notes to the Consolidated financial statementsfor the year ended 30 June 2013

Group				Company
2013 R’000	2012 R’000			2013 R’000	2012 R’000
		31.	Investment in subsidiary
			Investment in subsidiary company
			Clover SA	326 735	326 735
			Share-based payment investment in Clover SA	32 881	23 315
			Total investment in subsidiary	359 616	350 050

Subsidiary and joint venture			Effective interest in capital		Investment in subsidiaries and joint ventures		Profit/(loss) after taxation
Name of company	Country of incorporation	Nature of business	2013 %	2012 %	2013 R’000	2012 R’000	2013 R’000	2012 R’000
Clover SA	South Africa	Dairy manufacturing, distribution, sales	100	100	359 616	350 050	99 763	169 298
Real Juice Co	South Africa	Manufacturing and sales of fruit juices	100	–	174 627	–	22 188	–
Clover Botswana	Botswana	Dairy manufacturing, distribution, sales	100	100	23 111	23 111	24 940	21 202
CloverManhattan^@	South Africa	Distribution and sales of ice tea	100	50,1	–	3 034	863	1 120
Clover Swaziland	Swaziland	Distribution and sales of dairy products in Swaziland	100	100	1	1	(869)	(77)
Lactolab	South Africa	Testing of dairy products	52	52	–	–	2 568	2 087
Clover Capital	South Africa	Finance	100	100	434 744	91 000	–	–
Clover Fonterra^#	South Africa	Marketing, selling and distribution of dairy and related ingredient products	51	51	3 060	3 060	14 221	12 297
Clover West Africa	Nigeria	Marketing of non-alcoholic beverage products	100	100	468	468	(9 841)	(10 539)
Clover Namibia	Namibia	Distribution and sales of dairy products in Namibia	100	100	–	–	(13)	(2 752)

Group					Company
2013 R’000	2012 R’000				2013 R’000	2012 R’000
		32.	Share-based payments
			32.1	Equity-settled share appreciation rights scheme
				– Clover Share Appreciation Rights Plan (2010) (ordinary shares in CIL) On 31 May 2010 the ordinary and preference shareholders approved the Clover Share Appreciation Rights Plan (2010) as well as the placement of 8 million unissued ordinary shares under the control of the Directors to fulfil the Company’s potential future obligations in terms of the plan. The main rules of the scheme are as follows: The Company’s obligations in terms of this plan can at the election of the Company be settled in cash or by the issue of ordinary shares. New SAR may be encashed at the election of the participants, at any time after they have vested, provided that the participant concerned is still in the employment of Clover. On encashment employees will be paid an amount equal to the difference between the fair market value of ordinary shares on the date of issue of the new SAR in question and the fair market value of the ordinary shares on the date of encashment. Further details on the scheme are available in the detailed circular issued to shareholders on 7 May 2010 and the remuneration report here. The SAR granted are expensed over their vesting period in terms of IFRS 2. The estimated fair value of these SAR was calculated using the Hull-White Trinomial Lattice valuation model. The following inputs were used for the calculation of the fair value: Initial allocation – Expected volatility of 30,3%, risk free rate of 8,90% and a dividend yield of 2,34%. Second allocation – Expected volatility of 14,9%, risk free rate of 8,90% and a dividend yield of 2,34%. Third allocation – Expected volatility of 19,9%, risk free rate of 8,55% and a dividend yield of 3,33%. Allocation to new Executive Committee member – Expected volatility of 17,4%, risk free rate of 7,94% and a dividend yield of 2,00%. Fourth allocation – Expected volatility of 17,4%, risk free rate of 7,94% and a dividend yield of 2,00% Allocation to new Executive Committee member – Expected volatility of 23,3%, risk free rate of 7,94% and a dividend yield of 2,18%.

Share appreciation rights
Description	Grant date	Weighted average remaining contractual life (years)	Exercise price	SAR granted not yet exercised	Estimated weighted average fair value per right at grant date (Adjusted for 2 for 1 share split	Vesting period
Clover’s Share Appreciation Rights Plan (2010) – Initial allocation	31 May 2010	* Till employment terminates	R4,67	12 676 780 (2012: 15 500 000)	R2,11	One-third on 31 May 2013, a further third on 31 May 2014 and a final third on 31 May 2015
Clover’s Share Appreciation Rights Plan (2010) – Second allocation	18 August 2010	* Till employment terminates	R0,00	933 335 (2012: 1 466 667)	R4,31	One-third on 18 August 2011, a third on 18 August 2012 and final third on 18 August 2013
Clover’s Share Appreciation Rights Plan (2010) – Third allocation	1 July 2011	Six years	R11,00	1 614 939 (2012: 2 093 918)	R3,11	Full allocation vest on 1 July 2014
Clover’s Share Appreciation Rights – Allocation to Executive Committee member ER Bosch	1 June 2012	Seven years	R13,50	953 620 (2012: 953 620)	R4,03	One-third on 1 June 2015, one-third on 1 June 2016 and a final third on 1 June 2017
Clover’s Share Appreciation Rights Plan (2010) – Fourth allocation	1 July 2012	Seven years	R13,73	2 737 742 (2012: Nil)	R3,70	Full allocation vest on 1 July 2015
Clover’s Share Appreciation Rights Plan (2010) – Allocation to Executive Committee member MM Palmeiro	1 October 2012	Seven years	R15,15	925 500 (2012: Nil)	R3,95	One-third on 1 October 2015, a third on 1 October 2016 and a final third on 1 October 2017

Group			Company
2013 R’000	2012 R’000		2013 R’000	2012 R’000
		Provision against income
18 407	13 115	Share-based payment reserve

33.	Directors’ remuneration and interests
	33.1 Directors’ remuneration

	2013
	Basic salary R’000	Fees for services as Director R’000	Car allow- ance R’000	Individual perfor- mance bonus R’000	Profit share bonus	Retire- ment and medical contri butions R’000	Other benefits* R‘000	Total R’000	Share apprecia- tion rights exercised R’000
Executive Directors
JH Vorster	3 778		1 048	1 454	1 615	761	57	8 713	8 498
HB Roode (retired 30 June 2013)	2 863		816	931	1 034	541	43	6 228	11 967
LJ Botha	2 587		733	832	925	487	51	5 615	–
CP Lerm(Dr)	2 240		664	975	696	438	41	5 054	11 852
Total remuneration of Executive Directors	11 468	–	3 261	4 192	4 270	2 227	192	25 610	32 317
Non-Executive Directors
JAH Bredin (resigned 30 November 2012)		490					9	499
HPF du Preez (resigned 30 November 2012)		136					–	136
WI Büchner		747					–	747
MG Elliot		272					46	318
JC Hendriks (Dr)		342					26	368
TA Wixley		739					–	739
SF Booysen (Dr)		513					17	530
NP Mageza		383					–	383
JNS Du Plessis (Adv)		435					34	469
NA Smith		272					16	288
Total remuneration of Non-Executive Directors	–	4 329	–	–	–	–	148	4 477	–
Total Directors’ remuneration	11 468	4 329	3 261	4 192	4 270	2 227	340	30 087	32 317
Other Executives (prescribed officers)
H Lubbe	2 256		655	975	696	440	55	5 077	9 897
JHF Botes (Dr)	2 266		657	975	696	441	46	5 081	6 895
ER Bosch	2 283		629	1 219	580	456	70	5 237	–
MM Palmeiro (appointed 1 October 2012)	930		264	398	190	172	336	2 290	–
Total remuneration of other Executives	7 735	–	2 205	3 567	2 162	1 509	507	17 685	16 792
* Travel and accommodation expenses, fees paid for directorships held in subsidiaries.

	2012
	Basic salary R’000	Fees for services as Director R’000	Car allow- ance R’000	Individual perfor- mance bonus R’000	Profit share bonus	Retire- ment and medical contri butions R’000	Other benefits* R‘000	Total R’000	Share apprecia - tion rights exercised R’000
Executive Directors
JH Vorster	3 498		979	2 243	2 020	673	60	9 473	–
HB Roode	2 651		754	1 482	1 334	462	75	6 758	1 468
LJ Botha	2 395		672	1 339	1 206	391	48	6 051	1 504
CP Lerm (Dr)	1 989		581	1 111	1 002	355	198	5 236	489
Total remuneration of Executive Directors	10 533	–	2 986	6 175	5 562	1 881	381	27 518	3 461
Non-Executive Directors
JAH Bredin		907					20	927
HPF du Preez		252					3	255
WI Büchner		417					–	417
MG Elliot		252					31	283
JC Hendriks (Dr)		329					27	356
TA Wixley		684					–	684
SF Booysen (Dr)		437					6	443
NP Mageza		354					–	354
JNS Du Plessis (Adv)		431					43	474
NA Smith		252					14	266
Total remuneration of Non-Executive Directors	–	4 315	–	–	–	–	144	4 459	–
Total Directors’ remuneration	10 533	4 315	2 986	6 175	5 562	1 881	525	31 977	3 461
Other Executives (prescribed officers)
H Lubbe	1 882		537	1 052	947	299	52	4 769	489
JHF Botes (Dr)	1 879		536	1 051	946	300	39	4 751	489
ER Bosch (appointed 1 June 2012)	190		52			17	6	265
Total remuneration of other Executives	3 951	–	1 125	2 103	1 893	616	97	9 785	978
* Travel and accommodation expenses, fees paid for directorships held in subsidiaries.

33.2 Interest of Directors and other Executives in share appreciation rights
The interest of executive and non-executive directors in the shares of the company provided for in the form of share appreciation rights are set out in the table below:
	Number of rights as at 30 June 2012	Share appreciation rights granted during the year	Number of right exercised/ cancelled during the year	Number of rights as at 30 June 2013	Share price on date exercised	Grant price	Date from which exercisable
JH Vorster	4 587 200			4 587 200		R4,67	One-third on 31 May 2013, a further third on 31 May 2014 and a final third on 31 May 2015.
	800 000		533 333	266 667	15,93	R0,00	One-third on 18 August 2011, a third on 18 August 2012 and final third on 18 August 2013.
	821 256			821 256		R11,00	All on 1 July 2014.
		1 036 716		1 036 716		R13,73	All on 1 July 2015.
HB Roode	2 616 762		872 254	1 744 508	18,39	R4,67	One-third on 31 May 2013, a further third on 31 May 2014 and a final third on 31 May 2015.
	266 667			266 667	11,01	R0,00	One-third on 18 August 2011, a third on 18 August 2012 and final third on 18 August 2013.
	478 979		478 979	–		R11,00	All on 1 July 2014.
CP Lerm (Dr)	2 454 758		818 253	1 636 505	18,39	R4,67	One-third on 31 May 2013, a further third on 31 May 2014 and a final third on 31 May 2015.
	88 890		44 445	44 445	14,08	R0,00	One-third on 18 August 2011, a third on 18 August 2012 and final third on 18 August 2013.
	1 119			1 119		R11,00	All on 1 July 2014.
		389 123		389 123		R13,73	All on 1 July 2015.
LJ Botha	2 443 140			2 443 140		R4,67	One-third on 31 May 2013, a further third on 31 May 2014 and a final third on 31 May 2015.
	266 667			266 667	11,28	R0,00	One-third on 18 August 2011, a third on 18 August 2012 and final third on 18 August 2013.
	404 063			404 063		R11,00	All on 1 July 2014.
		533 657		533 657		R13,73	All on 1 July 2015.
Total Executive Directors	15 229 501	1 959 496	2 747 264	14 441 733

	Number of rights as at 30 June 2012	Share appreciation rights granted during the year	Number of right exercised/ cancelled during the year	Number of rights as at 30 June 2013	Share price on date exercised	Grant price	Date from which exercisable
Other Executives (prescribed officers)
H Lubbe	2 027 236		675 745	1 351 491	18,39	R4,67	One-third on 31 May 2013, a further third on 31 May 2014 and a final third on 31 May 2015.
	88 888		44 444	44 444	14,08	R0	One-third on 18 August 2011, a third on 18 August 2012 and final third on 18 August 2013.
	57 778			57 778		R11	All on 1 July 2014.
		389 123		389 123		R13,73	All on 1 July 2015.
JHF Botes (Dr)	1 370 904		456 968	913 936	18,39	R4,67	One-third on 31 May 2013, a further third on 31 May 2014 and a final third on 31 May 2015.
	88 888		44 444	44 444	14,08	R0	One-third on 18 August 2011, a third on 18 August 2012 and final third on 18 August 2013.
	330 723			330 723		R11	All on 1 July 2014.
		389 123		389 123		R13,73	All on 1 July 2015.
E Bosch	953 620			953 620		R13,50	One-third on 1 June 2015, a third on 1 June 2016 and final third on 1 June 2017.
MM Palmeiro		925 500		925 500		15,15	One-third on 1 October 2015, a third on 1 October 2016 and final third on 1 October 2017.
Total other Executives	4 918 037	1 703 746	1 221 601	5 400 182
Total	20 147 538	3 663 242	3 968 865	19 841 915

Number of shares at 30 June 2013					Number of shares at 30 June 2012
Direct	Indirect	Associates			Direct	Indirect	Associates
			33.3	Interest of Directors and other Executives of the Company in ordinary share capital
				Executive Directors
7 575 496	–	398 315		JH Vorster	7 505 496	–	398 315
5 346 547	–	–		HB Roode	5 388 276	–	–
3 919 804	–	–		CP Lerm (Dr)	3 309 341	–	–
1 887 768	–	–		LJ Botha	2 542 049	–	–
18 729 615	–	398 315			18 745 162	–	398 315
				Non-executive Directors
–	–	–		JAH Bredin (resigned 30 November 2012)	411 265
–	480 400	–		WI Büchner*	–	480 400	–
–	–	–		HPF du Preez* (resigned 30 November 2012)	64 634	–	–
241 689	–	–		MG Elliot*	241 689	–	–
1 112 892	–	–		JC Hendriks (Dr)*	1 112 892	–	–
–	1 337 586	–		NA Smith	–	1 306 586	–
47 619	–	–		TA Wixley	47 619	–	–
1 402 200	1 817 986	–			1 878 099	1 786 986	–
20 131 815	1 817 986	398 315		Total Directors’ interests in ordinary share capital	20 623 261	1 786 986	398 315
				Other Executives (prescribed officers)
771 632	–	–		H Lubbe	523 810	–	–
738 543	–	–		JHF Botes (Dr)	547 619	–	–
1 510 175	–	–		Total interest of other Executives in ordinary share capital	1 071 429	–	–
				* These Directors are trustees of the Clover Milk Producer Trust that holds 21 932 000 (2012: 21 530 353) ordinary shares in the Company.

Number of shares at 30 June 2013					Number of shares at 30 June 2012
Direct	Indirect	Associates			Direct	Indirect	Associates
			33.4	Interest of Directors and other Executives of the company in preference share capital
				Executive Directors
–	–	–		JH Vorster	3 696 232	–	–
–	–	–		HB Roode	1 996 097	–	–
–	–	–		CP Lerm (Dr)	1 650 385	–	–
					7 342 714	–	–
				Non-executive Directors
–	–	–		MG Elliot	88 065	–	–
–	–	–		JC Hendriks (Dr)	–	229 885	–
					88 065	229 885	–
–	–	–		Total Directors interests in preference share capital	7 430 779	229 885	–
				There was no change in the shareholding of Directors in shares of the Company, between the end of the financial year and the approval of the financial statement by the Board on 11 September 2013.

Group					Company
2013 R’000	2012 R’000				2013 R’000	2012 R’000
		34.	Long-service bonus
			34.1	Introduction
				The Group rewards employees with long service by remunerating them with a lump sum after a specific number of service years. Assumptions and valuation methods are as follows:
			34.2	Background
				The long-service bonuses which employees receive differ between employees whose employment date were before 1 January 2001 and employees whose employment date was after 1 January 2001. The benefit is as follows:
				Employees with an employment date before 1 January 2001
				Employees receive a bonus of three times their monthly basic salary after 15 years service and one time their monthly basic salary every five years thereafter.
				Employees with an employment date after 1 January 2001
				Employees receive a bonus of 10% of their monthly basic salary after 10 years’ service, 15% after 15 years’ service, 20% after 20 years’ service, 25% after 25 years’ service, etc.
			34.3	Valuation method
				The projected unit credit method is used in the calculations. The values of the past service liabilities and the future service liabilities are given separately. The past service liability is the value of the accumulated liability as at the calculation date in respect of service already rendered. The future service liability is the value of the liability from service after the calculation date until the next date the employee is entitled to receive a bonus payment. The total liability is evenly distributed over the period since service inception until the date when the benefit is payable.
			34.4	Valuation results
				Past service liability
				The total past service liability in respect of long-service bonuses is set out as follows:
27 884	30 175			Employees with employment date before 01/01/2001
1 303	983			Employees with employment date after 01/01/2001
29 187	31 158			Total past service liability
				The valuation results as at 30 June 2013 are based on best estimate assumptions. The valuation is very sensitive to the real return rate assumed. For every 1% variance in the assumed rate of return, the liability varies by approximately R1 million. The results as at 30 June 2012 are based on the previous best estimates. The figures do not agree with the provisions as per the Group statements as the full liability for the joint venture has been included in the valuation results.

Group					Company
2013 %	2012 %				2013 %	2012 %
			34.5	Past service liability build-up
				The build-up of the total past service liability for the past year, using the best estimate assumptions are as follows:
8,9	9,0			a) The following discount rate per annum was used for the calculation of interest cost
7,7	7,5			b) The following salary escalation rate per annum and merit increases were used
				c) For current service cost an assumption is made that there are no withdrawals during the financial year
				d) For benefits paid it is assumed that all benefits were paid as estimated by Clover

R’000	R’000				R’000	R’000
				The increase in the past service liability is summarised as follows:
				Past services liability build-up
31 158	32 213			Opening balance
2 685	2 852			Plus: Interest cost
1 724	1 821			Current service cost
(9 670)	(7 447)			Less: Benefits paid
3 290	1 719			Actuarial loss
29 187	31 158			Closing balance

35. Events after the reporting period

On 1 August 2013 Clover SA acquired 70% of Clover Waters. Refer to directors’ report for more detailed information.

Other than the above, no significant events occurred subsequent to the year-end.

notes to the Consolidated financial statementsfor the year ended 30 June 2013

31.

Investment in subsidiary

32.

Share-based payments

32.1

Equity-settled share appreciation rights scheme

33.

Directors’ remuneration and interests

33.1 Directors’ remuneration

33.2 Interest of Directors and other Executives in share appreciation rights

33.3

Interest of Directors and other Executives of the Company in ordinary share capital

33.4

Interest of Directors and other Executives of the company in preference share capital

34.

Long-service bonus

34.1

Introduction

34.2

Background

34.3

Valuation method

34.4

Valuation results

34.5

Past service liability build-up

35. Events after the reporting period