Notes to the Group financial statements

for the year ended 30 June

	R million	2014	2013
22.	OTHER NON CURRENT LIABILITIES
	Financial instruments
	Monticello purchase consideration (refer to note 26)	1 687	–
	Derivative financial instruments
	Interest rate cross currency swaps (refer to note 26)	55	44
		1 742	44
	Current portion
	Interest rate cross currency swaps	–	(15)
		1 742	29
	Non-financial instruments
	Straight lining of operating leases	116	91
	Deferred income	252	138

	Sun City Vacation Club	111	23
	DTI Grant	8	–
	Discounted slot machines	24	–
	Lessor contribution	109	115

	Deferred payments	51	–

	Apartments for Ocean Sun Casino	48	–
	Other	3	–

	Accrual for farewell gifts	6	6
	Long service award	42	82
	Lease restoration provision	5	5
	Post-retirement medical aid liability	112	99
		584	421
	Current portion	(10)	(10)
		574	411
		2 316	440
	Monticello purchase consideration As announced on SENS on 2 July 2014 Sun International, on 30 June 2014, reached agreement to acquire a further 54.7% interest in Monticello for approximately US$114 million giving the Group an effective 98.9% interest. In addition Sun International will acquire shareholder loans and cash of approximately US$32 million. The R1 687 million relates to the purchase of an additional 54.7% in Monticello. R1 586 million is in respect of the initial cash amount, while R101 million is in respect of a possible earn out payment. Straight lining of operating leases Lease payments relating to property are straight-lined over the term of the leases. Deferred income Deferred income includes sales proceeds in respect of the Vacation Club units constructed at Sun City. This revenue is recognised over the 15 year period of the members’ contracts. Lessor contributions were received in respect of the Maslow refurbishment. The contribution is recognised over 20 years and reduces the rental expense. Apartments for Ocean Sun Casino In terms of the purchase agreement for the apartments on level 65 of the Trump Tower, payment is only due in December 2015 ($2 million) and December 2016 ($2.5 million).

R million	2014	2013
Post-retirement medical aid liability The Group contributes towards the post-retirement medical aid contributions of eligible employees employed by the Group as at 30 June 2003. Employees who joined the Group after 1 July 2003 are not entitled to any co-payment subsidy from the Group upon retirement. Employees are eligible for such benefits on retirement based upon the number of completed years of service. The methods of accounting and valuation are similar to those used for defined benefit schemes. The actuarial valuation to determine the liability is performed annually.
Present value of unfunded obligations in the statements of financial position	112	99
The Group has no matched asset to fund the obligations. There are no unrecognised actuarial gains or losses and no unrecognised past service costs.

Movement in unfunded obligation:
Benefit obligation at beginning of year	99	109
Interest cost	10	9
Current service cost	4	4
Actuarial loss/(gain)	1	(22)
Benefits paid	(2)	(1)
Benefit obligation at end of year	112	99
The amounts recognised in profit and loss are as follows (refer to note 3):
Current service cost	4	4
Interest cost	10	9
	14	13
The amounts recognised in other comprehensive income are as follows:
Actuarial loss/(gain)	1	(22)
Net movement in total comprehensive income for the year	15	(9)
The expected expense to be recognised in the statement of comprehensive income for the year ending 30 June 2015 is R15 million.
	2014	2013
The principal actuarial assumptions used for accounting purposes were:
Discount rate	9.65%	9.45%
Price inflation allowed by Group	6.80%	5.31%
The average life expectancy in years of a pensioner retiring at age 60 on the statement of financial position date and of a member retiring at age 60, 20 years after the statement of financial position date are as follows:
Male	19.4	19.4
Female	24.2	24.2
A 1% increase in the future rate of increase of the medical aid subsidy assumption from 5.78% (2013: 5.31%) per annum to 6.78% (2013: 6.31%) per annum results in the liability increasing by R22.8 million (2013: R20.4 million), or 20.3% (2013: 20.5%) and the resultant increase in the total of the service and interest costs is R3.3 million (2013: R2.9 million), or 21.6% (2013: 21.8%). A 1% decrease in the future rate of increase of the medical aid subsidy assumption from 5.78% (2013: 5.31%) per annum to 4.78% (2013: 4.31%) per annum results in the liability decreasing by R18.1 million (2013: R16.1 million), or 16.1% (2013: 16.2%) and the resultant reduction in the total of the service and interest costs is R2.6 million (2013: R2.3 million), or 17.0% (2013: 17.1%).

The present value of the post retirement medical aid obligation for the current and prior years is as follows:
	2014	2013	2012	2011	2010
Present value of obligations	112	99	109	91	75
Experience adjustment on plan obligations	1%	(22%)	7%	7%	(25%)

R million	2014	2013
Long service award
The Group offers employees a long service award. Employees are eligible for such benefits based upon the number of completed years of service. The method of accounting and valuation are similar to those used for defined benefit schemes. The actuarial valuation to determine the liability is performed annually.
Movement in unfunded obligation:
Benefit obligation at beginning of year	81	222
Interest cost	3	19
Current service cost	4	22
Actuarial gain	(6)	(5)
Settlement of past liability	(40)	(120)
Loss/(gain) on part settlement of liability	1	(37)
Benefits paid	(1)	(20)
Benefit obligation at end of year	42	81
The amounts recognised in profit and loss are as follows (refer to note 3):
Current service cost	4	22
Interest cost	3	19
Loss/(gain) on part settlement of liability	1	(37)
Actuarial gain	(6)	(5)
	2	(1)
The principal actuarial assumptions used for accounting purposes were:
Discount rate	8.35%	7.65%
Salary inflation assumption	N/A	7.30%
During the 2013 financial year, the Group settled the old long service liability for non-bargaining unit employees for R120 million. A settlement of R40 million was made to bargaining unit employees in the current year. The new long service policy is now applicable to all employees. A 1% increase in the discount rate will have a resultant decrease in the liability of R2.5 million (2013: R5.2 million), and a resultant decrease in the total of the service and interest costs of R0.1 million (2013: R0.3 million). A 1% decrease in the discount rate will have a resultant increase in the liability of R2.7 million (2013: R5.8 million), and a resultant increase in the total of the service and interest costs of R0.1 million (2013: R0.3 million). The expected expense to be recognised in the statement of comprehensive income for the year ending 30 June 2015 is R3.7 million.

The present value of the long service awards obligation for the current and prior years is as follows:
R million	2014	2013	2012	2011	2010
Present value of obligations	42	81	222	167	156
Experience adjustment on plan obligations	14%	6%	20%	(3%)	–

R million	2014	2013
Farewell gift liability
The Group offers a farewell gift to employees who are retiring or resigning. Employees are eligible for such based upon the number of completed years of service. The method of accounting and valuation are similar to those used for defined benefit schemes. The actuarial valuation to determine the liability is performed annually.
Movement in unfunded obligation:
Benefit obligation at beginning of year	6	–
Interest cost	–	1
Actuarial loss	–	5
Benefit obligation at end of year	6	6
The amounts recognised in profit and loss are as follows (refer to note 3):
Interest cost	–	1
Actuarial loss	–	5
Total	–	6
The principal actuarial assumptions used for accounting purposes were:
Discount rate	8.65%	8.20%
Salary inflation assumption	7.95%	7.40%
A 1% increase in the discount rate will have a resultant decrease in the liability of R0.6 million (2013: R0.6 million), and a resultant decrease in the total of the service and interest costs of R0.04 million (2013: R0.1 million). A 1% decrease in the discount rate will have a resultant increase in the liability of R0.7 million (2013: R0.7 million), and a resultant increase in the total of the service and interest costs of R0.04 million (2013: R0.1 million). The expected expense to be recognised in the statement of comprehensive income for the year ending 30 June 2014 is R0.9 million (2013: R1 million).

The present value of the Farewell gift liability obligation for the current year is as follows:
	2014	2013	2012	2011	2010
Present value of obligations	6	6	–	–	–
Experience adjustment on plan obligations	–	(83%)	–	–	–