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Adding value to life

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Adding value to life...

CONTENTS

IFC

1

2

4

8

11

12

18

Profile, vision and strategy

Group highlights

Group at a glance

Chairman’s letter to shareholders

Directorate

Executive management committee

Chief executive officer’s review

Group financial review

Divisional reviews

22

28

32

Domestic food

Home and Personal Care (HPC)

International operations and Exports

Governance and sustainability

40

48

58

59

Corporate governance

Directors’ and senior management’s remuneration

Management reporting

Sustainability report

Annual financial statements

75

85

IBC

Contents

Shareholders’ diary

Administration

Notice of annual general meeting, see separate document enclosed with this report

Profile

Listed on the JSE, Tiger Brands Limited is a branded fast-moving consumer packaged goods company that operates mainly in South Africa and selected emerging markets.

Our vision

To be the world’s most admired branded consumer packaged goods company in emerging markets.

Ongoing focus and investment in:

Brand building and innovation of core business

Africa expansion

Domestic acquisitions Capital expansion

Strategy implementation

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Group highlights

Pleasing results achieved in most businesses in a challenging local and global economic environment

Disposal of Sea Harvest

Bedding down of group’s African acquisitions

Acquisition of Crosse & Blackwell business (effective 1 October 2009)

Continued investment in capital expenditure to expand operations

(Rands in millions) 2009 2008 % Change

Consolidated results (continuing operations)Turnover 20 430,4 18 954,0 8Operating income 3 133,4 2 522,6 24Headline earnings 2 170,1 1 815,0 20Total assets employed 11 687,3 12 676,9 (8)Cash generated from operations* 3 141,4 3 094,2 2Capital expenditure 561,1 641,8

Ordinary share performance (continuing operations)Headline earnings per ordinary share (cents) 1 382,1 1 149,5 20Dividends and distributions out of capital per ordinary share (cents) 704,0 786,0Dividend cover (times) 2,0 1,9Market price at year end (cents) 15 050 13 740

*Group results, including Adcock Ingram Holdings Limited and Sea Harvest in 2008.

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Domestic foodThe Domestic food division is a leading manufacturer, distributor and marketer of food brands.

Grains: Ace, Albany, Golden Cloud, Jungle, King Korn, Morvite, Tastic

Groceries: All Gold, Black Cat, Colmans, Fatti’s & Moni’s, KOO

Snacks & Treats: Anytime, Beacon, Black Cat, FFWD, Inside Story, Jelly Tots, Maynards, Smoothies, Wonderbar

Beverages: Energade, Hall’s, Oros, Roses

Value Added Meat Products: Bokkie, Enterprise, Like-it-Lean

Out of Home: Food service and home meal replacement


The HPC division is a leading manufacturer, distributor and marketer of personal care, babycare and homecare brands.

Personal Care: Gill, Ingram’s Camphor Cream, Kair, Lemon Lite, Perfect Touch, Protein Feed

Babycare: Elizabeth Anne’s, Purity

Homecare: Airoma, Bio-Classic, Doom, FastKill, ICU, Jeyes, Peaceful Sleep, Rattex

International operations and ExportsTiger Brands has direct and indirect interests in international food businesses in Chile, Zimbabwe, Kenya and Cameroon.

Empresas Carozzi (Chile, Peru, Argentina): Bonafide, Carozzi, Costa, Molitalia – 24%

Haco Industries Kenya Limited (Kenya): Ace, Bic, Jeyes, Miadi, Motions, Palmers, TCB – 51%

Chocolaterie Confiserie Camerounaise (“Chococam”) (Cameroon): Arina, Big Gum, Kola, Mambo, Martinal, Tartina, Tutoux, Start – 75%

National Foods Holdings Limited (Zimbabwe): Gold Seal, Red Seal – 26%

Datlabs (Pvt) Limited (Zimbabwe): Cafemol, Ingram’s Camphor Cream, Lanolene Milk – 50%

Fishing

Oceana is involved in the fishing, processing, marketing and trading of a wide variety of marine species and cold storage operations. The results of Oceana were proportionately consolidated up to 31 March 2009 after which date the earnings after tax have been equity accounted in terms of the accounting standard applicable to associate companies.

Sea Harvest Corporation is involved in deep-sea fishing, fresh and frozen fish and the processing and marketing of fish products. Sea Harvest was sold to a consortium led by Brimstone Investment Corporation Limited effective 28 May 2009, for R578,1 million.

Group at a glance

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07

08

09

Operating income

R1 601,5 million

R1 740,6 million

R2 408,3 million

Domestic food 2009Rm

2008 Rm

%Change

TurnoverOperating incomeOperating margin (%)

15 922,32 408,3

15,1

14 446,81 740,6

12,0

10,238,4

07

08

09

Operating income

R382,7 million

R450,0 million

R485,0 million


2009Rm

2008 Rm

%Change


1 883,7485,025,7

1 765,8450,025,5

6,77,8

07

08

09

Operating income

R104,2 million

R219,8 million

R214,0 million

International operations and Exports

2009Rm

2008 Rm

%Change


2 030,6214,010,5

1 519,3219,814,5

33,7(2,6)

07

08

09

Operating income*

R198,0 million

R249,6 million

R135,3 million

* Sea Harvest was disposed of on 28 May 2009. With effect from 1 April 2009 Oceana was reclassified from a joint venture to an associate.

Fishing 2009Rm

2008 Rm

%Change


1 336,1135,310,1

2 298,7249,610,9

(41,9)(45,8)

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Chairman’s letter to shareholders

“This performance is particularly pleasing as it comes after a period when the company was unsettled by serious reputational issues as well as the departure of a number of its senior, experienced executives.”

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Dear Shareholder

In a year in which Tiger Brands has for the first time operated as a focused, branded, consumer products company, I have pleasure in introducing an excellent set of results which were achieved in a difficult environment. Good strategic progress has also been made during the year under review.

This performance is particularly pleasing as it comes after a period when the company was unsettled by serious reputational issues as well as the departure of a number of its senior, experienced executives.

Peter Matlare and his Executive team have demonstrated their ability to ably deal with the softer issues such as compliance, reputation, morale and cultural transformation, whilst at the same time delivering a world-class bottom-line performance.

It is with great satisfaction that the unlocking of shareholder value that was anticipated as a result of the unbundling and separate listing of the company’s healthcare interests – Adcock Ingram – in August 2008, came to fruition. We are delighted by the consequent enhanced focus of Tiger Brands as a branded food and HPC (Home and Personal Care) company. A major strategic objective was thus achieved.

Operational results

The company has performed well in turbulent economic conditions. The global financial crisis that has contributed to volatile raw material input costs and soft consumer demand, provided management with significant challenges.

The company achieved an improvement in headline earnings per share from continuing operations of 20%. Turnover and operating income from continuing operations rose by 8% and 24% respectively, translating to an operating margin of 15,3% (2008: 13,3%). The Fast Moving Consumer Goods (FMCG) business, excluding Oceana, increased turnover by 12% to R19,7 billion, largely due to a strong first half as turnover increased by only 1% in the second six months. This was due to

significant price deflation in food commodities in the second half and the weaker trading environment.

At an operating income level, most of the businesses performed strongly and delivered double digit growth.

Tiger Brands’ balance sheet remains extremely healthy, with total net borrowings decreasing to R377 million at 30 September 2009 from a peak of R2,1 billion at 31 March 2009. Net borrowing levels in the second half benefited in particular from the proceeds of R578 million received on the sale of the company’s 73,16% interest in Sea Harvest, as well as the proceeds of R466 million relating to the sale of the company’s residual shareholding in Adcock Ingram.

Peter Matlare, the Chief Executive Officer, deals with the operational results in greater detail later in this report.

Investing for growth

The company continues to invest in upgrading its facilities and expanding capacity to meet the growing demand for its products. In recent years the investment that has taken place includes the installation of a new tomato sauce bottling plant, a new pasta manufacturing facility, a major upgrade of the Jungle Oats plant and the expansion of the Albany bakery in Pretoria. Capital expansion projects this past year totalled R240 million with replacement and efficiency projects amounting to R321 million. Expansionary capital expenditure of R600 million is anticipated to be spent in the year ahead. This includes the commencement of work on the planned R561 million investment in the replacement and upgrade of the Hennenman wheat mill, in the Free State.

Strategy implementation

The company is committed to a growth path through organic growth in its existing product categories and acquisitive growth by way of selected acquisitions in South Africa and elsewhere, particularly in the rest of Africa.

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Chairman’s letter to shareholders(continued)

In the year under review, excellent progress has been made with the integration of the newly acquired African businesses, namely the 51% owned Haco Industries (Kenya) and 74,7% owned Chococam (Cameroon). It is particularly pleasing to note the willing acceptance of the management teams of these companies in both Kenya and Cameroon to becoming very much part of the Tiger Brands Group. The company continues to actively pursue other opportunities in Africa and it is hoped that the ensuing financial year will lead to further substantive investments in the African continent.

Subsequent to the year-end, the company acquired the Southern African based mayonnaise business of Crosse & Blackwell from Nestlé. Crosse & Blackwell is a well recognised market leader and the company is particularly pleased to be able to add this brand to its portfolio. This acquisition will prove to be of significant benefit and value to Tiger Brands in the forthcoming years.

Transformation

Several years ago, the board of Tiger Brands committed the company to achieving a broad- based BEE ownership structure with a Black ownership target of 25% by the year 2010. It was the stated objective that a minimum of 10% would be effected by way of direct Black ownership with the balance comprising indirect Black ownership. In 2005, the first phase of the empowerment initiative took place which resulted in a direct Black shareholding of approximately 4%. This transaction was aimed primarily at the company’s employees.

The company was unable to progress with the second phase of its Broad Based Black Economic Empowerment initiative until such time as it had resolved the competition law issues that it had encountered and had completed the unbundling of its pharmaceutical interests. During the year under review, Phase II of the company’s Broad Based Black Economic Empowerment transaction was initiated and was approved by shareholders and implemented in October 2009. This has resulted

in an effective Black shareholding of 28,9%, which has exceeded the company’s stated objective. The major component of Phase II is the Tiger Brands Foundation, established for the benefit of selected regional and community groups. The company is particularly pleased to be able to contribute in this way to the meaningful transformation of South African society.

Corporate action

In October 2008, the company advised the board of AVI Limited of its intention to make an offer for the entire issued share capital of AVI Limited. This was considered an important, strategic acquisition. Careful steps were taken to ensure that there was strong support for this acquisition from the AVI Limited shareholders. Notwithstanding significant shareholder support, the AVI board declined to afford its shareholders an opportunity of voting on the proposed transaction. In February 2009, in view of the unwillingness of the AVI board to support the acquisition, the company decided to withdraw from the proposed transaction.

Corporate social investment

The company is fully committed to assisting in the upliftment of the underprivileged in South Africa and in the countries where it operates. In the year under review, a total amount of R25,6 million was spent on upliftment projects, compared to R22,0 million in the previous year. Details of the way in which these funds have been spent and the company’s commitment to sustainable development, are outlined in the sustainability report contained herein. It is particularly in respect of nourishment where Tiger Brands is pleased to be able to play a role, by providing almost R17 million worth of food donations in the form of daily school meals, the provision of monthly family food packs and monthly product and ad hoc donations of food products to various charities. Over the course of the year, approximately 100 000 people benefited from the company’s various initiatives.

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Governance

The company has progressed in responding to challenges in its governance structures, particularly with regard to its admitted contraventions of the Competition Act in 2007 and 2008. The adoption of a culture of greater team participation and openness, together with the appointment of a Group Compliance Executive in November 2008 and the implementation of various compliance training initiatives, have provided the board with much comfort in respect of overall governance issues.

The company welcomes the publication of the King Report on Governance for South Africa – 2009 (King III) and is taking all appropriate steps to ensure compliance by the effective date of 1 March 2010.

Directorate

Early in the financial year under review, Doug Band resigned as a non-executive director of the company. Doug was appointed to the board in 2000 and served for a period as chairman of the Remuneration and Nominations Committee. Doug provided significant value and strategic input in the deliberations of the board and his insight and experience will be sorely missed.

During the course of the year, Chris Nissen resigned as a non-executive director after serving on the board for a nine-year term. Chris was chairman of the company’s Transformation Committee. Chris’ experience played a key role in assisting the company in achieving its transformation objectives. We wish Chris well.

Phil Roux, an executive director, resigned from the company in March 2009. Phil had, over a period of some eight years, held a number of key executive management positions in the company. Shortly after leaving he was appointed a non-executive director of the company. Phil’s extensive knowledge of the group and his strategic and operational insights will continue to be of significant benefit.

During the course of the year Michael Fleming, the Chief Financial Officer, was appointed an executive director of the company.

Appreciation

Peter Matlare and his relatively new but enthusiastic management team, and all Tiger Brands employees, are to be congratulated for an excellent set of results under particularly difficult conditions, and for instilling a fresh spirit of excitement and teamwork.

Prospects

The company continues to face strategic challenges in being able to meet the growth expectations of its shareholders. In this regard, the executive management team will continue to focus on growth opportunities in existing, new and adjacent categories. Innovation will be a cornerstone of its growth initiatives. Expansion opportunities that add value, particularly in Africa, will continue to be aggressively pursued and carefully assessed.

Tiger Brands has a wonderful basket of leading brands and, notwithstanding the difficult trading conditions that are anticipated in year ahead, headline earnings per share, before taking into account the once-off IFRS 2 costs relating to the recently concluded BEE Phase II transaction, are expected to show satisfactory growth in real terms in 2010.

Lex van Vught

Chairman

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Directorate

Non-executive directors

1. Lex van Vught (66) BSc (Hons), BCom, independent non-executive

director, chairman, member of the audit committee, and remuneration and nomination committee

Lex joined Tiger Brands in March 2003 as a non-executive director, and was appointed chairman in 2006.

2. Bheki Sibiya (52) BAdmin, MBA, deputy chairman, independent non-

executive director, chairman of the transformation committee and member of the remuneration and nomination committee

Bheki is the executive chairman of Smartvest Investment, chairman of Brait South Africa Limited and Pretoria Portland Cement Company Limited and director of Famous Brands Limited. Bheki was appointed to the Tiger Brands board in March 2003.

3. Susan (Santie) Botha (45) BEcon (Hons), independent non-executive director,

chairman of the remuneration and nomination committee

Santie is executive director of MTN Group Management Services. Santie was appointed to the Tiger Brands board in August 2004.

4. Richard Dunne (61) CA(SA), independent non-executive director,

chairman of the audit committee and the risk committee

Richard is a director of Anglo Platinum and AECI Limited and was recently appointed to the board of Standard Bank Limited. Richard was appointed to the Tiger Brands board in June 2006.

5. Ursula Johnson (55) BA, independent non-executive director, member

of the transformation committee Ursula is managing director of Network International

(Pty) Limited and a director of SA Civil Society Initiative and SA International Women’s Forum. Ursula was appointed to the Tiger Brands board in February 2002.

1 2 3 4 51 2 3 4 5

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6. Khotso Mokhele (54) BSc (Agriculture), MS, PhD (Microbiology),

independent non-executive director, member of the audit committee

Khotso was appointed to the Tiger Brands board in August 2007. He currently serves as chairman of Adcock Ingram Holdings Limited and Impala Platinum Holdings Limited, and non-executive director of African Oxygen Limited and Zimplats Holdings Limited. In July 2007 he was appointed as a trustee of Hans Merensky Foundation.

7. André Parker (58) BEcon (Hons), independent non-executive director,

member of the audit committee André Parker was managing director of SABMiller

Africa and Asia until his retirement in September 2007. He is currently a director of AECI Limited and Distell Limited. André was appointed to the Tiger Brands board in August 2007.

8. Phil Roux (44) BCom (Hons), MBA, non-executive director Phil joined Tiger Brands in 2001 and was appointed

to the executive committee in 2006 and to the Tiger Brands board of directors on 1 August 2008. Phil resigned as an executive director on 13 March 2009, and was appointed as a non-executive director on 16 March 2009. Phil is currently divisional director of Coca-Cola Sabco (Pty) Limited, South Africa.

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Audit committee*R M W Dunne (Chairman)K D K MokheleA C ParkerL C van Vught

Nominations/remuneration committee*S L Botha (Chairperson)B L SibiyaL C van Vught

Executive management committee*P B Matlare (Chief executive)N G BrimacombeM Fleming

B N NjobeC F H Vaux B KoornneefM MatooaneT Segoale

Risk committee*R M W Dunne (Chairman)M Fleming B N NjobeC F H VauxI W M IsdaleJ Parkin

Transformation committee*B L Sibiya (Chairman)N G BrimacombeU P T JohnsonP B MatlareB N NjobeC Jackson B KoornneefZ MabasoC Manning M Matooane *As at 30 September 2009.

6 7

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Executive directors

1. Peter Matlare (50) BSc (Hons), Political Economy (MA), chief executive

officer, member of the transformation committee Appointed to the group in April 2008

Peter is a non-executive director of Oceana Group Limited and Kumba Iron Ore Limited.

2. Neil Brimacombe (45) BCom (Hons), MBL, executive director – responsible

for Consumer Food Brands. Neil has 10 years’ service with the group and is a member of the transformation committee

3. Michael Fleming (42) CA(SA), financial director, 9 years’ service with the

group, member of the risk committee Michael is a non-executive director of Oceana Group

Limited and serves as chairman of Langeberg & Ashton Foods (Pty) Limited.

4. Bongiwe Njobe (47) MSc (Agriculture), executive director – sustainability,

member of the transformation committee and of the risk committee

Appointed to the group in August 2008, serves as a non-executive director of Langeberg & Ashton Foods (Pty) Limited.

5. Clive Vaux (58) CA(SA), corporate finance director, member of the

risk committee, 25 years’ service with the group

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Directorate(continued)

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A. Neil Brimacombe (45) Executive director Refer to Neil’s CV on page 10.

B. Michael Fleming (42) Executive director Refer to Michael’s CV on page 10.

C. Brenda Koornneef (56) BCom, group marketing and corporate strategy

executive, member of the transformation committee Appointed to the group in 2001

D. Peter Matlare (50) Chief executive officer Refer to Peter’s CV on page 10. *As at 30 September 2009.

E. Matsie Matooane (44) MIS, MBA, group executive: Human Resources,

member of the transformation committee Appointed to the group in 2005

F. Bongiwe Njobe (47) Executive director Refer to Bongiwe’s CV on page 10.

G. Thabi Segoale (37) MSc, managing executive: Grains division Appointed to the group in 2007

H. Clive Vaux (58) Corporate finance director Refer to Clive’s CV on page 10.

Executive management committee*

C E GC E G

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Chief executive officer’s review

“The company is committed to ensuring that it is able to meet the demand for its quality products by continuing to invest for future growth.”

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It is with much pleasure that I can report to

shareholders on a year in which the company has

performed admirably and good strategic progress

has been made.

In my first full year as chief executive officer of

Tiger Brands Limited, the company’s challenges

have been externally driven, particularly the effect

of the global financial crisis and the implications

thereof on the South African economy.

Financial performance

A comparison of the financial performance of the

company to that of the previous year, is complicated

by the unbundling and separate listing of the

company’s Healthcare interests that took place in

August 2008, the disposal of the company’s interest

in Sea Harvest in May 2009 and the fact that the

company ceased to proportionally consolidate

Oceana Group Limited with effect from the end

of March 2009.

It is accordingly preferable, in order for shareholders

to have a meaningful appreciation of the

performance of the company, that my comments are

focused on the company’s continuing operations.

Overview of results

A significant factor in reviewing the performance

was that it was “a tale of two halves”, with the

impact of the recession on consumers becoming

more apparent in the second half.

Turnover growth from continuing FMCG operations

of 12% was impacted by the significant price

deflation in food commodities and a weaker trading

environment in the second half of the financial year.

Turnover growth at the half year was 24% while

turnover in the second six months reflected a

marginal increase of 1%.

The improvement in turnover has been assisted by

the inclusion of the turnover of the African businesses

which the company acquired during 2008 being

Haco Industries (Kenya) and Chococam

(Cameroon).

Operating income from continuing FMCG

operations increased by 28% with the operating

margin improving to 15,5% from 13,5% the

previous year. This improvement was influenced by

a recovery in selling prices of certain raw material

cost increases which in the prior year were partially

absorbed. The improved beverages performance,

after a disappointing performance in the previous

year, contributed meaningfully to the results.

The company is committed to investing in its brands

and its facilities in order to create and meet the

growing demand for its products. The year under

review has seen significant investment decisions to

meet this strategic imperative. A capital expansion

project at the Hennenman mill of over R561 million

was approved and the project is under way. The

expansion project at the Pietermaritzburg bakery,

costing in excess of R200 million will be

commissioned in the year ahead. This follows on

07

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Headline earnings per share (group)*

1 207 cents

878 cents

1 195 cents

1 407 cents

*Note: Includes Sea Harvest and excludes Adcock Ingram in all years.

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Chief executive officer’s review(continued)

the upgrading and expansion that has taken place

in recent years at several operations. In total

expansion projects for continuing operations

approved over the last three years have exceeded

R800 million. The company is committed to

ensuring that it is able to meet the demand for its

quality products by continuing to invest for future

growth.

This is a credible performance in a challenging

environment.

Strategic focus

Tiger Brands has refined its strategy of focusing on

organic growth complimented by domestic and

international acquisitions.

An important strategic acquisition was that of the

Crosse & Blackwell business that was acquired from

Nestlé, the effective date being subsequent to the

year end (1 October 2009). The Crosse &

Blackwell brand is a heritage brand well-known to

all South African consumers. We are confident in

the future success of this acquisition, which will be

integrated into the Groceries business.

During the period under review the company

divested of its interest in Sea Harvest. In one of the

earliest transformation initiatives, the company had

facilitated the acquisition by Brimstone of a minority

interest in Sea Harvest. The original transaction

gave rise to a put option in favour of Brimstone

against Tiger Brands which could be exercised at

any time during the three-year period ending in

December 2009. The company, in reviewing its

portfolio, felt that it was appropriate to offer its

shares in Sea Harvest to a consortium of investors

led by Brimstone. The result was the most significant

empowerment transaction that had yet taken place

in the South African fishing industry. Sea Harvest is

an excellent company and we wish it well under its

new owners.

AVI Limited was identified as a strategic domestic

acquisition target. In his letter to shareholders, the

chairman has outlined the circumstances surrounding

this potential acquisition and the decision not to

proceed.

Much has been made of the company’s stated

objective of expanding further in the African

continent. The acquisitions made in Kenya (Haco

Industries) and Cameroon (Chococam) in the

previous year, performed credibly and according to

expectations. We continue to actively pursue further

expansion opportunities on the African continent

and it is hoped that further progress in this regard

will be made in the forthcoming year.

Sustainable development

It is vital that the company, as part of its strategic

focus, addresses the important issues of culture and

organisational health. The company has taken steps

to develop a number of targets that would indicate

the organisational health of the company, which

would include being an employer of choice, the

retention and development of the best people,

transformation and leadership development.

Sustainability issues have, in particular, been a

subject of focus in the year under review internally

as well as externally in the context of discussions

on climate change. Tiger Brands understands

sustainability is part of our licence to do business

and the key enabler to build our reputation as a

solid corporate citizen. A sustainability strategy has

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been developed, the key deliverables of which

include:

(i) regulatory compliance;

(ii) commitment to environmentally attuned business

practices;

(iii) working with key stakeholders to create shared

values; and

(iv) partnering with employees and their families as

well as communities to build a solid social

fabric.

A formal compliance function has been established

which has assisted the business in the

implementation of a robust and proactive

compliance regime. In line with our commitment to

uphold the highest ethical standards, the company

will be participating in the South African Ethics

Indicator which measures honesty and transparency

in an organisation.

An environmental management strategy has been

completed and 20 key metrics have been adopted

in order to measure the critical areas of water,

waste, energy and packaging. The businesses will

be testing and implementing these measures during

the forthcoming financial year.

Details of the company’s sustainability strategies

and achievement are outlined in detail in the

sustainability report.

Transformation

A key element of the company’s transformation

strategy was the implementation of Phase II of

its ownership strategy which was approved by

shareholders in October 2009. Significant progress

has been made in overall transformation, particularly

those elements relating to preferential procurement

and enterprise development, which has resulted in

the company becoming a level 5 contributor, having

moved from a level 6 contributor in 2008.

This is a significant achievement and is reflective of

the company’s commitment to transformation issues.

Review of operations

FMCG

Strong performances were experienced in most

FMCG categories, however, underlying consumer

demand weakened marginally in the second half of

the financial year compared to the first six months.

An encouraging trend of a reduction in the rate of

inflation in the second half of the year extended

across most categories.

Domestic food increased turnover and operating

income by 10% and 38% respectively.

Within the Grains segment, the higher growth in

operating income relative to turnover was primarily

as a result of falling soft commodity prices which

benefited the Milling and Baking business in

particular. The prior year results were also adversely

affected by the substantial increases in raw material

commodity costs which were not fully recovered in

selling prices. Ace instant porridge continues to be

a very successful innovation in which the group

continues to invest, both in the form of marketing

and additional production capacity. Notwithstanding

the difficult trading environment, the Albany brand

recovered both volumes and market share in the

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Chief executive officer’s review(continued)

Home and Personal Care (HPC) grew operating

income by 8% compared to an increase in turnover

of 7%.

Personal Care achieved a modest improvement in

operating income in a category where pressure on

consumer discretionary spending is particularly

noticeable. In Baby care, both the Nutrition and

Well-Being categories recorded acceptable results,

with the Purity and Elizabeth Anne’s brands feeling

the impact of the slowing economy as consumers

came to grips with the tighter economic realities.

The Homecare category was negatively affected by

a poor pest season in the first six months, which

impacted the performance of the Doom brand in

particular. However, the category ended the year

with a 6% increase in operating income, primarily

due to an improved performance by the Jeyes

portfolio.

Exports and International

Tiger Brands International, comprising the

Tiger Brands Export division, the Deciduous Fruit

business Langeberg & Ashton Foods (67% held),

Haco Industries (Kenya) and Chococam

(Cameroon), reflected a combined decrease in

operating income of 3% for the year. This reduction

in profitability was attributable to a significant

decline in the contribution from the Deciduous Fruit

business as a result of softer global demand arising

from the global financial crisis and a stronger rand

exchange rate. The Tiger Brands Export division

produced an excellent result. This was assisted by

its enhanced distribution capabilities and heightened

in-country sales focus, particularly in Zambia,

Angola, Mozambique and Zimbabwe.

second half. Tastic and Aunt Caroline rice volumes

were negatively impacted by some consumers

switching from rice to maize products, primarily as a

result of the impact of high raw material rice prices.

Demand for Jungle Oats was particularly strong with

the oats category continuing to reap the benefits

of the previously reported major upgrade to its

manufacturing facility in Maitland. The Sorghum

beverages business continued to disappoint, with

both volumes and margins remaining under

pressure.

The Groceries business recorded a 27%

improvement in operating income off a 19%

increase in turnover. Strong volume growth was

achieved by Fatti’s & Moni’s with the new state-of-

the-art pasta manufacturing facility operational for

the full 12 month period compared to six months in

the prior year. The KOO, All Gold and Black Cat

brands grew sales volumes, albeit at a much slower

rate than in the prior year, as consumer demand

remained sluggish particularly during the

second half.

Snacks & Treats recorded a pleasing growth of

14% in operating income off an increase in turnover

of 9%. This performance was achieved despite

pressure on consumer discretionary spending, which

was particularly evident in the chocolate category.

The performance of the Beverages business reflected

a marked improvement on the prior year with

operating income of R89,5 million being

R78,4 million ahead of last year. The prior year

result had been negatively impacted by

unfavourable weather conditions.

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customers and other stakeholders, for the continued

support that you have provided Tiger Brands over

the past year. We look forward to continuing

addressing the many challenges and opportunities

that face us in assisting the company in achieving

its strategic objectives and in meeting shareholder

expectations.

Peter Matlare

Chief executive officer

With regard to Haco and Chococam, 2009 has

been a year of bedding down the two African

acquisitions concluded during 2008. Haco has

performed well during the year under review and,

in addition, made a good contribution to the

distribution of Tiger Brands’ products in the

East African region. The overall performance of

Chococam was satisfactory despite the business

being challenged with significant cost increases

in certain major raw materials and an

underperformance in its key export market of

Gabon.

Appreciation

I have received the continued and valued support

of the members of the board together with executive

management and I would like to thank them all,

together with all of our employees, suppliers,

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Introduction

The unbundling and separate listing of the

company’s Healthcare interests on 29 August

2008, and the disposal of the company’s interest

in Sea Harvest on 28 May 2009, have given rise

for the need to distinguish between earnings from

continuing operations, which exclude both the

Healthcare and Sea Harvest results, and total

group earnings. Total group earnings include the

Healthcare results for the 11 months ended

29 August 2008 in the comparative period as well

as the results of Sea Harvest for the eight months

ended 28 May 2009 in the current period and for

the full twelve months of the comparative period.

Financial results

Headline earnings from continuing operations

for the year ended 30 September 2009 of

R2 170,1 million reflected an increase of 19,6%

compared to the previous year. At the headline

earnings per share (HEPS) level, this translates to an

increase of 20,2% following a 0,6% decrease in

the weighted average number of shares in issue.

Earnings per share (EPS) from continuing operations

increased by 44,9% to 1 556,8 cents per share.

The higher percentage improvement in EPS

compared to HEPS is primarily due to the inclusion

in 2009, of an abnormal amount of R201,1 million

(relating to the capital profit of R234,3 million

arising from the disposal of the group’s residual

shareholding in Adcock Ingram Holdings Limited,

net of taxation of R33,2 million) as well as the

inclusion of a capital profit of R62,1 million from

the disposal of the group’s 73,16% interest in

Sea Harvest. Furthermore, the comparative period

included a charge of R112,3 million relating to the

impairment of the carrying value of the goodwill

associated with the Beverages business. These three

items were excluded for the purposes of determining

HEPS in the respective reporting periods.

In total, there were 173,6 million shares in issue as

at 30 September 2009. This includes 10,3 million

held as treasury shares and a further 5,9 million

shares held, in aggregate, by the Tiger Brands

Black Managers’ Trust and Thusani Empowerment

Investment Holdings (Pty) Limited in terms of the

Phase I staff empowerment transaction which was

implemented during October 2005. The weighted

average number of ordinary shares (157,0 million)

on which headline earnings per share and basic

earnings per share are based, excludes both the

treasury and the empowerment shares. The treasury

shares and empowerment shares, together, account

for 9,3% of the company’s total issued share

capital.

On a per share basis, total group headline earnings

decreased by 7,7% to 1 407,4 cents compared to

the prior year, whilst total group earnings per share

increased by 9,9% to 1 583,0 cents. For the

reasons outlined in the introductory statement above,

total group headline earnings per share and total

group earnings per share for 2009 are not directly

comparable with the previous year.

As the company no longer has joint control of

Oceana, it has ceased to proportionately

consolidate its results with effect from the end of

March 2009. Accordingly, although Oceana’s

results are included for the full year, the first six

months to 31 March 2009 are shown on a

proportional consolidation basis, whereas the results

for the second six months to 30 September 2009

have been equity accounted as an associate

company. This change in accounting treatment of

Oceana makes meaningful comparison of the

Group financial reviewfor the year ended 30 September 2009

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group’s results difficult and hence, to assist

shareholders in comparing the performance of the

company with the previous year, the information in

the commentary below excludes Oceana’s results.

Also see note 16 of the accompanying financial

statements for further information in this regard.

The commentary below therefore relates only to

the group’s FMCG businesses.

Turnover from continuing operations (excluding

Oceana) amounted to R19,7 billion, reflecting an

increase of 12% on the previous year. This rate of

growth is lower than the 24% increase recorded at

the half year. Turnover showed a marginal increase

of 1% in the second six months. This reflects the

impact of the significant price deflation in food

commodities and a weaker trading environment.

The full year improvement in turnover has benefited

from the inclusion of the turnover of the African

businesses, Haco Industries (Kenya) and Chococam

(Cameroon), in which the company acquired a

51,0% and 74,7% stake on 1 June 2008 and

1 August 2008 respectively.

Operating income for the year (excluding Oceana)

rose by 28% to R3 054,9 million. The group

operating margin from continuing operations

improved from 13,5% last year to 15,5%,

benefiting from a recovery in selling prices of

certain raw material cost increases which were

partially absorbed by the group in the prior year, as

well as a normalised Beverages performance after

this category was adversely impacted in the prior

year by cool and wet summer conditions. The

Milling & Baking, Groceries, Snacks & Treats and

Value Added Meat Products businesses produced

exceptional operating performances while Other

Grains, Home and Personal Care (HPC) and Out

of Home recorded single digit operating income

growth. Within Exports and International, the

sustained strength of the rand negatively impacted

the performance of the Deciduous Fruit business,

but pleasing results were achieved by Haco,

Chococam and the Tiger Brands Export division.

Abnormal items (excluding Oceana) reflect a net

abnormal profit of R342,4 million in 2009. The

current year composition of abnormal items primarily

includes a capital profit of R234,3 million relating

to the sale of the group’s residual shareholding in

Adcock Ingram Holdings Limited; a capital profit of

R62,1 million relating to the disposal of the group’s

73,16% interest in Sea Harvest; the release to

income of an amount of R81,4 million relating to

the Sea Harvest put option provision which is no

longer required; and the costs of R29,8 million

incurred in the current year relating to the

unsuccessful attempt by Tiger Brands to acquire

the entire issued share capital of AVI Limited.

Net financing costs from continuing operations

(excluding Oceana) of R256,5 million (2008:

R87,7 million) rose sharply over the prior year,

reflecting the increased level of gearing of the

FMCG business as a consequence of the

unbundling of Adcock Ingram, as well as the impact

of higher working capital demands, particularly

during the first six months of the year.

Group net debt from continuing operations has

reduced to R377,4 million at 30 September 2009

from a peak of R2 104,4 million at 31 March 2009.

Net borrowing levels in the second half benefited from

the gross proceeds of R578,1 million received on

28 May 2009 for the disposal of Sea Harvest, as

well as the net proceeds of R465,5 million relating to

the sale of the shares in Adcock Ingram Holdings

Limited received on 30 September 2009.

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Group financial reviewfor the year ended 30 September 2009 (continued)

Income from associates reflects a significant increase compared to the prior year. This is due to the inclusion for the first time of the company’s share of the after tax earnings of Oceana which amounted to R76,5 million (for the second six months to 30 September 2009 as noted above), as well as the inclusion of a capital profit of R16,6 million arising on the part disposal of a subsidiary by Chilean-based Empresas Carozzi. A stronger trading performance by Empresas Carozzi also contributed to the improvement.

The average tax rate, before abnormal items, increased to 32,3% (2008: 30,7%). This was primarily due to a reduced STC charge in 2008 as a result of a portion of the 2007 final dividend being distributed as a payment of capital out of share premium in January 2008.

Discontinued operations in 2009 comprise the profit after tax attributable to the Sea Harvest fishing business, determined from the commencement of the 2009 financial year to the date of its disposal on 28 May 2009. The prior year discontinued operations include the profit after tax attributable to the Healthcare business, determined from the commencement of the 2008 financial year to the date of its unbundling on 29 August 2008, as well as the profit after tax attributable to Sea Harvest for the 12 months ended 30 September 2008.

The share of income attributable to minority shareholders decreased from R71,2 million in the prior year to R48,5 million in 2009. The lower share of income attributable to minorities is largely due to the declining profitability in the group’s Deciduous Fruit business, partially offset by a full 12 month contribution by the two partly owned African subsidiaries, Haco and Chococam, which were acquired during the second half of 2008.

Group cash flow performance (including Healthcare in the prior year)

Cash generated from operations increased by 1,5% from R3 094,2 million in the prior year (which includes 11 months trading from unbundled Adcock Ingram) to R3 141,4 million. Cash available from operations of R1 947,9 million reflected an increase of 11,9% compared to the previous year. The previous year was adversely affected by the payment of Competition Commission administrative penalties amounting to R152,3 million.

After taking into account dividend payments and net cash movements from investing activities, there was a net cash inflow, before financing activities, of R812,5 million compared to a net cash outflow of R1 620,5 million in the previous year. The prior year included a significant cash outflow of R2 240,9 million in respect of investing activities, largely due to the distribution relating to the unbundling of Adcock Ingram amounting to R1 130,2 million, capital expenditure amounting to R888,5 million and the cost of acquisitions of R186,7 million.

The group ended the year with net borrowings of R377,4 million (2008: R1 272,7 million).

Cash flow performance from continuing operations (pro forma)

Continuing operations generated cash from operations of R3 001,8 million in 2009 after accounting for working capital outflows of R470,7 million.

After taking into account dividend payments and the net cash movements from investing activities, there was a net cash inflow before financing activities of R754,0 million. The cash inflow of R172,3 million in respect of investing activities in 2009 largely comprised the proceeds of R465,5 million from the disposal of the group’s residual investment in Adcock Ingram Holdings Limited, the net proceeds on disposal of businesses amounting to R242,2 million, less capital expenditure of R561,1 million.

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Key financial ratios

The key ratios for the group are outlined below: 20091 20081 20082 20072 20073

Profitability and asset management Operating margin (%) – continuing operations 15,5 13,5 13,2 13,9 16,4 Net asset turn (times) 3,2 3,3 3,5 3,2 3,4 Return on average net assets (%) 50 44 46 44 54 Working capital per R1 turnover (cents) (end of year) 18,7 14,8 14,8 17,0 20,1 Financing and liquidityNet debt/(cash) to equity (%) 5,2 20,5 20,5 (1,3) 12,1 Net interest cover (times) 12,4 30,5 36,5 29,3 17,5 Current ratio (:1) 1,8 1,3 1,3 1,6 1,5 Total liabilities to total shareholders’ funds (%) 54 93 93 71 89 1FMCG only.2FMCG including Sea Harvest. .3Including Healthcare and Sea Harvest. .

30 September 2009. This, together with the interim dividend of 245 cents per share, will therefore amount, in aggregate, to a total payment to shareholders of 704 cents per share (2008: 786 cents per share, comprising the interim and final dividend). The total payment of 704 cents per share represents a decrease of 10,4% on the total dividend of 786 cents per share declared in respect of the previous year, primarily as a result of the unbundling of Adcock Ingram. The Tiger Brands final dividend in respect of 2008 of 541 cents per share took into account the earnings of Adcock Ingram up to the date of the unbundling on 29 August 2008.

The company’s stated policy of paying an annual dividend/distribution cover of two times, remains in place. In respect of the 2010 financial year, the two times annual dividend/distribution cover ratio would be applicable to headline earnings before taking into account the once-off IFRS 2 costs relating to the recently concluded BEE Phase II transaction.

Inflation

Details of the group’s performance after adjusting for the cumulative effects of inflation are outlined on page 92. The effect of inflation is constantly monitored and built into future plans in order to meet the group’s long-term objective of creating shareholder wealth in real terms.

The improvement in the return on average net assets (RONA) in 2009 is reflective of the increase in the group’s profitability.

Notwithstanding continued investment in capital expenditure and increased working capital requirements, net interest cover remained at a healthy level for continuing operations of 12,4 times (2008: 30,5 times). Net interest cover is expected to improve in the year ahead given the lower levels of debt and the more favourable interest rate environment.

The reduction in the percentage of total liabilities to total shareholders’ funds reflects the lower level of gearing in 2009. In addition, the net debt to equity ratio reduced to 5,2% by the end of the financial year (2008: 20,5%).

Capital reduction out of share premium in lieu of final dividend

At the general meeting of shareholders of the company held on 12 October 2009, the board of directors was given the general authority to make payments to shareholders out of the company’s share premium account. Pursuant to this authority, the directors have decided to declare a capital distribution by way of a reduction of capital (in lieu of the final dividend) out of share premium of 459 cents per share, for the year ended

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Divisional review

Favourite brandKOO is one of South Africa’s heritage brands and the strong market leader in the canned foods category. In 2009 the brand was voted no 3 in the “South Africa’s favourite brand” survey run by TNS and the Sunday Times. The KOO brand is continually strengthened by successful innovations such as Chakalaka, Samp & Beans and flavoured paste, and supported by strong marketing positioning – “the Best You can Do”

DOMESTIC FOOD

Highlights

Most categories achieved pleasing performances

Rice category declined as consumers switched into more affordable carbohydrate categories, benefiting the Milling business

Beverages reflected a sound recovery

07

08

09

R1 601,5 million

R1 740,6 million

R2 408,3 million

Operating income

Salient features 2009Rm

2008 Rm

%Change


15 922,32 408,3

15,1

14 446,81 740,6

12,0

10,238,4

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Divisional review / DOMESTIC FOOD

(continued)

Grains

The Grains division performed well in spite of a very challenging trading environment, where market shares were maintained across all the categories. Volumes, however, declined during the first half but showed some recovery during the second half of the year in response to the current global economic downturn. Volumes were affected as consumers switched between the various carbohydrates as well as showing increasing preference for smaller pack sizes. The rice business was particularly affected by a significant volume decline of the category in favour of the maize category, largely caused by the significant increase in the price of rice.

The start of the financial year saw significant price inflation that followed a rapid escalation of input costs during the previous period. Input costs had started to decline in line with softening international prices of agricultural commodities, but the weaker exchange rate of the rand versus the US dollar during the first half delayed some of that benefit.

A key objective was to restore operating margins to an acceptable level to assist in reinvestment in the business. Acceptable margins were achieved as a result of the combined benefits of increased initiatives in the management of costs, and most notably, the decline in raw material costs. Increased investment in the brands and in the upskilling of our workforce took place.

Continued focus on strengthening our manufacturing platform and significant investment were important factors in the year under review. In addition to the new Pietermaritzburg bakery that is under construction, the board approved the replacement of the Hennenman flour mill at a cost of R561 million.

The current economic downturn remains a cause for concern. Plans to overcome the challenge of a possible stagnation in sales volumes have been put in place.

Groceries

In 2009 the Groceries business has continued to show strong volume and operating profit growth notwithstanding the difficult trading environment. The performance was underpinned by a significant investment in the core brands such as KOO, and All Gold together with the relaunch of the Fatti’s & Moni’s brand. The categories which contributed to the positive volume growth were pasta, baked beans, chakalaka, curried mixed vegetables and tomato sauce.

The results achieved are a consequence of:

A clear growth strategy sustained over five years, focused on the core business

Significant investment in manufacturing capacity for key categories, being Tomato Sauce, Baked Beans and Pasta

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Focus on margin expanding innovation

Rigorous cost management

Highly focused brand investment on core brands such as KOO and All Gold

The 2009 year has celebrated a number of successes for the Groceries business:

Pasta plant was fully commissioned and running at requisite capacity for the full 12-month period

New Tomato Sauce plant was commissioned

KOO brand voted third in the Sunday Times “Top Brands Awards” after Coca-Cola and Vodacom

Launched first in the world – KOO flavoured paste

As a consequence, the Groceries business is well positioned to continue its growth path with activity revolving around three key themes:

Organic growth focused on the core business

Innovation

Entering adjacent categories

2010 will see the integration of the Crosse & Blackwell mayonnaise brand, acquired from Nestlé on 1 October 2009, into the Groceries business.

Snacks & Treats

The Snacks & Treats business performed satisfactorily despite trading in difficult conditions. This result was as a consequence of a clear strategy focusing on three pillars: prioritised growth opportunities, tight efficiencies management and people capability enhancement.

The chocolate portfolio, however, struggled under pressures of discretionary income cuts which were partly offset by growth in targeted sugar segments. Gums and Jellies, supported by the core brands Jelly Tots and Maynards, enjoyed the benefit of growing health trends, increased production

capacity and a robust innovation plan which included Tiger’s core beverage brand Energade being successfully launched in an energy jelly format.

The Boilings category supported by Smoothies, experienced growth in sales volumes. The Snacking category continued to boost portfolio performance through a support programme behind the Jungle brand.

Operational efficiencies included streamlining the logistics process and curtailing of factory costs to absorb lower volume recoveries.

Beverages

During 2009, the Beverages category focused on restoring the business to a sustainable profitable position, after delivering a disappointing performance in the previous year.

Excellent progress has been made during 2009 in restoring profitability through a number of initiatives. These initiatives included the consolidation of the field sales force, rationalisation of non-profitable product lines, optimal stock management to support seasonal bias, and manufacturing and logistics cost reduction initiatives.

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Divisional review / DOMESTIC FOOD

(continued)

The consequence of these management actions has resulted in an enhanced competitive cost base.

The correction of margins and profitability in 2009 has allowed the Beverage business to continue to invest behind its core brands. During the year, the Rose’s brand was renovated and augmented with the launch of three new variants. Energade continued to drive and leverage its promotions and sponsorships. Oros benefited from a successful TV campaign which ran throughout the summer season. Hall’s was supported through a variety of promotions, including an extensive community events campaign. 2009 saw the introduction of Oros Iced Tea and the Energade Champs range.

Value Added Meat Products

The Enterprise Foods business has succeeded in restoring margins following the very drastic protein cost increases experienced since the third quarter of the previous financial year and which continued to increase, reaching a peak during the third quarter of the year under review.

As a result of the very high price increase implemented in the current year to recover these cost pushes, consumers have opted for cheaper and lower cost products or have exited the chilled processed meat category altogether due to affordability. Consequently, chilled processed meat market volumes have contracted significantly in the second half of the reported period. The recessionary impact is particularly evident in the polony product segment.

Focused brand and product strategies were implemented during the year which made a noticeable contribution to the improved margins and growth in profitability against last year.

Substantial benefits were reaped from investments made in recent years in the latest production technology, resulting in continued improvement in efficiencies and product quality.

The improved category margins, the full commissioning of the new slaughter and deboning facility, and exciting innovation delivered in 2009 with the associated increase in brand investment, augurs well for further improvements in 2010.

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Out of Home Solutions

Ingredients

Notwithstanding changing consumer spending patterns during the year as a result of the contraction in consumer discretionary spending, the ingredients category has performed satisfactorily. This performance was achieved largely through better margin management and improved sales mix in key categories and an increased focus on value-added products.

As a focused Out of Home ingredients business, supported by the supply chains of the various Tiger Brands categories, the Out of Home business is well positioned to take advantage of future growth opportunities.

Prepared Meals

As a consequence of volumes and profits being significantly lower than expectations – which were exacerbated by prevailing economic conditions – resulting in an increase in home cooking, a decision was made to exit this category during the year.

The Gauteng and Cape Town facilities were closed in December 2008 and May 2009 respectively.

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Divisional review(continued)

The Perfect TouchIn 2009 Tiger Brands’ hair styling brand “Perfect Touch” was relaunched with a new fresh look and exciting new product variants. The brand retains its number 1 market share position in the hair styling market.

Highlights

Baby and Personal Care categories showed modest growth

Homecare performance improves after a disappointing pest season in the first half

HOME AND PERSONAL CARE (HPC)

07

08

09

R382,7 million

R450,0 million

R485,0 million

Operating income


2008 Rm

%Change


1 883,7485,025,7

1 765,8450,025,5

6,77,8

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Divisional review / HOME AND PERSONAL CARE (HPC)

(continued)

The year under review has been particularly challenging for the HPC division which comprises the Home Care, Personal Care and Baby categories.

Home Care

The Home Care category was negatively impacted by a poor pest season with the total pest control market volumes contracting by 8%. The market was further impacted by a significant devaluation of the sector through a vast range of value based offerings. The aerosol market performance has been characterised by substantial increases in raw metal prices during 2009, further impacting on margins and volumes.

The company’s sanitary and surface cleaner portfolio performance improved through the course of the year as supply normalised after the closure of a major third party supplier. Growth in this segment has been driven through the company’s brand consolidation process and entry into sizable sectors previously controlled by a single brand.

The Fabric Care market has been characterised by local and multinational brands competing aggressively for market share. The Bio-Classic expansion into fabric conditioners and pre-treatments has proved to be extremely successful.

Personal Care

The Personal Care portfolio reflected a marginal volume growth notwithstanding the economic conditions wherein discretionary based categories typically exhibit volume pressures. Ingram’s Camphor Cream experienced strong volume growth as consumers traded down to smaller pack sizes. The manufacture of Ingram’s products will be brought in-house in the new financial year and the resulting lower cost base will improve the competitiveness and growth prospects of the brand.

Lemon Lite has maintained market share during the past year through a focused brand support programme and a clear orientation around the sales channels associated with the brand. The support programme and innovation pipeline for the Lemon Lite brand should enable strong growth in 2010.

The Glycerine market has declined by 9% in the reported period as the price of raw material fluctuated dramatically due to exchange rates and vacillating demand for palm oil. The Dolly Varden brand remains the market leader within this segment.

Designer Group is being integrated into the Consumer Health business to form an integrated Tiger Brands Home and Personal Care (HPC) division. To underpin the more focused approach,

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the forthcoming year will give rise to an investment in a dedicated HPC field and merchandising force, assisting the company to achieve its growth ambitions. This consolidation will result in meaningful financial synergies being realised, facilitating investment in value proposition competitiveness.

Baby category

The Baby category which comprises the nutrition and well-being segments, has managed to sustain a positive performance amidst a period of economic slowdown.

Baby Nutrition’s performance reflects intra-category mix changes, with Purity cereals showing a positive volume performance largely driven by hot porridges, as consumers downtrade to more affordable, traditional but branded offerings. Purity cereals have gained market share with Purity hot porridges making up four of the top seven selling cereal variants. Notwithstanding pressure on jarred baby food volumes through downtrading into cereals, as well as earlier than expected exiting of the category into mainstream foods, Purity jarred baby food market shares have shown marginal growth.

Baby Nutrition growth plans in 2010 include brand building and education for continued organic growth and extending into existing and adjacent segments.

Baby Well-being comprises toiletries and medicines and has again achieved good top line growth. This year, Elizabeth Anne’s volume and value market share gains have been driven by focusing on core segments. The migration strategy of Purity into the Toiletries segment, resulting in the dual branding of Elizabeth Anne’s and Purity, has been well received by consumers and will continue to be the cornerstone of consumer communication in 2010. The Baby medicinal segment, with leading brands such as Telament and Vidaylin, continues to show positive growth.

Future growth plans for the Baby Well-being segment will include the continuing focus on a master brand strategy, innovation into existing and new segments and expansion of the medicinal portfolio.

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Divisional review(continued)

INTERNATIONAL OPERATIONS AND EXPORTS

Highlights

Deciduous Fruit profitability was adversely impacted by a strong rand exchange rate in the second half

Central and East African acquisitions successfully bedded down during 2009

Exports into African markets continue to perform well


2008 Rm

%Change


2 030,6214,010,5

1 519,3219,814,5

33,7(2,6)

07

08

09

R104,2 million

R219,8 million

R214,0 million

Operating income

Africa exploredThe Tiger Brands expansion strategy into the rest of Africa gained strong traction during 2009 with strong growth in our exports into Southern Africa Rim countries; and the growth and consolidation of our bridge-head acquisitions – i.e. Haco in East Africa and Chococam in Central Africa.

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Divisional review / INTERNATIONAL OPERATIONS AND EXPORTS

(continued)

Langeberg & Ashton Foods

2009 has been an exceptionally challenging year for the group’s Deciduous Fruit business.

The prevailing global economic conditions, coupled with the strengthening of the rand in the second half of the year and high local input costs, reduced profitability considerably compared to the prior year.

In the canned fruit category, volumes initially dropped but recovered in the second half of the year to prior year levels, indicating that the customers and markets that Langeberg & Ashton Foods services remain resilient.

In the fruit puree sector, overall demand remained depressed and global pricing was significantly lower than the previous year.

2010 will remain challenging for Langeberg & Ashton Foods due to a combination of surplus global stocks, depressed demand, expected strong rand exchange rates and tin plate related cost increases.

Chococam (held 75% – Cameroon)

The 2009 financial year marks the first full twelve months’ performance under Tiger Brands’ ownership.

The overall performance of Chococam proved satisfactory. The performance should be seen against a backdrop of significant cost increases in key raw materials i.e. cocoa, sugar and energy, that were partly offset through price increases.

The Cameroonian domestic market proved to be resilient and single digit growth versus 2008 was achieved. The effects of the global economic crisis were evident as consumers downtraded from chocolate to sugar confectionery products, which negatively impacted the business mix.

The export market under performed during 2009, driven mainly by political events and related uncertainty in the key market of Gabon.

Due to the retirement of the Chief Executive Officer at the end of June, a new Chief Executive Officer was appointed effective July 2009. The position of Chief Financial Officer was filled in May 2009.

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Very satisfactory progress was made in 2009 in organisational capability, consistent with the expected Tiger Brands standards and particularly in the key areas of Culture Integration, Performance and Risk Management.

Various capital investments were made in terms of replacement and expansion of key assets. A new ERP system will be commissioned in 2010, a key enabler in extracting future operational efficiencies.

Future growth will be centred on a combination of both organic and acquisitive growth, as well as continued organisational capability development.

Haco Industries (held 51% – Kenya)

Haco Industries in Kenya was acquired effective 1 June 2008 as part of Tiger’s expansion into East Africa. Although the business is heavily dependent on stationery products (55%), its Home and Personal Care (HPC) footprint in East Africa has potential for further leverage, driven by rapid expansion of the formal trade and an emergent middle class.

Haco has made a solid contribution to the distribution of Tiger Brands products in the East African region. A core spectrum of Tiger Brands branded products (i.e. Beacon, All Gold, Purity and Ingram’s) are now readily available to Kenyan consumers in the fast growing and established modern formal trade within East Africa.

In the period under review, the Kenya shilling depreciated by approximately 25% against major currencies. This subsequently inflated the cost of raw materials and exerted pressure on margins. Nevertheless the business was able to hold its margins with aggressive cost containment measures.

Within the year, Haco invested R20 million in expanding production capacity and bolstering working capital to support portfolio expansion into Tiger Brands products.

The people and culture integration process following the acquisition has progressed very smoothly. Tiger human resource management and people performance systems and processes have been fully embraced and implemented in the business.

Further opportunity exists with the implementation of a full customs union for the East African Community in January 2010 and deeper penetration of the Tiger Brands portfolio into the wider East African markets of Rwanda, Burundi, Ethiopia and Eastern Congo.

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Divisional review / INTERNATIONAL OPERATIONS AND EXPORTS

(continued)

protection. Carozzi also realised a capital profit of R16,6 million (Tiger Brands‘ 24% share) arising on a part sale of a subsidiary.

Molitalia (a wholly owned subsidiary in Peru) had a disappointing performance, with a particularly challenging first six-month period. A combination of depressed consumer demand and contracting gross margins, due to an inability to pass on the requisite price increases, has resulted in unacceptable returns in the reported period.

The sale of 50% of the related equity in the Argentinean operation to Molinos Del Plata during the prior year has yet to stem the medium-term loss position of that business. The loss was exacerbated by shorter-term increases in brand investment to drive the associated brand awareness and product demand.

Tiger Brands International: Exports

The Export division of Tiger Brands International has experienced another year of strong revenue and profit growth that was ahead of expectations. The strong rand has impacted negatively on the profitability of export business outside the African

Carozzi (held 24% – Chile)

Empresas Carozzi is a leading company in the Chilean food industry with manufacturing, marketing and distribution activities in Chile, Peru and Argentina. It enjoys market leadership positions in most of the market sectors in which it operates.

2009 has been a challenging year for the Carozzi business. The environment has been characterised by a volatile exchange rate, depressed consumer demand across a number of its key categories and continued high input cost pressures. In particular, biscuits, candies and chocolates have all experienced volume pressures in keeping with the more discretionary nature of the category. In addition, chocolate margins compressed marginally due to a fiercely competitive pricing arena.

The contribution by Carozzi to Tiger Brands earnings was driven mostly by inflation based sales increases from the core foods business, as well as exchange rate driven gains from the export and the Agro-industrial divisions. In addition, operational efficiencies, cost savings and a focus on elimination of waste across the extended value chain have been key management actions to enable margin

Haco investsHaco has made a solid contribution to distribution and invested R20 million in expanding production capacity and bolstering working capital to support portfolio expansion.

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A continuation of the growth achieved is anticipated with new distributors in Angola and Mozambique delivering improved performances. In addition, product registrations in Nigeria, and new distributors in Ghana, should further enhance growth prospects in 2010.

continent in markets such as Europe, Australasia and North America. Within the African continent, strong demand for the Tiger Brands basket of products has been experienced at acceptable margins.

A notable feature of the 2009 performance has been the growth achieved as a result of exceptional demand from Zimbabwe and Zambia as well as South African retailer expansion into Africa.

There have been several operational changes made in the supply chain, resulting in improved service levels and shortened lead times. The improvement in product availability, together with brand activation specifically in Mozambique, Kenya, Zimbabwe and Zambia, has resulted in accelerated growth.

The Kenyan subsidiary Haco Industries has made a solid contribution to the distribution of Tiger Brands’ products in the East African region. Logistical difficulties experienced at the beginning of the year have been overcome and rapid growth is expected as demand increases.

A feature of 2009 has been the demand for products from Zimbabwe post the ‘US-dollarisation’ of that economy. Advantage was taken of the opportunity presented by Zimbabwe and this has contributed to the overall improved performance.

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Reinvesting in the community

Tiger Brands Unite Against Hunger is the vehicle that is used to carry out all the activities of social investments. Over the course of the year, approximately 100 000 people benefited from the company’s various initiatives.

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Highlights

Sustainability framework approved

Key focus areas for environmental management identified

Compliance support systems embedded

Transformation moves to new levels

CSI interventions have meaningful impact

CONTENTS

40 Corporate governance

48 Directors’ and senior management’s remuneration

58 Management reporting

59 Sustainability report

Governance and sustainability

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Corporate governance

The board of directors and management of Tiger Brands are committed to the highest standards of corporate governance and ethical and moral business behaviour.

The company placed an enhanced focus on governance and compliance following upon the lapses in ethical behaviour that occurred in 2007 and 2008 which resulted in administrative penalties being paid in terms of the Competition Act.

In November 2008, a group compliance executive was appointed to assist in ensuring that appropriate processes and systems are in place to enable the group to be compliant with legislation and group policies.

The group Compliance Officer has direct access to the chairman of the risk committee.

The group is committed to sound and transparent business practices and to complying in all material respects with the principles contained in the King Code of Corporate Practices and Conduct (King II). The group is also committed to compliance with the principles, policies and practical application of corporate governance as outlined by the Public Investment Corporation.

The company welcomes the King Report on Governance for South Africa 2009 (King III) and is taking steps to ensure that it will be compliant with the obligations placed upon the company as a consequence thereof by the time it comes into effect on 1 March 2010.

The board

The board of Tiger Brands currently consists of eight non-executive directors and five executive directors.

The board is governed by a charter as are each of the subcommittees that have been established by the board. Copies of the board and committee charters are available on request from the company secretary and are accessible on the website.

The primary powers and responsibilities of the board include:

responsibility for approving the strategic direction of the group and the budgets necessary for the implementation thereof;

being the guardian of the values and ethics of the group;

responsibility for appointing the Chief Executive Officer;

retaining full and effective control of the group;

monitoring the management and the implementation of the corporate vision; and

communicating with shareholders openly and timeously throughout the year.

It may delegate responsibility to an executive committee or board subcommittees.

The charter outlines certain key responsibilities that may not be delegated.

The subcommittees of the board are the remuneration/nominations committee, the audit committee, the transformation committee and the risk committee, which is a subcommittee of the audit committee. Each of the committees is chaired by an independent non-executive director. Details in respect of each committee are reflected on pages 44 to 46. An independent director is as defined in King II.

Performance of individual board members is assessed when board members are required, in terms of the articles of association, to retire from the board and offer themselves for re-election. External evaluation of the effectiveness of the board and its members takes place from time to time.

The board meets at least six times a year to monitor the performance of the group, to approve the budget for the forthcoming year and to approve the strategic plan of the group.

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Directors’ attendance at board meetings

24/11/08 16/02/09 18/05/09 08/06/09 05/08/09 16/09/09

L C van Vught (Chairman) ✓ ✓ ✓ ✓ ✓ ✓

S L Botha ✓ ✓ A ✓ ✓ ✓

R M W Dunne ✓ ✓ ✓ ✓ ✓ ✓

U P T Johnson ✓ ✓ ✓ ✓ ✓ ✓

K D K Mokhele ✓ A ✓ ✓ ✓ ✓

A C Nissen1 ✓ A n/a n/a n/a n/aA C Parker ✓ ✓ ✓ A ✓ ✓

P M Roux2 ✓ ✓ ✓ ✓ ✓ ✓

B L Sibiya ✓ ✓ ✓ ✓ ✓ ✓

N G Brimacombe ✓ ✓ ✓ ✓ ✓ ✓

M Fleming3 n/a n/a ✓ ✓ ✓ ✓

P B Matlare ✓ ✓ ✓ ✓ ✓ ✓

B N Njobe ✓ ✓ ✓ ✓ ✓ ✓

C F H Vaux ✓ ✓ ✓ ✓ ✓ ✓

1Resigned 16 February 2009.²Resigned 13 March 2009 and subsequently appointed as non-executive director on 16 March 2009.

³Appointed 18 May 2009.

✓ Indicates attendance.

A Apologies tendered.

and reviewing (at least annually) the terms and conditions of remuneration packages for executive directors and senior management. The committee is responsible for making recommendations to the board on all fees payable by the group to non-executive directors for membership of both the board and any board subcommittee.

The committee is also required to play an integral part in succession planning, particularly in respect of the Chief Executive Officer and the executive directors of the company.

The committee comprises three independent non-executive directors. At 30 September 2009 the committee comprised S L Botha (Chairman), L C van Vught and B L Sibiya.

Remuneration and nomination committee

The remuneration and nomination committee is a subcommittee of the board, the responsibilities of which are governed by a charter which outlines that the role of the committee is to work on behalf of the board and be responsible for its recommendations within the terms of reference approved by the board.

The terms of reference inter alia include the determination, agreeing and developing of the group’s general policy on executive and senior management’s remuneration, determining any criteria necessary to measure the performance of executive directors and senior management in discharging their functions and responsibilities,

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Corporate governance(continued)

Attendance at remuneration/nominations committee meetings

18/11/08 02/02/09 12/05/09 15/09/09

S L Botha (Chairman) ✓ ✓ ✓ ✓

B L Sibiya ✓ ✓ ✓ ✓

L C van Vught ✓ ✓ ✓ ✓


ensure that the board of directors makes informed decisions and is aware of the implications of such decisions regarding accounting policies, practices and disclosures;

provide a safeguard for directors’ liabilities by informing the board of directors on issues of importance to the business and the status of the financial reporting; and

enquire into the process of risk identification.

Operational audit committees are also in place which are responsible to the audit committee of the company. These operational audit committees focus largely on divisional issues. The audit committee reviews the effectiveness of internal control in the group with reference to the findings of both the internal and external auditors. In addition, the audit committee reviews the work of the risk committee which has been established as a subcommittee of the audit committee.

The external and internal auditors have unrestricted access to the audit committee. The internal audit function has the respect and co-operation of the board of directors and management.

The audit committee has adopted a policy limiting the consulting work of the auditors, apart from their work as external auditors, and prior approval of any such work is required. The audit committee is satisfied with the independence of the external auditors.

Audit committee

The company has an audit committee which operates under an approved charter, the members of which are all independent non-executive directors. The audit committee has satisfied its responsibilities in terms of the charter in the year under review.

As at 30 September 2009 the composition of the committee was R M W Dunne (Chairman), L C van Vught, K D K Mokhele and A C Parker.

The Chief Executive Officer, the Chief Financial Officer and at least one representative of the external auditors and the internal auditors are required to attend the meetings of the audit committee.

The objectives of the audit committee are to:

determine that management has created and maintained an effective control environment and that management demonstrates and stimulates the necessary respect of the internal control structure amongst all parties;

review the scope and outcome of audits. The review will include an assessment of the effectiveness of the annual audit, ensuring emphasis is placed on areas where the committee, management or the auditors believe special attention is necessary;

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Attendance at audit committee meetings

18/11/08 11/05/09 16/09/09

R M W Dunne (Chairman) ✓ ✓ ✓

L C van Vught ✓ ✓ AK D K Mokhele ✓ ✓ ✓

A C Parker ✓ ✓ ✓


A Apologies tendered.

ensure that a proper business risk assessment is carried out and that a risk profile is compiled by management;

identify on an ongoing basis the most significant risks;

satisfy the corporate governance reporting requirements of the committee;

monitor the group’s risk management and assurance efforts; and

report to the board through the audit committee, on the risk management work undertaken and the extent of any action taken by management to address areas identified for improvement.

The risk management process, which is assessed by the risk committee, involves a formalised system to identify and assess risk, both at a strategic and at an operational level.

The process includes the evaluation of the mitigating controls and other assurances in identifying and assessing the risks.

The risk categories assessed include reputation risk, raw material procurement risk, brand risk, product risk, legislative issues, people risks, competitive forces, information technology issues, insurable perils, investor risks and financial risks.

Major risks are reviewed annually and are also updated during the course of the year as the risk environment changes.

Risk committee

The board is responsible for governing the risk management processes in the group in accordance with corporate governance best practice. This is achieved through the risk committee which is a subcommittee of the audit committee.

Specialists are invited to attend meetings of the committee when necessary so as to provide advice on matters of risk addressed by the committee.

The risk committee is chaired by an independent non-executive director, R M W Dunne. The other members of the risk committee comprise members of the group’s senior management. As at the end of the financial year the senior management representatives on the committee included representatives of the sustainability, financial, legal/secretarial and supply chain functions of the group. These members report to the group executive committee on risk issues. The group Compliance Officer attends meetings of the committee and has direct access to the chairman of the committee.

The risk committee is governed by a charter which outlines its primary purposes as being to:

establish and maintain a common understanding of the risk universe, which needs to be addressed in order to align with the group’s strategy and ensure sustainability of the group;

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The group’s strategic risks have been identified and documented by management and reviewed by the risk committee.

The risks identified include the following areas:

Legislative issues

The group participates in both industry and corporate responses to proposed government legislation affecting the group. In addition, the group also engages directly with the relevant government departments where appropriate. Fair trade, product safety and tariff enforcement are areas relevant to the group, where interaction at appropriate governmental level is required.

Transformation

The company recognises that participation in the successful transformation of South African society is critical for the sustainability of the current macro-economic environment.

Products

The group continually monitors, reviews and approves quality control procedures in the supply chains throughout the business.

Production facilities

The group formally reviews both preventative and mitigating controls on a regular basis relating to key production facilities and assets throughout the group.

Global financial crisis

The group continues to monitor and assess the impact of the global economic crisis on customers, suppliers, funding requirements and the business environment in general.

Information technology

The risks surrounding the security, back-up and conversion and update risks relating to the company’s information technology systems are continually assessed. Disaster recovery plans are regularly reviewed as disruptions to critical management information could have a material impact on the group’s continuing operations.

Foreign exchange

The foreign exchange environment is monitored on an ongoing basis and any transactions involving foreign currency are managed through a clear foreign exchange policy where open positions are limited.

Reputation risk

The group constantly monitors and addresses issues that can adversely impact the group’s reputation and the reputation of its brands as well as all other facets of the business that can have an impact on reputation.

Human resources

The group continues to develop its internal talent pool and to seek innovative ways to find and retain skilled staff. Succession planning is in place and specific skills shortages are being addressed.

Resources and procurement

The group continually monitors and reviews the changes in climatic conditions, which is being expanded to assess the agricultural arena in view of the increasing focus on climate change and its implications.

Exposures and strategy relating to procurement of key raw materials required by the group are reviewed on an ongoing basis.

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Electricity and water supply

As a consequence of the increase in demand for electricity in South Africa, the company is required to assess its current exposure and back-up position with regard to electricity supply and possible alternative sources of energy. The company assesses savings opportunities in respect of electrical consumption. The company is also required to regularly assess the quality of water used at its facilities and the sustainability of supply.

The responsibility for each of the strategic risks that have been identified has been assigned to an appropriate member of the group’s senior management team who is required to report to the executive committee on the identified risks assigned to them and outline the steps being taken to manage or mitigate such risks.

The group also runs a number of specific risk control initiatives addressing health and safety management, security, fire defence, food safety, environmental management and quality management and has adopted a system of incident reporting at operational level which allows for reporting to management by exception.

The group has also implemented a control risk assessment process at all operations.

These risk management activities are complemented by the enforcement of the group’s code of ethics, the confidential ethics hotline and the use of an internal commercial audit department to assist in addressing potential fraud or criminal activity.

The commercial audit department carries out compliance-based audits focusing on the control environment. The commercial audit department also responds to issues arising from the ethics hotline as well as any reports of defalcation or other issues requiring investigation.

The company will be focusing on the obligations placed upon it relating to risk in terms of the King Report on Governance for South Africa 2009 (King III), to ensure compliance with King III.

Transformation committee

The transformation committee has been established by the board and acts in terms of a charter which outlines as its primary purposes the following:

to change and develop a new way of doing business within Tiger that represents and celebrates diversity;

to foster and encourage broader economic participation in the food and healthcare industry;

to develop a personnel profile that is more inclusive and representative of the demographic spectrum of South Africa and subsequently develop a reputation of being an “employer of choice”;

to ensure that actual change occurs, and business benefits are achieved; and

to report to the board on the transformation work undertaken, and the extent of any action taken by management to address areas identified for improvement.

Attendance of board members at risk committee meetings

05/11/08 04/02/09 06/05/09 05/08/09

R M W Dunne (Chairman) ✓ ✓ ✓ ✓

M Fleming1 n/a n/a n/a ✓

C F H Vaux ✓ ✓ ✓ ✓

B N Njobe2 n/a n/a ✓ ✓

1Appointed as an executive director 18 May 2009.2Appointed to the risk committee on 6 May 2009.


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The transformation committee primarily comprises representatives of management but is chaired by an independent non-executive director. The committee is chaired by B L Sibiya and the independent non-executive director who is also a member is U P T Johnson. Messrs P B Matlare, N G Brimacombe and Ms B N Njobe are also members of this committee.

Ethics

The group has adopted a code of ethics which applies to executive directors, non-executive directors, managers and all other employees of the group.

The purpose and scope of the code is:

to promote and enforce ethical business practices and standards in the group; and

to reflect the group’s policy on ethics and accordingly should be carefully studied as it forms part of the expectations the company has of all its managers and employees. An acceptance of employment with the company is deemed to be an acceptance of the principles set out in this code.

The company subscribes to the principles of the King Code (King II) on Corporate Governance, which principles are embodied in the group’s code of ethics:

suppliers and competitors of the integrity of the group companies with which they deal.

The group is a founder member of the Ethics Institute of South Africa.

A confidential ethics hotline has been established and all reports received are investigated by the commercial audit department. The commercial audit department has been successful in investigating and assisting in prosecutions as and when fraud or defalcations have been reported and identified.

Dealing in company shares

The code of ethics makes provision for the procedure for dealing in Tiger Brands shares. The code outlines procedures that are to be implemented throughout the group to protect directors and executives against possible and unintentional contravention of the insider trading laws and stock exchange regulations.

Adherence to the code is seen as a strategic business imperative and a source of competitive advantage.

The code is intended for use to raise ethical awareness, and as a guide in day-to-day decisions. It can also be used in training programmes, and to help assure customers,

Attendance of board members at transformation committee meetings

19/11/08 12/02/09 14/05/09 30/07/09

A C Nissen (Chairman)1 A A n/a n/aB L Sibiya (Chairman) ✓ ✓ ✓ AU P T Johnson ✓ ✓ ✓ ✓

P B Matlare ✓ ✓ ✓ ✓

N G Brimacombe ✓ A A ✓

B N Njobe ✓ ✓ ✓ ✓

1Resigned on 16 February 2009.


A Apology tendered.

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Any investment in or disinvestment from a group company must be referred to the chairman of the company concerned to obtain consent before any instruction is given to a stockbroker. The consent required may be delayed or withheld according to judgement of the circumstances prevailing at the time. Short-term or speculative positions may not be taken by directors or executives of the company in any of the securities of the group companies. Participants in the group’s share incentive schemes are subject to the rules of the scheme and the provisions of the Listing Requirements of the JSE Limited.

Unless extraordinary circumstances exist, and are approved by the chairman, no investment or disinvestment may take place during the closed periods which are between 31 March and the release of the interim results in May and between 30 September and the release of the final results in November and any other closed period as may be outlined in terms of the JSE Listing Requirements.

Party political support

The group does not support, financially or otherwise, any individual political party.

Accountability – financial statements

The directors of Tiger Brands are responsible for preparing financial statements and other information presented in the annual report in a manner that fairly presents the state of affairs and results of the operations of the company and the group. The external auditors are responsible for carrying out an independent examination of the financial statements in accordance with International Standards of Auditing (ISA) and reporting their findings thereon.

The annual financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and the Companies’ Act in South Africa. They are based on appropriate accounting policies and are supported by reasonable and prudent judgements and estimates.

The directors have no reason to believe that the group’s operations will not continue as going concerns in the year ahead, other than where closures or discontinuations are anticipated, in which case provision is made to reduce the carrying cost of the relevant assets to net realisable value.

Directorate and executive management

The board of directors of Tiger Brands includes independent non-executive directors who are chosen for their business acumen and skills. The chairman of Tiger Brands acts in a non-executive capacity and is independent.

New appointees to the board are appropriately familiarised with the company’s businesses through an induction programme.

The board of the company meets regularly and monitors the performance of executive management. It addresses a range of key issues and ensures that debate on matters of policy, strategy and performance is critical, informed and constructive.

All directors of Tiger Brands have access to the advice and services of the company secretary and, in appropriate circumstances, may, at the group’s expense, seek independent professional advice concerning its affairs.

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Directors’ and senior management’s remuneration

Remuneration committee

The remuneration committee (“the committee”) has been delegated by the board with the responsibility for determining the remuneration of the executive directors and other senior management members as well as approving all grants of options under the Tiger Brands Phantom Cash Option Scheme. The committee comprises three independent non-executive directors, which at 30 September 2009, were S L Botha (chairperson), L C van Vught and B L Sibiya. The chairperson reports to the board on the committee’s deliberations and decisions.

Remuneration policy

Remuneration policy is formulated to attract, retain and motivate top-quality people in the best interests of the group, and is based upon the following principles:

Remuneration arrangements will be designed to support Tiger Brands’ business strategy, vision and to conform to best practices.

Total rewards will be set at levels that are competitive within the context of the relevant areas of responsibility and the industries in which the group operates.

Total incentive-based rewards are earned through the attainment of demanding targets consistent with shareholders’ growth expectations.

Composition of executive remuneration

The remuneration of executive directors is determined on a total cost-to-company basis (i.e. total remuneration package). The total remuneration packages comprise an annual cash amount, various benefits including retirement provision, group life, health and disability insurance, funeral benefits and a travel allowance.

The total remuneration packages of the executive directors are subject to annual review and benchmarked against external market data taking into account the size of the company, its market sector and business complexity. Individual performance and overall responsibility are also taken into consideration. For consistently high performers, it is the intention to set guaranteed (non-variable) pay at above median levels of remuneration as reflected by an appropriate external executive remuneration survey.

Outside of the total remuneration package structure, executive directors participate in an incentive bonus plan and in the Tiger Brands Phantom Cash Option Scheme (and historically the Tiger Brands (1985) Share Option Scheme). Two executive directors are also participants in the Tiger Brands Black Managers Trust.

The incentive bonus plan, Phantom Cash Option Scheme, Black Managers Trust, retirement and other benefits are commented on in more detail below:

Incentive bonus plan

The executive directors participate in an annual incentive bonus plan, which is based on the achievement of short-term performance targets. These targets comprise a financial as well as a number of non-financial components. For 2009, the non-financial element of the bonus consisted of various components including the achievement of agreed transformation targets; the implementation of Phase II of the company’s BEE initiative; meaningful progress in the company’s acquisitive growth strategy in the rest of Africa; and the level of progress made in respect of organisational development issues. Each of these elements carried an appropriate weighting. The financial performance component is based on growth in

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profits, as measured by headline earnings per share, and the return on net assets employed, with growth in headline earnings per share carrying a higher weighting. Measures and targets are reviewed annually by the remuneration committee.

Incentive bonuses payable to executive directors in respect of 2009 are outlined in the table of directors’ emoluments.

The incentive scheme for 2009 was capped at 100% of total remuneration package, with 80% of the incentive bonus being based on the group’s financial performance (headline earnings per share and return on net assets) and the remaining 20% (subject to minimum financial performance criteria being achieved) based on the level of achievement and progress made against the various non-financial targets referred to above. The bonuses accruing to executive directors (those eligible in terms of the scheme rules i.e. Messrs N G Brimacombe, M Fleming, P B Matlare, B N Njobe and C F H Vaux) in respect of 2009 equated to, in aggregate, 83,82% (2008: 91,04%) of their combined total remuneration packages.

The profit incentive scheme for 2010 is similar to the 2009 scheme, with 80% of the bonus being based on financial performance criteria and the remaining 20% based on transformation, people development, further development of the strategy in the rest of Africa, development of the company’s environmental strategy and the performance of the company’s share price tracked against an appropriate index. As in the past, performance against individual personal objectives will be taken into account in the final bonus determination.

Phantom Cash Settled Option Scheme

The committee gives consideration to granting options to executive directors on an annual basis.

On 23 February 2006 shareholders approved the adoption of a Phantom Cash Option Scheme to replace the Tiger Brands (1985) Share Option Scheme. In terms of the Phantom Cash Option Scheme, cash options have been granted to the executive directors on an annual basis since 2006.

The rules of the Phantom Cash Option Scheme are based on the 1985 share option scheme. Apart from the fact that the options in the new scheme are “cash settled” rather than “equity settled”, the major difference between the two schemes is that the maturity period of the cash settled options is six years as opposed to 10 years. The cash options awarded in 2006 and 2007 are subject to purely time-based vesting conditions, which is consistent with the previous scheme (i.e. one-third becoming vested on each of the third, fourth and fifth anniversary of the date of grant). With effect from January 2008 and in line with global best practice and emerging South African practice, the company has introduced performance vesting conditions to govern the vesting of a portion of the options granted under the Phantom Cash Option Scheme.

With regard to the options granted in both 2008 and 2009, a total of 50% of the options will not be subject to performance conditions. The vesting of these options will remain time-based. The right to exercise the remaining 50% is subject to the requirement that the company’s headline earnings per share increase by a minimum of 3% per annum above inflation, on a rolling cumulative basis, over the relevant three, four and five year performance periods. Annual retesting of the performance condition is permitted up to the sixth anniversary of the date of original grant of the options.

The grant price of a cash settled option is equal to the average closing market price of a Tiger Brands share on the JSE for the 30 trading days immediately prior to the grant date of the option.

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Directors’ and senior management’s remuneration(continued)

The cash settlement amount of the option is equal to the difference between the closing market price of a Tiger Brands share on the date on which the option is exercised and the grant price. The participants therefore receive the same net proceeds as under the previous equity settled option scheme, apart from broking fees and associated costs which are not payable under the Phantom Cash Option Scheme.

The value of the underlying Phantom shares over which the cash options are granted is determined by reference to a predetermined multiple of annual total remuneration package. The individual multiples applied to the executive directors, in respect of the 2009 allocations, ranged between 1,2 and 1,4 times.

Details of equity settled options over shares in Tiger Brands Limited held by directors as at 30 September 2009, together with options exercised during the year, are set out in note 24.5 to the notes of the annual financial statements.

In addition to holding equity settled options over shares in Tiger Brands Limited, some of the executive directors also hold options over shares in The Spar Group Limited and Adcock Ingram Holdings Limited. These options were created as part of the Spar and Adcock Ingram unbundling transactions, to ensure that Tiger option holders were treated on a consistent basis with Tiger shareholders following the distribution of Tiger’s investments in those companies.

On 18 October 2004, The Spar Group Limited was unbundled and separately listed on the JSE Limited. Holders of Tiger Brands options received one option in The Spar Group Limited for each Tiger Brands option held. The price of a Spar option was determined by reference to the relative average prices of the shares of the company and The Spar Group Limited for the first five trading days

following upon the unbundling. The price of each Tiger option was accordingly reduced by 18,88112% and the exercise price of the options in The Spar Group Limited was determined as 18,88112% of the original price at which the options in the company were granted. These Spar options are exercisable directly against The Spar Group Limited and are subject to the same vesting terms and conditions as the original Tiger options.

On 25 August 2008, Adcock Ingram Holdings Limited was unbundled and separately listed on the JSE Limited. Holders of Tiger Brands equity settled options received one equity settled option in Adcock Ingram Holdings for each Tiger Brands option held. The price of an Adcock option was determined by reference to the relative average prices of the shares of the company and Adcock Ingram Holdings Limited for the first five trading days following upon the unbundling. The price of each Tiger option was accordingly reduced by 20,9877% and the exercise price of the options in Adcock Ingram Holdings Limited was determined as 20,9877% of the original price at which the options in the company were granted. These Adcock options are exercisable directly against Adcock Ingram Holdings Limited and are subject to the same vesting terms and conditions as the original Tiger equity settled options.

With regard to the impact of the Adcock Ingram unbundling on the Tiger Brands Phantom Cash Option Scheme, all cash settled options in favour of Tiger Brands employees which were unexercised at the date of the unbundling, were adjusted in terms of an equalisation formula as to quantum and to price. As a result, no Adcock Ingram cash settled options were granted to Tiger Brands employees. Tiger Brands cash settled options previously issued to Adcock Ingram employees were cancelled and replaced by cash settled options in Adcock Ingram, using an appropriate equalisation formula.

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The first table below reflects the details of cash settled options granted to executive directors in February 2009, whilst the following two tables reflect the details of cash settled options granted in January 2008 and April 2008 respectively.

Cash settled options granted February 2009

Name

Number of

cash options

Grant price

per cash option

Value of

allocation

P B Matlare 40 400 R141,91 R5 733 164B N Njobe 20 300 R141,91 R2 880 773C F H Vaux 25 400 R141,91 R3 604 514N G Brimacombe 25 400 R141,91 R3 604 514P M Roux* 27 900 R141,91 R3 959 289M Fleming** 14 800 R141,91 R2 100 268

* Options forfeited, as P M Roux ceased to be an employee of the company on 13 March 2009.

** These options were granted prior to M Fleming’s appointment as an executive director of the company on 18 May 2009.

Cash settled options granted January 2008 (adjusted for Adcock Ingram unbundling)

Name

Number of

cash options

Grant price

per cash option

Value of

allocation

N G Brimacombe* 23 920 R130,59 R3 123 748P M Roux*† 23 920 R130,59 R3 123 748N P Doyle** 23 920 R130,59 R3 123 748C F H Vaux 23 920 R130,59 R3 123 748M Fleming‡ 6 834 R130,59 R 892 452

* These options were granted prior to N G Brimacombe and P M Roux’s appointment as executive directors of the company on 1 August 2008.

** Options forfeited, as N P Doyle resigned from the company on 31 May 2008.

†Options forfeited, as P M Roux ceased to be an employee of the company on 13 March 2009.

‡ These options were granted prior to M Fleming’s appointment as an executive director of the company on 18 May 2009.

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Cash settled options granted April 2008 (adjusted for Adcock Ingram unbundling)

Name

Number of

cash options

Grant price

per cash option

Value of

allocation

P B Matlare 126 563 R106,44 R13 471 040N G Brimacombe*† 29 363 R106,44 R3 125 322P M Roux*†‡ 29 363 R106,44 R3 125 322C F H Vaux† 29 363 R106,44 R3 125 322M Fleming **† 16 959 R106,44 R1 805 116

* These options were granted prior to N G Brimacombe and PM Roux’s appointment as executive directors of the company on 1 August 2008.

† The options granted in April 2008 to N G Brimacombe, P M Roux, C F H Vaux and M Fleming, constituted a special allocation of options as part of a retention bonus which was awarded to members of the Tiger Brands executive committee.

** These options were granted prior to M Fleming’s appointment as an executive director of the company on 18 May 2009.

‡ Options forfeited, as P M Roux ceased to be an employee of the company on 13 March 2009.

Black Managers Trust

The Tiger Brands Black Managers Trust was established in 2005 as part of the company’s Phase I staff empowerment transaction, implemented in October 2005. In terms of the BEE Phase I staff empowerment transaction, the allocation of participation rights to Black Managers will entitle beneficiaries to receive the underlying Tiger shares (and shares in Adcock Ingram on a one-for-one basis) – after making the required capital contributions to the Trust – at any time after the specified lock-in period, i.e. from 1 January 2015.

Two executive directors have received allocations from the Trust. P B Matlare was allocated the rights to 13 500 Tiger shares in July 2008 at an initial notional price of R117,91 per Tiger underlying share. This notional cost will vary over time in terms of a Formula and, when these participation rights are taken up, this will result in the participant being entitled to receive 13 500 Tiger shares as well as 13 500 Adcock Ingram shares. On the same basis, B N Njobe was allocated the rights to 13 500 Tiger shares (and 13 500 Adcock Ingram shares) in January 2009 at an initial combined notional price of R117,67 for a Tiger and an Adcock share.

In terms of Tiger Brands’ recently concluded BEE Phase II transaction, qualifying executive directors of the company will be eligible for an allocation of Tiger shares based on similar criteria as that established for the BEE Phase I transaction. The first allocation of shares is expected to be made at the end of January 2010.

Retirement benefits

During the year, the group made contributions on behalf of the executive directors to an umbrella retirement scheme operated by Investment Solutions. The scheme is a defined contribution retirement plan, with the company contributing 15,4% of gross pensionable remuneration for retirement funding. In addition, contributions were made in respect of one executive director, for a portion of the year, to the Tiger Brands Management Provident Fund, which is a defined contribution plan. The cost of these contributions forms a component of the directors’ total remuneration packages.

Details of contributions made in the year ended 30 September 2009 on behalf of executive directors are set out in the table of directors’ emoluments.

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Other benefits

The executive directors enjoy various other benefits including medical aid cover, permanent health insurance, death in service and funeral cover, as well as the entitlement to a travel allowance. Post-retirement death benefits are also provided in respect of the former Chief Executive Officer, Mr N Dennis. The latter benefit is payable in December 2009, subject to the fulfillment of certain conditions.

The total value of other benefits is set out in the table of directors’ emoluments.

Deemed interest

One director enjoyed the benefit of a low interest loan from the Tiger Brands Share Trust in order to finance the purchase of ordinary shares in the company in terms of the Tiger Brands (1985) Share Purchase Scheme. Details of the deemed interest benefit in respect of this loan, for the six-month period ended 31 August 2009, are set out in the table of directors’ emoluments.

Employment agreement

On 15 June 1999, Mr I W M Isdale entered into an employment agreement with the company in respect of his services as company secretary. The employment agreement is subject to a notice period of not less than three months to be given by either party. The company may elect to make the payment of a cash sum in lieu of notice of termination.

In the event of such termination of employment creating an obligation on the employer to pay severance pay to the individual concerned in terms of the Labour Relations Act, 1995 or the Basic Conditions of Employment Act, 1997, then the severance package shall be equal to a multiple of monthly remuneration. The multiple applicable

to Mr I W M Isdale equates to 20 months’ remuneration. However, the multiple is limited to the number of months that remain from the termination date to the date on which the employee would have reached his normal retirement age. The payment is based on pensionable remuneration plus the value of medical aid, group life and permanent health insurance benefits. In addition, a fixed amount will be payable by the company as compensation for the loss of benefits arising in terms of the company’s post-retirement death benefit scheme.

Succession planning

Development of a formal succession plan for senior and executive management takes place in October of each year. The plan is discussed and approved by the executive committee. The objective is to ensure that immediate succession is in place and also to develop a pool of persons with potential for development and future placement. This includes managers at lower levels.

Non-executive directors’ fees

The remuneration of the non-executive directors is approved by the shareholders in terms of the company’s articles of association. In terms of the company’s articles of association, non-executive directors who perform services outside the scope of the ordinary duties of a director may be paid additional remuneration, the reasonable maximum of which is fixed by a disinterested quorum of directors.

For the year ended 30 September 2009, each non-executive director, other than the chairman and deputy chairman of the company, was paid an annual fee of R200 000 for his/her general board duties. Mr D D B Band was paid a pro rata fee in respect of the period up until his retirement as a director on 6 October 2008. Mr A C Nissen

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was paid a pro rata fee in respect of the period up until his retirement on 16 February 2009. Mr L C van Vught received annual remuneration of R1 075 000 in respect of his services as chairman of the company, whilst Mr B L Sibiya received annual remuneration of R355 000 in respect of his services as deputy chairman of the company.

The chairman of the audit committee, Mr R M W Dunne, received an additional fee of R175 000 in respect of his services as chairman of the audit committee. In addition, Mr R M W Dunne received an additional fee of R100 000 in respect of his services as chairman of the risk committee.

Ms S L Botha received an additional fee of R62 609 in respect of her participation as a member of the remuneration committee, including the period from 15 September 2009, being the date of her appointment as chairperson of the remuneration committee. Mr A C Nissen received a pro rata fee of R38 056 for serving as chairman of the transformation committee up to the date of his resignation as a director on 16 February 2009. Two non-executive directors each received an additional fee of R87 500 for services rendered as members of the audit committee, whilst one non-executive director received an additional fee of R50 000 for serving as a member of the transformation committee.

Fees paid to non-executive directors for the year ended 30 September 2009 are set out in the table of directors’ emoluments, which includes additional fees paid to three directors for additional work undertaken.

The board, based on the recommendation of the remuneration committee, has determined that shareholders be requested to approve that the fee payable to non-executive directors be increased to R250 000 per annum with effect from 1 October 2009. This increase reflects a market related adjustment of 25%.

Subject to shareholder approval, it has been agreed by the board that for the year commencing 1 October 2009 the emoluments paid to the chairman in respect of his services as chairman of the company, be increased to R1 161 000 per annum, an increase of 8%.

Furthermore, the emoluments paid to the deputy chairman of the company will be increased to R600 000 per annum. This represents an increase of 69% on the previous fee. The annual fee payable to the chairman of the audit committee will be R190 000, and the remaining members of the audit committee will receive an annual fee of R94 000. The chairman of the remuneration committee will receive an annual fee of R130 000, with the chairmen of the risk and transformation committees each receiving R108 000. Non-executive members of the risk and transformation committees will each receive an annual fee of R54 000. These fees are reviewed on an annual basis.

The chairman and deputy chairman of the company will not receive any additional fees for their participation on various board subcommittees.

Approval of shareholders will also be sought for increasing the fees paid for attendance at special board meetings from R12 500 to R13 500 per meeting and for additional work undertaken from R2 500 per hour to R2 700 per hour.

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(a) Table of directors’ emoluments for the year ended 30 September 2009(all figures are stated in rand thousands)

Name Fees

Cash

salary Bonus

Other

benefits

Retire-

ment fund

contribu-

tions

Deemed

interest

Gains on

options

exercised

Total

2009

Executive directorsN G Brimacombe — 2 412 2 516 92 496 — — 5 516M Fleming (note 1)(from 18 May 2009) — 608 1 764 45 126 10 — 2 553P B Matlare (CEO) — 3 283 3 437 240 578 — — 7 538B N Njobe — 1 798 2 014 223 338 — — 4 373P M Roux (note 2)(to 13 March 2009) — 1 153 — 152 251 — 1 626 3 182C F H Vaux — 2 476 2 519 24 500 — — 5 519

Total A — 11 730 12 250 776 2 289 10 1 626 28 681

Non-executive directors EFsL C van Vught (Chairman) 1 238 163 — — — — — 1 238D D B Band(to 6 October 2008) 5 — — — — — — 5S L Botha (note 3) 263 — — — — — — 263R M W Dunne 500 25 — — — — — 500U P T Johnson 250 — — — — — — 250K D K Mokhele 288 — — — — — — 288A C Nissen(to 16 February 2009) 114 — — — — — — 114A C Parker 288 — — — — — — 288P M Roux(from 16 March 2009) 109 — — — — — — 109B L Sibiya (DeputyChairman) 380 25 — — — — — 380

Total B 3 435 — — — — — — 3 435

Total A + B 3 435 11 730 12 250 776 2 289 10 1 626 32 116

Note 1 On 5 May 2009, M Fleming was paid a retention bonus amounting to R1 800 000 which was originally approved in April 2008. This amount is refundable to the company should the employee leave the employment of the company prior to 2 April 2010. The amount of R1 764 000 reflected in the bonus column represents M Fleming’s full incentive bonus for the year. The retention bonus amounting to R1 800 000 is not reflected in the table above as this was paid prior to M Fleming’s appointment as an executive director of the company on 18 May 2009.

Note 2 Although P M Roux ceased to be an executive director on 16 February 2009, his employment with the company terminated on 13 March 2009. Options were exercised between 16 February 2009 and 13 March 2009. His emoluments as an executive are included up to 13 March 2009 in the above table. Included in other benefits in respect of P M Roux is a farewell gift valued at R10 500.

Note 3 Director’s fees paid to MTN Group Management Services.

EFs Extra fees paid for additional work undertaken. These extra fees are included in the column under fees and are also shown separately for information purposes.

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(b) Table of directors’ emoluments for the year ended 30 September 2008(all figures are stated in rand thousands)

Name Fees

Cash

salary Bonus

Other

benefits

Retire-

ment fund

contribu-

tions

Deemed

interest

Gains on

options

exercised

Total

2008

Executive directorsN G Brimacombe (note 4) (from 1 August 2008) — 347 2 367 15 72 — — 2 801N Dennis (former CEO) (note 1) (to 19 February 2008) — 2 061 — 2 052 477 706 — 5 296N P Doyle (note 2) (to 31 May 2008) — 1 385 — 254 290 38 — 1 967P B Matlare (CEO) (from 1 April 2008) — 1 384 1 250 120 247 — — 3 001B N Njobe (note 3) (from 11 August 2008) — 257 1 000 38 48 — — 1 343P M Roux (note 4) (from 1 August 2008) — 324 2 367 36 72 — — 2 799C F H Vaux (note 4) — 2 145 2 372 21 434 — — 4 972

Total A — 7 903 9 356 2 536 1 640 744 — 22 179

Note 1 Included in other benefits is a retirement gratuity (leave) of R1 932 395.

Note 2 Included in other benefits is a leave payout of R195 211.

Note 3 Includes a sign-on bonus of R1 000 000.

Note 4 In April 2008, a retention bonus comprising a cash lump sum of one times total remuneration package and a special allocation of share options, was awarded to N G Brimacombe, P M Roux and C F H Vaux. The payment of the cash lump sum was subject to the recipient still being in the employ of the company on 1 April 2010, failing which the full amount would be refundable to the company. Messrs Roux and Vaux elected to take payment only in 2010. None of these amounts are included in the table above.

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Name Fees

Cash

salary Bonus

Other

benefits

Retire-

ment fund

contribu-

tions

Deemed

interest

Gains on

options

exercised

Total

2008

Non-executive directors EFsL C van Vught (Chairman) 1 731 880 — — — — — 1 731D D B Band 310 84 — — — — — 310S L Botha (note 5) 242 52 — — — — — 242B P Connellan (to 19 February 2008) 93 10 — — — — — 93R M W Dunne 334 20 — — — — — 334U P T Johnson 220 30 — — — — — 220K D K Mokhele 225 20 — — — — — 225A C Nissen 250 30 — — — — — 250G N Padayachee (to 25 August 2008) 227 30 — — — — — 227A C Parker 206 30 — — — — — 206B L Sibiya (Deputy chairman) 342 58 — — — — — 342

Total B 4 180 — — — — — — 4 180

Total A + B 4 180 7 903 9 356 2 536 1 640 744 — 26 359

Note 5 Director’s fees paid to MTN Group Management Services.

EFs Extra fees paid for attending special board meetings and for additional work undertaken. These extra fees are included in the column under fees and are also shown separately for information purposes.

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Management reporting

There are comprehensive management reporting disciplines in place, which include the preparation of annual budgets by all operating units and categories. Individual operational, functional and category budgets are approved by the relevant company executives, while the group budget is reviewed by the directors of the company. Monthly results and the financial status of operating units are reported against approved budgets and compared to the prior year. Profit projections and cash flow forecasts are updated regularly, while working capital and cash/borrowing levels are monitored on an ongoing basis.

As part of the strategic planning process, category growth and brand plans are compiled at the appropriate level, incorporating detailed action plans and allocated responsibilities. Progress against the action plans is reviewed on a regular basis.

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Sustainability report

Climate change and the protection of natural resources have become of increased significance for companies’ reputations and operating systems. Consumers are changing their expectations of companies and their products and are looking for sustainable solutions particularly with respect to packaging. As a supplier into the retail sector – some of our customers are also expecting a quantification of our carbon, energy and water footprints. Globally, and more recently at the national level, regulators are seeking new ways of driving sustainability at all levels.

Consequently, companies such as Tiger Brands need to be more proactive in developing knowledge and systems to reduce the possible negative effects of their operations on the environment and thus maintain their licence to trade.

In the year under review, a study undertaken by Ernst & Young to assess at a high level the current state of the sustainable development landscape at Tiger Brands in relation to identified minimum requirements, recommended that:

A group-wide framework that includes guidance on objectives, goals and targets for sustainability, minimum requirements and standards as well as an indication of where Tiger Brands wants to innovate and develop leading practices or respond to existing standards must be developed and implemented.

Their analysis of the benchmarking companies selected (and reference to leading practice) indicates that sustainable development has been accepted as an integral part of their businesses. This is reflected both by the manner in which sustainability is governed in these organisations and the strategy and policies adopted. Best practice in their view shows that:

Companies endeavour to understand their sustainability context clearly in order to be able to implement sustainable practices internally and

ensures that their interaction with their stakeholders reflect the company’s values and business principles and that engagement with stakeholders clearly reflects their commitment to create value for the company and the communities within which their operations are located.

Internally, a strong focus is placed on employee development and empowerment (especially in the South African context) to ensure employees are attracted and retained. As with global trends, there has been a lot of focus on climate change issues and emphasis is on understanding and reducing companies’ carbon footprint.

A strong effort is made by companies to prioritise their non-financial aspects and risks. This requires that their performance is measured based on the triple bottom line concept focussing on the environment, the economy and social aspects.

It is clear companies that embrace global initiatives such as the UN Global Compact and the GRI enhance their sustainability performance and reporting. However, there are many bodies that the group could become affiliate with and each one needs to be understood in terms of its requirements, benefits, costs, etc, and then a clear and focused decision can be made.

In terms of local (South African) companies, it is clearly evident that issues such as BBBEE and HIV/Aids receive substantial attention. However, these companies have established corporate cultures which are reflected in their own business philosophies and principles.

As a consequence of this increased focus, an executive director for sustainability was appointed and, in the year under review, the company has developed a sustainability strategy based on six strategic pillars.

Tiger Brands is committed to adopting business practices that integrate environmental, social and ethical principles that can progress the transformation and sustainability agenda into the

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Sustainability report(continued)

future. As one of the top 100 JSE Listed companies in South Africa, our first priority is to be rated with respect to the JSE SRI Index. This index focuses on various core governance, social and environmental measures which are in line with the more generally accepted principles in the UN Global Compact.

Sustainability has now been identified as a critical enabler in the Company Business Strategy and this will be achieved through focusing on the following six pillars, namely: Growth, Governance, Economy, Environment, Society and Partnerships.

The sustainability strategy that is being developed at a divisional and business unit level will propose actions that respond to the gaps identified by the JSE SRI Index, the Ernst & Young report as well as draw from best practice in South Africa and among our peers globally.

Economy

In emerging markets, our primary objective is to run the business profitably and in so doing contribute to economic growth, trade, taxes and jobs. In the South African context this is augmented by a commitment to contribute to the transformation of the economy. In the year under review, we made substantial progress on all the elements of the Broad-Based Black Economic Empowerment Scorecard. Of particular significance to the economy are the codes relating to procurement and enterprise development.

In the course of the year there was a comprehensive verification and updating of the Tiger Brands supplier base and, as a consequence, a marked improvement in the preferential procurement scores.

In the year under review, a status report on Enterprise Development (ED) initiatives within the group showed that most of the ED projects were largely driven by interest free loans and grants. It became clear that more can be done to integrate enterprise development opportunities into business strategy in a sustainable manner. What is now pleasing to note is that the new projects which

are being developed, are driven by the managing executives as part of their business strategy.

Some of the new ED initiatives include: RATTEX Co-Packers NEWCO – an initiative by the Homecare division to facilitate the creation of a co-packer company for specific Tiger products that has credible BEE credentials.

NCEKU Logistics – is a black-owned and managed logistics company that services our Grains division.

BRITS Sorghum Farmer’s Project – working with an Agricultural Advisory Service Provider to ensure a pool of about 30 black sorghum farmers in our supply chain.

Upgrade of a pork supplier facility to bio-security standards of a black pig farmer to ensure he meets the traceability standards for Value Added Meat Products and becomes part of the supply chain.

Catering Partnership with Centre for Culinary Excellence – this is a project that is intended to build capability (cooking and catering skills) among black-owned catering companies and chefs in a manner that facilitates a route to market for our Out of Home and culinary divisions.

Snacks and Treats Micro- Retailers Programme – this initiative also assists in the route to market for our confectionery products in support of the business strategy.

As a consequence of these initiatives, the Enterprise Development Scorecard also improved significantly to 8,9 points out of a possible 15 points.

Environment

Our goal is to commit to effective environmental governance practices within our sphere of influence (Water, Waste, Energy, and Packaging) and build an environmentally sensitive ethos among all our stakeholders, in response to climate change impacts, changing consumer demands and the

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regulatory environment. In the past year we have worked with external consultants to establish 20 key issues that are of significance to our business and the world we live in. Baseline data will be collated in the coming financial year to assist in the calculation of carbon and water footprints.

Compliance

Our goal is to ensure that all our business practices remain compliant with prevailing legislation and that we respect human rights within our sphere of influence.

A formal compliance function has been established to assist in ensuring that appropriate processes and systems are in place to enable the group to be compliant with statutory, regulatory and supervisory requirements and group policies. The plan is to implement a robust compliance regime in accordance with accepted principles with a view to improving the quality of the current compliance processes. In this regard, a process to review and document the compliance universe of material significance to the group is under way. Once the compliance requirements of the group have been formally established and documented, an appropriate compliance governance model will be designed, including a compliance manual, policy and mandate. Appropriate awareness and monitoring tools will be implemented to give effect to the governance principles adopted by the group.

Growth

Without profitable growth we cannot expect the company to exist in the long-term. The detail of the report on the growth strategy is contained in the body of the operational part of the report, with cross references to the emerging underlying principles of sustainability.

Society

Our goal is to develop our people and through them, their families and build community partnerships that enhance social capital in the areas in which we

operate and, in that way, confirm our intention to be regarded as an admired corporate citizen.

This year we report on selected activities that connect us to society from five different filters in order to reflect the shift in our strategic approach to community re-investment.

Ad hoc donations

We regularly receive ad hoc requests for support. These requests are considered on a case by case basis and within the framework of our CSI policy. As a predominantly food company, we have focused and developed our capacity to contribute to urgent and pressing requests to address food insecurity at the household level over the past six years through the provision of food parcels.

In the year under review, we continued to donate food parcels to over 30 000 people in response to ad hoc requests and were also able to make contributions to emergency relief operations in areas in which we operate. In November 2008, devastating floods affected several parts of the Western Cape resulting in road closures and displaced communities. Ashton, where the Tiger Brands fruit canning unit Langeberg & Ashton Foods is based, was also affected. Our CSI unit worked with our business partners and the Ashton Municipality’s Disaster Committee to identify and respond to the immediate food needs of the displaced people in Ashton.

Similarly, when there was a crisis in Orkney and the Pamodzi Mine had to be closed, Tiger Brands stepped in with immediate humanitarian support in the form of food parcels for the 3 000 or so families who were displaced.

Goodwill building activities

Tiger Brands continues to participate in a range of goodwill building projects as part of its corporate social investment activities that involve staff as well as outside partners and communities.

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The Thusani Trust

The Thusani Trust was created in 2005, aimed at all employees who fit the criteria of a Black Employee. The objective of the Trust is to allow the flow of economic benefits to Black Employees by providing grants to support tertiary education of the children of qualifying beneficiaries.

Since its inception, the Trust has assisted 134 beneficiaries (at a cost of R1,5 million) who received tertiary education bursaries in the 2007 academic year. In the 2008 academic year, the trust issued bursaries to 160 beneficiaries (R1,8 million). Of the 144 students who were successful in 2008, more than 90% reapplied for assistance in 2009. Applications amounted to R1,8 million for the 2009 academic year.

One of the beneficiaries of the Trust, a 20 year old, second year law student (LLB) Lerato Maboya, had the following to say about her achievements through the Thusani Trust.

“To whom much is given, much is tested.” This expression rings true as I look back on the year passed. A blessing was put in my hands and from it stemmed a world of opportunities, of light, of hope. The very blessing I was challenged to share, and I did. Had someone told me last year I would have experienced all I did, I would not have believed them.

Through your contribution towards my education I was exposed to a world I never knew existed, was able to play a major role in four organisations, representing one in the United States of America, and being a board member of another. I was also able to start my own organisation that might receive funding from Ashoka Youth Ventures. I was able to touch lives in a way I could not have imagined and make a difference even though I hadn’t the personal financial capacity to do so. I thank you fully for believing in me, investing in my future and giving me a chance to soar.

I learnt from this trip the value of education, that success comes with presenting oneself creatively before others, that mentors are an absolute must, that it is up to me to mould my community into what it ought to be, and a lot more. I remain touched, moved and enlightened. Thinking like a Global Minded Leader through exposure was the aim and I am glad to report: MISSION ACCOMPLISHED.”

SANDF Goodwill Parcel Project

In 2001, in response to a concern for families who did not spend the festive period together, because the soldiers were either on duty in the United Nations (UN) peacekeeping missions or in military hospitals and sick bays in these peacekeeping areas, R25 000 was raised among the home based soldiers through a personal donation of R1 each. The SANDF Goodwill Project now raises over R6 million on an annual basis to provide 4 000 parcels of appreciation to South African soldiers on peacekeeping missions in places like the Democratic Republic of Congo and the Sudan over the festive period. Tiger Brands contributes to the hampers alongside other companies and these are delivered each December.

“The parcels don’t replace our loved ones posted all over South African borders, but they do make a difference” says one of the family members who benefit from the SANDF Goodwill Parcel Project.

Food Security Dialogue Series

16 October is the United Nations recognised World Food Day. As part of its own activities to bring visibility to the plight of the food insecure, Tiger Brands organised a stakeholder dialogue on the challenges facing Food Security in South Africa. Over 50 delegates from government departments and parastatals, non-governmental organisations, agricultural banks and service providers and academics shared views and experiences on the pressing issues with technical experts and managers from Tiger Brands.

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Inspiring inputs were received from, amongst others, an 18 year old student, from Dr Makhura from the Development Bank of South Africa and from Professor Johan Kirsten from the University of Pretoria. The discussion raised questions about the impact of industrial fortification on the nutritional status of South Africans; the challenges of sustainable and viable agricultural production in South Africa in the face of climate change impacts on natural resource availability and a rapidly growing urban population; and the experiences of feeding the poor whilst enhancing their livelihood opportunities.

Most delegates found the platform useful for information sharing and making linkages across subsectors.

Cause related marketing

Avril Elizabeth Home

The Avril Elizabeth Home has, over the past 37 years, been providing food, clothing, care and stimulation to more than 155 mentally and physically challenged residents on a daily basis, ensuring that they are well cared for and enjoy a good quality of life. For the past 16 years, Elizabeth Anne’s (part of the Baby Care division of Tiger Brands) has raised close to R3,4 million by donating 10 cents from the sale of any Elizabeth Anne’s products between June and September of every year and this has been given to the Avril Elizabeth Home.

Over the years, the funds have been put to a good cause to uplift the living conditions of the residents of the Home. In 2009, over and above the money raised through the annual cause related promotion, Tiger Brands provided an additional amount of R650 000 to further strengthen its commitment to the Home.

All Gold – Spar Campaign to Support Unite Against Hunger (UAH)

For three years, as a result of their donations to Unite against Hunger (UAH), All Gold and Spar

have been helping feed children throughout South Africa. The UAH/Spar and All Gold donation initiative was started in 2006, with the objective of enhancing the relationship between Spar, All Gold and their customers by providing a platform to address a good social cause that contributes to the well being of South Africans.

The campaign initiative, through which 50 cents was raised on every All Gold product bought by South African consumers in a Spar store, generated over R1,3 million. The money raised was distributed to seven charity organisations supported by the partners – namely The African Children’s Feeding Scheme, Heartbeat, St Clement Home Based Care Centre, Nelson Mandela Metropolitan University’s Day Care Centres, Gozololo, SOS Children and Arebaokeng Day Care Centre.

Water For All – Douala

Tiger Brands recently acquired Chococam which is based in Douala, Cameroon. As part of the goodwill building activities in the town – we have installed a water tap outside of our facilities through which poor communities who live in the adjacent residential area have access to clean potable water on a daily basis. It is a common sight to see children gather in the early hours of the evening and share stories of the day whilst waiting to fill up their water containers.

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Tastic Winter Warmers

Food insecure and vulnerable communities are often disproportionately affected by the harsh winter conditions we experience in South Africa. In response to this, Tiger Brands set up food kitchens for the coldest days of the year in Kliptown – Johannesburg, Motherwell in Port Elizabeth and the Nirvana Hall in Polokwane. This year they were held in mid June 2009 and provided two hot meals a day to a total of 40 000 disadvantaged people from homeless shelters, children’s homes, old age homes and similarly affected establishments identified through our key strategic flagship programme partners – namely Heartbeat, African Children’s Feeding Scheme, Olive Leaf Foundation, St Clement Home Based Care and the Nelson Mandela Metropolitan University.

The 2009 campaign involved volunteers from staff and management at the different sites as well as visits from the Minister of Social Development, Mrs Edna Molewa in Gauteng and her Deputy Minister, Mrs Bathabile Dlamini attending the Polokwane campaign, who found the event to be heartwarming.

Flagships

The Tiger Brands group has over the years reported on our flagship projects and partners. This year we continue to report on the activities we undertake and reflect on the impact these interventions have on the lives of ordinary vulnerable South Africans.

Heartbeat

Heartbeat supports orphaned and vulnerable children by ensuring that their basic needs are taken care of to ensure they can finish their schooling and live their lives as children. Through its partnership with Heartbeat, Tiger Brands supports projects in seven provinces through five key interventions which collectively contribute to the holistic transformation of orphaned and vulnerable children. These projects are delivered through aftercare sites and focus on

material provision; education; children’s empowerment; rights and access to basic services; and capacity building.

In 2009, Tiger Brands donated a total of R3,7 million to the Heartbeat programme and in preparing this report we spoke to a few of the beneficiaries.

Student from Umthonjeni High School supported through Heartbeat

“I believe it when Madiba says it’s a long walk to freedom...” says a Heartbeat beneficiary. “I lost my parents at a very young age. My aunt who had her own children took me in and tried her best to give me a normal childhood. Life was difficult and to make matters worse I only realised that I did not have parents when I was 12 years old. When I learnt the truth about my parents passing, my life took a turn for the worst. Heartbeat support groups and Tiger Brands’ food parcels changed my life in a way that it’s hard to explain. I had food on the table and a bright future to look forward to.”

Olive Leaf Foundation

Olive Leaf Foundation’s work began in Soweto and quickly expanded to offer services at over 30 sites. Working in partnership with the South African Government and other host-country decision makers and professionals, Olive Leaf Foundation takes a comprehensive integrated community based approach to programming. Its core competencies include HIV/Aids prevention, community capacity development and care and support services for adults and children affected and infected by HIV/Aids.

A family that is supported by Olive Leaf Foundation

Aids turns children into orphans everyday in South Africa. For this family of seven from Sitebe community in Mtata, their mother Lindiwe, is both on ARV and TB treatment to help prolong her life. Lindiwe is a single parent and a breadwinner and she always worries about where her family’s next

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meal would come from. Tiger Brands through Olive Leaf Foundation supports her family with a monthly donation of a nutritious food parcel that helps keep her healthy and her children full every day.

In the year under review, Tiger Brands has supported the Olive Leaf Foundation to the tune of R890 000.

African Children’s Feeding Scheme (ACFS)

The ACFS Community Education and Feeding programme has made a difference in the lives of poverty-stricken children by combating malnutrition through feeding and education. In previous years we have reported on the Gauteng activities – the programme has now extended to the Western Cape. Together with the Stellenbosch Community Development, using the same modus operandi, the ACFS has made the lives of many South Africans better. Tiger Brands has donated a total of R6,4 million to ACFS inclusive of its subsidiary organisations.

A beneficiary from Stellenbosch Community Development who looks after eight children

Nokwakha Mahala, a beneficiary from a sister NGO to ACFS, Stellenbosch Community Development, is 57 years old and a single parent who looks after eight children – two of her own and six from her relatives. She currently receives a monthly food parcel and has become an active leader of her vegetable garden project to sustain their supply of healthy and nutritious food.

A single mother of six supported through ACFS

“Changing one family at a time...” Nomonde Fumbutha – a 41 year old mother of six children living in Kagiso in a three-roomed house is a recipient of a Tiger Brands food parcel on a monthly basis. “I have been struggling to make ends meet. My only source of income is the state’s grant which amounts to R690 a month that I receive for my three children. I cannot afford a number of basic

needs like food. I wish to thank the sisters from ACFS who came into my life in December 2008.

I was surprised to receive a food parcel donated by Tiger Brands, a parcel that consisted of Tastic rice, samp, beans, Morvite, Jungle Oats, KOO baked beans and mixed vegetables. My children had a Christmas lunch like other children. That was the beginning of a changed life. Ever since that day, I visit ACFS daily for the children’s ration of peanut butter sandwiches with milk and a monthly grocery pack from Tiger Brands – today I have a grocery cupboard that I never thought I would ever have.

The change in my children’s physical appearance is amazing. I have also noticed the excitement on their faces when going to school. They are sure of bread, peanut butter and milk from ACFS. We didn’t feel the pinch of winter this year as we were sure of hot soup from beans and “mgqushu” which the children enjoy, especially when mixed with sugar beans.

I thank God for Tiger Brands’ intervention that came even before my children could resort to crime (stealing and prostitution) just to get money. For a mother not to know what to give to the children, kills her inside. I say thank you to Tiger Brands for shaping my children’s future.

“Phambilinge Tiger Brands and ACFS.”

St Clement Home Based Care

St Clement Home Based Care is one of our flagship projects based in Claremont and Kwa-Dabeka Townships in KwaZulu-Natal. These are densely populated areas with several informal settlements and two single-sex hostels.

Mrs Mildred Radebe is a direct beneficiary from St Clement Home Based Care and she benefits from Tiger Brands food products. Mrs Radebe is 65 years old and her husband died in 1992. She had eight children, all of which have passed on, and she is now left with grandchildren whom she feeds and educates from her disability grant.

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Before the intervention to her plight, Mildred struggled to keep her family going and eventually heard about St Clement Home Based Care. She receives a monthly food parcel from St Clement which includes; Tastic rice, samp, Morvite, Jungle Oats, and peanut-butter and is now able to feed her grand children.

In the year under review, Tiger Brands has donated R1 million towards St Clement Home Based Care.

Nelson Mandela Metropolitan University (NMMU)

Part of the Institution’s mission is to be actively involved in community projects, therefore the institution engages in numerous outreach programmes throughout the year. Tiger Brands food products are distributed to various identified needy groups of adults and children. These groups of children and adults are from children’s homes in and around the Port Elizabeth area.

Some of the beneficiaries are: Maranatha Street Children’s Haven which takes care of children found on the street and feeds and clothes them until they can be reunited with their families, with most of these children remaining in the haven until they matriculate; the Mother of Hope Crisis Centre, which provides a safe haven for woman and children who are victims of abuse; Sinethemba’s Children Shelter, a centre for abandoned children and orphans, and also the Aids Haven.

Until recently, the NMMU was in a position to support them all once per year. With Tiger Brands product support, the NMMU is now able to distribute food to these needy shelters on a more regular basis, ensuring that with all the hardships the people in these shelters have to face, they have the strength that comes with eating a balanced meal.

The NMMU has benefited by R270 000 worth of donations from Tiger Brands.

Stakeholders

Stakeholders (employees, customers, shareholders, regulators, and suppliers) perceptions of the company drive our reputation and influence our ability to do business. We have committed to respect, value and manage our relationships with key stakeholders.

Most of our CSI initiatives happen because we are in partnership with a range of customers, communities’, governmental and non-governmental organisations. Experience has shown that in the absence of clearly defined objectives, roles and responsibilities and auditable procedures, it becomes almost impossible to do good in communities in need. At Tiger Brands we are proud of our governance systems that support the CSI interventions we make.

Our people

Progress on strategy implementation

In our quest to be the most admired employer in the FMCG industry in markets wherein we operate, the group commenced with the implementation of its 2013 people strategy. Some of the projects, aligned to the five key thrusts that were pursued in the 2009 financial year, are:

Growing our reputation as a good corporate citizen – the group followed through on surveys conducted with our business partners, customers and employees where their respective opinions were sought on how we could improve on our corporate citizenship reputation. Recommendations made were followed through with appropriate action plans and embedded within the organisation.

Enhancing our standing as an admired FMCG company – an exercise to determine why current and potential employees would choose Tiger Brands as an employer of choice was undertaken to determine the group’s employee value proposition. The results showed that current

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employees were attracted and remained committed to our company because Tiger Brands added value to their lives. This value was added in four ways; Tiger Brands is a reputable company, offering great career growth opportunities, compensating our employees in line with the market, and finally, a company working hard at creating an inclusive and enabling culture.

Continuing our efforts in creating and maintaining an enabling culture – we have revisited our organisational values and this important topic is expanded on below. Additionally, Tiger Brands participated in the Deloitte & Touche “Best companies to work for” survey. Our baseline performance was very encouraging. It is our intention to utilise the results to build momentum on our journey to renew and invigorate the organisation.

Increasing our efforts in growing people capability and capacity ahead of demand – having completed leadership competencies needed to succeed as a Tiger leader, we partnered with a reputable provider to create assessment tools. A good number of our leaders in leadership levels three and above have undergone assessments and, where necessary, development plans have been drawn up. We partnered with another reputable provider and have developed learning programmes specifically aligned to our required leadership competencies. The first pilot group has undergone the learning journey and we are confident the project will deliver great value for the group over time.

Integrating people management practices – we have simplified our people management practices and have, where appropriate and practical, developed toolkits for use by our line managers.

Context for 2010 and our key focus areas

As the group intensifies efforts to expand into different geographies, it is imperative that in 2010 attention is focused on revisiting our operating

model and organisational design as well as building specific skills and capabilities required to manage across various geographies. Additionally, we will focus on strengthening our capability to partner, as geographic expansion will largely be driven off a brownfields acquisition based platform.

The group’s ability to bolt-on domestic acquisitions has, over the years, been honed into a key strength and core competency. Focused attention needs to be directed to increasing our ability to integrate new businesses in new geographies, which invariably will not be wholly owned, as efficiently and seamlessly as possible.

Preferred supplier databases will be developed per geography to ensure a strong supplier base for talent sourcing, development, and related services.

Our values and culture

We refined the group values in 2009 to align to our promise of adding value to life to all our key stakeholders and to inject passion and energy into the organisation. The five values are:

We have passion for excellence

Our consumers are our business

We value our employees and treat them with dignity

We act with integrity

We continue to reinvest in our society

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The company remains committed to maintaining these high levels of performance.

Tiger Brands is a vast group procuring from tens of thousands of suppliers. The group has a policy in place to encourage suppliers to improve their BBBEE performance, either one level per annum in step with the group or two levels per annum if their rating is well below acceptable levels as defined in the Codes. This policy has accelerated the progress on transformation, with the group’s preferential procurement element of the scorecard achieving a score of 16,4 (i.e 82%) out of a possible 20 points.

The group’s focus on “Socio-Economic Development” (formerly CSI), dates back many years as corporate social responsibility was group practice long before the Codes were published. Examples of such are noted elsewhere in the annual report with the group anchor project, Unite Against Hunger, continuing to grow in strength and influence. Although the group scores maximum CSI points, giving back to our communities and making a difference is part of the way we do business as espoused in our values.

The areas of focused attention for 2010 are Employment Equity, Skills Development and Enterprise Development. Although our performance in the first two areas has been improving progressively as detailed in the statistics under separate headings below, our Employment Equity score remains low at 7,9 (i.e. 53%) out of a possible 15 points. For Skills Development, a score of 8,8 (i.e. 58%) out a possible 15 points was achieved, while the group score for Enterprise Development improved significantly to 8,9 points (i.e. 59%) out of a possible 15 points.

Update on attract and retain

Tiger Brands’ ambition is to be the most admired employer in the branded consumer packaged goods sector within its chosen geographies. One of the acid tests for “most admired” is our ability to attract and retain key talent.

Each of these expressions is linked to specific and measurable behaviours to ensure that they galvanise the organisation.

The focus in 2010 will be on embedding these values and celebrating people and teams that lead the way in living them out.

Update on group BBBEE performance

Subsequent to aligning the company to the BBBEE codes of good practice, we have continued to increase our momentum on our contribution to nation building through BBBEE. To this end, the company previously undertook to improve its performance by one level per annum until it reached a Level 4 contributor status. We have met our commitment, achieving a Level 5 contributor status for 2009 (2008: Level 6). The targets for 2010 were set to reach a Level 4 status even without the recently announced Phase II BBBEE deal.

The recently implemented Phase II BBBEE transaction in terms of which 9,09% of the company’s shares have been subscribed for and issued to black participants, includes a 2,02% employee ownership component made up of 1,58% ownership by black managers and 0,44% ownership by general staff. The Thusani Trust, whose beneficiaries are children of our black employees, was allocated a further 1,01%. A total of 3,03% or 33% of the deal therefore directly or indirectly accrues to Tiger Brands employees.

The Thusani Trust, set up in November 2005 as part of the company’s Phase 1 BBBEE staff ownership transaction, was operationalised in 2006. The trustees decided to use the funds to support tertiary education of the children of qualifying beneficiaries. Part of the class of 2006, a total of 30 students who had enrolled for three year degrees, will complete their studies in 2009.

Our performance with respect to the second BBBEE element, Management Control, remains strong. We achieved 9,5 points (i.e 95%) of the possible 10.

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Our attraction of new external talent performance for 2009 for C-band and above was as follows:

Grade Black White Total % Black

E 2 3 5 40D 37 10 47 79C 137 58 195 70

Total 176 71 247 71

With respect to retention, the group has a retention target for key and critical talent that each business unit has to attain. Our group target is to retain 80% of our identified critical talent in key positions. The group retained 88% of critical talent during 2009 (2008: 82%).

Growing our own timber

We continue to grow our own timber as detailed in the people development section further on in this report. We offer bursaries to our employees, financial support for tertiary education to the children of our employees through the Thusani Trust, as well as personal development opportunities to our employees on an ongoing basis. The group employed 14 graduates during 2009 and will continue to develop them within the organisation (2008: 18).

Our leadership development model has been reviewed, the leadership competencies have been defined and objective assessment tools introduced. Our top 40 leaders have been assessed and development plans formulated. Learning programmes have been developed and the first pilot group commenced the learning journey. More groups will be introduced to the programme during 2010. Functional academies continue to offer refreshed modules to ensure functional depth and bench strength throughout the organisation.

Organisational and individual performance reviews are conducted annually. Individual performance and personal development remain an important aspect of each Tiger employee’s growth prospects.

Sharing the wealth

All our employees who participated in the first general staff share allocation have enjoyed bi-annual dividend payments since November 2005. Based on the success of the Phase I BEE transaction, the company has allocated an additional tranche of 100 shares each to our South African based employees with effect from 20 October 2009. As the second allocation was on the same basis as the first allocation, beneficiaries of the general staff trust will continue to enjoy dividends whenever they are declared.

The Tiger Brands Black Managers Trust has now allocated about 90% of the rights to shares that were warehoused for allocation to black managers (2008: 79%) as part of the Phase I BEE transaction. A further 1,58% of Tiger Brands enlarged issued share capital has been earmarked for black managers in terms of the recently concluded Phase II BEE transaction. This will further strengthen the company’s ability to attract and retain quality black managers.

The Thusani Trust will receive a further 1,01% of the Tiger Brands’ enlarged share capital and the proceeds from the dividends will enable the Trust to support an increased number of qualifying employees’ children.

Remuneration philosophy, policy and practices

Periodically, the company appoints external experts to review our remuneration philosophy, policy and practices. These were reviewed in 2009, together with our remuneration strategy and the total remuneration mix, and found to be in line with best practice.

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Our variable remuneration instruments such as the short-term profit incentive scheme and the long-term incentive programme are well entrenched. The Remuneration Committee reviews the rules of the short-term profit incentive scheme annually. The rules for the long-term incentive scheme have also been reviewed and updated by the Committee in keeping with dynamic market conditions.

Update on relevant statistics

We continue to provide sustainable employment to a significant number of people as per the table below. Our total salary and wage bill is around R1,9 billion (2008: R1,5 billion).

We set employment equity targets annually as part of our broader transformation targets and track performance on a quarterly basis.

The composition of our staff is as follows:

African Indian Coloured White Disabled Permanent Temporary Total

2009 5 895 820 1 032 1 154 83 8 901 2 542 11 4432008 5 637 797 955 1 212 60 8 601 3 386 11 987

With respect to the number of employees with disabilities, Stats SA reported that people with disabilities decreased from 6,5% (1996) to 4% (2007). Of the 4%, the physically disabled accounted for 1,7%.

People with disabilities as a percentage of our total headcount:

Year ActualPercentage headcount

2009 83 0,92008 60 0,7

The overall employee turnover rate for 2009 is 8% (2008: 9%). The reasons for these staff movements were:

Reason 2009 2008

Resignation 28,7% 44,3%Contract expired 2,1% 2,2%Retrenchment 23,6% 9,6%Retirement 9,9% 12,0%Dismissal 18,9% 16,8%Deceased 8,9% 9,8%Other (Disability/Absconded) 7,9% 5,3%

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Our gender track record

Women constitute 52% of the total national population. Our transformation agenda includes the gender issue. Our performance to date is as follows:

Executive Senior Middle Junior

2009 30% 13% 29% 37%2008 30% 13% 30% 26%2007 17% 14% 33% 33%2006 13% 12% 31% 33%2005 10% 13% 30% 35%

Our black management talent

In this environment where it is challenging to retain management talent, regardless of race, we have been able to steadily grow our black management talent pool. Our performance to date is reflected in the table below.

Executive Senior Middle Junior

2009 50% 35% 43% 55%2008 50% 29% 39% 51%2007 18% 24% 36% 55%2006 13% 18% 29% 43%2005 10% 9% 27% 42%

Employee rights and relations

Our code of ethics governs our relationships with each other, as well as with our customers, suppliers, competitors and communities.

Our employees enjoy freedom of association. To that extent we have 15 unions recognised and operating at our various sites. In 2009 two of our businesses were affected by strike action which lasted nine days in the one business and four weeks in the other. The impact of the strike action in both

businesses was minimal due to sufficient inventory holdings (2008: attributable cost amounted to approximately R3 million).

The group continues to monitor and assess the implementation of our continuous improvement programme and culture creation processes at our various manufacturing units, to improve on our employment relations. Currently 88% of our operating sites have completed the culture creation process (involvement & communication), and 87% have progressed a step

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further and implemented 20 Keys, the group’s continuous improvement programme. The table below reflects the performance to date.

Sites which havecompleted InvoComs

implementation

Sites in the processof implementing

20 keys

2009 88% 87%2008 88% 87%2007 80% 84%2006 71% 69%2005 57% 55%

As all our employees are shareholders, the Tiger share performance is tracked on a daily basis and shared during the InvoComs sessions in most of the units, just as productivity is tracked. This is in addition to the tracking of the share price via our intranet.

Update on people development initiatives

We continue to invest in the learning and development of our employees. In 2009 we spent around R10 million on various in-house learning programmes.

The Tiger Brands Academy (TBA), the group’s in-house learning institution, provides an opportunity for employees to acquire portable cross-functional skills. Our recent performance is represented below.

Number of learners Actual training2009 2008 days 2009

Customer academy 188 118 380IT academy 440 461 475Leadership academy 279 128 352Marketing academy 52 80 308Manufacturing academy 268 100 475Finance Academy 102 62 204

Total 1 329 949 2 194

These figures exclude programmes offered by external providers such as Adult Basic Education and Training (ABET), core skills, and business specific skills, which are reflected separately below.

Additionally, we offer bursaries to our employees. In 2009 we offered bursaries to 96 employees (2008:109).

The group continues to support national skills development initiatives through learnerships. TBA has offered the national certificate in manufacturing management (NQF5) and national diploma in manufacturing management (NQF6) since 2001. In 2007, we added three new learnerships:

FET certificate in generic management (NQF4)

Meat processing learnership (NQF3)

Packaging learnership (NQF3).

In 2009 we enrolled 169 learners in learnerships per the table below (2008:139).

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Number of learnersLearnership title 2009 intake 2008 intake Qualified in 2009

National certificate in manufacturing management (NQF5) 21 9 17National diploma in manufacturing management (NQF6) 3 9 0FET certificate in general management (NQF4) 19 5 12Meat processing learnership (NQF3) 10 49 38Electrical learnership (Artisans and Apprentices) (NQF3) 9 18 0Fitter learnership (Artisans and Apprentices) (NQF3) 51 23 0

Packaging learnership (NQF3) 56 5 employed*21 unemployed 0

Total 169 139 67*These unemployed learners were engaged on a fixed term contract for 12 months.

We participate in sector specific skills programmes which relate to basic manufacturing practices and operating skills, including functional entry level skills training.

Operator training skills programme (NQF2) – around 200 learners will begin this programme in November 2009

Core Skills programme (NQF2) – 122 learners participated in 2009 (2008: 115)

Fundamentals Programme (NQF3) – 15 learners started in 2009 (2008: 25)

Since 2006 we have placed workplace experience students in areas of scarce skills such as food technology and engineering. The table below reflects our current and 2008 intake per functional discipline. These workplace experience students become a feeder pool for our graduate programme or entry level appointments.

2008 2009

DisciplineFoodTech

Engin-eering Finance

Market-ing Other*

FoodTech

Engin-eering Finance

Market-ing Other*

Total 19 22 2 5 10 24 18 2 2 18

*Other includes Production and Operations.

Our ABET programme is well entrenched in most business units and has been introduced in further units during 2009. A total of 47 employees completed the programme in 2009 (2008: 97). We currently have 400 learners on the programme at different levels – from basic orientation (BO) to level 4, as per the table below.

Active Literacy NumeracyYear learners BO 1 2 3 4 BO 1 2 3 4

2009 400 1 132 58 54 77 0 10 31 22 152008* 369 2 110 51 69 71 3 17 22 7 17

* Number of active learners decreased in 2008 due to the unbundling of Adcock Ingram. 97 completed the programme.

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Update on employee wellness

The group continues to provide holistic wellness services to employees either through on-site clinics or contracted professional services. We invested over R11,1 million in 2009 to provide these services (2008: R6,5 million). These services are offered free of charge to all employees, irrespective of whether they are on a permanent or temporary contract.

We offer our employees voluntary membership to our in-house medical scheme. The scheme has 5007 principal members (2008: 5061) and 11622 beneficiaries (2008: 11665), of which 1744 are pensioners (2008: 1729). These members and their dependents have access to cost effective comprehensive health cover.

Although access to the medical scheme is open to all employees, affordability remains a barrier for some. From our bargaining unit side, we have 247 (2008: 264) employees covered by Sechaba Medical Solutions (Sizwe). Additionally, 368 employees are on the Food Workers Medical Benefit Fund (2008: 404).

We have in place a comprehensive HIV/Aids management framework as well as a policy for the group. We support our HIV-positive employees through a third-party administered programme designed to cater especially for employees not on medical aid. Employees on medical aid are supported by the same third party but their process is slightly different as their access to ARVs is through the medical scheme.

Of the employees voluntarily counselled and tested in 2009, 6% tested positive (2008: 4%). They have all been enrolled on the programme and are provided with immune boosting supplements and appropriate education. An encouraging trend is that all employees who test positive enroll and remain on the programme. Although we have a number

of employees in stages two and three, the bulk (72%) remain in stage one. Approximately 93% of the affected employees in stages one to three are healthy, with no opportunistic infections.

Antiretroviral treatment is provided to 97% of the HIV-positive employees on medical aid and their beneficiaries and to 16% of employees who are not – through provincial clinics.

Health and safety

As a food company, the health and safety of our employees and the end consumer of our products is vital to us. We have an in-house consumer services centre that addresses all consumer complaints and queries relating to any of our products. We adhere to generally accepted food manufacturing standards and have external bodies auditing food safety at our facilities on an ongoing basis. Examples include the American Institute of Baking and the South African Food Safety Inspection Services. Several of our units have HACCP accreditation, others are in the qualification process, whilst some are in preparation for ISO 22 000 accreditation.

Risk control is high on the group’s agenda and all sites are audited annually by an external provider. Included in our risk control system are elements such as health and safety, fire defence, security, emergency planning, etc. We have set a health and safety target of 95% for all our businesses. Our overall risk control score for 2009 was 94% (2008: 94%) while the overall health and safety score was also 94% (2008: 94%).

As a minimum all our operating sites have health and safety committees. Aspects of health and safety form part of the culture creation and continuous improvement process referred to under employee rights and relations. Audit results are shared not only with the executive team but also with the risk committee.

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Annual financial statements

CONTENTS

76 Value added statement

78 Segment report

80 Five-year review

81 Definitions

82 Summary of ratios and statistics

83 Analysis of ordinary shareholders

85 Shareholders’ diary

86 Responsibility for annual financial statements

87 Independent auditors’ report

88 Directors’ approval

88 Certificate by company secretary

89 Statutory information

92 Effects of changing prices

93 Accounting policies

112 Income statements

113 Balance sheets

114 Cash flow statements

115 Notes to the cash flow statements

118 Statements of changes in equity

120 Notes to the financial statements

175 Annexure A

176 Annexure B

176 Annexure C

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Value added statementfor the year ended 30 September 2009

Value added is a measure of the wealth the group has been able to create. The following statement shows how this wealth has been distributed. The individual line items include the effect of discontinued operations.

2009 2008(Rands in millions) % %

Turnover 21 035,9 22 815,3Less: Net cost of products and services 15 110,8 16 291,7

Value added 5 925,1 6 523,6Add: Income from investments and associates 414,8 362,4

WEALTH CREATED 6 339,9 6 886,0

Applied to:Employees Salaries, wages and other benefits 2 338,9 36,9 2 577,2 37,5

Providers of capital 1 697,3 26,8 1 122,5 16,2

Interest on borrowings 436,8 6,9 462,2 6,7 Dividends to minorities and preference shareholders 15,7 0,3 24,0 0,3 Dividends to ordinary shareholders* 1 244,8 19,6 636,3 9,2

Government Taxation (see note1) 1 030,3 16,2 1 032,9 15,0Retained in the group (see note 2) 1 273,4 20,1 2 153,4 31,3

6 339,9 100,0 6 886,0 100,0

NOTE 1Income taxation (excluding deferred tax) 970,9 969,5Skills development levy 11,7 17,5Rates and taxes paid to local authorities 21,0 23,2Customs duties, import surcharges and excise taxes 26,7 22,7

Gross contribution to government 1 030,3 1 032,9

The payments to government exclude taxation deducted from employees’ remuneration of R270,0 million (2008: R338,5 million), net VAT of R229,4 million (2008: R314,0 million), excise duty on revenue and UIF payments.

NOTE 2Retained in the group excludes goodwill and trademarks written off.

*2008 excludes capital distribution of R499,8 million.

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(Rands in millions) 2009 % 2008 % 2007 % 2006 % 2005 %

TREND OF VALUE ADDEDEmployees 2 338,9 37 2 577,2 38 2 463,8 39 2 254,1 41 1 938,2 39Providers of capital 1 697,3 27 1 122,5 16 1 092,6 17 1 141,1 21 1 229,5 24Government 1 030,3 16 1 032,9 15 1 029,6 16 872,2 16 701,2 14Retained in the group 1 273,4 20 2 153,4 31 1 810,3 28 1 222,2 22 1 171,0 23

6 339,9 100 6 886,0 100 6 396,3 100 5 489,6 100 5 039,9 100

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Segment report

Turnover Operating income1Depreciation and

amortisationImpairment losses/

(reversals)(Rands in millions) 2009 2008 2009 2008 2009 2008 2009 2008

FMCG – CONTINUING OPERATIONS 19 699,8 17 589,7 3 054,9 2 378,3 253,6 219,1 11,6 126,6

Domestic Food 15 922,3 14 446,8 2 408,3 1 740,6 179,1 157,9 11,6 126,6

Grains 8 793,4 7 959,7 1 414,1 1 004,6 68,1 61,5 — —

– Milling and baking2 6 266,8 5 948,9 1 157,7 764,9 59,6 54,9 — —– Other Grains3 2 526,6 2 010,8 256,4 239,7 8,5 6,6 — —

Groceries 2 651,6 2 223,0 471,7 372,6 41,3 28,0 — —Snacks & Treats 1 746,9 1 605,6 282,4 246,8 26,0 22,0 — —Beverages 1 056,3 1 015,6 89,5 11,1 19,0 26,0 — 123,1Value-Added Meat Products 1 413,2 1 340,5 113,1 70,0 23,4 16,5 — —Out of Home 260,9 302,4 37,5 35,5 1,3 3,9 11,6 3,5

HPC 1 883,7 1 765,8 485,0 450,0 12,5 10,7 — —

Personal 681,2 630,5 197,9 185,2 7,6 6,8 — —Babycare 560,8 517,0 166,0 150,6 0,9 0,7 — —Homecare 641,7 618,3 121,1 114,2 4,0 3,2 — —

Exports and International 2 030,6 1 519,3 214,0 219,8 34,3 19,0 — —Intergroup sales – FMCG (136,8) (142,2) — — — — — —Other – FMCG5 — — (52,4) (32,1) 27,7 31,5 — —

Fishing – Oceana4 730,6 1 364,3 78,5 144,3 13,8 30,6 — 0,4

TOTAL CONTINUING OPERATIONS 20 430,4 18 954,0 3 133,4 2 522,6 267,4 249,7 11,6 127,0DISCONTINUED OPERATIONS 605,5 3 861,3 56,8 1 004,8 36,6 113,4 — 14,6

Healthcare — 2 926,9 — 899,5 — 61,9 — 17,8Sea Harvest 605,5 934,4 56,8 105,3 36,6 51,5 — (3,2)

Total 21 035,9 22 815,3 3 190,2 3 527,4 304,0 363,1 11,6 141,6

1Operating income is stated after amortisation of intangible assets.2Comprises maize milling, wheat milling and baking, sorghum beverages and malt based breakfast cereals.3Comprises rice and oat-based breakfast cereals.4Includes fishing exports. With effect from 1 April 2009, Oceana was reclassified from a joint venture to an associate.5Includes the corporate office and international investments.

All segments operate on an arm’s length basis in relation to inter-segment pricing.

No geographical segments are reported as the company operates mainly in South Africa and the international operations do not meet the thresholds for reportable segments in terms of IAS14.

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Total Assets

Accounts payable, provisions and accruals

and taxation Capital expenditure(Rands in millions) 2009 2008 2009 2008 2009 2008

FMCG – CONTINUING OPERATIONS 11 629,1 10 966,1 3 036,5 3 601,6 543,6 526,1

Domestic Food 8 447,4 7 276,6 2 202,7 2 337,6 399,0 440,3

Grains 3 507,7 3 000,8 1 072,1 1 195,4 85,0 112,4

– Milling and baking1 2 394,7 1 868,3 796,3 839,9 76,8 95,1– Other Grains2 1 113,0 1 132,5 275,8 355,5 8,2 17,3

Groceries 1 908,4 1 446,1 453,2 426,9 201,0 131,0Snacks & Treats 940,1 810,8 293,4 350,5 62,3 59,6Beverages 1 416,4 1 318,6 157,8 163,4 19,1 10,1Value-Added Meat Products 669,9 659,1 221,0 183,5 30,6 125,6Out of Home 4,9 41,2 5,2 17,9 1,0 1,6

HPC 1 230,4 1 243,4 286,5 313,8 12,4 15,7

Personal 732,4 736,8 116,7 138,5 5,2 6,5Babycare 85,9 72,4 28,8 25,0 1,2 1,6Homecare 412,1 434,2 141,0 150,3 6,0 7,6

Exports and International 1 209,5 1 112,0 240,9 289,5 39,6 26,0Other – FMCG4 741,8 1 334,1 306,4 660,7 92,6 44,1

Fishing – Oceana3 — 710,5 — 380,5 17,5 57,9

TOTAL CONTINUING OPERATIONS 11 629,1 11 676,6 3 036,5 3 982,1 561,1 584,0DISCONTINUED OPERATIONS — 911,1 — — 42,8 285,7

Healthcare — — — — — 227,9Sea Harvest — 911,1 — — 42,8 57,8

Total 11 629,1 12 587,7 3 036,5 3 982,1 603,9 869,7

1Comprises maize milling, wheat milling and baking, sorghum beverages and malt based breakfast cereals.2Comprises rice and oat-based breakfast cereals.3Includes fishing exports. With effect from 1 April 2009, Oceana was reclassified from a joint venture to an associate.4Includes the corporate office and international investments.

Reconciliation of total assets:

(Rands in millions) 2009 2008

Total assets per balance sheets 11 687,3 12 676,9Deferred taxation asset (58,2) (89,2)

11 629,1 12 587,7

No geographical segments are reported as the company operates mainly in South Africa and the international operations do not meet the thresholds for reportable segments in terms of IAS14.

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(Rands in millions) 20095 20083,5 20084,6 20073,6 20074,6 20064,6 20051,4,6

Consolidated income statementsRevenue 20 643 19 170 20 126 16 477 19 980 16 706 15 062

Profit before taxation and abnormal items 2 909 2 449 2 575 2 207 3 090 2 583 2 170Income from associates 204 72 72 57 57 4 72Abnormal items 344 4 13 204 151 466 (107)

3 457 2 525 2 660 2 468 3 298 3 053 2 135Income tax expense (978) (792) (826) (741) (1 006) (730) (570)

Profit for the year 2 479 1 733 1 834 1 727 2 292 2 323 1 565Attributable to:Ordinary shareholders 2 444 1 696 1 770 1 685 2 243 2 303 1 553Minorities 35 37 64 42 49 20 12

Consolidated balance sheetsProperty, plant and equipment, goodwill, intangible assets and investments 5 382 5 562 5 562 4 414 4 937 4 257 3 281Deferred taxation asset 58 89 89 114 132 145 165Current assets 6 247 7 026 7 026 5 767 6 951 5 873 5 745

Total assets 11 687 12 677 12 677 10 295 12 020 10 275 9 191

Ordinary shareholders’ interest before share-based payment reserve 6 849 5 639 5 639 5 352 5 665 4 393 3 208Share-based payment reserve 134 122 122 120 120 78 39Minority interest 301 458 458 193 214 182 138Deferred taxation liability 156 316 316 272 280 231 464Provision for post-retirement medical aid 327 328 328 322 335 354 350Long-term borrowings 483 498 498 365 772 912 762Sea Harvest put option7 — — — — — 108 108Current liabilities 3 437 5 316 5 316 3 671 4 634 4 017 4 122

Total equity and liabilities 11 687 12 677 12 677 10 295 12 020 10 275 9 191

Consolidated cash flow statementsCash operating profit after interest and taxation 2 233 1 858 1 858 2 655 2 655 2 043 1 866Working capital changes (471) (548) (548) (807) (807) (333) (112)Dividends received 79 50 50 58 58 74 62

Cash available from operations 1 841 1 360 1 360 1 906 1 906 1 784 1 816Dividends paid2 (1 259) (1 121) (1 121) (1 000) (1 000) (865) (677)

Net cash inflow from operating activities 582 239 239 906 906 919 1 139Net cash inflow/(outflow) from investing activities 172 (811) (811) (784) (784) (1 302) 760

Net cash inflow/(outflow) before financing activities 754 (572) (572) 122 122 (383) 1 899Net cash inflow/(outflow) from financing activities 100 (854) (854) (142) (142) (287) (1 980)Net cash inflow from discontinued operation 290 225 225 0 0 0 0

Net increase/(decrease) in cash and cash equivalents 1 144 (1 201) (1 201) (20) (20) (670) (81)

1Adjusted for the adoption of IFRS.2Includes capital distribution of R499,8 million in 2008 (2007: R367 million).3Excluding Adcock Ingram Holdings Limited, which was unbundled on 25 August 2008.4Not adjusted for the unbundling of Adcock Ingram Holdings Limited.5Excluding Sea Harvest, which was sold on 28 May 2009.6Not adjusted for Sea Harvest, which was sold on 28 May 2009.72007 has been reclassified from long-term to current liabilities.

Five-year review

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Definitions

HEADLINE EARNINGS PER SHARE: Headline earnings divided by the weighted average number of ordinary shares in issue during the year (net of treasury and empowerment shares).

DIVIDEND COVER: Headline earnings per share divided by the total ordinary dividend per share for the year, comprising the interim dividend paid and final dividend declared post-year end. The denominator includes a capital distribution paid out of share premium in July 2007, a capital distribution declared out of share premium in November 2007 and a capital distribution declared out of share premium in November 2009.

NET WORTH PER ORDINARY SHARE: Interest of ordinary shareholders after deducting the cost of treasury and empowerment shares divided by the number of ordinary shares in issue at the year-end, excluding treasury and empowerment shares.

ASSET TURNOVER: Turnover divided by the average of net assets, excluding cash resources, short-term and long-term borrowings, taxation, shareholders for dividends and the carrying value of investments, at the beginning and end of the financial year.

WORKING CAPITAL PER R1 000 REVENUE: The average of inventory and receivables less payables, excluding shareholders for dividends and taxation, at the beginning and end of the financial year divided by turnover (R’000).

OPERATING MARGIN: Operating profit as a percentage of turnover.

ABNORMAL ITEMS: Items of income and expenditure which are not directly attributable to normal operations or where their size or nature are such that additional disclosure is considered appropriate.

EFFECTIVE TAXATION RATE: Taxation charge in the income statement as a percentage of profit before taxation.

RETURN ON AVERAGE NET ASSETS EMPLOYED: Operating profit as a percentage of the average of net assets, excluding cash resources, short-term and long-term borrowings, taxation, shareholders for dividends and the carrying value of investments, at the beginning and end of the financial year.

CURRENT RATIO: Ratio of current assets to current liabilities.

NET INTEREST COVER: Operating profit plus dividend income divided by net interest paid.

NET FUNDING: Capital and reserves, minority interest and long- and short-term borrowings net of cash.

TOTAL LIABILITIES: Long-term borrowings and current liabilities.

CASH FLOW TO NET LIABILITIES: Cash generated from operations after interest and taxation as a percentage of long-term borrowings and current liabilities less cash resources.

DIVIDEND YIELD: Dividend per share (in 2007, 2008 and 2009, including capital distribution per share) as a percentage of year-end market price per share.

EARNINGS YIELD: Headline earnings per share as a percentage of year-end market price per share (from 2008 based on headline earnings per share from continuing operations only).

PRICE:EARNINGS RATIO: Year-end market price per share as a multiple of headline earnings per share (from 2008 based on headline earnings per share from continuing operations only).

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Summary of ratios and statistics

(Rands in millions) 20096 20084,9 20084,8 20074,8 20075,8 20065,8 20052,5,8

ORDINARY SHARE PERFORMANCENumber of ordinary shares upon which headline earnings per shareis based (000)3 157 012 157 893 157 893 157 311 157 311 156 071 164 195 Headline earnings per ordinary share (cents) 1 382 1 150 1 195 878 1 283 1 207 986 Dividends per ordinary share (cents)1 704 786 786 660 660 603 500 Dividend cover (times)1 2,0 1,9 1,9 1,9 1,9 2,0 2,0 Net worth per ordinary share (cents) 4 439 3 673 3 673 3 453 3 665 2 855 2 015

PROFITABILITY AND ASSET MANAGEMENTAsset turnover (times) 3,2 3,3 3,5 3,2 3,4 3,9 4,1 Working capital per R1 000turnover (R) 130 115 110 118 115 111 119 Operating margin (%) 15,3 13,3 13,2 13,9 16,4 16,1 15,7 Effective taxation rate (%) 28 31 31 30 30 24 27 Return on average net assets 49,7 43,9 45,7 43,8 53,5 62,7 64,3

FINANCINGCurrent ratio 1,8 1,3 1,3 1,6 1,5 1,5 1,4 Net interest cover (times) 12 31 37 29 18 22 14 Net debt/(cash) to net funding (%) 5 17 17 (1) 11 17 (5)Percentage total liabilities to total shareholders’ funds 54 93 93 71 89 106 144 Cash flow to net liabilities (%) 65 35 35 75 40 41 51

EMPLOYEE STATISTICSNumber of employees at year-end 11 443 11 987 11 987 13 302 16 270 17 678 16 764 – permanent 8 901 8 601 8 601 8 688 10 949 13 421 13 722 – seasonal 2 542 3 386 3 386 4 614 5 321 4 257 3 042 Revenue per employee (R) 1 803 941 1 599 207 1 678 977 1 238 650 1 211 125 945 016 898 473 Value-added per employee (R)7 398 380 450 743 450 743 372 768 372 768 299 429 272 399 Operating profit per employee (R) 273 827 210 445 219 229 168 824 199 078 150 792 127 356

STOCK EXCHANGE STATISTICSMarket price per share (cents)– year-end 15 050 13 740 13 740 18 185 18 185 14 150 13 880 – highest 16 400 19 259 19 259 20 279 20 279 17 800 14 000 – lowest 11 267 12 849 12 849 13 700 13 700 12 900 8 280 Number of transactions 245 699 172 932 172 932 127 625 127 625 104 848 58 212 Number of shares traded (000) 213 904 154 503 154 503 169 488 169 488 141 800 129 709 Value of shares traded (Rm) 29 926 23 560 23 560 29 701 29 701 23 185 14 035 Number of shares traded as a percentage of total issued shares 123,2 89,4 89,4 98,3 98,3 82,9 76,4 Dividend yield at year-end (%) 4,7 5,7 5,7 3,6 3,6 4,3 3,6 Earnings yield at year-end (%) 9,1 8,7 8,7 7,1 7,1 8,5 7,2 Price earnings ratio at year-end 11 12 12 14 14 12 14 Market capitalisation at year-end (Rm) (net of treasury and empowerment shares) 23 939 21 547 21 547 28 707 28 707 22 157 22 360 Market capitalisation to shareholders’ equity at year-end (times) 3,4 3,7 3,7 5,0 5,0 5,0 6,9 1 Based on the sum of the interim dividend paid in the current year and the final dividend declared post year-end. In 2007, also includes a capital distribution paid out of share premium in July 2007, a capital distribution declared out of share premium in November 2007, paid in January 2008 and a capital distribution declared out of share premium in November 2009.

2Adjusted for the adoption of IFRS.3Net of treasury and empowerment shares.4Excluding Adcock Ingram Holdings Limited, which was unbundled on 25 August 2008.5Not adjusted for the unbundling of Adcock Ingram Holdings Limited.6Excluding Sea Harvest, which was sold on 28 May 2009.7Includes Sea Harvest and Adcock Ingram Holdings Limited (to 2008).8Not adjusted for Sea Harvest, which was sold on 28 May 2009.9 In terms of IFRS 5, the comparative balance sheet has not been restated for the sale of Sea Harvest whereas the income statement is restated. Accordingly, ratios which contain references to the income statement have been adjusted for the sale of Sea Harvest.

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Analysis of ordinary shareholders

TIGER BRANDS LIMITED: SHAREHOLDER ANALYSIS TABLESIn accordance with the JSE Listing Requirements, the following table details the spread of the registered shareholders as perthe register dated 25 September 2009:

SHAREHOLDER SPREADNumber of

shareholders %Number of

shares %

1 – 1 000 shares 16 933 77,39 5 733 253 3,30 1 001 – 5 000 shares 4 091 18,70 12 082 411 6,96 5 001 – 100 000 shares 685 3,13 22 969 450 13,23 100 001 – 1 000 000 shares 149 0,68 40 639 134 23,421 000 001 shares and over 22 0,10 92 135 104 53,09

21 880 100 173 559 352* 100

DISTRIBUTION OF SHAREHOLDERSNumber of

shareholders %Number of

shares %

Banks 168 0,77 54 293 148 31,28Brokers 43 0,20 1 850 479 1,07Close corporations 169 0,77 170 684 0,10Empowerment 2 0,01 5 896 140 3,40Endowment funds 229 1,05 1 191 135 0,69Individuals 14 648 66,95 10 132 875 5,84Insurance companies 73 0,33 6 480 210 3,73Investment companies 44 0,20 1 460 421 0,84Medical aid schemes 22 0,10 622 290 0,36Mutual funds 367 1,68 24 894 363 14,34Nominees and trusts 4 898 22,39 8 572 076 4,94Other corporations 241 1,10 540 523 0,31Own holdings 1 0,00 10 326 758 5,95Pension funds 453 2,07 44 050 725 25,38Private companies 507 2,32 2 030 663 1,17Public companies 13 0,06 33 124 0,02Share trusts 2 0,01 1 013 738 0,58

21 880 100 173 559 352* 100

PUBLIC AND NON-PUBLIC SHAREHOLDINGSNumber of

shareholders% of total

shareholdersNumber of

shares% of issued

capital

Non-public shareholders 6 0,03 17 238 429 9,93

Own holdings 1 0,01 10 326 758 5,95Share trusts/share incentive scheme 2 0,01 1 013 738 0,58Empowerment holdings 2 0,01 5 896 140 3,40Company pension fund 1 0,00 1 793 0,00

Public shareholders 21 874 99,97 156 320 923 90,07

21 880 100 173 559 352* 100

*Excludes 1 000 shares issued between 25 September 2009 and 30 September 2009.

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Analysis of ordinary shareholders(continued)

GEOGRAPHIC HOLDINGS BY OWNER

BENEFICIAL SHAREHOLDERS HOLDING OF 3% OR MORE*Number of

shares %

Government employees pension fund 22 600 789 13,02Tiger Consumer Brands Limited 10 326 758 5,95Lazard Emerging Markets Fund (US) 7 505 156 4,33Dodge & Cox International Stock Fund (US) 7 072 043 4,07

INVESTMENT MANAGEMENT SHAREHOLDINGS OF 3% OR MORE*Total

shareholding %

Investment managerPublic Investment Corporation 21 322 860 12,29Lazard Asset Management LLC Group 13 845 904 7,97Investec Asset Management 12 085 603 6,96Coronation Fund Managers 9 499 986 5,47Dodge & Cox 7 072 043 4,07

*As at 25 September 2009 per J P Morgan Cazenove.

Shareholders

South Africa 66,8%

Other countries 10,0%

USA 21,4%

England and Wales 1,8%

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Shareholders’ diary

Financial year-end 30 September

Annual general meeting February

Report and accounts

Interim report for the half-year ending 31 March May

Announcement of annual results November

Annual financial statements December

Dividends Declaration Payment

Ordinary shares

Interim dividend May July

Final dividend November January

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Responsibility for annual financial statements

The directors of Tiger Brands Limited are responsible for the integrity of the annual financial statements of the company, consolidated subsidiaries, associates and proportionately consolidated entities and the objectivity of other information presented in the annual report.

The fulfilment of this responsibility is discharged through the establishment and maintenance of sound management and accounting systems, the maintenance of an organisation structure which provides for delegation of authority and establishes clear responsibility, together with the constant communication and review of operations’ performance measured against approved plans and budgets.

Management and employees operate in terms of a code of ethics approved by the board. The code requires compliance with all applicable laws and maintenance of the highest integrity in the conduct of all aspects of the business.

The annual financial statements, prepared in terms of International Financial Reporting Standards, are examined by our auditors in conformity with International Standards on Auditing.

An audit committee of the board of directors, composed entirely of independent non-executive directors, meets periodically with our internal and external auditors and management to discuss internal accounting controls, auditing and financial reporting matters. The auditors have unrestricted access to the audit committee.

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Independent auditors’ report

TO THE MEMBERS OF TIGER BRANDS LIMITED

Report on the financial statements

We have audited the annual financial statements and group annual financial statements of Tiger Brands Limited, which comprise the balance sheet as at 30 September 2009, the income statement, the statement of changes in equity and cash flow statement for the year then ended, a summary of significant accounting policies and other explanatory notes, as set out on pages 78, 79, 89 to 91 and 93 to 176.

Directors’ responsibility for the financial statements

The company’s directors are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards, and in the manner required by the Companies Act of South Africa. This responsibility includes: designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditor’s responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal controls relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements present fairly, in all material respects, the financial position of the company and of the group as at 30 September 2009, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards, and in the manner required by the Companies Act of South Africa.

Ernst & Young Inc.

Registered Auditor

Johannesburg

15 December 2009

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Directors’ approval

Certificate by company secretary

The annual financial statements for the year ended 30 September 2009, which appear on pages 78, 79, 89 to 91 and 93 to 176, which are in agreement with the books of account at that date, and the related group annual financial statements, were approved by the board of directors on 15 December 2009 and signed on its behalf by:

L C van Vught P Matlare

Chairman Chief Executive Officer

15 December 2009

I certify that the company has lodged with the Registrar of Companies all such returns as are required of a public company in terms of section 268G(d) of the Companies Act, 1973, and that all such returns are true, correct and up to date.

I W M Isdale

Company Secretary

15 December 2009

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Statutory information

AUTHORISED AND ISSUED SHARE CAPITAL

Details of the authorised and issued share capital are set out in notes 24 and 25 on pages 143 to 145 of the annual financial statements and in the statements of changes in equity on pages 118 and 119.

During the year under review the number of shares in issue increased by 517 188 shares as a result of options exercised in terms of the Tiger Brands (1985) Share Option Scheme.

SHARE PURCHASE AND SHARE OPTION SCHEMES

Tiger Brands (1985) Share Purchase Scheme

During the year under review, no loans were granted to employees in terms of the Tiger Brands (1985) Share Purchase Scheme.

459 909 ordinary shares remain subject to the provisions of the Tiger Brands (1985) Share Purchase Scheme.

Tiger Brands (1985) Share Option Scheme

2009 2008

Shares under option at the beginning of the year 1 856 518 3 895 755

Reinstatement 3 000 —

Movement of Adcock Ingram on unbundling — (1 239 355)

Disposal of Sea Harvest 2 400 —

Options granted — —

Exercised subject to loans — (23 000)

Exercised and paid in full (335 488) (465 532)

Forfeited (31 400) (311 350)

Shares under option at the end of the year 1 490 230 1 856 518

Options available for issue 4 866 216 4 834 816

The above table excludes Spar and Adcock Ingram employees. Refer to note 24.2, which reflects details including both Spar and Adcock Ingram employees.

During the year under review, no loans were granted in respect of ordinary shares.

During the year under review, shares in issue increased by 517 188 shares as a result of options exercised in terms of the Tiger Brands (1985) Share Option Scheme.

Subsidiaries, associates, joint ventures and investments

Financial information concerning the principal subsidiaries, associates, joint ventures and investments of Tiger Brands Limited is set out in Annexures A to C of the annual financial statements. Details of joint ventures are given in note 39.

Dividends and capital distributions

Details of dividends paid and declared and capital distributions in respect of the year are outlined in note 10 to the annual financial statements.

Attributable interest

The attributable interest of the company in the profits and losses of its subsidiaries, joint ventures and associated companies is as follows:


Subsidiaries and joint ventures

Total income after taxation 2 330,4 2 272,9

Associate companies

Total income after taxation 203,6 72,0

MAJOR SHAREHOLDERS

Details of the registered and beneficial shareholders of the company are outlined on pages 83 and 84.

DIRECTORS

In terms of the articles of association B L Sibiya, L C van Vught, R M W Dunne, P M Roux and M Fleming, retire at the forthcoming annual general meeting of shareholders.

These directors offer themselves for re-election.

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Statutory information(continued)

Statutory information

transaction that was approved by the shareholders on 12 October 2009.

Tiger Brands Foundation SPV (Pty) Limited:

Creation of variable rate cumulative redeemable non-participating preference shares, and amendment to the Articles of Association.

Thusani Empowerment Investment Holdings No.II (Pty) Limited:

Creation of variable rate cumulative redeemable non-participating preference shares, and amendment to the Articles of Association.

The following special resolutions were passed on 16 September 2009 for change of names:

Newshelf 1019 (Pty) Limited to Tiger Brands Foundation SPV (Pty) Limited.

Newshelf 1020 (Pty) Limited to Thusani Empowerment Investment Holdings No. II (Pty) Limited.

RETIREMENT FUNDS

Details in respect of the retirement funds of the group are set out on page 52, and in note 35, on pages 151 and 152.

Insurance and risk management

The group’s practice regarding insurance includes an annual assessment, in conjuction with the group’s insurance brokers, of the risk exposure relative to assets and possible liabilities arising from business transactions. In addition, the group’s insurance programme is monitored by the risk committee.

All risks are considered to be adequately covered, except for political risks in the case of which as much cover as is reasonably available has been arranged.

Self-insurance programmes are in operation covering primary levels of risk at a cost more advantageous than open-market premiums. Regular risk management audits are conducted by the group’s risk management consultants, whereby improvement areas are identified and resultant action plans implemented accordingly.

Assets are insured at current replacement values.

The names of the directors who presently hold office are set out on pages 8 to 10 of this report.

No director holds 1% or more of the ordinary shares of the company. The directors beneficially hold, directly and indirectly, 13 880 ordinary shares in the company (2008: 2 880 shares).

Details of the directors’ shareholdings (direct and indirect) are reflected below. The register of interests of directors and others in shares of the company is available to the members on request.

2009 2008

Name of director Number of shares

M Fleming 6 000 —

R M W Dunne 5 000 —

L C van Vught 2 880 2 880

13 880 2 880

SHARE REPURCHASE

At the annual general meeting of shareholders held in February 2009, shareholders passed a special resolution authorising the company, or a subsidiary, to acquire the company’s own ordinary shares. During the period to 30 September 2009, no shares were acquired.

The company has previously purchased a total of 10 326 758 shares at an average price of R106,67 per share, for a total consideration of R1 101,5 million.

AMERICAN DEPOSITORY RECEIPT FACILITY

With effect from 9 September 1994 a sponsored American Depository Receipt (ADR) facility was established. This ADR facility is sponsored by the Bank of New York Mellon and details of the administrators are reflected under Administration on the inside back cover of this report.

RESOLUTIONS

Special resolutions passed during the year under view

The following Special resolutions were passed on 18 September 2009 relating to the BBBEE Phase II

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Brimstone SPV (Pty) Limited 1 813 613

Tiger Brands Black Managers Trust No. II 2 835 427

Tiger Brands General Staff Share Trust 791 800

Thusani Empowerment Investment Holdings No. II (Pty) Limited 1 813 613

Tiger Brands Foundation SPV (Pty) Limited 9 068 067

Acquisition of Crosse & Blackwell mayonnaise business

With effect from 1 October 2009 the Crosse & Blackwell mayonnaise business was acquired from Nestlé.

EVENTS SUBSEQUENT TO THE YEAR-END

BBBEE Phase II

On 12 October 2009 Shareholders approved the Phase II of the company’s BEE share ownership initiative as per the SENS announcement released on 1 September 2009 and the Circular to shareholders dated 16 September 2009. The transaction has resulted in Brimstone Investment Corporation Limited (through its SPV) holding 1,01%, Tiger Brands Black Managers Trust No. II 1,58%, Tiger Brands General Staff Share Trust 0,44%, Thusani Trust 1,01% and the Tiger Brands Foundation (through its SPV) 5,05% in the issued share capital of the company. On the 20th October, the ordinary shares were allotted and issued as follows to the parties thereto.

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Effects of changing prices

The group has a diverse range of operations spread throughout South Africa, East and Central Africa as well as South America. Many of these operations are affected by different inflation factors due to the varying nature of businesses, climatic conditions, geographical locations and business cycles. The diversity of these factors does not allow for meaningful inflation-adjusted statements to be prepared using a simple, standardised procedure.

The effect of inflation is monitored by examination of cash flows inherent in operating results, budgets, plans and new projects, with emphasis concentrated towards the objective of the creation of shareholder wealth in real terms.

The following graphs show the extent to which certain key performance indicators compare when discounted by the movement in the consumer price index. Years prior to 2007 have not been adjusted for the unbundling of Adcock Ingram Holdings Limited; no adjustments have been made for Oceana and Sea Harvest for years prior to 2009. Figures presented for 2009 relate to continuing operations.

05

06

07*

08

09

Capital expenditure

R328 million

R461 million

R540 million

R642 million

R561 million

R299 million

R399 million

R437 million

R459 million

R380 million

Normal

Adjusted for inflation

*2007 adjusted for the Adcock unbundling.Years prior to 2007 have not been adjusted for the unbundling of Adcock Ingram.

Years prior to 2009 have not been adjusted for the sale of Sea Harvest or change in accounting treatment of Oceana.

05

06

07*

08

09

Profit before tax and abnormal items(excludes income from associates)

R2 170 million

R2 583 million

R2 207 million

R2 575 million

R2 909 million

Normal




05

06

07*

08

09

Cash available from operations

R1 816 million

R1 784 million

R1 906 million

R1 360 million

R1 841 million

Normal




R1 657 million

R1 545 million

R1 541 million

R972 million

R1 248 million

R1 979 million

R2 236 million

R1 784 million

R1 852 million

R1 971 million

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Accounting policies

CORPORATE INFORMATION

The consolidated financial statements of Tiger Brands Limited (the company) and the Tiger Brands Group (the group) for the year ended 30 September 2009 were authorised for issue in accordance with a resolution of the directors on 15 December 2009. Tiger Brands Limited is incorporated and domiciled in South Africa, where the shares are publicly traded.

BASIS OF PREPARATION

The consolidated financial statements have been prepared on the historical-cost basis, except where indicated below.

STATEMENT OF COMPLIANCE

The annual financial statements of the group and company have been prepared in accordance with International Financial Reporting Standards (IFRS).

BASIS OF CONSOLIDATION

The consolidated financial statements include the financial statements of the company and its subsidiaries (as well as special-purpose entities controlled by the group or company). The financial statements of the subsidiaries are prepared for the same reporting period using consistent accounting policies. Where the financial year-end of a subsidiary is not coterminous with that of the group or the accounting policies adopted by the subsidiary differ from the group’s accounting policies, the financial statements of the subsidiary are adjusted in accordance with the group’s accounting policies and year-end.

The results of subsidiaries acquired are included in the consolidated financial statements from the date of acquisition, being the date on which the group obtains control, and continue to be consolidated until the date that such control ceases.

Subsidiaries acquired with the intention of disposal within 12 months are consolidated in line with the principles of IFRS 5: Non-current Assets Held for Sale and Discontinued Operations and disclosed as held for sale.

All intragroup transactions, balances, income and expenses are eliminated on consolidation.

Minority interests represent the portion of profit or loss, and net assets not held by the group. It is presented

separately in the consolidated income statement, and in the consolidated balance sheet, separately from own shareholders’ equity. Subsequent acquisitions of minority interests are accounted for using the entity concept method, whereby the difference between the consideration and the book value of the share of the net assets is recognised as an equity transaction.

UNDERLYING CONCEPTS

The financial statements are prepared on the going-concern basis, which assumes that the group will continue in operation for the foreseeable future.

The financial statements are prepared using accrual accounting whereby the effects of transactions and other events are recognised when they occur, rather than when the cash is received or paid.

Assets and liabilities and income and expenses are not offset unless specifically permitted by an accounting standard. Financial assets and financial liabilities are only offset when there is currently a legally enforceable right to offset, and the intention is either to settle on a net basis or to realise the asset and settle the liability simultaneously.

Accounting policies are the specific principles, bases, conventions, rules and practices applied in preparing and presenting financial statements. Changes in accounting policies are accounted for in accordance with the transitional provisions in the standard. If no such guidance is given, they are applied retrospectively. If, after making every reasonable effort to do so, it is impracticable to apply the change retrospectively, it is applied prospectively from the beginning of the earliest period practicable.

Changes in accounting estimates are adjustments to assets or liabilities or the amounts of periodic consumption of assets that result from new information or new developments. Such changes are recognised in profit or loss in the period they occur.

Prior period errors are omissions or misstatements in the financial statements of one or more prior periods. They may arise from a failure to use, or misuse of, reliable information that was available or could reasonably be expected to have been obtained. Where prior period errors are material, they are retrospectively restated. If it is impracticable to do so, they are applied prospectively from the beginning of the earliest period practicable.

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Accounting policies(continued)

and deferred. This is then recognised as revenue over the period that the award credits are redeemed. The group does not maintain a rewards programme and therefore, this interpretation has no impact.

IFRIC 16 Hedges of a Net Investment in a Foreign Operation: IFRIC 16 was issued in July 2008 and became effective for financial years beginning on or after 1 October 2008. The interpretation is applied prospectively. IFRIC 16 provides guidance on the accounting for a hedge of a net investment. As such it provides guidance on identifying the foreign currency risks that qualify for hedge accounting in the hedge of a net investment, where within the group the hedging instruments can be held in the hedge of a net investment and how an entity should determine the amount of foreign currency gain or loss, relating to both the net investment and the hedging instrument, to be recycled on disposal of the net investment. The group has applied this interpretation and hedges certain net investments in foreign operations.

IAS 39 Amended Financial Instruments: Recognition and Measurement Reclassification of financial assets and IFRS 7 Amended Financial Instruments: Disclosures – Reclassification of financial assets: The IASB issued this amendment in October 2008. This amendment allows reclassification of certain financial assets held for trading to either held to maturity, loans and receivables or available for sale. The effective date of the amendment was 1 July 2008. The group has not applied the reclassification option.

FOREIGN CURRENCIES

Foreign currency transactions

The consolidated financial statements are presented in South African Rands, which is the company’s functional and presentation currency. Each foreign entity in the group determines its own functional currency. Transactions in foreign currencies are initially recorded in the functional currency at the rate of exchange ruling at the date of the transaction.

Translation of foreign currency transactions

Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rate of exchange ruling at the balance sheet date. Exchange differences are taken to profit or loss, except for

CHANGES IN ACCOUNTING POLICIES

The accounting policies adopted are consistent with those of the previous financial year except as follows:

The group has adopted the following new and amended IFRS and IFRIC interpretations during the year.

IFRIC 9 Amended: Reassessing Embedded Derivatives

IFRIC 12 Service Concession Arrangements

IFRIC 13 Customer Loyalty Programmes

IFRIC 16 Hedges of a Net Investment in a Foreign Operation

IAS 39 Amended Financial Instruments: Recognition and Measurement – Reclassification of financial assets

IFRS 7 Amended Financial Instruments: Disclosures – Reclassification of financial assets

The application of these standards and interpretations did not have a significant impact on the group’s reported results and cash flows for the year ended 30 September 2009 and the financial position at 30 September 2009.

IFRIC 9 Amended: Reassessing Embedded Derivatives

The IFRIC issued the amendment in April 2009, and it became effective for financial years ending on or after 30 June 2009. The amendment states that when an entity reclassifies a financial instrument in terms of the amended IAS 39, the entity must assess whether an embedded derivative needs to be separated from the host contract. The entity also clarifies the date at which the assessment would need to be made. If the fair value of the embedded derivative cannot be measured, the entire hybrid instrument must be accounted for at fair value. This amendment has no impact on the financial statements of the group.

IFRIC 12 Service Concession Arrangements: The IFRIC issued IFRIC 12 in November 2006. This interpretation applies to service concession operators and explains how to account for the obligations undertaken and rights received in service concession arrangements. No member of the group is an operator and, therefore, this interpretation has no impact on the group.

IFRIC 13 Customer Loyalty Programmes: The IFRIC issued IFRIC 13 in June 2007. This interpretation requires customer loyalty credits to be accounted for as a separate component of the sales transaction in which they are granted. A portion of the fair value of the consideration received is allocated to the award credits

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INTEREST IN GROUP COMPANIES

Business combinations

The acquisition of subsidiaries is accounted for using the purchase method. The cost of the acquisition is measured at the aggregate fair values, at the date of exchange, of the assets given, liabilities incurred, and equity instruments issued plus any costs directly attributable to the business combination.

The acquiree’s identifiable assets (including previously unrecognised intangible assets) and liabilities (including contingent, but excluding future restructuring liabilities) are recognised at fair value at the acquisition date. The exception is for non-current assets classified at the acquisition date as held for sale in accordance with IFRS 5. These assets are recognised and measured at fair value less costs to sell.

The interest of minority shareholders in the acquiree is initially measured at the minority’s proportion of the net fair value of the assets, liabilities and contingent liabilities recognised.

Goodwill arising in a business combination is accounted for in terms of the policy outlined below.

The company carries its investments in subsidiaries and associate companies at cost less accumulated impairment losses.

Associates

An associate is an entity over which the group has significant influence through participation in the financial and operating policy decisions. The entity is neither a subsidiary nor a joint venture.

Associates are accounted for using the equity method of accounting. Under this method, investments in associates are carried in the consolidated balance sheet at cost, plus post acquisition changes in the group’s share of the net assets of the associate. Goodwill relating to an associate is included in the carrying amount of the investment and is not tested separately for impairment.

The income statement reflects the group’s share of the associate’s profit or loss. However, an associate’s losses in excess of the group’s interest are not recognised. Where an associate recognises an entry directly in equity, the group in turn recognises its share in the consolidated statement of changes in equity. Profits and

differences arising on foreign currency borrowings that provide a hedge against a net investment in a foreign entity. These are taken directly to equity, in the consolidated annual financial statements, until the disposal of the net investment, at which time they are recognised in profit and loss. Tax charges and credits attributable to such exchange differences are also accounted for in equity.

If non-monetary items measured in a foreign currency are carried at historical cost, the exchange rate used is the rate applicable at the initial transaction date. If they are carried at fair value, the rate used is the rate at the date when the fair value was determined.

Foreign operations

At the reporting date the assets and liabilities of the foreign operations are translated into the presentation currency of the group (Rands) at the exchange rate ruling at the balance sheet date. The income statement is translated at the weighted average exchange rate for the year. Exchange differences are taken directly to a separate component of equity. On disposal of a foreign operation, the deferred cumulative amount recognised in equity relating to that particular foreign operation is recognised in the income statement.

Goodwill and fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition of a foreign operation are treated as assets and liabilities of that foreign operation, and are translated at the closing rate.

The functional currencies of the foreign operations are as follows:

Empresas Carozzi (associate) – Chilean peso; Haco (subsidiary) – Kenyan shilling; and Chococam (subsidiary) – Cameroon franc.

HYPERINFLATIONARY ECONOMIES

Where the functional currency of a foreign operation is the currency of a hyperinflationary economy, the financial statements are restated for the decrease in general purchasing power before they are translated into the group’s presentation currency.

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is discontinued, and the investment is held at the lower of its carrying value and fair value less costs to sell.

SEGMENT REPORTING

The principal segments of the group have been identified by grouping similar-type products. This basis is representative of the internal structure for financial reporting to key management personnel. No geographical segments are reported as the group operates mainly in South Africa and the international operations do not meet the thresholds for reportable segments in terms of IAS 14: Segment Reporting.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are stated at cost, excluding the costs of day-to-day servicing, less accumulated depreciation and accumulated impairment losses. Assets subject to finance lease agreements are capitalised at the lower of the fair value of the asset and the present value of the minimum lease payments.

Where an item of property, plant and equipment comprises major components with different useful lives, the components are accounted for as separate assets. Expenditure incurred on major inspection and overhaul, or to replace an item, is also accounted for separately if the recognition criteria are met.

Depreciation is calculated on a straight-line basis, on the difference between the cost and residual value of an asset, over its useful life. Depreciation starts from when the asset is available for use. An asset’s residual value, useful life and depreciation methods are reviewed at least at each financial year-end. Any adjustments are accounted for prospectively.

The following useful lives have been estimated:

Freehold land Not depreciated

Freehold buildings

– general purpose 40 years

– specialised 20 – 50 years

Leasehold improvements The lease term or useful life, whichever is the shorter period

Vehicles and computer equipment 3 – 5 years

Plant, equipment and vessels 5 – 15 years

losses resulting from transactions between the group and associates are eliminated to the extent of the interest in the underlying associate.

After application of the equity method, each investment is assessed for indicators of impairment. If applicable, the impairment is calculated as the difference between the current carrying value and the higher of its value in use or fair value less costs to sell. Impairment losses are recognised in the income statement.

Where an investment in an associate is classified as held for sale in terms of IFRS 5, equity accounting is discontinued, and the investment is held at the lower of its carrying value and fair value less costs to sell.

Where an associate’s reporting date differs from the group’s, the associate prepares financial statements as of the same date as the group. If this is impracticable, financial statements are used where the date difference is no more than three months. Adjustments are made for significant transactions between the relevant dates. Where the associate’s accounting policies differ from those of the group, appropriate adjustments are made to conform the accounting policies.

Joint ventures

A joint venture is a contractual arrangement whereby the group and other parties undertake an economic activity that is subject to joint control. The strategic, financial and operating policy decisions of the joint venture require the unanimous consent of the parties sharing control.

The group reports its interests in joint ventures using proportionate consolidation. The group’s share of the assets, liabilities, income and expenses of joint ventures are combined with the equivalent items in the consolidated financial statements on a line-by-line basis. Where the group transacts with its joint ventures, unrealised profits and losses are eliminated to the extent of the group’s interest in the joint venture.

Any goodwill arising on the acquisition of a joint venture is accounted for in accordance with the group’s policy for goodwill. The financial statements of the joint venture are prepared for the same reporting period as the group, using consistent accounting policies.

Where an investment, in a joint venture is classified as held for sale in terms of IFRS 5, proportionate consolidation

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are carried at cost less any accumulated amortisation and accumulated impairment losses. Internally generated intangible assets, excluding capitalised development costs, are not capitalised and expenditure is charged to the income statement in the year in which the expense is incurred.

The useful lives of intangible assets are either finite or indefinite.

Intangible assets with finite lives are amortised over their useful life and assessed for impairment when there is an indication that the asset may be impaired. The amortisation period and the method are reviewed at each financial year-end. Changes in the expected useful life or pattern of consumption of future benefits are accounted for prospectively.

The following useful lives have been estimated:

Trademarks 1 – 20 years

Customer and supplier-related intangibles 5 – 15 years

Fishing rights 5 – 15 years

Other intangible assets 1 – 5 years

Intangible assets with indefinite useful lives are not amortised but are tested annually for impairment either individually or at the cash-generating unit level. The useful lives are also reviewed each period to determine whether the indefinite life assessment continues to be supportable. If not, the change in the useful life assessment to a finite life is accounted for prospectively.

Certain trademarks have been assessed to have indefinite useful lives, as presently there is no foreseeable limit to the period over which the assets can be expected to generate cash flows for the group.

Research and development costs

Research costs, being the investigation undertaken with the prospect of gaining new knowledge and understanding, are recognised in profit or loss as they are incurred.

Development costs arise on the application of research findings to plan or design for the production of new or substantially improved materials, products or services, before the start of commercial production. Development costs are only capitalised when the group can demonstrate the technical feasibility of completing the project, its intention and ability to complete the project

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement in the year the asset is derecognised.

GOODWILL AND INTANGIBLE ASSETS

Goodwill

Goodwill is measured initially as the excess of the cost of the acquisition over the group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised at the acquisition date.

Where the group’s interest in the net assets recognised at the acquisition date is in excess of the cost of the acquisition, the group reassesses the identification and measurement of the acquiree’s net assets and the measurement of the cost of the acquisition. If after reassessment the group’s interest in the net assets exceeds the cost of the acquisition, the excess is recognised in profit and loss.

Goodwill relating to subsidiaries and joint ventures is recognised as an asset and is subsequently measured at cost less accumulated impairment losses.

Goodwill is reviewed annually for impairment, or more frequently if there is an indicator of impairment. Goodwill is allocated to cash-generating units expected to benefit from the synergies of the combination. When the recoverable amount of a cash-generating unit is less than its carrying amount, an impairment loss is recognised. The impairment loss is allocated first to any goodwill assigned to the unit, and then to other assets of the unit pro rata on the basis of their carrying values. Impairment losses recognised for goodwill cannot be reversed in subsequent periods.

On disposal of a subsidiary or joint venture, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

Intangible assets

Intangible assets acquired separately are measured on initial recognition at cost. The cost of an intangible asset acquired in a business combination is the fair value at the date of acquisition. Subsequently, intangible assets

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no impairment. A reversal of an impairment loss is recognised immediately in profit or loss.

FINANCIAL INSTRUMENTS

Financial instruments are initially recognised when the group becomes a party to the contract. The group has adopted trade date accounting for “regular way” purchases or sales of financial assets. The trade date is the date that the group commits to purchase or sell an asset.

Financial instruments are initially measured at fair value plus transaction costs, except that transaction costs in respect of financial instruments classified at fair value through profit or loss are expensed immediately. Transaction costs are the incremental costs that are directly attributable to the acquisition of a financial instrument, i.e. those costs that would not have been incurred had the instrument not been acquired.

A contract is assessed for embedded derivatives when the entity first becomes a party to the contract. When the economic characteristics and risks of the embedded derivative are not closely related to the host contract, the embedded derivative is separated out, unless the host contract is measured at fair value through profit and loss.

The group determines the classification of its financial instruments at initial recognition.

Classification

The group’s classification of financial assets and financial liabilities are as follows:

Description of asset/liability Classification

Investments Available-for-sale

Preference share investments Held-to-maturity

Loans and advances receivable Loans and receivables

Loans to subsidiaries Loans and receivables

Trade and other receivables Loans and receivables

Cash and cash equivalents Loans and receivables

Loans payable and borrowings Other liabilities

Trade and other payables Other liabilities

Loans from subsidiaries Other liabilities

and use or sell the materials, products or services flowing from the project, how the project will generate future economic benefits, the availability of sufficient resources and the ability to measure reliably the expenditure during development. Otherwise development costs are recognised in profit or loss.

During the period of development, the asset is tested annually for impairment. Following the initial recognition of the development costs, the asset is carried at cost less accumulated amortisation and accumulated impairment losses. Amortisation begins when development is complete. The development costs are amortised over the period of expected future sales.

IMPAIRMENT

The group assesses tangible and intangible assets, excluding goodwill and indefinite life intangible assets, at each reporting date for an indication that an asset may be impaired. If such an indication exists, the recoverable amount is estimated as the higher of the fair value less costs to sell and the value in use. If the carrying value exceeds the recoverable amount, the asset is impaired and is written down to the recoverable amount. Where it is not possible to estimate the recoverable amount of an individual asset, the recoverable amount of the cash-generating unit to which the asset belongs is estimated.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, the hierarchy is firstly a binding arm’s length sale, then the market price if the asset is traded in an active market, and lastly recent transactions for similar assets.

Impairment losses of continuing operations are recognised in the income statement in those expense categories consistent with the function of the impaired asset.

A previously recognised impairment loss is reversed only if there is a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If this is the case, the carrying amount of the asset is increased to the revised recoverable amount, but not in excess of what the carrying amount would have been had there been

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Other liabilities

After initial recognition, liabilities that are not carried at fair value through profit or loss are measured at amortised cost using the effective interest rate method.

Gains and losses are recognised in the income statement when the liabilities are derecognised as well as through the amortisation process.

Fair value

The fair value of listed investments is the quoted market bid price at the close of business on the balance sheet date. For unlisted investments the fair value is determined using appropriate valuation techniques. Such techniques include using recent arm’s length market transactions, reference to the current market value of similar instruments, discounted cash flow analysis and option-pricing models.

Impairment of financial assets

The group assesses at each balance sheet date whether there is objective evidence that a financial asset, or group of assets, is impaired.

Available-for-sale financial assets

In the case of equity investments classified as available-for-sale, objective evidence would include a significant or prolonged decline in the fair value of the investment below its carrying value.

If an available-for-sale asset is impaired, the amount transferred from equity to the income statement is:

the difference between the asset’s acquisition cost (net of any principal payments and amortisation); and

its current fair value, less any impairment loss previously recognised in profit or loss.

Reversals in respect of equity instruments classified as available-for-sale are not recognised in profit or loss. Reversals of impairment losses on debt instruments are reversed through profit or loss if the increase in fair value of the instrument can be objectively related to an event occurring after the impairment loss was recognised in profit or loss.

Available-for-sale financial assets

These are non-derivative financial assets that are designated as available-for-sale or are not classified as loans and receivables or held-to-maturity investments or financial assets at fair value through profit or loss.

Available-for-sale financial assets are subsequently measured at fair value with unrealised gains or losses recognised directly in equity. When such a financial asset is disposed of the cumulative gain or loss previously recognised in equity is recognised in the income statement and interest earned on the financial asset is recognised in the income statement using the effective interest rate method. Dividends earned are recognised in the income statement when the right of receipt has been established.

Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities where there is a positive intention and ability to hold them to maturity.

After initial recognition, held-to-maturity assets are measured at amortised cost less impairment losses. Amortised cost is computed as the amount initially recognised minus the principal repayments, plus or minus the cumulative amortisation. Amortisation is calculated using the effective interest rate method. The effective interest rate method allocates interest over the relevant period using a rate that discounts the estimated future cash flows (excluding future credit losses) to the net carrying amount of the instrument. The rate calculation includes all fees, transaction costs, premiums and discounts.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial recognition, loans and receivables are measured at amortised cost less impairment losses.

Gains and losses are recognised in the income statement when the loans and receivables are derecognised or impaired, as well as through the amortisation process.

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Derivative instruments

Derivatives are financial instruments whose value changes in response to an underlying factor, require no initial or little net investment and are settled at a future date. Derivatives, other than those arising on designated hedges, are measured at fair value with changes in fair value being recognised in profit or loss.

Hedge accounting

At the inception of a hedge relationship, the group formally designates and documents the hedge relationship to which the group wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge. The documentation includes identification of the hedging instrument, the hedged item or transaction, the nature of the risk being hedged and how the entity will assess the hedging instrument’s effectiveness in offsetting the exposure to changes in the hedged item’s fair value or cash flows attributable to the hedged risk. Such hedges are expected to be highly effective in achieving offsetting changes in fair value or cash flows and are assessed on an ongoing basis to determine that they actually have been highly effective throughout the financial reporting periods for which they were designated.

Fair value hedges

Fair value hedges cover the exposure to changes in the fair value of a recognised asset or liability, or an unrecognised firm commitment (except for foreign currency risk). Foreign currency risk of an unrecognised firm commitment is accounted for as a cash flow hedge.

The gain or loss on the hedged item adjusts the carrying amount of the hedged item and is recognised immediately in profit and loss. The gain or loss from remeasuring the hedging instrument at fair value is also recognised in profit or loss.

When an unrecognised firm commitment is designated as a hedged item, the change in the fair value of the firm commitment is recognised as an asset or liability with a corresponding gain or loss recognised in profit or loss. The change in the fair value of the hedging instrument is also recognised in profit or loss.

The group discontinues fair value hedge accounting if the hedging instrument expires or is sold, terminated or

Assets carried at amortised cost

If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of the estimated future cash flows (excluding future expected credit losses) discounted at the asset’s original effective interest rate.

The carrying amount of the asset is reduced through the use of an allowance account, and is recognised in profit and loss.

The group assesses whether there is objective evidence of impairment individually for financial assets that are individually significant, and individually or collectively for financial assets that are not individually significant. In relation to trade receivables, a provision for impairment is made when there is objective evidence (such as the probability of insolvency or significant financial difficulties of the debtor) that the group will not be able to collect all of the amounts due under the original terms of the sale. The carrying amount of the receivable is reduced through use of an allowance account. Impaired debts are derecognised when they are assessed as uncollectible.

If, in a subsequent period, the amount of the impairment decreases and the decrease relates objectively to an event occurring after the impairment, it is reversed to the extent that the carrying value does not exceed the amortised cost. Any subsequent reversal of an impairment loss is recognised in profit or loss.

Held-to-maturity financial investments

For held-to-maturity investments the group assesses individually whether there is objective evidence of impairment. If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows. The carrying amount of the asset is reduced and the amount of the loss is recognised in the income statement.

If, in a subsequent year, the amount of the estimated impairment loss decreases because of an event occurring after the impairment was recognised, any amounts formerly charged are credited to the profit or loss.

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Derecognition of financial assets and financial liabilities

Financial assets or parts thereof are derecognised when:

the right to receive the cash flows have expired;

the right to receive the cash flows is retained, but an obligation to pay them to a third party under a ‘pass-through’ arrangement is assumed; or

the group transfers the right to receive the cash flows, and also transfers either all the risks and rewards, or control over the asset.

Financial liabilities are derecognised when the obligation is discharged, cancelled or expired.

NON-CURRENT ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS

An item is classified as held for sale if its carrying amount will be recovered principally through a sale transaction rather than through continuing use.

Assets classified as held for sale are not subsequently depreciated and are held at the lower of their carrying value and fair value less costs to sell.

A discontinued operation is a separate major line of business or geographical area of operation that has been disposed of, or classified as held for sale, as part of a single coordinated plan. Alternatively, it could be a subsidiary acquired exclusively with a view to resale.

Inventories

Inventories are stated at the lower of cost or net realisable value. Costs incurred in bringing each product to its present location and condition are accounted for as follows:

Raw materials: Purchase cost on a first-in first-out basis.

Finished goods and Cost of direct work in progress: material and labour and a

proportion of manufacturing overheads based on normal operating capacity but excluding borrowing costs.

Consumables are written down with regard to their age, condition and utility.

exercised, the hedge no longer meets the criteria for hedge accounting or the group revokes the designation.

Cash flow hedges

Cash flow hedges cover the exposure to variability in cash flows that are attributable to a particular risk associated with:

a recognised asset or liability; or

a highly probable forecast transaction; or

the foreign currency risk in an unrecognised firm commitment.

The portion of the gain or loss on the hedging instrument that is determined to be an effective hedge is recognised directly in equity, while any ineffective portion is recognised in the income statement.

Amounts taken to equity are transferred to the income statement when the hedged transaction affects profit or loss, such as when the hedged income or financial asset or liability is recognised or when the forecast sale or purchase occurs. Where the hedged item is the cost of a non-financial asset or liability, the amount deferred in equity is transferred to the initial carrying amount of the non-financial asset or liability.

If the forecast transaction is no longer expected to occur, amounts previously recognised in equity are transferred to profit or loss. If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover, or if its designation is revoked, amounts previously recognised in equity remain in equity until the forecast transaction occurs. If the related transaction is not expected to occur, the amount is taken to profit or loss.

Hedges of a net investment

Hedges of a net investment in a foreign operation, including a hedge of a monetary item that is accounted for as part of the net investment, are accounted for similarly to cash flow hedges. On consolidation, gains or losses on the hedging instrument relating to the effective portion of the hedge are recognised in equity, while any gains or losses relating to the ineffective portion are recognised in profit or loss. On disposal of the foreign operation, the cumulative gain or loss recognised in equity is transferred to profit or loss.

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Capitalised lease assets are depreciated in line with the group’s stated depreciation policy. If there is no reasonable certainty that the group will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of its estimated useful life and lease term.

Operating leases are those leases which do not fall within the scope of the above definition. Operating lease rentals are charged against trading profit on a straight-line basis over the lease term.

REVENUE

Revenue comprises turnover, dividend income and interest income. Revenue is recognised to the extent that it is probable that the economic benefits will flow to the group and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received/receivable excluding value added tax, normal discounts, rebates, settlement discounts, promotional allowances, and internal revenue which is eliminated on consolidation.

Turnover from the sale of goods is recognised when the significant risks and rewards of ownership have passed to the buyer, usually on dispatch of the goods.

Dividend income is recognised when the group’s right to receive payment is established. Non-resident shareholders’ taxation is provided in respect of foreign dividends receivable, where applicable.

Interest income is accrued on a time basis recognising the effective rate applicable on the underlying assets.

BORROWING COSTS

Borrowing costs are recognised as an expense when incurred.

TAXATION

The income tax expense represents the sum of normal tax payable (both current and deferred) and secondary taxation on companies.

Normal tax – current

The normal tax is based on taxable profit for the year. Taxable profit differs from profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years,

Costs of inventories include the transfer from equity of gains and losses on qualifying cash flow hedges in respect of the purchases of raw materials.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated completion and selling costs.

Provisions

Provisions are recognised when the group has a present legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

Where the group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the income statement net of any reimbursement.

If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

LEASES

At inception date an arrangement is assessed to determine whether it is, or contains, a lease. An arrangement is accounted for as a lease where it is dependent on the use of a specific asset and it conveys the right to use that asset.

Leases are classified as finance leases where substantially all the risks and rewards associated with ownership of an asset are transferred from the lessor to the group as lessee. Finance lease assets and liabilities are recognised at the lower of the fair value of the leased property or the present value of the minimum lease payments. Finance lease payments are allocated, using the effective interest rate method, between the lease finance cost, which is included in financing costs, and the capital repayment, which reduces the liability to the lessor.

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The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Unrecognised deferred tax assets are reassessed at each balance sheet date and recognised to the extent it has become probable that future taxable profit will allow the asset to be utilised.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised based on tax rates/laws that have been enacted or substantively enacted by the balance sheet date.

Deferred tax relating to items recognised directly in equity is recognised in equity and not in the income statement.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset and they relate to income taxes levied by the same taxation authority and the group intends to settle its current tax assets and liabilities on a net basis.

Secondary tax on companies

Secondary taxation on companies (STC) on dividends declared is accrued in the period in which the dividend is declared.

Value added tax

Revenues, expenses and assets are recognised net of the amount of value-added tax except:

where the value-added tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case the value-added tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and

receivables and payables that are stated with the amount of value-added tax included.

The net amount of value-added tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the balance sheet.

EMPLOYEE BENEFITS

A liability is recognised when an employee has rendered services for benefits to be paid in the future,

and it further excludes items that are never taxable or deductible. Normal tax may include under or over provisions relating to prior year taxation. The group’s liability for normal tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Normal tax relating to items recognised directly in equity is recognised in equity and not in the income statement.

Normal tax – deferred

Deferred tax is calculated on the balance sheet liability method, using the difference between the carrying amounts of assets and liabilities and their corresponding tax base used in the computation of taxable profit.

Deferred tax liabilities are recognised for taxable temporary differences:

except where the liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

except in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled, and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, where it is probable that the asset will be utilised in the foreseeable future:

except where the asset arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

except in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, only to the extent that it is probable that the differences will reverse in the foreseeable future, and taxable profit will be available against which these differences can be utilised.

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Valuations are based on assumptions which include employee turnover, mortality rates, discount rate based on current bond yields of appropriate terms, healthcare inflation costs and rates of increase in salary costs. Valuations of these obligations are carried out by independent qualified actuaries.

Actuarial gains or losses are recognised in the same manner as those of pension obligations.

SHARE-BASED PAYMENTS

Certain employees (including senior executives) of the group receive remuneration in the form of share-based payment transactions, whereby employees render services as consideration for equity instruments (“equity-settled transactions”) or share appreciation rights (“cash-settled transactions”).

Equity-settled share options granted before 7 November 2002

No expense is recognised in the income statement for such awards.

The group has taken advantage of the voluntary exemption provision of IFRS 1: First-time Adoption of International Financial Reporting Standards in respect of equity-settled awards and has applied IFRS 2: Share-based Payment – only to equity-settled awards granted after 7 November 2002 that had not vested on 1 January 2005.

Equity-settled and cash-settled share options granted after 7 November 2002

Equity-settled transactions

The cost of equity-settled transactions with employees is measured by reference to the fair value at the date on which they are granted. The fair value is determined by an external valuer using a modified version of the Black-Schöles model, further details of which are given in note 23.

The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (‘the vesting date’). The cumulative expense recognised reflects the extent to which the vesting period has expired and the group’s

and an expense when the entity consumes the economic benefit arising from the service provided by the employee.

In respect of defined contribution plans, the contribution paid by the company is recognised as an expense. If the employee has rendered the service, but the contribution has not yet been paid, the amount payable is recognised as a liability.

In respect of defined benefit plans, the company’s contributions are based on the recommendations of independent actuaries as determined using the projected unit credit actuarial valuation method.

Actuarial gains and losses are recognised in the income statement when the net cumulative unrecognised actuarial gains and losses for each individual plan at the end of the previous reporting period exceed 10% of the higher of the defined benefit obligation and the fair value of plan assets at that date. These gains or losses are recognised over the expected average remaining working lives of the employees participating in the plans.

Past-service costs are recognised as an expense on a straight-line basis over the average period until the benefits become vested. If the benefits vest immediately following the introduction of, or changes to, a defined benefit plan, the past-service cost is recognised immediately.

The defined benefit asset or liability recognised in the balance sheet comprises the present value of the defined benefit obligation, plus any unrecognised actuarial gains (minus losses), less unrecognised past-service costs, net actuarial losses and the fair value of plan assets out of which the obligations are to be settled. The value of an asset recognised is restricted to the sum of the unrecognised past-service costs and unrecognised actuarial gain or loss and the present value of any economic benefits available in the form of refunds from the plan or reductions in the future contributions.

Post-retirement medical obligations

The group provides post-retirement healthcare benefits to certain of its retirees based on the qualifying employee remaining in service up to retirement age. The expected costs of these benefits are accrued over the period of employment, using the projected unit credit method.

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A restriction on the BEE party to transfer the equity instrument subsequent to its vesting is not treated as a vesting condition, but is factored into the fair value determination of the instrument.

TREASURY SHARES

Shares in Tiger Brands Limited held by the group are classified within total equity as treasury shares. The shares acquired by the Black Managers Trust and Thusani Trust are accounted for as treasury shares in line with the consolidation requirement for special-purpose entities. Treasury shares are treated as a deduction from the issued and weighted average number of shares for earnings per share and headline earnings per share purposes, and the cost price of the shares is reflected as a separate component of capital and reserves in the balance sheet. Dividends received on treasury shares are eliminated on consolidation. No gain or loss is recognised in the income statement on the purchase, sale, issue or cancellation of treasury shares. Consideration received or paid in respect of treasury shares is recognised in equity.

CONTINGENT ASSETS AND CONTINGENT LIABILITIES

A contingent asset is a possible asset that arises from past events and whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the company. Contingent assets are not recognised as assets.

A contingent liability is a possible obligation that arises from past events and whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the company. Alternatively, it may be a present obligation that arises from past events but is not recognised because an outflow of economic benefits to settle the obligation is not probable, or the amount of the obligation cannot be measured with sufficient reliability. Contingent liabilities are not recognised as liabilities unless they are acquired as part of a business combination.

best estimate of the number of equity instruments that will ultimately vest. The income statement charge for a period represents the movement in the cumulative expense at the beginning and end of that period.

No expense is recognised for awards that do not ultimately vest.

Where the terms of an equity-settled award are modified, the expense is recognised as if the terms had not been modified. If, at the date of modification, the total fair value of the share-based payment is increased or is otherwise beneficial to the employee, the difference is recognised as an additional expense.

Where an equity-settled award is cancelled (other than forfeiture), it is treated as if it had vested on the date of cancellation, and any unrecognised expense recognised immediately. However, if a new award is substituted and designated as a replacement for the cancelled award, the cancelled and new awards are treated as if they were a modification of the original award, as described above.

The dilutive effect of outstanding equity-settled options is reflected as additional share dilution in the computation of earnings and headline earnings per share.

Cash-settled transactions

The cost of cash-settled transactions is measured initially at fair value at the grant date using a modified version of the Black-Schöles model, taking into account the terms and conditions upon which the instruments were granted (see note 23). This fair value is expensed over the period until vesting with recognition of a corresponding liability. The liability is remeasured at each balance sheet date up to and including the settlement date with changes in fair value recognised in profit or loss.

ACCOUNTING FOR BEE TRANSACTIONS

Where equity instruments are issued to a black economic empowerment (BEE) party at less than fair value, the instruments are accounted for as share-based payments in terms of the stated accounting policy.

Any difference between the fair value of the equity instrument issued and the consideration received is accounted for as an expense in the income statement.

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changes in economic factors, such as discount rates, could also impact this calculation. Further details are given in notes 11 and 12.

Residual values and useful lives of tangible and intangible assets

Residual values and useful lives of tangible and intangible assets are assessed on an annual basis. Estimates and judgements in this regard are based on historical experience and expectations of the manner in which assets are to be used, together with expected proceeds likely to be realised when assets are disposed of at the end of their useful lives. Such expectations could change over time and therefore impact both depreciation charges and carrying values of tangible and intangible assets in the future. Further details are given in notes 11 and 12.

Fair value of BEE share allocations

In calculating the amount to be expensed as a share-based payment, the group was required to calculate the fair value of the equity instruments granted to the BEE participants in terms of the staff empowerment transaction implemented in October 2005. This fair value was calculated by applying a valuation model which is in itself judgemental and takes into account certain inherently uncertain assumptions (detailed in note 23).

Had different assumptions been applied, this could have impacted the expense recognised.

Share-based payments

The group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. Estimating fair value requires determining the most appropriate valuation model for a grant of equity instruments, which is dependent on the terms and conditions of the grant. This also requires determining the most appropriate inputs to the valuation model including the expected life of the option, volatility and dividend yield and making assumptions about them. The assumptions and models used are disclosed in note 23.

POST-BALANCE SHEET EVENTS

Recognised amounts in the financial statements are adjusted to reflect significant events arising after the balance sheet date, but before the financial statements are authorised for issue, provided there is evidence of the conditions existing at the balance sheet date. Events after the balance sheet that are indicative of conditions that arose after the balance sheet date are dealt with by way of a note.

SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES

Judgements

In the process of applying the group’s accounting policies, management has made the following judgements, apart from those involving estimations, which has the most significant effect on the amounts recognised in the financial statements:

Consolidation of special-purpose entities

The special-purpose entities established in terms of the BEE transaction implemented in October 2005, have been consolidated in the group results. The substance of the relationship between the company and these entities has been assessed and the decision made that they are controlled entities.

Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below.

Carrying value of goodwill, tangible and intangible assets

Goodwill and indefinite life intangible assets are tested for impairment annually or more frequently if there is an indicator of impairment. Tangible assets and finite life intangible assets are tested when there is an indicator of impairment. The calculation of the recoverable amount requires the use of estimates and assumptions concerning the future cash flows which are inherently uncertain and could change over time. In addition,

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incurred could differ materially from those estimated at the balance sheet date. Further details are given in note 30.

STANDARDS AND INTERPRETATIONS NOT YET EFFECTIVE

The group has not applied the following IFRS and IFRIC Interpretations that have been issued but are not yet effective and will be adopted by the group when they become effective. These are as follows:

Amendments to IFRS 1 First time adoption of IFRS and IAS 27 Consolidated and Separate Financial statements. Cost of an investment in a subsidiary, jointly controlled entity or associate

This amendment provides guidance on the measurement of the cost of investments in subsidiaries, jointly controlled entities and associates when adopting IFRS for the first time. In addition, it removes the obligation for entities to distinguish between pre and post acquisition dividends. However, the entity must now consider if the receipt of such dividend is a possible indicator of impairment. The amendment is effective for financial periods beginning on or after 1 January 2009. The adoption of this amendment may have an impact on future dividends received from subsidiaries.

IFRS 1 Additional Exemptions for First-time Adopters

This amendment provides additional relief for some entities applying IFRS for the first time, in particular:

the measurement of oil and gas assets for entities using the “full cost accounting method” under local GAAP; and

the assessment of leasing contracts in accordance with IFRIC 4.

This amendment will have no impact on the company or group.

IFRS for Small and Medium-sized Entities (SMEs)

The IASB issued the IFRS for SMEs in July this year. The IASB undertook the project with the specific aim of publishing a standard that addresses the needs of SMEs and reduces the cost and burden of compliance with IFRS. The standard consists of 35 chapters addressing all the requirements for SMEs.

Deferred tax assets

Deferred tax assets are recognised for all unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies. Further details are contained in note 19.

Pension and other post-employment benefits

The cost of defined benefit pension plans and other post-employment medical benefits is determined using actuarial valuations. The actuarial valuation involves making assumptions about discount rates, expected rates of return on assets, future salary increases, mortality rates and future pension increases. Due to the long-term nature of these plans, such estimates are subject to significant uncertainty. Further details are given in notes 35 and 36.

Provisions

Best estimates, being the amount that the group would rationally pay to settle the obligation, are recognised as provisions at the balance sheet date. Risks, uncertainties and future events, such as changes in law and technology, are taken into account by management in determining the best estimates. Where the effect of discounting is material, provisions are discounted. The discount rate used is the pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability, all of which requires management judgement.

The establishment and review of the provisions requires significant judgement by management as to whether or not a reliable estimate can be made of the amount of the obligation.

The group is required to record provisions for legal or constructive contingencies when the contingency is probable of occurring and the amount of the loss can be reasonably estimated. Liabilities provided for legal matters require judgements regarding projected outcomes and ranges of losses based on historical experience and recommendations of legal counsel. Litigation is however unpredictable and actual costs

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managing such assets, as well as the cash flow characteristics of such instruments, in determining the appropriate classification and measurement of these items.

The mandatory effective date for IFRS 9 will be 1 January 2013, with early adoption of Phase 1 permitted for reporting periods ending on or after 31 December 2009.

IAS1 Presentation of Financial Statements

This standard is required for years commencing on or after 1 January 2009. The presentation of financial statements will change as a result of this revised standard. This will not have any quantitative effect on the group.

IAS 23 Borrowing Costs

This standard is required for years commencing on or after 1 January 2009. This standard has been revised to require capitalisation of borrowing costs when such costs relate to a qualifying asset. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use. The impact on the group can not be determined, but this impact is unlikely to be significant.

IAS 24 Related Party Disclosures (Amendment)

The IASB has issued a revised version of IAS 24 Related Party Disclosures that clarifies and simplifies the definition of a related party. The revised standard also provides some relief for government-related entities (as defined in the amended standard) to disclose details of all transactions with other government-related entities (as well as with the government itself). This standard may have an impact on the disclosure of related parties. The amendments become effective for annual periods beginning on or after 1 January 2011 and should be applied retrospectively.

IAS 27 Consolidated and Separate Financial Statements

This standard is required for years commencing on or after 1 July 2009. The most significant changes to the standard addresses the accounting for change in ownership interest of the subsidiary that does not result in a loss of control, the accounting for losses in a subsidiary and the accounting treatment for losses in control of a subsidiary. The revised standard will have an impact on the group should such events occur in future periods.

SMEs are defined as entities that do not have public accountability, and publish general purpose financial statements for external users. Therefore, the standard will not have an impact on the group.

IFRS 2 Amendment to IFRS 2 Share-based payment – Vesting Conditions and Cancellations

This amendment is effective for years commencing on 1 January 2009. This amendment provides more guidance on accounting for cancellations and non- vesting conditions. The amendment is not expected to have a material impact on the group.

IFRS 3 Business Combinations

This standard is required for years commencing on or after 1 July 2009. This standard has been revised. As a result the accounting for business combinations will change. One of the changes is that costs directly attributable to a business combination will be expensed and not capitalised as part of the acquisition costs. The impact on the group is not known but all future business combinations will be affected.

IFRS 8 Operating Segments

This standard is required for years commencing on or after 1 January 2009. This standard primarily deals with additional disclosures and, in certain instances, the restatement of comparative figures relating to the operating segments. This will not have any quantitative effect on the group.

IFRS 9 Financial Instruments: Recognition and Measurement

In November 2009 the IASB published IFRS 9 which deals with the classification and measurement of financial assets. This standard is part of the IASBs project to replace IAS 39. In order to expedite the replacement of IAS 39, the IASB divided the project into phases. The main focus of the first phase, which resulted in IFRS 9, is the classification and measurement of financial assets. The Board’s work on the other phases is currently ongoing, and includes: impairment of financial instruments, hedge accounting, financial liabilities and derecognition.

This standard addresses the classification and measurement of financial instruments. The standard is expected to have an impact on the group financial statements. The group will need to consider its financial assets in light of its business model for

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IFRIC 15 Agreements for the Construction of Real Estate

This standard is required for years commencing on or after 1 January 2009. This interpretation is to be applied retrospectively. It clarifies when and how revenue and related expenses from the sale of a real estate unit should be recognised if an agreement between a developer and a buyer is reached before the construction of the real estate is complete. Furthermore the interpretation provides guidance on how to determine whether an agreement is within the scope of IAS 11 or IAS 18. This amendment will not have any impact on the financial statements because the group is not involved in the sale or construction of real estate.

IFRIC 17 Distributions of Non-Cash Assets to Owners

This standard is required for years commencing on or after 1 June 2009. The interpretation provides guidance on the measurement of distributions of assets other than cash (non-cash assets). The impact of this interpretation is unknown.

IFRIC 18 Transfers of Assets from Customers

This standard is required for years commencing on or after 1 July 2009. This interpretation provides guidance on how to account for a transfer of assets from customers. This interpretation will not have an impact on the group.

Improvements to IFRS

May 2008 Improvement to IFRS

In May 2008 the IFRS Board issued its first omnibus of amendments to its standards, primarily with a view to removing inconsistencies and clarifying wording. Most of these are applicable for financial periods beginning on or after 1 January 2009. A description of the more significant changes is included below. These changes will have no material effect on the financial statements.

IFRS 7 Financial Instruments: Disclosures: Removal of the reference to ‘total interest income’ as a component of finance costs.

IAS 1 Presentation of Financial Statements: Assets and liabilities classified as held for trading in accordance with IAS 39 are not automatically classified as current in the balance sheet.

IAS 32 Financial Instruments: Presentation and IAS1 Presentation of Financial Statements – Puttable Financial Instruments and Obligations Arising on Liquidation

These amendments to IAS 32 and IAS 1 become effective for years commencing on or after 1 January 2009. The revisions provide a limited scope exception for puttable instruments to be classified as equity if a number of specified features are fulfilled. The amendments to the standards will have no impact on the financial position or performance of the group, as the group has not issued such instruments.

IAS 32 Financial Instruments: Presentation (Amendment)

The Amendment alters the definition of a financial liability in IAS 32 to classify rights issues and certain options or warrants (together, here termed rights) as equity instruments. This is applicable if the rights are given pro rata to all of the existing owners of the same class of an entity’s non-derivative equity instruments, in order to acquire a fixed number of the entity’s own equity instruments for a fixed amount in any currency. By changing the definition of a liability, these rights are no longer considered derivative instruments. Their fair value adjustments will no longer impact profit or loss. This amendment is unlikely to have an impact on the group.

The Amendment is effective for annual periods beginning on or after 1 February 2010. Early application is permitted. The Amendment, once effective, is to be applied retrospectively.

IAS 39 – Financial Instruments: Recognition and Measurement – Eligible Hedged Items

These amendments to IAS 39 become effective for years commencing on or after 1 July 2009. The amendment addresses the designation of a one-sided risk in a hedged item, and the designation of inflation as a hedged risk or portion in particular situations. It clarifies that an entity is permitted to designate a portion of the fair value changes or cash flow variability of a financial instrument as a hedged item. The group has concluded that the amendment will have no impact on the financial position or performance of the group, as the group has not entered into any such hedges.

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entity in the form of cash or repayment of loans applies. An investment in an associate is a single asset for the purpose of conducting the impairment test. Therefore, any impairment test is not separately allocated to the goodwill included in the investment balance.

IAS 29 Financial Reporting in Hyperinflationary Economies: Revised the reference to the exception to measure assets and liabilities at historical cost, such that it notes property, plant and equipment as being an example, rather than implying that it is a definitive list. Also, revised various terms used to be consistent with other IFRS.

IAS 31 Interest in Joint Ventures: If a joint venture is accounted for at fair value, in accordance with IAS 39, only the requirements of IAS 31 to disclose the commitments of the venturer and the joint venture, as well as summary financial information about the assets, liabilities, income and expense will apply.

IAS 34 Interim Financial Reporting: Earnings per share is disclosed in interim financial reports if an entity is within the scope of IAS 33.

IAS 36 Impairment of Assets: When discounted cash flows are used to estimate ‘fair value less cost to sell’ additional disclosure is required about the discount rate, consistent with disclosures required when the discounted cash flows are used to estimate ‘value in use’.

IAS 38 Intangible Assets: Expenditure on advertising and promotional activities is recognised as an expense when the group either has the right to access the goods or has received the service.

IAS 39 Financial Instruments: Recognition and Measurement: Changes in circumstances relating to derivatives are not reclassifications and therefore may be either removed from, or included in, the ‘fair value through profit or loss’ classification after initial recognition. Removed the reference in IAS 39 to a ‘segment’ when determining whether an instrument qualifies as a hedge. Require the use of the revised effective interest rate when remeasuring a debt instrument on the cessation of fair value hedge accounting.

IAS 40 Investment Property: Revision of the scope such that property under construction or development for future use as an investment property is classified as investment property. Also revised the conditions for

IAS 8 Accounting Policies, Change in Accounting Estimates and Errors: Clarifies that only implementation guidance that is an integral part of an IFRS is mandatory when selecting accounting policies.

IAS 10 Events after the Reporting Period: Clarifies that dividends declared after the end of the reporting period are not obligations.

IAS 16 Property, Plant and Equipment: Items of property, plant and equipment held for rental that are routinely sold in the ordinary course of business after rental, are transferred to inventory when rental ceases and they are held for sale. The term ‘net selling price’ was replaced with ‘fair value less costs to sell’.

IAS 18 Revenue: Replaces the term ‘direct costs’ with ‘transaction costs’ as defined in IAS 39.

IAS 19 Employee Benefits: Revised the definition of ‘past service costs’, ‘return on plan assets’ and ‘short-term’ and ‘other long-term’ employee benefits. Amendments to plans that result in a reduction in benefits related to future services are accounted for as curtailment. Deleted the reference to the recognition of contingent liabilities to ensure consistency with IAS 37.

IAS 20 Accounting for Government Grants and Disclosures of Government Assistance: Loans granted in the future with no or low interest rates will not be exempt from the requirement to impute interest. The difference between the amount received and the discounted amount is accounted for as government grants.

IAS 23 Borrowing Costs: The definition of borrowing costs is revised to consolidate the two types of items that are considered components of ‘borrowing costs’ into one – the interest expense calculated using the effective interest rate method calculated in accordance with IAS 39.

IAS 27 Consolidated and Separate Financial Statements: When a parent entity accounts for a subsidiary at fair value in accordance with IAS 39 in its separate financial statements, this treatment continues when the subsidiary is subsequently classified as held for sale.

IAS 28 Investment in Associates: If an associate is accounted for at fair value in accordance with IAS 39, only the requirement of IAS 28 to disclose the nature and extent of any significant restrictions on the ability of the associate to transfer funds to the

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take place but the risks and rewards of ownership have been transferred.

IAS 18 Revenue: This amendment provides guidance on when an entity is a principal or agent.

IAS 36 Impairment of Assets: This amendment was made to state that the largest unit permitted for allocating goodwill acquired in a business combination for the purpose of impairment testing is an operating segment as defined by IFRS 8 before aggregation. IAS 38 Intangible Assets: The amendment clarifies that if an intangible asset acquired in a business combination is identifiable only with another intangible asset, the acquirer may recognise the group of intangible assets as a single asset, provided the individual assets have similar useful lives. The amendment clarifies the valuation techniques an entity may use to determine the value of intangible assets in a business combination. IAS 39 Financial Instruments: Recognition and Measurement: The standard clarifies that the scope exemption for contracts between an acquirer and a vendor in a business combination to buy or sell an acquiree at a future date applies only to binding forward contracts entered into before the acquirer obtains control at a specified price or on a specified basis.

The standard scopes out any forward contracts between an acquirer and a selling shareholder to buy or sell an acquiree that will result in a business combination at a future acquisition date.

The amendment clarifies that a reclassification adjustment of the gain or losses on cash flow hedges should be recorded in the period that the hedged forecast cash flows affect profit or loss.

The impacts of the above amendments are not known. However, these are not expected to have a significant impact on the financial statements.

a voluntary change in accounting policy to be consistent with IAS 8 and clarified that the carrying amount of investment property held under lease is the valuation obtained increased by any recognised liability.

IAS 41 Agriculture: Removed the reference to the use of a pre-tax discount rate to determine fair value. Removed the prohibition to take into account cash flows resulting from any additional transformations when estimating fair value. Also replaced the term ‘point-of-sale costs’ with ‘costs to sell’.

April 2009 Improvements to IFRS

These improvements are mostly effective from 1 January 2010. The second omnibus of improvements to IFRS was issued in April 2009. A description of the more significant changes is included below. IFRS 2 Share-based Payment: This was amended to confirm that the contribution of a business on the formation of a joint venture and common control transactions are not within the scope of IFRS 2.

IFRS 5 Non-current Assets Held for Sale: This amendment clarifies that the disclosures required in respect of non-current assets (or disposal groups) classified as held for sale or discontinued operations are only those set out in IFRS 5.

IFRS 8 Operating Segments: This amendment clarifies that segment assets and liabilities need only be reported when included in measures used by the chief operating decision maker.

IAS 1 Presentation of Financial Statements: The amendment clarifies that the terms of a liability that could at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

IAS 7 Statement of Cash Flows: Clarifies that only an expenditure that results in a recognised asset can be classified as a cash flow from investing activities.

IAS 17 Leases: A lease of land may be classified as a finance lease even if the transfer of title does not

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Income statementsfor the year ended 30 September 2009

COMPANY GROUP2009 2008 (Rands in millions) Notes 2009 2008

Continuing operations883,1 3 653,4 Total revenues 2 20 642,5 19 169,7

Turnover 3 20 430,4 18 954,0

6,6 (0,5) Operating income/(loss) before abnormal items 4 3 133,4 2 522,6205,4 (643,3) Abnormal items 5 343,9 4,3

212,0 (643,8) Operating income/(loss) after abnormal items 3 477,3 2 526,9(82,8) (44,4) Interest paid 6.1 (436,3) (289,7)147,2 93,1 Interest received 6.2 181,6 206,6735,9 3 560,3 Dividend income 7 30,5 9,1

Income from associated companies 16 203,6 72,0

1 012,3 2 965,2 Profit before taxation 3 456,7 2 524,9(150,9) (54,4) Taxation 8 (977,7) (791,6)

861,4 2 910,8 Profit for the year from continuing operations 2 479,0 1 733,3Discontinued operationsProfit after tax for the year – Sea Harvest 41.1 55,0 101,0Profit after tax for the year – Healthcare business 41.2 — 510,6

861,4 2 910,8 Profit for the year 2 534,0 2 344,9

Attributable to:993,7 2 910,8 Ordinary shareholders 2 485,5 2 273,7

Minorities 48,5 71,2

993,7 2 910,8 2 534,0 2 344,9

Headline earnings per ordinary share (cents) 9 1 407 1 524Diluted headline earnings per ordinary share (cents) 9 1 398 1 517Basic earnings per ordinary share (cents) 9 1 583 1 440Diluted basic earnings per ordinary share (cents) 9 1 573 1 433

704 786Dividends and distributions out of capital per ordinary share (cents) 10.2 704 786

Headline earnings per ordinary share (cents) for continuing operations 1 382 1 150Diluted headline earnings per ordinary share (cents) for continuing operations 1 373 1 144Basic earnings per ordinary share (cents) for continuing operations 1 557 1 074Diluted basic earnings per ordinary share (cents) for continuing operations 1 547 1 069

Headline earnings per ordinary share (cents) for discontinued operations 25 375Diluted headline earnings per ordinary share (cents) for discontinued operations 25 373Basic earnings per ordinary share (cents) for discontinued operations 26 366Diluted basic earnings per ordinary share (cents) for discontinued operations 26 364

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Balance sheetsat 30 September 2009

COMPANY GROUP2009 2008 (Rands in millions) Notes 2009 2008

ASSETSNon-current assetsProperty, plant and equipment 11 2 202,7 2 369,2

Land and buildings 700,7 718,2Plant, vehicles and equipment 1 502,0 1 650,8Capitalised leased assets — 0,2

Goodwill and intangible assets 12 1 669,1 1 713,91 258,5 1 638,7 Interest in subsidiary companies 142 893,7 3 472,2 Amounts owed by subsidiaries 15

195,5 304,9 Investments 1 509,8 1 478,7

31,5 — Investments in associated companies 16 1 046,3 472,6161,6 302,5 Other investments 17 441,4 965,2

2,4 2,4 Loans 18 22,1 40,9

2,0 4,9 Deferred taxation asset 19 58,2 89,2431,9 590,2 Current assets 6 247,5 7 025,9

Inventories 20 3 059,9 3 364,717,9 26,8 Trade and other receivables 21 2 681,4 3 102,5

414,0 563,4 Cash and cash equivalents 22 506,2 558,7

4 781,6 6 010,9 Total assets 11 687,3 12 676,9

EQUITY AND LIABILITIES4 039,2 4 478,5 Issued capital and reserves 6 983,7 5 760,7

70,8 41,8 Ordinary share capital and premium 25 70,8 41,82 943,0 2 937,4 Non-distributable reserves 26 788,7 713,6

894,3 1 394,2 Accumulated profits 7 309,8 6 203,5Tiger Brands Limited shares held by subsidiary (817,7) (817,7)Tiger Brands Limited shares held by empowerment entities 27 (502,2) (502,2)

131,1 105,1 Share-based payment reserve 23 134,3 121,7

Minority interest 301,0 458,3

4 039,2 4 478,5 Total equity 7 284,7 6 219,0684,5 783,5 Non-current liabilities 965,3 1 141,9

9,1 3,8 Deferred taxation liability 28 156,1 316,5Provision for post-retirement medical aid 36 326,4 327,9

198,5 182,9 Long-term borrowings 32 482,8 497,5476,9 596,8 Amounts owed to subsidiaries 40

57,9 748,9 Current liabilities 3 437,3 5 316,0

49,5 239,2 Accounts payable 29 2 684,1 3 546,3Provisions 30 300,1 299,8Sea Harvest put option 31 — 81,4

0,2 — Taxation 52,3 54,68,2 509,7 Short-term borrowings 32 400,8 1 333,9

4 781,6 6 010,9 Total equity and liabilities 11 687,3 12 676,9

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Cash flow statementsfor the year ended 30 September 2009

COMPANY

Pro-formacontinuingoperations GROUP

2009 2008 (Rands in millions) Notes 2009 2009 2008

7,4 (0,5) Cash operating income from continuing operations A 3 472,5 3 472,5 2 973,7Cash operating income from discontinued operations A — 93,6 1 034,6

3 472,5 3 566,1 4 008,3

(15,5) 10,0 Working capital changes B (470,7) (424,7) (914,1)

(8,1) 9,5 Cash generated from/(utilised by) operations 3 001,8 3 141,4 3 094,2148,3 94,5 Interest received and income from investments 181,6 189,8 265,8(82,8) (44,4) Interest paid (436,3) (436,8) (462,2)

734,8 3 558,9Dividends received from associate companies and subsidiaries 79,2 86,7 55,2

(142,2) (66,0) Taxation paid C (1 007,6) (1 033,2) (1 059,1)Dividends received from discontinued operation – Sea Harvest 21,9 — —Payment of competition commission administrative penalties — — (152,3)

650,0 3 552,5 Cash available from operations – Continuing operations 1 840,6 1 947,9 1 741,6(1 361,3) (2 406,1) Dividends paid (including capital distribution) D (1 258,9) (1 267,8) (1 121,2)

(711,3) 1 146,4 Net cash inflow/(outflow) from operating activities 581,7 680,1 620,4

Purchase of property, plant, equipment and intangibles E (561,1) (603,9) (888,5)Proceeds from disposal of property, plant and equipment 6,8 6,8 18,4Cash cost of businesses acquired F (5,2) (5,2) (186,7)Cash cost of unbundling of Adcock Ingram Holdings Limited G — — (1 130,2)Net proceeds from disposal of businesses H 242,2 242,2 20,1Research, development and related expenditure — — (73,0)Repayment of investment loans 21,7 21,7 5,6

(5,2) (194,7) Investments acquired (3,7) (3,7) (8,4)(4,3) — Disposal of AVI shares (4,3) (4,3) —

575,8 0,2 Proceeds from disposal of investments 465,5 465,5 —452,8 (1 240,6) Other inflow/(outflow) I 10,4 13,3 1,8

1 019,1 (1 435,1) Net cash inflow/(outflow) from investing activities 172,3 132,4 (2 240,9)

307,8 (288,7) Net cash inflow/(outflow) before financing activities 754,0 812,5 (1 620,5)

29,0 40,0 Increase in shareholder funding J 29,0 29,0 46,2Cash outflow relating to an increase in treasury shares — — (259,6)Foreign long-term borrowings raised 92,3 92,3 183,5

(486,2) 597,1 Long- and short-term borrowings raised/(repaid) (21,0) (21,2) 514,2Capitalised finance leases repaid — — (4,5)Other outflow — — (21,1)

(457,2) 637,1 Net cash inflow/(outflow) from financing activities 100,3 100,1 458,7

Net cash inflow from discontinued operation 290,2 — —

(149,4) 348,4 Net increase/(decrease) in cash and cash equivalents 1 144,5 912,6 (1 161,8)563,4 215,0 Cash and cash equivalents at the beginning of the year K (957,3) (725,4) 436,4

414,0 563,4 Cash and cash equivalents at the end of the year L 187,2 187,2 (725,4)

2009 pro forma figures for continuing operations are presented to enhance comparability for future periods.

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Notes to the cash flow statementsfor the year ended 30 September 2009

COMPANY


2009 2008 (Rands in millions) 2009 2009 2008

A. Cash operating income6,6 (0,5) Operating income/(loss) before abnormal items 3 133,4 3 190,2 3 527,4

Add back:0,8 — Depreciation and other non-cash items 322,4 359,0 473,3

(Profit)/loss on sale of property, plant and equipment (1,0) (1,0) 6,1Provision for post-retirement medical aid 17,7 17,9 1,5

7,4 (0,5) Cash operating income/(loss) 3 472,5 3 566,1 4 008,3

Attributable to:Cash operating income from continuing operations 3 472,5 2 973,7Cash operating income from discontinued operations 93,6 1 034,6

3 566,1 4 008,3

B. Working capital changesIncrease in inventories (95,6) (64,3) (902,3)

(0,2) 34,2 Decrease/(increase) in accounts receivable 5,8 30,5 (491,0)(15,3) (24,2) (Decrease)/increase in accounts payable (380,9) (390,9) 479,2

(15,5) 10,0 Working capital changes (470,7) (424,7) (914,1)

C. Taxation paid

1,2 1,8Amounts (payable)/receivable at the beginning of the year, net (44,7) (54,6) (190,8)

(143,3) (66,6) Per income statements (1 030,5) (1 049,4) (984,1)Subsidiaries disposed of, net 14,6 17,8 62,7Exchange rate difference 0,7 0,7 (1,5)

(0,1) (1,2)Amounts receivable/(payable) at the end of the year, net 52,3 52,3 54,6

(142,2) (66,0) Total taxation paid (1 007,6) (1 033,2) (1 059,1)

D. Dividends paidAmounts accrued and payable at beginning of the year (7,3) (7,3) (9,8)

(1 361,3) (1 864,8) Per statement of changes in equity (1 244,8) (1 244,8) (636,9)

— (541,3)Capital distribution (net of group credit in respect of treasury and empowerment shares) — — (457,8)Dividends paid to outside shareholders (6,8) (15,7) (24,0)Amounts accrued and payable at the end of the year — — 7,3

(1 361,3) (2 406,1) Total dividends paid (1 258,9) (1 267,8) (1 121,2)

E. Purchase of property, plant, equipment and intangiblesExpansion (240,4) (240,4) (467,2)Replacement (320,7) (363,5) (402,6)Goodwill and trademarks acquired — — (18,7)

(561,1) (603,9) (888,5)

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Notes to the cash flow statements(continued) for the year ended 30 September 2009

COMPANY



F. Cash cost of businesses acquiredInventories (129,3)Accounts receivable (114,8)Accounts payable 98,2Taxation and deferred taxation 15,8Borrowings and cash, net 62,5Property, plant and equipment (148,5)Post-retirement medical aid 4,8Minorities 82,3Goodwill (5,2) (5,2) (17,8)Intangibles (54,7)

Total cost of businesses acquired (5,2) (5,2) (201,5)Add: Cash and cash equivalents acquired 14,8

Cash cost of businesses acquired (5,2) (5,2) (186,7)

G. Cash cost of unbundling of Adcock Ingram Holdings LimitedInventories 560,2Accounts receivable 960,8Accounts payable (490,4)Taxation and deferred taxation (55,7)Borrowings and cash, net (1 355,9)Property, plant and equipment 442,5Investments 170,8Post-retirement medical aid (13,5)Minorities (21,0)Goodwill 95,3Intangibles 127,8

Total cost of businesses unbundled — — 420,9Dividend in specie (1 551,1)

Cash cost of businesses unbundled — — (1 130,2)

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COMPANY



H. Net proceeds from disposal of businessesInventories 342,9 342,9 9,5Accounts receivable 387,1 387,1 3,1Goodwill and other intangibles 35,4 35,4 6,0Accounts payable (343,9) (343,9) —Post-retirement medical aid (19,5) (19,5) —Taxation and deferred taxation (96,9) (96,9) —Borrowings and cash 287,9 287,9 —Property, plant and equipment and investments 113,2 113,2 —Minorities (189,2) (189,2) —

517,0 517,0 18,6Profit on disposals 62,1 62,1 1,5Add: Cash and cash equivalents disposed (336,9) (336,9) —

Net proceeds of businesses disposed 242,2 242,2 20,1

I. Other inflows/(outflows)

484,2 (1 240,6)Net decrease/(increase) in loans to subsidiaries, associates and others 9,9 9,2 —

— — Receipt of pension fund investment 38,8 38,8 —(31,4) — Cash-related abnormal items (38,3) (34,7) 1,8

452,8 (1 240,6) 10,4 13,3 1,8

J. Increase in shareholder funding29,0 40,0 Proceeds from issue of share capital 29,0 29,0 46,2

29,0 40,0 29,0 29,0 46,2

K. Cash and cash equivalents at the beginning of the year

563,4 215,0 Cash resources 326,8 558,7 573,2

— —Short-term borrowings regarded as cash and cash equivalents (1 284,1) (1 284,1) (136,8)

563,4 215,0 (957,3) (725,4) 436,4

L. Cash and cash equivalents at the end of the year

414,0 563,4 Cash resources 506,2 506,2 558,7

— —Short-term borrowings regarded as cash and cash equivalents (334,1) (334,1) (1 284,1)

414,0 563,4 172,1 172,1 (725,4)— — Effect of exchange rate changes 15,1 15,1 —

414,0 563,4 187,2 187,2 (725,4)

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(Rands in millions)

Sharecapital

andpremium

Non-distribu-

tablereserves

Accumu-lated

profits

Sharesheld by

subsidiaryand

empower-ment trusts

Sharebased

paymentreserve

Totalattribu-table to

ordinaryshare-

holders Minorities Total

GROUP

Balance at 30 September 2007 536,9 526,5 6 074,8 (1 473,1) 119,9 5 785,0 213,6 5 998,6Net profit for the year 2 273,7 2 273,7 71,2 2 344,9Fair value adjustments recognised in equity* 164,4 164,4 164,4Foreign currency translation reserve movement (18,7) (18,7) (18,7)

Total income and expenses for the period 536,9 672,2 8 348,5 (1 473,1) 119,9 8 204,4 284,8 8 489,2Issue of share capital and premium 46,2 46,2 46,2Capital distribution out of share premium – final (499,8) 42,0 (457,8) (457,8)Distribution in specie in respect of unbundling of Adcock Ingram Holdings Limited (41,5) (1 450,5) (33,3) (1 525,3) (25,8) (1 551,1)Minority interest arising from unbundling of Adcock Ingram Holdings Limited — 138,0 138,0Movement in treasury shares as a result of unbundling of Adcock Ingram Holdings Limited 370,8 370,8 370,8Share buyback (259,6) (259,6) (259,6)Transfers between reserves 41,4 (41,4) — —Other reserve movements 35,1 35,1 35,1Dividends on ordinary shares (636,3) (636,3) (23,5) (659,8)

Total dividends (694,5) (694,5) (23,5) (718,0)Less: Dividends on treasury and empowerment shares 58,2 58,2 — 58,2

Arising on changes in and acquisition of subsidiaries and joint ventures (16,8) (16,8) 84,8 68,0

Balance at 30 September 2008 41,8 713,6 6 203,5 (1 319,9) 121,7 5 760,7 458,3 6 219,0

Net profit for the year 2 485,5 2 485,5 48,5 2 534,0Fair value adjustments recognised in equity* (43,1) (43,1) (43,1)Foreign currency translation reserve movement (36,4) (36,4) (36,4)

Total income and expenses for the period 41,8 634,1 8 689,0 (1 319,9) 121,7 8 166,7 506,8 8 673,5Issue of share capital and premium 29,0 29,0 29,0Adjustment due to finalisation of African acquisitions — (2,5) (2,5)Transfers between reserves 157,4 (157,4) — —Other reserve movements 14,8 28,2 43,0 43,0Reclassification from joint venture to associate 2,3 (12,8) (10,5) (13,7) (24,2)Dividends on ordinary shares (1 244,8) (1 244,8) (14,1) (1 258,9)

Total dividends (1 362,7) (1 362,7) (23,7) (1 386,4)Less: Dividends on treasury and

empowerment shares 117,9 117,9 9,6 127,5

Adjustment due to sale of Sea Harvest (2,8) 5,9 (2,8) 0,3 (175,5) (175,2)

Balance at 30 September 2009 70,8 788,7 7 309,8 (1 319,9) 134,3 6 983,7 301,0 7 284,7

Refer to note: 25 26 27 23

*Relates to available-for-sale financial instruments.

Statements of changes in equityfor the year ended 30 September 2009

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(Rands in millions)

Sharecapital

andpremium

Non-distribu-

tablereserves

Accumu-lated

profits

Sharebased

paymentreserve

Totalattribu-table to

ordinaryshare-

holders

COMPANY

Balance at 30 September 2007 536,9 2 943,4 348,2 106,0 3 934,5

Net profit for the year 2 910,8 2 910,8Fair value adjustments recognised in equity* (6,0) (6,0)

Total income and expenses for the period 536,9 2 937,4 3 259,0 106,0 6 839,3Issue of share capital and premium 46,2 46,2Capital distribution out of share premium – interim (499,8) (499,8)Distribution in specie in respect of unbundling of Adcock Ingram Holdings Limited (41,5) (41,5)Other reserve movements (0,9) (0,9)Dividends on ordinary shares (1 864,8) (1 864,8)

Balance at 30 September 2008 41,8 2 937,4 1 394,2 105,1 4 478,5

Net profit for the year 861,4 861,4Fair value adjustments recognised in equity* 5,6 5,6

Total income and expenses for the period 41,8 2 943,0 2 255,6 105,1 5 345,5Issue of share capital and premium 29,0 29,0Other reserve movements 26,0 26,0Dividends on ordinary shares (1 361,3) (1 361,3)

Balance at 30 September 2009 70,8 2 943,0 894,3 131,1 4 039,2

Refer to note 25 26 23

*Relates to available-for-sale financial instruments.

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1. Business combinations1.1 Crosse & Blackwell

On 1 October 2009 Tiger Brands acquired the Crosse & Blackwell mayonnaise business from Nestlé. The acquisition included both the mayonnaise production plant and staff in Bellville, Cape Town, as well as inventory and intangible assets. The purchase consideration to be accounted for from 1 October 2009 comprises the following:

(Rands in millions)

Trademarks 250,0Land and buildings 50,0Plant and equipment 27,7Inventories 74,5

Fair value of assets acquired 402,2Goodwill 72,3

Purchase consideration 474,5

Apart from plant and equipment and inventories, where the carrying value approximated fair value, the carrying values of the remaining assets at the date of acquisition, being trademarks and land and buildings, are not disclosed as these values were not made available to the company during the sale transaction.

Since the effective date of the transaction was subsequent to 30 September 2009, the acquisition has not contributed any revenue, operating income or profit after tax to the 2009 group results.

Goodwill represents the difference between the purchase consideration and the fair value of the net assets acquired as there are no further separately identifiable intangible assets.

Refer also to note 42 relating to subsequent events.

1.2 African acquisitions

On 1 June 2008 the group acquired 51,0% of Haco Industries (Kenya) Limited (“Haco”) and on 1 August 2008 the group acquired 74,7% of Chocolaterie Confiserie Camerounaise Sa (“Chococam”), collectively referred to as the “African acquisitions”.

The functional currency of Haco is the Kenyan shilling, whilst Chococam is the Cameroon franc.

Notes to the financial statementsfor the year ended 30 September 2009

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1. Business combinations (continued)

1.2 African acquisitions (continued)

The fair value of the identifiable assets and liabilities of the African acquisitions were:

Restated Previously Carryingrecognised recognised value

on on at date of(Rands in millions) acquisition acquisition acquisition

Property, plant and equipment 147,3 145,6 145,6Trademarks 53,3 54,1 0,8Deferred taxation asset 1,5 1,5 1,5Deposits, cash and cash equivalents 12,1 12,1 12,1Debtors 111,0 111,0 111,0Inventories 116,3 126,5 126,5

Fair value of assets acquired 441,5 450,8 397,5

Creditors and provisions 98,4 94,8 94,8Long-term and short-term borrowings 76,6 76,6 76,6Provision for post-retirement medical aid 4,8 4,8 4,8Taxation payable 2,3 2,3 2,3Deferred taxation liability 14,3 14,3 14,3

Fair value of liabilities acquired 196,4 192,8 192,8

Fair value of net assets acquired 245,1 258,0 204,7

Minority interest (79,5) (82,0)Goodwill arising on acquisition 32,6 17,9

Purchase consideration 198,2 193,9

During the course of 2009, certain adjustments were made to the amounts recognised on acquisition, as permitted by IFRS 3 – Business Combinations.

The effect of the adjustments resulted in a reclassification between trademarks and property, plant and equipment, as well as a restatement of property, inventories and creditors, and a corresponding adjustment to goodwill.

In addition, the deferred purchase price was finalised resulting in a final adjustment to goodwill and the purchase consideration.

The total cost of the acquisition was R198,2 million (2008: R193,9 million) which was funded out of external resources.

Cash outflow on acquisition:Net cash acquired on acquisition (12,1) (12,1)Cash paid 198,2 184,2

Net cash outflow 186,1 172,1

From the date of acquisition to September 2008, the African acquisitions contributed R126,6 million to revenue from continuing operations and R7,6 million to group operating income.

Should the African acquisitions have been included from 1 October 2007 to 30 September 2008, their contributions are estimated to have been R536,2 million to revenue and R21,4 million to profit after tax before accounting for acquisition financing costs. The group’s share of the R21,4 million profit after tax before accounting for acquisition financing costs was R15,4 million.

The significant factors that contributed to the recognition of goodwill included, but were not limited to, the establishment of a presence within the Central and East African markets, with local management and distribution capabilities to drive the group’s product sales into the various channels and customers that exist within those markets.

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Notes to the financial statements(continued) for the year ended 30 September 2009

COMPANY GROUP2009 2008 (Rands in millions) 2009 2008

2. Total revenues Turnover 20 430,4 18 954,0

147,2 93,1 Interest received 181,6 206,6735,9 3 560,3 Dividend income 30,5 9,1

883,1 3 653,4 20 642,5 19 169,7

3. Turnover comprises: Turnover denominated in foreign currencies 2 138,8 1 879,6 Turnover denominated in functional currency 18 291,6 17 074,4

20 430,4 18 954,0

Turnover is net of value-added tax, normal discounts, rebates and promotional allowances.

4. Operating income

4.1 Analysis of expenses Cost of sales 13 282,5 12 574,6 Sales and distribution expenses 2 506,0 2 471,7 Marketing expenses 529,8 472,7 Other operating expenses 978,7 912,4

4.2 Operating income has been determined after charging/(crediting):

External auditors’ remuneration0,1 0,2 – Audit fees 16,2 15,3

– Other fees and expenses 2,1 1,3 Internal auditors’ remuneration 5,3 4,6 Depreciation – On buildings 24,2 24,2 – On plant, equipment, vessels and vehicles 237,5 219,9 – On capitalised leased assets 0,2 1,4 Amortisation – On trademarks 4,9 4,1 – On licence agreements, supplier relationships and

other intangibles 0,6 0,1

1,0 0,6 Fees paid for administrative, managerial and

technical services 76,7 70,2 Operating lease charges – On land and buildings 41,9 41,1 – On plant, equipment and vehicles 80,7 73,0 Net loss on disposal of plant, equipment and

vehicles 1,2 5,9 Research, development and related expenditure – Research and development expenditure 17,8 18,5 Staff costs 1 808,0 1 622,1 Employer’s contribution to defined contribution

retirement funding 123,0 123,7 Employer’s contribution to medical aid 75,5 67,5

(14,0) (0,6) Foreign exchange profit (24,9) (7,0)

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4. Operating income (continued)4.3 Directors’ emoluments Executive directors – salaries and bonuses 24,0 17,3 – retirement, medical and other benefits 4,7 4,9 Non-executive directors

3,4 4,2 – fees 3,4 4,2

3,4 4,2 Total directors’ emoluments 32,1 26,4 Less: Paid by subsidiaries 28,7 22,2

3,4 4,2 Emoluments paid by company 3,4 4,2

Refer to page 48 of the sustainability report for further details pertaining to directors’ emoluments.

4.4 Directors’ service contracts No directors have service contracts with notice

periods of more than three months.

5. Abnormal items5.1 Loss on sale of property, plant and equipment

and intangibles, including impairment charges (11,7) (129,5)

355,1 0,4 Net profit on sale of interest in subsidiaries

and joint ventures 62,7 10,6(4,3) — Loss on sale of investments (4,3) —

Profit on sale of investments, including reversal of impairment 234,3 3,8

(29,8) — Costs relating to the unsuccessful attempt to acquire

AVI Limited (29,8) —(12,0) — Empowerment transaction costs (12,0) —

Release of provision for Sea Harvest put option 81,4 — Release of provision for Healthcare unbundling costs 1,1 2,1 Recognition of pension fund surpluses 27,5 127,0

— (600,0) Waiver of loan due to deregistration of subsidiaries25,3 (48,5) Exchange rate translation of Mauritian loan

(132,3) — Impairment of investment in dormant subsidiary3,4 4,8 Other (5,3) (9,7)

205,4 (643,3) Abnormal profit before taxation 343,9 4,3 Income tax expense (36,7) (39,7)

205,4 (643,3) Attributable to shareholders in Tiger Brands Limited 307,2 (35,4)

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5. Abnormal items (continued)5.2 Asset impairments The following asset (impairments)/impairment

reversals are included in abnormal items above: The impairments are shown before tax and

minority interests: Reversal of impairment of investments — 0,3 Impairment of property, plant and equipment (7,6) (14,3) Impairment of intangible assets (4,0) (113,0)

(11,6) (127,0)

The value-in-use method was used in assessing impairments and the discount rate used was 11,4% (2008: 12,75%) for the whole group and 16,0% (2008: 16,1%) for the fishing business and Langeberg & Ashton Foods.

Included in abnormal items from continuing operations is an amount of R4,0 million relating to the impairment of goodwill and trademarks in respect of the pre-prepared meals division of the Out of Home business, as well as R7,6 million in respect of plant and equipment. The impairments are attributable to the expected reduction in the future profit stream of the business.

Refer to note 13 for further details.

Included in the September 2008 abnormal items from continuing operations was the impairment of goodwill relating to the Bromor Foods acquisition in August 2006. The impairment amounted to R112,3 million and was largely attributable to the expected reduction in the future profit stream, as well as an increase in the discount rate applied to the future cash flows of the business.

Also included in the 2008 impairment charge is property, plant and equipment relating to the closure and relocation of one manufacturing site for the Out of Home business and the closure of one manufacturing line for the Beverages business. The recoverable amount was based on fair value less costs to sell for these assets.

6. Interest(82,8) (44,4) 6.1 Interest paid (436,3) (289,7)

– Finance lease charges — (0,6)(19,9) (3,7) – Long-term borrowings (52,3) (39,1)(62,8) (39,3) – Bank and other short-term borrowings (365,8) (226,1)

(0,1) (1,4) – Other (18,2) (23,9)

147,2 93,1 6.2 Interest received 181,6 206,6

28,0 2,8 – From subsidiary companies117,8 89,2 – From cash and cash equivalents 165,4 201,4

1,4 1,1 – From other sources 16,2 5,2

64,4 48,7 Net interest (paid)/received (254,7) (83,1)

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7. Dividend income734,8 3 558,9 From subsidiary companies and joint ventures

From investment of employer-controlled reserve invested by pension fund on behalf of Tiger Brands Limited 12,5 (1,2)

From other investments1,0 1,3 – listed 12,7 1,60,1 0,1 – unlisted 5,3 8,7

735,9 3 560,3 30,5 9,1

8. Taxation27,5 16,6 8.1 South African current taxation 769,8 666,8

115,5 50,8 Secondary tax on companies 122,5 46,1— — Foreign taxes 25,4 8,3

143,0 67,4 917,7 721,21,1 0,2 Deferred taxation 21,1 29,1

144,1 67,6 938,8 750,3(0,3) (0,8) Adjustments in respect of previous years – current 1,7 (4,0)

– foreign taxation — (1,3)— (2,2) – deferred 0,6 6,9

143,8 64,6 941,1 751,9 Taxation on abnormal items – current 31,8 1,8

7,1 (10,2) – deferred 4,8 37,9

150,9 54,4 977,7 791,6

Income tax expense reported in the consolidated income statement 977,7 791,6

Income tax attributable to discontinued operations 19,7 232,9

997,4 1 024,5

% %8.2 The reconciliation of the effective rate of taxation

with the statutory taxation rate is as follows: % %

14,9 1,8 Taxation for the year as a percentage of income

before taxation 28,3 31,420,3 33,6 Dividend income 0,2 0,2(4,7) (5,7) Expenses and provisions not allowed for taxation (1,1) (2,4)

(11,4) (1,7) Secondary tax on companies (3,5) (1,8)

0,1 Reversal of expenditure previously disallowed

for taxation 0,7 —8,8 Tax effect of capital profits 1,2 (0,2)

Income from associates 1,6 0,8 Effect of differing rates of foreign taxes, prior year

adjustments and timing differences not provided for and other sundries 0,6 —

28,0 28,0 Rate of South African company taxation 28,0 28,0

Losses available to reduce future taxable income — 18,8

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8. Taxation (continued)8.3 Reconciliation of movement on deferred

taxation Movement recognised in income statement

this year1,1 0,2 Current year charge 21,1 33,6— (2,2) Adjustments in respect of previous years 0,6 6,5

7,1 (10,2) Deferred tax on abnormal items 4,8 37,9

8,2 (12,2) 26,5 78,0

Movement per deferred tax accounts0,9 (4,0) Decrease/(increase) in deferred taxation asset 22,1 47,07,3 (8,2) Increase/(decrease) in deferred taxation liability 4,4 31,0

8,2 (12,2) 26,5 78,0 Movement relating to discontinued operation — (4,1)

8,2 (12,2) 26,5 73,9

9. Calculation of weighted average number of shares for headline earnings per share and basic earnings per share purposes

9.1 Opening balance of number of ordinary shares 162 716 406 163 757 905 Weighted number of ordinary shares – Issued 191 445 173 211 Weighted number of ordinary shares

– Share buyback — (142 412) Weighted number of shares held for BEE deal (5 896 140) (5 896 140)

Weighted average number of shares in issue 157 011 711 157 892 564

Anti-dilutive instruments not included in the weighted average number of shares in issue 239 700 1 208 200

9.2 Weighted average number of shares in issue 157 011 711 157 892 564 Share options dilution 1 009 922 744 211

Adjusted number of ordinary shares for diluted headline and basic earnings per share purposes 158 021 633 158 636 775

9.3 Headline earnings (Rm) 2 209,8 2 406,5 Income attributable to ordinary

shareholders (Rm) 2 485,5 2 273,7

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9. Calculation of weighted average number of shares for headline earnings per share and basic earnings per share purposes (continued)

9.4 Reconciliation between profit for the year and headline earnings (Rands in millions) Gross Tax Net

2009 2 485,5 Profit attributable to ordinary shareholders Adjusted for: Net profit on sale of interest in subsidiaries and joint ventures (62,7) — (62,7) Loss on sale of property, plant and equipment, including

impairment charge on intangibles 5,3 (1,8) 3,5 Net profit on sale of investments (230,0) 33,2 (196,8) Associates (16,6) — (16,6)

Profit on sale of partial interest in subsidiary (16,6) — (16,6)

Other (3,6) 0,5 (3,1)

Headline earnings for the year (307,6) 31,9 2 209,8

2008 Profit attributable to ordinary shareholders 2 273,7 Adjusted for: Net profit on sale of interest in subsidiaries and joint ventures (9,4) 0,7 (8,7) Loss on sale of property, plant and equipment, including

impairment charge on intangibles 141,1 0,6 141,7 Reversal of impairment including net profit on sale Associates 1,2 0,2 1,4

Profit on sale of property, plant and equipment (1,5) 0,2 (1,3) Impairment of property, plant and equipment 2,7 — 2,7

Other (2,8) 1,2 (1,6)

Headline earnings for the year 130,1 2,7 2 406,5

9.5 Reconciliation between profit for the year and headline earnings Discontinued operations 2009 Profit attributable to ordinary shareholders 41,1 Adjusted for: Profit on sale of property, plant and equipment, including

impairment charges on intangibles (1,7) 0,3 (1,4)

Headline earnings for the year (1,7) 0,3 39,7

2008 Profit attributable to ordinary shareholders 577,8 Adjusted for: Loss on sale of property, plant and equipment, including

impairment charges on intangibles 17,2 — 17,2 Net profit on sale of interest in subsidiaries (3,5) — (3,5)

Headline earnings for the year 13,7 — 591,5

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10. Dividends and capital reductions

1 361,3 2 406,110.1 Dividends and capital distributions on ordinary

shares 1 244,8 2 306,9

— 270,6 Final dividend No 126 of 157 cents per share

– paid — 247,9

— 499,8 Capital distribution No 126 of 290 cents

per share – paid — 457,8

— 422,9 Interim dividend No 127 of 245 cents per share

– paid — 387,4

— 41,5 Distribution in specie in respect of unbundling

of Adcock Ingram Holdings Limited — 41,5

— 1 171,3 Dividend paid in respect of unbundling of

Adcock Ingram Holdings Limited — 1 171,3— — Dividend paid to Thusani Trust 1,2 1,0

936,4 — Final dividend No 128 of 541 cents per share

– paid 855,4 —

424,9 — Interim dividend No 129 of 245 cents per share

– paid 388,2 —

704,0 786,010.2 Dividends and capital distributions per ordinary

share (cents) 704,0 786,0

— 245,0 Interim dividend No 127 declared

19 May 2008 — 245,0

245,0 — Interim dividend No 129 declared

18 May 2009 245,0 —— 541,0 Final dividend No 128 – declared post year-end — 541,0

459,0 — Capital distribution No 130 – declared post

year-end 459,0 —

11. Property, plant and equipment11.1 Freehold land and buildings 667,9 635,0 Cost 849,5 818,5 Accumulated depreciation (181,6) (183,5)11.2 Leasehold land and buildings 32,8 83,2 Cost 46,1 142,7 Accumulated depreciation (13,3) (59,5)

Total land and buildings 700,7 718,211.3 Details of the individual properties are contained

in a register which is open for inspection at the registered office of the company.

11.4 Land and buildings and plant and machinery having a book value of R40,5 million (2008: R6,4 million), are mortgaged/pledged as security for long-term loans of R36,0 million (2008: Rnil) included in note 32.1 and capitalised finance leases of R2,0 million (2008: R6,4 million) as per note 32.3.

11.5 Plant, vehicles, vessels and equipment 1 502,0 1 650,8 Cost 3 411,6 3 875,9 Accumulated depreciation (1 909,6) (2 225,1)11.6 Capitalised leased assets — 0,2 Cost 0,2 12,5 Accumulated depreciation (0,2) (12,3)

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GROUP Plant,vehicles,

Freehold Leasehold vessels Capitalisedland and land and and leased

(Rands in millions) buildings buildings equipment assets Total

11. Property, plant and equipment (continued)

11.7 Movement of the group property, plant and equipment

2009 Net balance at the beginning of the year 635,0 83,2 1 650,8 0,2 2 369,2 Discontinued operations (0,7) (18,7) (268,6) — (288,0)

Net balance at the beginning of the year – continuing operations 634,3 64,5 1 382,2 0,2 2 081,2

Adjustments to at-acquisition values of business combinations — — 0,9 — 0,9

Reclassification of at-acquisition values of business combinations — — 0,8 — 0,8

Reclassification 11,8 (3,3) (8,5) — — Reclassification of Oceana from joint

venture to associate (15,7) (17,7) (122,2) — (155,6) Additions 58,5 0,5 502,1 — 561,1

688,9 44,0 1 755,3 0,2 2 488,4 Disposals — — (4,0) — (4,0) Impairment — (3,2) (4,4) — (7,6) Depreciation (21,0) (3,2) (237,5) (0,2) (261,9) Exchange rate translation difference — (4,8) (7,4) — (12,2)

Net balance at the end of the year 667,9 32,8 1 502,0 — 2 202,7

2008 Net balance at the beginning of the year 586,2 45,5 1 282,4 1,6 1 915,7 Business combinations 1,0 46,0 101,5 — 148,5 Transfer from discontinued operation 0,8 — 5,1 — 5,9 Additions 67,2 2,5 572,1 — 641,8

655,2 94,0 1 961,1 1,6 2 711,9 Disposals (1,5) — (3,9) — (5,4) Transfer to discontinued operation — — (23,9) — (23,9) Impairment — — (14,3) — (14,3) Depreciation (18,7) (7,6) (267,4) (1,4) (295,1) Exchange rate translation difference — (3,2) (0,8) — (4,0)

Net balance at the end of the year 635,0 83,2 1 650,8 0,2 2 369,2

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GROUP(Rands in millions) 2009 2008

12. Goodwill and intangible assets

12.1 Trademarks 561,9 576,9

Cost 575,7 587,6 Accumulated amortisation (13,8) (10,7)

12.2 Goodwill 1 083,8 1 093,3

Cost 1 185,2 1 205,6 Adjustments to at acquisition values of business combinations 14,7 — Accumulated impairment/amortisation (116,1) (112,3)

12.3 Licence agreements and supplier relationships 23,2 25,8

Cost 25,8 25,8 Reclassification of at-acquisition values of business combinations (0,8) — Accumulated amortisation (1,8) —

12.4 Fishing rights — 17,7

Cost — 21,3 Accumulated amortisation — (3,6)

12.5 Other intangible assets 0,2 0,2

Cost 0,3 0,3 Accumulated amortisation (0,1) (0,1)

Total goodwill and intangible assets 1 669,1 1 713,9

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GROUP Licenceagreements Other

Trade- and supplier Fishing intangible(Rands in millions) marks Goodwill relationships rights assets Total

12. Goodwill and intangible assets (continued)

12.6 Reconciliation of goodwill and intangible assets

Movement of group goodwill and intangible assets

2009 Net balance at the

beginning of the year 576,9 1 093,3 25,8 17,7 0,2 1 713,9 Adjustment to

accumulated amortisation — — (1,2) — — (1,2) Discontinued operations — — (17,7) — (17,7)

Net balance at the beginning of the year – continuing operations 576,9 1 093,3 24,6 — 0,2 1 695,0

Reclassification of at-acquisition values of business combinations (0,8) (0,8)

Business combinations 14,7 14,7 Reclassification of

Oceana from joint venture to listed associate (9,1) (19,6) (28,7)

567,8 1 088,4 23,8 — 0,2 1 680,2 Amortisation (4,9) (0,6) (5,5) Impairment (0,2) (3,8) (4,0) Exchange rate

translation difference (0,8) (0,8) (1,6)

Net balance at the end of the year 561,9 1 083,8 23,2 — 0,2 1 669,1

2008 Net balance at the

beginning of the year 511,1 1 210,1 23,3 24,0 2,2 1 770,7 Business combinations 53,6 18,0 0,8 — — 72,4 Reclassification 16,3 (16,3) — — — — Transfer (to)/from

discontinued operations 0,7 (0,5) 1,7 — (1,9) —

581,7 1 211,3 25,8 24,0 0,3 1 843,1 Disposals — (6,0) — (4,4) — (10,4) Amortisation (4,1) — — (1,9) (0,1) (6,1) Impairment (0,8) (112,3) — — — (113,1) Exchange rate

translation difference 0,1 0,3 — — — 0,4

Net balance at the end of the year 576,9 1 093,3 25,8 17,7 0,2 1 713,9

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12. Goodwill and intangible assets (continued)12.6 Goodwill and intangible assets (continued) The carrying value of goodwill at 30 September 2009 is allocated to

cash-generating units as follows: Home and Personal care 156,5 156,5 Designer Group 308,4 308,4 Bromor 580,5 581,1 Oceana — 19,7 Out of Home — 3,7 Enterprise 6,0 6,0 African acquisitions 32,4 17,9

1 083,8 1 093,3

Trademarks comprise well-established, growing brands. Except for trademarks with a cost of R59,4 million (2008: R58,6 million) which are amortised, the brand portfolio is considered to have indefinite useful lives and are therefore not amortised. Refer to the accounting policies for further details on amortisation.

13. Impairment testing of goodwill and intangibles with indefinite lives Annually or if there is an indication of impairment, all indefinite life intangible assets and goodwill are assessed for

impairment. Goodwill acquired through business combinations, trademarks, licence agreements, supplier relationships and restraint of trade agreements have been allocated to cash-generating units to facilitate this assessment.

The key assumptions disclosed below are based on management’s experience and expectations. Based on this experience and the well-established brands the group owns, management considers forecast cashflow periods in excess of five years to be appropriate.

13.1 Methods and assumptions The group applies a discounted cash flow methodology to assess goodwill and indefinite life intangible assets for

impairment (excluding certain Bromor intangibles as indicated below). This methodology entailed a calculation of the present value of future cash flows generated by applicable cash-generating units over a period of 10 years and incorporates a terminal growth rate.

These cash flows are based on forecasts which included assumptions on profit before interest and tax, depreciation, working capital movements, capital maintenance expenditure, an appropriate pre-tax discount rate and a terminal growth rate. The terminal growth rate used is 1% (2008: 1%), however it is dependent on the industry and maturity of the cash generating unit.

Bromor trademarks The group applies the “relief-from-royalty” valuation methodology to value certain Bromor trademark assets. This

methodology entails quantifying royalty payments, which would be required if the trademark were owned by a third party and licenced to the company.

Main inputs used are forecast future sales, a notional royalty rate payable in an arm’s length transaction and an appropriate discount rate.

Bromor customer lists The group applies the “excess earnings” valuation methodology to value customer lists related to the Bromor

acquisition. The method is based on apportioning the returns earned by a business across its tangible and intangible assets.

Main inputs used were forecast sales to which the customer relationships contribute and estimated cash flows earned from these sales, a tax rate of 28% (2008: 28%) and a required rate of return.

13.2 Discount rates Discount rates applied range from 11,4% to 16,0% (2008: 12,75% to 16,10%) as applicable to the cash

generating unit.

The discounted cash flow models are most sensitive to the discount rates, although reasonably possible movements in the discount rate of 1% do not result in any material movements to recoverable amounts which could cause them to be exceeded by carrying amounts.

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13. Impairment testing of goodwill and intangibles with indefinite lives (continued)13.3 Recorded impairments Included in the 2008 abnormal items from continuing operations is the impairment of goodwill relating to the Bromor

acquisition. The impairment amounted to R112,3 million and was largely attributable to the expected reduction in the future profit stream, as well as an increase in the discount rate applied to the future cash flows of the business.

The carrying amount of goodwill and other intangibles of the Bromor Foods cash generating unit is significant in comparison with the group’s total carrying amount of goodwill and other intangibles with indefinite useful lives.


14. Interest in subsidiary companies (Annexure A)

1 258,5 1 638,7 Shares at cost less amounts written off

2 893,7 3 472,2 15. Amounts owed by subsidiaries (Annexure A) Refer to the related parties note 40 for additional

information

16. Investments in associated companies (Annexure B)

31,5 — Listed, at cost 444,6 — Unlisted, at cost less amounts written off 342,0 342,0 Share of accumulated profits and reserves since

acquisition 259,7 130,631,5 — 1 046,3 472,6

1 173,4 — Fair value of listed investments 1 173,4 — Directors’ valuation of unlisted investments 494,4 472,6 The trading results of the associate companies

whose results are equity accounted in the consolidated financial statements are as follows:

Turnover (100%) 9 319,0 7 382,5 Revenue (100%) 9 328,6 7 384,4 Profit for the year (100%) 671,6 340,3 Profit attributable to ordinary shareholders

of Tiger Brands 203,6 72,0 Empresas Carozzi 110,5 72,0 Abnormal items 16,6 — Oceana (2009: 1 April 2009 to

30 September 2009) 76,5 — Less: Dividends (48,7) (30,5) Share of associated companies’ income 154,9 41,5 Share of movement in associates’ reserves (25,8) — The aggregate balance sheets of associates

are summarised as follows: Property, plant and equipment 2 960,9 2 905,5 Goodwill and intangible assets 868,3 991,3 Investments 175,0 60,8 Deferred taxation 86,6 34,7 Net current assets 2 315,8 702,3 Total assets 6 406,6 4 694,6 Long-term liabilities (2 157,2) (1 457,8) Deferred taxation (278,6) (98,4) Total shareholders’ funds 3 970,8 3 138,4

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16. Investments in associated companies (continued) (Annexure B) (continued) The results of Empresas Carozzi for the 12 months

ended 31 August 2009 have been used in preparation of these financial statements. The management accounts represent the latest available financial information which have been subject to a limited review by the associate company auditors. There have been no material differences noted in the associate’s results during September 2009. Empresas Carozzi operates in various food categories as outlined on page 36.

With effect from 1 April 2009 the company no longer has joint control of Oceana. It has been reclassified as an associate and is therefore equity accounted whereas previously it was a joint venture which was proportionately consolidated.

16.1 Oceana On 1 April 2009 the group ceased proportional

consolidation of Oceana and commenced equity accounting. The results of Oceana for the six months to 31 March 2009 (2008: 12 months to 30 September 2008), which are included in the group results, are presented below:

Turnover 730.6 1 364.3

Operating income before abnormal items 78,5 144,3 Abnormal items 1,5 5,3 Interest paid (3,7) (3,0) Interest received 5,5 7,6 Dividends received 5,2 8,7

Profit before tax 87,0 162,9 Taxation (28,4) (47,3)

Profit for the year 58,6 115,6

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17. Other investments (Annexure C)

— 170,2 Listed, at fair value 303,2 738,06,1 6,0 Unlisted, at fair value 6,1 64,4

Employer controlled reserve invested by pension fund on behalf of Tiger Brands Limited 132,1 162,8

155,5 126,3 Notional investment in subsidiary companies in terms

of IFRS 2

161,6 302,5 441,4 965,2

— 170,2 Fair value of listed investments 303,2 738,0

6,1 6,0 Directors’ valuation of unlisted investments and

employer controlled reserve 138,2 227,2

Included in unlisted investments in 2008 is the group’s proportionate share of R51,8 million of the Oceana Group Limited’s preference share investment in Oceana SPV (Pty) Limited.

These preference shares carried a coupon rate of 95% of the prime overdraft rate and a 20-year term. The carrying value included preference dividends accrued but not yet declared.

18. Loans

18.1 Tiger Brands Share Trust participants 12,7 15,2 Sea Harvest Share Trust participants — 15,8 Oceana loans to fishermen — 1,8

2,4 2,4 Other 9,4 8,1

2,4 2,4 22,1 40,9

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18.2 Tiger Brands Share Trust The Tiger Brands Share Trust was formed to finance

the purchase of ordinary shares in the company by employees of the group.

The loan is secured by the pledge of the ordinary shares purchased in terms of the scheme and is repayable within 10 years after the grant of the option. Interest is determined by the directors six months in arrears. The rate applied is 1% for both 2008 and 2009.

The market value of Tiger Brands Limited shares pledged as security for loans granted amounted to R69,2 million at 30 September 2009 (2008: R78,6 million). The value of Adcock Ingram Holdings Limited shares pledged as security for loans granted amounted to R22,2 million at 30 September 2009 (2008: R17,3 million).

In addition, as at 30 September 2009 the Trust held 131 915 shares (2008: 166 637 shares) in Astral Foods Limited, which shares were transferred to it at the time of the unbundling of Astral Foods. These shares had a market value of R13,6 million at 30 September 2009 (2008: R16,1million) which are pledged as security where employees have exercised their options.

18.3 Sea Harvest Share Trust The Sea Harvest Share Trust was formed to finance

the purchase of ordinary shares in the group by employees. In 2008 the loans were secured by pledge of the shares purchased in terms of the scheme, bearing interest at 0% – 3,2% per annum.

19. Deferred taxation asset19.1 Movement of deferred taxation asset

4,9 — Balance at the beginning of the year 89,2 114,4

(2,0) — Net reallocation between deferred taxation asset

and deferred taxation liability (3,0) 15,4 Reclassification of Oceana from joint venture

to listed associate (3,0) — Adjustment in respect of (disposals)/acquisition

of businesses (1,0) 2,6 Adjustments in respect of currency losses taken

directly to non-distributable reserves — 2,8— 0,9 Fair value adjustments – Investments — 1,0

Exchange rate translation reserve (1,9) —(0,9) 4,0 Income statement movement (22,1) (47,0)

(0,9) 4,0 – current year timing differences (22,1) (42,9)— — – tax rate change movement — (4,1)

2,0 4,9 Balance at the end of the year 58,2 89,2

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19.2 Analysis of deferred taxation asset Property, plant and equipment (11,8) (35,1)

2,0 2,0 Pension fund surpluses (40,1) (32,4)— 0,9 Fair value adjustment – investments — 1,0— 2,0 Foreign exchange losses — —

Provisions 93,6 134,9 Other temporary differences 16,5 20,8

2,0 4,9 58,2 89,2

20. Inventories Raw materials 1 162,9 1 240,4 Partly processed goods 37,0 37,5 Finished goods and merchandise 1 685,7 1 905,2 Consumable stores and spares 156,7 165,3 Other 17,6 16,3

3 059,9 3 364,7

Inventories to the value of R89,6 million (2008: R68,9 million) are carried at net realisable value.

The amount of writedown of inventories recognised as an expense is R34,1million (2008: R36,5 million).

This expense is included in cost of sales. Refer note 4.1.

21. Trade and other receivables21.1 Analysis of trade and other receivables Trade receivables 2 332,0 2 752,6

0,1 1,2 Tax overpaid Prepayments 79,3 88,2

17,8 25,6 Sundry receivables 326,0 342,4

17,9 26,8 2 737,3 3 183,2 Impairment provision (55,9) (80,7)

Trade receivables (55,9) (70,1) Sundry receivables — (10,6)

17,9 26,8 2 681,4 3 102,5

Trade receivables, which generally have 30 – 60-day terms, are recognised and carried at original invoice amount less an allowance for any uncollectible amounts.

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21. Trade and other receivables (continued)21.2 Impairment provisions Provision is made when there is objective evidence

that the company will not be able to collect the debts. The allowance raised is the amount needed to reduce the carrying value to the present value of expected future cash receipts. Bad debts are written off when identified. Movements in the impairment provision were as follows:

Reconciliation of trade receivables impairment provision

Balance at the beginning of the year (70,1) (74,8) Utilised during the year 0,9 17,6 Reversed during the year 15,0 11,4 Decrease due to disposal of business and

reclassification of joint venture as associate 3,7 — Raised during the year (5,4) (3,0) Increase due to acquisition of business — (21,3)

Balance at the end of the year (55,9) (70,1)

Reconciliation of sundry receivables impairment provision

Balance at the beginning of the year (10,6) (11,0) Utilised during the year — 0,8 Reversed during the year — 0,8 Reclassification of joint venture as associate 10,6 — Raised during the year — (1,2)

Balance at the end of the year — (10,6)

21.3 Past due or impaired analysis As at 30 September, the ageing analysis of trade

receivables was as follows: Not past due, or impaired 1 923,8 2 347,9 Past due and not impaired: Current to 60 days 349,2 315,8 61 to 90 days 23,9 53,6 91 to 180 days 34,2 24,6 > 180 days 0,9 10,7

Total 2 332,0 2 752,6

As at 30 September, the ageing analysis of sundry receivables was as follows:

16,9 25,6 Not past due, or impaired 312,1 327,6 Past due and not impaired: Current to 60 days 10,9 7,7 61 to 90 days 1,5 1,2 91 to 180 days 1,4 2,6 > 180 days 0,1 3,3

16,9 25,6 Total 326,0 342,4

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21. Trade and other receivables (continued)21.4 Trade receivable analysis Industry spread of trade receivables: Retail 1 251,5 1 155,1 Wholesale/Distributors 905,3 1 251,1 Export 135,9 257,3 Other 39,3 89,1

Total 2 332,0 2 752,6

Geographical spread of trade receivables: South Africa 2 049,6 2 312,0 Rest of Africa 191,3 171,6 Europe 41,7 187,5 Rest of the World 49,4 81,5

Total 2 332,0 2 752,6

21.5 Collateral held and pledged Collateral pledged A subsidiary of the group has pledged trade

receivables with a carrying amount of R182,2 million (2008: R134 million) as security for a loan from the Landbank with a carrying amount of R323,5 million (2008: R186,4 million).

In 2008, the group’s joint venture pledged trade receivables with a carrying amount of R38,1 million as collateral against bank overdrafts.

Collateral held In 2008 sundry receivables of the group’s joint

venture were secured by marine bonds over vessels and mortgage bonds over fixed property as appropriate.

2009 includes hawker deposits held for the group‘s Bakeries division.

Fair value of collateral held 11,6 3,6

22. Cash and cash equivalents414,0 563,4 Cash 506,2 390,1

Investments in marketable preference shares — 168,6 In 2008 portion of the surplus cash was invested in

preference shares carrying a coupon rate of 57,5% – 63% of prime.

414,0 563,4 506,2 558,7

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23. Share-based payment plans23.1 General employee share-option plan Certain senior employees are entitled to receive options based on merit. Options are issued annually by the board of

directors of the company.

Options vest as follows: a third after three years, a third after four years and a third after five years. The exercise price is determined in accordance with the rules of the scheme.

From January 2006 a new option scheme was adopted by the company. The new scheme is a cash settled option scheme, which replaces the previous equity settled share option scheme.

The expense recognised for employee services received during the year to 30 September 2009 is R18,0 million (2008: R6,8 million). The portion of that expense arising from equity-settled share-based payment transactions is R0,8 million (2008: R0,3 million).

Equity settled The following table illustrates the number and weighted average exercise prices (WAEP) of, and movements in, share

options during the year.2009 2008

Number WAEP Number WAEP

Outstanding at the beginning of the year 1 856 518 52,56 3 895 755 52,59 Movement of Adcock Ingram on unbundling — — (1 239 355) — Reinstated during the year 3 000 33,29 — — Disposal of Sea Harvest (2 400) 75,13 — — Forfeited during the year (31 400) 74,37 (311 350) 62,70 Exercised during the year2 (335 488) 52,24 (488 532) 46,15 Outstanding at the end of the year1 1 490 230 52,10 1 856 518 52,56

Exercisable at the end of the year 1 371 130 49,89 1 318 618 47,22

1 Included within the number of options outstanding at the end of the year are options over 328 900 shares that have not been recognised in accordance with IFRS 2 as the options were granted on or before 7 November 2002. These options have not been subsequently modified and therefore do not need to be accounted for in accordance with IFRS 2.

2The weighted average share price at the date of exercise for the options exercised is R140,49 (2008: R116,15).

The weighted average remaining contractual life for share options outstanding as at 30 September 2009 is 3,88 years (2008: 4,88 years).

The range of exercise prices for options outstanding at the end of the year was R32,72 – R106,67 (2008: R27,05 – R106,67).

The observable volatility in the market was the basis upon which the options were valued.

Share options were fair valued using a modified Black-Schöles model. The following inputs were used:

Expected Market price volatility of the

of the stock overunderlying stock remaining life Dividend

Strike price at grant date of option cover Date of grant (Rand) Expiry date (Rand) (%) (times)

03/02/2003 69,16 02/02/2013 66,11 22,0 2,7 08/08/2003 69,76 07/08/2013 70,55 22,0 2,7 29/01/2004 80,02 28/01/2014 82,65 18,0 2,5 28/02/2004 82,16 27/02/2014 84,66 18,0 2,5 01/08/2004 89,08 31/07/2014 89,70 19,0 2,5 25/01/2005 95,09 24/01/2015 95,36 18,0 2,0 18/05/2005 97,93 17/05/2015 100,69 18,0 2,0 01/07/2005 107,70 30/06/2015 113,74 19,0 2,0 01/09/2005 125,60 31/08/2015 131,80 19,0 2,0

The interest rate yield curve was derived from the Nedbank Treasury calculation.

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23. Share-based payment plans (continued)23.1 General employee share-option plan (continued) Cash settled The following table illustrates the number and weighted average exercise prices (WAEP) of, and movements in, cash

settled options during the year.2009 2008

Number WAEP Number WAEP

Outstanding at the beginning of the year 1 723 677 124,69 991 900 125,54 Movement of Adcock Ingram on unbundling — — (272 500) — Compensation for exit of Adcock Ingram — — 207 047 — Sale of Sea Harvest (6 455) 118,13 — — Granted during the year 574 800 141,91 1 138 568 124,09 Forfeited during the year (200 012) 124,72 (341 338) 124,97 Exercised during the year (28 490) 119,83 — — Outstanding at the end of the year1 2 063 520 129,57 1 723 677 124,69

Exercisable at the end of the year 87 655 118,13 — —

1 The weighted average remaining contractual life for cash-settled options outstanding as at 30 September 2009 is 4,32 years (2008: 4,89).

The weighted average fair value of options granted during the year was R35,56 per option (2008: R37,57).

The range of exercise prices for options outstanding at the end of the year was R106,44 – R141,91 (2008: R106,44 – R136,53).

Cash options were valued using a modified Black-Schöles model taking into account the dividend cover, expected exercise pattern and volatility of the Tiger Brands share price.

The following inputs were used:Expected

Market price volatility of theof the stock over the Expected

Strike price underlying stock remaining life dividendof option at grant date of the option cover

Date of grant (Rand) Expiry date (Rand) (%) (times)

06/07/2009 141,63 05/07/2015 144,01 29,9 2,0 02/02/2009 141,91 01/02/2015 137,60 29,5 2,0 16/09/2008 131,35 15/09/2014 137,00 27,2 2,0 01/04/2008 106,44 31/03/2014 132,90 27,9 2,0 22/01/2008 130,59 21/01/2014 146,50 28,3 2,0 22/01/2007 133,39 21/01/2013 172,51 28,7 2,0 30/03/2007 136,53 29/03/2013 177,00 28,2 2,0 26/01/2006 118,13 25/01/2012 162,00 29,1 2,0 21/04/2006 130,43 20/04/2012 171,00 28,5 2,0 08/05/2006 133,61 07/05/2012 170,00 28,6 2,0

The interest rate yield curve was derived from the Nedbank Treasury calculation. The average volatility was 29,9% and the risk-free rate ranged from 6,9% to 8,6% during the year.

The carrying amount of the liability relating to the cash-settled options at 30 September 2009 is R36,0 million (2008: R17,5 million). No cash-settled options were exercised during the year (2008: R17,5 million). Cash-settled options exercised during the year amounted to R0,8 million (2008: no cash-settled options were exercised).

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23. Share-based payment plans (continued)23.2 Black Managers share-option scheme (equity settled) In terms of the BEE transaction implemented on 17 October 2005, 4 381 831 Tiger Brands shares were acquired by

the Tiger Brands Black Managers Trust. Allocations of vested rights to these shares were made to 435 black managers. The allocation of vested rights entitles beneficiaries to receive Tiger Brands shares (after making capital contributions

to the Black Managers Trust) at any time after the defined lock-in period, i.e. from 1 January 2015. These vested rights are non-transferable. From 1 January 2015, the beneficiaries may exercise their vested rights in which event the beneficiary may: – instruct trustees to sell all of their shares and distribute the proceeds to them, net of the funds required to pay the

capital contributions, taxation (including employees’ tax), costs and expenses; – instruct the trustees to sell sufficient shares to fund the capital contributions, pay the taxation (including employee’s

tax), costs and expenses, and distribute to them the remaining shares to which they are entitled; or – fund the capital contributions, taxation (including employees’ tax) costs and expenses themselves and receive the

shares to which they are entitled.

The expense recognised for employee services received during the year to 30 September 2009 is R30,4 million (2008: R30,2 million).

The following table illustrates the number (No.) of, and movements in, share participation rights during the year.

2009 2008No. No.

Outstanding at the beginning of the year 2 217 400 1 832 700 Granted during the year 689 400 571 800 Forfeited during the year (187 100) (187 100) Outstanding at the end of the year 2 719 700 2 217 400

Exercisable at the end of the year — —

The weighted average remaining contractual life for share options outstanding as at 30 September 2009 is 5,25 years (2008: 6,25 years).

The weighted average fair value of options granted during the year was R67,46 (2008: R40,62). The notional exercise price of participation rights at 30 September 2009 was R95,06 per option (2008: R92,79). No weighted average exercise price has been calculated as there were no options exercised. Participation rights were valued using the Monte-Carlo simulation approach to estimate the average, optimal payoff of

the participation rights using 5 000 permutations. The payoff of each random path was based on: the projected Tiger Brands share price, outstanding debt projections and optimal early exercise conditions.

The following inputs were used:Expected

Expected dividend yieldInitial strike Market price volatility of the of the stock

price of of the stock over the over theparticipation underlying stock remaining life remaining life

rights at grant date of the option of the option Date of grant (Rands) Expiry date (Rand) (%) (%)

01/11/2005 112,28 30/09/2027 140,00 22,0 3,6 31/01/2006 110,90 30/09/2027 159,90 25,0 3,6 31/07/2006 112,89 30/09/2027 150,00 25,0 3,6 31/01/2007 112,99 30/09/2027 172,30 30,4 3,5 31/07/2007 115,17 30/09/2027 186,70 27,8 3,5 31/01/2008 115,43 30/09/2027 151,00 27,5 4,0 31/07/2008 117,91 30/09/2027 145,00 28,1 4,2 31/01/2009 91,46 30/09/2027 140,99 28,5 4,7 31/07/2009 93,97 30/09/2027 157,00 28,7 4,4

The risk-free interest rate was taken from the Standard Bank, zero-coupon South African bond curves.

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24. Authorised share capital

25,0 25,024.1 250 000 000 (2008: 250 000 000) ordinary

shares of 10 cents each 25,0 25,0

25,0 25,0 25,0 25,0

Number of shares Number of shares

2 181 996 2 784 58424.2 Number of outstanding options in terms of the

company’s share option scheme

— 24 900 2008: R33,29 per share, exercisable until

24 June 2009

— 1 333 2008: R27,05 per share, exercisable until

8 July 2009

1 400 74 500 At R36,69 per share, exercisable until

8 November 2009


13 October 2010


14 November 2010


1 September 2011


29 January 2012


3 February 2013


31 March 2013

— 5 000 At R44,71 per share, exercisable until

8 August 2013


29 January 2014


25 January 2015


18 May 201510 000 10 000 At R85,10 per share, exercisable until 1 July 2015


1 September 2015


1 October 2015

69 252 546 69 252 54624.3 Number of shares under the control of the directors

until the next annual general meeting 69 252 546 69 252 546

5 005 106 4 919 706

24.4 Number of shares under the control of the directors for purposes of the Tiger Brands (1985) Share Purchase Scheme and the Tiger Brands (1985) Share Option Scheme 4 995 506 4 919 706

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COMPANYNumber of shares Options exercised

under option during 2009Number Gain in

2009 2008 of shares R’000

24. Authorised share capital (continued)24.5 Executive directors’ options over shares

in Tiger Brands Limited M Fleming (appointed 18 May 2009) 9 100 — — —

At R51,29 per share, exercisable until 29 January 2014 2 400 —

At R75,13 per share, exercisable until 25 January 2015 6 700 —

N G Brimacombe 69 100 69 100 — —

At R36,53 per share, exercisable until 29 January 2012 21 400 21 400

At R44,33 per share, exercisable until 3 February 2013 24 700 24 700



P M Roux (resigned 13 March 2009)* — 32 400 22 400 1 562

At R51,29 per share, exercisable until 29 January 2014 — 12 400 12 400 997

At R75,13 per share, exercisable until 25 January 2015 — 20 000 10 000 565

C F H Vaux 65 400 65 400 — —

At R44,33 per share, exercisable until 3 February 2013 23 400 23 400



Totals for Tiger Brands Limited 143 600 166 900 22 400 1 562

* Although P M Roux ceased to be an executive director on 16 February 2009, his employment with the company terminated on 13 March 2009. Options were exercised between 16 February 2009 and 13 March 2009 which are included in the above table.

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25. Issued ordinary share capital and premium

17,4 17,3

25.1 Issued share capital 173 560 352 (2008: 173 043 164) ordinary shares of 10 cents each 17,4 17,3

25.2 Share premium24,5 519,7 Balance at the beginning of the year 24,5 519,728,9 46,1 Issues of shares 28,9 46,1

— (499,8) Capital distribution out of share premium – interim — (499,8)

— (41,5) Distribution in specie in respect of unbundling of

Adcock Ingram Holdings Limited — (41,5)

53,4 24,5 53,4 24,5

70,8 41,8 70,8 41,8

The increase in ordinary shares issued is due to share options exercised.

26. Non-distributable reserves16,6 16,6 Amounts transferred from share premium account 16,6 16,62,7 2,7 Capital redemption reserve fund

2 918,6 2 918,6 Other reserves 68,2 65,7 Share of accumulated profits and reserves since

acquisition in associated companies 628,7 473,8 Fair value adjustment – Forward exchange contracts (13,4) 1,9

5,1 (0,5) Fair value adjustment – Investments 148,1 178,7 Translation reserve (59,5) (23,1)

2 943,0 2 937,4 788,7 713,6

27. Tiger Brands Limited shares held by empowerment trusts

On 19 September 2005, shareholders approved a Scheme of Arrangement (section 311 of the Companies Act) in terms of which Tiger Brands would facilitate the acquisition of a 4% direct ownership interest in its issued ordinary share capital by a broad base of staff employed within the group. The court order sanctioning the Scheme was registered by the Registrar of Companies on 29 September 2005, being the effective date of acquisition of the Scheme shares.

The total value of the staff empowerment transaction was R723,5 million, based on the closing price of the company’s shares on the JSE Limited on 13 July 2005 of R112 per share. The transaction was implemented on 17 October 2005 through a number of trusts and a special purpose vehicle. The acquisition of 5 896 140 Tiger Brands shares by the Black Managers Trust and Thusani Empowerment Investment Holdings (Pty) Limited in terms of the Scheme, at an aggregate cost of R649,5 million was shown as a deduction from equity in the group balance sheet. This reduced to R502,2 million in 2008 as a result of the Adcock unbundling. As from 2008 such shares in Adcock Ingram were reflected as listed investments held for sale.

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27. Tiger Brands Limited shares held by empowerment trusts (continued)

The cost of the Tiger Brands shares acquired by the General Staff Trust (547 733 shares), together with the total expenses of the BEE transaction, was reflected as an abnormal item of R69,4 million in the group income statement in 2005.

28. Deferred taxation liability28.1 Movement of deferred taxation liability

3,8 12,0 Balance at beginning of the year as reported 316,5 272,3 Discontinued operations (57,4) —

3,8 12,0 Balance at the beginning of the year –

continuing operations 259,1 272,3

(2,0) — Net reallocation between deferred taxation

asset and deferred taxation liability (3,0) 15,4 Fair value adjustments – investments (12,6) 19,0 Arising on sale of subsidiaries — (8,2) Reclassification of Oceana joint venture to

associate (19,1) — Adjustment in respect of currency losses taken

directly to non-distributable reserve 7,0 (13,0) Exchange rate translation reserve (3,9) — Reallocation to taxation (75,8)

7,3 (8,2) Income statement movement 4,4 31,0

7,3 (7,8) – current year timing differences 4,4 34,9— (0,4) – tax rate change movement — (3,9)

9,1 3,8 Balance at end of year 156,1 316,5

28.2 Analysis of deferred taxation liability Fair value adjustments – investments 8,7 19,2 Property, plant and equipment 206,2 226,3 Provisions (126,2) (84,6) Foreign exchange profits — 1,0

9,1 3,8 Other temporary differences 67,4 154,6

9,1 3,8 156,1 316,5

29. Accounts payable Trade and other payables 1 509,3 1 900,6

49,5 239,2 Accruals 1 174,8 1 645,7

49,5 239,2 2 684,1 3 546,3

Trade payables are non-interest bearing and are normally settled on 45-day terms.

Other payables are non-interest bearing and have an average term of 60 days.

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GROUP2009

(Rands in millions) Leave pay Other Total

30. Provisions 2009 Balance at the beginning of the year as reported 253,0 46,8 299,8 Discontinued operations (7,8) (3,7) (11,5)

Balance at the beginning of the year – continuing operations 245,2 43,1 288,3 Charged to the income statement 63,5 14,2 77,7 Utilised in the year (50,6) (5,4) (56,0) Provisions reversed during the year (0,7) (4,2) (4,9) Reclassification of Oceana from joint venture to associate (4,5) (0,5) (5,0)

Balance at the end of the year 252,9 47,2 300,1

Analysed as follows: Provision for leave 252,9 — 252,9 Provision for Adcock unbundling — 0,1 0,1 Provision for BEE Phase II transaction costs — 10,6 10,6 Other — 36,5 36,5

252,9 47,2 300,1

Leave pay Other Total

2008 Balance at the beginning of the year as reported 240,3 206,3 446,6 Reclassification of accruals 4,8 (63,7) (58,9) Charged to the income statement 65,3 42,8 108,1 Utilised in the year (56,3) (122,6) (178,9) Provisions reversed during the year (1,1) (16,0) (17,1)

Balance at the end of the year 253,0 46,8 299,8

Analysed as follows: Provision for leave 253,0 — 253,0 Provision for Adcock unbundling — 42,0 42,0 Other — 4,8 4,8

253,0 46,8 299,8

Leave pay is provided on accumulated leave balances at year-end based on employees’ cost to company.

The provision for BEE Phase II costs relates to the costs expected to be incurred to implement the BEE Phase II transaction subsequent to 30 September 2009. The provision for Adcock unbundling relates to the costs associated with the unbundling and separate listing of the Healthcare business. Refer to note 41.2.

In 2008 certain accruals and provisions were reclassified due to stricter application of IAS 37: Provisions, Contingent Liabilities and Contingent Assets.

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31. Sea Harvest put option — 81,4 As a result of difficult fishing conditions

experienced over the last few years, compounded by the strengthening of the rand at that time and the uncertainty over future quota rights, the put option granted by the Tiger Brands group to Brimstone Investment Corporation Limited (“Brimstone”) resulted in a potential exposure to the group should the option be exercised by Brimstone.

During 2008 the put option was reclassified to current liabilities and was valued by an independent valuator utilising a discounted cash flow model based on the following:

Forecasts for the years ending 30 September 2009 to 2018 provided by management;

a discount rate range of 13% to 18%; and a terminal growth rate of 3,5%. The put option was cancelled during 2009 as a

result of the sale of Sea Harvest to Brimstone.

32. Borrowings162,2 153,0 32.1 Secured loans 503,6 510,3

Loan bearing interest at 15,5% per annum, repayable by 2011 51,2 77,5

Loan bearing interest at 11,5% per annum, repayable by 2013 — 1,7

162,2 153,0 Loan bearing interest at 6,8% per annum,

repayable by 2013 162,2 153,0 Loan bearing interest at 13,8% per annum,

repayable by 2014 36,0 10,5 Loan bearing interest at 7,53% per annum,

repayable by 2015 254,2 267,6

Refer also to notes 11.4 and 37 for details on security.

43,9 29,9 32.2 Unsecured loans 43,9 30,1

43,9 29,9 Loan bearing interest at 13,5% per annum,

repayable by 2016 43,9 29,9 Interest-free loans, with no fixed repayment terms — 0,2

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32. Borrowings (continued)32.3 Capitalised finance leases 2,0 6,4

Repayment during the next year 1,3 4,3 Repayment during the next five years subsequent

to year 1 0,7 2,1

Liabilities under capitalised finance leases bear interest at 9,0% to 12,5% per annum.

Capitalised finance leases relate to plant and equipment with a book value of Rnil (2008: R0,2 million) as per note 11.6 of these annual financial statements.

206,1 182,9 549,5 546,8

32.4 Instalments disclosed as:7,6 — Short-term borrowings 66,7 49,3

198,5 182,9 Long-term borrowings 482,8 497,5

206,1 182,9 549,5 546,8

Total Total Total Group(Rands in millions) SA rand Kenya shilling CAF franc total

32.5 Summary of borrowings by currency and year of repayment

During 2010 51,3 14,3 1,1 66,7 During 2011 40,6 11,6 1,9 54,1 During 2012 26,5 13,5 2,4 42,4 During 2013 31,9 14,0 156,8 202,7 During 2014 and thereafter 157,1 26,5 — 183,6

307,4 79,9 162,2 549,5


8,2 509,7 32.6 Short-term borrowings 400,8 1 333,9

0,6 509,7 Bank overdrafts 334,1 1 284,1 Unsecured loans — 0,5

7,6 — Current portion of long-term loans 66,7 49,3

33. Group borrowings In terms of the company’s articles of association

the group’s borrowings are unlimited.

34. Group commitments34.1 Approved capital expenditure, which will be

financed from the group’s own resources, is as follows:

Contracted 336,8 168,5 Not contracted 669,3 266,8

1 006,1 435,3

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34. Group commitments (continued)34.2 Commitments of R547,6 million will be expended in 2010 and the remaining commitments will be expended during

2011 and 2012.

The capital commitments amounting to R1 006,1 million include the following major items: (Rands in millions)

Milling – Replacement of Wheat Mill in Hennenman 560,5 Bakeries – Increase capacity of Pietermaritzburg manufacturing site 203,4

34.3 Commitments in respect of operating leasesLand and Motor Total

(Rands in millions) buildings vehicles Other commitments

2009 During 2010 11,1 31,4 19,5 62,0 During 2011 10,0 22,3 18,7 51,0 During 2012 10,4 15,5 17,9 43,8 During 2013 10,5 8,8 16,3 35,6 During 2014 and thereafter 44,0 2,9 31,6 78,5

86,0 80,9 104,0 270,9

2008 During 2009 23,6 38,0 21,4 83,0 During 2010 20,8 29,7 19,9 70,4 During 2011 16,4 19,3 17,6 53,3 During 2012 15,5 13,1 16,7 45,3 During 2013 and thereafter 96,4 10,4 42,7 149,5

172,7 110,5 118,3 401,5

With the exception of the lease described below, operating leases are generally three to five years in duration, without purchase options and in certain instances have escalation clauses of between 7,5% and 10% or are linked to the prime rate of interest or CPI. Contingent rentals are generally not applicable.

One lease, relating to fruit processing equipment, has a remaining contract period of six years, contingent rental linked to tons of fruit processed and escalates based on the American Consumer Price Index. Contingent rental paid amounts to R3,7 million (2008: R3,7 million).

34.4 Commitments in respect of finance leases The group has finance leases and hire purchase contracts for various items of plant and machinery. These leases have

terms of renewal but no purchase options and escalation clauses. Renewals are at the option of the specific entity that holds the lease. Future minimum leases payments under finance leases and hire purchase contracts, together with the present value of the net minimum lease payments, are as follows:

GROUP2009 2008

Minimum Present value Minimum Present value (Rands in millions) payments of payments payments of payments

Within one year 1,4 1,3 4,8 4,3 After one year but not more than five years 0,8 0,7 2,4 2,1

Total minimum lease payments 2,2 2,0 7,2 6,4 Less amounts representing finance charges (0,2) — (0,8) —

Total 2,0 2,0 6,4 6,4

34.5 Commitments in respect of inventories In terms of its normal business practice certain group operations have entered into commitments to purchase certain

agricultural inputs over their respective seasons.34.6 Commitments in respect of transport The group maintains long-term contracts, including certain minimum payments, with various transport companies for

the distribution of its products.

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35. Pension obligations The company and its subsidiaries contribute to retirement plans that cover all employees. The retirement plans are either

defined benefit plans or defined contribution plans and are funded. The assets of the funds are held in independent trustee-administered funds, administered in terms of the Pension Funds Act of 1956 (Act 24), as amended. In terms of the Pension Funds Act, certain of the retirement funds are exempt from actuarial valuation. Those funds not exempt from valuation must, in terms of the Pension Funds Act, be valued at least every three years. For purposes of production of these disclosures, and in order to comply with the requirements of IAS 19, valuations have been performed by independent actuaries, using the projected unit credit method. Where valuations were not possible due to the limited availability of complete data, roll forward projections of prior completed actuarial valuations were used, taking account of actual subsequent experience.

Within the company’s group of subsidiaries, there are a total of 31 retirement plans, three of which are defined benefit pension funds, two are defined benefit provident funds, three are defined contribution pension funds, one a defined benefit plan and 16 are defined contribution provident funds. There are a further six schemes of insurance into which the company and its subsidiaries contribute. Certain companies within the group sponsor external death, funeral and disability benefit insurance policies. These insurance costs have been allowed for in the disclosures provided.

The actual return on plan assets for the period 1 October 2008 to 30 September 2009 was R13,2 million (2008: R57,7 million). This compares with the expected return for the same period of R48,6 million (2008: R48,0 million).

The value of contributions expected to be paid by group companies for the year ending 30 September 2010 amounts to R149,4 million (2009 actual: R195,7 million).

As at 30 September 2009, the percentage of the fair value of plan assets invested in Tiger Brands Limited shares amounted to 0,4% (2008: 0,2%).

As at 30 September 2009, there we no properties occupied by, or other assets used by, group companies which formed part of the fair value of plan assets (2008: Rnil).

GROUP (Rands in millions) 2009 2008

Balance at the end of the year Present value of funded defined benefit obligations 245,6 388,5 Fair value of plan assets in respect of defined benefit obligations (376,0) (528,0)

Funded status of defined benefit plans (130,4) (139,5) Unrecognised actuarial gains — 1,5 Asset not recognised at balance sheet date 100,1 127,4 IFRIC 14 additional liability — 38,8

(Asset)/liability at balance sheet date (30,3) 28,2

The disclosure of the funded status is for accounting purposes only, and does not necessarily indicate any assets available to the company or its subsidiaries. Once a surplus apportionment exercise is completed, and approved by the Registrar of Pension Funds in terms of the provisions of the Pension Funds Second Amendment Act, 2001, only at that stage would it be appropriate for the company or its subsidiaries to recognise any assets in respect of the retirement funds, to the extent that they are apportioned such assets. The surplus apportionment schemes for the Tiger Brands Defined Benefit Fund and the Beacon Products Staff Pension Fund were approved by the Registrar during the previous year. Surplus apportioned to the company has been recognised on the balance sheet. This legislation is not applicable to arrangements not registered in terms of the Pension Funds Act, such as special purpose entities established for purposes of providing disability benefits.

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35. Pension obligations (continued) The principal actuarial assumptions used for accounting purposes were: Discount rate 9,00% 9,25% Expected return on plan assets 8,50% 9,25% Future salary increases 6,75% 6,75% Future pension increases 5,31% 4,05%

The expected long-term return on plan assets is a function of the expected long-term returns on equities, cash and bonds. In setting these assumptions reference was made to the asset split as at 31 August 2009. The expected long-term rate of return on bonds was set at the same level as the discount rate. This implies a yield on government bonds of 9,00% per annum. The expected long-term rate of return on equities was set at a level of 3% above the bond rate, whilst the expected long-term rate of return on cash was set at a level of 2% below the bond rate. Adjustments were made to reflect the effect of expenses.

Reconciliation of the defined benefit obligation: Defined benefit obligation as at 30 September 2008/2007 388,5 111,8 Service cost 3,5 3,8 Member contributions 1,0 1,2 Interest cost 36,3 8,9 Actuarial loss 16,8 293,1 Benefits paid (199,5) (11,8) Risk premiums (0,2) (0,6) Amount settled (0,8) (17,9)

Defined benefit obligation as at 30 September 2009/2008 245,6 388,5

Reconciliation of fair value of plan assets Assets at fair market value as at 30 September 2008/2007 528,0 580,4 Expected return on assets 48,7 48,0 Contributions 43,6 3,5 Risk premiums (0,2) (0,5) Benefits paid (199,5) (11,9) Actuarial (loss)/gain (35,5) 9,7 Amount settled (9,1) (101,2)

Assets at fair market value as at 30 September 2009/2008 376,0 528,0

Asset balance at the end of the year (130,4) (139,5)

Trend information30 Sept 30 Sept 30 Sept 30 Sept 30 Sept

(Rands in millions) 2005 2006 2007 2008 2009

Present value of defined benefit obligation 98,5 125,7 111,8 388,5 245,6

Fair value of plan assets (511,1) (521,2) (580,4) (528,0) (376,0) Funded status (412,6) (395,5) (468,5) (139,5) (130,4)

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36. Post-retirement medical aid obligations The company and its subsidiaries operate post-employment medical benefit

schemes that cover certain of their employees and retirees. This practice has since been stopped for new employees. The liabilities are valued annually using the projected unit credit method. The latest actuarial valuation was performed on 30 September 2009.

Balance at the end of the year Present value of obligations 467,8 363,3 Unrecognised actuarial losses (141,4) (35,4)

Liability at balance sheet date 326,4 327,9

Movement in the liability recognised in the balance sheet: Balance at the beginning of the year 327,9 335,2 Relief of liability on businesses sold (19,5) (13,5) Contributions paid (24,4) (22,8) Settlements — 2,1 Other expenses included in staff costs 42,4 26,9

Current service cost 1,9 1,6 Interest cost 32,2 25,8 Actual losses/(gains) recognised 8,3 (0,5)

Balance at the end of the year 326,4 327,9

Current portion 29,1 23,7

The principal actuarial assumptions used for accounting purposes were: Discount rate 9,00% 9,25% Medical inflation 7,00% 6,25% Future salary increases 7,25% 7,25% Post-employment mortality tables PA(90)

ultimaterated down

2 yearswith 1,0%improve-ment pa

from 2006

PA(90)ultimate

rated down2 years

with 1,0%improve-ment pa

from 2006

The employer’s estimate of contributions expected to be paid for the 2010 financial year is R29,1 million (2009: R24,4 million).

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36. Post-retirement medical aid obligations (continued)36.1 Sensitivity analysis 2009 Base case Healthcare cost inflation

Key assumption 7,0% (1,0%) 1,0%

Accrued liability 30 September 2009 (Rands in millions) 467,8 420,1 525,4 % change (10,2%) 12,3% Current service cost plus interest cost 2009/2010 (Rands in millions) 43,2 38,5 49,0 % change (10,9%) 13,4%

2008


Accrued liability 30 September 2008 (Rands in millions) 363,3 328,5 404,9 % change (9,6%) 11,5% Current service cost plus interest cost 2008/2009 (Rands in millions) 34,0 30,5 38,3 % change (10,5%) 12,6%

2009 Base case Discount rate


Present value of obligations 30 September 2009 (Rands in millions) 467,8 527,8 418,9 % change 12,8% (10,5%)

2008



2009 Base case Expected retirement age

Key assumption60/63/65

years1 year

younger1 year

older


2008

Key assumption60/63/65

years1 year

younger1 year

older


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36. Post-retirement medical aid obligations (continued)36.1 Sensitivity analysis (continued) Trend information

30 Sept 30 Sept 30 Sept 30 Sept 30 Sept (Rands in millions) 2005 2006 2007 2008 2009

Present value of obligations 320,7 330,7 317,8 363,3 467,8 Fair value of plan assets — — — — — Present value of obligations in excess

of plan assets 320,7 330,7 317,8 363,3 467,8 Experience adjustments 9,9 5,0 (9,3) (15,0) (61,3) Actuarial gains/(losses) before changes

in assumptions: In respect of present value of obligations 9,9 5,0 (9,3) (15,0) (61,3) In respect of fair value of plan assets — — — — —


37. Guarantees and contingent liabilities Group guarantees and contingent liabilities 54.6 31.3 Company The company has bound itself as surety and

co-principal debtor for the obligations of certain subsidiaries amounting to R51,2 million at 30 September 2009 (2008: R77,5 million). Refer to note 32.1.

A put option exists against the company for the obligations of certain subsidiaries amounting to R254,2 million at 30 September 2009 (2008: R267,6 million).

An intercompany loan granted by the company to one of its subsidiaries with a book value of R1 227,6 million (2008: R1 151,8 million), has been assigned by the company as security for its obligations as surety.

Shares in Chocolaterie Confiserie Camerounaise Sa (“Chococam”), acquired on 1 August 2008 (see also note 1), have been pledged as security for the foreign loan utilised to acquire the subsidiary. Refer to note 32.1.

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38. Financial instruments The group’s objective in using financial instruments is to reduce the uncertainty over future cash flows arising principally

as a result of commodity price, currency and interest rate fluctuations. The use of derivatives for the hedging of firm commitments against commodity price, foreign currency and interest rate exposures is permitted in accordance with group policies, which have been approved by the board of directors. Where significant finance is taken out, this is approved at board meetings.

The foreign exchange contracts outstanding at year-end are marked to market at closing spot rate.

The group finances its operations through a combination of retained surpluses, bank borrowings and long-term loans.

The group borrows short-term funds with fixed or floating rates of interest through the holding company, Tiger Brands Limited.

The main risks arising from the group’s financial instruments are in order of priority, procurement risk, foreign currency risk, interest rate risk, liquidity risk and credit risk as detailed below.

38.1 Fair values There are no significant differences between carrying values and fair values of financial assets and liabilities, except

for intercompany loans at a company level, which are eliminated on consolidation.

Trade and other receivables, investments and loans and trade and other payables carried on the balance sheet approximate the fair values thereof.

Long-term and short-term borrowings are measured at amortised cost using the effective interest rate method, and the carrying amounts approximate their fair value.

38.2 Procurement risk (commodity price risk) Commodity price risk arises from the group being subject to raw material price fluctuations caused by supply

conditions, weather, economic conditions and other factors. The strategic raw materials acquired by the group include wheat, maize, rice, oats and sorghum.

The group uses commodity futures and options contracts or other derivative instruments to reduce the volatility of commodity input prices of strategic raw materials. These derivative contracts are only taken out to match an underlying physical requirement for the raw material. The group does not write naked derivative contracts.

The group has developed a comprehensive risk management process to facilitate, control and to monitor these risks. The procurement of raw materials takes place in terms of specific mandates given by the executive management. Position statements are prepared on a monthly basis and these are monitored by management and compared to the mandates.

The board has approved and monitors this risk management process, inclusive of documented treasury policies, counterparty limits, controlling and reporting structures.

At year-end the exposure to derivative contracts relating to strategic raw materials is as follows:

Derivative contracts expiring

within 0 – 3 monthsUnrealised

loss at (Rands in millions) 30 September Hedged value

2009 Maize and wheat Futures 6,5 138,9

6,5 138,9

2008 Maize and wheat Futures 0,4 75,1

0,4 75,1

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38. Financial instruments (continued)38.2 Procurement risk (commodity price risk) (continued) Commodity price sensitivity analysis The following table details the group’s and company’s sensitivity to a 10% increase and decrease in the price of

wheat, rice, maize and sorghum. The 10% stringency is the sensitivity rate used when reporting the commodity price risk internally to key management personnel and represents management’s assessment of the possible change in the relevant commodity prices.

The sensitivity analysis includes only material outstanding, unmatured derivative instruments and adjusts their mark-to-market price at the reporting date for a 10% change in their prices. A positive/(negative) number indicates an increase/(decrease) in profit or loss and other equity where the respective price changes against the relevant forward position.

GROUPProfit or (loss)


Milling and baking + 10% (32) (241) Milling and baking – 10% 32 241 Other grains + 10% (192) (101) Other grains – 10% 192 101 Other + 10%* (4) (31) Other – 10%* 4 31

Total + 10% (228) (373) Total – 10% 228 373

*Other includes, tomato paste, sugar, pork, soya and sundry other items.

Commodity price sensitivity is not applicable to the company.

38.3 Foreign currency risk The group enters into various types of foreign exchange contracts as part of the management of its foreign exchange

exposures arising from its current and anticipated business activities.

As the group operates in various countries and undertakes transactions denominated in foreign currencies, exposures to foreign currency fluctuations arise. Exchange rate exposures on transactions are managed within approved policy parameters utilising forward exchange contracts or other derivative financial instruments in conjunction with external consultants who provide financial services to group companies as well as contributing to the management of the financial risks relating to the group’s operations.

The group does not hold foreign exchange contracts in respect of foreign borrowings, as its intention is to repay these from its foreign income stream or subsequent divestment of its interest in the operation. Foreign exchange differences relating to investments, net of their related borrowings, are reported as translation differences in the group’s net equity until the disposal of the net investment, at which time exchange differences are recognised as income or expense.

Forward exchange contracts are mainly entered into to cover net import exposures, after setting off anticipated export proceeds on an individual currency basis. The fair value is determined using the applicable foreign exchange spot rates at 30 September 2009.

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38. Financial instruments (continued)38.3 Foreign currency risk (continued) The exposure and concentration of foreign currency risk is included in the table below.

South Africanrand US dollar Pound Euro Other* Total

GROUP Rm Rm Rm Rm Rm Rm

2009 Financial assets Accounts receivable 2 568,3 53,8 7,7 28,2 23,4 2 681,4 Cash and cash

equivalents 339,0 119,3 1,2 45,7 1,0 506,2

Financial liabilities Borrowings** (677,6) — — — (206,0) (883,6) Accounts payable (2 577,3) (58,4) (16,1) (30,6) (1,7) (2 684,1)

2008 Financial assets Accounts receivable 2 828,3 100,6 45,5 104,8 23,3 3 102,5 Cash and cash

equivalents 445,9 107,2 (10,5) 14,9 1,2 558,7

Financial liabilities Borrowings** (1 638,0) — — — (193,4) (1 831,4) Accounts payable (3 124,6) (280,2) (77,2) (63,2) (1,1) (3 546,3)

*Other includes the Australian dollar, Canadian dollar and Japanese yen.

**All foreign borrowings are held by the company.

The following spot rates were used to translate financial instruments denominated in foreign currency:

Assets Liabilities Average

2009 US dollar 7,54 7,57 7,56 Pound sterling 12,04 12,09 12,07 Euro 11,01 11,05 11,03

2008 US dollar 8,31 8,32 8,32 Pound sterling 14,97 14,98 14,98 Euro 11,79 11,79 11,79

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38. Financial instruments (continued)38.3 Foreign currency risk (continued)

Foreigncurrency Average Rands

(in millions) rate (in millions)

Forward exchange contracts outstanding at the balance sheet date all fall due within 12 months. A summary of forward exchange contract positions bought to settle group foreign liabilities and sold to settle group foreign assets is shown below.

2009Foreign currency soldUS dollar 1,1 7,6 8,6Pound sterling 0,3 12,1 3,8Euro 0,7 11,1 7,6Other currencies — — 9,3

Foreign currency purchasedUS dollar 34,3 7,6 260,5Pound sterling 1,6 12,1 19,8Euro 2,6 11,2 29,2Other currencies — — 9,7

Unhedged foreign currency monetary assetsUS dollar 5,3 7,6 39,5Pound sterling 0,7 12,1 7,9Euro 3,1 11,0 33,8Other currencies — — 17,3

Unhedged foreign currency monetary liabilitiesUS dollar 1,4 7,6 10,9Other currencies — — 3,3

2008Foreign currency soldUS dollar 8,2 8,3 68,4Pound sterling 0,4 15,0 6,6Euro 7,5 11,9 89,1Other currencies — — 15,6

Foreign currency purchasedUS dollar 55,7 8,3 464,4Pound sterling 3,2 15,1 48,5Euro 5,1 11,9 61,1Other currencies — — 12,3

Unhedged foreign currency monetary assetsUS dollar 10,8 8,3 87,4Pound sterling 1,1 15,0 16,1Euro 4,2 11,8 49,1Other currencies — — 24,2

Unhedged foreign currency monetary liabilitiesUS dollar 1,5 8,3 12,4Other currencies — — 0,5

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38. Financial instruments (continued)38.3 Foreign currency risk (continued) Cash flow hedges At 30 September 2009, the group had foreign exchange contracts outstanding designated as hedges of future

purchases from suppliers outside South Africa for which the group has firm commitments.

Foreign A summary of these contracts are: currency Average Rands

(in millions) rate (in millions)

2009 Foreign currency bought US dollar 15,3 7,6 116,6 Euro 1,8 11,5 20,9 Pound sterling 1,0 13,3 13,1 Other currencies — — 8,9

2008 Foreign currency bought US dollar 27,1 8,0 215,6 Euro 3,4 12,0 40,6 Pound sterling 2,5 15,2 37,4 Other currencies — — 8,8

The terms of the forward currency contracts have been negotiated to match the terms of the commitments.

The cash flow hedge of expected future purchases was assessed to be effective and an unrealised profit of R3 million (2008: loss R10,1million), with deferred tax of R0,9 million (2008: R2,8 million) relating to the hedging instrument is included in equity. These are expected to affect the income statement in the following financial year:

Foreign currency 1 – 6 7 – 12 (in millions) months months

US dollar 15,2 0,1 Euro 1,5 0,3 Pound sterling 1,0 — Australian dollar 0,6 — Japanese yen 57,2 —

During the year R9,5 million (2008: R10,8 million) was removed from equity and included in the cost or carrying amount of the non-financial asset or liability.

There are no forecast transactions for which hedge accounting was previously used but is no longer expected to occur.

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38. Financial instruments (continued)38.3 Foreign currency risk (continued) Foreign currency sensitivity The following table details the group’s and company’s sensitivity to a 10% weakening/strengthening in the ZAR

against the respective foreign currencies.

The sensitivity analysis includes only material outstanding foreign currency denominated monetary items as detailed in the table above and adjusts their translation at the reporting date for a 10% change in foreign currency rates. A positive number indicates an increase in profit or loss and other equity where the ZAR weakens against the relevant currency.

GROUPProfit or (loss) Other equity

2009 2008 2009 2008Rm Rm Rm Rm

USD + 10% 107 72 — 1USD – 10% (107) (72) — (1)EUR + 10% (3) (27) (1) —EUR – 10% 3 27 1 —Pound sterling + 10% — (3) — —Pound sterling – 10% — 3 — —Other + 10% 19 (1) — (1)Other – 10% (19) 1 — 1

Total + 10% 122 41 (1) —Total – 10% (122) (41) 1 —

COMPANYProfit or (loss) Other equity

2009 2008 2009 2008Rm Rm Rm Rm

USD + 10% 26 28 — —USD – 10% (26) (28) — —Other + 10% 3 — — —Other – 10% (3) — — —

Total + 10% 28 28 — —Total – 10% (28) (28) — —

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38. Financial instruments (continued)38.4 Interest rate risk management Interest rate risk results from the cash flow and financial performance uncertainty arising from interest rate fluctuations. Financial assets and liabilities affected by interest rate fluctuations include bank and cash deposits as well as bank

borrowings. At the balance sheet date, the group cash deposits were accessible immediately or had maturity dates up to six months. The interest rates earned on these deposits closely approximate the market rates prevailing.

GROUPAverage

interestrate for

Fixed Floating the year (Rands in millions) rate rate Total (%)

The interest rate profile of the group’s borrowings at 30 September 2009 and 30 September 2008 is reflected in note 32 to these annual financial statements.

2009 Local currency denominated loans Loan repayable by 2011 (secured) 51,2 51,2 15,5 Loan repayable by 2015 (secured) 254,2 254,2 7,5 Other loans and capitalised finance leases

(secured and unsecured) Variable Variable 2,0 9,0 to 12,5

307,4

Foreign currency denominated loans Loan repayable by 2012 (secured) 36,0 36,0 13,5 Loan repayable by 2013 (secured)* 162,2 162,2 6,8 Loan repayable by 2016 (unsecured)* 43,9 43,9 13,5

242,1

Total 549,5

2008 Local currency denominated loans No fixed payment terms (unsecured) 0,2 interest free Loan repayable by 2011 (secured) 77,5 77,5 15,5 Loan repayable by 2013 (secured) 1,7 1,7 11,5 Loan repayable by 2015 (secured) 267,6 267,6 7,5 Other loans and capitalised finance leases

(secured and unsecured) Variable Variable 6,4 12,0 to 13,5

353,4

Foreign currency denominated loans Loan repayable by 2012 (secured) 10,5 10,5 15,0 Loan repayable by 2013 (secured)* 153,0 153,0 6,8 Loan repayable by 2016 (unsecured)* 29,9 29,9 12,0

193,4

Total 546,8

*Company loans.

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38. Financial instruments (continued)38.4 Interest rate risk management (continued) Interest rate sensitivity The sensitivity analysis addresses only the floating interest rate exposure emanating from the net cash position. The

interest rate exposure has been calculated with the stipulated change taking place at the beginning of the financial year and held constant throughout the reporting period.

If interest rates had increased/(decreased) by 1% and all other variables were held constant, the profit for the year ended would increase/(decrease) as detailed in the table below due to the use of the variable interest rates applicable to the long-term borrowings and short-term borrowings. The fixed interest rate on the borrowings would not affect the financial performance. Any gain or loss would be unrealised and consequently the notional impact is not presented.

COMPANY GROUP2009 2008 2009 2008

ZAR borrowings(3,7) (3,6) + 1% (22,9) (20,0)3,7 3,6 — 1% 22,9 20,0

Foreign borrowings(2,8) (0,4) + 1% (2,8) (0,5)2,8 0,4 — 1% 2,8 0,5

Total

(6,5) (4,0) + 1% (25,7) (20,5)6,5 4,0 — 1% 25,7 20,5

38.5 Liquidity risk management Liquidity risk arises from the seasonal fluctuations in short-term borrowing positions. A material and sustained shortfall

in cashflows could undermine investor confidence and restrict the group’s ability to raise funds.

The group manages its liquidity risk by monitoring weekly cash flows and ensuring that adequate cash is available or borrowing facilities maintained. In terms of the articles of association, the group’s borrowing powers are unlimited.

Other than the major loans disclosed in note 32 to these annual financial statements, which are contracted with various financial institutions, the group has no significant concentration of liquidity risk with any other single counterparty.

The group’s liquidity exposure is represented by the aggregate balance of financial liabilities as indicated in the categorisation table in note 38.8.

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38. Financial instruments (continued)38.5 Liquidity risk management (continued) Contractual maturity for its non-derivative financial liabilities The following tables detail the group’s and company’s remaining contractual maturity for non-derivative financial

liabilities:

The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the group and company will be required to pay.

The table includes both interest and principal cash flows. The ‘discount’ column represents the possible future cash flows attributable to the instrument included in the maturity analysis, which are not included in the carrying amount of the financial liability on the face of the balance sheet.

Carrying Finance 0 – 6 7 – 12 1 – 5 > 5 (Rands in millions) amount charge months months years years

GROUP For the year ended 30 September 2009 Trade and other payables 2 684,1 — 2 681,8 1,8 0,5 — Borrowings (long- and short-term) 883,6 190,2 222,0 203,2 520,4 128,2 Sea Harvest put option — — — — — —

Total 3 567,7 190,2 2 903,8 205,0 520,9 128,2

For the year ended 30 September 2008 Trade and other payables 3 546,3 — 3 540,2 6,0 — 0,1 Borrowings (long- and short-term) 1 831,4 219,1 1 243,0 137,0 488,5 182,0 Sea Harvest put option 81,4 — 81,4 — — —

Total 5 459,1 219,1 4 864,6 143,0 488,5 182,1

COMPANY For the year ended 30 September 2009 Trade and other payables 49,5 — 49,5 — — — Borrowings (long- and short-term) 206,7 73,1 — — 279,8 — Intergroup loan accounts 476,9 — — — 476,9 —

Total 733,1 73,1 49,5 — 756,7 —

For the year ended 30 September 2008 Trade and other payables 239,2 — 239,2 — — — Borrowings (long- and short-term) 692,6 73,2 509,7 — 242,6 13,5 Intergroup loan accounts 596,8 — — — 596,8 —

Total 1 528,6 73,2 748,9 — 839,4 13,5

Refer to notes 34.3 and 34.4 for disclosure relating to operating and finance lease commitments.

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38. Financial instruments (continued)38.6 Credit risk management GROUP Credit risk arises from the risk that a counterparty may default or not meet its obligations timeously. The group limits its counterparty exposure arising from financial instruments by only dealing with well-established

institutions of high credit standing. The group does not expect any counterparties to fail to meet their obligations given their high credit ratings.

Credit risk in respect of the group’s customer base is controlled by the application of credit limits and credit monitoring procedures. Certain significant receivables are monitored on a daily basis. Where appropriate, credit guarantee insurance is obtained.

The group’s credit exposure, in respect of its customer base, is represented by the net aggregate balance of amounts receivable. The maximum credit exposure at balance sheet date was R2 658,0 million (2008: R3 095,0 million). Concentrations of credit risk are disclosed in note 21.4.

COMPANY The company had no significant credit exposure at 30 September 2009.

38.7 Capital management The primary objective of the company and group’s capital management is to ensure that it maintains a strong credit

rating and healthy capital ratios in order to support its business and maximise shareholder value. The company and group manages its capital structure, calculated as equity plus net debt, and makes adjustments to it, in

light of changes in economic conditions. To maintain or adjust the capital structure, the company and group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the years ended 30 September 2009 and 30 September 2008.

The company and group monitor capital using a gearing ratio, which is net debt divided by total equity. The group targets a long-term gearing ratio of 30% to 40%, except when major investments are made where this target may be exceeded.


GROUP Cash and cash equivalents (506,2) (558,7) Long-term borrowings 482,8 497,5 Short-term borrowings 400,8 1 333,9

Net debt 377,4 1 272,7 Total equity 7 284,7 6 219,0

Total capital 7 662,1 7 491,7 Net debt to equity (%) 5,2 20,5

COMPANY Cash and cash equivalents (414,0) (563,4) Long-term borrowings 198,5 182,9 Short-term borrowings 8,2 509,7

Net debt (207,3) 129,2 Total equity 4 039,2 4 478,5

Total capital 3 831,9 4 607,7 Net debt to equity (%) (5,1) 2,9

38.8 Financial instruments are normally held by the group until they close out in the normal course of business. The fair values of the group’s financial instruments, which principally comprise put, call and futures positions with SAFEX, approximate their balance sheet carrying values. The maturity profile of these financial instruments fall due within 12 months. The maturity profile of the group’s long-term liabilities is disclosed in note 32.1 of these annual financial statements.

Trade and other receivables, investments and loans and trade and other payables carried on the balance sheet approximate the fair values thereof.

Long-term and short-term borrowings are measured at amortised cost using the effective interest rate method, and the carrying amounts approximate their fair value.

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38. Financial instruments (continued)38.9 Categorisation of financial assets and liabilities

Held to Loans andmaturity receivables

Amortised Amortised (Rands in millions) cost cost

GROUP 2009 Assets Other investments Loans 22,1 Trade and other receivables 2 602,1 Cash and cash equivalents 506,2

Total 3 130,4

Shareholders’ equity and liabilities Long-term borrowings Trade and other payables Short-term borrowings

Total

2008 Assets Other investments Loans 40,9 Trade and other receivables 3 014,3 Preference shares (included in cash and cash equivalents) 168,6 Cash and cash equivalents 390,1

Total 168,6 3 445,3

Shareholders’ equity and liabilities Long-term borrowings Sea Harvest put option Trade and other payables Short-term borrowings

Total

Refer to the accounting policies for further details on the above classifications.

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Financialassets

available Other Other Non-financial Totalfor sale liabilities liabilities items book value

AmortisedFair value cost Fair value

8 036,2 8 036,2441,4 441,4

22,179,3 2 681,4

506,2

441,4 8 115,5 11 687,3

8 119,6 8 119,6480,8 2,0 482,8

2 684,1 2 684,1400,8 400,8

3 565,7 8 121,6 11 687,3

8 009,6 8 009,6965,2 965,2

40,988,2 3 102,5

168,6390,1

965,2 8 097,8 12 676,9

7 217,8 7 217,8497,4 497,4

81,4 81,43 546,3 3 546,31 333,9 1 333,9

5 377,6 81,4 7 217,8 12 676,8

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38. Financial instruments (continued)38.9 Categorisation of financial assets and liabilities (continued)

Financialassets Non-

Loans and available Other financial Totalreceivables for sale liabilities items book value

Amortised Amortised(Rands in millions) cost Fair value cost

COMPANY2009Assets 1 292,0 1 292,0Other investments 161,6 161,6Loans 2 896,1 2 896,1Trade and other receivables 17,8 0,1 17,9Cash and cash equivalents 414,0 414,0

Total 3 327,9 161,6 1 292,1 4 781,6

Shareholders’ equity and liabilities 476,9 4 048,5 4 525,4Long-term borrowings 198,5 198,5Trade and other payables 49,5 49,5Short-term borrowings 8,2 8,2

Total 733,1 4 048,5 4 781,6

2008Assets 1 643,6 1 643,6Other investments 302,5 302,5Loans 3 474,6 3 474,6Trade and other receivables 26,8 26,8Cash and cash equivalents 563,4 563,4

Total 4 064,8 302,5 1 643,6 6 010,9

Shareholders’ equity and liabilities 596,8 4 482,3 5 079,1Long-term borrowings 182,9 182,9Trade and other payables 239,2 239,2Short-term borrowings 509,7 509,7

Total 1 528,6 4 482,3 6 010,9

Refer to the accounting policies for further details on the above classifications.

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2009 2008

39. Joint ventures Percentage holding39.1 The principal joint ventures included: Oceana Group Limited — 45,4 Sea Vuna Fishing Company (Pty) Limited — 49,8

(Rands in millions)

39.2 The group’s proportionate share of the assets and liabilities of the joint ventures, which are included in the consolidated financial statements, are as follows:

Property, plant, equipment, goodwill and investments — 253,6 Current assets — 484,0 Less: Current liabilities — (237,1)

— 500,5 Minority interest — (13,5) Provision for post-retirement medical aid — (0,3) Long-term liabilities including amounts due to reporting company — (7,2) Deferred taxation (net) — (19,2)

Total shareholders’ interest — 460,3

39.3 The group’s proportionate share of the trading results of the joint ventures is as follows:*

Revenue 730,6 1 364,3

Profit before abnormal items 85,5 157,6 Abnormal items 1,5 5,3

Profit after abnormal items 87,0 162,9 Income tax expense – inclusive of tax on abnormal items (28,4) (47,3)

Profit for the year 58,6 115,6

Attributable to: Ordinary shareholders 55,2 111,8 Minorities 3,4 3,7

* 2008 trading results have been restated to exclude Sea Vuna Fishing Company (Pty) Limited which was sold during 2009 as part of the Sea Harvest disposal.

39.4 The group’s proportionate share of cash flows of the joint ventures is as follows: Cash operating income after interest and taxation 66,3 160,6 Working capital changes (86,3) (36,4)

Cash (utilised in)/generated from operations (20,0) 124,2 Dividends paid (61,1) (60,7)

Net cash (outflow)/inflow from operating activities (81,1) 63,5 Net cash outflow from investing activities (10,7) (41,2)

Net cash (outflow)/inflow before financing activities (91,8) 22,3 Net cash inflow/(outflow) from financing activities 8,9 (23,9)

Net decrease in cash and cash equivalents (82,9) (1,6)

39.5 The group’s proportionate share of the joint ventures’ capital commitments included in the financial statements is Rnil (2008: R58,0 million).

39.6 The group’s proportionate share of the joint ventures’ contingent liabilities is Rnil for both 2009 and 2008.

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40. Related-party disclosures The board of directors of Tiger Brands Limited has given general declarations in terms of section 234 of the Companies

Act. These declarations indicate that certain directors hold positions of influence in other entities which are suppliers, service providers, customers and/or competitors of Tiger Brands Limited. Transactions conducted with these director-related customers and suppliers were on an arm’s length basis.

The sales to and purchases from related parties are made at normal market prices. Outstanding balances at the year-end are unsecured and settlement occurs in cash. For the year ended 30 September 2009, the group has not recorded any impairment of receivables relating to amounts owed by related parties (2008: Nil, apart from the waiver of a loan for R600 million relating to deregistered dormant companies). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.

Details of material transactions with related parties not disclosed elsewhere in the financial statements are as follows:

RentalsAmounts and fees

Sales Purchases owed receivedto related from related to related from related

(Rands in millions) parties parties parties parties

GROUP 2009 Related party Associate/Joint venture Oceana Group Limited* — 10,9 0,4 — Sea Vuna Fishing Company (Pty) Limited 0,8 24,6 0,6 5,3

2008 Related party Joint venture Oceana Group Limited* — 8,9 1,1 0,2 Sea Vuna Fishing Company (Pty) Limited 1,1 32,1 3,2 0,6

* In 2009 Oceana and its related companies were reclassified as an associate.

Other related parties(Rands in millions) 2009 2008

Key management personnel* Short-term employee benefits 75,3 78,9 Post-employment and medical benefits 8,8 18,4 Share-based payments 11,8 10,1

Total compensation paid to key management personnel 95,9 107,4

* Key management personnel comprises the top tier of the organisation and the managing executives of the individual businesses, forming the core of the decision-making process for the group.

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40. Related-party disclosures (continued)Amounts Amountsowed by owed to

related related Dividends(Rands in millions) parties1 parties1 received

COMPANY2009Related party – intergroupSubsidiariesDurban Confectionery Works (Pty) Limited 483,0 — —Sea Harvest Corporation Limited — — 22,8Tiger Consumer Brands Limited 2,1 — 236,0Tiger Brands Mauritius (Pty) Limited — 256,1 0,7Enterprise Foods (Pty) Limited 0,4 — 270,0Langeberg Holdings Limited 702,4 — —Langeberg Foods Africa (Pty) Limited — 201,6 —The Duntulum Trust 18,9 — —Gloriande NV 0,2 — —The Designer Group (Pty) Limited — — 35,0Tiger Food Brands Intellectual Property Holding Company (Pty) Limited 248,6 — —Investment and dormant companies 1 438,1 19,2 92,7Chocolaterie Confiserie Camerounaise — — 5,6

Joint venturesOceana Group Limited — — 72,0

OtherTiger Brands Employee Share Trust 0,8 8,8 —1Interest free with no fixed repayment terms. Not repayable before 30 September 2010.

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40. Related-party disclosures (continued) Amounts Amounts owed by owed to

related related Dividends (Rands in millions) parties1 parties1 received

COMPANY 2008 Related party – intergroup Subsidiaries Durban Confectionery Works (Pty) Limited 483,0 — — Sea Harvest Corporation Limited — — 29,9 Sea Vuna Fishing Company (Pty) Limited 2,0 3,2 — Tiger Consumer Brands Limited 202,1 — 1 188,6 Tiger Brands Mauritius (Pty) Limited — 281,4 — Enterprise Foods (Pty) Limited 480,4 — 1 000,6 Langeberg Holdings Limited 702,4 — — Langeberg Foods Africa (Pty) Limited — 201,6 — Barberton Bakery (Pty) Limited 0,3 — — The Duntulum Trust 18,9 — — Gloriande NV 0,2 — — The Designer Group (Pty) Limited — — 45,0 Tiger Food Brands Intellectual Property Holding Company (Pty) Limited 220,6 — — Investment and dormant companies 1 364,3 113,8 1 244,3

Joint ventures Oceana Group Limited — — 50,5

Other Tiger Brands Employee Share Trust 1,0 9,5 —

1Interest free with no fixed repayment terms. Not repayable before 30 September 2009.

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41. Discontinued operations41.1 Sea Harvest On 28 May 2009 the group disposed of Sea Harvest. The results of Sea Harvest for the eight months to 28 May 2009 (2008: 12 months to 30 September 2008), which

are included in the group results, are presented below:28 May 30 September

2009 2008

Turnover 605,5 934,4

Operating income before abnormal items 56,8 105,3 Abnormal items 2,1 8,9 Interest paid (0,5) (1,0) Interest received 8,2 11,5 Dividends received 7,5 10,3

Profit before tax from a discontinued operation 74,1 135,0 Taxation (19,1) (34,0)

Profit for the year from a discontinued operation 55,0 101,0

Attributable to minorities 13,9 25,6

The major classes of assets and liabilities of Sea Harvest are not classified as held for sale since the discontinuation occurred subsequent to 30 September 2008 and the transaction was completed prior to 30 September 2009.

The net cash flows generated/(incurred) by the Sea Harvest business are as follows: Operating activities 98,3 47,1 Investing activities (39,6) (43,0) Financing activities (0,2) (0,7)

Net cash inflow 58,5 3,4

The major classes of assets and liabilities of Sea Harvest were not classified as held for sale as at 30 September 2008 as the decision taken to discontinue the operation was made during the current financial year.

Assets Property, plant and equipment — 288,0 Goodwill and other intangibles — 17,7 Investments — 22,0 Deferred taxation asset — 0,6 Cash and cash equivalents — 231,9 Inventory — 151,3 Trade and other receivables — 200,3

Assets classified as held for sale — 911,8

Liabilities Interest-bearing liabilities (long- and short-term borrowings) — 4,7 Deferred taxation liability — 57,8 Provision for post-retirement medical aid — 19,2 Trade and other payables — 171,9 Taxation — 10,0

Liabilities directly associated with assets classified as held for sale — 263,6

Net assets directly associated with disposal group — 648,2

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41. Discontinued operations (continued)41.2 Healthcare On 25 August 2008 the unbundling of Adcock Ingram Holdings Limited was completed. The results of Adcock Ingram Holdings Limited for the 11 months to 24 August 2008, which were included in the

group results, are presented below:30 September 24 August


Turnover — 2 926,9

Operating income before abnormal items — 899,5 Abnormal items — (71,4) Interest paid — (171,5) Interest received — 47,7 Dividends received — 5,2

Profit before tax from a discontinued operation — 709,5 Taxation — (198,9)

Profit for the year from a discontinued operation — 510,6

The major classes of assets and liabilities of the Healthcare business classified as held for sale are not presented as the transaction was completed prior to 30 September 2008.

The net cash flows incurred by the Healthcare business are as follows: Operating activities — 342,2 Investing activities — (1 429,5) Financing activities — 1 312,9

Net cash inflow — 225,6

42. Subsequent events The following material events occurred during the period subsequent to 30 September 2009, but prior to these

financial statements being authorised for issue:

Crosse & Blackwell Purchase of the Crosse & Blackwell mayonnaise business from Nestlé. Further details are disclosed in note 1.1 to

these financial statements.

BEE Phase II On 20 October 2009, Tiger Brands implemented the second phase of its Broad-Based Black Economic

Empowerment (“BEE”) strategy which introduced further direct black ownership to the company (“the Phase II BEE Transaction”). The Phase II BEE Transaction facilitated the subscription of a further 9,09% ownership interest in the company’s enlarged issued ordinary share capital post implementation of the transaction (net of 10 326 758 treasury shares held by Tiger Consumer Brands Limited) by black participants. The black participants include a strategic black partner, black managers and general staff employed by Tiger Brands and its wholly-owned subsidiaries (“the Tiger Brands group”), the Thusani Trust (which is currently focused on assisting with the tertiary education requirements of the immediate families of the black employees of the Tiger Brands group), and the Tiger Brands Foundation, a new trust established for the benefit of broad-based regional and community groups.

The Phase II BEE Transaction follows the successful implementation of the first phase of Tiger Brands’ BEE strategy in October 2005, in terms of which Tiger Brands transferred approximately 4% of its then issued share capital to a broad-base of empowerment shareholders comprising Tiger Brands’ black managers and other staff, as well as the Thusani Trust.

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INTEREST IN SUBSIDIARY COMPANIES AND JOINT VENTURES

Issued Effective Company’s interestordinary capital percentage holding Shares at cost Indebtedness

2009 2008 2009 2008 2009 2008 2009 2008(Rands in millions) % %

Designer Group 0,1 0,1 100,00 100,00 396,3 396,3 — — Durban Confectionery Works (Pty) Limited 0,4 0,4 100,00 100,00 63,4 63,4 483,0 483,0 Enterprise Foods (Pty) Limited — — 100,00 100,00 49,7 49,7 0,4 480,4 Langeberg Holdings Limited 1,6 1,6 100,00 100,00 190,8 323,2 702,4 702,4 Langeberg and Ashton Foods (Pty) Limited — — 66,67 66,67 — — — —Sea Harvest Corporation Limited — 0,8 — 74,64 — 220,6 — — Tiger Food Brands Intellectual Property Holding Company (Pty) Limited 1,0 1,0 100,00 100,00 17,3 17,3 248,6 220,6 Tiger Consumer Brands Limited 0,1 0,1 100,00 100,00 0,1 0,1 2,1 202,1 Tiger Brands Mauritius3 35,7 35,7 100,00 100,00 337,9 337,9 (256,1) (281,4)Oceana Group Limited2 — 0,1 — 45,44 — 31,5 — — Haco Industries Kenya Limited3 11,1 11,1 51,00 51,00 45,5 41,4 — — Chocolaterie Confiserie Camerounaise3 71,8 71,8 74,70 74,70 152,7 152,5 — — Pharma I Investment Holdings Limited4 — — 100,00 100,00 — — 1 227,6 1 151,8 Other miscellaneous, property, investment and dormant companies — — 100,00 100,00 4,8 4,8 8,8 (83,5)

1 258,5 1 638,7 2 416,81 2 875,41

1 Amounts owed to the company 2 893,7 3 472,2

Amounts owed by the company (476,9) (596,8)

2 416,8 2 875,4 2 Details of joint ventures can be found in note 39 to the financial statements. In 2009, Oceana was reclassified as an associate, further details

of associates are available in note 16.3 All companies are incorporated in South Africa other than four, two of which are incorporated in Mauritius, one in Kenya and one

in Cameroon.4 Previously Adcock Ingram Holdings (Pty) Limited.

All rand amounts of less than R100 000 are shown as nil in the above table.

Annexure A

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Annexure B

INTEREST IN ASSOCIATED COMPANIES

Date of financial Effectivestatements percentage holding Nature of business

2009 2008

Empresas Carozzi (Chile) 31/12/2008 24,4 24,4 Food processingOceana Group Limited1 30/09/2009 45,1 — Fishing

1 With effect from 1 April 2009 Oceana was reclassified from a joint venture to an associate.

Annexure C

OTHER INVESTMENTS

Effective GROUP COMPANYpercentage holding Number of shares Number of shares

2009 2008 2009 2008 2009 2008% %

Listed investmentsAdcock Ingram Holdings Limited 3,4 9,4 5 896 140 16 222 941 — — AVI Limited — 3,3 — 11 382 134 — 11 382 134 National Foods Holdings Limited 26,1 26,1 17 596 696 17 596 696 12 557 991 12 557 991

Unlisted investmentsOrdinary sharesBusiness Partners Limited 0,2 0,2 336 550 336 550 336 550 336 550

The above lists the number of shares held by the group and the company, where material. A register is available for inspection at the registered office of the company.

Administration

BASTION GRAPHICS

TIGER BRANDS LIMITEDReg No 1944/017881/06

COMPANY SECRETARYI W M Isdale

REGISTERED OFFICE3010 William Nicol Drive

BryanstonSandton

PO Box 78056, Sandton, 2146Telephone 27 11 840 4000

Telefax 27 11 514 0477

AUDITORSErnst & Young Inc.

PRINCIPAL BANKERNedbank Limited

SPONSORJ P Morgan Equities Limited

SOUTH AFRICAN SHARE TRANSFER SECRETARIESComputershare Investor Services (Pty) Limited

70 Marshall StreetJohannesburg

2001PO Box 61051, Marshalltown, 2107

AMERICAN DEPOSITORY RECEIPT (ADR) FACILITYADR Administrator

The Bank of New York Mellon

SHAREHOLDER RELATIONS DEPARTMENT FOR ADRsPO Box 11258

New York, NY10286Level I ADR Symbol: T10AY

WEBSITE ADDRESShttp://www.tigerbrands.com

Adding value to life

Telephone: 011 840 4000

Facsimile: 011 514 0477

Physical address: Tiger Brands Limited, 3010 William Nicol Drive, Bryanston

Postal address: PO Box 78056, Sandton, 2146, South Africa

Website: www.tigerbrands.com

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