Notes to the annual financial statements

FOR THE YEAR ENDED 31 MARCH 2009

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9.   RETIREMENT BENEFITS    
    2009   2008  
    R million   R million  
  Balance sheet obligations    
  Retirement benefits (9)  (91) 
  Post-retirement medical benefits (147)  (138) 
    (156)  (229) 
  Balance sheet assets 100   103  
  Retirement benefits 9   10  
  Defined contribution fund employer's surplus** 91   93  
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  Net defined benefit post-retirement obligation   (56)  (126) 
   
  Represented by:
  Retirement benefits (refer note 9.1) –   (81) 
  Post-retirement medical benefits (refer note 9.2) (147)  (138) 
  Defined contribution fund employer's surplus** 91   93  
    (56)  (126) 
   
  Income statement
  Retirement benefits* 5     2  
  Post-retirement medical benefits 13   10  
  Expense/(income) 18   12  
  * Refer note 23
  ** The defined contribution fund employer's surplus was included under “Debtors and short-term loans” in the 2008 financial statements.
     
  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     Amount  
  Fair value   value of   actuarial   fund     recognised  
  of plan   funded   (gains)/   surplus     in balance     Included in  
  assets   obligations   losses   limitation * sheet     staff costs  
  R million   R million   R million   R million     R million     R million  
Balances at 1 April 2007 771   (767)  (45)  (34)    (75)      
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  
Current service cost –   (2)  –   –     (2)    2  
Interest cost –   (54)  –   –     (54)    54  
Expected return on assets 66   –   –   –     66     (66) 
Surplus limitation utilisation –   –   (47)  32     (15)    15  
Contributions 79   –   –   –     79     –  
Exchange rate differences (88)  108   (13)  –     7     –  
Benefit payments (43)  43   –   –     –     –  
Actuarial movements:                      
   fund obligation –   53   (53)   –     –     –  
Actuarial movements:                      
   plan assets (171)  –   171   –     –     –  
Balances at 31 March 2009  718   (697)  60   (81)    –     5  
     
   
* 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 yet been finalised.
     
   
  2009   2008  
  R million   R million  
Retirement benefits      
Amount of plan assets represented by investment in the entity’s own financial instruments 6   20  
Actual return on plan assets   (105)  115  
Adjustment for experience on funded obligations 3   (21) 
Expected contributions to retirement funds for the year ended 31 March 2010: R9 million    
       
  Number   Number  
Number of members 7 870   7 425  
       
Composition of plan assets %   %  
Cash 7.16   6.81  
Equity 21.23   22.48  
Bonds 1.80   1.67  
Property 1.15   1.39  
International 68.66   67.65  
  100.00   100.00  
       
Principal actuarial assumptions on balance sheet date      
Discount rate 6.50 – 9.25   6.50 – 9.62  
Expected rates of return on plan assets* 6.76 – 10.25   6.43 – 10.25  
Future salary increases 6.25 – 7.25   6.25 – 7.25  
Future pension increases  3.00 – 5.25   3.50 – 6.25  
Inflation rate 5.25   6.25  
     
    * The expected return on plan assets is determined with reference to the expected long-term returns on equity, cash and bonds.
     
   
  2009   2008   2007   2006  
Fund history for the current and previous 3 years R million   R million   R million   R million  
Fair value of plan assets 718   875   771   722  
Present value of funded obligations (697)  (845)  (767)  (633) 
Surplus/(deficit) 21   30   4   89 
         
  9.2 Post-retirement medical benefits
   
            Income  
          statement  
  Present   Unrecognised   Amount  
  Fair value   value of   actuarial   recognised  
  of plan   funded   (gains)/   in balance     Included in  
  assets   obligations   losses   sheet     staff costs  
  R million   R million   R million   R million     R million  
Balances at 1 April 2007 35   (146)  (18)  (129)     
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  
Current service cost  –   (5)  –   (5)    5  
Interest cost –   (13)  –   (13)    13  
Expected return on assets   3   –   –   3     (3) 
Amortisation of actuarial (gains)/losses –   –   2   2     (2) 
Contributions –   2   –   2     –  
Benefit payments (2)  4   –   2     –  
Actuarial movements (4)  (29)  33   –     –  
Balances at 31 March 2009   34   (194)  13   (147)    13  
         
      2009   2008  
      R miljoen   R miljoen  
Amount of plan assets represented by investment in the entity’s own financial instruments 2   2  
Actual return on plan assets     (1)  2  
Expected contributions to retirement funds for the year ended 31 March 2010: R14 million    
           
      Number   Number  
Number of members     959   987  
         
  2009   2008   2007   2006  
Fund history for the current and previous 3 years R million   R million   R million   R million  
Fair value of plan assets 34   37   35   16  
Present value of funded obligations   (194)  (153)  (146)  (121) 
Surplus/(deficit) (160)  (116)  (111)  (105) 
           
      2009   2008  
Composition of plan assets      %   %  
Cash       16.00   3.00  
Equity       81.00   92.00  
Bonds     3.00   5.00  
      100.00   100.00  
     
   
  2009   2008  
  %   %  
Post-retirement medical benefits (continued)      
Principal actuarial assumptions on balance sheet date       
Discount rate 8.25 – 9.00   8.75 – 9.00  
Expected rates of return on plan assets* 10.00   9.75  
Annual increase in healthcare costs 5.25 – 7.25   5.50 – 7.50  
    * The expected return on plan assets is determined with reference to the expected long-term returns on equity, cash and bonds.
     
   
  2009   2009  
  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 34   27  
   Current service costs and interest on obligation 2   2