Tiger Brands

The preparation of these results has been supervised by N Doyle, chief financial officer of Tiger Brands Limited.

The condensed consolidated financial statements are prepared in accordance with the requirements of the JSE Limited Listings Requirements for provisional reports and the requirements of the Companies Act of South Africa. The Listings Requirements require provisional reports to be prepared in accordance with the framework concepts and the measurement and recognition requirements of International Financial Reporting Standards (IFRS) and the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by Financial Reporting Standards Council and to also, as a minimum, contain the information required by IAS 34 Interim Financial Reporting. The accounting policies applied in the preparation of the condensed consolidated financial statements are in terms of IFRS and are consistent with those applied in the previous consolidated annual financial statements.

Ernst & Young Inc., Tiger Brands Limited’s independent auditors, have audited the consolidated financial statements of Tiger Brands Limited from which the condensed consolidated financial results have been derived. The auditors have expressed an unmodified audit opinion on the consolidated annual financial statements. Any reference to future financial performance included in this announcement has not been audited or reported on by the group’s external auditors. The auditors’ audit report does not necessarily report on all the information contained in this announcement/financial results. Shareholders are therefore advised that in order to obtain a full understanding of the nature of the auditors’ engagement they should obtain a copy of the auditors’ audit report together with the accompanying financial information from the issuer’s registered office.

Revenue is recorded in terms of IFRS 15. The majority of the group’s financial instruments measured at fair value in terms of IFRS 13 are noted as level 1 hierarchy, which are valued based on quoted market prices.

IFRS 9 brings together all the aspects of accounting for financial instruments: classification, measurement, impairment and hedge accounting. IFRS 9 is effective for annual periods beginning on or after 1 January 2018, with early application permitted. The group will apply the new rules using a modified restrospective approach from 1 October 2018. Comparatives for 2018 will not be restated in the 2019 financial statements.

The adoption of IFRS 9 will impact on the provisions for receivables as IFRS 9 applies the expected credit loss model rather than the incurred loss model. The new hedge accounting rules will align the accounting for hedging instruments more closely with the group’s risk management practices.

The group has reviewed its financial assets and financial liabilities and the impact on the 2018 financial statements is assessed to be immaterial.

IFRS 16 introduces significant changes to lessee accounting as it removes the distinction between operating and finance leases under IAS 17 and requires a lessee to recognise a right-of-use asset and a lease liability at lease commencement for all leases, except for short-term leases and leases of low value assets. The impact of this is being quantified and an impact assessment will be completed by 30 September 2019. The effective date will be 1 October 2019.

Goodwill and indefinite useful life intangible assets are tested for impairment annually (as at  30 September) and when circumstances that indicate the carrying value may be impaired. The group’s impairment tests for goodwill and intangible assets with indefinite useful lives are based on the value-in-use calculations. The impairments recognised in the current year relate mainly to the Personal Care category within HPCB business (R125,0 million) as well as the full impairment of the goodwill and intangible assets of the Hercules business (R19,3 million). The impairment on property, plant and equipment relates mainly to Deli Foods, LAF and group infrastructure assets.

8.2 Reconciliation of headline earnings excluding VAMP

With the exception of the Listeria litigation update reflected on page 4 and the decision to pursue an unbundling of its shareholding in Oceana as reflected on page 5, there are no material events that occurred during the period subsequent to 30 September 2018, but prior to these financial results being authorised for issue.