NOTES TO THE FINANCIAL STATEMENTS l NOTE 22

22. Related parties

  Identity of the related party   Relationship   Transaction and balances
  The Venture   In July 2004, Glencore and Merafe Ferrochrome pooled and shared ferrochrome assets to form the Venture.   Refer Note 22.2 for the amounts that are included in the consolidated financial statements of the group.
  Merafe Ferrochrome and Mining Proprietary Limited (Merafe Ferrochrome)   Merafe Ferrochrome is a wholly-owned subsidiary of Merafe Chrome.   Merafe Resources charges Merafe Ferrochrome a management fee as per note 14.  Dividends were paid to Merafe Chrome of R45m (2014: R60m).
  Merafe Chrome and Alloys Proprietary Limited (Merafe Chrome)   Merafe Chrome is a wholly owned subsidiary of Merafe Resources Limited (Merafe Resources)   A loan account is recognised with Merafe Resources and Merafe Ferrochrome as per note 13 and note 5.  Dividends were received from Merafe Ferrochrome of R45m (2014: R60m).
  Horizon Nature Conservation Trust (SE)   The Trust, which was registered on 15 July 1998, was established to provide funds for the rehabilitation of land involved in any prospecting or mining operations of Merafe Ferrochrome’s Horizon mine and to discharge any liability which may arise in terms of the Atmospheric Pollution Prevention Act of 1965, the Environment Conservation Act, No 73 of 1989, the Minerals Act, No 50 of 1991, the Water Act, No 54 of 1956 and any such other legislation as may be enacted in the future.   A loan account is recognised with Merafe Resources of R87k (2014: R75k) which relates to the payment of audit fees.  Merafe Resources owes Horizon Nature Conservation Trust R1.9m (2014: R1.8m).
  Merafe Kroondal Rehabilitation Trust (SE)   The Trust, which was registered on 31 May 2006, was established to provide funds for the rehabilitation of land involved in any prospecting or mining operations of Merafe Ferrochrome of the Kroondal mine and to discharge any liability which might arise in terms of the Atmospheric Pollution Prevention Act of 1965, the Environment Conservation Act, No 50 of 1991, the Water Act, No 54 of 1956 and any such other legislation as may be enacted in the future.  The environmental obligations and corresponding liability remains the sole responsibility of the Venture.   A loan account is recognised with Merafe Resources of R72k (2014: R60k) which relates to the payment of audit fees.
  Merafe Resources Limited Share Incentive Scheme   The Trust was established for the purpose of implementing the company’s share incentive scheme in 1999.  The trust operates and administers share options which the company may grant to participants.   No transactions occurred during the year.  The trust is dormant.
  Industrial Development Corporation of South Africa Limited (IDC)   The IDC holds 21.8% of the issued share capital of Merafe Resources Limited and has the ability to exercise significant influence over Merafe Resources Limited as a result of their shareholding.   The IDC received the non–executive directors’ fees for M Mosweu and M Mamathuba as disclosed in Note 22.1.  IDC received dividends declared by Merafe Resources.
  Royal Bafokeng Resources Holdings Proprietary Limited (RBRH) and Glencore (Nederland) B.V.   RBRH held 28.7% of the issued share capital of Merafe Resources Limited and had the ability to exercise significant influence over Merafe Resources Limited as a result of their shareholding.  This shareholding was disposed of to Glencore (Nederland) B.V. effective 29 April 2015.   No transactions occurred during the year. RBRH received dividends declared by Merafe Resources.
  C Molefe,
M Mosweu,
BN Majova,
Z van der Walt,
A Mngomezulu,
K Nondumo,
ZJ Matlala,
K Bissessor,
S Blankfield		   Directors of Merafe Resources Limited at 31 December 2015.
Refer to Directors’ Report for changes in directorate. 		  Refer to Note 22.1
22.1 Transactions with key management personnel and non-executive directors

Executive directors of the company and their immediate families control 0.1% (31 December 2014: 0.3%) of the voting shares of the company.  In addition to their salaries, the company also contributes to a provident fund (defined contribution plan) and medical aid fund on their behalf.  Executive directors also participate in the company’s share incentive schemes (refer note 8).

   Company    
  2015 
R'000 		       2014 
R'000 		   
Directors' fees - Non-executive directors            
C Molefe   (662)¹       (671)¹   
A Mngomezulu  (373)        (395)    
M Mamathuba2  (31)        (323)    
BN Majova  (505)        (484)    
M Mosweu  (294)        (252)    
Z van der Walt  (515)        (528)    
K Nondumo  (457)        (488)    
M Salanje*  –         (150)    
S Blankfield³  (207)        –     
       (3 044)            (3 291)    

The above fees relate to services rendered as directors. No other services were rendered.

¹ includes cell phone allowance
² resigned effective 2 March 2015
³ appointed effective 13 May 2015
* passed away in June 2014

      Company    
      2015 
R'000 		       2014 
R'000 		   
Executive directors and prescribed officers remuneration                   
ZJ Matlala                   
Salary     (3 618)        (3 409)    
Bonus      (3 822)        (2 798)    
Fringe benefits and leave pay     (283)        (313)    
Provident fund contributions     (635)        (511)    
Share grants vested     (2 019)        (1 132)    
      (10 377)        (8 163)    
DC Chocho                   
Salary     –         (2 527)    
Bonus     –         (1 535)    
Severance pay     –         (4 686)    
Leave pay     –         (289)    
Fringe Benefits     –         (374)    
Provident Fund contributions     –         (379)    
Share grants vesting     –         (3 518)    
      –         (13 308)    
B McBride                   
Salary     (646)        (2 901)    
Bonus      –         (1 907)    
Severance pay     (5 411)        –     
Fringe benefits and leave pay     (448)        (457)    
Provident fund contributions     (91)        (435)    
Share grants vesting     (4 441)*       (2 339)    
      (11 037)        (8 039)    
Cost of share options and grants exercised     –         1 100     
Proceeds on disposal of share options and share grants exercised     (4 441)        (3 439)    
* Includes R1 014k retrenchment share grants (retrenched effective 15 March 2015).                   
K Bissessor                   
Salary     (1 806)        (1 224)    
Bonus      (1 643)        (778)    
Fringe benefits and leave pay     (237)        (172)    
Provident fund contributions     (310)        (169)    
Share grants vested     (269)        (292)    
      (4 265)        (2 635)    
A Mahendranath                   
Salary     –         (526)    
Bonus      –         (296)    
Severance pay     –         (1 269)    
Fringe benefits     –         (121)    
Leave pay     –         (88)    
Provident fund contributions     –         (73)    
Share grants vested and options exercised     (30)        (1 448)*   
      (30)        (3 821)    
* includes R338k retrenchment shares                   
Total key management personnel remuneration     (25 709)        (35 966)    
Short-term employee benefits     (18 950)        (27 237)    
Share grants and options     (6 759)        (8 729)    

Note: In accordance with the Remuneration Policy, the 2015 bonus will be paid during March 2016.

There are no fixed term director service contracts and there are no director service contracts with provisions for predetermined compensation on termination of the contracts in excess of one year's salary and benefits.
22.2 Directors interests in Merafe Resources Limited

As at 31 December 2015, the directors of the company are beneficially interested (directly and indirectly) in 2 774 915 (31 December 2014: 6 612 862) shares in the company.

  2015 2014
  Direct   Indirect   Direct   Indirect  
Kajal Bissessor* 700 000   –   –   –  
Bruce McBride** –   –   –   1 500 194  
Zanele Matlala 2 012 305   –   1 000 000   –  
Steve Phiri** –   –   254 000   –  
Belese Majova –   62 610   –   62 610  
Ditabe Chocho** –   –   3 796 058   –  
  2 712 305   62 610   5 050 058   1 562 804  
* Appointed effective 1 January 2015
** Resigned in 2015

22.3 Transactions with the Glencore-Merafe Chrome Venture

The Venture resulted in Glencore and Merafe Ferrochrome pooling and sharing their ferrochrome assets.  The Venture’s head-office is located at Portion 27, Farm Waterval 306 JQ, Rustenburg, 0302.  While Merafe Ferrochrome’s assets form part of the Venture, Merafe Ferrochrome retains ownership of its assets and is closely involved in the Venture’s operations through the Chrome Executive Committee, joint board and sub-committees (Treasury, Audit and Risk, Transformation, Sustainable Development and Health and Safety) formed to oversee the combined operation of both companies.  The group receives 20.5% of the Venture’s earnings before interest, tax, depreciation and amortisation (EBITDA) and owns 20.5% of the Venture’s working capital

Included in the consolidated financial statements are the following items that represent the group’s share of the working capital and EBITDA of the Venture.

   Year ended 
31 December 
2015 
R'000 		    Year ended 
31 December 
2014 
R'000 		  
Inventories  1 445 887     1 435 799    
Trade and other receivables  316 305     646 525    
Net cash  200 860     (177 050)   
Finance leases  (14 428)    (13 677)   
Long-term provisions  (139 351)    (129 029)   
Short-term provisions  –     (7 932)   
Trade and other payables  (413 580)    (587 967)   
Net working capital  1 395 693     1 166 669    
Revenue  4 428 075     3 608 986    
Foreign exchange gains/(losses) 83 424     (1 251)   
Operating expenses: the Venture  (3 659 608)    (2 956 854)   
EBITDA  851 891     650 881