Integrated annual report
for the year ended 30 September 2021
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ABOUT THIS REPORT
REPORT BOUNDARY AND AUDIENCE
TIGER BRANDS’ 2021 INTEGRATED REPORTING SUITE
Our 2021 integrated reporting process comprises the following reports:
This integrated annual 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 2021.
This is our primary integrated annual report, written for investors and any other stakeholders who have 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 sustainability report and our annual financial statements, published on our website:
www.tigerbrands.com.
COMBINED ASSURANCE
MATERIALITY
We use 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
report. The auditor’s audit report does not necessarily report
on all the information included in this integrated annual report
› EmpowerLogic Proprietary Limited provided external verification
of our BBBEE activities
› Marsh South Africa conducted risk control audits at our
manufacturing sites and warehouses covering health, safety,
security, fire protection and readiness
› 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.
REPORTING FRAMEWORKS
Our reporting process has been guided by the principles and
requirements contained in the International Financial Reporting
Standards (IFRS), the Value Reporting Foundation’s recently
updated International Framework, the King Code on
Corporate Governance 2016 (King IV™*), the JSE Listings
Requirements, the South African Companies Act, No 71 of 2008,
and the GRI’s Sustainability Reporting Standards.
* Copyright and trademarks are owned by the Institute of Directors
in South Africa NPC and all of its rights are reserved.
Our integrated annual report provides information to enable an
informed assessment of Tiger Brands’ capacity to create value
over time. We believe that all the information in this report is
of material interest to report users wishing to make such an
assessment, and is structured in a manner to enable them to
do so:
› Who we are: Our group profile (pages 10 to 12) and leadership
team (pages 56 to 57 and 62 to 63)
› How we create value: Our business model and business
impacts (pages 20 to 23), key relationships (pages 27 to 29)
› What impacts value: Our operating environment (pages 24 to
26), and material risks and opportunities (pages 30 to 33)
› Our strategic response: Our strategy and performance
(pages 34 to 47)
› Our governance: Our governance activities (pages 56 to 63)
and remuneration practices (pages 64 to 81).
Additional information not material to this report, but of interest for
other purposes, is provided in separate reports and on our website.
Applying the principle of double materiality, our integrated report
focuses on enterprise value, while our sustainability report focuses
on our impacts on society and the environment, and our contribution
to sustainable development. 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).
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 2021, as well as an accurate reflection of our strategic commitments. On the advice of the audit committee, the board approved
the integrated annual report and the consolidated annual financial statements on 18 November 2021.
› Integrated annual report 2021: Provides a succinct
review of our strategy and business model, operating
context, operational performance, and governance.
Aimed primarily at investors, it is written for all
stakeholders who have an interest in Tiger Brands’
long-term performance.
› Sustainability report 2021: Reviews our
performance in managing significant environmental,
social and governance (ESG) impacts and addressing
sustainability issues of interest to a broad range
of stakeholders.
› Consolidated annual financial statements 2021:
Comprehensive review of our financial results, with
audited financial statements, prepared in accordance
with IFRS.
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Integrated annual report
for the year ended 30 September 2021
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Eat Well
Live Well
Sustainability report: a review of Tiger Brands’ environmental,
social and governance (ESG) performance
(Supplement to the integrated annual report for the year ended 30 September 2021)
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Integrated annual report
for the year ended 30 September 2021
These are all available at www.tigerbrands.com
NAVIGATION
Further reading
within this report
Reference to
further online
disclosure
Further reading in
the sustainability
report
Jump to page
within document
UNITED NATIONS SUSTAINABLE DEVELOPMENT
GOALS (SDGs)
The 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 commitment to a
sustainable future (page 38),
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 11 SDGs.
Geraldine Fraser-Moleketi
Chairman
Noel Doyle
Chief executive officer
Cora Fernandez
Chairman of audit committee
Our approach to responding to these goals is reviewed in more detail
in our accompanying sustainability report 2021, which reviews Tiger
Brands’ material ESG impacts.
CONTENTS
OVERVIEW
IFC About this report
2 Who we are
4
5
8
Our value contribution in 2021
Our investment case
Celebrating our centenary
OUR BUSINESS
Group profile
10
13
16
20
22
Chairman’s review
Chief executive officer’s review
Our business model
How we sustain value
OUR OPERATING CONTEXT
24
Our operating environment
27
30
Our key relationships
Material risks and opportunities
OUR STRATEGY
34
Delivering on our purpose: our strategy
35
40
42
43
45
Meet the needs of the consumer
Optimise our supply chain
Be obsessed about cost savings
and efficiency
Build a growth pipeline
Ignite our people
OUR PERFORMANCE
48
Financial review
50
50
52
54
55
Operational review
Grains
Consumer Brands
Home and Personal Care
Exports and International
OUR GOVERNANCE
56
Our board
62
64
Our executive committee
Remuneration and performance
ADMINISTRATION
Shareholders’ diary
82
83
84
Declaration of final dividend
Administration
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Tiger Brands Limited Integrated annual report 2021
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WHO
WE ARE
OUR
STRATEGY
Our strategy for sustainable
profitable growth is supported
by five strategic pillars,
underpinned by our core values.
MEET THE NEEDS
OF THE
CONSUMER
OPTIMISE OUR
SUPPLY CHAIN
BE OBSESSED
ABOUT COST
SAVINGS AND
EFFICIENCIES
BUILD A GROWTH
PIPELINE
IGNITE
OUR PEOPLE
Tiger Brands is one of Africa’s largest listed
manufacturers of fast-moving consumer goods (FMCG).
Our core business is the manufacture, marketing and
distribution of everyday branded food and beverages.
Our products are relevant across every meal occasion
and are well positioned to grow. The portfolio also
includes leading brands in the home and personal care
segments and we have a growing presence in Africa.
OUR
VALUES
OUR
VISION
To deliver top-tier financial
results and be recognised by
all stakeholders as the pre-
eminent fast-moving
consumer goods (FMCG)
company in South Africa and
most desirable growth
company on the continent.
OUR
PURPOSE
We nourish and
nurture more
lives every day.
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
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OVERVIEW OUR BUSINESSOUR OPERATING CONTEXTOUR STRATEGYOUR PERFORMANCEOURGOVERNANCEADMINISTRATION <
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OUR VALUE
CONTRIBUTION IN 2021
The value created, preserved or eroded for our stakeholders in 2021.
DELIVERY OF VALUE BY STAKEHOLDER GROUP
PROVIDERS OF FINANCIAL CAPITAL
R1,7 billion
paid in dividends
(2020: R740 million)
Return on equity
12,7%
(2020: 9,0%)
Return on net assets
19,3%
(2020: 21,1%)
Cash generated from
operations
R4,0 billion
(2020: R3,0 billion)
FINANCIAL PERFORMANCE
(FROM CONTINUING OPERATIONS)
REVENUE
R31,0 billion
2020: R29,8 billion
CUSTOMERS (retailers, wholesalers and general trade)
97% on-shelf availability
(2020: 96%)
90% order-fill
(2020: 90%)
› Improved promotional discipline
› Prioritising customers’ perceptions through an action
plan to further improve service levels and enhance
engagements
› Improved product availability and average basket size in
the general trade
GROUP OPERATING INCOME*
R2,2 billion
2020: R2,5 billion
EMPLOYEES
GROUP OPERATING MARGIN*
R4,0 billion
paid in salaries and
benefits to 10 158
permanent employees
(2020: R4,1 billion
to 11 188 employees)
R94 million
invested in employee
training and development
(2020: R97 million)
Zero employee
fatalities (2020: 2)
2021 Southern Africa Gender
Mainstreaming Champion
Women on Boards – recognising
the deliberate and targeted
steps we have taken to increase
representation of women in
senior leadership and decision-
making roles.
7,2%
2020: 8,3%
HEPS
46 innovation projects
launched this year, 31%
growth on FY20
Foundational work concluded
to speed up innovation
Launched the Tiger Brands
Venture Capital Fund
CONSUMERS
Responded to growth in
e-commerce with raised online
presence
Africa strategy re-invigorated
and appropriately resourced
Billion Rand Brands
maintain or improve brand
health
28,6% value
share
Tastic X Laduma
Heritage Advert wins
Kantar Best Liked
Advert
R14 billion spent
with broad-based black
economic empowerment
(BBBEE) verified suppliers
(2020: R13 billion)
SUPPLIERS
R6 billion spend
with black-owned
enterprises
(2020: R5 billion)
R4 billion
spend with black
women-owned
enterprises
(2020: R4 billion)
COMMUNITIES AND ENVIRONMENT
R23 million total
socio-economic development
(SED) spend
(2020: R32 million)
99 million cumulative
meals since 2011
Received the Empowerment of Women in the
Community Award and the Economic Empowerment
Award at the annual Gender Mainstreaming Awards
1 127 cents
2020: 1 196 cents
TOTAL DIVIDEND
826 cents per share
2020: 670 cents per share
* Before impairments and non-operational items
OUR INVESTMENT CASE
At the heart of Tiger Brands is the passion to produce quality, branded products that resonate
with our consumers. This means we work hard to understand their diverse and changing needs
to serve them better.
LONG HISTORY OF PRODUCING QUALITY, BRANDED PRODUCTS
THAT RESONATE WITH CONSUMERS
We have a hundred years’ experience in producing quality, branded products that resonate with consumers. Many of our brands
hold number one or number two positions in market share and equity in their respective categories and have celebrated many
external awards for being South Africa’s most loved brands.
Our Billion Rand Brands have stayed relevant through our ability to renovate and innovate. By monitoring consumer tastes and
trends, and investing in product and process research and development, we maintain our leadership position.
The year under review is no exception. We have focused innovation and renovation on meeting the needs of consumers. This
includes the launch of a larger Albany Xtra loaf, Tinkies mini value pack, Purity Junior pouches, Jungle Cereal Bars and Doom
value pack. We have innovated by adding two new flavours to our Rose’s Cordial range (ginger and blueberry), and demonstrated
our ability to compete in categories that we see value in by launching KOO pilchards.
BRAND
EQUITY
VOLUME SHARE
VALUE SHARE
#1
#1
#3
#2
#2
#1
#1
#1
#1
#1
#3
#2
#1
#2
#2
#1
#1
#1
#1
#1
#2
#3
#1
#1
#2
#2
#1
#1
#1
#1
#1
#2
#3
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OVERVIEW OUR BUSINESSOUR OPERATING CONTEXTOUR STRATEGYOUR PERFORMANCEOURGOVERNANCEADMINISTRATION <
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Our investment case continued
ENVIRONMENTAL, SOCIAL AND GOVERNANCE
(ESG) PERFORMANCE
We recognise the significant increase in investor interest and
engagement on environmental, social and governance (ESG)
issues. Tiger Brands has made significant progress in delivering
on its sustainable future strategy, and on its commitments in
each of its three strategic focus areas: health and nutrition;
enhanced livelihoods; and environmental stewardship. Tiger
Brands has launched several new healthy and affordable
products and improved its labelling to accommodate more
nutrition information. Significant further strides have been
taken in promoting economic inclusion and food security through
the company’s enterprise and supplier development fund,
preferential procurement activities, and ongoing investments in
socio-economic development. In addressing some of the more
immediate food security challenges in poor communities, the
Tiger Brands Foundation has continued to make a meaningful
impact on the nutritional needs of learners, students and
vulnerable families across the country. We continue to explore
opportunities to design inclusive circular economy initiatives with
our current focus on minimisation. Our key initiatives focus on
reducing waste-to-landfill, recycling packaging material, reducing
food waste and loss, and diverting food waste and loss towards
new value-creation opportunities.
We recognise that we have a significant responsibility to
continue addressing our material ESG impacts and continue
to fully integrate this responsibility across the organisation.
For more information on sustainability see our sustainability report.
STRONG BALANCE SHEET AND CASH FLOW
GENERATION
We have a strong, ungeared balance sheet and the business
consistently generates attractive cash flows. In 2021 cash
generated from operations increased 34% to R4,0 billion while
we ended the year with a strong net cash position of R2,2 billion
(FY20: R1,8 billion). This sound capital structure provides us with
the ability to drive growth through investment in the existing
business, brands and innovation, as well as returning cash to
shareholders.
It also allows us flexibility to be able to invest in potential
acquisitions, while our ability to convert earnings into cash
means we are able to self-fund many initiatives, including the
recently launched Venture Capital Fund. The launch of the fund
led to the receipt of over 500 expressions of interest. We are in
the final stages of making an offer for a business, which is
closely aligned to our health and nutrition strategy, while a
further nine opportunities are being assessed.
FUTURE-FIT STRUCTURE MEANS WELL-
POSITIONED FOR LONG-TERM GROWTH
Last year, we revised our operating model with the aim of
providing the individual business units with the benefits of Tiger’s
scale, but with sufficient autonomy, accountability and flexibility
so that this benefit is not eroded by the inertia of command and
control from the centre. In addition, we have embarked on a
future-fit campaign, a project that aims to make the group more
agile through cost containment and factory efficiencies. With
cumulative cost savings in excess of R900 million over the last
two years (R474 million in 2020 and R498 million in 2021), these
initiatives are well-established to gain momentum.
In addition, we have made significant improvements in material
usage variances, reducing waste, improving factory performances
and ensuring procurement savings. Factories operating optimally
will restore competitiveness and improve service levels.
CLEAR ACCOUNTABILITY MATRIX DRIVES CONSISTENT COST MANAGEMENT IN LINE
WITH GUIDANCE (R’million)
NEW MANAGEMENT TEAM;
REFRESHED BOARD
Tiger Brands’ management has seen some significant changes
to its executive management and the board over the last few
years. With Noel Doyle taking the helm as CEO – after 11 years
as CFO and in other areas across the group – this created an
opportunity to bring in some fresh thinking into the CFO
position with the appointment of Deepa Sita in October 2020,
combining the stability of institutional memory with the energy
of new perspective.
The board has benefited from newly appointed members
with strong global and FMCG expertise. Together with a new
chairman, Geraldine Fraser-Moleketi, this has helped deepen
a culture of execution and accountability at the highest level.
“I believe that we have a highly engaged board, that
brings differing individual strengths and that is robust
in ensuring accountability of the management team.”
Geraldine Fraser-Moleketi, Chairman
NET DEBT TO EBITDA (X)
Cash has exceeded debt since FY17
0,0
(0,1)
(0,2)
(0,3)
(0,4)
(0,5)
(0,1)
(0,2)
(0,4)
(0,6)
(0,7)
FY17
FY18
FY19
FY20
FY21
For more information, see CFO report, page 48.
183
79
2 478
236
3 000
2 500
2 000
1 500
1 000
500
0
2 236
(732)
(8)
For more information, see the governance section, page 56.
Group
operating
income FY20*
OEE and
factory
efficiencies
Material
usage
variance
Procure-
ment
savings
Costs relating
to civil
unrest and
product recall
Operational
perfor-
mance
Group
operating
income FY21*
* Group operating income from continuing operations before impairments and non-operational items.
We have concluded a review of our technology requirements to
ensure we are future-fit with investment planned to expand our
technology and digital capabilities.
ADDITIONAL STRENGTHS
GROWTH AREAS
› Scale: We are one of Africa’s largest FMCG companies.
This allows for greater brand recognition and economies of
scale. In addition, our scale provides us with opportunities
to generate valuable consumer data through our customer
relationship channels
› Inherently defensive categories: From Bread to Personal
Care, our products address consumer needs at every
occasion across each part of the day and our portfolio
is well placed to grow presence in most occasions
› Supply base in South Africa is concentrated: This
reduces supply risk and increases supplier responsiveness
and innovation.
› Africa: We aspire to be a pan-African business with a South
African head office. The company has ambitious growth
targets for the next five years, building on its established
presence across the continent, targeting consumer-led
category growth through carefully chosen brand investments
and innovations, developing superior routes-to-markets and
investing in developing supply chain capacity
› Informal market: According to Trade Intelligence, the
informal market in South Africa, which ranges from spaza
shops to tuck shops, is valued at approximately R150 billion
per year. We are developing product offerings and improving
distribution strategies to expand our reach in the fast-
growing informal market (general trade).
For more information, see build a growth pipeline, page 43.
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OVERVIEW OUR BUSINESSOUR OPERATING CONTEXTOUR STRATEGYOUR PERFORMANCEOURGOVERNANCEADMINISTRATION
CELEBRATING
OUR CENTENARY
Founded by Jacob Frankel in 1921, with some help from business entrepreneur Joffe Marks,
Tiger Brands is built on the strength of family businesses and the spirit of entrepreneurship.
SA’s #1
squash
2015
1899
Oros which has now become a staple in
South African households with various
flavours available has been around since
1899, when Charles Brookes founded
the brand.
1917
Mrs H.S. Ball’s Chutney™ was created
with the Ball family crest on the top of
the label. The Woodstock factory opened
in 1917 to meet escalating demand of
the most loved chutney in South Africa.
1819
Loved by South Africans for many
generations, Crosse & Blackwell is one
of South Africa’s most recognised
brands, renowned for its superior
quality and taste. The brand’s British
roots go as far back as 1706, but the
familiar name was only adopted
in 1830.
1867
Rose’s lime juice was the world’s first
commercially produced fruit concentrate
which was patented in 1867. From
1795, due to the higher vitamin C
content than any other citrus fruits, it
was normal practice within the Royal
Navy for sailors to receive a daily ration
of lemon or lime juice.
1915
The Moni brothers started producing pasta in
1915 in Johannesburg. United Macaroni
Factories was born out of a peace treaty
signed between the Italian Fatti’s and Moni’s
families in 1925. In 1982 Tiger Brands took
over the controlling interest and became
known as Fatti’s & Moni’s.
1925
Jungle Oats
(originally known
as Tiger Oats)
was launched
and produced in
Moorreesburg
as Tiger Brands’
first product.
1982
Barlow Rand (now
Barloworld) acquires
majority share in
Tiger Oats through
CG Smith Limited.
1998
Tiger Oats acquires
ICS Holdings
Limited (formerly
Imperial Cold
Storage and Supply
Company).
2001
Tiger Brands
unbundles and
separately lists its
animal feed and
poultry operations
into Astral Foods.
2006
Acquires the sugar
confectionery
businesses from
Nestlé, including
Jelly Tots.
...
1921
Founded in 1921
by Jacob Frankel,
with help from Joffe
Marks, Tiger
Brands Limited,
formerly known
as Tiger Oats
Limited, begins as
a family business in
Newtown,
Johannesburg.
Frankel originally started his small family business in Newtown, a
thriving hub of cultural, industrial, and economic activity in a young
and growing Johannesburg. In 1925 the company, then known as
Tiger Oats Limited, launched a breakfast oatmeal brand called Jungle
Oats which featured the iconic Tiger in the grass logo that remains a
firm favourite on breakfast tables across South Africa.
Two decades later, Tiger Oats Limited and National Milling Company
Limited, founded by Frederick John Collier, incorporated and listed
on The Johannesburg Stock Exchange in 1944, where the company
retains its primary listing. In 2000, Tiger Oats was renamed
Tiger Brands.
Over the course of a century, our brands have been part of the moments
that matter in the lives of millions of South Africans. Many have a rich
and interesting history, born from the efforts of enterprising men and
women, with several homegrown South African success stories.
From these modest beginnings and many others, Tiger Brands grew
through acquisitions and clustering of businesses that cover Food,
Beverages as well as Home and Personal Care brands to become one
of Africa’s largest listed manufacturers of FMCG.
Our history is rich and varied, and from these stories of belief, ingenuity
and perseverance we draw our inspiration as we work to nourish and
nurture more lives, every day.
SA’s Overall
Favourite
Brand 2012
and 2015
1926
Manufactured in South Africa
since 1926, Black Cat peanut
butter was first produced
under the name Alderton
Limited in Potgietersrus before
it became part of the Tiger
Oats Company.
1940
Established in 1940 by the Langeberg
Cooperative, KOO initially produced canned
fruit. Innovation has been a brand strength
from the early days. A year after being
established, KOO introduced canned
vegetables and soon followed with the
launch of tomato paste and baked beans.
#1
spot for
over 20 years
– The Sunday
Times Top
Brands
1961
Tastic is an iconic staple in South
African kitchens. It has held the number
1 spot in The Sunday Times Top Brands
Essential Foods category for over 20 years.
1937
First formulated in 1937 for Ingram’s
Pharmacy in Johannesburg by
German immigrant Hans Rose,
Ingram’s Camphor Cream was initially
marketed by sending
complimentary jars to
Johannesburg Hospital,
with demand soon
outstripping supply.
No.1 Iconic
Food Brand by
TGI SA
1959
Originally launched in 1908, All GOLD,
South Africa’s most iconic tomato sauce,
was first made by lowering muslin bags filled
with herbs and spices into pots of ripe, freshly
crushed tomatoes at a jam manufacturing
company in Paarl, Western Cape. By 1959
demand for ALL GOLD Tomato Sauce
increased countrywide and mass production
began in Paarl and Langlaagte.
1970
Albany Bakeries
have been
dedicated to
baking the freshest
and most delicious
products since
1970, offering
superior quality
and nutrition to our
consumers.
2016
Disposes of TBCG.
2019
Unbundles
investment in
Oceana.
2008
Unbundles and
separately lists
Adcock Ingram.
Extends African
footprint by
acquiring controlling
stake in Haco
Industries of Kenya
and Chococam of
Cameroon.
2011
Expands African
footprint by acquiring
interests in the East
African Group of
Ethiopia, Deli Foods of
Nigeria and Davita, a
South African exporter
of powdered
seasoning (Benny)
and beverages
(Jolly Jus).
1944
Tiger Oats and
National Milling
Company Limited
are incorporated
and list on the JSE.
1993
CG Smith
unbundles from
Barlow Rand.
2000
Tiger Oats renames
to Tiger Brands.
Adcock Ingram
becomes wholly
owned subsidiary and
delists from the JSE.
2004
Tiger Brands
unbundles and
separately lists Spar.
2007
Expands branded
portfolio further into
beverages by
acquiring Bromor
Foods, with key
brands Oros,
Energade and Rose’s.
2009
Expands branded
portfolio by
acquiring Crosse &
Blackwell.
2012
Acquires controlling
interest in Dangote
Flour Mills in Nigeria
(Tiger Branded
Consumer Goods plc
– TBCG) and the
Mrs Ball’s trademark.
2017
Disposes of
non-core EATBI and
Haco Tiger Brands.
2021
100 years of
bringing brands
that have made
moments matter.
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GROUP PROFILE
Excludes product recall and civil unrest
Our core business is providing everyday branded food products to large and growing markets.
We target best-in-class profitability, underpinned by a cost-conscious culture, and ESG principles
to create and share value.
We have leading positions in most categories and our iconic brands are well-entrenched with
consumers in South Africa, as illustrated by the percentage share of market.
GRAINS
CONSUMER BRANDS
HOME AND PERSONAL CARE
EXPORTS AND INTERNATIONAL
+5%
+11%
+4%
+20%
REVENUE
OPERATING INCOME
REVENUE
OPERATING INCOME
R14,6bn
2020: R13,9 billion
R1,4bn
2020: R1,2 billion
R11,1bn
2020: R10,7 billion
R1,1bn
2020: R941 million
+6%
+8%
+7%
-7%
REVENUE
OPERATING INCOME
REVENUE
OPERATING INCOME
R2,0bn
2020: R1,8 billion
R433m
2020: R400 million
R3,6bn
2020: R3,4 billion
R96m
2020: R103 million
MILLING AND BAKING
› Baking
MILLING
›
Flour
› Maize
› Sorghum
TOP
BRANDS
OTHER GRAINS
› Pasta
› Oat-based breakfast (Jungle)
› Rice
GROCERIES
› Condiments and ingredients
› Spreads
› Canned fruit and vegetables
BEVERAGES
› Concentrates
› Sports drinks
› Ready-to-drink
SNACKS & TREATS
› Sugar
› Chocolate
BABY
› Nutrition and wellbeing
HOME CARE
› Sanitary cleaners
› Pesticides
PERSONAL CARE
› Camphor cream and lotions
› Hair care
EXPORTS
INTERNATIONAL
OPERATIONS
› Central Africa (Chococam)
DECIDUOUS FRUIT
›
Langeberg & Ashton Food (LAF)
TOP
BRANDS
TOP
BRANDS
REVENUE
REVENUE
OPERATING
INCOME
OPERATING
INCOME
MARKET SHARE (%)*
MARKET SHARE (%)*
Grains
Mazie
Flour
Cereals
Rice
Dry pasta
Bread
* Market share limited to South Africa
Source: IRi.
27
12
24
20
42
42
33
Groceries
Spreads
Condiments
Canned fruit & vegetables
Snacks & Treats
Chocolate
Candy
Beverages
Dilutables
Sports drinks
Ready-to-drink
Baby nutrition
* Market share limited to South Africa
Source: IRi.
40
36
44
54
21
12
44
47
53
45
18
62
Campho r
MARKET SHARE (%)*
Home Care (Pest)
Personal Care
● 47%
● 36%
● 6%
● 11%
● 47%
● 36%
● 6%
● 11%
47%
2019: 47%
2020: 47%
2019: 36%
2019: 6%
36%
2019: 11%
2020: 36%
2019: 47%
2019: 36%
2019: 6%
2019: 11%
Grains
Grains
Consumer Brands – Food
Grains
Consumer Brands – Food
HPCB
Consumer Brands
HPCB
Exports and International
Exports and International
● 45%
● 37%
● 14%
● 3%
46%
● 45%
2020: 46%
● 37%
● 14%
37%
● 3%
2020: 35%
2019: 46%
2019: 35%
2019: 15%
2019: 4%
2019: 46%
2019: 35%
2019: 15%
2019: 4%
6%
2020: 6%
11%
2020: 11%
Home and Personal Care
Exports and International
14%
2020: 15%
3%
2020: 4%
60
9
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11
OVERVIEW OUR BUSINESSOUR OPERATING CONTEXTOUR STRATEGYOUR PERFORMANCEOURGOVERNANCEADMINISTRATION
<
Group profile continued
WE CURRENTLY EXPORT OUR PRODUCTS TO 33 MARKETS IN AFRICA
Own and operate
41
manufacturing sites
in South Africa and
Cameroon and export to
33
markets in Africa, with
almost
80%
of total export sales from
Guinea
5
Sierra Leone
Liberia
priority markets:
Mozambique, Zimbabwe,
Zambia, Nigeria and
Cameroon
Manufacture
Current exports
Out of scope*
* Botswana, Namibia, Lesotho
and Swaziland are serviced by
the domestic business.
Tiger Brands
is dedicated to
growing its footprint
by continuing to explore
new opportunities to
bring quality brands to
consumers across Africa.
Mali
Burkina
Faso
Ghana
Chad
Sudan
Niger
Nigeria
Central African
Republic
Cameroon
Equatorial Guinea
Congo
Gabon
Rwanda
Democratic
Republic of the
Congo
Uganda
Kenya
Tanzania
Seychelles
Angola
Malawi
Zambia
Mozambique
Zimbabwe
Madagascar
Namibia
Botswana
Mauritius
Reunion
Swaziland
Lesotho
South Africa
154
quality brands and
products within
21
categories
CHAIRMAN’S REVIEW
>
“ In last year’s integrated annual report,
in my capacity then as chairman designate,
I referred to Tiger Brands as being at a
critical inflection point – with the company’s
management team facing significant
pressure to deliver a rapid and visible
change in fortune – and to do so in the
context of the pandemic and a particularly
tough operating environment. One year on,
and while the company has not yet crossed
this inflection point, I believe that it has
made some important progress in key
areas of its strategy and I remain confident
that it is on the right path for recovery and
growth. The next two years will be critical in
ensuring that Tiger Brands is able to build
on its 100-year legacy and deliver on its
potential.
“
Geraldine Fraser-Moleketi
Chairman
Tiger Brands’ main market, South Africa, continues to face
a very challenging socio-economic environment, with the
Covid-19 pandemic exacerbating already high levels
of inequality and unemployment, and further dampening
GDP and wage growth.
Combined with rising input costs and food inflation, this is
placing profound pressure on consumers. All of us in the
FMCG sector have been feeling the impact of these pressures,
with the combination of reduced consumer spend and
heightened competition among food producers and retailers,
impacting volumes, market share and margins. The costs
associated with the civil unrest that took place in July, and the
precautionary recall of canned vegetable products following
the early detection of defective welds, had a further negative
impact on group earnings.
These costs are reflected in Tiger Brands’ results this year, with
group operating income and HEPS from continuing operations
down 10% and 6%, respectively. Excluding the impact of the
civil unrest and the product recall, group operating income
increased by 20%, proving the defensive nature of the core
portfolio. At financial year end an ordinary final dividend of 506
cents per share was declared. The company’s dividend policy
of 1,75x cover was applied to normalised headline earnings
per share, excluding the impact of the canned vegetable recall
and the civil unrest. Despite the challenges faced this year and
some specific areas where strategy execution has fallen short
of expectations – most notably in Milling and Baking, and
Exports – there has been valuable progress in some of the
company’s critical strategic drivers, particularly in improving
operational performance, realising efficiencies within the supply
chain and in delivering on product quality and food safety
objectives.
For Tiger Brands to turn the corner and produce
the necessary step change in performance – and
at most, we have two years to do so – the company
will need to build substantially on its recent
foundational work in striving to instil a high-
performance culture, supported by best-in-class
capabilities.
We all know that “culture eats strategy for breakfast”. For too
long the company has been playing it safe; the Tiger has been
complacent, sitting in the sun. It’s time for the Tiger to start
hunting – to develop a bolder, hungrier, more aggressive and
creative mindset, to be out there in the trade, finding the entry
points and driving the innovations that will enable the company
to fulfil its growth aspirations and do justice to its rich history
and 100-year legacy. The management team is fully aware of
the challenges that lie ahead, the tough decisions to be taken,
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OVERVIEW OUR BUSINESSOUR OPERATING CONTEXTOUR STRATEGYOUR PERFORMANCEOURGOVERNANCEADMINISTRATION Chairman’s review continued
and the work to be done in driving a
more aggre ssive approach to both
organic and inorganic growth.
EMBEDDING A CULTURE OF
FOOD SAFETY AND QUALITY
An important area of progress this year
has been the company’s drive to
enhance product quality and ensure
consumer safety. As Africa’s largest food
producer, we recognise that we have an
incredible responsibility to strengthen
regional food security, improve nutrition
and strive to maintain the highest levels
of food safety and quality. Following the
tragic listeriosis incident in February
2018, the board has maintained a
heightened focus on driving a sustained
improvement in Tiger Brands’ food
safety and quality practices and on
strengthening the quality of reporting
and board oversight.
The company has continued
to make progress in
embedding a strong quality
culture and in implementing
robust management and
auditing systems, both across
its own operations and among
its suppliers and third-party
manufacturing partners.
It is pleasing to see that against some
key metrics there have been marked
improvements this year, with a 25%
reduction in consumer complaints
and a 40% reduction in marketplace
incidents. Within Tiger Brands’ own
operations, the company has
implemented necessary critical control
measures in identified high-risk areas,
introduced new automation and in-line
inspection technologies, and continued
to conduct quarterly self-assessments
against the Global Food Safety Initiative
requirements. All of Tiger Brands’
manufacturing facilities maintained their
certifications this year against either the
globally recognised Food Safety System
Certification (FSSC 22000) or the
Hazard Analysis and Critical Control
Points (HACCP) system.
In terms of suppliers, the product recall
in our canned vegetable range, after the
company identified a latent defect in a
supplier’s cans, was of course a great
disappointment. Tiger Brands acted
quickly and decisively in recalling the
cans, ensuring a strong precautionary
approach to minimise any potential
impact on public health. Various
measures have subsequently been
taken to strengthen the quality
assurance processes of suppliers,
including introducing a new supplier
quality accreditation protocol and a
more robust supplier audit programme,
working with suppliers to proactively
close any identified gaps.
DISAPPOINTING PROGRESS
IN AFRICA
Tiger Brands’ aspiration is to be a truly
pan-African business with a South
African head office. The company has
ambitious growth targets for the next
five years, building on its established
presence across the continent, targeting
consumer-led category growth through
carefully chosen brand investments and
innovations, developing superior routes
to markets, and investing in developing
supply chain capacity. As I mentioned
in last year’s report, I believe that these
are credible and appropriate ambitions.
Some of the most exciting growth
opportunities are in markets across
Africa, where we are likely to see
stronger levels of economic growth than
in South Africa. While I appreciate that
some investors and board members
might be cautious – given Tiger Brands’
and other South African companies’
recent experiences on the continent
– I believe that the company is correct
to expand its current export strategy,
learning from past mistakes and building
on the success in Cameroon.
Given this context, it has been
disappointing for me to see the
performance this year in the Exports
portfolio, where I expected us to do
much better. I have spent time this year
visiting some of our operations, meeting
with management teams and service
providers and seeing first-hand the
challenges on the ground. While some
of the performance disappointments
have been a result of headwinds
beyond our control, there are clear
areas where the company has
underperformed, reflecting challenges
both in our business model and in the
execution of our strategy. The board
and the management have reflected
on the experiences learned and are
taking various steps to ensure improved
performance, recruiting the right skills,
developing an innovation pipeline,
investing in improving overall equipment
effectiveness in key operations and
building distributor management
capabilities.
ENCOURAGING ESG
AND SUSTAINABILITY
PERFORMANCE
In the context of the recent significant
increase in investor interest and
engagement on environmental, social
and governance (ESG) issues, it has
been pleasing to see the continuing
progress the company has been making
in delivering on its sustainable future
strategy, and on its commitments in
each of its three strategic focus areas:
health and nutrition, enhanced
livelihoods, and environmental
stewardship.
APPRECIATION
This has been a stimulating and
rewarding first year as chairman of the
Tiger Brands’ board. I would like to
thank all my colleagues on the board for
their support and insight in fulfilling our
governance responsibilities, as well as all
the Tiger Brands’ executive committee
and employees for their efforts in striving
to deliver value in this particularly
challenging environment.
Geraldine Fraser-Moleketi
Chairman
18 November 2021
GOVERNANCE AND
ACCOUNTABILITY
There have been several
changes to the board this year. In
February, Mr Makhup Nyama retired
from the board, after 10 years of
service, and in June Mr Ian Burton
resigned from the board, stepping
down as chairman of the investment
committee. Ian has subsequently
entered into an agreement to provide
consulting services to the company,
enabling us to access his valuable
insight and extensive FMCG
experience. Looking ahead, Ms Maya
Makanjee will be stepping down as
independent non-executive director,
and as chairman of the social, ethics
and transformation committee with
effect from 31 December, and Mr Mark
Bowman will retire from the board,
and as chairman of the remuneration
committee immediately following the
AGM in February 2022. Both have been
on the board for more than 10 years;
the board extends our gratitude to each
of these departing members for their
valuable contribution and wish them
well in their future endeavours.
I believe that we have a highly engaged
board, that brings differing individual
strengths and that is robust in ensuring
accountability of the management team.
Following the recent and imminent
departures of some longstanding board
members, we will be announcing some
new appointments shortly, where we will
be looking to bring in valuable new skills,
experience, and insights, particularly in
the FMCG and retail sectors, as well as
ideally on ESG issues.
Tiger Brands has launched
several new healthy and
affordable products, improved
its labelling to accommodate
more nutrition information,
and run a television campaign
in partnership with KOO and
SABC 2 to promote healthy
home-cooking, supported by
further investment in our Eat
Well Live Well programme.
Significant further strides have been
taken in promoting economic inclusion
and food security through the company’s
enterprise and supplier development
fund, preferential procurement activities
and ongoing investments in socio-
economic development. In addressing
some of the more immediate food
security challenges in poor communities,
the Tiger Brands Foundation has
continued to make a meaningful impact
to the nutritional needs of learners,
students and vulnerable families across
the country.
As a large food company, we recognise
our significant responsibility in
responding to the climate change
challenge; globally the food sector is
both one of the largest contributors to
greenhouse gas emissions and also
potentially one of the most vulnerable.
While it is encouraging to see the
company’s progress this year in
improving energy and water efficiency,
reducing GHG emissions and striving
for zero waste-to-landfill operations,
more still needs to be done to fully
integrate this thinking across the
organisation. I encourage you to read
the separate sustainability report which
reviews the company’s progress in
addressing its most significant ESG
impacts in more detail.
14
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15
> WACC 12,2%.
Ensuring sustainable growth in financial capital
sometimes involves significant capital
investments in the short term – for example to
maintain and optimise plant and equipment,
invest in research and development (R&D), and
develop employee talent – or alternatively
involves divesting from certain businesses and/
or closing of manufacturing plants. Some of
these activities to optimise financial capital may
be more efficient and have positive benefits in
terms of safety and the environment, but come
at the cost of employment opportunities,
undermining social capital and contributing to
broader downward trends in consumer spend.
The trade-off between delivering short-term
results – to enhance investor sentiment and
attracting necessary financial capital – against
the need to deliver longer-term sustainable
growth, is one of the more challenging
trade-offs affecting businesses generally.
intensity down by 15%.
Challenges remain in certain areas:
xWater intensity up by 6%
xPost Covid-19 global supply chain squeeze.
Natural capital is a critical input for our activities.
Our means of generating value across the other
capitals unfortunately often involves some
negative impact on natural capital, sometimes
only evident in the longer term. The global food
system is recognised as having a significant
impact on biodiversity and habitat loss, climate
change and packaging pollution, placing direct
pressure on some of the resources we depend
on, and increasing consumer and regulatory
pressure for more sustainable business
practices. Given our dependency on natural
capital, as well as the potential impact on
reputational capital, we strive to minimise
environmental impacts by investing in mitigating
measures in our processes, products and
packaging. These measures may themselves
have trade-offs – for example using more
packaging to reduce food waste, or investing in
carbon-efficient technologies that reduce jobs.
Balancing these trade-offs is an important
challenge affecting all businesses in resource-
related sectors.
SEE PAGE 40.
SEE PAGE 48.
SEE SUSTAINABILITY REPORT.
22
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>
OUR OPERATING
ENVIRONMENT
Changing dynamics in our operating environment shape our ability to create value and deliver
on our purpose. We have identified five core trends that have a material bearing on our business
model and strategy. Our updated strategic priorities have positioned the company to respond
effectively to the risks and opportunities emerging in association with each of these trends.
WEAK MACRO-ECONOMIC FUNDAMENTALS
We track and review changes in the macro-economic environment, as we would benefit from a strong economy
and healthy consumer demand.
The tough macro-economic environment has resulted in reduced demand for
discretionary and premium products, shifting demand to value offerings, and
increasing competition. Volumes and margins are threatened, and cost recovery
ahead of inflation remains a challenge. The impact of these developments was
exacerbated by the civil unrest and looting in South Africa, as well as
operational challenges that include employee unrest across several operations.
On a positive note, the government has released economic stimulus capital,
further opened the door to independent power producers, and allowed the
private sector to participate in improving rail and port infrastructure.
For consumers, the renewal of the social relief of distress grant until
March 2022 will help bolster consumer confidence for low-income households.
CONSUMER CONFIDENCE VS HOUSEHOLD EXPENDITURE
(quarterly change year-on-year)
16
12
8
4
0
(4)
(8)
(12)
(16)
(20)
(0,1)
(0,2)
(0,3)
(0,4)
2016
2017
2018
2019
2020
2021
FNB/BER consumer confidence index
Final consumption expenditure by households – Stats SA
40
30
20
10
4
0
(10)
(20)
(30)
(40)
(50)
OUR STRATEGIC RESPONSE
› To meet the growing needs of the value-conscious consumer, we are driving our relevance in the value segment through innovation and
renovation to meet value-specific consumer needs, highlighting the benefits of our current brands through marketing best practice and
delivering commercially viable opportunities to manufacture private label products to our benefit
› We have introduced a more systemic approach to delivering cost saving and efficiencies across the business, changing the governance
structures, improving accountabilities, strengthening our central revenue management capability within each of our business units, and
improving our stock-keeping unit (SKU) rationalisation; these various initiatives have contributed to R498 million in savings this year
› We are driving long-term cost savings and improved productivity across our supply chain, investing in world-class manufacturing operations,
improving our procurement capabilities, and approving an ambitious logistics transformation programme to be executed over the next
three years
› We have further strengthened our activities to boost economic opportunities and improve the livelihoods of thousands of people across our
value chain, including through a deliberate focus on supporting black/black-women farmers and owned enterprises.
AN INCREASINGLY COMPETITIVE MARKET
We are inspired to meet the shifting needs of consumers, and beat our competitors, by harnessing our capabilities to bring
innovative new products to market with speed and agility.
The maturing food retail environment in South Africa remains particularly competitive, both among food producers and within distribution channels. New
producers are establishing strong premium brands and successful niche products, challenging traditional market leaders, and placing significant pressure on
industry margins. While supermarkets remain the leading distribution channel in packaged food, the channel is seeing strong competition from mixed and
wholesale retailers, independents, and emerging informal players. Food retail generally has diversified, with increasing online engagement and digital sales.
Retailers have hardened their procurement practices, and in many instances built successful private labels on core staples and key niche products. As
convenience and value have become key drivers of consumer choice, and informal players capture consumers closer to home, a shift to alternative pack
formats has enabled market expansion and affordable price points. Heightened promotional activity has undercut margins, runs the risk of damage to price
perception, and inspired competition and differentiation towards richer value propositions that threaten brand dominance.
Innovation and speed-to-market is increasingly necessary to meet consumer trends and gain market share. The pressure on food safety governance and
management has mounted, as has the need and benefit of adopting digital technologies and new ways of working to drive smarter, more efficient operations.
While digitalisation brings valuable performance benefits, it also brings cyber security risks. These various dynamics reflect the complexity of the market and the
relentless intensity of competition. In this context we are challenged to reinvent our historic brand advantage, and to ensure the sophistication of our operations,
but are inspired to build our agility and capability for innovation.
OUR STRATEGIC RESPONSE
well as building our "Big Brand" image and consumer intimacy and loyalty
identified opportunities to optimise our product portfolio and respond to the growth in private label
› We have enhanced our research and analytics, strengthened our monitoring of customer and brand strategies and performance, and
› We have invested in strengthening innovation, focusing on fewer and larger innovation projects – on value, nutrition and convenience – as
› We are developing product offerings and distribution strategies to expand our reach and target faster growth in the emerging informal market
› We have strengthened our customer marketing teams, invested in category management resources and tools to enhance in-store execution,
and established key account forums and joint business plans with major customers. We are introducing legally compliant, fair and equitable
trading terms that are performance and behavioural-based.
(general trade)
CHANGING CONSUMER EXPECTATIONS
We continuously adapt to the changing needs of consumers who demand connectivity, convenience, quality, affordability,
taste, health and sustainability.
Shifting patterns of consumer behaviour are leading to significant changes in the food system, driven by increasing urbanisation, digital connectivity and
mobility, the rising number of single households, and changing personal priorities. Dietary shifts reflect these changing global patterns and economic
aspirations, with growing public health concerns offset by the consistent uptake of processed products, and convenience foods, snacks and beverages. In the
emerging post-Covid-19 environment, consumers across income-groups are typically shopping less frequently, across fewer categories, and at fewer retailers,
for bigger baskets. E-commerce channels have become markedly more important for middle and higher-income groups. The practice of home cooking,
stocking pantries, and extending product life has increased broadly, along with momentum towards more health-conscious purchasing.
Middle and high-income consumers are increasingly sensitive to the social and environmental practices of retailers, brands and products. The profile of goods
favoured has shifted for each income-group, with consumers needing to spend more for the same, driving growth in value for food businesses but lower growth
in volumes. The overriding rise in the price-consciousness of consumers has increased demand for value and affordability. The increase in health-consciousness
has increased product scrutiny and an emerging social and environmental-awareness is prompting the search for added value. These multifaceted shifts in
consumer needs present a significant opportunity for innovation.
OUR STRATEGIC RESPONSE
process innovation and to optimise our product portfolio
› Our consumer and market insights team tracks market and consumer behaviour and preferences to identify opportunities for product and
› We have appointed an innovation director who is reworking our innovation practices and methodologies to drive a step-change in
› Given recent and anticipated growth in the e-commerce channel, fuelled in part by the pandemic, we are working to raise our online
innovation performance, with innovation opportunities currently being realised in areas such as snackification, value and health and wellness
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presence and become the preferred supplier to priority e-commerce partners.
OVERVIEW OUR BUSINESSOUR OPERATING CONTEXTOUR STRATEGYOUR PERFORMANCEOURGOVERNANCEADMINISTRATION
Our operating environment: material trends continued
PRESSURE TO IMPROVE ESG PERFORMANCE
We acknowledge the growing interest from investors and stakeholders on our ESG performance and recognise
the importance of building an ethical and sustainable business practice.
Increasing consumer and investor activism on ESG issues, and emerging regulatory interventions, reflect a growing concern to address the negative nutritional,
health and environmental outcomes of the food system, placing greater pressure for industry action, transparency and accountability. Globally, the food system
has been identified as “the single strongest lever to optimise human health and environmental sustainability*”. Locally, South Africa has profound food-related
health challenges, characterised by high levels of obesity, lifestyle-induced non-communicable disease (NCD), and persistent hunger and malnutrition.
The SDGs provide a benchmark for clear targets and an increasing number of global industry initiatives demand collective action. Enhanced regulatory and
voluntary interventions have introduced new marketing, health and environment-related control mechanisms, regulations and taxes. An increased threat of
litigation threatens resources and reputation. Higher-income consumers are more willing to trade-off on price for health and sustainability, with increasing
demand for brands-with-purpose, sustainable and local products, plant-based proteins, ethical marketing and front-of-pack nutrition labels. These shifts
challenge some traditional business approaches and encourage the adoption of purpose-led innovation. We are increasingly pressured to align with global
agreements and voluntary initiatives, proactively address environmental impacts, accelerate social transformation and prioritise value creation that aligns with
public health interests.
* EAT/Lancet Commission (2019) Food Planet Health
OUR STRATEGIC RESPONSE
› We have made further progress this year on our commitment to enabling consumers to improve their health and wellbeing, refreshing our
Eat Well Live Well programme, updating our nutritional standards to align with globally recognised guidelines, and taking deliberate steps
to prioritise health and nutrition in our innovation pipeline
› We have continued to invest significantly in driving quality and food safety across the company to ensure that we have
robust management systems, qualified people and a strong quality culture, further strengthening our audit and
assessment processes, achieving external certification for all our manufacturing facilities against globally recognised food
safety standards, and made valuable progress in securing certification for our warehouses
› We are striving to 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
› We are continuing in our efforts to improve the livelihoods of thousands of people across our value chain, using our procurement
practices and our investment in supplier and enterprise development, to stimulate economic opportunities, including through a specific
focus on supporting black/black-women farmers and owned enterprises.
PERSISTENT IMPACTS OF THE COVID-19 PANDEMIC
We have responded effectively to the prolonged impacts of a persistent pandemic by re-allocating capital and capacity
to protect our people and business operations.
The Covid-19 pandemic had a material impact on all business across the food producer sector, despite much of the sector being classified as an essential
service. The pandemic has increased complexity in the operating environment and amplified existing macro-economic challenges, placing further pressure
on consumer spending and driving changes in consumer needs and expectations. It has impacted local and global supply chains, increased the costs of
production, contributed to production setbacks, and presented new challenges in terms of employee engagement and wellbeing. The rise of new Covid-19
variants, the slow vaccination roll-out in South Africa, and a potentially widening gap between the recovery of developed and emerging markets, means
that the Covid-19 pandemic will continue to impact the economy and directly shape our plans and prospects for the next few years.
OUR STRATEGIC RESPONSE
› During the stringent lockdowns we worked with suppliers, logistics and customers to limit disruptions in essential food supplies,
supplemented by effective communication to address concerns around food security
› We have prioritised the safety and wellbeing of employees, requiring remote working where possible, and introducing health screening
and testing for staff at essential service sites, accompanied by numerous other measures to ensure employee wellbeing
› Although global raw material availability may impact supply levels in some categories, we are generally well-placed to meet demand
and increase production capacity on key products if needed.
OUR KEY RELATIONSHIPS
We have a structured stakeholder relations strategy in place to ensure a consistent and proactive
approach to engagement across the group.
In 2017, we undertook a dedicated engagement process to develop a baseline appreciation of stakeholders’ perceptions regarding
our existing engagements and to identify opportunities to foster increased inclusivity. Since October 2018, we have been working
with various stakeholder groups to develop and implement site-specific stakeholder engagement plans. During 2020, we started
the programme of engaging with host communities and partnering with non-governmental organisations (NGOs) to undertake
social-mapping exercises. These have not yet been completed due to the prevailing Covid-19 circumstances. We will resume
with these earlier in the next financial year, enabling us to be more responsive to specific community needs and to inform the
development of sustainable impact programmes for beneficiary communities.
In the table below, we identify those stakeholder groups that have a substantive impact on our ability to create value, briefly 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.
EMPLOYEES
Provide the capability, experience and innovation required to deliver on our business strategy
Eat Well
Live Well
How we engage employees
› CEO engagements
› Virtual and face-to-face executive
leadership engagements
› Internal website
› ROAR App specifically designed
for employee communication and
engagement
› Digital communications
› Employee hotline
› Site engagements
› One-on-one consultations
› Focus groups.
What is important to
employees
› Talent and career management
› Rewards
› Strong internal engagement
› Cross-functional teamwork and
collaboration
› Diversity, inclusion and equity
› Recognition and feedback
› Work-life balance and wellbeing
› Opportunities to innovate and
challenge the status quo.
Responding to employee interests (pg 45)
› Our people strategy and operating model seeks to
address each one of our employee issues directly
› Employee feedback is solicited through our Voice of
Tiger engagement and employee experience survey
and pulse which is conducted across all our sites in
six languages
› Specific actions to address key feedback areas
› Fit-for-purpose people processes focusing on talent,
capability development, leadership, rewards,
wellbeing, engagement and culture
› Our THRIVE employee wellbeing programme directly
supports employees and their families by proactively
managing their physical, emotional and mental
wellbeing.
CUSTOMERS
Our retail and wholesale customers provide consumers with ready access to our product
How we engage customers
› Top-to-top meetings
› Category presentations to
provide customers with
category insights
› Growth workshops to ensure
plans are in place a quarter in
advance
› Business forums
› Joint business planning.
What is important to
customers
› Trading terms that are fair and
equal
› Stock availability
› Competitive pricing
› Continuous promotional support.
Responding to customers interests (pg 43)
› Various customer engagements undertaken to
ensure clarity on expectations, including through
jointly developed business plans
› Various innovations undertaken to ensure we
continue to win at the point-of-sale (POS)
› Differentiated promotions based on basket
associations, including value promotions to meet
consumer needs in a tough economy.
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OUR STRATEGY
DELIVERING ON OUR PURPOSE
Tiger Brands is one of Africa’s largest listed manufacturers of FMCG. Our core business is the
manufacture, marketing and distribution of everyday branded food and beverages. Our products
are relevant across every meal occasion and are well positioned to grow. The portfolio also
includes leading brands in the home and personal care segments and we have a growing
presence in Africa.
DELIVERING ON OUR PURPOSE: OUR STRATEGY
MEET THE NEEDS
OF THE
CONSUMER
OPTIMISE OUR
SUPPLY CHAIN
› Value
› Health and nutrition
› Snacking
› Sustainability.
› World-class factories
› Seamless logistics
› Advanced
procurement.
BUILD A GROWTH
PIPELINE
IGNITE
OUR PEOPLE
› Leadership, capability
and culture.
› Innovation enablement
› Adapt to evolving
channels
› Future-proof our
categories
› Restage the Rest of
Africa.
BE OBSESSED
ABOUT COST
SAVINGS AND
EFFICIENCIES
› Supporting systems
› Revenue growth
management
› Cost benchmarking
and zero-based
budgeting
› Continuous
improvement.
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
PERFORMANCE
SUMMARY 2021
✓ Driven value-for-money
innovations in certain
categories to meet more
affordable price points
✓ Introduced new healthier
product lines in the Snacks,
Baby and Personal Care
categories, and relaunch of
a lower calorie drinks
product, with further
significant launches
imminent in health and
snackification
✓ 25% reduction year-on-year
in consumer complaints
✓ In the interest of public
health, implemented a
product recall after
identifying a defect in
supplied cans
✓ R14 billion BBBEE supplier
spend
✓ R6 billion on black-owned
enterprises
✓ Strengthened investment
in community food and
nutrition during pandemic.
MEET THE NEEDS
OF THE
CONSUMER
To protect and enhance our brand leadership, and to realise growth
opportunities in a post-Covid-19 operating context, we are implementing
measures to meet and beat the current and anticipated needs of
our consumers. We are delivering market-leading consumer relevant
solutions to meet the needs of the value conscious consumer, to realise
commercial opportunities in health, nutrition and snackification, and to
respond to changes in in-store shopping dynamics and heightened
consumer sensitivity to sustainability issues.
MEETING THE GROWING NEEDS OF THE VALUE-CONSCIOUS
CONSUMER
We recognised that to effectively meet the needs of the value-seeking consumer,
we needed to take a combination of deliberate steps to be successful and deliver
explicit value in price points as well as the total value equation. Last year, the
board approved a clear value-trend strategy for the business, with three key focus
areas: driving our relevance in the value segment by building the clear benefits of
our current brands through marketing and communication best practice; driving
innovation and renovation to meet value-specific consumer needs; and identifying
and delivering commercially viable opportunities to manufacture private label
products to our benefit.
Although we have made some progress this year in each of these focus areas,
this has not yet had a material impact on business performance, with many of
the initiatives only landing in the last quarter. In addition to a recent value-led
marketing campaign, we have driven value-for-money innovations in certain
categories to meet more affordable price points, including new value packs in
bread, chutneys, KOO (canned food), and in Personal Care categories. Given the
continued growth in the sale of private label products in South Africa, including in
some of our priority product categories, this year we have defined clear guidelines
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OVERVIEW OUR BUSINESSOUR OPERATING CONTEXTOUR STRATEGYOUR PERFORMANCEOURGOVERNANCEADMINISTRATION Meet the needs of the consumer continued
around engagement with customers in this regard, clarified the
private label manufacturing decision-tree, and identified some
specific private label manufacturing opportunities in key
categories with relevant customers.
Next year we should see the positive outcomes of this year’s
projects, and we have plans for additional innovations and
initiatives in the value space. Delivery of these initiatives will be
aided by the accelerated rollout of revenue management aimed
at optimising promotional activity, cost savings projects that
help keep prices competitive, and our strategy for competing
effectively in the deep discounter channel (see page 48).
REALISING THE COMMERCIAL OPPORTUNITIES
IN HEALTH AND NUTRITION
As Africa’s biggest food company our health and nutrition
agenda is integral to our corporate purpose to nourish
and nurture more lives every day.
We believe that there are valuable opportunities for business
growth in leading the health and nutrition agenda in South
Africa and across the continent. We are looking to realise
these commercial opportunities through our health and
nutrition strategy. The strategy has been in play for more than
18 months and remains particularly relevant given the state
of nutrition in South Africa, as well as pending labelling and
marketing regulations. We have recently revised the strategy to
include a focus on commercialisation in a bid to drive stronger
awareness and actions in favour of this portfolio of products.
RESPONDING TO THE SNACKIFICATION TREND
Earlier this year we commissioned comprehensive proprietary
research on snacking trends in South Africa; this research
supports global statistics that indicate that snacking is on
the rise, particularly among younger consumers. Through
qualitative and quantitative assessments, we have identified
and sized five target platforms, and agreed an ambitious
strategy to realise the growth opportunities in this trend. We
are targeting this potential through our innovation pipeline, and
through potential inorganic growth opportunities. Among other
initiatives, we have launched the Black Cat brand (in countline
bars and slabs) as our third power brand, joining Jungle
Energy and TV Bar.
ENHANCING SUSTAINABILITY THROUGH
IMPROVED ESG PERFORMANCE
Our sustainable future strategy supports delivery on our
core purpose, communicates our forward-looking approach
to sustainability, and orients the business towards improved
ESG performance. The strategy addresses our most material
ESG impacts, and articulates our societal value-proposition
through our commitments to protecting and creating social,
economic, and environmental value.
The strategy includes four key focus areas:
› Renovating our existing product range to make more
of our products compliant with our “Eat Well Live Well”
standards, while striving towards global best practice
› Innovating within our existing brands and through new
brands to develop more nutritious, affordable food
products
› Educating consumers, in partnership with government,
academia and NGOs, in a manner that allows them to
make better informed decisions about their wellbeing
› Commercialising our portfolio to drive growth.
We made some progress this year in delivering on this strategy,
particularly in the education area with the launch of the second
Eat Well Live Well State of Nutrition in South Africa report. We
launched new healthy product lines in the Snacks, Baby and
Personal Care categories, relaunched a lower calorie drinks
product and introduced clear and simple consumer relevant
health claims in various brands. Looking to the year ahead,
our innovation pipeline programme is focused on filling this
territory; while several renovations are underway, we anticipate
this to become a more active space as the front of pack
labelling regulations become firmer.
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FINANCIAL REVIEW
“ Cash generated from operations
increased by 34% to R4,0 billion. This
included an overall improvement in
working capital requirements despite the
group’s conscious decision to increase
inventory levels across the portfolio in
anticipation of Covid-19 related and
other supply chain disruptions.“
Deepa Sita
Chief financial officer
Total revenue from continuing operations (excluding
the product recall and civil unrest) increased by 5%,
underpinned by price inflation of 7%, which was partially
offset by an overall volume decrease of 2%. As a result
of the costs related to the product recall and civil unrest,
operating income from continuing operations1 declined
to R2,2 billion from R2,5 billion the previous year, with
gross margin and operating margin declining to 28,5%
(2020: 30,1%) and 7,2% (2020: 8,3%), respectively. In
addition, naked margins came under pressure due to the
high level of agricultural commodity cost push not being
fully recovered in selling prices. However, this was offset
by a steady improvement in manufacturing efficiencies,
resulting in a marginal improvement of overall gross
margins (excluding the product recall and civil unrest)
to 30,3% from 30,1% in the prior year. Operating income1
(excluding the product recall and civil unrest) increased
20% to R3 billion.
The impairment charge in the current period of R154 million
relates primarily to property, plant and equipment in the
Deciduous Fruit business.
Net financing costs for the year amounted to R54 million
(2020: R97 million), benefiting from lower interest rates and
lower average debt levels, due primarily to improved debtor
collections. A foreign exchange loss of R9 million was recorded
due to the significant strengthening of the rand against other
major currencies during the year under review. This negatively
impacted the translation of foreign currency cash balances,
relative to a net foreign exchange profit of R40 million reported
last year.
Income from associates decreased by 2% to R346 million
despite an improved performance from all three associate
companies in local currency. National Foods’ reported
outcome, which has been accounted for in line with
IAS 29 Financial Reporting in Hyperinflationary Economies
was adversely impacted on currency translation. As previously
reported, Tiger Brands disposed of its 49% shareholding in
UAC Foods effective 1 September 2021. The loss on sale of
UAC amounted to R11 million.
The effective tax rate before impairments, non-operational items
and income from associates, declined from 32,0% to 29,1%,
largely due to an increased benefit in respect of special
investment allowances claimed on qualifying capital projects in
the current year as well as lower non-tax deductible expenditure.
Earnings per share (EPS) from continuing operations increased
by 21% to 1 070 cents (2020: 886 cents), while headline
earnings per share (HEPS) from continuing operations
declined by 6% to 1 127 cents (2020: 1 196 cents).
EPS from total operations increased by 87% to 1 142 cents
(2020: 612 cents), and HEPS from total operations increased
by 20% to 1 127 cents (2020: 940 cents).
The relatively higher rates of increase
in EPS from total and continuing
operations, compared to the year-on-
year percentage changes in HEPS,
are primarily due to the significant
impairment charges of R603 million
recorded in 2020, all of which related to
continuing operations. These impairment
charges were excluded from the
calculation of HEPS. The increase in
HEPS from total operations is primarily
due to the losses recorded in Value
Added Meat Products (VAMP) in 2020
compared to a small profit in the year
ended 30 September 2021. Consistent
with the previous year, VAMP has been
treated as a discontinued operation.
The total after tax profit for the year from
discontinued operations amounted to
R120 million (2020: R453 million loss).
This primarily relates to the release of
foreign currency translation reserves
following the closure of Deli Foods as
well as profit on the sale of trademarks,
property, plant and equipment at Deli
Foods and VAMP.
SEGMENTAL OPERATING
PERFORMANCE
Domestic revenue in the second half
was adversely impacted by volume
declines across the Grains portfolio,
Groceries and Snacks & Treats,
compounded by lower overall price
inflation relative to the first half. Despite
the muted second half growth, Domestic
revenue for the year increased by 5% to
R27,6 billion, driven by price inflation of
8% which was marginally offset by
overall volume declines of 3%. The
effective containment of costs together
with an improvement in production
efficiencies, resulted in positive operating
leverage, with Domestic operating
income1 (excluding the product recall
and civil unrest), increasing by 19% to
R2,9 billion.
Total revenue for the Exports and
International businesses increased by
7% to R3,6 billion. This was primarily
attributable to a strong start to the year
as our Exports division resumed trade
in Nigeria following resolution of the
trademark dispute with a former
distributor. The second half, however,
proved challenging for Exports, the
Deciduous Fruit business, as well as
our operation in Cameroon. Operating
income for the year reduced by 7% to
R96 million as a result of increased
losses in Deciduous Fruit.
Further details of the performance of
our operations are provided in our
operational review.
SEE PAGE 50.
CASH FLOW AND CAPITAL
EXPENDITURE
Cash generated from operations
increased by 34% to R4,0 billion. This
included an overall improvement in
working capital requirements despite the
group’s conscious decision to increase
inventory levels across the portfolio in
anticipation of Covid-19 related and
other supply chain disruptions. The
group ended the year in a strong net
cash position of R2,2 billion (2020:
R1,8 billion). Total capital expenditure
increased 8% to R1,0 billion, with
replacement capex amounting to
R762 million (2020: R659 million) and the
balance relating to expansionary projects.
For the year under review, ROE increased
to 12,7% from 9,0% last year. Similarly,
ROIC improved to 12,1% from 11,2%
relative to the WACC of 12,2%
(2020: 12,8%). The year-on-year
improvement in both metrics was driven
by higher after-tax earnings. RONA
decreased to 19,3% from 21,1% due
to increased capital expenditure,
compounded by the adverse impact
of the product recall and civil unrest on
operating income. Excluding the cost of
the product recall and civil unrest, ROE,
ROIC and RONA increased to 16,1%,
15,3% and 25,7%, respectively.
CLASS ACTION UPDATE
As previously reported, the awaited
subpoena appeal relating to the request
by the company for various third parties
to provide epidemiological information
required for the Class Action lawsuit
was finally heard by the Supreme Court
of Appeal on 5 November 2021.
Judgment is not expected to be handed
down before the end of this calendar
year. The parties continue to attend to
pre-trial preparations, including discovery
in terms of the Rules of the Court.
FINAL ORDINARY DIVIDEND
The board declared a final ordinary
dividend of 506 cents per share for
the year ended 30 September 2021.
This, together with the interim ordinary
dividend of 320 cents per share, brings
the total dividend for the year to
826 cents. In light of the company’s
ungeared balance sheet and strong cash
generation, this year’s total dividend was
calculated on adjusted headline
earnings. Consequently, HEPS was
adjusted to exclude the impact of the
product recall and the civil unrest, which
took place in July this year. The
company’s dividend policy of 1,75x
cover has therefore been applied to
HEPS after the aforementioned
adjustments.
Shareholders are referred to the
accompanying dividend declaration
for further details.
SEE PAGE 83.
OUTLOOK
We expect the constrained consumer
environment to negatively impact
demand, while global supply chain
constraints may spill over into the
domestic environment. Against this
backdrop, we are encouraged by the
meaningful progress made in terms of
optimising our supply chain and driving
cost saving initiatives, all of which are
expected to gain momentum.
Our long operating history and portfolio of
strong brands, coupled with our ongoing
focus on leveraging continuous
improvement opportunities, position us
well to deliver an improved overall
performance in the year ahead.
APPRECIATION
I wish to thank Noel and my colleagues
on the executive committee, the audit
committee and the board for their
support and guidance during my first
year as CFO. I also wish to thank the
finance department who continuously
strive to deliver best practice and
improved disclosure. Finally, thank you
to our shareholders for their investment
and meaningful engagement.
Deepa Sita
Deepa Sita
Chief financial officer
18 November 2021
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1 Before impairments and non-operational items
1 Before impairments and non-operational items
OVERVIEW OUR BUSINESSOUR OPERATING CONTEXTOUR STRATEGYOUR PERFORMANCEOURGOVERNANCEADMINISTRATION
Price increases coupled with improved efficiencies resulted
in operating income in Other Grains increasing significantly
to R353 million (2020: R114 million).
54%
2020: 56%
Mill Bake
REVENUE BY
SEGMENT
● 54%
● 6%
● 7%
● 9%
● 4%
● 20%
6%
2019: 54%
2020: 6%
2019: 6%
7%
2019: 7%
2020: 7%
2019: 9%
2019: 4%
9%
2019: 18%
2020: 9%
Breakfast
(Jungle)
Mill Bake
Breakfast
Sorghum
Sorghum-
based products
Pasta
Mazie
Maize
Rice
4%
2020: 4%
20%
2020: 18%
Pasta
Rice
Revenue in Other Grains increased by 13% to R4,5 billion,
comprising price inflation of 15% and an overall volume decline
of 2%. Despite the impact of the civil unrest on the Rice
business, its timely return to normal operations helped to
ensure that it sustained its strong first half performance. As
a result, the Rice business delivered a strong year-on-year
improvement, underpinned by higher selling prices and sound
cost management. Following muted revenue growth in the first
half, Pasta volumes benefited as consumer behaviour favoured
the category. Improved demand coupled with strong in-store
execution resulted in Fatti’s & Moni’s gaining market share.
Although growth in its core oats offering was sustained in the
second half due to a successful winter campaign, an adverse
mix impacted Jungle’s overall second half performance.
Nonetheless, Jungle achieved a pleasing full-year performance.
OPERATIONAL REVIEW
GRAINS*
PERFORMANCE SUMMARY
Maize recovers in the second half to deliver positive
full year result
Consumer-centric innovation: Albany Xtra loaf, Tinkies
mini value pack and Golden Cloud carrot cake mix
Revenue in Other Grains increases to R4,5 billion
Fatti’s & Moni’s gains market share
Adverse bread category dynamics persist; Albany
holding its premium; focus on volume share recovery
Sorghum-based products experienced difficult year
STRATEGIC OUTLOOK
Our vision is to remain a leader in Milling and Baking.
Our identified priorities over the medium term are to lead
innovation and continue to build on our brand purpose
that effectively differentiates Albany, while focusing on
enhanced supply chain efficiencies. We will also be
investing in maintaining superior route-to-market
execution. In other segments of Milling and Baking we
will seek to differentiate the brands, strengthening their
visibility as tasty, quality nutrition, with strongholds
developed and maintained in targeted geographies.
In the ready-mix category, we aim to continue to lead
the market, while driving value propositions through
innovation. In Other Grains, we will maintain our market
leadership through differentiated communication,
purpose-driven campaigns and targeted pricing, while
expanding into adjacent products and categories and
innovating to capitalise on growing trends in health and
wellness, on-the-go, convenience and value. This will be
supported by realising further manufacturing and supply
chain efficiencies by improving overall equipment
effectiveness and maintaining improved quality-
management practices.
* Excludes civil unrest
FINANCIAL HIGHLIGHTS
+5%
REVENUE
+11%
OPERATING INCOME
R14,6 billion
R1,4 billion
(2020: R13,9 billion)
(2020: R1,2 billion)
OPERATING MARGIN
9,4%
(2020: 8,9%)
Revenue increased by 5% to R14,6 billion, reflecting price
inflation of 10%, while overall volumes declined by 5%. Our
ability to pass through some input cost inflation, combined with
cost savings across the segment, resulted in operating income
increasing by 11% to R1,4 billion and the operating margin
expanding to 9,4% from 8,9% in the prior year.
After a strong start to the year, Milling and Baking
experienced a challenging second half, driven predominantly
by Bakeries and Sorghum-based products. Revenue from
Milling and Baking increased by a muted 2%, as average price
inflation of 8% was mostly offset by an overall volume decline
of 6%. Operating income declined by 9% to R1,0 billion.
Maize enjoyed a strong recovery in the second half. Despite
a year-on-year volume decline, primarily due to increased
in-home consumption last year, margins improved in the
second half, resulting in a positive performance for the year.
The wheat-to-bread value chain continued to experience
margin compression because of adverse category dynamics,
with deep discounting in the market remaining prevalent.
Higher selling prices were more than offset by the impact
of reduced volumes. In addition to higher than expected
electricity and fuel costs, lost sales and increased expenses
caused by the civil unrest in KwaZulu-Natal, further negatively
impacted performance. Sorghum-based products experienced
a particularly difficult year as a result of higher conversion and
distribution costs, which was compounded by lower sales
volumes as competition intensified.
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>< PEOPLE STRATEGYOVERVIEW OUR BUSINESSOUR OPERATING CONTEXTOUR STRATEGYOUR PERFORMANCEOURGOVERNANCEADMINISTRATION
Remuneration and performance continued
› 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
GROUP PERFORMANCE FACTOR
(0 to 200%)
=STI
Annual
TRP
(GP)
X
On
target
%
X
BUSINESS UNIT
PERFORMANCE FACTOR
(0 to 200%)
INDIVIDUAL PERFORMANCE
(0 to 200%)
EBIT THRESHOLD GATEKEEPER
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
In FY22 the following ranges of STI awards will apply to the
various categories of people covered by this report:
On-target
percentage
of guaranteed
package
%
Maximum of
on-target
percentage
%
CEO, CFO and
executive directors
Executive committee
members
Other participants
(Paterson grades CU
to E band)
60
60
8,5 to 50
200
200
200
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 FY22 that will be
applied to the CEO, CFO, executive directors, executive committee members and other participants.
Strategic objective
Strategic
objective
weighting
Growth*, **
65%
Efficiency*, **
10%
Key performance
indicator
Sales volume growth
Brand health
Innovation
EBIT
Overall Equipment
Effectiveness (Factor
in Waste)
People and
sustainability*
Quality
25%
Safety (LTI)
Leadership positions
filled internally
Key
performance
indicator
weighting
10%
7,5%
7,5%
40%
5%
5%
10%
10%
5%
Threshold
score = 50%
On-target
score = 100%
Stretch
score = 200%
92%
98%
92%
95%
100%
100%
100%
100%
108%
105%
108%
105%
Improvement in Overall Equipment
Effectiveness year-on-year
80%
Material Usage Variance (R’m)
85%
100%
100%
103%
Reduction in complaints (consumer call line)
year-on-year
12%
10%
15%
120%
Reduction in lost-time injuries year-on-year
46%
40%
50%
50%
54%
60%
* 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, represent the targeted percentage achievement of the underlying budgeted amounts.
The group, business unit and individual performance weightings applicable to the various employee categories are detailed below:
Business
unit
Individual
0%
0%
20%
20%
20%
Employee category
CEO, CFO and executive directors
Executive committee members
Group
80%
80%
Other participants (Paterson grades CU to E band)
0% to 40% 40% to 80%
LTI
Description
We have aligned our LTI to our reward approach and operating model, taking into consideration the following principles:
› Strengthen our ability to competitively attract and retain talent to enable the execution of our business strategy
› Align Tiger Brands’ management’s performance to our long-term strategy and, in particular, to unleashing the power
of our people objective
› Employees in Paterson grade D and above may be eligible to participate in the annual awards of the LTI.
The table below provides further details regarding the performance and restricted shares awarded under the LTI plan (LTIP):
Performance shares
Restricted shares
Instrument
Employee category
Award
mechanism
CEO
CFO
Executive committee members
Senior management and below
Performance
shares
multiple
81,3%
81,3%
61,0%
10,6% to
27,7%
Employee category
Restricted
shares multiple
CEO
CFO
Executive committee members
–
–
–
Senior management and below 14,5% to 22,9%
Performance
multiplier
Calculation of
award quantum
Vesting
Performance
conditions
applicable to
performance
shares
› 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% and applied on award.
› (GP x performance share multiple/share price)
› (GP x restricted share multiple/share price)
x performance multiplier.
x performance multiplier.
› Three-year vesting based on anniversary
› Three-year time-based vesting based on anniversary
of award.
of grant.
HEPS growth (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.
Share price
The measurement will be the average ROIC over the three-year vesting period.
Linear vesting to apply between threshold and stretch.
› Based on the VWAP for a Tiger Brands’ share calculated for the 10-trading day period ending immediately
prior to the date of award/grant.
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> CPI + rate of growth in GDP (measured
Average ROIC measured
over three, four and five
years for each one-third
tranche
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
50% ROIC < WACC +1% No vesting
ROIC = WACC +1% 25% vesting
ROIC > WACC +1%
but < WACC +2%
ROIC = > WACC
+2%
Pro rata vesting on a linear scale
100% vesting
HEPS: Headline earnings per share.
ROIC: Return on invested capital (after tax).
For SARs allocated in December 2016, September 2017 and
December 2017, the performance vesting condition is as
follows:
Metric
HEPS
Weight
0%
vesting
Maximum
100%
vesting
100% CPI and below
CPI +GDP
Bonus-matching shares
The practice of granting restricted shares in the form of
“bonus-matching shares” (which were linked directly to the
achievement of an STI in the previous financial year) was
discontinued as from FY19 (with the last grant of bonus-
matching shares made on 6 December 2018). All previous
grants of bonus-matching shares will continue to vest in
accordance with the rules of the LTIP.
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).
Vesting takes place on the third anniversary of the date
of grant. No performance conditions are applicable.
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, i.e. 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
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 2021, the aggregate number
of shares that may be acquired by participants under the
various schemes was 2 634 230 (2020: 2 728 933), which
represents approximately 1,4% of the number of issued
ordinary shares. This is in line with JSE regulations.
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. In the case of the CEO,
the target is 200% of guaranteed package while the target for
executive directors and 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.
Exemption from compliance with the minimum
shareholding requirements
In the case of the minimum shareholding requirement not
being met, the board retains the overriding discretion to:
› Vary the minimum shareholding level or extend the
determination date for an individual executive or the
executives as a whole. This will only be allowed to apply in
exceptional circumstances considered as “business unusual”
› Determine that an executive has complied with the policy
even if the number of shares held by an executive does not
meet the minimum shareholding requirements. Such an
exemption will only be allowed in exceptional circumstances
where compliance will result in severe financial difficulty for
an executive or prevent an executive from complying with
an order of a court of law.
MALUS AND CLAWBACK
A malus and clawback 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 (i.e. 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 and dishonesty
› Negligence or material breach of obligations to the company
› Deliberate harm to the company’s reputation
› 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 on page 72, it should
be noted that:
› STI represents the cash component of short-term
performance
› LTI represents the total award of performance vesting
shares.
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