Notes to the annual financial statements

FOR THE YEAR ENDED 31 MARCH 2008

« Note 9 Note 11 »
         
10. TAXATION    
      2008   2007  
  10.1 Deferred taxation R million   R million  
    Deferred taxation liability 1 454   1 205  
       Property, plant and equipment 334   378  
       Intangibles 13   16  
       Inventories 109   84  
       Provisions (68)  (44) 
       Biological agricultural assets 26   34  
       Investments (accounted for directly in equity)  1 027   738  
       Tax losses (38)  –  
       Future capital gain taxable 35   –  
       Other 16   (1) 
    Deferred tax asset (4)  (124) 
       Property, plant and equipment (2)  (44) 
       Provisions (2)  (20) 
       Tax losses –   (49) 
       Other –   (11) 
space
    Net deferred taxation 1 450   1 081  
    The movement between balances of deferred taxation at the    
       beginning and end of the year can be analysed as follows:    
       Beginning of the year 1 081   700  
       Rate change (25)  –  
       As per income statement   79   43  
       Direct in equity   315   338  
      1 450   1 081  
         
    No deferred tax is provided on temporary differences relating to investments in subsidiary companies and joint ventures as Remgro controls the dividend policy of these companies and consequently also controls the reversal of the temporary differences.

Deferred taxation on capital distributions received from 1 October 2001 to 30 September 2007 is provided at 14.0%, as a result of the promulgation of retrospective legislation.
         
      2008   2007  
  10.2 Tax losses R million   R million  
    Estimated tax losses available for set-off against future taxable income 189   245  
    Utilised to create deferred tax asset (135)  (168) 
      54   77  
  10.3 Secondary taxation on companies (STC)     
    The STC credits on 31 March, which could be set off against future    
       dividend payments, amount to    
       – The Company 76   172  
       – Subsidiary companies 2 970   1 356  
    Unutilised STC credits 3 046   1 528  
    A foreign wholly owned subsidiary company of Remgro has reserves available that will    
    give rise to additional STC credits of R1 621 million (2007: R1 538 million) when    
    declared as dividends to its South African holding company.    
         
    Remgro’s history of dividends received compared to ordinary dividends paid suggests    
    increasing STC credits over time. It is therefore unlikely that Remgro’s STC credits will    
    be utilised against ordinary dividends paid in the foreseeable future, and consequently    
    no deferred tax asset has been created for the Company’s unutilised STC credits.    
         
  10.4 Taxation in income statement    
    Current 313   339  
    – current year – South African normal taxation 290   332  
    space– Taxation on capital gain 17   –  
    space– Foreign taxation 8   8  
      315   340  
    – previous year – South African normal taxation (2)  (1) 
    Secondary taxation on companies – current 27   21  
    Deferred – current year 56   60  
    space– previous year 1   (17) 
    space– rate change (13)  –  
    space– tax on capital gain 35   –  
      419   403  
         
  10.5 Reconciliation of effective tax rate of the Company and its    
    subsidiaries with standard rate %   %  
    Effective tax rate 12.9   26.4  
    Reduction/(increase) in standard rate as a result of:    
       Exempt dividend income 2.3   3  
       Non-taxable capital profit 13.5   –  
       Other non-taxable income 3.6   0.4  
       Foreign taxation (1.7)  (0.5) 
       Taxation in respect of previous years –   1.1  
       Rate change 0.4   –  
       Future capital gain payable (1.2)  –  
       Secondary taxation on companies (0.8)  (1.4) 
    Standard rate 29.0   29.0