intellectual capital

Trademarks and Patents

Clover is the proprietor of more than 934 registered trademarks within the following jurisdictions

JURISDICTION	NUMBER OF TRADEMARKS
South Africa	400
Rest of Africa **	532
Other countries**	2

**	Botswana, Swaziland, Namibia, Angola, DRC, Egypt, Ghana, Kenya, Lesotho, Malawi, Mauritius, Morocco, Mozambique, Nigeria, OAPI and Seychelles.

Clover further holds 11 patents registered in South Africa and Namibia.

Clover’s intellectual property is protected through employment contracts, confidentiality agreements and/ or licence agreements. Clovers Intellectual property portfolio is further managed through competent patent and trademark attorneys.

BRANDS AND REPUTATION

Clover’s Marketing Department has over the years developed several household brands including Clover, Tropika, Butro and Krush, just to name a few. Continuous marketing efforts are required to ensure Clover’s brands remain relevant.

Clover has enjoyed a long and successful history as part of the development of South Africa’s dairy and fast moving consumer goods industry. Clover has been a household name for more than 117 years. Today, Clover is a leading and competitive branded consumer goods and products group operating in South Africa and other selected African countries with its core competencies in the production of dairy and non-dairy beverage consumer products, the distribution of chilled and ambient consumer products and the sales and merchandising of consumer goods.

Clover has won numerous accolades thereby confirming its status as a trusted household name. Some of the awards bestowed on Clover includes:

• winner of Reader’s Digest’s Most Trusted Brands for 2015;
• SAFTA award for best game show for “Little Big Cook Off”; and
• South Africa’s leading Iconic Brand in the fresh milk, cream and cheese category for 2015.

That being said, Clover takes pride in announcing its market shares as at 30 June 2015 in all major categories of dairy products available on the market:

	Clover’s Percentage Market Share as at 30 June 2015
Fresh Milk	24,6
UHT Milk	16,4
Cream	31,6
Feta Cheese	26,1
Pre-packed cheese	19,1
Liquid custard	2,6
Processed Cheese slices	8,5
Pure Fruit Juice	44,1
Dairy Fruit Mix	78,9
Iced Tea	17,6
Bottled Water (Including Aquartz and Nestle)	13,0
Flavoured Milk	26,5
Maas	8,1
Yoghurt	4,0

Source: Nielsen Report 30 June 2015 (12 monthly moving)

	Cream Clover cream is ultra-pasteurised to ensure a superior quality product with an extended shelf life. Clover aims to increase its market share in this segment by creating awareness and educating consumers on the multiple uses of cream. The packaging used for our cream products are dedicated to recipes and communication on all areas of cooking and baking where cream can be used.
	Butter Clover is the largest manufacturer of butter in the country. Clover is the market leader in this segment, including such well-known brands as Clover Mooi River salted butter, Clover Springbok unsalted butter and Butro butter spread. Clover butter is a natural product without any additives, artificial colouring or flavouring.
	Fresh milk Clover is the market leader in fresh milk. In order to maintain our number one position and reinforce our leadership, Clover focuses on differentiation and innovation, underpinned by superior quality, providing consumers with solutions that make their lives Way Better.
	UHT milk The quality and goodness of UHT milk is kept fresh for longer due to the UHT (Ultra High Temperature) process and special packaging that allows the product to be stored for a period of nine months without refrigeration.
	Feta Cheese Clover feta cheese is the second largest brand in the market and is competing for the number one position. In this extremely price sensitive market, Clover recognises that it is important to ensure pricing and quality are right. Further to this, Clover promotes feta in store to drive growth and profitability.

Clover’s range of cheeses For over 100 years, Clover cheeses have been making mealtimes more delicious. This is because they are made according to the highest quality standards, with care and dedication. Clover is the market leader in the pre-packed cheese segment with Clover and Elite cheese sharing in this category. Clover’s award winning individually wrapped processed cheese is indicative of Clover’s clear ambition to provide consumers with the highest quality, best tasting products. New Clover individually wrapped processed cheese slices are preservative free and made with great tasting, excellent quality ingredients. Sacca cheese enjoys great heritage as it has been available since 1914. Elite Gouda is the only gouda in South Africa that is made in the traditional way.

	Danao Danao is a dairy fruit mix drink containing real fruit juice and dairy with added vitamins A, B2, B12, C and Calcium. The brand focuses on the inherent goodness of fruit juice and dairy – “Double the Happiness”. The plan is to broaden the appeal from being a breakfast drink to an all-day, any time refreshment with an extended consumer target market.
	Tropika Tropika is made from a combination of fruit juice and dairy, which results in a unique smooth tasting beverage. After 30 years in the South African market, Tropika is still the market leader and the bestselling dairy fruit mix beverage in South Africa.
	Clover Krush Clover Krush is a premium, 100% fruit juice blend, available in 10 exciting flavours and caters for the entire family. Clover Krush will ensure not only a great healthy alternative, but the delicious tastes of nature with uncompromising everyday goodness. No sugar or sweeteners are addded to the juice and it is enriched with Vitamins A, C and E. Clover Krush is the market leader in the pure juice, short life fruit juice market.
	Nestlé Purelife Mineral Water Nestlé Purelife is a pure, still or sparkling mineral water that is bottled directly at its unique source, ensuring a good balance of minerals and a crisp mouth sensation that revives your palate and is pure hydration for the whole family.
	Clover Life Nectar Clover Life Nectar range offers consumers a delicious, refreshing juice nectar that is affordable enough to purchase regularly. Clover Life has always been a favourite in South African homes and occupies the number one position in the Fruit Drink/ Nectar category.
	Manhattan Iced Tea Manhattan Iced Tea is a noncarbonated beverage with a tea extract base and fruit flavour blends. Manhattan Iced Tea has three tea extract variants, black, green and white tea, which is then blended with a variety of fruit flavours or fruit blend combinations, to give a refreshing and tasty ready to go Iced Tea.
	Aquartz Natural Mineral Water Aquartz is a natural mineral water that is bottled directly at source, this is to ensure the highest quality, purity and safety. The Aquartz water source is a naturally sweet mineral water that is low in TDS’s (“Total Dissolved Salts”). Aquartz is available in natural mineral water or in sparkling flavoured water options and is also complemented by a flavoured water range.
	Amasi Amasi (so called in Zulu and Xhosa, and “maas” in Afrikaans) is the common word for fermented milk that tastes like cottage cheese or plain yogurt. Clover brings the love for tradition into dairy with Clover Amasi. Clover’s Maas recipe is rich and creamy to reignite the love in their customer’s hearts with this cultural and delicious treat.
	Super M Super M is the coolest teenage flavoured milk. It is available in four great flavours: chocolate, strawberry, banana and cream soda. Where the competing market leading brand’s strategy is based on flavour, offering a variety of flavours for each consumer, Super M decided to follow global trends and offer variety in pack sizes in the top four selling flavours.
	Condensed Milk Full-cream sweetened condensed milk manufactured by Clover is prepared from standardised bovine milk and pure refined sugar. The product does not contain any preservatives except sugar.
	Fruits of the Forest Fruits of the Forest is a high quality, low fat, fruit yoghurt made with real fruit pieces. It’s improved recipe now has creamier taste, bigger fruit pieces than before, crunchy fruit& 10 vitamins. Available in a variety of popular flavours and convenient packs, consumers can indulge in this ‘fruitful’ bounty any time of the day.
	Clover Classic Yoghurt Clover Classic Yoghurt is made with more than 80% Clover Milk and is the only yoghurt in the market enriched with 10 Vitamins. After the successful launch in January 2015, Clover Classic Yoghurt already achieved a market share of 9,2% in the Smooth Yoghurt category.
	Clover Classic Custard Clover Classic is a range of deliciously creamy, smooth yoghurt and ready-to-eat custard made with a unique Clover recipe. Clover Classic Custard is made with more than 80% Clover Milk and made with Clover Cream and is uniquely a source of Vitamins, Protein and Calcium. After the successful launch in January 2015, Clover Classic Custard already achieved a market share of 8.3% with only one pack size.

Future value creation by expanding Clover’s brand basket

Clover Future Life

Clover and Futurelife will introduce “Smart Drink”, an On-The-Go snack with added nutrients. Smart Drink is designed for everyone who lives their lives on the go.

It is a delicious dairy snack formulated with Clover milk and the nutritional benefits of Futurelife cereals. It is an ideal in between meal snack for the whole family with 50 nutrients, and it is a source of protein, calcium, high in energy and 12 vitamins.

Smart Drink comes in a unique easy to grip 250ml bottle and will be available in 3 flavours

• Vanilla Caramel;
• Milky Chocolate; and
• Strawberry & Banana.

Bliss decadence desserts

Clover plans to use the Bliss brand, a double cream yoghurt range that Clover bought as part of the Dairybelle transaction, to launch its own range of desserts. The Bliss dessert range will be imported from Italy until such time that it can be manufactured in SA.

Licences and Memberships

Clover is constantly looking for ways to improve the way it does business and making sure every aspect of the business is appropriately recorded and functions appropriately. This includes having state of the art systems to achieve its day to day objectives and therefore to be “Way Better”.

Below is a table with some of Clover’s significant licences which it subscribes to and uses to make sure information is readily available:

SOFTWARE	DESCRIPTION
BES Time	Time & Attendance Software
ERP LX, eRMS, ELKE	ERP System
SSL Certificates for external exposed systems	IT Security
KAS, Milk System	Application Development Software
Cognos	Analytics and Reporting
Heat & ITSM	Customer/Consumer call logging software
Exrillo	Export System
Dispatcher	Warehouse Management System
Startrak	Warehouse Management System (Small Branches)
D-BIT	Fixed Assets System
ION BI	Fixed Budget System
FTP Server	Integration
Brightstor	Backup Software
Sophos	IT Security
Email protection	IT Security
DB2Connec	Development software for Data Warehouse
Websphere Message Broker	Integration Software
Wonderware	Process Control Software
AutoCad	Design Software
Entropy	SHE Software
On-Key	Production Performance Software
Advanced Planner, Demand Planner, S&OP	Planning Software
Optima/Plato	Primary Distribution Software
Roadshow	Secondary Distribution Software (Route Optimisation)
BarnOwl	Risk Management

Clover’s employees pride themselves in being associated with various memberships and institutions of the highest professional standard. Below is a table where this professional institutions have been listed according to the Six Capitals as well as Governance:

List of memberships that C lover as a company and certain employees belong to

Capitals	Memberships or Professional Institution
Human Capital	Institute of Directors
Natural Capital	Cape of Good Hope Agricultural Society Central Agricultural Society South African Juice Association Milk Producers organisation (part of MilkSA) International Dairy Federation Global Dairy Platform (GDP) Dairy Sustainability Framework (DSF) International Farm Comparison Network (IFCN) South African Society of Dairy Technology
Manufactured Capital	Engineering Council of South Africa National Laboratory Association South African Association of Food Science & Technology South African Institute of Professional Engineers The Institute of Packaging Chartered Institute of Purchasing and Supply
Intellectual Capital	Consumer Goods Council of South Africa Law Society of South Africa
Social and Relationship Capital	Health Professions Council of South Africa South African Reward Association
Financial Capital	South African Institute of Chartered Accountants Chartered Institute of Management Accountants South African Institute of Professional Accountants

In addition to the memberships listed under each of the capitals above, Clover is associated with the following institutions which regulate its broader governance objectives:

The Institute of Risk Management;

• Institute of Compliance;
• The Institute of Internal Auditors; and
• Institute of Directors.

Commercial Sales

Beating the pace of change in existing markets and conquering new markets - this in summary, is the ethos and strategy that Clover’s Commercial Sales department subscribes to.

In existing markets, vertical growth will be achieved by utilising better customer insights, analytics, and research. Leveraging and enhancing existing partnerships will similarly provide further growth.

Conquering new markets will see the Commercial Sales team identifying new and untouched markets. The horizontal growth that Clover requires will be driven by improving existing structures, implementing new/better route-to-market methods, as well as enhancing support systems and processes.

To support the strategy, there is a focused approached from the various key departments that make up the Commercial division i.e. Trade Marketing and Key Accounts, Sales Execution, Category and Sales Development, Customer Service Call Centre and Masakhane (our “Bottom of the Pyramid Route-to- Market” solution).

Future value creation: IBM, leaders of change and innovation

Clover decided to partner with IBM in order to promote its future growth strategy. The IBM/Clover partnership will empower Clover to pull data from multiple sources (internal and external) and unify this in one data repository. The result, Clover will be able to link data from its complex supply chain, right through to customer till points. This project is formally known as the Customer Collaboration Project.

This system fully supports retail partner initiatives aimed at understanding shopper behaviour eg. Pick n Pay’s Smart Shopper and Shoprite’s Dunnhumby. This dynamic, customisable solution will assist Clover in collaborating with retail partners to identify optimal solutions and opportunities that will mutually benefit both the retail partner and Clover.

From a supply chain perspective, it will enhance visibility allowing Clover to improve efficiencies, and develop new route-to-market solutions to promote Clover’s ambition to grow existing and new markets.

Once fully developed and implemented, the solution can be utilised to benefit our valued principals and their businesses.

This investment in advanced analytics will ensure a “quicker, better, faster” and certainly more adaptable Clover.

CLOVER Merchandising is “WAY BETTER ”!

Nationally, Clover has approximately 2 350 permanent merchandisers deployed who provide a service to over 3 000 retail and wholesale outlets. These merchandisers work a maximum of 45 hours per week, and depending on volume and type of outlet, weekend merchandising services are also provided. Clover merchandisers ensure that all Clover and principal products are correctly merchandised in the stores. Merchandisers in collaboration with store management and Clover sales staff are responsible for ensuring that products appear in the correct shelf/placement within the store, are available at all times and in the correct quantities. It involves working closely with the store management team, as well as Clover’s sales and supply teams.

In 2014, Clover rolled out the CAMPRO Project. Part of the project involved using the best practises within Clover and incorporating these practises as standardised steps in an Account Managers call, as well as the Merchandiser processes within stores. The CAMPRO project therefore standardised and improved the “way we worked”. This project is still yielding exceptional results for Clover, so much so that one of our retail partners requested Clover to share this process so that they could incorporate it into their own procedures.

Strategic focus next year will see Clover focusing its efforts in driving perfect store execution at store level. A particular focus will be franchised stores where Clover intends to increases its service level.

In an ever changing Commercial structure, the only constant is the drive for continuous improvement, increased sales and delivery of innovative solutions for both Clover and its principals.

Principals

Despite specialising in distribution and sales of chilled products, Clover also handles a significant basket of non-perishable food products. In leveraging its capabilities, Clover provides sales and/or distribution services to a host of valued principals. Refer here where these principals have been listed.

Information Systems

Clover has an in-house Information Technology Department to support the business on its ERP environment, while also being at the forefront of supplying and developing Clover’s management reporting. Refer to the Governance, Risk and Compliance Report where Clover’s overall IT Governance, including the independent assurance thereof, has been discussed in more detail here.

Clover successfully replaced its legacy order-to-cash system in August 2014 with a commercial off-the-shelf system used in international dairy companies called eRMS (Electronic Route Management System). This enabled Clover to standardise its ERP environment on one platform and to keep up to date with the latest ERP versions and developments. Being on the latest ERP version exposes Clover to the latest developments and improvements within the ERP suite. Clover is accordingly in the process of testing improved components regarding application integration and workflow development. This, among other improvements, will enable Clover to improve its system security and data integrity by implementing improved controls and simplifying integration between applications.

Clover has identified customer collaboration as a critical strategic lever for becoming an essential partner to its retailers. With the assistance from Clover’s IT department, the Commercial Sales division in association with IBM will implement an analytical platform for customer collaboration and data analytics. Once implemented the platform will be expanded to other business areas for improved analytics and business insights. This platform offers many opportunities to other business areas for example in manufacturing where improved analytics around machine maintenance can lead to a major reduction in scrap, downtime and related costs. Another example is the establishment of the ability to have the necessary insights and controls within Clover’s HR and Access Control Systems that will generate further savings and improvements around overtime management.

In addition to Clover’s strategy on Customer Collaboration, there will also be a focus on further improvements by making use of mobile solutions to automate and improve the way we conduct our daily operations. This includes benefits around administration processes that will reduce credit notes, overtime, time spent on driver reconciliations and turn-around times at the back door for deliveries.

Clover is also in the process of implementing an integrated Supply Chain Planning System to ensure that sales, production and logistics planning activities are synchronised to generate benefits like improved order fulfilment, reduced finished goods inventory levels, reduced inventory holding costs, reduced raw material and packaging inventory, reduced waste and improved production throughput. The system will generate the capability to do better tactical and forward scenario planning to make Clover more responsive to market dynamics and will also increase Clover’s demand forecasting accuracy.

The Information Technology Infrastructure is a key platform for the availability and performance of all systems. Clover is continuously evaluating the changing trends in technology to ensure that business gets done as best as possible in order to generate maximum value to our business, customers and shareholders. New technology trends regarding cloud services and outsourcing models are being investigated prior to equipment replacements to ensure that Clover’s operations are fully optimised and to obtain maximum value from our investments in technology.

The adoption of cloud services, big data, collaboration, mobility and analytics are the fundamentals that Clover is focussing on which will be used to assist Clover in achieving its business strategies, improving process efficiencies and enhancing customer experience. Business is all about partnerships and these technologies are the perfect enablers to build and improve on these relationships and to consequently grow our business.

Product Innovation and Technology

Clover is focused on the ongoing revision and revitalisation of its marketing strategy by growing its brand basket and successfully maintaining existing brand market shares. This is done through developing new value added products and leveraging from its existing strong brands in the dairy and beverages categories as well as new market segments to increase Clover’s profitability. New products will either be developed by CIover’s in-house Product Innovation and Technology Department or in co-ordination with a joint venture like partnerships. Clover’s Product Innovation Department (“PIT”) is constantly looking to improve its current product offerings through improved product formulations and improved packaging, working towards ‘greener’ alternatives. These projects initiated also generally result in cost savings. With a dedicated PIT department, Clover is able to constantly evaluate new product opportunities that would complement its existing basket of products. The project engineering section of PIT is responsible for the construction of new factories as well as new production lines according to product specifications determined by PIT. All new lines installed have to meet product quality and safety standards benchmarked against international best practices.

Future value creation

Clover’s brands

• Bolt on additional principals’ products and extract synergistic value
• Bolt on additional brands to Clover’s basket of products
• Moving our brands into Africa and beyond and create greater brand awareness