NOTES TO THE CONSOLIDATED ANNUAL FINANCIAL STATEMENTS l NOTE 20 |
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2014 Rm |
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2013 Rm |
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20. |
Retirement benefit obligations |
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Defined contribution plans |
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The Group provides retirement benefits through independent funds under the control of trustees and all contributions to those funds are charged to profit or loss. The large majority of South African employees, other than those employees required by legislation to be members of various industry funds, are members of the Imperial Group Pension Fund and the Imperial Group Provident Fund which are governed by the Pensions Funds Act, 1956. |
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Total cost charged to profit or loss |
676 |
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597 |
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Defined benefit plans
Imperial Logistics International GmbH, a subsidiary located in Germany, operates a number
of defined benefit plans for its employees in Europe with a majority of the plans being unfunded. Under the plans the employees are entitled to retirement benefits which are dependent on seniority, length of service and level of pay.
The benefit obligations in Europe are provided for based on actuarial valuations prepared using the projected unit credit method, with the following assumptions: |
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– Discount rate |
3,00 |
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2,80 |
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– Projected pension payment increase |
1,75 |
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2,00 |
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– Projected salary and other contribution increase |
2,00 |
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2,00 |
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– Fluctuation rate (depends on the age of male or female) |
0 - 8,00 |
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0 - 8,00 |
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The latest actuarial valuation was performed in June 2014. In the opinion of the actuary,
the provision for the defined benefit obligations is adequate. The next valuation will be conducted in June 2015. |
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The amounts, included in staff costs, recognised in profit or loss in respect of the plans are as follows: |
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2014
Rm |
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Restated
2013 Rm |
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Current service cost |
25 |
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14 |
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Expected return on plan assets |
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(1) |
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Interest costs |
30 |
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33 |
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55 |
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46 |
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The amount included on the statement of financial position arising from the Group’s obligations are as follows: |
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Defined retirement benefit obligations |
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Carrying value at beginning of year |
1 014 |
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590 |
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Adjustment resulting from the adoption of amendments to IAS 19 - Employee Benefits |
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61 |
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Remeasurement in other comprehensive income |
(64) |
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186 |
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Payments to retired employees |
(38) |
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(32) |
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Plan assets transferred |
2 |
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4 |
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Currency adjustments |
114 |
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159 |
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Amounts charged to profit or loss |
55 |
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46 |
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Carrying value at end of year |
1 083 |
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1 014 |
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The adoption of amendments to IAS19 - Employee Benefits, as outlined in , resulted in the recognition of all previously unrecognised actuarial gains and losses so that the net pension liability reflect the full value of the plan deficit.
The expected payments to retired employees for the next financial year is R40 million and the average duration of the retirement plans varies from 9 to 37 years with a median of 15 years.
A quantitative sensitivity analysis for significant assumptions as at 30 June 2014 is as shown below:
Assumptions |
Discount rate |
Future pension cost |
Sensitivity level |
1% increase |
1% decrease |
1% increase |
1% decrease |
Impact on defined benefit obligation (R million) |
(155) |
195 |
140 |
(118) |
Based on past experience life expectancy is assumed to remain unchanged.
The sensitivity analysis have been determined based on a method that extrapolates the impact on the defined benefit obligation as a result of reasonable changes in the key assumptions occurring at the end of the reporting period. |
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