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Tiger Brands Limited Integrated Annual Report
2014
Annual financial statements
Consumables are written down with regard to their
age, condition and utility.
Costs of inventories include the transfer from other
comprehensive income 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
Group as a lessee
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 assets 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.
Capitalised lease assets are depreciated in line with
the group’s stated depreciation policy for each asset.
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 definition of a finance lease.
Operating lease rentals are charged against trading
profit on a straight-line basis over the lease term.
Group as a lessor
Leases in which the group does not transfer
substantially all the risks and benefits of ownership
as an asset are classified as operating leases. Initial
direct costs incurred in negotiating an operating
lease are added to the carrying amount of the
leased asset and recognised over the lease term on
the same basis as rental income. Contingent rents
are recognised as revenue in the period in which
they are earned.
Revenue
Revenue comprises turnover, rental income, 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.
The group assesses its revenue arrangements against
specific criteria in order to determine if it is acting as
principal or agent.