Wrap Text
Abridged audited consolidated results for the year
30 June 2012 and cash dividend declaration
Clover Industries Limited
Company registration number: 2003/030429/06
Ordinary share code: CLR Preference share code: CLRP
ISIN: ZAE000152377 ISIN: ZAE000152385
Abridged audited
consolidated results for the year
30 June 2012 and cash dividend declaration
Highlights
- Revenue increased by 10,4% to
R7,2 billion
- Operating profit increased by
16,4% to R371,2 million
- Operating margin increased to
5,1% from 4,9%
- Headline earnings increased by
18,6% to R207,8 million
- Headline earning per share
increased by 1,9% to 116,0 cents
- Cash dividend per ordinary share
of 13,40 cents declared
Consolidated statement of comprehensive income
For the year ended 30 June 2012 30 June 2011
R'000 R'000
Sales of products 6 109 268 5 510 436
Rendering of services 763 723 642 133
Sale of raw milk 346 287 386 070
Rental income 4 585 3 682
Revenue 7 223 863 6 542 321
Cost of sales (5 233 222) (4 801 323)
Gross profit 1 990 641 1 740 998
Other operating income 14 716 13 974
Selling and distribution costs (1 422 643) (1 243 160)
Administrative expenses (191 382) (173 287)
Restructuring expenses (9 573) (16 907)
Other operating expenses (10 527) (2 610)
Operating profit 371 232 319 008
Finance income 28 598 24 625
Finance cost (52 460) (62 065)
Profit before tax 347 370 281 568
Taxes (137 654) (97 534)
Profit for the year 209 716 184 034
Other comprehensive income
Exchange differences on translations of foreign
operations (822) (856)
Total comprehensive income for the year,
net of tax 208 894 183 178
Profit attributable to:
Equity holders of the parent 205 290 179 588
Non-controlling interests 4 426 4 446
209 716 184 034
Total comprehensive income attributable to:
Equity holders of the parent 204 388 178 992
Non-controlling interests 4 506 4 186
208 894 183 178
Headline earnings calculation
Profit for the year attributable to shareholders of 205 290 179 588
the parent company
Gross remeasurements excluded from headline
earnings 3 918 (4 173)
Profit on sale of property, plant and equipment (878) (7 277)
Non-controlling interest portion of profit on sale 1 324
of property, plant and equipment
Impairment of plant and equipment 4 796 1 780
Taxation effects of remeasurements (1 408) (248)
Headline earnings attributable to shareholders of
the parent company 207 800 175 167
Number of ordinary shares used in the
calculation of:
Earnings per share (weighted average) 179 111 867 1 153 882 447
Diluted earnings per share (weighted average) 191 127 152 1 164 890 519
Earnings per share attributable to ordinary equity
holders of the parent
Earnings per share (cents) 114,6 116,7
Diluted earnings per share (cents) 107,4 108,9
Headline earnings per share (cents) 116,0 113,8
Diluted headline earnings per share (cents) 108,7 106,2
Dividends per share (cents) 30,0 43,0
Consolidated statement of financial position
As at 30 June 30 June
2012 2011
R'000 R'000
Assets
Non-current assets
Property, plant and equipment 1 168 047 1 013 289
Investment properties 492 961
Intangible assets 357 767 347 102
Deferred tax assets 492 3 262
1 526 798 1 364 614
Current assets
Inventories 602 053 460 247
Trade and other receivables 996 995 865 725
Prepayments 25 631 29 000
Other current financial assets 173 750
Cash and short-term deposits 711 470 824 212
2 336 322 2 179 934
Assets classified as held-for-sale 423 940
2 336 745 2 180 874
Total assets 3 863 543 3 545 488
Equity and liabilities
Equity
Issued share capital 8 955 8 955
Share premium 675 113 675 113
Other reserves 254 286 252 784
Retained earnings 955 890 805 499
Equity attributable to equity holders of the parent 1 894 244 1 742 351
Non-controlling interests 1 796 9 444
Total equity 1 896 040 1 751 795
Liabilities
Non-current liabilities
Interest-bearing loans and borrowings 21 686 432 833
Provisions 61 637 62 526
Deferred tax liability 116 950 32 017
Trade and other payables 6 904 13 357
207 177 540 733
Current liabilities
Trade and other payables 1 316 794 1 068 836
Interest-bearing loans and borrowings 421 376 173 829
Other current financial liabilities 4 308
Income tax payable 5 672 243
Provisions 12 176 10 052
1 760 326 1 252 960
Total liabilities 1 967 503 1 793 693
Total equity and liabilities 3 863 543 3 545 488
Consolidated statement of cash flows
For the year ended 30 June 30 June
2012 2011
R'000 R'000
Operating activities
Profit before tax 347 370 281 568
Adjustment for non-cash items 141 710 153 197
Working capital adjustments (28 202) (122 585)
Income tax paid (44 519) (55 264)
Net cash flow from operating activities 416 359 256 916
Investing activities
Proceeds from sale of property, plant and
equipment 4 181 10 676
Interest received 28 598 24 625
Goodwill purchased through the buy-out of
Clover Beverages non-controlling interests (49 387)
Acquisition of non-controlling interest (20 792) (21 045)
Capital expenditure: tangible and intangible assets (273 682) (216 326)
Other investing activities 5 545 (1 854)
Net cash flows used in investing activities (256 150) (253 311)
Financing activities
Interest paid (52 460) (62 065)
Dividends paid (53 734) (58 720)
Proceeds from issue of ordinary shares 577 335
Transaction cost on issue of shares (14 807)
Repayment of borrowings (169 974) (52 790)
Proceeds from borrowings 6 375
Other financing activities (3 158) 2 380
Net cash flows (used in)/from financing activities (272 951) 391 333
Net (decrease)/increase in cash and cash
equivalents (112 742) 394 938
Cash and cash equivalents
at the beginning of the year 824 212 429 274
Cash and cash equivalents at the end of the year 711 470 824 212
Consolidated statement of changes in equity
For the year ended 30 June 2012 Preference
Ordinary Ordinary share
and and capital and Foreign
preference preference premium Other currency Non-
share share transferred capital translation Retained controlling Total
capital premium to debt reserves reserve earnings Total interests equity
R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000
Balance at 30 June 2010 15 136 365 786 (259 382) 248 565 (6 377) 684 631 1 048 359 28 108 1 076 467
Profit for the year 179 588 179 588 4 446 184 034
Other comprehensive income (596) (596) (260) (856)
Total comprehensive income (596) 179 588 178 992 4 186 183 178
Ordinary shares issued 2 763 574 572 577 335 577 335
Share issue cost allocated to share premium (14 807) (14 807) (14 807)
Share-based payment reserve 11 192 11 192 11 192
Dividends of subsidiaries (1 805) (1 805)
Non-controlling interest acquired through
the buy-out of Clover Beverages minorities (21 045) (21 045)
Dividends (58 720) (58 720) (58 720)
Balance at 30 June 2011 17 899 925 551 (259 382) 259 757 (6 973) 805 499 1 742 351 9 444 1 751 795
Profit for the year 205 290 205 290 4 426 209 716
Other comprehensive income (902) (902) 80 (822)
Total comprehensive income (902) 205 290 204 388 4 506 208 894
Acquisition of non-controlling interest (8 987) (8 987) (11 805) (20 792)
Share appreciation rights exercised (1 724) (2 716) (4 440) (4 440)
Share-based payment reserve 13 115 13 115 13 115
Dividends of subsidiaries (349) (349)
Dividends forfeited 1 551 1 551 1 551
Dividends (53 734) (53 734) (53 734)
Balance at 30 June 2012 17 899 925 551 (259 382) 262 161 (7 875) 955 890 1 894 244 1 796 1 896 040
Accounting policies and notes
Corporate information and basis of preparation
Clover Industries Limited ("Clover" or "the Group") 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 abridged 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 2011, except for the
adoption of the following new and amended Standards:
- IAS 24 Amendments to IAS 24 Related Party Disclosures, effective date
1 January 2011.
- IFRIC 14 Amendments to IFRIC 14 Prepayments of a Minimum Funding
Requirement, effective date 1 January 2011.
- IFRS 7 Financial Instruments: Disclosure Transfer of Financial Assets,
effective date 1 July 2011.
- 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.
The Group comprises 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 30 June
2012 2011
R'000 R'000
External revenue (excluding sale of raw milk)
Dairy fluids 3 092 413 2 959 585
Dairy concentrated products 1 020 961 922 306
Ingredients 428 494 332 258
Non-alcoholic beverages 1 557 476 1 287 553
Other 9 924 8 734
6 109 268 5 510 436
Margin on material
Dairy fluids 1 225 251 1 227 429
Dairy concentrated products 300 797 224 199
Ingredients 83 903 71 397
Non-alcoholic beverages 805 551 656 297
Other 7 418 6 160
2 422 920 2 185 482
The Group operates mainly in the geographical area of South Africa. The revenue
and assets of the operations outside South Africa are insignificant.
Overview
Clover is proud to announce another set of solid results for the year ended
30 June 2012. Revenue increased by 10,4% to R7,2 billion from R6,5 billion,
operating profit by 16,4% to R371,2 million from R319,0 million and the operating
margin for the year improved from 4,9% to 5,1%.
Clover continued its strategy of investing in and concentrating on branded and
value-added products. In most categories Clover increased its market share
except, notably, UHT (long life) milk where there were new low-priced entrants
to the market.
As a result of continuous input cost pressures at farm level, milk prices were
increased by 60 cents a litre during the months of January, February and March,
which had the desired effect of stimulating milk flow. However, the milk price
was subsequently reduced by 20 cents a litre from August 2012, ahead of
the high milk producing season in order not to over stimulate milk flow. Cost
pressures on farms have, however, not abated, and adjustments will be made
when considered necessary subject to market conditions.
Clover's major capital expansion and repositioning programme Project
Cielo Blu is still on track for completion towards the end of 2013. No major
delays, other than the delay at the Queensburgh distribution facility due to a
new network design, or material over-expenditure, have occurred to date. The
continuous drive to lower operational costs by increasing efficiencies has had
positive results, with cost savings being invested back into lower selling prices to
achieve the desired volume growth.
Financial performance
Headline earnings improved by 18,6% to R207,8 million from R175,2 million in
the prior year. The 16,4% increase in operating profit and a 36,3% reduction in net
finance costs largely contributed to the increase in headline earnings. Headline
earnings per share increased by 1,9% to 116,0 cents (2011: 113,8 cents) as a result
of the greater number of shares in issue during the current year.
Revenue from the sale of products increased by 10,9%, with 2,4% of this
relating to volume growth and the rest being attributable to a combination of
inflationary price increases and improved product mix. Revenue from rendering
of services increased by 18,9% or R121,6 million as a result of increased
distribution capacity and consequent principal volume growth, together with
the additional Epic Foods and Danone merchandising business. Revenue from
the sale of raw milk to Danone, which is made at cost, decreased by 10,3% due
to greater direct raw milk purchases by Danone in the market.
Raw material costs increased by 10,2%, mostly as a result of the farm-gate milk
price increases of more than 20% early in the second half of the year.
Packaging costs increased by 6,7%, slightly above inflation, mainly because of
the influence of higher oil prices on plastic packaging.
Despite the direct impact of higher fuel prices and staff costs on milk collection
costs, the overall increase of only 5,3% was brought about by the increased
UHT production capacity created in Port Elizabeth as part of Project Cielo
Blu. Higher staff costs, volume growth and inflation in electricity costs caused
production costs to rise by 9,3%.
Primary distribution costs are heavily influenced by volume growth and fuel
costs. The high volume growth in Principal distribution volumes and Clover's
own volume growth, and fuel cost increases, pushed the increase to 11,7% for
the year.
Resulting from the above the gross margin increased to 27,6% from 26,6%.
High staff inflation, increased distribution volumes and higher fuel prices all
contributed to the 14,4% increase in selling and distribution expenses. Clover's
investment in the production of its "Way Better" advertising campaign, which
was accounted for during this year, also contributed to the increase in selling
expenses.
Administrative expenses increased by 10,4% or R18,1 million with the above
staff cost inflation portion accounted for by a departmental restructuring of a
business unit from marketing to administration.
The 2010/2011 restructuring expenses included a sum of R8,5 million associated
with the listing on the JSE resulting in a 43,4% decrease in the year under review.
As is the case with headline earnings, the increase in operating profit and the
reduced net interest charge increased profit for the year by 14,0% to R209,7 million
(2011: R184,0 million). However, the effective tax rate of 39,6%, largely resulting
from prior year tax adjustments, eroded the earlier gains to some extent.
Segmental performance
Dairy Fluids' external revenue, excluding raw milk sales, increased by 4,5% on
volume growth of 2,6%. The margin on material ("MOM") percentage weakened
from 41,5% to 39,6%. Selling price increases were insufficient to recover the
increase in raw material costs, and in particular the increase in raw milk prices
during the second half of the year, to maintain the MOM percentage. A higher
than normal national autumn and early winter milk supply constrained attempts
to increase selling prices further, which would have risked volume losses.
MOM, as a result, decreased to R1 225,3 million or 0,2%.
Concentrated Dairy Product volumes increased by 0,1% and external revenue by
10,7%. The volume of the bulk commodity product component further reduced
by 19,5% in line with the Group's strategy. The branded component volume,
however, increased by 15,6%. The improved mix and the higher selling prices
increased the MOM percentage to 29,5% from 24,3%. MOM increased to
R300,8 million or 34,2%.
International dairy ingredient prices weakened substantially during the second
half of the year, affecting the volumes of milk powder sales due to the availability
of cheaper imported product. Ingredient volumes consequently decreased
by 13,1%, albeit from an already low base in line with the Group's strategy.
A much higher butter component, however, caused revenue to increase by
29,0% and the MOM percentage to only reduce slightly from 21,5% to 19,6%.
MOM increased by 17,5% to R83,9 million.
The Beverages segment performed very well, with sales volumes increasing
by 8,6% and revenue by 21,0%. The MOM percentage increased to 51,7% from
51,0% and MOM by 22,7% to R805,6 million. This resulted from the higher selling
prices and tight control over raw material costs.
Financial position and cash flows
The increase in property, plant and equipment stems mostly from the capital
expenditure associated with Project Cielo Blu and other capital projects.
Inventory levels increased sharply by 30,8%. This was the cumulative result of
the farm-gate milk price increase of more than 20%, volume growth, imported
UHT milk to facilitate the move of production capacity in terms of Project Cielo
Blu and lower UHT sales volumes in the last quarter of the year after Clover's
selling price increases.
Clover's volume growth and increased Principal volumes, together with
the higher selling prices accounted for the 15,1% increase in trade and other
receivables from 30 June 2011. Trade receivable days outstanding remained at
very low levels.
Trade and other payables increased by R241,5 million or 22,3%. Increased farm-
gate milk prices, increased principal sales, creditors for capital projects and
the year-end which occurred over a weekend resulted in this above-normal
increase. Principal sales are included in trade receivables, with a corresponding
liability included in trade payables reflecting the amount payable to principals for
their sales.
Cash generated from operations, before working capital changes, is
R444,6 million compared to R379,5 million reported in the prior year. During
the year under review, working capital absorbed cash in the sum of R28,2 million.
The Group ended with a net decrease in its cash position for the year of
R112,7 million.
Prospects
The global economy is set to remain uncertain in the year ahead and Clover is
bracing itself for another difficult year economically in South Africa.
In spite of this, Clover is confident that the continued implementation of Project
Cielo Blu, ongoing cost-savings drives and other margin-enhancing projects
approved by the Board will ensure Clover retains a healthy market share and
strong balance sheet.
Events after the reporting period
Subsequent to year end the competition authorities approved the acquisition of The
Real Juice Co. Holdings (Pty) Ltd by Clover.
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 abridged audited
consolidated financial statements.
Cash dividends
Notice is hereby given that the directors have declared an annual gross cash dividend
of 13,40 cents (11,39 cents net of dividend withholding tax) per ordinary share for the
year ended 30 June 2012.
The dividend has been declared from income reserves and no secondary tax on
companies' credits has been used.
A dividend withholding tax of 15% will be applicable to all shareholders who are not
exempt. The Company's income tax number is 9657/002/71/4.
The issued share capital at the declaration date is 179 111 867 ordinary shares.
The salient dates will be as follows:
Last day to trade to receive a dividend Friday, 28 September 2012
Shares commence trading "ex" dividend Monday, 1 October 2012
Record date Friday, 5 October 2012
Payment date Monday, 8 October 2012
Share certificates may not be dematerialised or rematerialised between Monday,
1 October 2012 and Friday, 5 October 2012, both days inclusive.
On behalf of the Board
JAH Bredin JH Vorster
Chairman Chief Executive
11 September 2012
Preparation of abridged annual consolidated results
The audited financial statements summarised in this section were prepared
under 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 Friday, 30 November 2012, at
09:00 to transact the business as stated in the Annual General Meeting notice
which will be distributed to shareholders on 21 September 2012. The salient
dates are as follows:
Record date to determine which shareholders are
entitled to receive the notice of Annual General Meeting 14 September 2012
Last day to trade in order to be eligible to attend and vote
at the Annual General Meeting 16 November 2012
Record date to determine which shareholders are entitled
to attend and vote at the Annual General Meeting 23 November 2012
Forms of proxy for the Annual General Meeting to be
lodged by 09:00 on* 29 November 2012
*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 Preference share code: CLRP
ISIN: ZAE000152377 ISIN: ZAE000152385
Registered office: Postal address:
200 Constantia Drive PO Box 6161, Weltevredenpark, 1715
Constantia Kloof, 1709 Telephone: (011) 471 1400
Transfer secretary:
Computershare Investment Services (Pty) Ltd
70 Marshall Street, Johannesburg, 2001
Directors: Non-executive
JAH Bredin (Chairman)
WI Buchner (Vice-chairman)
TA Wixley* (Lead Independent)
SF Booysen (Dr)*
JNS du Plessis*
HPF du Preez
MG Elliott
JC Hendriks (Dr)
NP Mageza*
NA Smith
*Independent
Directors: Executive
JH Vorster (Chief Executive)
HB Roode (Deputy Chief Executive)
LJ Botha (Chief Financial Officer)
CP Lerm (Dr)
Company secretary: HB Roode
Auditors: Ernst & Young Inc., Johannesburg
Bankers: The Absa Group, First National Bank,
Investec Bank
Sponsor: Rand Merchant Bank (a division of
FirstRand Bank Limited)
www.clover.co.za
Date: 11/09/2012 07:15:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
