Tiger Brands Ltd
Annual Report 2023

Plain-text annual report

INTEGRATED ANNUAL REPORT 2023 for the year ended 30 September 2023 NOURISH AND NURTURE MORE LIVES EVERY DAY Who we are 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, supported by a growing presence in Africa. OUR VISION To deliver top-tier financial results and be recognised by all stakeholders as the pre- eminent FMCG company in South Africa and the most desirable growth company on the continent. OUR PURPOSE We nourish and nurture more lives every day. Our strategy Our strategy for sustainable profitable growth is supported by six strategic pillars, underpinned by our core values. Meeting the needs of the consumer Being obsessed about cost-savings and efficiencies Investing in a sustainable future Contents OVERVIEW About this report Our value contribution in 2023 Our footprint OUR BUSINESS Group profile Our board Our executive committee Chairman’s review Chief executive officer’s statement Our business model How we sustain value Our key relationships OUR OPERATING CONTEXT Our operating environment Material risks and opportunities OUR STRATEGY Strategy overview 1. Building a growth pipeline 2. Meeting the needs of consumers 3. Optimising our supply chain Building a growth pipeline Optimising our supply chain Igniting our people 5. Igniting our people 4. Being obsessed about cost-savings and efficiency 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 Empowered accountability Teamwork Focused execution 6. Investing in a sustainable future OUR PERFORMANCE Chief financial officer’s review Operational review Grains Consumer Brands Home and Personal Care Exports and International GOVERNANCE Governance Remuneration and performance Company information 2 4 6 10 12 15 18 20 22 24 28 32 37 43 44 48 50 53 55 58 62 65 65 66 68 69 70 75 IBC TIGER BRANDS’ 2023 INTEGRATED REPORTING SUITE Our 2023 integrated reporting process comprises the following reports: INTEGRATED ANNUAL REPORT 2023 Provides a succinct review of our strategy and business model, operating context, operational performance, and governance. Aimed primarily at existing and potential investors and providers of capital, it is written for use by all parties who have an interest in Tiger Brand’s long-term performance. ANNUAL FINANCIAL STATEMENTS 2023 ANNUAL FINANCIAL STATEMENTS 2023 Comprehensive review of our financial results, with audited financial statements, prepared in accordance with IFRS accounting standards. T I G E R B R A N D S A N N U A L I I F N A N C A L S T A T E M E N T S 2 0 2 3 NOURISH AND NURTURE MORE LIVES EVERY DAY SUSTAINABILITY REPORT 2023 Reviews our performance in managing our most significant impacts on people, society and the environment (impact materiality), and in addressing the significant sustainability-related risks and opportunities that could reasonably be expected to affect cash flows, access to finance, or cost of capital over the short, medium or long term (financial materiality). These reports are all available at www.tigerbrands.com. HOW TO NAVIGATE THE REPORT Reference to further online disclosure Further reading in the sustainability report Jump to page within document 1 Page headerTiger Brands Limited Integrated annual report 2023www.tigerbrands.comOverviewGovernanceOur performanceOur strategyOur operating contextOur business About this report Report audience and purpose Tiger Brands’ integrated report (IR) is our primary annual report in our annual reporting suite. The IR is written mainly for existing and potential investors and providers of capital who have an interest in Tiger Brands’ capacity to create value over the short, medium and long term, and who are assessing whether to provide resources to the company. Although this report will be of interest to a broad range of interested parties – including customers, government and regulators, current and prospective employees, civil society organisations and the media – the primary purpose of this report is to inform the decisions of report users relating to the provision of resources to the company. By providing a frank review of our business model and strategy, the risks and opportunities in our operating environment, and our governance activities and performance for the financial year ending 30 September 2023, the report is intended to help report users assess whether Tiger Brands is a good long-term investment. The IR should be read in conjunction with our sustainability report (SR) and our audited annual financial statements (AFS), available on our website: www.tigerbrands.com. Noting the growing call from investors and analysts for Reporting frameworks The reporting process across our reporting suite complies with the following regulatory requirements: › South African Companies Act, 71 of 2008 (as amended) › JSE Listings Requirements › The company’s memorandum of incorporation › King IV™ Code on Corporate Governance™ for South Africa, 2016 (King IV™) › The International Financial Reporting Standards (IFRS) accounting standards, developed and maintained by the International Accounting Standards Board (IASB) Our reporting has also been informed by the following disclosure standards and frameworks: › The GRI Sustainability Reporting Standards › The IFRS sustainability standards recently released by the International Sustainability Standards Board (ISSB): IFRS S1 General Requirements for Disclosure of Sustainability- related Financial Information and IFRS S2 Climate-related Disclosures › The Processed Foods Sustainability Accounting Standard issued by the Sustainability Accounting Standards Board (SASB) › The JSE Sustainability Disclosure Guidance and JSE Climate Disclosure Guidance transparent, reliable and comparable ESG data, we have also made provision for the disclosure expectations of relevant ESG rating agencies. 2 Our approach to materiality In response to recent developments in global disclosure standards and frameworks, we have adopted “double materiality” across our reporting suite. Financial materiality: Our IR provides information on those matters that are likely to influence report users’ assessment of Tiger Brands’ future cash flows over the short term (less than 12 months), medium term (one to three years) and long term (beyond three years). Our AFS reflect the effects on company value and cash flow that have already taken place at the time of the financial year end. Impact materiality: Our SR provides disclosure on the most significant impacts of our operations and activities on people, society and the environment over the short, medium or long term; this includes impacts caused by the company in its own operations, products or services, as well as the impacts directly linked to Tiger Brands’ upstream and downstream value chain. We have also made provision in the SR for financially-material ESG risks and opportunities impacting the business, thus adopting a “double materiality” perspective for our sustainability report. Our materiality process To identify the issues for inclusion in our IR and SR, we ran an independently facilitated materiality workshop in which management representatives from across the company considered the following issues: Our business model – reviewing Tiger Brands’ significant revenue and cost streams and areas for differentiation and identifying our most important resources and relationships across our value chain, including specific resources and relationships we depend on for capital value retention and growth. Our dependencies and impacts on the capitals – reviewing where we have the most significant dependencies and impacts (positive and negative, direct and indirect) on each of the capital stocks. Our operating environment – identifying the most important trends in our operating environment, including relevant sustainability-related risks and opportunities that we anticipate will impact our performance over time, and reflecting on the outcomes of our latest internal risk assessment process. Our stakeholders’ interests – reviewing the matters of greatest interest to our stakeholders and providing for the latest developments in global disclosure standards and for the outcomes of recent assessments of relevant ESG rating agencies and internal board discussions. Our strategy – reflecting on the robustness of our strategy to ensure Tiger Brands’ long-term resilience is informed by the above analysis. The outcomes of this internal materiality process informed the content and structure of our IR and SR. We prioritised the matters for inclusion in these reports based on their relative importance, applying the principle of double materiality. Our aim is that all the information in the IR is material, in that it should be reasonably capable of influencing the decision of any report user wishing to make an informed assessment relating to the provision of resources to the company. Our IR is structured in a manner to enable such an assessment, by providing information on: our business ( pages 10 to 26), our operating context ( ( pages 43 to 58) and our governance ( most significant risks impacting value ( with the key trends in our operating environment ( of material issues. page 32) are often seen as constituting a discrete set pages 32 to 41), our strategy pages 70 to 96). The page 37), together These risks and trends are not sufficient to inform report users’ assessments of value creation; hence we have chosen once again not to list a separate set of material issues. Report boundary 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 considered the most significant risks, opportunities and impacts associated with our own operations, as well as with the activities directly linked to Tiger Brands’ upstream and downstream value chain. Combined assurance Combined assurance refers to the incorporation of all assurance services and activities to optimise our risk and governance oversight function within our risk appetite. All assurance providers co-ordinate efforts and reporting, ensuring alignment of governance and risk activities with the company strategy and improved business performance. The audit and risk and sustainability committees of the board are responsible for overseeing the effectiveness of combined assurance arrangements within the organisation, directing the effort of the three lines of assurance: › First line of assurance: All levels of management – covering strategy development and implementation, performance measurement, risk management, and company control and monitoring of assurance to laws and regulations › Second line of assurance: Corporate functions and oversight forums (such as the company secretariat, compliance function, combined assurance forums, operational audit and risk committees) – all risk and assurance management structures of the company such as risk management, compliance and legal services › Third line of assurance: Internal audit, external audit and other assurance providers who are independent of the operational activities of the company and provide assurance to the board. This year, Deloitte & Touche audited our consolidated and separate annual financial statements, from which extracts have been included in this report. The auditor’s report does not report on the information included in this integrated report. EmpowerLogic (Proprietary) Limited provided external verification of our B-BBEE activities. Marsh South Africa conducted risk control audits at our manufacturing sites and warehouses1, covering health, safety, security, fire protection and readiness Board approval As members of the Tiger Brands board, we acknowledge our collective responsibility for ensuring the integrity of this report, which was drafted with input from all members of the executive team. The board has applied its collective mind to the preparation and presentation of the information in this report. We believe that the report is presented in accordance with the Integrated Reporting Framework, and that it presents a balanced and fair account of Tiger Brands’ performance, governance practices and operating context for the financial year ended 30 September 2023, as well as an accurate reflection of our strategic commitments. On the recommendation of the audit committee, the board approved the integrated report and the consolidated annual financial statements on 30 November 2023. We invite our stakeholders to review this report and to provide feedback on the company’s performance, strategy and disclosure. Geraldine Fraser-Moleketi Chairman Tjaart Kruger Chief executive officer Donald Wilson Chairman of audit committee 1 Does not include audit disciplines at third-party owned or managed manufacturing and warehousing facilities, with some of these third-party facilities excluded from the programme 3 Tiger Brands Limited Integrated annual report 2023www.tigerbrands.comOverviewGovernanceOur performanceOur strategyOur operating contextOur businessOur value contribution in 2023 The value created, preserved, or eroded for our stakeholders in 2023. FINANCIAL PERFORMANCE DELIVERY OF VALUE BY STAKEHOLDER GROUP Providers of financial capital R1,6 billion paid in dividends (2022: R1,4 billion) Return on equity 15,7% (2022: 18,4%) Return on net assets 21,7% (2022: 27,5%) Return on invested capital 14,7% (2022: 16,4%) Cash generated from operations R2,7 billion (2022: R2,7 billion) Employees R4,5 billion paid in salaries and benefits to 9 296 permanent employees (2022: R4,3 billion to 9 670 employees) R93 million invested in employee training and development (2022: R97 million) One fatality (2022: three) Suppliers R18 billion spend with B-BBEE-verified suppliers (2022: R14 billion) R7 billion spend with black-owned enterprises (2022: R7 billion) R6 billion spend with black women-owned enterprises (2022: R5 billion) What is in it for the consumer? Morvite, the brand that is known of giving South Africans strength is now entering the market with Corn Flakes with added nutrients and the same convenience at an affordable price. Customers (retailers, wholesalers, and general trade) 98% on-shelf availability (2022: 97%) 91% order-fill (2022: 88%) Consumers 31 innovation projects launched this year (2022: 21) 28,4% value share (2022: 28,2%) Expanded our reach in the booming South African informal sector, securing 50 000 general trade stores since inception Four awards in the MMASmarties Award* Fatti’s & Moni’s “Always Eat’alian” TV commercial won a Silver Loerie Award Communities R70 million total socio-economic development spend (2022: R26 million) 14 million breakfasts served by The Tiger Brands Foundation, reaching 74 109 learners (2022: 10 million breakfasts to 74 177 learners) Revenue R37,4 billion 2022: R34,0 billion 10% Group operating income* R3,1 billion 2022: R3,4 billion 9% EPS 1 725cps** 2022: 1 762cps -2% HEPS 1 735cps** 2022: 1 702cps 2% Final dividend 671cps** 2022: 653cps Total dividend 991cps** 2022: 973cps 3% 2% * Before impairments, fair value losses and operational items ** Cents per share Ingram’s Moisture Plus Body Cream on the packaging line at the Tiger Brands Home and Personal Care manufacturing plant in Isando. 4 * Honours for effective modern marketing in South Africa 5 Tiger Brands Limited Integrated annual report 2023www.tigerbrands.comOverviewGovernanceOur performanceOur strategyOur operating contextOur business Our footprint WE CURRENTLY EXPORT OUR PRODUCTS TO 29 MARKETS IN AFRICA SOUTH AFRICA Senegal Côte d'Ivoire Ghana Nigeria Cameroon Ethiopia South Sudan Manufacture Current exports Out of scope* * Botswana, Namibia, Lesotho and Eswatini are serviced by the domestic business Uganda Kenya Democratic Republic of the Congo Tanzania Angola Malawi Zambia Mozambique Zimbabwe Madagascar Namibia Botswana Eswatini Lesotho South Africa Plant Location Randfontein Mill Plant Peanut butter Location Randfontein Plant Davita (Exports – powdered soft drinks (Jolly Jus) and seasoning (Benny)) Location Crown Mines Plant Location Randfontein Bakery Plant Location HPC Isando Plant Location Pasta Isando NC Plant Location Tomato paste Lutzville Bakery Plant Location Pretoria NW L GP Plant Location Potchefstroom Sorghum FS KZN Plant Location Bakery Virginia Bakery and mill Plant Location Pietermaritzburg Plant Location Hennenman Mill Plant Location Ndabeni Pulses Plant Location Ndabeni Jungle Plant Baby unit – jars, pouches, cereals Location Ndabeni Bakery Plant Location Bellville Plant Location Jam Paarl Plant Location Mill Bellville Plant Location Maitland Bakery EC WC Plant Location Deciduous Fruit (LAF) East and West Ashton Plant Location Umzinto Bakery Plant Location Margate Bakery Unit Bakeries Grains Unit Groceries Home and Personal Care Mills Snacks and Treats Beverages Plant Location Musina Tomato paste Plant Vegetable agriculture Location Marble Hall Plant Bakery Location Secunda Plant Consumer unit includes salad, mayonnaise, vegetables and tomato sauce Location Boksburg Plant Location Germiston Bakery Plant Location Sasolburg Bakery Beverages Plant Location Roodekop Plant Bakery Location Durban Snacks and Treats (Mallows and Jellies) Jacobs Plant Location Plant Location Mobeni Tastic Rice Plant Snacks and Treats (Candy and Chocolate) Location Mobeni Own and operate and export to 41 manufacturing units in South Africa and 1 in Cameroon with almost 72% of total export sales from 29 markets in Africa 5 priority markets: Mozambique, Zimbabwe, Zambia, Nigeria and Cameroon 6 7 Tiger Brands Limited Integrated annual report 2023www.tigerbrands.comOverviewGovernanceOur performanceOur strategyOur operating contextOur businessOur investment case Strong brands › With almost 30%* of the grocery basket and 10 Billion Rand Brands, Tiger Brands has leading positions in most categories, and its iconic brands are well-entrenched with consumers in South Africa › Our products provide a solution for every meal occasion and meet consumer needs through a range of daily touchpoints * Source: Circana 12-month moving data to September 2023 Equity rank Volume rank Value rank Equity rank Volume rank Value rank Equity rank Volume rank Value rank #1 #1 #1 #2 #1 #1 #2 #2 #2 Equity rank Volume rank Value rank Equity rank Volume rank Value rank Equity rank Volume rank Value rank #3 #2 #2 #1 #1 #1 #1 #1 #1 Equity rank Volume rank Value rank Equity rank Volume rank Value rank Equity rank Volume rank Value rank Equity rank Volume rank Value rank #1 #1 #1 #3 #4 #3 #1 #1 #1 #1 #1 #1 Refreshed leadership › New CEO with strong FMCG experience, especially in Milling and Baking › Focus on improving organisational effectiveness and delivering improved returns Supportive financial position › Cash-generative operations › Balance sheet flexibility › Ability to invest in capex › Attractive dividend yield at 5,64% Dividend yield (%) 30,88 17,80 5,64 12-month yield One-year dividend growth Three-year dividend growth Source: Bloomberg Positive environmental, social and governance performance › We have made significant progress in delivering on our sustainable future strategy and on our commitments in each of our three strategic focus areas: health and nutrition, enhanced livelihoods, and environmental stewardship › 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 business Through our sustainable future strategy, Tiger Brands is committed to creating opportunities for inclusive economic participation in our value chain. Growth areas Informal market The informal market in South Africa is valued at approximately R150 billion a year. We are pursuing various initiatives to expand our reach in this market and have reached 50 000 stores with the aim to expand our presence to 130 000 stores over the next five years. Stores in South Africa’s informal market are supported by a dedicated team of sales representatives, relevant ranging as well as visible storefront branding. Innovation Innovation should be viewed through the dual lens of both continuous improvement and product innovation. We need to ensure the continuing relevance of our products – informed by an assessment of their cost, taste and overall value proposition. Once we have ensured that the core business remains relevant, we will explore opportunities to introduce new products in our three prioritised growth platforms: driving affordability, democratising health and nutrition, and snackification. Africa We aspire to be a pan-African business with a South African head office. The past year has seen a step change in trajectory for the Rest of Africa business, with Exports reporting a marked improvement across all key metrics, namely volumes, revenue and profitability. This has been driven by the rejuvenation and remodelling of our key distributor model, allowing for improved visibility and availability of our brands. With the foundation stabilised, the business is well-positioned for growth. 8 9 Tiger Brands Limited Integrated annual report 2023www.tigerbrands.comOverviewGovernanceOur performanceOur strategyOur operating contextOur businessGroup profile Our core business is providing everyday branded food to large and growing markets, primarily in South Africa and neighbouring countries. We target best-in- class profitability, underpinned by a cost-conscious culture and a strong commitment to ESG performance. 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 ulti Reg. No. L 7317 Act No. 36 of 1947 'Ns�crs C' Revenue R17,0bn 2022: R15,5 billion Operating income R838m 2022: R1,3 billion Revenue R13,3bn 2022: R12,4 billion Operating income R1,2bn 2022: R1,4 billion Revenue R2,2bn 2022: R1,9 billion Operating income R461m 2022: R308 million Milling and baking › Bakeries › Wheat milling › Maize milling › Sorghum-based breakfast and beverages Other grains › Pasta › Oat-based breakfast › Rice (Jungle) Groceries › Condiments and ingredients › Spreads › Canned fruit and vegetables Snacks and treats › Sugar › Chocolate Personal care › Body care (includes Camphor cream) › Depilatories › Hair care › Deodorant › Hair styling Tiger Brands Food Service Solution (previously Out of Home) › Services professional Home care › Sanitary cleaners › Pesticides kitchens and quick-service restaurants Beverages › Concentrates › Sports drinks › Ready-to-drink Baby › Nutrition and wellbeing S D N A R B P O T 10 Revenue R4,9bn 2022: R4,3 billion Operating income R601m 2022: R350 million International operations › Central Africa (Chococam) Deciduous fruit › Langeberg & Ashton Food (LAF) Exports Revenue Revenue Revenue 46% 36% 6% 12% MARKET SHARE (%) Grains Grains Maize Flour Cereals Rice Dry pasta Bread 9 27 26 20 49 40 30 Consumer Brands Groceries Spreads Condiments Canned fruit and vegetables Snacks and treats Chocolate Candy Health bars Beverages Dilutables Sports drinks Ready-to-drink Baby nutrition 23 14 8 39 33 42 56 57 58 44 43 50 30 Home and Personal Care Home care (Pesticides) Personal care 9 62 Source: Circana 12-month moving to end-September 2023 Operating income Operating income Operating income Grains Consumer Brands Home and Personal Care Exports and International 27% 38% 15% 20% 11 CamphorTiger Brands Limited Integrated annual report 2023www.tigerbrands.comOverviewOur businessGovernanceOur performanceOur strategyOur operating context Our board Our governance framework is designed to support our core purpose in line with the Companies Act, JSE Listings Requirements, King IV™ and other relevant laws and regulations and ensures that Tiger Brands remains a good corporate citizen. The Tiger Brands board comprises a range of corporate and strategic business leadership skills, diversity and independence to appropriately exercise sound judgement and leadership in fulfilling its oversight functions. EXECUTIVE DIRECTORS INDEPENDENT NON-EXECUTIVE DIRECTORS INDEPENDENT NON-EXECUTIVE DIRECTORS EMMA MASHILWANE 48 Lead independent director Appointed December 2016 Emma is co-founder and CEO of MASA Group of Companies, which includes MASA Risk Advisory Services (Proprietary) Limited and MASA Chartered Accountants Incorporated. A seasoned chartered accountant, she has more than 15 years’ experience leading internal audit, external audit and advisory teams at various multi-national companies in the public and private sectors, including logistics, mining, financial services, retail, FMCG, real estate management, healthcare and non-profit organisations. Until 30 September 2023, Emma served as a non-executive director on the boards of Capitec Bank Holdings Limited and Capitec Bank, and as chairman of Capitec Bank’s social and ethics committee. She holds an MBA from Wits Business School, BCom Honours (University of KwaZulu-Natal) and BCompt (UNISA). Area of expertise and contribution › Extensive auditing and finance › Governance and leadership › Corporate finance and banking › FMCG › Risk management Board meeting attendance › 8/9 TJAART KRUGER 63 Chief executive officer DEEPA SITA 46 Chief financial officer Appointed 1 November 2023 Appointed October 2020 Area of expertise and contribution › Strategy execution › Extensive FMCG experience › Culture alignment Board meeting attendance › N/A Area of expertise and contribution › Leadership and strategy › Extensive finance and governance › Risk management › Innovation and IT › Procurement practices › FMCG Board meeting attendance › 9/9 GERALDINE FRASER- MOLEKETI 63 Chairman Appointed September 2020 and as chairman on January 2021 Geraldine serves as chancellor of the Nelson Mandela University, a non-executive director on the board of the Standard Bank Group and Standard Bank South Africa and lead independent director of Exxaro Resources Limited. She is also chairman of the Thabo Mbeki Foundation. She is a fellow of the Institute of Politics at the Harvard Kennedy School and has completed a leadership course at Wharton Business School, University of Pennsylvania. She has been recognised with several awards, including the OP Dwivedi Public Service Award from the International Association of Schools and Institutes of Public Administration, and a special award for outstanding achievement from the University of Pretoria’s School of Public Management and Administration. Area of expertise and contribution › Leadership and strategy › Extensive governance and public › Stakeholder relations and sustainability/ administration ESG leadership Board meeting attendance › 9/9 KEY Nomination and governance committee Social, ethics and transformation committee Risk and sustainability committee Audit committee Remuneration committee C Chairman Investment committee GAIL KLINTWORTH 60 DONALD WILSON 66 LUCIA SWARTZ 65 MAHLAPE SELLO 61 Appointed August 2018 Appointed June 2019 Appointed June 2022 Appointed October 2019 Gail is the co-founder and chair of Savo Project Developers, an advisory and investment facilitation business focused on building a portfolio of sustainable businesses across the African continent. She additionally holds a portfolio of strategic and governance roles with various industries to help drive systemic change to a more sustainable economy. Her formal roles include board advisor to MAS Holdings, member of the supervisory board of Rabobank and chair of the Shell Foundation. Previously, Gail served as the business and transformation director for the global Business and Sustainable Development Commission, as customer and responsible business director for Old Mutual Plc and global chief sustainability director for Unilever (Proprietary) Limited. Earlier, Gail led several Unilever businesses, including as EVP for Unilever’s global savoury category and as CEO of the group’s South African business. She has a master’s degree in Sustainability Leadership from Cambridge University. Donald is an experienced finance executive whose career spans over 20 years working for listed entities with global operations. He retired in 2020 as group finance director of Barloworld Limited, a global industrial company. At Barloworld, he played a strategic role during the unbundling of PPC Limited and the listing of Freeworld Limited. He is a non-executive director of Mpact Limited and Zeda Limited and director of BHBW Holdings (Proprietary) Limited. Donald is a CA(SA). management Area of expertise and contribution › Mergers and acquisitions and stakeholder engagement › Extensive finance and general › Governance and remuneration › Leadership and strategy Board meeting attendance › 9/9 governance Area of expertise and contribution › FMCG – General management and › Stakeholder relations › Brand and reputational management › Innovation and marketing › Extensive sustainability/ESG leadership and strategy Board meeting attendance › 9/9 As an executive and strategic business partner within international corporate and startup operations, Lucia has wide-ranging experience in human resources leadership. She started her career with Reckitt & Colman before joining BP Southern Africa as human resources officer. Following this, she spent eight years at the Seagram Group of Companies as human resources director and later joined Sappi Limited as group head of HR. She also served as the vice president, people at AB InBev Africa Zone. Previously Lucia served as a non-executive director of Clicks Holdings Limited, Zambian Breweries Plc and SABMiller Namibia (Proprietary) Limited. She is currently a non-executive director of Mr Price Group, Santam, Isizwe Advisory Services (Proprietary) Limited and Delta Corporation Limited (Zimbabwe). Area of expertise and contribution › General management and strategy › Extensive human resources › Remuneration policies › Governance and FMCG Board meeting attendance › 9/9 Mahlape is a practising advocate and a member of the Johannesburg Society of Advocates and of the International Court of Arbitration of the International Chamber of Commerce Council. She has been in practice since 2003. She is a panellist with the Arbitration Foundation of Southern Africa and China-Africa Joint Arbitration Centre. She is currently non-executive director of Life Healthcare Group Holdings Limited. Mahlape was appointed a member of the South African Law Reform Commission in 2007, on which she served until December 2011, before being re-appointed in August 2013. She was previously chairman of Murray & Roberts Limited, having been appointed to the board in 2009 and as chairman in 2013. She was chairman of the Advertising Industry Tribunal Appeal Committee of the Advertising Standards Authority of South Africa (appointed in 2013). expertise Area of expertise and contribution › Extensive legal and commercial › General management and leadership › Governance, strategy › Stakeholder relations Board meeting attendance › 9/9 12 13 Tiger Brands Limited Integrated annual report 2023www.tigerbrands.comOverviewOur businessGovernanceOur performanceOur strategyOur operating contextOur board continued Our executive committee INDEPENDENT NON-EXECUTIVE DIRECTORS Our executive committee (Exco) facilitates the effective control and monitoring of the business activities in terms of the delegation of authority framework approved by the board. It is responsible for implementing policies and executing strategies in line with the board’s mandate and ensuring that appropriate internal controls are in place to maintain compliance with relevant laws and best practice. OLIVIER WEBER 60 Appointed August 2020 Olivier is a senior executive with more than 30 years of experience in the food and beverage industry. He is currently director of Marilan Alimentos S.A. (Brazil), Risamar (USA) and Resiter S.A. (Chile). He has held various general management roles, including as president, leading the PepsiCo Food businesses in Latin America (except Mexico). He has specialised in successfully turning businesses around in Latin America and leading M&A activities. Area of expertise and contribution › General management and strategy › Mergers and acquisitions › Governance › Business turnaround and culture transformation › Risks management and marketing and brands › ESG experience Board meeting attendance › 9/9 FRANK BRAEKEN 63 Appointed April 2022 Based in Dubai, Frank has deep FMCG and emerging markets experience, having held various senior and executive roles at Unilever in Eastern Europe, Latin America, Africa and Asia. Other previous roles include executive chairman of Feronia Inc., chief investment officer of Amatheon Agri Holding and a short period at Procter & Gamble. He is currently chairman of MSI International and Baobab International, a non-executive director of Buhler Holdings AG (Switzerland), AECF LLC (USA) and Alliance for a Green Revolution in Africa (Kenya). Area of expertise and contribution › General management and strategy › Mergers and acquisitions › Governance and risk management › FMCG and emerging market › Sustainability/ESG Board meeting attendance › 9/9 MICHAEL AJUKWU 67 Appointed March 2015 Michael is a seasoned business executive who has held leadership roles across various sectors. He is currently non-executive director of International Breweries Plc, a subsidiary of AbInbev, MTN Limited (Nigeria), Novotel Hotels Group, Sterling Bank Plc, chairman of Munica Properties Investment Limited and Mobax Nigeria Limited. Previously, Michael was non-executive chairman of Fenikso Limited. He has an undergraduate degree from the University of Lagos and an MBA from The Leonard N Stern School of Business. Area of expertise and contribution › Stakeholder relations › Risks and general management › Corporate finance › West Africa › Banking and finance › FMCG Board meeting attendance › 9/9 NON-EXECUTIVE DIRECTOR SAM SITHOLE 50 Appointed March 2023 Sam is co-founder and CEO of Value Capital Partners (VCP). Prior to VCP, he held several leadership positions at Brait including executive director: capital and treasury. He was a partner at Deloitte, where he was group leader for the Financial Services Audit Practice in the Johannesburg office. Sam is chairman of Sun International, as well as an alternate director of Metair Investments and Adcorp Holdings and a former non-executive director of Altron. expertise Area of expertise and contribution › Extensive investment and finance › General management and strategy › Mergers and acquisitions › Governance › Stakeholder relations Board meeting attendance › 6/6 TJAART KRUGER 63 Chief executive officer DEEPA SITA 46 Chief financial officer ZAYD ABRAHAMS 46 Chief strategy and marketing officer Appointed November 2023 Appointed October 2020 Appointed January 2023 Tjaart is a CA(SA) with a PMD from Harvard Business School and has more than 30 years of leadership experience garnered from multiple leading South African companies including strong fast-moving consumer goods (FMCG) know-how. He sharpened his career through previous experience as divisional managing director at ICS Foods Limited (today Astral Foods), CEO of Country Bird (Proprietary) Limited, and at Tiger Brands as the managing executive for the Pharmaceuticals and Grains divisions over the period 2001 to 2007. In 2007, Tjaart was appointed as CEO of Afrox Limited where he gained experience in managing a global company with responsibility for operations in six countries. Prior to re-joining Tiger Brands in 2023, Tjaart served as CEO of Premier Foods over the period 2011 to 2021. Deepa joined Tiger Brands from the Massmart Group, where she held the role of vice president: integration and strategy for Massmart Wholesale. Earlier, she served as the interim CEO for the Masscash division. She joined the Masswarehouse division of Massmart as finance director in 2016. In 2018, her portfolio was expanded when she was appointed as finance and commercial director. She is currently a non-executive director of Datatec. Deepa’s previous roles include finance director of Mondelˉez International (responsible for South, Central and East Africa, Israel and Mauritius), finance and procurement director at Entyce Beverages, a division of National Brands (AVI), and senior finance manager at Samsung Electronics. Deepa is a chartered accountant, with an MBA (cum laude) from GIBS. Zayd re-joined Tiger Brands, from FNB, a division within The First Rand Group, where he led the marketing team. He brings broad commercial, marketing, strategy and business leadership experience amassed through leadership roles in companies including Unilever, L’Oréal, Coca-Cola and MTN Group, in global, local, and regional roles across sub-Saharan Africa, Europe, the Middle East and Turkey. He also spent several years running his own business. He has a track record in driving business, brand and category growth, and developing strategy from insights to execution. He holds a BCom degree from the University of KwaZulu-Natal and an MBA from Wits University. 14 15 Tiger Brands Limited Integrated annual report 2023www.tigerbrands.comOverviewOur businessGovernanceOur performanceOur strategyOur operating contextOur executive committee continued Our executive committee represents diversity of knowledge, skills, backgrounds and new perspective, which foster better debate and decision-making underpinned by our values. LUIGI FERRINI 56 Chief customer officer Re-joined the group in October 2009 Exco member since May 2019 Luigi has more than 14 years with Tiger Brands, after re-joining the group in 2009 as customer executive: Grains. He was previously with AVI: National Brands where he held the position of sales director of their Snackworks business. Luigi has more than 27 years’ experience within FMCG, spanning both South Africa and international markets with particular emphasis on sales strategy and execution, customer management and customer relations. THUSHEN GOVENDER 47 Chief growth officer: Consumer Brands POLYCARP IGATHE 51 Chief growth officer: Rest of Africa Appointed May 2021 Appointed December 2022 Thushen re-joined Tiger Brands from Aspen Holdings Limited, where he was group commercial officer responsible for markets including China, Russia and the USA. Prior to this, he played a pivotal role in developing the international strategy of Pioneer Foods with direct responsibility for the global exports business as well as UK and Africa operations. During his previous tenure at Tiger Brands, he played a pivotal role in the execution and development of Tiger Brands’ growth strategy at the time, having held the executive position of group strategy, investor relations and business development. He is a qualified CA(SA) with an MBA from Henley Management College. Polycarp re-joined Tiger Brands in this position, having previously served as managing director for Tiger Brands East Africa business. He brings strong commercial capability as well as marketing, sales, strategy and business leadership experience developed through various leadership roles in companies such as Coca-Cola, Kenya Breweries, Vivo Energy and Equity Bank across the continent. He spent a brief period as the deputy governor of Nairobi and is well-versed in engaging and influencing diverse stakeholders towards a shared outcome. He has a track record of leading high-energy teams that deliver stretch targets, business results, innovation and growth. Polycarp holds a BA (Economics) degree from the University of Nairobi. S’NE MAGAGULA 50 Chief human resources officer Appointed May 2018 S’ne is a seasoned and innovative business leader with a passion and track record for growing high impact teams that deliver results and create sustainable value. Before joining Tiger Brands, she was group senior vice president, human capital for the Sasol Group and has held various human resources leadership positions within Sasol since 2008, both locally and globally. Prior to joining Sasol, she spent 10 years at Shell in various roles in South Africa and the Netherlands. She is a well-rounded and highly experienced human resources executive having a proven track record in business strategy development and execution, global human resources leadership and organisational design. S’ne has an undergraduate degree in social sciences and an MBA from the University of Cape Town. YOKESH MAHARAJ 51 Chief growth officer: Grains Re-joined the group November 2021 Yokesh re-joined Tiger Brands from Mondelˉez where he was president for sub-Saharan Africa. During his previous tenure at Tiger Brands, he was chief growth officer for Exports, International and Consumer Brands. He has a long track record in the FMCG industry and broad experience in working across Africa. Yokesh previously held the position of managing director: Africa at Distell Limited and spent 17 years at South African Breweries (SAB). During his tenure at SAB, Yokesh held the positions of executive director: sales and distribution, executive director: HR, and president of SAB, following the AB InBev acquisition. DEREK MCKERNAN 56 Chief manufacturing officer Appointed July 2020 Exco member since January 2022 Derek is an internationally experienced technical and operations leader with over 30 years of experience in supply chain and manufacturing leadership roles. Prior to joining Tiger Brands as operations support director in July 2020, Derek held senior roles at SABMiller and AB InBev in South Africa and in Asia Pacific. MARY-JANE MORIFI 61 Chief corporate affairs and sustainability officer JOE RALEBEPA 52 Chief legal officer Appointed December 2016 Appointed January 2020 Joe joined Tiger Brands from the Massmart Group where he served as group legal executive, general counsel and company secretary until December 2019. Prior to Massmart, Joe held various senior corporate legal roles at British American Tobacco Southern Africa Region and The Coca-Cola Company in South Africa and the UK. He is an admitted attorney and an accomplished legal and corporate executive with extensive corporate legal skills and multi-national FMCG experience as well as retail knowledge. Mary-Jane joined Tiger Brands in 2016 as the chief corporate affairs and sustainability officer. Prior to this, she was the head of corporate affairs at Anglo-American Platinum from 2007 to 2013. Her passion for sustainability and women’s development has led to the establishment of many projects to address food security. Her desire to contribute positively to society has led to numerous recognitions. With a career spanning more than 30 years, she has tackled some of the toughest socio-economic challenges. Among her significant academic achievements was her visiting fellowship at Harvard University. She is a senior associate of the Cambridge Institute of Sustainability Leadership, a trustee of The Tiger Brands Foundation, Leratong Hospice and the Nelson Mandela Children’s Fund. She holds an undergraduate degree in Social Science and post-graduate degree in Sociology from the University of Cape Town. She is a fellow of Harvard University and has completed a number of executive education programmes at Stanford University, Harvard Business School and Cambridge University. Executive gender Executive age Executive tenure Women 27% Men 73% 40 to 49 years 3 50 to 59 years 6 60 to 69 years 2 0 to 3 years 4 3 to 6 years 5 6 to 8 years 2 16 17 Tiger Brands Limited Integrated annual report 2023www.tigerbrands.comOverviewOur businessGovernanceOur performanceOur strategyOur operating contextChairman’s review GERALDINE FRASER-MOLEKETI: Chairman While not always immediately visible in our year-on-year results, it is important to recognise that, in the past three years, we have successfully delivered some important corrective measures and continued to make valuable progress in the foundational areas of our business. it needed to build on the recent foundational work and instil a high-performance culture, supported by best-in-class capabilities. With regard to growth, I had indicated at the time that the management team was fully aware of the tough decisions required, and of the work to be done in driving a more aggressive approach to both organic and inorganic growth. The board therefore took decisive steps this year towards concretely building a high-performance culture that would achieve these outcomes. This year, group operating income was down 9%, while headline earnings per share (HEPS) was up 2%, year-on-year. These results were ahead of market expectations, reflecting both the subdued nature of these expectations as well as Tiger Brands’ underlying resilience in the face of a particularly challenging operating environment. We saw good performance from Beverages, Tiger Brands Food Services Solutions, the Home and Personal Care divisions, and Deciduous Fruit, while our strategies in the Rest of Africa have gained traction, with Exports outperforming on every key metric. The strong performances were offset by the one-off impact of poor price/ volume management in Rice in the first half, reduced demand within Groceries, and poor performance in the Bakeries and Snacks and Treats divisions. Group earnings were bolstered by higher income from associates primarily due to earnings from National Foods being favourably impacted by a change in functional currency from Zimbabwean dollars to United States dollars. Earnings per share (EPS) decreased by 2% to 1 725 cents, while HEPS increased marginally to 1 735 cents. In addition, the company declared a final dividend of 671 cents per share, bringing the total dividend for the year to 991 cents per share. Addressing underperformance While not always immediately visible in our year-on-year results, it is important to recognise that, in the past three years, we have successfully delivered some important corrective measures and continued to make valuable progress in the foundational areas of our business. We have achieved valuable improvements in manufacturing, digitalisation, procurement, and food safety and quality, launched new products in the value segment, expanded our reach in general trade and e-commerce, and exceeded our targets on cost-savings and efficiencies in each of the past three years. Given the heightened stakeholder interest in companies’ ESG performance, it has been pleasing to see the notable progress we have made in implementing our Sustainable Future strategy, leveraging our influence, and increasing our investment to advance our commitments to improve consumer health and nutrition, enhance livelihoods, and ensure responsible environmental stewardship. The strategy is closely aligned with the company’s growth strategy and has placed a particular focus on moving beyond simple compliance to identify opportunities to innovate and differentiate our products and services as a solution to societal challenges. This year, despite high consumer inflation, our volumes were only marginally lower year-on-year, showing stronger comparative performance than most of our competitors. We were also able to sustain our service levels in the face of significant disruption in local and global supply chains, and we improved our in-market execution and pricing in our Rest of Africa markets. It is clear that, in these three years, we have made some valuable strides in key areas of our strategy, laying an important foundation for further growth in the context of a particularly tough operating environment. This year’s performance suggests, however, that we haven’t yet delivered on our promised turnaround. The company still lags behind its historical earnings levels and faces sustained pressure on margins, despite having some of the country’s most iconic brands. Understandably, the market has lost patience with our various strategy “refreshes”, and there has been some evident frustration with the pace of execution. When I took on the role of chairman of the Tiger Brands board three years ago, I made it clear that I was expecting the company to regain its rightful place as the country’s leading food company, underpinned by consistent strong growth. More specifically, in 2021, I stated that for Tiger Brands to turn the corner, 18 Notwithstanding all these improvements, we recognise that Tiger Brands has not realised its full value potential. Given current pressure on consumer disposable income and heightened market competition – including from private label – we not only need to maintain a strong focus on addressing efficiencies and cost reduction, but also need to be more aggressive and effective in executing our innovation in products, processes, and packaging. Effectively realising these opportunities requires a strong performance-based culture and appropriate levels of responsibility and delegation in our decision-making. These are all challenges and opportunities that have been well recognised internally, but in which we have struggled to execute efficiently and effectively. A change in leadership Given this context, the board concluded that it was appropriate for new leadership to deliver the required transformation, jointly agreeing with Noel that he would step down as CEO while remaining available to the company until end-March 2024. Recognising the specific challenges facing the company, we were very pleased that Tjaart Kruger agreed to join Tiger Brands as CEO on a 26-month contract effective 1 November 2023. Tjaart is a chartered accountant with more than 30 years’ leadership experience at some of the top South African FMCG companies, the most notable being as CEO of Premier Foods, from 2011 to 2021, where he oversaw a fivefold increase in EBITDA and significant market share gains in the Milling and Baking category. On the board’s behalf, I extend our appreciation to Noel for his contribution over 20 years of service with Tiger Brands. During his three-year tenure as CEO, Noel has navigated some particularly tough challenges, including managing the aftermath of the listeriosis crisis and dealing with COVID-19, civil unrest, supply chain disruptions, and high inflation. In this period, the company’s underlying operating profit trajectory was stabilised and there have been many improvements in internal operating metrics. We thank Noel for his unwavering commitment through these challenges, and we wish him the best in his future activities. Board changes In addition to Noel’s departure, there have been several other changes to the board this year. In February 2023, Ms Emma Mashilwane was appointed as lead independent director with effect from the close of the AGM, having served on the board since 2016. Mr Sam Sithole joined the board as a non-executive director of the company with effect from 1 April 2023, bringing extensive experience in finance, general management and strategy, mergers and acquisitions, governance, and stakeholder relations. Ms Cora Fernandez stepped down as independent non-executive director with effect from 10 October 2023. At an executive level, Ms Deepa Sita resigned as chief financial officer and executive director with effect from 31 December 2023. The board extends its gratitude to Ms Sita and Ms Fernandez for their service and commitment, and we wish them well in their future endeavours. Outlook To deliver the transformation we have committed to will require hard work in what promises to be a particularly challenging global and local macro-economic environment. Globally, the economic outlook remains uncertain, with a relatively flat Chinese economy, potential further tightening in monetary policy, worrying conflicts in Eastern Europe and the Middle East, and possible further disruptions in global supply chains from extreme weather events. In South Africa – our primary market – we continue to face increasing levels of poverty, inequality and unemployment, profound infrastructure challenges, persistent crime and corruption, and poor levels of service delivery. Our incoming CEO faces a daunting in-tray. As part of the selection process, Tjaart outlined his vision for Tiger Brands, in which he prioritised operational excellence, margin management, and realignment of the organisational structure. His key performance indicators for the next two years will be linked to addressing priority areas of concern, including addressing gross and operating margin declines, stabilising the millbake operations, and delivering a recovery in shareholder returns, underpinned by strengthened strategy execution and a healthy company culture. Acknowledgements As chairman, I am fortunate to have an engaged board with significant FMCG skills and a strong global presence, well-suited to ensuring robust accountability of the executive team. I wish to thank my colleagues on the board for their continued support and advice during this challenging year. On behalf of the board, I would also like to thank the Tiger Brands management team and all employees for their effort in responding to some of the significant challenges, and for striving to move the company on a path to outperformance. Geraldine Fraser-Moleketi Chairman 30 November 2023 19 Tiger Brands Limited Integrated annual report 2023www.tigerbrands.comOverviewOur businessGovernanceOur performanceOur strategyOur operating contextChief executive officer’s statement TJAART KRUGER: Chief executive officer I am honoured and excited to be taking on the challenge of chief executive of Tiger Brands, returning to a company where I spent some important formative years of my career. Although it is fair to say that Tiger Brands has faced some challenges recently and not delivered on its full potential, I strongly believe that the company has what is needed to restore the business to its rightful position. Financial performance Despite strong revenue growth, Tiger Brands’ gross margins this year were down on the prior year, while group earnings were boosted by improved income from associates. Total revenue increased this year by 10% to R37,4 billion off the back of price inflation of 11%, favourable foreign exchange gains of 1%, and overall volume declines of 2%. Group operating income ended lower than FY22. The ongoing challenges of fully recovering higher input costs persisted in the second half, resulting in marginally lower volumes. Together with the year-on-year impact of incremental retrenchment costs of approximately R100 million, this proved too significant to be offset by the group’s cost reduction initiatives, which ended ahead of the R460 million target previously guided. Good performances from Beverages, Home and Personal Care, Tiger Brands Food Services Solutions, Exports and Deciduous Fruit were more than offset by poor performances in Rice, Bakeries, Groceries, and Snacks and Treats, with the last two of these businesses operating in categories marked by absolute volume declines. Despite making good progress with cost-saving initiatives and supply chain efficiencies, this was not enough to counter high input cost inflation and the substantial costs of loadshedding, which amounted to R126 million for the year. As a result, gross margins declined to 27,7% from 30,3% last year. Group operating income (before impairments and non-operational items) decreased by 9% to R3,1 billion. Earnings per share were down 2% to 1 725 cents per share, while headline earnings per share increased marginally to 1 735 cents per share. A particularly tough operating environment This year’s results reflect the impacts both of a very challenging trading environment and some internal goals. Globally, the green shoots of a post-COVID-19 economic recovery have been undermined by high inflation, tighter monetary and fiscal policies, and increasing geopolitical instability, further exacerbated by extreme weather events. The outlook for the global economy remains subdued amid growing concerns around the fragility of the Chinese economy. Closer to home, our markets across Africa face their own macro-economic challenges, with increasing youth unemployment, glaring income disparity, and continuing political and regulatory instability. In South Africa, the company has faced strong headwinds associated with record levels of unemployment, significant infrastructure bottlenecks, and increasing frustration with service delivery. On the political and regulatory front, businesses have been working in what can best be described as a “holding pattern” in the run-up to next year’s national election that could result in an untested coalition government. With consumer confidence dropping to its second-lowest level since 1994, the anticipated growth of the emerging middle class is stalling as it submerges under Its brands are strong, the product offerings are comprehensive and well-represented, and many of the recent challenges it has faced have been internal, signifying that solutions are within our reach. As is evident over the last few years, the company has the financial strength to withstand some significant headwinds, and that places it in a good position for further growth. In taking on this role for the next 26 months, my primary objective is clear: to increase sales, optimise pricing, and establish a cost structure and operating model that will enable sustainable growth. To achieve this, I will be working to foster a focused and entrepreneurial spirit throughout the organisation that will ensure a responsive and nimble organisation. 20 sustained waves of economic challenges, such as high interest rates and debt levels, and soaring fuel and food prices. As disposable income comes under increased pressure, consumers have responded by trading down, reducing demand for discretionary and premium products, and increasingly relying on promotional pricing and private-label products, with brand-loyal customers reverting to smaller pack sizes. In the context of heightened price competition, volumes and margins are threatened, and cost recovery ahead of inflation remains a challenge. Back to basics To deliver on Tiger Brands’ full potential in this very challenging context, there are certain aspects that I wish to highlight: › Fostering the right culture: In any company, culture is the cornerstone of success. It shapes the way we interact with one another, ideally underpinned by strongly shared values such as mutual respect, hard work, and unwavering commitment. As an organisation, we should be clear on working together as a cohesive team, setting high standards for ourselves, informed by a spirit of collaboration, while being at ease within our working environment › Operating model: While there is certainly value in achieving operational efficiencies through centralised synergies, it is equally important that critical decision- making should be as close to the operations as possible. I believe that there are opportunities for Tiger Brands to strengthen its decentralised decision-making. We will also be realising some specific cost-saving opportunities that have been identified, and we will seek to deliver on specific targets by expense type and category. To this end, the most appropriate organisational design will be implemented with renewed intensity and urgency › Managing complexity: Tiger Brands’ business and product portfolios are still unnecessarily complex. I believe that there remains valuable opportunity to optimise the product mix and further streamline the business by eliminating non-performing products. We will be looking to deliver changes in our current portfolio, exiting certain categories that are no longer deemed future-fit, and seizing identified opportunities for entry in adjacent categories where we see valuable synergies, a growing market, and/or higher margin potential. We will be further simplifying, rationalising and stretching our brands through rigorous investment to ensure that our brands talk to the relevant consumer and demand spaces, with progress measured both in terms of brand profitability and brand equity indicators › Innovation: While innovation should be a key element of the company’s growth strategy, this must be viewed through the dual lens of both continuous improvement and product innovation. We need to ensure the continuing relevance of our products – informed by an assessment of their cost, taste, and overall value proposition – striving constantly to update our recipes to remain relevant while driving cost-savings. Our initial focus should be on ensuring that the core business remains relevant before we explore opportunities to innovate and introduce new products Outlook The immediate market outlook remains challenging. Consumer confidence is likely to remain under pressure given current high interest rates and food inflation, which have continued to accelerate this year. While there has been a recent softening in global food prices, this has been offset in South Africa by a weakening rand as well as loadshedding, which has disrupted food production and distribution, and significantly increased costs for manufacturers and food retailers. Although some projections suggest food inflation in the country will abate in 2024, this assumes a further slowdown in global food inflation, an easing in electricity outages, an improvement in our summer crop production, and a stable rand, none of which is guaranteed. Given the anticipated low to no growth environment, and in response to the recent shifts in consumer and shopper behaviour, we have prioritised the below key focus areas in addition to the fundamentals mentioned above. › Restoring cost leadership: We will continue our rigorous approach to cost savings, having identified additional opportunities informed by an extensive external and internal benchmarking exercise, which will deliver on specific targets by expense type and category › Turbo-charging our growth in general trade: To capture the growth opportunities evident in the informal sector we are expanding our presence in this segment of the market by implementing robust route-to-market support and solutions for our general trade customers › Executing our identified key growth platforms in three priority areas: We have prioritised three growth platforms aimed at driving broader consumer and shopper relevance and increasing market success: driving affordability, democratising health and nutrition, and over-indexing on snackification I am confident that, with motivated people who are aligned to a clear purpose, we can deliver the necessary results. While the full return to ultimate performance will not be achieved in 26 months, we should certainly be on a measurable track towards it. I am looking forward to leading Team Tiger on this journey. Tjaart Kruger Chief executive officer 30 November 2023 21 Tiger Brands Limited Integrated annual report 2023www.tigerbrands.comOverviewOur businessGovernanceOur performanceOur strategyOur operating context Our business model KEY RESOURCES HC NC MC SRC IC FC Experienced, diverse leadership team and skilled employees, underpinned by strong governance structures Reliable and sustainable access to primary agricultural products (including wheat, rice, maize, oats, sugar and sorghum), other ingredients, packaging, energy, fuel and water Well-capitalised manufacturing plants, supported by efficient and effective supply chain, distribution and logistics networks Strong and trusted corporate brand, positive supplier and customer relations, and constructive relationship with government, regulators and host communities Continuous investment in our brands through research and development, marketing investment, and innovation informed by strong consumer insights Access to financial capital, through strong cash generation and enhanced by superior investor returns and sustained market confidence Read more on pages 26. KEY RELATIONSHIPS › Employees and trade union partners › Customers › Consumers › Government › Investors › Suppliers › Communities Read more on pages 28. OUR OPERATING ENVIRONMENT Trends impacting value: › An unsettled global and regional macro-economic environment › Profound socio-economic challenges in South Africa impacting consumer confidence › An increasingly competitive market responding to shifting consumer dynamics › Digital technologies and e-commerce › The rising impact of ESG and sustainability- related considerations Read more on pages 32. 22 Tiger Brands creates value and delivers on its purpose by producing, marketing, and distributing everyday branded food, home and personal care products, predominantly in South Africa, with a growing market presence across Africa. Our core category is food with immediate adjacencies in beverages and snacks and treats. Our product portfolio is well-placed to grow presence in most occasions with further innovation or inorganic opportunities possible. MATERIAL RISKS 1.1 Market responsiveness 1.2 Cost competitiveness 2.1 People security 2.2 People safety 2.3 Food safety 2.4 Cyber security 2.5 Consumer preferences 2.6 Third-party supplier risks 2.7 Industrial action 2.8 Insufficient electricity supply 2.9 Security of food supply Climate change: a particular risk type Read more on pages 37 to 42. Marketing and branding: Supporting these activities with our strategic marketing and branding initiatives, and our corporate social investment (CSI) activities Procurement: Procuring raw materials, ingredients, and packaging from local and international markets OUR VALUE CHAIN ACTIVITIES Manufacturing: Converting raw materials into quality food, beverages, home, and personal care products, using Tiger Brands’ proprietary formulations Packaging and logistics: Packing our products in branded packaging, and distributing these products as efficiently as possible to consumers through a network of customers that include retailers, wholesalers, and the general trade Research and development: Monitoring consumer tastes and trends, and investing in product and process research and development, to maintain a leadership position GROWTH OPPORTUNITIES › Opportunities in accessing informal market ( › Changing consumer expectations on affordability, nutrition and convenience page 45) (   page 34) › Improved consumer insights through big data and analytics ( › Growing consumer base in African markets ( page 47) page 44) OUR REVENUE STREAMS Our revenue streams comprise product sales from: › Grains (46%) › Exports and International › Consumer Brands (36%) › Home and Personal Care (6%) division (12%) Material revenue differentiators › Long-standing market-leading position in branded food and beverages › Our Billion Rand Brands, many of which are rated first or second in their categories › Robust marketing strategy, ensuring our brands remain top-of-mind, supported by targeted investment › Far-reaching distribution capabilities › The strength and quality of our customer relationships › Strong consumer insights informing our category strategies OUR COST STREAMS Our most significant cost streams are: › Raw material procurement › Sales and distribution expenses › Marketing expenses › Maintenance and upgrading › Food quality and safety › Employee wages and benefits › Electricity and fuel › Regulatory compliance costs of plant and equipment Material cost differentiators › Our vertical supply chain › Standardisation and simplification of group processes, systems and practices › Centralised procurement function leveraging scale, internally and externally SENSITIVITY ANALYSIS Tiger Brands’ cost base is highly sensitive to exchange rate volatility, with ~70% of our costs directly or indirectly exposed to exchange rates. Variable Forex (sensitivity to 5% weaker rand) Domestic operations** International and associates translation Exports Price increases Effect of a 1% movement in price increases Up Down Volume growth Effect of a 1% movement in volume growth Up Down Logistics R1 increase per litre of fuel * Impact on operating income ** Assumes no recovery in price Impact* (R586 million) R66 million R30 million R402 million (R402 million) R112 million (R112 million) (R38 million) VALUE OUT Our products (outputs) GRAINS The most important meal of the day made easy! GROCERIES BABY NUTRITION AND WELLBEING BEVERAGES, SNACKS AND TREATS HOME AND PERSONAL CARE Read more on page 62. OUR OUTCOMES Significant impacts (positive and negative) include: › Consumer nutrition and health › Natural resource use and habitat impact from raw materials › Energy and water use in manufacturing operations › Food and packaging waste › Employment (direct and indirect) and associated benefits › Development of small businesses › Government tax revenue › Financial returns to shareholders › Investment in infrastructure, plant and equipment 23 Tiger Brands Limited Integrated annual report 2023www.tigerbrands.comOverviewOur businessGovernanceOur performanceOur strategyOur operating context How we sustain value SRC OUR RELATIONSHIPS IC OUR BRAND, REPUTATION AND COMPANY CULTURE Material inputs Our actions to sustain value Outcomes of our activities Material inputs Our actions to sustain value Outcomes of our activities › Engaged workforce › Constructive relationship with government › Investor confidence › Trusted brands and strong consumer reputation › Positive supplier and customer relations › Robust operating context and strong levels of institutional trust Challenges in securing inputs › Finding the right balance in addressing the sometimes competing interests of stakeholders, each of whom add value to the company ( see page 28) Generally positive relations across stakeholder groups 7% reduction in consumer complaints R18 billion B-BBEE supplier spend R54 million spend to support black farmers and small businesses Year-on-year HEPS growth of 2% Year-on-year dividend growth of 2% Continuing concerns in certain areas Pending listeria class action lawsuit › Investment in employee value proposition › Structured engagement with regulators; focus on compliance and societal contributions › Regular investor communication › Investment in product safety and quality › Product and process innovation › Active engagement with suppliers and customers › Trading terms that are fair, equal and available to all customers Strategic pillar: › Established strong brand and › Focus on innovation and renovation to meet consumer needs including on value, health and nutrition, convenience, e-commerce, and sustainability › Deploy marketing best practice toolkit across the business › Drive relevance in value segment by building clear benefits of current brands Strategic pillar: reputation › Unique product formulations and trusted recipes › Research and development capacity › Internal governance and business systems › Company culture Challenges in securing inputs › Constrained consumer environment favouring affordability over brand › Increased retailer concentration and growing role of private label › High prevalence of promotional activity Sustained a strong brand presence a Billion Rand Brands sustained their brand equity and relevance among consumers despite inflationary pressures a Continue to focus on our unique ability to offer local brands with local flavours, leveraging cross-brand collaborations to offer consumers more of what they love a MMASmarties Awards (effective modern marketing in South Africa – Albany (x2), Morvite and Eat Well Live Well) a Heritage brand, KOO refreshed positioning and packaging, entrenching it as SA’s No.1 tinned product, and highlighting its “farm-to-plate” credentials Innovation launches › Completing 31 innovation projects across our consumer growth areas, achieving a 3,7% innovation rate › Innovations include Jungle Oats functional beverages, lower-calorie Energade drink, Jungle Crunchalots Fillows and Crosse & Blackwell’s Kasi Magic sauces HC OUR PEOPLE MC OUR MANUFACTURING CAPACITY Material inputs Our actions to sustain value Outcomes of our activities Material inputs Our actions to sustain value Outcomes of our activities › Strong and diverse board › Experienced executive team › 9 296 permanent employees Challenges in securing inputs › Technical skills shortages › Changing employee career expectations and priorities › Increasing emigration from South Africa › Increased cost of attracting and retaining skills › Company underperformance › Enabling workplace › Implementing people strategy to attract, retain and develop a diverse talent base, with strong leadership capacity › Invested in employee reward and personal development opportunities a R3,1 billion on salaries and Investment in talent and personal development a Accelerated core capability in manufacturing, customer, marketing and R&D a Launched accelerated leadership development programme Progress in promoting employee diversity a 57,6% ACI representation at senior management and benefits 64% at top management a R93 million on employee training and development › Focus on diversity and employment equity › Embedded enhanced employee wellbeing programme (THRIVE) a Eliminated historical wage and salary income differentials ahead of target a46% female representation at senior management and 30% at top management Board diversity a 46% black and 54% female on our board a Directors with extensive FMCG knowledge, global experience and skills in digitalisation and innovation Improvements in employee health and safety a One work-related fatality (2022: three) a 0,25 lost-time injury frequency rate (2022: 0,45) environment with performance and purpose-led culture Strategic pillar: › R1,2 billion capital expenditure in manufacturing and distribution capability and technology › 22% improvement in overall equipment effectiveness (OEE) in focus sites over past three years › R525 million in cost-savings through continuous improvement initiatives Strategic pillar: Continued investment in plant and equipment Expanded capacity, optimising efficiency, upgrading infrastructure, and realising innovation opportunities Some challenges remain High agricultural and other input cost inflation Short supply of certain ingredients resulting in factory under-recoveries › 41 manufacturing facilities › Efficient logistics and distribution activities Challenges in securing inputs › High frequency of loadshedding › Knock-on effects of loadshedding on other municipal services such as water and sanitation › Inefficient local ports and other transport routes › Shortage of technical skills › Civil unrest › Adverse weather patterns such as flooding 24 25 Tiger Brands Limited Integrated annual report 2023www.tigerbrands.comOverviewOur businessGovernanceOur performanceOur strategyOur operating contextTiger Brands Limited Integrated annual report 2023 How we sustain value continued FC OUR FINANCIAL STRENGTH Material inputs Our actions to sustain value Outcomes of our activities › Equity › Borrowings › Cash generated from operations Challenges in securing inputs › Rising interest rate cycles › Underperformance resulting in higher cost of capital › Implementing a fit-for-purpose operating model with decision- making close to the operations › Continued operational efficiency drive › Strong corporate governance structures › Acceleration of portfolio optimisation › Clear guiding principles in response to the growth of private label Strategic pillar: a 21,7% return on net assets (RONA) (2022: 27,5%) a R238 million paid in net interest (2022: R75 million) a R2,7 billion cash generated from operations (2022: R2,7 billion) a Savings of R525 million (2022: R387 million) a Total dividend per share declared: 991 cents (2022: 973 cents) a 15,7% return on equity (2022: 18,4%) a ROIC of 14,7% exceeds weighted average cost of capital of 14,1% (2022: 16,4% >13,6%) NC OUR RAW MATERIAL INPUTS Material inputs Our actions to sustain value Outcomes of our activities › Energy and water efficiency measures › Investment in renewable energy to strengthen energy security and reduce carbon footprint › Innovations and partnerships to reduce packaging and food waste Some progress in mitigating impacts 0,6% reduction in total GHG emissions 0,9% reduction in GHG emissions intensity 0,3% reduction in absolute energy use 0,9% reduction in electrical energy intensity 4% reduction in absolute water use 1,9% reduction in water intensity 32,1% reduction in landfill waste intensity Strategic pillar: Challenges remain in certain areas 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 the resources we depend on and increasing consumer and regulatory practices › Local and imported raw material ingredients › Water (municipal and own borehole) for production › Fuel (diesel and petrol) for distribution and manufacture › Energy for manufacturing (primarily Eskom electricity) › Fertile soil and conducive agricultural conditions Challenges in securing inputs › Climate change and extreme weather events impacting quality, quantity and cost › Supply disruptions in certain key inputs due to adverse weather patterns › Inefficiencies at South African ports resulting in delays 26 27 www.tigerbrands.comOverviewOur businessGovernanceOur performanceOur strategyOur operating contextOur key relationships CUSTOMERS How we engage customers What is important to customers We have a structured stakeholder relations strategy in place to ensure a consistent and proactive approach to engagement across the group. 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. We do not rate the quality of our relationships with each stakeholder group, as we do not believe it is possible or useful to generalise the quality of this relationship across an entire stakeholder group; the nature of these relationships can vary significantly between specific members within each stakeholder group, between different divisions within the company and the stakeholders, and between different times throughout the year. EMPLOYEES How we engage employees What is important to employees Provide the capability, experience and innovation required to deliver on our business strategy › CEO engagements › Virtual and in-person executive leadership engagements › Internal website › ROAR app designed for employee engagement › Digital communications › Employee hotline › Site engagements › Focus groups › Extended leadership engagement session › Notice boards and digital signage › Employee resource groups and communities › Talent and career development › Remuneration and rewards › Work-life balance › Safety, security and wellbeing › Strong internal engagement › Cross-functional teamwork and collaboration › Recognition and feedback › Opportunities to innovate and challenge the status quo › Speed and visibility of decisions Responding to employee interests ( page 55) › 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 › Tiger Trolley, a digital staff shop, is a direct response to employee needs in a socio-economically challenged environment Label inspection in the quality laboratory at Tiger Brands’ Beverages manufacturing facility in Roodekop. Our retail and wholesale customers; provide consumers with ready access to our products › Senior leadership engagement (top-to-top) to align on business priorities, joint corporate initiatives, and optimised trading practices › Annual trading term negotiations to agree on shared growth ambitions and associated strategic business levers and investments to achieve the performance objectives sets › Joint category development planning to collaboratively identify shared growth opportunities and agree on joint action plans and investments › Regular action-planning meetings to execute business plans, respond to tactical dynamics, and resolve operational issues to achieve our joint performance targets › Routine business review sessions to identify and address performance shortfalls as well as take advantage of new opportunities › Trading terms and promotional pricing that are fair and equal, and that promote mutual profitable growth › Innovation, commercially attractive brand propositions, and marketing campaigns that appeal to their shoppers and drive profitable basket conversion › Operational systems and ways of working that enhance logistics and administrative efficiencies facilitating cost-effective speed-to-market and continuous supply › Stock availability and service levels › Competitive pricing › Promotional support Responding to customer interests ( page 44) › Alignment of business priorities and commitment to shared growth ambitions and action plans › Collaborative cross-functional projects/initiatives to address prioritised business imperatives › Tailored solutions and campaigns in support of customer-specific growth opportunities and initiatives › Sharing of market/shopper research and knowledge to better inform business and category growth strategies › Proactive performance reviews that identify competitive growth opportunities and risks coupled with ideas and proposals › Utilising the Tiger basket to drive value-adding promotions through combos CONSUMERS How we engage consumers What is important to consumers By purchasing our products, and believing in our brand, they provide the basis for revenue growth › Tiger Brands website › Promotional activities and competitions › Information on our packaging › Research, including continuous engagement via consumer communities, online and offline qualitative studies, immersions, visual diaries and preparation › Neuroscience to identify implicit behaviour in-store and communication engagement › Consumer care line › Multi-channel approach as well as integration of online and offline channels to provide a seamless user engagement experience › Cooking shows and blogs › CSI activities, community programmes and › Affordable, value-for-money, tasty nutrition › Innovative products not reliant on energy supply › Healthier choices › Food safety and product quality › Business leadership on social, economic, and environmental issues › Convenience Responding to consumers interests ( page 48) feeding schemes › Tiger Brands’ portfolio aimed at democratising nutrition and driving affordable solutions through our iconic brands › Democratising health and nutrition through education of current offerings, tiering of relevant consumer benefits and innovation › We will continue to leverage price pack architecture to provide consumers “more for less” and more affordable packaging formats. This year, we were able to give 250g free Jungle muesli granola as an added value initiative on an existing SKU as well as introducing the Kasi Magic sauces under Crosse & Blackwell as a more affordable format › Through inter-department collaboration between the Consumer Contact Centre and Tiger Brands Quality Teams, product complaints have decreased by 7% year-on-year › Unconstrained localisation and sensory platforms to enable agility and innovation speed-to-market › Heritage brand, KOO, refreshed positioning and packaging, entrenching it as SA’s No.1 tinned product, and highlighting its “farm-to-plate” credentials › Brands like Jungle, Morvite and KOO have incorporated health and nutrition messaging into their marketing initiatives › The Eat Well Live Well nutritional programme’s Family Food Matters behavioural science study report › In-house sensory testing capability 28 29 Tiger Brands Limited Integrated annual report 2023www.tigerbrands.comOverviewOur operating contextOur businessGovernanceOur performanceOur strategyOur key relationships continued GOVERNMENT How we engage government What is important to government SUPPLIERS How we engage suppliers What is important to suppliers Provide the regulatory framework and informs the socio-economic context essential for our activities › One-on-one engagements › Engagements on draft regulations › Public forums › Industry consultative bodies › Parliamentary processes › Bilateral business forums › Site visits › Job creation and preservation › Economic development and growth of the township economy › Food safety and quality › Consumer nutrition and health › Delivering on broad-based black economic empowerment (B-BBEE) and boosting employment opportunities › Fostering growth and development of local agricultural sector › Meeting the relevant UN sustainable development goals Responding to government interests ( page 58) › Robust safety systems in place supported by academic partnerships and consumer campaigns › Public-private partnerships to revitalise the economy (such as the Agri Processing Master Plan) › In-school breakfast programme in partnership with The Tiger Brands Foundation and the Department of Basic Education › Investment in B-BBEE-verified suppliers and promotion of socio-economic development › Internal drive to ensure representation at executive and management level › Investment in skills development › Active partnerships to promote agri-sector development and smallholder farmers › Engage on draft policy and legislation INVESTORS How we engage investors What is important to investors Provide the financial capital needed for long-term growth › Annual and interim reports › Presentations › One-on-one meetings, non-deal roadshows, investor conferences › Site visits and themed investor days › SENS announcements › Dedicated investor relations function and mailbox › Website › Performance of key segments › Visible execution of strategies geared towards a value economy in the context of an increasingly constrained consumer environment and retail concentration › Limited visibility of a turnaround › Cost of one-off items and resultant value destruction › People culture as well as global skills shortages: impact on the ability to attract and retain talent › ESG performance including the cost and impact of broader infrastructure decay › Enhanced returns and cash flows Responding to investor interests ( pages 42 and 62) › Clearly articulate strategies to rectify the performance of milling and baking, and groceries › Supplemented investor engagements with site visits and increased contact with divisional leadership › Evidence of dedicated resources to accelerate execution of value engineering initiatives and value propositions › Provide bi-annual updates on underlying progress that will enable turnaround and consequential talent acquisition and retention › Clear consequence management › Introduction of governance and remuneration roadshows to create a dialogue, giving confidence to our shareholders while contributing to better informed board deliberations › Comprehensive disclosure and updates on ESG including mitigating strategies Provide the services and inputs that form the basis of our products and activities › Supplier forums › Site visits › Supplier assessments › Supplier relationship management via digital platforms › Supplier satisfaction surveys › Timely payment and fair terms › Collaboration and partnering › B-BBEE commitments › Enterprise and supplier development › Health and safety standards › Ease of doing business through self-service portals Responding to supplier interests ( page 50) › Negotiate with strategic suppliers to secure requirements › Collaborating with Tiger Brands’ Enterprise and Supplier Development programme to diversify the supply base with a focus on black-owned and black women-owned suppliers › Engage key suppliers to drive procurement efficiencies and improve B-BBEE commitments and innovation › Reviewed supplier quality programme being rolled out in line with enhanced internal quality protocols › Utilise technology to enhance communication and administrative channels › Develop category strategies to work with suppliers beyond a price focus COMMUNITIES How we engage communities What is important to communities Provide the social capital and licence to operate for the business to succeed › Community NGO implementation partners › Community social mapping to identify opportunities to share value › Community mobilisation and interaction on SED and ESD projects › Collaborative partnerships with industry peers › Food security and related nutrition issues › Stimulate economic activity to support and sustain community enterprise development and job creation › Impact of our operations on host communities › Employment and business opportunities Responding to community interests ( page 58) › Partner with government, industry peers and developmental agencies to promote nutrition, health and education, and contribute to community development and poverty alleviation › Initiatives in place on enterprise and supplier development and community investment › Addressing environmental impacts of our operations on our host communities 30 31 Albany is South Africa’s most-loved bread brand. With 12 bakeries and almost 1 000 trucks, Albany produces 480 million loaves of bread a year and distributes to over 40 000 outlets daily. Tiger Brands Limited Integrated annual report 2023www.tigerbrands.comOverviewOur operating contextOur businessGovernanceOur performanceOur strategyOur operating environment Our ability to create value, and to deliver on our purpose, is significantly affected by the changing dynamics in our external operating environment. We have identified five interconnected trends that are having a material impact on our business model and that have informed our strategic response: 1. An unsettled global and regional macro-economic environment 2. Profound socio-economic challenges in South Africa, impacting consumer confidence 3. Changing customer and consumer dynamics 4. The impact of digital technologies 5. The rising impact of ESG and sustainability-related considerations Each of these trends brings challenges and opportunities, highlighting the critical importance of having the right skills, operating processes, leadership and culture to ensure Tiger Brands’ continued growth. 1. AN UNSETTLED GLOBAL AND REGIONAL MACRO-ECONOMIC ENVIRONMENT › The global economy has had a challenging year. Initial signs of a post-COVID-19 recovery are in danger of being reversed, with global trade under pressure in the face of continuing geopolitical instability, weakening global demand, and tighter monetary and fiscal policies in response to stubborn inflation › Commodity prices and foreign exchange markets have been volatile, while fuel prices have increased, driven by rising global oil prices off the back of slow demand and decreased output. This has been exacerbated by the increasing incidence of extreme weather-related events impacting global supply chains › The outlook remains uncertain, with sluggish growth anticipated amid growing concerns around the fragility of the Chinese economy. The country’s post-pandemic recovery has been slower than expected, with lower global demand putting deflationary pressure on the world’s second-largest economy, which is also facing a potential property bubble › Our markets across Africa face their own macro-economic challenges, characterised by growing youth unemployment, accelerating food inflation, high levels of income disparity and continuing political instability. Regionally, the political landscape is clouded in many countries by mismanagement, corruption, political intolerance and popular protests, with post-election violence increasingly a feature in many electoral cycles Our strategic response › In the context of a subdued economic outlook – and given our exposure as a premium-priced brand in staple products – we have strengthened our focus on driving operational efficiencies and delivering a step-change in our innovation practices and in the nature of our customer and consumer engagement › Three years ago, we introduced a more systematic approach to driving a culture of cost-saving and efficiencies across the business, changing the governance structures, improving accountabilities, and strengthening our central revenue management capability within each of our business units. This year, we maintained our focus on this efficiency drive, delivering R525 million in savings over the year › To improve productivity and secure long-term cost-savings across our supply chain, we have made further investments in improving our manufacturing operations – expanding capacity, optimising efficiency, replacing ageing equipment, upgrading infrastructure and realising innovation opportunities › In response to the increasingly challenging geopolitical landscape and growing supply chain vulnerabilities, we have further strengthened our centralised procurement capabilities and shifted our focus towards mitigating supplier risk, ensuring seamless supply chain continuity and managing inflationary pressures 32 2. PROFOUND SOCIO-ECONOMIC CHALLENGES IN SOUTH AFRICA IMPACTING CONSUMER CONFIDENCE › South Africa’s economic prospects continue to be constrained by record-high levels of unemployment and loadshedding, significant infrastructure bottlenecks, persistent crime and corruption and dysfunctional local municipalities. The country has among the world’s highest rates of inequality and unemployment, which is constraining economic activity and feeding growing youth alienation and heightened potential for social unrest amid broader frustration with poor levels of service delivery and weak political leadership. The business sector is faced with significant policy and regulatory uncertainty in the run-up to next year’s election that may result in a new coalition government › Over the past 10 years, the value of the rand has depreciated 86% against the US dollar, significantly increasing the cost of imported goods, and contributing to the country’s inflation rate, which has been above 4% on average for the past five years › This year, consumer confidence plummeted to its second-lowest level since 1994, reflecting consumers’ concerns with the country’s economic prospects and the sustained pressure on disposable income due to high interest rates and debt levels, and soaring fuel and food prices. While food price inflation has been easing recently in much of the rest of the world, South Africa’s consumer food inflation has continued to accelerate this year, reaching 7% for the year ended September 2023 › We are now operating in an environment where the anticipated emerging middle class is submerging under sustained waves of economic challenges, with brand loyalty under pressure across the food and FMCG sectors. Consumers are trading down, reducing demand for discretionary and premium products, switching to cheaper value offerings, and showing a heightened reliance on promotional pricing and growing shift to private label, with brand-loyal customers reverting to smaller pack sizes. With heightened price competition, volumes and margins are threatened, and cost recovery ahead of inflation remains a challenge › The outlook is not encouraging, with a tougher trading environment anticipated due to the flat economy, downward pressure on our currency, continuing high rates of unemployment and indebtedness, and ongoing electricity supply constraints, on top of local political uncertainty and the potential for social unrest Our strategic response › Meeting the needs of the value-seeking consumer is a critical basis for fuelling Tiger Brand’s growth objectives. In responding to the affordability imperative, we have been enhancing the affordability and accessibility of our existing and new product offerings through appropriate pack, price and channel architecture, realising opportunities for product and packaging innovation, and harnessing effective distribution channels, supported by value marketing and consumer engagement campaigns to highlight the value benefits of our current brands. We are continuing to rationalise our brand and product portfolio, seeking to preserve margins by focusing resources on our best-performing lines › As reviewed in more detail in our response to the increasingly competitive retail sector and shifting consumer dynamics, we are actively expanding our reach in general trade, and we have refreshed our strategy to best defend our product offerings against the increasing threat of private label › In seeking to alleviate some of the underlying socio-economic challenges facing South Africa, we are continuing in our efforts to boost economic opportunities and improve the livelihoods of thousands of people across our value chain through a deliberate focus on supporting black/black-women farmers and owned enterprises as part of our enterprise and supplier development activities, and our preferential procurement practices HOUSEHOLD AFFORDABILITY INDEX – LOW-INCOME HOUSEHOLD +7% Average cost of household food basket +8,1% Basket of core foods +9% Cost for a basic nutritional food basket for a family of seven Source: Econometrix, PPEJDG, Deloitte 33 Tiger Brands Limited Integrated annual report 2023www.tigerbrands.comOverviewOur operating contextOur businessGovernanceOur performanceOur strategyOur operating environment continued 3. AN INCREASINGLY COMPETITIVE MARKET RESPONDING TO SHIFTING CONSUMER DYNAMICS › In response to challenging market conditions – as well as drivers such as increasing digitisation, growing urbanisation, busier lifestyles and changing aspirations relating to healthier eating and ethical sourcing – consumers are changing their purchasing patterns. They are typically shopping less frequently, across fewer categories, and at fewer retailers, for bigger baskets, with growth biased towards essential categories, while demanding more in terms of affordability, convenience and quality › Responding effectively to these changing consumer dynamics has intensified competition across the sector, with food retailers and wholesalers looking to defend and grow market share by being more precise and deliberate in their consumer engagement strategies. Retailers are strengthening their analysis of shopper behaviour and leveraging basket data to segment stores to satisfy specific shoppers through targeted ranging, pricing and promotions › At the same time, we are seeing fundamental shifts in our route-to-market, with supermarkets facing strong competition from mixed and wholesale retailers, emerging informal players, and convenience retail solutions such as forecourts and e-commerce. Informal independent traders, such as spaza shops and superettes, contribute roughly 26% of the FMCG market in South Africa, and have faster growth rates than the modern market. There has also been a continued rise in e-commerce, with online retail sales doubling in the country in roughly two years. These developments are requiring us to revise our channel strategies and further strengthen customer engagement and service levels Our strategic response › To capitalise on emerging consumer trends, we are creating a more streamlined two-track innovation process that balances the benefits of agility with more traditional linear product development. This will ensure continued renovation of core products, while encouraging experimentation with higher-risk, high-reward innovations to meet emerging consumer preferences where speed-to-market is more important. We have prioritised three growth platforms for innovation: driving affordability to meet the needs of value-seeking consumers; democratising health and nutrition; and owning relevant demand spaces in key snacking categories. In doing so, we are placing a strengthened focus on reducing artificial ingredients and leveraging natural and home- grown credentials to differentiate on authenticity and health › To ensure more effective penetration in a challenging market, we have prioritised the execution of shopper-centric segmentation of our trade channels. Deepening our insight of broad shopper profiles is informing our shopper activation and store execution plans, enhancing our consumer marketing campaigns, and ensuring more targeted pricing, promotions, and price and pack architecture CONSUMER STATE OF MIND Financial state of mind 40% Have money left over at end of the month after expenses Cost- saving behaviours 47% Dedicated more time to planning their shopping 60% Feel their financial situation stayed the same/worsened over the past year 42% Like to choose meals to make the most of the food they already have at home 63% Concerned about their level of savings and the lack of confidence in their capacity to absorb any financial shock 31% Switched to cheaper proteins and buying store brands 34 › We are continuing to see aggressive competitor pricing, as well as increasing sophistication in private-label penetration, both of which are placing pressure on branded product volumes and margins › As convenience and value have become key drivers of consumer choice, and informal players capture consumers closer to home, a shift to smaller pack sizes has enabled market expansion and affordable price points 4. DIGITAL TECHNOLOGIES AND E-COMMERCE › Growing levels of digitalisation, and the rapid rise of artificial intelligence, big data and data analytics are transforming business models across all sectors, presenting profound opportunities and significant risks. Digitally savvy consumers increasingly expect their shopping experience to be as frictionless as possible and now have a strengthened ability to mobilise market sentiment. Similarly, the increase in digitally based hybrid work has fundamentally reshaped the office experience and become an important feature in attracting and retaining talent › Digital tools and technologies are generating significant efficiencies, allowing companies to rapidly identify and adapt to changing consumer preferences, and providing exciting opportunities for business innovation. Seizing these opportunities effectively, and staying ahead of competitors, requires new talent, skills and work patterns, as well as the ability to manage heightened cyber security risks › In South Africa, we have seen significant growth in Bricks and Clicks grocery e-tailers (such as Checkers’ Sixty60 and Pick n Pay’s ASAP), as well as more non-grocery platforms starting to drive groceries on their platform (such as Mr D). There has been continued uptake of Pure Play e-commerce initiatives – in the form of e-tailers (such as Takealot) and super apps (such as Nedbank Avo), with the online retail giant Amazon expected to launch in the country soon – as well as increasing growth in direct-to-consumer initiatives › In response to the growing importance of the informal market, we are pursuing various initiatives to expand our reach in general trade. Following an aggressive roll-out plan, we have reached 50 000 general trade stores this year and aim to expand our presence to 130 000 stores over the next five years › We have refreshed our strategy to best defend our product offerings against the increasing threat of private label by further investing in our brands, building our innovation capabilities, and offering consumers choice through our premium and value offerings Our strategic response › We have continued to drive various initiatives to raise our online presence and become the preferred supplier to prioritised digital e-commerce partners. We have made further progress this year in each of the targeted focus areas: delivering focused category/brand activity with leading grocery e-tailers; enhancing our online presence through joint strategic initiatives with platforms such as Takealot; scaling up our pilot online shop (Tiger Trolley) as a test case direct-to-consumer platform; and strengthening our social e-commerce strategy › Last year, the Tiger Brands board approved a new digital strategy that provides a comprehensive framework and roadmap to leverage digital technologies to improve productivity, drive growth and enhance the experience of our customers, consumers, service partners and employees. This year, our primary focus has been ensuring effective execution of our prioritised digitisation initiatives in three areas: food safety and quality; digitising the freight desk for both import and export goods; and uplifting our procurement capabilities. During the year, we have also deepened the operational proficiency of our cyber risk management processes. We have completed our digital prioritisation process for next year, identifying various specific programmes for in-depth investigation, including specifically in customer and marketing analytics, our people strategy, and order and returns management 35 Tiger Brands Limited Integrated annual report 2023www.tigerbrands.comOverviewOur operating contextOur businessGovernanceOur performanceOur strategyOur operating environment continued Material risks and opportunities 5. THE RISING IMPACT OF ESG AND SUSTAINABILITY-RELATED CONSIDERATIONS › Interconnected social and environmental pressures are having a more visible direct impact on markets and businesses, globally and locally. The increased frequency and severity of extreme weather events, floods, droughts and wildfires – seen this year across the world – has highlighted the risks for the availability, quality and pricing of essential raw materials, for the resilience of distribution and supply chains, and for the robustness of manufacturing and productivity. Similarly, the recent civil unrest in South Africa has arguably sharpened business and investor appreciation of the commercial impacts associated with persistent inequality, poverty and joblessness › The growing visibility of social and environmental pressures is prompting greater regulatory intervention – including for example new and/or strengthened regulation on sodium reduction, extended producer responsibility, food labelling, marketing to children, and taxes on sugar and carbon – all of which has a material impact on our business activities › A failure to demonstrate effective response measures on issues such as economic transformation, public health, food security and climate change can damage a company’s reputation, market share and ability to attract talent, particularly in the context of rising social and shareholder activism › Many middle and high-income consumers are now looking behind the brand to assess whether the operating practices and impacts of food producers are aligned with their values, showing an increasing willingness to trade off on price in favour of health and sustainability priorities. In some market segments, we are seeing growing demand for brands-with-purpose, sustainable and local products, plant-based proteins, ethical marketing, and front-of-pack nutrition labels. Globally, there is an increasing preference for local ingredients, given these products are often perceived as healthier and more sustainable, trustworthy and authentic › Within this context, there has been a marked increase in investor engagement on companies’ environmental, social and governance (ESG) performance and disclosure amid significant changes in global reporting standards and frameworks. The publication this year of the first set of IFRS Sustainability Disclosure Standards, the European Sustainability Reporting Standards (ESRS), and the recommendations of the Task Force on Nature-related Financial Disclosures (TNFD) signals a material shift in global sustainability reporting Our strategic response › As one of the largest food companies in South Africa and across the continent, we recognise that we have a substantial role to play in facilitating access to affordable nutrition, shaping employment, enterprise development, and skills development opportunities, respecting human rights, entrenching fair labour and remuneration practices, and promoting responsible environmental practices within our operations and across our supply chain › Our forward-looking approach to addressing our sustainability impacts is reflected in our sustainable future strategy. This strategy comprises three focus areas – health and nutrition, enhanced livelihoods and environmental stewardship – underpinned by a set of strategic enablers aimed at building a strong foundation for responsible business practice › We have made further progress this year on our commitment to empower consumers to improve their health and wellbeing by launching various food products that are more nutritious and affordable, developing best-in-class nutritional standards, and leveraging our brand and marketing activities to promote consumer nutrition. We have continued to invest in strengthening product quality and food safety across the company to ensure that we have robust systems, qualified people, and a strong quality and safety culture, achieving external certification for all our manufacturing facilities against globally recognised food safety standards › 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 › We have also made further progress in reducing our environmental impact through various initiatives, including investments in renewable energy, optimising energy and water consumption in our operations, and minimising waste, effluent, and emissions. We are continuing to explore innovative opportunities for circular economy interventions in areas such as packaging and food waste, as well as leveraging our brand and marketing activities to inspire positive behaviour change Risk management arrangements We manage our risks and opportunities to support the achievement of our strategic objectives by identifying opportunities to protect, create and capture value. Our risk management arrangements align with the principles of King IV™, ISO 31000:2018, and generally accepted good practice in a manner that is fit-for-purpose. Ultimate accountability for the adequacy of the risk management programme across Tiger Brands rests with the board. The board has assigned oversight responsibilities for risk governance and the development of appropriate organisational and cultural maturity to the risk and sustainability committee. The group executive committee, supported by category-level executive committees, is tasked with the design, implementation and operation of the risk management system. Category-level management teams, supported by group operations, continuously monitor and manage their risk profiles, and are responsible for developing and maintaining an appropriate risk- aware culture. Risk profiling and oversight We adopt a comprehensive approach to identifying risks that includes a top-down as well as bottom-up analysis. The top-down approach starts with a group view of Tiger Brands, where consideration is given to the operating environment, the business model, and the associated objectives and strategies defined by the group. Similarly, category leadership is required to analyse their operating environments, business models, products and strategies to identify category-specific risks; these are also reported at the group level for oversight. Common category-level risks are then identified, which may be escalated and managed at the group level as needed. In addition to identifying risks that impact our ability to achieve our organisational objectives, management also considers factors that may develop into risks, even in those instances where our understanding of these factors is not sufficient to develop comprehensive mitigating strategies. These are termed ‘emerging risks’ and are also tracked through the various oversight structures following a top-down and bottom- up identification process. We believe that effective risk management practices generate additional benefits beyond the value protection outcomes typically associated with risk remediation activities. As part of its risk analysis process, management identifies and reviews opportunities to create or enhance competitive advantage, and/or increase our reputation, with a view to optimising value creation. The group executive committee oversees the identification of group risks and responses. Category-level management oversees and manages category-specific risks and reports the material risks to the group executive committee through the operational risk management committee. A consolidated Tiger Brands risk profile is then compiled and reported to the board risk and sustainability committee before being submitted to the board. In addition to the analysis and remediation of top risks, we maintain a combined assurance programme that aims to provide stakeholders with comfort that the control measures deployed to shape risks are adequate and effective. Risk appetite and tolerance General risk appetite and tolerance ranges are defined by group executive management and annually approved by the board. These ranges are reflected in the heat maps and provide general guidance regarding expected responses to the mapped risks. For each risk, group executive management determines a targeted residual risk level that represents risk-specific appetite levels. These targets are set against the backdrop of the approved risk appetite and tolerance ranges and more specifically define the nature and extent of each risk’s control improvement plan. This target and the associated control improvement plan is subject to management and non-executive director oversight in accordance with Tiger Brands’ risk management policy. While the group will accept risk to achieve its ambitions of being a market-leading, international, diversified FMCG company, Tiger Brands has an aversion to risk in the areas of food safety, the delivery of quality products, and loss of life. 36 PURITY is the market leader in baby nutrition, offering 145 variants, all specially developed to meet the nutritional and care needs of mothers, babies and toddlers. 37 Tiger Brands Limited Integrated annual report 2023www.tigerbrands.comOverviewOur operating contextOur businessGovernanceOur performanceOur strategyMaterial risks and opportunities continued Our top risks Our material risks are those that exceed our residual risk tolerance level and are thus identified as having the most material implications for Tiger Brands and its stakeholders. The following table reviews the implications, mitigation measures, and year-on-year trend in the risk rating for each of our top risks. The inherent risk heat map presented below represents the inherent risk profile of our material risks. Without adequate remediation, the risks are potentially a threat to the group as a going concern and thus merit management attention. Following management’s intervention through various remediation programmes the material risk profile shows a marked improvement, albeit still in need of further remediation. This is outlined below in our residual risk heat map. INHERENT RISK MAP Catastrophic – 5 Critical – 4 Significant – 3 Minor – 2 t c a p m I Insignificant – 1 1.1 2.1 2.2 2.3 2.4 1.2 2.6 2.7 2.8 2.9 1 – Unlikely 2 – Possible 3 – Likely 4 – Almost certain Likelihood RESIDUAL RISK MAP Catastrophic – 5 Critical – 4 t c a p m I Significant – 3 Minor – 2 Insignificant – 1 2.2 2.3 2.4 2.5 2.6 1.2 1.1 2.7 2.1 2.8 2.9 1 Unlikely 2 Possible 3 Likely 4 Almost certain Likelihood The positioning of cost competitiveness does not appear to improve on the back of implemented control processes. This reflects our cautious stance on risk. Although we are confident in our response strategies, we monitor the risk for evidence of control effectiveness before adjusting residual risk ratings, a position that permeates across all our risks. In addition to the risks listed below, we recognise that climate-related risks are becoming increasingly significant, not only directly to our business model but also at a broader economy-wide level. Given the growing materiality of this issue, we are maturing our processes to identify, assess and remediate the climate-related risks across our value chain. 38 Material risk 1.1 MARKET RESPONSIVENESS Responsiveness to an evolving trade environment, blurring of channels and trade concentration. Risk trend 2022 Ranking (Joint 3) Context and value impact Meeting and exceeding customer and consumer needs and wants is the lifeblood of our business. With consumer spending remaining depressed and competition high, this challenge remains material and threatens our market share, brand strength, profitability and penetration Mitigating actions Our mitigation actions continue to revolve around the following key themes: › Collaborating with customers and researchers to better understand market needs and wants while leveraging insights garnered by our own consumer insights division › Joint business planning with customers to ensure we leverage activity to mitigate adverse market dynamics and respond to consumer needs › Ensuring that product and customer mix are optimal › Maximising service levels to ensure product availability at locations through joint forecasting with customers › Deploying promotions to meet evolving shopper needs › Price-pack tiering to ensure affordability of our lines › Creating differentiated value proposition to ensure we create value to shoppers through our offerings › Ongoing review of pricing strategies to ensure competitiveness Material risk 1.2 COST COMPETITIVENESS Decline in competitiveness due to higher input costs across the value chain, specifically in procurement, manufacturing, packaging and logistics and corporate costs. Material risk 2.1 PEOPLE SECURITY Material risk 2.2 PEOPLE SAFETY Material risk 2.3 FOOD SAFETY Failing to provide a secure work environment for employees, contractors and visitors. Failing to provide an adequately safe operating environment for employees partners and visitors. Harm to the consumer caused either by food-borne illnesses relevant to our food products, or undesired skin/body reactions relevant to our personal and home care products. Risk trend 2022 Ranking (Joint 3) Risk trend: 2022 Ranking (new) Risk trend Risk trend 2022 Ranking (Joint 3) 2022 Ranking (Joint 3) Context and value impact Context and value impact Context and value impact Context and value impact Our supply chain remains a central component of our ability to remain cost-competitive, and also has a direct impact on our climate-change aspirations. The efficiency of our inbound and outbound logistics, together with heightened pressure on our manufacturing capabilities caused by electricity disruptions (refer to 2.8 below), are dominant drivers of this risk. The physical and transition risks of climate change are also increasingly being felt across the supply chain, resulting in cost escalations and disruptions in procurement and logistics. Mitigating actions Our initiatives are predominantly focused on improving efficiency and effectiveness in four areas: › Prioritising the availability of stock to ensure consistent service levels › Maximising the efficiency of our logistics value chain › Optimising our manufacturing to reduce material usage variances and improve overall plant efficiency › Enhancing management forecasting, renegotiating creditor terms and conditions, and careful oversight Manufacturing is an inherently dangerous environment. This risk is further elevated when contractors, temporary staff and visitors enter our premises. It is within this context that we continue to pursue zero harm, which is founded on solid occupational health and safety compliance and due diligence processes. Although we have seen a marked improvement in our OHS performance during 2023, there is still some room for improvement. Mitigating actions Tiger Brands’ comprehensive approach to OHS management aims to prevent incidents of injury and provide quality incident response capability. Our approach is risk-based and supported by our combined assurance programme to identify and rectify areas of improvement, which are unified and expressed in a five-year strategy. Strategic pillar: The security of our employees, partners and visitors is of cardinal importance to Tiger Brands. Threats to security may be experienced on our premises, en route to our premises, and off-site (for example during the delivery of product). Common drivers of threats include criminal elements intent on intimidation, covering up of theft, labour disputes and wage negotiations. This risk is distinct from occupational health and safety. Mitigating actions Our measures aim to provide a foundation of safety protocols to guide appropriate behaviour, reduce the likelihood of occurrence and ensure effective responses should the risk occur. These include effective labour and union engagement, collaborating with law enforcement agencies and related parties, deploying technology for rapid alert and response action, security vetting of employees and partners, and effective disciplinary processes. Strategic pillar: We have elected to split food safety and product quality risks to better manage the underlying drivers. Food products have inherent potential to lead to health concerns for consumers and thus remain at the forefront of management’s attention given our strong risk-averse stance on issues relating to public health and safety. Mitigating actions The nature of food safety demands that we approach it in a scientific and systematic manner to ensure consistent and repeatable results. To this end, we have implemented: › Quality risk assessment and management protocols (including incident management processes) › Industry hygiene and quality standards, including the development and roll-out of 60 new internal Tiger Brands group quality and food safety standards › External certifications of all our manufacturing facilities › Positive release protocols › Operational monitoring and reporting processes › Extensive ongoing employee training programmes A key improvement initiative starting in FY23 has been the roll-out of a technology-enabled quality system to be phased in over the next three years. Strategic pillar: 39 Strategic pillar: Legend – Risk trend: – Up – Down – Stable Strategic pillar: Tiger Brands Limited Integrated annual report 2023www.tigerbrands.comOverviewOur operating contextOur businessGovernanceOur performanceOur strategyMaterial risks and opportunities continued Material risk 2.4 CYBER SECURITY Material risk Material risk 2.5 CONSUMER PREFERENCES 2.6 THIRD-PARTY SUPPLIER RISKS Any risk of financial loss, disruption or damage to Tiger Brands’ reputation due to failures of its information technology systems because of large-scale cyber security attacks. Risk trend 2022 Ranking (Joint 3) Failure to understand and respond effectively to changing consumer demographics and spend, as well as consumption behaviour and patterns. Risk trend: 2022 Ranking (Joint 3) Deteriorating disposable income levels driven by cyclical macro-challenges is resulting in an increased year-on- year ranking. Failing to adequately manage risks associated with outsourced manufacturing, and in-bound supply. Risk trend: 2022 Ranking (Joint 3) Material risk 2.7 INDUSTRIAL ACTION Deteriorating labour relations and associated disruption to our value chain. Risk trend 2022 Ranking (Joint 3) Material risk Material risk 2.8 INSUFFICIENT ELECTRICITY SUPPLY 2.9 SECURITY OF FOOD SUPPLY Insufficient availability, or inadequate quality of supplied electricity. Risk trend: 2022 Ranking (New) Increasing instances of loadshedding experienced. Brand rationalisation due to adverse climatic conditions, deteriorating socio-economic norms, and evolving legal frameworks. Risk trend: 2022 Ranking (new) Climate-related impacts are increasingly affecting our supply chain, putting at risk the security of ongoing production of food. Context and value impact Increasing interconnectivity, globalisation and commercialisation of cyber crime are driving greater frequency and severity of cyber incidents, including data breaches. This can compromise the confidentiality, integrity and availability of information and technology resources, lead to disclosure of commercially sensitive information, intellectual property and/or disruption to operations. In addition to non-compliance risks, the release of any personal information also has negative reputational and brand implications. Mitigating actions Our cyber-security measures aim to mitigate key risks identified through independent cyber assessments. › We have purchased and are implementing various core capabilities › We have added strong skill sets to the team through vendor partnerships to ensure we are ready to respond to any cyber incident › We are building capacity to ensure monthly reporting on our cyber- security status; this is critical in ensuring that identified gaps are continuously addressed Strategic pillar: 40 Context and value impact Context and value impact Context and value impact Context and value impact Context and value impact Consumer preferences are dynamic, requiring early signal detection and rapid response. Our ability to respond effectively to these changes is influenced by the following: › Failure to detect signals in a timely manner › Factory constraints › Third-party supplier constraints › The nature of our supply chain dynamics › Innovation process not fit-for-purpose These factors accumulate and require a comprehensive and effective response in a timely manner to allow for differentiation in a very competitive market. Mitigating actions Our mitigation programme is centred around the following key activities: › Internal and third-party market and consumer research › Factory design optimisation (see also risk 1.2) › Third-party supplier management (see also risk 2.6) › Consumer satisfaction monitoring › Accelerating the quality, speed and commercial value of our innovation by the introduction of a new process, which went live on 1 October 2023 Strategic pillar: Tiger Brands collaborates with various supply chain partners to deliver on its strategies. These suppliers provide raw materials, ingredients and packaging, and in some instances finished goods, that are subject to quality control processes outside of our protocols. Failure to ensure adherence to Tiger Brands’ specifications and standards may erode consumer satisfaction, profitability, and brand equity. Mitigating actions Relationships with these suppliers and manufacturers are carefully contracted to maintain Tiger Brands’ quality requirements and allow for effective performance management. All potential suppliers are put through a rigorous assessment and on- boarding programme to ensure they are aligned with Tiger Brands’ commitment to quality and standards throughout the product life cycle. Beyond contractual compliance management, we also implement physical inspections upon delivery; where appropriate, we obtain certificates of analysis. We also roll out our supply quality assurance (SQA) audit programmes to provide necessary assurances. Consumer complaints are closely monitored and investigated where necessary. Strategic pillar: Within a context of labour-dependent manufacturing that is unionised, the threat of industrial action remains prevalent, especially during wage negotiations. Failure to contain industrial action may lead to loss of sales, erosion of profitability and market share. Mitigating actions › We are embedding an employee relations strategy geared towards creating labour stability and providing a great place to work › We are delivering employee engagement and shop-floor development programmes › We continuously review our remuneration policies and practices to ensure competitiveness and relevance › Implementing a business continuity plan Strategic pillar: South Africa’s electricity generation capacity is increasingly under pressure because of inadequate capacity expansion. The resultant loadshedding and fluctuating quality of electricity supply impacts adversely on our production capability, costs (see 1.2), and our environmental stewardship aspirations. Mitigating actions › Our initiatives have focused on generating electricity onsite through mobile generator capacity and renewable sources such as solar. In addition, we actively protect our equipment from electricity surges that are linked to loadshedding, and continue to identify opportunities for energy efficiency Strategic pillar: Our global supply chain is increasingly impacted by climatic conditions that impact not only the location, availability, accessibility, and price of our raw materials, but also downstream factors such as logistics and regional legal requirements. Mitigating actions Our mitigation response targets the following: › Ongoing identification of alternative source markets for raw materials, and/or researching the use of substitutes for raw materials › Reformulating products to use more readily available, accessible, and price-viable ingredients, and/or optimise our manufacturing processes to accommodate reformulated products › Stockpiling of raw materials to protect against shortages, inaccessibility or price volatility › Application of technology or alternative processes to improve production of raw material or substitutes, and enhance forecasting of key aspects such as planting dates and precipitation patterns › Enterprise development initiatives develop and promote sustainable farming of desired raw materials Strategic pillar: 41 Tiger Brands Limited Integrated annual report 2023www.tigerbrands.comOverviewOur operating contextOur businessGovernanceOur performanceOur strategyMaterial risks and opportunities continued Our strategy Climate change: a particular risk type We do not classify climate change as a single risk. In our minds, it is too wide a risk definition to effectively respond to all its drivers and consequences in a single mitigating strategy. Consequently, we refer to climate change as a “risk type” to ensure that it receives due consideration when emerging and active risks are identified across our value chain. Our drive to identify and respond to specific climate-related risks is gaining momentum. This year, we have taken some pragmatic steps to identify and assess specific climate-related risks, including engaging with internal and external specialists. For example, we have engaged a water specialist to undertake an assessment of water security risks across our value chain, and we have had internal discussions with our agricultural commodity managers to explore the security of food supply as a specific concern. Climate-related risks are identified, managed and reported on through the established Tiger Brands risk methodology and structures to ensure that it is not a stand-alone consideration but fully integrated with our business oversight and management practices. The table below provides a generalised overview of the climate-related risks, opportunities and impacts of greatest significance for our business. Risks Supply chain disruptions Extreme weather events and climate change, aggravated by local water scarcity and energy instability, could lead to significant disruptions in the supply of commodities and raw materials, and the distribution of products. Regulatory and legal risks New legislative requirements, including new taxes and stricter regulation on environment and health, present legal and compliance risks. Reputational risk Failure to address economic transformation, public health, food security and climate change issues could damage Tiger Brands’ reputation and market share, especially with rising social and shareholder activism. Opportunities Resource efficiency By implementing water-efficient processes, energy-saving technologies and renewable energy sources, we can help mitigate resource scarcity, lower costs, and reduce environmental impact ( see sustainability report). Sustainable and resilient supply chains By developing more local, diversified, sustainable, and resilient supply chains, we can support local economies, reduce vulnerability to geopolitical or climate-induced disruptions, and strengthen our ability to partner with suppliers to address social and environmental impacts and risks in the supply chain (   see sustainability report). Waste reduction and circular economy initiatives Reducing packaging and food waste, as well as developing innovative new packaging solutions, service models, and circular material flows, offers the potential to reduce costs and to develop new income streams and business models that reduce resource consumption and environmental impact, and that support enterprise development initiatives that address social inequality and economic exclusion ( see sustainability report). Impacts Greenhouse gas (GHG) emissions Resource use 42 GHG emissions from our direct operations and manufacturing plants, purchased electricity, upstream manufacturing and agriculture (land conversion) and manufacturing, and downstream transport contribute to climate change. Organic waste that we send to landfill contributes to climate change through the release of methane. Water scarcity and energy security are acute issues in South Africa. We use energy and water in our operations, and the efficiency and circularity of our use of these resources in our operations directly impact the general availability of these resources for communities and ecosystems (water). Our use of borehole water potentially impacts groundwater quality and availability. 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 PURPOSE IS TO NOURISH AND NURTURE MORE LIVES EVERY DAY DELIVERING ON OUR PURPOSE: OUR STRATEGY Building a growth pipeline Meeting the needs of the consumer Optimising our supply chain › Innovation › Optimising our product portfolio › Winning at the point of purchase › Growth in Africa › Affordability › Health and nutrition › Snackification › World-class manufacturing facilities › Product quality and safety › Procurement › Logistics Being obsessed about cost-savings and efficiencies Igniting our people Investing in a sustainable future › Unlocking costs and cash › Digital transformation › Talent › Leadership › Great place to work › Health and nutrition › Enhanced livelihoods › Environmental stewardship 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 43 Tiger Brands Limited Integrated annual report 2023www.tigerbrands.comOverviewOur operating contextOur businessGovernanceOur performanceOur strategyBuilding a growth pipeline To realise our ambition of building a growth pipeline through best-in- class category, channel and customer strategies, we have been driving an innovation pipeline, optimising our product portfolio, winning at the point of purchase and pursuing growth in Africa. Performance summary 2023 Positive developments › Expanded our reach in the booming South African informal sector, securing 50 000 general trade stores since inception › Made progress in further raising our online presence and becoming a preferred supplier to prioritised e-commerce partners › Improved in-market execution and optimal pricing in Rest of Africa (RoA), reflected in significant profit growth Opportunities for improvement › Improving the quality and speed of execution of our innovation and R&D activities › Accelerating initiatives to further improve customer service levels › Intensifying dedicated customer forums across all customers Delivering growth through innovation enablement Driving constant innovation in our products, packaging and processes is critical to delivering on our growth ambitions and to ensuring that we continue to meet the constantly evolving needs of the consumer. Although Tiger Brands has a recent history of some strong innovation, we recognise that there is significant scope to improve the quality and speed of execution of our innovation and R&D functions. We believe that our recent innovation activities – from ideation through commercialisation to execution – have not fully counterbalanced the increasing commoditisation of certain categories and that our speed-to-market falls short of benchmark. Informed by internal and external feedback and a review of global innovation best practice, we are looking to address these challenges by creating a more streamlined two-track innovation process that balances the benefits of agility with more traditional linear product development. This approach ensures continued renovation of our core products, while encouraging experimentation with high-risk, high-reward innovations that are more appropriate in the context of rapidly emerging consumer preferences where speed-to-market is more important and where there are potential benefits in “failing forward”. This year, we completed 31 innovation projects, achieving a R1,4 billion in sales and an innovation rate of 3,7%, with a priority focus in our targeted growth areas: affordability, health and nutrition, and snackification. These include successful launches in Crosse & Blackwell’s Kasi Magic sauces, Energade Zero and Boost, Jungle Crunchalots Fillows, Albany Wraps and Jungle Oats functional beverages. In March this year, we launched a new state-of-the-art multi-purpose centre dedicated to nurturing a culture of innovation in the company. The Sensorium, based at our head office in Bryanston, features an analytical laboratory, a functional pantry, a development kitchen and a 44 sensory room. By providing a modern workspace facility for product demonstrations and training sessions, it offers an opportunity to inspire employees and encourage collaboration. This development forms part of a larger R42 million multi-year investment aimed at enhancing our R&D facilities, developing category pilot plants at our manufacturing sites, and deepening our technical innovation skills. We have recently completed upgrades to category pilot plants at our Home and Personal Care and our Baby manufacturing facilities, and we plan to upgrade a further three pilot plants and two new pilot plants over the next two years. We have continued to work closely with select universities, science and technology laboratories, and expert third-party suppliers to address technology gaps and improve speed-to- market. We have also been working with the Tiger Venture Capital Fund to supplement our own internal pipeline by accessing external innovators and ideas that may not yet be scalable or easy for us to build internally. Post-year end, the fund concluded an investment in Rush Nutrition, a female-founded naked snacks and functional beverages company from the Western Cape. Rush Nutrition was established in 2013 and produces healthy and nutritious snack bars, snack balls and beverages for children and adults, which are made from botanical ingredients, are free from refined sugars, soy, gluten, dyes and preservatives. We remain committed to executing on the strong pipeline of both food and technology-enabled opportunities to future-proof our business. Optimising our product portfolio We continually evaluate and optimise our product portfolio, using a structured approach to identify those product categories with high attractiveness and competitive strength that should be invested in and grown, those that present new opportunities for our portfolio of the future, and those to be targeted for possible exit. In determining where Tiger Brands is best positioned to compete, we have analysed the current market dynamics in the South African FMCG sector, identifying specific categories that are the largest and/or fastest-growing in terms of volume and/or value. Informed by this analysis, we continue to see potential for further growth in groceries, baked goods, beverages, wheat flour, snacks and treats, breakfast cereals, rice and pasta, and baby food (jars and pouches). In these categories, we are investing in product and process innovation, driving further process efficiencies, and/or expanding our production capacity. We have also identified potential opportunities for entry in adjacent categories where we see valuable synergies, a growing market, and/or higher margin potential. In rationalising our portfolio, we are reviewing the status of the following business units over the medium term: maize meal, sorghum-based beverages and breakfast, personal care, and baby wellbeing. Winning at the point of purchase We have continued to make progress this year in our ambition to secure growth and win at the point of purchase by delivering against most of our success metrics in each of our three strategic focus areas: › Growing in new channels: through improved channel segmentation and tailored channel strategies, expanding our route-to-market for general trade and forecourts, and growing our e-commerce presence › Optimisation: ensuring best-practice revenue management and strengthening our position in neighbouring countries › Execution: enhancing our customer engagement and ensuring precision execution These strategic commitments are underpinned by our activities aimed at strengthening the capabilities of our sales force and leveraging digital transformation opportunities to optimise and automate our sales processes, improve customer data accuracy, and equip our sales team with the necessary digital tools and training to sell more effectively to retailers. Given the growing importance and contribution of the informal market (general trade) to the total South African FMCG sector – contributing roughly 26% of the total R716 billion FMCG market, and with faster growth rates than the traditional retail market – we are pursuing various initiatives to expand our reach in general trade. Through our aggressive roll-out plan, we reached 50 000 general trade stores this financial year, and we aim to expand our presence to 130 000 stores over the next five years, as well as establishing 2 000 Perfect Outlets supported by innovative point-of-sale marketing execution. We have prioritised the execution of more in-depth shopper- centric segmentation of trade channels to ensure more effective proposition development in a very saturated market. Deepening our insight and understanding of broad shopper profiles is informing our shopper activation and store execution plans, and contributing to more effective shopper messaging and campaigns, targeted pricing and promotions, and appropriate price and pack architecture. We have continued to drive various initiatives to raise our online presence and become the preferred supplier to prioritised digital commerce partners. We have made further progress this year in our various targeted areas: › Increasing sales in Bricks and Clicks, by ensuring closer strategic alignment and delivering focused category/brand activity with leading grocery e-tailers (such as Checkers Sixty60 and Pick n Pay ASAP), while accelerating our growth in growing e-tailers (such as Spar, Makro and Dischem) 45 Tiger Brands Limited Integrated annual report 2023www.tigerbrands.comOverviewOur strategyGovernanceOur performanceOur operating contextOur businessBuilding a growth pipeline continued › Growing our online presence and conversion in Pure Play through our joint strategic initiatives with leading platforms such as Takealot and Yebo Fresh, growing our presence in smaller, fast-growing customers, and being proactive ahead of the anticipated arrival of Amazon in the country › Scaling up our pilot online employee shop (Tiger Trolley) while on-boarding non-competing value offerings onto the platform › Strengthening our social e-commerce strategy, ensuring that every brand campaign now includes a deep linkage directly to our e-commerce platform We have continued to leverage our revenue management practices to improve profitability, prioritising five specific levers to ensure that our product prices, placement and availability are properly aligned within each customer segment based on an informed understanding of customers’ perception of product value, as well as a detailed review of price indexing, discount curves and brand health. Our recently implemented decision-making tool, that connects disparate data sets to enable detailed analysis at an SKU and customer level, is delivering results in improving the identification of profitable revenue growth opportunities, enabling us to eliminate margin dilution in various product categories and to target volume growth in more profitable customer groups. We have also seen the benefits this year of our recently revised trading terms that have clearer performance metrics aimed at incentivising strong customer performance aligned with our strategic growth drivers. This year, we ran an independent trade perceptions survey, benchmarking how Tiger Brands is perceived in terms of the quality of our customer engagement against 26 leading manufacturers in the FMCG sector. The survey was conducted across eight of our most influential customers – with a mix of directors, senior managers, buyers and operational staff – and assessed our comparative performance across a range of key focus areas. We were rated fifth among the 26 manufacturers, with useful feedback on our perceived strengths and challenges. To address the identified challenges, we have been working on various initiatives to improve customers’ perception of their relationship with Tiger Brands. We are intensifying our dedicated customer forums across all our customers to enhance our relationships, and we are continuing to work with them to ensure greater alignment between our category strategies and customers’ strategies to find mutually beneficial win-win opportunities. To speed up reaction time, we have strengthened the delegation of authority to customer management teams, and we aim to ensure that every action or decision requested will be attended to within 24 hours. We remain committed to fair and competitive pricing, and to ensuring that our pricing policy is clearly communicated and strictly enforced. 46 Expanding our footprint in the booming South African informal sector The informal sector is a significant part of the South African economy, contributing at least 6% to GDP and accounting for one-third of local jobs in the country1. Informal independent traders, such as spaza shops and superettes, contribute roughly 26% of the total R716 billion FMCG market in the country, with more than 70% of South Africa’s households purchasing from the informal trade and with faster growth rates than the modern market2. To capture the significant growth opportunities in the informal sector, we are expanding our presence in the sector by implementing robust route-to-market support and solutions for our general trade customers. We expanded our reach to more than 50 000 outlets this year, and we aim to further expand our presence in 130 000 general trade stores over the next five years. We are working with our customers to create Perfect Outlets in the general trade, investing in point-of-sale marketing execution across the Tiger Brands basket and in branded coolers to improve the cold availability of Tiger Brands’ ready-to-drink beverages. Our goal is to establish 2 000 Perfect Outlets over the next five years. Some of the key tactical initiatives we have implemented include: › Providing a mobile cashless payment and order platform solution, facilitating delivery of stock from a midi-wholesaler to a spaza store or supermarket within 48 hours, and dramatically reducing the risks for customers associated with handling cash › Using data and shopper insights to ensure optimal product ranges, pack sizes and product bundles › Deepening brand awareness among consumers in the informal sector by investing in township marketing activations; this included branding select general trade stores and community walls with mural stories around some of Tiger Brands’ most recognised heritage and category brands Through our route-to-market strategy for general trade, together with our partners, we have created an estimated 272 local jobs in communities, with 198 local community jobs specifically for women. 1 2 Stats SA, 2021 Trade Intelligence, 2022 Driving growth in Africa With a rapidly growing and increasingly urbanised population, Africa offers huge opportunities for volume and revenue growth as we seek to nourish and nurture consumers across our target markets. We believe that we are now well-positioned to grow at an accelerated pace, building on our established presence across the continent, our strong manufacturing assets and brands, and a more stabilised base. This year, we delivered solid performance across our markets, with improved margins driven by robust demand off a low base, reflecting improved in-market execution and optimal pricing. Our Chococam operation in Cameroon and our Mozambique business have both continued to be our strongest markets, despite a challenging operating environment. We have also seen a pleasing turnaround in performance in our exports businesses off the back of improved operational efficiencies. Building on this strengthened base, we are focusing on three strategy and growth clusters: › Driving deeper penetration into our existing Southern Africa markets (Zimbabwe, Zambia, Mozambique), building our brands within these countries to capture more than fair share of the market, aided where necessary by infrastructure investments › Expanding our reach and presence in our other existing trading areas (with a priority focus on Kenya, Nigeria, Angola and the DRC) by sustaining volume and profitability growth, diversifying our sales volume mix, and investing in strengthening our leadership teams and core competencies, supported by improvements in factory performance, targeted capex deployment, and a step-up in our commercialisation of innovation. 47 Tiger Brands Limited Integrated annual report 2023www.tigerbrands.comOverviewOur strategyGovernanceOur performanceOur operating contextOur businessMeeting the needs of consumers Informed by a thorough analysis of global, regional and local trends specific to the FMCG and retail sectors, we have prioritised three growth platforms aimed at driving broader consumer and shopper relevance and increasing market success: we will be delivering market-leading solutions for the value-seeking consumer, driving education and accessibility of our portfolio to meet the nutritional needs of consumers, and working to own all the relevant demand spaces for consumers in the snackification segment. Driving affordability to meet the needs of value-seeking consumers Our ambition is to become the leading choice for value-seeking consumers by enhancing the affordability and accessibility of existing and new product offerings through appropriate pack, price and channel architecture, harnessing effective distribution channels, and realising opportunities for product and packaging innovation, supported by value-led marketing and consumer engagement campaigns, as well as our broader cost reduction initiatives. We have made further progress this year in these ambitions, delivering value-for-money innovations in selected categories to ensure more affordable price points, including new value packs in beverages as well as new value offerings in groceries and beverages. We have identified a pipeline of value-led innovations, including new value packs in snacks and treats, and value offerings in groceries. These innovations will be aided by our continuing activities to enhance efficiency and reduce costs, as well as by delivering on our goals to compete more effectively in the deep discounter channel. Informed by renewed insight and analysis, we have refreshed our strategy to best defend our product offerings against the increasing threat of private label by further investing in our brands, building our innovation capabilities, protecting our IP, and offering consumers choice through our premium and value offerings. We will only manufacture private-label products in selected categories where we see clear, long-term strategic benefit, informed by a thorough cost-benefit assessment. Performance summary 2023 Positive developments › 7% reduction in consumer complaints, reflecting impact of our strengthened focus on quality › New healthier product lines in the Beverages and Oat-based breakfast (Jungle) categories and innovation in the personal care category › Material gains in volume market share in certain categories › Six external marketing awards including: the MMA Smarties Awards (for effective modern marketing in South Africa), and the Sunday Times GenNext 2023 Awards › Silver Loerie Award for Fatti’s & Moni’s “Always Eat’alian” TV commercial Opportunities for improvement › Strengthening the speed-to-market and commercialisation of innovation activities › Further improving our equity score in some of our Billion Rand Brands 48 Democratising health and nutrition As Africa’s largest food company, our health and nutrition agenda is integral to our corporate purpose of nourishing and nurturing more lives every day. In addition to the broader socio-economic and moral imperative of driving positive change in health and nutrition, we believe that there are valuable opportunities for business growth in leading this agenda in our markets. In the lower-income market, we aim to democratise nutrition by driving awareness, accessibility and affordability of our healthy food portfolio. We are amplifying our nutrition communication to drive category leadership by leveraging on our Eat Well Live Well labelling, and we are making healthier products more accessible through increased availability in general trade. To close nutrient gaps, we enrich many of our affordable nutrition food offerings with nutrients that are often lacking in the South African diet – such as Vitamin A, iron, zinc and protein – ensuring that we strike the right balance between taste and enhanced nutritional value. In the higher-income market, we are innovating across categories to unlock “superfoods” as a snacking option. This year, we launched new healthy product lines in the Oat-based breakfast offerings (Jungle), Pulses and Beverages categories, including Jungle Oats functional beverages, a lower-calorie Energade drink, and new breakfast offerings. We have also continued the roll-out of clear and simple consumer-relevant health claims on various brands. Through our renovation and innovation efforts, we have targeted that by 2030, 75% of our food basket will meet our EWLW nutritional standards for healthier product categories “improved for you” and “good for you”. Responding to the snackification trend Recent research confirms that snacking is continuing to gain momentum in South Africa, with more than 70% of South Africans estimated to be snacking on a daily basis across all consumer age groups. We aim to capitalise on this growing trend by owning relevant demand spaces for consumers in all key snacking categories, including liquification, nano-meals, “crunch time” and “sweet pleasures”. We are continuing to drive innovation to capitalise on this trend with recent product innovations including ready-to-eat cereal snacks and new offerings in confectionery. In launching new products, we are spending equal effort to develop robust pipelines to enter adjacent categories aligned with our core and emerging capabilities. Investing in consumer care and after-sales Recognising that an effective consumer care and after- sales service provides a pivotal source of competitive differentiation and consumer retention, we pride ourselves in ensuring that consumer complaints are addressed in a timely and efficient manner. Over the years, the nature of consumer complaints has become more complex, and consumer needs and expectations have changed. In response to these changes and a recent review of our consumer contact centre, we have introduced various changes, including increasing the contact centre’s operating hours from 08:00 to 22:00 Monday to Sunday, resulting in a marked reduction in consumer waiting time, especially over weekends. As a result of enhanced interdepartmental collaboration between the consumer contact centre and Tiger Brands quality teams, product complaints have decreased by 7% year-on-year. Tiger Brands continues to accelerate innovation, commercialisation and execution of its growth platforms with the launch of its ready-to-drink (RTD) Jungle Oat Drink range, a first of its kind in the local market. The Jungle Oats RTD range also meets the growing need among consumers for foods that are convenient and offer functional benefits such as heart and digestive wellness. A recent study by consumer research organisations, Kantar and Mintel, indicates that more than half of consumers would like their diet to help maintain health and wellbeing including brain function and maintain immunity. 49 Tiger Brands Limited Integrated annual report 2023www.tigerbrands.comOverviewOur strategyGovernanceOur performanceOur operating contextOur businessOptimising our supply chain We have maintained a particular focus this year on further strengthening our product quality and food safety practices, stabilising operational performance in our supply chain, and implementing clear processes to boost productivity, efficiencies and workplace safety. In addition to upgrading some of our factories and investing in renewable energy, we have continued to seek opportunities to deliver value from our procurement and logistics activities. Developing world-class manufacturing facilities Our ability to deliver long-term value for our shareholders and other stakeholders is dependent on the quality of our manufacturing operations. Through our capex programme and our operations support strategy, we are striving to build agile, fit-for-purpose operations that deliver continuous improvement in productivity as efficiently and safely as possible, ensuring product quality and enhanced environmental performance. We continue to place a particular priority on progressing manufacturing excellence custom and practice (MECP) across our operations, focusing our activities initially on 10 priority sites with the greatest need for improvement. It is pleasing to report that we have achieved a 22% improvement in overall equipment effectiveness (OEE) across these priority sites over the past three years, with Tiger Brands now inside the best-in-class definition area for OEE. In addition, over the same period, we have achieved R247 million in savings through material usage variance (MUV). Our total capital expenditure this year amounted to R1,2 billion, with investments to expand and optimise our existing capacity, upgrade infrastructure and replace ageing equipment, realise innovation opportunities, improve our energy and water security, and ensure regulatory compliance. Specific projects included relocating and upgrading our peanut butter plants, investing in automation in Home and Personal Care, and upgrading the aerosol canning line. During the year, we successfully completed commissioning of solar power at four of our sites and are looking to roll out similar initiatives at the balance of our operations. This forms an important step towards our goal of sourcing 65% of our manufacturing electricity requirements from renewable energy by 2030, and ensuring greater energy independence from the Eskom grid. Our investment in plant and equipment is supported by investment in safety performance, competency-based training, talent 50 Performance summary 2023 Positive developments › Achieved R247 million in savings through material usage variance (MUV) over past three years › 3,2% year-on-year improvement in overall equipment effectiveness (OEE) › R1,2 billion in approved Capex projects, managed within time and on-budget › Significant improvements in our food quality performance and our occupational safety performance › Successful commissioning of four rooftop solar systems, strengthening energy security and reducing GHG emissions Opportunities for improvement › Embedding ESG considerations more thoroughly in our raw material sourcing practices › Realising productivity improvements that match or exceed our OEE improvements attraction and retention, and building a skills pipeline through management trainees and apprentices. We have incorporated our management of occupational safety, security, health and the environment (SSHE) into our MECP management framework, benchmarking our maturity level against industry best-practice standards. As part of our commitment to safety, we have tied safety performance to remuneration incentives at senior management levels, contributing 10% to the variable performance reward under our short-term incentive (STI) scheme. At a group level, our emphasis on behavioural safety has resulted in a marked improvement in our overall safety performance. Our lost-time injury frequency rate (LTIFR) decreased from 0,45 in 2022 to 0,25. Despite these improvements, regrettably there was one employee fatality and two serious injuries. The fatality occurred at an off-site warehouse for our Chococam facility due to unsafe stacking practices; stacking operations at this warehouse were immediately halted until recommendations from an incident investigation are fully implemented. Further details on our occupational health and safety performance and management activities are provided in our sustainability report. Embedding a product quality approach We made good progress this year in embedding an integrated food safety and quality system, in which robust operating processes are supported by well-trained people supported by a culture of quality excellence. We have established measurable product safety and quality objectives across all our operations and at group level, and we monitor and report on performance against these objectives and targets through a quality scorecard, implemented across all sites and categories. This year, we restructured the resourcing of our Quality and Food Safety Centre of Excellence, introducing clear oversight lines and distinct roles and responsibilities across six priority focus areas, with technical personnel appointed in each of these areas. To cultivate a culture of quality excellence, we have been piloting a culture survey index that seeks to identify the strengths, weaknesses and opportunities related to enhancing our food safety and quality culture and performance throughout the organisation. We also approved funding this year to digitise our quality and food safety management system, which will further strengthen our management and reporting on food safety and quality. Following these initiatives, we have seen significant improvements in our overall quality performance, with a 7% reduction in consumer complaints. Following two product recalls over the past two years, it is pleasing to report that there were no product recalls in 2023, as well as no notices from government authorities for any regulatory food safety violations. All our food manufacturing operations comply with the Global Food Safety System Certification 22000 (FSSC 22000) standard recognised by the Global Food Safety Initiative (GFSI), with each operation conducting quarterly GFSI self-assessments. As part of our certification commitments, we conduct regular internal audits and risk assessments at our manufacturing facilities, targeting specific opportunities to mitigate or eliminate identified risks. This year, with assistance from external experts, we initiated a new audit process for certain food categories in alignment with the American Institute of Baking (AIB) Standard, a stringent and credible audit standard that emphasises the production environment and operational aspects, complementing our FSSC 2220 certification audit processes. All our suppliers and third-party manufacturers are required to possess food safety certification, ideally recognised by the GFSI. As a minimum, we conditionally accept Hazard Analysis and Critical Control Points (HACCP) certification. This year, all our third-party logistics warehouses were certified against the BRC Global Standard for warehousing and distribution. We also undertook onsite audits of a prioritised selection of suppliers and third-party manufacturers, using our recently introduced supplier quality assurance (SQA) protocol. Driving value through centralised procurement In response to the lingering supply chain impacts of the COVID-19 pandemic, an increasingly challenging geopolitical landscape, and heightened supply chain disruptions from extreme weather events, our procurement team’s priorities have shifted significantly over the past two years towards mitigating supplier risk, ensuring seamless supply chain continuity, and managing inflationary pressures. While there has been a softening recently in the global price of some of our key commodities, this price softening has not been sufficiently reflected in our South African market due to the depreciation of the rand and the cost impact of sustained loadshedding. In addition, a firming in fertiliser pricing has driven higher production costs for critical commodities, such as sugar, beans and tomatoes. Extreme weather events and limited access to critical raw materials have further strained the supply fundamentals of key commodities – including cocoa, oranges, gelatine, eggs, groundnuts and beans – exacerbating an already constrained supply chain feeling the impacts of China’s COVID-19-related lockdown that was only lifted earlier in this financial year. 51 Tiger Brands Limited Integrated annual report 2023www.tigerbrands.comOverviewOur strategyGovernanceOur performanceOur operating contextOur businessOptimising our supply chain continued This year, we have been executing on our ambition to become a leading procurement function in South Africa and to bring us in line with global procurement best practice. We have begun implementing our recently revised procurement strategy, focusing on three key pillars: building value-enabling capabilities, becoming functionally excellent in our chosen capabilities, and supporting the team and organisation with leading digital technologies. These changes will deliver an estimated R500 million in productivity gains over three years, enhancing our central procurement function through increased access to spend, capability building, digital enablement, and changes in our operating model. We have made good progress this year with our digital transformation process, starting work on digitising source-to- contract activities, as well as our supplier management, spend analysis and risk management functions, all of which will go live before the end of this calendar year. Digitising and automating our operational and administrative activities will streamline our policies and processes, contributing to increased business efficiencies, improved compliance and spend visibility, and enhanced cost-savings. We remain committed to making further investments in talent, with advanced training and capacity building sessions already in progress. As we refine our supply chains, we are continuously striving to ensure more sustainable sourcing practices. Over the last two years, our procurement team has successfully implemented new procurement and supplier management policies and revised our existing policies on B-BBEE and ethical sourcing. Transforming our logistics activities In 2021, we launched an ambitious logistics transformation programme aimed at realising significant cost-savings and improving overall efficiencies. The programme covers 12 broad focus areas and several individual projects with the goal of developing a function that is self-sufficient and agile, where we have full ownership of the intellectual property and data, as well as improved overall visibility and management of the logistics process. Since launching the programme in 2021, we have secured R210 million in savings, and anticipate reaching R260 million by the end of the next financial year. Through this programme, we have implemented a new warehouse management system at two of our warehouses, which has already delivered some significant benefits, reducing stock-taking time, improving stock accuracy to 99,9%, improving stock rotation and traceability, and improving direct delivery efficiencies. We will be rolling this system out at our other sites next year. We have completed the re-organisation of our customer support centre, which delivered R2,5 million in savings, and we have introduced a pallet weight optimisation initiative at some of our facilities, yielding improvements in transport cost efficiencies. We have also introduced a freight desk control tower and on-boarded a specialised team. This has provided end-to-end visibility of both import and export flows, resulting in improved stock management and enabling leveraging of economies of scale to obtain best freight rates and overall improved freight management. The annual freight rate benefits are estimated to be around R12 million. We are currently reviewing the possibility of converting our forklifts from gas/diesel to lithium ion batteries, which we believe will deliver significant environmental and cost-savings benefits. With almost 40% market share and one of Tiger Brands’ Billion Rand Brands, Fatti’s and Moni’s has been a firm favourite in the pasta category. This year, the Fatti’s and Moni’s Always Eat’alian TV campaign was recognised with a silver Loerie award, the highest accolade for creativity and innovation. Source: Circana 52 Being obsessed about cost-savings and efficiency This year, we delivered R525 million in savings, reflecting our drive in instilling a culture of cost-savings. Performance summary 2023 Positive developments › R525 million in cost-savings realised this year exceeding the guidance of R460 million › Reduced SKUs across the Consumer Brands segment by 16% and across Grains by 12% over the last two years › Significant progress in driving execution of our digital transformation strategy Opportunities for improvement › Continue to deepen our cost-efficiency culture change › Improve execution in realising identified efficiencies in procurement, process automation, product reformulation, SKU rationalisation, and our manufacturing, distribution and logistics activities Unlocking costs and cash We have been running a strong cost-savings culture-change initiative across the company since 2020. The aim of this initiative has been to ensure a more systemic group-wide approach to driving efficiencies across our activities, and to enhance the quality and quantity of cost- savings projects that are being tracked. To deliver on this ambition, we changed the governance structure, introduced clear process steps from identification to realisation of savings, improved internal transparency, and strengthened our accountability measures to ensure appropriate ownership of expenses. We have been further strengthening our central revenue management capability within each of our business units, delivering positive results in most parts of the business, and we have seen positive results from our revised trading terms that provide stronger pay-for-performance incentives. We have also continued to deliver cost-savings and reduce complexity through SKU rationalisation. Although we have been successful over the past three years in meeting or beating our continuous improvement targets – delivering R525 million in savings this year – we recognise that we still have work to do to become more cost-competitive. This is particularly important in a highly constrained economic environment in which consumers are trading down, and where margins remain under pressure. To restore our cost leadership and improve operating margins, we have identified further potential savings in raw materials procurement and packaging design, improved manufacturing efficiencies and process automation, product reformulation and SKU rationalisation, while further optimising our distribution and logistics activities. Delivering digital transformation Having access to integrated IT solutions is an increasingly important source of competitive advantage, and fundamental to realising our vision of developing an effective, best-in-class supply chain. Last year, the board approved a new digital strategy that provides a comprehensive framework and roadmap to leverage digital technologies to improve productivity, drive growth, and enhance the experience of our customers, consumers, service partners and employees. 53 Tiger Brands Limited Integrated annual report 2023www.tigerbrands.comOverviewOur strategyGovernanceOur performanceOur operating contextOur businessBeing obsessed about cost-savings and efficiency continued Our primary focus this year has been ensuring effective execution of the year’s identified digitisation initiatives in three priority areas: › Food safety and quality: This three-year programme is on schedule to automate all aspects of the food safety and quality management process, which includes tracking non-compliances of specific suppliers, and managing the monitoring and reporting of internal quality management › Digitising the freight desk for both import and export goods: In the past, import and export function was managed manually and independently within different categories, relying heavily on external freight-forwarding and clearing agents. Through this freight desk project, we have been expanding the scope of our existing GTS application to encompass the import process. Launched in June 2023, the initiative has already delivered tangible commercial advantages › Uplifting our procurement capabilities: This 30-month initiative will enhance our centrally led procurement activities by implementing a technology system encompassing the full spectrum of our procurement capabilities, including sourcing, e-purchasing, contract management, supplier management and spend analytics We have completed our prioritisation process for next year and have targeted various specific programmes identified for in-depth investigation. These span a number of operational and functional disciplines including HR, order and returns management as well as customer and marketing analytics. During the year, we have also deepened the operational proficiency of our cyber risk management processes. Sensory testing in the quality laboratory at Tiger Brands’ Beverages manufacturing plant in Roodekop. 54 Igniting our people To deliver on our growth ambitions, we need to be able to attract, retain and develop future-fit employees who are consumer-obsessed, excellent executors, collaborative, agile, innovative and resilient, centred by our purpose, values and culture of winning behaviour. In the context of increased competition for skills and talent – and given recent challenges in terms of high rates of attrition and internal rotation – we have placed a strengthened focus on ensuring effective execution of our people strategy. Through the three strategic pillars of talent, leadership and great place to work, we seek to attract, retain and develop a diverse talent base, deepen our leadership capabilities, and provide an engaging work environment that inspires execution excellence, accelerates innovation, and creates an agile culture that is highly focused on the consumer. Talent We have laid a strong foundation in talent acquisition and management by identifying and developing the essential skills that align with our strategic goals and priorities. This has involved a concentrated effort on internal growth and promotion, accelerating the development of core and future-fit capabilities across relevant internal disciplines. This year, in response to more challenging market dynamics, we sharpened our focus on talent acquisition, accelerated the development of a diverse talent pipeline for critical skills, and continued to build core capabilities at all levels across the company. By strengthening our targeted talent management processes internally, we have improved our ability to transition talent across categories and functions, enhancing our capacity for internal talent growth. The focus on internal placements, coupled with a skills shortage in critical technical areas, has depleted our middle to senior leadership talent pipeline, and created readiness gaps in succession planning. To address these gaps, we have established a talent acquisition hub to better leverage talent insights, prioritising the filling of critical vacancies and building robust talent pools. Over the last three years, we have enhanced our ability to grow our own talent and improved our succession bench strength. We have also made substantial progress in our Rest of Africa talent strategy, filling essential positions, and implementing graduate development, coaching and mentoring to prepare for in-market placements. In 2023, we made a total of 409 new hires, filling 32% of our leadership vacancies through internal career moves and promotions. Tiger Brands was once again recognised as one of South Africa’s top employers. Performance summary 2023 Positive developments › 32% leadership vacancies filled internally › 64% African, Coloured, and Indian (ACI) representation in top-tier management › Substantial progress in delivering on our Rest of Africa talent strategy › Accelerated implementation of our targeted talent development programmes › Improved participation rate and engagement score in our annual employee engagement process › Once again recognised as one of South Africa’s top employers Opportunities for improvement › Strengthening stability and tenure particularly at middle-management level › Improving internal and external talent mapping and pipeline management › Streamlining decision-making and reporting lines through a revised operating model › Strengthening performance-based incentives, and addressing employee work-life balance needs 55 Tiger Brands Limited Integrated annual report 2023www.tigerbrands.comOverviewOur strategyGovernanceOur performanceOur operating contextOur businessOur 12 to 18-month WINGS accelerated leadership development programme, launched in 2022, aims to bolster succession planning by fast-tracking the development of experienced talent by rotating them into various roles across the business and providing mentorship and coaching from senior leaders to support their learning. Through this programme we have successfully promoted two employees to senior leadership roles in the company in the last year. In 2023, we introduced the Re-imagine Tiger leadership development programme in partnership with GIBS Business School, in which participants collaboratively develop innovative solutions for key business ventures aimed at accelerating Tiger Brands’ growth agenda. This year, 163 leaders participated in leadership development programmes. Great place to work We are dedicated to creating a great place to work and to growing our company culture by continuously enhancing our employee value proposition and strengthening employee engagement. Our aspiration is to develop a culture that is collaborative, innovative, agile and consumer-obsessed where our people are inspired to execute on strategy with excellence. Our culture transformation roadmap clearly defines the aspiration for our culture and identifies the priority actions for getting there. Ensuring employee partnership in the culture transformation journey is a fundamental principle of our approach. Each year, we conduct our Voice of Tiger (VoT) employee survey to assess the quality of employees’ experience at Tiger Brands and their level of engagement in their roles and at the workplace. The survey results inform the actions we take to deliver our culture transformation journey. In this year’s survey, undertaken in November 2022, we achieved an 85% participation rate, with an overall engagement score of 70 (up from 66 in the prior year), suggesting a generally positive work experience among employees, yet with evident room for improvement. We are acting on this feedback, engaging with leadership teams and employees to further embed the desired culture transformation, including through specific initiatives on strengthening performance-based incentives, streamlining decision-making and reporting lines, and addressing employee work-life balance. Igniting our people continued Learning and development Targeted skills development is executed through our learning academies, which we have recently aligned to our core capabilities and digitalisation goals. Remote-working arrangements have enabled us to integrate digital learning more seamlessly into daily work practices. In 2023, we accelerated the implementation of our targeted development programmes to strengthen internal pipelines and support the growth of our own talent. In 2023, 3 298 employees were trained through our academy core capability programmes. We invested R93 million in learning and development across all areas of our business, averaging R861,68 per full-time employee. Diversity and inclusion We continue to make progress on promoting workforce diversity, increasing African, Coloured, and Indian (ACI) representation, and promoting gender equity and the inclusion of people with disabilities. During the year, we implemented various women development programmes to support achievement of our gender equity goals. The Tiger women’s network offers networking and development opportunities, as well as personalised coaching and mentorship. Training in unconscious bias, and various other dialogues supporting a culture respectful of diversity and non- discrimination continue to form part of our leadership development and cultural transformation efforts. In 2023, our workforce was 96% ACI, with a management level representation of 64% ACI in top-tier management. Internal leadership placements were 83% ACI, and our management trainee intake was 100% ACI. Females make up 31% of our workforce, with 30% in top management and 46% at senior management. The year’s management trainee intake was 82% female. Most new hires belonged to Generation Y, with 97% ACI and 52% female representation. Our full employment equity profile is reviewed in more detail in our sustainability report. Leadership We work to deepen leadership capabilities across the organisation through our future-fit leadership development programmes and targeted rotations, using leadership assessment tools, mentoring and coaching to further enhance performance, stimulate innovation and catalyse our desired culture. We track progress on leadership behaviour shifts by using a 360° MultiRater feedback platform that helps foster a growth mindset within our leadership talent pool and bring our values and behaviours to life. 56 Employee wellbeing Our employee wellbeing programme, THRIVE, makes physical, emotional and mental-health support available to employees and their families. This includes 24-hour telephonic counselling, and access to professional dieticians, bio-kineticists, and financial and legal advisors. In line with our goal of prioritising better work-life balance, we have embraced hybrid and flexible work arrangements, offering employees more autonomy in where and when they work. Remuneration, recognition and reward We reward our employees to inspire exceptional performance and attract and retain top talent. We revise our reward strategy annually to boost performance, align with market standards, and satisfy the employees and shareholder expectations. We administer rewards fairly and responsibly, complying with our remuneration policy, International Labour Organization (ILO) conventions, and relevant laws. Our remuneration policy includes an explicit objective to address unjustifiable pay differentials. Our pay practices mitigate against unjustifiable pay differences between employees in the same role and between race and gender groups. A five-year long, company-wide initiative has succeeded in significantly narrowing the gap between the lowest paid groups and the highest paid groups. At every compensation review opportunity, we consider, report, and address pay differentials seen through various lenses, including gender and race. Our reward framework follows a “total reward” approach, consisting of guaranteed pay, variable pay, and a range of market-relevant benefits, as well as professional growth opportunities that recognise individual and team performance. Our remuneration strategy is aligned with KPIs to measure and reward performance against our core business strategy. Long-term incentives are used to attract, retain, motivate and reward eligible executives, senior managers, and key talent to influence the performance of the group and align their interests with the interests of the company’s shareholders. This, in turn, aims to incentivise employees to meet long-term growth and sustainability plans. Our STI scorecard includes both financial and non-financial elements, with remuneration incentives indirectly linked to sustainability performance via weighted measures for achieving strategic sustainability-related objectives, including safety, quality, efficiency and carbon emissions. The incentives are applicable across the group from senior executives to employees who operate our plants. We continue to enhance our remuneration strategy and improve alignment with our strategic key performance indicators and shareholder interests. Employee relations Guided by our employee relations partnership framework, we seek to foster meaningful collaboration between management, employees and trade union partners, ensuring that as a minimum, we adhere to the ILO core conventions and relevant labour laws. This year, we maintained a high level of interaction, placing an emphasis on line manager skills development and implementing targeted interventions to improve employee engagement and wellbeing, advancing our collective bargaining strategies, and resolving outstanding legacy issues. We have made notable progress, particularly in enhancing employee engagement within our manufacturing operations, and are gradually seeing an improvement in the sense of partnership between our employees and line managers on the shop floor. As at year end, 51% of our workforce is unionised. Our collective bargaining has stabilised, with a recent shift toward standardising processes and moving from annual to multi- year wage agreements. This year, wage negotiations were conducted for five of our sites, with three of the five being settled as two-year deals, and the remaining site settled as a one-year deal. With the year ahead potentially marked by tensions surrounding the national election, we will be looking to further strengthen workforce relationships, leveraging the impact of the two-year agreements signed last year, and beginning the next wage negotiation cycle across most of our sites. 4-in-1 benefits High in Energy Source of Fibre Energy Support Brain Support Quick and Easy Just add Milk High in fibre for digestive balance High in Energy High in V itamins B1 Source o f V itamins B3 and B6 SouSourrccee oo ff Fibre Source o f Selenium Shopper Proposition A trusted brand that now offers an appealing, nutritious, and an affordable option to the Flakes segment Consumer Proposition Healthier option containing B Vitamins, Vitamins C & E and Zinc which helps build immunity and sustain energy. For a more balanced diet and a healthy lifestyle, Jungle offers Bran Flakes high in fibre for improved digestive wellbeing to help families have a great start to the day. Trade Proposition Increased penetration at a competitive price point and trade margin. Marketing Support TVC Instore Activations On shelf POS to improve shopability as well as communicating new look and added benefits. What is in it for the consumer? Consumers also need breakfast that is nutritious and healthy to help provide them with essential nutrients and vitamins that are important to kick--start their metabolism. For a more balanced diet and a healthy lifestyle, Jungle offers Bran Flakes high in fibre for improved digestive wellbeing to help families have a great start to the day. Consumer insights A healthy start is a good start with breakfast that is not only high in fibre for digestive wellbeing, but also ensures sustained energy. Drive awareness on Instagram & Facebook. B Vitamin B1, B3, aanndd B6 B5 contributes to normal mental performance. 57 E-tailer Campaign Targeted sampling through e-commerce channels and drive promotional activity. Tiger Brands Limited Integrated annual report 2023www.tigerbrands.comOverviewOur strategyGovernanceOur performanceOur operating contextOur business Investing in a sustainable future Our sustainable future strategy supports the delivery of our core purpose, strives to ensure effective management of our relevant environmental, social and governance (ESG) risks, and reflects our commitment to addressing our most material environmental and social impacts and to creating broader social, economic, and environmental value. The strategy comprises three focus areas: health and nutrition, enhanced livelihoods and environmental stewardship. Our commitments under these pillars drive the pursuit of commercial opportunities in health and nutrition, the systematic transformation of our supply chain to promote more inclusive economic development, and the adoption of environmentally responsible production practices. These strategic pillars are underpinned by seven critical anchors: food safety and quality; ethical supply chain practices; safety, health and environment; responsible marketing; partnerships; and transparency. These critical anchors represent key areas of competency and practice that are crucial for building a strong foundation in responsible business practice in our sector. A summary of our performance in these three strategic focus areas is presented below; a more detailed review of our sustainability and ESG performance is provided in the Tiger Brands sustainability report 2023, available at www.tigerbrands.com/sustainability/reporting Health and nutrition We will enable consumers to improve their health and wellbeing by providing affordable, good nutrition. 2030 targets Key commitment Empower good nutrition choices for 100 million African consumers annually, through: › Eat Well Live Well (EWLW) › Product innovation and renovation › Branding and messaging › Feeding schemes and SED partnerships › Funding of emerging food trends through the Tiger Brands Venture Capital Fund › Portfolio shifts 75% of our food portfolio to meet our EWLW nutritional standards for healthier product categories. Develop nutritional standards for our products that meet or exceed globally recognised nutritional guidelines. Develop more nutritious and affordable products, including fortification of new and existing products. Leverage our brand and marketing activities to promote consumer health and nutrition awareness and inspire positive behaviour change. Play a leading role in modern food labelling practices. 2023 achievements › Developed criteria for assessing the health category of our snacking products › 52% of our food basket meet our EWLW nutritional standards › Six healthier products launched, including: four nutrition products and two affordable nutrition products › Micronutrient enrichment across >30% of our portfolio › R75 million spent on marketing health and nutrition products › KOO healthy brand refresh › Reached five million consumers through the EWLW programme › Launched Family Food Matters case study report › 100% adherence to EWLW and Be-Nutrient-Wise labelling standards › Revised Tiger Brands’ position on the imminent FOP labelling regulations Enhancing livelihoods Priority SDGs 2030 targets Invest in sustainable communities › 20 community enterprises Enterprise and supplier development › Support 1 000 black enterprises › Create 4 000 jobs › ESD fund of R400 million through partnerships Preferential procurement › Prioritise local/regional sourcing of agricultural raw materials › 50% of our total local procurement spend towards black/black women-owned suppliers › 100% of our products ethically sourced Employee diversity › 50% female representation › 80% African, Coloured and Indian (ACI) representation across all management levels Key commitment 2023 achievements Annually contribute at least 1,5% of net profit after tax towards SED activities that promote sustainable thriving communities. Support new black/black women- owned enterprises and create sustainable livelihood opportunities by 2030. 50% of our total local procurement spend will be towards black/black women-owned suppliers by 2030. › R70,8 million SED spend › 228 648 food hampers distributed in total › 300+ schools reached through EduPlant › 5 209 food hampers distributed to students across 14 campuses through Plates4Days › 13 845 reached monthly through Family Food and Alleviating Child Hunger Initiatives › R104 million Dipuno ESD Fund › 54,4 million invested in agri-development since Dipuno Fund launch › Three new agriculture aggregators on-boarded › Five black aggregators supported to cultivate small white beans, white maize and wheat › Nine farmers supported under the aggregator model › 137 small-scale farming jobs created, including 44 permanent and 93 seasonal › Winner of Small Business Development Service Provider of the Year award at the Inaugural National Presidential SMME Awards 2022 › 90% of total procurement spend with local suppliers (municipalities, public sector companies and includes international suppliers with a local presence) › 53% of local procurement spend with B-BBEE- verified suppliers › 17% of total local procurement spend with black and black women-owned suppliers › R25 billion with local suppliers › R18,3 billion total spend with B-BBEE-verified suppliers › R6,9 billion with suppliers that qualify as black-owned › R6,0 billion with suppliers that qualify as black women-owned To attract, source and develop a skilled and diverse workforce, and create an inclusive and collaborative work environment where our people can thrive, grow and innovate. › 31% female workforce › 46% female senior management › 30% female top management › 80% ACI across all management levels › 57,6% ACI in senior management › 63,6% ACI at top management › 0,6% people with disabilities 58 59 Tiger Brands Limited Integrated annual report 2023www.tigerbrands.comOverviewOur strategyGovernanceOur performanceOur operating contextOur businessTiger Brands Limited Integrated annual report 2023 Investing in a sustainable future continued Environment We will significantly reduce our environmental impact through innovative solutions. Key commitment 2023 achievements Optimise our energy usage through integrated and environmentally friendly energy options. › 0,6% year-on-year reduction in absolute total GHG emissions › 0,9% year-on-year reduction in GHG emissions Optimise our water consumption through the evaluation of water reuse opportunities and responsible effluent discharges. Develop innovative product offerings that are “good for you” and “kind to the environment”. Provide innovative packaging solutions that minimise environmental impact. intensity › 0,3% year-on-year reduction in absolute energy use › 0,9% year-on-year reduction in electrical energy intensity › 4% year-on-year reduction in absolute water use › 1,9% reduction in water-use intensity › 32,1% year-on-year reduction in waste to landfill intensity › Secured waste management contracts for all sites › Baseline food waste assessment completed, with target set for 20% reduction by 2027 › 70% of plastic packaging is recyclable › Developed tools for extended producer responsibility (EPR) compliance Implement closed-loop/circular economy initiatives that stimulate sustainable economic opportunities. › Continued exploring value-adding circular economy projects for recycled plastic waste › Continued to work through Consumer Goods Council Leverage our brand and marketing activities to inspire positive behaviour change in consumers. of South Africa (CGCSA) to develop a voluntary industry food-waste reduction framework for South Africa 2030 targets Sustainable manufacturing facilities Energy › 65% of all electrical energy at manufacturing sites from sustainable energy solutions › Reduce energy intensity (kWh/ tonne) across all sites by 30% Water › Reduce water intensity (kℓ/tonne) across all sites by 30% › Achieve a water-intensity figure of 1,12kℓ/tonne GHG emissions › Reduce carbon emissions by 45% for scope 1 and 2 emissions › Work towards achieving net zero carbon emissions by 2050 Waste › Zero waste to landfill at all sites › 50% reduction in production of food waste from a 2022 baseline Sustainable packaging solutions › 100% of plastic packaging is recyclable/compostable › All plastic packaging (by volume) to contain at least 50% recycled plastic An Eduplant training session. Eduplant is South Africa’s national school nutrition and food security programme supported by Tiger Brands. 60 61 www.tigerbrands.comOverviewOur strategyGovernanceOur performanceOur operating contextOur businessChief financial officer’s review DEEPA SITA: Chief financial officer Tiger Brands’ results for the 12 months ended 30 September 2023 reflect the challenging trading environment marked by high food inflation, cost-conscious consumers continuing to trade out of premium products, rand depreciation and unreliable electricity supply. half, resulting in the overall gross margin declining to 27,7% from the 30,3% reported in the prior year. Group operating income was impacted by non-recurring items related to insurance proceeds of R137 million (2022: R190 million) and retrenchment costs in the current year of R95 million (2022: reversal of R8 million). Group operating income decreased by 9% to R3,1 billion. Income from associates increased by 46% to R697 million, driven by a good underlying performance from Carozzi. Earnings from National Foods were favourably impacted by R120 million due to a change in functional currency from Zimbabwean dollars (ZWD) to United States dollars (USD) as a consequence of listing on the Victoria Falls Stock Exchange (VFEX) in January 2022. Net financing costs for the year amounted to R238 million compared to R75 million last year. The increase was due to higher interest rates, the impact on opening cash balances of the R1,5 billion share buy-back, which commenced in June 2022 and concluded in August 2022, and higher average levels of working capital investment despite progress being made in managing these levels down in the second half. The group’s effective tax rate before fair value losses, non-operational items and income from associates declined slightly to 29,0% from 29,4% last year. EPS decreased by 2% to 1 725 cents (2022: 1 762 cents). HEPS increased marginally by 2% to 1 735 cents (2022: 1 702 cents). The variation in EPS when compared to HEPS is due to the non-recurrence of certain capital profit items accounted for in EPS in FY22, which were excluded from HEPS. A mixed operational performance This year, our strategies in our Exports division paid off, while the Domestic Business reflected the tough operating environment, with mixed performances across our local divisions. In Grains, revenue benefited from price increases across all segments and a strong volume performance in rice and bread. While bread volumes and market shares increased in line with the intended strategy, price realisations and profit margins were negatively impacted by adverse channel mix as volumes in the general trade declined. The bakery business was also impacted by the significant incremental cost of loadshedding versus prior year (R69 million in FY23 vs. R18 million in FY22) and higher conversion costs due to higher wages and utilities. Our sorghum-based Breakfast and Beverages business delivered a muted performance, impacted by supply challenges and lower demand. Although our Jungle business delivered solid profit growth, adverse product mix, higher raw material and distribution costs, and sub-optimal factory performances in the Rice and Pasta segments adversely impacted overall profitability. Despite double-digit inflation across the portfolio, the impact on group volumes was minimal. Total revenue increased by 10% to R37,4 billion, driven by price inflation of 11%, favourable foreign exchange gains of 1%, and marginal overall volume declines of 2%. Volume growth in Exports was offset by volume declines in the Domestic Business, primarily attributable to Milling and Baking, Groceries and Baby, as well as the Deciduous Fruit business due to the timing of shipments. These volume declines were partially offset by good volume growth in Rice, Beverages, Home and Personal Care, Tiger Brands Food Service Solutions, as well as Chococam. Cost-containment initiatives and supply chain efficiencies continued to make a positive contribution to the results at R525 million, R65 million higher than the R460 million previously guided. Despite this, the ongoing challenges of fully recovering higher input costs persisted in the second 62 Revenue increased 10% year-on-year to R37,4 billion, driven largely by price inflation (R’million) Total revenue Cost of sales Gross profit Gross profit % Sales, marketing and distribution expenses Other operating expenses Operating income before sundry income Sundry income Operating income before impairments and non-operational items Operating income % Impairments and fair value losses Operating income before non-operational items Non-operational items Profit including non-operational items Net finance costs Foreign exchange profit/(loss) Investment income Income from associated companies Profit before taxation Taxation Profit for the year EPS from operations HEPS from operations FY23 FY22 37 388 (27 048) 10 340 27,7% (5 671) (1 719) 2 950 168 3 118 8,3% (43) 3 075 33 3 108 (238) (34) 18 697 3 551 (817) 2 734 1 725 1 735 34 029 (23 713) 10 316 30,3% (5 257) (1 847) 3 212 219 3 431 10,0% (16) 3 415 28 3 443 (75) 46 23 478 3 915 (1 020) 2 895 1 762 1 702 Decline in gross margin attributable to higher input costs and under- recoveries Cost-containment initiatives and supply chain efficiencies amounted to R525 million, ahead of R460 million target Operating income impacted by: › Higher conversion costs › Adverse product mix › Loadshedding › Retrenchment costs of R95 million Higher financing costs driven by higher average debt levels and interest rates as well as higher working capital requirements Income from associates benefited from good underlying performance at Carozzi and change in functional currency reporting at National Foods Within Consumer Brands, all segments delivered top-line growth, with a particularly strong performance from Snacks and Treats, Beverages and Tiger Brands Food Service Solutions. Lower profitability is reflective of the ongoing challenges of fully recovering from higher input costs, particularly from agricultural inputs, as well as the fact that certain categories reflected the difficult consumer environment with absolute category volume contraction. Home and Personal Care’s performance was driven by a solid recovery in both segments. Revenue in Personal Care was up 24%, with higher volumes in skincare brands, Ingram’s and Skin Clinic. Operating income benefited from strong volume growth, price increases, and lower inflation on key ingredients. Home Care’s top-line performance was supported by a better pest season, while improved factory efficiencies, cost containment initiatives, and favourable mix resulted in higher operating income. Exports and International delivered a pleasing performance, driven primarily by a step change in the Rest of Africa business, with Exports reporting a marked improvement across all key metrics, namely volumes, revenue and profitability. Exports and International increased revenue by 14% to R4,9 billion while profits were up 71% to R601 million, benefiting from improved profitability, especially within Exports and Deciduous Fruit, as well as an improvement in the quality of the debtor’s book. The sale process for Deciduous Fruit (Langeberg & Ashton Foods) was re-opened earlier in the year, with the final stage of a due diligence process currently underway. The business will continue in its current form to allow the process to be completed. 63 Tiger Brands Limited Integrated annual report 2023www.tigerbrands.comOverviewOur performanceGovernanceOur strategyOur operating contextOur business Chief financial officer’s review continued Major contributors to decrease in cash for the period (R’million) 4 264 2 703 247 (1 561) (1 564) (808) (208) 726 (1 144) Cash operating profit Working capital changes Cash generated from operations Dividends received from associated companies Dividends paid Tax paid Net financing costs Cash outflow from investing operations Net borrowings 1 116 776 (292) Other Cash at beginning of period Net cash closing balance Chococam’s operating environment was characterised by high input costs, unreliable electricity supply and increased regulation pertaining to imports. Nevertheless, revenue increased by 30% to R1,4 billion, comprising price inflation and solid volume growth, driven by a strong performance from the spreads segment while pricing stability and optimal packaging solutions resulted in market share gains. Operating income benefited from sound cost control. The overall performance was further boosted by rand weakness on translation. Further details are provided in the operational review. Cash flow and capital expenditure Cash operating profit relative to the prior year was unchanged at R4,3 billion. The benefit of lower inventory outflows on working capital was offset by a decline in trade and other payables, which is in line with the company’s strategy of securing raw materials, packaging, and ingredients in response to a volatile and unreliable global and local inbound supply chain. This resulted in cash generated from operations increasing marginally to R2,7 billion. Capital expenditure for the period amounted to R1,2 billion (2022: R1,0 billion). The group ended the period in a net debt position of R923 million (2022: net cash R143 million). Final ordinary dividend The company declared a final ordinary dividend of 671 cents per share for the year ended 30 September 2023, in line with the company’s dividend policy of 1,75x cover based on HEPS. Together with the interim dividend of 320 cents per share, this brings the total dividend for the year to 991 cents per share. Shareholders are referred to the dividend declaration in the AFS for further details. approached the National Institute of Communicable Diseases (NICD) for access to their records, which are vital to a determination of the action. Tiger Brands is yet to receive a response from the NICD. Farewell The last three years at Tiger Brands have been challenging as well as rewarding. During my tenure, we have made significant investments in technology and digital capabilities, which will help drive operational efficiencies, increase automation, improve customer and consumer data and analytics, and drive revenue management initiatives. We have resourced up in critical functions such as logistics and procurement, the benefits of which will emerge in the medium to long term. In addition, we have pursued cost-saving opportunities with rigour, and laid the foundation that will benefit the group going forward. Finally, the year under review marks the successful transition and on-boarding of Deloitte & Touche as the company’s newly appointed independent auditors. I wish to thank Noel, my colleagues on the executive committee, the audit committee, and the board for their support and guidance throughout my time at Tiger Brands. I am particularly grateful to the finance team for their dedication, unwavering commitment and support. Finally, thank you to our shareholders for their investment and meaningful engagement. Tiger Brands has what is needed to deliver on its full potential and to restore the business to its rightful position. I wish Tjaart and the executive team the very best and I will watch with keen interest from afar. Class action update As previously reported, pre-trial preparations by the parties to get the matter ready for trial are ongoing. As part of the overall endeavour to expedite the resolution of the matter, Tiger Brands’ legal team and the plaintiffs’ attorneys jointly Deepa Sita Chief financial officer 30 November 2023 64 Operational review GRAINS FINANCIAL PERFORMANCE Revenue R17 billion 2022: R15,5 billion 10% Operating income R838 million 2022: R1,3 billion 34% Operating margin 4,9% 2022: 8,2% -330bps Performance summary 2023 › Albany gains market share ahead of the market › New Albany brand positioning › Sorghum impacted by a 42% increase in raw material prices due to reduced plantings › Well-executed pricing strategy in Rice resulted in margin recovery in H2 › Launch of Tastic Rice chips and cakes › Introduction of nutrient-enhanced ready-to-drink Jungle Oats functional drink Revenue by sub-segment ● 53% (2022: 53%) Millbake ● 5% (2022: 6%) Breakfast (Jungle) Sorghum-based products ● 6% (2022: 6%) ● 9% (2022: 9%) Maize ● 5% (2022: 5%) Pasta ● 22% (2022: 21%) Rice Revenue increased by 10% to R17,0 billion, reflecting average price inflation of 13%, offset by overall volume declines of 3%. Operating income recorded a decline in the second half relative to the same period last year, driven by all segments except Maize, and Oat-based Breakfast (Jungle), as most segments experienced higher conversion costs compounded by adverse product mix. As a result, operating income for the year ended 34% lower at R838 million. Revenue in Milling and Baking increased by 8% to R11,5 billion, as price inflation of 13% was offset by a 5% volume decline. While bread volumes and market shares increased in line with the intended strategy, realisations and profit margins were negatively impacted by adverse channel mix, with volumes in the general trade declining. The Bakery business was also impacted by the significant incremental cost of loadshedding versus prior year (R69 million in FY23 vs. R18 million in FY22) and higher conversion costs due to higher wages and utilities. Lower wholesale and retail wheat volumes were partially offset by higher inter-company volumes, while operating income within this segment was adversely impacted by unfavourable customer mix and higher costs of distribution. Maize’s performance was adversely impacted by continued volume pressure driven by overall category declines and aggressive competitor pricing, particularly in private label. This was partially offset by lower conversion costs driven by lower generator utilisation and resultant diesel cost-saving in the second half. The Sorghum-based Breakfast and Beverages business delivered a muted performance, impacted by supply challenges and lower demand as a result of multiple price increases to offset the exponential increase in sorghum. Overall, Milling and Baking’s operating income declined by 25% to R602 million. Revenue in Other Grains grew by 14% to R5,5 billion, as all categories benefited from improved pricing, while Rice reported improved volumes year-on-year. While the Oat-based Breakfast (Jungle) segment reported pleasing operating profit growth, adverse product mix, higher raw material and distribution costs, and sub- optimal factory performances in the Rice and Pasta segments adversely impacted overall profitability. Operating income declined 50% to R235 million. Following poor price/volume management in Rice in the first half, pleasing progress was made in restoring underlying profitability, particularly in the last quarter. Overall, a solid volume performance was sustained despite high levels of price increases required in the second half to restore margins. 65 Tiger Brands Limited Integrated annual report 2023www.tigerbrands.comOverviewOur performanceGovernanceOur strategyOur operating contextOur business Operational review continued CONSUMER BRANDS FINANCIAL PERFORMANCE Revenue R13,3 billion 2022: R12,4 billion 8% Operating income R1,2 billion 2022: R1,4 billion 18% Operating margin 8,7% 2022: 11,1% 240bps Performance summary 2023 › Category contraction evidence of change in consumer behaviour, shifting spend to essential items and more affordable options › Value propositions in groceries gain traction › Relocation of peanut butter plant on track › Beverages gain share in declining category reflective of price pack architecture strategies and innovation funnel › Snacks and Treats innovations well- received by customers and consumers › Baby category impacted by affordability issues resulting in lower consumer demand across key segments Groceries’ revenue was largely unchanged at R6,4 billion, with price inflation of 8% offset by lower volumes of 7%. The muted top-line performance reflects the lower category demand that was evident in the first half, continuing into the second half, with market volumes contracting by 5% over the year. In addition to the adverse category dynamics, raw material shortages in the first half, exacerbated by the low supply of eggs in the second half due to avian influenza, resulted in factory under-recoveries. Operating income declined by 49% to R308 million. Improving profitability is a primary focus area for FY24, with cost reduction being a critical focus area. Good progress has been made in this regard, with the factory restructuring completed and initiatives underway to reduce warehousing and distribution costs. Moreover, the relocation of the peanut butter plant has progressed well, with the startup of the new site on track for the first quarter of FY24. The Snacks and Treats division recorded revenue growth of 16% to R2,8 billion, supported by price inflation of 6% and overall volume growth of 10% achieved primarily by the sugar segment. The category remains in volume decline as consumers limit basket spend to necessities. Despite this, Snacks and Treats achieved value and volume growth ahead of the market over the 12-month period. Operating income, however, was adversely impacted by the reconfiguration of the plant to improve safety protocols as well as raw material shortages. This resulted in significant under- recoveries and lost sales. Operating income declined by 13% to R229 million. Beverages’ revenue increased by 17% to R2,2 billion, supported by volume growth of 12% and price inflation of 5%. Volume growth was achieved across all dilutable brands benefiting from optimal pricing and effective promotional activity. This was offset in part by a less-than-favourable volume performance from sports drinks (Energade), which faces strong competitor activity and new listings. Despite significant increases in the cost of key ingredients and packaging items, operating income for the full year increased 27% to R340 million. This was due to the successful execution of the pricing strategy in the dilutable segment, focused continuous improvement initiatives, price pack architecture, and revenue growth management. The Baby segment performance reflects the continued affordability challenges across the category as consumers opt out of baby-specific offerings and into general meal and wellbeing solutions for the whole family. Revenue was marginally up at R1,1 billion, driven by price inflation of 5%, offset by volume declines of 4%. Volumes are reflective of lower demand across key segments, particularly jars, while pouches continue to gain share in a declining market. Operating income declined by 9% to R134 million, with the benefit of improved factory efficiencies being more than offset by lower volumes and an unfavourable product mix. Tiger Brands Food Service Solutions delivered a strong set of full-year results. Revenue grew by 25% to R835 million, with volumes increasing by 15% and price inflation of 10%. Operating income increased 12% to R152 million, benefiting from improved efficiencies in distribution. The business successfully executed accelerating growth in key channels while improving the product and margin mix, supported by strong customer relationships, cross-category collaboration and agile solutions. Revenue by sub-segment Groceries Snacks and Treats Beverages Baby Care Tiger Brands Food Service Solutions ● 48% ● 21% ● 16% ● 9% (2022: 51%) (2022: 19%) (2022: 15%) (2022: 9%) ● 6% (2022: 6%) Oros is the number-one ranked brand in the dilutables category having significantly grown market share this year through optimal pricing while price pack architecture gains traction. 66 67 Tiger Brands Limited Integrated annual report 2023www.tigerbrands.comOverviewOur performanceGovernanceOur strategyOur operating contextOur business Operational review continued HOME AND PERSONAL CARE (HPC) EXPORTS AND INTERNATIONAL Campho r Overall revenue in HPC grew by 17% to R2,2 billion, while operating income increased by 50% to R461 million, driven by a strong recovery from both segments. Personal Care’s revenue increased by 24% to R836 million, with price inflation of 12% and an equal increase in volumes driven by skincare brands, Ingram’s and Skin Clinic. The improved profitability was a consequence of strong volume growth, price increases, and lower inflation on key ingredients. As a result, operating income increased from R16 million last year to R118 million in the current period. Home Care’s performance was supported by a better pest season relative to the prior year. Revenue increased by 12% to R1,3 billion due to 3% volume growth and price inflation of 9%. Volume growth, together with improved factory efficiencies, cost-containment initiatives, and favourable mix resulted in operating income improving by 18% to R343 million. FINANCIAL PERFORMANCE Revenue R2,2 billion 2022: R1,9 billion 17% Operating income R461 million 2022: R308 million 50% Operating margin 21,3% 2022: 16,6% 471bps Performance summary 2023 › Strong recovery in Home and Personal Care › Relaunch and innovation in skincare segments, Ingram’s and Skin Clinic drive volumes in Personal Care › Home Care’s performance supported by better pest season relative to last year › Improved factory efficiencies supported by solar power installation boost operating income Revenue by sub-segment Home Care Personal Care ● 61% (2022: 64%) ● 39% (2022: 36%) Ingram’s is the market leader in camphor cream. The recent launch of body lotions leveraged the brand’s strength and was well-received by customers and consumers. FINANCIAL PERFORMANCE Revenue R4,9 billion 2022: R4,3 billion 14% Operating income R601 million 2022: R350 million 71% Operating margin 12,4% 2022: 8,2% 420bps Performance summary 2023 › Strong growth momentum across all key metrics, volumes, revenue and profitability, exceeding GDP growth and inflation in RoA markets › Rejuvenated and remodelled key distributor operator model evidenced by sound debtor management, better visibility and availability in the trade and higher rate of sale › Five power brands: Benny, Jolly Jus, Crosse & Blackwell, Ingram’s and Doom › Number 1 brand positions in Cameroon Revenue by sub-segment ● 47% Exports Central Africa (Cameroon) ● 30% ● 23% Deciduous Fruit (2022: 44%) (2022: 26%) (2022: 30%) Total revenue for Exports and International increased by 14% to R4,9 billion, driven by price inflation of 12% and favourable foreign exchange translation gains of 7%, offset by volume declines of 5%. Total operating income increased by 71% to R601 million, benefiting from improved profitability across all segments, especially Exports and Deciduous Fruit, and an improvement in the quality of the debtor’s book. We have seen a step change in trajectory for the Rest of Africa business, with Exports reporting a marked improvement in volumes, revenue and profitability. This has been driven by the rejuvenation and remodelling of our key distributor model, allowing for improved in-country visibility and availability of our brands. As a result, the improved sales momentum achieved in the first half for the Exports business was sustained in the second half, resulting in full-year revenue growth of 23% to R2,5 billion. Higher volumes, improved realisations, as well as better factory efficiencies resulted in operating income increasing significantly to R286 million (2022: R143 million). Chococam’s revenue increased by 30% to R1,4 billion (15% in local currency), comprising 9% volume growth and 8% price inflation, supported by favourable foreign currency translation movement of 13%. Volumes were driven by a strong performance from the spreads segment, while pricing stability and optimal packaging solutions resulted in market share gains. Operating income in rand terms increased by 22% to R222 million (8% in local currency) driven by sound cost-containment initiatives and the benefit of rand weakness on translation. The sale process for Deciduous Fruit (Langeberg & Ashton Foods) was re-opened earlier in the year, with the final stage of a due diligence process currently underway. The business will continue in its current form to allow the due diligence process to be completed. 68 69 Tiger Brands Limited Integrated annual report 2023www.tigerbrands.comOverviewOur performanceGovernanceOur strategyOur operating contextOur business Governance Our board The board is the custodian of corporate governance within Tiger Brands. It has the ultimate accountability to monitor the performance of the company through properly constituted governance structures and ensure that the group adheres to the highest standard of ethical behaviour. BOARD COMPOSITION AS AT 30 SEPTEMBER 2023 Unitary board structure Gender Independent non-executives 9 Executives 2 Non-executive 1 Women 7 Men 6 1 Cora Fernandez stepped down as non-executive director with effect from 10 October 2023 2 Noel Doyle stepped down as CEO and executive director, with effect from 31 October 2023 3 Tjaart Kruger appointed as CEO and executive director, with effect from 1 November 2023 54% representation of women on the board against 50% target Demographic Age Tenure Black 9^ 60 to 69 years 9 0 to 3 years 6 White 4 50 to 59 years 1 3 to 6 years 4 ^ 3 Non-South Africans 40 to 49 years 2 6 to 8 years 3 Board diversity The Tiger Brands board comprises a diverse set of corporate leadership skills, perspectives and deep industry knowledge enabling the company to achieve its strategic objectives and support long-term value creation. To this end, the diversity of skills was further strengthened by the appointment of Sam Sithole as non-executive director with effect from 1 April 2023. Sam Sithole has deep-seated capital allocation skills and a proven track record of valuable contributions at other listed entities. The board provided effective leadership and strategic direction in the best interest of the company and its stakeholders, and is satisfied that it has executed on its mandate. Any term in office by an independent non- executive director exceeding nine years is subject to a vigorous review by the board. Mr Michael Ajukwu will complete nine years of service as a non-executive director on 31 March 2024. After taking into account, among other considerations, the extent to which the diversity of his views, skills and experience continue to enhance the board’s effectiveness, the board is satisfied that Mr Ajukwu’s independence is not impaired by his length of service and resolved to extend his tenure until the company’s AGM in 2025. 46% representation of black board members (South African) against 50% target 70 Separation of powers The board is led by the independent chairman, whose role and functions are clearly defined and separate from that of the CEO. The board charter sets out a clear division of responsibilities and authority at board level, providing that no individual director has unfettered powers of decision-making or influence over the board. Emma Mashilwane was appointed lead independent director with effect from 1 March 2023. The roles and functions of the chairman, the lead independent director and the CEO are clearly defined in the board charter. The group embraces the principles of ethical leadership and good corporate governance aligned to the King IV™ Code, JSE Listings Requirements, the Companies Act and other relevant laws and regulations. The application of the King IV™ principles is available on the company’s website on review of our integration of sustainability-related issues in our governance processes is provided in our  www.tigerbrands.com. A more detailed sustainability report. OUR EXECUTIVE COMMITTEE The executive committee is an experienced and diverse team with appropriate knowledge and backgrounds to effectively execute the group’s strategic priorities and is responsible for control of the operational activities in line with the board’s mandate. Executive gender Executive age Executive tenure Women 27% Men 73% 40 to 49 years 3 50 to 59 years 6 60 to 69 years 2 0 to 3 years 4 3 to 6 years 5 6 to 8 years 2 Attendance at board meetings Board meetings take place at least quarterly. The board also meets annually to consider and approve the group strategy and the budget for the ensuing year. This year, four special board meetings were convened to deliberate on critical matters that needed the attention of the board during the review period. ^ Cora Fernandez and Emma Mashilwane tendered their apologies for the unscheduled/special board meeting 9 Number of meetings 98%^ Attendance BOARD KEY HIGHLIGHTS IN 2023 › Monitored the business performance in the context of global macro-economic environment › Oversaw the board and senior management succession plan › Monitored the ESG and climate change landscape › Reviewed and supported the digital › Monitored the liquidity and balance sheet transformation agenda › Monitored stakeholder engagements › Considered the efficiency and optimisation initiatives › Reviewed the group’s strategy and supported its strategic goals for the period FY24 to FY28 › Monitored the organisational culture transformation journey and people agenda 71 Tiger Brands Limited Integrated annual report 2023www.tigerbrands.comOverviewGovernanceOur performanceOur strategyOur operating contextOur business Governance continued Board committees’ composition and responsibilities The board has delegated certain of its functions to board committees to assist it in meeting its oversight responsibilities. The board committees operate under clearly defined mandates that set out the roles, responsibilities and scope of decision-making powers. Annually, the membership of individual committees is reviewed for the appropriateness of skills and knowledge required by each committee to effectively execute its mandate. The chairmen of the board committees provide regular feedback to the board on key deliberations and decisions taken by the committees, as well as matters worthy of the board’s attention. The board is satisfied that the committees effectively executed their key responsibilities in 2023. AC AUDIT COMMITTEE Committee mandate The committee primarily oversees the integrity of the company’s financial reporting, monitors the strength of internal financial controls and ensures the effectiveness of assurance services and functions, with particular focus on combined assurance arrangements, including external assurance service providers, the finance function and internal audit. financial and non-financial reporting and recommended their re-appointment to shareholders Highlights in 2023 › Oversight of the integrity and effectiveness of the › Evaluated the effectiveness of the internal financial reporting controls and the combined assurance model › Assessed the independence of the external auditors › Considered the company’s performance, going- concern assumptions and liquidity management › Confirm solvency and liquidity in the context › Considered the accounting treatment and disclosures › Assessed the processes and effectiveness of our and the group’s impairment assessments of distributions compliance with regulatory requirements and changes to operating environment › Assessed the independence and effectiveness of external auditors Committee members › CH Fernandez (chairman)^ › FNJ Braeken › TE Mashilwane# › M Sello° › DG Wilson* Number of meetings: 4 Attendance: 99% The audit committee report is set out on page 2 of the annual financial statements. ^ Stepped down as non-executive director of the company effective 10 October 2023 # Appointed as member of the committee effective 10 October 2023 * Appointed as chairman of the committee effective 10 October 2023 ° Mahlape Sello tendered her apology for one scheduled audit committee meeting SET SOCIAL, ETHICS AND TRANSFORMATION COMMITTEE Committee mandate The committee fulfils the statutory duties as set out in Regulation 43 of the Companies Act and has oversight of and reports on organisational ethics, responsible corporate citizenship, sustainable development and stakeholder relationships, and assists the board in facilitating and supporting the development of transformation objectives, ensuring that the corporate culture is supportive of the approach and monitoring and reporting actual performance against these objectives. Highlights in 2023 › Monitored the group’s activities in respect of good corporate citizenship › Ensured processes are in place to promote an ethical culture › Monitored the socio-economic development initiatives aimed at uplifting the communities where Tiger Brands operates › Monitored stakeholder engagement activities and the employee relations environment › Ensured processes are in place to drive the company’s transformation objectives › Monitored the company’s regulatory compliance programme and the people’s agenda Committee members › TE Mashilwane (chairman) › MO Ajukwu › NP Doyle^ › GA Klintworth › TN Kruger# › M Sello* Number of meetings: 3 The social, ethics and transformation committee report is set out on page 6 of the sustainability report. Attendance: 99% ^ Stepped down as executive director of the company effective 31 October 2023 # Appointed as member of the committee effective 1 November 2023 * Mahlape Sello tendered her apology for one scheduled social, ethics and transformation committee meeting RS RISK AND SUSTAINABILITY COMMITTEE Committee mandate The committee assists the board in its oversight of the management of risk and mitigation strategies across the group. Highlights in 2023 › Evaluated and monitored key risks and the overall business risk profile and response plan to address the group’s risks appropriately › Ensured maturity and effectiveness of enterprise risk management processes and continuously monitored the implementation of the risk management plans › Reviewed the combined assurance plan › Considered the company’s ESG disclosures and assessed the implementation of science-based targets › Monitored the health, safety, security and environment activities of the group › Monitored the impact of water scarcity, loadshedding and climate change on the company’s operating environment › Monitored the quality and food safety performance and assessed the maturity level of Tiger Brand’s food safety culture Committee members › M Sello (chairman)* › MO Ajukwu › FNJ Braeken › CH Fernandez^ › GA Klintworth › GJ Fraser-Moleketi › OM Weber › DG Wilson# Number of meetings: 3 Attendance: 99% The risk management report is set out on page 37. * Mahlape Sello tendered her apology for one scheduled risk and sustainability committee meeting ^ Stepped down as non-executive director of the company effective 10 October 2023 # Appointed as member of the committee effective 10 October 2023 RC REMUNERATION COMMITTEE Committee mandate The committee assists the board in ensuring Tiger Brands’ remuneration policies and practices are aligned with the company’s objectives for value creation and are benchmarked to ensure fairness and competitiveness in remuneration of employees to attract and retain key talent and critical skills required to deliver business goals and results. Highlights in 2023 › Evaluated the effectiveness of the reward strategies, including policy and practices designed to attract, motivate and retain talent › Engaged with key shareholders and deliberated relevant feedback › Evaluated the group’s short-term and long-term incentives plans to ensure relevance and effectiveness › Continued engaging with our shareholders on remuneration policy and the implementation report to ensure appropriateness of the reward mechanism › Evaluated the minimum shareholding policy to encourage compliance Number of meetings: 5 Attendance: 100% The remuneration report is set out on page 75. ^ Stepped down as chair of the committee effective 10 October 2023 # Appointed as member of the committee effective 1 June 2023 * Appointed as chairman of the committee effective 10 October 2023 Committee members › DG Wilson (chairman)^ › GJ Fraser-Moleketi › TE Mashilwane › S Sithole# › LA Swartz* › OM Weber 72 73 Tiger Brands Limited Integrated annual report 2023www.tigerbrands.comOverviewGovernanceOur performanceOur strategyOur operating contextOur businessGovernance continued Remuneration and performance NG NOMINATION AND GOVERNANCE COMMITTEE Committee mandate The committee assists the board in ensuring performance of the board, its committees and directors. It reviews the composition of the board and its committees and recommends suitable candidates to fill vacancies on these governance structures, ensures the implementation of Tiger Brands’ succession plans, and reviews continuous development programmes for directors. Highlights in 2023 › Evaluated the board composition to ensure it appropriately reflects the combination of expertise and experience required for Tiger Brands’ future › Assessed the succession mechanism for the board, executive management and other critical skills to ensure effective talent pipelines are in place › Conducted the nomination and selection process to ensure right skills are considered for appointment to the board › Ensured continuous development of directors through the execution of appropriate induction and training sessions Number of meetings: 5 Attendance: 100% # Appointed as member of the committee effective 1 June 2023 ^ Stepped down as member of the committee effective 10 October 2023 Committee members › GJ Fraser-Moleketi (chairman) › TE Mashilwane › S Sithole# › LA Swartz › OM Weber › DG Wilson^ I INVESTMENT COMMITTEE Committee mandate The committee assists the board in assessing mergers, acquisitions, investment opportunities and divestments in line with the group’s strategic objectives. Highlights in 2023 › Assessed acquisition, investments and divestments Committee members › GJ Fraser-Moleketi opportunities in line with the group’s strategic objectives › Monitored the group's investments performance (chairman)^ › FNJ Braeken › CH Fernandez* › TE Mashilwane › S Sithole# › OM Weber › DG Wilson Number of meetings: 3 Attendance: 100% ^ Stepped down as chairman of the committee effective 10 October 2023 * Stepped down as non-executive director of the company effective 10 October 2023 # Appointed member and chairman of the committee effective 1 June 2023 and 10 October 2023, respectively Section 1: Background statement Statement from the chairman of the remuneration committee Dear stakeholder On behalf of the remuneration committee (the committee), I am pleased to present the 2023 remuneration report which, in compliance with best practice reporting as recommended by the King IV™ Report on Corporate Governance for South Africa highlights: › Key components of our remuneration policy › Alignment of our remuneration policy with the Tiger Brands’ business strategy and priorities › Implementation of the policy for the year ended 30 September 2023 (FY23) During the period under review, the Tiger Brands executive leadership team have led the execution of our five strategic priorities to drive business performance, growth and innovation while proactively navigating very challenging market conditions. The six strategic priorities continued to focus the organisation on: 1. Meeting the needs of the consumer 2. Building a growth pipeline 3. Be obsessed about cost-savings and efficiencies 4. Optimising our supply chain 5. Igniting our people 6. Investing in a sustainable future Our remuneration outcomes Operating in a pressurised consumer market, in the context of persistently elevated food inflation, high interest rates, low economic growth, and high cost of living, the company experienced pressure on sales volumes in the domestic business and overall group margins. As a result, the company did not achieve the threshold group EBIT target required to release funding for the group portion of the short-term incentive (STI). As our remuneration philosophy is clear on the principle of pay for performance, Tiger Brands executives (CEO, CFO and Exco) will receive no STI in FY23. The third and last tranche of share appreciation rights (SARs) that vested in FY23 did not achieve the minimum performance conditions for both the HEPS and ROIC targets. As a result, this tranche of SARs lapsed. The performance vesting shares (PVS) awarded in December 2020 will vest on 3 December 2023. For the period covering this award, the HEPS stretch target was exceeded, resulting in a 200% vesting rate of this portion (50% of award). The ROIC threshold target was achieved, resulting in a 25,49% vesting of this component. As a result, the overall vesting of the December 2020 PVS award is at 112,7%. The one-off retention payments and share grants made to executive committee members (as detailed in the FY22 report) to stabilise and retain key talent succeeded in retaining the services of 88% of recipients to ensure the continued focus on business performance in the context of challenging economic conditions. The resignation of the CFO, Deepa Sita, to pursue a new opportunity in Australia was announced during the year. Consequently, Deepa’s retention share awards under this initiative shall be forfeited as the vesting date is December 2024. As announced in October 2023, the board and Noel Doyle jointly agreed that he steps down as CEO. The terms of the separation were mutually agreed upon, the principles of which are disclosed on Tjaart Kruger, commenced service in November 2023. His compensation details are disclosed on page 89. The incoming CEO, pages 89 and 90. Policy enhancements During the period under review, further enhancements were made to the remuneration strategy to improve alignment of critical business key performance indicators (KPIs) to measure and reward performance against our strategy. As such, the remuneration committee approved the implementation of a revised short-term incentive (STI) scorecard that enables the achievement of key performance indicators as well as maintains a balance between the focus on financial, strategic and sustainability measures. As reported in FY22, ESG-associated targets to drive and measure our performance were implemented. To this end, the remuneration committee approved an ESG key performance indicator (KPI) and associated targets for inclusion in the FY23 short-term incentive scheme scorecard ( see page 83: FY24 group and business unit performance factors, and pages 90 and 91: executive directors performance scorecard FY23). The committee also approved an upward revision of on-target and stretch conditions in respect of the long-term incentive plan ( see table on page 84: LTI performance conditions). Shareholder voting outcomes The remuneration committee maintains strong relationships with shareholders and strives towards high standards of disclosure of our remuneration approach to ensure that there is a clear understanding of our remuneration policy and the practices that have been adopted. 74 75 Tiger Brands Limited Integrated annual report 2023www.tigerbrands.comOverviewGovernanceOur performanceOur strategyOur operating contextOur businessRemuneration and performance continued The non-binding advisory votes by shareholders for the past four years are summarised as follows: Voting history % vote in favour Remuneration policy Remuneration implementation February 2023 February 2022 February 2021 February 2020 73,70% 91,55% 89,20% 76,55% 53,81% 96,94% 82,24% 78,71% Neither remuneration policy nor the implementation report achieved the requisite threshold of 75% non-binding advisory approval. Tiger Brands is committed to continuous and robust shareholder engagement. To this end, key shareholders were engaged prior to the annual general meeting as well as in response to the voting outcomes. The outcomes of these engagements are addressed in the following section. Shareholder engagement The remuneration committee chairman, the chief human resources officer (CHRO) and investor relations conducted a series of engagements with key shareholders, with the feedback summarised below: 1. General feedback Most shareholders were complimentary on how the Tiger Brands' remuneration policy has been simplified, improved and aligned more explicitly with shareholder interests over the last three years. They were also appreciative on how the disclosure in the remuneration report had become progressively more transparent. 2. Retention grants to executive team (excluding CEO) Although the majority of shareholders indicated support for the retention payments, citing their understanding of the fine balance between retaining skill and aligning management reward with shareholder returns, there were reservations expressed around the usage of a) cash payments, and b) restricted shares, the vesting criterion of which is only time with no performance vesting criteria. The shareholders also requested full disclosure of retention payments in the remuneration report. The retention payments were fully disclosed in the FY22 remuneration report. 3. ESG metrics Most shareholders indicated that they rely on companies to indicate which metrics are most relevant to creating long term, sustainable value but mentioned carbon emissions, energy efficiencies and water as relevant in the context of companies operating in South Africa. Tiger Brands has a comprehensive ESG strategy (   see the sustainability report). In addition to existing KPIs for efficiency, quality and safety, reduction in carbon emissions was integrated into the short-term incentive (STI) scorecard in FY23. 4. Minimum shareholding requirement targets Consistent feedback from all shareholders was that the minimum shareholding requirement (MSR) targets are on the lower side, with best practice being 300% for the CEO, 200% for the CFO, and 100% for the rest of the executive committee. In addition, they recommended that Tiger Brands considers putting mechanisms in place to enable executives to meet MSR requirements within the set period. The remuneration policy has been benchmarked against market practice and reviewed accordingly to make the mechanisms that enable executives to meet the MSR requirements more explicit. 5. Retrospective disclosure of business performance targets used to determine short-term incentives An area of improvement for the majority of shareholders is the disclosure of retrospective business performance targets used to determine short-term incentives. The remuneration committee has considered this feedback and made a decision to continue to align the disclosure policies with industry standards so as to proactively manage the risk of disclosing information that could jeopardise Tiger Brands’ competitive position in the market. The remuneration committee is committed to shareholder engagement and takes the following steps, if 25% or more of total votes exercised by shareholders at the AGM are against the remuneration policy or implementation report: › Tiger Brands seeks to actively engage with dissenting shareholders by inviting them to one-on-one meetings by issuing a SENS announcement, requesting shareholders to appropriately engage on their specific concerns › Tiger Brands considers the shareholder concerns and reports on the outcome of the engagements and measures taken in its next integrated report Key focus areas, objectives, and actions for FY23 In FY23, the committee executed its duties in line with the approved annual work plan, which included the following activities: › Reviewed and approved changes to the remuneration policy based on shareholder feedback and market developments › Reviewed the outcome of the voting of the remuneration and implementation reports, and deliberated on shareholder feedback to focus the response › Ratified discretionary LTI awards related to the appointment of persons in senior management positions, where such awards are made in lieu of forfeited awards when they resign › Approved STI payments and LTI allocations to executive and senior management › Ratified group-wide business performance outcomes › Approved executive director and Exco member remuneration packages on appointment › Reviewed and approved STI audit report and recommendations › Reviewed the rules of the share incentive scheme, benchmarked appropriateness of performance conditions and targets, and prospectively amended the performance conditions for HEPS outperformance vesting, as well as ROIC conditions for on-target performance › Approved the wage negotiation mandate for bargaining unit employees › Approved the salary increase mandate for employees on total remuneration packages (TRP) › Approved the remuneration for executive directors and executive committee members › Approved the STI and LTI performance conditions, targets, and weightings in respect of FY24 › Recommended for approval to the board the non-executive directors’ (NEDs) fee increase › Evaluated the performance of the committee against its terms of reference › Approved the remuneration implementation report as part of the annual financial statements › Approved the remuneration policy and implementation report for inclusion in the integrated report › Approved the CEO performance agreement Key future focus areas of the committee for FY24 The focus areas are deliberately designed to ensure the committee remains abreast of the latest remuneration market trends and best practice, business needs, as well as our responsibilities to Tiger Brands’ people, shareholders, and communities to ensure that our remuneration practices enable and support the delivery of the business strategy. Key focus areas in FY24 will include: › Reviewing the STI integrated scorecard to align our people with business objectives and shareholder interests, and to ignite winning performance › Benchmarking of the total reward of the executive committee, non-executive directors, and senior management against the set comparator group of JSE- listed companies › Consider market-aligned amendments to remuneration policy and mechanisms to drive retention and the accelerated progression towards minimum shareholder requirements › In terms of our commitment to fair and responsible pay, a continuous review of our approach to monitor and address identified pay inequities during the annual salary review process, as well as during ongoing remuneration decision points › Continue to review our reward mechanisms and practices, with a view to introducing innovative reward strategies to: – Ignite winning performance – Attract, retain, and motivate key and critical talent – Embed the recognition platform and practices to improve the way we recognise execution excellence, agility, and consumer obsession External advice provided to the committee in FY23 We enlist the services of PwC South Africa for purposes of independent benchmarking, incentive scheme market practice, remuneration trends and survey data. KPMG is engaged for the purposes of auditing STI payments and to assist with the review of the single figure of the remuneration table. The committee is satisfied that PwC South Africa and KPMG are independent and remain objective in providing the services. 76 77 Tiger Brands Limited Integrated annual report 2023www.tigerbrands.comOverviewGovernanceOur performanceOur strategyOur operating contextOur business Remuneration and performance continued Voting at AGM As required by the King IV™ Code on Corporate Governance, the remuneration policy and implementation report that follow will be tabled for separate, non-binding advisory votes by shareholders at the upcoming AGM in February 2024. As required by the Companies Act, non-executive directors’ fees for the coming year will be put to shareholders by way of a special resolution. We are committed to engaging with shareholders as required to discuss issues of concern and, therefore, encourage shareholders to provide feedback. Achievement of policy objectives On behalf of the committee, I am satisfied that the remuneration policy is appropriate, and I am confident that our remuneration policy has achieved the desired outcomes for FY23 and is aligned with the company’s strategic goals and shareholder interests. The remuneration disclosures presented in this report have been made in compliance with the remuneration policy as approved by shareholders. No known deviations from the remuneration policy have been made in the current financial year. As I take over the chairmanship of the remuneration committee, I would like to thank Don Wilson for his service as chairman of this committee for the last three years and wish him well with his new role as chairman of the audit committee. Lucia Swartz Chairman: remuneration committee 30 November 2023 KOO baked beans in tomato sauce has been a firm favourite among South Africans for over 80 years. With market shares in excess of 60%, it is the most preferred brand among consumers and is loved by South Africans more than any other brand of baked beans. Unjustifiable pay differentials are addressed during the annual reward review process, where we assess and adjust the salaries of unjustifiably underpaid employees in line with the prevailing mandate. This salary adjustment is generally capped at a predetermined percentage to limit exorbitant increases. Specific focus is given to African, Coloured, female, and employees in roles that are classified as scarce and critical skills. In addition, we follow a systemic approach in day-to-day decision-making by ensuring individual pay and salary ranges are matched to similar roles in the market, and frameworks that guide decision-makers to ensure that new appointments, promotions, and other pay review opportunities are executed in accordance with our set standards and parameters. At every compensation review opportunity, we consider, report and interrogate pay differentials seen through various lenses, including gender and race. At every compensation decision point, we ensure that these differentials, where they are unjustified, are addressed with a view to continuously narrow such gaps. After each company-wide pay review, these outcomes and trends are reported to the board for approval before implementation. As a result, income differentials have closed significantly since 2018 when we started to apply dedicated and structured efforts. To maintain the focus on fair and responsible pay, Tiger Brands will perform regular analyses of compensation differentials and close gaps accordingly. Tiger Brands’ remuneration strategy The company’s remuneration strategy is aligned to the Tiger Brands’ people strategy, which is geared to enable the execution of the business strategy and accelerate business performance. Our remuneration principles have been designed to support the execution of the people strategy and are premised on our belief that great people and great brands are at the core of our success. Our reward framework is holistic, encompassing the financial elements of reward as well as non-financial aspects such as recognition, development, the work environment, culture and meaningful work. Section 2: Overview of remuneration policy Remuneration governance The membership of the Tiger Brands remuneration committee consists of a minimum of three non-executive directors, the majority of who are independent. The CEO is a permanent invitee to all meetings and other executives attend the meetings by invitation. The CEO and nominated invitees are not present when matters relating to their own remuneration are discussed. The group company secretary is the secretary of the committee. The committee meets four times a year and, where necessary, additional meetings may be held. The role of the committee is to provide independent and objective assistance to the board in ensuring that Tiger Brands remunerates fairly, responsibly, and transparently to promote the achievement of strategic objectives and positive performance outcomes in the short, medium and long term. As documented in the remuneration committee terms of reference, the duties and responsibilities of the committee are: › Remuneration governance › Executive and senior management remuneration and performance › Non-executive director remuneration The terms of reference are reviewed annually. Fair and responsible remuneration Tiger Brands is committed to a total reward offering built on a strong foundation of fair and responsible pay that is linked to our remuneration philosophy of pay for performance. Salaries are benchmarked against the REMchannel® salary survey once a year to ensure that remuneration decisions are fair and in line with market practice. We also follow a job-grading methodology that is consistent and provides a fair and accurate job grade, which allows for proper salary benchmarking. Our pay progression model strives to fairly reward employees based on performance and market positioning. It enables us to actively manage outlier compensation in a fair and responsible manner, and to ensure that differentials that exist are justifiable. 78 79 Tiger Brands Limited Integrated annual report 2023www.tigerbrands.comOverviewGovernanceOur performanceOur strategyOur operating contextOur businessRemuneration and performance continued REWARD FRAMEWORK BUSINESS STRATEGY DEVELOP TALENT INSPIRE WINNING PERFORMANCE EMPLOYEE VALUE PROPOSITION e g a k c a p d e e t n a r a u G s t fi e n e B e v i t n e c n i m r e t - t r o h S e v i t n e c n i m r e t - g n o L n o i t i n g o c e R GREAT PEOPLE DELIVERING WINNING PERFORMANCE People strategy The following are the key objectives of our remuneration policy: › Strengthen our ability to competitively attract and retain talent to enable the execution of our strategy › Motivate and stimulate high performance across Tiger Brands through competitive short and long-term incentives › Ensure fair and responsible pay › Ensure that reward mechanisms are simple and provide line of sight to all employees › Align Tiger Brands’ annual and long-term performance to the delivery of the strategy › Align Tiger Brands’ reward structures with shareholder interests Below we have summarised the various remuneration elements (guaranteed package, short-term incentive, and long-term incentive) that Tiger Brands offers at different levels of employment: Compensation mix FIXED COMPENSATION VARIABLE COMPENSATION Total remuneration package (Base salary, medical aid, retirement fund and insured benefits) Base salary and benefits (As per union agreement) / / / Executive directors Exco Senior management / Management / / Skilled employees Bargaining unit Long-term incentive (LTI) Short-term incentive (STI) Thirteenth cheque (As per agreement) Guaranteed package (excluding bargaining unit employees) Description Guaranteed package (GP) offered to people on a total remuneration package basis (TRP) comprises base pay, allowances, retirement and medical benefits. It is reviewed annually based on personal performance (KPIs linked to individual performance agreements (IPA) for each TRP employee, which is agreed to at the commencement of every year), business performance (linked to budget), behaviours aligned with company values, and market competitiveness (national and sector benchmarks). Companies included in the comparator group comprise: Factor Executive directors Benchmarks Benchmarking for executive directors is based on a comparator group of companies and is reviewed on a bi-annual basis. The comparator group is determined using the closeness metric formula, which measures how similar a candidate company is to Tiger Brands, and is based on: › Total assets › Turnover › Earnings before interest, tax, depreciation and amortisation Survey type Bespoke survey Public data of South African companies listed on the JSE, based on the closeness metric used to determine an appropriate comparator group JSE-listed comparator group* The Foschini Group Limited AVI Limited Clicks Group Limited KAP Industrials Holdings Limited Dischem Pharmacies Limited Mr Price Group Limited Pick n Pay Stores Limited Rest of Exco, senior management, and below REMchannel® survey: National and consumer goods circles RCL Foods Limited Oceana Group Limited Woolworths Holdings Limited Barloworld Limited Libstar Holdings Limited * From FY22, the same comparator group is issued for executive directors’ and non-executive directors’ remuneration benchmarking Anchor point Tiger Brands has anchored its current pay position at the 65th percentile of the national market. We aspire to achieve a normal distribution around the anchor point based on individual performance, talent, potential, experience and scarcity and criticality of skills. The performance-based increases granted in the organisation (including those for executive directors and executive committee members) are managed within the overall salary increase budget. Benefits Benefits include retirement fund contributions, funeral cover, permanent health insurance, death-in-service cover, medical aid contributions and travel allowances (where applicable). Short-term incentive (STI) Description and link to strategy The primary intention of the STI is to improve business performance by focusing participants’ attention on annual key financial, strategic, functional and personal performance objectives (KPIs based on a balanced scorecard), which are aligned with the long-term business strategy for sustainable value creation. This drives high performance by explicitly creating line of sight in linking group, business unit and individual performance. › All permanent employees on a guaranteed package in Paterson grades CU and above are eligible to participate › The STI is paid annually, in cash, to qualifying people who are employed by the organisation on the payment date › The on-target percentage (as a percentage of guaranteed package) is benchmarked against the South African market to ensure market practice alignment. It is based on affordability, and the STI payment is based on achieving defined objectives › The STI outcomes are determined based on a multiple of the on-target STI, which comprises three performance factors, reflecting the three dimensions of performance that are expected from employees: – 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, which allows for differentiation in rewarding high performers 80 81 Tiger Brands Limited Integrated annual report 2023www.tigerbrands.comOverviewGovernanceOur performanceOur strategyOur operating contextOur business Remuneration and performance continued Payment of an STI is subject to the overriding condition that the group and business unit meet or exceed 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) On-target % Business unit performance factor (0 to 200%) Individual performance (0 to 200%) EBIT THRESHOLD GATEKEEPER Predetermined weightings are applied to each of the performance factors, ranging from 50% (threshold performance) to 200% (stretch performance). 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 FY24, the following ranges of STI awards will apply to the various categories of people covered by this report: Maximum percentage of guaranteed package (based on the achievement of stretch performance) (%) On-target percentage of guaranteed package (%) 60 60 50 40 35 17,5 12,5 8,5 120 120 100 80 70 35 25 17 CEO, CFO and executive directors Executive committee members Senior management (EU MDs) Senior management (EU) Senior management (EL) Qualified and experienced specialists and mid-management (DU) Qualified and experienced specialists and mid-management (DL) Technical, skilled and supervisory employees (CU band) 82 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. The STI scorecard for 2024 is simplified so as to ensure sharper focus on key outcomes. Below is the group STI scorecard for FY24 that will be applied to the CEO, CFO, executive directors, executive committee members, and other participants: Strategic objective Performance and growth Enablers: People and sustainability Strategic objective weighting Key performance indicator Key performance indicator weighting Threshold score = 50% On-target score = 100% Stretch score = 200% 80% Brand equity EBIT (absolute) EBIT (margin) Gross margin Working capital management 5% 25% 20% 20% 10% 89% 95% 96% 98% 100% 100% 100% 100% 111% 105% 108% 105% Cash conversion rate (cash generated from operations as a % of EBITDA) 86% 100% 143% 20% Quality and food safety 5% Reduction in complaints year-on-year Safety (LTI manufacturing) Carbon emissions Talent pipeline 5% 5% 5% 83% 94% 80% 100% 100% 100% 117% 107% 140% % internal leadership appointments 75% 100% 125% The actual targets have not been provided as they are linked to budget and considered to be commercially sensitive information * ** The targeted percentages for “threshold”, “on-target” and “stretch” as set out above per key performance indicator represent the targeted percentage achievement of the underlying budgeted amounts The group, business unit and individual performance weightings applicable to the various employee categories are detailed below: Employee category CEO, CFO and executive directors Executive committee members Group 80% 80% 0% 0% Other participants (Paterson grades CU to E band) 0% to 40% 40% to 80% Business unit Individual 20% 20% 20% 83 Tiger Brands Limited Integrated annual report 2023www.tigerbrands.comOverviewGovernanceOur performanceOur strategyOur operating contextOur businessRemuneration and performance continued Long-term incentive Description The LTI is aligned 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’ leadership performance to our long-term strategy and 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 long-term incentive. The table below provides further detail regarding the performance and restricted shares awarded under the long-term incentive plan: Instrument Performance shares Employee category Restricted shares Employee category Performance shares award multiple as a % of guaranteed pay Award mechanism CEO CFO 81,3% CEO 81,3% CFO Executive committee members 61,0% Executive committee members Restricted shares award multiple as a % of guaranteed pay – – – Senior management and below › A personal performance multiplier is used to modify the standard quantum of performance shares and 10,6% to 27,7% Senior management and below 8,2% to 22,9% restricted shares, based on an individual’s personal sustained performance and potential, and, taken into account over the last three years, a percentage ranging from 0% to 150% is applied on award. › TGP x (performance share award multiple x performance multiplier)/10-day VWAP on award date › TGB x (performance share award multiple x performance multiplier)/10-day VWAP on award date Performance multiplier Calculation of award quantum Vesting › Vesting is subject to the satisfaction of performance conditions over the three-year performance period and remaining in service at vesting date Performance conditions applicable to performance shares 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 +5%(1) 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 +3%(2) › 200% vesting (stretch) – WACC +5% and above The measurement will be the average ROIC over the three-year vesting period. Linear vesting to apply between threshold and stretch. Definition of ROIC: Operating income from total operations before impairments and non-operational items (reduced by the group’s average tax rate) plus the after-tax share of income from associates as a percentage of average invested capital. Invested capital comprises the book value of total equity (which is inclusive of non-controlling interests), plus long-term and short-term borrowings (including the liability arising from IFRS 16), less the value of cash on hand and cash equivalents. Invested capital is also increased by the re-instatement of any write-offs/impairments (both historically as well in the current period) that are included in non-operational income of any intangible assets, fixed assets, and associates. The average invested capital is determined by calculating the simple average of the aforesaid balances, based on their values at the beginning and end of the relevant financial year. › Based on the volume-weighted average price (VWAP) for a Tiger Brands share calculated for the 10-day trading period ending immediately prior to the date of award/grant Share price (1) +4% for all allocations before December 2023 (2) +2% for all allocations before December 2023 84 Historical LTI information Eligible employees who have been awarded SARs prior to its discontinuation in FY19 continue to participate in the SARs. No new SARs awarded since FY19. 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. The scheme made its final allocation in August 2022 › 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 persons who might not otherwise be able to afford this cost Dilution In compliance with the JSE Listings Requirements, the LTIP contains limits setting out the aggregate maximum number of shares that may be settled to all participants as well as the aggregate maximum number of shares to be settled to any one participant. The LTIP rules provide that these limits are not applicable where shares acquired on the JSE are used to settle LTIP awards. Tiger’s practice is to purchase shares in the market and the LTIP therefore does not result in any dilution to shareholders. 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 Exco 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. In order to accelerate the progress towards achieving minimum shareholding, this policy was amended to compel a commitment of a minimum of 30% (thirty percent) of executives’ vested long-term incentives towards their shareholding pre-tax or post-tax, or such portion required to reach the minimum shareholding, should they be less than 30% below the requirement. 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, extend the determination date, or reset the commencement of the build-up period 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 85 › Three-year, time-based vesting based on anniversary of grant and remaining in service at vesting date On 30 September 2023, the aggregate number of shares that may be acquired by participants under the various schemes, and which will be purchased in the market, was 2 200 673 (2022: 2 557 731). Tiger Brands Limited Integrated annual report 2023www.tigerbrands.comOverviewGovernanceOur performanceOur strategyOur operating contextOur businessRemuneration and performance continued Malus and clawback The preventative aim of this policy is to remove the incentive for an executive to intentionally manipulate financial results or financial position or organisational information with the intention of financially benefiting from variable remuneration. These provisions align the interests of executives with the long-term interests of the organisation as well as shareholders, and to ensure that irresponsible behaviour is not rewarded. 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, the remuneration committee, in consultation with the board and/or any committee of the board, may 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 Pay for performance link The variable pay arrangements described above have various potential outcomes. These outcomes could be from zero (minimum) to the expected level of performance outcomes (target) to the maximum potential variable pay outcomes (maximum). In the illustrations presented alongside, it should be noted that: › STI represents the cash component of short-term performance › LTI represents the total award of performance vesting shares Total remuneration potential for members of executive management for the year ended 30 September 2023 CEO (R’000) The depiction below mirrors the potential remuneration of the outgoing CEO, expressed in annual terms. Maximum 11 086 400 13 303 680 27 039 730 On-target 11 086 400 6 651 840 13 519 865 Minimum 11 086 400 GP STI LTI CFO (R’000) Maximum 7 194 8 633 17 546 On-target 7 194 4 316 8 773 Minimum 7 194 GP STI LTI 12 Members of the executive committee (average) (R’000) Maximum 5 446 6 535 6 644 On-target 5 446 3 268 3 322 Minimum 5 446 GP STI LTI 12 Executive service contracts Senior executives are employed full-time under standard agreements, with a notice period of three months and retirement age of 63. We bind all senior executives by a restraint-of-trade agreement to protect Tiger Brands’ interests (including trade secrets, confidential information and customer connections), and to prevent economic prejudice to Tiger Brands, including loss of clients and goodwill. To the extent that executives have access to proprietary business insights and intellectual property, Tiger Brands will enforce the agreement should they join a competitor. The restraint comprises a three-month notice period or three months’ special leave (paid as a three-month lump sum based on guaranteed package on termination). Sign-on and specific retention payments In exceptional circumstances (mainly for the recruitment and retention of critical and/or scarce talent), Tiger Brands will award a sign-on/retention payment that will be subject to the following conditions: › Employees should remain in the service of Tiger Brands as a permanent employee for an uninterrupted period of 24 months from date of payment. Should the employee or Tiger Brands decide to terminate the employment relationship for any reason, excluding those listed below, before the expiration of 24 months, the employee will be required to repay Tiger Brands the full gross amount. There will be no pro rata refunds. Should Tiger Brands terminate the employment relationship because of operational reasons (for example, retrenchment or redundancy) or ill health, or if termination occurs as a result of death, the employee will not be required to repay Tiger Brands 86 87 Tiger Brands Limited Integrated annual report 2023www.tigerbrands.comOverviewGovernanceOur performanceOur strategyOur operating contextOur businessRemuneration and performance continued Payments on termination of employment Remuneration policy component Voluntary termination (i.e. resignation) Guaranteed package Medical aid Paid up to last day of service Benefit continues to last day of service Involuntary termination (retrenchment, retirement, death) Paid up to last day of service including notice period, where applicable. Benefit continues up to last day of service. Employees who qualify for post-retirement medical aid funding will continue to receive the employer contribution with effect from their normal retirement date. Retirement and risk plans Employer contributions paid until last day of service. Employee is entitled to the value of the investment, but all risk benefits cease on termination of service. Other benefits Not applicable Short-term incentives No pro rata bonus paid Long-term incentives All unvested awards lapse Severance package in respect of retrenchments – one or two weeks for every completed year of service in terms of the relevant rules. Pro rata STI payment (based on extent of achieving specified financial and strategic targets for the period and a personal performance agreement being in place at the date of exit). Depending on the nature of the instrument and reasons for termination, a participant may retain all units or a pro rata portion. Accelerated vesting and settlement of retained units may apply in certain circumstances. External board appointments Under a formal policy, an executive is limited to one substantive outside directorship. The chairman of the Tiger Brands’ board, chairman of the nominations committee and chairman of the remuneration committee are required to authorise these appointments based on a recommendation from the CEO. Other than in respect of their appointment to the boards of associate companies, directors’ fees under this policy may be retained by the individual. Other than associate companies, Deepa Sita serves on the board of Datatec Limited. Non-executive directors Fees and approval process Non-executive directors are paid an annual retainer that reflects their overall contribution and input to the company, and not just for attendance at board and committee meetings. Fees are reviewed annually, and increases are implemented in March after approval at the relevant AGM. Benchmarking is conducted on an annual basis to benchmark these fees against South African companies listed on the JSE based on market capitalisation, turnover and total assets. As these are similar metrics to that of the benchmark group for executive directors, it was decided that, from FY20, in line with King IV™ and in terms of the current requirements of the organisation, a single comparator group be adopted for the non-executive directors’ and executive directors’ remuneration benchmarking. The revised comparator group is detailed on page 81. Targeted remuneration for the 12-month period ending 28 February 2023 was based on the 65th percentile of the comparator group, which is aligned with our internal anchor point. Non-resident, non-executive directors are paid a premium in comparison to resident directors. The chairman does not receive any additional remuneration for participating in committees of the board. Non-executive directors who perform services outside the scope of their ordinary duties will not receive additional remuneration. Shareholder approval will be sought for increasing non-executive directors’ fees, including fees paid for attending special board meetings. Details of proposed non-executive directors’ fees effective from 1 March 2023 appear in the notice of AGM of shareholders to be held on Thursday, 22 February 2024. Details of non-executive directors’ fees paid in the review period appear on page 96. Voting statement This remuneration policy is subject to a non-binding advisory vote by shareholders at the upcoming AGM. 88 Section 3: Implementation report In this section of the remuneration report, we explain the implementation of our remuneration policy, providing details of the remuneration paid to our executive directors and members of the executive committee for the financial year ended 30 September 2023. Salary adjustments In 2022, the remuneration committee approved a 6,5% annual increase effective December 2022. This excludes the negotiated increases for bargaining unit employees and targeted increases to reward exceptional performance, retain critical skills and execute day-to-day internal mobility practices such as promotions, transfers and other deployments during the financial year. 2023 guaranteed package The following increases to guaranteed packages were implemented in the reporting period for executive directors. New amounts were effective as indicated below. Deepa Sita’s increase at the time reflected acknowledgement of performance, criticality of role and skills and market position. Executive directors NP Doyle DS Sita 1 Dec 2022 to 30 Nov 2023 1 Dec 2021 to 30 Nov 2022 % increase R11 086 400 R7 194 000 R10 400 000 R6 600 000 6,6% 9,0% Mutual separation The board and Noel Doyle entered into a mutual separation agreement, which facilitated his amicable exit. His exit is subject to various conditions, including restraint-of-trade conditions for a period of six (6) months after his formal termination, which is March 2024. The financial aspects of the mutual separation agreement include a severance payment equal to two weeks per year’s service, three months’ contractual notice pay, a payment in lieu of restraint of trade equal to six months, and annual leave accrued at termination date. The financial details of the separation payments will be fully disclosed in the FY24 remuneration report. Outstanding long-term incentives shall be treated in terms of the rules of the scheme. Unvested share awards shall be reduced pro rata in relation to Noel’s service period relative to the award period, and shares shall vest according to the existing structure. There shall be no accelerated vesting. Incoming CEO The incoming CEO’s total reward offer is in line with the market, and in accordance with Tiger Brands’ policy and practices. Because Tjaart Kruger is engaged on a fixed-term basis, some elements of his compensation were specifically agreed upon to avoid conflict with current policies and regulations, and to drive business outcomes required by the board in relation to the period of service. Element Multiple Salary STI End-of-term conditional award (allocation value = 100% of guaranteed package) N/A On-target 60%; max 120% On-target 100%; max 200% On-target amount R11 000 000 R6 600 000 R22 550 000 (Face value over the 26-month term) The conditional award is a vehicle that aligns with shareholder interests, in terms of which conditional rights to shares in Tiger Brands Limited are awarded to Tjaart Kruger. This award is different to performance vesting shares awarded to executive management, given that the measurement period is equal to the length of the contract (two years), as opposed to the three-year vesting criterion for performance vesting shares. This is a focused and bespoke plan aligned with the strategic objective of fixing the fundamentals and creating value for shareholders. The award will vest at the end of the contract period (31 December 2025) 89 Tiger Brands Limited Integrated annual report 2023www.tigerbrands.comOverviewGovernanceOur performanceOur strategyOur operating contextOur businessRemuneration and performance continued subject to the achievement of performance outcomes as set out in the table below over the contract period and will be settled using shares purchased in the market by the company. A one-year lock-in period will apply from the date of issue until 31 December 2026. In addition, Tjaart has agreed to purchase Tiger Brands shares with his own funds, in the open market, by the end of March 2024. Incoming CEO performance conditions Performance condition Weighting Threshold (25% vesting) Target (100% vesting) Stretch (200% vesting) Operating margin ROIC Cash flow (cash conversion) 40% 40% 20% 90% of target WACC + 1% 86% of target 100% 119% of target WACC + 3% WACC + 5% 100% 143% of target Due to the non-achievement of the group EBIT threshold, the EBIT disqualifier is triggered, and therefore disqualifies the group portion of the STI weighting. Individual performance factor The individual performance factor (20% overall weighting) for executive directors is weighted according to the table below. The results for FY23 were as follows: NP DOYLE DS SITA Not met Partially met Met Exceeded % achievement of target Not met Partially met Met Exceeded % achievement of target Key performance indicators Partially met 2023 short-term incentive outcomes As indicated in the policy section, the STI for executive directors is based on the combination of a group performance factor and individual performance component. Met Partially met Not met Final outcomes for 2023 Group performance factor The group performance factor (80% overall weighting) for executive directors is weighted according to the table below. Results for FY23 were as follows: Key performance indicator weighting Threshold score = 50% Target score = 100% Stretch score = 200% Achievement Actual result Weighted result 5% 7,5% 5% 40% 5% 92% 96% 100% 150% 100% 104% Net sales delivery 90% 100% Pipeline value 93% 96% 78% 100% 100% 100% 120% 114% 107% 144% <0% 93% 74% 57% 90% 71% 0% 0% 0% 0% 0% 0% Strategic objective Growth Strategic objective weighting Key performance indicator 57,5% Sales volume growth Brand health Innovation Efficiency 10% Overall EBIT equipment effectiveness (factor in waste) Continuous improvement Actual group performance factor % x weighting Actual personal performance factor % x weighting GP# On-target % (80%)## (20%)### 2023 STI (rand) 2022 STI (rand) 11 086 400 x 7 194 000 x 60% x 60% x 0 0 + + 0 0 0 0 6 219 647 4 184 683 Name NP Doyle DS Sita Annual guaranteed package in rand as at 30 September 2023 # ## Actual group performance factor determined as 0% x 80% = 0% ### Based on the non-achievement of group EBIT minimum target, the executives are disqualified from STI, hence the personal performance factor is considered 0 for calculation purposes 2023 long-term incentives Awards made during FY23 In FY23, performance shares were awarded to executive directors, executive committee members, senior management, and middle management. Long-term incentive awards made during the year to executive directors are set out below: 5% 89% 100% 122% 117% 5,4% Long-term incentive awards to executive directors for FY23 People and sustainability 32,5% Quality 10% Reduction in complaints year-on-year 121% 17,5% Safety (LTIFR) 10% Carbon emissions Talent pipeline 5% 7,5% 100% 86% Reduction in lost-time injuries year-on-year 96% 67% 100% 100% Time to fill 100% Vacancy fill % 100% 82% 89% 129% 113% 150% 129% 111% 116% 2,0% 2% 0% 113% 5,6% 110% 7,1% 59% 0% › The targeted percentages for “threshold”, “target” and “stretch”, as set out above per KPI, represent the targeted percentage Final group performance factor EBIT disqualifier achievement of the underlying budgeted amounts › Linear vesting will apply if the actual result falls between “threshold” and “target” or between “target” and “stretch” 90 Name NP Doyle DS Sita Performance shares LTI personal performance multiplier* GP Award % Number Face value# Expected value 150% 11 086 400 150% 7 194 000 81,3% 81,3% 64 530 13 520 326 16 630 000 41 880 8 774 698 10 792 879 * # 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 percentage ranging from 0% to 150% Allocated on 15 December 2022 at VWAP of R209,52 91 Tiger Brands Limited Integrated annual report 2023www.tigerbrands.comOverviewGovernanceOur performanceOur strategyOur operating contextOur business Remuneration and performance continued LTI awards vesting or with a performance period ending in 2023 The outcome for awards due to vest in FY23, and whose performance conditions ended by 30 September 2022, are shown below. This applies to all eligible participants. Payments for termination of office No additional payments were made for executives terminating office, save for the payments to be made in FY24 disclosed in relation to Noel Doyle on page 89 of this report. Performance value shares granted in FY20 Weighting Threshold (25% vesting) Target (100% vesting) Stretch (200% vesting) Actual achievement Performance outcome % vesting Targets Headline earnings per share (HEPS) Return on invested capital (ROIC) 50% CPI + GDP CPI + GDP + 2% CPI + GDP + 4% 50% WACC + 1% WACC + 2% WACC + 5% Total Met Partially met Not met Share appreciation rights granted in FY18 – third tranche Targets Weighting Minimum target Actual achievement Headline earnings per share (HEPS)* 100% 12 296,70 cents Total 0% * Cumulative HEPS over the five-year vesting period Met Partially met Not met Share appreciation rights granted in FY19 – second tranche 0% 0% 0% Performance outcome % vesting 0% 0% Targets Headline earnings per share (HEPS)* Return on invested capital (ROIC) Total * Cumulative HEPS over the four-year vesting period Met Partially met Not met Current minimum shareholding summary Weighting Minimum target Actual achievement Performance outcome % vesting 100% 7 056,80 cents 50% 13,76% 0% 0% 0% Name NP Doyle Date of engagement Number of shares held GP* Original value of shares held Current value of shares held** Original value as % of GP 1 July 2012 R11 086 400 5 December 22 775 R5 769 933 R3 494 824 CXO1 2016 R4 361 094 7 373 R1 638 700 R1 131 387 * GP as at 30 September 2023 ** Value calculated with reference to the closing price of a Tiger Brands share as at 30 September 2023, i.e. R153,45 52% 38% Years remaining to meet target 0 2 Target % of GP 200% 100% Compliance with remuneration policy There were no deviations from the remuneration policy in the financial year. Single total figure of remuneration The following tables disclose total remuneration received and receivable by executive directors and executive management for the period 1 October 2022 to 30 September 2023. Executive directors Remuneration element Basic salary Retirement funding Other benefits Guaranteed package Short-term incentive FY21 long-term performance shares* Total remuneration NP DOYLE FY23 (R’000) FY22 (R’000) 9 427 1 545 – 10 972 – 10 364 21 336 8 878 1 455 – 10 333 6 219 – 16 552 DS SITA FY23 (R’000) FY22 (R’000) 6 527 330 251 7 108 – 5 479 12 587 5 938 330 245 6 513 4 184 – 10 697 % 6,2 6,2 – 6,2 <0 n/a 28,9 % 9,9 – 2,4 9,6 <0 n/a 17,7 * The FY21 performance shares awarded on 4 December 2020 will vest on 4 December 2023. The shares will vest at a multiple of 112,7%. The above values are indicative and based on the Tiger Brands closing share price on 29 September 2023 (R153,54) Member of executive committee Key CXO1 CXO2 CXO3 CXO4 CXO6 CXO8 CXO11 CXO14 CXO15 Total FY23 (R’000) 6 371# 5 486# 10 371# 6 650 9 685# 6 865# 4 577** 5 092 6 728 61 825 FY22 (R’000) 8 605* 6 581* 11 551* 12 671* 13 774* 10 770* 7 399* 71 351 Notes: CXO14 appointed 1 December 2022 CXO11 appointed 1 January 2023 * ** # Includes retention payments made in December 2021 of R24,1 million as well as FY22 STI payable in December 2022 of R36,1 million Includes sign-on bonus Includes the FY21 performance shares awarded on 4 December 2020 that will vest on 4 December 2023, totalling R11,9 million 92 93 Tiger Brands Limited Integrated annual report 2023www.tigerbrands.comOverviewGovernanceOur performanceOur strategyOur operating contextOur business Remuneration and performance continued Number and value of LTI share awards Disclosure of the quantum and value of awards for the CEO and CFO outstanding at the beginning and end of the reporting period, as well as new awards made in the period, are provided in the table on settled during the reporting period indicated in the value-based tables below. page 91, with the cash value of awards Name and awards Award date Vesting date NP Doyle FY20 performance shares FY21 performance shares FY22 performance shares FY23 performance shares FY18 SARs FY19 SARs FY19 SARs Total 07/09/2020 04/12/2020 15/12/2021 19/12/2022 11/12/2017 06/12/2018 06/12/2018 07/09/2023 04/12/2023 15/12/2024 19/12/2025 11/12/2022 06/12/2022 06/12/2023 Grant price (ZAR) – – – – 385,29 254,79 254,79 Opening number 65 880 59 930 69 700 – 16 433 18 896 18 897 249 736 Granted during the year – – – 64 530 – – – 64 530 Forfeited during the year Performance condition achieved Settled during the year Closing number Face value at award (ZAR) Cash received (ZAR) Value of shares acquired (ZAR) Closing fair value vesting (ZAR)* 65 880 – – – 16 433 18 896 – 101 209 – – – – – – – – – – – – – – – – – 59 930 69 700 64 530 – – 18 897 – 12 195 755 12 683 309 13 520 326 – – 4 814 767 213 057 43 214 157 – – – – – – – – – – – – – – – 9 053 625 9 996 374 8 787 050 – – 17 952 27 855 001 Value of shares acquired (ZAR) Closing fair value vesting (ZAR) Name and awards Award date Vesting date Grant price (ZAR) Opening number Granted during the year Forfeited during the year Performance condition achieved Settled during the year Closing number Face value at award (ZAR) Cash received (ZAR) DS Sita FY21 performance shares FY22 performance shares FY23 performance shares FY22 restricted shares Total 04/12/2020 15/12/2021 19/12/2022 04/12/2023 15/12/2024 19/12/2025 15/12/2021 15/12/2024 – – – – 31 680 9 220 – 72 540 – – 41 880 – 113 440 41 880 Interests of executive directors in B-BBEE schemes DS Sita was awarded shares in terms of the Black Managers Trust Scheme for the year ended 30 September 2021: Name and awards Award date Vesting date Opening number Granted during the year Forfeited during the year DS Sita Tiger Brands share allocation 31/01/2021 Adcock Ingram share allocation*** 31/01/2021 Oceana share allocation*** 31/01/2021 Total 31/01/2024 31/01/2025 31/01/2026 31/01/2024 31/01/2025 31/01/2026 31/01/2024 31/01/2025 31/01/2026 – – – – – – – – – – 2 333 2 333 2 334 1 983 1 983 1 984 603 604 604 14 761 – – – – – – – – – – * Calculated with reference to the market value of an allocated share (less the amount of the capital contribution) as at the date of the award ** Calculated with reference to the market value of an allocated share (less the amount of the capital contribution) as at year end (30 September 2023) *** In addition to the award of the Tiger Brands shares, the executive was also awarded Adcock Ingram and Oceana shares (as a consequence of the unbundling by Tiger Brands of its interests in Adcock Ingram and Oceana, the Tiger Brands Black Managers Trust – as Tiger Brands shareholder – also became a shareholder of shares in Adcock Ingram and Oceana). Participants in the trust are, consequently, also awarded shares in these two companies when awarded Tiger Brands shares 94 – – – – – – – – – – – – – – – 31 680 9 220 41 880 72 540 6 446 880 1 677 763 8 774 698 13 200 104 155 320 30 099 445 – – – – – – – – 4 785 898 1 322 332 5 702 800 10 403 687 22 214 717 Settled during the year Closing number Face value at award* (ZAR) Cash received (ZAR) Value of shares acquired (ZAR) Closing fair value vesting** (ZAR) – – – – – – – – – – 2 333 2 333 2 334 1 983 1 983 1 984 603 604 604 334 995 334 995 335 139 63 278 63 278 63 309 30 554 30 605 30 605 14 761 1 286 758 – – – – – – – – – – – – – – – – – – – – 263 932 263 932 264 045 92 031 92 031 92 077 38 411 38 475 38 475 1 183 409 95 Tiger Brands Limited Integrated annual report 2023www.tigerbrands.comOverviewGovernanceOur performanceOur strategyOur operating contextOur businessRemuneration and performance continued Company information Tiger Brands Limited (Tiger Brands or the company) (Incorporated in the Republic of South Africa) Share code: TBS ISIN: ZAE000071080 INDEPENDENT NON-EXECUTIVE DIRECTORS GJ Fraser-Moleketi (chairman), MO Ajukwu, FNJ Braeken, GA Klintworth, TE Mashilwane, M Sello, LA Swartz, OM Weber, DG Wilson NON-EXECUTIVE DIRECTOR S Sithole EXECUTIVE DIRECTORS TN Kruger (chief executive officer) DS Sita (chief financial officer) COMPANY SECRETARY JK Monaisa REGISTERED OFFICE 3010 Winnie Mandela Drive Bryanston Sandton POSTAL ADDRESS PO Box 78056, Sandton, 2146 Telephone: +27 11 840 4000 AUDITORS Deloitte & Touche PRINCIPAL BANKER Rand Merchant Bank SPONSOR JP Morgan Equities South Africa Proprietary Limited SOUTH AFRICAN SHARE TRANSFER SECRETARIES Computershare Investor Services Proprietary Limited Rosebank Towers, 15 Biermann Avenue Rosebank, 2196 Private Bag X9000 Saxonwold, 2132 INVESTOR RELATIONS Nikki Catrakilis-Wagner Erene Kairuz Telephone: +27 11 840 4000 WEBSITE ADDRESS www.tigerbrands.com CONTACT DETAILS Companysecretary@tigerbrands.com Investorrelations@tigerbrands.com Consumer helpline: 0860 005342 Non-executive directors’ remuneration 2023 The non-executive directors’ remuneration paid (excluding VAT) for the year ended 30 September 2022 is disclosed below: Committee MO Ajukwu FNJ Braeken MJ Bowman CH Fernandez GJ Fraser- Moleketi GA Klintworth Notes Board fees Audit committee fees Remuneration committee, nomination and governance committee fees Social, ethics and transformation committee fees Risk and sustainability committee fees Investment committee fees Extraordinary fees in respect of special board meeting Total FY23 Total FY22 R1 071 973 4 R1 071 973 R478 775 5 1 R466 075 R2 225 830 R1 071 973 R369 255 R260 590 R379 514 R379 514 R86 269 R165 006 R49 393 R260 590 R379 514 R113 267 R113 267 R1 825 344 R2 129 798 R49 246 R49 246 R113 267 R1 098 975 R2 275 076 R1 825 344 R1 563 468 R992 006 R340 448 R990 714 R2 143 370 R1 505 804 Notes: 1. CH Fernandez resigned 10 October 2023 S Sithole appointed 1 April 2023 LA Swartz appointed 1 June 2022 FNJ Braeken appointed 1 April 2022 2. 3. 4. 5. MJ Bowman retired 16 February 2022 6. M Makanjee retired 31 December 2021 Committee Notes Board fees Audit committee fees Remuneration committee, nomination and governance committee fees Social, ethics and transformation committee fees Risk and sustainability committee fees Investment committee fees Extraordinary fees in respect of special board meeting Total FY23 Total FY22 M Makanjee 6 TE Mashilwane M Sello S Sithole LA Swartz OM Weber DG Wilson R562 018 R466 075 R208 163 2 R239 825 3 R466 075 R1 071 973 R466 075 R208 163 R122 982 R63 282 R122 982 R282 859 R263 371 R217 330 R113 300 R323 420 R44 639 R17 637 R379 514 R113 604 R44 639 R49 246 R49 246 R25 340 R49 246 R113 267 R49 246 R996 215 R1 160 204 R346 084 R638 303 R1 961 216 R1 031 494 R188 190 R732 962 R1 080 840 R142 975 R1 628 110 R874 546 Notes: 1. CH Fernandez resigned 10 October 2023 S Sithole appointed 1 April 2023 LA Swartz appointed 1 June 2022 FNJ Braeken appointed 1 April 2022 2. 3. 4. 5. MJ Bowman retired 16 February 2022 6. M Makanjee retired 31 December 2021 96 Forward-looking information This report contains forward-looking statements that, unless otherwise indicated, reflect the company’s expectations at the time of finalising the report. Actual results may differ materially from these expectations if known and unknown risks or uncertainties affect the business, or if estimates or assumptions prove inaccurate. Tiger Brands cannot guarantee that any forward-looking statement will materialise and, accordingly, readers are cautioned not to place undue reliance on these statements. The company assumes no obligation to update or revise any forward-looking statements, even if new information becomes available as a result of future events or for any other reason, save as required by legislation or regulation. 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