, implementing circular economy initiatives that stimulate sustainable economic opportunities, and leveraging
our brand and marketing activities to inspire positive behaviour change in consumers.
This year we made valuable progress in reducing the environmental impact of our operations, focusing on the most
material issues: improving energy and water efficiency, reducing greenhouse gas emissions, and striving for zero waste
to landfill operations. As a result of various energy efficiency measures, we achieved a 6,5% reduction in total carbon
emissions year-on-year, with emissions intensity down from 0,23 ton in FY18 to 0,21 ton CO2-equivalent per ton of
product this year. We undertook baseline work on energy management, and next year we will be working on defining
the ISO 50001 implementation and certification roadmap for our 10 most energy-intensive facilities. All of our coal fired
boilers above 10MW were upgraded and grit arrestors installed to reduce particulate emissions below the legislated
requirements. We conducted water efficiency assessments in multiple operations, contributing to a 7,2% reduction in
total water use, and a slight improvement in water intensity. We completed a mapping of our waste streams across the
business units, and we have engaged with the National Cleaner Production Centre to support our circular economy
activities and identify opportunities for industrial symbiosis. All our manufacturing operations that went through their
surveillance and recertification audits for ISO 14001 have successfully retained their certification.
(Further details are in our online sustainability report.)
36 Tiger Brands Limited Integrated annual report 2019
SUSTAINABLE FUTURE CONTINUED
ROBUST FOOD SAFETY AND FOOD QUALITY SYSTEMS
We are committed to energising the quality agenda, raising the bar and offering superior products. We are determined
to develop a quality capability that differentiates Tiger Brands from our competitors, supported by trained and talented
people integrated across functions, a robust and integrated set of processes and tools, and a culture and passion for
quality that permeates across the organisation. This year, we invested in driving the quality agenda across
the company. Quarterly self-assessments and gap closeouts were completed across our operations,
and we achieved external certification (FSSC 22000/HACCP) for all our manufacturing sites. Supplier
quality assurance processes are now in place for all new raw material and packaging suppliers, and we
successfully delivered an online self-assessment module and incident management tool against the
Global Food Safety Initiative (GFSI) for reporting and managing quality data. We completed HACCP
training for all high-risk sites, provided basic microbiology and sampling training for relevant factory
teams, and made progress with quality onboarding and awareness training across our operations.
Through our various quality initiatives, this year we have seen a 18% reduction in consumer complaints,
a 35% reduction in marketplace incidents, and zero public recalls.
During 2020, we will build on this renewed focus on quality, defining and implementing a centralised
hygiene and quality verification schedule for manufacturing units, and we will continue to drive self-
assessments to deliver a step-change improvement in performance. We will deploy European Hygienic
Engineering and Design guidelines as a manufacturing hygiene standard, deploy testing protocols at our
operations, and develop and implement metrics and processes for supplier performance measurement.
OCCUPATIONAL HEALTH, SAFETY AND SECURITY
Ensuring zero injuries and delivering strong behavioural safety, health and security performance through visible, felt
leadership is a top priority. We have a holistic health and safety programme with clear roadmaps and deliverables,
supported by a behavioural safety programme that drives leadership accountability and responsibility, as well as by
effective auditing to ensure that process safety management is implemented properly. A brief performance review is
provided below.
Safety performance
This year, tragically, one employee was killed in a work-related incident. In April 2019, Mr Aubrey Tornado Skosana, a
driver at Albany Pretoria, died following a multi-collision vehicle accident while on a delivery. The Albany drivers have all
subsequently been provided with additional training on defensive driving, with an online training programme delivered
to all Bakery drivers and van assistants on route-to-market alertness. The family has been given support and
counselling. Regrettably, there was an increase in the group’s lost-time injury frequency rate (LTIFR) to 0,38. For all
reported incidents, we undertake a thorough root cause analysis. The findings inform the implementation of
appropriate preventative measures, and are used to improve the operational safety culture. Disciplinary action is
metered where appropriate. We are in the process of rolling out behaviour-based safety to all our manufacturing
facilities and ensuring safety visual management standardisation in all operations.
Occupational health (OH)
This year we focused on driving the implementation of a revised OH strategy and improving the reporting of OH KPIs
and incapacity cases. We have run ongoing operational OH awareness campaigns and interventions with the support
of external OH service providers, developed and standardised our occupational hygiene surveys, and conducted
health risk assessments. We have commenced a process of rationalising the health service providers across the group
to deliver a consistent, cost-effective and standardised approach, and ensure that mobile healthcare service providers
are available at relevant sites. Where necessary, we have contracted occupational health nurses, and are upgrading
medical clinics’ infrastructure and equipment.
Our strategy Tiger Brands Limited Integrated annual report 2019 37
OCCUPATIONAL HEALTH, SAFETY AND SECURITY continued
Security management
We have maintained a major focus on managing the concerning number of violent route-to-market
incidents. All delivery routes are risk assessed, and tailored response measures developed. We have
also improved security at our facilities, informed by site security risk assessments using a methodical
security management system to review and ensure the availability of appropriate physical security
measures and access controls. Training awareness is provided, and appropriate incident
management, reporting and investigations undertaken. This year, we enhanced security personnel and
controls at Bakeries and site security, revised the firearms policy and cash management guidelines, and
commenced the process of rationalising security service providers across the group.
TRANSPARENCY, STAKEHOLDER RESPONSIVENESS AND PARTNERSHIPS
Recognising the importance of transparency and partnerships we are committed to playing an active role in industry
forums to help shape sustainable consumption standards, tools and best practices. We are
a member of industry bodies such as the National Business Initiative (NBI), Manufacturing
Circle, Business Leadership South Africa, Consumer Goods Council of South Africa
(CGSA), South African Agricultural Processors Association (SAAPA), South African Fruit
and Vegetable Export Council (SAFVEC) and the South African Fruit Juice Association
(SAFJA). We play an active role on various sustainability initiatives with these organisations,
including for example on the UN SDGs, responsible labelling and marketing, and plastics
packaging. We are working with South Africa’s Council for Scientific and Industrial
Research (CSIR) on assessments to enhance manufacturing industry competitiveness
through resource efficiency and cleaner production, and we partner with various academic
bodies and NGOs. Each year, we voluntarily disclose our performance on carbon
emissions and water management as part of the global CDP initiative. We are also
signatories to the “We Mean Business” initiative, through which we have committed to
adopting a science-based emissions reduction target, promoting responsible corporate
engagement on climate policy, and reporting climate change information in mainstream
reports as a fiduciary duty.
38 Tiger Brands Limited Integrated annual report 2019
CHIEF FINANCIAL OFFICER’S REVIEW
“Tiger Brands’ full year results have been impacted by the unbundling of the company’s
interest in Oceana, the challenging operating environment, and a slower than anticipated
recovery in the Value Added Meat Products (VAMP) business.” Noel Doyle Chief financial officer
SALIENT FEATURES*
Revenue
R29,2bn 3%
(excluding VAMP†, R28,6 bn 5%)<
Operating income**
R2,6bn 20%
(excluding VAMP†, 11% R3,2 billion)
<
Group operating margin**
9,0% 260 bps
(2018: 11,6%)
HEPS
1 349 cps 17%
(2018: 1 633 cps)
Total dividend***
1 061 cps 2%
(2018: 1 080 cps)
Unbundling of
investment in
Oceana
concluded
* From continuing operations.
** Before impairments and abnormal items.
*** Includes special dividend of 306 cents per share declared on 22 May 2019.
† Refer to Annexure A of the audited group results and dividend declaration for
the year ended 30 September 2019 available on the company’s website.
EPS
2 364 cps 55%
(2018: 1 530 cps)
Deli Foods
discontinued
Our performance Tiger Brands Limited Integrated annual report 2019 39
OVERVIEW
Tiger Brands’ results for the year ended 30 September 2019
reflect the difficult trading conditions, characterised by an
increasingly challenging consumer environment and input
costs rising ahead of price inflation. The overall result was
significantly impacted by ongoing margin compression
across the Grains portfolio, tough trading conditions in
the group’s primary export markets and the slower than
anticipated recovery of the VAMP business. The unbundling
of the company’s investment in Oceana also had a
significant impact on year-on-year comparisons. Details of
the impact of VAMP and the unbundling of Oceana on key
financial metrics are detailed below and overleaf.
Shareholders are referred to the SENS announcement
issued by the company on 8 November 2019 regarding
the cessation of operations at Deli Foods in Nigeria. The
business has been treated as a discontinued operation
in these results, with the comparative information restated
accordingly.
Despite the challenging backdrop, total revenue from
continuing operations increased by 3%, driven by price
inflation of 5% and partially offset by an overall volume
decline of 2%. Lower volumes, coupled with the inability
to fully recover input costs, placed gross margins under
pressure, resulting in group operating income before
impairments and abnormal items (operating income)
declining by 20% to R2,6 billion (2018: R3,3 billion).
Excluding VAMP*, operating income before impairments
and abnormal items decreased by 11% to R3,2 billion
compared to the reported decline of 20% to R2,6 billion.
The impairment charge was driven by a R96 million
write-down in respect of VAMP’s property, plant and
equipment and a R212 million goodwill impairment related
to Davita, reflecting the challenging outlook in export
markets. Abnormal income of R2,0 billion reported in the
current period (2018: R422 million loss) largely comprises
gains linked to the unbundling of Tiger Brands’ stake in
Oceana and related share disposals.
Income from associates decreased by 49% to R371 million
(2018: R731 million). As previously reported, the company
ceased to equity account the earnings of Oceana with effect
from 1 December 2018, following the decision in November
2018 to unbundle the company’s investment in Oceana. The
total income from associates is therefore not comparable
with that of the prior year. All associates, including National
Foods Zimbabwe (which has been accounted for in line with
IAS 29 Financial Reporting in Hyperinflationary Economies),
reported an increase in earnings.
Net financing costs of R11 million (2018: R42 million)
benefited from lower average debt levels over the past year.
In addition, a net foreign exchange gain of R10 million was
realised compared to a gain of R21 million in the prior year.
The effective tax rate before abnormal items, impairments
and income from associates has increased marginally in
comparison with the prior year. The prior year’s effective tax
rate has been restated to account for the discontinuation of
Deli Foods in the current year.
Headline earnings per share (HEPS) from continuing operations
declined by 17% to 1 349 cents (2018: 1 633 cents). Earnings
per share (EPS) from continuing operations, on the other hand,
increased by 55% to 2 364 cents (2018: 1 530 cents) principally
due to a capital surplus amounting to R2 billion, arising from
capital profits realised and a fair value gain relating to the
unbundling of the company’s interest in Oceana. This capital
surplus had no impact on headline earnings per share as it is
excluded for headline earnings purposes.
After adjusting for the impact of VAMP*, the unbundling of
Tiger Brands’ investment in Oceana, as well as the capital
profit arising from the sale of Oceana shares, attributable
earnings per share from continuing operations declined
by 11% compared to the reported increase of 55%.
At a headline earnings level, after adjusting for VAMP and
Oceana, headline earnings per share from continuing
operations reflect a decline of 8% compared to the reported
decline of 17%.
* Refer to Annexure A of the audited group results and dividend declaration for the year ended 30 September 2019 available on the company’s website.
The reconciling items between reported items and adjusted items are set out in the table below and overleaf.
Table 1: Adjusted headline earnings from continuing operations
Headline earnings as reported (continuing
operations)1
Oceana equity-accounted earnings1
Adjusted headline earnings – excluding Oceana2
VAMP – after-tax trading loss1
VAMP – abnormal items after tax3
Adjusted headline earnings (excluding VAMP
and Oceana)4
2019
2018
R’million
2 234
(31)
2 203
394
(54)
HEPS
(cents)
1 349
(18)
1 331
238
(33)
R’million
2 689
(416)
2 273
181
303
HEPS
(cents)
% change
cps
(17%)
(4%)
1 633
(252)
1 381
110
184
2 543
1 536
2 757
1 675
(8%)
1 This has been extracted from Tiger Brands’ audited financial statements for the years ended 30 September 2019 and 30 September 2018.
2 Adjusted headline earnings after adjusting for all Oceana-related transactions for the year.
3 The effects of the VAMP losses have been removed as this had a significant year-on-year impact on normal operations. This has been extracted from
note 3 – Impairments and note 4 – Abnormal items in the audited group results and dividend declaration for the year ended 30 September 2019 available
on the company’s website.
4 Adjusted headline earnings after adjusting for all Oceana and VAMP-related transactions for the year.
40 Tiger Brands Limited Integrated annual report 2019
CHIEF FINANCIAL OFFICER’S REVIEW CONTINUED
HEPS from total operations decreased by 17% to 1 322 cents
(2018: 1 589 cents), while EPS from total operations
increased by 60% to 2 333 cents (2018: 1 458 cents).
BASIS OF PREPARATION
Non-IFRS measures, such as adjusted revenue from
continuing operations, and adjusted operating income from
continuing operations before impairments and abnormal
items as well as adjusted earnings from continuing
operations, are considered to be pro forma financial
information as per the JSE Listings Requirements. The pro
forma financial information is the responsibility of the group’s
board of directors and is presented for illustrative purposes
only. Due to its nature the pro forma financial information
may not fairly present the company’s results of operations.
The pro forma financial information is based on the
condensed consolidated income statement for the year
ended 30 September 2019. The pro forma financial
information has been prepared to illustrate the impact of
the company’s unbundling of Oceana as well as VAMP’s
performance on the condensed consolidated income
statement for the year ended 30 September 2019.
Table 2: Adjusted revenue from continuing operations
The pro forma financial information is presented in
accordance with the JSE Listings Requirements. The JSE
Listings Requirements require that pro forma financial
information be compiled in terms of the JSE Listings
Requirements, the SAICA Guide on Pro forma Financial
Information and any relevant guidance issued by the IRBA.
Ernst & Young Inc.’s independent reporting accountants’
assurance report on the pro forma financial information
for the year ended 30 September 2019 as presented in
Annexure A of the audited group results and dividend
declaration for 2019, is available for inspection at the
company’s registered office. The independent reporting
accountants’ assurance report on the pro forma financial
information for the year ended 30 September 2019 does
not necessarily report on all the information contained in
Annexure A of the audited group results and dividend
declaration for 2019. Shareholders are therefore advised that
in order to obtain a full understanding of the nature of the
independent reporting accountants’ engagement, they
should obtain a copy of the independent reporting
accountants’ assurance report together with the
accompanying pro forma financial information for the year
ended 30 September 2019 from the issuer’s registered office.
Revenue1
VAMP revenue for the period1
Revenue excluding VAMP2
2019
R’million
29 233
(654)
28 579
2018
R’million
28 365
(1 066)
27 299
% change
3%
5%
1 This has been extracted from Tiger Brands’ audited financial statements for the years ended 30 September 2019 and 30 September 2018.
2 Revenue from continuing operations excluding VAMP, the performance of which distorts the group’s performance as this had a significant year-on-year
impact on normal operations.
Table 3: Adjusted operating income from continuing operations before impairments and abnormal items
Operating income before impairments and abnormal items1
VAMP losses1
Adjusted operating income before impairments and abnormal items2
2019
R’million
2 623
547
3 170
2018
R’million
3 289
252
3 541
% change
(20%)
(11%)
1 This has been extracted from Tiger Brands’ audited financial statements for the years ended 30 September 2019 and 30 September 2018.
2 Total adjusted operating income after adjusting for the VAMP operating losses which had a significant year-on-year impact on normal operations.
Table 4: Adjusted earnings from continuing operations
Earnings as reported (continuing operations)1
Oceana equity-accounted earnings1
Oceana – profit on sale of associate investment2
Oceana – realised fair value gain on unbundling2
Adjusted earnings – excluding Oceana3
VAMP – after-tax trading loss1
VAMP – impairments and abnormal items after tax2
Adjusted earnings (excluding VAMP and Oceana)4
2019
2018
R’million
3 916
(31)
(340)
(1 630)
1 915
394
21
2 330
EPS
(cents)
2 364
(18)
(205)
(984)
1 157
238
13
1 408
R’million
2 519
(420)
–
–
2 099
181
328
2 608
EPS
(cents)
1 530
(255)
–
–
1 275
110
199
1 584
% change
cps
55%
(9%)
(11%)
1 This has been extracted from Tiger Brands’ audited financial statements for the years ended 30 September 2019 and 30 September 2018.
2 The effects of the Oceana unbundling as well as the VAMP losses have been removed as these had a significant year-on-year impact on normal
operations. Items have been extracted from note 3 – Impairments and note 4 – Abnormal Items in the audited group results and dividend declaration for
the year ended 30 September 2019 available on the company’s website.
3 Adjusted earnings after adjusting for transactions related to the unbundling of the company’s interest in Oceana for the year.
4 Adjusted earnings after adjusting for transactions related to the unbundling of the company’s interest in Oceana and VAMP-related transactions for the year.
Our performance Tiger Brands Limited Integrated annual report 2019 41
SEGMENTAL OPERATING PERFORMANCE
Domestic revenue increased by 5% to R26 billion in line with
price inflation of 5%, with overall volume growth unchanged.
Particularly strong performances were delivered by Snacks
and Treats, Beverages, Home, Personal Care and Baby,
offset by disappointing results in Grains and VAMP.
Industrial action affecting Groceries in the first half and
Bakeries in the second half, as well as load shedding during
the year, had an adverse impact on both revenue and costs.
These contributed to operating income from domestic
operations decreasing by 19% to R2,5 billion (2018:
R3,1 billion). Excluding VAMP, operating income from
domestic operations, decreased by 9% to R3,0 billion
(2018: R3,3 billion).
Total revenue for the Exports and International businesses
declined by 11% to R3,2 billion, while operating income
reduced by 34% to R212 million. A poor operating
performance from Exports was partially offset by a
significant recovery in the Deciduous Fruit business.
Further details of the performance of our operations are
provided on pages 42 to 49.
CASH FLOW AND CAPITAL EXPENDITURE
Cash generated from operations increased by 6% to
R3,5 billion. This improvement was largely the result of a
reduction in working capital requirements of R91 million
compared to an increased investment in working capital
of R573 million in the prior year. The level of capital
expenditure for the year accelerated to R1,1 billion
(2018: R720 million) with investments across the group’s
portfolio including various projects to deliver efficiency
improvements and increase capacity. The group ended
the year in a net cash position of R1,2 billion compared with
a net cash position of R669 million in the previous year.
FINAL DIVIDEND
A gross final cash dividend of 434 cents per share has been
declared for the year ended 30 September 2019. This,
together with the interim ordinary dividend of 321 cents
per share, brings the total ordinary dividend for the year to
755 cents, in line with Tiger Brands’ dividend policy of
1,75x cover based on headline earnings per share.
In addition, a special dividend of 306 cents per share was
declared for the six months to 31 March 2019 as a result
of the once-off proceeds received from the disposal of
Oceana shares to Brimstone.
The special dividend, together with the total ordinary
dividend for the year, brings the total distribution for the
year to 1 061 cents per share (2018: 1 080 cents).
Shareholders are referred to the dividend announcement
on page 87 for further details.
OUTLOOK
Significant progress has been made in terms of optimising
the portfolio, with firm decisions having been made in
respect of VAMP and Deli Foods. With respect to the
potential disposal of VAMP, the formal due diligence process
is under way and further updates will be given as key
milestones are reached. The ongoing work to optimise Tiger
Brands’ portfolio will ensure that the group is appropriately
positioned for growth.
It is expected that the significant macro-economic
challenges facing the country are likely to persist for
the foreseeable future. In the context of structural
unemployment, ongoing challenges relating to state-owned
enterprises and increased competitive pressure, the
operating environment is likely to remain subdued. To this
end, we will prioritise investment in the group’s key brands
while delivering product innovations to meet changing
consumer needs. In addition, Tiger Brands will leverage the
strength of its brands by evaluating opportunities to stretch
its brands within and across existing and new product
categories.
In terms of Tiger Brands’ Africa growth strategy, the
company is looking to deliver organic growth by driving
category growth through targeted brand investments,
developing superior routes to market and investing in
enabling capabilities.
To protect margins in a constrained consumer environment,
the company has placed heightened focus on driving
productivity and securing cost efficiencies across the
value chain.
APPRECIATION
Thank you to our local and international shareholders for
your continued investment in the company and to the
broader investment community for their interest and
engagement. I also thank my colleagues in the finance
department who constantly strive towards best practice
standards and disclosure and extend my gratitude to the
audit committee for their guidance throughout the year.
Noel Doyle
Chief financial officer
21 November 2019
42 Tiger Brands Limited Integrated annual report 2019
OPERATIONAL REVIEW
Grains
Revenue
R13,2bn 4%
Operating income
R1,4bn 24%
(2018: R12,8 billion)
(2018: R1,9 billion)
Operating margin
10,9%
(2018: 14,8%)
SALIENT FEATURES
✓
✗
Jungle increases operating profit
Increasing costs and competition, as well
as subdued consumer behaviour, place
pressure on margins
✗
✗
Baking results negatively impacted by adverse
pricing dynamics and small volume losses
Pasta impacted by aggressively priced imports
Revenue in the Grains division increased by 4% to R13,2 billion, while operating income
decreased by 24% to R1,4 billion. Price inflation was insufficient to offset the impact of
higher input costs. Overall operating margins consequently reduced to 10,9%.
Milling and Baking’s revenue increased by 6%, with selling prices up 7% across the
segment, slightly offset by a 1% decline in volumes. Operating income was down 20%
to R1,2 billion. Within Maize, despite good volume growth, operating profit declined
significantly as pricing pressures intensified. Bakeries experienced small volume losses,
which were compounded by margin compression as the competitive environment did not
allow for the full recovery of cost increases.
In Other Grains, revenue declined by 2% to R3,8 billion, driven by 3% price inflation but
offset by volume declines of 5%. Volume declines were driven predominantly by lower
volumes in Pasta as the category continues to be adversely impacted by low-price
imports. Rice also had a disappointing year, being unable to recover cost push due to
increased promotional activity in the category. Jungle benefited from price inflation,
despite increased competition from private label in the core oats and ready-to-eat
segments of the Breakfast category, achieving a marginal increase in operating income
for the year.
The lower volumes in Pasta and Rice had an adverse impact on factory efficiencies, with
the overall operating income declining by 41% to R202 million.
We have continued to target cost savings across the value chain, including by identifying
new procurement opportunities, and are looking to drive margin improvement by
optimising the product mix, driving innovation in response to consumer insights, and
delivering further efficiencies across the cost base.
19%
4%
8%
20%
5%
7%
56%
2019
8%
5%
■ Mill Bake
■ Breakfast
■ Sorghum
■ Maize
■ Pasta
■ Rice
55%
2018
8%
5%
■ Mill Bake
■ Breakfast
■ Sorghum
■ Maize
■ Pasta
■ Rice
COPY TO BE SUPPLIEDOur performance Tiger Brands Limited Integrated annual report 2019 43
OPERATING FACILITIES
Mpumalanga
Milling and baking
(Bakeries)
Gauteng
Milling and baking
North West
Sorghum-based breakfast
and beverages
(Potchefstroom)
Free State
Milling and baking
KwaZulu-Natal
Milling and baking (Bakeries
and milling)
Other grains (Rice)
Western Cape
Milling and baking
Other grains (Jungle)
Perfect. Every time.
COPY TO BE SUPPLIED 44 Tiger Brands Limited Integrated annual report 2019
OPERATIONAL REVIEW CONTINUED
Consumer Brands – food
Revenue
R10,1bn 4%
R9,4 billion (excluding VAMP) 9%
(2018: R9,7 billion)
(2018: R8,7 billion)
Operating income
R494m 40%
(2018: R828 million)
R1,0 billion (excluding VAMP)
(2018: R1,1 billion)
4%
Operating margin
4,9%
(2018: 8,5%)
11,0% (excluding VAMP)
(2018: R12,5%)
SALIENT FEATURES
✓
✓
✓
Groceries’ sales ahead of market with revenue
up 7%
Gains in market share across all segments
within Beverages
Strong performance from Oros and Energade
contributes to double-digit volume growth in
Beverages
✗
✗
=
Absolute revenue and operational efficiencies
negatively impacted by strike action early in
the year
Challenges in reopening VAMP, with launch
logistics adversely impacting service levels
Revenue growth and share gains in Snacks and
Treats, diluted by higher conversion costs
Consumer Brands – Food has continued to feel the impact of the Valued Added Meat
Products (VAMP) operation. Excluding VAMP, the division delivered solid growth across
the businesses, with Beverages enjoying a particularly strong performance. Total revenue
increased 9% to R9,4 billion, underpinned by 3% price inflation and 6% volume growth,
while operating income fell by 4% to R1,0 billion (excluding VAMP).
At Groceries, revenue was up 7% to R5,1 billion, underpinned by volume growth of 4%
and price inflation of 3%. Despite this higher top-line growth, operating income was down
25% to R325 million, reflecting the impact of the three-week strike at the start of the
financial year as well as supply challenges.
5%
51%
7%
15%
2019
Revenue at Snacks and Treats increased 9% to R2,3 billion, off the back of 5% volume
growth and average price increases of 4%. Growth was recorded across the portfolio, with
the relaunch of Beacon and Maynards supported by focused marketing investment and
successful in-store activations. Operating income was up 3% to R313 million.
22%
■ Groceries
■ Snacks and Treats
■ Beverages
■ Value Added
Meat Products
■ Out of Home
The Beverages business delivered another year of strong revenue growth with revenue
up 19% to R1,5 billion, fuelled by a pleasing 14% volume growth, ahead of category growth.
Market share gains were achieved as a result of effective in-store activations, strong
marketing campaigns throughout the year and new launches performing ahead of
expectations. Operating income rose 39% to R296 million, benefiting from recent
investments in the plant. In addition, we gained market share across all segments
in beverages with the exception of ready-to-drink.
Revenue at VAMP was down 39% to R654 million, impacted by challenges in managing
the factory’s reopening and product launch logistics. Despite excellent brand equity,
revenue was impacted by distribution gaps and tactical pricing strategies. The lower factory
throughput and delayed reopening, together with higher raw material costs, led to an
operating loss of R547 million (2018: R252 million).
11%
13%
6%
49%
2018
21%
■ Groceries
■ Snacks and Treats
■ Beverages
■ Value Added
Meat Products
■ Out of Home
COPY TO BE SUPPLIEDOur performance Tiger Brands Limited Integrated annual report 2019 45
OPERATING FACILITIES
Limpopo
Groceries (Musina,
Polokwane)
VAMP
Gauteng
Groceries (spreads,
condiments and
ingredients)
Beverages (Roodekop)
VAMP (Germiston)
KwaZulu-Natal
Snacks and Treats
Western Cape
Groceries (Paarl)
COPY TO BE SUPPLIED 46 Tiger Brands Limited Integrated annual report 2019
OPERATIONAL REVIEW CONTINUED
Home, Personal Care and Baby (HPCB)
Revenue
R2,7bn 20%
Operating income
R546m 60%
(2018: R2,2 billion)
(2018: R341 million)
Operating margin
20,4%
(2018: 15,3%)
SALIENT FEATURES
✓
✓
Home Care recovered well from last year’s poor
pest season, with operating income up 60%
✓
Strong in-store execution and flavour
innovations drive growth in baby food pouches
ahead of market
Personal Care benefits from continuous
improvement initiatives
HPCB’s overall revenue increased 20% to R2,7 billion, with operating income up
60% to R546 million.
The Home Care category (including stationery) recovered strongly from last year’s
disappointing performance, with revenue growth up 29% to R1,1 billion. Operating
income increasing strongly by 112% to R306 million as result of sustained demand
in the pest category, improved product mix and lower factory costs. The higher
production volumes had a positive effect on factory recoveries. This year we had
a better pest season and the stock position was normalised.
In the Personal Care category, revenue was up 4% to R639 million, aided by inflation
of 5%, partly offset by volume declines of 1%. Operating income increased by 37% to
R89 million, supported by continuous improvement programmes in the factory as well
as reduced promotional spend.
Baby Care grew revenue by 23% to R981 million, with the infant nutrition segment
performing particularly well off the strength of the Purity brand. The pleasing 24%
volume growth was driven by effective in-store execution, optimal pricing and
improved distribution, particularly in pouches, resulting in market share gains across
the nutrition portfolio. The benefit of improved volumes was partially offset by higher
conversion costs, resulting in an increase in operating income of 14% to R151 million.
Given increasing competitive pressure, we have retained a strong focus on innovation
to underpin margin growth.
37%
24%
2019
39%
■ Baby Care
■ Home Care
■ Personal Care
36%
28%
2018
36%
■ Baby Care
■ Home Care
■ Personal Care
COPY TO BE SUPPLIEDOur performance Tiger Brands Limited Integrated annual report 2019 47
OPERATING FACILITIES
Gauteng
HPCB (Isando)
Western Cape
Baby
COPY TO BE SUPPLIED 48 Tiger Brands Limited Integrated annual report 2019
OPERATIONAL REVIEW CONTINUED
Exports and International
Revenue
R3,2bn 11%
(2018: R3,7 billion)
Operating income
R212m 34%
(2018: R320 million)
Operating margin
6,5%
(2018: 8,8%)
SALIENT FEATURES
✗ Challenging market conditions in Mozambique,
Zimbabwe and Nigeria impacted performance
✓
Improved offtake agreement in Deciduous Fruit
✓ Efficiencies realised through consolidation of
facilities
✓ Profitability in Chococam off the back of sound
cost management and favourable product mix
Cameroon
Chococam
Gauteng
Powdered soft drinks (Jolly
Jus) and Benny seasoning
for export markets
Western Cape
Deciduous Fruit (LAF)
Total revenue for the Exports and International businesses declined by 11% to
R3,2 billion, reflecting the challenging trading conditions particularly in Mozambique,
as well as foreign currency shortages in Zimbabwe. The adverse performance of
Exports was partially offset, however, by a significant recovery in the Deciduous Fruit
business.
Revenue in Deciduous Fruit declined by 2% due to lower volumes as the drought in
the prior year impacted opening stocks as well as the postponement of certain export
shipments into the first quarter of FY20. The business recorded a significantly reduced
operating loss of R8 million (2018: R128 million loss) due to favourable foreign
exchange positions, as well as the benefits of operational restructuring implemented
at the beginning of the year.
In line with the guidance provided earlier in the year, the Exports business was
adversely impacted by operational issues in Mozambique, while exports to Zimbabwe
were affected by ongoing macro-economic challenges resulting in foreign exchange
shortages. Trading in Nigeria was affected by the transition to a new distributor in the
first half of the year. Revenue declined by 18% to R1,5 billion, while operating income
fell by 84% to R48 million.
In a difficult trading environment, Cameroon-based Chococam recorded a 3%
revenue decline in local currency terms, as tactical pricing was implemented to sustain
volumes. Revenue in rand terms increased by 3% to R906 million. Operating income
was up 8% in rand terms to R172 million (2% in local currency), supported by
favourable product mix and tight cost management.
42%
2019
30%
30%
28%
■ Exports and International
■ Central Africa
■ Deciduous Fruit
46%
2018
24%
■ Exports and International
■ Central Africa
■ Deciduous Fruit
COPY TO BE SUPPLIEDOur performance Tiger Brands Limited Integrated annual report 2019 49
Associates
Earnings
R371m 49%
(2018: R731 million)
Contribution to headline
earnings
to 17%
(2018: 28%)
66%
2019
Contribution
to associate
income
13%
20%
6%
8%
■ Carozzí
■ Oceana
■ UAC Foods
■ National Foods
As previously reported, the company ceased to equity account the earnings of Oceana with effect
from 1 December 2018, following the decision in November 2018 to unbundle the company’s
investment in Oceana. The total income from associates is therefore not comparable with that
of the prior year. Excluding Oceana, all other associates reported an increase in earnings.
Chile: Empresas Carozzí (24,4% held)
Empresas Carozzí S.A., a Chilean company
headquartered in Santiago, is one of the largest and most
respected South American food producers that has
manufacturing operations in Chile, Peru and Argentina.
Carozzí has two main business areas: fast-moving
consumer goods and agro-industrial (business-to-
business) products. Its main customer markets are
Chile and Peru.
Chilean economic growth slowed amid the trade
negotiations between the world’s biggest economies that
adversely impacted the copper price and other Chilean
exports. The Peruvian economy has also seen negative
effects while the impact of the recession in Argentina
on the year under review was not material. Despite the
challenging environment, the company’s consolidated
net revenues increased 4,1%, and earnings before taxes
increased 1,1% (in local currency). The growth in FY19
was driven primarily by the fast-moving consumer goods
segment.
Nigeria: UAC Foods (49,0% held)
UAC Foods is a leading manufacturer and marketer of
convenience foods in Nigeria, with respected brands in
snacks, dairy products and beverages. The snacks
category comprises Gala sausage roll, Funtime cupcakes,
Funtime coconut chips and the new Gala Chinchin
(a popular regional fried snack). The dairy category includes
the Supreme range of ice-cream and yoghurt products,
while the beverage category includes Swan Natural Spring
Water.
UAC Foods Limited’s marginally improved performance this
year is due to increased revenues arising from improved
market penetration.
This improvement was despite operating in a highly
competitive market that is yet to recover fully from a
recession that has greatly curtailed consumers’ purchasing
power. Production capacity constraints impacted volumes
in the water category.
Zimbabwe: National Food Holdings Limited
(37,4% held)
National Foods is a leading branded food manufacturer
in Zimbabwe. In addition to maize and flour milling, the
company produces a range of food products, including
stockfeed, snacks and treats, rice, peanut butter and oil.
This has been another tough year for the company, as
a result of the country’s significant macro-economic
challenges. Foreign currency shortages worsened in the
past year and continue to create challenges for importers
in settling foreign creditors.
The financial year saw the newly elected Zimbabwean
government introduce reforms aimed at stabilising the
economy. A local currency was reintroduced in February
2019. The reforms precipitated significant market
corrections resulting in a decline in the value of the local
currency and consequently significant inflation. The country
also experienced a crippling drought and a devastating
cyclone.
The group reported a profit growth supported by volume
growth and improved margins. Performance was driven
by the Maize and Stockfeeds divisions, partially offset by
the Flour division.
COPY TO BE SUPPLIED 50 Tiger Brands Limited Integrated annual report 2019
WHO GOVERNS US
Tiger Brands’ board of directors plays a critical role in the governing of the business. Its
diversity lends important perspective and depth to the group’s direction. We are therefore
committed to building a board that is diverse in terms of race, gender and experience
NON-EXECUTIVE DIRECTORS
Khotso Mokhele
Monwabisi Fandeso
Cora Fernandez
Emma Mashilwane
Makhup Nyama
CHAIRMAN
64
Appointed
August 2007
60
Appointed
July 2019
46
Appointed
March 2019
44
Appointed
December 2016
62
Appointed
August 2010
Experience
› General management
and strategy
› Risk management
› Auditing and accounting
› Governance
› Stakeholder relations
Experience
› Executive leadership
and strategy
› Agriculture and tourism
› FMCG Africa
› Mergers and acquisitions
› Stakeholder relations
Experience
› Finance and investment
› Governance and general
management
› Leadership and strategy
› Auditing and accounting
Experience
› Auditing and financial
management
› Governance
› Corporate finance
› Banking, finance and
FMCG
Experience
› General management
› HR and remuneration
› Governance
› ICT
› Remuneration and risk
Other directorships
Non-executive director
of Thebe Investment
Corporation, Empact Group
and SABSA Holdings
Other directorships
Non-executive director of
Sphere Holdings, Spar
Corporation, National
Empowerment Fund and
Allan Grey Retirement
Funds
Other directorships
Non-executive director
of Murray & Roberts and
Famous Brands.
Co-founder and CEO
of MASA Risk Advisory
Services
Other directorships
Non-executive director
of Marsh Inc, director of
Zensar SA, Makhup
Properties, Kapela Holdings
and its subsidiaries
Other directorships
Non-executive director of
AECI, Afrox, MTN Group,
Mapitso Consortium, Hans
Merensky Holdings, Kenosi
Investment Holdings.
Special advisor to the
Minister of Science and
Technology and chancellor
of the University of the
Free State
Committee memberships
■ Nomination and
Committee memberships
■ Risk and sustainability
governance (Chair)
■ Investment (Chair)
■ Remuneration
(Member)
(Member)
■ Nomination and
governance (Member)
Committee memberships
■ Risk and sustainability
(Chair)
■ Audit (Member)
Committee memberships
■ Audit (Chair)
■ Risk and sustainability
(Member)
Committee memberships
■ Risk and sustainability
(Member)
■ Social, ethics and
transformation
(Member)
Our governance Tiger Brands Limited Integrated annual report 2019 51
Board committee
membership key
Audit committee
Social, ethics and transformation committee
Remuneration committee
Nomination committee
Risk and sustainability committee
Investment committee
NON-EXECUTIVE DIRECTORS
EXECUTIVE DIRECTORS
Maya Makanjee
Donald Wilson
Mahlape Sello
Lawrence Mac Dougall
Noel Doyle
57
Appointed
August 2010
62
Appointed
June 2019
57
Appointed
October 2019
62
Appointed
May 2016
53
Appointed
July 2015
CHIEF EXECUTIVE OFFICER
CHIEF FINANCIAL OFFICER
Experience
› Strategy and general
management
› Stakeholder relations and
reputation management
› Human resources
› Sustainable development
› FMCG in Africa
Other directorships
Non-executive director of
Mpact, Truworths
International, Datatec, AIG
South Africa, trustee of
Nelson Mandela Foundation
Experience
› Finance and general
management
› Governance, leadership
and strategy
› Mergers and acquisitions
› Stakeholder engagement
Experience
› Legal and commercial
› General management
and leadership
› Governance and strategy
› Stakeholder relations
Experience
› General management
› Strategy execution
› FMCG in Africa and
developing markets
Experience
› Accounting and auditing
› Corporate finance
› Mergers and acquisitions
› FMCG in South Africa and
Africa
Other directorships
Non-executive director of
Empresas CarozzÍ (Chile)
Other directorships
Non-executive director of
National Foods Holdings
(Zimbabwe)
Other directorships
Non-executive director of
Life Healthcare Group
Holdings Limited. Member
of International Court of
Arbitration of the ICC
Council and a panellist with
the Arbitration Foundation
of Southern Africa
Committee memberships
■ Social, ethics and
transformation (Chair)
■ Nomination and
governance (Member)
■ Remuneration
(Member)
Committee memberships
■ Audit (Member)
■ Remuneration
(Member)
■ Investment (Member)
Committee membership
■ Social, ethics and
transformation
(Member)
52 Tiger Brands Limited Integrated annual report 2019
WHO GOVERNS US CONTINUED
NON-EXECUTIVE DIRECTORS
EXECUTIVE COMMITTEE
Mark Bowman
Michael Ajukwu
Gail Klintworth
Lawrence Mac Dougall
CHIEF EXECUTIVE
OFFICER
62
Appointed
May 2016
Experience
› General management
› Strategy execution
› FMCG in Africa and
developing markets
53
Appointed
June 2012
Experience
› Strategy and general
management
› FMCG sector in Africa
› Corporate governance
› Mergers and acquisitions
› Remuneration
Other directorships
Non-executive director
Dis-Chem, Mr Price Group,
Grand Parade Investments
Limited, Signal Mill
Products and The
Alternative Power (Pty) Ltd
Committee memberships
■ Remuneration (Chair)
■ Nomination and
governance (Member)
■ Investment (Member)
63
Appointed
March 2015
Experience
› Stakeholder relations
› Risk and general
management
› Corporate finance
› West Africa
› Banking, finance and
FMCG
Other directorships
Non-executive director of
MTN Nigeria, Intafact
Beverages (subsidiary of
SABMiller) in Nigeria,
Sterling Bank Plc, Novotel
hotel and Port Harcourt,
Nigeria (member of Accor
Hotels group)
Committee membership
■ Risk and sustainability
(Member)
56
Appointed
August 2018
Experience
› General management and
governance
› Sustainability leadership
and strategy
› Stakeholder relations
› Brand and reputational
management
› Marketing
Other directorships
Non-executive director of
GlobeScan, advisory board
member to MAS Holdings
and NESTE, advisory group
member for SIG, advisory
council member of Wheeler
Business and Development
Institute, London Business
School and partner at
SYSTEMIQ
Committee membership
■ Social, ethics and
transformation
(Member)
■ All our non-executive directors are independent as determined by the board. Any term in office by an independent non-executive director exceeding nine years is
subject to a rigorous review by the board. Dr Khotso Mokhele completed 12 years of service as a non-executive director on 30 September 2019. After taking into
account, among other considerations, the extent to which the diversity of his views, skills and experience continue to enhance the board’s effectiveness, the board
is satisfied that Dr Mokhele’s independence is not impaired by his length of service.
46%
8%
62%
62%
2019
Board tenure
23%
2019
Gender
diversity
38%
23%
■ 0 – 3 years
■ 3 – 6 years
■ 6 – 9 years
■ >9 years
■ Male
■ Female
2019
Demographic
diversity
38%
■ Black
■ White
The board is
determined to
achieve a target
of 50% women
and black
representation,
respectively by
end of FY22.
Our governance Tiger Brands Limited Integrated annual report 2019 53
Noel Doyle
Mary-Jane Morifi
Becky Opdyke
Patrick Sithole
Luigi Ferrini
CHIEF FINANCIAL
OFFICER
CHIEF CORPORATE
AFFAIRS AND
SUSTAINABILITY OFFICER
CHIEF MARKETING
OFFICER
CHIEF SUPPLY CHAIN
OFFICER
CHIEF CUSTOMER
OFFICER
53
Appointed
July 2012
Experience
› Accounting and auditing
› Corporate finance
› Mergers and acquisitions
› Governance
› FMCG in South Africa and
Africa
57
Appointed
December 2016
Experience
› Corporate affairs
› Sustainability
› Oil, gas and mining
sectors
40
Appointed
October 2018
Experience
› FMCG in USA, SA and
globally
› Marketing and brand
leadership
› Commercial
52
Appointed
August 2012
Experience
› FMCG
› Supply chain
management
52
Appointed
May 2019
Experience
› FMCG in South Africa
and globally
› Sales strategy and
execution
› Customer management
and customer relations
Kamal Harilal
S’ne Magagula
Yokesh Maharaj
Pieter Spies
Clive Vaux
CHIEF STRATEGY
OFFICER
CHIEF HUMAN
RESOURCES OFFICER
CHIEF GROWTH OFFICER:
CONSUMER BRANDS
CHIEF GROWTH OFFICER:
GRAINS, OUT OF HOME
EXECUTIVE: CORPORATE
FINANCE
46
Appointed
April 2018
46
Appointed
May 2018
Experience
› FMCG in South Africa
and Africa
› Strategy development
and execution
› Mergers and acquisitions
› Corporate finance
Experience
› Human resources
strategy and leadership
› Oil and gas sector in
South Africa and Europe
› Business strategy
development and
execution
47
Appointed
July 2018
Experience
› FMCG in South Africa
and Africa
› Sales and distribution
› Human resources
54
Appointed
February 2017
Experience
› Executive leadership in
FMCG and agricultural
sectors in Africa
› Strategy development
and execution
68
Appointed
June 2000
Experience
› Executive leadership
in FMCG
› Corporate finance
54 Tiger Brands Limited Integrated annual report 2019
CREATING VALUE THROUGH GOOD GOVERNANCE
The Tiger Brands board provides effective leadership and strategic direction in the best interest of the company and its
stakeholders. The board embraces the principles of ethical leadership and good corporate governance aligned to the
King IV Report on Corporate Governance, the JSE Listings Requirements, the Companies Act and other relevant laws and
regulations. In executing its mandate, the board regularly reviews its business model to ensure that it supports long-term
value creation, that effective systems of risk management and internal control are in place, and that a culture of ethical
leadership has been established across the group.
In this year’s integrated annual report, we have chosen to provide a summarised review of those governance activities
pertaining to value creation. This includes an overview of the skills and diversity of our leadership team (page 50), a review
of the board’s main focus areas of discussion during the year (page 55), and a detailed summary of our remuneration
policies and practices (pages 57 to 82). Additional information on our governance policies and activities, including on the
application and explanation of the King IV principles, is available online at www.tigerbrands.com/investor.
Special
board
Audit
committee
Board
Special
audit
committee
Risk and
sustainability
committee
Remuneration
committee
Nomination
and
governance
committee
Special
nomination
and
governance
committee
Social,
ethics and
transformation
Ad hoc:
investment
Number of
meetings
KDK Mokhele
MO Ajukwu
MJ Bowman
NP Doyle
MP Fandeso
CH Fernandez
GA Klintworth
LC Mac Dougall
M Makanjee
TE Mashilwane
MP Nyama
DG Wilson
YGH Suleman
6
6
6
6
6
3
4
6
6
5
6
6
3
1
6
6
6
5
6
3
4
6
6
5
6
6
3
1
3
–
2
2
3
1
1
1
1
1
3
3
2
3
2
1
4
4
4
4
2
1
1
1
1
1
4
4
4
3
2
3
2
1
3
3
3
4
4
4
1
1
1. CH Fernandez was appointed to the board on 1 March 2019
2. MO Ajukwu was appointed as member of the audit committee on 21 November 2018 and ceased to be a member on
1 June 2019
3. MJ Bowman was appointed as member of the audit committee on 2 November 2018 and ceased to be a member on
1 June 2019
4. GA Klintworth was appointed as member of the social, ethics and transformation committee on 1 March 2019
5. MP Fandeso was appointed to the board on 1 July 2019
6. MP Nyama was appointed as member of the risk and sustainability committee and ceased to be a member of the
remuneration and nomination governance committees on 1 March 2019
7. DG Wilson was appointed to the board and as member of the audit, remuneration and investment committees on
1 June 2019
8. KDK Mokhele ceased to be a member of the social, ethics and transformation committee on 1 March 2019
9. YGH Suleman resigned as director on 22 November 2018
Our governance Tiger Brands Limited Integrated annual report 2019 55
The following table briefly reviews the main areas of discussion and review by the board and its sub-committees during the
year, in fulfilling its fiduciary responsibility of ensuring long-term value growth in accordance with its charter, corporate
governance standards and applicable regulatory and legislative requirements.
BOARD
Strategy review
DRIVE
GROWTH
BE
EFFICIENT
GREAT
PEOPLE
SUSTAINABLE
FUTURE
COMMITTEE
STRATEGY
> Deep dived into challenges affecting the business operating environment
> Tracked the business performance against the group’s strategy
> Monitored milestones of group strategic pillars aimed at driving the 2022 strategy
Good governance, succession planning and leadership
> Assessed board structure for its experience, skills, diversity and ability
to create value
> Identified and assessed skilled candidates for potential board appointments
> Assessed directors retiring by rotation
> Assessed independence of the non-executive directors
> Commissioned external board performance review
> Reviewed induction programme for new non-executive directors appointed
during FY19/20
> Conducted performance assessment of chairman and CEO
> Monitored the succession plans for chairman, CEO and key executives
> Approved appointments of new directors on the board
Risk management
> Reviewed risk appetite and risk tolerance
> Reviewed business and group risks and ensured management actions
are implemented
Investment and divestment decisions
> Assessed investment opportunities identified in strategic planning process
> Made recommendations on Oceana group investment
> Approved sale of Oceana shares to Brimstone and Oceana unbundling transaction
> Attended to post-investment reviews
VAMP business
> Approved the relaunch of the VAMP business
> Monitored status of VAMP insurance claims, accounting treatment
and related disclosures
Occupational health
Board
N&G
N&G
N&G
N&G
N&G
N&G
N&G
N&G
Board
R&S
R&S
INVCO
INVCO
Board
INVCO
Board
Board
> Considered the work undertaken within the Occupational Health Framework with
R&S
regard to implementation of the Occupational Health Strategy
> Approved the Firearm and Human Rights policies
Board
Committees:
AC – audit committee
REMCO – remuneration committee
R&S – risk and sustainability committee
SETCO – social, ethics and transformation committee
N&G – nomination and governance committee
INVCO – investment committee
56 Tiger Brands Limited Integrated annual report 2019
CREATING VALUE THROUGH GOOD GOVERNANCE CONTINUED
BOARD
IT security and business continuity
> Conducted an IT security assessment
> Progressed on the implementation plans on cybersecurity
> Monitored implementation of business continuity plans across the business
> Approved IT governance charter and framework
Remuneration
> Engaged shareholders on remuneration policy
> Approved the remuneration strategy amendments for implementation in FY20
> Considered outcome of the benchmarking exercise
> Approved performance target for the CEO and CFO
Transformation
> Approved the BBBEE strategy for 2022 and the implementation plans
> Monitored progress on the transformation and culture journey
> Prioritised transitioning contingency labour to permanent workforce
Ethics
> Monitored organisational ethics
> Progressed in addressing the reported ethics matters
Stakeholder relations and sustainability
> Monitored relationship with Consumer Goods and Services Ombudsman;
progressed on consumer complaints
> Monitored implementation of socio-economic development (SED) strategy
and Enterprise Development initiatives
> Monitored engagement with stakeholders and regulators
Budget and financial controls
> Approved capital expenditures for our business operations
> Approved the group’s budget 2019/2020
> Approved the dividend cover
> Approved amendments to the foreign exchange and hedging policy
Audit processes
> Completed the audit plan including mapping to the group register
> Approved the policy on the use of external auditors for non-audit services
> Approved the internal audit charter and structure
> Reviewed the outcomes of impairment assessments
> Reviewed and recommended the proposed share repurchase programme
> Considered contract management systems
> Recommended the annual financial statements, integrated and sustainable
development reports to the board for approval
> Considered the reports of the internal and external auditors on the group’s systems
of internal control, including financial controls
> Considered the independence of external auditors
COMMITTEE
STRATEGY
R&S
R&S
R&S
Board
REMCO
REMCO
REMCO
REMCO
SETCO
SETCO
SETCO
SETCO
SETCO
SETCO
SETCO
SETCO
Board
Board
Board
Board
AC
AC
AC
AC
AC
AC
AC
AC
AC
Committees:
AC – audit committee
REMCO – remuneration committee
R&S – risk and sustainability committee
SETCO – social, ethics and transformation committee
N&G – nomination and governance committee
INVCO – investment committee
The board performance and effectiveness assessment
The outcomes of this assessment can be found on page 7.
Our governance REMUNERATION REPORT
Section 1: Background statement
Tiger Brands Limited Integrated annual report 2019 57
STATEMENT FROM THE CHAIRMAN OF THE
REMUNERATION COMMITTEE
DEAR STAKEHOLDER
On behalf of the remuneration committee (the committee),
I am pleased to present the 2019 remuneration report
which, in compliance with best practice reporting as
recommended by the King IV™ Report on Corporate
Governance for South Africa (King IV™ Code for Corporate
Governance), highlights:
› Key components of our remuneration policy
› Alignment of our remuneration policy with the Tiger
Brands business strategy and priorities
› Implementation of the policy for the 2019 financial year
(FY19)
During the period under review we focused our efforts on
ramping up the execution of our four strategic priorities:
1. Drive Growth: Winning category, channel and
customer strategies.
2. Be Efficient: Cost-conscious and an integrated
supply chain.
3. Great People: A winning mindset and great place
to work.
4. Sustainable Future: Health and nutrition, enhanced
livelihoods and environmental stewardship.
The focus on these priorities is placing the company in a
better position to react appropriately to prevailing market
conditions.
During the period under review, various changes were
made to the remuneration strategy and policy to align with
market practices and drive further alignment on critical
business key performance indicators (KPIs) to measure
and reward performance against our strategy. To this end,
the remuneration committee approved the implementation
of a revised short-term incentive (STI) scorecard that
creates a balance between the focus on financial and
sustainability measures and a move from the allocation
of share appreciation rights (SARs) to the allocation of full
value shares with performance conditions for members
of the executive committee, including the CEO, CFO,
executive directors, prescribed officers and a combination
of performance shares and restricted shares for senior
management and below, to ensure that the long-term
incentive scheme (LTI) remains competitive. This revised
incentive structure is simple, easily understood by
participants and creates a better and longer-term
alignment of management’s interests with that of
stakeholders. The new incentive structure enhances
our reward framework, which follows a “Total Reward”
approach, consisting of salary, a range of market relevant
benefits and professional growth opportunities that
recognise individual contributions, as well as performance.
This holistic approach enables us to attract, motivate and
retain high-performing people (see further details on
page 60).
58 Tiger Brands Limited Integrated annual report 2019
REMUNERATION REPORT CONTINUED
SHAREHOLDER VOTING OUTCOMES
In line with our commitment to remunerate our people in a
fair and equitable manner, we maintain strong relationships
with stakeholders, and strive towards high standards of
disclosure of our remuneration approach to ensure that
there is a clear understanding of our remuneration policy
and the practices that have been implemented.
The non-binding advisory votes by shareholders at the
2019 and 2018 annual general meetings (AGM) are
summarised as follows:
% vote in favour
February
2019
February
2018
Remuneration policy
Remuneration implementation
Non-executive directors’ fees
76,33%
99,42%
97,45%
73,41%
82,59%
99,80%
The following common themes were highlighted by shareholders:
SHAREHOLDER FEEDBACK
REMUNERATION COMMITTEE ACTION/RESPONSE
Matching plans are considered contrary to
best practice especially if awarded without
specific performance criteria.
The vesting scale for Share Appreciation
Rights (SARs) does not include sufficient
stretch.
Non-executive directors are paid hourly fees
for extra work and additional meetings
attended. This may affect their ability to
function independently.
Deferred bonus shares and company matching shares will be
discontinued from FY20.
The long-term incentive scheme design does not include SARs as an
instrument from FY20. Performance vesting shares will be awarded to
members of the executive committee, with revised vesting conditions.
The revised vesting conditions are broad enough to create a balance
between entry and stretch targets on the vesting scale. Details on
pages 66 and 67.
The payment of hourly fees was discontinued with effect from
1 October 2018. The payment of NED fees for additional meetings
over and above the standard meetings, will only be permitted at the
discretion of the chairman of the remuneration committee and
chairman of the board. Detailed disclosure on additional payments,
if made, to be included in the remuneration report.
SHAREHOLDER ENGAGEMENT
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:
› Tiger Brands will seek to actively engage with dissenting
shareholders by inviting them to one-on-one meetings
and, where necessary, will issue a SENS announcement
requesting shareholders to appropriately engage on their
specific concerns; and
› Tiger Brands will consider the shareholder concerns
and report on the outcome of the engagements and
measures taken, in its next integrated report.
REMUNERATION COMMITTEE OBJECTIVES AND
ACTIVITIES FOR FY19
In FY19 the committee undertook the following activities:
› Approved total remuneration packages (TRP) salary
increase mandate;
› Approved the remuneration for executive directors,
prescribed officers and senior management;
› Approved the redesign of the STI scorecard and LTI
instruments;
› Approved the STI and LTI performance conditions,
targets and weightings in respect of FY19/20;
› Approved the adjustments to LTIs as a consequence
of the unbundling of Oceana;
› Approved the non-executive directors’ (NEDs) fee
increases; and
› Re-evaluated the effectiveness of the current BBBEE
share scheme.
FOCUS AREAS FOR FY20
The committee is committed to remaining up to date with
the latest remuneration market trends and best practice,
business needs, as well as our responsibilities to our
people, shareholders and communities to ensure that
our remuneration practices are aligned to the business
strategy.
Our governance Tiger Brands Limited Integrated annual report 2019 59
Key focus areas include:
› Embed the STI integrated scorecard to align our people
with business objectives;
› Cement and refine our approach to monitor and address
identified pay inequities;
› Continue to review our reward mechanisms and
practices with a view to introducing innovative reward
strategies to:
✓ Ignite winning performance; and
✓ Attract, retain and motivate key talent.
EXTERNAL ADVICE PROVIDED TO THE COMMITTEE
IN FY19
In reviewing our remuneration offering to ensure that it is
competitive, fair, transparent and responsible, we enlisted
the services of PwC South Africa and Vasdex Associates
to assist us with design, market practice and survey data.
The committee is satisfied that PwC South Africa and
Vasdex Associates are independent.
VOTING AT AGM
As required by the King IV Code on Corporate
Governance, the remuneration policy and implementation
report which follows will be tabled for separate non-
binding advisory votes by shareholders at the upcoming
AGM. As required by the Companies Act, non-executive
directors’ fees for the coming year will be put to
shareholders by way of a special resolution. We encourage
all shareholders to provide feedback on their position on
the various voting requirements. We are committed to
engaging with shareholders as required to discuss issues
of concern.
On behalf of the committee, I am confident that our
remuneration policy has achieved the desired outcomes
for FY2019 and is aligned with the company’s
strategic goals.
Mark Bowman
Chairman – Remuneration committee
4 November 2019
60 Tiger Brands Limited Integrated annual report 2019
REMUNERATION REPORT CONTINUED
Section 2: Overview of remuneration policy
TIGER BRANDS PEOPLE STRATEGY
The remuneration strategy is aligned to the Tiger Brands people strategy, which is directly linked to our business strategy
and it combines the three pillars of TALENT, LEADERSHIP AND GREAT PLACE TO WORK underpinned by the
foundation of EXECUTION EXCELLENCE. Our remuneration principles have been designed to drive the execution of the
people strategy, in the belief that great people and great brands are at the core of our success. Our reward framework is
holistic, encompassing the monetary elements of reward, as well as non-financial aspects such as growth, development
and the work environment.
BUSINESS STRATEGY
Develop talent
Inspire winning
performance
Employee value
proposition
GUARANTEED
PACKAGE
BENEFITS
SHORT-
TERM
INCENTIVE
LONG-
TERM
INCENTIVE
RECOGNITION
Great people
delivering
winning
performance
PEOPLE STRATEGY
The following key objectives of our remuneration policy drive the Tiger Brands people strategy:
› Strengthen our ability to competitively attract and retain talent to enable the execution of our strategy;
› Align Tiger Brands’ annual and long-term performance to the delivery of the strategy;
› Align Tiger Brands’ people performance with shareholder interests;
› Motivate and stimulate high performance across Tiger Brands through competitive short and long-term incentives;
› Cement the foundation for fair and responsible pay we have already built; and
› Ensure that reward mechanisms are simple and provide line of sight to all employees.
Our governance Tiger Brands Limited Integrated annual report 2019 61
The following tables summarise the various remuneration elements (guaranteed package, short-term incentive and
long-term incentive) that Tiger Brands offers at different levels of employment:
GUARANTEED PACKAGE (EXCLUDING BARGAINING UNIT PEOPLE)
Description
Guaranteed package (GP) offered to people on a total remuneration package (TRP) comprises base pay, allowances,
retirement and medical benefits. It is reviewed annually based on personal performance (KPIs based on a balanced
scorecard that includes financial and non-financial metrics), business performance (linked to budget), behaviours aligned
with the company values and market competitiveness (national and sector benchmarks).
Benchmarks
Benchmarking for executive directors and prescribed officers is based on a peer group of companies. The peer group is
determined using the closeness metric formula, based on:
Turnover
Operating income before tax
Number of people
Total assets
EBITDA
Market capitalisation
Companies included in the peer group comprise:
Factor
Executive directors and prescribed officers
Survey type
Comparator
group
Bespoke survey
Public data of South African companies listed on the JSE, based on
the closeness metric is used to determine an appropriate peer group
Aspen Pharmacare Ltd Massmart Holdings Ltd Remgro Ltd
Bid Corporation Ltd
Distell Group Ltd
Imperial Holdings Ltd
Pick n Pay Stores Ltd
Pioneer Foods Ltd
RCL Foods Ltd
Shoprite Holdings Ltd
The Spar Group Ltd
Woolworths Holdings Ltd
Rest of exco, senior
management and
below
REMchannel survey
National and consumer
goods circles
The peer group is reviewed on a bi-annual basis.
Anchor point
Tiger Brands has anchored its current pay position at the 65th percentile of the national market,
where a normal distribution around the anchor point is based on individual performance,
talent/potential, experience and in certain instances, tenure. It is important to note that guaranteed
packages are not automatically adjusted to the anchor point. The performance-based increases
granted in the organisation (including those for executive directors and prescribed officers) are
managed within the overall salary increase budget and the pay progression model as discussed
below.
Benefits
Benefits include retirement fund contributions, funeral cover, permanent health insurance, death-in-
service cover, medical aid contributions and travel allowances (where applicable).
Pay progression
model
The intention of the pay progression model is to competitively reward performance and to actively
align our remuneration to the market. The pay progression model will, gradually over time and within
the confines of our salary increase budget, correct the guaranteed packages for high-performing
people to align them closer to the market. The model considers the employee’s salary positioning
in relation to the pay scale as well as performance when granting an increase whilst ensuring that
the company remains within the overall salary budget.
62 Tiger Brands Limited Integrated annual report 2019
REMUNERATION REPORT CONTINUED
SHORT-TERM INCENTIVE
Description and link to strategy
In FY17, we revised the operating model for Tiger Brands
to help maximise the potential of our people in line with our
business goals. To ensure that our reward approach is
aligned with our integrated operating model, we
have revised and simplified the STI scheme to align the
contributions of all our people to a One Team Tiger bottom
line, thereby creating greater potential for reward across
the board. The STI scheme is summarised below.
Summary of changes for FY19
› STI formula change – to drive performance and ensure
retention, the company has moved away from the
multiplicative approach, which was an “all or nothing”
approach, to an additive approach that provides
participants with an opportunity to earn the STI based
on individual elements (financial and non-financial) of
performance delivered. To improve line of sight between
individual contribution, team and business performance,
the STI scheme now includes an Individual Performance
Factor at a weighting of 20%;
› Inclusion of an integrated group STI scorecard for
the whole of Tiger Brands with a greater focus on
sustainability measures to align teams on a One Tiger
bottom line; and
› Revision of group, business unit and individual
performance factors and weightings.
The primary intention of the STI is to improve business
performance by focusing participants’ attention on key
financial, strategic, functional and personal performance
objectives (KPIs based on a balanced scorecard), which
are aligned with the long-term business strategy for
sustainable value creation. This drives high performance
by explicitly creating line of sight in linking group, business
unit and individual performance.
› All permanent employees on a guaranteed package
in Paterson grades CU and above, are eligible to
participate. Previously CU employees were not eligible
to participate; however, to better align our people and
motivate winning performance, we have included this
group in the STI.
› The STI is paid annually in cash to qualifying people who
are employed by the organisation on the payment date.
› The on-target percentage (as a percentage of
guaranteed package) 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 defined objectives.
› The STI outcomes are determined based on a multiple
of the on-target percentage of guaranteed package,
which comprises three performance factors:
✓ A group performance factor focused on group
financial and non-financial metrics.
✓ A business unit performance factor focused on
business unit financial and non-financial metrics.
✓ An individual performance factor focused on individual
performance objectives and allows for differentiation
in rewarding high performers.
Payment of an STI is subject to the overriding condition
that the group/business unit meets or exceeds the agreed
entry threshold in respect of its earnings before interest
and tax (EBIT).
Calculation
STI = Annual guaranteed package X on target % X
{group performance factor (0 to 200%) + business unit
performance factor (0 to 200%) + Individual Performance
Factor (0 to 200%).
Predetermined weightings will be applied to each of
the performance factors. In respect of the Individual
Performance Factor, participants will be rated on a rating
scale ranging from 1 (poor performer) to 5 (exceptional
performer).
Target and maximum
The following ranges of STI awards apply to the various categories of people covered by this report:
CEO, CFO and executive directors
Prescribed officers
Other participants (Paterson grades CU to E band)
On-target
guaranteed
package
%
60
50
8,5 to 30
Maximum
of on-target
amount
%
200
200
200
Our governance Tiger Brands Limited Integrated annual report 2019 63
Group and business unit performance factors
The underlying values and weightings for each KPI are set and approved by the remuneration committee in advance of
each year to determine parameters for the STI in the form of a balanced scorecard. Below is the group STI scorecard
for FY19 that applied to the CEO, CFO, executive directors, prescribed officers and other participants:
Strategic
objective
Growth*,**
Efficiency*,**
People and
sustainability*
Strategic
objective
weighting
Key performance
indicator
Key
performance
indicator
weighting
Score = 50% Score = 100% Score = 200%
60% Sales volume growth
Absolute gross margin
PBIT
10% Cost savings initiatives
Net working capital
10%
10%
40%
5%
5%
40,0%
98,6%
98,6%
98,6%
101,2%
100,0%
100,0%
100,0%
100,0%
100,0%
140,0%
103,6%
103,6%
123,4%
97,7%
30% Quality
Safety (LTIFR)
BBBEE score
10%
Reduction in execution-related marketplace incidents
year-on-year by
15%
10%
100,0%
10% Level 7 (60 to 61) Level 7 (61.1 to 65)
20%
80,0%
Level 6
10%
120,0%
* The actual targets have not been provided as they are linked to budget and considered commercially sensitive information.
** For the key performance indicators within the growth and efficiency strategic objectives, the targeted percentages for “threshold”, “on-target” and
“stretch” as set out above per key performance indicator represent the targeted percentage achievement of the underlying budgeted amounts.
The group, business unit and individual weightings applicable to the various employee categories are detailed below:
Employee category
Group
Business unit
Individual
CEO, CFO and executive directors
Prescribed officers
80%
80%
0%
0%
Other participants (Paterson grades CU to E band)
10% to 40%
40% to 70%
20%
20%
20%
LONG-TERM INCENTIVE – MANAGEMENT
(PATERSON GRADE D AND ABOVE)
Description
To ensure that we align our reward approach to our
integrated operating model, we have revised and simplified
the LTI for FY20 to consider the following:
› Strengthen our ability to competitively attract and retain
talent to enable the execution of our business strategy;
and
› Align Tiger Brands’ management’s performance to our
long-term strategy and, in particular, to unleashing the
power of our people objective.
The original Tiger Brands 2013 Share Plan (LTIP)
comprised the following instruments:
› Performance vesting shares (full value shares with a
three-year vesting period, performance vesting criteria
linked to the FINDI30 Index in terms of shareholder
return)
› Restricted shares issued as bonus-matching shares
(full value shares with a three-year vesting period, no
performance criteria)
› Restricted shares issued as deferred bonus shares and
company-matching shares (full value shares with a
three-year vesting period, no performance criteria)
› Restricted shares as retention specific shares for
African, Coloured and Indian (ACI) employees in D band
and above (full value shares with a three-year vesting
period, no performance criteria)
› Share appreciation rights (SARs).
The allocations of SARs were subject to performance
vesting criteria. Apart from a 5% vesting of the third
tranche of SARs allocated in FY14, all the tranches of
SARs allocated in subsequent financial years that
would have vested in FY19 have been forfeited due
to performance criteria not having been met. Any
continuation of this trend is of concern to the company
as the mechanism is ineffective in providing key people
with a vested interest in the company.
In mitigation of this risk, the committee approved the
reintroduction of the award of performance shares, ie full
value shares that are subject to performance conditions,
with effect from FY20. At the same time, the company will
also commence with the grant of restricted shares on
a “specific retention basis”. The allocation of SARs will
thus be discontinued going forward.
64 Tiger Brands Limited Integrated annual report 2019
REMUNERATION REPORT CONTINUED
The practice of the grant of restricted shares in the form of
“bonus-matching shares” (which were linked directly to the
achievement of an STI in the previous financial year) will be
discontinued as from FY20. In addition, as from FY20, the
voluntary deferral of a portion (25%, 33% or 50%) of
participants’ STI awards into restricted shares (“deferred
bonus shares”) which are matched by the company on
a 1:1 basis in the form of “company-matching shares” will
be discontinued (due to shareholders raising best practice
concerns and a historical low uptake from participants).
All previous grants of bonus-matching shares, deferred
bonus shares and company-matching shares will continue
to vest in accordance with the rules of the LTIP.
Below is a description of the share instruments
utilised in FY19
Share Appreciation Rights
The last grant of Share Appreciation Rights was made on
5 June 2019. The following multiples of Share Appreciation
Rights, based on guaranteed package, applied to the
employee categories shown below:
Value of awards
Employee category
% of guaranteed
package
CEO
CFO
Prescribed officers and executive directors
120%
120%
110%
Calculation
The number of SARs at allocation date is determined as
follows: SARs = (GP x SARs multiple/share price) x PDT
multiplier. A performance differentiation tool (PDT) is used
to modify the standard quantum of SARs, based on an
individual’s personal performance, leadership and ability.
This is a discretionary percentage ranging from 0% to
200%.
Share price
The share price is determined based on the volume-
weighted average price (VWAP) of a Tiger Brands share
for the 10 trading days before the allocation date.
Vesting
In addition to meeting the required performance
conditions, vesting is time-based according to the
following pattern:
Year from allocation date
0
1
2
3
4
5
Vesting
1/3
1/3
1/3
Performance metrics
The allocations of SARs during the 2019 financial year are subject to the performance criteria as set out in the table below:
Metric
Measurement
Weight Metric
HEPS (real HEPS
growth)
Compound annual growth
50% Full vesting: HEPS = > CPI + rate of growth in GDP (measured
on an annual compound basis over the applicable period)
Pro rata vesting on a linear scale: HEPS growth > CPI but
below CPI + GDP rate. No vesting if HEPS < = CPI
ROIC
Average ROIC measured
over three, four and five
years for each one-third
tranche
50% ROIC < WACC +1%
ROIC = WACC +1%
ROIC > WACC +1% but
< WACC +2%
No vesting
25% vesting
Pro rata vesting on a linear scale
ROIC => WACC +2%
100% vesting
HEPS: Headline earnings per share
ROIC: Return on invested capital (after tax)
Our governance Tiger Brands Limited Integrated annual report 2019 65
For SARs allocated in December 2016, September 2017
and December 2017, the performance vesting condition is
as follows:
Metric
Weight
0% vesting
Maximum
100% vesting
HEPS
100%
CPI and below CPI +GDP
matching shares is directly linked to the achievement of a
STI. Performance is, therefore, determined “on the way in”.
The executive directors and prescribed officers did not
meet their STI targets in FY18 and therefore did not qualify
for STIs. No bonus-matching shares were, therefore,
granted to executive directors and prescribed officers
in FY19.
Pro rata vesting on a linear scale of HEPS growth >CPI but
below CPI + GDP rate. Further vesting condition: Average
annual return on capital over the relevant performance
period must exceed the company’s weighted average
cost of capital (WACC).
Bonus-matching shares
The last grant of bonus-matching shares was made
in December 2018. The following multiples of bonus-
matching shares, based on the face value of the STI
award, applied to the employee categories covered
by this section.
Value of awards
Employee category
CEO
CFO
Prescribed officers
% of STI earned
(face value)
50%
50%
50%
Calculation
The number of bonus-matching shares at grant date is
determined as follows: Bonus-matching shares = (actual
STI x 50%/share price) x PDT multiplier. The performance
differentiation tool (PDT) is used to modify the standard
quantum of bonus-matching shares based on an
individual’s personal performance, leadership and ability.
This is a discretionary percentage ranging from 0% to
200%. No bonus-matching shares are awarded if no STI
is earned.
Share price
The share price is determined based on the VWAP of
a Tiger Brands share for the 10 trading days before the
grant date.
Vesting
Vesting takes place on the third anniversary of the date
of grant:
Year from grant date
0
1
2
3
4
5
Vesting
100%
Performance metrics
There are no further performance conditions to determine
vesting, which is therefore time-based. The reason for no
further vesting conditions is that the quantum of bonus-
Deferred bonus shares and company-matching
shares
Previously the CEO, CFO, executive directors, prescribed
officers and members of the executive team could
voluntarily defer a portion (25%, 33% or 50%) of their STI
into deferred bonus shares, which were then matched by
the company on a 1:1 basis.
Value of awards
Deferred bonus shares and company-matching shares
could only be granted if a bonus/STI was earned. Hence
performance is “on the way in”.
Calculation
The number of deferred bonus shares and company-
matching shares, at grant date, is determined as: Deferred
bonus shares and company-matching shares = (actual STI
deferred x 2/share price). If no bonus is earned or a
participant elects not to voluntarily defer a portion of their
STI, no deferred bonus shares and company-matching
shares will be awarded.
Share price
The share price is determined based on the VWAP of
a Tiger Brands share for the 10 trading days before the
grant date.
Vesting
Vesting of deferred bonus shares and company-matching
shares takes place on the third anniversary of the date
of grant:
Year from grant date
0
1
2
3
4
5
Vesting
100%
Performance metrics
There are no further performance conditions to determine
vesting.
The executive directors and prescribed officers did not
meet their STI targets in FY18 and, therefore, did not
qualify for STIs in December 2018. No deferred bonus
shares and company-matching shares were, therefore,
granted to executive directors and prescribed officers in
FY19. No upward adjustment of other share instruments
was implemented to compensate.
66 Tiger Brands Limited Integrated annual report 2019
REMUNERATION REPORT CONTINUED
Historical LTI information
SARs performance conditions for previous allocations
For 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 the corresponding percentage of the
allocation to vest are as follows:
HEPS growth
>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%
Vesting outcome
5%
10%
16%
27%
44%
75%
100%
Performance conditions for previous allocations of
performance shares
Performance shares vest on the third anniversary of their
award, to the extent that the company has met the
specified performance criteria over the period, which
were determined as the company’s comparative total
shareholder return (TSR) relative to constituent members
of the FINDI 30 index. If the company’s relative TSR over
the three-year period place it in:
› 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; and
› Between position 7 and 15, or between 15 and 23:
a pro rated number of performance shares will vest.
As far as the awards of performance shares made in
February 2016 and May 2016 are concerned, the
performance of the company can be summarised
as follows:
February 2016 award
The company’s TSR over the three-year period ended
February 2019 placed it in 20th position, resulting in a
vesting of 37,5% of the performance shares awarded.
May 2016 award
The company’s TSR over the three-year period ended
May 2019 placed it in 26th position, resulting in a forfeiture
of the award.
BEE shares
The following two schemes were established as part of
the company’s black empowerment strategy:
› Tiger Brands Black Managers Trust (BMT I)
✓ Established in 2005 to attract and retain diverse talent.
✓ Rights allocated – Tiger Brands shares. Rights are
settled after making the required capital contributions
to BMT I. For all rights allocated on or before 31 July
2010, settlement may take place at any time after
the initial 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.
Periodically, new allocations are made to new joiners
and top-up allocations are made to existing
participants promoted to higher grades out of shares
that may become available as a consequence of
forfeitures.
› Thusani Trust
✓ Established in 2005 as part of the company’s BEE
phase I empowerment initiative. The trust’s resources
were enhanced in 2009 under the company’s BEE
phase II transaction.
✓ The trust provides bursaries for tertiary education to
dependants of permanently employed black people
who might not otherwise be able to afford this cost.
Dilution
Under the rules of the Tiger Brands Phantom Cash Option
Scheme (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.
At 30 September 2019, aggregate outstanding options
under this scheme represented 0,0% (2018: 0,02%) 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. At 30 September 2019, the
aggregate number of shares that may be acquired by
participants under the various schemes was 2 543 551
(2018: 1 898 112), which represents approximately 1,3%
of the number of issued ordinary shares. This is in line with
JSE regulations.
Changes for FY20
As from FY20, performance shares will be awarded to
executive management, prescribed officers, senior
management and middle management. Grants of
restricted shares (ie specific retention shares) will be made
to selected senior management and key people whose
contribution has been identified as being critical to
achieving Strategy 2022.
Our governance Tiger Brands Limited Integrated annual report 2019 67
The table below provides further details regarding performance and restricted shares:
INSTRUMENT
PERFORMANCE SHARES
RESTRICTED SHARES
Award
mechanism
Employee category
CEO
CFO
Prescribed officers and executive
directors
Senior management and below
Performance
shares multiple
81,3%
81,3%
61,0%
10,6% – 27,7%
Employee category
CEO
CFO
Prescribed officers and executive
directors
Senior management and below
Restricted
shares multiple
–
–
–
14,5% – 16,3%
Calculation
Performance
multiplier
› (GP x performance share multiple/share price) x
performance multiplier
› (GP x restricted share multiple/share price) x
performance multiplier
› The personal performance multiplier is used to modify the standard quantum of performance shares and
restricted shares, based on an individual’s personal sustained performance and potential
› This is a discretionary percentage ranging from 0% to 200%
Vesting
› Three-year vesting based on anniversary of award
› Three-year time-based vesting based on
anniversary of grant
Performance
conditions
applicable to
performance
shares
HEPS (weighted at 50%):
› 0 – less than CPI + GDP
› 25% vesting (threshold) – CPI + GDP
› 100% vesting – CPI + GDP +2%
› 200% vesting (stretch) – CPI + GDP +4%
The HEPS calculation is performed on an annual
compound basis over the three-year vesting period
Linear vesting to apply between threshold and stretch
ROIC – (weighted at 50%)
› 0 – less than WACC +1%
› 25% vesting (threshold) – WACC +1%
› 100% vesting – WACC +2%
› 200% vesting (stretch) – WACC +5% and above
The measurement will be the average ROIC over the
three-year vesting period
Share price
Linear vesting to apply between threshold and stretch
› Based on the volume-weighted average price (VWAP) for a Tiger Brands share calculated for the
10-trading day period ending immediately prior to the date of award/grant.
Minimum shareholding policy
We have a minimum shareholding policy, where senior executives are expected to build up their personal shareholding in
the company over a specific period of time. In the case of the CEO, the target is 200% of guaranteed package whilst the
target for executive directors, prescribed officers and other members of the executive committee is 100% of guaranteed
package. Senior executives who were in service when the policy was adopted in 2016 have six years to build up their
shareholding from date of adoption. Senior executives appointed after adoption have six years to build their shareholding
from date of appointment. They may use any vesting LTIs or their own resources to acquire these shares.
Current minimum shareholding summary
Name
Date of engagement
GP*
LC Mac Dougall 10 May 2016
NP Doyle
P Spies
Y Maharaj
1 July 2012
1 February 2017
1 July 2018
PD Sithole
1 August 2012
9 537 728
6 877 238
5 095 650
5 092 500
5 097 331
Number of
shares held
Original
value of
shares held
Current
value of
shares
held**
% of GP
Target
% of GP
Years
remaining to
meet target
699
11 750
2 318
–
7 000
257 309
4 106 615
893 102
–
147 181
2 474 080
488 078
–
2 701 072
1 473 920
3
60
18
–
53
200
100
100
100
100
3
3
4
5
3
* GP as at 30 September 2019.
** Value calculated with reference to the closing price of a Tiger Brands share as at 30 September 2019, ie R210,56.
68 Tiger Brands Limited Integrated annual report 2019
REMUNERATION REPORT CONTINUED
Clawback and malus
A clawback and malus policy is in place with the intention
to minimise risk.
With respect to malus, if the remuneration committee, in
consultation with the board and/or any committee of the
board, believes that a trigger event has occurred, it has full
discretion to reduce, in part or whole, unvested variable
remuneration (ie STIs and LTIs) before the end of the
vesting or payment period. In the case of clawback, it is
the responsibility of the remuneration committee, in
consultation with the board and/or any committee of the
board, to implement clawback for the whole or portion of
vested variable remuneration in the event of a trigger event
occurring over a period of three years from the date on
which payment was made of such vested variable
remuneration. Trigger events include, but are not limited to:
› Material misstatement of financial results;
› Misconduct, incompetence, fraud, dishonesty;
› Negligence or material breach of obligations to the
company;
› Deliberate harm to the company’s reputation; and
› Material failure of risk management.
Illustrating potential remuneration outcomes
The variable pay arrangements described above have
various potential outcomes. These outcomes could be
from zero (minimum) to the expected level of performance
outcomes (target) to the maximum potential variable pay
outcomes (maximum). In the illustrations presented
alongside, it should be noted that:
› STI represents the cash component of short-term
performance; and
› LTI represents the total share appreciation rights awards,
bonus-matching awards, deferred bonus shares and
company-matching shares.
CEO (R000)
Maximum
9 538
11 445
13 734
On-target
9 538
5 723
6 009
Minimum
9 538
■ GP
■ STI
■ LTI
CFO (R000)
Maximum
6 877
8 253
9 903
On-target
6 877
4 126
4 333
Minimum
6 877
■ GP
■ STI
■ LTI
Prescribed officers (average) (R000)
Maximum
5 095
5 095
6 267
On-target
5 095
2 548
2 828
Minimum
5 095
■ GP
■ STI
■ LTI
Other executives (average) (R000)
Maximum
3 258
3 152
3 896
On-target
3 258
1 576
1 768
Minimum
3 258
■ GP
■ STI
■ LTI
EXECUTIVE SERVICE CONTRACTS
Senior executives are employed full-time under standard
agreements, with a notice period of three months.
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 or three months’ special leave (paid
as a three-month lump sum (based on guaranteed
package) on termination).
SIGN ON AND SPECIFIC RETENTION PAYMENTS
In exceptional circumstances (mainly for the recruitment
and retention of critical and/or scarce talent), Tiger Brands
will award a sign on/retention payment which will be
subject to the following conditions:
Employees must remain in the service of Tiger Brands as
a permanent employee for an uninterrupted period of
24 months from date of the payment. Should the employee
or Tiger Brands decide to terminate the employment
relationship for any reason, excluding those listed below,
before the expiration of 24 months, the employee will be
required to repay Tiger Brands the full gross amount.
There will be no pro rata refunds. Should Tiger Brands
terminate the employment relationship because of
operational reasons (for example, retrenchment or
redundancy) or ill health, or if termination occurs as a
result of death, the employee will not be required to repay
Tiger Brands the full gross amount.
Our governance Tiger Brands Limited Integrated annual report 2019 69
Payments on termination of employment
REMUNERATION
POLICY COMPONENT
VOLUNTARY TERMINATION
(IE RESIGNATION)
INVOLUNTARY TERMINATION (RETRENCHMENT,
RETIREMENT, DEATH)
Guaranteed package
Paid up to last day of service
Medical aid
Benefit continues to last day
of service
Paid up to last day of service including notice period, where
applicable.
Benefit continues up to last day of service. Employees who
qualify for post-retirement medical aid funding will continue to
receive the employer contribution with effect from their normal
retirement date.
Retirement and risk
plans
Employer contributions paid until last day of service. Employee is entitled to the value of the
investment, but all risk benefits cease on termination of service.
Other benefits
Not applicable
Short-term incentive
No pro rata bonus paid
Long-term incentives
All unvested awards (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, chairman of the nominations committee,
and chairman of the remuneration committee are required
to authorise these appointments based on a
recommendation from the CEO. Other than in respect of
their appointment to the boards of associate companies,
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 or committees
of external companies. Details of executive committee
Severance package in respect of retrenchments – one or two
weeks for every completed year of service in terms of the
relevant rules.
Pro rata STI payment (based on extent of achieving specified
financial and strategic targets for the period and a personal
performance agreement being in place at the date of exit).
Depending on the nature of the instrument and reasons for
termination, a participant may retain all units or a pro rata
portion. Accelerated vesting and settlement of retained units
may apply in certain circumstances.
members serving on the boards of associate companies
appear on page 51.
Non-executive directors
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 every two years to
benchmark these fees against South African companies
listed on the JSE, based on market capitalisation, revenue,
total assets and number of people. These are similar
metrics to that of the benchmark group for executive
directors and prescribed officers, but further expanded
to include the diversity of skill and calibre required on the
board or relevant committee. Companies comprising
the peer group are detailed below:
RCL Foods Limited
The Spar Group Ltd
MTN Group Ltd
Blue Label Telecoms Ltd
Clicks Group Ltd
Vodacom Group Ltd
Pioneer Food Group Ltd
Sappi Group
Standard Bank Group Ltd
Telkom SA SOC Ltd
Distell Group Ltd
Woolworths Holding Ltd
Datatec Ltd
Aspen Pharmacare Holdings Ltd
JD Group Ltd
70 Tiger Brands Limited Integrated annual report 2019
REMUNERATION REPORT CONTINUED
Targeted remuneration for FY19 was based on the 65th
percentile of the peer group, which is in line with the
revision of our internal anchor point. Non-resident non-
executive directors are paid a premium in comparison to
resident directors. The table below shows the range of the
premium paid to non-resident non-executive directors
across large JSE-listed organisations in various industries:
Target position
Premium for non-resident
non-executive directors
Minimum
Maximum
Average
Median
72%
296%
171%
155%
The median for non-resident non-executive directors’ fees
reflects a premium of 155% above resident director fees.
Tiger Brands currently pays a premium of 130% for
non-resident non-executive directors, which is below the
market median. 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 will not receive
additional remuneration. Shareholder approval will be
sought for increasing non-executive directors’ fees,
including fees paid for attending special board meetings.
Details of proposed increases for FY20 appear in the
notice of AGM of shareholders to be held on 18 February
2020. Details of non-executive directors’ fees paid in the
review period appear on pages 80 and 81.
Voting statement
This remuneration policy is subject to a non-binding
advisory vote by shareholders at the upcoming AGM.
Our governance Tiger Brands Limited Integrated annual report 2019 71
Section 3: Implementation report
In this section of the remuneration report we explain the implementation of our remuneration policy, providing details of the
remuneration paid to our executive directors, prescribed officers and senior management for the financial year ended
30 September 2019.
SALARY ADJUSTMENTS
The remuneration committee approved an overall guaranteed package salary increase budget of 5% for the period
1 December 2018 to 30 November 2019. This included executive management.
An additional budget was ringfenced and managed centrally to correct pay disparities.
2019 GUARANTEED PACKAGE
The following increases to guaranteed packages were implemented in the reporting period for executive directors and
prescribed officers. New amounts were effective from 1 December 2018:
Executive directors
LC Mac Dougall
NP Doyle
Prescribed officers
PW Spies
Y Maharaj
PD Sithole
1 Dec 2018 to
30 Nov 2019
Rand
1 Dec 2017 to
30 Nov 2018
Rand
% increase
9 537 728
6 877 238
5 095 650
5 092 500
5 097 331
9 083 550
6 549 750
4 853 000
4 850 000
4 549 157
5%
5%
5%
5%
12,1%*
* PD Sithole was awarded a 12,1% increase to align remuneration with the market and that of his peers.
An average increase of 6% (2018: 6%) was awarded to executive directors and prescribed officers in comparison to an
average increase of 5,32% (2018: 6%) for the rest of the company.
2019 SHORT-TERM INCENTIVE
As indicated in the policy section, the STI for executive directors and prescribed officers is based on the combination of
a business performance component and personal performance component.
EXECUTIVE DIRECTORS
The business multiplier for executive directors is weighted according to the table below. Results for FY19 were as follows:
Strategic
objective
Growth
Strategic
objective
weighting Key performance indicator
60% Sales volume growth
Absolute gross margin
PBIT
Efficiency
10% Cost-saving initiatives
Net working capital
30% Quality
People and
sustainability
Safety (LTIFR)
BBBEE score
Key
performance
indicator
weighting
Threshold
Score = 50%
Target
Score = 100%
Stretch
Score = 200%
Actual result Weighted result
Achievement
10%
10%
40%
5%
5%
10%
10%
10%
40,0%
98,6%
98,6%
98,6%
101,2%
100,0%
100,0%
100,0%
100,0%
100,0%
140,0%
103,6%
103,6%
123,4%
97,7%
Reduction in execution-related
marketplace incidents yoy by
10%
120,0%
15%
100,0%
20%
80,0%
Level 7
(60 to 61)
Level 7
(61,1 to 65)
Level 6
<40%
<98,6%
<98,6%
100%
>101,2%
>20%
<120%
Level 6
–
–
–
–
–
–
–
–
The targeted percentages for “threshold”, “target” and “stretch” as set out above per KPI represent the targeted percentage achievement of the underlying
budgeted amounts.
Linear vesting will apply if the actual result falls between “threshold” and “target” or between “target” and “stretch”. Targets for the STI for 2018 and 2019
were not met, hence no STI was paid. Note for 2019, the EBIT threshold was not met to trigger payment of the STI. This is an overriding condition of the
scheme. Therefore the weighted result for each KPI was zero in FY19.
72 Tiger Brands Limited Integrated annual report 2019
REMUNERATION REPORT CONTINUED
For the review period, in addition to the financial targets above, the following KPIs as per the balanced scorecard applied to
the CEO, CFO and prescribed officers. The level of achievement is reflected alongside each KPI in the table below.
The FY19 personal performance multiplier is the aggregated result of assessing the KPIs for the relevant executive, as follows:
Executive directors
The business multiplier for executive directors is weighted according to the table below. The results for FY19 were as follows:
Key performance indicators
Not met
Partially met
Met
Exceeded
Not met
Partially met
Met
Exceeded
LC Mac Dougall
NP Doyle
Top-tier financial results
Revenue
Gross margin
Cost savings
Return on net assets
Market performance
On-shelf availability
Innovation rate
Power in Mind (Brand Health)*
Compliance
Zero high level 1 audit findings
Reduction in consumer complaints
Safety (LTIFR)
BBBEE implementation
People
Improved employee engagement
Percentage of leadership positions
filled internally
Diversity and inclusion
Individual KPIs
* Brand Health is measured on an individual category and not on an aggregated basis.
Name
LC Mac Dougall
NP Doyle
GP*
On-target %
Actual group
performance
factor %
Actual personal
performance
factor %
9 537 728
6 877 238
x
x
60%
60%
x
x
–
–
+
+
–
–
2019 STI
(Rand)
2018 STI**
(Rand)
–
–
–
–
Prescribed officers
The business multiplier for the prescribed officers is weighted according to the table below. Results for FY19 were as follows:
Strategic
objective
Growth
Efficiency
People and
sustainability
Strategic
objective
weighting Key performance indicator
Key
performance
indicator
weighting
Threshold
Score = 50%
Target
Score = 100%
Stretch
Score = 200%
Achievement
Actual result Weighted result
60% Sales volume growth
Absolute gross margin
PBIT
10% Cost savings initiatives
Net working capital
30% Quality
Safety (LTIFR)
BBBEE score
10%
10%
40%
5%
5%
10%
10%
10%
40,0%
98,6%
98,6%
98,6%
101,2%
100,0%
100,0%
100,0%
100,0%
100,0%
140,0%
103,6%
103,6%
123,4%
97,7%
Reduction in execution-related
marketplace incidents yoy by
10%
120,0%
15%
100,0%
20%
80,0%
Level 7
(60 to 61)
Level 7
(61.1 to 65)
Level 6
<40%
<98,6%
<98,6%
100%
>101,2%
>20%
<120%
Level 6
–
–
–
–
–
–
–
–
The targeted percentages for “threshold”, “target” and “stretch” as set out above per key performance indicator represent the targeted percentage
achievement of the underlying budgeted amounts.
Linear vesting will apply if the actual result falls between “threshold” and “target” or between “target” and “stretch”. Targets for the STI for 2018 and 2019 were not
met, hence no STI was paid. Note for 2019, the EBIT threshold was not met to trigger payment of the STI. This is an overriding condition of the scheme. Therefore
the weighted result for each KPI was zero in FY19.
Our governance Tiger Brands Limited Integrated annual report 2019 73
Key performance indicators
Not met
Top-tier financial results
PW Spies
Partially
met
Met
Exceeded
Not met
Y Maharaj
Partially
met
Met
Exceeded
Not met
PD Sithole
Partially
met
Met
Exceeded
Revenue
Gross margin
Cost savings
Return on net assets
Market performance
On-shelf availability
Innovation rate
Power in Mind (Brand Health)*
Compliance
Zero high level 1 audit
findings
Reduction in consumer
complaints
Safety (LTIFR)
BBBEE implementation
People
Improved employee
engagement
Percentage of leadership
positions filled internally
Diversity and inclusion
Individual KPIs
* Brand Health is measured on an individual category and not on an aggregated basis.
No STI was awarded to prescribed officers as illustrated below:
Name
P Spies
Y Maharaj
PD Sithole
GP*
On-target %
5 095 650
5 092 500
5 097 331
x
x
x
50%
50%
50%
x
x
x
Actual group
performance
factor %
Actual business
unit performance
factor %
Actual personal
performance
factor %
–
–
–
+
+
+
–
–
–
+
+
+
–
–
–
2019 STI
(Rand)
2018 STI**
(Rand)
–
–
–
–
–
–
* Annual guaranteed package in rand as at 30 September 2019.
**
Includes the value of bonus deferrals.
74 Tiger Brands Limited Integrated annual report 2019
REMUNERATION REPORT CONTINUED
2019 LONG-TERM INCENTIVES
Long-term incentive awards made during the year to executive directors and prescribed officers are set out below:
SARs
Bonus-matching shares
Expected value (based on fair value)
Deferred bonus shares and
company-matching shares
Name
LC Mac Dougall*
NP Doyle*
PDT multiplier***
GP
Award %
Face value
137,5%
175,0%
9 537 728
6 877 238
120%
120%
15 737 099
14 443 489
Number
57 420
52 700
* Allocated on 6 December 2018 at a VWAP of R274.07.
** STI in respect of the year ended 30 September 2018.
*** 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%.
SARs
Bonus-matching shares
Expected value (based on fair value)
Deferred bonus shares and
company-matching shares
Name
P Spies*
Y Maharaj*
PD Sithole*
PDT multiplier***
GP
Award %
Face value
125,0%
137,5%
175,0%
5 095 650
5 092 500
5 097 331
110%
110%
110%
7 007 970
7 704 108
9 814 447
Number
25 570
28 110
35 810
* Allocated on 6 December 2018 at a VWAP of R274,07.
** STI in respect of the year ended 30 September 2018.
*** 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%.
Only share appreciation rights were awarded. Bonus-matching shares, deferred bonus shares and company-matching
shares were not awarded to executive directors and prescribed officers in addition to Share Appreciation Rights as the
STI targets were not met.
STI**
Award %
Face value
Number
Match %
Face value
Number
SARS
100%
100%
–
–
–
–
4 721 130
4 333 047
–
–
–
–
–
50%
50%
50%
50%
50%
–
–
–
–
–
–
–
–
–
–
STI**
Award %
Face value
Number
Match %
Face value
Number
SARS
100%
100%
100%
–
–
–
–
–
–
2 102 391
2 311 232
2 944 334
Deferred
bonus shares
Bonus-
and company-
matching
shares
matching
shares
Deferred
bonus shares
Bonus-
and company-
matching
shares
matching
shares
–
–
–
–
–
–
–
–
–
–
Our governance Tiger Brands Limited Integrated annual report 2019 75
2019 LONG-TERM INCENTIVES
Long-term incentive awards made during the year to executive directors and prescribed officers are set out below:
SARs
Bonus-matching shares
Deferred bonus shares and
company-matching shares
Expected value (based on fair value)
Name
LC Mac Dougall*
NP Doyle*
PDT multiplier***
GP
Award %
Face value
STI**
Award %
Face value
Number
Match %
Face value
Number
SARS
137,5%
175,0%
9 537 728
6 877 238
120%
120%
15 737 099
14 443 489
–
–
50%
50%
–
–
–
–
100%
100%
–
–
–
–
4 721 130
4 333 047
* Allocated on 6 December 2018 at a VWAP of R274.07.
** STI in respect of the year ended 30 September 2018.
*** 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%.
Deferred
bonus shares
and company-
matching
shares
–
–
Bonus-
matching
shares
–
–
SARs
Bonus-matching shares
Deferred bonus shares and
company-matching shares
Expected value (based on fair value)
PDT multiplier***
GP
Award %
Face value
STI**
Award %
Face value
Number
Match %
Face value
Number
SARS
Deferred
bonus shares
and company-
matching
shares
Bonus-
matching
shares
125,0%
137,5%
175,0%
5 095 650
5 092 500
5 097 331
110%
110%
110%
7 007 970
7 704 108
9 814 447
–
–
–
50%
50%
50%
–
–
–
–
–
–
100%
100%
100%
–
–
–
–
–
–
2 102 391
2 311 232
2 944 334
–
–
–
–
–
–
Number
57 420
52 700
Number
25 570
28 110
35 810
Name
P Spies*
Y Maharaj*
PD Sithole*
* Allocated on 6 December 2018 at a VWAP of R274,07.
** STI in respect of the year ended 30 September 2018.
*** 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%.
Only share appreciation rights were awarded. Bonus-matching shares, deferred bonus shares and company-matching
shares were not awarded to executive directors and prescribed officers in addition to Share Appreciation Rights as the
STI targets were not met.
76 Tiger Brands Limited Integrated annual report 2019
REMUNERATION REPORT CONTINUED
LTI AWARDS VESTING OR WITH A PERFORMANCE PERIOD ENDING IN 2019
The outcome for awards due to vest in FY19, and whose performance conditions ended by 30 September 2019, are
shown below. This applies to all eligible participants.
LTI allocation
Company-matching shares granted in 2016
Deferred bonus shares granted in 2016
Bonus-matching shares granted in 2016
Performance shares granted in 2016*#
LTI measures
Total shareholder
return
Real HEPS
growth
Performance
condition result
(% vesting)
N/A
N/A
N/A
9 February 2016 –
partially met,
and 24 May 2016 – not met
N/A 100% (time-based vesting)
N/A 100% (time-based vesting)
N/A 100% (time-based vesting)
N/A
37,5%/0%
Share appreciation rights granted in 2014 – third tranche
Share appreciation rights granted in 2015 – second
tranche
Share appreciation rights granted in 2016 – first tranche
N/A
N/A
N/A
* Performance conditions for awards made on 9 February 2016 partially met, but not met for awards made on 24 May 2016.
# The last allocation of performance shares was in May 2016.
5%
–
–
Met
Partially met
Not met
Payments for termination of office
No additional payments were made for executives terminating office.
Compliance with remuneration policy
There were no deviations from the remuneration policy in the financial year.
Our governance Tiger Brands Limited Integrated annual report 2019 77
SINGLE TOTAL FIGURE OF REMUNERATION
The following tables disclose total remuneration received and receivable by executive directors and prescribed officers for
the period 1 October 2018 to 30 September 2019:
EXECUTIVE DIRECTORS
Remuneration element
Basic salary
Retirement funding
Other benefits
Guaranteed package
Short-term incentive
Cash remuneration
SARs
Bonus-matching shares
Deferred bonus shares and company-
matching shares
LC Mac Dougall
NP Doyle
FY2019
R’000
8 973 398
328 810
159 824
9 462 032
–
9 462 032
–
–
FY2018
R’000
8 511 653
339 880
153 092
9 004 625
–
9 004 625
–
–
%
FY2019
R’000
5 831 685
960 971
30 000
6 822 656
–
6 822 656
4 446 313
–
FY2018
R’000
5 497 977
913 148
72 000
6 483 125
–
6 483 125
–
–
–
–
–
–
%
Total remuneration
9 462 032
9 004 625
5,1
11 268 969
6 483 125
73,8
PRESCRIBED OFFICERS
Remuneration element
Basic salary
Retirement funding
Other benefits
Guaranteed package
Short-term incentive
Cash remuneration
SARs
Bonus-matching shares
Deferred bonus shares and
company-matching shares
PW Spies
Y Maharaj
PD Sithole
FY2019
R’000
FY2018
R’000
FY2019
R’000
FY2018*
R’000
%
FY2019
R’000
FY2018
R’000
%
%
4 354 374 4 029 942
344 639
408 446
338 725
363 917
5 057 016 4 783 027
–
–
5 057 016 4 783 027
–
–
–
–
4 347 451 1 021 587
84 797
338 732
365 901 1 106 116
5 052 084 2 212 500
–
–
5 052 084 2 212 500
–
–
–
–
4 547 133 3 988 160
344 981
141 624
338 836
120 000
5 005 969 4 474 765
–
–
5 005 969 4 474 765
–
1 674 224
–
–
–
–
–
–
–
–
Total remuneration
5 057 016 4 783 027
5,7 5 052 084 2 212 500
128,3 6 680 193 4 474 765
49,3
* Y Maharaj appointed 1 July 2018.
NUMBER AND VALUE OF LTI SHARE AWARDS
Disclosure of the quantum and value of awards for the CEO and CFO outstanding at the beginning and end of the reporting
period, as well as new awards made in the period, are provided in the tables on pages 78 and 79, with the cash value of
awards settled during the reporting period indicated in the value-based tables.
78 Tiger Brands Limited Integrated annual report 2019
REMUNERATION REPORT CONTINUED
Name and awards
Award date
Vesting date
Grant price
at award
ZAR
Revised grant
price due to
Oceana
unbundling***
Opening
number
Adjustment
due to Oceana
unbundling***
Granted
Adjustment
during
due to Oceana
the year
unbundling***
Forfeited
Performance
during
the year
condition
achieved
Settled
during
the year
Closing
number
Face value
at award
ZAR
Cash
received
ZAR
Value of
shares
Closing fair
acquired
value vesting
ZAR
ZAR
LC Mac Dougall
2016 Deferred bonus shares
2016 Company-matching shares
2016 Bonus-matching shares
2016 Performance shares
2016 SARS
2016 SARS
2017 SARS
2018 SARS
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
2015 Performance shares
2016 Performance shares
2012 Phantom cash share options
07/12/2016
07/12/2016
07/12/2016
24/05/2016
24/05/2016
07/12/2016
11/12/2017
06/12/2018
03/12/2015
03/12/2015
07/12/2016
07/12/2016
04/02/2015
09/02/2016
07/12/2016
04/02/2015
09/02/2016
02/07/2012
2013 Phantom cash share options
13/02/2013
2014 SARs
2015 SARs
2016 SARs
2016 SARs
2017 SARS
2018 SARS
Total
28/02/2014
04/02/2015
09/02/2016
07/12/2016
11/12/2017
06/12/2018
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
11/12/2020
11/12/2021
11/12/2022
06/12/2021
06/12/2022
06/12/2023
03/12/2018
03/12/2018
07/12/2019
07/12/2019
04/02/2018*
09/02/2019
07/12/2019
04/02/2018*
09/02/2019
02/07/2015**
02/07/2016**
02/07/2017**
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
11/12/2020
11/12/2021
11/12/2022
06/12/2021
06/12/2022
06/12/2023
–
–
–
–
341,68
341,68
341,68
395,97
395,97
395,97
414,45
414,45
414,45
274,07
274,07
274,07
–
–
–
–
–
–
–
–
–
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
414,45
414,45
414,45
274,07
274,07
274,07
–
–
–
–
317,64
317,64
317,64
368,11
368,11
368,11
385,29
385,29
385,29
254,79
254,79
254,79
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
236,55
236,55
236,55
358,22
358,22
358,22
271,19
271,19
271,19
368,11
368,11
368,11
385,29
385,29
385,29
254,79
254,79
254,79
650
650
650
8 160
12 000
12 000
12 000
10 946
10 947
10 947
2 996
2 997
2 997
–
–
–
87 940
2 688
2 688
1 060
1 060
2 320
1 330
1 590
4 358
5 720
5 000
5 000
5 000
5 000
5 000
5 000
6 067
6 067
6 066
1 038
3 847
3 847
7 623
7 623
7 624
11 260
11 260
11 260
15 276
15 277
15 277
–
–
–
182 226
49,00
49,00
49,00
618,00
–
908,00
908,00
828,33
828,33
829,00
227,00
227,00
227,00
–
–
–
5 748
–
–
80,00
80,00
–
–
120,00
–
–
–
–
–
–
–
–
459,00
459,00
23,00
79,00
291,00
–
–
577,00
577,00
852,00
852,00
852,00
1 156,00
1 156,00
1 156,00
–
–
–
8 769
* Vesting date and, where applicable, settlement of shares extended as a consequence of the voluntary closed period.
** Lapsing of shares extended as a consequence of closed period. Shares should have been exercised by 02/07/2018.
*** Tiger Brands implemented the unbundling of its investment in Oceana Group Limited on 29 April 2019. Shareholders were notified that participants
in the Tiger Brands 2013 Share Plan will be placed in a position which is as close as possible to the position they would have been in, had the unbundling
not taken place.
Consequently, the number of instruments that had been awarded in terms of the rules of the plan were increased by 7,5679%
and the strike prices applicable to SARs were reduced by 7,035%.
19 140
19 140
19 140
57 420
1 448,00
1 448,00
1 448,00
4 344
20 778
134 674
41 438 841
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
8 778
12 000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
3 575
5 000
5 000
5 000
5 766
3 847
7 623
2 688
2 688
2 320
1 330
4 358
2 145
5 000
5 000
5 000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
699
699
699
–
–
12 908
12 908
11 774
11 775
11 776
3 223
3 224
3 224
20 588
20 588
20 588
257 308,89
257 308,89
257 308,89
4 100 097,12
4 100 097,12
4 334 249,84
4 334 617,95
4 334 863,36
1 241 789,67
1 242 174,96
1 242 174,96
5 245 616,52
5 245 616,52
5 245 616,52
1 140
1 140
419 645,40
419 645,40
1 710
629 468,10
6 526
6 526
323
1 117
4 138
1 543 725,30
1 543 725,30
76 405,65
400 131,74
1 482 314,36
8 200
8 201
12 112
12 112
12 112
16 432
16 433
16 433
18 895
18 896
18 897
2 223 758,00
2 224 029,19
4 458 548,32
4 458 548,32
4 458 548,32
6 331 085,28
6 331 470,57
6 331 470,57
4 814 257,05
4 814 511,84
4 814 766,63
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
497 243
497 512
231 323
231 050
199 407
190 634
374 808
307 371
429 411,36
161 916,00
806 396,16
261 214,00
89 950
89 950
89 950
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
146 803,98
146 803,98
146 803,98
113 461,32
159 671,96
79 947,72
90 787,82
92 794,88
24 430,34
30 015,44
44 168,80
734 579,84
823 520,00
888 578,08
3 522 368
239 422,80
239 422,80
359 134,20
18 077,02
18 077,02
894,71
793,07
2 937,98
76 014,00
146 797,90
82 240,48
93 383,52
95 442,56
124 554,56
152 991,23
225 132,10
674 173,60
755 840,00
815 594,52
17 566
17 567
17 567
52 700
1 329,00
1 329,00
1 330,00
3 988
35 811
30 529
181 343
57 776 055
2 923 542
1 534 593
4 120 924
Our governance Tiger Brands Limited Integrated annual report 2019 79
Award date
Vesting date
Revised grant
Grant price
price due to
at award
Oceana
ZAR
unbundling***
Adjustment
Opening
due to Oceana
number
unbundling***
Granted
during
the year
Adjustment
due to Oceana
unbundling***
Forfeited
during
the year
Performance
condition
achieved
Settled
during
the year
Closing
number
Face value
at award
ZAR
Cash
received
ZAR
Value of
shares
acquired
ZAR
Closing fair
value vesting
ZAR
–
–
–
–
–
–
–
–
–
–
–
–
–
19 140
19 140
19 140
57 420
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
17 566
17 567
17 567
52 700
–
–
–
–
–
–
–
–
–
–
–
–
–
1 448,00
1 448,00
1 448,00
4 344
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1 329,00
1 329,00
1 330,00
3 988
–
–
–
8 778
12 000
–
–
–
–
–
–
–
–
–
–
–
20 778
–
–
–
–
–
–
–
–
3 575
–
–
–
5 000
5 000
5 000
–
–
5 766
–
–
3 847
7 623
–
–
–
–
–
–
–
–
–
–
–
35 811
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2 688
2 688
–
–
2 320
1 330
–
4 358
2 145
5 000
5 000
5 000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
699
699
699
–
–
12 908
12 908
11 774
11 775
11 776
3 223
3 224
3 224
20 588
20 588
20 588
257 308,89
257 308,89
257 308,89
–
–
4 100 097,12
4 100 097,12
4 334 249,84
4 334 617,95
4 334 863,36
1 241 789,67
1 242 174,96
1 242 174,96
5 245 616,52
5 245 616,52
5 245 616,52
134 674
41 438 841
–
–
1 140
1 140
–
–
1 710
–
–
–
–
–
–
–
–
6 526
6 526
323
1 117
4 138
–
–
8 200
8 201
12 112
12 112
12 112
16 432
16 433
16 433
18 895
18 896
18 897
–
–
419 645,40
419 645,40
–
–
629 468,10
–
–
–
–
–
–
–
–
1 543 725,30
1 543 725,30
76 405,65
400 131,74
1 482 314,36
–
–
2 223 758,00
2 224 029,19
4 458 548,32
4 458 548,32
4 458 548,32
6 331 085,28
6 331 470,57
6 331 470,57
4 814 257,05
4 814 511,84
4 814 766,63
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
497 243
497 512
–
–
429 411,36
161 916,00
–
806 396,16
261 214,00
89 950
89 950
89 950
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
231 323
231 050
–
–
199 407
190 634
–
374 808
307 371
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
146 803,98
146 803,98
146 803,98
–
–
113 461,32
159 671,96
79 947,72
90 787,82
92 794,88
24 430,34
30 015,44
44 168,80
734 579,84
823 520,00
888 578,08
3 522 368
–
–
239 422,80
239 422,80
–
–
359 134,20
–
–
–
–
–
–
–
–
18 077,02
18 077,02
894,71
793,07
2 937,98
–
–
76 014,00
146 797,90
82 240,48
93 383,52
95 442,56
124 554,56
152 991,23
225 132,10
674 173,60
755 840,00
815 594,52
30 529
181 343
57 776 055
2 923 542
1 534 593
4 120 924
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
2017 SARS
2018 SARS
Total
NP Doyle
2014 SARs
2015 SARs
2016 SARs
2016 SARs
2017 SARS
2018 SARS
Total
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
2015 Performance shares
2016 Performance shares
2012 Phantom cash share options
2013 Phantom cash share options
13/02/2013
07/12/2016
07/12/2016
07/12/2016
24/05/2016
24/05/2016
07/12/2016
11/12/2017
06/12/2018
03/12/2015
03/12/2015
07/12/2016
07/12/2016
04/02/2015
09/02/2016
07/12/2016
04/02/2015
09/02/2016
02/07/2012
28/02/2014
04/02/2015
09/02/2016
07/12/2016
11/12/2017
06/12/2018
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
11/12/2020
11/12/2021
11/12/2022
06/12/2021
06/12/2022
06/12/2023
03/12/2018
03/12/2018
07/12/2019
07/12/2019
04/02/2018*
09/02/2019
07/12/2019
04/02/2018*
09/02/2019
02/07/2015**
02/07/2016**
02/07/2017**
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
11/12/2020
11/12/2021
11/12/2022
06/12/2021
06/12/2022
06/12/2023
341,68
341,68
341,68
395,97
395,97
395,97
414,45
414,45
414,45
274,07
274,07
274,07
–
–
–
–
–
–
–
–
–
–
–
–
–
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
414,45
414,45
414,45
274,07
274,07
274,07
317,64
317,64
317,64
368,11
368,11
368,11
385,29
385,29
385,29
254,79
254,79
254,79
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
236,55
236,55
236,55
358,22
358,22
358,22
271,19
271,19
271,19
368,11
368,11
368,11
385,29
385,29
385,29
254,79
254,79
254,79
87 940
5 748
650
650
650
8 160
12 000
12 000
12 000
10 946
10 947
10 947
2 996
2 997
2 997
–
–
–
2 688
2 688
1 060
1 060
2 320
1 330
1 590
4 358
5 720
5 000
5 000
5 000
5 000
5 000
5 000
6 067
6 067
6 066
1 038
3 847
3 847
7 623
7 623
7 624
11 260
11 260
11 260
15 276
15 277
15 277
–
–
–
49,00
49,00
49,00
618,00
–
908,00
908,00
828,33
828,33
829,00
227,00
227,00
227,00
80,00
80,00
120,00
459,00
459,00
23,00
79,00
291,00
577,00
577,00
852,00
852,00
852,00
1 156,00
1 156,00
1 156,00
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
* Vesting date and, where applicable, settlement of shares extended as a consequence of the voluntary closed period.
** Lapsing of shares extended as a consequence of closed period. Shares should have been exercised by 02/07/2018.
*** Tiger Brands implemented the unbundling of its investment in Oceana Group Limited on 29 April 2019. Shareholders were notified that participants
in the Tiger Brands 2013 Share Plan will be placed in a position which is as close as possible to the position they would have been in, had the unbundling
not taken place.
Consequently, the number of instruments that had been awarded in terms of the rules of the plan were increased by 7,5679%
and the strike prices applicable to SARs were reduced by 7,035%.
182 226
8 769
80 Tiger Brands Limited Integrated annual report 2019
REMUNERATION REPORT CONTINUED
INTERESTS OF DIRECTORS AND PRESCRIBED OFFICERS IN BBBEE SCHEMES
No executive director or prescribed officer, was granted shares in terms of the Black Managers Trust (BMT) Scheme.
Non-executive directors’ remuneration 2019
The non-executive director remuneration paid for the year ended 30 September 2019 is disclosed below, excluding VAT
in rand:
Committee
Notes
Board fees
Audit committee fees
Investment committee fees
Remuneration committee, nomination and
governance committee fees
Social, ethics and transformation
committee fees
Risk and sustainability committee fees
Extraordinary fees
Ad hoc work/meetings
Total FY19
Total FY18
* Member of the remuneration committee only.
1. YGH Suleman resigned on 22 November 2018.
2. CH Fernandez appointed on 1 March 2019.
3. DG Wilson appointed on 1 June 2019.
4. MP Fandeso appointed on 1 July 2019.
MO Ajukwu MJ Bowman MP Fandeso CH Fernandez GA Klintworth
M Makanjee TE Mashilwane KD Mokhele
RD Nisbet
MP Nyama YGH Suleman BS Tshabalala DG Wilson
938 898
207 382
–
408 216
133 619
38 418
–
225 390
–
334 080
50 837
–
1 531 197
1 208 332
–
–
–
–
805 643
647 384
4
104 543
–
–
–
–
22 103
–
126 646
–
2
209 086
93 426
–
938 898
–
–
–
–
–
109 636
22 103
–
434 251
–
113 236
–
50 837
–
1 102 971
229 000
408 216
–
–
–
–
103 586
188 730
22 103
722 635
683 284
408 216
314 782
1 895 752
–
–
–
145 252
22 103
8 334
898 687
555 884
–
–
–
–
–
–
22 103
1 917 855
1 805 504
–
–
–
–
–
–
–
–
–
408 216
–
–
49 920
94 820
74 050
22 103
–
649 109
572 598
1
–
–
–
99 565
43 453
10 417
70 155
8 334
231 924
876 207
–
–
–
–
–
–
–
–
–
104 543
46 712
8 792
13 416*
22 103
195 566
3
–
–
–
–
873 012
525 362
Our governance Tiger Brands Limited Integrated annual report 2019 81
INTERESTS OF DIRECTORS AND PRESCRIBED OFFICERS IN BBBEE SCHEMES
No executive director or prescribed officer, was granted shares in terms of the Black Managers Trust (BMT) Scheme.
Non-executive directors’ remuneration 2019
The non-executive director remuneration paid for the year ended 30 September 2019 is disclosed below, excluding VAT
in rand:
Committee
Notes
Board fees
Audit committee fees
Investment committee fees
Remuneration committee, nomination and
governance committee fees
Social, ethics and transformation
committee fees
Risk and sustainability committee fees
Extraordinary fees
Ad hoc work/meetings
Total FY19
Total FY18
* Member of the remuneration committee only.
1. YGH Suleman resigned on 22 November 2018.
2. CH Fernandez appointed on 1 March 2019.
3. DG Wilson appointed on 1 June 2019.
4. MP Fandeso appointed on 1 July 2019.
MO Ajukwu MJ Bowman MP Fandeso CH Fernandez GA Klintworth
M Makanjee TE Mashilwane KD Mokhele
RD Nisbet
MP Nyama YGH Suleman BS Tshabalala DG Wilson
938 898
207 382
–
–
–
–
334 080
50 837
408 216
133 619
38 418
225 390
–
–
–
–
1 531 197
1 208 332
805 643
647 384
104 543
938 898
209 086
93 426
4
–
–
–
–
–
–
2
–
–
–
–
–
–
–
–
–
–
113 236
50 837
1 102 971
229 000
22 103
109 636
22 103
126 646
434 251
408 216
–
–
103 586
188 730
–
22 103
–
722 635
683 284
408 216
314 782
–
1 895 752
–
–
–
–
–
145 252
22 103
8 334
898 687
555 884
–
–
22 103
–
1 917 855
1 805 504
–
–
–
–
–
–
–
–
–
873 012
408 216
–
–
49 920
94 820
74 050
22 103
–
649 109
572 598
1
99 565
43 453
10 417
–
–
70 155
–
8 334
231 924
876 207
–
–
–
–
–
–
–
–
–
525 362
3
104 543
46 712
8 792
13 416*
–
–
22 103
–
195 566
–
82 Tiger Brands Limited Integrated annual report 2019
REMUNERATION REPORT CONTINUED
NON-EXECUTIVE DIRECTORS’ REMUNERATION FY20
The following table reflects the proposed fees from 1 March 2020, excluding VAT, subject to the approval of shareholders
at the AGM on 18 February 2020:
Forum
Main board
Audit
Remuneration and nominations
Risk and sustainability
Capacity
Chairman
Member
Chairman
Member
Chairman
Member
Chairman
Member
Social, ethics and transformation Chairman
Member
Hourly fees*
Extraordinary meetings**
Current rate
effective March 2019
Proposed rate resident
board members –
effective March 2020
Proposed fees to be
paid to non-resident
board members –
effective March 2020
1 941 990
418 173
326 890
186 851
229 810
107 331
290 443
148 100
195 111
98 467
4 396
22 103
2 077 929
435 000
344 869
194 325
245 897
114 844
302 061
154 024
202 915
103 883
4 572
22 987
*
1 000 500
*
*
*
*
*
354 255
*
238 930
10 516
52 870
* Hourly fees are for the sole purpose of the calculation of fees for the investment committee meetings which are held on an ad hoc basis.
** Payment of fees for extraordinary meetings are at the discretion of the chairman of the board and chairman of the remuneration committee.
NON-BINDING ADVISORY VOTE
This implementation report is subject to a non-binding advisory vote by shareholders at the AGM on 18 February 2020.
Our governance INTERVIEW WITH THE CHAIRMAN OF THE SOCIAL, ETHICS
AND TRANSFORMATION (SET) COMMITTEE
Tiger Brands Limited Integrated annual report 2019 83
Q Last year was a very challenging year for
Tiger Brands as it engaged in managing
the listeriosis crisis and the class action
instituted against the company. What has
the company done since the outbreak to
regain consumer confidence?
Yes, it certainly was a challenging period and we have
worked very hard to regain the trust of our consumers
regarding the quality of our products. We have implemented
a comprehensive seven-step safety promise and
accompanying protocols that include full traceability from raw
material sourcing through to the finished product. This year,
we commissioned an independent international auditing body
to undertake food safety and quality audits at all relevant
operations; it is pleasing to report that all of Tiger Brands’
manufacturing sites have achieved external certification
aligned with the Global Food Safety Initiative (GFSI).
To promote broader food safety, Tiger Brands funded
the establishment of the Centre for Food Safety at
Stellenbosch University, which conducts academic
research in this area. The results of its independent
research activities will be used to inform government on
food safety regulation, raise consumer awareness and
improve communication on food safety. The centre is also
training postgraduate students in food safety, which will
ensure that regulators and the food industry in South
Africa and the southern African region will have increased
access to qualified food safety scientists.
We have engaged actively with the class action process
to facilitate a speedy resolution of the matter for all
stakeholders, by co-funding the class action communication
campaign once it was certified. We will continue to act with
integrity and do the right thing once the courts have ruled
on the matter.
Q A further challenge experienced last year
was the significant drop in Tiger Brands’
BBBEE rating, from a level 3 to a level 8
contributor. You indicated in your
chairman’s report last year that plans will
be put in place to improve the BBBEE score
to level 4 by 2022. What improvement
measures have been put in place?
The revised agri-sector codes introduced sub-minimum
elements last year which, if missed, result in discounting.
These revisions impacted our enterprise and supplier
development scores, which in turn also impacted our
preferential procurement score. I am, however, pleased
with the significant progress that we made in 2019, and
I am confident that the plans we are putting in place will
set us firmly on the path to achieving a level 4 contributor
status by 2022.
This year we launched the Dipuno Enterprise and Supplier
Development Fund to support smallholder farmers and
other emerging suppliers and enterprises to transform
our supply value chain. The fund will be managed as an
independent entity with its own board. It will be used
as a vehicle through which Tiger Brands will execute its
enterprise and supplier development projects and drive
job creation and procurement spend with black-owned
enterprises.
We have also done some work to understand who the
beneficiaries of the mandated investments are, as these
were formerly excluded from our scorecard calculations.
This year we will be including mandated investments as
we now have a better understanding of the profile of the
beneficiaries.
84 Tiger Brands Limited Integrated annual report 2019
INTERVIEW WITH THE CHAIRMAN OF THE SOCIAL, ETHICS
AND TRANSFORMATION (SET) COMMITTEE CONTINUED
Skills development and employment equity continued to
receive focus in 2019, with detailed and refreshed training
and development programmes being implemented across
the company. Our socio-economic development unit
continues to implement the community development
strategy which now places greater emphasis on
community skills and enterprise development, in addition
to building on the company’s successful community and
university food and nutrition programmes.
Q Tiger Brands had a protracted strike by its
bakery employees in Pretoria; unfortunately
at times the strike turned violent. How has
this matter been resolved?
The SET committee monitors and considers the employee
relations climate as part of its mandate. The strike was as
a result of wage negotiations and was a protected strike.
What was unfortunate was the violence against and
intimidation of those staff members who decided to return
to work. The perpetrators of the violence were put through
disciplinary processes when they returned to work and
appropriate consequence management was implemented.
The strike was limited to the Pretoria bakeries.
Q One of the company’s top 10 risks is
employee safety. How was the company’s
performance this year?
Employee safety is not negotiable for us and remains a top
priority at Tiger Brands. We are very conscious that our
Bakery drivers sometimes travel into unsafe areas as part
of their delivery routes. To enhance employee safety on
these routes we have implemented security monitoring
and support, and we are looking at solutions to remove
cash from the vehicles. We are continuing to work with law
enforcement agencies to gather information on the delivery
routes and safety of the areas to which we deliver our
products.
Despite our strong focus on employee safety, I am deeply
saddened that one of our employees died while on duty.
In April 2019, Mr Aubrey Tornado Skosana, a driver at
Albany Pretoria, died following a multi-vehicle collision
while on a delivery. I extend my sincere condolences to
his family and colleagues. Regrettably, there was also an
increase in the group’s lost-time injury frequency rate
(LTIFR) to 0,38; this was accompanied by a 20,19%
increase in the number of lost-time injuries. We will
continue to look for solutions to improve the safety and
security of our employees.
Q There has been increasing evidence
recently of corruption within both the public
and the private sector; what is Tiger Brands
doing to prevent this from happening within
the company?
We recognise that there is a need for an agreed set of
values that are unique to Tiger Brands, and we firmly
believe that our values will help drive the right behaviours
across the business. We have recently rolled out our
refreshed values and culture programme, supported by an
intensive communication campaign. The company has a
confidential tip-off line that can be accessed by all
employees and external stakeholders. All complaints
received through the tip-off line or our consumer care line,
or those that are uncovered through internal audits, are
investigated and reported to the SET committee. All senior
employees are required to undergo annual anti-bribery
and anti-corruption training.
Q As a food company, product quality is
clearly very important. Last year you
reported that the consumer contact centre
received an increased number of consumer
complaints because of the listeriosis crisis.
Have the consumer complaints reduced
significantly during this review period?
Quality of our products is critical to our success and we
monitor consumer complaints very closely to ensure swift
responses to any issues. This year, we reported an 18%
year-on-year reduction in consumer complaints; five of
the six cases referred to the consumer goods services
Ombudsman were closed with one pending closure.
We will continue to implement continuous improvement to
ensure that our consumers are provided with quality
products they can trust.
Q Do you have any closing remarks?
It is increasingly clear that environmental, social
and governance (ESG) issues influence our ability
to generate value and could ultimately affect the
company’s future sustainability. For the Tiger Brands SET
committee these are issues that receive as much focus
as financial matters, as they have the potential to have a
material negative impact on the company’s financial
performance. Strategically, ESG issues also offer Tiger
Brands a potential competitive advantage to be a source
for revenue generation. With this in mind, we are exploring
some exciting business opportunities relating to closed
loop economies, inclusive business, conversion of waste
into energy or other valuable products, plant-based
protein, and regenerative agriculture. These are some of
the areas we will be focusing on and will progress as part
of our sustainability strategy going forward.
Our governance Tiger Brands Limited Integrated annual report 2019 85
SOCIAL, ETHICS AND TRANSFORMATION COMMITTEE (SET) MANDATE
The SET committee is primarily focused on areas that impact the long-term growth and sustainability of the business; these
cover the broader issues around economic, social and environmental impacts. The SET committee provides oversight of
the company’s social and ethical performance through its monitoring and reporting function to the board; it receives and
considers reports from the risk and sustainability committee covering the environmental risks that they monitor.
This year the SET committee reviewed the following issues to ensure that there is effective and ethical leadership and an
integrated approach to how Tiger Brands carries out its business activities:
WORKPLACE
SOCIAL ENVIRONMENT
ECONOMY
NATURAL ENVIRONMENT
› Transformation
› Employment equity
› Decent work
› Employee safety and
health
› Employee relations
› Education and training
› Organisational ethics
› Social development
› Consumer relations
and protection
› Advertising
› Human rights
› Public health and
safety
› Sponsorships
› Social and economic
› Greenhouse gas
development
› Corruption prevention
› BBBEE
emissions
› Waste
› Water
› Energy
The SET committee’s annual work plan is structured to focus on material ESG issues. The committee provides guidance to
the CEO and the executive committee in respect of continuous improvement within these performance areas.
86 Tiger Brands Limited Integrated annual report 2019
SHAREHOLDERS’ DIARY
Financial year end
Annual general meeting
Reports and accounts
Announcement of interim results and dividend for the six months ending 31 March 2020
Announcement of annual results and final dividend for the year ending 30 September 2020
Integrated annual report
Dividends 2020
Ordinary shares
Interim dividend
Final dividend
30 September
18 February 2020
May 2020
November 2020
December 2020
Declaration
Payment
May 2020
July 2020
November 2020
January 2020
Administration DECLARATION OF FINAL DIVIDEND NUMBER 150
Tiger Brands Limited Integrated annual report 2019 87
The board has approved and declared a final gross cash dividend of 434 cents per ordinary share in respect of the year
ended 30 September 2019.
The dividend will be subject to the dividends tax introduced with effect from 1 April 2012.
In accordance with paragraphs 11.17(a)(i) to (x) and 11.17(c) of the JSE Listings Requirements the following additional
information is disclosed:
› The dividend has been declared out of income reserves
› The local dividends tax rate is 20% (twenty percent) effective 22 February 2017
› The net local dividend amount is 434 cents per ordinary share for shareholders exempt from the dividends tax
› The net local dividend amount is 347,2 cents per ordinary share for shareholders liable to pay the dividends tax
› Tiger Brands has 189 818 926 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:
Declaration date
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 date in respect of the final dividend
Friday, 22 November 2019
Tuesday, 7 January 2020
Wednesday, 8 January 2020
Friday, 10 January 2020
Monday, 13 January 2020
Share certificates may not be dematerialised or rematerialised between Wednesday, 8 January 2020 and
Friday, 10 January 2020, both days inclusive.
By order of the board
JK Monaisa
Company secretary
Bryanston
21 November 2019
88 Tiger Brands Limited Integrated annual report 2019
COMPANY INFORMATION
TIGER BRANDS LIMITED
Registration number: 1944/017881/06
COMPANY SECRETARY
JK Monaisa
REGISTERED OFFICE
3010 William Nicol Drive
Bryanston
Sandton
POSTAL ADDRESS
PO Box 78056, Sandton, 2146
Telephone: +27 11 840 4000
AUDITORS
Ernst & Young Inc.
PRINCIPAL BANKER
Nedbank Limited
SPONSOR
JP Morgan Equities South Africa (Pty) Limited
SOUTH AFRICAN SHARE TRANSFER
SECRETARIES
Computershare Investor Services Proprietary Limited
Rosebank Towers, 15 Biermann Avenue
Rosebank, 2196
PO Box 61051, Marshalltown, 2107
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
Consumer helpline: 0860 005342
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. Tiger Brands 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.
Administration Head office: South Africa
Physical address
Tiger Brands Limited
3010 William Nicol Drive
Bryanston
Postal address
PO Box 78056
Sandton, 2146
South Africa
www.tigerbrands.com
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