JSE Sens

CLOVER INDUSTRIES LIMITED - Reviewed condensed consolidated financial results for the year ended 30 June 2018 and cash dividend declaration

12 September 2018 - 07:45 AM
CLR
Reviewed condensed consolidated financial results for the year ended 30 June 2018 and cash dividend declaration

Clover Industries Limited 
(Incorporated in the Republic of South Africa)
(Registration Number: 2003/030429/06)
ISIN: ZAE000152377
Share Code: JSE: CLR, NSX:CLN
Bond company code: JSE: CLRI

Reviewed condensed consolidated financial results
for the year ended 30 June 2018
and cash dividend declaration

REVENUE*
UP 7.9%
to R8,3 billion
*Compared to June 2017 adjusted for DFSA restructure

NORMALISED HEADLINE EARNINGS
UP 224.7%
to R394,9 million

NORMALISED EPS
UP 152.9%
to 210,1 cents

REVENUE
DOWN 17.4%
to R8,3 billion

OPERATING PROFIT
UP  94.3%
to R611,0 million

NORMALISED HEPS
UP 223.8%
to 206,9 cents

TOTAL DIVIDEND PER SHARE
UP 210.8%
to 75,24 cents 

Directorate and statutory information  
Directors: non-executive
WI Buchner (Chairman)
SF Booysen (Dr)(#) (Lead Independent)
NV Mokhesi(#)
B Ngonyama(#)
NA Smith 
JW Basson(#) (Appointed 1 January 2018)
JFM Morgan(#)(^) (Appointed 1 January 2018)
(#)Independent
(^)British national

Directors: executive
JH Vorster (Chief Executive) 
FF Scheepers (Chief Financial Officer) (Appointed 1 January 2018)
ER Bosch (Chief Financial Officer) (Resigned 31 December 2017)

Company secretary
J van Heerden 

Ordinary share code                                           Transfer secretary
JSE: CLR, NSX:CLN                                             Computershare Investor Services Proprietary
ISIN: ZAE000152377                                            Limited
Bond code                                                     Rosebank Towers, 15 Biermann Avenue,
JSE: CLRI                                                     Rosebank, 2196
Registered office                                             Auditors
200 Constantia Drive, Constantia Kloof, 1709                  Ernst & Young Inc.
Postal address                                                Bankers
PO Box 6161, Weltevredenpark, 1715                            The Absa Group, Rand Merchant Bank,
                                                              Investec Bank
Telephone
(011) 471 1400                                                Sponsor
                                                              Rand Merchant Bank (a division of FirstRand
Registration number                                           Bank Limited) (JSE)
2003/030429/06
                                                              Merchantec Capital Namibia Proprietary
Tax number                                                    Limited (NSX)
9657/002/71/4

Commentary 

OVERVIEW 
The Board of Clover Industries Limited ("Clover" or "the Group") received unforeseen
notice of the resignation of the DFSA CEO on 11 September 2018. His decision to
resign is understood to be as result of the enormous conflict between losing milk
producers or losing market share during what has been a very challenging time for the 
dairy industry generally. 
  
The Chairman of DFSA also took the decision to resign and to give the opportunity to
the producer shareholders to appoint their own independent chairman and CEO to
take DFSA forward. The DFSA board will begin the process to identify replacements
and the current CEO will stay on until 30 April 2019 to assist with identifying a suitable
replacement and to ensure a seamless handover.

Whilst the Clover Board had received no indications of the resignations at the
time it published its trading statement on 07 August 2018, following yesterday's
announcement, it believed it prudent to adopt a conservative approach and provide
for the full impairment of the R439 million Revolving Credit Facility it extended to
DFSA as at year-end.  

These latest developments should not deter from the exceptional performance
delivered by Clover as highlighted in the normalised results presented below. 

Clover reported an exceptional turnaround from a drought-stricken prior year to
deliver its best financial performance since listing. Strategic efficiency initiatives
implemented by management and the normalisation of external factors enabled the
Group's results to recover to expected profit levels.

To achieve this was hard-fought, as the Group had to counter the impacts of
political instability, poor economic growth, Rand volatility, rising unemployment and
higher electricity and fuel costs, all of which eroded discretional consumer spend
considerably. Added to this, the VAT increase and health promotion levy ("sugar tax")
came into effect as of 1 April 2018, placing further strain on consumers' disposable
income.

Overall trading conditions were difficult and exacerbated by structural changes in the
retail environment which included aggressive pricing from competitors. Additionally,
the listeria outbreak resulted in losses in principal fee income which could not be
replaced during the reporting period.

During the prior year, clear patterns emerged where consumers shopped on
promotions more often and prices of historically premium branded products came
under pressure. This created an environment of fierce competition amongst FMCG
companies to maintain and grow volumes. In addition, the setting of optimal price
points became more important than ever.

As mentioned in previous announcements, Clover's early start during the latter part of
the prior financial year to re-align the business to the new 'normal' through a rigorous
series of efficiency improvement initiatives, enabled management to plough back
savings achieved into selling prices of selected products. This was rewarded by an
overall volume increase of 8,2% and market share growth across a number of product
categories.

Strong growth in value-added dairy fluids as well as fermented products and desserts
together with the rigorous series of efficiency improvement drives culminated in a
strong ending to the financial year.
We are pleased that our financial results returned back to historical levels and show a
significant improvement over the previous financial year.

STRATEGY IN ACTION
Since listing in 2010, we have been working towards diversifying Clover's business
away from low-margin commoditised bulk dairy products, focusing on higher margin,
value-added branded food and beverages to improve operating margins across the
portfolio.

This translated into a medium- to long-term strategy of:
-  promoting and developing value added products in dairy and other related food
   categories;
-  expanding our non-alcoholic beverages portfolio; and
-  developing and enhancing our key competencies in brand development,
   production, distribution and merchandising.

We have made good progress in leveraging our brand to introduce value-added
products in recent years and this year was no exception with the main focus being on
consumer needs and what they perceive as adding value.

Products that were launched recently include Numel, Sip Up, Snack Pack, Cream O'
Naise, Whistling Chef, Bliss Yoghurt Double Cream, Krush flavour extensions, olive oil
and soya products.

To ensure strategic alignment across the Group we have focused on five strategic
areas: 

-  Growth through product and brand development
-  Volume growth and market share recovery
-  Distribution effectiveness and reach (including Africa expansion)
-  Cost management and production efficiencies
-  Win-win stakeholder relationships

Clover is very excited about its renewed strategic focus on value-added products,
driving volumes and expanding into Africa.

FINANCIAL PERFORMANCE
Normalised headline earnings increased by 224,7% or R273,2 million to R394,9 million.
The increase in normalised headline earnings is primarily because of normalised
headline operating profit, which increased by 122,3% or R332,5 million, net finance
costs, which decreased by 29,2% or R38,9 million and normalised headline tax
expense, which increased by 296,2% or R103,9 million. Normalised headline earnings
per share increased by 223,8% (or 143,0 cents).

With the unbundling of Dairy Farmers of South Africa ("DFSA") from the operations of
Clover (effective from 1 July 2017) as discussed in detail in the 2017 integrated report,
the comparative financial information for revenue (comprising mainly of sale of
products and rendering of services), cost of sales and gross profit are not comparable
with the financial information for those line items reported in the June 2017 reporting
period. It will therefore be of more value to compare pro-forma information taking
the effect of the operational restructuring of DFSA into account when commenting
on the current year performance compared to the previous year.

The table below is an extract of the pro-forma comparable information that will
be used for further comments (on a like-for-like basis) on the current year financial
results:

                                                                               30 June
                                                                            2017 after
                                                               30 June    adjusted pro
                                                              2018 (1)       forma (2)
                                                Change      Normalised     adjustments
                                                     %           R'000           R'000
                
Sale of products                                  10,0       6 435 663       5 852 036   
Rendering of services                              2,1       1 873 581       1 834 421   
Sales of raw milk                                                  335          11 907   
Rental income                                                    2 898           3 351   
Revenue                                           7,9        8 312 477       7 701 715   
Cost of sales                                    (6,9)     (5 357 424)     (5 012 009)   
Gross profit                                       9,9       2 955 053       2 689 706   
Other operating income                            38,1          82 913          60 040   
Selling and administration costs                 (1,4)     (2 117 936)     (2 089 364)   
Administrative expenses                            4,0       (273 310)       (284 721)   
Restructuring expenses                            91,4         (4 123)        (48 098)   
Other operating expenses                          35,5        (31 548)        (48 936)   
Operating profit                                 119,3         611 049         278 627   
Finance income                                   (1,8)          47 618          48 499   
Finance costs                                      2,7       (141 880)       (145 765)   
Share of profit in joint venture                  14,2          21 104          18 486   
Profit before tax                                169,2         537 891         199 847   
Taxation                                       (239,4)       (139 509)        (41 105)   
Profit for the year                              151,0         398 382         158 742   
    

Notes:
1.  As per the pro forma consolidated statement of comprehensive income for the year ended 30 June 2018
    as disclosed in Annexure II to the condensed consolidated financial results for the year ended 30 June
    2018. 
2.  As per the pro forma consolidated statement of comprehensive income for the year ended 30 June
    2017 as disclosed in Annexure I to the condensed consolidated financial results for the year ended 30
    June 2018. Please refer to Annexure I for more details regarding the basis for the pro forma consolidated
    statement of comprehensive income. 

Revenue 
Revenue increased by 7,9% or R 610,8 million to R8 312,5 million. Sale of products
showed an increase of 10,0% to R6 435,7 million

                                                                 30 June
                                                                    2017
                                                    30 June     adjusted     30 June
                                                       2018    excluding     2017 as
                                        Change     Reviewed         DFSA    reported
                                             %        R'000        R'000       R'000
             
Revenue from sale of                                                                   
products                                  10,0    6 435 663    5 852 036   9 401 842   
- Non-alcoholic beverages                  1,7    2 409 724    2 369 071   2 369 071   
- Concentrated products                   13,7    1 492 849    1 312 575   1 312 575   
- Value-added dairy fluids                12,5    1 230 831    1 093 794   4 643 600   
- Fermented products and desserts         25,7      998 847      794 403     794 403   
- Ingredients                           (18,5)      176 484      216 424     216 424   
- Olive oil and soya                      93,0      126 928       65 769      65 769   
           

The increase of 10,0% in revenue from sale of products, compared on a like-for-like
basis, was achieved through increased volumes in certain categories - most notably
in fermented products and desserts (up 25,7%) as well as value-added dairy fluids
(up 12,5%) where optimal pricing was rewarded with higher volumes. In the dairy
concentrated product category (up 13,7%), the shortage of butterfat during most part
of the year led to above-inflationary price increases on butter, but lower volumes,
whilst volumes in cheese increased on the back of no price increases.

Services rendered to principals contributed R1 873,6 million to revenue, which is
moderately up by 2,1% or R 39,3 million on a comparable like-for-like basis. The
moderate growth in rendering of service income was primarily because of the
subdued market conditions of our principals, as well as the outbreak of listeriosis,
which led to the withdrawal of products by one of our principals. The creation
of DFSA saw services rendered revenue increase substantially, but strain on the
consumer and price pressure on non-value-added drinking milk subdued volume
growth, which resulted in service fee income to Clover also coming under pressure.
Clover will continue to maximise the return on its distribution and merchandising
infrastructure with new product listings and signing of new principals.

Cost of sales
Cost of sales increased by 6,9% or R345,4 million compared on a like-for-like basis.
This compares favourably to the 7,9% increase in total revenue. Savings were achieved
through a continued and intense focus on efficiencies, recipe reformulations and
robust retendering drives on input costs such as ingredients and packaging material.
Pressure on primary distribution cost, driven by fuel inflation and transport of product
between factories and distribution centres eroded some of the gains. As a result, the
like-for-like gross profit margin increased from 34,9% to 35,5%.

Other operating income
Other operating income of R82,9 million includes:
-  R25,3 million royalty income earned from DFSA;
-  R25,2 million from supplier settlement claims;
-  R1,3 million from the sale of PPE;
-  R4,5 million gain from unbundling of DFSA;
-  R3,6 million gain from fair value adjustments;
-  Sundry income of R12,1 million, largely from the head office canteen.

Operating costs
Selling and distribution costs increased marginally by 1,4% or R28,5 million. As
explained in the prior year Clover's staff structure was optimised and new positions
were limited, except for the Masakhane roll-out for which the Group received grant
funding income from the DTI of R13,7 million. The benefits of these initiatives led to
below inflationary costs increases.

In total, Clover spent 6,3% or R15,4 million more on advertising, marketing, research
and development costs compared to the prior year. Advertising spend was allocated
to activities to achieve volume growth in the current year as well as to promote new
product launches, innovation on existing product groups and the re-launch of the
Clover mother brand which was met with great excitement and response from the
market.

Approximately R4,1 million was spent on retrenchment and asset relocation costs,
which are classified as restructuring expenses. Restructuring expenses are notably
down when compared to the previous year and relate primarily to the cost of
relocating assets as part of project Sencillo (asset optimisation drive).

FINANCIAL POSITION AND CASHFLOW 
Clover has invested methodically in acquisitions as well as capacity building and
rightsizing of factories and distribution assets to support our high standards on
product quality and growth ambitions. The level of investment required to support
Clover's outstanding reputation for quality is balanced by our ambition to grow
through acquisitions and internal development of brands and products.

Clover invested R214,7 million (compared to R316,9 million in the prior year) on
capitalised maintenance, factories, IT upgrades and other tangible assets. The net
decrease in property, plant and equipment and intangible assets amounted to
R33,6 million, made up by R 218,1 million additions, less R228 million depreciation
and the balance to disposals, transfer to held for sale and scrapping of assets.

As part of the operational restructure the Group made available a revolving credit
facility ("RCF") of R550,0 million to DFSA, in order for DFSA to fund its operations
and the inventory it initially acquired from the Group at the time the DFSA business
was established. The facility has been made available to DFSA for an initial period
of 20 years and the available facility will increase annually with CPI. The balance
outstanding on the facility was R439,0 million at the end of the reporting period. The
Board decided to fully impair the aforementioned outstanding facility of R439 million.

The advance of the RCF was the primary reason that investment activities consumed
R578,7 million in cash compared to R277,7 million in the previous year.

Since milk inventory such as UHT is no longer carried by Clover, inventory levels
decreased by 9,9% or R95,6 million in comparison to the previous corresponding
reporting period. Given that DFSA no longer forms part of the Group, the decrease
in inventory would be expected to be more (than the decrease currently reflected),
however, inventory carried on value added products increased because of normal
business growth and new products added to Clover's portfolio.

Trade and other receivables increased by 10,3% or R 137,7 million. The increase was as
a result of manufacturing, distribution and sales and mechanising services rendered to
DFSA as well as volume growth achieved in the current period.

Trade and other payables increased by R401,5 million or 31,5%. This increase is driven
by the addition of DFSA as a principal, where Clover collects sales revenue on behalf
of DFSA and pays the same over to DFSA on 30 days from statement basis. Clover
also negotiated more favourable payment terms with certain suppliers.

Cash generated from operations, before working capital changes, totalled
R769,5 million compared to R439,2 million reported in the prior year. Improved cash
generation was primarily due to the higher normalised profit recorded as explained
above and a reduction in finance changes. In the current year, the decrease in
working capital generated R348,2 million of cash compared to the R162,2 million of
the prior year.

Higher operating profit, a lowered investment in working capital, and contained
capital expenditure were the primary contributors to a R131,2 million net decrease on
interest bearing debt (both current and non-current).

MATERIAL RISKS AND MITIGATING ACTIONS

DFSA's future sustainability 
DFSA's future sustainability will have an impact on Clover's services rendered income
and the recoverability of the RCF as discussed below.

DFSA incurred a loss of R128,8 million for the financial year ended 30 June 2018
mainly as a result of national milk surpluses which was stimulated by higher milk
prices paid to milk producers from July 2017 through to December 2017 as well as
favourable weather conditions over most parts of the country during the summer
months.

The above mentioned was compounded by favourable exchange rates which created
room for cheap imports of UHT milk which has put tremendous pressure on the
recovery of sustainable pricing on non-value-added milk and commodity related milk
products in the market. These conditions have put strain on the local milk industry
and DFSA in particular.

At current market pricing some of DFSA's volumes could be at risk, which could
also impact service fees Clover generates through DFSA on volumes processed
through Clover's factories and distribution channel. However, the volumes from the
non-value-added drinking milk business have been relatively stable over the last 5
years.

Cyclicality is not uncommon in the dairy industry and experience shows that surplus
years, which lead to a reduction in the milk price paid to producers are followed by
a recovery of the industry as normal market forces lead to a natural decrease in raw
milk availability and consequential recovery of sustainable pricing in the market as
well as prices paid to milk producers.

Historically, the dairy business transferred to DFSA has been exposed to seasonal
cyclicality from time to time and therefore it will not be possible to synchronise prices
paid to producers with prices recouped in the market within a specific financial year
or cycle. A longer investment horizon is required to establish a trendline. The below
sets out the historical performance of the non-value added dairy business when it
was part of Clover's product portfolio:

-  2012/2013 - Operating loss of R62,7 million;
-  2013/2014 - Operating loss of R126,4 million;
-  2014/2015 - Operating profit R60,5 million;
-  2015/2016 - Operating profit R77,0 million; and
-  2016/2017 - Operating profit R23,8 million.

Based on the above, it is not unexpected that DFSA may make losses, however, as
market forces align (i.e. supply and demand), it is expected that profits and losses will
balance out.

In view of future sustainability, DFSA implemented a strategy to navigate through the
current down cycle by introducing a new system whereby it will adjust the milk price
paid to producers on a more frequent basis, depending on the market conditions that
influence DFSA's financial performance against budget.

The above has been put into practice and DFSA announced a milk price reduction to
producers effective 1 August 2018. The board of DFSA further decided that a portion
of the aforementioned reduction will be placed into a restricted reserve to assist DFSA
to strengthen its balance sheet.

As a result of continued strong milk flow and the muted economy, selling prices
in the trade remained under pressure and DFSA announced a further milk price
reduction on 31 August, which will be effective 1 October 2018.

The above confirms the implementation of DFSA's board decision and the
subsequent communication to milk producers that DFSA would adjust the milk price,
depending on DFSA's actual financial performance against its budgeted financial
performance.

DFSA has committed to build up a reserve of R90 million as alluded to above.

Clover has an interest in the stability and growth of DFSA, as growth in volumes will
directly benefit services income and the dilapidation of volumes will negatively affect
Clover's services income and profitability.

Clover will therefore also make a R 90 million cash injection in DFSA that will
be capitalised once shareholder approval is obtained as required by DFSA's
Memorandum of Incorporation. This will not increase Clover's voting rights or
shareholding and underpins Clover's ongoing commitment to support its milk source,
service fees and the sustainability of DFSA. Clover's capitalisation of DFSA and the
build-up of the aforementioned reserve by DFSA will add stability to DFSA to navigate
through future cycles.

Based on the steps taken as explained above, Clover is comfortable that the risk
identified is inherent to the industry and can be managed as has been the case in the
past.

Clover has granted DFSA two 20 year revolving credit facilities (RCF) of R450 million
and R100 million respectively repayable. Given the loss situation, management
tested the revolving credit facility for impairment in terms of IAS39 and other
recognised impairment tests. Due to untenable tension between losing milk
producers or losing markets, the CEO of DFSA has resigned with effect from 30 April
2019.  Unfortunately, the Chairman of DFSA also resigned, and felt it prudent that the
producer shareholders appoint their own new independent chairman along with a
new CEO. Given the imminent change of leadership of DFSA, the board of Clover
decided to rather impair the full RCF of R439 million although the accumulated loss
at 30 June 2018 is only R135 million. The impairment of the RCF will be assessed on
a continuous basis, taking into consideration the lien that Clover holds over the DFSA
inventory and debtors' balances that is being controlled/managed by Clover as part of
Clover's services rendered agreement, as well as the DFSA board approved plans to
manage the business through the cycle.

As the revolving credit facility was granted over a period of 20 years, repayment is not
expected over the short-term.

Changes in competitive landscape
Increased competition for consumer spend from retailer own brands, other branded
dairy offerings and retail centralisation.

Following a thorough strategic review of the business environment and the expected
continued muted economic environment, efficiency drives in Clover's infrastructure
have been introduced to adapt to changes in the competitive landscape, which will
bode well for future cost savings.

Clover embarked on continued cost savings through various initiatives including
Project Sencillo to improve efficiencies in the supply chain and Project Meglio
to reduce product unit cost from recipe reformulations. Product Innovation and
Technology ("PIT") is considering further product reformulations.

Re-strategise and optimise costs for specific retailer changes in distribution model to
ensure Clover remains cost competitive in each of the distribution channels affected.

Principal income 
Principal income under pressure and loss of principal income.  

On 5 September 2018, Remgro gave notice of termination of distribution and
warehousing services relating to the margarine and spread business. The distribution
agreement will terminate 3 March 2019. 

Management will continue to identify new principals and alternative distribution
opportunities.

Clover is focused on enhancing its distribution model to extract efficiencies.

Expansion opportunities of Clover's merchandising services is currently being
considered as a growth area.

Volatile labour environment
Volatile labour environment with increased pressure on labour costs.

Communication channels with labour are being enhanced to address business risks.

Business continuity plans have been updated to mitigate potential industrial action.

Arbitration channels employed to amicably settle wage disputes.

Non-compliance with legislation
Non-compliance with legislative requirements.

Clover established a Competition Law Policy with continuous compliance monitoring
and training of personnel.

Clover established the Competition Law Centre of Excellence and is supported by
Herbert Smith Freehills LLP.

Clover implemented a process to ensure compliance to the Health Promotion Levy
on sugary beverages.

Clover is in process to evaluate the impact of upcoming legislation such as POPIA,
Carbon Tax and AARTO.

Food health and safety
Stricter regulatory compliance is expected to promote consumer health and safety.

All South African Clover factories are HACCP certified and accredited by third-party
auditors.

In line with international best practices for quality, hygiene and food safety Clover
has accredited systems and processes in place according to which products are
produced.

Clover is a FSSC 22000 accredited manufacturer of food and beverages. Clover's
food safety systems comply with international standards. 

PROSPECTS
Whilst it is pleasing to see normalised profitability levels returning to expected levels,
the challenging macroeconomic and trading conditions experienced this year are
expected to continue over the next year.

Specifically, inflationary cost pressures in the form of wages, fuel and electricity
will continue to take their toll on consumers opting for cheaper alternatives while
trade competition for growth and market share remains a key challenge as a
disproportionate number of promotions lead to erosion of margins.

Additionally, the milk flow may affect DFSA volumes through our network which
adds to the impact of the depressed processed meat market on principal volumes
following the listeria outbreak.

Against this backdrop, Clover has secured strategic trading partnerships and is
confident that it can provide cost and value effective solutions to alleviate the
pressure faced by consumers.

The strategy to grow value added products that places consumers' perceptions
of what value means front of mind continues to be implemented in a responsible
and sustainable way while efficiency drives will remain a key focus into the future.
Management will continue to drive volumes and market shares and expand our
value-added product portfolio which is now a core business focus. 

We are optimistic that the actions taken will ensure that the business is managed
successfully through potential downward cycles and will support Clover's continued
drive for improvement in profitability levels over the short to medium term. 

Unfortunately, we have been given notice of termination of the distribution and
warehousing services relating to the Remgro margarine and spreads business with
effect from 3 March 2019. We are however, in the process of developing plans to
mitigate the loss of this service income. On a positive note, this will provide us with an
opportunity to potentially enter the margarine market. 

DIVIDEND DECLARATION
Notice is hereby given that the directors have declared a final gross cash dividend of
R92,9 million or 48,68000 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 will be 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. 

On behalf of the Board  




WI Buchner                                                          JH Vorster
Chairman                                                            Chief Executive 
11 September 2018                            

Condensed consolidated statement of comprehensive Income
For the year ended

                                                                                                    30 June       30 June   
                                                                                                       2018          2017   
                                                                                                      R'000         R'000   
Sale of products                                                                                  6 435 663     9 401 842   
Rendering of services                                                                             1 873 581       641 499   
Sale of raw milk                                                                                        335        11 907   
Rental income                                                                                         2 898         3 351   
Revenue                                                                                           8 312 477    10 058 599   
Cost of sales                                                                                   (5 357 424)   (7 333 041)   
Gross profit                                                                                      2 955 053     2 725 558   
Other operating income                                                                               82 913        60 040   
Selling and distribution costs                                                                  (2 117 936)   (2 089 364)   
Administrative expenses                                                                           (273 310)     (284 721)   
Restructuring expenses                                                                              (4 123)      (48 098)   
Other operating expenses                                                                           (31 548)      (48 936)   
Operating profit                                                                                    611 049       314 479   
Impairment of revolving credit facility to DFSA                                                   (439 042)             -   
Finance income                                                                                       47 618        12 647   
Finance cost                                                                                      (141 880)     (145 765)   
Share of profit of a joint venture after tax                                                         21 104        18 486   
Profit before tax                                                                                    98 849       199 847   
Taxes                                                                                             (139 509)      (41 105)   
(Loss)/profit for the year                                                                         (40 660)       158 742   


                                                                                                    30 June       30 June   
                                                                                                       2018          2017   
                                                                                                      R'000         R'000   
(Loss)/profit for the year (carried forward from the previous page)                                (40 660)       158 742   
Other comprehensive income                                                                                                  
Other comprehensive income to be reclassified to profit or loss in subsequent periods:                                      
Exchange differences on translations of foreign operations, net of tax                                7 523      (14 510)   
Exchange differences on translations of foreign operations                                            7 523      (14 510)   
Reclassified to profit or loss                                                                            -             -   
Income tax effect                                                                                         -             -   
Net gain/(loss) on cash flow hedges, net of tax                                                           -       (2 412)   
Cash flow hedge fair value adjustment                                                                     -       (9 294)   
Reclassified to profit or loss                                                                            -         5 944   
Income tax effect                                                                                         -           938   
Net other comprehensive income/(loss) to be reclassified to profit or loss in subsequent periods      7 523      (16 922)   
Total comprehensive (loss)/income for the year, net of tax                                         (33 137)       141 820   
(Loss)/profit for the year attributable to:                                                                                 
Equity holders of the parent                                                                       (38 021)       158 258   
Non-controlling interests                                                                           (2 639)           484   
                                                                                                   (40 660)       158 742   
Total comprehensive (loss)/income attributable to:                                                                          
Equity holders of the parent                                                                       (30 498)       141 336   
Non-controlling interests                                                                           (2 639)           484   
                                                                                                   (33 137)       141 820   


Headline earnings and headline earnings per share
For the year ended

                                                                                                    30 June       30 June   
                                                                                                       2018          2017   
                                                                                                      R'000         R'000   
Headline earnings calculation                                                                                               
(Loss)/profit for the year attributable to equity holders of the parent company                    (38 021)       158 258   
Gross remeasurements excluded from headline earnings                                                (6 709)      (42 674)   
Profit on sale of property, plant and equipment and gains on other assets                           (1 273)      (33 404)   
Non controlling interest portion in loss on sale of property, plant and equipment                     (753)             -   
Profit on unbundling of Dairy Farmers of South Africa                                               (4 483)             -   
Profit on the sale of an investment in subsidiary                                                     (200)       (9 270)   
Taxation effects of remeasurements                                                                      542         6 033   
Headline (loss)/earnings attributable to shareholders of the parent company                        (44 188)       121 617   
Issued ordinary shares                                                                          190 835 364   190 835 364   
Number of ordinary shares used in the calculation of:                                                                       
Earnings per share                                                                                                          
- weighted average                                                                              190 835 364   190 433 237   
Diluted earnings per share                                                                                                  
- weighted average                                                                              192 680 105   192 358 073   
Earnings per share attributable to ordinary equity holders of the parent                                                    
(Loss)/Earnings per share (cents)                                                                    (19.9)          83.1   
Diluted (loss)/earnings per share (cents)                                                            (19.7)          82.3   
Headline (loss)/earnings per share (cents)                                                           (23.1)          63.9   
Diluted headline (loss)/earnings per share (cents)                                                   (22.9)          63.2   


Condensed consolidated statement of financial position
As at

                                                                                                    30 June       30 June   
                                                                                                       2018          2017   
                                                                                                      R'000         R'000   
ASSETS                                                                                                                      
Non-current assets                                                                                                          
Property, plant and equipment                                                                     2 417 791     2 427 444   
Investment properties                                                                                     9             9   
Intangible assets                                                                                   626 671       650 663   
Investment in joint venture                                                                          46 035        38 946   
Other non-current financial assets                                                                    5 781         3 165   
Deferred tax assets                                                                                  30 203        45 496   
                                                                                                  3 126 490     3 165 723   
Current assets                                                                                                              
Inventories                                                                                         869 091       964 630   
Trade and other receivables                                                                       1 479 090     1 341 311   
Prepayments                                                                                          16 829        19 844   
Income tax receivable                                                                                 3 702         7 165   
Cash and short-term deposits                                                                        760 693       544 863   
                                                                                                  3 129 405     2 877 813   
Assets classified as held-for-sale                                                                    2 719         4 607   
Total assets                                                                                      6 258 614     6 048 143   


                                                                                                    30 June       30 June   
                                                                                                       2018          2017   
                                                                                                      R'000         R'000   
EQUITY AND LIABILITIES                                                                                                      
Equity                                                                                                                      
Issued share capital                                                                                  9 542         9 542   
Share premium                                                                                       892 692       892 692   
Other capital reserves                                                                              105 689        78 642   
Foreign currency translation reserve                                                                 17 160         9 637   
Retained earnings                                                                                 1 817 322     1 904 349   
Equity attributable to equity holders of the parent                                               2 842 405     2 894 862   
Non-controlling interests                                                                          (17 818)      (15 179)   
Total equity                                                                                      2 824 587     2 879 683   
Liabilities                                                                                                                 
Non-current liabilities                                                                                                     
Interest-bearing loans and borrowings                                                               665 059       767 621   
Non-controlling interest put liability                                                               23 226        57 088   
Employee-related obligations                                                                         75 424        82 595   
Deferred tax liability                                                                              260 309       221 065   
Trade and other payables                                                                             11 448        25 492   
Other non-current financial liabilities                                                               2 776         9 683   
                                                                                                  1 038 242     1 163 544   
Current liabilities                                                                                                         
Trade and other payables                                                                          1 676 176     1 274 700   
Interest-bearing loans and borrowings                                                               685 691       714 304   
Other current financial liabilities                                                                  13 639         6 141   
Employee-related obligations                                                                         20 279         9 771   
                                                                                                  2 395 785     2 004 916   
Total liabilities                                                                                 3 434 027     3 168 460   
Total equity and liabilities                                                                      6 258 614     6 048 143   


Condensed consolidated statement of changes in equity
For the year ended

                                                                                                    30 June       30 June   
                                                                                                       2018          2017   
                                                                                                      R'000         R'000   
Balance at 1 July                                                                                 2 879 683     2 888 717   
Profit for the year                                                                                (40 660)       158 742   
Other comprehensive income                                                                            7 523      (16 922)   
Total comprehensive income                                                                         (33 137)       141 820   
Ordinary shares issued                                                                                    -           731   
Share-based payment (credit)/expense recognised                                                     (2 593)         5 865   
Share appreciation rights exercised, net of tax                                                     (2 636)       (1 012)   
Non-controlling interest arising from business combination                                                -        24 234   
Non-controlling interest put option movement                                                         33 863      (57 088)   
Acquisition of non-controlling interest                                                                   -       (8 354)   
Dividends to non-controlling interest                                                                     -         (490)   
Dividends                                                                                          (50 686)     (114 802)   
Dividends forfeited                                                                                      93            62   
Balance at end of the year                                                                        2 824 587     2 879 683   
Consists of:                                                                                                                
Share capital and premium                                                                           902 234       902 234   
Other capital reserves                                                                              105 689        78 642   
Foreign currency translation reserve                                                                 17 160         9 637   
Retained earnings                                                                                 1 817 322     1 904 349   
Shareholder equity                                                                                2 842 405     2 894 862   
Non-controlling interest                                                                           (17 818)      (15 179)   
Total equity                                                                                      2 824 587     2 879 683   


Condensed consolidated statement of cash flows
For the year ended

                                                                                                    30 June       30 June   
                                                                                                       2018          2017   
                                                                                                      R'000         R'000   
OPERATING ACTIVITIES                                                                                                        
(Loss)/profit before tax                                                                             98 849       199 847   
Adjustment for non-cash items                                                                       755 100       286 451   
Working capital adjustments                                                                         348 207     (162 227)   
Income tax paid                                                                                    (84 424)      (47 115)   
Net cash flows (used in)/from operating activities                                                1 117 732       276 956   
INVESTING ACTIVITIES                                                                                                        
Proceeds from sale of property, plant and equipment and other assets                                 32 965        58 941   
Interest received                                                                                    47 618        12 647   
Unbundling of Dairy Farmers of South Africa Proprietary Limited                                     (2 020)             -   
Acquisition of controlling interest in Clover Pride Proprietary Limited                                   -      (29 639)   
Disposal of controlling interest in Lactolab Proprietary Limited                                          -        10 275   
Revolving credit facility granted to Dairy Farmers of South Africa Proprietary Limited            (439 042)             -   
Capital expenditure: Tangible and intangible assets                                               (218 168)     (322 554)   
Cancellation of a finance lease                                                                           -         3 854   
Realised foreign exchange loss                                                                            -      (11 232)   
Net cash flows used in investing activities                                                       (578 647)     (277 708)   
FINANCING ACTIVITIES                                                                                                        
Interest paid                                                                                     (112 362)     (145 765)   
Dividends paid                                                                                     (50 593)     (115 230)   
Non-controlling interest acquired in Clover Frankies Proprietary Limited                                  -       (4 440)   
Cancellation of a finance lease                                                                           -       (3 854)   
Repayment of borrowings                                                                           (313 333)     (285 668)   
Proceeds from borrowings                                                                            150 000       496 975   
Net cash flows from financing activities                                                          (326 288)      (57 982)   
Net (decrease)/increase in cash and cash equivalents                                                212 797      (58 734)   
Net foreign exchange difference                                                                       3 033         (474)   
Cash and cash equivalents at the beginning of the year                                              544 863       604 071   
Cash and cash equivalents at the end of the year                                                    760 693       544 863   


Accounting policies and notes 

1.    CORPORATE INFORMATION AND BASIS OF PREPARATION 
      These condensed consolidated financial results have been prepared in accordance with the framework concepts and the measurement and recognition requirements of
      International Financial Reporting Standards (IFRS), its interpretations issued by the IFRS Interpretations Committee, the SAICA Financial Reporting Guides as issued by the
      Accounting Practices Committee and Financial Pronouncements as issued by the Financial Reporting Standards Council, presentation and disclosure as required by IAS 34
      Interim Financial Reporting, the JSE Listings Requirements and the requirements of the Companies Act of South Africa. The accounting policies are consistent in all material
      respects with those of the previous annual financial statements. New and amended IFRS and IFRIC interpretations were adopted by the Group during the year but these did not
      have an impact on the Group.  

2.    SEGMENT REPORTING
      The Group's manufacturing, distribution, other assets and liabilities are totally integrated between the different product groups. The Chief Executive Officer (the Chief Operating
      Decision Maker) is of the opinion that the operations for individual manufacturing, distribution and product groups are substantially similar to one another and that the risks and
      returns are likewise similar. As a result thereof, the business of the Group is considered to be a single segment, namely Clover Industries Limited ("CIL"). 

      Group operations outside of South Africa are insignificant and therefore not disclosed separately.

      The following information regarding the Group's product groups, for which no discrete financial information is available, are presented on a voluntary basis. The Group
      comprises the following main product groups: 

      -  The value-added dairy fluids products are focused on providing the market with quality value- added dairy fluid products.
      -  The dairy concentrated products consist of cheese, butter, condensed milk and retail milk powders.
      -  The ingredients products consist of bulk milk powders, bulk butter, bulk condensed milk, bulk creamers, calf feed substitutes, whey powder and buttermilk powder.
      -  The non-alcoholic beverages products focus on the development and marketing of non-alcoholic, value-added branded beverages products.
      -  The fermented products and desserts consist of yoghurt, maas and desserts
      -  The soya and oil products consist of soya, olive oil and olives.
      -  The services rendered product group consists of sales, merchandising, warehousing and distribution services rendered to principals

      For the year ended                                                                     30 June 2018    30 June 2017   
                                                                                                    R'000           R'000   
      External revenue from sale of products(*)                                                                              
      Value-added dairy fluids                                                                  1 230 831       4 643 600   
      Dairy concentrated products                                                               1 492 849       1 312 575   
      Ingredients                                                                                 176 484         216 424   
      Non-alcoholic beverages                                                                   2 409 724       2 369 071   
      Fermented products and desserts                                                             998 847         794 403   
      Olive oil & Soya                                                                            126 928          65 769   
      External revenue from rendering of services                                               1 873 581         641 499   
                                                                                                8 309 244      10 043 341   
      Margin on material(#)                                                                                                   
      Value-added dairy fluids                                                                    488 000       1 764 858   
      Dairy concentrated products                                                                 545 152         393 180   
      Ingredients                                                                                  64 916          71 265   
      Non-alcoholic beverages                                                                   1 364 817       1 288 742   
      Fermented products and desserts                                                             356 935         220 274   
      Olive oil & Soya                                                                             38 608          29 714   
      Services rendered                                                                         1 873 581         641 499   
                                                                                                4 732 009       4 409 532   
  

      (*) External revenue excludes revenue from the sale of raw milk. 
      (#) Margin on material and revenue from services rendered consist of sale of products plus sale of raw milk plus 
          revenue from services rendered less charges against sales, cost of material and packaging and milk collection cost.

      Assets, liabilities and overheads are managed on a Group basis and are therefore not allocated to the product groups. 
      The Group operates mainly in the geographical area of South Africa. The revenue and assets of the operations outside South Africa are insignificant. 
3.    EARNINGS PER SHARE
      The difference between earnings per share and diluted earnings per share is due to the impact of equity settled unexercised share appreciation rights. 

4.    PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS
      During the year under review the Group acquired property, plant and equipment (PPE) to the value of R214,7 million (2017: R316,8 million) and also acquired intangible assets
      at a cost of R3,4 million (2017: R5,7 million). During the year PPE with a book value of R26,2 million (2017: R14,2 million) was disposed or scrapped. 
      Certain items of property, plant and equipment have been classified as assets classified held-for-sale. It is those assets that are expected to be disposed of within the
      next 12 months. 

5.    ASSETS CLASSIFIED AS HELD FOR SALES
      An offer to purchase was received by CSA for the property (land and buildings) situated at Bethlehem but the transfer was not yet finalised as at 30 June 2018. Transfer took
      place after year end. The balance at year end represents only the Bethlehem property. 

6.    OTHER COMPONENTS OF EQUITY
      Other comprehensive income:
      The disaggregation of changes of other comprehensive income (OCI) by each type of reserve in equity is shown below:  
      
      Foreign currency translation reserve                                        As at 30 June 2017   As at 30 June 2018   
                                                                                               R'000                R'000   
      Foreign exchange translation differences in OCI                                       (14 510)                7 523   
      Total movement                                                                        (14 510)                7 523   
 

7.    UNBUNDLING OF DFSA  
      Effective 1 July 2017, Clover Industries indirectly holds a 26% voting rights (0% economic interest) in the form of A-shares in DFSA through Clover SA. The A-shares do not share
      in profits of DFSA while the B-shares held by the producers of DFSA do share in profits. 
      Previously, when DFSA was a subsidiary of the Clover Group, all intercompany balances would have been eliminated on a group consolidated basis. However, with the
      unbundling of DFSA, the balances as at 30 June 2018 owing to and from the Group now reflect as part of "trade and other receivables", "trade and other payables" and "other
      non-current financial assets" respectively as follows:
      
      Trade and other receivables                                                                                   R'000   
      Trade and other receivables (excluding DFSA)                                                              1 299 150   
      DFSA trade account                                                                                          179 940   
      Total                                                                                                     1 479 090   
      Trade and other payables                                                                                      R'000   
      Trade and other payables (excluding DFSA)                                                                 1 260 738   
      DFSA trade account and milk purchases                                                                       426 886   
      Total                                                                                                     1 687 624   
      Other non-current financial assets                                                                            R'000   
      Other non-current financial assets (excluding DFSA)                                                           5 781   
      DFSA revolving credit facility                                                                                    *   
      Total                                                                                                         5 781   


      *The revolving credit facility ("RCF") is repayable by DFSA on the 20th anniversary from the effective date and bears interest at the average cost of debt to the Group. The RCF
      with a balance of R439 million at year-end was fully impaired. Refer to note 12 for more details. 

      The investment in associate line does not appear on the statement of financial position as the investment is less than R 1000 and the results are quoted in R'000

8.    SHARE CAPITAL AND SHARE PREMIUM
      There were no shares issued during the period under review. 

9.    NON-CONTROLLING INTEREST PUT OPTION LIABILITIES
      The Group has entered into transactions with non-controlling interest equity holders whereby they are able to put their shareholding to the Group for a limited time period.
      The options are accounted for using the present access method. These are written put options in respect of which the Group does not have an unconditional right to avoid
      the delivery of cash and are recognised as financial liabilities. In the current year R34 million was recognised as a reduction in the liability of R57 million and the corresponding
      credit against equity under other capital reserves in the statement of changes in equity.

      Put option to acquire remaining shares in Clover Good Hope
      Clover granted Good Hope the irrevocable right to sell Good Hope's 49% of the issued share capital in Clover Good Hope ("Put shares"). The put option may be exercised by
      Good Hope within three months after each 12-month period from the third anniversary of the effective date. The purchase price of the put shares will be determined by way of
      an earnings before interest tax depreciation and amortisation (EBITDA) multiple formula.

      Put option to acquire remaining shares in Clover Pride
      Clover granted AECI the irrevocable right to sell AECI's 49% of the issued share capital in Clover Pride ("Call shares"). The put option may be exercised by AECI within three
      months after each 12 month period from the third anniversary of the effective date. The purchase price of the put shares will be determined by way of an earnings before
      interest tax depreciation and amortisation (EBITDA) multiple formula.

10.   FAIR VALUE OF FINANCIAL INSTRUMENTS
      For financial instruments traded in an active market (Level 1), fair value is determined using stock exchange quoted prices. For other financial instruments (Level 2), appropriate
      valuation techniques, including recent market transaction and other valuation models, have been applied and significant inputs include market yield curves and exchange
      rates. For non-current assets (level 3) fair value has been determined based on the sale agreements. There is no difference between the fair value and carrying value of financial
      assets and liabilities not presented below due to either the short-term nature of these items, or the fact that they are priced at variable interest rates. Long-term fixed-rate and
      variable-rate borrowings are evaluated by the Group based on parameters such as interest rates and repayment periods as at year-end, the carrying amounts of the borrowings
      are not materially different from the calculated fair value.

      The carrying values of all other financial assets or liabilities, which include trade receivables, trade payables, as well as cash and cash equivalents, approximate their fair values
      based on the nature or maturity period of the financial instrument. 
      
                                                                                30 June 2018   Level 1   Level 2   Level 3   
                                                                                       R'000     R'000     R'000     R'000   
      Assets measured at fair value                                                                                          
      Derivatives not designated as hedging instruments:                                                                     
      Call option to acquire remaining shares in Clover Good Hope (Pty) Ltd            2 657         -         -     2 657   
      Call option to acquire remaining shares in Clover Pride (Pty) Ltd                1 795                         1 795   
      Investment in cell captive                                                       1 329         -     1 329         -   
      Liabilities measured at fair value                                                                                     
      Derivatives not designated as hedging instruments:                                                                     
      Foreign exchange contracts                                                                     -         -         -   
      Clover Industries shares forward purchases                                      16 415         -    16 415         -   
        
        
                                                                                30 June 2017   Level 1   Level 2   Level 3   
                                                                                       R'000     R'000     R'000     R'000   
      Assets measured at fair value                                                                                          
      Derivatives not designated as hedging instruments:                                                                     
      Call option to acquire remaining shares in Clover Good Hope (Pty) Ltd              856         -         -       856   
      Investment in cell captive                                                       2 309         -     2 309         -   
      Liabilities measured at fair value                                                                                     
      Derivatives not designated as hedging instruments:                                                                     
      Foreign exchange contracts                                                         638         -       638         -   
      Clover Industries shares forward purchases                                      13 521         -    13 521         -   
      Diesel hedge                                                                     1 665               1 665             
  

      During the reporting period ended 30 June 2018, there were no transfers between Level 1 and Level 2 fair value measurements. 
      During the reporting period ended 30 June 2017, there were no transfers between Level 1 and Level 2 fair value measurements.  
      
      Reconciliation of fair value measurement of level 3 financial assets                                   2018     2017   
                                                                                                            R'000    R'000   
      Call option to acquire remaining shares in Clover Pride (Pty) Ltd                                                      
      Balance at the beginning of the year                                                                      -        -   
      Remeasurement recognised through statement of profit or loss                                          1 795        -   
      Balance at the end of the year                                                                        1 795        -   
      Call option to acquire remaining shares in Clover Good Hope (Pty) Ltd                                                  
      Balance at the beginning of the year                                                                    856      560   
      Remeasurement recognised through statement of profit or loss                                          1 801      296   
      Balance at the end of the year                                                                        2 657      856   
      
      
      Call option to acquire remaining shares in Clover Good Hope 
      Good Hope granted Clover the irrevocable right to purchase Good Hope's 49% of the issued share capital in Clover Good Hope ("Call shares"). The call option may be
      exercised by Clover within three months after each 12 month period from the fifth anniversary of the effective date. The purchase price of the call shares will be determined by
      way of an earnings before interest tax depreciation and amortisation (EBITDA) multiple formula.
      
      Call option to acquire remaining shares in Clover Pride
      AECI granted Clover the irrevocable right to purchase AECI's 49% of the issued share capital in Clover Pride ("Call shares"). The call option may be exercised by Clover within
      three months after each 12 month period from the third anniversary of the effective date. The purchase price of the call shares will be determined by way of an earnings before
      interest tax depreciation and amortisation (EBITDA) multiple formula.
      
      Foreign exchange contracts
      Foreign exchange contracts through profit or loss are those foreign exchange forward contracts that are not designated in hedge relationship as they are intended to reduce
      the level of foreign currency risk for expected sales and purchases.
      
      Clover Industries shares forward purchase
      The Group had entered into a forward contract to purchase 1 824 195 (2017: 2 132 695) Clover Industries shares, this transaction was entered into to hedge a portion of the
      share appreciation rights issued to management.
      
      The fair value of the shares forward purchases was determined by Investec Bank Limited. The fair value was determined by calculation the future settlement price after the
      following inputs were taken into consideration, a dividend of 1,61% (2017: 3,92%), a credit spread of 2,80% (2017: 2,75%), a spot rate of R16,40 (2017: R16,55) and a swap interest
      rate reflecting the term of each tranche of the hedge.

11.   RELATED PARTY DISCLOSURE
      Transactions with related parties are made at market-related prices.
      Based on business done with joint ventures and or associates, the following transactions took place: 
      
                                                                                                                            2018       2017    
                                                                                                                           R'000      R'000   
      Income earned by Clover SA for services rendered, royalties and interest to joint ventures and associate                                
      DFSA - Associate                                                                                                 1 228 925          -    
      Clover Fonterra - Joint Venture                                                                                      4 991      4 821   
      Clover Futurelife - Joint Venture                                                                                    5 873      3 190   
      Total income earned by Clover SA for services rendered, royalties and interest to joint ventures and associate   1 239 789      8 011   
      Amounts due to Clover SA from joint ventures and associate                                                                              
      DFSA - Associate (Trade receivable)                                                                                179 939          -    
      Clover Fonterra - Joint Venture                                                                                      3 233      1 274   
      Clover Futurelife - Joint Venture                                                                                    3 698      4 840   
      Total amounts due to Clover SA from joint ventures and associate                                                   186 870      6 114   
      Amounts owing by Clover SA to joint ventures and associate                                                                              
      DFSA - Associate                                                                                                   426 886          -    
      Clover Fonterra - Joint Venture                                                                                     64 783     37 934   
      Clover Futurelife - Joint Venture                                                                                    1 545      3 550   
      Total amounts owing by Clover SA to joint ventures and associate                                                   493 214     41 484   


12.   IMPAIRMENT ASSESSMENT
      The Group has assessed the need for impairment of assets which includes property, plant and equipment, intangibles assets, financial assets and inventory.
      As alluded to earlier in this report, the DFSA Chairman and CEO has resigned. The Clover Board could not have foreseen this event at the time it published its trading statement
      on 07 August 2018. The Board believed it prudent to adopt a conservative approach and provide for the full impairment of the R439 million revolving credit facility it extended
      to DFSA as at year-end.
      In addition, inventories of R17,2 million (2017: R22,4 million) were written down during the year. Apart from the above, no further write-downs were required as at 30 June 2018. 

13.   EVENTS AFTER THE REPORTING PERIOD  
      Except for the events noted below, no significant events occurred subsequent to the year-end that would require disclosure or amendment to these financial results.  
 
      Clover made a R90 million cash injection in September 2018 in DFSA that will be capitalised once shareholder approval is obtained as required by DFSA's Memorandum
      of Incorporation. This will not increase Clover's voting rights or shareholding and underpins Clover's ongoing commitment to support its milk source, service fees and the
      sustainability of DFSA.
  
      DFSA has in turn committed to also build up a reserve of R90 million through the reduction of milk prices paid to its producers. Clover's capitalisation of DFSA and the build-up
      of the aforementioned reserve will add stability to DFSA to navigate through future cycles. Refer to the discussion of risks in the commentary section of this report for further
      information regarding the DFSA.
  
      Subsequent to year-end, the board has approved a final gross cash dividend of R92,9 million (2017: Rnil) or 48,680 cents (2017: 0,000 cents) per ordinary share for the year
      ended 30 June 2018 which will be paid Monday, 8 October 2018.  

14.   GOING CONCERN
      The directors are satisfied that the Group is a going concern and has therefore continued to adopt the going-concern basis in preparing the condensed consolidated financial
      results.

15.   PREPARATION OF THE REVIEWED CONDENSED CONSOLIDATED FINANCIAL RESULTS 
      The condensed consolidated financial results in this section were prepared under the supervision of Frantz Scheepers, CA(SA), in his capacity as Chief Financial Officer of the
      Group.

      The condensed consolidated financial results have not been audited by the group's auditors.

16.   INDEPENDENT REVIEW BY AUDITORS
      These condensed consolidated results have been reviewed by the independent external auditors, Ernst & Young Inc. and their unmodified review report is available for
      inspection at the Company's registered office. The review was performed in accordance with ISRE 2410, Review of Interim Financial Information Performed by the Independent
      Auditor of the Entity.

17.   ANNUAL GENERAL MEETING
      The Annual General Meeting of the company will be held at 200 Constantia Drive, Constantia Kloof, Roodepoort, 1709 on Monday, 26 November 2018, at 10:00 to transact
      the business as stated in the Annual General Meeting notice which will be distributed to shareholders on 29 October 2018. 
  
      Record date to determine which shareholders are entitled to receive the notice of Annual General Meeting                                               Friday, 19 October 2018
      Last day to trade in order to be eligible to attend and vote at the Annual General Meeting                                                           Tuesday, 13 November 2018
      Record date to determine which shareholders are entitled to attend and vote at the Annual General Meeting                                             Friday, 16 November 2018
      Forms of proxy for the Annual General Meeting to be lodged by 10:00 on(*)                                                                             Friday, 23 November 2018
  
      (*) Any proxies not lodged by this time must be handed to the Chairperson of the Annual General Meeting immediately prior to the Annual General Meeting. 

18.   PUBLISHING OF INTEGRATED REPORT
      The full integrated report will be published on Clover's website and distributed to shareholders on 28 September 2018.

ANNEXURE I TO THE RESULTS ANNOUNCEMENT FOR THE YEAR ENDED 30 JUNE 2018

PRO FORMA REGARDING THE EFFECT OF THE OPERATIONAL RESTRUCTURING OF DFSA ON THE CONSOLIDATED RESULTS OF CLOVER INDUSTRIES LMITED ("Clover")

Introduction
On the 1st of July 2017 Clover concluded a corporate action that would have an impact on the 2018 financial year.

As communicated on the Securities Exchange News Service ("SENS") on 6 July 2017 and earlier, Clover, has formed a wholly owned subsidiary (called Dairy Farmers of South Africa
(Pty) Ltd ("DFSA")). Clover transferred the non-value added dairy business and sold the related finished goods, packaging material and ingredients inventory, to DFSA with effect from
1 April 2017. In exchange for the transfer of the non-value added dairy business as aforementioned, DFSA allotted and issued to Clover A-shares (which constituted the entire issued
share capital of DFSA at the time) for a nominal amount, and a loan account for the inventory.

With effect from 1 July 2017, DFSA issued and allotted B-shares to milk producers for a nominal amount and accordingly, the milk producers now hold all the B-shares which
constitute 74% of the voting rights of DFSA. Clover holds all the A-shares which constitute 26% of the voting rights of DFSA.

With effect from 1 July 2017 Clover relinquished its control of DFSA, as assessed in terms of IFRS 10, and will for accounting purposes treat it as an investment in an associate going
forward. 

DFSA houses the non-value added drinking milk business and is responsible for the procurement of raw milk as well as the selling, marketing and distribution of the non-value-added
drinking milk referred to above. 

DFSA is currently Clover's largest principal, where all its related requirements such as distribution, production, administration (invoicing, debt collection, marketing), IT services,
payroll administration, central services, sales and merchandising are outsourced to Clover for an initial period of 20 years. In exchange for these services, Clover will earn service
income.

This Annexure to the results announcement includes the 30 June 2017 audited results which have been adjusted to reflect the loss of control of DFSA ("Pro Forma Adjustments") as
if the loss of control of DFSA had occurred (a) on 1 July 2016 for purposes of the Pro Forma Adjustments made to the pro forma consolidated statement of comprehensive income
and (b) as at 30 June 2017 for purposes of the Pro Forma Adjustments made to the pro forma consolidated statement of financial position. 

It is important to note that in the 2017 pro forma financial information of the Group, released on SENS on 12 September 2017 as an annexure to the financial results for the year
ended 30 June 2017 ("2017 Pro Forma Financial Information"), it was anticipated that Clover would procure packaging material from third party suppliers and on-sell the packaging
material to DFSA at no margin. The 2017 Pro Forma Financial Information was compiled as if Clover acted as the principal.

Post the implementation of the unbundling on 1 July 2017, the legal agreement was clarified to infer that Clover is acting as an agent for packaging material procured on behalf
of DFSA. In terms of this clarification the Revenue and Cost of Sales pertaining to the procurement of the packaging material does not form part of the 2018 audited results of the
Group. Accordingly, the directors are of the view that the Pro Forma adjustment (refer note 4) as disclosed in the 2017 Pro Forma Financial Information needs to be amended by
excluding the sale of packaging material procured and sold to DFSA in order to do a like-for-like comparison. 

The pro forma financial information, as presented in the 2018 group results, have been prepared for illustrative purposes only, to provide information about how the Pro Forma
Adjustments might have affected the financial information presented by Clover had the unbundling of DFSA occurred on 1 July 2016 for statement of comprehensive income
purposes and as at 30 June 2017 for statement of financial position purposes. Because of its pro forma nature, the pro forma financial information may not fairly present Clover's
financial position, changes in equity, results of operation or cash flows. It does not purport to be indicative of what the financial results would have been, had the loss of control of
DFSA been implemented on a different date.

The Clover directors are responsible for the preparation of the pro forma financial information. The pro forma financial information has been prepared using accounting policies that
are consistent with IFRS and with the basis on which the historical financial information has been prepared in terms of the accounting policies of Clover. The pro forma financial
information has been prepared in accordance with the JSE Listings Requirements and the revised Guide on Pro Forma Financial Information issued by the South African Institute of
Chartered Accountants.

These pro forma financial effects have been prepared to assist Clover's shareholders in assessing the impact of the loss of control of DFSA on the Clover consolidated statement of
comprehensive income and statement of financial position.

This pro forma financial information was reported on by the independent external auditors, Ernst & Young Inc., in terms of International Standards on Assurance Engagements
(ISAE) 3420, Assurance Engagements to Report on the Compilation of Pro forma Financial Information Included in a Prospectus. Their unmodified limited assurance report dated 11
September 2017 is available for inspection at the Company's registered office. 

PRO FORMA CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME  

                                                         Exclusion of the                                                                                  
                                                         revenue and cost                              Interest charged                                    
                                                     of sales of the DFSA   Income from services     on working capital                                    
                                      30 June 2017           business (2)   rendered to DFSA (3)           facility (4)   After pro forma   30 June 2018   
                                       Audited (1)   Pro forma adjustment   Pro forma adjustment   Pro forma adjustment       Adjustments    Audited (5)   
                                             R'000                  R'000                  R'000                  R'000             R'000          R'000   
Sales of products                        9 401 842            (3 549 806)                                                       5 852 036      6 435 663   
Rendering of services                      641 499                                     1 192 922                                1 834 421      1 873 581   
Sale of raw milk                            11 907                                                                                 11 907            335   
Rental income                                3 351                                                                                  3 351          2 898   
Revenue                                 10 058 599            (3 549 806)              1 192 922                                7 701 715      8 312 477   
Cost of sales                          (7 333 041)              2 321 032                                                     (5 012 009)    (5 357 424)   
Gross profit                             2 725 558            (1 228 774)              1 192 922                                2 689 706      2 955 053   
Other operating income                      60 040                                                                                 60 040         82 913   
Selling and distribution costs         (2 089 364)                                                                            (2 089 364)    (2 117 936)   
Administrative expenses                  (284 721)                                                                              (284 721)      (273 310)   
Restructuring expenses                    (48 098)                                                                               (48 098)        (4 123)   
Other operating expenses                  (48 936)                                                                               (48 936)       (31 548)   
Operating profit                           314 479            (1 228 774)              1 192 922                                  278 627        611 049   
Finance income                              12 647                                                               35 852            48 499         47 618   
Finance costs                            (145 765)                                                                              (145 765)      (141 880)   
Share of profit in a joint venture          18 486                                                                                 18 486         21 104   
Profit before tax                          199 847            (1 228 774)              1 192 922                 35 852           199 847        537 891   
Taxation                                  (41 105)                344 057              (334 018)               (10 039)          (41 105)      (139 509)   
Profit for the year                        158 742              (884 717)                858 904                 25 813           158 742        398 382   


PRO FORMA CONSOLIDATED STATEMENT OF FINANCIAL POSITION                                                              
                                                                                                 30 June 2017    Sale of inventory (6)   After pro forma   
                                                                                                  Audited (1)     Pro forma adjustment       Adjustments   
                                                                                                        R'000                    R'000             R'000   
Assets                                                                                                                                                     
Non-current assets                                                                                                                                         
Property, plant and equipment                                                                       2 427 444                                  2 427 444   
Investment properties                                                                                       9                                          9   
Intangibles assets                                                                                    650 663                                    650 663   
Investment in joint ventures                                                                           38 946                                     38 946   
Other non-current financial assets                                                                      3 165                                      3 165   
Deferred tax assets                                                                                    45 496                                     45 496   
                                                                                                    3 165 723                                  3 165 723   
Current assets                                                                                                                                             
Inventories                                                                                           964 630                (244 076)           720 554   
Trade and other receivables                                                                         1 341 311                  244 076         1 585 387   
Prepayments                                                                                            19 844                                     19 844   
Income tax receivable                                                                                   7 165                                      7 165   
Cash and short term deposits                                                                          544 863                                    544 863   
                                                                                                    2 877 813                                  2 877 813   
Assets classified as held for sale                                                                      4 607                                      4 607   
Total assets                                                                                        6 048 143                                  6 048 143   

Equity and liabilities                                                                                                                                     
Equity                                                                                                                                                     
Issued share capital                                                                                     9 542                                     9 542   
Share premium                                                                                          892 692                                   892 692   
Other capital reserves                                                                                  78 642                                    78 642   
Foreign currency translation reserve                                                                     9 637                                     9 637   
Retained earnings                                                                                    1 904 349                                 1 904 349   
Equity attributable to holders of the parent                                                        2 894 862                                  2 894 862   
Non-controlling interests                                                                             (15 179)                                  (15 179)   
Total equity                                                                                         2 879 683                                 2 879 683   
Liabilities                                                                                                                                                
Non-current liabilities                                                                                                                                    
Interest bearing loans and borrowings                                                                  767 621                                   767 621   
Non-controlling put liability                                                                           57 088                                    57 088   
Employee-related obligations                                                                            82 595                                    82 595   
Deferred tax liability                                                                                 221 065                                   221 065   
Trade and other payables                                                                                25 492                                    25 492   
Other non-current financial liabilities                                                                 9 683                                      9 683   
                                                                                                     1 163 544                                 1 163 544   
Current liabilities                                                                                                                                        
Trade and other payables                                                                             1 274 700                                 1 274 700   
Interest-bearing loans and borrowings                                                                  714 304                                   714 304   
Other current financial liabilities                                                                      6 141                                     6 141   
Employee-related obligations                                                                             9 771                                     9 771   
                                                                                                     2 004 916                                 2 004 916   
Total liabilities                                                                                    3 168 460                                 3 168 460   
Total equity and liabilities                                                                         6 048 143                                 6 048 143   


Notes: 
1.  As per the consolidated statement of comprehensive income and the consolidated statement of financial position for the year ended 30 June 2017 with reference to the
    audited annual financial statements.
2.  The sale of products relating to the non-value added drinking milk, namely Fresh, UHT and UP milk that will be excluded from Clover and be part of DFSA in future. The Pro
    Forma Adjustment was determined with reference to actual volumes sold and realised. The tax effect was determined using the corporate tax rate of 28%.
3.  Clover provided all the production, distribution, sales and merchandising, marketing and certain administrative service to DFSA at a contracted fee. The pro forma adjustment
    was determined with reference to actual volumes produced. The contracted fee was calculated based on the actual costs for the period 1 July 2016 to 31 December 2016. The
    tax effect was determined using the corporate tax rate of 28%.
4.  Clover provided the working capital funding to DFSA in the form of an interest bearing facility on which Clover earned interest at a rate equal to the average rate Clover pays to
    its interest bearing debt funders. The tax effect was determined using the corporate tax rate of 28%.
5.  As per the consolidated statement of comprehensive income for the year ended 30 June 2018 with reference to the audited annual financial statements.
6.  All the finished goods, packaging material and ingredients inventory related to Fresh, UHT and UP milk were sold to DFSA on loan account on 1 April 2017. It was assumed that
    the inventory was sold in the same manner on 30 June 2017 to give effect to the Pro Forma Adjustment.
7.  The loss of control of DFSA was structured in such a way that the non-value-added drinking milk business broke even and therefore there was no equity accounted earnings or
    Investment in Associate in terms of IAS28. 
8.  IFRS 10 Consolidated Financial Statements paragraph 25 requires the calculation of a gain / (loss) on the deemed sale of the investment in DFSA when control is lost. On 1
    July 2016 this gain / (loss) on the deemed sale would however equal the nominal amount received as consideration for the B shares issued by DFSA. It was assumed that the
    inventory, the only asset of DFSA on 1 July 2016, was sold in the same manner on this date as it was on 1 April 2017. Therefore, the fair value of any retained interest is zero.

ANNEXURE II TO THE RESULTS ANNOUNCEMENT FOR THE YEAR ENDED 30 JUNE 2018

PRO FORMA REGARDING THE EFFECT OF THE IMPAIRMENT ON THE RCF TO DFSA ON THE CONSOLIDATED RESULTS OF CLOVER INDUSTRIES LMITED ("Clover")

Background
The Board of Clover Industries Limited ("Clover" or "the Group") received unforeseen notice of the resignation of the DFSA CEO on 11 September 2018. His decision to resign is
understood to be as result of the enormous conflict between losing milk producers or losing market share during what has been a very challenging time for the dairy industry
generally.

The Chairman of DFSA also took the decision to resign and to give the opportunity to the producer shareholders to appoint their own independent chairman and CEO to take DFSA
forward. The DFSA board will begin the process to identify replacements and the current CEO will stay on until 30 April 2019 to assist with identifying a suitable replacement and to
ensure a seamless handover.

Whilst the Clover Board had received no indications of the resignations at the time it published its trading statement on 07 August 2018, following the resignation of the DFSA
Chairman and CEO, it believed it prudent to adopt a conservative approach and provide for the full impairment of the R439 million revolving credit facility it extended to DFSA as at
year-end.

This Annexure ("Annexure II") to the results announcement includes the 30 June 2018 reviewed results which have been adjusted to reflect the reversal of the impairment (a) on
30 June 2018 for purposes of the pro forma adjustments made to the pro forma consolidated statement of comprehensive income and (b) as at 30 June 2018 for purposes of the
pro forma adjustments made to the pro forma consolidated statement of financial position.

The pro forma financial information, as presented in the 2018 group results, have been prepared for illustrative purposes only, to provide information on how the normalised
earnings and headline earnings have been calculated had no impairment taken place.

Because of its nature, the pro forma financial information may not be a fair reflection of the Group's results of operations, financial position, changes in equity or cash flows. No
other adjustments have been made to the pro forma financial information.

The Clover directors are responsible for the preparation of the pro forma financial information. The pro forma financial information has been prepared using accounting policies that
are consistent with IFRS and with the basis on which the historical financial information has been prepared in terms of the accounting policies of Clover. The pro forma financial
information has been prepared in accordance with the JSE Listings Requirements and the revised Guide on Pro Forma Financial Information issued by the South African Institute of
Chartered Accountants.

This pro forma financial information was reported on by the independent external auditors, Ernst & Young Inc., in terms of International Standards on Assurance Engagements (ISAE)
3420, Assurance Engagements to Report on the Compilation of Pro forma Financial Information Included in a Prospectus. Their unmodified limited assurance report is available for
inspection at the Company's registered office.

These latest developments should not deter from the exceptional performance delivered by Clover as highlighted in the normalised results discussed earlier in this report.

PRO FORMA CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

                                                                           30 June 2018     Reversal of impairment   After Pro Forma   30 June 2017   
                                                                           Reviewed (1)   Pro forma adjustment (2)        Normalised   Adjusted (3)   
                                                                                  R'000                      R'000             R'000          R'000   
Sales of products                                                             6 435 663                                    6 435 663      5 852 036   
Rendering of services                                                         1 873 581                                    1 873 581      1 834 421   
Sale of raw milk                                                                    335                                          335         11 907   
Rental income                                                                     2 898                                        2 898          3 351   
Revenue                                                                       8 312 477                                    8 312 477      7 701 715   
Cost of sales                                                               (5 357 424)                                  (5 357 424)    (5 012 009)   
Gross profit                                                                  2 955 053                                    2 955 053      2 689 706   
Other operating income                                                           82 913                                       82 913         60 040   
Selling and distribution costs                                              (2 117 936)                                  (2 117 936)    (2 089 364)   
Administrative expenses                                                       (273 310)                                    (273 310)      (284 721)   
Restructuring expenses                                                          (4 123)                                      (4 123)       (48 098)   
Other operating expenses                                                       (31 548)                                     (31 548)       (48 936)   
Operating profit                                                                611 049                                      611 049        278 627   
Impairment of revolving credit facility to DFSA                               (439 042)                    439 042                 -              -   
Finance income                                                                   47 618                                       47 618         48 499   
Finance costs                                                                 (141 880)                                    (141 880)      (145 765)   
Share of profit in a joint venture                                               21 104                                       21 104         18 486   
Profit before tax                                                                98 849                    439 042           537 891        199 847   
Taxation                                                                      (139 509)                                    (139 509)       (41 105)   
(Loss)/Profit for the year                                                     (40 660)                    439 042           398 382        158 742   
Profit for the year attributable to equity holders of the parent company       (38 021)                    439 042           401 021        158 258   
Headline earnings attributable to shareholders of the parent company           (44 180)                    439 042           394 854        121 617   
Earnings per share attributable to ordinary equity holders of the parent                                                                              
(Loss)/Earnings per share (cents)                                                (19,9)                      230,0             210,1           83,1   
Diluted (loss)/earnings per share (cents)                                        (19,7)                      227,8             208,1           82,3   
Headline (loss)/earnings per share (cents)                                       (23,1)                      230,0             206,9           63,9   
Diluted headline (loss)/earnings per share (cents)                               (22,9)                      227,8             204,9           63,2   


PRO FORMA CONSOLIDATED STATEMENT OF FINANCIAL POSITION

                                                                           30 June 2018     Reversal of impairment   After Pro Forma   30 June 2017   
                                                                           Reviewed (1)   Pro forma adjustment (4)        Normalised   Adjusted (3)   
                                                                                  R'000                      R'000             R'000          R'000   
ASSETS                                                                                                                                                
Non-current assets                                                                                                                                    
Property, plant and equipment                                                 2 417 791                                    2 417 791      2 427 444   
Investment properties                                                                 9                                            9              9   
Intangible assets                                                               626 671                                      626 671        650 663   
Investment in joint venture                                                      46 035                                       46 035         38 946   
Other non-current financial assets                                                5 781                    439 042           444 823          3 165   
Deferred tax assets                                                              30 203                                       30 203         45 496   
                                                                              3 126 490                    439 042         3 565 532      3 165 723   
Current assets                                                                                                                     -                  
Inventories                                                                     869 091                                      869 091        964 630   
Trade and other receivables                                                   1 479 090                                    1 479 090      1 341 311   
Prepayments                                                                      16 829                                       16 829         19 844   
Income tax receivable                                                             3 702                                        3 702          7 165   
Cash and short-term deposits                                                    760 693                                      760 693        544 863   
                                                                              3 129 405                                    3 129 405      2 877 813   
Assets classified as held-for-sale                                                2 719                                        2 719          4 607   
Total assets                                                                  6 258 614                    439 042         6 697 656      6 048 143   

EQUITY AND LIABILITIES                                                                                                           
Equity                                                                                                                           
Issued share capital                                                              9 542                                        9 542          9 542   
Share premium                                                                   892 692                                      892 692        892 692   
Other capital reserves                                                          105 689                                      105 689         78 642   
Foreign currency translation reserve                                             17 160                                       17 160          9 637   
Retained earnings                                                             1 817 322                    439 042         2 256 364      1 904 349   
Equity attributable to equity holders of the parent                           2 842 405                    439 042         3 281 447      2 894 862   
Non-controlling interests                                                      (17 818)                                     (17 818)       (15 179)   
Total equity                                                                  2 824 587                    439 042         3 263 629      2 879 683   
Liabilities                                                                                                                                           
Non-current liabilities                                                                                                                               
Interest-bearing loans and borrowings                                           665 059                                      665 059        767 621   
Non-controlling interest put liability                                           23 226                                       23 226         57 088   
Employee-related obligations                                                     75 424                                       75 424         82 595   
Deferred tax liability                                                          260 309                                      260 309        221 065   
Trade and other payables                                                         11 448                                       11 448         25 492   
Other non-current financial liabilities                                           2 776                                        2 776          9 683   
                                                                              1 038 242                                    1 038 242      1 163 544   
Current liabilities                                                                                                                -                  
Trade and other payables                                                      1 676 176                                    1 676 176      1 274 700   
Interest-bearing loans and borrowings                                           685 691                                      685 691        714 304   
Other current financial liabilities                                              13 639                                       13 639          6 141   
Employee-related obligations                                                     20 279                                       20 279          9 771   
                                                                              2 395 785                                    2 395 785      2 004 916   
Total liabilities                                                             3 434 027                                    3 434 027      3 168 460   
Total equity and liabilities                                                  6 258 614                    439 042         6 697 656      6 048 143   


Notes
1.  As per the annual condensed consolidated statement of comprehensive income and the annual condensed consolidated statement of financial position for the year ended
    30 June 2018 with reference to the reviewed annual condensed consolidated financial results.
2.  The pro forma was determined with reference to the impairment of the entire revolving credit facility advanced to DFSA as at 30 June 2018. There is no tax effect due to this
    adjustment. The adjustment is not excluded for purposes determing headline earnings.
3.  As per the pro forma consolidated statement of comprehensive income and the pro forma consolidated statement of financial position for the year ended 30 June 2017 with
    reference to Annexure I.
4.  The pro forma was determined with reference to the impairment of the entire revolving credit facility advanced to DFSA as at 30 June 2018. The facility is designated as a
    financial asset at amortised cost. The carrying value of the revolving credit facility approximates the fair value due to the rolling nature of the facility and interest being charged.

http://www.clover.co.za



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