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ANNUAL FINANCIAL STATEMENTS
Notes to the financial statements
continued
for the year ended 30 September 2014
152
Tiger Brands Limited Integrated Annual Report
2014
ineffective portion are recognised in profit or loss.
On disposal of the foreign operation, the cumulative
gain or loss recognised in other comprehensive
income is transferred to profit or loss.
Current versus non-current classification
Derivative instruments that are not designated and
effective hedging instruments are classified as current
or non-current or separated into a current and
non-current portion based on an assessment of the
facts and circumstances (ie the underlying contracted
cash flows).
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Where the group will hold a derivative as an
economic hedge (and does not apply hedge
accounting) for a period beyond 12 months after
the reporting date, the derivative is classified as
non-current (or separated into current and
non-current portions) consistent with the
classification of the underlying item.
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Embedded derivatives that are not closely related
to the host contract are classified consistent with
the cash flows of the host contract.
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Derivative instruments that are designated as,
and are effective, hedging instruments are
classified consistent with the classification of the
underlying hedged item.
Derecognition of financial assets and financial
liabilities
Financial assets or parts thereof are derecognised
when:
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the right to receive the cash flows has expired;
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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
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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.
This condition is regarded as met only when the sale
is highly probable and the asset or disposal group is
available for immediate sale in its present condition.
For a sale to be highly probable, management must
be committed to the sale at a price that is
reasonable in relation to its current fair value and an
active programme to locate a buyer and complete
the plan must be initiated. This should be expected
to qualify for recognition as a completed sale within
one year from the date of classification.
Assets classified as held-for-sale are not subsequently
depreciated and are held at the lower of their
carrying value and fair value less cost of disposal.
A discontinued operation is a separate major line of
business, separate component or geographical area of
operation that has been disposed of, or classified as
held-for-sale, as part of a single coordinated plan. A
subsidiary acquired exclusively with a view to resale
and that meets the criteria of a non-current asset
held-for-sale is also defined as a discontinued
operation.
In the consolidated income statement of the reporting
period and of the comparable period, income and
expenses from discontinued operations are reported
separately from income and expenses from
continuing activities down to the level of profit after
taxes, even when the group retains a non-controlling
interest in the subsidiary after the sale. The resulting
profit or loss (after taxes) is reported separately in the
income statement.
Inventories
Inventories are stated at the lower of cost or net
realisable value. Costs incurred in bringing each
product to its present location and conditions are
accounted for as follows:
Raw materials:
Purchase cost on a first-in
first-out basis.
Finished goods and
Cost of direct material and
work in progress:
labour and a proportion of
manufacturing overheads
based on normal operating
capacity but excluding
borrowing costs.