Notes to the annual financial statements

FOR THE YEAR ENDED 31 MARCH 2008

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9. RETIREMENT BENEFITS    
    2008   2007  
    R million   R million  
  Balance sheet assets    
  Retirement benefits 10   10  
  Balance sheet obligations    
  Retirement benefits (91)  (85) 
  Post-retirement medical benefits (138)  (129) 
    (229)  (214) 
  Income statement    
  Retirement benefits* 2   (95) 
  Post-retirement medical benefits 10   11  
  Expense/(income) 12   (84) 
  * Refer note 22    
     
  9.1 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 2005 and 31 March 2008.
                  Income 
      Balance sheet   statement 
        Present  Unrecognised  Pension       
      Fair value  value of  actuarial  fund  Amount     
      of plan  funded  (gains)/  surplus  recognised in    Included in 
      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 2006 722  (633) (16) (142) (69)    
    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  –  –  –    – 
    Actuarial movements:              
       fund obligation –  11  (11) –  –    – 
    Actuarial movements:              
       plan assets (6) –  6  –  –    – 
    Balances at 31 March 2007 771  (767) (45) (34) (75)   (95)
    Current service cost –  (3) –  –  (3)   3 
    Interest cost –  (44) –  –  (44)   44 
    Expected return on assets 52  –  –  –  52    (52)
    Surplus limitation utilisation –  –  71  (79) (8)   8 
    Amortisation of actuarial              
       (gains)/losses –  –  1  –  1    (1)
    Contributions 8  –  –  –  8    – 
    Exchange rate differences 64  (80) 4  –  (12)   – 
    Benefit payments (83) 83  –  –  –    – 
    Actuarial movements:              
       fund obligation –  (34) 34  –  –    – 
    Actuarial movements:              
       plan assets 63  –  (63) –  –    – 
    Balances at 31 March 2008 875  (845) 2  (113) (81)   2 
                   
    The pension fund surplus is not recognised as an asset in the balance sheet as the process of allocating these surpluses in terms of the Pension Funds Act has not been finalised yet.
      2008   2007  
      R million   R million  
    Amount of plan assets represented by investment in the entity’s own financial instruments 20   14  
    Actual return on plan assets 115   47  
    Adjustment for experience on plan assets –   5  
    Adjustment for experience on funded obligations (21)  17  
    Expected contributions to retirement funds for the year ended 31 March 2009: R8 million    
      Number   Number  
    Number of members 444   445  
    Composition of plan assets %   %  
    Cash 6.81   6.69  
    Equity 22.48   20.62  
    Bonds 1.67   2.73  
    Property 1.39   0.70  
    International 67.65   69.26  
      100.00   100.00  
    Principal actuarial assumptions on balance sheet date    
    Discount rate 6.50 – 9.62   5.40 – 9.95  
    Expected rates of return on plan assets* 6.43 – 10.25   6.48 – 9.95  
    Future salary increases 6.25 – 7.25   5.75 – 7.04  
    Future pension increases 3.50 – 6.25   2.90 – 4.75  
    Inflation rate 6.25   4.75  
    * The expected return on plan assets is determined with reference to the expected long-term    
      returns on equity, cash and bonds.    
         
      2008   2007   2006  
    Fund history for the current and previous 2 years R million   R million   R million  
    Fair value of plan assets 875   771   722  
    Present value of funded obligations (845)  (767)  (633) 
    Surplus/(deficit) 30   4   89  
                 
  9.2 Post-retirement medical benefits            
                Income  
      Balance sheet   statement  
                   
        Present  Unrecognised       
      Fair value  value of  actuarial  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 2006 16  (121) (11) (116)    
    Current service cost –  (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 
    Current service cost –  (3) –  (3)   3 
    Interest cost –  (11) –  (11)   11 
    Expected return on assets 3  –  –  3    (3)
    Amortisation of actuarial (gains)/losses –  –  1  1    (1)
    Benefit payments –  1  –  1    – 
    Actuarial movements (1) 6  (5) –    – 
    Balances at 31 March 2008 37  (153) (22) (138)   10 
           
        2008   2007  
        R million   R million  
    Amount of plan assets represented by investment in the entity’s own financial instruments 2   2  
    Actual return on plan assets   2   14  
    Adjustment for experience on plan assets   –   14  
    Adjustment for experience on funded obligations   –   4  
    Expected contributions to retirement funds for the year ended 31 March 2009: R8 million
           
        Number   Number  
    Number of members   987   1 050  
           
      2008   2007   2006  
    Fund history for the current and previous 2 years R million   R million   R million  
    Fair value of plan assets 37   35   16  
    Present value of funded obligations (153)  (146)  (121) 
    Surplus/(deficit) (116)  (111)  (105) 
           
        2008   2007  
    Composition of plan assets   %   %  
    Cash   3   3  
    Equity   92   92  
    Bonds   5   5  
        100   100  
         
      2008  2007 
      %  % 
    Principal actuarial assumptions on balance sheet date    
    Discount rate 8.75 – 9.00  7.50 – 7.75 
    Expected rates of return on plan assets * 9.75  8.75 
    Annual increase in healthcare costs 5.50 – 7.50  4.75 – 6.75 
    * The expected return on plan assets is determined with reference to the expected long-term returns on equity, cash and bonds.
      2008  2008 
      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 2  2 
    Current service costs and interest on obligation 17  16