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Notes to Financial Statements
For the year ended 31 March 2010
(All amounts in Tshs M)
3 CRITICAL ACCOUNTING ESTIMATES AND
JUDGMENTS
In determining and applying accounting policies, judgment is often
required where the choice of specific policy, assumption or accounting
estimate to be followed could materially affect the reported results or
net position of the Group or Company, should it later be determined
that a different choice would be more appropriate.
Management considers the following to be areas of significant
judgment for the Group and Company:
(i)
(ii)
(iii)
The determination of the carrying amount of goodwill;
The determination of the carrying amount of plant, property
and equipment and related depreciation, capitalisation of costs,
estimation of useful economic life and recoverability of such
assets;
The calculation of the Group’s total tax charge where tax
treatment cannot be finally determined until a formal resolution
has been reached with the relevant tax authority;
4 FINANCIAL RISK MANAGEMENT
The Group’s activities expose it to a variety of financial risks including:
market risk (including foreign exchange, interest rate and price risk),
credit risk and liquidity risk. The Group’s overall risk management
programme seeks to minimize potential adverse effects on the
Group’s financial performance. Risks management is carried out by
the management on behalf of the Board of Directors.
Market risk
(i) Foreign exchange risk
The group imports raw materials, capital equipment and services and
is exposed to foreign exchange risk arising from various currency
exposures, primarily with respect to the US dollar, Euro and SA Rand.
Foreign exchange risk arises from future commercial transactions,
and recognised assets and liabilities.
Currency exposure arising from liabilities denominated in foreign
currencies is managed primarily through the holding of bank balances
in the relevant foreign currencies. Occasionally, when considered
prudent, exposure to foreign currency risk is hedged, by forward
contracts.
The Group adopts a policy of ensuring that net monetary assets or
liabilities denominated in a non functional currency are lower than
Tshs 20 billion. In addition, the Group’s policy is to limit the impact to
1% of Group operating profit (excluding exceptional items) for each
10% change in foreign exchange rates.
31 March 2010
Total in
functional
currency
Exposure in
ZAR
Exposure in
US$
Exposure in
Euro
Exposure in
GBP
Financial Assets
Current Assets
Cash & Cash Equivalents 3,801 256 1,023 2,522 -
Current Liabilities
Trade & Other Payables (4,964) (408) (4,510) (46) -
Non-monetary Assets (1,163) (152) (3,487) (2,476) -
31 March 2009
Total in
functional
currency
Exposure in
ZAR
Exposure in
US$
Exposure in
Euro
Exposure in
GBP
Financial Assets
Current Assets
Cash & Cash Equivalents 7,137 319 3,249 3,569 -
Current Liabilities
Trade & Other Payables (3,067) 161 (2,260) (977) -
Non-monetary Assets 4,061 480 989 2,592 -
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Tanzania Breweries Limited