Further trading statement Clover Industries Limited (Incorporated in the Republic of South Africa) (Registration number 2003/030429/06) Ordinary Share code: CLR ISIN No: ZAE000152377 NSX Ordinary Share code: CLN Bond Company Code: CLRI ("Clover" or "the Company") FURTHER TRADING STATEMENT In terms of the Listings Requirements of the JSE Limited, companies are required to provide guidance to the market when they are satisfied that a reasonable degree of certainty exists that the financial results for the forthcoming reporting period will differ by at least 20% from the results of the previous corresponding reporting period. Accordingly, shareholders are also referred to the announcement released on the Stock Exchange News Service (“SENS”) on 28 June 2018 wherein the Company advised that headline earnings per share (“HEPS”) and earnings per share (“EPS”) for the year ended 30 June 2018 (“current period”) are expected to be more than 20% higher than the corresponding reporting period of the previous year (the year ended 30 June 2017) (“comparative period”). After having closed out the June 2018 month-end, the Company now has a better view on the expected full year results of the group, and shareholders are now advised that the Company expects: - HEPS for the current period to be between 207.13% and 227.13% higher than HEPS of 63.90 cents reported for the comparative period, resulting in an expected HEPS of between 196.26 cents and 209.04 cents. - EPS for the current period to be between 135.0% and 155.0% higher than EPS of 83.1 cents reported for the comparative period, resulting in an expected EPS of between 195.40 cents and 212.03 cents. During the current period, a mix of interventions by the management team and the normalisation of external factors enabled the Company’s results to recover to expected profit levels compared to the disappointing results achieved in the comparative period. These interventions and factors included, inter alia, the following: - normalised weather conditions following the drought-related difficulties which significantly impacted the Company’s performance for the corresponding period; - lower input costs compared to the corresponding period which saw abnormally high levels because of the widespread and prolonged drought; - aggressive fixed cost control; - realisation of planned supply chain efficiencies and resultant lower costs; - ongoing introduction of value-added products, focusing on the needs of the consumers; - increased marketing spend, including new product launch activities; - controlled roll-out of a wider distribution reach; - after substantial capital spent in previous years, normalised capital expenditure in the current period resulted in lower interest charges; and - the successful exit and transfer of the cyclical low margin drinking milk business from Clover to Dairy Farmers of South Africa (“DFSA”). The macro environment during the second half of the financial year was in some instances tougher than the first half and characterised by a rise in unemployment, a contraction in GDP, rand volatility and ongoing price inflation, specifically higher fuel and electricity prices. In addition, the introduction of sugar taxes and the VAT increase put a significant strain on consumer spending. Consequently, 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. The Company decided to increase selling prices only moderately and to implement them late in the financial year in order to gain back lost market shares from the previous year. Selling prices were therefore increased in April 2018 to cover inflationary cost pressures, however cost management and driving efficiencies remained a clear focus to align with the consumers’ continued price sensitivity. Clover’s brands performed well, with all major categories either increasing or maintaining their market shares. Whilst it is pleasing to see profitability levels returning to expected levels, the challenging macroeconomic and trading conditions experienced since the beginning of the year are expected to continue over the next year. 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. The estimated financial information on which this trading statement is based has not been reviewed and reported on by the Company’s external auditors. It is anticipated that Clover will release its annual results on SENS on or about 12 September 2018. Johannesburg 7 August 2018 Sponsor RAND MERCHANT BANK (A division of FirstRand Bank Limited) Date: 07/08/2018 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.