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Notes to the financial statements
continued
for the year ended 30 September 2015
174
Tiger Brands Limited integrated annual report
2015
37 Financial instruments
continued
37.2 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 other
comprehensive income until the disposal of the net investment, at which time exchange differences are recycled through
profit or loss.
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 2015.
The exposure and concentration of foreign currency risk is included in the table below:
(R’million)
South
African
rand
US
dollar
Pound
sterling
Euro
Nigerian
naira Other*
Total
GROUP
2015
Financial assets
Accounts receivable
3 710,9
200,5
12,5
18,8
548,0 405,0
4 895,7
Cash and cash equivalents
386,7
390,3
4,1
8,5
113,5
148,5
1 051,6
Financial liabilities
Borrowings**
(2 918,9)
–
–
– (1 551,3)
(369,6) (4 839,8)
Accounts payable
(3 880,5)
(185,5)
(10,3)
(28,5)
(927,4)
(284,7) (5 316,9)
2014
Financial assets
Accounts receivable
2 227,1
841,3
249,1
305,8
747,8
496,3 4 867,4
Cash and cash equivalents
309,7
266,7
8,5
110,2
233,7
231,5 1 160,3
Financial liabilities
Borrowings**
(2 942,9)
(23,3)
–
– (1 383,8)
(299,5) ( 4 649,5)
Accounts payable
(3 614,6)
(93,7)
(92,0)
(64,5)
(937,7)
(303,7) ( 5 106,2)
* Other includes the Australian dollar, Canadian dollar, Japanese yen, Swiss franc, New Zealand dollar, Cameroon franc and
Kenyan shilling.
** In 2015, R270,7 million (2014: R169,3 million) is held by the company (refer to note 31).