NOTES TO THE ANNUAL FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2007

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14.

RETIREMENT BENEFITS

2007

2006

R million

R million

Balance sheet assets

Retirement benefits

–

Balance sheet obligations

Retirement benefits

(85)

(69)

Post-retirement medical benefits

(129)

(116)

(214)

(185)

Income statement

Retirement benefits*

(95)

Post-retirement medical benefits

(84)

* Refer to note 24

14.1 Retirement benefits Some of the Company’s subsidiaries have various defined benefit pension funds, defined contribution pension funds and defined contribution provident funds which are privately administered independent of the finances of the Group. All the funds are governed by the Pension Funds Act, 1956 (as amended). All salaried employees are obliged to accept membership of one of these funds. For statutory purposes the defined benefit pension funds are actuarially valued every three years by independent actuaries using the projected unit credit method. The latest actuarial valuations of these funds were conducted between 31 March 2002 and 31 December 2004.

						Income
	Balance sheet					statement
		Present	Unrecognised	Pension
	Fair value	value of	acturial	fund	Amount
	of plan	funded	(gains)/	surplus	recognised in	Included
	assets	obligations	losses	limitation	balance sheet	in staff costs
	R million	R million	R million	R million	R million	R million
Balances at 1 April 2005	629	(527)	(55)	(124)	(77)
Current service cost	–	(4)	–	–	(4)	4
Interest cost	–	(30)	–	–	(30)	30
Expected return on assets	46	–	–	–	46	(46)
Amortisation of actuarial
gains/losses	–	–	2	–	2	(2)
Contributions	7	–	–	–	7	–
Exchange rate differences	(24)	29	–	–	5	–
Benefit payments	(28)	28	–	–	–	–
Actuarial movements:
fund obligation	–	(129)	129	(18)	(18)	18
Actuarial movements:
plan assets	92	–	(92)	–	–	–
Balances at 31 March 2006	722	(633)	(16)	(142)	(69)	4
Current service cost	–	(4)	–	–	(4)	4
Interest cost	–	(40)	–	–	(40)	40
Expected return on assets	53	–	–	–	53	(53)
Surplus limitation utilisation	–	–	–	108	108	(108)
Amortisation of actuarial
gains/losses	–	–	(22)	–	(22)	22
Contributions	7	–	–	–	7	–
Transfer of assets	(88)	–	–	–	(88)	–
Exchange rate differences	114	(132)	(2)	–	(20)	–
Benefit payments	(31)	31	–	–	–	–
Actuarialmovements: fund obligation	–	11	(11)	–	–	–
Actuarial movements: plan assets	(6)	–	6	–	–	–
Balances at 31 March 2007	771	(767)	(45)	(34)	(75)	(95)

	2007	2006
	R million	R million
Amount of plan assets represented by investment in the entity’s own financial instruments	14	17
Actual return on plan assets	47	138
Adjustment for experience on plan assets	5	90
Adjustment for experience on funded obligations	17	74
Expected contributions to retirement funds for the year ended 31 March 2008: R8 million

	Aantal	Aantal
Number of members	7 670	7 115

Composition of plan assets	%	%
Cash	6.69	9.16
Equity	20.62	27.59
Bonds	2.73	3.25
Property	0.7	0.96
International	69.26	59.04
	100	100
Principal actuarial assumptions on balance sheet date
Discount rate	5.40 – 9.95	5.50 – 8.50
Expected rates of return on plan assets*	6.48 – 9.95	7.50 – 8.50
Future salary increases	5.75 – 7.04	2.75 – 5.50
Future pension increases	2.90 – 4.75	4.50 – 6.50
Inflation rate	4.75	2.75 – 4.50
* The expected return on plan assets is determined with reference to the expected long-term
returns on equity, cash and bonds..

Fund history for the current and prior years	R million	R million
Balances at 31 March
Fair value of plan assets	771	722
Present value of funded obligation	(767)	(633)
Surplus/(deficit)	4	89


14.2 Post-retirement medical benefits

					Income
	Balance sheet				statement
			Unrecog-
		Present	nised
	Fair value	value of	acturial	Amount
	of plan	funded	(gains)/	recognised in	Included
	assets	obligations	losses	balance sheet	in staff costs
	R million	R million	R million	R million	R million
Balances at 1 April 2005	–	(163)	1	(162)
Current service cost	–	(22)	–	(22)	22
Interest cost	–	(18)	–	(18)	18
Expected return on assets	2	–	–	2	(2)
Contributions	–	5	–	5	–
Actuarial movements	–	5	(5)	–	–
Acquired in business combination	14	(23)	(7)	(16)	–
Medi-Clinic*	–	95	–	95	–
Balances at 31 March 2006	16	(121)	(11)	(116)	38
Current servicecost	–	(3)	–	(3)	3
Interest cost	–	(10)	–	(10)	10
Expected return on assets	2	–	–	2	(2)
Liability accepted	5	(6)	(2)	(3)	–
Amortisation of actuarial gains/losses	–	(1)	1	–	–
Benefit payments	–	1	–	1	–
Actuarial movements	12	(6)	(6)	–	–
Balances at 31 March 2007	35	(146)	(18)	(129)	11
* Since 1 January 2006, Medi-Clinic has been accounted for as an associated company, while it was consolidated previously.

				2007	2006
				R million	R million
Amount of plan assets represented by investment in the entity’s own financial instruments				2	1
Actual return on plan assets				14	2
Adjustment for experience on plan assets				14	–
Adjustment for experience on funded obligations				4	–
Expected contributions to retirement funds for the year ended31 March 2008: R8 million
				Number	Number
Number of members				1 050	1 046
Fund history for the current and prior years				R million	R million
Balances at 31 March
Fair value of plan assets				35	16
Present value of funded obligation				(146)	(121)
Surplus/(deficit)				(111)	(105)
Composition of plan assets				%	%
Cash				3.00	3.00
Equity				92.00	92.00
Bonds				5.00	5.00
				100.00	100.00

	2007	2006
	%	%
Principal actuarial assumptions on balance sheet date
Discount rate	7.50 – 7.75	7.50
Expected rates of return on plan assets *	8.75	8.50
Annual increase in health care costs	4.75 – 6.75	5.50 – 6.50
* The expected return on plan assets is determined with reference to the expected long-term returns on equity, cash and bonds.

	2007	2007
	Increase	Decrease
	R million	R million
The effect of a 1% movement in the above-mentioned expected yearly increase in
healthcare costs is as follows:
Post-retirement medical liability	24	21
Current service costs and interest on obligation	2	1

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