T I G E R B R A N D S IN T E G R A T E D A N N U A L R E P O R T 2 0 1 4 Integrated Annual Report 2014 Contents About this report 01 Sustainability 106 Business overview 04 Our approach 106 Key financial indicators 04 Stakeholder engagement 108 Our organisational structure 06 Our people 110 Our footprint 08 Transformation 117 Business operations 10 Our communities 119 Our history 12 Our vision and mission 14 Environmental impact 123 Our values 15 Annual financial statements 126 Corporate strategy 16 Responsibility for annual financial statements 128 Leadership 19 Report of the independent auditor 129 Performance review 24 Directors’ approval 130 Reports to stakeholders 24 Certificate by Company Secretary 130 Chairman’s letter to stakeholders 24 Preparation of annual financial statements 130 Chief Executive Officer’s report 28 Statutory information 131 Chief Financial Officer’s report 32 Effects of changing prices 133 Divisional review 36 Income statements 134 Grains 36 Consumer Brands – food businesses 38 Statements of comprehensive income 135 Home, Personal Care and Baby (HPCB) 42 Statements of financial position 136 Exports and International (excluding Nigeria) 43 Statements of cash flows 137 Nigeria 46 Notes to the cash flow statements 138 Associates 48 Statements of changes in equity 140 Key statistics 50 Notes to the financial statements 143 Definitions 50 Shareholder information 242 Five-year review 52 Application of King III 242 Segmental report 53 Administration 249 Value added statement 55 Summary of ratios and statistics 56 Analysis of shareholders 250 Governance and risk 58 Shareholders’ diary 257 Corporate governance 58 Declaration of final dividend number 140 257 Risk management 68 Notice of annual general meeting 258 Audit committee 74 Re-election of directors and election of 270 Social, ethics and transformation committee 78 audit committee Remuneration report 80 Form of proxy 271 Group profile Tiger Brands is the largest manufacturer of branded food products in sub-Saharan Africa. It participates About this report in a broad range of categories spanning food, home and personal care products. In South Africa, it holds leading market shares across most of the categories in which it operates and, over the years, has grown through the development of its leading brands, as well as through acquisitions. In recent years, the group has expanded its which is used to obtain comprehensive footprint into the rest of the African continent, consumer insights into the relevant categories primarily through acquisitions, as well as and markets in which Tiger Brands operates. through the export of its South African brands into new markets. The group holds meaningful minority shareholding interests in: Tiger Brands prides itself on being a world-class ϢϢ JSE-listed fishing company Oceana Group manufacturer and marketer. The continuous Limited; renovation and innovation of its brands and ϢϢ Chilean-based FMCG company Empresas the successful extension of these brands into Carozzí; adjacent categories and new markets underpin ϢϢ Nigerian-based FMCG company UAC its success. The group’s brand strategy is Foods Limited; and supported by extensive investment in marketing, ϢϢ Zimbabwean-listed FMCG company as well as consumer and shopper research, National Foods Holdings Limited. Tiger Brands Limited Integrated Annual Report 2014 01 ABOUT THIS REPORT Scope of this report The report is further based on principles and In line with the requirements of King III, this guidance from the GRI and the relevant Sector Integrated Annual Report provides a consolidated Supplement (collectively the GRI G3.1 view of the group’s financial, social, economic Guidelines) and is compiled based on a and environmental performance for the year self-declared Application Level C. ended 30 September 2014, and follows the Supplementary information prior year Integrated Annual Report published in December 2013. This report represents one of two elements of Tiger Brands’ communication strategy with There was no change to the boundary or any stakeholders for the 2014 financial year. In measurement techniques. Restatements during addition the sustainability report, which forms the year are outlined within note 42 on part of this Integrated Annual Report, contains page 238. additional non-financial disclosures referencing GRI and the requirements of the JSE SRI Index. There were no significant changes in size, Forward looking statements structure or ownership of the group during the year. This Integrated Annual Report contains forward looking statements that, unless otherwise This Integrated Annual Report 2014 aims to indicated, reflect the company’s expectations provide stakeholders with an understanding of the as at 30 September 2014. Actual results may group’s business, prospects and strategy and an differ materially from the company’s expectations appreciation of the overall environment in which if known and unknown risks or uncertainties the group operates. The report covers the affect the business, or if estimates or assumptions operations of Tiger Brands Limited and its prove to be inaccurate. The company cannot subsidiary and associate companies for the guarantee that any forward looking statement year ended 30 September 2014. will materialise and, accordingly, readers are cautioned not to place undue reliance on these Basis of preparation forward looking statements. The company The annual financial statements have been disclaims any intention and assumes no prepared in accordance with International obligation to update or revise any forward Financial Reporting Standards (IFRS) and the looking statement even if new information South African Companies Act. In reporting on becomes available as a result of future events or the non-financial aspects of its performance, the for any other reason, save as required to do so group has been guided by the King III report and by legislation and/or regulation. the Listings Requirements of the JSE Limited. Tiger Responsibility statement and review Brands has also considered and applied many of the recommendations contained in the The audit committee and the board acknowledge International Integrated Reporting Framework their responsibility to ensure the integrity of this issued in December 2013. Integrated Annual Report. The report has been reviewed by the audit committee and the board. In addition, the Integrated Annual Report 2014 The annual financial statements included in this has been informed by various standards and Integrated Annual Report have been audited by codes that govern specific areas, including the the external auditors. Department of Trade and Industry’s Broad-Based Black Economic Empowerment (B-BBEE) Codes of For further information, please contact the Good Practice. group Company Secretary, Ian Isdale: T: +27 (0)11 840 4350 The company has applied the key principles in E: [email protected] the King III report. An explanation is provided where any material non-adherence has occurred. 02 Tiger Brands Limited Integrated Annual Report 2014 Assurance BTuhsein cesosm pbroinceedss assurancNaesa smuturoraedn oecefl of the gAprorsousvupird aiennr ciets currentI nftoergmraatte dis Asnent uoaul t Rbeeploorwt d:isclosure About this report Annual financial Audit Ernst & Young The scope of their audit is limited to the statements Inc. information set out in the annual financial statements and does not extend to any financial or operating indicators included in the Integrated Annual Report. Risk management Audit KPMG Services Please refer to risk management and the and internal controls (Pty) Limited audit committee report on pages 68 and 74, respectively. Environmental risk Audit Marsh (Pty) Please refer to pages 70 and 112. assessments Limited Social responsibility SRI Index JSE Limited Tiger Brands is part of the SRI Index. and sustainability CDP National Tiger Brands is part of the Carbon Business Disclosure Programme (CDP). Initiative (NBI) B-BBEE BEE scorecard EmpowerLogic Please refer to Transformation on (Pty) Limited page 117. Send us your feedback Corporate information Your feedback has resulted in the improvements Tiger Brands’ Integrated Annual Report 2014 seen in this year’s report. is available in hard copy from the Company Secretary on request, and is also posted on the Please direct any questions or comments to: group’s website: http://www.tigerbrands.com. Ian Isdale, Company Secretary at [email protected] or The company’s contact details are disclosed on +27 (0)11 840 4350. page 249. Key data Tiger Brands Limited (Registration number: 1944/017881/06) (Incorporated in the Republic of South Africa) Share code: TBS JSE Main Board sector: Food Processors ISIN: ZAE000071080 Listing date: 1944 Number of shares in issue: 191 948 268 Tiger Brands Limited Integrated Annual Report 2014 03 BUSINESS OVERVIEW Key financial indicators CONTINUING OPERATIONS Headline earnings Group turnover per share R30,1 billion 1 804 cents Up 11% Up 15% Diluted headline Operating income# earnings per share R3,6 billion 1 760 cents Up 15% Up 15% TOTAL OPERATIONS Headline earnings Earnings per share per share 1 816 cents 1 262 cents Up 11% Diluted headline Down 22% Dividend earnings per share per share 1 771 cents 940 cents Up 12% Up 9% #Before abnormal items 04 Tiger Brands Limited Integrated Annual Report 2014 Group   Nigeria   Grains   Consumer  Brands   Exports  and  Interna+onal   CONTRIBUTION  TO  TURNOVER   14   SEGMENTAL CONTRIBUTION 2014   2013   NNigigeerriiaa    NNiiggeerriaia     1100%%   MMilliillningg     1100%%   Milling IInnEEtteexxprpr1non5oar%aWtrstit  o  s&no a&  n  l  a  l anadn2 dB27  B7a%a%kk  iinngg   InI  tEnexEtrpenxoaprrWntosoar  &ntitas  ol  &na l and2 B8  Ma%Bikl2laiin8nki%ggn    agn    d   H7%H7O1P%%C  OPO1B  %CHOV6V6    B%A%AH1M  M5P%P   GO1GrtO0arh1ta%ihe0inne%rssr          HOO117HPO%%%O7CP  1HVV    %BC5H  6A    A%6  1B%M%M  5  P%  P   GO1rt  G0ahO1r%iet0anh%irnse  sr       Business overview B4B4%e%evv  eerraaSggneeass  ckSsn aA7cnk%sd  A7 Tn%rd  e  Taretsats   GrocGe1rro3ice%es1r3ie%s      BBeev4ve%4rea  %rgaegs  e  s SnaTcrkesa  tASsnnTardcek ast  as  n  d   Gro1c  2Ge%rro1i2cee%sr  ies     7% 7%   Group   Nigeria   Grains   Consumer  Brands   Exports  and  Interna+onal   CO20N1T4  RTuIBrnUoTvIeOr:N  R3  T0O.1    ObilPliEoRn  ATING  INCOME  2B0E1F3O  TuRrEn  oIvFeRrS:  R22  A7.N0  Dbi  llOioTnH   ER   OPERATING  CHARGES   16   2014   2013    NNigigeerirai  a    NigerNiai  g  eria  ((88%%)  ) Milling  (12%()  12%) Mi  Mlliinllign g  and   InI  ntEeExtr  pex1nop9rar1n%Wot9sao  r    %&ntitsa  o l&  na l and4 B3  Ma%kBil  ila4innk3gig%n  ag    n    d   In  tEIexnrpEntoaexrWptrs1ono  &n8ara%  titls  o &na l and4 B4a%B  ka4ik4ni%ngg          18%      HHPPCCBB     HPCB  1111%%      H1P4CB%      14%      OOOOH  H   OOH  2%2    %  OOH2  %    VVAAMMP    P V  2A%M    P  44%%     Ot  Ohtehre rG  Grraaiinnss     4% Ot  hOethre Gr  Graraininss     Beverages 9  %9%     B  VeAvMerPa    ges 9  %9%      Bev  3e%r3a  g%  es     S  nSnaTTacrrckeekassat  taAss  n  ndd   G  Grroo9  c9c%e%err  i  ieess      4%3  %    Bev  3eS%ran  g  aTecsrk  e  sa   StAnsnacdk s  andG  ro9c%eri  eGsro  9c%er  i  es      88%%     9% Treats      9%     2014  OperaWng  income:  R3.7  billion   2013  Opera+ng  income:  R3.2  billion   #Before IFRS 2, abnormal items and other operating charges Tiger Brands Limited Integrated Annual Report 2014 05 BUSINESS OVERVIEW Our organisational structure Grains Consumer Brands d e t i m i Exports and L International s d n a r B r e g i T Nigeria Associates 06 Tiger Brands Limited Integrated Annual Report 2014 Grains division (100%) – Maize milling – Rice – Oats and Pulses – Wheat milling – Pasta – Bakeries – Sorghum beverages and breakfast CGSnoraonccskeusrmi e&es rT rBeraatnsds division (100%) Business overview Beverages Value Added Meat Products (VAMP) Out of Home Home, Personal Care and Baby (HPCB) Exports and International division (excluding Nigeria) (100%) Tiger Brands International (Exports division) Langeberg & Ashton Foods (South Africa) Davita Trading (South Africa) Haco Tiger Brands (Kenya) (51%) East African Tiger Brands Industries (Ethiopia) (51%) Chocolaterie Confiserie Camerounaise (Cameroon) (74,7%) Nigeria Deli Foods (Nigeria) (100%) Dangote Flour Mills (Nigeria) (65,7%) Associates Oceana Group (South Africa) (41,9%) Empresas Carozzí (Chile) (24,4%) National Foods Holdings (Zimbabwe) (37,4%) UAC Foods (Nigeria) (49,0%) Tiger Brands Limited Integrated Annual Report 2014 07 BUSINESS OVERVIEW Our footprint South Africa • Corporate office in Johannesburg South Africa • 50 manufacturing sites Our footprint ◗On-shore manufacturing: ◗Export territories: Cameroon Angola Equatorial Guinea Mali Uganda Ethiopia Botswana Ghana Mozambique Zambia Kenya Burkina Faso Guinea Namibia Zimbabwe Nigeria Chad Ivory Coast Malawi South Africa Chile Liberia Sierra Leone Zimbabwe DRC Madagascar Tanzania 08 Tiger Brands Limited Integrated Annual Report 2014