| |
Our capitals |
| |
|
|
|
|
|
|
|
|
|
|
|
| |
Financial capital |
|
Manufactured capital |
|
Natural capital |
|
Human capital |
|
Intellectual capital |
|
Social and relationship capital |
| |
 |
|
 |
|
 |
|
 |
|
 |
|
 |
| |
- Funding received from providers of capital and financial resources available to the group
|
|
- The physical infrastructure used to convert raw materials
and ingredients into high-quality food, home and
personal care products in branded packaging; inbound/
outbound logistics – we receive imported and locally
produced raw materials, ingredients and packaging
from suppliers and distribute finished products via
third-party transport and leased fleet to customers.
|
|
- Natural resources consumed to convert
raw materials
|
|
- Employees’ skills, capabilities, development and experience
- Remuneration practices and recruitment strategy
|
|
- Company knowledge, systems, processes, intellectual property such as formulations, and, most importantly, brands
|
|
- Stakeholder relationships and engagement, corporate reputation and values
- Governance and safety systems
|
| |
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
| |
Input by capital |
| |
Financial capital |
|
Manufactured capital |
|
Natural capital |
|
Human capital |
|
Intellectual capital |
|
Social and relationship capital |
| |
- Equity financing: R17,3 billion
- Borrowing: R991 million
- Low gearing levels and strong cash generating capabilities
|
|
- Cost of sales: R19,2 billion
- Sales and distribution: R3,7 billion
- Other operating expenses: R1,5 billion
- Production facilities: 44 manufacturing facilities
- Capital expenditure: R720 million
|
|
- Raw materials
- Energy
- Fuel
- Water
|
|
- Board of directors with a diverse range of corporate leadership and industry expertise
- Twelve executive committee members
- Capabilities have been enhanced in key disciplines
|
|
- Marketing investment: R845 million
- Innovation, R&D: 5,3% of net sales
|
|
- Maintain positive relationships with
stakeholders including government,
regulators, investors, suppliers, service
providers and customers and invest in the
well-being of our communities through
corporate social investment initiatives
|
| |
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
Outputs
|
|
|
|
|
Profit formula |
|
Our revenues |
|
Our costs |
|
Outcomes and trade-offs |
|
The group’s value-creating business model is focused on
producing, marketing and distributing food, home and personal
care products. We generate profit by procuring raw materials
and ingredients and convert these as efficiently as possible into
high-quality food, home and personal care products; seal them
into branded packaging; and distribute to consumers through a
network of customers that includes retailers, wholesalers and the
general trade. Our purpose is to nourish and nurture more lives
every day. |
|
The majority of our revenue is generated in South Africa
from grains, consumer brands – food, home, personal
care and baby, with the balance from exports as well as
our international businesses in Cameroon and Nigeria.
Tiger Brands has defined its core as the manufacturing,
marketing and distribution of everyday branded food to
middle-income consumers. Key revenue differentiators
include the group’s overall market-leading position and the
number 1 or 2 position of most of our brands, increased
marketing investment to ensure our brands remain relevant
and top of mind, our far-reaching distribution capabilities
and the relationships with our customers. |
|
Our aim is to achieve sustainable savings based on
targeted spending, clear policies and compliance. We
have an established cost-conscious culture and a proven
track record of procurement savings and supply chain
efficiencies. In addition, we are focused on optimising
indirect costs to deliver savings in sales activities as well as
general and administrative costs. Key cost differentiators
include our ability to leverage a centralised procurement
hub as well as the standardisation and simplification of
processes, systems and practices. |
|
Our business activities affect our capitals. Our aim is to
ensure that trade-offs have a positive effect overall. Given
the challenges we faced in FY18, we created little value
for shareholders, but we did create value for employees,
particularly those in our value added meat products unit who
have benefited from focused training and are now working in
a world-class facility.
We invested in our social and relationship capital through
stakeholder engagement, particularly with government and
regulators, as well as shareholders, through joint business
planning with our customers, and through our corporate
social investment initiatives. Signifi cant investments in our
manufactured and intellectual capitals were balanced with
acceptable reductions in natural capital for sustainable growth.
|
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
Key external impacts
| Exchange rates |
Commodity prices and demand/supply dynamics |
Security of raw materials supply |
Legislative/regulatory change |
Weather patterns and climate change, including water scarcity |
|
| |
|
|
 Our activities
Outcomes and trade-offs |
|
|
Actions to enhance/mitigate outcomes in 2018 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
Financial capital
|
|
|
- Continued access to financial capital through
investor and financial market confidence
- Net interest paid R55 million
- Dividends paid R1,9 billion
|
- Dividend policy: 1,75x cover (based on HEPS)
from FY19
- Revenue R28,5 billion
- Interest cover 59x
|
- Operating income* R3,3 billion
- Cash generated from operations
R3,3 billion
- Return on equity 18,6%
|
|
- Long-term strategy remains compelling and relevant
- Identified priorities to facilitate focused execution
- Clear Africa strategy, building on what we have in South Africa
- Embed operating model through revitalised ways of working
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
Manufactured capital
|
|
|
- R12 billion spent with BBBEE-verified suppliers
including R2 billion with black-owned enterprises
|
- Ongoing investment in the group’s manufacturing
architecture, distribution capability and technology
to promote and sustain growth
|
- On-shelf availability 97%
- Continuous improvement – R707 million
|
|
- Prudent and diligent approach to capex approvals
- Focus on appropriate business restructuring
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
Natural capital
|
|
|
- Depleting natural resources through our
supply chain and operations
- Water consumption down 19,3%
|
- Significant water savings from facilities in the
water-stressed Western Cape
- CO2 emissions down 4,17% (intensity trend)
|
- Incinerated 4 500 tons of processed meat
products due to Listeria outbreak
- 156 tons of non-recyclable packaging
reduction since FY15
|
|
- Assessed the impact of climate change and the drought in the
Western Cape on our operations and supply of raw materials
and implemented mitigating measures to ensure continuity of
production and supply
- Energy efficiency and water-saving initiatives continued, and
we support the new Energy Efficiency Accord in South Africa.
We have mitigating plans in place to ensure continued
production in spite of an unstable electricity grid
- We have enhanced waste reduction and are in the process
of implementing the relevant legislation
- We continue to optimise packaging by light weighting where
possible
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
Human capital
|
|
|
- Creating employment, developing employees through
skills training and workplace experience, promoting
fair labour practices
- Capabilities appointed in line with new operating model
- One fatality in a route-to-market incident
- Lost-time injury frequency rate on target at 0,27
|
- Management trainee programme ranked second
in SAGEA awards (SA Graduate and Employee
Associate)
- Fair labour practices – nil reported cases of unfair
practices (this was after year end)
- Black Managers Trust II terminated in December
2017 in line with our plan. On termination,
R575 million (pre-tax) was paid to employees
|
- Invested R61 million or 1,8% of total
payroll on training
- Recognised by Top Employers Institute as
a Top Employer 2019 for excellence in
employee conditions
|
|
- Strengthened, experienced executive team
- Key skills gaps addressed
- Structure capability and new process embedded
- Centralised R&D function established and fully resourced
- Detailed plans on career development
- Establish long-term human capital planning
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
Intellectual capital
|
|
|
- Developing new and streamlining existing business
processes and systems, maintaining our market-leading
brand portfolio
- Tiger Brands has a 100% penetration in South Africa.
Every household buys at least one Tiger Brands product
- In the categories we compete in, we have 26% volume
share and improved brand equity for most key brands
- Top three in 80% of categories we compete in; 41% are
number 1 brands
- Innovation 5,3% of revenue
|
- Increasing marketing investment by outspending
our competitors as measured by share of voice
- 100% compliance to current sodium targets
- 11% reduction in sugar across the portfolio in past
five years
- 25% of net sales from wholegrain, fibre-rich grains,
vegetables and fruit
|
- Leading the industry in modern food-labelling
practices in South Africa through
Eat Well Live Well initiative to empower
consumers to make more informed
decisions about their dietary intake
- 5% of net sales fortified voluntarily
with micronutrient enrichment
- The group has 5 brands generating
in excess of R1 billion in net invoiced
sales and 10 brands in excess of
R500 million
|
|
- Health and wellness underpins our R&D to ensure our brands
remain relevant and make a meaningful contribution to the
health challenges affecting our communities. Focus is to provide
affordable everyday nutrition
- IT investment
- Centralised reporting platforms being implemented
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
Social and relationship capital
|
|
|
- Total socio-economic development (SED) spend of R32 million
|
- Over 200 engagements with shareholders,
investors and analysts
- The Thusani Trust provides bursaries for the children
of qualifying black employees; 381 students have
graduated since 2007
|
- Tiger Brands Foundation provides breakfast
meals to 67 500 learners across the
country. By September 2018, over
65 million breakfasts had been served
- Responsible supply chain practices
- Considered investor feedback and
addressed in remuneration policy
- Black Managers Trust
|
|
- Relationship with Stellenbosch University (Food Safety Centre)
- Supplier development fund
|
|
|
|
|
| |
|
|
|
|
* Before IFRS 2 charges impairments and abnormal items. |
|
|
|
|
