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AVI
AVI
AVI - AVI Limited - Interim Results for the Six Months Ended
31 December 2009
AVI Limited
ISIN: ZAE000049433
Share code: AVI
Registration number: 1944/017201/06
("AVI" or "the Group" or "the Company")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2009
Key features
- Solid brand performance in difficult trading conditions
- Revenue and operating profit maintained in spite of lower I&J contribution
- Net finance costs down 24%
- Headline earnings per share from continuing operations up 9% to 112 cents
- Strong cash generation maintained
- Interim dividend up 8,3% to 39 cents
Operating profit from continuing operations was at the same level as the first
half of last year despite a difficult trading environment and a materially
weaker performance from Irvin and Johnson ("I&J"). Headline earnings increased
by 9,2% due to lower net finance costs and an improved contribution from the
Simplot seafood product joint venture.
The fashion brands portfolio, Indigo Cosmetics ("Indigo") and A&D Spitz
("Spitz") achieved higher gross profit margins and sound volume growth in the
first semester. The improved profitability and operating leverage resulted in a
35,2% increase in operating profit from R124,1 million to R167,8 million for
this portfolio that together with a strong performance from hot beverage brands
which lifted its operating profit from R129,3 million to R166,7 million offset
the R65,9 million decrease in profit from I&J.
I&J`s operational performance was better than last year, assisted by lower fuel
prices and good fishing conditions in terms of catch rates and size mix.
However export markets continue to be over-supplied because of reduced consumer
demand and increased supply from other fish resources. Whilst volumes were
largely sustained selling prices have been under pressure which together with
the stronger Rand caused a significant drop in revenue and ultimately operating
profit, which decreased from R125,7 million to R59,8 million.
I&J did not manage to find a credible prospective purchaser for its Argentinean
hake and shrimp operations conducted by Alpesca s.a. ("Alpesca") during the six
months to December, but remains committed to disinvesting from this asset. The
long awaited new regulations for the allocation and transfer of long term hake
fishing rights were promulgated during the first half and are likely to benefit
Alpesca when implemented. Alpesca is classified as a discontinued operation and
presented accordingly in these results.
In general domestic selling prices have been stable for the first half, with
few increases implemented. In several categories re-alignment of price points
and tactical discounting, in particular in the biscuit category, meant that
realised prices were lower than a year ago. This approach has helped maintain
volumes but kept the pressure on gross margins. The aggregate cost of the key
commodities that AVI consumes did not decline as expected and was similar to
last year, principally because of higher black tea prices which offset the
benefit of lower prices for most other commodities. Selling and administration
costs increased by just 3,1% compared to the first half of last year,
reflecting tight control, more efficient marketing activity and lower fuel
costs.
Cash generated from operations remained strong at R620,5 million and net debt
has reduced to R479,5 million at the end of the period from R568,3 million a
year ago.
CONTINUING OPERATIONS
Revenue from continuing operations rose by 1,1% from R4,00 billion to R4,05
billion for the first half. I&J`s export revenue stream was materially impacted
by lower prices and the stronger Rand, resulting in a decrease in revenue of
R138,5 million. The rest of our businesses achieved an overall increase in
revenue of 5,8%. The consolidated gross profit margin improved slightly from
40,3% to 40,6% due to improvements in Indigo and Spitz that were largely offset
by tactical pricing to support volumes in the food and beverage business units.
Selling and administration costs were well contained at a 3,1% increase and
operating profit of R534,7 million was marginally higher than the R534,6
million achieved in the first half of last year, despite a decrease of R65,9
million in I&J`s operating profit.
Lower interest rates and lower debt levels than in the corresponding period
last year resulted in a material decrease in net finance charges from R69,3
million to R52,4 million.
AVI`s share of earnings from the Simplot joint venture in Australia increased
from R7,5 million to R21,0 million reflecting Simplot`s improved performance in
the Australian retail sector during the period.
Headline earnings increased by 9,2% from R307,1 million to R335,4 million and
headline earnings per share increased by 8,8% to 112,3 cents per share.
There were no material capital items in the six months to December 2009. In the
prior period capital items of R54,1 million before tax largely comprised a
R26,4 million profit on the sale of an I&J property and a R23,6 million profit
on the disposal of a non-core subsidiary that packed private label teas and
coffees.
Cash generated by operations remained strong and was slightly higher than the
first half of last year at R620,5 million. Capital expenditure of R199,1
million includes R88,5 million to acquire a property adjacent to Indigo`s site
in Cape Town which will support the long-term growth of this operation.
Proceeds on disposals of R12,4 million were lower than the R107,4 million
realised in the first half of last year which included the disposals of an I&J
property and a non-core subsidiary. Other material cash out-flows during the
period were dividends of R155,4 million, taxation of R123,7 million and
interest paid of R58,7 million. Net debt at the end of December 2009 was
R479,5 million compared to R568,3 million at the end of December 2008.
SEGMENTAL REVIEW - CONTINUING OPERATIONS
Six months ended 31 December
Segmental revenue Segmental operating
profit
2009 2008 Change 2009 2008 Change
Rm Rm % Rm Rm %
Food & beverage 3 161,5 3 219,5 (1,8) 370,7 413,7 (10,4)
brands
Entyce 1 179,5 1 110,3 6,2 166,7 129,3 28,9
Snackworks 1 135,2 1 139,6 (0,4) 121,3 143,9 (15,7)
Chilled & 846,8 969,6 (12,7) 82,7 140,5 (41,1)
frozen
convenience
brands
Fashion brands 882,9 777,9 13,5 167,8 124,1 35,2
Personal care 418,9 377,8 10,9 56,6 42,1 34,4
Footwear & 464,0 400,1 16,0 111,2 82,0 35,6
apparel
Corporate 3,6 5,4 (3,8) (3,2)
Group 4 048,0 4 002,8 1,1 534,7 534,6 0,0
Note: the Out of Home business, comprising Ciro Beverage Solutions and Sir
Juice, is now reported within the Entyce and Snackworks segments. This is in
line with the decision to incorporate the catering wholesale customer base, a
material portion of the Out of Home business, into the existing Entyce and
Snackworks structures that service the wholesale channel. Comparatives have
been restated accordingly.
Entyce
Revenue increased by 6,2% to R1,18 billion and operating profit increased by
28,9% from R129,3 million to R166,7 million with the operating profit margin at
14,1% compared to 11,7% in the prior period.
Growth in revenue came from the annualisation of price increases during the
previous financial year, as well as increased creamer sales volumes. Underlying
consumer demand remained sound, and a combination of focused advertising and
promotional activity, incremental product development and tactical pricing
helped Entyce maintain its strong position in the tea, coffee and creamer
categories. The costs of key commodities were in aggregate higher than in the
first half of last year, largely due to high black tea prices experienced
during the period. This constrained the improvement in gross profit margin,
with only the coffee category seeing a material improvement in gross
profitability relative to the same period last year. Selling and administration
costs were well controlled supporting the increase in operating profit margin
in the current period.
Snackworks
Revenue of R1,13 billion was 0,4% lower than the first half of last year while
operating profit declined by 15,7%, from R143,9 million to R121,3 million. The
operating profit margin for the period decreased to 10,7% from 12,6% for the
same period last year.
The decrease in revenue was caused by lower selling prices mostly offset by
higher biscuit sales volumes. Biscuit demand has responded well to the lower
price points implemented during the second half of last year as well as
tactical discounting to encourage consumption in the face of an underlying
decline in demand over the last year. The impact of lower prices was partially
offset by lower commodity costs. Factory performance was below standard during
the period and together with the tactical biscuit pricing resulted in a
reduction in the gross profit margin. In addition aggressive pricing by
competitors in the potato chip segment at the same time as a shortage of
potatoes resulted in a reduction of R9 million in the snacks category operating
profit. Although there was no increase in selling and administration costs, the
lower gross profit resulted in a reduction in operating profit. A number of
remedial initiatives have addressed factory performance and in combination with
improving selling prices, gross margins should recover in the second semester.
Chilled and Frozen Convenience Brands (I&J* and Denny)
*excluding Alpesca
Revenue decreased by R122,8 million to R846,8 million and operating profit
decreased by R57,8 million to R82,7 million. Operating profit margin decreased
from 14,5% to 9,8%.
The reduction in profit is attributable to a weaker result from I&J, partially
offset by a marked improvement in the performance of Denny Mushrooms ("Denny").
I&J`s operational performance was better than last year, with improved catch
rates and size mix as well as lower fuel prices. However export revenues were
materially reduced by lower prices in key European markets due to reduced
demand and increased supply from other fish resources, as well as the strong
Rand. Consequently I&J`s revenue decreased by R138,5 million while operating
profit decreased by R65,9 million to R59,8 million. Denny had a strong first
half with good production allowing it to compete effectively in a tough trading
environment for the category. Denny`s operating profit for the first half
increased from R14,8 million to R22,9 million.
Fashion brands (personal care, footwear and apparel)
Revenue rose by 13,5% and operating profit increased by 35,2%, from R124,1
million to R167,8 million. Operating profit margin increased from 16,0% to
19,0%. Both Indigo and Spitz maintained the higher selling prices established
last year and achieved higher sales volumes which resulted in improved gross
profit margins and good operating leverage.
In the personal care category, Indigo`s revenue grew by 10,9% to R418,9 million
while operating profit increased by 34,4% to R56,6 million. The operating
profit margin for the period of 13,5% was 21,2% higher than the margin of 11,1%
last year. Revenue growth was the product of price increases implemented during
the second half of the last financial year and ongoing growth in volumes,
principally in body sprays where further market share gains were achieved.
Costs were well managed and the purchase of an adjoining property has reduced
rental costs previously incurred.
Revenue in the footwear and apparel category increased by 16,0%, and operating
profit increased by 35,6% from R82,0 million to R111,2 million. The increases
are largely due to higher volumes and selling prices in Spitz.
In Spitz, revenue increased by 16,0% to R438,9 million while operating profit
increased by 34,5% to R114,2 million. The operating profit margin for the first
half increased from 22,3% to 26,0%. Overall footwear volumes grew 9% as demand
for the core Carvela, Lacoste and Kurt Geiger brands remained strong and the
Tosoni brand was successfully re-introduced.
DISCONTINUED OPERATION
Alpesca`s hake operation has been materially impacted by lower selling prices
into export markets and is primarily responsible for the deterioration in
Alpesca`s results, from an operating profit of R20,8 million in the first half
of last year to an operating loss of R9,0 million. Alpesca`s tax charge in the
first half of last year was higher than usual as it included the devaluation of
tax assets in line with the weakening of the Argentinean Peso, which did not
recur in the current period. Consequently the deterioration in profit after tax
is not as pronounced, declining from a profit of R2,5 million to a loss of R7,5
million.
DIVIDENDS
An interim dividend of 39 cents per share has been declared in line with AVI`s
interim dividend policy of a three times cover on diluted headline earnings per
share from continuing operations.
OUTLOOK
Notwithstanding the general view that the South African economy has started to
recover from recession, we believe that tough trading conditions will prevail
through the second half of the financial year with consumers likely to remain
cautious with their spending for some time.
I&J`s results for the second half of the year will be much lower than last year
should weak prices for seafood products and the strong Rand continue to
prevail. In line with the ongoing pressure on I&J`s margins a number of new
cost saving initiatives are being implemented but will not have much impact on
the current financial year. The benefits from the remedial actions implemented
in Snackworks over the past year will, if demand is sustained, result in an
improved performance from this business unit in the second half of the year.
The Board remains confident of AVI`s ability to compete effectively in these
tougher trading conditions. The ongoing focus on profit enhancing opportunities
across our market-leading brand portfolio, as well as remaining vigilant for
strategic acquisition opportunities, underpin AVI`s medium term growth
objective.
Angus Band
Chairman
Simon Crutchley
CEO
8 March 2010
CONDENSED GROUP BALANCE SHEETS
Unaudited at Audited at
31 December 30 June
2009
Rm
2009 2008
Rm Rm
ASSETS
Non-current assets
Property, plant and equipment 1 307,9 1 224,6 1 205,1
Intangible assets and goodwill 923,4 982,9 925,4
Investments 302,2 283,9 276,8
Deferred taxation 49,6 72,2 74,4
2 583,1 2 563,6 2 481,7
Current assets
Inventories and biological 927,4 994,0 950,0
assets
Trade and other receivables 1 211,6 1 244,0 1 170,1
including derivatives
Cash and cash equivalents 686,8 496,5 516,6
Assets of discontinued 367,6 504,4 390,5
operations classified as held-
for-sale *
Other assets classified as held- 4,0 2,9 8,2
for-sale **
3 197,4 3 241,8 3 035,4
Total assets 5 780,5 5 805,4 5 517,1
EQUITY AND LIABILITIES
Capital and reserves
Attributable to equity holders 2 922,9 2 796,8 2 675,9
of AVI
Non-controlling interests (23,4) (23,3) (23,3)
Total equity 2 899,5 2 773,5 2 652,6
Non-current liabilities
Financial liabilities, 541,9 604,9 544,1
borrowings and operating lease
straight-line liabilities
Employee benefits 327,1 301,9 295,9
Deferred taxation 115,4 179,2 110,3
984,4 1 086,0 950,3
Current liabilities
Current borrowings 636,6 482,2 532,1
Trade and other payables 1 097,0 1 170,1 1 200,1
including derivatives
Corporate taxation 24,8 35,5 13,4
Liabilities of discontinued 138,2 258,1 168,6
operations classified as held-
for-sale*
1 896,6 1 945,9 1 914,2
Total equity and liabilities 5 780,5 5 805,4 5 517,1
*Discontinued operations comprise the Argentinean hake and shrimp operations
conducted by Alpesca, a wholly owned subsidiary of I&J.
**Other assets classified as held-for-sale comprise equipment and properties
held for disposal.
CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME
Unaudited Audited
Six months ended Year
31 December ended
30 June
2009 2008 Change 2009
Rm Rm % Rm
CONTINUING OPERATIONS
Revenue 4 048,0 4 002,8 1 7 462,4
Cost of sales 2 402,6 2 391,3 - 4 485,5
Gross profit 1 645,4 1 611,5 2 2 976,9
Selling and administrative 1 110,7 1 076,9 3 2 068,4
expenses
Operating profit before 534,7 534,6 - 908,5
capital items
Income from investments 5,5 11,8 (53) 22,4
Finance costs (57,9) (81,1) (29) (147,4)
Share of equity accounted 21,0 7,5 180 15,3
earnings of joint ventures
Capital items (0,3) 54,1 17,1
Profit before taxation 503,0 526,9 (5) 815,9
Taxation 167,9 166,7 1 276,7
Profit from continuing 335,1 360,2 (7) 539,2
operations
DISCONTINUED OPERATIONS*
Revenue 191,8 275,7 (30) 428,8
Operating (loss)/profit (8,9) 20,8 143 4,6
before capital items
Finance costs (2,8) (3,8) (26) (8,0)
Capital items (1,1) - (30,0)
(Loss)/profit before taxation (12,8) 17,0 175 (33,4)
Taxation (5,3) 14,5 (137) (2,6)
(Loss)/profit from (7,5) 2,5 400 (30,8)
discontinued operations
Profit for the period 327,6 362,7 (10) 508,4
Profit attributable to:
Owners of AVI 327,7 361,9 (9) 507,7
Non-controlling interests (0,1) 0,8 (113) 0,7
327,6 362,7 (10) 508,4
*Discontinued operations comprise the Argentinean hake and shrimp
operations conducted by Alpesca, a wholly owned subsidiary of I&J.
Other comprehensive 46,1 42,3 9 (133,6)
income/(expense), net of tax
Foreign currency translation 2,9 34,5 (92) (79,4)
differences
Cash flow hedging reserve 60,0 10,8 456 (75,3)
Income tax on other (16,8) (3,0) 460 21,1
comprehensive
income/(expense)
Total comprehensive income 373,7 405,0 (8) 374,8
for the period
Comprehensive income
attributable to:
Owners of AVI 373,8 404,2 (8) 374,1
Non-controlling interests (0,1) 0,8 (113) 0,7
373,7 405,0 (8) 374,8
Basic earnings per share from 112,2 120,8 (7) 180,8
continuing operations
(cents)#
Diluted basic earnings per 108,9 119,3 (9) 177,5
share from continuing
operations (cents)##
Depreciation and amortisation 93,5 87,0 5 187,4
of property, plant and
equipment, fishing rights and
trademarks included in
operating profit from
continuing operations
Headline earnings per share 112,3 103,2 9% 174,7
from continuing operations
(cents)#
Diluted headline earnings per 109,0 102,0 7% 171,5
share from continuing
operations (cents)##
# Basic earnings and headline earnings per share is calculated on a weighted
average of 298 739 809 (2008: 297 599 002 and 30 June 2009 : 297 806 357)
ordinary shares in issue.
## Diluted basic earnings and headline earnings per share is calculated on a
weighted average of 307 588 251 (2008 : 301 276 209 and 30 June 2009 : 303 400
679) ordinary shares in issue.
CONDENSED GROUP STATEMENT OF CASH FLOWS
Unaudited Audited
Six months ended Year
31 December ended
30 June
2009 2008 Change 2009
Rm Rm % Rm
CONTINUING OPERATIONS
OPERATING ACTIVITIES
Cash generated by operations 652,2 649,5 - 1 086,6
before working capital
changes
(Increase)/decrease in (31,7) (31,7) - 30,0
working capital
Cash generated by operations 620,5 617,8 - 1 116,6
Interest paid (58,7) (79,9) (27) (140,5)
Taxation paid (123,7) (171,0) (28) (392,9)
Net cash available from 438,1 366,9 19 583,2
operating activities
INVESTING ACTIVITIES
Cash flow from investments 6,0 10,2 (41) 21,2
Property, plant and equipment (199,1) (165,7) 20 (257,8)
acquired
Proceeds from disposals 8,0 67,4 (88) 68,2
Disposal of businesses and 4,4 40,0 (89) 57,1
other investments
Net cash used in investing (180,7) (48,1) 276 (111,3)
activities
FINANCING ACTIVITIES
Net increase in shareholder 15,3 4,3 256 9,0
funding
Long term borrowings - net (1,7) 199,2 101 191,1
(repaid)/raised
Increase/(decrease) in short 85,1 (74,8) (214) (14,1)
term funding
Dividends paid (155,4) (139,9) 11 (247,2)
Net cash used in financing (56,7) (11,2) 406 (61,2)
activities
DISCONTINUED OPERATIONS*
Cash flows from operating 11,5 20,5 44 3,6
activities
Cash flows from investing (0,5) (2,1) (76) (4,3)
activities
Cash flows from financing (32,6) (22,2) 47 (64,6)
activities
Cash flows from discontinued (21,6) (3,8) 468 (65,3)
operations
Increase in cash and cash 179,1 303,8 (41) 345,4
equivalents
Cash and cash equivalents at 529,7 204,8 159 204,8
beginning of period
708,8 508,6 39 550,2
Translation of cash (3,8) 16,1 (124) (20,5)
equivalents of foreign
subsidiaries at beginning of
year
Cash and cash equivalents at 705,0 524,7 34 529,7
end of period
Attributable to:
Continuing operations** 686,8 496,5 38 516,6
Discontinued operations** 18,2 28,2 (35) 13,1
* Discontinued operations comprise the Argentinean hake and shrimp operations
conducted by Alpesca, a wholly owned subsidiary of I&J.
** Cashflows between continuing and discontinued operations are eliminated on
consolidation and therefore the movement on the individual cash balances does
not reconcile to the individual cashflows reflected above.
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
Share Treasury Reserves Retained
capital shares Rm earnings
and Rm Rm
premium
Rm
Six months ended 31 December
2009
Balance at 1 July 2009 171,0 (710,5) 35,1 3 180,3
Profit for the period 327,7
Other comprehensive income
Foreign currency translation 2,9
differences
Cash flow hedging reserve 43,2
Total other comprehensive - - 46,1 -
income
Total comprehensive income - - 46,1 327,7
for the period
Transactions with owners,
recorded directly in equity
Share based payments 13,3
Dividends paid (155,4)
Own ordinary shares sold by 15,3
AVI Share Trusts (net)
Total contributions by and - 15,3 13,3 (155,4)
distributions to owners
Total transactions with - 15,3 13,3 (155,4)
owners
Balance at 31 December 2009 171,0 (695,2) 94,5 3 352,6
Six months ended 31 December
2008
Balance at 1 July 2008 171,0 (719,8) 147,8 2 919,8
Profit for the period 361,9
Other comprehensive income
Foreign currency translation 34,5
differences
Cash flow hedging reserve 7,8
Total other comprehensive - - 42,3 -
income
Total comprehensive income - - 42,3 361,9
for the period
Transactions with owners,
recorded directly in equity
Share based payments 9,4
Dividends paid (139,9)
Own ordinary shares sold by 4,3
AVI Share Trusts (net)
Total contributions by and - 4,3 9,4 (139,9)
distributions to owners
Changes in ownership
interests in subsidiaries
Disposal of a subsidiary
Total transactions with - 4,3 9,4 (139,9)
owners
Balance at 31 December 2008 171,0 (715,5) 199,5 3 141,8
Year ended 30 June 2009
Balance at 1 July 2008 171,0 (719,8) 147,8 2 919,8
Profit for the year 507,7
Other comprehensive income
Foreign currency translation (79,4)
differences
Cash flow hedging reserve (54,2)
Total other comprehensive - - (133,6) -
income
Total comprehensive income - - (133,6) 507,7
for the period
Transactions with owners,
recorded directly in equity
Share based payments 20,9
Dividends paid (247,2)
Own ordinary shares sold by 9,3
AVI Share Trusts (net)
Total contributions by and - 9,3 20,9 (247,2)
distributions to owners
Changes in ownership
interests in subsidiaries
Disposal of minority
interests
Total transactions with - 9,3 20,9 (247,2)
owners
Balance at 30 June 2009 171,0 (710,5) 35,1 3 180,3
Total Non- Total
Rm controlling equity
interests Rm
Rm
Six months ended 31 December 2009
Balance at 1 July 2009 2 675,9 (23,3) 2 652,6
Profit for the period 327,7 (0,1) 327,6
Other comprehensive income
Foreign currency translation 2,9 2,9
differences
Cash flow hedging reserve 43,2 43,2
Total other comprehensive income 46,1 - 46,1
Total comprehensive income for the 373,8 (0,1) 373,7
period
Transactions with owners, recorded
directly in equity
Share based payments 13,3 13,3
Dividends paid (155,4) (155,4)
Own ordinary shares sold by AVI Share 15,3 15,3
Trusts (net)
Total contributions by and (126,8) - (126,8)
distributions to owners
Total transactions with owners (126,8) - (126,8)
Balance at 31 December 2009 2 922,9 (23,4) 2 899,5
Six months ended 31 December 2008
Balance at 1 July 2008 2 518,8 (17,5) 2 501,3
Profit for the period 361,9 0,8 362,7
Other comprehensive income
Foreign currency translation 34,5 34,5
differences
Cash flow hedging reserve 7,8 7,8
Total other comprehensive income 42,3 - 42,3
Total comprehensive income for the 404,2 0,8 405,0
period
Transactions with owners, recorded
directly in equity
Share based payments 9,4 9,4
Dividends paid (139,9) (139,9)
Own ordinary shares sold by AVI Share 4,3 4,3
Trusts (net)
Total contributions by and (126,2) - (126,2)
distributions to owners
Changes in ownership interests in
subsidiaries
Disposal of a subsidiary - (6,6) (6,6)
Total transactions with owners (126,2) (6,6) (132,8)
Balance at 31 December 2008 2 796,8 (23,3) 2 773,5
Year ended 30 June 2009
Balance at 1 July 2008 2 518,8 (17,5) 2 501,3
Profit for the year 507,7 0,7 508,4
Other comprehensive income
Foreign currency translation (79,4) (79,4)
differences
Cash flow hedging reserve (54,2) (54,2)
Total other comprehensive income (133,6) - (133,6)
Total comprehensive income for the 374,1 0,7 374,8
period
Transactions with owners, recorded
directly in equity
Share based payments 20,9 20,9
Dividends paid (247,2) (247,2)
Own ordinary shares sold by AVI Share 9,3 9,3
Trusts (net)
Total contributions by and (217,0) - (217,0)
distributions to owners
Changes in ownership interests in
subsidiaries
Disposal of minority interests - (6,5) (6,5)
Total transactions with owners (217,0) (6,5) (223,5)
Balance at 30 June 2009 2 675,9 (23,3) 2 652,6
SUPPLEMENTARY NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended 31 December 2009
AVI Limited ("AVI" or 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 International
Financial Reporting Standards "IFRS", the presentation as well as the
disclosure requirements of IAS34 - Interim Financial Reporting, the Listing
Requirements of the JSE Limited (the "JSE") and the requirements of the South
African Companies Act. 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 Rands ("Rm")
on the historical cost basis, except for derivative financial instruments and
biological assets which are measured at fair value.
The accounting policies are those presented in the annual financial statements
for the year ended 30 June 2009 and have been applied consistently to the
periods presented in these condensed consolidated interim financial statements
and by all Group entities.
3. Determination of headline earnings
Unaudited Six Audited
months ended Year
31 December ended
30 June
2009
Rm
2009 2008 Change
Rm Rm %
Profit for the year 327,7 361,9 (9) 507,7
attributable to equity holders
of AVI
Total capital items included (0,9) 52,3 (6,2)
in earnings
Net (loss)/surplus on disposal (0,7) 30,3 28,8
of investments, properties,
vessels and plant and
equipment
Net surplus on disposal of - 23,8 23,8
subsidiaries
Impairment of plant, equipment (0,7) - (5,2)
and vessels
Impairment of assets - - (0,3)
classified as held for sale
Impairment of intangible - - (30,0)
assets and goodwill
Impairment of disposal groups - - (30,0)
held for sale
Taxation attributable to 0,5 (1,8) 6,7
capital items
Headline earnings 328,6 309,6 6 513,9
Attributable to:
Continuing operations 335,4 307,1 9 520,4
Discontinued operations (6,8) 2,5 (6,5)
328,6 309,6 6 513,9
Headline earnings per ordinary 110,0 104,0 6 172,6
share (cents)
Continuing operations (cents) 112,3 103,2 9 174,7
Discontinued operations (2,3) 0,8 (2,1)
(cents)
Diluted headline earnings per 106,8 102,8 4 169,4
ordinary share (cents)
Continuing operations (cents) 109,0 102,0 7 171,5
Discontinued operations (2,2) 0,8 (2,1)
(cents)
4. Segmental results
Unaudited Audited
Six months ended Year
31 December ended
30 June
2009 2008 % 2009
Rm Rm change Rm
CONTINUING OPERATIONS
Segmental revenue
Food and beverage brands 3 161,5 3 219,5 (2) 6 052,1
Entyce 1 179,5 1 110,3 6 2 099,0
Snackworks 1 135,2 1 139,6 - 2 036,8
Chilled & frozen convenience 846,8 969,6 (13) 1 916,3
brands
Fashion brands 882,9 777,9 13 1 400,6
Personal care 418,9 377,8 11 730,2
Footwear & apparel 464,0 400,1 16 670,4
Corporate 3,6 5,4 9,7
GROUP 4 048,0 4 002,8 1 7 462,4
Segmental operating profit
before capital items
Food and beverage brands 370,7 413,7 (10) 724,8
Entyce 166,7 129,3 29 271,3
Snackworks 121,3 143,9 (16) 192,5
Chilled & frozen convenience 82,7 140,5 (41) 261,0
brands
Fashion brands 167,8 124,1 35 196,2
Personal care 56,6 42,1 34 94,5
Footwear & apparel 111,2 82,0 36 101,7
Corporate (3,8) (3,2) (12,5)
GROUP 534,7 534,6 - 908,5
The Out of Home business, comprising Ciro Beverage Solutions and Sir Juice, is
now reported within the Entyce and Snackworks segments. This is in line with
the decision to incorporate the catering wholesale customer base, a material
portion of the Out of Home business, into the existing Entyce and Snackworks
structure that service the wholesale channel. Comparatives have been restated
accordingly.
5. Investment activity
There were no significant changes to investments in the year to date.
6. Commitments
Unaudited Audited
Six months ended Year
31 December ended
30 June
2009 2008 2009
Rm Rm Rm
Capital expenditure commitments for 80,8 104,0 88,7
property, plant and equipment
Contracted for 49,2 56,8 52,2
Authorised but not contracted for 31,6 47,2 36,5
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. Post-balance sheet events
No significant events outside the ordinary course of business have occurred
since the balance sheet date.
8. Dividend declaration
Notice is hereby given that an interim ordinary dividend No 71 of 39 cents per
share for the six months ended 31 December 2009 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 Thursday, 25 March 2010
First trading day ex dividend on the JSE Friday, 26 March 2010
Record date Thursday, 1 April 2010
Payment date Tuesday, 6 April 2010
In accordance with the requirements of Strate Limited, no share certificates
may be dematerialised or rematerialised between Friday, 26 March 2010 and
Thursday, 1 April 2010, 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
Tuesday, 6 April 2010.
Acting Company secretary
Vivien Crystal
Directors:
Executive
Simon Crutchley(Chief executive officer), Owen Cressey(Chief financial
officer), Robert Katzen(Business development director)
Independent non-executive
Angus Band*(Chairman), Humphrey Buthelezi?, James Hersov, Sean Jagoe* (resigned
30 October 2009), Kim Macilwaine^, Nombulelo Moholi, Adriaan Nuhn#, Gavin
Tipper+*
? Member of the Audit Committee
* Member of the Appointments and Remuneration Committee
# Dutch
^ British
Business address and registered office
2 Harries Road
Illovo
Johannesburg 2196
South Africa
Postal address
PO Box 1897
Saxonwold 2132
South Africa
Telephone: +27 (0)11 502 1300
Telefax: +27 (0)11 502 1301
e-mail: info@avi.co.za
Website: www.avi.co.za
Auditors
KPMG Inc.
Sponsor
Standard Bank
Commercial bankers
Standard Bank
FirstRand Bank
Transfer secretaries
Computershare Investor Services 2004 (Pty) Limited
Business address
70 Marshall Street, Marshalltown, Johannesburg 2001, South Africa
Postal address
PO Box 61051, Marshalltown 2107, South Africa
Telephone: +27 (0)11 370 5000
Telefax: +27 (0)11 370 5271
8 March 2010
Date: 08/03/2010 07:30:01 Produced by the JSE SENS Department.
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