for the six months ended 31 December 2015 - · PDF file• Industry remains subject to...

CLOVER INDUSTRIES LIMITED:

UNAUDITED INTERIM CONDENSED CONSOLIDATED RESULTS

for the six months ended 31 December

2015 Speakers:

Johann Vorster (CE) & Elton Bosch (CFO)

Date: 02nd and 03rd March 2016

2 for the six months ended 31 December 2015

AGENDA

• Highlights

• Operating environment

• Segmental and product performance

• Group financial results

• Capital projects

• Prospects

• Questions and answers

HIGHLIGHTS

7,9% REVENUE

R5,0 BILLION

7,1% HEPS

117,0 CENTS

10,2% HEADLINE EARNINGS

R219,7 MILLION

5,8% OPERATING

PROFIT

R340,3 MILLION

7,1% TOTAL INTERIM

DIVIDEND PER SHARE

24,2c


MAJOR FACTORS THAT INFLUENCED RESULTS

ECONOMIC CHALLENGES AND HEADWINDS

• Pedestrian growth of economy - SA’s economy only grew 1,3% in 2015

• More incidents of social and political unrest

• Infrastructure constraints – interrupted electricity supply – water quality and availability

• High unemployment and rising interest rates

• Labour costs increasing at a rate higher than inflation

• Macro-economic outlook for sub-Saharan Africa is muted – currency weakness and foreign exchange

liquidity are additional risks

• Growth has slowed in emerging economies – consumer spending not affected to same extent as in SA

• Perceived difficulties in China have increased risk aversion and impacted emerging market currencies,

particularly those in commodity based economies

• Industry remains subject to evolving and increasing regulation

• Further health regulations related to sugar and salt levels are expected in the medium term

• Food safety remains a concern


EXIT OF PRINCIPAL

• The termination of income from a principal of R104 million in the previous

corresponding six month period, led to lower services rendered income for the

reporting period

CYCLICAL SURPLUS OF RAW MILK

• Milk production for 2014/15 was 7,3% higher than the previous year, resulting in

an oversupply of raw milk in the country, and consequently lower selling prices

MAJOR FACTORS THAT INFLUENCED THE COMPANY

EXIT OF PRINCIPAL AND CYCLICAL SURPLUS OF RAW MILK


6.5 6.4 5.8 5.0 4.7

4.3 4.4 4.3 4.4 4.8 4.8 5.9

17.4

15.0 14.3

12.1

9.9 7.9

3.3 4.3

(0.7)

(3.7)

(5.7)

(8.6) (10)

(5)

0

5

10

15

20

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Total food inflation Milk inflation

MAJOR FACTORS THAT INFLUENCED THE INDUSTRY

CYCLICAL NATIONAL SURPLUS AND SELLING PRICES

2015 MILK INFLATION VS. TOTAL FOOD INFLATION – MONTH VS. SAME PERIOD 2014

Source: Total food inflation – www.tradingeconomics.com/Stats SA Source: Milk inflation – Nielsen RMS December 2015

Perc

enta

ge

Management fixed cost levers


MAJOR MANAGEMENT ACTIONS TO MITIGATE CHALLENGES

IN THE ENVIRONMENT, INDUSTRY AND COMPANY

EXIT OF PRINCIPAL

• Clover managed to sign up new principals

• Invested in new product categories such as yoghurt, custard and maas

CYCLICAL NATIONAL SURPLUS

• Enhanced the beverage portfolio

• Developed export market initiative (Mozambique)

• Enhanced distribution reach for the bottom of the pyramid

• Increased efficiencies and cost cutting initiatives

OPERATING

ENVIRONMENT

Presented by: Johann Vorster


2.4%

2.0%

2.3%

3.2%

2.5%

3.4%

3.3%

4.0%

3.0%

3.4% 3.8%

4.1%

Jul Aug Sep Oct Nov Dec

Dec-14 Dec-15

OPERATING ENVIRONMENT

TOTAL RETAIL SALES DATA FOR SOUTH AFRICA

Source: Statistics SA (Statistical Release of Retail Sales Data for December 2014 and 2015)

Year-on-year retail sales volumes for

the six months increased by 3,3%

YEAR-ON-YEAR VOLUME MOVEMENT (%)



TOTAL RETAIL SALES DATA FOR SOUTH AFRICA

Source: Statistics SA (Statistical Release of Retail Sales Data for December 2014 and 2015)

Year-on-year retail sales for the six

months increased by 7,5%

8.5% 8.2% 8.0%

8.6% 8.1%

9.0%

7.2%

7.9%

6.9% 7.4%

7.7% 8.2%

Jul Aug Sep Oct Nov Dec

Dec 14 Dec 15

YEAR-ON-YEAR TOTAL SALES MOVEMENT (%)


Six

months

ended

31 Dec

2014

Six

months

ended

31 Dec

2015


INTERNATIONAL DAIRY COMMODITY PRICES

1. Prices recovered marginally after

another NZ drought and expected

lower supply

2. This was however followed by a

steep decline in world commodity

prices due to the Russian ban on

EU manufactured products and the

softening of the Chinese economy

and market

0

1 000

2 000

3 000

4 000

5 000

6 000

Feb 10 Feb 11 Feb 12 Feb 13 Feb 14 Feb 15

US$

pe

r to

n

Skimmed milk powder Whole milk powder

Source: Calculated by Clover using various international sources


Six

months

ended

31 Dec

2014

Six

months

ended

31 Dec

2015


INTERNATIONAL SMP PRICES IN US$ AND ZAR

1. US$ prices weakened due to the

Russian ban and softening of the

Chinese market

2. The South African Rand weakened

against foreign currencies since

January 2015

3. Although the US$ prices are low,

imports are not that attractive,

due to the weakening Rand

0

10 000

20 000

30 000

40 000

50 000

60 000

0

1 000

2 000

3 000

4 000

5 000

6 000

Feb 10 Feb 11 Feb 12 Feb 13 Feb 14 Feb 15

Ran

d p

er

ton

US$

pe

r to

n

US$/ton ZAR/ton

Source: Calculated by Clover using various international sources



INTERNATIONAL FARM GATE MILK PRICE TRENDS

1. Strong decline in international

prices due to collapse in dairy

commodity prices

2. RSA prices stable throughout

period

3. International prices started to firm

4. Clover’s milk price was decreased

by 60 c/litre on 1 August 2015,

due to a strong oversupply in the

country and resulting lower

market prices

5. The impact of the severe and

prolonged drought in the country

will force producer prices up in

South Africa

Sep

12

Dec

12

Mar

13

Jun

13

Sep

13

Dec

13

Mar

14

Jun

14

Sep

14

Dec

14

Mar

15

Jun

15

Sep

15

Dec

15

EU NZ USA SOUTH AMERICA CLOVER



RSA NATIONAL FARM GATE MILK PRICE TO FEED COST RATIO

Source: Milk Producers Organisation

1. Ratio improved drastically from

early 2014 due to favorable feed

costs and milk price increases

2. Ratio deteriorated dramatically

due to increased feed costs and

lower milk prices during the latter

part of 2015

3. The severe and prolonged drought

in South Africa has resulted in a

continuous increase in feed prices,

due to maize shortages and very

low availability of good quality

roughage

4. The ratio is currently at a level

where the production of raw milk

is de-stimulated and the only short

term solution to protect the raw

milk source is to increase the farm

gate milk prices

1.10

1.20

1.30

1.40

1.50

1.60

1.70

1.80

Jul 0

7

Jan

08

Jul 0

8

Jan

09

Jul 0

9

Jan

10

Jul 1

0

Jan

11

Jul 1

1

Jan

12

Jul 1

2

Jan

13

Jul 1

3

Jan

14

Jul 1

4

Jan

15

Jul 1

5

Rat

io

Actual ratio Break even ratio Linear (Actual ratio)



RSA NATIONAL MILK PRODUCTION

Source: Milk Producers Organisation

1. The national raw milk production was very strong since the latter part of 2014, resulting from a favorable milk price to feed cost ratio which followed through into 2015

2. Milk production for 2014/15 was 7,3% higher than the previous year, resulting in an oversupply of raw milk in the country

3. Although Clover’s unique milk procurement system (CUMPS) protected it from an oversupply of raw milk from its own producers, the group was still exposed to lower prices in the market for dairy products

4. The raw milk in the country started to show a decline from November 2015 and December’s intake was 3,5% below the previous year

Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun

2012/13 2013/14 2014/15 2015/16



CLOVER’S FARM GATE MILK PRICE VS. CPI

1. Clover’s milk prices remained high

during the 2014/15 year:

• Competition after shortage of

raw milk during the last quarter

of the previous financial year

• Volatility in the raw milk market

due to Clover’s cessation of its

milk supply to Danone on

31 December 2014, as well as

fierce competition for raw milk

for cheese production

2. The Farm gate price paid to

producers was lowered by ±60 c on

1 August 2015 due to market forces

and to prevent further exceptional

milk production growth during the

spring and summer of 2015

80

100

120

140

160

180

200

Jul 0

7

Jan

08

Jul 0

8

Jan

09

Jul 0

9

Jan

10

Jul 1

0

Jan

11

Jul 1

1

Jan

12

Jul 1

2

Jan

13

Jul 1

3

Jan

14

Jul 1

4

Jan

15

Jul 1

5

Ind

ex

Farm gate milk price CPI inflated milk price

95% upper control limit 95% lower control limit

Source: Calculated by Clover



TOTAL MARKET VOLUME GROWTH

FOR THE SIX MONTHS TO DECEMBER 2015

Source: Nielsen RMS (total SA incl. all store types)

(2.39)

19.86

(7.13)

13.41

4.97

6.40

(3.19)

7.11

2.82

5.65

(2.57)

3.46

5.77

30.93

(0.88)

5.10

7.87

FRESH MILK (INCL UP MILK)

UHT MILK

RTD FLAVOURED MILK

FRESH CREAM

MAAS

NATURAL PREPACKED CHEESE

PROCESSED CHEESE SLICES

FETA

TOTAL SLFJ

100% SLFJ

NECTAR SLFJ

DFM SLFJ

BUTTER

LIQUID CUSTARD

RTD ICE TEA

YOGHURT

BOTTLED WATER

RTD = Ready to Drink DFM = Dairy Fruit Mix SLPJ = Short Life Pure Juice UP = Ultra Pasteurised

SEGMENTAL AND

PRODUCT PERFORMANCE



47,6% 25,9%

15,5% 8,1% 2,7%

46,9% 35,6%

10,7% 5,8% 0,9%

SEGMENTAL PERFORMANCE

CONTRIBUTION TO CLOVER’S OVERALL REVENUE

AND MARGIN ON MATERIAL (MOM)

Dairy fluids Non-alcoholic

beverages

Dairy concentrated

products

Fermented products

and desserts

Ingredients

Dairy fluids Non-alcoholic

beverages

Dairy concentrated

products

Fermented products

and desserts Ingredients

CONTRIBUTION TO REVENUE

CONTRIBUTION TO MOM

R 2,21bn R 1,20bn R 720m R375m R 125m



REVENUE

100.0%

(14.1%)

13.9%

15.2%

(0.7%)

100.0%

(24.7%)

1.3%

0.7%

(6.7%)

391.3%

10.6%

12.6%

14.5%

6.0%

Fermented Products & Desserts*

Ingredients

Dairy concentrated products

Non-alcoholic beverages

Dairy fluids

Volume growth Price inflation and mix changes Revenue growth

* The Fermented Products and Desserts category does not have comparative figures and thus shows a growth of 100%



MARGIN ON MATERIALS (MOM) %

28.8%

13.4%

27.9%

55.5%

39.9%

0.0%

31.2%

32.6%

52.8%

40.3%

Fermented Products and Desserts

Ingredients

Dairy concentrated products

Non-alcoholic beverages

Dairy fluids

Dec 14 Dec 15



PRODUCT VOLUME GROWTH VS MARKET GROWTH

Total market growth source: Nielsen RMS (total SA incl. all store types)

(2.4

)

19

.9

(7.1

)

13

.4

5.0

6.4

(3.2

)

7.1

2.8

5.6

(2.6

)

3.5

5.8

30

.9

(0.9

)

5.1

7.9

(2.0

)

3.7

(10

.1)

4.2

19

.6 3

7.8

30

.0

14

.5

2.2

(0.5

)

(5.7

)

5.1

(18

.2)

91

.7

(0.6

)

7.9

(1.6

)

FRES

H M

ILK

(IN

CL

UP

MIL

K)

UH

T M

ILK

RTD

FLA

VO

UR

ED M

ILK

FRES

H C

REA

M

MA

AS

NA

TUR

AL

PR

EPA

CK

ED C

HEE

SE

PR

OC

ESSE

D C

HEE

SE S

LIC

ES

FETA

TOTA

L SL

FJ

100%

SLF

J

NEC

TAR

SLF

J

DFM

SLF

J

BU

TTER

LIQ

UID

CU

STA

RD

RTD

ICE

TEA

YOG

HU

RT

BO

TTLE

D W

ATE

R

6-MONTH VOLUME GROWTH 6-MONTH VOLUME GROWTH



DAIRY FLUIDS

Dairy fluid volumes up 6% and MOM % was down by 0,4% to 39,9% due to:

• The volume growth was driven by higher national milk flow of 7,3% in South Africa in the 2015

calendar year

• Industry selling prices remained low throughout the peak milk season, and this increased the overall

growth in the UHT category in particular

• Inventories increased substantially, and to protect its market shares, Clover did not increase dairy

selling prices in July as anticipated

• The total market growth of UHT was at the expense of fresh milk. Clover’s UHT grew 12,9%, while fresh

milk declined by 5,9% in the traditional markets. Clover however benefited from the recently acquired

Nkunzi Milkyway volumes to Woolworths, and this resulted in overall fresh milk growth of 2,8%

• Clover’s UHT underperformed the category growth, but was supported by strong independent

wholesaler sales and increased exports into Mozambique

• Cream declined by 3,7% as a result of machine availability constraints in November and December



CONCENTRATED PRODUCTS

Concentrated volumes were up 12,6% and MOM% down by 4,7% to 27,9% due to:

• The higher national milk flow also resulted in high cheese stock levels that negatively impacted

industry selling prices

• Pre-packed and bulk natural cheese volumes were up 29,9%

• Condensed milk volumes were up 5,4%

• Processed cheese volumes increased by 25,1% of which processed cheese slices grew by 81,3%.

MOM was however negatively impacted as Gouda offcuts had to be sold at very low prices in the bulk

processed cheese market

• Feta cheese volumes were up 20,6% as a result of Clover growing its market share (Clover has been

the market leader since September 2015)

• Branded butter volumes were up 2,5% as a result of a change in consumption favouring high protein

and high fat products



INGREDIENTS

Ingredient volumes up 10,6% and MOM% down by 17,7% to 13,4% due to:

• The national oversupply of raw milk resulting in higher inventory levels in balancing products like SMP,

butter milk powder, and whey, impacting negatively on local market prices. This was further negatively

affected by a steep decline in world commodity prices

• Volume growth was mostly due to increased sales in SMP, butter milk powder, and whey powder,

to clear high inventory levels



NON-ALCOHOLIC BEVERAGES

Beverage volumes up 14,5% and MOM% up 2,6% to 55,5% due to:

• Clover’s brands traded in line with expectations, buoyed by solid demand during

the festive season and volumes increased for most beverages categories

• Clover managed to increase its beverages selling prices in July as anticipated

(as opposed to the dairy portfolio)

• The severe heat wave and drought conditions resulted in an exceptional performance

of the beverage portfolio

• Dairy fruit mix volumes increased 15,3%

• Water volumes were up 24,9%

• Ice Tea volumes were up 13%

• Fruit juice volumes were up 2,6%

• Fruit nectar volumes were up 0,6%

• Flavoured milk volumes were up by 13,3%



FERMENTED PRODUCTS AND DESSERTS

Fermented products and desserts MOM 28,8% and volumes (no base to compare)

• Clover entered the highly competitive yoghurt and custard markets only in January 2015

and achieved higher than anticipated market share targets

• Clover’s maas volumes increased by 54,4% (this was the only product in the portfolio

with previous corresponding volumes)

• Clover’s custard market share reached 8% in December 2015

• Clover’s yoghurt market share reached 9,8% in December 2015

• Clover’s maas market share reached 6,9% in December 2015



MARKET SHARES 3

1.9

%

28

.5%

26

.9%

12 months toDec 13

12 months toDec 14

12 months toDec 15

Fresh and UP milk

17

.0%

17

.7%

17

.6%

12 months toDec 13

12 months toDec 14

12 months toDec 15

UHT milk

4.9

%

9.7

%

12

.0%

12 months toDec 13

12 months toDec 14

12 months toDec 15

Processed cheese slices

41

.8%

45

.4%

48

.4%

12 months toDec 13

12 months toDec 14

12 months toDec 15

Pure juices

35

.0%

30

.4%

33

.9%

12 months toDec 13

12 months toDec 14

12 months toDec 15

Feta cheese (incl. PnP house brand)

33

.6%

32

.7%

30

.1%

12 months toDec 13

12 months toDec 14

12 months toDec 15

Cream



MARKET SHARES 1

0.9

%

10

.4%

9.2

%

12 months toDec 13

12 months toDec 14

12 months toDec 15

Water brands

23

.4%

18

.7%

16

.3%

12 months toDec 13

12 months toDec 14

12 months toDec 15

Fruit drink/nectar

22

.1%

18

.5%

18

.3%

12 months toDec 13

12 months toDec 14

12 months toDec 15

Ice tea

74

.1%

74

.5%

78

.1%

12 months toDec 13

12 months toDec 14

12 months toDec 15

Dairy fruit mix

25

.9%

26

.5%

26

.1%

12 months toDec 13

12 months toDec 14

12 months toDec 15

Flavoured milk

6.6

%

8.3

%

12 months toDec 13

12 months toDec 14

12 months toDec 15

Maas

0.0

%



MARKET SHARES 2

8.4

%

19

.7%

19

.7%

12 months toDec 13

12 months toDec 14

12 months toDec 15

Natural pre-packed cheese

0.0

%

0.0

%

8.3

%

12 months toDec 13

12 months toDec 14

12 months toDec 15

Yoghurt

0.0

%

0.0

%

6.6

%

12 months toDec 13

12 months toDec 14

12 months toDec 15

Custard

GROUP FINANCIAL

RESULTS

Presented by: Elton Bosch


35,4%

(1,4%)

87,5%

7,1%

93,6%

41,2%

89,9%

41,3%

GROUP FINANCIAL RESULTS

EARNINGS AND HEADLINE EARNINGS 7

2.9

14

1.1

19

9.3

21

9.7

1H13 1H14 1H15 1H16

HEADLINE EARNINGS (R’m)

40

.7

46

.4

77

.3

87

.0

10

9.2

11

7.8

11

7.0

11

6.1

Headline earnings per share Earnings per share

1H13 1H14 1H15 1H16

HEADLINE EARNINGS PER SHARE

AND EARNINGS PER SHARE (cents)

10,2%



HEADLINE EARNINGS CALCULATION

R’000

Six months to 31 December

2015

Six months to 31 December

2014

Profit for the year attributable to shareholders of the parent company 218 044 214 890

Gross re-measurements excluded from headline earnings 2 191 (18 542)

Loss on sale and scrapping of property plant and equipment 2 191 5 816

Gain on change of ownership of leased buildings - (24 358)

Impairment of plant and equipment - -

Taxation effects of re-measurements (519) 2 948

Headline earnings attributable to shareholders of the parent company 219 716 199 296



REVENUE

1. Revenue up 7,9%:

• Average deflation 7,7%

• Volume increase of 15,6%

2. CAGR since listing is 8,5%

3 5

90

.1

3 9

09

.5

4 3

17

.2

4 6

59

.4

5 0

25

.4

1H12 1H13 1H14 1H15 1H16

R’m

7,9%



REVENUE (SALE OF PRODUCTS)

1. Revenue up 14,4%:

• Average deflation 1,2%

• Volume increase of 15,6%


3 0

28

.6

3 3

22

.5

3 6

54

.1

4 0

57

.8

4 6

43

.3

1H12 1H13 1H14 1H15 1H16

R’m

14,4%



REVENUE (SALE OF RAW MILK) 1

73

02

5

16

8 8

31

25

5 8

25

14

6 5

53

13

47

7

1H12 1H13 1H14 1H15 1H16

R’0

00

90,8%

1. Supply of raw milk to Danone

phased out during 2014 and came

to an end at 31 December 2014

2. This was at cost to Danone with

no margin



REVENUE (SERVICES RENDERED)


2. Low overall principal volume

growth due to cessation of a

principal contract

3. Full extent of losses largely

mitigated by increased sales of

existing and new products,

as well as income from a new

principal contract entered into

38

6.3

41

5.3

40

4.8

45

3.3

36

3.8

1H12 1H13 1H14 1H15 1H16

R’m

19,7%



GROSS PROFIT %

1. Cost of sales up by 10,7% while revenue

from the sale of product up by 14,4%

2. New products launches necessitated 25,6%

(R20m) increase in cooperative advertising

3. Raw material costs up by 9,8% as a result of

higher sales volumes, inflationary increases

and the weakening Rand

4. Packaging costs up by 18,3% also as a result

of higher sales volumes, inflationary

increases and the weakening Rand

5. Milk collection down 3,4% due to phasing

out of raw milk supply to a principal that led

to more efficient route utilisation

6. Manufacturing costs up 14,4% as a result of:

• New launches that required additional

investments

7. Primary distribution reduced by 2,4%

(R5,4m) due to greater route and cost

efficiency

27

.6%

26

.4%

28

.0%

31

.0%

29

.1%

1H12 1H13 1H14 1H15 1H16



EBIT & EBITDA

1. CAGR in EBIT since listing is 14,1%

2. CAGR in EBITDA since listing is

12,5%

24

1

18

4

29

7

40

1

43

4

18

8

13

8

23

5

32

2

34

0

1H12 1H13 1H14 1H15 1H16

R’m

EBITDA EBIT

EBIT ▲ 70,3%

EBITDA ▲ 61,4%

EBIT ▲ 37,0%

EBITDA ▲ 35,0%

EBIT ▲ 5,8%

EBITDA ▲ 8,2%



EBIT MARGIN

Slight margin decline after:

1. New products necessitated

R21,3m additional investment in

research, development and R20m

more on cooperative advertising

2. 10,7% increase in administrative

costs:

• Provision for profit based

incentives raised as profit

targets were achieved*

5.5

%

3.7

%

5.8

%

7.1

%

6.8

%

5.2

%

3.5

%

5.4

%

6.9

%

6.8

%

1H12 1H13 1H14 1H15 1H16

EBIT % excl raw milk sales EBIT %

* Short term incentives are self funded



EBITDA MARGIN

We maintained the margin after:

1. New products necessitated

R21,3m additional investment in

research, development and R20m

more on cooperative advertising

2. 10,7% increase in administrative

costs:

• Provision for profit based

incentives raised as profit

targets were achieved*

7.1

%

4.9

%

7.3

%

8.9

%

8.7

%

6.7

%

4.7

%

6.9

%

8.6

%

8.6

%

1H12 1H13 1H14 1H15 1H16

EBITDA % excl raw milk sales EBITDA %

* Short term incentives are self funded



PROFIT FOR THE PERIOD

Increase in profit despite:

1. High inventory levels contributed

to increased working capital

requirements. Net finance costs

were R24,5m higher than the

previous period

Increase also attributable to:

1. The effective tax rate was 25,5%

compared to 29,1% during the

previous period

11

0

84

16

4

21

1

21

9

1H12 1H13 1H14 1H15 1H16

R’m

Increased

by 28,5%

Increased

by 4%



CASH FLOW FROM OPERATIONS

1. The 1H12 period benefitted from much lower milk intake than normal due to on-farm cost pressures

1. Clover generated R183,3 million

more net cash from operations

compared to December 2014

2. High inventory levels as at June

2015 required 21,8% less working

capital compared to December

2014

30

3

(21

0)

(2)

(47

)

13

6

1H12 1H13 1H14 1H15 1H16

R’m



CASH FLOW

65

4

38

6

(28

)

(54

)

(38

0)

31

(24

5)

(30

)

(29

)

2

13

8

44

5

47

5

44

8

(54

)

(15

)

(29

7)

0

(17

5)

(7)

(64

)

24

18

2

51

7

Openingcash

balance

EBITadjusted

for non-cashitems

Net financecosts

Tax paid Workingcapital

movements

Capitalproceeds

Capex Acquisitions Dividendspaid

Other Borrowingsraised

Closingcash

balance

R’m

1H15 1H16



GEARING 2

3.9

%

39

.9%

38

.4%

41

.3%

52

.2%

(19

.6%

)

17

.1%

20

.7%

23

.2%

33

.4%

1H12 1H13 1H14 1H15 1H16

Gearing Gearing net of cash



DIVIDENDS

• Stated dividend policy will be applied at the end

of the financial year

• 24,2 cents per share interim dividend declared

• The dividend represents a 7,1% increase over

the interim dividend of 22,6 cents paid during

April 2015 in line with the growth in headline

earnings per share

CAPITAL PROJECTS

Presented by: Elton Bosch


CAPITAL PROJECTS

MAJOR CAPITAL PROJECTS

Estimated capex on replacement and major maintenance for 2015/16 estimated at 125% of 2014/15 depreciation

Description Amount

(Rm) Estimated date of completion

Clayville chilled distribution expansion 111 July 2016

Bloemfontein yoghurt capacity expansion 35 July 2016 (entire project to be completed

by June 2018)

Beverages 45 Dec 2016

IT Collaboration Project 30 May 2016

PROSPECTS



PROSPECTS

• It is anticipated that planned selling price increases will absorb

anticipated inflationary cost increases in the second half of the

year

• The current financial crisis experienced in Nigeria, is a cause of

concern, thus the Group has decided to withdraw from future

investments in Nigeria

• The Group will continue to expand its operations within the BNLS

region, and will continue to pursue export opportunities in Africa

where the currency risks can be mitigated. The capital previously

earmarked for Africa will no longer be spent

• The protracted drought in the country resulted in a shortage of

feed and an increase in on-farm costs, however, Group is

comfortable with its inventory levels for the winter and spring


PROSPECTS (CONTINUED)

• The Company remains focussed on fully utilising its capacities and the asset base that was heavily

invested in during the last five years

• The Company remains focused to continue to invest in newly launched products and to

continuously grow a portfolio that is not exposed to dairy price fluctuations

• Clover will continue to explore local consolidation opportunities to leverage its existing value

chain

• Clover's redesigned strategy since listing and management’s ability to rapidly adapt to market

changes will enable the Company to employ numerous levers to mitigate the major effects of

cyclicality in the business for the next six months

• The company remains optimistic on achieving its full year objectives

Any reference to future performance included herein has not been reviewed and reported on by the company’s auditors and

does not constitute an earnings forecast


APPENDIX

NEW PRODUCTS LAUNCHED OR ACQUIRED

January 2015

Clover Yoghurt

January 2015

Clover Custard

January 2015 Acquired

“Fruits of the Forest” from Dairybelle. This fruit

yoghurt range has been fully

migrated to Clover.

December 2015

Futurelife Smart drink

Clover’s functional smart drink in a joint venture with

Futurelife.


APPENDIX

ACQUISITIONS

June 2015

Clover Milkyway

May 2016

Clover Good Hope

October 2015

Clover acquired

Frankie’s Olde Soft

Drink Company

QUESTIONS

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