Impairments push Clover into a full-year loss
By Andries Mahlangu - Sep 12th 2018, 13:07
Consumer goods and products producer Clover swung to a loss in the year to end-June, as the sudden resignations of the CEO and chair of Dairy Farmers of SA (DFSA) forced the group to write down the R439m revolving credit facility it had extended to the subsidiary.
DFSA CEO Louis Botha resigned due to the "enormous" conflict between losing milk producers or losing market share during what has been a very challenging time for the dairy industry, the company said in a statement.
DFSA chair Dirk Reyneke also resigned to allow the producer shareholders to appoint their own independent chair and CEO.
DFSA is responsible for the procurement of raw milk as well as the selling, marketing and distribution of the non-value-added drinking milk.
Clover said while it received no notification from the DFSA when it released a trading update in early August, it deemed it fit to "adopt a conservative approach and provide for the full impairment of the R439m revolving credit facility it extended to DFSA as at year-end".
As a result, headline loss per share was 23c in the year to June, from 64c a year ago.
"These latest developments should not deter from the exceptional performance delivered by Clover as highlighted in the normalised results," Clover said in its statement.
Stripping out the impairments, normalised headline earnings rose 224.7%, or R273.2m, to R394.9m, as the group recovered from the after-effects of the drought it experienced a year ago.
Clover also benefited from lower input costs, as well as what it said were efficiency initiatives.
"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," Clover said.
The group declared a final dividend of 48.68c per share, bringing the total to 75.24c, which was up 210.8%.
The share price was up 2.69% to R15.29 in early trade on the JSE, valuing the company at R3bn.
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