| Mon 5 Sep 2011, 7:05 | | AVI - AVI Limited - Results for the year ended 30 June 2011 |
|
AVI
AVI
AVI - AVI Limited - Results for the year ended 30 June 2011
AVI Limited
ISIN: ZAE000049433 Share code: AVI
Registration number: 1944/017201/06
("AVI" or "the Group" or "the Company")
Results for the year ended 30 June 2011
KEY FEATURES
- Operating profit from continuing operations up by 25% to R1,1 billion
- Headline earnings per share from continuing operations up 31% to 248 cents
- Significant fashion brands profit growth from increased volumes and
improved gross margins
- Strong food and beverage brands profit growth in competitive environment
- Alpesca disposal completed
- Cash generated from operations up 24% to R1,4 billion
- Capital expenditure to support growth R413 million
- R496 million returned to shareholders via special payment and share buy-
back
- Final dividend of 75 cents per share; total normal dividend up 25% to 125
cents per share
GROUP OVERVIEW
AVI has enjoyed strong consumer demand in the fashion brand businesses
during the 2011 financial year. Both Spitz and Indigo achieved strong volume
growth and strengthened their respective market positions. In the Food and
Beverage portfolio most of our brands performed well in a competitive
environment where consumer spending was relatively constrained. The tea
category had a strong second half, gaining volumes and market share for the
year and the coffee category continued to grow steadily despite a price
increase in the second half and the creamer category benefited from strong
demand. Biscuit volumes declined due to selling price increases and product
rationalisation during the year, compounded by rising local and imported
competition. I&J`s sales volumes were in line with last year with higher
quota volumes offset by a reduction in purchased raw material.
The net result of these price and volume movements was a 5,7% growth in
revenue from continuing operations, from R7,27 billion to R7,69 billion.
Operating profit increased by 25,4%, from R895,1 million to R1,12 billion
due to the higher gross profit margins and volume leverage. Headline
earnings rose by 32,3%, from R567,6 million to R750,8 million due to the
higher operating profit and lower net finance costs. Headline earnings per
share from continuing operations increased 31,1% to 248,2 cents.
Cash generated by operations remained strong, increasing to R1,01 billion
after interest and taxation payments, which is 29,4% higher than last year.
Net debt reduced from R310,1 million at the end of June 2010 to R246,2
million at the end of June 2011, after making a special payment to
shareholders of R226,6?million, share buy-backs settled of R169,2 million
and capital expenditure of R412,7 million. The Board has approved a final
dividend of 75 cents per share, bringing the dividend for the year to 125
cents, 25% higher than last year.
FINANCIAL REVIEW - CONTINUING OPERATIONS
(excluding Alpesca and Denny)
Revenue from continuing operations rose by 5,7% from R7,27 billion to R7,69
billion. This increase is largely attributable to higher sales volumes,
particularly in the footwear, personal care, creamer and coffee categories,
as well as higher selling prices in the biscuit category. Commodity prices,
including the benefit of the stronger rand, were in aggregate lower than
last year, which offset increases in packaging and overhead costs. These
factors resulted in a material improvement in the consolidated gross profit
margin from 41,8% to 44,9% with the gross profit increasing by 13,6% to
R3,45 billion. All business units generated an improved gross margin with
the exception of 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 at
some of the factories. Operating profit improved by 25,4%, from R895,1
million to R1 122,9 million due to the material leverage from higher sales
volumes, improved gross profit margins and tight control on general
overheads. The consolidated operating profit margin increased from 12,3% to
14,6%.
Lower interest rates and lower debt levels resulted in a decrease in net
finance charges from R85,6 million to R39,8 million. AVI`s share of earnings
from joint ventures decreased from R40,0 million to R36,1 million due to
lower operating profit from I&J`s Australian joint venture with Simplot,
largely as a result of a tough retail environment in Australia.
Headline earnings increased by 32,3% from R567,6 million to R750,8 million
and headline earnings per share increased by 31,1% to 248,2 cents per share.
The capital loss of R21,2 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 R8,8
million arise from impairments and disposals of assets in the normal course
of business.
Cash generated by operations increased 23,7% to R1,39 billion. Working
capital was well controlled, with the balance at the end of June 2011
slightly lower than a year ago. Capital expenditure increased to R412,7
million with an increase in major projects to improve capacity, technology
and efficiency. Other material cash outflows during the period were capital
repayments of R395,8 million, dividends of R335,6 million and taxation of
R330,1 million. Net debt at the end of June 2011 was R246,2 million compared
to R310,1 million at the end of June 2010.
SEGMENTAL REVIEW - CONTINUING OPERATIONS
Year ended 30 June
Segmental revenue Segmental operating
profit
2011 Restated % 2011 Restated %
Rm 2010 change Rm 2010 change
Rm Rm
Food and beverage 5 837,8 5 680,6 2,8 763,3 649,5 17,5
brands
Entyce 2 308,8 2 217,9 4,1 410,9 342,4 20,0
Snackworks 2 159,7 2 080,9 3,8 261,8 232,8 12,5
Chilled and frozen 1 369,3 1 381,8 (0,9) 90,6 74,3 21,9
convenience brands
Fashion brands 1 842,6 1 583,7 16,3 368,8 255,4 44,4
Personal care 890,3 802,8 10,9 132,7 104,7 26,7
Footwear and 952,3 780,9 21,9 236,1 150,7 56,7
apparel
Corporate 5,9 6,7 (9,2) (9,8)
Group 7 686,3 7 271,0 5,7 1 122,9 895,1 25,4
Entyce
Revenue increased 4,1% to R2,31 billion and operating profit increased by
20,0% from R342,4 million to R410,9 million with the operating profit margin
at 17,8% compared to 15,4% in the prior year.
Growth in revenue came primarily from higher creamer, coffee and tea sales
volumes. Both creamer and coffee benefited from competitor supply problems
in the first semester and creamer in particular continued to achieve strong
growth in the second half, while coffee continued with a steady volume
performance, despite price increases in April 2011 to offset rising coffee
bean prices. For the full year, creamer volumes increased by 19,9%, while
coffee volumes were up 7,6%.
Tea had a much stronger second half with the advantage of stable black tea
prices and the strong rand facilitating more aggressive price points.
Together with effective promotional activity this resulted in 3,0% volume
growth for the year. Gross profit margins benefited from lower input costs
of key commodities as well as the stronger rand, mostly in the first half of
the year. 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 R8,4 million compared to R5,4
million last year.
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 and high coffee bean prices, resulting in Ciro`s
operating profit declining from R21,1 million to R15,6 million. Sir Juice
was sold 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 R7,1 million in the 12 months to June 2010.
Snackworks
Revenue of R2,16 billion was 3,8% higher than last year, while operating
profit rose by 12,5%, from R232,8 million to R261,8 million. The operating
profit margin increased from 11,2% to 12,1%.
The increase in revenue is largely attributable to higher biscuits selling
prices, partially offset by lower sales volumes attributable to selling
price increases and product rationalisation during the year, compounded by
rising import competition. The improvement in operating profit is largely
due to a materially higher gross profit margin in biscuits resulting from
lower commodity costs and higher biscuit selling prices. The Isando biscuit
factory made good progress in improving product yields, but this was
partially offset by a poor second half performance at the Westmead factory.
A number of key capital projects were commissioned during the second
semester which will enhance our competiveness in the coming years.
The Snacks business faced ongoing and aggressive price competition in the
potato category during the second semester and thus, despite a good
performance from the corn brand portfolio, the full year`s profit was down
on the prior year.
Chilled and frozen convenience brands
(I&J excluding Alpesca)
Revenue decreased by 0,9% to R1,37 billion, while operating profit rose by
21,9%, from R74,3 million to R90,6 million. The operating profit margin
increased from 5,4% to 6,6%.
The stronger rand caused a material decline in export revenue which was
largely offset by an improved sales mix and slightly higher prices in some
export markets. Export markets remain under pressure with reduced demand
from customers and increased supply from other fish resources. Domestic
market prices were constrained by competitor activity. In addition, sales
volumes were in line with last year, despite the 10% quota increase, as
higher caught volumes were offset by lower volumes of purchased raw
material.
However, I&J continues to perform well operationally and catch rates for the
year were high which, together with good factory performance and the benefit
of cost-saving initiatives, yielded an improvement in operating profit.
Fashion brands (personal care, footwear and apparel)
Revenue rose by 16,3% to R1,84 billion and operating profit increased by
44,4%, from R255,4 million to R368,8 million with the operating profit
margin increasing from 16,1% to 20,0%.
In the personal care category, Indigo`s revenue grew by 10,9% to R890,3
million, while operating profit increased 26,7% to R132,7 million. The
operating profit margin for the period improved from 13,0% to 14,9%. Revenue
growth is largely attributable to higher sales volumes with the core
Yardley, Lentheric and Coty brands all performing well. Further growth in
body spray market shares was complemented by good performance in fragrances
and colour cosmetics. 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 21,9%, and
operating profit increased by 56,7% from R150,7 million to R236,1 million.
The operating profit margin increased from 19,3% to 24,8%. The improvement
is largely attributable to strong sales volume growth and higher gross
profit margins in Spitz resulting from an improved sales mix and the
stronger rand. Footwear sales volumes in Spitz increased by 22,3% with the
core Carvela, Lacoste, Kurt Geiger and Tosoni brands all performing well.
The expansion of the mono branded Kurt Geiger men`s clothing stores has
progressed well, with 12 new stores opened during the year, bringing the
total to 15 stores out of the total of 25 stores planned by the end of the
2012 financial year.
DISCONTINUED OPERATIONS (ALPESCA AND DENNY)
Year ended 30 June
Segmental revenue Segmental operating
profit
2011 Restated % 2011 Restated %
Rm 2010 change Rm 2010 change
Rm Rm
Alpesca 298,4 329,4 (9,4) (37,5) (50,6) (25,9)
Denny 385,2 359,9 7,0 50,0 45,9 8,9
683,6 689,3 (0,8) 12,5 (4,7) (366,0)
Alpesca
I&J sold its shares in Alpesca to an Argentinean consortium during May 2011
for a consideration of USD10 million plus transfer of loan guarantees of
USD4 million. Consequently the Group results for the year ended 30 June 2011
include a capital loss on disposal of R40,8 million after tax. An impairment
of R76,5 million was recognised in the prior year.
AVI`s consolidated results include Alpesca`s losses for the 10 months to the
end of April 2011. The operating loss of R37,5 million is lower than the
prior year loss of R50,6 million due to an improved performance from the
shrimp operation in the first half.
Denny
In July 2011, AVI entered into an agreement to sell Denny with effect from 1
July 2011 for a consideration of R263,5 million, subject to the fulfilment
of certain conditions precedent including the unconditional approval of the
South African Competition Authorities which was received on 31 August 2011.
This transaction will be recorded in the 2012 financial year, however, in
compliance with accounting standards, Denny has been disclosed as a
discontinued operation in the current financial year and the comparative
numbers for the year ended 30 June 2010 have been restated accordingly.
Revenue rose by 7,0% to R385,2 million and operating profit increased by
8,9%, from R45,9 million to R50,0 million with the operating profit margin
increasing from 12,8% to 13,0%. Denny has performed well in the fresh
mushroom category with improved production facilitating more aggressive
trading and promotion which led to higher sales volumes despite increased
supply from other growers. However, the value-add business, comprising
soups, sauces and canned mushrooms, has been impacted by the sustained
supply of cheap canned mushroom imports which partially offset the
improvement in the fresh mushroom business.
DIVIDENDS
A final dividend of 75 cents per share has been declared bringing the total
normal dividend for the year to 125 cents. This dividend is slightly above
AVI`s normal dividend policy of a two times cover on diluted headline
earnings per share from continuing operations as the AVI Board resolved to
include the Denny results in the dividend calculation notwithstanding that
Denny was classified as a discontinued operation at the end of the year.
In addition to normal dividends paid during the year of R335,6 million, a
further R496,5 million was returned to shareholders. A special payment out
of share premium of 75 cents per share, amounting to R226,6 million, was
paid in November 2010 and a total of R269,9 million was used to buy 9,0
million shares in the open market, of which R100,7 million still had to be
settled at year-end.
OUTLOOK
Recent local and international data indicates that economic growth in South
Africa over the next few years is likely to be slower than expected. In line
with this, consumer demand is likely to remain restrained in the year ahead
and AVI will need to earn future profit growth by competing effectively in
the marketplace and continuing to reduce our cost of doing business. There
is a strong portfolio of initiatives planned for the next financial year,
covering local and regional market opportunities, factory improvement and on-
going development of shared and support services.
In addition, the Group has a material level of forward exchange cover in
place to protect the cost of imports and commodity costs have started to
soften, both of which will allow more leeway to manage the balance between
price, volume and profitability with the flexibility that constrained
trading environments require. I&J has the advantage of increased quota and
will benefit materially if the rand weakens against the euro.
The Board is confident, despite prevailing market conditions, 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
5 September 2011
PRELIMINARY SUMMARISED GROUP BALANCE SHEET
Audited Audited
at at
30 June 30 June
2011 2010
Rm Rm
Assets
Non-current assets
Property, plant and equipment 1 459,5 1 340,4
Intangible assets and goodwill 759,4 923,4
Investments 310,0 304,1
Deferred taxation 66,1 60,0
2 595,0 2 627,9
Current assets
Inventories and biological assets 943,1 918,4
Trade and other receivables including 1 116,9 1 189,5
derivatives
Cash and cash equivalents 380,1 589,3
Assets of discontinued operations 344,3 288,8
classified as held-for-sale*
Other assets classified as held-for-sale** 3,8 4,4
2 788,2 2 990,4
Total assets 5 383,2 5 618,3
Equity and liabilities
Capital and reserves
Attributable to equity holders of AVI 2 918,9 2 954,1
Non-controlling interests (19,8) (19,8)
Total equity 2 899,1 2 934,3
Non-current liabilities
Financial liabilities, borrowings and 55,8 65,1
operating lease straight-line liabilities
Employee benefits 286,7 292,8
Deferred taxation 76,2 113,6
418,7 471,5
Current liabilities
Current borrowings 583,0 848,1
Trade and other payables including 1 279,1 1 183,4
derivatives
Share buy-back liability 100,7 -
Corporate taxation 16,6 17,3
Liabilities of discontinued operations 86,0 163,7
classified as held-for-sale*
2 065,4 2 212,5
Total equity and liabilities 5 383,2 5 618,3
*Discontinued operations in 2010 comprise the Argentinian hake and
shrimp operations conducted by Alpesca, a wholly owned subsidiary of
I&J, that was sold in May 2011. In 2011, discontinued operations
comprise the fresh, canned and value-added mushroom business conducted
by Denny, which was disposed of with effect from 1 July 2011, subject
to the fulfilment of certain conditions precedent including the
unconditional approval of the South African Competition Authorities in
terms of the Competition Act, No 89 of 1998, as amended, which was
received on 31 August 2011.
**Other assets held-for-sale comprise equipment and properties held for
disposal.
PRELIMINARY SUMMARISED GROUP STATEMENT OF COMPREHENSIVE INCOME
Audited Restated
year ended audited
30 June year ended
30 June
2011 2010 %
Rm Rm change
Continuing operations
Revenue 7 686,3 7 271,0 5,7
Cost of sales 4 234,1 4 232,2 -
Gross profit 3 452,2 3 038,8 13,6
Selling and administrative expenses 2 329,3 2 143,7 8,7
Operating profit before capital items 1 122,9 895,1 25,4
Income from investments 12,9 11,1 16,2
Finance costs (52,7) (96,7) (45,5)
Share of equity-accounted earnings of 36,1 40,0 (9,8)
joint ventures
Capital items (21,2) (8,3) 155,4
Profit before taxation 1 098,0 841,2 30,5
Taxation 363,0 275,9 31,6
Profit from continuing operations 735,0 565,3 30,0
Discontinued operations*
Revenue 683,6 689,3 (0,8)
Operating profit/(loss) before 12,5 (4,7) (366,0)
capital items
Income from investments 4,3 5,1 (15,7)
Finance costs (10,6) (16,2) (34,6)
Capital items (54,0) (76,5) (29,4)
Loss before taxation (47,8) (92,3) (48,2)
Taxation (10,6) 1,3 (915,4)
Loss from discontinued operations (37,2) (93,6) (60,3)
Profit for the year 697,8 471,7 47,9
Profit attributable to:
Owners of AVI 697,8 468,2 49,0
Non-controlling interests - 3,5 (100,0)
697,8 471,7 47,9
Other comprehensive income/(expense), 25,1 8,4 198,8
net of tax
Foreign currency translation 15,9 (31,0) (151,3)
differences
Cash flow hedging reserve 12,8 54,9 (76,7)
Income tax on other comprehensive (3,6) (15,5) (76,8)
income/(expense)
Total comprehensive income for the 722,9 480,1 50,6
year
Total comprehensive income
attributable to:
Owners of AVI 722,9 476,6 51,7
Non-controlling interests - 3,5 (100,0)
722,9 480,1 50,6
Basic earnings per share from 242,9 187,5 29,6
continuing operations (cents)#
Diluted basic earnings per share from 234,8 180,9 29,8
continuing operations (cents)##
Basic earnings per share (cents)# 230,6 156,3 47,5
Diluted basic earnings per share 222,8 150,8 47,7
(cents)##
Depreciation and amortisation of 195,6 179,7 8,8
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, that
was sold in May 2011, as well as the fresh, canned and value-added
mushroom business conducted by Denny, which was disposed of with effect
from 1 July 2011, subject to the fulfilment of certain conditions
precedent including the unconditional approval of the South African
Competition Authorities in terms of the Competition Act, No 89 of 1998,
as amended, which was received on 31 August 2011.
Headline earnings per share from 248,2 189,4 31,1
continuing operations (cents)#
Diluted headline earnings per share 239,7 182,9 31,1
from continuing operations (cents)##
#Basic earnings and headline earnings per share is calculated on a
weighted average of 302 547 792 (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 313 191 990 (30 June 2010: 310 453 132)
ordinary shares in issue.
PRELIMINARY SUMMARISED GROUP STATEMENT OF CASH FLOWS
Audited Restated %
year ended audited change
30 June year ended
2011 30 June
Rm 2010
Rm
Continuing operations
Operating activities
Cash generated by operations before 1 372,1 1 105,5 24,1
working capital changes
Increase in working capital 21,5 21,3 0,9
Cash generated by operations 1 393,6 1 126,8 23,7
Interest paid (50,9) (93,9) (45,8)
Taxation paid (330,1) (250,3) 31,9
Net cash available from operating 1 012,6 782,6 29,4
activities
Investing activities
Interest received 15,0 13,7 9,5
Property, plant and equipment (412,7) (329,8) 25,1
acquired
Proceeds from disposals of property, 19,3 9,7 99,0
plant and equipment and businesses
Movement in joint ventures and other 53,8 18,8 186,2
investments
Net cash used in investing activities (324,6) (287,6) 12,9
Financing activities
Net increase in shareholder funding 38,4 47,0 (18,3)
Long-term borrowings repaid - (1,3) (100,0)
Short-term funding repaid (218,3) (145,6) 49,9
Own ordinary shares purchased by the (169,2) -
Company
Capital repayment (226,6) -
Dividends paid (335,6) (272,4) 23,2
Net cash used in financing activities (911,3) (372,3) 144,8
Discontinued operations*
Cash flows from operating activities 21,6 30,3 (28,7)
Cash flows from investing activities 8,7 2,3 278,3
Cash flows from financing activities (73,8) (61,7) 19,6
Proceeds on disposal of discontinued 69,6 -
operation
Cash flows from discontinued 26,1 (29,1) (189,7)
operations
(Decrease)/increase in cash and cash (197,2) 93,6 (310,7)
equivalents
Cash and cash equivalents at 598,0 529,7 12,9
beginning of year
400,8 623,3 (35,7)
Translation of cash equivalents of 3,3 (25,3) (113,0)
foreign subsidiaries at beginning of
year
Cash and cash equivalents at end of 404,1 598,0 (32,4)
year
Attributable to:
Continuing operations*** 380,1 589,3 (35,5)
Discontinued operations** 24,0 8,7 175,9
* Discontinued operations comprise the Argentinian hake and shrimp
operations conducted by Alpesca, a wholly owned subsidiary of I&J, that
was sold in May 2011, as well as the fresh, canned and value-added
mushroom business conducted by Denny, which was disposed of with effect
from 1 July 2011, subject to the fulfilment of certain conditions
precedent including the unconditional approval of the South African
Competition Authorities in terms of the Competition Act, No 89 of 1998,
as amended, which was received on 31 August 2011.
**Cash flows between continuing and discontinued operations are
eliminated on consolidation. These amounted to R41,9 million net cash
flow from discontinued operations to continuing operations in 2011. In
the previous year the net cash flow from continuing operations to
discontinued operations was R13,8 million.
***Cash and cash equivalents of R589,3 million in 2010 include
R31,1 million in respect of Denny which has been reflected as part of
the discontinued operation in the 2010 statements of comprehensive
income and cash flows.
PRELIMINARY SUMMARISED GROUP STATEMENT OF CHANGES IN EQUITY
Share Treasury Reserves Retained
capital shares Rm earnings
and Rm Rm
premium
Rm
Year ended 30 June 2011
Balance at 1 July 2010 183,9 (682,0) 70,5 3 381,7
Profit for the year 697,8
Other comprehensive income
Foreign currency translation 15,9
differences
Cash flow hedging reserve 9,2
Total other comprehensive income - - 25,1 -
Total comprehensive income for the - - 25,1 697,8
year
Transactions with owners, recorded
directly in equity
Share-based payments 25,7
Deferred taxation on Group share 9,9
scheme recharge
Dividends paid (335,6)
Capital repayment (261,8) 35,2
Issue of ordinary shares to AVI Share 107,8 (107,8)
Trusts
Own ordinary shares purchased by (0,4) (269,5)
Company
Own ordinary shares sold by AVI Share 46,8 (8,4)
Trusts
Total contributions by and (25,8) 35,6 (613,5)
distributions to owners (154,4)
Total transactions with owners (154,4) (25,8) 35,6 (613,5)
Balance at 30 June 2011 29,5 (707,8) 131,2 3 466,0
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 income - - 8,4 -
Total comprehensive income for the - - 8,4 468,2
year
Transactions with owners, recorded
directly in equity
Share-based payments 27,0
Dividends paid (272,4)
Issue of ordinary shares to AVI Share 12,9 (12,9)
Trusts
Own ordinary shares sold by AVI Share 41,4 5,6
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
Total Non- Total
Rm Control- equity
ling Rm
interests
Rm
Year ended 30 June 2011
Balance at 1 July 2010 2 954,1 (19,8) 2 934,3
Profit for the year 697,8 - 697,8
Other comprehensive income
Foreign currency translation differences 15,9 15,9
Cash flow hedging reserve 9,2 9,2
Total other comprehensive income 25,1 - 25,1
Total comprehensive income for the year 722,9 - 722,9
Transactions with owners, recorded directly
in equity
Share-based payments 25,7 25,7
Deferred taxation on Group share scheme 9,9 9,9
recharge
Dividends paid (335,6) (335,6)
Capital repayment (226,6) (226,6)
Issue of ordinary shares to AVI Share - -
Trusts
Own ordinary shares purchased by Company (269,9) (269,9)
Own ordinary shares sold by AVI Share 38,4 38,4
Trusts
Total contributions by and distributions to (758,1) - (758,1)
owners
Total transactions with owners (758,1) - (758,1)
Balance at 30 June 2011 2 918,9 (19,8) 2 899,1
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 for the year 476,6 3,5 480,1
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 AVI Share 47,0 47,0
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
SUPPLEMENTARY NOTES TO THE PRELIMINARY SUMMARISED CONSOLIDATED FINANCIAL
STATEMENTS
For the year ended 30 June 2011
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 Listing
Requirements of the JSE Limited (the "JSE") and the requirements of the
Companies Act of South Africa, 2008 (as amended).
2. Basis of preparation
The summarised annual 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 consistent with those presented in the annual
financial statements for the year ended 30 June 2011 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 Restated %
year ended audited change
30 June year ended
2011 30 June
Rm 2010
Rm
Profit for the year attributable to 697,8 468,2 49,0
owners of AVI
Total capital items after taxation (56,8) (81,6)
Net loss on disposal of investments, (1,0) (0,6)
properties, vessels and plant and
equipment
Net loss on disposal of assets of (0,2) (1,1)
disposal groups held-for-sale
Net loss on disposal of Sir Juice (12,4) -
Net loss on disposal of Alpesca (53,9) -
Impairment of vessels and plant and (7,7) (6,6)
equipment, investments, intangible
assets and assets classified
as held-for-sale
Impairment of disposal groups held-for-- (76,5)
sale
Capital items attributable to non- 3,2 -
controlling interests
Taxation attributable to capital items 15,2 3,2
Headline earnings 754,6 549,8 37,2
Attributable to:
Continuing operations 750,8 567,6 32,3
Discontinued operations 3,8 (17,8)
754,6 549,8 37,2
Headline earnings/(loss) per ordinary 249,4 183,6 35,8
share (cents)
Continuing operations (cents) 248,2 189,4 31,1
Discontinued operations (cents) 1,2 (5,8)
Diluted headline earnings/(loss) per 240,9 177,1 36,0
ordinary share (cents)
Continuing operations (cents) 239,7 182,9 31,1
Discontinued operations (cents) 1,2 (5,8)
4. Segmental results
Audited Restated %
year ended audited change
30 June year ended
2011 30 June
Rm 2010
Rm
Continuing operations
Segmental revenue
Food and beverage brands 5 837,8 5 680,6 2,8
Entyce 2 308,8 2 217,9 4,1
Snackworks 2 159,7 2 080,9 3,8
Chilled and frozen convenience brands 1 369,3 1 381,8 (0,9)
Fashion brands 1 842,6 1 583,7 16,3
Personal care 890,3 802,8 10,9
Footwear and apparel 952,3 780,9 21,9
Corporate 5,9 6,7
Group 7 686,3 7 271,0 5,7
Segmental operating profit before
capital items
Food and beverage brands 763,3 649,5 17,5
Entyce 410,9 342,4 20,0
Snackworks 261,8 232,8 12,5
Chilled and frozen convenience brands 90,6 74,3 21,9
Fashion brands 368,8 255,4 44,4
Personal care 132,7 104,7 26,7
Footwear and apparel 236,1 150,7 56,7
Corporate (9,2) (9,8)
Group 1 122,9 895,1 25,4
Discontinued operations
Segmental revenue
Alpesca 298,4 329,4 (9,4)
Denny 385,2 359,9 7,0
683,6 689,3 (0,8)
Segmental operating profit before
capital items
Alpesca (37,5) (50,6) (25,9)
Denny 50,0 45,9 8,9
12,5 (4,7) (366,0)
The fresh, canned and value-added mushroom business conducted by Denny has
been sold with effect from 1 July 2011 subject to the fulfilment of certain
conditions precedent including the unconditional approval of the South
African Competition Authorities in terms of the Competition Act, No 89 of
1998, as amended, which was received on 31 August 2011. Denny has therefore
been disclosed as a discontinued operation in AVI`s results for the year
ended 30 June 2011 and comparatives for the year ended 30 June 2010 in the
statements of comprehensive income and cash flows have been restated
accordingly.
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 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.
In addition to the above, I&J sold its shares in Alpesca to an Argentinean
consortium during May 2011 for a consideration of USD10 million (R69,6
million) plus transfer of loan guarantees of USD4 million. Consequently the
Group results for the year ended 30 June 2011 include an after-tax capital
loss of R40,8 million in respect of the disposal.
6. Commitments
Audited Restated
year ended audited
30 June year ended
2011 30 June
Rm 2010
Rm
Capital expenditure commitments for property, 372,8 246,7
plant and equipment*
Contracted for 182,6 92,8
Authorised but not contracted for 190,2 153,9
*Not included in capital commitments in respect of property, plant and
equipment are commitments of R1,6 million (2010: R1,1 million) relating to
Denny which have been contracted for at 30 June 2011.
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
Subsequent to the year-end, AVI entered into an agreement in terms of which
it sold 100% of the issued share capital of and AVI`s shareholder claims
against Denny to Blue Falcon 134 Trading (Pty) Limited ("Blue Falcon") for a
consideration of R263,5 million. Blue Falcon`s shareholders include RMB
Ventures Six (Pty) Limited, an indirect subsidiary of FirstRand Limited,
which holds a 49,9% interest therein, and Denny`s executive management team.
Denny is the leading producer of fresh, canned and value-added mushroom
products in South Africa, with a market share exceeding 50%. While Denny is
a sound business with the leading national brand in the fresh and canned
mushroom categories, the importance of branding in the "fresh to market"
produce segment in general and in the fresh mushroom segment in particular
has declined over the past several years and this category is no longer
strategically aligned to AVI`s growth ambitions.
The effective date of the transaction is 1 July 2011. The transaction is
subject to the fulfilment of certain conditions precedent including the
unconditional approval of the South African Competition Authorities in terms
of the Competition Act, No 89 of 1998, as amended, which was received on 31
August 2011. Denny has been disclosed as a discontinued operation in AVI`s
results for the year ended 30 June 2011 and comparatives for the year ended
30 June 2010 have been restated accordingly.
Other than the above there have been no significant events outside the
ordinary course of business since the reporting date.
8. Dividend declaration
Notice is hereby given that a final ordinary dividend No 74 of 75 cents per
share for the year ended 30 June 2011 has been declared payable to
shareholders of ordinary shares. The salient dates relating to the payment
of the dividend are as follows:
Last day to trade cum dividend on the JSE Friday, 23 September 2011
First trading day ex dividend on the JSE Monday, 26 September 2011
Record date Friday, 30 September 2011
Payment date Monday, 3 October 2011
In accordance with the requirements of Strate Limited, no share certificates
may be dematerialised or rematerialised between Monday, 26 September 2011
and Friday, 30 September 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, 3 October 2011.
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 2011, dated 2 September 2011,
are available for inspection at the registered office of the company.
10. Preparer of financial statements
These summarised financial statements have been prepared under the
supervision of Owen Cressey CA (SA).
11. Annual report
The annual report for the year ended 30 June 2011 will be posted to
shareholders on or about Tuesday, 27 September 2011. The financial
statements will include the notice of the annual general meeting of
shareholders to be convened on Tuesday, 1 November 2011.
ADMINISTRATION AND PRINCIPAL SUBSIDIARIES
Administration
Company registration
AVI Limited ("AVI")
Registration no: 1944/017201/06
Share code: AVI
ISIN: ZAE000049433
Company secretary
Sureya Naidoo (appointed 1 May 2011)
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
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 Beverages)
Telephone: +27 (0)11 707 7100
Simon Crutchley (Snackworks - acting)
Telephone: +27 (0)11 707 7200
Roger Coppin (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 2196
PO Box 1897, Saxonwold 2132
Managing director
Donnee MacDougall
Telephone: +27 (0)11 707 7100
Telefax: +27 (0)11 707 7808
Chilled and 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
Fashion brands
Indigo Brands (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 (resigned 4 March 2011)
(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 Kawa2
Abe Thebyane (appointed 3 December 2010)
Neo Dongwana1 (appointed 15 March 2011)
Barry Smith (appointed 15 March 2011)
1 Member of the Audit and Risk Committee
2 Member of the Remuneration, Nomination and Appointments Committee
3 Dutch
4 British
For more information, please visit our website: www.avi.co.za
Date: 05/09/2011 07:05:33 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
