SOUTH AFRICA - Clover has wrapped up the restructuring of the company, a move CE Johann Vorster called the “most exciting change in the business” since the dairy company listed seven years ago.
The group announced on Thursday that a board of directors had been constituted for the Dairy Farmers of SA (DFSA) and that milk producers under the new subsidiary had been allotted B shares, which constituted 74% of the voting rights of DFSA.
Clover will retain 26% of the voting rights via A shares.
Members of the new board include former chief financial officer of the group, Louis Botha, in the role of CEO of DFSA.
Vorster said he had asked Botha to come back in that capacity. Botha stepped down as Clover chief financial officer in 2016.
Dirk Reyneke will be chairman of the DFSA board. Frederick Booysen and Tobias de Villiers will act in the capacity of executive directors.
Clover said it was optimistic about its new path, which would have a complete focus on the value-added business.
“Clover looks forward to a mutually beneficial relationship with DFSA and wishes its board and management well in driving the objectives of DFSA forward to the benefit of its stakeholders.”
Vorster previously stated that DFSA became a necessity as there were misconceptions concerning Clover’s role in setting milk prices.
“The move will allow both parties to concentrate on what they do best.
“DFSA will even be able to supply some of our competitors. It’s a big change, but an important one in our lives,” he said.
The DFSA’s operations will include the procurement and collection of milk, exports, finding new markets, supply of milk to other dairy processors and trade negotiations.
It will supply milk to Clover for cheese, yoghurt and other value-added products at the average national milk price.
Clover will guarantee intake of 270-million litres.
Clover’s share price yo-yoed in intraday trade, falling as much as 4% following the announcement and climbing as high as 2% in midday trade.
Cratos Wealth analyst Ron Klipin said that with the economy in a downturn the company could be in for a challenging year, but its management had invested in streamlining operations.
“What Clover has is management expertise. Management has certainly done a lot under difficult circumstances, including the establishment of DFSA and diversifying its product range. Only time will tell, but I’m prone to giving them the benefit of the doubt,” he said.
July 12, 2017: BD Live