NOTES (31-36) TO THE
FINANCIAL STATEMENTS

31.  RETIREMENT BENEFITS (Rmillion)      
         
  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 members of either a Tongaat Hulett implemented scheme or of various designated industry or state schemes. The Tongaat Hulett schemes, which are predominantly defined contribution 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 R106 million were expensed during the year (2016: R100 million). 
         
  Zimbabwe Pension Funds       
  The post-retirement benefit provisions for the Zimbabwe operations at 31 March 2017 amount to R213 million (2016: 
R234 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):  2017  2016   
         
  Fair value of fund assets       
  Balance at beginning of year  845  793   
  Expected return on scheme assets  61  49   
  Settlements/conversion  4  3   
  Balance at end of year  910  845   
         
  Comprises:       
  Employer surplus account (note 3) 689  634   
  Provisions and reserves  221  211   
    910  845   
  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 these current employees is dependent upon the employee remaining in service until retirement. 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 using the projected unit credit method and comprises: 
    Consolidated  Company 
    2017  2016  2017  2016 
           
  Amounts recognised in the statement of financial position:         
  Net liability at beginning of year  600  542  450  427 
           
  Actuarial (gain)/loss included in other comprehensive income:  (25) 22  (31) 14 
  From changes in financial assumptions  (26) 3  (26) 3 
  From changes in demographic assumptions  (10) 3  (12)  
  From changes in experience items during the year  11  16  7  11 
  Net expense recognised in income statement  57  49  46  37 
  Employer contributions  (38) (36) (30) (28)
  Currency alignment  (18) 23     
  Net liability at end of year  576  600  435  450 
           
  Amounts recognised in profit or loss:         
  Current service costs  9  9  4  4 
  Interest costs  48  40  42  33 
    57  49  46  37 
           
  The principal actuarial assumptions applied are:         
  Discount rate:         
  South Africa  9,60%  9,60%  9,60%  9,60% 
  Mozambique  8,60%  9,09%     
  Zimbabwe  5,00%  4,00%     
           
  Healthcare cost inflation rate:         
  South Africa  8,15%  8,75%  8,15%  8,75% 
  Mozambique  7,31%  8,24%     
  Zimbabwe  3,50%  2,50%     
           
  Sensitivity analysis:         
  On discount rate:         
  1% increase in trend rate - decrease in the aggregate of the service and interest costs  (1) (2) (1) (1)
  1% increase in trend rate - decrease in the obligation  (57) (62) (38) (42)
  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  70  76  45  50 
           
  On healthcare 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  70  76  46  50 
  1% decrease in trend rate - decrease in the aggregate of the service and interest costs  (1) (2) (1) (1)
  1% decrease in trend rate - decrease in the obligation  (58) (63) (39) (43)
           
  Estimated contributions payable in the next financial year  40  38  32  30 
  Weighted average duration of the obligation:         
  South Africa  10,5 years  11,1 years  10,5 years  11,1 years 
  Mozambique  6,4 years  6,6 years     
  Zimbabwe  16,5 years  16,6 years     
           
  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) turns out 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 is determined actuarially each year using the projected unit credit method
and comprises: 
    Consolidated  Company 
    2017  2016  2017  2016 
           
  Amounts recognised in the statement of financial position:         
  Net liability at beginning of year  226  198  130  122 
           
  Actuarial (gain)/loss included in other comprehensive income:  (15) 2  (9) 2 
  From changes in financial assumptions  (8) (2) (8) 1 
  From changes in demographic assumptions  (2)   (2)  
  From changes in experience items during the year  (5) 4  1  1 
  Net expense recognised in income statement  29  27  20  17 
  Payments made by the employer  (22) (18) (15) (11)
  Currency alignment  (10) 17     
  Net liability at end of year  208  226  126  130 
           
  Amounts recognised in profit or loss:         
  Service costs  13  12  8  7 
  Interest costs  16  15  12  10 
    29  27  20  17 
  The principal actuarial assumptions applied are:         
  Discount rate:         
  South Africa  9,60%  9,60%  9,60%  9,60% 
  Zimbabwe  5,00%  4,00%     
           
  Salary inflation rate:         
  South Africa  7,90%  8,50%  7,90%  8,50% 
  Zimbabwe  2,50%  1,50%     
           
  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  (19) (20) (11) (11)
  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  22  23  13  13 
           
  On salary inflation rate:         
  1% increase in trend rate - increase in the aggregate of the service and interest costs  4  4  2  2 
  1% increase in trend rate - increase in the obligation  23  23  13  13 
  1% decrease in trend rate - decrease in the aggregate of the service and interest costs  (3) (3) (2) (2)
  1% decrease in trend rate - decrease in the obligation  (20) (20) (12) (11)
           
  Estimated amounts payable in the next financial year  20  23  11  15 
           
  Weighted average duration of the obligation:         
  South Africa  10,6 years  9,8 years  10,6 years  9,8 years 
  Zimbabwe  10,9 years  10,5 years     
           
  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) turn out 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 Share Appreciation Right Scheme 2005, the Long Term Incentive Plans 2005 and the Deferred Bonus Plan 2005 are set out here of 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. Due to these shares having specific repurchase rights at maturity (five years from grant date), they were a separate class of restricted shares which, other than for the repurchase terms, rank pari passu with ordinary shares and became ordinary shares at maturity of the scheme on 1 August 2012. 
             
  Employee Share Ownership Plan 
           
  Grant date  Number of 
shares at 
31 March 2016 		 Released 
including deaths 
in service 		 Forfeited / 
adjustments 		 Balance time 
constrained 
31 March 2017 
 
 
           
  1 August 2011  11 279  (10 074) (1 205)  
  Unallocated  31 126    1 205  32 331 
    42 405  (10 074) -  32 331 
           
  Management Share Ownership Plan 
             
  Grant date  Number of 
shares at 
31 March 2016 		 Released 
including deaths 
in service 		 Awarded 
during 
2016/17 		 Forfeited / 
adjustments 		 Balance time 
constrained 
31 March 2017 
 
 
             
  1 August 2011  77 998  (77 998)      
  1 February 2012  93 737  (93 737)      
  1 June 2012  43 885        43 885 
  1 July 2012  41 935        41 935 
  1 November 2012  246 481      (4 006) 242 475 
  7 January 2013  5 000        5 000 
  1 March 2013  4 855        4 855 
  1 July 2013  25 000      (25 000)  
  1 August 2014  41 967      (1 491) 40 476 
  1 September 2014  1 928        1 928 
  1 September 2015  52 213      (2 043) 50 170 
  1 March 2017      52 789    52 789 
  Unallocated  153 484    (52 789) 32 540  133 235 
    788 483  (171 735) -  -  616 748 
 
35.  CHANGE IN ACCOUNTING POLICY (Rmillion)  
     
  The adoption of the revised IAS 16: Property, Plant and Equipment and IAS 41: Agriculture has resulted in cane roots being reclassified from growing crops to property, plant and equipment in the statement of financial position, root planting costs being capitalised to the cost of the roots and thereafter the roots depreciated over their estimated useful lives. Standing cane is now disclosed under current assets. The effect of the change in accounting policy on the 2015/16 financial statements is disclosed below. 
     
  Previously cane roots and standing cane were disclosed under the heading of Growing Crops and classified as non current asssets in the statement of financial position. Changes in the fair value of cane roots and standing cane and root planting costs were included in profit or loss. 
     
    Consolidated  Company 
  Effect on profit or loss for the year ended 31 March 2016     
       
  Root planting costs capitalised to property, plant and equipment  601  63 
  Reversal of root fair valuation  (96) (1)
  Depreciation of roots  (644) (143)
  Decrease in operating profit  (139) (81)
  Deferred tax relief  32  23 
  Decrease in profit after tax for the year  (107) (58)
       
  Attributable to:     
  Shareholders of Tongaat Hulett  (104) (58)
  Minority (non-controlling) interest  (3)  
    (107) (58)
       
  Effect on earnings per share (basic and diluted) - cents     
  Net profit per share  (90,1)  
  Headline earnings per share  (90,1)  
       
  Effect on other comprehensive income for the year ended 31 March 2016     
  Foreign currency translation  2   
  Increase in other comprehensive income  2   
       
  Net decrease in total comprehensive income  (105) (58)
       
  Attributable to:     
  Shareholders of Tongaat Hulett  (102) (58)
  Minority (non-controlling) interest  (3)  
    (105) (58)
       
  Effect on the statement of financial position at 31 March 2016     
  Equity as previously reported  15 530  2 607 
       
  Effect of change in accounting policy  (105) (58)
  Operating profit  (139) (81)
  Foreign currency translation  2   
  Decrease in carrying value of cane roots  (137) (81)
  Deferred tax  32  23 
       
  Equity restated  15 425  2 549 
       
    Consolidated  Company 
  Property, plant and equipment as previously reported  13 318  3 340 
  Effect of change in accounting policy  3 097  1 153 
  Transfer of cane roots from growing crops  3 234  1 234 
  Adjusted for application of IAS 16 and IAS 41:     
  Root planting costs capitalised  601  63 
  Reversal of root fair valuation  (96) (1)
  Depreciation of roots  (644) (143)
  Foreign currency translation  2   
       
  Property, plant and equipment restated  16 415  4 493 
       
  Growing crops as previously reported  6 148  1 699 
  Transfer of cane roots to property, plant and equipment  (3 234) (1 234)
  Growing crops restated  2 914  465 
       
  Effect on statement of cash flows for the year ended 31 March 2016     
       
  Cash flow from operations as previously reported  1 262  972 
  Expenditure on root planting now included in capex *  601  63 
  Cash flow from operations restated  1 863  1 035 
   
  * This is a reallocation and there is thus no effect on cash flow before dividends and financing activities. 
       
  Effect on the statement of financial position at 31 March 2015     
       
  Property, plant and equipment as previously reported  12 059  2 894 
  Transfer of cane roots from growing crops  2 923  1 164 
  Property, plant and equipment restated  14 982  4 058 
       
  Growing crops as previously reported  5 473  1 490 
  Transfer of cane roots to property, plant and equipment  (2 923) (1 164)
  Growing crops restated and disclosed under current assets  2 550  326 
 
       
36.  SUBSEQUENT EVENTS     
       
  There were no material events between 31 March 2017 and the date of this report.     
 
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