Notes

GROUP					COMPANY

2017 R’000	2016 R’000				2017 R’000	2016 R’000
		21	OTHER COMPONENTS OF EQUITY
			21.1	Foreign currency translation reserve
24 147	(2 314)			Balance at the beginning of the year
(14 510)	(1 905)			Foreign exchange translation differences
–	28 366			Reclassified to statement of profit or loss
(14 510)	26 461			Net foreign exchange translation movement
9 637	24 147			Balance at the end of the year
			21.2	Cash flow hedge reserve
3 350	–			Balance at the beginning of the year
(9 294)	(22 500)			ICE Gasoil forward contracts fair value adjustment
5 944	25 850			Reclassified to statement of profit or loss
–	3 350			Net other comprehensive income movement
–	(938)			Income tax effect
–	2 412			Net cash flow hedge movement
–	2 412			Balance at the end of the year

GROUP						COMPANY

2017 R’000	2016 R’000					2017 R’000	2016 R’000
		22	INTEREST-BEARINGS LOANS AND BORROWINGS
			22.1	Secured liabilities
900 000	900 000			(a)	Secured by securitisation of trade debtors (Refer to Note 17).The first tranche of R 400 million is repayable 30 June 2018, and is charged a fixed interest rate of 9,28% (2016: 9,28%). The second tranche of R 250 million is repayable on 30 September 2019, and is charged a floating rate of 220 bps above 3 month JIBAR. The third tranche of R 250 million is repayable 30 June 2020, and is charged a floating interest rate of 185 basis points above 3 month JIBAR. The funding is raised in the form of debentures issued to financial institutions and investment funds with specific redemption dates
23 170	31 790			(b)	Secured by plant and equipment with a book value of R19,9 million (2016: R25,8 million). Repayable in monthly instalments. Payments due within the next year are R5,9 million (2016: R5 million). Variable interest rate portion: 8,5% – 10,5% (2016: 8,5% – 10,5%). Maturity: between July 2016 and March 2022. Fixed interest rate portion 9.0% and 10,5% (2016: 9,0% and 10,5%).
923 170	931 790				Total secured liabilities
			22.2	Unsecured liabilities
4 889	30 386			(a)	Credit financing agreements entered into with IBM Global Financing to fund the acquisition of certain software and consulting costs. Interest is charged at 3% with the final instalment due on 1 September 2017.
1 763	7 188			(b)	Bank overdraftRepayable on demand. The full outstanding amount is repayable within one year. Variable interest rate: 10,5% (2016: 9,25% - 10.5%)
302 033	55 036			(c)	Call loansVariable interest rate: 8,6% – 9,0% (2016: 7,0% – 9,0%)
250 070	250 070			(d)	Debentures issued to financial institutions and investment funds with fixed redemption date, interest is charged at JIBAR plus 2.85% and is repayable on 1 October 2018.
558 755	342 680				Total unsecured liabilities
1 481 925	1 274 470				Total secured and unsecured liabilities
					Current portion transferred to current liabilities:
405 899	255 247				Secured liabilities
308 405	87 768				Unsecured liabilities
714 304	343 015				Total current portion transferred to current liabilities
767 621	931 455				Total non-current interest-bearing borrowings
1 481 925	1 274 470				Total current and non-current interest-bearing loans and borrowings

GROUP				COMPANY

2017 R’000	2016 R’000			2017 R’000	2016 R’000
		23	Non-controlling interest put options liabilities
			The Group has entered into transactions with non-controlling interest equity holders whereby they are able to put their shareholding to the Group for a limited time period.
57 088			Non-controlling interest put options
57 088			Total non-controlling interest put options
–			Current portion reflected under current liabilities
57 088			Non-current portion reflected under non-current liabilities
			Put option to acquire remaining shares in Clover Good Hope Clover granted Good Hope the irrevocable right to sell Good Hope’s 49% of the issued share capital in Clover Good Hope (“Put shares”). The put option may be exercised by Good Hope within three months after each 12-month period from the third anniversary of the effective date. The purchase price of the put shares will be determined by way of an earnings before interest tax depreciation and amortisation (EBITDA) multiple formula. ((A - C) x B ) x 49% A – Average annual EBITDA of Clover Good Hope for the financial years preceding the put option B – EBITDA multiple. If Clover’s EBITDA multiple is 7 or lower the EBITDA multiple will be 6. If Clover’s EBITDA multiple is above 7 then the EBITDA multiple will be 7 C – Actual average net financing cost of Clover Good Hope for the two financial years preceding the put optionThe value of the put option was calculated by estimating the future EBITDA as per the contract and discounted given the remaining time period until the option becomes exercisable. The EBITDA estimates for purposes of the valuation of the put option was based on the following inputs; estimated annual free cash flow of R7,3 million; free cash flow growth per annum of between 6% to 10% and a discount rate of 18%. The fair value op the put was calculated by comparing the expected price as per the contract to a price calculated by using a discounted cash flow model. The resultant fair value based on this calculation is Rnil. This value is considered a level 3 valuation. Refer to note 30.1 for more details regarding the sensitivity of the valuation inputs. Put option to acquire remaining shares in Clover Pride Clover granted AECI the irrevocable right to sell AECI’s 49% of the issued share capital in Clover Pride (“Call shares”). The put option may be exercised by AECI within three months after each 12 month period from the third anniversary of the effective date. The purchase price of the put shares will be determined by way of an earnings before interest tax depreciation and amortisation (EBITDA) multiple formula. (A x B - C + D -E) x 49% A – 5.5 (EBITDA multiple) B – Average normalised EBITDA C – Clover Pride’s debts D – Working capital on hand E – Normal working capitalThe value of the put option was calculated by estimating the future EBITDA as per the contract and discounted given the remaining time period until the option becomes exercisable. The EBITDA estimates for purposes of the valuation of the put option was based on the same assumptions utilised in calculating the discounted cash flow as used for the purchase price allocation as per note 3.1. The fair value op the put was calculated by comparing the expected price as per the contract to a price calculated by using a discounted cash flow model. The resultant fair value based on this calculation is Rnil. This value is considered a level 3 valuation. Refer to note 30.1 for more details regarding the sensitivity of the valuation inputs.

GROUP					COMPANY

2017 R’000	2016 R’000				2017 R’000	2016 R’000
		24	EMPLOYEE-RELATED OBLIGATIONS
			24.1	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:
7 754	7 901			Active members
6.3%	6.3%			Salary escalation ratio
8.1%	8.9%			Discounting rate
65	65			Normal retirement age
21 846	24 868			Balance at the beginning of the year
5 086	5 690			Amounts provided
(5 507)	(8 712)			Amounts utilised
21 425	21 846			Total long-service bonus provision
				Refer to note 34 for further detail on the long-service bonus provision.
			24.2	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 and leave days taken are recognised as utilisations.
68 305	64 461			Balance at the beginning of the year
11 714	13 054			Amounts provided
(9 078)	(9 210)			Amounts utilised
70 941	68 305			Total leave pay provision
			24.3	Total employee-related obligations
82 595	73 474			Non-current portion
9 771	16 677			Current portion transferred to current liabilities
92 366	90 151			Total non-current and current employee-related obligations

GROUP				COMPANY

2017 R’000	2016 R’000			2017 R’000	2016 R’000
		25	TRADE AND OTHER PAYABLES
1 056 019	1 115 717		Trade payables	8 240	8 703
174 635	218 950		Other payables	1 773	1 389
69 538	47 976		Payable to joint ventures
1 300 192	1 382 643		Total trade and other payables	10 013	10 092
25 492	19 311		Non-current portion included in other payables transferred to non-current liabilities
1 274 700	1 363 332		Current portion	10 013	10 092
1 300 192	1 382 643		Total trade and other payables	10 013	10 092
			The terms for trade payables and other short term 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.
			Non-current payables range from one to three years after the date of accrual
		26	NOTES TO THE STATEMENT OF CASH FLOWS
			Tax paid
(9 893)	40 330		Amount receivable/(due) at the beginning of the year	928	2 157
(30 057)	(107 161)		Taxation charged in statement of comprehensive income and other adjustments, excluding deferred taxation	(13 544)	(9 925)
(7 165)	9 893		Amount due/(receivable) at the end of the year	3 432	(928)
(47 115)	(56 938)		Total tax paid	(9 184)	(8 696)

GROUP						COMPANY

2017 R’000	2016 R’000					2017 R’000	2016 R’000
		27	PENSIONS AND OTHER POST-EMPLOYMENT BENEFIT PLANS
			27.1	Defined-contribution funds
				27.1.1 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 2017: 1 082 (30 June 2016: 1 112).
				27.1.2 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 2017: 6 572 (2016: 6 759).
			27.2	Amounts recognised in profit or loss
				Contributions for the Group for the current year:

40 170	38 999			Pension fund
69 536	65 587			Provident fund
109 706	104 586			Total contributions recognised in profit or loss

GROUP					COMPANY

2017 R’000	2016 R’000				2017 R’000	2016 R’000
		28	COMMITMENTS AND CONTINGENCIES
			28.1	Operating lease commitments - Group as lessee
				The Group entered into an outsourcing agreement whereby the Group is provided with 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:
158 053	88 021			Within one year
217 014	110 929			After one year but not more than five years
23 305	179 326			More than five years
398 372	378 276			Total lease payments payable

			28.2	Future contractual distribution and milk collection cost
				The Group entered into a multiyear outsourcing arrangement in respect of distribution and milk collection vehicles. In terms of the outsourcing arrangement the supplier shall acquire and supply vehicles based on functional specifications by the Group. The functional specifications don’t result in the vehicles becoming so customised to the extent that they cannot be repurposed, and used in other parts of the supplier’s fleet or sold. In addition, the supplier has the right to substitute any vehicle in the fleet at its sole discretion as long as it meets the functional speciation as agreed in the service level agreement. Management concluded that the right to substitute the vehicle, and the economic incentive to do so, will result in a substantive right by the supplier, and accordingly the outsourcing arrangement does not meet the definition of a lease.
				Future minimum contractual payments are as follows:
205 477	211 606			Within one year
762 505	866 791			After one year but not more than five years
158	203 970			More than five years
968 140	1 282 367			Total contractual payments payable

			28.3	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 five 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 are as follows:
2 654	2 400			Within one year
12 321	7 366			After one year, but not more than five years
14 975	9 766			Total lease payments receivable

GROUP 2017				GROUP 2016

Minimum payments	Present value of payments			Minimum payments	Present value of payments
R’000	R’000			R’000	R’000
		28.4	Finance leases and hire purchase agreements
			The Group has finance leases and hire purchase contracts for various items of plant, machinery and vehicles. These leases have no terms of renewal, purchase options or escalation clauses.
			Future minimum lease payments with the present value of the net minimum lease payments are as follows:
11 974	9 755		Within one year	30 073	25 894
23 321	18 304		After one year but not more than five years	45 098	36 282
35 295	28 059		Total minimum lease payments	75 171	62 176
(7 236)			Less: Amounts representing finance charges	(12 995)
28 059	28 059		Present value of minimum lease payments	62 176	62 176

GROUP				COMPANY

2017 R’000	2016 R’000			2017 R’000	2016 R’000
		28.5	Capital commitments
40 908	191 498		Capital expenditure authorised and contracted for
43 424	68 963		Capital expenditure authorised but not contracted for
84 332	260 461		Total capital commitments
			Commitments will be spent within the next three to four years.

GROUP						COMPANY

2017 R’000	2016 R’000					2017 R’000	2016 R’000
		29	RELATED PARTY DISCLOSURE
			Transactions with related parties are made at market-related prices. Outstanding balances at the year-end are unsecured. No interest is paid on current accounts. There have been no guarantees provided or received for any related party receivables or payables except for a sub-ordination agreement with Clover Milkyway (Pty) Ltd amounting to R9.6m. 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 and joint ventures, the following transactions took place during the year:
				(a)	Fees earned by CIL for services rendered to Group Companies
					Clover SA – Subsidiary	51 812	44 424
					Total fees earned by CIL for services rendered to Group Companies	51 812	44 424
				(b)	Amounts due to CIL from Group Companies
					Clover SA – Subsidiary	547 578	546 844
					Total amounts due to CIL from Group Companies	547 578	546 844
				(c)	CIL received the following dividends during the year from Group Companies
					Clover SA – Subsidiary	80 000	100 000
					Total dividends received by CIL from Group Companies	80 000	100 000

GROUP				COMPANY

2017 R’000	2016 R’000			2017 R’000	2016 R’000
		29.2	With regard to business done with Non-Executive Directors or legal entities that are related to them, the following transactions took place:
			Milk purchased from the following Non-executive Directors or companies in which they are connected by Clover SA:
146 949	104 643		WI Büchner
49 358	44 632		NA Smith
7 284	15 362		PR Griffin (Resigned 30 November 2016)
203 591	164 637		Total milk purchased from Non-Executive Directors
			Refer to note 33 for more information regarding compensation of Directors and key management personnel
		29.3	Loans advanced to senior management outstanding
			Other Executives
2 585	2 612		JHF Botes (Dr)	2 585	2 612
2 585	2 612		Total	2 585	2 612
			Refer to note 17 for more details around the terms of the loans.

30	FINANCIAL INSTRUMENTS
	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.

	30.1	Financial Risk management
		The Group has exposure to the following risks from its use of financial instruments:
		– credit risk
		– liquidity risk
		– market risk: foreign currency, interest rate and share price risk
		This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and processes for measuring and managing risk and the Group’s management of capital. Further quantitative disclosures are included throughout these consolidated and separate financial statements.
		The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework. The Audit and Risk Committee, is responsible for developing and monitoring the Group’s risk management policies. The Committee reports regularly to the Board of Directors on its activities.
		The Group’s risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities. The Group, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.
		The Audit and Risk Committee is assisted in its oversight role by Clover Risk Management, assisted by Deloitte Risk Management. Risk Management undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Committee.

		a.	Credit risk management
			Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Group’s receivables from customers and investment securities.
			Credit risk primarily relates to potential exposure on bank and cash balances, investments, derivatives and trade receivables. The Group limits its exposure arising from money market and derivative instruments by only dealing with well-established financial institutions of high credit standing. The Group is exposed to credit risk in the form of trade receivables. The maximum exposure is the carrying amount as disclosed in note 30.5. Historically, Group bad debts have been negligible and the management of debtors payment terms have been very successful. Trade receivables comprise a large number of debtors, but with significant concentration in value on the country’s major retail and wholesale chains, credit is extended in terms of the Group’s credit policies. In the opinion of the Board there was no significant credit risk at year-end which had not been adequately provided for.
			The Group limits its exposure to credit risk by only investing in reputable institutions with high credit ratings.
			The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the Group’s customer base, including the default risk of the industry and country in which customers operate, has less of an influence on credit risk. Approximately 71,6% (2015: 79,56%) of the Group’s credit sales is attributable to sales transactions with the major national chain stores of good credit standing. However, geographically there is no concentration of credit risk.
			The responsibility for effective credit management rests with the Chief Financial Officer. The granting of credit is governed by a policy for the approval and authorisation levels for new credit applications and revision of credit limits.
			The credit policy requires that each new customer is analysed individually for creditworthiness before the Group’s standard payment and delivery terms and conditions are offered. Any variations in authorisation levels must be approved in terms of the credit policy. The review includes obtaining and evaluating trade references, bank codes, financial statements and trade history. Depending on the customer profile and credit limit required, further information on Directors and a credit bureau report will be obtained. With the exception of the major national chain stores, where credit risks are assessed as low, credit limits are established for each customer, which represents the maximum open amounts.
			Most of the Group’s customers have been transacting with the Group for many years and the Group has had a steady customer base. In monitoring customer credit risk, customers are grouped according to their credit characteristics, including whether they are chain stores, general trade or wholesalers.
			Additional credit is withheld from customers, excluding the major national chain stores, that have defaulted on their payments, until the situation has been resolved.
			The Group establishes an allowance for impairment that represents its estimate of expected losses in respect of trade and other receivables and investments. The main component of this allowance is a specific loss component that relates to individually significant exposures.

			As a general rule, sureties must be obtained for all new accounts, unless the Group waives its rights in this regard, backed by a low credit risk assessment.

		b.	Liquidity risk management
			Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing liquidity is to ensure that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions. Refer to note 30.4 for detailed analysis of liquidity exposure.
			The Group manages liquidity risk by monitoring actual and budgeted cash flows and ensuring that adequate borrowing facilities are maintained.
			The Group ensures that it has sufficient cash on demand to meet expected operational demands, including the servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters. In addition the Group maintains the lines of credit as can be viewed in note 22.
			The Group monitors the liquidity risk using a recurring liquidity planning tool. This tool considers the maturity of both its financial investments and financial assets and projected cash flows from operations.
			The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts, bank loans, finance leases, funding through securitisation of debtors book and hire purchase contracts. The Group’s policy is that not more than 25% (2016: 25%) of long-term borrowings should mature in the next 12-month period. In less than one year, the Group’s long-term debt of 27.3% (2016: 20%) will mature at year-end based on the carrying value of borrowings reflected in the financial statements.
			Trade creditors form an important part of the short-term financing of the Group’s working capital. Careful management and control of trade creditors is applied to ensure maximum use of what is viewed as interest-free debt.

			The following guarantees were in place:

Guarantees	2017 R'000	2016 R'000
Municipalities	15 642	15 694
Other*	329	18 586
	15 971	34 280

*Primarily relates to major supplier in relation to the import of equipment which has been subsequently settled.

c.	Market risk management
	Market risk is the risk that changes in market prices such as foreign exchange rates and interest rates will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return of risk.
	The Group buys and sells derivatives in the ordinary course of business in order to manage market risks. All such transactions are carried out within the guidelines set by the Risk Management Policy.
	(i)	Foreign currency risk management
		The Group is exposed to currency risk on sales and purchases that are denominated in a currency other than the respective functional currencies of Group entities. Currencies primarily exposed to from time to time are the Euro, US Dollar, Botswana Pula, British Pound and the Nigerian Naira. Certain exchange rate exposures are hedged through the use of forward exchange contracts. No forward exchange contracts were in place at year-end.
		The Group hedges amounts greater than R2 million (2016: R2 million) denominated in a foreign currency. Forward exchange contracts are used to hedge currency risk, when applicable, most with a maturity of less than one year from the reporting date. When necessary, forward exchange contracts are rolled over at maturity.

GROUP 2017				GROUP 2016

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
			Foreign subsidiaries – equity
+10%			Rand – strengthening	+10%
		(21 556)	Loss on Pulas			(25 035)
		32	Profit on Naira			160
-10%			Rand – weakening	-10%
		21 556	Profit on Pulas			25 035
		(32)	Loss on Naira			(160)

GROUP				GROUP

2017 R’000				2016 R’000
		At the reporting date the interest rate profile of the Group’s interest-bearing financial instruments was:
400 000		Fixed-rate instruments		400 000
1 081 925		Variable-rate instruments		874 470
1 481 925				1 274 470
		Interest rate sensitivity
		An increase/decrease of 100 basis points (2016: 100 basis points) in interest rates at the reporting date would affect profit before taxation by the amount shown below. This analysis assumes that other variables, in particular foreign currency rates, remain constant. The analysis is performed on the same basis for the prior year.
		Increase of 100 basis points
(10 819)		Decrease in profit before tax		(8 745)
		Decrease of 100 basis points
10 819		Increase in profit before tax		8 745
		(iii)	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 details.
			Forward share purchases sensitivity
			An increase/decrease of 10% (2016: 10%) 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
3 484			Increase in profit before tax	3 972
			Decrease of 10 % in share price
(3 464)			Decrease in profit before tax	(3 926)
		(iv)	Fuel price risk management
			The Group is effected by the volatility of the diesel price. Its operating activities require the ongoing purchase of diesel for logistic purposes.
			Based on an 12-month forecast about the required diesel supply, the Group hedged the purchase price of diesel using a futures contract linked to the Rand Ice Gas Oil Price. The Group hedged 13 200 000 litres of diesel, which is equivalent to 8 months’ diesel usage. Subsequent to year-end the Group extended its hedging period until 30 June 2017, at 1 650 000 per month.
			Cash flow hedge sensitivity
			An increase/decrease of 10% (2016: 10%) in the diesel price at the reporting date would have affected other comprehensive income, by the amounts shown below. This analysis assumes that all other variables remain constant. The analysis is performed on the same basis for the prior year.
			Increase of 10% in diesel price
–			Increase in other comprehensive income	7 607
			Decrease of 10% in diesel price
–			Decrease in other comprehensive income	(7 607)
		(v)	Clover Frankies - Call and put options
			Call option Clover Frankies
			Frankies granted Clover the irrevocable right to purchase Frankies’ 49% of the issued share capital in Clover Frankies (“Call shares”). The call option was exercisable by Clover any time after 30 June 2019. However the option was effectively cancelled when Clover acquired the remaining 49% shares in the current year. Refer to note 14 for more information regarding the call option.
			Call option sensitivity
			An increase/decrease of 10% (2016: 10%) in the terminal growth rate at the reporting date would have effected profit before taxation, by the amounts shown below. This analysis assumes that all other variables remain constant.
			Increase of 10% in terminal growth rate
–			Increase in profit before tax	780
			Decrease of 10% in terminal growth rate
–			Decrease in profit before tax	(780)
			An increase/decrease of 10% (2016: 10%) in the discount rate at the reporting date would have effected profit before taxation, by the amounts shown below. This analysis assumes that all other variables remain constant.
			Increase of 10% in discount rate
–			Decrease in profit before tax	(1 358)
			Decrease of 10% in the discount rate
–			Increase in profit before tax	2 000
		(vi)	Clover Good Hope - Call and put options
			Call option Clover Good Hope
			Good Hope granted Clover the irrevocable right to purchase Good Hope’s 49% of the issued share capital in Clover Good Hope (“Call shares”). The call option may be exercised by Clover within three months after each 12 month period from the fifth anniversary of the effective date. Refer to note 14 for more information regarding the call option.
			Call option sensitivity
			An increase/decrease of 10 % in the terminal growth rate at the reporting date would have effected profit before taxation, by the amounts shown below. This analysis assumes that all other variables remain constant.
			Increase of 10% in terminal growth rate
1 195			Increase in profit before tax	1 526
			Decrease of 10% in terminal growth rate
(856)			Decrease in profit before tax (limited to current option value)	(560)
			An increase/decrease of 10 % in the discount rate at the reporting date would have effected profit before taxation, by the amounts shown below. This analysis assumes that all other variables remain constant.
			Increase of 10 % in discount rate
(856)			Decrease in profit before tax (limited to current option value)	(560)
			Decrease of 10 % in the discount rate
4 547			Increase in profit before tax	2 806
			Put option Clover Good Hope
			Clover granted Good Hope the irrevocable right to sell Good Hope’s 49% of the issued share capital in Clover Good Hope (“Put shares”). The put option may be exercised by Good Hope within three months after each 12 month period from the third anniversary of the effective date. Refer to note 23 for more information regarding the put option.
			Put option sensitivity
			The sensitivity analysis indicates that there is no effect on profit before tax when the terminal growth rate is adjusted by 10% upwards or downwards.An increase/decrease of 10% in the discount rate at the reporting date would have effected profit before taxation, by the amounts shown below. This analysis assumes that all other variables remain constant.
			Increase of 10 % in discount rate
(2 480)			Decrease in profit before tax	(689)
			Decrease of 10 % in the discount rate
–			No effect	–
		(vii)	Clover Pride - Call and put options
			Call option Clover Pride
			AECI granted Clover the irrevocable right to purchase AECI’s 49% of the issued share capital in Clover Pride (“Call shares”). The call option may be exercised by Clover within three months after each 12 month period from the third anniversary of the effective date. Refer to note 14 for more information regarding the call option.
			Call option sensitivity
			An increase/decrease of 10 % in the terminal growth rate at the reporting date would have effected profit before taxation, by the amounts shown below. This analysis assumes that all other variables remain constant.
			Increase of 10% in terminal growth rate
1 433			Increase in profit before tax
			Decrease of 10% in terminal growth rate
–			Decrease in profit before tax (limited to current option value)
			An increase/decrease of 10 % in the discount rate at the reporting date would have effected profit before taxation, by the amounts shown below. This analysis assumes that all other variables remain constant.
			Increase of 10 % in discount rate
–			No effect on net profit before tax	–
			Decrease of 10 % in the discount rate
5 619			Increase in profit before tax	–
			Put option Clover Pride
			Clover granted AECI the irrevocable right to sell AECI’s 49% of the issued share capital in Clover Pride (“Put shares”). The put option may be exercised by AECI within three months after each 12 month period from the third anniversary of the effective date. Refer to note 23 for more information regarding the put option.
			Put option sensitivity
			The sensitivity analysis indicates that there is no effect on profit before tax when the terminal growth rate is adjusted by 10% upwards or downwards. An increase/decrease of 10% in the discount rate at the reporting date would have effected profit before taxation, by the amounts shown below. This analysis assumes that all other variables remain constant.
			Increase of 10 % in discount rate
(1 148)			Decrease in profit before tax	–
			Decrease of 10 % in the discount rate
			No effect on net profit before tax	–
	30.2	Capital management
		Capital consists of ordinary share capital, as well as ordinary share premium
		A combination of retained earnings, senior debt, 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 R900 million (2016: R900 million). The securitisation provides access to senior debt equal to 74,5% (2016: 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 5,4% (2016: 12,9%) of the debtors’ book. In comparison the weighted average interest expense on interest-bearing borrowings was 10,6% (2016: 9,7%).
	30.3	Fair value
		The carrying amount of financial assets and liabilities carried at amortised cost are a reasonable approximation of fair value due to the short-term maturities of these financial instruments, other than the put liabilities disclosed in note 23.
		These financial instruments are short term in nature and includes trade receivables, trade payables, cash and cash equivalents.
		Long-term fixed-rate and 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. The credit rating remained unchanged at zaAA, as rated by Khanda Credit.

GROUP

2017
0 – 6 months	6 – 12 months	1 – 2 years	2 – 5 years	5 years	Total
R’000	R’000	R’000	R’000	R’000	R’000
						30.4	Liquidity risk profile
							Maturity profile of financial instruments
							The following tables summarises the maturity profile of Clover’s financial liabilities at 30 June 2017 and 30 June 2016, based on contractual undiscounted payments.
							Financial liabilities
7 987	3 370	7 790	14 284	–	33 431		Secured loans
42 256	441 900	46 834	529 055	–	1 060 045		Secured by securitisation of trade debtors
314 875	12 633	258 585	–	–	586 093		Unsecured loans
–	–	–	–	15 971	15 971		Guarantees
1 763	–	–	–	–	1 763		Bank overdrafts
6 141	–	9 683	–	–	15 824		Financial liabilities
1 230 532	44 168	17 995	7 497	–	1 300 192		Trade and other payables
1 603 554	502 071	340 887	550 836	15 971	3 013 319		Total financial liabilities

GROUP

2016
0 – 6 months	6 – 12 months	1 – 2 years	2 – 5 years	5 years	Total
R’000	R’000	R’000	R’000	R’000	R’000
						Financial liabilities
26 144	9 564	13 477	20 234	4 992	74 411	Secured loans
41 661	291 109	460 695	23 575	255 942	1 072 982	Secured by securitisation of trade debtors
67 741	12 496	25 200	256 352	–	361 789	Unsecured loans
18 257	–	–	–	16 023	34 280	Guarantees
7 188	–	–	–	–	7 188	Bank overdrafts
25 612	–	2 199	–	–	27 811	Financial liabilities
1 321 244	42 088	9 152	10 158	–	1 382 642	Trade and other payables
1 507 847	355 257	510 723	310 319	276 957	2 961 103	Total financial liabilities

COMPANY

2017
0 – 6 months	6 – 12 months	1 – 2 years	2 – 5 years	5 years	Total
R’000	R’000	R’000	R’000	R’000	R’000
						The maturity profile of the financial instruments is summarised as follows for the Company:
						Financial liabilities
10 013					10 013	Trade and other payables
10 013	–	–	–	–	10 013	Total financial liabilities

COMPANY

2016
0 – 6 months	6 – 12 months	1 – 2 years	2 – 5 years	5 years	Total
R’000	R’000	R’000	R’000	R’000	R’000
						Financial liabilities
10 092	–	–	–	–	10 092	Trade and other payables
10 092	–	–	–	–	10 092	Total financial liabilities

GROUP				COMPANY

		30.5	Credit risk
			Exposure to credit risk
			The carrying amount of financial assets represents the maximum exposure to credit risk.
			Financial assets per class
1 182 775	1 227 372		Trade receivables
178 380	97 035		Other receivables	563 233	603 605
544 863	604 071		Cash and short-term deposits	63 241	21 871
1 906 018	1 928 478		Total financial assets	626 474	625 476
			Trade receivables
			The maximum exposure to credit risk for trade receivables at the reporting date by customer type was as follows:
906 736	878 273		Retail chain stores
123 878	134 852		Wholesale chain stores
152 161	214 247		Industrial/Catering/General trade
1 182 775	1 227 372		Total
			The ageing of trade receivables at the reporting date is as follows:
1 127 639	1 128 812		Neither past due nor impaired*
41 753	84 201		Past due, but not impaired 0–30 days
5 940	10 069		Past due but not impaired 31–120 days
7 443	4 290		Past due but not impaired 120 days
1 182 775	1 227 372		Total
			The movement in the allowance for impairment in respect of trade receivables during the year was as follows:
3 847	2 525		Balance at the beginning of the year	275	275
4 978	1 671		Increases in impairments
(2 308)	(349)		Impairment loss written off
6 517	3 847		Balance at the end of the year	275	275
			* The balance of these receivables mainly relate to well-known retail and wholesale chain stores and is considered to be of a high credit quality as is evident from the relative low impairment balance and zaAA credit ratings based on evaluations performed by independent credit valuation agencies.
			The allowance for impairment accounts in respect of trade receivables are used to record impairment losses unless the Group is satisfied that no recovery of the amount owing is possible; at that point the amount considered irrecoverable is written off against the financial asset directly.
			The impairment loss written off relates to customers defaulting on payments and being handed over to lawyers for recovery.

Annual financial statements

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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