| Thu 6 Mar 2008, 7:14 | | AVI - AVI Limited - Interim results for the six mo |
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AVI
AVI
AVI - AVI Limited - Interim results for the six months ended 31 December 2007
AVI Limited
Registration number: 1944/017201/06?
Share code: AVI ISIN: ZAE000049433
("AVI" or "the Group")
Interim results for the six months ended 31 December 2007
- Revenue up 10% to R3,6 billion
- Operating profit up 12% to R459 million
- Headline earnings per share up 11% to 92 cents
- Interim dividend up 10% to 33 cents per share
- Returned to shareholders R435 million
Condensed group balance sheets
Unaudited Audited
at 31 December at 30 June
2007 2006 2007
Rm Rm Rm
ASSETS
Non-current assets
Property, plant and equipment 1 263,8 1 244,5 1 241,7
Intangible assets and goodwill 1 080,6 1 041,5 1 052,1
Investments 255,6 249,2 245,9
Deferred taxation 106,4 110,5 121,6
2 706,4 2 645,7 2 661,3
Current assets
Inventories and biological assets 763,7 635,6 760,8
Trade and other receivables including
derivatives 1 194,1 1 115,8 1 058,6
Cash and cash equivalents 428,2 380,5 317,1
Assets classified as held for sale* 3,9 2,1 30,5
2 389,9 2 134,0 2 167,0
Total assets 5 096,3 4 779,7 4 828,3
EQUITY AND LIABILITIES
Capital and reserves
Attributable to equity holders of AVI 2 421,5 2 543,6 2 680,4
Minority interests (17,9) (14,3) (18,4)
Total equity 2 403,6 2 529,3 2 662,0
Non-current liabilities
Financial liabilities, borrowings and 175,5 207,7 196,6
operating lease straight line
liabilities
Employee benefits 312,8 298,9 286,2
Deferred taxation 160,5 142,6 144,6
648,8 649,2 627,4
Current liabilities
Current borrowings including 915,5 500,9 344,1
derivatives
Trade and other payables 1 062,5 1 038,4 1 117,5
Corporate taxation 65,9 61,9 66,9
Liabilities classified as held for - - 10,4
sale*
2 043,9 1 601,2 1 538,9
Total equity and liabilities 5 096,3 4 779,7 4 828,3
*Assets and liabilities held for sale comprise the remaining assets of
ancillary offshore subsidiaries of I&J. (December 2006: remaining assets
of ancillary offshore subsidiary; June 2007: remaining assets of
ancillary offshore subsidiary, properties and retired fishing vessels)
Condensed group income statements
Unaudited Audited
Six months ended Year ended
31 December 30 June
2007 2006 Change 2007
Rm Rm % Rm
Revenue* 3 612,5 3 280,9 10 6 332,4
Cost of sales 2 122,7 1 922,5 10 3 704,8
Gross profit 1 489,8 1 358,4 10 2 627,6
Selling and administrative expenses 1 031,0 950,5 8 1 892,2
Operating profit before capital 458,8 407,9 12 735,4
items
Income from investments 8,6 8,0 8 25,3
Finance costs (34,3) (27,4) 25 (57,9)
Share of equity accounted earnings 5,5 (10,8) 151 (21,4)
of joint ventures
Capital items 21,6 46,4 36,4
Profit before taxation 460,2 424,1 9 717,8
Taxation 156,0 128,6 21 234,6
Profit for the period 304,2 295,5 3 483,2
Attributable to:
Equity holders of AVI 303,4 299,7 1 491,3
Minority interests 0,8 (4,2) 119 (8,1)
304,2 295,5 3 483,2
Basic earnings per share (cents)# 97,7 95,5 2 156,6
Diluted earnings per share (cents)## 96,9 95,0 2 155,7
Depreciation and amortisation of 91,7 88,6 3 177,6
property, plant & equipment, fishing
rights and trademarks included in
operating profit
*Revenue for the six months ended 31 December 2006 restated to deduct
warehouse allowances granted to customers, in compliance with Circular
9/2006. See note 2.
Headline earnings per share (cents)# 92,0 82,8 11 146,8
Diluted headline earnings per share 91,2 82,3 11 145,9
(cents)##
#Earnings and headline earnings per share is calculated on a weighted
average of 310 513 219 (2006: 313 649 284 and 30 June 2007: 313 775 479)
ordinary shares in issue.
##Diluted earnings and headline earnings per share is calculated on a
weighted average of 313 206 531 (2006: 315 488 354 and 30 June 2007: 315
614 574) ordinary shares in issue.
Condensed group cash flow statements
Unaudited Audited
Six months Year
ended ended
31 December 30 June
2007 2006 Change 2007
Rm Rm % Rm
Operating activities
Cash generated by operations before 598,1 557,5 7 932,7
working capital changes
Increase in working capital (240,1) (273,9) (12) (182,3)
Cash generated by operations 358,0 283,6 26 750,4
Interest paid (34,4) (27,8) 24 (57,0)
Taxation paid (106,0) (120,5) (12) (255,2)
Net cash available from operating 217,6 135,3 61 438,2
activities
Investing activities
Cash flow from investments 8,5 8,3 2 25,3
Property, plant and equipment (118,8) (143,6) (17) (251,5)
acquired
Proceeds from disposals 30,5 72,2 (58) 82,4
Proceeds on disposal of businesses 15,1 - -
- Note 5
Acquisition of businesses and (38,8) (347,4) (89) (361,5)
investments - Note 5
Net cash used in investing (103,5) (410,5) (75) (505,3)
activities
FINANCING ACTIVITIES
Net increase in shareholder funding 2,1 7,6 (72) 7,1
Long-term borrowings - net repaid (22,5) (12,5) 80 (4,5)
Increase in short-term funding 582,2 429,4 36 242,4
Capital returned to shareholders - -
(435,1)
Dividends paid (134,4) (105,4) 28 (199,5)
(7,7) 319,1 (102) 45,5
Increase/(decrease) in cash and 106,4 43,9 142 (21,6)
cash equivalents
Cash and cash equivalents at 317,1 335,8 (6) 335,8
beginning of period
423,5 379,7 12 314,2
Translation of cash equivalents of 4,7 0,8 488 2,9
foreign subsidiaries at beginning
of year
Cash and cash equivalents at end of 428,2 380,5 13 317,1
period
Condensed group statements of changes in equity
Share Treasu- Rese- Retai- Premium Total Minor- Total
Capital ry rves ned on Rm ity equity
and shares Rm Earni- minor- inter- Rm
premium Rm ngs ity ests
Rm Rm equity Rm
trans-
actions
Rm
Six months
ended
31
December
2007
Balance at 428,2 (435,7) 23,2 2 667,4 (2,7) 2 680,4 (18,4) 2 662,0
1 July
2007
Recognised
income and
expense
Profit for 303,4 303,4 0,8 304,2
the period
Foreign 0,4 0,4 0,4
currency
translatio
n
difference
s
Cash flow (4,5) (4,5) (4,5)
hedging
reserve
Transactio
ns with
share-
holders
Share 7,7 7,7 7,7
based
payments
Dividends (134,1) (134,1) (0,3) (134,4)
paid
Payment (257,0) 26,4 (230,6) (230,6)
out of
share
premium
Own (201,4) 0,2 (201,2) (201,2)
ordinary
shares
(purchased
)/
sold by
AVI Share
Trusts and
subsidiari
es (net)
Balance at 171,2 (610,7) 26,8 2 836,9 (2,7) 2 421,5 (17,9) 2 403,6
31
December
2007
Six months
ended 31
December
2006
Balance at 20,5 (40,8) (13,2) 2 376,1 (2,7) 2 339,9 (8,5) 2 331,4
1 July
2006
Recognised
income and
expense
Profit for 299,7 299,7 (4,2) 295,5
the period
Foreign (0,1) (0,1) (0,1)
currency
translatio
n
difference
s
Cash flow (0,6) (0,6) (0,6)
hedging
reserve
Transactio
ns with
share-
holders
Share 1,3 1,3 1,3
based
payments
Dividends (103,8) (103,8) (1,6) (105,4)
paid
Disposal 7,2 7,2 7,2
of own
ordinary
shares by
AVI Share
Trusts
(net)
Balance at 20,5 (33,6) (12,6) 2 572,0 (2,7) 2 543,6 (14,3) 2 529,3
31
December
2006
Year ended
30 June
2007
Balance at 20,5 (40,8) (13,2) 2 376,1 (2,7) 2 339,9 (8,5) 2 331,4
1 July
2006
Recognised
income and
expense
Profit for 491,3 491,3 (8,1) 483,2
the year
Foreign 17,3 17,3 17,3
currency
translatio
n
difference
s
Cash flow 10,5 10,5 10,5
hedging
reserve
Transactio
ns with
share-
holders
Share 8,6 8,6 8,6
based
payments
Dividends (197,7) (197,7) (1,8) (199,5)
paid
Issue of 407,7 407,7 407,7
ordinary
shares
Own (394,9) (2,3) (397,2) (397,2)
ordinary
shares
(purchased
)/
sold by
AVI Share
Trusts
(net)
Balance at 428,2 (435,7) 23,2 2 667,4 (2,7) 2 680,4 (18,4) 2 662,0
30 June
2007
SUPPLEMENTARY NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 31 DECEMBER 2007
AVI Limited (the "Company") is a South African registered company. The
condensed consolidated interim financial statements of the Company comprise
the Company and its subsidiaries (together referred to as the "Group") and the
Group`s interest in jointly controlled entities.
1. Statement of compliance
The condensed consolidated interim financial statements have been prepared in
accordance with the recognition and measurement criteria of IFRS, the
requirements of IAS34 - Interim Financial Reporting, and the Listings
Requirements of the JSE Limited (the "JSE"). These condensed interim financial
statements have not been reviewed or audited by the group`s auditors.
2. Basis of preparation
The financial statements are prepared in millions of South African Rand ("Rm")
on the historical cost basis, except for certain financial instruments and
biological assets recognised at fair value.
The accounting policies are those presented in the annual financial statements
for the year ended 30 June 2007 and have been applied consistently to the
periods presented in these condensed consolidated interim financial statements
and by all Group entities.
During the second half of the prior year it was determined that warehouse
allowances paid to retailers for using their distribution networks fall within
the scope of SAICA Circular 9/2006 - Transactions giving rise to adjustments
to revenue/purchases. Previously these costs were estimated at time of sale
but presented as an operating expense. In accordance with Circular 9/2006
these have been reclassified as a reduction in revenue, and the comparative
figures restated as follows:
Six months ended
31 December 2006
Rm
Decrease in revenue 18,4
Decrease in selling and administration expenses 18,4
3. Determination of headline earnings
Unaudited Audited
Six months ended Year
31 December ended
30 June
2007 2006 Change 2007
Rm Rm % Rm
Profit for the period attributable to 303,4 299,7 1 491,3
equity holders of AVI
Total capital items included in earnings 17,8 40,0 30,7
Net surplus on disposal of investments, 22,1 46,4 57,0
properties, vessels and plant and
equipment
Impairment of plant, equipment and (0,5) - (2,5)
vessels
Impairment of trademarks - - (1,8)
Impairment of disposal groups held for - - (16,3)
sale
Taxation attributable to capital items (3,8) (6,4) (5,7)
Headline earnings 285,6 259,7 10 460,6
4. Segmental results*
Six months ended Year
31 December ended
30 June
2007 2006 % 2007
Rm Rm change Rm
Segmental revenue**
Retail beverage brands - Entyce 762,9 682,4 12 1 339,1
Retail snacking brands - Snackworx 883,7 751,4 18 1 394,2
Chilled and frozen convenience brands 1 060,3 1 080,5 (2) 2 171,3
Out of home 201,6 173,9 16 344,9
Fashion brands 693,3 584,0 19 1 058,1
Corporate 10,7 8,7 23 24,8
GROUP 3 612,5 3 280,9 10 6 332,4
Segmental operating profit before
capital items
Retail beverage brands - Entyce 94,8 80,7 17 160,6
Retail snacking brands - Snackworx 128,6 96,9 33 156,8
Chilled and frozen convenience brands 83,3 81,2 3 172,2
Out of home 27,0 30,5 (11) 53,5
Fashion brands 134,7 131,0 3 208,4
Corporate (9,6) (12,4) (23) (16,1)
GROUP 458,8 407,9 12 735,4
*The segments have been categorised to reflect the revised operating
structure of the Group as detailed in previous reporting periods.
**Revenue for the six months ended 31 December 2006 restated to
deduct warehouse allowances granted to customers, in compliance with
Circular 9/2006. See note 2.
5. Investment activity
There were no significant changes to investments in the year to date.
Effective 1 July 2007, National Brands Limited, through a subsidiary, acquired
the assets of a roaster and distributor of coffee in the Out of Home sector
for R15,1 million. A long term supply agreement between Ciro Beverage
Solutions (Pty) Ltd and Famous Brands Limited was concluded as a condition of
this transaction. Net tangible assets acquired amounted to R5,3 million, with
R9,8 million attributed to the supply agreement.
Effective 4 October 2007, I&J disposed of part of the assets of an ancillary
offshore subsidiary, which was shown as held for sale at 30 June 2007, for
R15,1 million.
Effective 15 November 2007, the Company acquired a licensee and wholesaler of
exclusive apparel brands (including Gant), for R20,6 million. Net tangible
assets acquired amounted to R3,0 million, with R17,6 million attributed to
trademarks.
6. Commitments
Six months ended Year ended
31 December 30 June
2007 2006 2007
Rm Rm Rm
Capital expenditure commitments 101,7 67,5 130,0
for property, plant & equipment
Contracted for 75,0 45,8 89,5
Authorised but not contracted for 26,7 21,7 40,5
It is anticipated that this expenditure will be financed by cash resources,
cash generated from activities and existing borrowing facilities. Other
contractual commitments have been entered into in the normal course of
business.
7. Contingent liabilities
The South African Revenue Service ("SARS") has issued revised assessments on a
foreign subsidiary for taxes plus penalties and interest in respect of the tax
years previously assessed, 1998 through 2003. The additional taxes assessed by
SARS amount to R49,4 million. The total amount in terms of the assessments,
including penalties and interest up to July 2007, is R254,2 million.
Were assessments to be issued for the 2004 to 2007 tax years on the same basis
applied in the assessments received, the total amount of additional tax
payable in respect of these years would be R38,6 million, excluding penalties,
with interest thereon estimated at R9,0 million.
The foreign subsidiary is waiting to be allocated a court date. The issues in
dispute are of a complex nature and it is anticipated that the matter will
remain unresolved for an extended period.
8. Post-balance sheet events
No significant events have occurred since the balance sheet date.
9. Dividend declaration
Notice is hereby given that an interim ordinary dividend No 67 of 33 cents per
share for the six months ended 31 December 2007 has been declared payable to
shareholders of ordinary shares. The salient dates relating to the payment of
the dividend are as follows:
Last day to trade cum dividend on the JSE Friday, 28 March 2008
First trading day ex dividend on the JSE Monday, 31 March 2008
Record date Friday, 4 April 2008
Payment date Monday, 7 April 2008
In accordance with the requirements of Strate, no share certificates may be
dematerialised or rematerialised between Monday, 31 March 2008 and Friday, 4
April 2008, both days inclusive.
Dividends in respect of certificated shareholders will be transferred
electronically to shareholders` bank accounts on payment date. In the absence
of specific mandates, dividend cheques will be posted to shareholders.
Shareholders who hold dematerialised shares will have their accounts at their
Central Securities Depository Participant ("CSDP") or broker credited on
Monday, 7 April 2008.
GROUP OVERVIEW
Demand for the Company`s brands was robust for the six months ended December.
Overall financial performance was strong with revenue up 10,1% and operating
profit improving by 12,5%. This was achieved in spite of a material decline in
the operating results of I&J`s Argentinean subsidiary Alpesca, which was
adversely impacted by poor catch rates, high wage inflation and lower shrimp
prices. Headline earnings per share rose by 11,1% to 92,0 cents. An interim
dividend of 33 cents per share has been declared (2007: 30 cents per share).
A total of R435 million was returned to shareholders through a payment out of
share premium of 75 cents per share and through buying back shares in the open
market.
GROUP FINANCIAL RESULTS
Revenue rose by 10,1% from R3,3 billion to R3,6 billion as a result of solid
volume growth, mainly in the biscuits, tea, cosmetics and footwear categories
and higher selling prices in the food and beverage business units. The
consolidated gross profit margin declined slightly as a result of high
commodity prices which were partially offset by price increases and the
Group`s practice of hedging key commodities on a rolling basis. Operating
profit rose by 12,5% from R407,9 million to R458,8 million with the operating
profit margin up from 12,4% to 12,7%.
Net financing costs increased from R19,4 million in 2007 to R25,7 million as a
result of higher interest rates and an increase in the Group`s gearing to fund
working capital and capital expenditure requirements.
AVI`s share of the equity accounted earnings of joint ventures comprised a net
profit of R5,5 million compared to a loss of R10,8 million in the prior
period. The improvement is due to a better performance of I&J`s Australian
fish processing joint venture with Simplot (Australia) Pty Ltd ("Simplot").
The effective tax rate has risen from 30,3% to 33,9% largely as a result of
lower capital profits, which are taxed at lower rates.
Headline earnings increased by 10,0% to R285,6 million while the weighted
average number of shares in issue decreased by 1,0% as a result of the share
buy-back which commenced after the annual general meeting in October 2007.
Consequently headline earnings per share increased by 11,1% to 92,0 cents per
share.
The capital items of R21,6 million before tax largely comprises profits on the
sale of trawlers as I&J matches its fleet size to lower quota levels.
Cash generation remains strong and the Group has negligible direct consumer
credit risk. Cash generated by operations before working capital changes
amounted to R598,0 million, 7,3% higher than in the prior period. The seasonal
increase in working capital amounted to R240,0 million with net working
capital at the end of December decreasing from 18,4% of sales in the prior
period to 17,6% of sales because of earlier receipts from debtors. Other
material cash out-flows during the year were the return of capital to
shareholders totalling R435,1 million, normal dividends of R134,4 million,
capital expenditure of R118,8 million and taxation of R106,0 million. Net debt
at the end of December 2007 was R635,5 million compared to R328,1 million at
the end of December 2006.
Capital expenditure of R118,8 million included mainly replacement expenditure
as well as the new biscuit line at Isando and new and refurbished stores at
Spitz. Further projects to improve capacity and operating efficiency are
expected to be approved in the second half of the year.
SEGMENTAL REVIEW
Six months ended 31 December
Segmental revenue Segmental operating
profit
2007 2006 % 2007 2006 %
Rm Rm change Rm Rm change
Food & beverage brands 2 908,5 2 688,2 8,2 333,7 289,3 15,3
Retail Beverage Brands 762,9 682,4 11,8 94,8 80,7 17,4
- Entyce
Retail Snacking Brands 883,7 751,4 17,6 128,6 96,9 32,7
- Snackworx
Chilled & Frozen 1 060,3 1 080,5 (1,9) 83,3 81,2 2,6
Convenience Brands
Out of Home 201,6 173,9 15,9 27,0 30,5 (11,5)
Fashion Brands 693,3 584,0 18,7 134,7 131,0 2,8
Personal care 325,3 283,4 14,8 35,8 30,7 16,6
Footwear & apparel 368,0 300,6 22,4 98,9 100,3 (1,4)
Corporate 10,7 8,7 (9,6) (12,4)
Group 3 612,5 3 280,9 10,1 458,8 407,9 12,5
Retail Beverage Brands - Entyce
Revenue growth of 11,8% was achieved with good volume growth in the tea
category supported by input cost driven price increases across all categories.
The strong market shares of key brands in this business unit were maintained
or increased with support from several packaging re-launches. Operating profit
increased 17,4% from R80,7 million to R94,8 million with the operating profit
margin at 12,4% compared to 11,8% in the prior period.
Retail Snacking Brands - Snackworx
Strong biscuit volume growth, combined with selling price increases in
response to an exceptionally high basket of input commodity costs resulted in
a 17,6% increase in revenue. Notwithstanding increases in selling prices,
higher input costs, net of the benefit of favourable hedge positions taken in
the last financial year, resulted in a small decrease in the gross margin
percentage. However operating profit benefited from volume driven operating
leverage in biscuits as well as a weighting of promotional and new product
launch expenditure to the second half of the year. Operating profit increased
by 32,7% to R128,6 million with operating profit margin up to 14,6%. The
profit margin is expected to normalise to a level similar to the prior year
over the next six months.
The strong growth in demand during the period has consumed incremental
capacity improvements and as a result kept the pressure on service levels. The
new high capacity line at Isando has been installed and commissioning is in
progress. This should improve service levels on key lines over the next few
months.
Chilled and Frozen Convenience Brands
Revenue in this business unit decreased by 1,9% primarily due to lower shrimp
revenue resulting from a significant weakening in shrimp prices following a
prolonged period of strong supply. Hake volumes were lower in both South
Africa and Argentina because of the reduced quota allocations. Operating
profit increased 2,6% to R83,3 million because of a healthy improvement in
operating profit at I&J`s South African operations driven materially by higher
prices, revenue optimisation initiatives and an ongoing focus on operating
efficiencies in both trawling and processing activities. This improvement was
largely offset by a poor performance from Alpesca which was adversely impacted
by low shrimp prices, high labour costs and poor fishing conditions at the end
of the year. Operating profit margin for the business unit improved from 7,5%
to 7,9%.
Out of Home
Revenue increased by 15,9% on the back of significant volume growth in other
beverages while core coffee volumes were maintained. The higher proportion of
relatively low margin product combined with input cost pressures resulted in a
lower operating margin of 13,3% and operating profit decreased by R3,5 million
to R27,0 million.
Fashion Brands
Strong volume growth resulted in revenue growth of 18,7% with selling prices
largely in line with the prior period. Operating margin decreased from 22,4%
to 19,4%, reflecting the impact of the Spitz investment phase and import cost
pressures arising from a weaker rand. Operating profit increased 2,8% to
R134,7 million.
Indigo made strong gains in toiletry brands supported by a robust performance
in all other product categories. Revenue grew by 14,8% with pleasing operating
profit growth of 16,6% to R35,8 million.
Spitz made good progress with its accelerated investment programme that should
be largely completed by December 2008. In addition to the ongoing
refurbishment of old stores eight new Spitz stores were opened, as well as two
Geox, one Lacoste, and two Kurt Geiger mono-branded stores. Like for like
revenue growth at Spitz was lower than last year but remained sound at 7%
while new trading space relative to the prior period accounted for the balance
of revenue growth. In addition to the Spitz store roll-out, AVI`s first Gant
store opened in November. Overall footwear & apparel revenue grew by 22,4%,
however the investment in increased infrastructure and new stores together
with import cost pressures arising from a weaker rand resulted in a decline in
operating profit from R100,3 million to R98,9 million. Operating profit margin
for the period was 26,9%.
DIVIDENDS AND RETURN OF CAPITAL TO SHAREHOLDERS
An interim dividend of 33 cents per share has been declared in line with AVI`s
interim dividend policy of a three times interim cover on diluted headline
earnings per share from continuing operations.
In addition to the final dividend for the 2007 financial year of R134,4
million a further R435,1 million was returned to shareholders during the six
months. The special payment of 75 cents per share out of share premium,
approved by shareholders in October 2007 and paid in November 2007 amounted to
R230,6 million and a total of R204,5 million was used to buy shares in the
open market. A total of 9,8 million shares were repurchased during the period.
BLACK ECONOMIC EMPOWERMENT
AVI remains committed to driving transformation in all of its operations.
Following the establishment of the AVI Black Staff Empowerment Scheme Trust in
the prior year, which places share purchase rights to 7,7% of the issued
ordinary shares in the hands of AVI`s current and future black employees, the
main activity during the six months to December has been ongoing review,
measurement and target setting in all of the areas identified in the Broad
Based Black Economic Empowerment codes gazetted in February 2007.
OUTLOOK
From a demand point of view, the defensive characteristics of AVI`s food,
beverage and personal care brands in times when consumers have less to spend
are well established and there is good opportunity for the Group`s footwear
and apparel brands to continue to gain market share. This notwithstanding, it
seems highly probable that rates of growth in the next six months will slow
especially if further cost driven price increases become necessary.
With respect to input costs, AVI is moving into a period where commodity
prices and foreign exchange rates, net of hedges taken on a rolling basis,
will continue to put pressure on margins. While these drivers are common to
the categories that we compete in, and management will implement further price
increases to maintain gross margin where appropriate, there may be knock-on
demand effects with consumers trading down to cheaper alternatives.
AVI`s strong portfolio of brands, with their associated supply chains, still
contain material opportunity for improvement in terms of capacity, technology
and overall cost efficiency which management is addressing in a progressive
and structured way.
Electricity interruptions have not had a material impact on operating
performance to date. Incremental improvements to back-up supply are being
evaluated and will be progressed as required.
Whilst inherently volatile, white fish resources in South Africa are at levels
that support economic returns and look set to perform soundly in the year
ahead. In Argentina, the hake total allowable catch for calendar year 2008 has
been set at a 20% lower level than for 2007. This, together with ongoing
unrealistic wage demands, is forcing a review of the operating model and the
investment in Alpesca.
In summary, while it appears likely that trading conditions for the second
semester will be more difficult than those experienced in the prior year, we
remain confident that AVI`s strong brand portfolio, combined with planned
efficiency and product initiatives will underpin AVI`s ability to sustain
earnings growth over the medium term.
Angus Band Simon Crutchley
Chairman Chief Executive
6 March 2008
Sponsor
Standard Bank
Date: 06/03/2008 07:14:43 Produced by the JSE SENS Department.
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