Annual Financial Statements
PREPARATION OF ANNUAL FINANCIAL STATEMENTSDownload pdf
The preparation of the consolidated and separate annual financial statements for the year ended 30 September 2022, which appear here has been supervised by Deepa Sita, chief financial officer CA(SA) of Tiger Brands Limited.
DIRECTORS' APPROVALDownload pdf
The financial statements for the year ended 30 September 2022, which appear here and are in agreement with the books of account at that date, were approved by the board of directors on 1 December 2022 and signed on its behalf by:
|Noel Doyle||Chief executive officer|
1 December 2022
RESPONSIBILITY FOR ANNUAL FINANCIAL STATEMENTSDownload pdf
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 (IFRS), 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.
CERTIFICATE BY COMPANY SECRETARYDownload pdf
Certified in terms of section 88(2)(e) that the company has filed required returns and notices in terms of the Companies Act of South Africa, and that all such returns and notices appear to be true, correct and up to date.
|Kgosi Monaisa||Company secretary|
1 December 2022
DECLARATION BY CHIEF EXECUTIVE OFFICER (CEO) AND CHIEF FINANCIAL OFFICER (CFO)Download pdf
The CEO and the CFO, hereby confirm that:
|(a)||the consolidated and separate annual financial statements, set out here, fairly present in all material respects the financial position, financial performance and cash flows of the issuer in terms of IFRS;|
|(b)||to the best of our knowledge and belief, no facts have been omitted or untrue statements made that would make the annual financial statements false or misleading;|
|(c)||internal financial controls have been put in place to ensure that material information relating to the issuer and its consolidated subsidiaries have been provided to effectively prepare the financial statements of the issuer;|
|(d)||the internal financial controls are adequate and effective and can be relied upon in compiling the annual financial statements, having fulfilled our role and function as executive directors with primary responsibility for implementation and execution of controls;|
|(e)||where we are not satisfied, we have disclosed to the audit committee and the auditors any deficiencies in design and operational effectiveness of the internal financial controls, and have taken the necessary steps to remedy the deficiencies; and|
|(f)||we are not aware of any fraud involving directors.|
|Deepa Sita||Chief financial officer|
|Noel Doyle||Chief executive officer|
1 December 2022
AUDIT COMMITTEE 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 2022 financial year.Download pdf
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.
* Copyright and trademarks are owned by the Institute of Directors in South Africa NPC and all of its rights are reserved.
The committee comprises four 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.
AREAS OF FOCUS
The committee, among other matters:
- Presented Ernst & Young Inc. to shareholders for appointment as the external auditor, with Ahmed Bulbulia as the designated auditor, for the financial year ended 30 September 2022. It ensured that the appointment complied with all applicable legal and regulatory requirements, and that the auditor and designated auditor are accredited by the JSE Limited
- Approved the external audit engagement letter, plan and budgeted audit fees. Fees paid to the auditor are detailed in note 4 of the group financial statements
- Reviewed the audit results, evaluated the effectiveness of the auditor and its independence, and evaluated the external auditor's internal quality-control procedures
- Considered the reports of the external auditor on the group's systems of internal control and financial controls
- Determined the nature and extent of all non-audit services provided by the external auditor and pre-approved all non-audit services in line with the group's audit and non-audit services policy
- Obtained assurances from the external auditor that adequate accounting records were being maintained
- Considered whether any reportable irregularities were identified and reported by the external auditor in terms of the Auditing Profession Act, No 26 of 2005, and determined that there were none
- Reviewed external auditor mandatory firm rotation effective 1 October 2022
- Reviewed JSE accreditation documentation and evaluated IRBA inspection and engagement findings, as well as related correspondence.
Independence of the external auditor
The audit committee is satisfied that Ernst & Young Inc. is independent of the group after considering the following factors:
- Representations by Ernst & Young Inc. to the committee
- The auditor does not, except as external auditor or in rendering permitted non-audit services, receive any remuneration or other benefit from the company
- Obtained an annual written statement from the auditor that its independence was not impaired. The auditor's independence was not impaired by any consultancy, advisory or any other work undertaken
- The auditors met, in all material respects, the criteria specified for independence by the Independent Regulatory Board for Auditors and international regulatory bodies.
The audit committee would like to extend their gratitude to Ernst & Young Inc. for their 19 years of excellent service, support and commitment to Tiger Brands.
Deloitte & Touche have been appointed as the incoming external auditors effective 1 October 2022.
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 2022 non-audit fees were 2,3% 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:
- Confirmed the going-concern requirement as the basis of preparing interim and annual financial statements
- Reviewed cash flow forecasts and determined that the capital and debt facilities of the group are adequate
- Examined and reviewed the interim and annual financial statements, as well as related SENS announcements for recommendation to the board for approval
- Ensured that the annual financial statements fairly present the financial position of the company and group at the end of the financial year
- Considered and reviewed accounting treatments and disclosures of significant transactions
- Considered accounting judgements and the appropriateness of accounting policies adopted and any changes
- Reviewed the external auditor's audit report, including the key audit matters identified by the external auditors which are included in the Tiger Brands Limited annual financial statements. The committee considered the key audit matters as reported by the external auditors and satisfied itself with management's treatment and responses thereof
- Reviewed the representation letter from management in connection with audit of the consolidated and separate financial statements of the group
- Considered any issues identified and reviewed any significant legal and tax matters that could have a material impact on the financial statements
- Met separately with management and external auditors to review and discuss the annual financial statements, the audit process and findings.
Internal controls and internal audit
For internal controls and internal audit, the committee:
- Reviewed and approved the internal audit charter and annual audit plan, including the annual budget and evaluated the independence
- Effectiveness and performance of the internal audit function and compliance with its charter
- Considered reports of the internal auditor on the group's systems of internal control and the enterprise risk management framework and process
- Received assurance that an adequate and effective system of internal control and risk management is being maintained
- Reviewed significant issues raised and assessed reports by internal and forensic audit functions and the adequacy of corrective action taken
- Assessed the performance and the arrangements of the internal audit function and found it to be in conformance to the International Standards for the Professional Practice of Internal Auditing as issued by the Institute of Internal Auditors (IIA) standards. In addition, the committee is satisfied that the internal audit function is independently and appropriately resourced
- Reviewed the JSE control attestation to support the CEO and CFO
- Reviewed the report by internal audit on its assessment of the effectiveness of the internal controls and risk management, in accordance with King IV
- Reviewed ethics and whistle blowing reports to ensure effective actions are implemented.
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:
- Reviewed and assessed the risk management framework and practices for effective risk management
- Reviewed and assessed the information technology environment and the cyber security plan and found it to be effective and adequate
- Considered the reporting of the quarterly risk and sustainability meetings
- Received the necessary assurances from management that material disclosures are reliable and do not conflict with financial information.
For legal and regulatory requirements, the committee:
- Reviewed and assessed the adequacy and effectiveness of the group's procedures to ensure compliance with legal and regulatory requirements
- Executed all duties as detailed in paragraph 3.84(g) of the JSE Listings Requirements
- Reviewed the JSE proactive monitoring reports and considered findings and recommendations for the group financial statements and integrated annual report
- Reviewed IRBA inspection findings for application to the group financial statements and integrated annual report
- Considered reports provided by management, the internal auditor and external auditor on compliance with legal and regulatory requirements.
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 that supports the control environment.
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 for ensuring compliance with corporate governance and statutory requirements are adhered to and compiled with.
The company secretary also ensures the proper administration of proceedings and matters relating to the board, as well as the 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 neither a director of the company nor related to any directors.
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:
- The expertise, effectiveness, capabilities and adequacy of resources with required capabilities in the finance function
- The experience, effectiveness, expertise and continuous professional development of senior members of the finance function.
Biographical details appear in the integrated annual report.
Annual financial statements
Following its review of the consolidated and separate annual financial statements of Tiger Brands Limited for the year ended 30 September 2022, the committee believes that, in all material respects, these comply with the relevant provisions of the Companies Act and IFRS and fairly present the annual financial statements of the company and group for the year ended 30 September 2022. The committee has also satisfied itself on the integrity of the integrated annual report for the year ended 30 September 2022.
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 2022, which will be open for discussion at the upcoming annual general meeting.
On behalf of the committee
||Chairman – audit committee|
1 December 2022
INDEPENDENT AUDITOR'S REPORTDownload pdf
To the Shareholders of Tiger Brands Limited
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 comprise of the consolidated and separate statements of financial position as at 30 September 2022, 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 2022, and its consolidated and separate financial performance and consolidated and separate cash flows for the year then ended in accordance with IFRS 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.
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.
The key audit matters apply only to the audit of the consolidated financial statements.
Key audit matters
Rebates and incentives
As described in the accounting policy notes and reflected in notes 2, 20 and 24 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 is a key audit matter as the final amount due to each customer that is eligible for a rebate and/or 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 results from a number of 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 volumes. The agreements include those which span the financial year-end of the group, and to a lesser extent certain rebates which are based on a calendar year. All rebates are calculated monthly, however settlement of the said rebates is monthly, quarterly and in some instances annually. The contractual terms allows a customer to claim most rebates within a specified period, the accrual at year-end reflects the rebates earned.
How the matter was addressed in the audit
Rebates and incentives
Our audit procedures included:
- Considering the appropriateness of the group’s revenue recognition accounting policies including those relating to rebates and incentives; and
- We tested the effectiveness of the group's controls over the calculation of rebates and incentives and the correct timing of revenue recognition and measurement.
Our audit procedures in respect of the variable consideration recognised against revenue and rebate liability included the following, based on our materiality:
- On a sample basis, based on the high value rebates and incentives paid, we inspected the terms in the agreement and agreed them to inputs used in the calculation;
- Using data extraction tools, we agreed the sales volumes used in the calculation to those per the accounting records and considered whether the amounts being used in the calculation related to the correct period per the agreement and recalculated the rebates and incentives due to each customer based on its contractual terms;
- We developed an independent expectation of the estimated rebates and incentives due to each customer based on actual sales year to date and operational, supply and customer market share metrics. We then compared this expectation to actual results. Where our recalculation based on the contractual terms and estimation based on sales year to date and operational, supply and customer market share metrics differed to management's final accrual, we obtained support for the differences to vouch their validity;
- We tested the arithmetical accuracy of the management calculation and agreed the amount calculated to the amount recognised in the financial statements;
- We tested the prior period accrual to actual payments made to customers in the current year to assess the historical accuracy of managements estimation process for incentives and rebates;
- In addition, we tested the validity of the amounts payable at the year-end by agreeing the amounts to subsequent payment to customers where these had been completed by the date of our audit report;
- In addition we considered the prescription period and past practices that management applied before unclaimed rebates accruals are released; and
- We performed a completeness assessment of the signed contractual agreements with customers to perform an overall completeness assessment of the rebate liability.
Revenue recognition is a focus area across the group. Specific attention is given to transactions close to financial year-end in order to identify abnormalities relating to the correctness of the period in which revenue is recorded.
Our audit procedures in respect of the cut off of revenue and rebates liability included the following, based on our materiality:
- We obtained a cut off reconciliation for local and foreign sales performed by management which shows how the reconciliation agrees to the last couple of days and first couple of days’ sales listing, and how the reconciliation is split between sales recorded in the correct accounting period, and sales recorded in the incorrect accounting period;
- We selected a sample from both classes to test management’s calculation for accuracy by vouching the transactions against the proof of delivery/shipping documents (Inco terms). We assessed managements interpretation of the Inco terms to determine the appropriate cut off to applied; and
- We performed our own independent sampling over local and foreign sales to ensure recorded in the correct period.
Impairment assessment of non-financial assets [goodwill, intangible assets, property, plant and equipment (PPE) and investment in associates]
Non-financial assets – goodwill, intangible assets, PPE and investment in associates represent 46% of total assets and 70% of total equity. Management tests goodwill, indefinite useful life intangible assets and investment in associates annually for impairment. PPE is assessed annually for an indication of impairment and if such an indication exists, management conducts an impairment assessment.
The impairment assessment process is complex, and the calculation of the recoverable amount requires the use of estimates and assumptions concerning the future cash flows, evaluation of discount rates and other assumptions, which are inherently uncertain and could change over time.
In performing the annual assessment of impairment as required by IAS 36 – Impairment of Assets, management noted that certain cash-generating units were sensitive to changes in volume and discount rates applied to the valuation model impairments of goodwill and intangible assets. Refer to note 14.
Due to the complexity of the impairment calculations and the estimates and judgement required in evaluating recoverable amounts we consider this to be a key audit matter.
Our audit procedures included:
- Assessing the reasonableness of the completeness of the impairment assessments by evaluating managements impairment assessment process;
- Evaluating the determination of the cash-generating units to distinguish between stand-alone business valuations and brand valuations and fair value less cost of disposal as these have different valuation methodologies applied to them;
- We evaluated the models used by management in determining the value in use of the identified cash-generating units or the recoverable amount, as well as independently by using our internal Transaction Support specialists, to reassess the discount rate, valuation methodology used as well as the cash flow forecasts;
- We compared the cash flow forecasts used in the impairment model to the approved budgets and other relevant market and economic information;
- We identified different risk dependent cash flows used in the valuation models to assess whether additional specific risk premiums needed to be applied to the discount rate when discounting those cash flows;
- We evaluated and challenged management's future cash flow forecasts and the process by which they were drawn up, and tested the underlying value in use calculations by comparing future cash flows to prior period actual results to assess management's forecast accuracy rate;
- Calculated a range of possible impairment by performing a sensitivity analysis around the key assumptions of volume growth, margins and the discount rate used in the models as well and the fair value of the asset; and
- Considered the adequacy and accuracy of disclosures in the financial statements.
The directors are responsible for the other information. The other information comprises the information included in the shareholders’ information document titled “Tiger Brands Limited annual financial statements 2022”, 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:
- Identify and assess the risks of material misstatement of the consolidated and separate financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
- Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the group and company's internal control.
- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
- Conclude on the appropriateness of the directors' use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the group and company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated and separate financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the group and/or the company to cease to continue as a going concern.
- Evaluate the overall presentation, structure and content of the consolidated and separate financial statements, including the disclosures, and whether the consolidated and separate financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
- Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated and separate financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
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 19 years.
Ernst & Young Inc.
Director – Ahmed Bulbulia
Chartered Accountant (SA)
1 December 2022
102 Rivonia Road