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 2015.

nAture oF business

The procurement, production, marketing, sales and distribution of branded consumer goods to customers on the African continent.

Group results

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

			2015  R’m	2014  R’m
Revenue			9 266,3	8 530,2
Total comprehensive income attributable to equity holders of the parent Company			353,6	189,2

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 30 to the financial statements and business combinations and interests in joint ventures in note 3 and 4 to the financial statements.

During the year under review The Real Beverages Company Proprietary Limited (“Real Beverages”) (a wholly-owned subsidiary of the Company) has acquired the following two businesses from Dairybelle Proprietary Limited (“Dairybelle”):

• the UHT milk manufacturing, marketing and distribution business (“UHT Milk Business”) for a cash consideration of R30 million, effective 1 December 2014; and

• the yoghurt manufacturing, marketing and distribution business (“Yoghurt Business”) for a cash consideration of R107,1 million, effective 1 January 2015.

These transactions are in line with the Company’s stated strategy to expand its portfolio of value added and branded consumer products.

The acquisition of the assets comprising the Yoghurt Business will provide the Company with access to the yoghurt market, in which Dairybelle has a meaningful presence. Additionally, the location of Dairybelle’s UHT production facilities in the Western Cape allows the Company to improve efficiencies through the more effective utilisation of its raw milk supply in the region.

Furthermore, as communicated in earlier SENS announcements Clover S.A. Proprietary Limited (“Clover”) (a wholly-owned subsidiary of the Company) has purchased from Nkunzi MilkyWay Proprietary Limited (“Nkunzi”) its business and assets effectively 1 June 2015 for a cash consideration of R48,7 million.

The acquisition will see Clover entering the Ayrshire and Organic milk markets, where it will manufacture and pack fresh milk and cream in addition to other dairy products for Woolworths Holdings Limited (“Woolworths”) at the acquired Nkunzi facility as well as its Clayville plant in Midrand, Gauteng. Clover will take over existing Nkunzi supply agreements with producers on the same terms and conditions, or renegotiate supply agreements on an individual basis with producers.

shAre cApitAl

Details of the authorised and issued share capital are disclosed 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 28 November 2014 and is valid until 27 November 2015. 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.

On 17 March 2015 the company issued 5 252 549 (2014: 1 260 440) ordinary Clover Industries shares to members of senior management to settle part of its obligation under the Clover Share Appreciation Rights Plan.

Except for the above no shares were issued or repurchased during the year ending 30 June 2015.

dividends

Dividends declared and paid by CIL during the year:

	2015  R’000	2014  R’000
Ordinary dividends
Declared	71 624	69 342
Paid	71 624	69 342

The Board declared and paid an interim cash dividend of (R42,4 million) 22,6 cents per ordinary share during April 2015. It further declared a final dividend of R62,7 million or 33,4 cents per ordinary share, bringing the total dividend for the year to R105,1 million (2014: R58,4 million) or 56,0 cents (2014: 32 cents) per ordinary share.

declArAtion oF dividend number 11

Notice is hereby given that the directors have declared a final gross cash dividend of R62,7 million or 33,40000 cents (28,39000 cents net of dividend withholding tax) per ordinary share for the year ended 30 June 2015.

The dividend has been declared from income reserves.

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

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

The issued share capital at the declaration date is 187 731 138 ordinary shares. The salient dates will be as follows:

Last day to trade to receive a dividend	Friday, 2 October 2015
Shares commence trading “ex” dividend	Monday, 5 October 2015
Record date	Friday, 9 October 2015
Payment date	Monday, 12 October 2015

Share certificates may not be dematerialised or rematerialised between Monday, 5 October 2015 and Friday, 9 October 2015, both days inclusive.

directors And compAny secretAry

Particulars of the present Directors and company secretary are available here and here.

shAre-bAsed compensAtion

On 26 September 2014, 501 425 SARs were issued to an executive at an issue price of R17,55 and on 30 June 2015 a further 3 656 212 SARs were issued to executives at an issue price of R17,34. These SARs will vest three years after the issue date and are subject to vesting conditions. SARs not exercised will be cancelled seven years after the issue date.

On exercise Executives will be entitled to a payment equal to the increase in the CIL ordinary share price over the issue price of the SARs. Such payment can at the election of the Group 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 management process please refer to the Report on Governance, Risk and Compliance.

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 R468,1 million (2014: R375,0 million) and R21,6 million (2014: R13, 0 million) on intangible assets.

events AFter the reporting period

No significant events occurred subsequent to the year-end that would require disclosure or amendment to these financial statements.

speciAl resolutions

The following special resolutions were adopted at the Annual General Meeting of Clover Industries Limited held on 28 November 2014:

A general authority was given to the Board of Directors to repurchase shares in the Company subject to the Companies Act and the JSE Listings Requirements;

The remuneration of the Non-executive Directors with effect from 1 July 2014 was approved; and

The Company and/or subsidiaries was given authority by way of general authority to provide, from time to time, subject to Section 45 of the Companies Act, financial assistance to related and inter- related companies on the terms and conditions that the Board of Directors deem appropriate.

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.

Werner Büchner Chairman 15 September 2015

Johann Vorster Chief Executive Officer