Annual Financial Statements


Financial Statements for the year ended 31 December 2006


Notes to the Annual Financial Statements (21 - 31)


21. EARNINGS PER SHARE
  Earnings per share are calculated using the weighted average number of ordinary shares in issue during the year. In the case of basic earnings per share the weighted average number of shares in issue during the year is 105 496 879 (2005 – 103 017 561). In respect of diluted earnings per share the weighted average number of shares is 108 260 821 (2005 – 105 552 404).
       
       
22. DIVIDENDS (Rmillion)    
              2006 2005
       
  Paid:    
      Final for previous year, paid 23 March 2006 – 280 cents (2005 – 120 cents) 294 123
    Interim for current year, paid 31 August 2006 – 200 cents (2005 – 120 cents) 212 124
    506 247
  The final dividend for the year ended 31 December 2006 of 350 cents per share declared on 16 February 2007 and payable on 22 March 2007 has not been accrued.
       
   
23. FINANCIAL RISK MANAGEMENT
  The Group's financial instruments consist primarily of cash deposits with banks, unlisted investments, derivatives, accounts receivable and payable, and loans to and from associates and others. Financial instruments are carried at fair value or amounts that approximate fair value.
 
  In the normal course of its operations, the Group is inter alia exposed to credit, foreign currency, interest, liquidity and commodity price risk. In order to manage these risks, the Group may enter into transactions, which make use of derivatives. They include forward exchange contracts (FEC's) and options, interest rate swaps and commodity futures and options. Separate committees are used to manage the risks and the hedging activities of the Group. The Group does not speculate in or engage in the trading of derivative instruments. Since the Group utilises derivative instruments for risk management, market risk relating to derivative instruments will be offset by changes in the valuation of the underlying assets, liabilities or transactions being hedged.
 
  Credit risk
  The Group's financial instruments do not represent a concentration of credit risk because the Group deals with a variety of major banks, and its accounts receivable and loans are spread among a number of major industries, customers and geographic areas. The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with high credit ratings assigned by international credit-rating agencies. In addition, appropriate credit committees review significant credit transactions before consummation. Where considered appropriate, use is made of credit guarantee insurance. A suitable provision is made for doubtful debts. Financial guarantee contracts are accounted for as insurance arrangements.
 
  Foreign currency risk
  In the normal course of business, the Group enters into transactions denominated in foreign currencies. As a result, the Group is subject to transaction and translation exposure from fluctuations in foreign currency exchange rates. The Group uses a variety of instruments to minimise foreign currency exchange rate risk in terms of its risk management policy. In principle it is the Group's policy to cover its foreign currency exposure in respect of liabilities and purchase commitments and an appopriate portion of its foreign currency exposure on receivables. There were no speculative positions in foreign currencies at year end. All foreign exchange contracts are supported by underlying transactions. The Group is not reliant on imported raw materials to any significant extent.
 
  The Group's FEC’s that constitute designated hedges of currency risk at year end are summarised as follows:
    Group Company
        2006 2005     2006 2005
    Average Commitment Fair value Fair value Average Commitment Fair value Fair value
    contract   of FEC of FEC contract   of FEC of FEC
    rate (Rmillion) (Rmillion) (Rmillion) rate (Rmillion) (Rmillion) (Rmillion)
  Imports                
  US dollars 7,03 37 (2) (1) 7,22 5    
  Euro 9,22 18     9,33 1    
  Australian dollars 5,75 5     5,75 5    
  UK pounds 13,70 2            
      62 (2) (1)   11    
  Exports                
  US dollars 7,10 378 10 7 7,32 124 4 4
  Euro 9,22 43 1          
  Australian dollars 5,61 5     5,61 5    
  UK pounds 13,73 6            
      432 11 7   129 4 4
  Loan capital payments and interest                
  US dollars       (7)        
  Net total   494 9 (1)   140 4 4
  The hedges in respect of imports and exports are expected to mature within approximately one year.
 
  The fair value is the estimated amount that the Group would pay or receive to terminate the FEC’s in arm’s length transactions at the balance sheet date.
 
  The Group's FEC’s that do not constitute designated hedges of currency risk at year end are summarised as follows:
 
    Group Company
        2006 2005     2006 2005
    Average Commitment Fair value Fair value Average Commitment Fair value Fair value
    contract   of FEC of FEC contract   of FEC of FEC
    rate (Rmillion) (Rmillion) (Rmillion) rate (Rmillion) (Rmillion) (Rmillion)
  Imports                
  US dollars 7,12 3     7,12 3    
  Euro 9,30 5     9,30 5    
      8       8    
  Exports                
  US dollars 7,00 312 6          
  Loan capital payments and interest                
  US dollars 7,00 85 1          
  Total   405 7     8    
  Although not designated as a hedge for accounting purposes, these FEC’s represent cover of existing foreign currency exposure. The FEC’s in respect of the capital payments and interest on the loan will mature during 2007 and 2008.
  The Group has the following uncovered foreign receivables:
    Group     Company    
      Foreign       Foreign    
      Amount 2006 2005   Amount 2006 2005
      (million) (Rmillion) (Rmillion)   (million) (Rmillion) (Rmillion)
  US dollars   6 45 8   1 9 6
  UK pounds     6 4        
  Euro   1 5          
        56 12     9 6
  Commodity price risk
  Commodity price risk arises from the risk of an adverse effect on current or future earnings resulting from fluctuations in the prices of commodities. To hedge prices for the Group's substantial commodity requirements, commodity futures and options are used, including fixed and spot-defined forward sales contracts and call and put options.
 
  Tongaat-Hulett Sugar secures the premium on refined sugar exports from fluctuating international prices by using commodity futures.
 
  African Products has secured its maize requirements for the current maize season to 31 May 2007 and a significant portion of its requirements for the year ending 31 May 2008 by means of unpriced procurement contracts and futures.
 
  Hulett Aluminium purchases its aluminium raw material at prices that fluctuate with movements in the London Metal Exchange price for aluminium and the Rand/US dollar exchange rate. The exposure to movements in the price of aluminium arising from the timing of sales and purchases contracts is hedged by entering into futures contracts.
   
  At the year end the commodity futures contracts were:
    Group Company
      Contract 2006 2005   Contract 2006 2005
      value Fair value Fair value   value Fair value Fair value
    Tons (Rmillion) (Rmillion) (Rmillion) Tons (Rmillion) (Rmillion) (Rmillion)
  Futures hedge accounted:                
  Raw sugar futures purchased 64 950 121 1 8 64 950 121 1 8
  Raw sugar futures sold 58 222 148 1 (9) 58 222 148 1 (9)
  Maize futures purchased 19 500 29 (4) 1 19 500 29 (4) 1
  Maize futures sold 40 300 53 (1) 18 40 300 53 (1) 18
  Aluminium futures purchased 10 838 200 13 7        
        10 25     (3) 18
                   
  Futures not hedge accounted:                
  Aluminium futures sold 9 000 169 (9)          
                   
  Embedded derivatives:     Group        
        2006 2005        
  Fair value Fair value     (Rmillion) (Rmillion)        
  Sales orders not yet fulfilled       (1)        
  Interest rate risk
  The Group is exposed to interest rate risk on its fixed rate loan liabilities and accounts receivable and payable, which can impact on the fair value of these instruments. The Group is exposed to interest rate cash flow risk in respect of its variable rate loans and short-term cash investments, which can impact on the cash flows of these instruments. The exposure to interest rate risk is managed using derivatives, where it is considered appropriate, and through the Group cash management system, which enables the Group to maximise returns while minimsing risks.
 
  Liquidity risk
  The Group manages its liquidity risk by monitoring forecast cash flows on a weekly basis. The Group has unutilised committed banking facilities of R1,0 billion (2005 - R1,3 billion).
   
   
24. PRINCIPAL SUBSIDIARY COMPANIES AND JOINT VENTURES (Rmillion)
      Interest of Holding Company
      Shares Indebtedness
      2006 2005 2006 2005
    African Products (Pty) Limited 15 15 (15) (15)
  # Hulett Aluminium (Pty) Limited (50%) 297 7 840 646
    Hulett-Hydro Extrusions (Pty) Limited (35%)        
    Moreland Estates (Pty) Limited     (16) (223)
    Tongaat-Hulett Sugar Limited 487 487 215 164
    Tambankulu Estates Limited (Swaziland)        
    Açucareira de Moçambique, SARL (Mozambique) (75%)        
  + Triangle Sugar Corporation Limited (Zimbabwe)        
  + Hippo Valley Estates Limited (Zimbabwe) (50,35%)        
    The Tongaat Group Limited 54 54 (43) (47)
      853 563 981 525
  # Joint venture        
  + Not consolidated, accounted for as an investment.        
    Except where otherwise indicated, effective participation is 100 percent.
    A full list of all subsidiaries and joint ventures is available from the group secretary on request.
     
25. GUARANTEES AND CONTINGENT LIABILITIES (Rmillion) Group Company
        2006 2005 2006 2005
  Guarantees in respect of obligations of the Group and third parties 57 30 21 14
  Contingent liabilities 22 14 4 11
    79 44 25 25
           
       
26. LEASES (Rmillion) Group Company
    2006 2005 2006 2005
  Amounts payable under finance leases        
    Minimum lease payments due:        
      Not later than one year 1 1    
      Later than one year and not later than five years 2 2    
      Later than five years 1 1    
    4 4    
    Less: future finance charges (1) (1)    
    Present value of lease obligations 3 3    
    Payable:        
      Not later than one year 1 1    
      Later than one year and not later than five years 2 2    
    3 3    
  Operating lease commitments, amounts due:        
    Not later than one year 13 12 8 8
    Later than one year and not later than five years 29 27 18 17
    Later than five years 3      
    45 39 26 25
           
  In respect of:        
    Property 28 25 16 11
    Plant and machinery 11 9 5 9
    Other 6 5 5 5
    45 39 26 25
           
       
27. CAPITAL EXPENDITURE COMMITMENTS (Rmillion) Group Company
    2006 2005 2006 2005
           
  Contracted 169 112 77 55
  Approved but not contracted 640 187 125 137
    809 299 202 192
  On 1 December 2006 the Board approved a R1,3 billion expansion of the sugar milling and cane growing activities at the Xinavane and Mafambisse sugar mills in Mozambique. The Xinavane project is subject to a favourable outcome to the Environmental Impact Assessment process currently underway.
 
  Funds to meet this future expenditure will be provided from retained net cash flows and financing activities.
   
   
28. RELATED PARTY TRANSACTIONS (Rmillion)

  
During the year the Group, in the ordinary course of business, entered into various related party sales, purchases and investment transactions. These transactions occurred under terms that are no more or no less favourable than those arranged with third parties. Intra-group transactions are eliminated on consolidation.
    Group Company
        2006 2005 2006 2005
  Goods and services:        
    Between the company and its subsidiaries       3
    Transacted between subsidiaries within the Group 10 3    
    Transacted with/between joint ventures within the Group 38 39 3 3
    Transacted with associate companies 79 75    
    Sales to external related parties 108 90 108 90
    Paid to the Tongaat-Hulett Pension Fund 31 29 23 21*
    Transacted with directors of the company 7      
           
  Administration fees and other income:        
    Transacted between operating entities within the company     2 1
    Between the company and its subsidiaries     34 20
    Transacted between subsidiaries within the Group 22 25    
    Transacted with/between joint ventures within the Group 305 235 2 2
    Transacted with associate companies 20 11    
    Paid to external related parties 4 4    
           
  Interest paid:        
    Transacted between operating entities within the company     23 16
    Between the company and its subsidiaries     2 1
    Transacted with/between joint ventures within the Group 11 6    
           
  Interest received:        
    Transacted between operating entities within the company     112 119
    Transacted between subsidiaries within the Group 22 8    
    Transacted with/between joint ventures within the Group 12 23 43 39
    Transacted with associate companies 1      
           
  Sale of fixed assets:        
    Between the company and its subsidiaries     314 57
    Transacted between subsidiaries within the Group 9      
           
  Loan balances:        
    Transacted between operating entities within the company     1 296 1 354
    Between the company and its subsidiaries     141 62
    Transacted with/between joint ventures within the Group 329 192 840 463
    With the holding company 12      
    External related parties 8 12 8 12
  Dividends received:        
    Transacted between operating entities within the company       47
    Between the company and its subsidiaries       45
    Transacted between subsidiaries within the Group 61 19    
  Other related party information: Export partnership – refer to note 3
    Total dividends paid to the holding company and other shareholders – refer to note 22 Directors – refer to note 30
    Increased investment of R254 million made in Triangle Sugar to acquire Hippo Valley Estates from Anglo American.
  * Restated
 
   
29. RETIREMENT BENEFITS
  Pension and Provident Fund Schemes
  The Group 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 Group implemented scheme or of various designated industry or state schemes. The Group 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 the Group. The scheme assets are administered by boards of trustees, each of which includes elected employee representatives.
 
  Defined Contribution Pension and Provident Schemes
  There are three Group defined contribution schemes, one of which is located in Swaziland. The latest audited financial statements of these schemes all reflect a satisfactory state of affairs. Contributions of R16 million were expensed during the year (2005 – R16 million).
 
  Defined Benefit Pension Scheme
  There is one defined benefit scheme (The Tongaat-Hulett Pension Fund) for employees including those of the Hulett Aluminium Joint Venture. The Fund is actuarially valued at intervals of not more than three years using the projected unit credit method. In the statutory actuarial valuation of the scheme as at 31 December 2001 the Fund was certified by the reporting actuary to be in a sound financial position. With effect from 7 December 2001 the Pension Funds Second Amendment Act was promulgated. This Act requires the Fund to submit a plan for the apportionment on a fair basis to the employer and past and current members of the Fund of the actuarial surplus as at 31 December 2001. The apportionment plan must be approved by the Financial Services Board (FSB). Whilst the valuation of the Fund as at 31 December 2001 and the apportionment plan have been completed and submitted to the FSB, they have not yet been approved. Accordingly, due to the uncertainty regarding apportionment, no surplus has been recognised on the Group's balance sheet.
 
  An actuarial valuation of liabilities, based on the existing benefits, carried out as at 31 December 2006 in accordance with IAS 19 Employee Benefits showed the present value of obligations to be adequately covered by the fair value of the scheme assets.
 
            2006 2005
    Rmillion Rmillion
  Details of the valuation of the Fund (100%) are as follows:    
  Fair value of plan assets:    
  Balance at beginning of year 4 554 3 602
  Expected return on scheme assets 348 283
  Employer contributions 39 37
  Members’ contributions 31 30
  Benefits paid (181) (179)
  Net member transfers (9) (13)
  Actuarial gain 1 163 794
  Balance at end of year 5 945 4 554
       
  Present value of defined benefit obligation:    
  Balance at beginning of year 3 465 3 109
  Current service cost 81 72
  Interest cost 265 245
  Members’ contributions 31 30
  Benefits paid (181) (179)
  Net member transfers (9) (13)
  Actuarial loss 550 201
  Balance at end of year 4 202 3 465
       
  Fund assets less member liabilities, before reserves 1 743 1 089
 
  Asset information:    
  Equities 4 624 3 512
  Fixed interest bonds 804 684
  Property 8 8
  Cash 509 350
            5 945 4 554
  Included in the assets of the scheme are ordinary shares held in The Tongaat-Hulett Group Limited, stated at fair value 212 125
  Actual return on scheme assets 1 511 1 077
       
  The principal actuarial assumptions are:    
  Discount rate 8,00% 7,75%
  Salary cost and pension increase 4,75% 4,25%
  Expected rate of return on assets 8,00% 7,75%
       
  Experience gains/(losses):    
  Plan liabilities (429) (198)
  Percentage of the present value of plan liabilities 10,20% 5,70%
       
  Plan assets 1 163 794
  Percentage of plan assets 19,60% 17,40%
       
  Estimated contributions payable in the next financial year 43 39
   
  Basis used to determine the rate of return on assets
  The rate of return on assets is based on the annualised yield on the R186 Government bond together with an allowance for the risk premium that one could reasonably expect on investing in a corporate bond compared to a Government bond.
 
  Post-retirement medical aid benefits
  The obligation of the Group 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 unfunded liability for post-retirement medical aid benefits is determined actuarially each year and comprises:
    Group Company
        2006 2005 2006 2005
    Rmillion Rmillion Rmillion Rmillion
  Amounts recognised in the balance sheet:        
  Present value of unfunded obligations 277 249 230 208
  Unrecognised actuarial losses (36) (19) (32) (18)
  Net liability in balance sheet 241 230 198 190
           
  The liability is reconciled as follows:        
           
  Net liability at beginning of year 230 221 190 184
  Net expense recognised in income statement 27 25 22 20
  Contributions (16) (16) (14) (14)
  Net liability at end of year 241 230 198 190
           
  Amounts recognised in the income statement:        
           
  Service costs 3 4 2 3
  Interest costs 19 19 16 15
  Net actuarial losses recognised 5 2 4 2
    27 25 22 20
           
  The principal actuarial assumptions applied are:        
  Discount rate 8,00% 7,75% 8,00% 7,75%
  Health care cost inflation rate 5,25% 4,75% 5,25% 4,75%
           
  Sensitivity of healthcare cost trend rates:        
  1% increase in trend rate – effect on the aggregate of the service and interest costs 4 3 3 2
  1% increase in trend rate – effect on the obligation 34 31 27 25
  1% decrease in trend rate – effect on the aggregate of the service and interest costs 4 3 3 2
  1% decrease in trend rate – effect on the obligation 29 26 23 21
  Estimated contributions payable in the next financial year 17 16 15 15
           
  Experience losses:        
  On plan liabilities 22 4 18 6
  Percentage of the present value of plan liabilities 7,94% 1,61% 7,83% 2,88%
           
  Retirement gratuities
  The Group 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 unfunded liability for retirement gratuities which is determined actuarially each year comprises:
    Group Company
    2006 2005 2006 2005
    Rmillion Rmillion Rmillion Rmillion
  Amounts recognised in the balance sheet:        
  Present value of unfunded obligations 59 50 51 43
  Unrecognised actuarial (losses)/gains (4) 2 (3) 3
  Net liability in balance sheet 55 52 48 46
           
  The liability is reconciled as follows:        
           
  Net liability at beginning of year 52 49 46 43
  Net expense recognised in income statement 7 6 6 5
  Payments made (4) (3) (4) (2)
  Net liability at end of year 55 52 48 46
           
  Amounts recognised in the income statement:        
           
  Service costs 3 2 2 2
  Interest costs 4 4 4 3
    7 6 6 5
  The principal actuarial assumptions applied are:        
  Discount rate 8,00% 7,75% 8,00% 7,75%
  Salary inflation rate 5,25% 4,75% 5,25% 4,75%
           
  Estimated contributions payable in the next financial year 5 5 5 4
  Experience losses:        
  On plan liabilities 7 2 6 1
  Percentage of the present value of plan liabilities 11,86% 4,00% 11,76% 2,33%
           
   
30. DIRECTORS' REMUNERATION AND INTERESTS
  Directors' remuneration (R000)
  The directors' remuneration for the year ended 31 December 2006 was as follows:
        Retirement Share  
    Cash   and medical option  
  Name package Bonus contributions gains Total
             
  Executive directors:          
  B G Dunlop 2 168 1 010 256 7 506 10 940
  A Fourie 2 043 882 234 2 408 5 567
  G R Hibbert 1 752 824 203 2 957 5 736
  G P N Kruger 2 009 629 252 4 380 7 270
  M H Munro 1 810 869 216 820 3 715
  S J Saunders 2 010 907 235   3 152
  M Serfontein 1 618 746 190 2 486 5 040
  P H Staude 3 718 1 785 397 6 257 12 157
    17 128 7 652 1 983 26 814 53 577
  Bonuses are reported to match the amount payable to the applicable financial year.
 
  The directors' remuneration for the year ended 31 December 2005 was as follows:
        Retirement Share  
    Cash   and medical option  
  Name package Bonus contributions gains Total
             
  Executive directors:          
  B G Dunlop 2 036 975 229 144 3 384
  A Fourie 1883 825 222   2 930
  G R Hibbert 1 615 761 194 96 2 666
  G P N Kruger 1886 775 229 86 2 976
  M H Munro 1 616 784 195   2 595
  S J Saunders 1888 878 221 126 3 113
  M Serfontein 1520 722 175 478 2 895
  P H Staude 3 475 1 685 372 96 5 628
    15 919 7 405 1 837 1 026 26 187
  Bonuses are reported to match the amount payable to the applicable financial year.
      
    2006 2005
  Name Fees Other Total Fees Other Total
  Non-executive directors:            
  D D Barber 135   135 115   115
  P M Baum 135 125 260 115 69 184
  I Botha 135 142 277 115 84 199
  L Boyd 135 178 313 115 138 253
  E le R Bradley 135 233 368 115 165 280
  B E Davison 135   135 115   115
  M W King 135 142 277 115 108 223
  J B Magwaza 135 140 275 115 1 936ø 2 051
  M Mia 135 123 258 115 105 220
  T H Nyasulu 135 32 167 115 96 211
  C M LSavage 500 267 767 230 628 858
  R H J Stevens 135 110 245 115 100 215
  A M Thompson 135 72 207 115   115
    2 120 1 564 3 684 1 610 3 429 5 039
  ø Includes share option gain on the exercise of options awarded when he was an executive director.
  Declaration of full disclosure            
  Other than that disclosed above, no consideration was paid to, or by any third party, or by the company itself, in respect of services of the company's directors, as directors of the company, during the year ended 31 December 2006.
 
  Interest of directors of the company in share capital
  The aggregate holdings as at 31 December 2006 of those directors of the company holding issued ordinary shares of the company are detailed below. Holdings are beneficial except where indicated otherwise.
      
    2006 2005
    Direct Indirect Direct Indirect
  Name shares shares shares shares
  Executive directors:        
  B G Dunlop 7 394   4 210  
  A Fourie 11 007   8 314  
  G R Hibbert 7 356   24 872  
  G P N Kruger 6 589   4 057  
  M H Munro 6 263   3 704  
  S J Saunders 12 849 761 632 9 982 761 632
  S J Saunders (non-beneficial)   487 376   487 376
  M Serfontein 8 498 8 000 6 141 8 000
  P H Staude 40 085   32 930  
    100 041 1 257 008 94 210 1 257 008
           
  Non-executive directors:        
  L Boyd 500   500  
  E le R Bradley   99 316   99 316+
  E le R Bradley (non-beneficial)   25 809   25 809+
  J B Magwaza 5 760   5 760  
  C M L Savage 24 003 73 225 24 003 73 225
  R H J Stevens 618   618  
    30 881 198 350 30 881 198 350
  + Reclassified        
   
   
31. EMPLOYEE SHARE INCENTIVE SCHEMES
  The adoption of IFRS 2 Share-based Payment (IFRS 2) in 2005 required that all awards made after 7 November 2002 be accounted for in the financial statements of the company and Group. IFRS 2 has therefore been applied to The Tongaat-Hulett Group Limited 2001 Share Option Scheme in respect of the awards made on 14 April 2003, 1 October 2003 and 21 April 2004 and to the Share Appreciation Right Scheme 2005 (SARS), the Long Term Incentive Plan 2005 (LTIP) and the Deferred Bonus Plan 2005 (DBP).
 
  Details of awards in terms of the company's share incentive schemes are as follows:
  The Tongaat-Hulett Employees Share Incentive Scheme and The Tongaat-Hulett Group Limited 2001 Share Option Scheme (the Original Share Option Schemes)
 
  Under the original share option schemes, participating employees were awarded share options in the company. On vesting, the employee is entitled to purchase shares in the company and immediately sell the shares at the market price, thereby benefiting from the appreciation in the share price.
 
Option   Expiring     Number of Options Options Number of Options
price   ten years from     options at exercised in forfeited in options at time
Rand       31 Dec 2005 2006 2006 31 Dec 2006 constrained
33,25   4 November 1998   105 000 83 000   22 000  
32,90     5 March 1999   733 200 489 200   244 000  
40,10   7 May 1999         361 800 192 940   168 860  
30,00   19 May 2000   122 000 88 200   33 800  
29,40   26 July 2000   11 800 10 300   1 500  
39,85   12 January 2001   108 500 71 800   36 700  
40,00   16 May 2001   785 283 470 383 7 000 307 900  
42,00   15 August 2001   55 000 51 500   3 500  
49,60   13 May 2002   1 071 350 571 300 8 700 491 350  
31,90   14 April 2003   1 107 500 432 500 20 500 654 500 353 310
34,50   1 October 2003   45 000 10 500   34 500 13 500
47,00   21 April 2004   1 192 800 224 000 25 600 943 200 692 760
        5 699 233 2 695 623 61 800 2 941 810 1 059 570
  The weighted average fair value costing of share options granted in 2003 and 2004, determined using the binomial tree valuation model, was R11,12 per share and R15,28 per share respectively. No awards were made in 2006 (2005 – nil) under the original share option schemes.
 
  The significant inputs into the model for the 2003/4 awards of the original share option schemes were: 
  Share price at grant date The share price at the date on which the share option is issued, as noted above.
  Exercise price The share price at grant date, as noted above.
  Expected option life 114 months (assume contractual plus a leaving percentage of 5%).
  Risk-free interest rate 9,02%
  Expected volatility Expected volatility of 35% is based on historical volatility determined by the statistical analysis of daily share price movements over the past three years.
  Expected dividends The measurement of the fair value of the share option did not take into account dividends, as no dividend payment was expected. A continuous dividend yield of 3,9% was used.
  Weighted average share price R40,40
  Expected early exercise Early exercise is taken into account on an expectation basis.
  Performance (vesting) conditions There are no performance (vesting) conditions other than the passage of time.
  Non-market performance conditions   No non-market conditions.
  Market performance conditions No market conditions.
  Weighted average remaining life:
- Expected
- Contractual
 
67 months or 5 years (2005 – 73 months or 6 years)
120 months or 10 years
   
Details of awards in terms of the company's share incentive schemes are as follows:
 
  Share Appreciation Rights Scheme 2005
 
  Under the share appreciation right scheme, participating employees are awarded the right to receive shares equal to the difference between the exercise price and the grant price, less income tax payable on such difference. The employee therefore participates in the after tax share price appreciation in the company. The vesting of the right is conditional on the achievement of Group performance levels over a performance period.
 
Grant price   Expiring   Number of Rights Rights Number of
Rand   seven years from           rights at granted in forfeited in rights at
        31 Dec 2005 2006 2006 31 Dec 2006
57,58   10 May 2005   1 372 162   29 294 1 342 868
96,09   25 April 2006     1 341 102 29 376 1 311 726
        1 372 162 1 341 102 58 670 2 654 594
  The estimated fair value costing of these share appreciation rights was determined using the binomial tree valuation model and non-market performance conditions, based on the following significant inputs:
 
  Share price at grant date The price at which the share appreciation right is issued, as noted above.
  Exercise price The share price at grant date, as noted above.
  Expected option life 80 months (assume contractual plus a leaving percentage of 5%).
  Risk-free interest rate 2006 award – 7,22% (2005 award – 8,09%).
  Expected volatility Expected volatility of 35% is based on historical volatility determined by the statistical analysis of daily share price movements over the past three years.
  Expected dividends The measurement of the fair value of the share appreciation rights did not take into account dividends, as no dividend payment was expected. A continuous dividend yield of 4,0% was used for the 2006 award (2005 award – 3,9%).
  Weighted average share price 2006 award – R96,09 (2005 award – R57,58).
  Expected early exercise Early exercise is taken into account on an expectation basis.
  Time constraints Three years from grant date.
  Performance (vesting) conditions An increase in headline earnings per ordinary share as determined by the Remuneration Committee. Retesting of the performance condition is allowed.
  Non-market performance conditions Growth in headline earnings per share.
  Market performance conditions No market conditions.
  Estimated fair value per right 2006 award – R18,11 (2005 award – R13,88).
  Weighted average remaining life:
- Expected
- Contractual
 
2006 award – 76 months or 6 years (2005 award – 64 months or 5 years)
84 months or 7 years
   
  Long Term Incentive Plan 2005
   
  Under the long term incentive plan, participating employees are granted conditional awards. These awards are converted into shares on the achievement of performance conditions over a performance period.
 
Issue price   Expiring   Number of Conditional Conditional Number of
Rand     three years from       conditional awards awards conditional
        awards at granted in forfeited in awards at
        31 Dec 2005 2006 2006 31 Dec 2006
               
57,58      10 May 2005   343 122   6 397 336 725
96,09   25 April 2006     183 218 918 182 300
        343 122 183 218 7 315 519 025
   
The estimated fair value costing of these conditional share awards was determined using the Monte Carlo Simulation model and non-market performance conditions, based on the following significant inputs:
 
  Share price at grant date The price at which the conditional share award is issued, as noted above.
  Exercise price The share price at grant date, as noted above.
  Expected option life 34 months (assume contractual plus a leaving percentage of 5%).
  Risk-free interest rate 2006 award – 7,01% (2005 award – 7,44%).
  Expected volatility Expected volatility of 25,60% for the 2006 award (2005 award –27,02%) is based on historical volatility determined by the statistical analysis of daily share price movements over the past three years.
  Expected dividends The measurement of the fair value of the conditional share awards did not take into account dividends, as no dividend payment was expected. A continuous dividend yield of 3,8% was used for the 2006 award (2005 award – 3,9%).
  Weighted average share price 2006 award – R96,09 (2005 award – R57,58).
  Expected early exercise Early exercise is taken into account on an expectation basis.
  Time constraints Two years from issue date.
  Performance (vesting) conditions 50% of the LTIP award will be subject to the TSR condition and 50% will be subject to the ROCE condition. No retesting of the performance condition is allowed.
  Non-market performance conditions Return on capital employed (ROCE).
  Market performance conditions Total shareholder return (TSR).
     
  Estimated fair value per conditional award   2006 award – R39,78 (2005 award – R24,96)
     
  Weighted average remaining life:
- Expected
- Contractual

2006 award – 28 months or 2 years (2005 award – 16 months or 1 year)
36 months or 3 years
   
Deferred Bonus Plan 2005
  Under the deferred bonus plan, participating employees purchase shares in the company with a portion of their after tax bonus. These pledged shares are held in trust by a third party administrator for a qualifying period, after which the company awards the employee a number of shares in the company which matches those pledged shares released from the trust.
 
 
Issue price   Expiring   Number of Conditional Conditional Number of
Rand   three years from   conditional awards awards conditional
        awards at granted in forfeited in awards at
          31 Dec 2005 2006 2006 31 Dec 2006
               
57,76   4 May 2005         35 094     35 094
91,86   3 March 2006     25 831   25 831
        35 094 25 831   60 925
  The estimated fair value costing of these deferred bonus share awards was based on the following significant inputs:
 
  Share price at grant date The price at which the deferred bonus share is issued, as noted above.
  Exercise price The share price at grant date, as noted above.
  Expected option life 34 months (assume contractual plus a leaving percentage of 5%).
  Risk-free interest rate Not applicable.
  Expected volatility Not applicable.
  Expected dividends The measurement of the fair value of the deferred bonus shares did not take into account dividends, as no dividend payment was expected.
  Weighted average share price 2006 award – R91,86 (2005 award – R57,76).
  Expected early exercise Early exercise is taken into account on an expectation basis.
  Time constraints Two years from date.
  Performance (vesting) conditions There are no performance (vesting) conditions other than the passage of time.
  Non-market performance conditions No non-market conditions.
  Market performance conditions No market conditions.
  Estimated fair value per deferred bonus share    2006 award – R72,47 (2005 award – R50,00)
  Weighted average remaining life:
- Expected
- Contractual
 
2006 award – 26 months or 2 years (2005 award – 16 months or 1 year)
36 months or 3 years
  The deferred bonus shares were purchased by the participating employees on 2 March 2006 in respect of the 2006 award (2005 award purchased over the period from 4 May 2005 to 10 May 2005).
   
      Interest of directors of the company in share-based instruments
  The interests of the directors in share options of the company are shown in the table below:
   
  The Original Share Option Schemes
          Number Options Number  
    Option     of options exercised of options Options
    price   Expiring at 31 Dec in at 31 Dec time
  Name Rand   ten years from 2005 2006 2006 constrained
  Executive director:              
  B G Dunlop 33,25   4 November 1998 8 000 8 000    
    32,90   5 March 1999 39 000 39 000    
    40,10   7 May 1999 14 000 14 000    
    30,00   19 May 2000 7 000 7 000    
    39,85   12 January 2001 9 000 9 000    
    40,00   16 May 2001 30 000 30 000    
    49,60   13 May 2002 25 000 18 000 7 000  
    31,90   14 April 2003 24 400 15 000 9 400 7 320
    47,00   21 April 2004 3 600   3 600 2 160
          160 000 140 000 20 000 9 480
  A Fourie 33,25   4 November 1998 4 000 4 000    
    32,90   5 March 1999 18 000 18 000    
    40,10   7 May 1999 5 200 5 200    
    30,00   19 May 2000 4 000 4 000    
    39,85   12 January 2001 2 400 2 400    
    40,00   16 May 2001 10 000   10 000  
    49,60   13 May 2002 35 000   35 000  
    31,90   14 April 2003 40 000 7 400 32 600 12 000
    47,00   21 April 2004 30 000   30 000 18 000
          148 600 41 000 107 600 30 000
  G R Hibbert 33,25   4 November 1998 8 000 8 000    
    32,90   5 March 1999 40 000 40 000    
    40,10   7 May 1999 9 000   9 000  
    30,00   19 May 2000 4 000   4 000  
    39,85   12 January 2001 5 000   5 000  
    40,00   16 May 2001 15 000   15 000  
    49,60   13 May 2002 15 000   15 000  
    31,90   14 April 2003 15 000   15 000 4 500
    47,00   21 April 2004 25 000   25 000 15 000
          136 000 48 000 88 000 19 500
  G P N Kruger 33,25   4 November 1998 8 000 8 000    
    32,90   5 March 1999 43 000 43 000    
    40,10   7 May 1999 14 000   14 000  
    30,00   19 May 2000 4 000 4 000    
    39,85   12 January 2001 5 000 5 000    
    40,00     16 May 2001 20 000   20 000  
    49,60   13 May 2002 25 000   25 000  
    31,90   14 April 2003 20 000 14 000 6 000 6 000
    47,00   21 April 2004 10 000   10 000 6 000
          149 000 74 000 75 000 12 000
  The interests of the directors in share options of the company are shown in the table below:
          Number Options Number  
    Option     of options exercised of options Options
    price   Expiring at 31 Dec in at 31 Dec time
  Name Rand   ten years from 2005 2006 2006 constrained
  Executive director continued:        
  M H Munro 33,25   4 November 1998 4 000   4 000  
    32,90   5 March 1999 14 000 14 000    
    40,10   7 May 1999 5 800   5 800  
    30,00   19 May 2000 3 800   3 800  
    39,85   12 January 2001 2 400   2 400  
    40,00   16 May 2001 9 000   9 000  
    49,60   13 May 2002 11 500   11 500  
    31,90   14 April 2003 12 400   12 400 3 720
    34,50   1 October 2003 30 000   30 000 9 000
    47,00   21 April 2004 32 000   32 000 19 200
          124 900 14 000 110 900 31 920
  S J Saunders 33,25   4 November 1998 8 000   8 000  
    32,90   5 March 1999 30 000   30 000  
    40,10   7 May 1999 14 000   14 000  
    30,00   19 May 2000 5 000   5 000  
    39,85   12 January 2001 5 000   5 000  
    40,00   16 May 2001 18 000   18 000  
    49,60   13 May 2002 18 000   18 000  
    31,90   14 April 2003 18 000   18 000 5 400
    47,00   21 April 2004 18 000   18 000 10 800
          134 000   134 000 16 200
  M Serfontein 32,90   5 March 1999 19 000 19 000    
    40,10   7 May 1999 10 000 10 000    
    30,00   19 May 2000 5 000 5 000    
    39,85   12 January 2001 5 000 5 000    
    40,00   16 May 2001 15 000 5 000 10 000  
    49,60   13 May 2002 15 000   15 000  
    31,90   14 April 2003 20 000   20 000 6 000
    47,00   21 April 2004 14 000   14 000 8 400
          103 000 44 000 59 000 14 400
  P H Staude 33,25   4 November 1998 10 000 10 000    
    32,90   5 March 1999 49 000 49 000    
    40,10   7 May 1999 14 000 14 000    
    30,00   19 May 2000 7 000 7 000    
    39,85   12 January 2001 9 000 9 000    
    40,00   16 May 2001 30 000 20 000 10 000  
    49,60   13 May 2002 65 000   65 000  
    31,90   14 April 2003 30 000   30 000 9 000
    47,00   21 April 2004 28 000   28 000 16 800
          242 000 109 000 133 000 25 800
  The interests of the directors in share options of the company are shown in the table below:
          Number Options Number  
    Option     of options exercised of options Options
    price   Expiring at 31 Dec in at 31 Dec time
  Name Rand   ten years from 2005 2006 2006 constrained
                 
  Non-executive director: #              
  J B Magwaza 30,00   19 May 2000 2 000   2 000  
    39,85   12 January 2001 1 600   1 600  
    40,00   16 May 2001 6 000   6 000  
    49,60   13 May 2002 6 000   6 000  
          15 600   15 600  
  C M L Savage 32,90   5 March 1999 60 000   60 000  
    40,10   7 May 1999 50 000   50 000  
    39,85   12 January 2001 8 000   8 000  
    40,00   16 May 2001 22 000   22 000  
          140 000   140 000  
                 
  Total       1 353 100 470 000 883 100 159 300
  # The non-executive directors’ share options were awarded when they were executive directors.
   
      The interests of the directors in other share-based instruments of the company are shown in the tables below:
     Share Appreciation Rights Scheme 2005
    Number Rights Number  
    of rights granted of rights Rights
    at 31 Dec in at 31 Dec time
  Name of executive director 2005 2006 2006 constrained
  B G Dunlop 40 597 23 737 64 334 64 334
  A Fourie 37 381 23 249 60 630 60 630
  G R Hibbert 30 776 19 590 50 366 50 366
  G P N Kruger 32 610 22 345 54 955 54 955
  M H Munro 32 185 20 472 52 657 52 657
  S J Saunders 31 003 21 680 52 683 52 683
  M Serfontein 24 942 17 355 42 297 42 297
  P H Staude 92 810 62 082 154 892 154 892
    322 304 210 510 532 814 532 814
  Grant price (Rand) 57,58 96,09    
  Expiring seven years from 10 May 2005 25 April 2006    
           
  Long Term Incentive Plan 2005        
    Number Conditional Number Conditional
    of conditional awards of conditional awards
    awards at granted in awards at time
  Name of executive director 31 Dec 2005 2006 31 Dec 2006 constrained
  B G Dunlop 20 126 10 117 30 243 30 243
  A Fourie 18 528 9 909 28 437 28 437
  G R Hibbert 15 730 8 349 24 079 24 079
  G P N Kruger 17 825 9 523 27 348 27 348
  M H Munro 15 955 8 725 24 680 24 680
  S J Saunders 17 308 9 240 26 548 26 548
  M Serfontein 13 925 7 396 21 321 21 321
  P H Staude 50 720 26 459 77 179 77 179
    170 117 89 718 259 835 259 835
  Issue price (Rand) 57,58 96,09    
  Expiring three years from 10 May 2005 25 April 2006    
           
  Deferred Bonus Plan 2005        
    Number Conditional Number Conditional
    of conditional awards of conditional awards
    awards at granted in awards at time
  Name of executive director 31 Dec 2005 2006 31 Dec 2006 constrained
  B G Dunlop 4 210 3 184 7 394 7 394
  A Fourie 3 314 2 693 6 007 6 007
  G R Hibbert 3 310 2 484 5 794 5 794
  G P N Kruger 3 852 2 532 6 384 6 384
  M H Munro 3 204 2 559 5 763 5 763
  S J Saunders 3 982 2 867 6 849 6 849
  M Serfontein 3 141 2 357 5 498 5 498
  P H Staude 10 081 7 155 17 236 17 236
    35 094 25 831 60 925 60 925
  Issue price (Rand) 57,76 91,86    
  Expiring three years from 4 May 2005 3 March 2006    
  The deferred bonus shares were purchased by the participating employees on 2 March 2006 in respect of the 2006 award (2005 award – purchased over the period from 4 May 2005 to 10 May 2005).