| Wed 5 Mar 2003, 9:35 | | Anglovaal Industries Limited - Unaudited financial |
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Anglovaal Industries Limited
(Registration Number 1944/017201/06)
(Incorporated in the Republic of South Africa)
("AVI" or "the Group")
Share code: AVI
ISIN: ZAE000030102
Unaudited financial results for the six months to 31 December 2002 ("the interim
period")
- Turnover up 23% to R3,6bn (R2,9bn) driven by volume growth of 10%
- Operating profit up 45% to R489m (R336m) resulting from volumes and efficiency
gains
- Headline earnings up 36% to R320m (R236m)
- Diluted headline earnings per share up 35% to 99.2 cents (73.3 cents)
- Acquisition of The Real Juice Company and House of Coffees
- Alpesca S.A. now fully integrated
- New glass capacity at Consol
Angus Band, Managing Director, commented:
"AVI has continued to lift operating performance with strong volume growth and
improved efficiencies contributing to the 45% growth in operating profit.
Although we expect the trading environment to be more challenging in the second
half, we are confident that we will grow our earnings, but not at the same rate
as the first half."
Sandton
5 March 2003
Enquiries:AVIAngus Band, Group Managing Director Tel: + 27 (0) 11 779 2703
Robert Katzen, Group Financial Director Tel: + 27 (0) 11 779 2704
College Hill Investor Relations Tel: + 27 (0) 11 447 3030
Nicholas Williams
Angela Parr
GROUP OVERVIEW
During the period to 31 December 2002, further progress in the implementation of
the Group`s growth strategy was made. In addition to a volume increase of 10%,
AVI acquired 75% of The Real Juice Company, NBL reached agreement in principle
to acquire the House of Coffees and I&J finalised an offer for an additional
vessel in Argentina with hake licences which would provide access to a further
3,000 tonnes of hake. The NBL salt business was sold for a consideration of
R40m.
Trading conditions were buoyant and consequently Group turnover increased by 23%
to R3,6bn driven by strong volume growth in Consol and NBL Food as well as
increased seafood realisations in international markets and the impact of the
acquisition of Alpesca S.A. in August 2001.
This increase in turnover coupled with further efficiency gains as well as an
improvement in the performance of the snacks category resulted in a significant
increase in Group operating profit which grew by 45% to R489m. The operating
margin lifted from 11.5% to 13.6%.
Net financing income at R21m was significantly lower than the comparative period
primarily as a result of accounting for foreign currency translation losses of
R21m (2001: R22m gain) in respect of the Group`s integrated foreign operations.
Other foreign currency losses totalling R76m (2001: R65m gain) relating to the
translation of the balance sheets of foreign entities have been taken directly
to non-distributable reserves.
Group headline earnings increased by 36% to R320m with diluted headline earnings
per share improving by 35% to 99.2 cents (2001: 73.3 cents).
Net cash after long-term borrowings ended the period at R606m (2001: R364m)
after funding capital expenditure of R153m (2001: R52m) to increase capacity and
R117m (2001: R73m) to maintain operations as the Group strives to ensure that
our facilities meet world class production benchmarks.
OPERATIONAL REVIEW
Segmental performance
Turnover Operating profit
2002 2001 Change 2002 2001 Change
Rm Rm % Rm Rm %
Branded Consumer Goods 2,336.0 1,920.2 22 247.4 168.0 47
Packaging 1,061.2 832.5 27 213.8 145.9 47
Logistics 188.5 157.1 20 29.9 24.4 23
Holding company 0.3 - - (2.5) (2.4) -
Total 3,586.0 2,909.8 23 488.6 335.9 45
Branded Consumer Goods
Turnover increased by 22% with volumes up 3%. Operating profit improved by 47%
with the operating profit margin improving from 8.7% to 10.6%. The segment
benefited from the strong local market position of its brands, continued
innovation and the higher export realisations in I&J.
NBL Food
Turnover grew by 24% to R1,3bn, largely as a result of a 9% increase in volumes
and improved mix in biscuits and snacks. The coffee and biscuit categories were
the main contributors to volume growth following the successful launch of the
"Flavour Bead" technology in instant coffee and the continuation of the biscuit
innovation product stream. Export sales volumes increased by 29% and all other
categories experienced small positive volume movements.
The volume growth together with a significant improvement in the snacks category
and sound cost control have contributed to operating profit increasing by 106%
and operating margins improving to 8.9% (2001:5.4%). This is particularly
pleasing in light of the increase in input costs as a result of the exchange
rate and commodity price increases.
The snacks category contained its loss for the year to date to R12m (2001:
R38m). This performance was ahead of expectation and after absorbing R4m in
additional costs arising from the potato shortages which resulted in abnormally
high potato costs and production variances caused by the poor grade of potato
available.
NBL Cosmetics
The cosmetics business achieved sales of R204m, an increase of 9%. Operating
profit for the period was R23m which is 10% ahead of last year with margins in
line with the prior year. The operating margin was adversely effected by
imported raw material cost increases and SAP implementation expenditure. The
introduction of SAP has been successfully completed, but the financial and
operational benefits will only be fully realised in the next financial year.
I&J
During the period I&J grew turnover by 25% to R848m. The consolidation of
Alpesca S.A. for the full six month period and export realisations in
international markets were the main factors driving this increase as volumes
were flat largely as a result of the local quota reduction of 4.7% and
disappointing fishing.
Fishing during the period was poor and these conditions extended well beyond
South Africa as the Namibian hake industry and shrimp fisheries in Argentina and
Mocambique also recorded weak seasons. These conditions resulted in a high
landed cost of fish which had an impact on both sales and production
efficiencies and restricted I&J`s operating profit growth to 23%.
Alpesca S.A. showed a substantial improvement in profitability for the six
months arising from operational efficiencies and improved margins, despite low
shrimp catches in the second quarter.
In the previous year we reported that the four-year hake quota rights for South
African waters were finally awarded. Unfortunately one of the unsuccessful
applicants has instituted legal proceedings challenging the process. The matter
is currently under appeal and is expected to be heard in May 2003. It is our
view that the Department of Environmental Affairs and Tourism conducted a
thorough process in respect of the initial allocation and the matter will be
favourably resolved. The industry will continue to fish in terms of the existing
quota licences while the appeal process is finalised.
Packaging
Consol experienced strong trading conditions for the first six months with
turnover at R1,1bn, up 27% on the prior year from volume growth of 18% and a
favourable mix. Local demand was strong and was boosted by cyclical returnable
glass requirements and excellent wine export growth. Operating profit grew by
47% to R214m and operating margins improved to 20.2% (2001: 17.5%).
All manufacturing facilities operated well during the period under review with
gains made in production efficiencies, quality and service levels. Rand
volatility and import linked inputs pushed costs up significantly and these were
partially recovered through price increases with the balance covered by
operating efficiencies. The glass manufacturing facilities were operating at
maximum capacity towards the end of the period with increased demand being
serviced from efficiency gains and inventory.
A new furnace at the speciality glass plant in Pretoria was successfully
commissioned in December and the furnace expansion at the Wadeville plant is in
its final start up phase. These two facilities will add 14% to glass production
capacity.
The plastics division significantly improved margins through improved production
and the rationalisation of product offerings by focusing on higher value added
niche markets.
Logistics
Vector Logistics` revenue increased by 20% as a result of higher average
realisations across the product basket and the contract distribution business
gaining momentum. Volumes in the traditional perishables business declined by 4%
mainly as a result of the reduced availability of seafood products. The
additional contract distribution volumes resulted in overall volumes being in
line with the prior year.
The Multi Temperature Contract Distribution model continues to grow and added 4%
to total volumes. A three year contract has been signed with Compass and a
significant increase in volume is evident compared to the prior year.
The combination of higher realisations and the continued focus on costs
delivered an operating profit for the period of R30m, an increase of 23%.
Group prospects
We believe that the favourable Budget together with the improved outlook for
inflation and the likelihood of a reduction in interest rates over the course of
the year will contribute to a period of sustained medium-term domestic growth.
However, we do not expect the earnings growth for the Group in the second half
to match the levels experienced in the first half primarily as a result of the
impact of the exchange rate on I&J and a softening in demand in the first two
months of the second half in the food business.
We are confident that the Group will deliver satisfactory growth in earnings for
the full year, notwithstanding the volatile global environment and the current
strength of the Rand.
AVI is currently trading under a cautionary announcement which was published on
25 February. Further details will be released as soon as possible.
Unaudited interim report for the half year ended 31 December 2002
Group income statements
Unaudited Audited
Half-year ended Year ended
31 December Increase/ 30 June
2002 2001 (decrease) 2002
Note Rm Rm % Rm
Turnover 3,586.0 2,909.8 23 5,779.6
Operating profit 488.6 335.9 45 705.7
Net financing income 20.6 46.2 (55) 84.7
509.2 382.1 33 790.4
Exceptional and capital items 21.6 6.0 23.7
Profit before taxation 530.8 388.1 37 814.1
Taxation 145.9 108.4 35 227.7
Profit after taxation 384.9 279.7 38 586.4
Share of equity accounted
earnings of associates and
joint ventures 11.4 11.2 2 28.5
396.3 290.9 614.9
Minority interests 55.5 48.7 14 105.4
Earnings 340.8 242.2 41 509.5
Determination of headline
earnings
Earnings 340.8 242.2 41 509.5
Adjustments:
Exceptional and capital items,
net of attributable taxation
credit
and minority interests (20.5) (6.1) (13.9)
Headline earnings 320.3 236.1 36 495.6
Headline earnings per
ordinary share (cents) 1 100.0 74.3 35
155.7
Diluted headline earnings
per ordinary share (cents) 2 99.2 73.3 35
153.9
Earnings per ordinary share
(cents) 1 106.4 76.2 40
160.1
Notes:
1 Earnings and headline earnings per ordinary share are calculated on a
weighted average of 320,425,172 (2001: 317,898,933) ordinary shares in issue.
2 Diluted headline earnings per ordinary share are calculated on a weighted
average of 322,948,105 (2001: 322,217,673) ordinary shares, after taking
account of the relevant number of incentive scheme shares and options currently
in issue.
3 Prior year numbers in respect of the half-year ended 31 December 2001 and
the year ended 30 June 2002 have been restated to reflect the re-allocation of
the rationalisation and restructuring costs incurred in these periods from
exceptional and capital items to operating profit. This is in accordance with
the recently released circular issued by the South African Institute of
Chartered Accountants with regard to headline earnings.
Group balance sheets
Unaudited Audited
31 December 30 June
2002 2001 2002
Rm Rm Rm
ASSETS
Non-current assets
Property, plant and
equipment 1,813.4 1,683.2 1,732.7
Intangible assets 107.9 63.4 108.8
Investments 433.8 440.6 466.6
Deferred taxation 78.7 106.5 105.6
2,433.8 2,293.7 2,413.7
Current assets
Inventories 759.0 682.6 744.7
Trade and other
receivables 1,481.5 1,342.8 1,219.9
Cash and cash
equivalents 694.6 491.3 850.3
2,935.1 2,516.7 2,814.9
TOTAL ASSETS 5,368.9 4,810.4 5,228.6
EQUITY AND LIABILITIES
Ordinary shareholders`
funds
Share capital and
reserves 2,849.2 2,485.6 2,746.7
Minority interests 521.7 473.0 526.6
Non-current liabilities
Interest-bearing
borrowings 53.6 108.9 56.5
Deferred taxation 86.5 84.2 78.7
Provisions 325.9 298.0 316.9
466.0 491.1 452.1
Current liabilities
Trade and other payables 1,380.8 1,227.6 1,243.6
Corporate taxation 116.3 114.2 194.9
Short-term borrowings 34.9 18.9 64.7
1,532.0 1,360.7 1,503.2
TOTAL EQUITY AND
LIABILITIES 5,368.9 4,810.4 5,228.6
Group cash flow statements Unaudited Audited
Half-year ended Year ended
31 December 30 June
2002 2001 2002
Rm Rm Rm
Operating activities
Cash generated by
operations 628.0 471.2 1,022.5
Other income 56.5 22.8 48.5
Increase in working capital (154.5) (131.0) (185.9)
530.0 363.0 885.1
Interest paid (17.5) (6.7) (17.9)
Taxation paid (182.2) (70.6) (104.6)
Dividends paid (208.3) (139.4) (139.4)
Cash retained from
operating activities 122.0 146.3 623.2
Investing activities
Property, plant and
equipment,
net of disposals (227.9) (120.8) (286.0)
Net investment acquisitions (23.4) (210.8) (186.0)
(251.3) (331.6) (472.0)
Financing activities
Net shareholder funding 8.3 4.7 1.0
Long-term borrowings -
net movement (4.9) 8.0 (11.6)
3.4 12.7 (10.6)
Net (decrease)/increase in
cash and cash equivalents (125.9) (172.6) 140.6
Net cash and cash equivalents
at beginning of period 785.6 645.0 645.0
Net cash and cash equivalents
at end of period 659.7 472.4 785.6
Statements of changes in equity
Share Non-
capital and Distribut-able Distrib
premium reserves reserve
Half-year ended 31 December 2002 Rm Rm Rm
At 30 June 2002 180.2 168.7 2,397.8
Movements recognised through the
income statement: 170.6 170.6
Earnings per income statement 340.8
Dividends paid (170.2) (170.2)
Movements not recognised through
the income statement: 8.3 (76.4) -
Issue of ordinary shares 8.3
Foreign currency translation
differences (76.4)
At 31 December 2002 188.5 92.3 2,568.
Share Non-
capital and Distribut-able Distribut
premium reserves reserves
Half-year ended 31 December 2001 Rm Rm Rm
At 30 June 2001, as previously
reported 178.6 114.8 2,036.4
Adjusted for changes in
accounting policies:
- Accounting for dividends payable in
accordance with AC107 (revised) 126.0
At 30 June 2001, as restated 178.6 114.8 2,162.4
2,455.8
- Provision for post-retirement
medical aid in accordance
with AC116 (revised) (161.3) (161.3)
178.6 114.8 2,001.1
Movements recognised through
the income statement: 121.2
Earnings per income statement 242.2
Dividends paid (121.0)
Movements not recognised through
the income statement: 5.3 52.8 11.8
Issue of ordinary shares 5.3
Foreign currency translation
differences 64.6
Inter-reserve transfer arising
on sale to minority interests (11.8) 11.8
At 31 December 2001 183.9 167.6 2,134.1
Exceptional and capital items
Half-year ended Year ended
31 December 30 June
2002 2001 2002
Rm Rm Rm
Net surplus on disposal and
write-down of investments,
properties, vessels and plant
and equipment 28.4 9.8 59.1
Goodwill amortisation (6.8) (3.8) (6.3)
Capital loss from an onerous
lease agreement - - (24.7)
Impairment of property, plant
and equipment of
of a subsidiary company - - (4.4)
21.6 6.0 23.7
Attributable taxation (1.1) - (4.8)
Attributable to minority
interests - 0.1 (5.0)
Net credit 20.5 6.1 13.9
Rationalisation and restructuring costs amounting to R9.8m in the half-year
ended 31 December 2001 (year ended 30 June 2002:R9.9m) have been reclassified to
operating expenses in order to comply with the recently released Circular 7/2002
issued by the South African Institute of Chartered Accountants with regard to
headline earnings.
Half-year ended Year ended
31 December 30 June
2002 2001 2002
Capital expenditure Rm Rm Rm
To maintain operations 116.6 73.0 270.5
To expand operations 152.8 51.6 61.9
269.4 124.6 332.4
Commitments for future capital
expenditure:
Contracted for 205.5 39.3 344.3
Authorised, but not contracted
for 74.7 367.7 121.4
280.2 407.0 465.7
The Group has sufficient available resources to fund this expenditure.
Investments
Cerebos Limited, a subsidiary of National Brands Limited, sold land comprising
the Coega salt works to Transnet in order to facilitate the building of the new
deep water harbour. Following this transaction, National Brands sold the shares
in Cerebos to a consortium consisting of the management of its salt business.
Commitments and contingent liabilities
At 31 December 2002 there were no commitments, other than operating lease and
other commitments entered into in the normal course of business.
Contingent liabilities amounted to R37,9m (2001: R34,4m) in respect of
guarantees and, in the prior year, a dispute with the South African Revenue
Service relating to a taxation issue in a subsidiary company.
Certain Group companies have entered into forward exchange contracts in the
normal course of business.
Comparative figures
Certain comparative figures have been reclassified where appropriate to conform
to changes in presentation in the current year in order to ensure comparability.
Interim results
The interim results have been prepared in accordance with South African
Statements of Generally Accepted Accounting Practice. There have been no
changes effected to any accounting policies during the six-month period covered
by the interim results.
For and on behalf of the board
Tony Ardington Chairman
Angus Band Managing Director
Registered office
19 Impala Road
Chislehurston
Sandton, 2196
website: www.avi.co.za
ISIN:ZAE000030102
5 March 2003
Date: 05/03/2003 08:51:52 AM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
