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CLR/CLRP - Clover - Abridged Audited Consolidated Results for the year ended
30 June 2011 and cash dividend declaration
CLOVER INDUSTRIES LIMITED
ISIN: ZAE000152377
Ordinary Share Code: CLR
ISIN: ZAE000152385
Preference Share Code: CLRP
Registration number: 2003/030429/06
("Clover" or "the Group" or the "Company")
www.clover.co.za
ABRIDGED AUDITED CONSOLIDATED RESULTS FOR THE YEAR ENDED 30 JUNE 2011 AND CASH
DIVIDEND DECLARATION
HIGHLIGHTS
Revenue increased by 6,1% to R6,5 billion
Normalised operating profit increased by 2,4% to R328,6 million
Headline earnings per share increased by 243,8% to 113,8 cents
Headline earnings per share from continuing operations increased by 825,2% to
113,8
ABRIDGED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 30 June 2011 2010
R`000 R`000
Continuing operations
Sales of products 5 510 436 5 213 234
Rendering of services 642 133 583 073
Sale of raw milk 386 070 362 198
Rental income 3 682 2 978
REVENUE 6 542 321 6 161 483
Cost of sales (4 801 323) (4 494 437)
Gross profit 1 740 998 1 667 046
Other operating income 13 974 60 054
Profit on sale of associated company - 337 682
Dividends received - 649
Selling and distribution costs (1 243 160) (1 200 290)
Administrative expenses (173 287) (149 061)
Restructuring expenses (16 907) (149 458)
Other operating expenses (2 610) (7 652)
Operating profit 319 008 558 970
Finance income 24 625 27 353
Finance cost (62 065) (90 871)
Profit before tax from continuing operations 281 568 495 452
Taxes (97 534) (191 662)
PROFIT FOR THE YEAR FROM CONTINUING OPERATIONS 184 034 303 790
DISCONTINUED OPERATIONS
Profit after tax for the year from discontinued - 32 123
operations
PROFIT FOR THE YEAR 184 034 335 913
OTHER COMPREHENSIVE INCOME
Exchange differences on translation of foreign (856) (2 717)
operations
Total comprehensive income for the year, net of tax 183 178 333 196
Profit attributable to:
Equity holders of the parent 179 588 330 819
Non-controlling interests 4 446 5 094
184 034 335 913
Total comprehensive income attributable to:
Equity holders of the parent 178 992 328 881
Non-controlling interests 4 186 4 315
183 178 333 196
The prior year revenue and cost of sales figures have been regrouped to
facilitate comparability.
Headline earnings calculation
Profit for the year attributable to shareholders of 179 588 330 819
the parent company
Gross remeasurements excluded from headline earnings (4 173) (376 046)
Profit on sale and scrapping of property, plant and (7 277) 908
equipment
Minority portion of profit on sale and scrapping of 1 324 -
property, plant and equipment
Profit on sale of Boksburg factory - (50 818)
Profit on sale of Danone Clover - (337 682)
Impairment of plant and equipment 1 780 11 546
Taxation effects of remeasurements (248) 96 347
Headline earnings attributable to shareholders of the 175 167 51 120
parent company
Discontinued operations - (32 123)
Headline earnings from continuing operations 175 167 18 997
Number of ordinary share used in the calculation of:
Earnings per share (weighted average) 153 882 447 154 595 442
Diluted earnings per share (weighted average) 164 890 519 154 595 442
Earnings per share attributable to ordinary equity
holders of the parent
Earnings per share 116,7 214,0
Diluted earnings per share 108,9 214,0
Headline earnings per share 113,8 33,1
Diluted headlines earning per share 106,2 33,1
Earnings per share for continuing operations
Earnings per share 116,7 193,2
Diluted earnings per share 108,9 193,2
Headline earnings per share 113,8 12,3
Diluted headline earnings per share 106,2 12,3
Earnings per share for discontinued operations
Earnings per share - 20,8
Diluted earnings per share - 20,8
Headline earnings per share - 20,8
Diluted headline earnings per share - 20,8
The comparative basic and diluted earnings per share have been recalculated to
take into consideration the 2 for 1 share split.
ABRIDGED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30 June 2011 2010
R`000 R`000
Balance at 1 July 1 076 467 1 481 008
Profit for the year 184 034 335 913
Other comprehensive income (856) (2 717)
Total comprehensive income 183 178 333 196
Reduction in ordinary share capital - HCI - (340 451)
Reduction in ordinary share capital - CIL - (504)
Stabilisation Trust
Ordinary shares issued 577 335 87 329
Share issue cost capitalised against share premium (14 807) -
Preference shares issued - 9 262
Increase in debt portion on conversion of preference - (107 732)
shares to redeemable preference shares
Increase in ordinary treasury shares - ( 41)
Reversal of debt portion on issue of treasury - (2 257)
preference shares
Treasury preference shares issued to executives - 3 047
Share based payment reserve 11 192 733
Dividends of subsidiaries - non controlling interest (1 805) (1 885)
Preference share capital of subsidiary repaid - (15 208)
Buy-back of equity rights of preference shares - (370 030)
(Special dividend)
Non-controlling interest acquired with the buy-out of (21 045) -
Clover Beverages minorities
Dividends (58 720) -
Balance at 30 June 1 751 795 1 076 467
Consists of:
Share capital and premium 684 068 121 540
Other capital reserves 252 784 242 188
Retained earnings 805 499 684 631
Shareholder equity 1 742 351 1 048 359
Non-controlling interests 9 444 28 108
Total equity 1 751 795 1 076 467
ABRIDGED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 30 June 2011 2010
R`000 R`000
Assets
Non-current assets
Property, plant and equipment 1 013 289 914 413
Investment properties 961 1 010
Intangible assets 347 102 287 060
Deferred tax assets 3 262 18 740
1 364 614 1 221 223
Current assets
Inventories 460 247 465 994
Trade and other receivables 866 475 807 463
Prepayments 29 000 6 170
Cash and short-term deposits 824 212 429 274
2 179 934 1 708 901
Assets classified as held-for-sale 940 1 979
2 180 874 1 710 880
Total assets 3 545 488 2 932 103
Equity and liabilities
Equity
Issued capital 8 955 6 192
Share premium 675 113 115 348
Other reserves 252 784 242 188
Retained earnings 805 499 684 631
Equity attributable to equity holders of the parent 1 742 351 1 048 359
Non-controlling interests 9 444 28 108
Total equity 1 751 795 1 076 467
Liabilities
Non-current liabilities
Interest-bearing loans and borrowings 432 833 592 504
Provisions 62 526 50 357
Deferred tax liability 32 017 6 363
Trade and other payables 13 357 6 320
540 733 655 544
Current liabilities
Trade and other payables 1 068 836 1 115 327
Interest-bearing loans and borrowings 173 829 66 947
Income tax payable 243 1 368
Provisions 10 052 16 450
1 252 960 1 200 092
Total liabilities 1 793 693 1 855 636
Total equity and liabilities 3 545 488 2 932 103
ABRIDGED CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 30 June 2011 2010
R`000 R`000
Operating activities
Profit before tax 281 568 495 452
Adjustment for non-cash items 153 197 (216 643)
Working capital adjustments (122 585) 170 392
Income tax paid (55 264) (102 124)
Net cash flows from operating activities 256 916 347 077
Investing activities
Proceeds from sale of property, plant and equipment 10 675 155 661
Interest received 24 625 27 353
Goodwill purchased through the buyout of Clover (49 387) -
Beverages non-controlling interests
Acquisition of non-controlling interests in Clover (21 045) -
Beverages
Proceeds on sale of associated company - 1 079 560
Increase in investment in associated company - (150 554)
Capital expenditure: tangible and intangible assets (216 326) (103 616)
Other investing activities (1 854) (3 291)
Net cash flows (used in)/from investing activities (253 312) 1 005 113
Financing activities
Interest paid (62 065) (90 871)
Dividends paid (58 720) (400 014)
Repayment of preference share liability in subsidiary - (50 000)
company
Reduction in ordinary share capital - (340 955)
Proceeds from issue of ordinary share capital 577 335 87 329
Transaction costs on issue of shares (14 807) -
Repayment of borrowings (52 790) (450 515)
Proceeds from borrowings - 38 536
Other financing activities 2 381 9 603
Net cash flows from/(used in) financing activities 391 334 (1 196 887)
Net increase in cash and cash equivalents 394 938 155 303
Cash and cash equivalents at the beginning of the 429 274 273 971
year
Cash and cash equivalents at the end of the year 824 212 429 274
ACCOUNTING POLICIES AND NOTES
Corporate information and basis of preparation
Clover Industries Limited is a company incorporated and domiciled in South
Africa.
These abridged consolidated financial statements were prepared in accordance
with IAS 34 Interim Financial Reporting, and the Companies Act, 2008 (Act 71
of 2008) as amended.
The accounting policies adopted in the preparation of the condensed
consolidated financial statements are in accordance with International
Financial Reporting Standards (IFRS) and are consistent with those followed in
the preparation of the annual financial statements for the year ended 30 June
2010, except for the adoption of the following new and amended Standards:
- IFRS 2 Amendments to IFRS 2 Share-based payments: Group cash settled
share-based payment transactions, effective date 1 July 2010
- IAS 32 Amendments to IAS 32, classification of rights issues denominated
in a foreign currency, effective date 1 July 2010
- IFRIC 19 Extinguishing financial liabilities with equity instruments,
effective date 1 January 2009
- Numerous minor improvements to IFRS
Segment report
Segment information is presented in respect of the Group`s operating segments.
The operating segments are based on the Group`s management and internal
reporting structure. During the current year reportable segments were changed
from reporting operating entities to product groups.
The Group comprises of the following operating segments:
- Dairy fluids segment is focused on providing the market with quality
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 segment focuses on the development and
marketing of non-alcoholic, value-added branded beverages products
- Other consists of Clover Industries Ltd holding company and Lactolab
(Pty) Ltd that renders laboratory services
SEGMENTAL REPORT
for the year ended 30 June 2011 2010
R`000 R`000
External Revenue
Dairy fluids 2 959 585 2 764 688
Dairy concentrated products 922 306 954 014
Ingredients 332 258 304 668
Non-alcoholic beverages 1 287 553 1 180 858
Other 8 734 9 006
5 510 436 5 213 234
Margin on material
Dairy fluids 1 227 429 1 133 850
Dairy concentrated products 224 199 258 706
Ingredients 71 397 67 676
Non-alcoholic beverages 656 297 629 880
Other 6 160 6 022
2 185 482 2 096 134
The Group operates mainly in the geographical area of South Africa. The
revenue and assets of the operations outside South Africa are insignificant.
Inter-segment revenue is insignificant.
OVERVIEW
Clover is pleased to announce that in its maiden year of being listed on the
JSE, it achieved solid and satisfactory results. It has managed to grow
profitability as well as market share despite difficult trading conditions
where input costs started to rise sharply.
The listing of the group on the JSE on 14 December 2010 is probably the
biggest highlight in Clover`s history. It culminated in what has been a very
long road to recapitalise the Group. In a very successful listing, Clover
raised R575 million of new capital that will be used to fund, amongst others,
Project Cielo Blu, which is necessary to address previous inefficiencies in
the supply chain.
Financial performance
Headline earnings improved considerably from R51,1 million to R175,2 million
and largely as a result of the much reduced restructuring costs in the year
under review. Normalised operating profit was slightly higher than the
previous year at R328,6 million compared to R320,8 million in FY2010 amidst
tough trading conditions during the latter part of the year and a
disappointing Easter sales period, this year falling outside the school
holidays. Sharp inflation towards the end of the year could not be
sufficiently recovered from the market as certain areas in the country
experienced oversupplies of milk during autumn and early winter. This caused
the normalised operating margin to deteriorate slightly from 5,2% in FY2010 to
5,0% in FY2011.
Cash flows were healthy and with the low gearing the Group is sufficiently
poised for expansion.
RECONCILIATION OF THE OPERATING AND ATTRIBUTABLE PROFIT TO NORMALISED PROFIT:
2011 2010
Rm Rm
Operating profit 319,0 559,0
Adjusted for:
(Profit)/loss on sale and scrapping of property, (7,3) 0,9
plant and equipment
Profit on the sale of Boksburg factory - (50,8)
Profit on sale of Danone Clover - (337,7)
Retrenchment costs 6,6 84,9
Option fee paid to HCI on capital restructuring - 11,4
Legal and professional services costs associated with 8,5 -
the listing
Legal and professional services costs associated with - 5,3
the capital restructuring
SAR bonuses paid to Executives on capital - 37,1
restructuring
Other restructuring costs 1,8 10,7
Normalised operating profit 328,6 320,8
Net financing cost (37,4) (63,5)
Tax expense
Total tax expense (97,5) (191,7)
STC paid on capital restructuring - 52,2
Tax adjustment on exceptional items (1,9) 69,8
Normalised profit from continuing operations adjusted 191,8 187,6
for exceptional items
During the year under review Clover experienced strong sales and volume growth
in its branded products category. Overall volumes grew by 5,4% (concentrated
dairy products expressed in milk equivalent) after a further strategic
reduction in bulk commodity product volumes of 13,4%.
Branded product volumes increased by 8,3% as a result of the successful
implementation of Project Reset, which used cost savings to reduce price
premiums.
Clover`s own beverage sales volumes as well as the volumes of principal
products distributed came under pressure during the last quarter, as consumer
spending contracted.
UHT and flavoured milk service levels to the market were poor during the
second half of the year, due to machinery inefficiencies on flavoured milk and
the unprecedented growth in sales volumes of UHT milk in the wake of Project
Reset, which outgrew production capacity. These constraints have been
addressed.
Selling prices were increased in the last quarter of the review period to
recover inflationary cost increases in wages, energy, fuel and ingredients.
These increases were difficult to implement fully at the time as certain areas
experienced an oversupply of milk during autumn that led to lagging competitor
prices. Operating margins as a result came under pressure during the second
part of the year.
Clover`s milk supply and demand were again largely in balance.
Financial position and cash flows
The increase in property, plant and equipment mostly stems from the capital
expenditure associated with Project Cielo Blu, which will expand distribution
capacity and increase efficiencies.
Intangible assets increased by R60 million, mainly as a result of a R49,3
million increase in goodwill following the Group`s acquisition of the non-
controlling interest in Clover Beverages from shareholders in terms of a
section 311 scheme of arrangement during May 2011 and the purchase of the
Danao trademark from Danone for R10 million.
Inventory levels were similar to the previous year while trade and other
receivables increased by 7,3% from 30 June 2010. This increase is in line with
revenue growth and is further inflated by the final quarter`s price increases.
Trade receivable days outstanding further improved on the previous year`s
already credible number.
Cash increased by R394,9 million, from R429,3 million in FY 2010 to R824,2
million, following the capital raised through the listing on the JSE.
The majority of the Group`s trade receivables have been securitised in the
past as collateral on long term funding. Of this funding, R155 million matures
during December 2011 and has accordingly been disclosed as a current
liability. A decision on whether to renew this funding is still pending given
the Group`s current strong cash position.
PROSPECTS
The global economy is set to remain uncertain in the year ahead and we are
bracing ourselves for another economically difficult year in South Africa. In
spite of this, we are confident that the impetus provided by the capital
raised through the listing, the various projects currently running, as well as
those that have been fully implemented will ensure that Clover maintains a
healthy position - both from a market share perspective as well as
financially.
The single biggest impact on Clover`s performance in the year ahead is going
to be input costs and the Group`s ability to recover it in the selling prices.
The country is seeing renewed inflationary pressures, and the high wage
settlements are indicative of price pressures on all fronts. Clover has not
yet addressed the inefficiencies in the supply chain, which means the higher
inflation will have an effect on a higher cost base than its competitors. It
is therefore imperative that Cielo Blu is implemented and finalised as a
matter of priority.
Clover`s fundamentals have not changed. It stands for quality and delivery.
Our products are cherished, enjoyed and admired by consumers. With the planned
savings in supply chain costs, our products can become more affordable and
available to even more potential consumers.
In the longer term, the entry of international retailers into South Africa, as
well as the opportunities to push into Africa through partnerships with our
customers, remain very exciting, and will continue to receive the Group`s
attention in the year ahead.
EVENTS AFTER THE REPORTING PERIOD
No significant events occurred subsequent to the year end.
GOING CONCERN
The Directors are satisfied that the Group is a going concern and have
therefore continued to adopt the going concern basis in preparing the
financial statements.
CASH DIVIDENDS
The Board declared a final dividend of R26,9 million or 15,0 cents per
ordinary share. The interim dividend together with the final dividend will
constitute 25% of Profit Attributable to Shareholders of Clover, excluding
after tax capital profits. The total ordinary dividend paid during the
financial year is 43 cents per share.
The dividend is payable in South African currency, on 17 October 2011.
The salient dates will be as follows:
Last day to trade "cum" the ordinary share dividend Friday, 7 October 2011
Shares commence trading "ex" the ordinary share Monday, 10 October 2011
dividend
Record date on Friday, 14 October 2011
Payment date on Monday, 17 October 2011
Share certificates may not be dematerialised or rematerialised between Monday,
10 October 2011, and Friday, 14 October 2011, both days inclusive.
On behalf of the Board
JAH Bredin (Chairman) JH Vorster (Chief Executive)
19 September 2011
PREPARATION OF ABRIDGED ANNUAL CONSOLIDATED RESULTS
The audited financial statements summarised in this section were prepared
under the supervision of Louis Jacques Botha CA(SA) in his capacity as Chief
Financial Officer of the Group.
INDEPENDENT AUDIT BY AUDITORS
The annual financial statements from which the abridged consolidated financial
statements were derived, have been audited by the Group`s independent
auditors, Ernst & Young Inc. A copy of their unmodified report is available
for inspection at the Company`s registered office.
ANNUAL GENERAL MEETING
The Annual General Meeting of the Company will be held at 200 Constantia
Drive, Constantia Kloof, Roodepoort, 1709 on Thursday, 10 November 2011, at
09:00 to transact the business as stated in the Annual General Meeting notice
which will be distributed to shareholders on 20 September 2011. The salient
dates are as follows:
Record date to determine which shareholders are entitled to 9 September 2011
receive the notice of Annual General Meeting
Last day to trade in order to be eligible to attend and vote 28 October 2011
at the Annual General Meeting
Record date to determine which shareholders are entitled to 4 November 2011
attend and vote at the Annual General Meeting
Forms of proxy for the Annual General Meeting to be lodged by 8 November 2011
12:00 on*
*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.
Company registration number 2003/030429/06
Ordinary share code CLR ISIN: ZAE000152377
Preference share code CLRP ISIN: ZAE000152385
Registered office 200 Constantia Drive, Constantia Kloof, 1709
Transfer secretary Computershare Investment Services (Proprietary) Limited, 70
Marshall street, Johannesburg, 2001
Postal address PO Box 6161, Weltevredenpark, 1715
Telephone (011) 471 1400
Directors - Non-executive JAH Bredin (Chairman), WI Buchner (Vice-chairman),
HPF du Preez, MG Elliott, JC Hendriks (Dr), TA Wixley* (Lead Independent), SF
Booysen* (Appointed: 7 October 2010), JNS Du Plessis* (Appointed: 7 October
2010), NP Mageza* (Appointed: 22 October 2010), NA Smith (Appointed 10 March
2011), VP Turner (Resigned: 10 March 2011), DK Smith* (Resigned: 22 October
2010), JW Lotz (Resigned: 7 October 2010), MG MacKenzie (Resigned: 7 October
2010), FG Meyer (Resigned: 7 October 2010), *Independent
Directors - Executive JH Vorster (Chief Executive), HB Roode (Deputy Chief
Executive), LJ Botha (Chief Financial Officer), CP Lerm (Dr)
Company secretary HB Roode
External auditors Ernst & Young Incorporated, Johannesburg
Bankers The Absa Group, First National Bank, Investec Bank
Sponsor Rand Merchant Bank (a division of First Rand Bank Limited)
www.clover.co.za
Date: 19/09/2011 07:05:01 Supplied by www.sharenet.co.za
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