The preparation of the consolidated and separate annual financial statements for the year ended 30 September 2021, which appear on pages 1 to 97 in the financial statements, has been supervised by Deepa Sita, chief financial officer CA(SA) of Tiger Brands Limited.
The directors of Tiger Brands Limited are responsible for the integrity of the annual financial statements of the company, consolidated subsidiaries, associates and the objectivity of other information presented in the integrated annual report. The fulfilment of this responsibility is discharged through the establishment and maintenance of sound management and accounting systems, an organisational structure which provides for delegation of authority and establishes clear responsibility, together with the constant communication and review of the operations' performance measured against approved plans and budgets.
Management and employees operate in terms of a code of ethics approved by the board. The code requires compliance with all applicable laws and maintenance of the highest integrity in the conduct of all aspects of the business.
The financial statements, prepared in terms of International Financial Reporting Standards, are audited by our external auditors in conformity with International Standards on Auditing.
An audit committee of the board of directors, composed entirely of independent non-executive directors, meets periodically with our internal and external auditors as well as management to discuss internal financial controls and auditing and financial reporting matters. The auditors have unrestricted access to management, financial records as well as the audit committee.
The directors have no reason to believe that the group's operations will not continue as going concerns in the year ahead, other than where closures or discontinuations are anticipated, in which case provision is made to reduce the carrying cost of the relevant assets to net realisable value.
18 November 2021
18 November 2021
The CEO and the CFO, hereby confirm that:
18 November 2021
The committee is constituted as a statutory committee of Tiger Brands in respect of its duties in terms of section 94(7) of the Companies Act of South Africa. The committee's activities are guided by a detailed charter informed by the Companies Act and King IV™* and the JSE Listings Requirements, which is reviewed and approved by the board annually.
The committee has executed its duties and responsibilities for the group's financial reporting practices, internal control environment and external auditing for the review period in line with its approved charter.
The committee comprises three independent non-executive directors, and its chairman is not the chairman of the board. Members and attendance are detailed in the integrated annual report.
Biographical details of members and fees are noted in the remuneration report of the integrated annual report.
The fundamental role of an audit committee is to assist the board in fulfilling its oversight responsibilities in areas of financial reporting, internal control systems and internal and external audit functions. The committee considers and evaluates the combined assurance framework and the assurance plans to ensure satisfactory coverage of risks that supports the control environment.
This report is provided by the audit committee appointed for the 2021 financial year.
The committee, among other matters:
Independence of the external auditor
The audit committee is satisfied that Ernst & Young Inc. is independent of the group after considering the following factors:
The committee annually reviews and approves the list of non-audit services which the auditors are permitted to perform in line with the company's audit and non-audit services policy. There is a pre-approval process where all non-audit service engagements above a certain threshold must be approved by the group chief financial officer, and pre-approved by the chairman of the committee. If a higher threshold is to be applied it has to be approved by the entire committee. Quarterly, the cumulative spend for the year to date is presented to the committee to keep track of the non-audit spend and the nature of services. The 2021 non-audit fees were 3,2% of the audit fees. This is below the group's policy threshold of 5% of the audit fees, which is in place for non-audit services.
For the financial statements, the committee:
Internal controls and internal audit
For internal controls and internal audit, the committee:
The committee confirms it has no reason to believe there were any material breakdowns in the design and operating effectiveness of internal financial controls during the period that have not been addressed or are not being addressed by management.
In terms of risk management, information technology and sustainability, the committee:
For legal and regulatory requirements, the committee:
There is an enterprise-wide system of internal control and risk management in all key operations to manage and mitigate risks. The combined assurance approach is integrated with the risk management process to assess assurance activities across the various lines of defence.
The committee considered and evaluated the combined assurance framework and the assurance plans to ensure satisfactory coverage of risks and supports the control environment.
Chief financial officer expertise and experience
The committee considered the expertise, resources and experience of the Chief financial officer, Deepa Sita, and concluded that this was appropriate.
In addition, the committee is satisfied with:
BIOGRAPHICAL DETAILS APPEAR IN THE INTEGRATED ANNUAL REPORT.
The board is satisfied that Advocate Kgosi Monaisa has the necessary skills, experience and qualifications to discharge his duties.
All directors have unlimited access to the services of the company secretary, who is responsible to the board for ensuring compliance with corporate governance and other statutory requirements are adhered to and compiled with.
The company secretary also ensures the proper administration of proceedings and matters relating to the board, the company and shareholders in line with applicable legislation. He is responsible for director training and induction, as well as the annual board evaluation.
The committee confirms that the company secretary maintains an arm's length relationship with the board and directors, taking into account that the company secretary is not a director of the company nor related to any directors.
Following its review of the annual financial statements of Tiger Brands Limited for the year ended 30 September 2021, the committee believes that, in all material respects, these comply with the relevant provisions of the Companies Act and International Financial Reporting Standards (IFRS) and fairly present the annual financial statements of the company and group for the year ended 30 September 2021. The committee has also satisfied itself on the integrity of the integrated annual report for the year ended 30 September 2021.
Having achieved its objectives, the audit committee recommended the annual financial statements and integrated report for approval by the board. The board has since approved the annual financial statements and integrated report 2021, which will be open for discussion at the upcoming annual general meeting.
On behalf of the committee
Chairman – audit committee
18 November 2021
Report on the audit of the consolidated and separate financial statements
We have audited the consolidated and separate financial statements of Tiger Brands Limited and its subsidiaries (the group) and company set out here which comprises the consolidated and separate statements of financial position as at 30 September 2021, and the consolidated and separate income statements, the consolidated and separate statements of comprehensive income, the consolidated and separate statements of changes in equity and the consolidated and separate statements of cash flows for the year then ended, and notes to the consolidated and separate financial statements, including a summary of significant accounting policies.
In our opinion, the consolidated and separate financial statements present fairly, in all material respects, the consolidated and separate financial position of the group and company as at 30 September 2021, and its consolidated and separate financial performance and consolidated and separate cash flows for the year then ended in accordance with International Financial Reporting Standards and the requirements of the Companies Act of South Africa.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the audit of the consolidated and separate financial statements section of our report. We are independent of the group and company in accordance with the Independent Regulatory Board for Auditors' Code of Professional Conduct for Registered Auditors (IRBA Code) and other independence requirements applicable to performing audits of financial statements of the group and company and in South Africa. We have fulfilled our other ethical responsibilities in accordance with the IRBA Code and in accordance with other ethical requirements applicable to performing audits of the group and company and in South Africa. The IRBA Code is consistent with the corresponding sections of the International Ethics Standards Board for Accountants' International Code of Ethics for Professional Accountants (including International Independence Standards). We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
TO THE SHAREHOLDERS OF TIGER BRANDS LIMITED
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated and separate financial statements of the current period. These matters were addressed in the context of our audit of the consolidated and separate financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor's Responsibilities for the Audit of the consolidated and separate financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the consolidated and separate financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying consolidated and separate financial statements.
Rebates and incentives
As described in the accounting policy notes and reflected in notes 2, 21 and 25 to the group financial statements, revenue is measured at the fair value of the consideration received/receivable excluding normal discounts, rebates, settlement discounts and promotional allowances (rebates and incentives), which are earned by customers on the group's sales.
Rebates and incentives are a key audit matter as the final amount due to each customer that is eligible for a rebate and incentive is considered to be complex and requires significant judgement and estimation by management each year in establishing an appropriate accrual for rebates and incentives earned at the year end due to the varying terms given to different customers. This is due to the operational, supply and market share metrics which vary annually and are used in the final estimation of the rebates and incentives due to each customer.
The majority of these rebates and incentives tend to be low in unit value but based on high volume. The agreements include those which span the financial year end of the group, and to a lesser extent certain rebates and incentives which are based on a calendar year. Most rebates and incentives are calculated and based on a quarter period end, hence at the end of the financial year an accrual is required. The contractual terms allow a customer to claim most rebates and incentives within a specified period, the accrual at year end reflects the rebates and incentives earned.
Additionally, trade terms were restructured in the current financial year which resulted in more than one rebates and incentives contract being applicable to a customer for certain periods within the financial year. This resulted in complexities in the calculation as the net invoice sales (NIS) and rebate percentages needed to be disaggregated to reflect the appropriate period for which the contract was relevant.
Allocation of rebates and incentives
The rebates and incentives accrual is to be recognised only to the extent that the customer has settled their invoice. Rebates and incentives relating to outstanding invoices are to be set off against the trade receivables balance and not recognised as an accrual.
As described in note 3 to the group financial statements, the company initiated a product recall on selected canned products within the Groceries business over safety concerns linked to defective cans. The defect was due to a deficient sideseam weld that could cause cans to leak.
Customer refunds related to the product recall have been accounted for as a reduction in revenue. The write-off of inventory through cost of sales, while other related costs have been accounted for through the relevant expense functions in the income statement.
Our audit procedures included:
Our audit procedures in respect of the variable consideration recognised against revenue and rebates and incentives accrual liability included the following, based on our materiality:
Our audit procedures in respect of the allocation of rebates and incentives from trade payables to receivables included the following:
Our audit procedures in respect of the product recall included the following:
The directors are responsible for the other information. The other information comprises the information included in the 99 page document titled "Tiger Brands Limited annual financial statements for the year ended 30 September 2021", which includes the directors' approval, the certificate by company secretary and the audit committee report as required by the Companies Act of South Africa. The other information does not include the consolidated or the separate financial statements and our auditor's report thereon.
Our opinion on the consolidated and separate financial statements does not cover the other information and we do not express an audit opinion or any form of assurance conclusion thereon.
In connection with our audit of the consolidated and separate financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated and separate financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the consolidated and separate financial statements
The directors are responsible for the preparation and fair presentation of the consolidated and separate financial statements in accordance with International Financial Reporting Standards and the requirements of the Companies Act of South Africa, and for such internal control as the directors determine is necessary to enable the preparation of consolidated and separate financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated and separate financial statements, the directors are responsible for assessing the group and company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going-concern basis of accounting unless the directors either intend to liquidate the group and company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the consolidated and separate financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated and separate financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated and separate financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the consolidated and separate financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
In terms of the IRBA Rule published in Government Gazette Number 39475 dated 4 December 2015, we report that Ernst & Young Inc. has been the auditor of Tiger Brands Limited for 18 years.
Ernst & Young Inc.
Director – Ahmed Bulbulia
Chartered Accountant (SA)
18 November 2021
102 Rivonia Road