Ethical operations – reporting on the 6 capitals

• Six capital report
• Human capital
• Natural capital
• Manufactured capital
• Intellectual capital
• Social and relationship capital
• Financial capital
• Combined Assurance

Intellectual capital

Trademarks and Patents

Clover is the proprietor of more than 934 registered trademarks within the following jurisdictions:

Jurisdiction	Number of trademarks	Number of designs
South Africa	442	9
Rest of Africa*	523
Other countries*	1

*	Botswana, Swaziland, Namibia, Angola, DRC, Egypt, Ghana, Kenya, Lesotho, Malawi, Mauritius, Morocco, Mozambique, Nigeria, OAPI and Seychelles.

Clover further holds 11 patents registered in South Africa and Namibia.

Clover's intellectual property is protected through employment contracts, confidentiality agreements and licence agreements. A second line of defence is the highly reputed patent and trademark attorneys we retain.

Brands and reputation

Over the years, Clover's Marketing Department has developed several deeply entrenched household brands. These include Clover, Tropika, Butro and Krush, just to name a few. These brands are kept fresh and relevant to their markets through continual marketing.

Clover has been a household name for more than a century and has played an integral role in the development of South Africa's dairy and fast moving consumer goods industry. Today, Clover is a high profile branded consumer goods and products group with core competencies in producing dairy and non-dairy beverage consumer products, distribution of chilled and ambient consumer products, and the sales and merchandising of consumer goods.

Clover regularly wins awards that confirms its status as a trusted household name. Some awards bestowed on Clover include:

• winner of South Africa RepTrak^® 2016 most reputable company in South Africa award
• numerous 2016 SA Dairy Championships awards
• Product of the year 2016 winner: Tropika 200ml
• winner of Reader's Digest's Most Trusted Brands for 2015
• South Africa's leading Iconic Brand in the fresh milk, cream and cheese category for 2015 and milk, feta and condensed milk in 2016

Clover's market share in major dairy product categories was as follows:

	Clover's Percentage Market Share as at 30 June 2016
Fresh Milk	24,1
UHT Milk	14,4
Cream	28,8
Feta Cheese	28,0
Pre-packed cheese	23,8
Liquid custard	7,7
Processed Cheese slices	15,4
Pure Fruit Juice	42,9
Dairy Fruit Mix	79,3
Iced Tea	17,5
Bottled Water (Including Aquartz and Nestle)	10,9
Flavoured Milk	25,6
Maas	9,3
Yoghurt	8,3

Source: Nielsen Report 30 June 2016 (12 monthly moving).

	Cream Clover cream is ultra-pasteurised to ensure a superior quality product with an extended shelf life. Clover aims to increase its market share in this segment by creating awareness and educating consumers on the multiple uses of cream. The packaging used for our cream products are dedicated to recipes and communication on all areas of cooking and baking where cream can be used.
	Fresh milk Clover is the market leader in fresh milk. In order to maintain our number one position and reinforce our leadership, Clover focuses on differentiation and innovation, underpinned by superior quality, providing consumers with solutions that make their lives Way Better.
	UHT milk The quality and goodness of UHT milk is kept fresh for longer due to the UHT (Ultra High Temperature) process and special packaging that allows the product to be stored for a period of nine months without refrigeration.
	Feta Cheese Clover feta cheese is the second largest brand in the market and is competing for the number one position. In this extremely price sensitive market, Clover recognises that it is important to ensure pricing and quality are right. Further to this, Clover promotes feta in store to drive growth and profitability.
	Butter Clover is the largest man-ufacturer of butter in the country. Clover is the market leader in this segment, including such well-known brands as Clover Mooi River salted butter, Clover Springbok unsalted butter and Butro butter spread. Clover butter is a natural product without any additives, artificial colouring or flavouring.

Clover's range of cheeses

For over 100 years, Clover cheeses have been making mealtimes more delicious. This is because they are made according to the highest quality standards, with care and dedication. Clover is the market leader in the pre-packed cheese segment with Clover and Elite cheese sharing in this category. Clover's award-winning individually wrapped processed cheese is indicative of Clover's clear ambition to provide consumers with the highest quality, best tasting products. New Clover individually wrapped processed cheese slices are preservative free and made with great tasting, excellent quality ingredients. Sacca cheese enjoys great heritage as it has been available since 1914. Elite Gouda is the only gouda in South Africa that is made in the traditional way.

 

	Aquartz Natural Mineral Water Aquartz is a natural mineral water bottled directly at source, to ensure the highest quality, purity and safety. The Aquartz water source is a naturally sweet mineral water that is low in salts. Aquartz is available in natural mineral water or in sparkling flavoured water options and is also complemented by a flavoured water range.
	Nestlé Purelife Mineral Water Nestlé Purelife is a pure, still or sparkling mineral water that is bottled directly at its unique source. Its balance of minerals and crisp mouth sensation revives your palate and is pure hydration for the whole family.
	Danao Danao is a dairy fruit mix drink containing real fruit juice and dairy with added vitamins A, B2, B12, C and Calcium. The brand focuses on the inherent goodness of fruit juice and dairy – “Double the Happiness”. A campaign is underway to broaden the appeal from being a breakfast drink to an all-day, any time refreshment with an extended consumer target market.
	Clover Life Nectar Clover Life Nectar range offers consumers a delicious, refreshing juice nectar that is affordable enough to purchase regularly. Clover Life has always been a favourite in South African homes and occupies the number one position in the Fruit Drink/Nectar category.
	Tropika Tropika is made from a combination of fruit juice and dairy, which results in a unique smooth tasting beverage. After 31 years in the South African market, Tropika is still the market leader and the bestselling dairy fruit mix beverage in South Africa.
	Manhattan Iced Tea Manhattan Iced Tea is a non-carbonated beverage with a tea extract base and fruit flavour blends. Manhattan Iced Tea has three tea extract variants, black, green and white tea, which are then blended with a variety of fruit flavours or fruit blend combinations for a refreshing and tasty ready to go Iced Tea.
	Clover Krush Clover Krush is a premium, 100% fruit juice blend, available in 10 exciting flavours and catering for the entire family. Clover Krush will ensure not only a great healthy alternative, but the delicious tastes of nature with uncompromising everyday goodness. No sugar or sweeteners are added to the juice and it is enriched with Vitamins A, C and E. Clover Krush is the market leader in the pure juice, short life fruit juice market.
	Super M Super M is the coolest teenage flavoured milk. It is available in four great flavours: chocolate, strawberry, banana and cream soda. Where the competing market leading brand's strategy is based on flavour, offering a variety of flavours for each consumer, Super M decided to follow global trends and offer variety in pack sizes in the top four selling flavours.
	Condensed Milk Full-cream sweetened condensed milk man-ufactured by Clover is prepared from stand-ardised bovine milk and pure refined sugar. The product does not contain any preservatives except sugar.
	Clover Classic Custard Clover Classic is a range of deliciously creamy, smooth yoghurt and ready-to-eat custard made with a unique Clover recipe. Clover Classic Custard comprises above 80% Clover Milk, with added Clover Cream, vitamins, protein and calcium.
	Amasi Amasi (so called in Zulu and Xhosa, and “maas” in Afrikaans) is the common word for fermented milk that tastes like cottage cheese or plain yogurt. Clover brings the love for tradition into dairy with Clover Amasi. Clover's Maas recipe is rich and creamy to reignite the love in their customer's hearts with this cultural and delicious treat.
	Fruits of the Forest Fruits of the Forest is a high quality, low fat, fruit yoghurt made with real fruit pieces. Its improved recipe now offers a creamier taste, bigger and crunchier fruit pieces than before, and 10 vitamins. Available in a variety of popular flavours and convenient packs, consumers can indulge in this ‘fruitful' bounty any time of the day.
	Clover Classic Yoghurt Clover Classic Yoghurt is made with more than 80% Clover Milk and is the only yoghurt in the market enriched with 10 vitamins. After its successful launch in January 2015, Clover Classic Yoghurt already achieved a market share of 9,2% in the Smooth Yoghurt category.

Future value creation by expanding Clover's brand basket

	Clover Nolac Clover Nolac is an innovative, great tasting, quality milk product for lactose intolerant people and those avoiding lactose an easy to digest and nutritionally boosted product in an easy, convenient format. This product is also enriched with calcium and vitamin D, which are nutrients known to be lacking in the diet of a lactose intolerant person. Clover Nolac will be launched in September 2016 and will be available in Fresh and Long Life options.
	Clover Care Clover Care Enriched Full Cream Milk is a quality tasting milk that is now enriched with vitamins, amino acids and minerals to give the whole family the nutritional boost they need to stay healthy. This innovative product delivers all the nutrients consumers are looking for in an easy, convenient format, without the expense of multivitamins. Clover Care is the first of its kind in South Africa and will be launched in September 2016. It is available in Fresh and Long Life options.
	Frankies Olde Soft Drink Clover Frankies offers the current Frankies range of carbonated soft drinks, ice lollies and hot chocolate to the market. The Frankies product brings original, unique and innovative flavours to the already established Clover brand.
	Clover Numel Clover Numel is the first product of its kind in South Africa which is a long life dairy blend of full cream or low fat milk, cream, whey powder and buttermilk powder with added vitamins and minerals. Numel is a product that will help consumers get more value for their money without losing out on quality. This product is ideal to use in cooking, baking, on cereals and in tea and coffee. This product was launched in June 2016.
	Clover “Sip Up” Drinking Yoghurt Sip Up is a nutritious and trendy yoghurt that will help curb daytime hunger while providing all the nutrients for healthy bodies. The trendy bottle is convenient and practical, making it a great on-the-go snack. Sip Up is a great source of 10 vitamins, calcium and sustained energy all day long.

Licence and memberships

Clover is constantly looking for ways to improve its business, methods and record keeping. Introducing state of the art systems to automate and gain further insight into business functions, enables Clover to be “Way Better”.

The following table lists some of Clover's significant IT and systems licences:

Software	Description
BES Time	Time & Attendance Software
ERP LX, eRMS, ELKE	ERP System
SSL Certificates for external exposed systems	IT Security
KAS, Milk System	Application Development Software
Cognos	Analytics and Reporting
Heat & ITSM	Customer/Consumer call logging software
Exrillo	Export System
Dispatcher	Warehouse Management System
Startrak	Warehouse Management System (Small Branches)
D-BIT	Fixed Assets System
ION BI	Fixed Budget System
FTP Server	Integration
Brightstor	Backup Software
Sophos	IT Security
Email protection	IT Security
DB2Connect	Development software for Data Warehouse
Websphere Message Broker	Integration Software
Wonderware	Process Control Software
AutoCad	Design Software
Entropy	SHE Software
On-Key	Production Performance Software
Advanced Planner, Demand Planner, S&OP	Planning Software
Optima/Plato	Primary Distribution Software
Roadshow	Secondary Distribution Software (Route Optimisation)
BarnOwl	Risk Management

Clover's people are encouraged to join institutions that offer knowledge and networking. Clover, as an organisation, and our people belong and contribute to the following associations:

Capitals	Memberships or Professional Institutions
Human Capital	Institute of Directors
Natural Capital	Cape of Good Hope Agricultural Society Central Agricultural Society South African Juice Association Milk SA International Dairy Federation Global Dairy Platform (GDP) Dairy Sustainability Framework (DSF) International Farm Comparison Network (IFCN) South African Society of Dairy Technology
Manufactured Capital	Engineering Council of South Africa National Laboratory Association South African Association of Food Science & Technology South African Institute of Professional Engineers The Institute of Packaging Chartered Institute of Purchasing and Supply
Intellectual Capital	Consumer Goods Council of South Africa Law Society of South Africa
Social and Relationship Capital	Health Professions Council of South Africa South African Reward Association
Financial Capital	South African Institute of Chartered Accountants Chartered Institute of Management Accountants South African Institute of Professional Accountants

Clover's association with the following institutions supports and informs our internal corporate governance:

• The Institute of Risk Management
• Institute of Compliance
• The Institute of Internal Auditors
• Institute of Directors.

Commercial sales

Clover stays ahead of changes in existing markets, while entering new markets and product categories. In summary, this is the ethos and strategy of Clover's Commercial Sales department.

In the Clover context, vertical growth is essential. We have made major improvements in assimilating customer insights, analytics and research. Our sales teams have introduced new concepts in selling, in which consumers are attracted to bigger basket buying and reward programmes that ensure sales right through until till point.

Clover's horizontal growth will be driven by improving structures and implementing new route-to-market methods, while building up support systems and processes. Our Masakhane project is a major driver of this process.

Future value creation: IBM, leaders of change and innovation

Collaboration with our customers is critical to maintaining close working relationships with our retailer partners. Clover has therefore embarked on a project with IBM, called Kolabo, to enable “well-informed” business decisions at all levels of management. The Kolabo project will enable Clover to make use of “big data” analytics to provide insights into market dynamics, consumption trends and the needs of our retailers.

Clover merchandising is “way better!”

Clover presently utilises approximately 2 385 permanent merchandisers to service over 3 000 retail and wholesale outlets. These merchandisers generally work a maximum of 45 hours per week, which may include some weekend servicing of clients.

Clover's merchandisers liaise closely with store management and Clover sales staff to ensure that our products are correctly placed in retail stores and are available at all times in the correct quantities.

In 2016, Clover continued to roll out the CAMPRO Project to improve and standardise the “way we worked”. The CAMPRO project continues to yield results, prompting one of our major retailer clients to request using it for their own company processes.

Distribution for third parties

Clover leverages our standard setting distribution system to provide sales and/or distribution services to many leading companies, as listed here.

Information systems

Clover's in-house Information Technology (IT) Department provides the digital backbone for all our management systems. Clover's IT governance and its independent assurance is outlined in the Governance, Risk and Compliance Report, here.

Clover's Commercial Sales division and our IT department are working with IBM to implement an analytical platform for customer collaboration and data analytics. Once operational, this platform will be expanded to other business areas to provide improved analytics and business insights. In manufacturing, for example, improved analytics around machine maintenance can result in a major reduction in scrap, downtime and related costs. We could also align the system to Clover's HR and access control systems to generate savings from overtime management.

Clover is examining mobile solutions to automate and/or improve many routine operations. Smartphone and tablet applications could speed up administrative processes such as credit notes, overtime, driver reconciliations and delivery turn-around times.

Clover is presently implementing an integrated Supply Chain Planning System to ensure that sales, production and logistics planning activities are synchronised and optimised for:

• improved order fulfilment
• reduced finished goods inventory levels and holding costs
• reduced raw material and packaging inventories
• less waste
• improved production throughput.

This system will enable improved tactical and forward scenario planning to make Clover more responsive to market dynamics, while also increasing our demand forecasting accuracy.

Clover continuously evaluates changing trends in technology to identify systems that can generate maximum value to our business, customers and shareholders. We are is examining the adoption of cloud services, big data, collaboration, mobility and analytics for improving process efficiencies and enhancing customer experience. Our business is all about partnerships, therefore technologies should be introduced that will enhance and deepen these relationships.

Product innovation and technology

As the owner of numerous household brands, Clover needs to continuously refine its marketing strategy. We do this by acquiring or developing new value added products for integration into our brand portfolios. New products are developed by CIover's in-house Product Innovation and Technology Department (PIT), or through joint ventures. PIT constantly seeks to improve Clover's current product offerings by revising product formulations and packaging, with an emphasis on ‘greener' alternatives. Ideally, these projects should also result in cost savings. PIT's project engineering section oversees the construction of new factories and production lines.