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 2018.

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:

	2018  R’m	2017  R’m
Revenue	8 312,5	10 058,6
Total comprehensive (loss)/income attributable to equity holders of the parent Company	(33,1)	141,3

Subsidiary companies and interests in joint ventures

Details of subsidiary companies are reflected in note 30.1 to the financial statements and interests in joint ventures and associate in notes 3.1 and 3.2 to the financial statements.

During the year under review, there were no business combinations. Instead the Group focussed its attention on curbing rising fixed costs and the implementation and realisation of planned supply chain efficiencies. In line with the Group’s stated strategy to expand its portfolio of value added and branded consumer products, the Group continued with the introduction of new value-added products, focusing on the needs of consumers and increased marketing spend to support the strategy, including new product launch activities.

In addition, the Group was successful in the exit and transfer of the cyclical low margin drinking milk business from Clover to Dairy Farmers of South Africa (“DFSA”). The Group currently holds a strategic share of 26% in DFSA and will continue to render services to DFSA for the next 19 years with an option to extend the agreement by another five years. Due to the resignation of the DFSA CEO and Chairman, the Board took a conservative approach and fully impaired the revolving credit facility of R439,0 million as at 30 June 2018. More details can be found in note 13.1.

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

Share capital

Details of the authorised and issued share capital are disclosed in note 18 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 2017 and is valid until 25 November 2018. 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 share capital at the time.

There were no new shares issued during the year under review.

Dividends

Dividends declared and paid by CIL during the year:

	2018  R’000	2017  R’000
Ordinary dividends
Declared and paid	50 686	114 802

The Board declared an interim dividend of R50,7 million (2017: R46,1 million) or 26,56 cents (2017: 24,21 cents) per ordinary share during February 2018. The cash paid in relation to the interim dividend amounted to R50,7 million (2017: R36,9 million cash and R9,2 million by the issue of 482 617 scrip distribution shares). It further declared a final dividend of R92,9 million or 48,68000 cents per ordinary share, bringing the total dividend for the year to R143,6 million (2017: R46,1 million) or 75,24 cents (2017: 24,21 cents) per ordinary share.

Declaration of dividend number 16

Notice is hereby given that the directors have declared a final gross cash dividend of R92,9 million or 46,68000 cents (38,94400 cents net of dividend withholding tax) per ordinary share for the year ended 30 June 2018.

The dividend has been declared from income reserves.

A dividend withholding tax of 20% 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

190 835 364 ordinary shares. The salient dates are as follows:

Last day to trade to receive a dividend	Tuesday, 2 October 2018
Shares commence trading “ex” dividend	Wednesday, 3 October 2018
Record date	Friday, 5 October 2018
Payment date	Monday, 8 October 2018

Share certificates may not be dematerialised or rematerialised between Wednesday, 3 October 2018 and Friday, 5 October 2018, both days inclusive.

Directors and Company Secretary

Particulars of the present directors and Company Secretary are listed here.

Share-based compensation

There were no new share appreciation rights (SARs) awarded during the current year.

Details of SARs issued and vested in terms of the plan are provided in the Remuneration Policy and Remuneration Report contained in the Integrated Report and note 31.

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 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 R214,7 million (2017: R316,9 million) and R3,4 million (2017: R5,7 million) on intangible assets.

Events after the reporting period

Please refer to note 34 and the report on risk which contains a detailed discussion on DFSA and the subsequent decision to contribute an additional R90m.

Special resolutions

The following special resolutions were adopted at the annual general meeting of Clover Industries Limited held on 28 November 2017:

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 2017 was approved.

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 26 September 2018

Johann Vorster Chief Executive Officer