Directors’ report

The Directors present their report on the activities and the financial statements for Clover Industries Ltd (“CIL”) and the Group in respect of the year ended 30 June 2012.

Nature of business

The procurement, production, marketing, sales and distribution of branded consumer goods to customers in the Southern African region at benchmarked costs, with margins sufficient to ensure Clover’s long-term prosperity and growth.

Group results

The Group’s results for the year are as follows:

	2012	2011
	R'm	R'm
Revenue	7 223,9	6 542,3
Total comprehensive income attributable to shareholders of the parent Company	205,3	179,6

More detailed financial information can be found in the Financial Report which forms part of the Integrated Annual Report.

Subsidiary companies and interests in joint ventures

Details of subsidiary companies are reflected in note 31 to the financial statements and interests in joint ventures in note 4 to the financial statements.

With effect from 1 July 2011 Clover SA bought out the 45% minority shareholder in Clover West Africa for US$ 1 million (R8,0 million). This Company is now a wholly owned subsidiary of Clover SA.

Similarly with effect from 1 April 2012 Clover SA also bought out the 30% minority shareholder in Clover Botswana for 18 million Pula (R19,2 million).

On 31 May 2012 Clover SA entered into an agreement with AVI Limited for the purchase of 100% of the shares in The Real Juice Co. Holdings (Pty) Ltd for a purchase consideration of R60 million. This Company, through its subsidiaries, manufactures and sells the Quali and Real Juice range of fruit juices. The transaction was conditionally approved by the competition authorities on 28 August 2012. Clover accepted the conditions attached to this approval and the effective date will be 1 October 2012.

Share capital

Details of the authorised and issued share capital are included in note 19 to the financial statements.

A general authority to repurchase ordinary shares of the Company was granted to the Directors by way of a special resolution adopted on 10 November 2011. Such authority is subject to the Companies Act and the Listings Requirements of the JSE. The Listings Requirements of the JSE limit repurchases during any one year to a maximum of 20% of the issued ordinary shares at the time.

No shares were issued or repurchased during the year ended 30 June 2012.

The debt portion of preference shares is quantified and separately disclosed as part of interest-bearing liabilities. The guaranteed preference dividends paid during the year are accounted for as interest paid in the statement of comprehensive income.

Dividends

Dividends declared and paid by CIL during the year:

	2012	2011
	R'000	R'000
Ordinary dividends
Declared	53 734	58 720
Paid	53 734	58 720

Preference dividends
Recognised as interest:
Declared	22 007	21 359
Paid	16 117	26 529

The Board declared and paid an interim cash dividend of 15c per ordinary share during April 2012. It further declared a final dividend of R24,0 million or 13,4 cents per ordinary share. The interim dividend together with the proposed final dividend will constitute 25% of Comprehensive Income Attributable to Shareholders of CIL, excluding after tax capital profits.

Declaration of dividend number 5

Notice is hereby given that the directors have declared a final gross cash dividend of 13,4 cents (11,39 cents net of dividend withholding tax) per ordinary share for the year ended 30 June 2012.

The dividend has been declared from income reserves and no secondary tax on companies credits has been used.

A dividend withholding tax of 15% will be applicable to all shareholders who are not exempt.

The Company income tax number is 9657/002/71/4

The issued share capital at the declaration date is 179 111 867 ordinary shares.

The salient dates will be as follows:
Last day to trade to receive a dividend	Friday, 28 September 2012
Shares commence trading “ex” dividend	Monday, 1 October 2012
Record date	Friday, 5 October 2012
Payment date	Monday, 8 October 2012

Share certificates may not be dematerialised or rematerialised between Monday, 1 October 2012 and Friday, 5 October 2012, both days inclusive.

Directors and Secretary

Particulars of the present Directors and Secretary are listed here.

Share-based compensation

During the current year a further 2,1 million SAR were issued to executives at an issue price of R11. These SAR will vest three years after the issue date and are subject to vesting conditions. SAR not excercised will be cancelled seven years after the issue date.

On 1 June 2012, Mr E Bosch was appointed to the Executive Committee and 953 620 SAR was issued to him on the same day at an issue price of R13,50. One third of these SAR will vest three years after the issue date and thereafter another third after four years and the last third after five years. There are no vesting conditions attached to theses SAR. SAR not excercised will be cancelled seven years after the issue date.

On excercise Executives will be entitled to a payment equal to the increase in the CIL ordinary share price over the issue price of the SAR. Such payment can at the election of the Company be either in cash or by way of the issue to the member of a number of ordinary shares equal in value to such cash amount. Details of SAR issued and vested in terms of the plan are given in the Remuneration Policy and Remuneration Report contained in the Integrated Annual Report.

Insurance and risk management

The Group follows a policy of reviewing the risks relating to assets and commitments that might flow from the use thereof with its insurers on an annual basis. Wherever possible, assets are automatically included. There is also a continuous asset risk control programme, which is carried out in conjunction with the Group’s insurance brokers. For further information on the Group’s risk managment process please refer to the Corporate Governance report here.

Property, plant and equipment

There was no change in the nature of the property, plant and equipment of the Group or in the policy regarding their use. Capital expenditure on tangible assets was R254,3 million (2011: R197,5 million) and R19,4 million (2011: R18,8 million) on intangible assets.

Events after the reporting period

On 28 August 2012 the Competition Commission conditionally approved Clover SA’s acquisition of The Real Juice Co. Holdings (Pty) Ltd from AVI Ltd. Clover SA accepted the conditions posed and the effective date of the transaction will be on 1 October 2012.

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

Special resolutions

The following special resolutions were adopted at the Annual General Meeting held on 10 November 2011:

A general authority was given to the board to repurchase shares in the Company subject to the Companies Act and the JSE Listings Requirements.
A general authority as required by sections 44 and 45 of the Companies Act was given to the Board to provide financial assistance to related and interrelated companies or to Directors and prescribed officers of the Company and Directors and prescribed officers of related and inter-related companies. This general authority is valid for two years from the date of the resolution.
The remuneration of the Non-executive Directors with effect from 1 July 2011 was approved.
The following special resolution was adopted at both a preference shareholders meeting and a combined preference and ordinary shareholder meeting held on 7 June 2012:
The dividend rate attached to preference shares was increased from 90% of the prime interest rate to 99% of the prime interest rate. This effectively passed on the savings of the Company, relating to preference dividends, on the abolishment of the STC tax regime to the preference shareholders.

On 4 August 2011 the Company granted the Board of Clover SA a general authority as required by sections 44 and 45 of the Companies Act to provide financial assistance to related and inter-related companies or to Directors and prescribed officers of the Company and Directors and prescribed officers of related and inter-related companies. This general authority is valid for two years from the date of the resolution.

Acknowledgements

We express our thanks and appreciation to:

our shareholders for their support during the year;
our staff for their dedication to the Clover brand;
all our suppliers for their support in reducing the costs in the supply chain;
the retail and wholesale trade for their support; and
the consumers who support the Clover brand.

John Bredin
Chairman

6 September 2012