for the year ended 30.6.2012
Group | Company | ||||||||
---|---|---|---|---|---|---|---|---|---|
2012 | 2011 | 2012 | 2011 | ||||||
R'000 | R'000 | R'000 | R'000 | ||||||
21. |
Retained earnings |
||||||||
955 890 | 805 499 | Retained profit at the end of the year | 52 923 | (83 510) | |||||
22. |
Interest-bearing loans and borrowings |
||||||||
22.1 |
Secured liabilities |
||||||||
150 000 | 305 000 | (a) |
Secured by securitisation of trade debtors
(refer to note 17). Repayable 31 March 2013,
fixed interest rate: 13,025% (2011: 13,025%). |
||||||
30 609 | 31 007 | (b) | Secured by plant and equipment with a book value of R44,5 million (2011: R32,9 million). Repayable in monthly instalments. Payments due within the next year are R8,9 million (2011: R7,5 million). Variable interest rate portion: 8,05% – 10,5% (2011: 8,05% – 10,5%). Maturity: between January 2013 and March 2022. Fixed interest rate portion 9,0% and 10,5% (2011: 9,6% and 11,5%). | ||||||
180 609 | 336 007 | Total secured liabilities | |||||||
22.2 |
Unsecured liabilities |
||||||||
259 382 | 259 382 | (a) | Debt portion of preference share capital: | 259 382 | 259 382 | ||||
On 8 June 2012 the Memorandum of Incorporation of the Company was amended (by way of special resolution) to gross up the preference dividend rate, from 90% of the average prime rate, to 99% of the average prime rate. The preference shares are redeemable on 2 June 2013. The total amount outstanding on the preference shares is recognised as debt. | |||||||||
625 | 8 095 | (b) | Bank overdraft | – | – | ||||
Repayable on demand. The full outstanding amount is repayable within one year. Variable interest rate: 9% (2011: 10,5% – 9,0%). | |||||||||
2 446 | 3 178 | (c) | Call loans | ||||||
Variable interest rate: 6,25% – 7,35% (2011:8,5% – 6,2%). | |||||||||
262 453 | 270 655 | Total unsecured liabilities | 259 382 | 259 382 | |||||
443 062 | 606 662 | Total secured and unsecured liabilities | 259 382 | 259 382 | |||||
Current portion transferred to current liabilities: | |||||||||
158 923 | 162 555 |
|
|||||||
262 453 | 11 274 |
|
259 382 | – | |||||
421 376 | 173 829 | Total current portion transferred to current liabilities | 259 382 | – | |||||
21 686 | 432 833 | Total non-current interest-bearing borrowings | – | 259 382 | |||||
443 062 | 606 662 | Total current and non-current interest-bearing loans and borrowings | 259 382 | 259 382 | |||||
23. |
Provisions |
||||||||
23.1 |
Long-service bonus |
||||||||
The projected-credit method is used for the calculation of the long-service bonus provision. Payments are recognised as utilisations | |||||||||
The determination of the long-service bonus is based on the following assumptions: | |||||||||
6 534 | 6 174 | Active members | |||||||
7,7% | 7,5% | Salary escalation ratio | |||||||
8,9% | 9,0% | Discounting rate | |||||||
65 | 65 | Normal retirement age | |||||||
32 096 | 30 295 | Balance at the beginning of the year | |||||||
6 426 | 10 551 | Amounts provided | |||||||
(7 489) | (8 750) | Amounts utilised | |||||||
31 033 | 32 096 | Total long-service bonus provision | |||||||
Refer to note 34 for further detail on the long-service bonus provision | |||||||||
23.2 |
Leave pay |
||||||||
A provision for leave pay is recognised for the number of days leave due to employees at 30 June valued at a rate per day based on the basic salary of each employee at 30 June. Leave payments are recognised as utilisations. | |||||||||
40 478 | 36 512 | Balance at the beginning of the year | |||||||
7 269 | 8 585 | Amounts provided | |||||||
(4 967) | (4 615) | Amounts utilised | |||||||
42 780 | 40 482 | Total leave pay provision | |||||||
23.3 |
Total provisions |
||||||||
61 637 | 62 526 | Non-current portion | |||||||
12 176 | 10 052 | Current portion transferred to current liabilities | |||||||
73 813 | 72 578 | Total non-current and current provisions | |||||||
24 |
Trade and other payables |
||||||||
1 147 039 | 906 224 | Trade payables | 1 616 | 1 312 | |||||
144 791 | 135 330 | Other payables | 1 793 | 1 429 | |||||
8 802 | 3 887 | Interest payable | 8 802 | 3 887 | |||||
23 066 | 36 752 | Payable to joint ventures | – | – | |||||
– | – | Inter company loan Clover SA | 214 | 214 | |||||
1 323 698 | 1 082 193 | Total trade and other payables | 12 425 | 6 842 | |||||
6 904 | 13 357 | Non-current portion transferred to non-current liabilities | |||||||
1 316 794 | 1 068 836 | Current portion | 12 425 | 6 842 | |||||
1 323 698 | 1 082 193 | Total trade and other payables | 12 425 | 6 842 | |||||
The terms for trade payables range from seven days after date of invoice to 45 days after month-end. Interest is payable on a monthly basis. Payables to joint ventures range from 30 days to 45 days after the end of the month in which the transaction took place. | |||||||||
25 |
Dividends declared |
||||||||
Dividends paid to preference shareholders are recognised as finance cost (Refer to
Note 6.6). During the year equity dividends were declared as follows |
|||||||||
53 734 | 58 720 | To ordinary shareholders | 53 734 | 58 720 | |||||
53 734 | 58 720 | Total dividends declared | 53 734 | 58 720 | |||||
Cents per
share |
Cents per
share |
Cents per share |
Cents per share |
||||||
30,0 | 43,0 | To ordinary shareholders | 30,0 | 43,0 | |||||
Group | Company | ||||||||
2012 | 2011 | 2012 | 2011 | ||||||
R’000 | R’000 | R’000 | R’000 | ||||||
26 |
Notes to the statements of cash flows |
||||||||
26.1 |
Tax paid |
||||||||
(243) | (1 368) | Amount unpaid at the beginning of the year | 237 | (3 143) | |||||
(49 948) | (54 139) | Taxation charged in income statement, excluding deferred taxation | (18 277) | (15 064) | |||||
5 672 | 243 | Amount due at the end of the year | 333 | (237) | |||||
(44 519) | (55 264) | Total tax paid | (17 707) | (18 444) | |||||
27 |
Pensions and other post-employment benefit plans |
||||||||
27.1 |
Defined-benefit fund |
||||||||
The fund is a defined-benefit fund and an actuarial valuation of the pension fund was done on 30 June 2012. The actuarial method used in determining the cost of the retirement benefits is the same as those used in previous calculations. The assumptions regarding deaths, interest rates, salary increases, retirements, resignations and administration cost were all based on generally accepted standards for the industry. The fair value of the assets of the fund of R13,62 million (2011: R12,95 million), exceeded the actuarial present value of promised retirement benefits of R6,86 million (2011: R6,68 million). The surplus has not been accounted for, as it accrues to the members of the fund. The Group policy is to fund any deficit in accordance with the Pension Fund Act of 1956 and published regulations issued by the Registrar of Financial Services from time to time. The fund is subject to the same Act which requires an actuarial valuation every three years. Number of members on 1 July 2012: 7 (1 July 2011: 8). The fund closed for new entrants on 1 July 1994. |
|||||||||
27.2 |
Defined-contribution funds |
||||||||
27.2.1 |
Clover SA pension fund |
||||||||
This is a defined-contribution fund. The value of this fund determines the benefits which accrue to members. The Group has no obligation other than its normal contributions. Number of members on 30 June 2012: 983 (30 June 2011: 982). | |||||||||
27.2.2 |
Clover SA provident fund |
||||||||
This is a defined-contribution fund. The value of the fund determines the benefits which accrue to members. The Group has no obligation other than its normal contributions. Number of members on 30 June 2012: 5 643 (2011: 5 266) | |||||||||
27.3 |
Amounts recognised in the statement of comprehensive income |
||||||||
Contributions for the Group for the current year: | |||||||||
104 | 106 | Defined-benefit fund | |||||||
26 616 | 24 614 | Pension fund | |||||||
40 598 | 35 881 | Provident fund | |||||||
67 318 | 60 601 | Total contributions recognised in statement of comprehensive income | |||||||
28 |
Commitments and contingencies |
||||||||
28.1 |
Commitments |
||||||||
28.1.1 |
Operating lease commitments – Group as lessee |
||||||||
The Group entered into an outsourcing agreement whereby the Group is provided with distribution and milk collection vehicles. The Group also entered into commercial leases on motor vehicles and machinery. These leases have an average life of between three and ten years, with renewal options included on some of the contracts. There are no restrictions placed upon the lessee by entering into these lease contracts. |
|||||||||
Future minimum lease payments are as follows: | |||||||||
229 985 | 248 147 | Within one year | |||||||
804 429 | 426 739 | After one year but not more than five years | |||||||
1 430 344 | 34 943 | More than five years | |||||||
2 464 758 | 709 829 | Total lease payments payable | |||||||
28.1.2 |
Operating lease commitments – Group as lessor |
||||||||
The Group has entered into commercial property leases on its investment property portfolio, consisting of the Group’s surplus offices and manufacturing buildings. These non-cancellable leases have remaining terms of between one and six years. All leases include a clause to enable upward revision of the rental charge on an annual basis according to prevailing market conditions. Future minimum rentals receivable under non-cancellable operating leases as at 30 June 2012 are as follows: |
|||||||||
4 999 | 2 950 | Within one year | |||||||
7 810 | 7 695 | After one year, but not more than five years | |||||||
– | – | More than five years | |||||||
12 809 | 10 645 | Total minimum lease payments |
Group | Company | |||||||
---|---|---|---|---|---|---|---|---|
2012 | 2011 | 2012 | 2011 | |||||
R’000 | R’000 | R’000 | R’000 | |||||
28.1.4 |
Capital commitments |
|||||||
223 603 | 53 474 | Capital expenditure authorised and contracted for | ||||||
41 558 | 577 817 | Capital expenditure authorised but not contracted for | ||||||
265 161 | 631 291 | Total capital commitments | ||||||
Commitments will be spent within the next three to four years. The capital expenditure will be funded from Group funds | ||||||||
29. |
Related party disclosure |
|||||||
Transactions with related parties are made at market prices. Outstanding balances at the year-end are unsecured. No interest is paid on current accounts. Interest is payable on borrowings by the holding company from subsidiary companies at prime. Where the holding company lends money to subsidiary companies interest is charged at prime plus 1%. There have been no guarantees provided or received for any related party receivables or payables. No impairment was recorded for related parties (2011: R Nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates. |
||||||||
29.1 |
With regard to operating activities with subsidiaries, associated companies and joint ventures, the following transactions took place during the year: |
|||||||
(a) | Fees earned by CIL for services rendered to Group Companies | |||||||
41 096 | 38 391 | Clover SA | 41 096 | 38 391 | ||||
41 096 | 38 391 | Total fees earned by CIL for services rendered to Group Companies | 41 096 | 38 391 | ||||
(b) | Fees earned by Clover SA for services rendered to Group Companies | |||||||
– | 414 459 | Clover Beverages | ||||||
3 749 | 817 | Clover Botswana | ||||||
5 611 | 4 793 | Clover Fonterra | ||||||
27 916 | 23 346 | Clover Manhattan | ||||||
37 276 | 443 415 | Total fees earned by Clover SA for services rendered to Group Companies | ||||||
(c) | Finance income received by Clover Beverages from Group Companies | |||||||
– | 7 543 | Clover SA | ||||||
– | 7 543 | Total finance income received by Clover Beverages from Group Companie | ||||||
(d) | Finance income received by Clover SA from Group Companies | |||||||
– | 11 195 | CIL | – | 11 195 | ||||
170 | 117 | Clover Namibia | ||||||
170 | 11 312 | Total finance income received by Clover SA from Group Companies | – | 11 195 | ||||
(e) | Amounts owing by Clover SA to Group Companies | |||||||
575 140 | 464 249 | Clover Industries | 575 140 | 464 249 | ||||
37 255 | 13 498 | Clover Fonterra | ||||||
96 | 107 | Lactolab | ||||||
– | 110 | Clover Botswana | ||||||
10 408 | 14 544 | Clover Manhattan | ||||||
544 | – | Clover Swaziland | ||||||
623 443 | 492 508 | Total amounts owing by Clover SA to Group Companies | 575 140 | 464 249 | ||||
(f) | Amounts due to Clover SA from Group Companies | |||||||
1 064 553 | 627 437 | Clover Capital | ||||||
32 481 | 7 846 | Clover West Africa | ||||||
– | 4 458 | Clover Zambia | ||||||
70 | 161 | Lactolab | ||||||
– | 164 | Clover Swaziland | ||||||
8 103 | 3 339 | Clover Fonterra | ||||||
27 220 | 31 565 | Clover Botswana | ||||||
16 199 | 10 359 | Clover Namibia | ||||||
9 067 | 1 207 | Clover Manhattan | ||||||
1 157 693 | 686 536 | Total amounts due to Clover SA from Group Companies | ||||||
(g) | Amounts due to CIL from Group Companies | |||||||
575 140 | 464 249 | Clover SA | 575 140 | 464 249 | ||||
480 | 461 | CIL Stabilisation Trust | 480 | 461 | ||||
1 480 | 1 438 | CIL Share Purchase Trust | 1 480 | 1 438 | ||||
577 100 | 466 148 | Total amounts due to CIL from Group Companies | 577 100 | 466 148 | ||||
(h) | Clover SA received the following dividends during the year from Group Companies: | |||||||
6 476 | 3 180 | Clover Fonterra Ingredients | ||||||
– | 339 123 | Clover Beverages | ||||||
378 | 756 | Lactolab | ||||||
– | 1 000 | Clover Swaziland | ||||||
2 443 | – | Clover Manhattan | ||||||
9 297 | 344 059 | Total dividends received by Clover SA from Group Companies | ||||||
(i) | CIL received the following dividends during the year from Group Companies | |||||||
190 000 | 461 012 | Clover SA | 190 000 | 461 012 | ||||
190 000 | 461 012 | Total dividends received by CIL from Group Companies | 190 000 | 461 012 | ||||
29.2 |
The following transactions regarding the securitisation of debtors took place during the year between Clover SA and Clover Capital: |
|||||||
27 550 | 39 869 | Net finance cost paid by Clover SA to Clover Capital | ||||||
9 236 322 | 8 240 320 | Debtors sold to Clover Capital | ||||||
(9 123 177) | (8 210 730) | Receipts from Clover Capital | ||||||
29.3 |
With regard to business done with Directors and Senior Management, the following transactions took place: |
|||||||
Milk purchased from the following Non-executive Directors by Clover SA | ||||||||
4 467 | 4 182 | JAH Bredin | ||||||
6 047 | 4 837 | HPF Du Preez | ||||||
3 737 | 3 387 | MG Elliott | ||||||
23 648 | 19 228 | JC Hendriks | ||||||
17 818 | 16 616 | WI Büchner | ||||||
– | 2 705 | JW Lotz (resigned 7 October 2010) | ||||||
– | 858 | FG Meyer (resigned 7 October 2010) | ||||||
– | 6 958 | MG Mackenzie (resigned 7 October 2010) | ||||||
– | 11 722 | VP Turner (resigned 10 March 2011) | ||||||
25 995 | 5 762 | NA Smith (appointed 10 March 2011) | ||||||
81 712 | 76 255 | Total milk purchased from Non-executive Directors | ||||||
Refer to note 33 for more information regarding compensation of Directors and key management personnel |
29.4 Loans outstanding to Directors and senior management |
|||||||||||||||||
Group | Group | ||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Company | Company | ||||||||||||||||
2012 | 2011 | ||||||||||||||||
R’000 | R’000 | ||||||||||||||||
Executive Director | |||||||||||||||||
JH Vorster | R25 822 | R26 509 | |||||||||||||||
HB Roode | R11 621 | R19 177 | |||||||||||||||
CP Lerm (Dr) | R11 718 | R12 037 | |||||||||||||||
LJ Botha | R5 330 | R5 636 | |||||||||||||||
Other Executives | |||||||||||||||||
H Lubbe | R930 | R1 001 | |||||||||||||||
JHF Botes (Dr) | R2 453 | R2 412 | |||||||||||||||
Total | R57 874 | R66 772 | |||||||||||||||
Refer to note 17 for more details around the terms of the loans | |||||||||||||||||
The Group treasury function does not operate as a profit centre, but rather provides financial services to the divisions and Group companies, coordinates access to credit and loan facilities and manages the financial risks relating to the Group’s operations. The Group’s objective in using financial instruments is to reduce the uncertainty over future cash flows arising from movement in currency and interest rates. Currency and interest rate exposure is managed within Board-approved policies and guidelines which restrict the use of derivatives to the hedging of specific underlying currency and interest rate exposures.
|
Guarantees | 2012 | 2011 |
---|---|---|
Rm | Rm | |
Muncipalities | 6,91 | 5,35 |
Other | 64,40 | 8,39 |
71,31 | 13,74 |
Group 2012 | Group 2011 | ||||||
---|---|---|---|---|---|---|---|
Change
in rate |
Effect on
profit before tax |
Effect on
equity |
Change
in rate |
Effect on
profit before tax |
Effect on
equity |
||
R’000 | R’000 | R’000 | R’000 | ||||
Forward exchange contracts open on reporting date | |||||||
+30% | Rand – strengthening | +30% | |||||
– | Profit on Euro | 743 | |||||
588 | Profit on US Dollar | 1 429 | |||||
–30% | Rand – weakening | -30% | |||||
– | Loss on Euro | (743) | |||||
(588) | Loss on US Dollar | (1 429) | |||||
Foreign subsidiaries – equity | |||||||
+10% | Rand – strengthening | +10% | |||||
5 496 | Profit on Pulas | 3 650 | |||||
–10% | Rand – weakening | -10% | |||||
(5 496) | Loss on Pula’s | (3 650) | |||||
(v) Interest rate risk management The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s interest-bearing loans and borrowings with fixed and variable rates. The risk is managed by maintaining an appropriate mix of fixed and floating rates. |
Group | ||
---|---|---|
2012 R’000 |
2011 R’000 |
|
At the reporting date the interest rate profile of the Group’s interest-bearing financial instruments was: | ||
Fixed-rate instruments | 158 196 | 306 914 |
Variable-rate instruments | 284 866 | 299 748 |
443 062 | 606 662 | |
Interest rate sensitivity | ||
An increase/decrease of 100 basis points (2011: 100 basis points) in interest rates at the reporting date would have affected profit before taxation, by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain constant. | ||
Increase of 100 basis points | ||
Decrease in profit before tax | 2 849 | 2 997 |
Decrease of 100 basis points | ||
Increase in profit before tax | 2 849 | 2 997 |
(vi) Share price risk management | ||
The Group is affected by the movement in its share price due to the share appreciation rights issued to management. The Group entered into forward share purchases to hedge 2 132 695 of the share appreciation right issued to management. Refer to note 14 for more detail. | ||
Forward share purchases sensitivity |
||
An increase/decrease of 10% (2011: 10 percent) in the share price at the reporting date would have affected profit before taxation, by the amounts shown below. This analysis assumes that all other variables remain constant.
|
||
Increase of 10% in share price | ||
Increase in profit before tax | 2 922 | – |
Decrease of 10% in share price | ||
Decrease in profit before tax | (2 922) | – |
(vii) Diesel price risk management | ||
The Group is affected by the volatility of the diesel price. Its operating activities require the ongoing purchase of diesel for logistic puposes. |
||
Based on a six month forecast of the required diesel supply, the Group hedged the purchase price of diesel using a Zero Cost Collar linked to the Rand Ice Gas Oil Price. The Group entered into a Zero Cost Collar for 1,67 million litres per month over a period of six month, beginning 3 February 2012 and ending 26 July 2012. At year end the Group had a total exposure, for the price movement, of 1,67 million litres. |
||
Diesel zero cost colllar sensitivity | ||
An increase/decrease of 10 percent (2011: 10 percent) in the diesel price at the reporting date would have affected profit before taxation, by the amounts shown below. This analysis assumes that all other variables remain constant. | ||
Increase of 10 percent in diesel price | ||
Increase in profit before tax | 550 | – |
Decrease of 10 percent in diesel price | ||
Decrease in profit before tax | (940) | – |
30.2 Capital managementCapital consists of ordinary and preference share capital, as well as ordinary and preference share premium.A combination of retained earnings, senior debt, preference shares, term asset finance, commodity finance and general banking facilities are used to fund the business. The bulk of the Group’s debtors forms part of a securitisation programme. This programme came into effect during 2001. Senior debt raised by the programme currently amounts to R150 million (2011: R305 million). The securitisation provides access to senior debt equal to 74,5% (2011: 74,5%) of the debtors’ book. The Board seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowings. The Group’s target is to achieve a return on shareholders’ equity of at least 20% in the medium to long term. A return of 11,3% (2011: 12,9%) was achieved. In comparison the weighted average interest expense on interest-bearing borrowings was 9,99% (2011: 9,8%). |
Group | Company | ||||
---|---|---|---|---|---|
Carrying amount |
Fair value |
Carrying amount |
Fair value | ||
2012 | 2012 | ||||
R’000 | R’000 | R’000 | R’000 | ||
30.3 Fair value |
|||||
The fair value of financial assets and liabilities, together with the carrying amounts shown in the balance sheet, are as follows: | |||||
Financial assets | |||||
1 022 626 | 1 022 626 | Loans and receivables | 640 859 | 640 859 | |
173 | 173 | Derivatives not designated as hedges | – | – | |
711 470 | 711 470 | Cash and short-term deposits | 42 955 | 42 955 | |
1 734 269 | 1 734 269 | Total financial assets | 683 814 | 683 814 | |
Financial liabilities | |||||
1 766 761 | 1 766 760 | Loans, trade and other payables | 271 806 | 271 806 | |
4 308 | – | Derivatives not designated as hedges | – | – | |
1 771 069 | 1 766 760 | Total financial liabilities | 271 806 | 271 806 | |
2011 | 2011 | ||||
Financial assets | h4|||||
894 725 | 894 725 | Loans and receivables | 538 993 | 538 993 | |
750 | 750 | Derivatives not designated as hedges | – | – | |
824 212 | 824 212 | Cash and short-term deposits | 2 232 | 2 232 | |
1 719 687 | 1 719 687 | Total financial assets | 541 225 | 541 225 | |
Financial liabilities | |||||
1 688 853 | 1 688 853 | Loans, trade and other payables | 266 224 | 266 224 | |
1 688 853 | 1 688 853 | Total financial liabilities | 266 224 | 266 224 | |
The carrying amount of these financial assets and liabilities is a reasonable approximation of fair value. Long-term fixed-rate variable-rate borrowings are evaluated by the Group based on parameters such as interest rates and repayment periods as at year-end, the carrying amounts of the borrowings are not materially different from the calculated fair value. |