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ANNUAL FINANCIAL STATEMENTS
Notes to the financial statements
continued
for the year ended 30 September 2014
146
Tiger Brands Limited Integrated Annual Report
2014
The group evaluates the performance of its
reportable segments based on operating profit. The
group accounts for intersegment sales and transfers
as if the sales and transfers were entered into under
the same terms and conditions as would have been
entered into in a market-related transaction.
The financial information of the group’s reportable
segments is reported to the CODM for purposes of
making decisions about allocating resources to the
segment and assessing its performance.
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 when
the asset is available for use. An asset’s residual
value, useful life and depreciation method is
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
Three to five
equipment
years
Plant and equipment
Five to 15 years
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 profit or loss in the year the asset
is derecognised.
Goodwill and intangible assets
Goodwill
Goodwill is initially measured at cost being the
excess of the consideration transferred over the
group’s net identifiable assets acquired and liabilities
assumed. If this consideration is lower than the fair
value of the net assets of the subsidiary acquired, the
difference in profit or loss is recognised as a “gain
on bargain purchase”. 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 in profit or loss. 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.
Where goodwill relates to a specific cash-generating
unit and part of the operation within that unit is
disposed of, the goodwill associated with the
operation disposed of is included in the carrying
amount of the operation when determining the gain
or loss on disposal of the operation. Goodwill
disposed of in this circumstance is measured based
on the relative values of the operation disposed of
and the portion of the cash-generating unit retained.
Intangible assets
Intangible assets acquired separately are measured
on initial recognition at cost. The cost of an