NOTES (31-34) TO THE FINANCIAL STATEMENTS

31.	RETIREMENT BENEFITS

	Pension and Provident Fund Schemes Tongaat Hulett contributes towards retirement benefits for substantially all permanent employees who, depending on preference or local legislation, are required to be a member of either a Tongaat Hulett implemented scheme or of various designated industry or state schemes. The Tongaat Hulett schemes are governed by the relevant retirement fund legislation. Their assets consist primarily of listed shares fixed income securities property investments and money market instruments and are held separately from those of Tongaat Hulett. The scheme assets are administered by boards of trustees each of which includes elected employee representatives. Defined Contribution Pension and Provident Schemes The latest audited financial statements of the defined contribution schemes including the scheme in Swaziland reflect a satisfactory state of affairs. Contributions of R94 million were expensed during the year (2013: R55 million). Zimbabwe Pension Funds The post-retirement benefit provisions for the Zimbabwe operations at 31 March 2014 amount to R186 million (2013: R269 million) including the post-retirement medical aid and the retirement gratuity provisions. Defined Benefit Pension Scheme A defined benefit scheme in South Africa which previously covered the old Tongaat-Hulett Group was split between Tongaat Hulett and Hulamin in 2012 and then in 2013 was converted to a Defined Contribution arrangement with the existing pensioner liabilities being outsourced to an insurer.

	Details of the IAS 19 valuation of the DB Fund (South Africa):			2014	2013
				Rmillion	Rmillion
	Fair value of fund assets
	Balance at beginning of year			737	5 076
	Expected return on scheme assets			34	366
	Contributions by plan members				18
	Benefits paid				(192)
	Actuarial loss				(72)
	Settlements / conversion			(20)	(4 459)
	Balance at end of year			751	737

	Present value of defined benefit obligation
	Balance at beginning of year				3 794
	Current service cost				56
	Interest cost				261
	Contributions by plan members				18
	Benefits paid				(192)
	Actuarial loss				111
	Settlements / conversion				(4 048)
	Balance at end of year			-	-

	Fund assets less member liabilities			751	737
	Employer surplus account (note 3)			(552)	(515)
	Provisions and reserves			199	222

	The following dislosure is in respect of the previous financial year and relates to the defined benefit scheme up to the time that it was converted to a Defined Contribution arrangement. Defined benefit accounting disclosure for the year ended 31 March 2013
					2013
					Rmillion
	Amounts included in the statement of financial position:
	Balance at 1 April 2012				469

	Amounts recognised in profit or loss:				46
	Net expense in respect of defined benefit accounting				(22)
	Employer surplus account recognition				68

	Balance at 31 March 2013				515

	Asset information
	Cash and other				737
	Actual return on scheme assets				294

	The principal actuarial assumptions were:
	Discount rate				8,00%
	Salary cost and pension increase				5,75%
	Expected rate of return on assets				8,00%

	Experience loss on:
	Plan assets				72
	Percentage of plan assets				9,80%

	Basis used to determine the rate of return on assets The expected rate of return on assets was calculated using the discount rate at the beginning of the year, which corresponds to that used in the previous valuation. This is a reasonably conservative approach, adopted on the basis that the additional returns anticipated on certain other asset classes in which the Fund is invested (e.g. equities) can only be achieved with increased risk. Post-Retirement Medical Aid Benefits In the South African operations, the obligation to pay medical aid contributions after retirement is no longer part of the conditions of employment for employees engaged after 30 June 1996. A number of pensioners and current employees, however, remain entitled to this benefit. The entitlement to this benefit for current employees is dependent upon the employee remaining in service until retirement and completing a minimum service period of ten years. The Zimbabwe operations provide post-retirement medical benefits for pensioners and current employees. In Mozambique, Acucareira de Xinavane subsidises the medical contributions in respect of its pensioners. The unfunded liability for post-retirement medical aid benefits is determined actuarially each year and comprises:
				Consolidated		Company
				2014	2013	2014	2013
					Restated		Restated
	Amounts recognised in the statement of financial position:

	Net liability at beginning of year as previously reported			448	357	383	274
	Effect of adoption of IAS 19 (Revised):
	Actuarial losses transferred to Other Comprehensive Income				34		61
	Net liability at beginning of year restated			448	391	383	335

	Actuarial loss/(gain):			10	33	4	39
	From changes in financial assumptions			1	23	1	24
	From changes in demographic assumptions			6	(7)	(4)
	From changes in experience items during the year			3	17	7	15
	Net expense recognised in profit or loss			48	40	33	32
	Employer contributions			(29)	(27)	(24)	(23)
	Currency alignment			10	11
	Net liability at end of year			487	448	396	383

	Amounts recognised in profit or loss:
	Current service costs			6	6	3	3
	Past service costs			7
	Interest costs			35	34	30	29
				48	40	33	32

	The principal actuarial assumptions applied are:
	Discount rate
	South Africa			9,00%	8,00%	9,00%	8,00%
	Mozambique			6,75%	6,75%
	Zimbabwe			7,00%	7,60%;

	Health care cost inflation rate
	South Africa			7,75%	6,75%	7,75%	6,75%
	Mozambique			6,00%	6,00%
	Zimbabwe			5,75%	6,35%

	Sensitivity analysis:
	On discount rate
	1% increase in trend rate - decrease in the aggregate of the service and interest costs			(2)	(1)	(1)	(1)
	1% increase in trend rate - decrease in the obligation			(53)	(49)	(38)	(37)
	1% decrease in trend rate - increase in the aggregate of the service and interest costs			2	2	1	1
	1% decrease in trend rate - increase in the obligation			65	59	45	45

	On health care cost inflation rate
	1% increase in trend rate - increase in the aggregate of the service and interest costs			2	2	1	1
	1% increase in trend rate - increase in the obligation			65	59	45	45
	1% decrease in trend rate - decrease in the aggregate of the service and interest costs			(2)	(1)	(1)	(1)
	1% decrease in trend rate - decrease in the obligation			(54)	(50)	(38)	(38)

	Estimated contributions payable in the next financial year			30	29	26	25

	Weighted average duration of the obligation (years):
	South Africa			11,3	11,4	11,3	11,4
	Mozambique			4,9	4,6
	Zimbabwe			17,8	16,9

	Key risks associated with the post-retirement medical aid obligation:
	Higher than expected inflation (to which medical cost/contribution increases are related). “Real” future medical aid cost/contribution inflation (i.e. above price inflation) is higher than allowed for. Members / pensioners changing medical aid plans to more expensive plans subject to maximum in terms of policy. Longevity – pensioners (and their dependants) living longer than expected in retirement. Changes in the prescribed basis (as a result of market conditions) which adversely impact the financial results of the company.

	Retirement Gratuities Tongaat Hulett has in the past made payments, on retirement, to eligible employees who have remained in service until retirement, and have completed a minimum service period of ten years. The benefit is applicable to employees in the South African and Zimbabwean operations. The unfunded liability for retirement gratuities which is determined actuarially each year comprises:

				Consolidated		Company
				2014	2013	2014	2013
					Restated		Restated
	Amounts recognised in the statement of financial position:
	Net liability at beginning of year as previously reported			152	116	102	77
	Effect of adoption of IAS 19 (Revised):
	Actuarial losses transferred to Other Comprehensive Income				8		11
	Net liability at beginning of year restated			152	124	102	88

	Actuarial loss:			7	11	8	10
	From changes in financial assumptions				4		4
	From changes in demographic assumptions			2		2
	From changes in experience items during the year			5	7	6	6
	Net expense recognised in income statement			22	19	14	13
	Payments made by the employer			(13)	(9)	(12)	(9)
	Currency alignment			8	7
	Net liability at end of year			176	152	112	102

	Amounts recognised in profit or loss:
	Service costs			9	8	6	5
	Interest costs			13	11	8	8
				22	19	14	13

	The principal actuarial assumptions applied are:
	Discount rate
	South Africa			9,00%	8,00%	9,00%	8,00%
	Zimbabwe			7,00%	7,60%

	Salary inflation rate
	South Africa			7,50%	6,50%	7,50%	6,50%
	Zimbabwe			5,00%	5,60%

	Sensitivity analysis:
	On discount rate
	1% increase in trend rate - decrease in the aggregate of the service and interest costs			(1)	(1)	(1)	(1)
	1% increase in trend rate - decrease in the obligation			(16)	(14)	(9)	(9)
	1% decrease in trend rate - increase in the aggregate of the service and interest costs			1	1	1	1
	1% decrease in trend rate - increase in the obligation			18	17	11	11

	On salary inflation rate
	1% increase in trend rate - increase in the aggregate of the service and interest costs			3	3	2	2
	1% increase in trend rate - increase in the obligation			18	17	11	11
	1% decrease in trend rate - decrease in the aggregate of the service and interest costs			(3)	(2)	(2)	(2)
	1% decrease in trend rate - decrease in the obligation			(16)	(15)	(9)	(9)

	Estimated contributions payable in the next financial year			15	16	11	12

	Weighted average duration of the obligation (years):
	South Africa			9,8	10,6	9,8	10,6
	Zimbabwe			11,4	12,3

	Key risks associated with the retirement gratuity obligation:
	Higher than expected inflation (to which salary increases are related). “Real” salary increases (i.e. above price inflation) are higher than allowed for. Large number of early retirements (normal or ill health) bringing forward gratuity payments. Fewer exits prior to retirement than expected (i.e. more people reach retirement than allowed for in terms of current demographic assumptions). Changes in the prescribed basis (as a result of market conditions) which adversely impact the financial results of the company.

32.	DIRECTORS’ AND PRESCRIBED OFFICERS’ EMOLUMENTS AND INTERESTS
	The information in respect of directors’ and prescribed officers’ emoluments and interests is included in the Remuneration Report as follows:


	Executive directors’ and prescribed officers’ remuneration
	Non-executive directors’ remuneration
	Declaration of full disclosure
	Interest of directors of the company in share capital


33.	EMPLOYEE SHARE INCENTIVE SCHEMES
	Details of awards made in terms of the company’s share incentive schemes comprising The Tongaat-Hulett Group Limited 2001 Share Option Scheme, the Share Appreciation Right Scheme 2005, the Long Term Incentive Plans 2005 and the Deferred Bonus Plan 2005 are set out in the Remuneration Report and details of the interest of directors in share-based instruments are set out here.

34.	BEE EMPLOYEE SHARE OWNERSHIP PLANS
	The BEE employee transaction, which comprises the Employee Share Ownership Plan (ESOP) and the Management Share Ownership Plan (MSOP), vested during the year ended 31 March 2013. The ESOP scheme consisted of a share appreciation right scheme and participants shared in 50% of the dividend payable to ordinary shareholders. The MSOP scheme consisted of two components, namely a share appreciation right scheme and a share grant scheme. The ESOP Trust and MSOP Trust were established to acquire and hold Tongaat Hulett Limited shares for the benefit of designated employees. Tongaat Hulett Limited and its subsidiaries made contributions to the MSOP Trust and the ESOP Trust (refer note 3). Due to these shares having had specific repurchase rights at maturity (five years from grant), they were a separate class of restricted shares which, other than for the repurchase terms, ranked pari passu with ordinary shares and became ordinary shares at maturity of the scheme on 1 August 2012. Employee Share Ownership Plan

	Grant date	Balance at 31 March 2013	Released including deaths in service	Scrip distribution	Forfeited / adjustments	Balance time constrained
	1 August 2008	49 154	(48 694)		(460)
	1 February 2009	28 564	(26 971)		(1 593)
	1 August 2009	23 524			(3 194)	20 330
	1 February 2010	24 330			(708)	23 622
	1 August 2010	13 436			(414)	13 022
	1 February 2011	12 688			(378)	12 310
	1 August 2011	11 883			(215)	11 668
	Unallocated	18 769		378	8 887	28 034
		182 348	(75 665)	378	1 925	108 986

	Management Share Ownership Plan

	Grant date	Balance at 31 March 2013	Released including deaths in service	Awarded during 2013/14	Scrip distribution	Forfeited / adjustments	Balance time constrained
	1 August 2008	116 851	(116 851)
	1 February 2009	45 420	(45 420)
	1 August 2009	47 167				(10 291)	36 876
	1 February 2010	76 390				(3 771)	72 619
	1 August 2010	49 749					49 749
	1 February 2011	23 430				(3 854)	19 576
	1 August 2011	82 638				(4 640)	77 998
	1 February 2012	93 737					93 737
	1 June 2012	43 885					43 885
	1 July 2012	41 935					41 935
	1 August 2012	2 782					2 782
	1 November 2012	267 587				(16 949)	250 638
	7 January 2013	5 000					5 000
	1 March 2013	4 855					4 855
	1 July 2013			25 000			25 000
	Unallocated	229 619		(25 000)	3 178	39 505	247 302
		1 131 045	(162 271)		3 178		971 952


35.	CHANGE IN ACCOUNTING POLICY (Rmillion)
	The adoption of the revised IAS 19 Employee Benefits has resulted in actuarial gains and losses being recognised immediately in other comprehensive income and no longer amortised via profit or loss. The effect of the change in accounting policy is disclosed below.

						Consolidated	Company
	Effect on the statements of financial position at 31 March 2012

	Equity at 31 March 2012 as previously reported					7 796	3 162

	Effect of change in accounting policy					(30)	(51)
	Increase in provision for retirement benefits: actuarial losses recognised					(42)	(72)
	Deferred tax thereon					12	21

	Equity at 31 March 2012 restated					7 766	3 111

	Effect on profit or loss for the year ended 31 March 2013

	Reversal of actuarial losses amortised					12	17
	Deferred tax					(3)	(5)
	Increase in profit for the year					9	12

	Attributable to:
	Shareholders of Tongaat Hulett					8	12
	Minority (non-controlling) interest					1
						9	12

	Effect on other comprehensive income for the year ended 31 March 2013

	Actuarial losses recognised					(44)	(49)
	Deferred tax					12	13
	Currency alignment					6
	Decrease in other comprehensive income					(26)	(36)

	Net decrease in total comprehensive income					(17)	(24)

	Attributable to:
	Shareholders of Tongaat Hulett					(19)	(24)
	Minority (non-controlling) interest					2
						(17)	(24)

	Effect on the statements of financial position at 31 March 2013

	Equity at 31 March 2013 as previously reported					9 752	2 922

	Effect of change in accounting policy					(47)	(75)
	Actuarial losses recognised					(74)	(104)
	Currency alignment					6
	Increase in provision for retirement benefits					(68)	(104)
	Deferred tax thereon					21	29

	Equity at 31 March 2013 restated					9 705	2 847

	The change in accounting policy did not affect cash flow from operations.

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financials

NOTES (31-34) TO THE FINANCIAL STATEMENTS