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ANNUAL FINANCIAL STATEMENTS
Notes to the financial statements
continued
for the year ended 30 September 2014
160
Tiger Brands Limited Integrated Annual Report
2014
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 34 and 35.
Provisions
Best estimates, being the amount that the group
would rationally pay to settle the obligation, are
recognised as provisions at the reporting 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 estimation.
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
incurred could differ materially from those estimated
at the reporting date. Further details are given in
note 30.
Assets, liabilities and contingent liabilities acquired
in a business combination
The amount of goodwill initially recognised as a
result of a business combination is dependent on the
allocation of the purchase price to the fair value of
the identifiable assets acquired and the liabilities
assumed. The determination of the fair value of the
assets and liabilities is based, to a large extent, on
management’s judgement.
The allocation of the purchase price affects the results
of the group as finite life intangible assets are
amortised, whereas indefinite life intangible assets,
including goodwill, are only tested for impairment on
an annual basis.
Identifiable intangible assets acquired under business
combination include trademarks and customer lists.
The fair value of these assets is determined by
discounting estimated future net cash flows generated
by the asset, where no active market for the assets
exists. The use of different assumptions for the
expectations of future cash flows and the discount rate
would change the valuation of the intangible assets.
Changes in accounting policies
The accounting policies adopted are consistent with
those of the previous financial year except as set out
below. The group has adopted the following new
and amended IFRS and IFRIC interpretations during
the year:
Further information on changes to accounting policies
The group has applied the following IFRS
interpretations during the year:
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IFRS 7
Disclosures – offsetting financial assets
and financial liabilities
. The amendment amends
the required disclosures to include information
that will enable users of an entity’s financial
statements to evaluate the effect or potential
effect of netting arrangements, including rights
of set-off associated with the entity’s recognised
financial assets and recognised financial
liabilities, on the entity’s financial position.
Adoption of this standard had no impact on the
separate and consolidated financial statements.
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IFRS 10
Consolidated Financial Statement
s.
IFRS 10 includes a new definition of control
which is used to determine which entities are
consolidated. This will apply to all entities,
including special-purpose entities (now known
as “structured entities”). Adoption of this
standard had no impact on the consolidated
financial statements.