Proposed restructure, cautionary announcement and further voluntary operational update Clover Industries Limited (Incorporated in the Republic of South Africa) Registration number 2003/030429/06 NSX Ordinary Share code: CLN Ordinary Share Code: CLR ISIN No: ZAE000152371 (“Clover” or "the Company" or "the Group") PROPOSED RESTRUCTURE, CAUTIONARY ANNOUNCEMENT AND FURTHER VOLUNTARY OPERATIONAL UPDATE Proposed restructure and cautionary announcement Shareholders are advised that Clover is in the process of restructuring its business ("Restructure") to give effect to its stated objective of developing higher margin, value added products in dairy and other related food categories and to eliminate its exposure to the cyclicality of its low margin business in future. The Restructure will effectively result in the Group rearranging its business in a way that will see Clover continue its strategy whilst simultaneously supporting the ambitions of its milk producers to pursue a volume growth strategy through a newly formed special purpose vehicle, Dairy Farmers of South Africa Proprietary Limited (“DFSA”). Further, Clover will address the issue of raw milk price determination in this process so that it will, in future, limit its price exposure to the various cycles in supply and demand of raw milk. In terms of the Restructure, DFSA will become the preferred supplier of all raw milk requirements to Clover. In addition, it is anticipated that DFSA will sell and administer all the low margin fresh milk, ultra-high temperature (UHT) milk, and ultra-pasteurised (UP) milk ("Non-Value Added Liquid Milk") directly to the trade and consumers under the Clover brand and other selected brands in terms of a licence agreement concluded between Clover and DFSA. Clover will not assume raw milk volume risk and will purchase its raw milk directly from DFSA using a predetermine pricing formula. Clover will, however, continue to provide the majority of support services to DFSA, including raw milk collection, warehousing, distribution and merchandising for an extensive period of time. While DFSA will initially operate on a break-even basis, it is anticipated that – as DFSA grows - Clover will increasingly benefit from the revenue gains made as a result of additional volumes in Non-Value Added Liquid Milk distributed through the Group's supply chain network. Initially, DFSA will be a wholly-owned subsidiary of the Group. However, a further transaction will be effected on or before 30 June 2017 in terms of which Clover will retain a strategic shareholding in DFSA. This carve-out of DFSA from the Group will commence as from 1 January 2017, and will be implemented on or before 30 June 2017, during which period, a number of important decisions and implementation steps will be actioned, including but not limited to the following: - Extensive consultation with all Clover producers to secure a commitment to the new structure; - To define growth opportunities for both the Group and DFSA as a result of the Restructure; - The appointment of the DFSA Board of Directors; - The appointment of a new management team of DFSA; - Finalisation of all legal and statutory requirements and agreements; - Transfer of existing staff (where appropriate); - Implementation of the various operational agreements and licensing agreement; and - Ensure practical execution of all said agreements. The Company will continue to pursue strategic growth prospects through organic and acquisitive growth opportunities. The board wishes to reiterate that Clover’s stated objectives remain sacrosanct and the Company will continue to pursue them: - To promote and develop value added products in dairy and other related food categories; - To expand its non-alcoholic beverages portfolio; and - To further develop and enhance its key competencies in brand development, production, distribution and merchandising. Having regard to the above, shareholders are advised to exercise caution when dealing in the Company's securities until a full announcement is made. Further voluntary operational update Shareholders are referred to the voluntary operational update published on the Security Exchange News Service on 27 October 2016. The Company wishes to advise shareholders that trading conditions remain constrained, with volumes tracking below anticipated levels. Strong trade during the Festive Season remains critical to match the financial performance achieved in the previous corresponding 6 months. Any forecast financial information contained in this announcement has not been reviewed or reported on by the Company’s external auditors. Johannesburg 5 December 2016 Sponsor RAND MERCHANT BANK (A division of FirstRand Bank Limited) NSX Sponsor IJG SECURITIES Attorneys Werksmans Date: 05/12/2016 12:00:00 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.