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AVI
AVI
AVI - AVI limited - Unaudited interim results for the six months ended 31
December 2010
AVI Limited
ISIN: ZAE000049433
SHARE CODE: AVI
Registration number: 1944/017201/06
("AVI" or "the Group" or "the Company")
www.avi.co.za
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2010
Key features
* Operating profit from continuing operations up by 30% to R695 million
* Headline earnings per share from continuing operations up 36% to 152 cents
* Sound brand performances across all categories
* Operating profit leverage from lower commodity costs, higher volumes and
operating efficiencies
* I&J profit constrained by adverse exchange rate impact on export revenues
* Cash generated from operations up 28% to R792 million
* Special payment of R227 million made to shareholders in November 2010
* Interim dividend up 28% to 50 cents per share
Group overview
Consumer demand in the six months to December 2010 has been strong in our
fashion brand businesses, and sound within the food and beverage categories. In
the fashion brands portfolio, Spitz achieved strong volume growth while Indigo
also achieved volume growth and strengthened its leading position in female body
sprays. In the food and beverage portfolio the coffee and creamer categories
achieved strong volume growth that was due, in part, to reduced supply by other
manufacturers. In the tea and biscuits categories, we continue to carefully
manage the balance between sales volume and profit margin. Tea volumes were
slightly lower than last year due to aggressive competition, however this was
offset by higher prices realised. Biscuit prices were increased in August which
resulted in lower sales volumes in the first half. I&J`s revenue was hit hard by
the stronger rand, however volumes were in line with the first half of last
year, with an improved sales mix and slightly better export prices in foreign
currencies.
The net result of these price and volume movements was a 6,8% growth in revenue
from continuing operations, from R4,05 billion to R4,32 billion. Commodity
prices, including the benefit of the stronger rand, were generally lower than
the first half of last year. Together with the growth in revenue and improving
factory efficiencies, this resulted in a material improvement in the
consolidated gross profit margin. Operating profit increased by 30,0%, from
R534,7 million to R695,2 million due to the higher gross profit margins and
volume leverage. Headline earnings rose by 37,1%, from R335,4 million to R459,9
million due to the higher operating profit and lower net finance costs. Headline
earnings per share from continuing operations increased 35,6% to 152,3 cents.
Cash generated from operations remained strong, increasing to R792,0 million
which is 27,6% higher than the same period last year. The special payment of 75
cents per share approved by shareholders in October 2010 was paid in November
2010, amounting to R226,6 million. Including this payment, net debt reduced from
R479,5 million at the end of December 2009 to R187,7 million at the end of
December 2010. The Board has approved an interim dividend of 50 cents per share.
Financial review - Continuing operations
Revenue from continuing operations rose by 6,8% from R4,05 billion to R4,32
billion for the six months. This increase is largely attributable to higher
sales volumes, particularly in the creamer, coffee, personal care and footwear
categories, as well as higher selling prices in the biscuit category. The
consolidated gross profit margin improved from 40,6% to 44,8% with improvement
at all business units except I&J which was adversely impacted by the strong
rand. This improvement reflects lower raw material costs, lower import exchange
rates, higher realised selling prices and improved manufacturing performance.
Operating profit improved by 30,0%, from R534,7 million to R695,2 million,
despite a decrease of R56,7 million at I&J, due to the material leverage in the
rest of the group from higher sales volumes and improved gross profit margins.
The consolidated operating profit margin increased from 13,2% to 16,1%.
Lower interest rates and lower debt levels resulted in a decrease in net finance
charges from R52,4 million to R28,2 million.
AVI`s share of earnings from joint ventures decreased from R21,0 million to
R14,6 million largely due to lower operating profit from I&J`s Australian joint
venture with Simplot. The joint venture`s operating performance was sound but
less favourable exchange rates on imported raw material resulted in lower profit
for the period.
Headline earnings increased by 37,1% from R335,4 million to R459,9 million and
headline earnings per share increased by 35,6% to 152,3 cents per share.
The capital loss of R17,2 million includes a R12,4 million loss on the disposal
of Sir Juice (Pty) Limited with effect from November 2010, of which R2,9 million
is attributable to minorities. Other net capital losses of R4,8 million arise
from impairments and disposals of assets in the normal course of business.
Cash generated by operating activities increased 27,6% to R792,0 million.
Working capital was well controlled in general and also benefited from strong
December sales in Spitz and Indigo which reduced inventory levels at the end of
the period. Capital expenditure of R152,6 million was lower than the prior
period which included R88,5 million to acquire a property adjacent to Indigo
Cosmetics site in Cape Town. Other material cash out-flows during the period
were dividends of R184,1 million, the capital repayment of R226,6 million and
taxation of R115,1 million. Net debt at the end of December 2010 was R187,7
million compared to R479,5 million at the end of December 2009.
Segmental review - continuing operations
Six months ended 31 December
Segmental revenue Segmental operating profit
2010 2009 % 2010 2009 %
Rm Rm change Rm Rm change
Food and beverage 3 289,1 3 4,0 463,3 370,7 25,0
brands 161,5
Entyce 1 246,4 1 5,7 258,8 166,7 55,2
179,5
Snackworks 1 185,6 1 4,4 180,5 121,3 48,8
135,2
Chilled and 857,1 846,8 1,2 24,0 82,7 (71,0)
frozen
convenience
brands
Fashion brands 1 030,7 882,9 16,7 237,4 167,8 41,5
Personal care 470,3 418,9 12,3 67,3 56,6 18,9
Footwear and 560,4 464,0 20,8 170,1 111,2 53,0
apparel
Corporate 3,3 3,6 (5,5) (3,8)
Group 4 323,1 4 6,8 695,2 534,7 30,0
048,0
Entyce
Revenue increased 5,7% to R1,25 billion and operating profit increased by 55,2%
from R166,7 million to R258,8 million with the operating profit margin at 20,8%
compared to 14,1% in the prior period.
Growth in revenue came primarily from higher coffee and creamer sales volumes
that resulted from strong demand for Frisco and Ellis Brown due partly to
competitor supply problems. Coffee volumes were 14,3% higher than the prior
period while creamer volumes were up by 22,9%. Tea revenue was in line with
last year with aggressive price competition resulting in a small decrease in
volumes that was offset by the annualising impact of price increases taken in
March 2010. Gross profit margins benefited from lower input costs of key
commodities as well as the stronger rand. Selling and administration costs were
well controlled and consequently the majority of the impact of lower input costs
and operating leverage from higher volumes flowed through to operating profit.
The retail juice business performed well in its second year after being
restructured, recording an operating profit of R4,0 million compared a loss of
R2,5 million in the prior period.
The out-of-home operations, made up of Ciro and Sir Juice, are included in the
Entyce numbers reflected above. The out-of-home trading environment was
constrained by lower demand, with Ciro`s operating profit declining from R9,3
million to R6,8 million. Sir Juice was disposed of to the minority shareholders
with effect from November 2010. The operating profit for the four months to
October 2010 was R2,1 million compared to R3,6 million in the six months to
December 2009.
Snackworks
Revenue of R1,19 billion was 4,4% higher than last year while operating profit
rose by 48,8%, from R121,3 million to R180,5 million. The operating profit
margin for the six months increased from 10,7% to 15,2%.
The increase in revenue is largely attributable to higher snack sales volumes
and higher biscuit selling prices.
Snack volumes have benefited from strong growth in our range of corn products
assisted by effective field marketing leading to improved shelf presence.
Biscuit prices were increased in August 2010 after a prolonged period of price
deflation, to recognise escalating fixed costs and an upward trend in commodity
prices. This has had a short-term negative impact on volumes. The improvement in
operating profit is largely due to a materially higher gross profit margin
resulting from lower commodity costs, higher biscuit selling prices and improved
factory performance. Marketing costs were lower in the first half with most of
the current year`s spend planned for the second half of the year.
Chilled and frozen convenience brands (I&J* and Denny)
* Excluding Alpesca
Revenue increased by 1,2% to R857,1 million and operating profit decreased by
R58,7 million to R24,0 million. Operating profit margin decreased from 9,8% to
2,8%. The reduction in profit is largely attributable to a weaker result from
I&J, with Denny Mushrooms ("Denny") continuing to perform well.
I&J continues to perform well operationally and catch rates have improved
further, however the stronger rand caused a material decline in export revenue
which was offset to a limited extent by an improved sales mix and slightly
higher prices in export markets. Export markets remain under pressure with
reduced demand from customers and increased supply from other fish resources.
The first half was also materially impacted by unrealised foreign exchange
losses of R17 million resulting from very low closing exchange rates at 31
December 2010, much of which has already reversed with exchange rate movements
since then. Operating profit declined from R59,8 million in the first half of
last year to R3,1 million. The hake quota for the 2011 calendar year has
increased by 10% which will give I&J extra volume opportunity in the second half
of the financial year.
Denny has performed well in the fresh mushroom category despite increased supply
from other growers and has increased sales volumes and operating profit. However
the value-add business, comprising soups, sauces and canned mushrooms, has been
impacted by the sustained supply of cheap canned mushroom imports resulting in a
decline in operating profit for the period and consequently Denny`s overall
operating profit for the six months decreased from R22,9 million to R20,9
million.
Fashion brands (personal care, footwear and apparel)
Revenue rose by 16,7% to R1,03 billion and operating profit increased by 41,5%,
from R167,8 million to R237,4 million with the operating profit margin
increasing from 19,0% to 23,0%.
In the personal care category, Indigo`s revenue grew by 12,3% to R470,3 million
while operating profit increased 18,9% to R67,3 million. The operating profit
margin for the period improved from 13,5% to 14,3%. Revenue growth was largely
attributable to higher sales volumes with further growth in body spray market
shares complemented by good performance in fragrances and colour cosmetics. The
core Yardley, Lentheric and Coty brands all performed well. Profit margin
benefited from lower input costs due to the stronger rand as well as higher
volumes.
Revenue in the footwear and apparel category increased by 20,8%, and operating
profit increased by 53,0% from R111,2 million to R170,1 million. In Spitz,
revenue increased by 21,9% to R535,1 million while operating profit increased
50,4% to R171,7 million. The operating profit margin for the first half
increased from 26,0% to 32,1%. The improvement is attributable to strong sales
volume growth and improved gross profit margins resulting from the stronger rand
and an improved sales mix. Footwear sales volumes increased by 24,6% with the
core Carvela, Lacoste, Kurt Geiger and Tosoni brands all performing well. Four
new mono-branded Kurt Geiger clothing stores were opened in the first half as
part of the fashion brands expansion plan.
Discontinued operation
Our efforts to dispose of the Argentinian hake and shrimp business conducted by
Alpesca are continuing. Alpesca`s operating results for the six months to
December were compromised by poor hake results resulting from unfavourable
exchange rates and a decline in fishing performance. However, shrimp fishing
improved and the operating loss of R9,5 million was similar to the loss of R8,9
million for the same period last year.
Dividends
An interim dividend of 50 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.
A special payment out of share premium of 75 cents per share, amounting to
R226,6 million, was approved by shareholders at the annual general meeting in
October 2010 and paid in November 2010.
Outlook
It is still unclear whether South Africa`s economy is set to meaningfully
recover in the second half of the financial year and our expectations for
increasing consumer expenditure, despite lower interest rates, are moderate.
Nonetheless demand for our brands is improving and we remain confident that we
can compete effectively while continuing to seek the optimal balance between
volumes and profit margins. However, if current commodity price levels are
sustained, the second half is unlikely to benefit as materially from lower input
costs as the first half. While I&J`s results in the second half should benefit
from the increase in hake quota, they will remain depressed should weak prices
for seafood products and the strong rand continue to prevail. Taking all of
these factors into account, it is unlikely that the rate of year-on-year growth
achieved in the six months to December will be repeated in the second half of
this financial year.
We continue to focus on maximising the medium-term profit growth opportunities
within our brand portfolios and several major projects that improve efficiency
and capacity will be commissioned in the second half of this year.
The Board is confident that AVI will continue to deliver profit growth from the
current brand portfolio while remaining vigilant for brand acquisition
opportunities both regionally and domestically.
The above outlook statements have not been reviewed or reported on by AVI`s
auditors.
Angus Band Simon Crutchley
Chairman CEO
7 March 2011
CONDENSED GROUP BALANCE SHEETS
Unaudited Audited at
at 31 December 30 June
2010 2009 2010
Rm Rm Rm
Assets
Non-current assets
Property, plant and equipment 1 375,6 1 307,9 1 340,4
Intangible assets and goodwill 903,3 923,4 923,4
Investments 326,5 302,2 304,1
Deferred taxation 54,9 49,6 60,0
2 660,3 2 583,1 2 627,9
Current assets
Inventories and biological assets 865,9 927,4 918,4
Trade and other receivables 1 261,4 1 211,6 1 189,5
including derivatives
Cash and cash equivalents 479,3 686,8 589,3
Assets of discontinued operations 227,5 367,6 288,8
classified as held-for-sale*
Other assets classified as held- 3,7 4,0 4,4
for-sale**
2 837,8 3 197,4 2 990,4
Total assets 5 498,1 5 780,5 5 618,3
Equity and liabilities
Capital and reserves
Attributable to equity holders of 2 980,6 2 922,9 2 954,1
AVI
Non-controlling interests (21,8) (23,4) (19,8)
Total equity 2 958,8 2 899,5 2 934,3
Non-current liabilities
Financial liabilities, borrowings 61,1 541,9 65,1
and operating lease straight-line
liabilities
Employee benefits 313,1 327,1 292,8
Deferred taxation 108,5 115,4 113,6
482,7 984,4 471,5
Current liabilities
Current borrowings 619,5 636,6 848,1
Trade and other payables including 1 239,9 1 097,0 1 183,4
derivatives
Corporate taxation 76,8 24,8 17,3
Liabilities of discontinued 120,4 138,2 163,7
operations classified as held-for-
sale*
2 056,6 1 896,6 2 212,5
Total equity and liabilities 5 498,1 5 780,5 5 618,3
?*?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.
CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME
Unaudited Audited
six months ended 31 year ended
December 30 June
2010 2009 % 2010
Rm Rm change Rm
Continuing operations
Revenue 4 323,1 4 048,0 7 7 630,9
Cost of sales 2 386,8 2 402,6 (1) 4 473,5
Gross profit 1 936,3 1 645,4 18 3 157,4
Selling and 1 241,1 1 110,7 12 2 216,4
administrative expenses
Operating profit before 695,2 534,7 30 941,0
capital items
Income from investments 8,4 5,5 53 16,2
Finance costs (36,6) (57,9) (37) (109,3)
Share of equity accounted 14,6 21,0 (30) 40,0
earnings of joint
ventures
Capital items (17,2) (0,3) 5 633 (7,2)
Profit before taxation 664,4 503,0 32 880,7
Taxation 219,2 167,9 31 287,2
Profit from continuing 445,2 335,1 33 593,5
operations
Discontinued operations*
Revenue 227,2 191,8 18 329,4
Operating loss before (9,5) (8,9) (7) (50,6)
capital items
Finance costs (2,4) (2,8) (14) (3,6)
Capital items 0,3 (1,1) (127) (77,6)
Loss before taxation (11,6) (12,8) 9 (131,8)
Taxation (3,3) (5,3) (38) (10,0)
Loss from discontinued (8,3) (7,5) (11) (121,8)
operations
Total operations
Profit for the period 436,9 327,6 33 471,7
Profit attributable to:
Owners of AVI 438,9 327,7 34 468,2
Non-controlling interests (2,0) (0,1) 1 900 3,5
436,9 327,6 33 471,7
Other comprehensive (37,3) 46,1 (181) 8,4
income, net of tax
Foreign currency (26,4) 2,9 (1 010) (31,0)
translation differences
Cash flow hedging reserve (15,1) 60,0 (125) 54,7
Income tax on other 4,2 (16,8) (125) (15,3)
comprehensive income
Total comprehensive 399,6 373,7 7 480,1
income for the period
Total comprehensive
income attributable to:
Owners of AVI 401,6 373,8 7 476,6
Non-controlling interests (2,0) (0,1) 1 900 3,5
399,6 373,7 7 480,1
Basic earnings per share 148,0 112,2 32 197,0
from continuing
operations (cents)#
Diluted basic earnings 143,6 108,9 32 190,0
per share from continuing
operations (cents)##
Basic earnings per share 145,3 109,7 32 156,3
(cents)#
Diluted basic earnings 140,9 106,5 32 150,8
per share (cents)##
Depreciation and 102,1 93,5 9 190,7
amortisation of property,
plant and equipment,
fishing rights and
trademarks included in
operating profit from
continuing operations
* Discontinued operations comprise the Argentinian hake and shrimp
operations conducted by Alpesca, a wholly owned subsidiary of I&J.
Headline earnings per 152,3 112,3 36 198,7
share from continuing
operations (cents)#
Diluted headline earnings 147,6 109,0 35 191,7
per share from continuing
operations (cents)##
#Basic earnings and headline earnings per share is calculated on a
weighted average of 302 013 133 (2009: 298 739 809 and 30 June
2010: 299 493 387) ordinary shares in issue.
##Diluted basic earnings and headline earnings per share is
calculated on a weighted average of 311 572 063 (2009: 307 588 251
and 30 June 2010: 310 453 132) ordinary shares in issue.
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
Share Treasury Reserves
capital shares Rm
and Rm
premium
Rm
Six months ended 31 December 2010
Balance at 1 July 2010 183,9 (682,0) 70,5
Profit for the period
Other comprehensive income
Foreign currency translation (26,4)
differences
Cash flow hedging reserve (10,9)
Total other comprehensive income - - (37,3)
Total comprehensive income for the - - (37,3)
period
Transactions with owners, recorded
directly in equity
Share-based payments 13,9
Dividends paid
Capital repayment (261,8) 35,2
Issue of ordinary shares to AVI 107,8 (107,8)
Share Trusts
Own ordinary shares sold by AVI 32,0
Share Trusts (net)
Total transactions with owners (154,0) (40,6) 13,9
Balance at 31 December 2010 29,9 (722,6) 47,1
Six months ended 31 December 2009
Balance at 1 July 2009 171,0 (710,5) 35,1
Profit for the period
Other comprehensive income
Foreign currency translation 2,9
differences
Cash flow hedging reserve 43,2
Total other comprehensive income - - 46,1
Total comprehensive income for the - - 46,1
period
Transactions with owners, recorded
directly in equity
Share-based payments 13,3
Dividends paid
Own ordinary shares sold by AVI 15,3
Share Trusts (net)
Total transactions with owners - 15,3 13,3
Balance at 31 December 2009 171,0 (695,2) 94,5
Year ended 30 June 2010
Balance at 1 July 2009 171,0 (710,5) 35,1
Profit for the year
Other comprehensive income
Foreign currency translation (31,0)
differences
Cash flow hedging reserve 39,4
Total other comprehensive income - - 8,4
Total comprehensive income for the - - 8,4
period
Transactions with owners, recorded
directly in equity
Share-based payments 27,0
Dividends paid
Issue of ordinary shares to AVI 12,9 (12,9)
Share Trusts
Own ordinary shares sold by AVI 41,4
Share Trusts (net)
Total transactions with owners 12,9 28,5 27,0
Balance at 30 June 2010 183,9 (682,0) 70,5
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY CONTINUED
Retained Total Non- Total
earnings Rm controlling equity
Rm interests Rm
Rm
Six months ended
31 December 2010
Balance at 1 July 2010 3 381,7 2 954,1 (19,8) 2 934,3
Profit for the period 438,9 438,9 (2,0) 436,9
Other comprehensive
income
Foreign currency (26,4) (26,4)
translation differences
Cash flow hedging (10,9) (10,9)
reserve
Total other - (37,3) - (37,3)
comprehensive income
Total comprehensive 438,9 401,6 (2,0) 399,6
income for the period
Transactions with
owners, recorded
directly in equity
Share-based payments 13,9 13,9
Dividends paid (184,1) (184,1) (184,1)
Capital repayment (226,6) (226,6)
Issue of ordinary - -
shares to AVI Share
Trusts
Own ordinary shares (10,3) 21,7 21,7
sold by AVI Share
Trusts (net)
Total transactions with (194,4) (375,1) - (375,1)
owners
Balance at 31 December 3 626,2 2 980,6 (21,8) 2 958,8
2010
Six months ended 31
December 2009
Balance at 1 July 2009 3 180,3 2 675,9 (23,3) 2 652,6
Profit for the period 327,7 327,7 (0,1) 327,6
Other comprehensive
income
Foreign currency 2,9 2,9
translation differences
Cash flow hedging 43,2 43,2
reserve
Total other - 46,1 - 46,1
comprehensive income
Total comprehensive 327,7 373,8 (0,1) 373,7
income for the period
Transactions with
owners, recorded
directly in equity
Share-based payments 13,3 13,3
Dividends paid (155,4) (155,4) (155,4)
Own ordinary shares 15,3 15,3
sold by AVI Share
Trusts (net)
Total transactions with (155,4) (126,8) - (126,8)
owners
Balance at 31 December 3 352,6 2 922,9 (23,4) 2 899,5
2009
Year ended 30 June 2010
Balance at 1 July 2009 3 180,3 2 675,9 (23,3) 2 652,6
Profit for the year 468,2 468,2 3,5 471,7
Other comprehensive
income
Foreign currency (31,0) (31,0)
translation differences
Cash flow hedging 39,4 39,4
reserve
Total other - 8,4 - 8,4
comprehensive income
Total comprehensive 468,2 476,6 3,5 480,1
income for the period
Transactions with
owners, recorded
directly in equity
Share-based payments 27,0 27,0
Dividends paid (272,4) (272,4) (272,4)
Issue of ordinary 0,0 0,0
shares to AVI Share
Trusts
Own ordinary shares 5,6 47,0 47,0
sold by AVI Share
Trusts (net)
Total transactions with (266,8) (198,4) - (198,4)
owners
Balance at 30 June 2010 3 381,7 2 954,1 (19,8) 2 934,3
CONDENSED GROUP STATEMENT OF CASH FLOWS
Unaudited % Audited
six months ended 31 change year
December ended
30 June
2010 2009 2010
Rm Rm Rm
Continuing operations
Operating activities
Cash generated by operations 803,9 652,2 23 1 171,7
before working capital
changes
Increase in working capital (11,9) (31,7) (62) (5,8)
Cash generated by operations 792,0 620,5 28 1 165,9
Interest paid (35,7) (58,7) (39) (106,5)
Taxation paid (115,1) (123,7) (7) (260,7)
Net cash available from 641,2 438,1 46 798,7
operating activities
Investing activities
Cash flow from investments 5,6 6,0 (7) 16,0
Property, plant and (152,6) (199,1) (23) (337,3)
equipment acquired
Proceeds from disposals of 17,1 8,0 114 11,5
property, plant and
equipment and businesses
Movement in joint ventures 2,6 4,4 (41) 18,8
and other investments
Net cash used in investing (127,3) (180,7) (30) (291,0)
activities
Financing activities
Net increase in shareholder 21,7 15,3 42 47,0
funding
Long-term borrowings - net - (1,7) 100 (1,3)
repaid
Short-term funding (233,4) 85,1 (374) (169,2)
(repaid)/raised
Capital repayment (226,6) - -
Dividends paid (184,1) (155,4) 18 (272,4)
Net cash used in financing (622,4) (56,7) 998 (395,9)
activities
Discontinued operations*
Cash flows from operating 13,4 11,5 (17) 14,2
activities
Cash flows from investing 8,0 (0,5) (1 700) 5,7
activities
Cash flows from financing (19,6) (32,6) (40) (38,1)
activities
Cash flows from discontinued 1,8 (21,6) (108) (18,2)
operations
Total operations
(Decrease)/increase in cash (106,7) 179,1 (160) 93,6
and cash equivalents
Cash and cash equivalents at 598,0 529,7 13 529,7
beginning of period
491,3 708,8 (31) 623,3
Translation of cash (6,7) (3,8) 76 (25,3)
equivalents of foreign
subsidiaries at beginning of
year
Cash and cash equivalents at 484,6 705,0 (31) 598,0
end of period
Attributable to:
Continuing operations** 479,3 686,8 (30) 589,3
Discontinued operations** 5,3 18,2 (71) 8,7
* Discontinued operations comprise the Argentinian hake and shrimp
operations conducted by Alpesca, a wholly owned subsidiary of I&J.
** Cash flows between continuing and discontinued operations are
eliminated on consolidation and therefore the movement on the
closing cash balances does not reconcile to the individual cash
flow movements reflected above.
SUPPLEMENTARY NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
For the six months ended 31 December 2010
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 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 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 Rand ("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 2010 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 % Audited
six months ended change year ended
31 December 30 June
2010
Rm
2010 2009
Rm Rm
Profit for the year 438,9 327,7 34 468,2
attributable to equity
holders of AVI
Total capital items (12,5) (0,9) (81,6)
included in earnings
Net surplus/(loss) on 0,6 (0,7) (0,6)
disposal of
investments,
properties, vessels and
plant and equipment
Net surplus/(loss) on 0,3 - (1,1)
disposal of assets of
disposal groups held-
for-sale
Net loss on disposal of (12,4) - -
subsidiaries
Impairment of plant, (2,6) (0,7) (6,6)
equipment and vessels
Impairment of (2,8) - -
investments
Impairment of disposal - - (76,5)
groups held-for-sale
Capital items 2,9 - -
attributable to non-
controlling interests
Taxation attributable 1,5 0,5 3,2
to capital items
Headline earnings 451,4 328,6 37 549,8
Attributable to:
Continuing operations 459,9 335,4 37 595,0
Discontinued operations (8,5) (6,8) (45,2)
451,4 328,6 37 549,8
Headline earnings per 149,5 110,0 36 183,6
ordinary share (cents)
Continuing operations 152,3 112,3 36 198,7
(cents)
Discontinued operations (2,8) (2,3) (15,1)
(cents)
Diluted headline 144,9 106,8 36 177,1
earnings per ordinary
share (cents)
Continuing operations 147,6 109,0 35 191,7
(cents)
Discontinued operations (2,7) (2,2) (14,6)
(cents)
4. Segmental results
Continuing operations
Segmental revenue
Food and beverage 3 289,1 3 161,5 4 6 040,5
brands
Entyce 1 246,4 1 179,5 6 2 217,9
Snackworks 1 185,6 1 135,2 4 2 080,9
Chilled and frozen 857,1 846,8 1 1 741,7
convenience brands
Fashion brands 1 030,7 882,9 17 1 583,7
Personal care 470,3 418,9 12 802,8
Footwear and apparel 560,4 464,0 21 780,9
Corporate 3,3 3,6 6,7
Group 4 323,1 4 048,0 7 7 630,9
Segmental operating
profit before capital
items
Food and beverage 463,3 370,7 25 695,4
brands
Entyce 258,8 166,7 55 342,4
Snackworks 180,5 121,3 49 232,8
Chilled and frozen 24,0 82,7 (71) 120,2
convenience brands
Fashion brands 237,4 167,8 41 255,4
Personal care 67,3 56,6 19 104,7
Footwear and apparel 170,1 111,2 53 150,7
Corporate (5,5) (3,8) (9,8)
Group 695,2 534,7 30 941,0
5. Investment activity
Effective 10 November 2010 the Group and the management of Sir
Juice entered into a sale of business agreement whereby the
Group`s entire interest in Sir Juice was disposed of for a
consideration of R12,7 million. The value of the net assets
disposed at the effective date amounted to R25,0 million and
consequently a capital loss of R12,3 million was incurred,
before attributing the non-controlling interests share of R2,9
million.
Other than the above transaction there were no significant
changes to investments during the period.
6. Commitments
Unaudited Audited
six months ended year ended
31 December 30 June
2010
Rm
2010 2009
Rm Rm
Capital expenditure 271,5 80,8 247,8
commitments for property,
plant and equipment
Contracted for 168,8 49,2 93,9
Authorised but not contracted 102,7 31,6 153,9
for
It is anticipated that this expenditure will be financed by cash
resources, cash generated from operating 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 73
of 50 cents per share for the six months ended 31 December 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 Friday, 25 March 2011
on the JSE
First trading day ex dividend on Monday, 28 March 2011
the JSE
Record date Friday, 1 April 2011
Payment date Monday, 4 April 2011
In accordance with the requirements of Strate Limited, no share
certificates may be dematerialised or rematerialised between
Monday, 28 March 2011 and Friday, 1 April 2011, 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 April 2011.
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 (resigned 3 December 2010)
James Hersov
Kim Macilwaine4
Adriaan Nuhn3
Gavin Tipper1, 2
Mike Bosman1
Andisiwe Kawu2
Abe Thebyane (appointed 3 December 2010)
1 Member of the Audit Committee
2 Member of the Appointments and Remuneration Committee
3 Dutch
4 British
Date: 07/03/2011 07:50:01 Produced by the JSE SENS Department.
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