NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

GROUP					COMPANY
2016 R'000	2015 R'000				2016 R'000	2015 R'000
		21	OTHER COMPONENTS OF EQUITY
			21.1	Foreign currency translation reserve
(2 314)	(5 582)			Balance at the beginning of the year
(1 905)	3 268			Foreign exchange translation differences
28 366	–			Reclassified to statement of profit or loss
26 461	3 268			Net foreign exchange translation movement
24 147	(2 314)			Balance at the end of the year
			21.2	Cash flow hedge reserve
				Balance at the beginning of the year
(22 500)	–			ICE Gasoil forward contracts fair value adjustment
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

2016
R'000

2015
R'000

2016
R'000

2015
R'000

INTEREST-BEARINGS LOANS AND BORROWINGS

22.1

Secured liabilities

900 000

(a)

Secured by securitisation of trade debtors (refer to note 17). The first tranche of R250 million is repayable on 30 June 2017, and is charged a floating interest rate of 160 bps above three-month Jibar. The second tranche of R400 million is repayable 30 June 2018, and is charged a fixed interest rate of 9,28% (2015: 9.28%). The third tranche of R250 million is repayable on 30 June 2019, and is charged a floating interest rate of 220 bps above three-month Jibar. The funding is raised in the form of debentures issued to financial institutions and investment funds with specific redemption dates.

31 790

36 247

(b)

Secured by plant and equipment with a book value of R25,8 million (2015: R31,9 million). Repayable in monthly instalments. Payments due within the next year are R5,0 million (2015: R5,1 million). Variable interest rate portion: 8,5% - 10.5% (2015: 8,5% - 10,5%). Maturity: between July 2016 and March 2022. Fixed interest rate portion 9.0% and 10,5% (2015: 9,0% and 10,5%).

931 790

936 247

Total secured liabilities

22.2

Unsecured liabilities

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.

–

688

(b)

Unsecured loan from Merchant West, interest is charged at 7,57% (2015: 6.96%), and is repayable in quarterly instalments with a final

payment on 1 October 2015

7 188

1 938

(c)

Bank overdraft

Repayable on demand. The full outstanding amount is repayable within one year. Variable interest rate: 9,25% – 10,5% (2015: 9,0% - 9.25%)

55 036

316 304

(d)

Call loans

Variable interest rate: 7,0% – 9,0% (2015: 6,75% – 7,8%)

250 070

–

(e)

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.

342 680

318 930

Total unsecured liabilities

1 274 470

1 255 177

Total secured and unsecured liabilities

Current portion transferred to current liabilities:

255 247

254 646

•	Secured liabilities

87 768

318 930

•	Unsecured liabilities

343 015

573 576

Total current portion transferred to current liabilities

931 455

681 601

Total non-current interest-bearing borrowings

1 274 470

1 255 177

Total current and non-current interest-bearing loans and borrowings

GROUP					COMPANY
2016 R'000	2015 R'000				2016 R'000	2015 R'000
		23	EMPLOYEE-RELATED OBLIGATIONS
			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:
7 901	6 976			Active members
6.3%	6.8%			Salary escalation ratio
8.9%	7.8%			Discounting rate
65	65			Normal retirement age
24 868	26 376			Balance at the beginning of the year
5 690	9 198			Amounts provided
(8 712)	(10 706)			Amounts utilised
21 846	24 868			Total long-service bonus provision
				Refer to note 33 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 and leave days taken are recognised as utilisations.
64 461	61 251			Balance at the beginning of the year
13 054	10 413			Amounts provided
(9 210)	(7 203)			Amounts utilised
68 305	64 461			Total leave pay provision

			23.3	Total employee-related obligations
73 474	74 901			Long-term portion
16 677	14 428			Short-term portion transferred to current liabilities
90 151	89 329			Total long-term and short-term employee-related obligations

GROUP				COMPANY
2016 R'000	2015 R'000			2016 R'000	2015 R'000
		24	TRADE AND OTHER PAYABLES
1 115 717	1 072 019		Trade payables	8 703	8 392
218 950	230 972		Other payables	1 389	1 335
–	346		Interest payable	–	346
47 976	48 507		Payable to joint ventures
1 382 643	1 351 844		Total trade and other payables	10 092	10 073
19 311	21 459		Non-current portion included in other payables transferred to non-current liabilities
1 363 332	1 330 385		Current portion	10 092	10 073
1 382 643	1 351 844		Total trade and other payables	10 092	10 073
			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

		25	NOTES TO THE STATEMENT OF CASH FLOWS
			Tax paid
40 330	33 877		Amount receivable/(due) at the beginning of the year	2 157	1 328
(107 161)	(99 801)		Taxation charged in statement of comprehensive income and other adjustments, excluding deferred taxation	(9 925)	(10 434)

9 893	( 40 330)		Amount due/(receivable) at the end of the year	(928)	(2 157)
(56 938)	(106 254)		Total tax paid	(8 696)	(11 263)

GROUP					COMPANY
2016 R'000	2015 R'000				2016 R'000	2015 R'000
		26	PENSIONS AND OTHER POST-EMPLOYMENT BENEFIT PLANS
			26.1	Defined-benefit fund
5 018	9 277			Value of fund assets
( 24)	(4 452)			Value of fund liabilities
4 994	4 825			Net surplus (recognised in other receivables)

				Funding level
				All of the fund's assets are indirectly invested in a quoted market by the utilisation of unit trusts.
n/a	8,8%			Expected rate of return
n/a	8,8%			Discount rate
n/a	8,1%			Future salary increases
n/a	6,80			Expected average remaining working life in years
				The fund has converted all members to the Group's defined contribution pension fund. As per the fund rules the net surplus of the fund will be available to the Group to be utilised as a reduction of future company contributions towards the defined contribution pensions fund. Number of members on 30 June 2016: 0 (30 June 2015: 4). The fund closed for new entrants on 1 July 1994.
				During the previous financial year the Board of Clover and the Trustees of the Clover Pension fund approved the move of the Clover Pension fund to the Sanlam Umbrella fund, with effect from 1 July 2015. As part of this transfer, all defined benefit members will become defined contribution members. As per the fund rules the net surplus of the fund will be available to the Group to be utilised as a reduction of future Company contributions towards the defined contribution pension fund. Accordingly a prepayment asset was raised in the previous financial year amounting to R4,8 million. The Group policy is still 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.

			26.2	Defined-contribution funds
				26.2.1 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 2016: 1 112 (30 June 2015: 1 102).
				26.2.2 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 2016:6 759 (2015: 6 143).
			26.3	Amounts recognised in profit or loss
				Contributions for the Group for the current year:
–	105			Defined-benefit fund
38 999	34 985			Pension fund
65 587	53 749			Provident fund
104 586	88 839			Total contributions recognised in profit or loss

GROUP					COMPANY
2016 R'000	2015 R'000				2016 R'000	2015 R'000
		27	COMMITMENTS AND CONTINGENCIES
				27.1 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:
299 627	289 823			Within one year
977 720	847 451			After one year but not more than five years
383 296	535 302			More than five years
1 660 643	1 672 576			Total lease payments payable

				27.2 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 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:
2 400	7 609			Within one year
7 366	8 607			After one year, but not more than five years
9 766	16 216			Total lease payments receivable

GROUP 2016			GROUP 2015
Minimum payments	Present value of payments		Minimum payments	Present value of payments
R'000	R'000		R'000	R'000

		27.3 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:
30 073	25 894	Within one year	8 248	5 196
45 098	36 282	After one year but not more than five years	41 488	31 739
75 171	62 176	Total minimum lease payments	49 736	36 935
(12 995)		Less: Amounts representing finance charges	(12 801)	–
62 176	62 176	Present value of minimum lease payments	36 935	36 935

GROUP			COMPANY
2016 R'000	2015 R'000		2016 R'000	2015 R'000
		27.4 Capital commitments
191 498	146 225	Capital expenditure authorised and contracted for
68 963	29 305	Capital expenditure authorised but not contracted for
260 461	175 530	Total capital commitments
		Commitments will be spent within the next three to four years. The capital expenditure will be funded from Group funds. Included in the prior year capital expenditure authorised and contracted for is R150 million for the acquisition of Dairybelle.

GROUP						COMPANY
2016 R'000	2015 R'000					2016 R'000	2015 R'000
		28	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 Namibia and Clover West Africa. During the year under review, the loan from Clover SA to Clover West Africa was written-off and a reversal of the prior year impairments on the loan to Clover Namibia of R3.8 million (2015: R5,5 million). 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.
			28.1	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	44 424	49 369
					Total fees earned by CIL for services rendered to Group Companies	44 424	49 369
				(b)	Amounts due to CIL from Group Companies
					Clover SA – Subsidiary	546 838	502 298
					Total amounts due to CIL from Group Companies	546 838	502 298
				(c)	CIL received the following dividends during the year from Group Companies
					Clover SA – Subsidiary	100 000	50 000
					Total dividends received by CIL from Group Companies	100 000	50 000
			28.2		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:
104 643	118 495				WI Büchner
44 632	42 870				NA Smith
15 362	11 888				PR Griffin
164 637	173 253				Total milk purchased from Non-Executive Directors
					Refer to note 32 for more information regarding compensation of Directors and key management personnel
			28.3		Loans advanced to Directors and senior management outstanding
					Executive Director
–	13 019				JH Vorster	–	13 019
					Other Executives
2 612	2 625				JHF Botes (Dr)	2 612	2 625
2 612	15 644				Total	2 612	15 644
					Refer to note 17 for more details around the terms of the loans.

29	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.

	29.1	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 29.5. 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 29.4 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% (2015: 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 20% (2015: 20,3%) 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	2016 R'm	2015 R'm
Municipalities	15.69	15.60
Other*	18.59	0.42
	34.28	16.02

*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 (2015: 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.

Foreign currency sensitivity

The following table demonstrates the sensitivity to a reasonably possible change in exchange rates of the Naira and the Pula. The Group's exposure to foreign currency changes for all other currencies is not material.

GROUP 2016				GROUP 2015
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%
		(25 035)	Loss on Pulas			(17 134)
		160	Profit on Naira			5 066
-10%			Rand – weakening	-10%
		25 035	Profit on Pulas			17 134
		( 160)	Loss on Naira			(5 066)

(ii) 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				GROUP
2016 R'000				2015 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
874 470		Variable-rate instruments		855 177
1 274 470				1 255 177
		Interest rate sensitivity
		An increase/decrease of 100 basis points (2015: 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
(8 745)		Decrease in profit before tax		(8 552)
		Decrease of 100 basis points
8 745		Increase in profit before tax		8 552

		(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% (2015: 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
3 972			Increase in profit before tax	3 754
			Decrease of 10 % in share price
(3 972)			Decrease in profit before tax	(3 754)
		(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% 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
7 607			Increase in other comprehensive income	–
			Decrease of 10% in diesel price
(7 607)			Decrease in other comprehensive income	–
			Diesel hedges sensitivity
			An increase/decrease of 10% 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. The analysis is performed on the same basis for the prior year.
			Increase of 10% in diesel price
–			Increase in profit before tax	21 344
			Decrease of 10% in diesel price
–			Decrease in profit before tax	(21 344)
		(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 may be exercised by Clover any time after 30 June 2019. Refer to note 14 for more information regarding the call option.
			Call option sensitivity
			An increase/decrease of 10 percent 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 percent in terminal growth rate
780			Increase in profit before tax	–
			Decrease of 10 percent in terminal growth rate
(780)			Decrease in profit before tax	–
			An increase/decrease of 10 percent 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 percent in discount rate
(1 358)			Decrease in profit before tax	–
			Decrease of 10 percent in the discount rate
2 000			Increase in profit before tax	–
			Put option Clover Frankies
			Clover granted Frankies the irrevocable right to sell Frankies' 49% of the issued share capital in Clover Frankies (“put shares”). The put option may be exercised by Frankies any time after 30 June 2019. Refer to note 14 for more information regarding the put option. The sensitivity analysis indicates that there is no effect on profit before tax when the terminal growth rate or discount rate is adjusted by 10% upwards or downwards
		(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 percent 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 percent in terminal growth rate
1 526			Increase in profit before tax	–
			Decrease of 10 percent in terminal growth rate
(560)			Decrease in profit before tax (limited to current option value)	–
			An increase/decrease of 10 percent 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 percent in discount rate
(560)			Decrease in profit before tax (limited to current option value)	–
			Decrease of 10 percent in the discount rate
2 806			Increase in profit before tax	–
			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 14 for more information regarding the put option. 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.
			Put option sensitivity
			An increase/decrease of 10 percent 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 percent in discount rate
(689)			Decrease in profit before tax	–
			Decrease of 10 percent in the discount rate
–			Increase in profit before tax	–
	29.2	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 securisation programme. This programme came into effect during 2001. Senior debt raised by the programme currently amounts to R900 million (2015: R900 million). The securisation provides access to senior debt equal to 74,5% (2015: 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 12,9% (2015: 14,5%) of the debtors' book. In comparison the weighted average interest expense on interest-bearing borrowings was 9,72% (2015: 7,8%).
	29.3	Fair value
		The carrying amount of financial assets and liabilities are a reasonable approximation of fair value due to the short-term maturities of these financial instruments.
		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
2016
0 – 6 months R'000	6 – 12 months R'000	1 – 2 years R'000	2 – 5 years R'000	5 years R'000	Total R'000
						29.4	Liquidity risk profile
							Maturity profile of financial instruments
							The maturity profile of the financial instruments is summarised as follows for the Group:
							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

GROUP
2015
0 – 6 months R'000	6 – 12 months R'000	1 – 2 years R'000	2 – 5 years R'000	5 years R'000	Total R'000
						Financial liabilities
3 812	3 732	7 502	23 455	11 235	49 736	Secured loans
37 212	36 903	557 851	437 323	–	1 069 289	Secured by securitisation of trade debtors
317 008	–	–	–	–	317 008	Unsecured loans
–	16 023	–	–	–	16 023	Guarantees
2 338	–	–	–	–	2 338	Bank overdrafts
598	2 118	2 670	–	–	5 386	Financial liabilities
1 284 506	45 878	10 730	10 730	–	1 351 844	Trade and other payables
1 645 474	104 654	578 753	471 508	11 235	2 811 624	Total financial liabilities

COMPANY
2016
0 – 6 months R'000	6 – 12 months R'000	1 – 2 years R'000	2 – 5 years R'000	5 years R'000	Total R'000
						The maturity profile of the financial instruments is summarised as follows for the Company:
						Financial liabilities
–	–	–	256 352	–	256 352	Unsecured loans
10 092	–	–	–	–	10 092	Trade and other payables
10 092	–	–	256 352	–	266 444	Total financial liabilities

COMPANY
2015
0 – 6 months R'000	6 – 12 months R'000	1 – 2 years R'000	2 – 5 years R'000	5 years R'000	Total R'000
						Financial liabilities
–	–	–	–	–	–	Unsecured loans
10 073	–	–	–	–	10 073	Trade and other payables
10 073	–	–	–	–	10 073	Total financial liabilities

GROUP				COMPANY
Carrying Value 2016 R'000	Carrying value 2015 R'000			Carrying Value 2016 R'000	Carrying Value 2015 R'000
		29.5	Credit risk
			Exposure to credit risk
			The carrying amount of financial assets represents the maximum exposure to credit risk.
			Financial assets per class
1 227 372	1 137 640		Trade receivables
97 035	95 469		Other receivables	603 600	522 334
604 071	475 436		Cash and short-term deposits	21 871	40 015
1 928 478	1 708 545		Total financial assets	625 471	562 349

			Trade receivables
			The maximum exposure to credit risk for trade receivables at the reporting date by customer type was as follows:
878 273	904 841		Retail chain stores
134 852	68 246		Wholesale chain stores
214 247	164 553		Industrial/Catering/General trade
1 227 372	1 137 640		Total

			The ageing of trade receivables at the reporting date is as follows:
1 128 812	1 059 421		Neither past due nor impaired*
84 201	56 454		Past due, but not impaired 0–30 days
10 069	12 157		Past due but not impaired 31–120 days
4 290	9 608		Past due but not impaired 120 days
1 227 372	1 137 640		Total

			The movement in the allowance for impairment in respect of trade receivables during the year was as follows:
2 525	3 849		Balance at the beginning of the year	275	275
1 671	–		Increases in impairments
(349)	(1 324)		Impairment loss written off
3 847	2 525		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.

GROUP				COMPANY
2016 R'000	2015 R'000			2016 R'000	2015 R'000
		30	INVESTMENT IN SUBSIDIARY AND JOINT VENTURE
			Investment in subsidiary company
			Clover SA	326 735	326 735
			Share-based payment investment in Clover SA	–	8 084
			Total investment in subsidiary	326 735	334 819
			Share of investment in a joint venture
–	(253)		Clover Futurelife
31 651	31 878		Clover Fonterra
31 651	31 625

			Effective interest in capital		Gross Investment in subsidiaries and joint ventures¹		Profit/(loss) after taxation³
Subsidiary and joint venture Name of company	Name of incorporation	Nature of business	2016 %	2015 %	2016 R'000	2015 R'000	2016 R'000	2015 R'000
Clover SA²	South Africa	Dairy manufacturing, distribution, sales	100	100	327 183	334 818	299 074	282 443
Real Beverage Company	South Africa	Manufacturing and sales of fruit juices	100	100	444 958	361 458	(14 389)	(3 231)
Clover Botswana	Botswana	Dairy manufacturing, distribution, sales	100	100	23 111	23 111	75 492	39 488
Clover MilkyWay	South Africa	Dairy manufacturing and sales	100	100	50 050	50 050	(8 861)	615
Clover Swaziland	Swaziland	Distribution and sales of dairy products in Swaziland	100	100	1	1	(1 208)	561
Lactolab	South Africa	Testing of dairy products	100	100	5 500	5 500	716	1 317
Clover Fonterra^#	South Africa	Marketing, selling and distribution of dairy and related ingredient products	51	51	31 651	31 878	14 015	11 192
Clover Frankies	South Africa	Marketing, sales, distribution and production of CSD's	51	–	10 928	–	518	–
Clover Good Hope	South Africa	Manufactures, distributes, sells and markets a range of soy based milk alternatives	51	–	7 068	–	1 380	–
Clover West Africa⁴	Nigeria	Marketing of non-alcoholic beverage products	100	100	468	468	71 273	(8 139)
Clover Namibia	Namibia	Distribution and sales of dairy products in Namibia	100	100	*	*	5 167	5 641
Clover Waters	South Africa	Marketing, sales, distribution and production of water and iced tea	70	70	76 669	69 392	(1 935)	(15 939)
Clover Futurelife^$	South Africa	Manufactures, distributes, sells and markets a range of functional food products	50	50	*	(253)	253	(253)

^#	Joint venture.
^*	Amounts less than R1 000.
^$	The company has not yet commenced trading.
¹	Held by Clover SA.
²	Held by CIL.
³	Before inter company eliminations.
⁴	Included in the profit is the write-off of the loan received from Clover SA of R61.1 million. However this amount was eliminated at Group level.

GROUP			COMPANY
2016 R'000	2015 R'000		2016 R'000	2015 R'000
		Clover Frankies
		Subsidiary's statement of financial position
9 265		Current assets including cash and cash equivalents of R1,6 million and inventory R4,3 million
12 233		Non-current assets including property, plant and equipment of R0,36 million and intangibles R11,8 million
(597)		Non-current liabilities including deferred tax R0,6 million
(6 925)		Current liabilities including trade and other payables of R6,9 million
( 13 976)		Equity (Net asset value)
51%		Portion of the Group's ownership
7 128		Net asset value of the investment

		Subsidiary's revenue and profit
20 568		Revenue
(9 864)		Cost of sales
(8 976)		Sales, marketing, distribution and administrative expenses

(262)		Net finance cost
1 466		Profit before taxation
(450)		Income tax expense
1 016		Profit for the year
51%		Portion of the Group's ownership
518		Group's share of profit for the year
–		Dividend received

GROUP			COMPANY
2016 R'000	2015 R'000		2016 R'000	2015 R'000
		Clover Good Hope
		Subsidiary's statement of financial position
27 302		Current assets including cash and cash equivalents of R3,6 million and inventory R8,7 million
7 329		Non-current assets including property, plant and equipment of Rnil million and intangibles R7,3 million
(657)		Non-current liabilities including deferred tax R0,6 million
(26 265)		Current liabilities including trade and other payables of R26 million
( 7 709)		Equity (Net asset value)
51%		Portion of the Group's ownership
3 932		Net asset value of the investment

		Subsidiary's revenue and profit
16 206		Revenue
(13 480)		Cost of sales
(1 293)		Sales, marketing, distribution and administrative expenses
1 721		Other operating income
(65)		Net finance cost
3 089		Profit before taxation
(383)		Income tax expense
2 706		Profit for the year
51%		Portion of the Group's ownership
1 380		Group's share of profit for the year
–		Dividend received

GROUP			COMPANY
2016 R'000	2015 R'000		2016 R'000	2015 R'000
		Clover Waters
		Subsidiary's statement of financial position
58 049	83 513	Current assets including cash and cash equivalents Rnil (2015: Rnil) and inventory R27,95 million (2015: R28,3 million)
132 674	89 149	Non-current assets including property, plant and equipment R97,8 million (2015: R52,8 million)
(9 866)	(5 887)	Non-current liabilities including deferred tax R2,7 million (2015: R3,9 million)
(138 729)	(121 882)	Current liabilities including trade and other payables of R138,2 million (2015: R121,4 million)
( 42 128)	( 44 893)	Equity (Net asset value)
70%	70%	Portion of the Group's ownership
29 490	31 425	Net asset value of the investment

		Subsidiary's revenue and profit
306 672	255 730	Revenue
(195 972)	(174 730)	Cost of sales
(87 740)	(85 231)	Sales, marketing, distribution and administrative expenses
(21 011)	(14 578)	Other operating expenses
(5 992)	(3 500)	Net finance cost
(4 043)	(22 309)	Loss before taxation
1 279	6 370	Income tax
(2 764)	(15 939)	Loss for the year
70%	70%	Portion of the Group's ownership
(1 935)	(11 157)	Group's share of loss for the year
–	–	Dividend received

Refer to note 4 for the joint ventures namely Clover Fonterra Ingredients and Clover Futurelife.

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Annual financial statements

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS