| Mon 6 Sep 2010, 7:30 | | AVI - AVI Limited - Audited results for the year ended 30 June 2010 |
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AVI
AVI
AVI - AVI Limited - Audited results for the year ended 30 June 2010
AVI Limited
ISIN: ZAE000049433
Share code: AVI
Registration number: 1944/017201/06
("AVI" or "the Group" or "the Company")
For more information, please visit our website: www.avi.co.za
AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2010
Key features
* Headline earnings per share from continuing operations up 14% to 199 cents
* Strong operating performance constrained by material decline in I&J
contribution
* Profit margin recovery in second half
* Net finance costs down 26%
* Simplot joint venture earnings up strongly
* Continuing strong cash generation, cash from operations R1,17 billion
* Final dividend of 61 cents per share, total dividend up 14% to 100 cents
per share
* Special payment of 75 cents per share proposed for shareholders approval
PRELIMINARY SUMMARISED GROUP BALANCE SHEET
Audited Audited
30 June 30 June
2010 2009
Rm Rm
Assets
Non-current assets
Property, plant and equipment 1 340,4 1 205,1
Intangible assets and goodwill 923,4 925,4
Investments 304,1 276,8
Deferred taxation 60,0 74,4
2 627,9 2 481,7
Current assets
Inventories and biological assets 918,4 950,0
Trade and other receivables including derivatives 1 189,5 1 170,1
Cash and cash equivalents 589,3 516,6
Assets of discontinued operations classified as held- 288,8 390,5
for-sale*
Other assets classified as held-for-sale** 4,4 8,2
2 990,4 3 035,4
Total assets 5 618,3 5 517,1
Equity and liabilities
Capital and reserves
Attributable to equity holders of AVI 2 954,1 2 675,9
Non-controlling interests (19,8) (23,3)
Total equity 2 934,3 2 652,6
Non-current liabilities
Financial liabilities, borrowings and operating lease 65,1 544,1
straight-line liabilities
Employee benefits 292,8 295,9
Deferred taxation 113,6 110,3
471,5 950,3
Current liabilities
Current borrowings 848,1 532,1
Trade and other payables including derivatives 1 183,4 1 200,1
Corporate taxation 17,3 13,4
Liabilities of discontinued operations classified as 163,7 168,6
held-for-sale*
2 212,5 1 914,2
Total equity and liabilities 5 618,3 5 517,1
* Discontinued operations comprise the Argentinian 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.
PRELIMINARY SUMMARISED GROUP STATEMENT OF COMPREHENSIVE INCOME
Audited Audited Change
Year ended Year %
30 June ended
2010 30 June
Rm 2009
Rm
Continuing operations
Revenue 7 630,9 7 462,4 2,3
Cost of sales 4 473,5 4 485,5 (0,3)
Gross profit 3 157,4 2 976,9 6,1
Selling and administrative expenses 2 216,4 2 068,4 7,2
Operating profit before capital items 941,0 908,5 3,6
Income from investments 16,2 22,4 (27,7)
Finance costs (109,3) (147,4) 25,8
Share of equity accounted earnings of joint 40,0 15,3 161,4
ventures
Capital items (7,2) 17,1 (142,1)
Profit before taxation 880,7 815,9 7,9
Taxation 287,2 276,7 3,8
Profit from continuing operations 593,5 539,2 10,1
Discontinued operations*
Revenue 329,4 428,8 (23,2)
Operating (loss)/profit before capital (50,6) 4,6 (1 200,0)
items
Finance costs (3,6) (8,0) (55,0)
Capital items (77,6) (30,0) 158,7
Loss before taxation (131,8) (33,4) 294,6
Taxation (10,0) (2,6) 284,6
Loss from discontinued operations (121,8) (30,8) 295,5
Profit for the year 471,7 508,4 (7,2)
Profit attributable to:
Owners of AVI 468,2 507,7 (7,8)
Non-controlling interests 3,5 0,7 400,0
471,7 508,4 (7,2)
Other comprehensive income/(expense), net 8,4 (133,6) 106,3
of tax
Foreign currency translation differences (31,0) (79,4) (61,0)
Cash flow hedging reserve 54,9 (76,2) (172,0)
Income tax on other comprehensive (15,5) 22,0 (170,5)
income/(expense)
Total comprehensive income for the year 480,1 374,8 28,1
Comprehensive income attributable to:
Owners of AVI 476,6 374,1 27,4
Non-controlling interests 3,5 0,7 400,0
480,1 374,8 28,1
Basic earnings per share from continuing 197,0 180,8 9,0
operations (cents)#
Diluted basic earnings per share from 190,0 177,5 7,0
continuing operations (cents)##
Basic earnings per share (cents)# 156,3 170,5 (8,3)
Diluted basic earnings per share (cents)## 150,8 167,3 (9,9)
Depreciation and amortisation of property, 190,7 187,4 1,8
plant and equipment, fishing rights and
trademarks included in operating profit
from continuing operations
Headline earnings per share from continuing 198,7 174,7 13,7
operations (cents)#
Diluted headline earnings per share from 191,7 171,5 11,8
continuing operations (cents)##
# Basic earnings and headline earnings per share are calculated on a
weighted average of 299 493 387 (30 June 2009: 297 806 357) ordinary
shares in issue.
## Diluted basic earnings and headline earnings per share are calculated
on a weighted average of 310 453 132(30 June 2009: 303 400 679) ordinary
shares in issue.
PRELIMINARY SUMMARISED GROUP STATEMENT OF CASH FLOWS
Audited Audited Change
Year ended Year ended %
30 June 30 June
2010 2009
Rm Rm
Continuing operations
Operating activities
Cash generated by operations before working 1 171,7 1 086,6 7,8
capital changes
(Increase)/decrease in working capital (5,8) 30,0 (119,3)
Cash generated by operations 1 165,9 1 116,6 4,4
Interest paid (106,5) (140,5) (24,2)
Taxation paid (260,7) (392,9) (33,6)
Net cash available from operating 798,7 583,2 37,0
activities
Investing activities
Interest received 16,0 21,2 (24,5)
Property, plant and equipment acquired (337,3) (257,8) 30,8
Proceeds from disposals of property, plant 11,5 103,4 (88,9)
and equipment and businesses
Movement in joint ventures and other 18,8 21,9 (14,2)
investments
Net cash used in investing activities (291,0) (111,3) 161,5
Financing activities
Net increase in shareholder funding 47,0 9,0 422,2
Long-term borrowings (repaid)/raised (1,3) 191,1 (100,7)
Short-term funding repaid (169,2) (14,1) 1 100,0
Dividends paid (272,4) (247,2) 10,2
Net cash used in financing activities (395,9) (61,2) 546,9
Discontinued operations*
Cash flows from operating activities 14,2 3,6 294,4
Cash flows from investing activities 5,7 (4,3) (232,6)
Cash flows from financing activities (38,1) (64,6) (41,0)
Cash flows from discontinued operations (18,2) (65,3) (72,1)
Increase in cash and cash equivalents 93,6 345,4 (72,9)
Cash and cash equivalents at beginning of 529,7 204,8 158,6
year
623,3 550,2 13,3
Translation of cash equivalents of foreign (25,3) (20,5) (23,4)
subsidiaries at beginning of year
Cash and cash equivalents at end of year 598,0 529,7 12,9
Attributable to:
Continuing operations** 589,3 516,6 14,1
Discontinued operations** 8,7 13,1 (33,6)
PRELIMINARY SUMMARISED GROUP STATEMENT OF CHANGES IN EQUITY
Share Treasury Reserves Retained
capital and shares Rm earnings
premium Rm Rm
Rm
Year ended 30 June 2010
Balance at 1 July 2009 171,0 (710,5) 35,1 3 180,3
Profit for the year 468,2
Other comprehensive income
Foreign currency translation (31,0)
differences
Cash flow hedging reserve 39,4
Total other comprehensive - - 8,4 -
income
Total comprehensive income - - 8,4 468,2
for the year
Transactions with owners,
recorded directly in equity
Share-based payments 27,0
Dividends paid (272,4)
Issue of ordinary shares to 12,9 (12,9)
AVI Share Trusts
Own ordinary shares sold by 41,4 5,6
AVI Share Trusts
Total contributions by and 12,9 28,5 27,0 (266,8)
distributions to owners
Total transactions with owners 12,9 28,5 27,0 (266,8)
Balance at 30 June 2010 183,9 (682,0) 70,5 3 381,7
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 year
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
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 owners - 9,3 20,9 (247,2)
Balance at 30 June 2009 171,0 (710,5) 35,1 3 180,3
PRELIMINARY SUMMARISED GROUP STATEMENT OF CHANGES IN EQUITY
Total Non- Total
Rm controlling equity
interests Rm
Rm
Year ended 30 June 2010
Balance at 1 July 2009 2 675,9 (23,3) 2 652,6
Profit for the year 468,2 3,5 471,7
Other comprehensive income -
Foreign currency translation differences (31,0) (31,0)
Cash flow hedging reserve 39,4 39,4
Total other comprehensive income 8,4 - 8,4
Total comprehensive income 476,6 3,5 480,1
for the year
Transactions with owners, recorded directly
in equity
Share-based payments 27,0 27,0
Dividends paid (272,4) (272,4)
Issue of ordinary shares to - -
AVI Share Trusts
Own ordinary shares sold by 47,0 47,0
AVI Share Trusts
Total contributions by and distributions to (198,4) - (198,4)
owners
Total transactions with owners (198,4) - (198,4)
Balance at 30 June 2010 2 954,1 (19,8) 2 934,3
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 differences (79,4) (79,4)
Cash flow hedging reserve (54,2) (54,2)
Total other comprehensive income (133,6) - (133,6)
Total comprehensive income 374,1 0,7 374,8
for the year
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 9,3 9,3
AVI Share Trusts
Total contributions by and distributions to (217,0) - (217,0)
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 PRELIMINARY SUMMARISED CONSOLIDATED FINANCIAL
STATEMENTS
For the year ended 30 June 2010
AVI Limited ("AVI" or the "Company") is a South African registered
company. The preliminary summarised consolidated 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 summarised consolidated annual 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 IAS 34 -
Interim Financial Reporting, the AC 500 Standards as issued by the
Accounting Practices Board, the Listings Requirements of
the JSE Limited (the "JSE") and the requirements of the Companies Act
of South Africa.
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.
In the current year the Group has adopted all of the new and revised
Standards and Interpretations relevant to its operations and effective
for annual reporting periods commencing 1 July 2009. The adoption of
these new Standards and Interpretations has not had any significant
impact on the amounts reported. The accounting policies are those
presented in the annual financial statements for the year ended 30
June 2010 and have been applied consistently to the years presented in
these summarised consolidated financial statements by all Group
entities.
3. Determination of headline earnings
Audited Audited Change
Year Year ended %
ended 30 June
30 June 2009
2010 Rm
Rm
Profit for the year attributable to 468,2 507,7 (7,8)
owners of AVI
Total capital items after taxation (81,6) (6,2)
Net (loss)/surplus on disposal of (0,6) 28,8
investments, properties, vessels and
plant and equipment
Net loss on disposal of assets of (1,1) -
disposal groups held-for-sale
Net surplus on disposal of subsidiaries - 23,8
Impairment of plant, equipment and (6,6) (5,2)
vessels
Impairment of assets classified as held- - (0,3)
for-sale
Impairment of intangible assets and - (30,0)
goodwill
Impairment of disposal groups held-for- (76,5) (30,0)
sale
Taxation attributable to capital items 3,2 6,7
Headline earnings 549,8 513,9 7,0
Attributable to:
Continuing operations 595,0 520,4 14,3
Discontinued operations (45,2) (6,5)
549,8 513,9 7,0
Headline earnings/(loss) per ordinary 183,6 172,6 6,4
share (cents)
Continuing operations (cents) 198,7 174,7 13,7
Discontinued operations (cents) (15,1) (2,1)
Diluted headline earnings/(loss) per 177,1 169,4 4,5
ordinary share (cents)
Continuing operations (cents) 191,7 171,5 11,8
Discontinued operations (cents) (14,6) (2,1)
4. Segmental results
Year Year ended Change
ended 30 June %
30 June 2009
2010 Rm
Rm
Continuing operations
Segmental revenue
Food and beverage brands 6 040,5 6 052,1 (0,2)
Entyce 2 217,9 2 099,0 5,7
Snackworks 2 080,9 2 036,8 2,2
Chilled & frozen convenience brands 1 741,7 1 916,3 (9,1)
Fashion brands 1 583,7 1 400,6 13,1
Personal care 802,8 730,2 9,9
Footwear and apparel 780,9 670,4 16,5
Corporate 6,7 9,7
Group 7 630,9 7 462,4 2,3
Segmental operating profit before
capital items
Food and beverage brands 695,4 724,8 (4,1)
Entyce 342,4 271,3 26,2
Snackworks 232,8 192,5 20,9
Chilled & frozen convenience brands 120,2 261,0 (53,9)
Fashion brands 255,4 196,2 30,2
Personal care 104,7 94,5 10,8
Footwear and apparel 150,7 101,7 48,2
Corporate (9,8) (12,5)
Group 941,0 908,5 3,6
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.
5. Investment activity
There were no significant changes to investments in the year to date.
6. Commitments
Year ended Year
30 June ended
2010 30 June
Rm 2009
Rm
Capital expenditure commitments for 247,8 88,7
property, plant and equipment
Contracted for 93,9 52,2
Authorised but not contracted for 153,9 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 a final ordinary dividend No 72 of 61
cents per share for the year ended 30 June 2010 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 Thursday, 23 September 2010
JSE
First trading day ex dividend on the JSE Monday, 27 September 2010
Record date Friday, 1 October 2010
Payment date Monday, 4 October 2010
In accordance with the requirements of Strate Limited, no share
certificates may be dematerialised or rematerialised between Monday,
27 September 2010 and Friday, 1 October 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 Monday, 4 October 2010.
9. Reports of the independent auditors
The unmodified audit reports of KPMG Inc, the independent auditors, on
the annual financial statements and the summarised financial
statements contained herein for the year ended 30 June 2010, dated 3
September 2010, are available for inspection at the registered office
of the company.
10. Annual report
The annual report for the year ended 30 June 2010 will be posted to
shareholders on or about Thursday, 23 September 2010. The financial
statements will include the notice of the annual general meeting of
shareholders to be convened on Wednesday, 20 October 2010.
Group overview
A strong second half in Snackworks, supported by continued solid performance
from Entyce Beverages and our Fashion Brands offset a materially weaker
performance from Irvin and Johnson ("I&J"). In spite of a difficult trading
environment the operating profit from continuing operations rose by 3,6% from
R908,5 million to R941,0 million for the year, after a reduction of R163,6
million in I&J`s operating profit. Lower net finance costs and much improved
performance from the Simplot seafood products joint venture resulted in a 14,3%
increase in headline earnings. Headline earnings per share increased by 13,7%,
from 174,7 cents per share to 198,7 cents per share.
Cash generated from operations remained strong at R1,17 billion and net debt has
reduced to R310,1 million from R547,7 million at the end of the 2009 financial
year. The Board has approved a final dividend of 61 cents per share, bringing
the total dividend for the year to 100 cents per share, 13,6% up on the 88 cents
per share paid last year. In addition, a special payment out of share premium of
75 cents per share has been proposed, subject to the approval of shareholders at
the annual general meeting in October.
The Argentinean hake and shrimp business conducted by Alpesca continues to be
classified as a discontinued operation in line with the Board`s commitment to
disinvesting from this asset. A material impairment provision of R76,5 million
has been raised to recognise the possibility that the sale process may result in
a consideration below the carrying value of the operating assets. There has been
a higher level of interest by prospective buyers in recent months and a disposal
should be completed during the next financial year.
There have been few price increases in our food and beverage categories during
2010 with price points carefully managed to maintain targeted sales volumes in a
more constrained demand environment. In some categories such as biscuits and
creamer, average prices realised were lower than a year ago. This approach has
been supported by an easing of commodity input costs over the year, which has
allowed margin recovery in most categories, with the exception of the tea
category where black tea prices remain high. Our biscuit brands in particular
enjoyed strong margin recovery in the second half of the year which together
with improvements in the Coffee category and our Fashion Brand businesses
resulted in the consolidated gross profit margin improving from 39,9% to 41,4%.
This is approaching the levels achieved prior to the prolonged increase in
commodity costs that started in 2008.
Continuing operations
Revenue from continuing operations rose by 2,3% from R7,46 billion to R7,63
billion for the year. I&J`s revenue declined by R215,8 million due to a
combination of lower export selling prices, a stronger Rand and lower volumes
following the reduction in the hake total allowable catch. The rest of our
businesses achieved an overall increase in revenue of 6,6% through a combination
of higher volumes or the annualising impact of price increases taken in the
prior year. The consolidated gross profit margin for the year improved from
39,9% to 41,4% due mainly to improvements in Indigo and Spitz supported by
higher Coffee margins and a strong second half recovery in Biscuits
profitability resulting from lower commodity costs and improved factory
performance. Selling and administration costs increased by 7,2% and operating
profit of R941,0 million was 3,6% higher than the R908,5 million achieved last
year, despite a decrease of R163,6 million in I&J`s operating profit.
Lower interest rates and lower debt levels resulted in a decrease in net finance
charges from R125,0 million to R93,1 million.
AVI`s share of earnings from joint ventures increased from R15,3 million to
R40,0 million reflecting improved performance from I&J`s Australian joint
venture with Simplot. Simplot benefited from better factory performance and also
performed well in the Australian retail sector during the year.
Headline earnings increased by 14,3% from R520,4 million to R595,0 million and
headline earnings per share increased by 13,7% to 198,7 cents per share.
There were no material capital items in the year to June 2010. In the prior year
capital items of R17,1 million before tax largely comprised a R26,4 million
profit on the sale of an I&J property and a R23,8 million profit on the disposal
of a non-core subsidiary that packed private label teas and coffees partially
offset by impairments of intangible assets in the retail juice and Nina Roche
footwear businesses.
Cash generated by operating activities increased 4,4% to R1,17 billion. Capital
expenditure increased from R257,8 million in the prior year to R337,3 million
which includes R88,5 million to acquire a property adjacent to Indigo`s site in
Cape Town that will support the long-term growth of this operation. Proceeds on
disposals of R11,5 million were lower than the R103,4 million realised 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 R272,4 million,
taxation of R260,7 million and interest paid of R106,5 million. Net debt at the
end of June 2010 was R310,1 million compared to R547,7 million at the end of
June 2009.
Segmental review - continuing operations
Year ended 30 June
Segmental revenue Segmental operating
profit
2010 2009 Change 2010 2009 Change
Rm Rm % Rm Rm %
Food & beverage 6 040,5 6 052,1 (0,2) 695,4 724,8 (4,1)
brands
Entyce 2 217,9 2 099,0 5,7 342,4 271,3 26,2
Snackworks 2 080,9 2 036,8 2,2 232,8 192,5 20,9
Chilled & frozen 1 741,7 1 916,3 (9,1) 120,2 261,0 (53,9)
convenience brands
Fashion brands 1 583,7 1 400,6 13,1 255,4 196,2 30,2
Personal care 802,8 730,2 9,9 104,7 94,5 10,8
Footwear & apparel 780,9 670,4 16,5 150,7 101,7 48,2
Corporate 6,7 9,7 (9,8) (12,5)
Group 7 630,9 7 462,4 2,3 941,0 908,5 3,6
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 5,7% to R2,22 billion and operating profit increased by 26,2%
from R271,3 million to R342,4 million with the operating profit margin at 15,4%
compared to 12,9% in the prior period.
Growth in revenue came from the annualisation of price increases during the
previous financial year, as well as increased sales volumes. Demand for Entyce`s
brands was good in the context of constrained consumer spending and strong
competition, and all of its categories benefited from incremental product
development, strong promotional activity and tactical pricing. Creamer volumes
in particular were higher with reduced price points stimulating demand. The cost
of key commodities was in aggregate higher than last year, largely due to high
black tea prices experienced during the period. Despite this the overall gross
profit margin rose due to pleasing improvements in both the coffee and juice
categories. Selling and administration costs were well controlled supporting the
increase in operating profit margin.
The Out of Home operations, made up of Ciro and Sir Juice, are included in the
Entyce numbers reflected above. Both operations performed very credibly in a
tough trading environment, achieving an operating profit of R28,5 million for
the year compared to R30,6 million last year.
Snackworks
Revenue of R2,08 billion was 2,2% higher than last year while operating profit
rose by 20,9%, from R192,5 million to R232,8 million. The operating profit
margin for the year increased from 9,5% to 11,2%.
The increase in revenue is largely attributable to higher biscuit sales volumes
offset by lower average selling prices. 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 in this category. The gross profit margin improved materially
in the second half of the year, due to lower commodity costs and improved
factory performance. The snacks category operating profit was maintained at the
same level as last year with lower commodity costs and strong World Cup volumes
offsetting aggressive competition and potato shortages in the first half.
Selling and administration costs were marginally higher than last year with cost
escalations partially offset by lower marketing costs in line with the emphasis
on value-pricing and improved media rates.
Chilled and Frozen Convenience Brands (I&J* and Denny)
*excluding Alpesca
Revenue decreased by R174,6 million to R1,74 billion and operating profit
decreased by R140,8 million to R120,2 million. Operating profit margin decreased
from 13,6% to 6,9%. 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 delivered a strong operational performance in 2010. In addition to lower
fuel prices and good fishing conditions, factory performance was maintained at
improved levels established over the last few years and further cost reduction
initiatives were implemented in the second half of the year. Despite this,
profits were materially impacted by a decrease in revenue of R215,8 million
caused by lower export selling prices in key European markets due to reduced
demand and increased supply from other fish resources, a stronger Rand and lower
volumes following the reduction in the hake total allowable catch. Although the
decrease in operating profit from R237,8 million last year to R74,3 million is
disappointing, it is some consolation that the majority of the profit for the
year can be attributed to improvements made to this business over the last four
years.
Denny had a much better year with good production allowing it to compete
effectively in a tough trading environment for the category. Denny`s operating
profit for the year increased from R23,1 million to R45,9 million.
Fashion brands (personal care, footwear and apparel)
Revenue rose by 13,1% to R1,58 billion and operating profit increased by 30,2%,
from R196,2 million to R255,4 million. Operating profit margin increased from
14,0% to 16,1%.
In the personal care category, Indigo`s revenue grew by 9,9% to R802,8 million
while operating profit increased 10,8% to R104,7 million. The operating profit
margin for the period improved slightly from 12,9% to 13,0%. Revenue growth was
the product of price increases implemented during the second half of the last
financial year and growth in domestic sales volumes, partially offset by lower
export volumes. Further market share gains were achieved in body sprays.
Revenue in the footwear and apparel category increased by 16,5%, and operating
profit increased by 48,2% from R101,7 million to R150,7 million. In Spitz,
revenue increased by 16,2% to R732,2 million while operating profit increased
38,2% to R157,8 million. The operating profit margin for the year increased from
18,1% to 21,6%. Overall footwear volumes grew 12,8% 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 operating results during the year have been compromised by lower hake
export prices, the weak Euro and material labour disruptions. Consequently this
business made an operating loss of R50,6 million compared to an operating profit
of R4,6 million last year.
An impairment provision of R76,5 million has been raised to recognise the
possibility that the ongoing sale process may result in a consideration below
the carrying value of the operating assets.
Dividends
A final dividend of 61 cents per share has been declared in line with AVI`s
dividend policy of a two times cover on diluted headline earnings per share from
continuing operations.
In addition, in view of AVI`s current low gearing and ongoing strong cash
generation the Board has proposed a specific payment to shareholders out of
share premium of 75 cents per share for approval at the annual general meeting
in October 2010.
Outlook
Accepting the general view that consumer spending is showing mixed signs of
recovery, the extent to which consumer demand in AVI`s categories will grow
during the next year remains uncertain. We believe that the somewhat variable
demand, low economic growth and tough price competition which characterised the
2010 financial year could prevail for much of the coming year.
I&J`s results will remain depressed should weak prices for seafood products and
the strong Rand continue to prevail. Further cost reduction initiatives
implemented in the second half and continuing into next year will produce
benefits, but will not be sufficient to offset the adverse impact of current
exchange rates.
In our other operations, there are a number of exciting and material profit
growth opportunities which we will develop in the next year. These range from
ongoing efficiency improvements to capacity expansion and growth in new formats
using our strong brand portfolio. Several major capital projects in support of
this are already in progress and further projects are being finalised for
approval.
The Board remains confident of AVI`s ability to compete effectively in these
tough, uncertain, trading conditions and continue to pursue organic profit
growth while remaining vigilant for strategic acquisition opportunities.
Angus Band Simon Crutchley
Chairman CEO
6 September 2010
Administration and principal subsidiaries
Administration
Company registration
AVI Limited ("AVI")
Reg no: 1944/017201/06
Share code: AVI
ISIN: ZAE000049433
Acting Company secretary
Vivien Crystal
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
Auditor
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
Principal subsidiaries
Food and beverage brands
National Brands Limited
Reg no: 1948/029389/06
(incorporating Entyce Beverages, Snackworks and Ciro Beverage Solutions)
30 Sloane Street, Bryanston 2021
PO Box 5159, Rivonia 2128
Telefax: +27 (0)11 707 7799
Managing directors
Donnee MacDougall (Entyce)
Telephone: +27 (0)11 707 7100
Geoff Whyte (Snackworks)
Telephone: +27 (0)11 707 7200
Robert Katzen (Ciro Beverage Solutions)
Telephone: +27 (0)11 807 3915
The Real Juice Co Holdings (Pty) Limited
Reg no: 2001/001413/07
2 Harries Road, Illovo
Johannesburg 2196
PO Box 1897, Saxonwold 2132
Managing directors
Donnee MacDougall
Telephone: +27 (0)11 707 7100
Telefax: +27 (0)11 707 7808
Chilled & frozen convenience brands
Irvin & Johnson Holding Company (Pty) Limited
Reg no: 2004/013127/07
1 Davidson Street, Woodstock
Cape Town 8001
PO Box 1628, Cape Town 8000
Managing director
Ronald Fasol
Telephone: +27 (0)21 402 9200
Telefax: +27 (0)21 402 9282
Denny Mushrooms (Pty) Limited
Reg no: 1998/003042/07
29 Eaton Avenue , Bryanston 2021
PO Box 787166, Sandton City 2146
Managing director
Roger Coppin
Telephone: +27 (0)11 707 7500
Telefax: +27 11 (0)11 707 7762
Fashion brands
Indigo Cosmetics (Pty) Limited
Reg no: 2003/009934/07
16-20 Evans Avenue, Epping 1 7460
PO Box 3460, Cape Town 8000
Managing director
Susan O`Keeffe
Telephone: +27 (0)21 507 8500
Telefax: +27 (0)21 507 8501
A&D Spitz (Pty) Limited
Reg no: 1999/025520/07
29 Eaton Avenue, Bryanston 2021
PO Box 782916, Sandton 2145
Managing director
Robert Lunt
Telephone: +27 (0)11 707 7300
Telefax: +27 (0)11 707 7763
Directors
Executive
Simon Crutchley
(Chief executive officer)
Owen Cressey
(Chief financial officer)
Robert Katzen
(Business development director)
Independent non-executive
Angus Band2 (Chairman)
Humphrey Buthelezi1
James Hersov
Sean Jagoe2 (resigned 2 November 2009)
Kim Macilwaine4
Nombulelo Moholi (resigned 24 March 2010)
Adriaan Nuhn3
Gavin Tipper1, 2
Mike Bosman1 (appointed 1 March 2010)
Andisiwe Kawa2 (appointed 15 July 2010)
1 Member of the Audit Committee
2 Member of the Appointments and Remuneration Committee
3 Dutch
4 British
Date: 06/09/2010 07:30:01 Produced by the JSE SENS Department.
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