| Mon 12 Mar 2012, 7:05 | | AVI - AVI Limited - Interim Results for the six months ended 31 December 2011 |
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AVI
AVI
AVI - AVI Limited - Interim Results for the six months ended 31 December 2011
AVI Limited
ISIN: ZAE000049433 Share code: AVI
Registration number: 1944/017201/06
("AVI" or "the Group" or "the Company")
Interim Results for the six months ended 31 December 2011
Key features
Revenue from continuing operations up 9% to R4,49 billion
Operating profit from continuing operations up 27% to R855 million
Headline earnings per share from continuing operations up 32% to 194 cents
I&J result underpinned by weaker rand and improving operational performance
Strong Fashion Brands profit growth from increased volumes and improved gross
margins
Sound overall Food & Beverage Brands performance in a competitive environment
High project activity in the semester
Annual dividend cover reduced from 2,0 to 1,5
Group overview
AVI has delivered strong results for a semester characterised by constrained
consumer demand, strong competition and high capital project activity within
the group.
I&J benefited materially from the weaker rand during the half, supported by
good performance from its catching and processing operations. The Fashion
Brands businesses, Spitz and Indigo, achieved solid volume growth and also
realised strong gross profit margins supported by favourable mix changes and
import exchange rates that were secured before the rand weakened during the
semester. Snackworks achieved a satisfactory improvement in results
underpinned by stable and improving manufacturing performance and regained
volume momentum in the biscuits category by re-aligning price points with
consumer expectations. Entyce had a difficult semester with high raw material
prices leading to margin pressure in coffee, creamer and rooibos tea which was
exacerbated by poor creamer service levels in the second quarter. Coffee and
Creamer revenue was slightly below last year, despite higher prices, due to
lower sales volumes in the absence of the competitor supply problems that
occurred in the first half of last year.
Revenue from continuing operations rose by 8,6%, from R4,14 billion to R4,49
billion due to selling price increases in most categories, stronger export
revenue in I&J due to the weaker rand and volume growth in Spitz, Indigo and
Tea. Gross profit rose by 10,7% to R2,08 billion with the consolidated gross
profit margin increasing from 45,4% to 46,3% due to strong improvements at
I&J, Spitz and Indigo. Entyce and Snackworks experienced some gross margin
pressure in the semester resulting from increases in raw and wrapping material
costs that were not fully recovered by price increases given the constrained
consumer environment and competitive pressures. Operating profit increased by
26,8%, from R674,2 million to R855,0 million due to the higher gross profit
margins and a constrained increase in selling and administration costs, which
rose by 1,7% compared to the first half of last year due mainly to I&J
recording material foreign exchange gains compared to losses in the first half
of last year.
Headline earnings rose by 29,1%, from R446,5 million to R576,3 million due to
the higher operating profit, lower net finance costs and higher earnings from
I&J`s joint venture with Simplot in Australia, which benefited from the strong
Australian currency. Headline earnings per share from continuing operations
increased 31,5% from 147,8 cents to 194,4 cents with less shares in issue
following the re-purchase of 9,0 million shares in June 2011.
Cash generated by operations remained strong, increasing by 1,7% to R765,7
million after working capital changes. Working capital increased by R152,7
million compared to R22,3 million in the first half of last year reflecting
relative timing differences on purchases and creditor payments close to the
end of the period as well as higher stock levels in parts of the group.
Capital expenditure increased to R290,9 million with material expenditure on
the major projects to improve capacity, technology and efficiency. Other
material cash out-flows during the period were dividends of R221,5 million and
taxation of R205,8 million. Net cash at the end of December 2011 was R50,6
million compared to net debt of R246,2 million at the end of June 2011.
On the project front, Indigo`s new aerosol plant, the packaging automation at
Isando biscuits and Entyce`s new creamer tower and coffee granulation plant
were all successfully commissioned during the semester with benefits expected
to accrue more materially during the second half of the financial year as
performance is optimised at normal production levels. In addition the
expansion of the Isando distribution centre was successfully completed and the
SAP implementation at Entyce and Snackworks has progressed well with minimal
disruption to sales volumes.
The board has approved a change in AVI`s annual dividend payout ratio from 2,0
to 1,5 times covered by diluted headline earnings from continuing operations.
An interim dividend in line with this new policy will be considered by the
board in April 2012 and will be subject to the new dividend withholding tax.
The AVI Black Staff Empowerment Share Scheme reached its first normal vesting
date on 31 December 2011. AVI`s strong share price performance since these
shares were allocated in January 2007 has resulted in a total gain of R68
million accruing to 2 509 black employees at all levels across the group.
Segmental review - continuing operations
Six months ended 31 December
Segmental revenue Segmental operating profit
2011 Restated* % 2011 Restated %
Rm 2010 change Rm * change
Rm 2010
Rm
Food and beverage 3 341,1 3 101,5 7,7 549,9 442,3 24,3
brands
Entyce 1 301,7 1 246,4 4,4 245,9 258,8 (5,0)
Snackworks 1 290,3 1 185,6 8,8 203,2 180,5 12,6
Chilled and frozen 749,1 669,5 11,9 100,8 3,0 3 260,0
convenience brands
Fashion brands 1 148,5 1 030,7 11,4 316,9 237,4 33,5
Personal care 487,5 470,3 3,7 85,9 67,3 27,6
Footwear and 661,0 560,4 18,0 231,0 170,1 35,8
apparel
Corporate 3,2 3,3 (11,8) (5,5)
Group 4 492,8 4 135,5 8,6 855,0 674,2 26,8
* = restated to exclude Denny Mushrooms now shown as a discontinued operation.
Entyce
Revenue increased 4,4% to R1,30 billion while operating profit decreased by
5,0% from R258,8 million to R245,9 million with the operating profit margin at
18,9% compared to 20,8% in the prior period.
Growth in revenue came primarily from higher selling prices on tea, coffee and
creamer in response to increased raw and wrapping material costs. Tea volumes
were 8,4% higher than last year due to effective promotional activity and
tactical pricing, however coffee and creamer sales volumes declined without
the additional demand that arose from competitor supply problems in the first
half of last year. Creamer volumes were also impacted by low service levels
caused by production planning problems in the last few months of the period.
Gross profit margins decreased with higher raw and wrapping material costs not
fully recovered given the constrained consumer environment and competitive
pressures, and also due to the lower coffee and creamer sales volumes. However
selling and administration costs were well controlled which ameliorated the
decrease in operating profit. Profit margins in absolute terms remain at
strong levels and Entyce is expecting to benefit from improved volumes in the
second half of the year following the commissioning of the new creamer tower
and coffee agglomeration plant in its Isando factory.
Snackworks
Revenue of R1,29 billion was 8,8% higher than last year while operating profit
rose by 12,6%, from R180,5 million to R203,2 million. The operating profit
margin increased from 15,2% to 15,7%.
The increase in revenue is largely attributable to higher selling prices,
supported by a 1,4% growth in biscuits sales volumes. Biscuit selling prices
were higher following the increases implemented in the previous financial
year, despite the re-alignment of price points for key products with consumer
expectations. Factory performance improved during the period with greater
stability, better product yields and consistency and more effective management
of labour costs all contributing to the overall Snackworks result. A shortage
of liquid petroleum gas in October and November disrupted output from the
Westmead factory, resulting in the loss of approximately 550 tons of
production and R8 million of operating profit in the period.
The Snacks business benefitted from better price points in the category as
well as tight control of selling and administrative costs, resulting in a
slight improvement in operating profit despite lower volumes attributable to
temporary delistings during price negotiations with customers.
The packaging automation project at Isando biscuits was successfully
commissioned and will now be extended to cover all lines in the factory. New
projects amounting to R65,1 million that will improve capacity and yields in
the Westmead factory were approved during the semester.
Chilled and Frozen Convenience Brands (I & J excluding Alpesca)
Revenue increased by 11,9% from R669,5 million to R749,1 million while
operating profit rose from R3,0 million to R100,8 million. The operating
profit margin increased from 0,5% to 13,5%.
The weaker rand caused a material increase in export revenue compared to the
first half of last year. While export volumes increased with the benefit of
increased quota, prices remained under pressure with reduced demand from
customers and increased supply from other fish resources. Domestic market
volumes were slightly higher than last year when I&J`s centenary celebrations
drove significant promotional activity, however prices have improved during
the semester.
Catch rates for the six months remained high which together with improved
fishing and factory performance, tight cost control and the benefit of foreign
exchange gains, compared to losses last year, yielded a material improvement
in operating profit.
The hake Total Allowable Catch for the year ending 31 December 2012 was
increased by 9,8%, with I&J`s quota increasing proportionally.
Fashion Brands (personal care, footwear and apparel)
Revenue rose by 11,4% to R1,15 billion and operating profit increased by
33,5%, from R237,4 million to R316,9 million with the operating profit margin
increasing from 23,0% to 27,6%.
In the personal care category, Indigo`s revenue grew by 3,7% to R487,5 million
while operating profit increased 27,6% to R85,9 million. The operating profit
margin for the period improved from 14,3% to 17,6%. Revenue growth is largely
attributable to higher sales volumes with Indigo maintaining its strong
position in aerosols and achieving good growth in Yardley colour cosmetics.
Profit margin benefitted from lower input costs due to the stronger rand,
higher volumes and tightly controlled selling and administrative costs.
In the footwear and apparel category, Spitz`s revenue increased by 18,0%, and
operating profit increased by 35,8% from R170,1 million to R231,0 million. The
operating profit margin increased from 30,3% to 34,9%. The improvement is
largely attributable to strong sales volume growth and higher gross profit
margins in Spitz resulting from higher selling prices on core ranges, an
improved sales mix and the stronger rand. Footwear sales volumes in Spitz
increased by 10,3% with the core Carvela, Lacoste, and Kurt Geiger brands
performing well. The expansion of the mono branded Kurt Geiger men`s clothing
stores has progressed well, with seven new stores opened during the six
months, bringing the total to 22 stores out of the total of 25 stores planned
by the end of the 2012 financial year.
DISCONTINUED OPERATIONS (ALPESCA AND DENNY)
Six months ended 31 December
Segmental Segmental Capital items
revenue operating
profit
2011 Restated* 2011 Restated* 2011 Restated*
Rm 2010 Rm 2010 Rm 2010
Rm Rm Rm
Alpesca - 227,2 - (9,5) - 0,3
Denny - 187,6 - 21,0 27,3 -
- 414,8 - 11,5 27,3 0,3
* = restated to include Denny Mushrooms now shown as a discontinued operation.
I&J concluded the sale of Alpesca in May 2011.
Denny was sold with effect from 1 July 2011 resulting in a capital profit of
R27,3 million before capital gains taxation of R10,3 million. The comparative
numbers for the six months ended 31 December 2010 have been restated to
reflect Denny as a discontinued operation.
DIVIDENDS
The board has reviewed AVI`s dividend policy given the group`s strong cash
generating capability which has been enhanced by the growth of the footwear
business over the last few years. It has resolved to change the annual
dividend pay-out ratio from 2,0 to 1,5 times covered by diluted headline
earnings from continuing operations. After the increase in dividends the group
will retain ample capacity to fund acquisitions that may arise. The board
remains committed to returning excess cash generated to shareholders and the
company will continue with its practice of periodically paying additional
dividends or buying back shares where appropriate.
An interim dividend in line with this new policy will be considered by the
board in April 2012 and will be subject to the new dividend withholding tax.
The change in dividend cover will also compensate shareholders for any
dividend withholding tax that they may be liable for after 1 April 2012.
OUTLOOK
AVI believes that consumer demand will remain restrained in the second half of
the financial year. However the group has good levels of forward exchange
cover in place to limit the cost of imports and some 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.
The projects commissioned in the last year have improved our ability to
compete in terms of capacity, quality and cost efficiency and further projects
are in progress. In addition we continue to work on various initiatives that
should deliver organic growth over time. These include local and regional
market opportunities, factory improvements and on-going development of shared
and support services.
At current exchange rates, I&J`s performance in the second half is likely to
be reasonably in line with the second half of last year and consequently it is
unlikely that the rate of earnings growth in the second half of the financial
year will be as high as in the first half.
The board is confident that AVI is well positioned to continue pursuing growth
from the current brand portfolio while remaining vigilant for brand
acquisition opportunities both domestically and regionally.
The above outlook statements have not been reviewed or reported on by AVI`s
auditors.
Angus Band Simon Crutchley
Chairman CEO
12 March 2012
CONDENSED GROUP BALANCE SHEETS
Unaudited at 31 Audited
December at 30
June
2011 2010 2011
Rm Rm Rm
Assets
Non-current assets
Property, plant and equipment 1 640,8 1 375,6 1 459,5
Intangible assets and goodwill 757,3 903,3 759,4
Investments 325,2 326,5 310,0
Deferred taxation 44,7 54,9 66,1
2 768,0 2 660,3 2 595,0
Current assets
Inventories and biological assets 917,5 865,9 943,1
Trade and other receivables including derivatives 1 288,1 1 261,4 1 116,9
Cash and cash equivalents 293,5 479,3 380,1
Assets of discontinued operations classified as - 227,5 344,3
held-for-sale*
Other assets classified as held-for-sale** 3,2 3,7 3,8
2 502,3 2 837,8 2 788,2
Total assets 5 270,3 5 498,1 5 383,2
Equity and liabilities
Capital and reserves
Attributable to equity holders of AVI 3 408,0 2 980,6 2 918,9
Non-controlling interests (19,6) (21,8) (19,8)
Total equity 3 388,4 2 958,8 2 899,1
Non-current liabilities
Financial liabilities, borrowings and operating 51,4 61,1 55,8
lease straight-line liabilities
Employee benefits 297,3 313,1 286,7
Deferred taxation 102,2 108,5 76,2
450,9 482,7 418,7
Current liabilities
Current borrowings 203,7 619,5 583,0
Trade and other payables including derivatives 1 171,8 1 239,9 1 279,1
Share buy-back liability - - 100,7
Corporate taxation 55,5 76,8 16,6
Liabilities of discontinued operations classified - 120,4 86,0
as held-for-sale*
1 431,0 2 056,6 2 065,4
Total equity and liabilities 5 270,3 5 498,1 5 383,2
* Discontinued operations at 31 December 2010 comprise the Argentinian hake
and shrimp operations conducted by Alpesca, a wholly owned subsidiary of
I&J, that was sold in May 2011. At 30 June 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.
** Other assets held-for-sale comprise equipment and properties held for
disposal.
CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME
Unaudited six Audited
months ended 31 year
December ended 30
June
Restated % 2011
2011 2010 change Rm
Rm Rm
Continuing operations
Revenue 4 492,8 4 135,5 9 7 686,3
Cost of sales 2 412,6 2 256,9 7 4 234,1
Gross profit 2 080,2 1 878,6 11 3 452,2
Selling and administrative expenses 1 225,2 1 204,4 2 2 329,3
Operating profit before capital items 855,0 674,2 27 1 122,9
Income from investments 2,9 6,2 (53) 12,9
Finance costs (16,5) (32,2) (49) (52,7)
Share of equity-accounted earnings of 25,3 14,6 73 36,1
joint ventures
Capital items 1,7 (17,2) (110) (21,2)
Profit before taxation 868,4 645,6 35 1 098,0
Taxation 290,0 213,8 36 363,0
Profit from continuing operations 578,4 431,8 34 735,0
Discontinued operations*
Revenue - 414,8 (100) 683,6
Operating profit before capital items - 11,5 (100) 12,5
Income from investments - 2,2 (100) 4,3
Finance costs - (6,8) (100) (10,6)
Capital items 27,3 0,3 9 000 (54,0)
Profit/(loss) before taxation 27,3 7,2 (279) (47,8)
Taxation 10,3 2,1 390 (10,6)
Profit/(loss) from discontinued 17,0 5,1 (233) (37,2)
operations
Total operations
Profit for the period 595,4 436,9 36 697,8
Profit attributable to:
Owners of AVI 595,2 438,9 36 697,8
Non-controlling interests 0,2 (2,0) (110) -
595,4 436,9 36 697,8
Other comprehensive income, net of tax 81,6 (37,3) (319) 25,1
Foreign currency translation differences 54,0 (26,4) (305) 15,9
Cash flow hedging reserve 38,3 (15,1) (354) 12,8
Income tax on other comprehensive income (10,7) 4,2 (355) (3,6)
Total comprehensive income for the period 677,0 399,6 69 722,9
Total comprehensive income attributable
to:
Owners of AVI 676,8 401,6 69 722,9
Non-controlling interests 0,2 (2,0) (110) -
677,0 399,6 69 722,9
Basic earnings per share from continuing 195,1 143,5 36 242,9
operations (cents)#
Diluted basic earnings per share from 187,8 139,3 35 234,8
continuing operations (cents)##
Basic earnings per share (cents)# 200,8 145,3 38 230,6
Diluted basic earnings per share 193,2 140,9 37 222,8
(cents)##
Depreciation and amortisation of 106,8 96,5 11 195,6
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.
Headline earnings per share from 194,4 147,8 32 248,2
continuing operations (cents)#
Diluted headline earnings per share from 187,0 143,3 30 239,7
continuing operations (cents)##
# Basic earnings and headline earnings per share is calculated on a weighted
average of 296 405 261 (2010: 302 013 133 and 30 June 2011: 302 547 792)
ordinary shares in issue
## Diluted basic earnings and headline earnings per share is calculated on a
weighted average of 308 126 447 ( 2010: 311 572 063 and 30 June 2011: 313
191 990) ordinary shares in issue.
CONDENSED GROUP STATEMENT OF CASH FLOWS
Unaudited six Audited
months ended 31 year
December ended 30
June
Restated %
2011 2010 change 2011
Rm Rm Rm
Continuing operations
Operating activities
Cash generated by operations before 918,4 774,9 19 1 372,1
working capital changes
(Increase)/decrease in working capital (152,7) (22,3) 585 21,5
Cash generated by operations 765,7 752,6 2 1 393,6
Interest paid (15,7) (31,3) (50) (50,9)
Taxation paid (205,8) (113,8) 81 (330,1)
Net cash available from operating 544,2 607,5 (10) 1 012,6
activities
Investing activities
Cash flow from investments 2,9 4,6 (37) 15,0
Property, plant and equipment acquired (290,9) (149,4) 95 (412,7)
Proceeds from disposals of property, plant 5,2 17,1 (70) 19,3
and equipment
Movement in joint ventures and other 45,0 2,6 1 631 53,8
investments
Net cash used in investing activities (237,8) (125,1) 90 (324,6)
Financing activities
Net increase in shareholder funding 18,6 21,7 (14) 38,4
Short-term funding repaid (384,1) (211,8) 81 (218,3)
Own ordinary shares purchased by Company (100,7) - (169,2)
Capital repayment - (226,6) (100) (226,6)
Dividends paid (221,5) (184,1) 20 (335,6)
Net cash used in financing activities (687,7) (600,8) 14 (911,3)
Discontinued operations*
Cash flows from operating activities - 47,1 100 21,6
Cash flows from investing activities - 5,8 100 8,7
Cash flows from financing activities - (41,2) (100) (73,8)
Proceeds on disposal of discontinued 261,9 - 69,6
operation
Cash flows from discontinued operations 261,9 11,7 2 138 26,1
Total operations
Decrease in cash and cash equivalents (119,4) (106,7) 12 (197,2)
Cash and cash equivalents at beginning of 404,1 598,0 (32) 598,0
period
284,7 491,3 400,8
Translation of cash equivalents of foreign 8,8 (6,7) (231) 3,3
subsidiaries at beginning of year
Cash and cash equivalents at end of period 293,5 484,6 404,1
Attributable to:
Continuing operations** 293,5 479,3 (39) 380,1
Discontinued operations*** - 5,3 (100) 24,0
* 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 diposed of with effect from 1 July 2011.
** Cash and cash equivalents of R479,3 million at 31 December 2010 include
R41,0 million in respect of Denny which has been reflected as part of the
discontinued operation in the statements of comprehensive income and cash
flows for the six months ended 31 December 2010.
*** 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.
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
Share Treasury Reserves Retained
capital shares Rm earnings
and Rm Rm
premium
Rm
Six months ended 31 December
2011
Balance at 1 July 2011 29,5 (707,8) 131,2 3 466,0
Profit for the period 595,2
Other comprehensive income
Foreign currency translation 54,0
differences
Cash flow hedging reserve 27,6
Total other comprehensive - - 81,6 -
income
Total comprehensive income for - - 81,6 595,2
the period
Transactions with owners,
recorded directly in equity
Share-based payments 8,7
Deferred taxation on Group 6,5
share scheme recharge
Dividends paid (221,5)
Own ordinary shares sold by AVI 16,7 1,9
Share Trusts (net)
Total transactions with owners - 16,7 15,2 (219,6)
Balance at 31 December 2011 29,5 (691,1) 228,0 3 841,6
Six months ended 31 December
2010
Balance at 1 July 2010 183,9 (682,0) 70,5 3 381,7
Profit for the period 438,9
Other comprehensive income
Foreign currency translation (26,4)
differences
Cash flow hedging reserve (10,9)
Total other comprehensive - - (37,3) -
income
Total comprehensive income for - - (37,3) 438,9
the period
Transactions with owners,
recorded directly in equity
Share-based payments 13,9
Dividends paid (184,1)
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 (10,3)
Share Trusts (net)
Total transactions with owners (154,0) (40,6) 13,9 (194,4)
Balance at 31 December 2010 29,9 (722,6) 47,1 3 626,2
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 - - 25,1 -
income
Total comprehensive income for - - 25,1 697,8
the period
Transactions with owners,
recorded directly in equity
Share-based payments 25,7
Deferred taxation on Group 9,9
share scheme recharge
Dividends paid (335,6)
Capital repayment (261,8) 35,2
Issue of ordinary shares to AVI 107,8 (107,8)
Share Trusts
Own ordinary shares purchased (0,4) (269,5)
by Company
Own ordinary shares sold by AVI 46,8 (8,4)
Share Trusts
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
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY CONTINUED
Total Non- Total
Rm controlling equity
interests Rm
Rm
Six months ended 31 December 2011
Balance at 1 July 2011 2 918,9 (19,8) 2 899,1
Profit for the period 595,2 0,2 595,4
Other comprehensive income
Foreign currency translation 54,0 54,0
differences
Cash flow hedging reserve 27,6 27,6
Total other comprehensive income 81,6 - 81,6
Total comprehensive income for the 676,8 0,2 677,0
period
Transactions with owners, recorded
directly in equity
Share-based payments 8,7 8,7
Deferred taxation on Group share 6,5 6,5
scheme recharge
Dividends paid (221,5) (221,5)
Own ordinary shares sold by AVI Share 18,6 18,6
Trusts (net)
Total transactions with owners (187,7) - (187,7)
Balance at 31 December 2011 3 408,0 (19,6) 3 388,4
Six months ended 31 December 2010
Balance at 1 July 2010 2 954,1 (19,8) 2 934,3
Profit for the period 438,9 (2,0) 436,9
Other comprehensive income
Foreign currency translation (26,4) (26,4)
differences
Cash flow hedging reserve (10,9) (10,9)
Total other comprehensive income (37,3) - (37,3)
Total comprehensive income for the 401,6 (2,0) 399,6
period
Transactions with owners, recorded
directly in equity
Share-based payments 13,9 13,9
Dividends paid (184,1) (184,1)
Capital repayment (226,6) (226,6)
Issue of ordinary shares to AVI Share - -
Trusts
Own ordinary shares sold by AVI Share 21,7 21,7
Trusts (net)
Total transactions with owners (375,1) - (375,1)
Balance at 31 December 2010 2 980,6 (21,8) 2 958,8
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 15,9 15,9
differences
Cash flow hedging reserve 9,2 9,2
Total other comprehensive income 25,1 - 25,1
Total comprehensive income for the 722,9 - 722,9
period
Transactions with owners, recorded
directly in equity
Share-based payments 25,7 25,7
Deferred taxation on Group share 9,9 9,9
scheme 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 (269,9) (269,9)
Company
Own ordinary shares sold by AVI Share 38,4 38,4
Trusts
Total transactions with owners (758,1) - (758,1)
Balance at 30 June 2011 2 918,9 (19,8) 2 899,1
SUPPLEMENTARY NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 31 DECEMBER 2011
AVI Limited ("AVI" or the "Company") is a South African registered company.
The condensed consolidated interim financial statements of the Company
comprise the Company and its subsidiaries (together referred to as the
"Group") and the Group`s interest in jointly controlled entities.
1. Statement of compliance
The condensed consolidated interim financial statements have been
prepared in accordance with the recognition and measurement criteria of
International Financial Reporting Standards ("IFRS"), the presentation
as well as the disclosure requirements of IAS34 - Interim Financial
Reporting, the 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).
These condensed interim financial statements have not been reviewed or
audited by the Group`s auditors.
2. Basis of preparation
The financial statements are prepared in millions of South African
Rands ("Rm") on the historical cost basis, except for derivative
financial instruments and biological assets which are measured at fair
value.
The accounting policies are those presented in the annual financial
statements for the year ended 30 June 2011 and have been applied
consistently to the periods presented in these condensed consolidated
interim financial statements by all Group entities. These condensed
financial statements have been prepared under the supervision of Owen
Cressey CA(SA) in his capacity as Chief Financial Officer.
3. Determination of headline earnings
Unaudited % Audited
six months ended change year ended
31 December 30 June
2011 Restated 2011
Rm 2010 Rm
Rm
Profit for the year 595,2 438,9 36 697,8
attributable to equity
holders of AVI
Total capital items included 18,9 (12,5) (56,8)
in earnings
Net surplus/(loss) on 0,5 0,6 (1,0)
disposal of investments,
properties, vessels and plant
and equipment
Net surplus/(loss) on - 0,3 (0,2)
disposal of assets of
disposal groups held-for-sale
Net profit on disposal of 27,3 - -
Denny
Net loss on disposal of Sir - (12,4) (12,4)
Juice
Net loss on disposal of - - (53,9)
Alpesca
Impairment of vessels and - (5,4) (7,7)
plant and equipment,
investments, intangible
assets and assets classified
as held-for-sale
Other 1,2 - -
Capital items attributable to - 2,9 3,2
non-controlling interests
Taxation attributable to (10,1) 1,5 15,2
capital items
Headline earnings 576,3 451,4 28 754,6
Attributable to:
Continuing operations 576,3 446,5 29 750,8
Discontinued operations - 4,9 3,8
576,3 451,4 28 754,6
3. Determination of headline earnings continued
Unaudited % Audited
six months ended change year ended
31 December 30 June
2011 Restated 2011
Rm 2010 Rm
Rm
Headline earnings per 194,4 149,5 30 249,4
ordinary share (cents)
Continuing operations (cents) 194,4 147,8 32 248,2
Discontinued operations - 1,7 1,2
(cents)
Diluted headline earnings per 187,0 144,9 29 240,9
ordinary share (cents)
Continuing operations (cents) 187,0 143,3 30 239,7
Discontinued operations - 1,6 1,2
(cents)
4. Segmental results
Unaudited % Audited
six months ended change year ended
31 December 30 June
2011 Restated 2011
Rm 2010 Rm
Rm
Continuing operations
Segmental revenue
Food and beverage brands 3 341,1 3 101,5 8 5 837,8
Entyce 1 301,7 1 246,4 4 2 308,8
Snackworks 1 290,3 1 185,6 9 2 159,7
Chilled and frozen 749,1 669,5 12 1 369,3
convenience brands
Fashion brands 1 148,5 1 030,7 11 1 842,6
Personal care 487,5 470,3 4 890,3
Footwear and apparel 661,0 560,4 18 952,3
Corporate 3,2 3,3 5,9
Group 4 492,8 4 135,5 9 7 686,3
Segmental operating profit
before capital items
Food and beverage brands 549,9 442,3 24 763,3
Entyce 245,9 258,8 (5) 410,9
Snackworks 203,2 180,5 13 261,8
Chilled and frozen 100,8 3,0 3 260 90,6
convenience brands
Fashion brands 316,9 237,4 33 368,8
Personal care 85,9 67,3 28 132,7
Footwear and apparel 231,0 170,1 36 236,1
Corporate (11,8) (5,5) (9,2)
Group 855,0 674,2 27 1 122,9
4. Segmental results continued
Unaudited % Audited
six months ended change Year ended
31 December 30 June
2011 Restated 2011
Rm 2010 Rm
Rm
Alpesca - 227,2 (100) 298,4
Denny - 187,6 (100) 385,2
- 414,8 (100) 683,6
Segmental operating profit
before capital items
Alpesca - (9,5) (100) (37,5)
Denny - 21,0 (100) 50,0
- 11,5 (100) 12,5
The fresh, canned and value-added mushroom business conducted by Denny
was sold with effect from 1 July 2011. As a result, Denny was disclosed
as a discontinued operation in AVI`s results for the year ended 30 June
2011, and comparatives for the six months ended 31 December 2010 in the
statements of comprehensive income and cash flows have been restated
accordingly.
5. Investment activity
Effective 1 July 2011, the Group 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
R261,9 million (after adjustments and interest). 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. The value of the net assets disposed at the effective
date amounted to R234,6 million and consequently a capital
profit of R27,3 million was earned, before attributing
capital gains taxation of R10,3 million.
Other than the above transaction, there were no significant
changes to investments during the period.
6. Commitments
Unaudited Audited
six months ended Year
31 December ended
30 June
2011 Restated 2011
Rm 2010 Rm
Rm
Capital expenditure commitments for 287,5 270,6 372,8
property, plant and equipment
Contracted for 214,9 168,4 182,6
Authorised but not contracted for 72,6 102,2 190,2
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.
ADMINISTRATION AND PRINCIPAL SUBSIDIARIES
Administration
Company registration
AVI Limited ("AVI")
Reg no: 1944/017201/06
Share code: AVI
ISIN: ZAE000049433
Company secretary
Sureya Naidoo
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
The Standard Bank of South Africa Limited
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
Gaynor Poretti (Snackworks)
Telephone: +27 (0)11 707 7200
Paul Hanlon (Ciro Beverage Solutions)
Telephone: +27 (0)11 287 6700
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)
INDEPENDENT NON-EXECUTIVE
ANGUS BAND2
(CHAIRMAN)
JAMES HERSOV
KIM MACILWAINE5
ADRIAAN NUHN4
GAVIN TIPPER1, 2
MIKE BOSMAN1
ANDISIWE KAWA2
ABE THEBYANE
NEO DONGWANA1,3
BARRY SMITH3
1 MEMBER OF THE AUDIT AND RISK COMMITTEE
2 MEMBER OF THE REMUNERATION, NOMINATION AND APPOINTMENTS COMMITTEE
3 MEMBER OF THE SOCIAL AND ETHICS COMMITTEE
4 DUTCH
5 BRITISH
For more information, please visit our website:
www.avi.co.za
Date: 12/03/2012 07:05:12 Produced by the JSE SENS Department.
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