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Interim results for the six months ended 31 December 2012
AVI Limited
ISIN: ZAE000049433
JSE share code: AVI
Registration number: 1944/017201/06
(AVI or the Group or the Company)
www.avi.co.za
Interim Results for the six months ended 31 December 2012
Key features
Revenue from continuing operations up 11% to R4,89 billion
Solid operating performance constrained by lower contribution from I&J
Operating profit from continuing operations up 8% to R921,3 million
Headline earnings per share from continuing operations up 8% to 210 cents
Pleasing progress on capacity and efficiency projects
Green Cross included in results from 1 July 2012
Interim dividend of 90 cents per share.
Group overview
AVIs results for the six months reflect a solid overall performance in a difficult trading
environment characterised by constrained consumer spending and increased competition in most
categories.
Entyce delivered slightly higher profit than last year with strong performances in Tea and Creamer
offset by pressure in the coffee category. Snackworks excellent result was driven by good volume
growth with effective promotional activity and improved factory performance. Spitz achieved strong
volume growth resulting in leverage and profit growth despite the material impact of a weaker Rand
on gross profit margins. Green Cross was included from 1 July 2012 and partially offset the decline
in the contribution from I&J, relative to the first half of last year.
Increased focus on our business in the rest of Africa yielded pleasing results with revenue
growing 15,7% and operating profit 18,3%.
Revenue from continuing operations rose by 10,8%, from R4,42 billion to R4,89 billion with selling
price increases and volume growth in most categories offset by lower sales volumes in I&J. Gross
profit rose by 9,5% to R2,25 billion with the consolidated gross profit margin declining from 46,5%
to 45,9%. Entyce and Snackworks maintained gross profit margins despite the constrained environment
however I&J was impacted by higher fishing costs while Spitz absorbed the impact of a weaker Rand
on core product ranges in order to support sales volumes. Operating profit increased by 7,9%, from
R854,0 million to R921,3 million with a decrease in the consolidated operating profit margin from
19,3% to 18,8% largely due to I&Js poorer result.
Headline earnings from continuing operations rose by 11,2%, from R575,6 million to R640,0 million
due to a lower effective tax rate with withholding tax on dividends replacing secondary tax on
companies, offset by higher net finance costs, and lower earnings from I&Js joint venture with
Simplot in Australia, which struggled in a difficult Australian retail environment. Headline earnings
per share from continuing operations increased 8,2% from 194,2 cents to 210,2 cents with more shares
in issue due to the vesting of employee share options.
Cash generated by operations remained strong, increasing by 5,9% to R969,8 million before working
capital changes. Working capital increased by R207,5 million reflecting volume growth and temporary
increases in stock levels in some of the businesses. Capital expenditure increased to R309,9 million
with ongoing expenditure on major projects to improve capacity, technology and efficiency as well
as the purchase of previously leased office premises in Johannesburg. Other material cash out-flows
during the period were dividends of R926,2 million (including the special dividend of 180 cents per
share), the acquisition of Green Cross for R344,8 million net of cash acquired, and taxation of
R215,2 million. Net debt at the end of December 2012 was R782,2 million compared to net cash of
R50,6 million at the end of December 2011.
Several long-term improvement projects are in progress at the coffee and biscuit factories. The
new Marel fish processing line at I&J was commissioned in January 2013 and is expected to contribute
to an improved second half result. In addition, an expansion to the Redhill distribution centre has
been approved as has additional office and distribution space at Green Cross.
Segmental review continuing operations
Six months ended 31 December
Segmental revenue Segmental operating profit
Restated* Restated*
2012 2011 % change 2012 2011 % change
Rm Rm Rm Rm
Food & beverage brands 3 454,1 3 264,8 5,8 539,8 548,9 (1,7)
Entyce 1 310,0 1 225,4 6,9 247,4 244,9 1,0
Snackworks 1 424,4 1 290,3 10,4 245,9 203,2 21,0
I&J 719,7 749,1 (3,9) 46,5 100,8 (53,9)
Fashion brands 1 431,7 1 148,5 24,7 394,1 316,9 24,4
Personal care 515,8 487,5 5,8 91,1 85,9 6,1
Footwear & apparel 915,9 661,0 38,6 303,0 231,0 31,2
Corporate 5,8 3,2 (12,6) (11,8)
Group 4 891,6 4 416,5 10,8 921,3 854,0 7,9
* Restated to exclude Real Juice now shown as a discontinued operation.
Entyce (excluding Real Juice now shown as discontinued)
Revenue increased 6,9% to R1,31 billion while operating profit increased by 1,0% to R247,4 million
with the operating profit margin at 18,9% compared to 20,0% in the prior period.
Tea revenue grew 10,4% due to price increases taken over the previous 12 months, a further
increase in Rooibos prices to recover increased raw material costs and good Rooibos volume growth.
Coffee revenue was slightly lower than last year with the impact of price increases taken over the
previous 12 months offset by lower sales volumes with the category impacted by lower overall consumer
demand following several years of steep price inflation. Strong growth in Creamer revenue was driven
largely by volumes.
Gross profit margin decreased slightly with higher tea and coffee costs, including the impact of a
weaker Rand, not fully recovered in a constrained environment. Strong growth in creamer volumes
with concomitant leverage offset the impact of lower coffee sales volumes and Ciros out-of-home
coffee business benefited from lower arabica coffee input prices. Selling and administration
cost increases were above inflation due to higher marketing costs and increased distribution costs
as a result of increased volumes. Profit margins in absolute terms remain at strong levels and
ongoing investment in the coffee and creamer factory in Isando will support further improvement
in Entyces competitive position in these categories in future years.
Snackworks
Revenue of R1,42 billion was 10,4% higher than last year while operating profit rose by 21,0%,
from R203,2 million to R245,9 million. The operating profit margin increased from 15,8% to 17,3%.
The increase in revenue is largely attributable to a 10,1% increase in biscuit sales volumes and
higher snack selling prices. Biscuit volumes responded well to focused price promotion and benefited
from good service levels on seasonal demand without the disruption of gas shortages experienced in
the first half of last year. The overall increase in cost for Snackworks basket of raw materials
was not material and the leverage from higher volumes, together with sustained good factory
performance, resulted in improved gross profit and operating profit margins.
Several capital projects are still in progress in the biscuit factories with further benefits in
quality, capacity and efficiency expected in future years.
I&J
Revenue decreased by 3,9% from R0,75 billion to R0,72 billion while operating profit decreased
from R100,8 million to R46,5 million. The operating profit margin decreased from 13,5% to 6,5%.
I&J had an unexpectedly difficult semester compared to the first half of last year with a number
of material factors constraining profitability. Sales volumes declined by 13,9% due largely to low
fishing fleet availability caused by planned and unplanned vessel maintenance and poor catch rates
on a comparable basis. In addition a material increase in fuel costs for the fishing fleet following
the termination of the supply of our cheaper marine fuel blend in the second half of the last
financial year, and lower foreign exchange gains than registered in the prior period, impacted on
profits.
I&Js catch rates improved in the latter part of the period under review and should these catch
rates be sustained, the increased volumes, together with the benefit of the weaker Rand on export
sales should support a materially improved second half for I&J.
The new Marel fish processing line was successfully commissioned in January 2013 and will be
optimised over the next few months. The improved efficiency from the new line is expected to
contribute to a better second half performance at I&J.
Fashion Brands, including Green Cross from 1 July 2012 (personal care, footwear and apparel)
Revenue rose by 24,7% to R1,43 billion and operating profit increased by 24,4%, from R316,9
million to R394,1 million, with the operating profit margin maintained at 27,5%.
In the personal care category, Indigos revenue grew by 5,8% to R515,8 million while operating
profit increased by 6,1% to R91,1 million. The operating profit margin for the period improved from
17,6% to 17,7%. Revenue growth was constrained with limited overall growth and increased competition
in the aerosol category offset by good performance in colour cosmetics. Gross profit margin came
under pressure from the weaker Rand and the mix change however marketing spend was more focussed
than in prior years which contributed to the improvement in the operating margin.
In the footwear and apparel category, revenue increased by 38,6% to R915,9 million and operating
profit increased by 31,2% from R231,0 million to R303,0 million. The increase is due to the
acquisition of Green Cross which added R171,0 million of revenue and R47,6 million of operating
profit in the semester, as well as strong volume led growth in Spitz with the core Carvela, Kurt
Geiger and Lacoste brands all performing well. The operating profit margin decreased from 34,9%
to 33,1%.
In the Spitz business total footwear volumes grew 11,5% while Kurt Geiger clothing revenue
increased by 42% due to maturing revenue from stores opened last year and four new stores opened
in the current period. Footwear gross margins were impacted by the weaker Rand with higher costs
absorbed in key product ranges to support sales volumes, however volume growth resulted in a 10,4%
increase in operating profit from R230,1 million to R254,1 million, while operating profit margin
declined slightly from 36,2% to 34,9%.
Green Cross performed soundly, achieving price increases commensurate with rising input costs in a
constrained consumer environment. There was limited growth in trading space with only one new store
compared to last year however profit margins were maintained through price increases and tight cost
control. The earn out period for the previous owners ends on 28 February 2013 and investment in the
factory site and retail stores will increase in the second half of the year.
DISCONTINUED OPERATIONS (REAL JUICE AND DENNY)
Six months ended 31 December
Segmental Segmental Capital
revenue operating profit items
Restated* Restated* Restated*
2012 2011 2012 2011 2012 2011
Rm Rm Rm Rm Rm Rm
Real Juice 33,6 76,3 0,6 1,0 41,1
Denny 27,3
33,6 76,3 0,6 1,0 41,1 27,3
* Restated to include Real Juice now shown as a discontinued operation.
In May 2012 AVI entered into an agreement in terms of which Clover acquired 100% of Real Juice.
The conditions precedent were fulfilled in September 2012 and consequently the transaction was
recognised with effect from 1 October 2012. The final purchase price of R62,3 million (after
adjustments and interest) resulted in a capital profit of R40,9 million after derecognising the
minority interest.
Denny was sold with effect from 1 July 2011 resulting in a capital profit in the prior period of
R27,3 million before capital gains taxation of R10,3 million.
DIVIDEND
The interim dividend has increased by 8,4% to 90 cents per share and is in line with AVIs reduced
dividend cover introduced a year ago.
OUTLOOK
We anticipate that the current constrained consumer demand environment will persist and result in
increased levels of competition in our categories. Together with cost pressure attributable to the
weaker Rand, rising energy costs and sustained high prices for some of our raw material requirements,
this will result in margin pressure in the second half of the year.
With most of the raw materials and foreign exchange required for the second half secured in terms
of our normal hedging practices, the business units will focus on managing the balance between
selling prices, volumes and profit margins to achieve the best long term return from our brands.
Notwithstanding expectations of a difficult trading environment we remain optimistic that we can
continue to deliver growth in key categories using our strong brand portfolio and improving
manufacturing base. Capital expenditure levels remain high and the benefits of the various projects
will be realised over the medium term. I&Js catch rates improved in the latter part of the period
under review and should these catch rates be sustained, the increased volumes, together with the
benefit of the weaker Rand on export sales should support a materially improved second half result.
In addition we expect our business in the rest of Africa to continue growing strongly.
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 AVIs auditors.
Gavin Tipper Simon Crutchley
Chairman CEO
11 March 2013
CONDENSED GROUP BALANCE SHEETS
Unaudited at
31 December Audited
Restated at 30 June
2012 2011 2012
Rm Rm Rm
Assets
Non-current assets
Property, plant and equipment 1 967,8 1 640,8 1 756,9
Intangible assets and goodwill 1 146,8 757,3 748,6
Investments 338,3 325,2 328,4
Deferred taxation 46,0 44,7 47,2
3 498,9 2 768,0 2 881,1
Current assets
Inventories and biological assets 1 190,8 917,5 1 042,0
Trade and other receivables including derivatives 1 516,7 1 288,1 1 315,6
Cash and cash equivalents 404,8 293,5 242,1
Assets of discontinued operations classified as held-for-sale* 43,4
Other assets classified as held-for-sale** 4,6 3,2 5,7
3 116,9 2 502,3 2 648,8
Total assets 6 615,8 5 270,3 5 529,9
Equity and liabilities
Capital and reserves
Attributable to equity holders of AVI 3 410,8 3 355,8 3 615,1
Non-controlling interests (19,6) (17,8)
Total equity 3 410,8 3 336,2 3 597,3
Non-current liabilities
Financial liabilities, borrowings and operating lease 15,6 51,4 15,7
straight-line liabilities
Employee benefits 365,1 369,8 349,7
Deferred taxation 226,9 81,9 90,9
607,6 503,1 456,3
Current liabilities
Current borrowings 1 185,0 203,7 63,2
Trade and other payables including derivatives 1 362,3 1 171,8 1 338,7
Corporate taxation 50,1 55,5 15,3
Liabilities of discontinued operations classified as held-for-sale* 59,1
2 597,4 1 431,0 1 476,3
Total equity and liabilities 6 615,8 5 270,3 5 529,9
Net debt/(cash)*** 782,2 (50,6) (175,0)
* Discontinued operations at 30 June 2012 comprise the fresh fruit juice manufacturing business of Real Juice Co Holdings
Proprietary Limited (Real Juice) which was disposed with effect from 1 October 2012. The balance sheet at 31 December
2011 has not been restated for the discontinued operation and the Real Juice assets and liabilities are included in
their respective asset and liability classes.
** Other assets held-for-sale comprise equipment and properties held for disposal.
*** Comprises financial liabilities, borrowings and current borrowings less cash and cash equivalents.
CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME
Unaudited
six months ended Audited
31 December Year ended
Restated % 30 June
2012 2011 change 2012
Rm Rm Rm
Continuing operations
Revenue 4 891,6 4 416,5 11 8 287,1
Cost of sales 2 645,0 2 364,6 12 4 524,3
Gross profit 2 246,6 2 051,9 9 3 762,8
Selling and administrative expenses 1 325,3 1 197,9 11 2 390,3
Operating profit before capital items 921,3 854,0 8 1 372,5
Income from investments 4,5 1,8 150 13,8
Finance costs (28,5) (15,2) 88 (28,1)
Share of equity-accounted earnings of joint ventures 5,4 25,3 (79) 46,8
Capital items 2,3 1,7 35 (13,8)
Profit before taxation 905,0 867,6 4 1 391,2
Taxation 263,3 290,0 (9) 443,6
Profit from continuing operations 641,7 577,6 11 947,6
Discontinued operations*
Revenue 33,6 76,3 (56) 146,2
Operating profit before capital items 0,6 1,0 40 8,1
Income from investments 0,5 1,1 (55) 2,2
Finance costs (0,6) (1,3) (54) (2,5)
Capital items 41,1 27,3 51 27,4
Profit before taxation 41,6 28,1 (48) 35,2
Taxation 10,3 (100) 10,3
Profit from discontinued operations 41,6 17,8 (134) 24,9
Total operations
Profit for the period 683,3 595,4 15 972,5
Profit attributable to:
Owners of AVI 683,2 595,2 15 970,5
Non-controlling interests 0,1 0,2 (50) 2,0
683,3 595,4 15 972,5
Other comprehensive income net of tax 3,6 81,6 (96) 100,9
Foreign currency translation differences 20,1 54,0 (63) 59,7
Actuarial gain recognised 32,7
Cash flow hedging reserve (22,9) 38,3 (160) 24,4
Income tax on other comprehensive income 6,4 (10,7) (160) (15,9)
Total comprehensive income for the period 686,9 677,0 1 1 073,4
Total comprehensive income attributable to:
Owners of AVI 686,8 676,8 1 1 071,4
Non-controlling interests 0,1 0,2 (50) 2,0
686,9 677,0 1 1 073,4
Basic earnings per share from continuing
operations (cents)# 210,7 194,8 8 316,7
Diluted basic earnings per share from continuing
operations (cents)## 201,1 187,5 7 302,0
Basic earnings per share (cents)# 224,3 200,8 12 324,3
Diluted basic earnings per share (cents)## 214,0 193,2 11 309,3
Depreciation and amortisation of property, plant
and equipment, fishing rights and trademarks included
in operating profit from continuing operations 128,3 106,1 21 220,7
Headline earnings per share from continuing
operations (cents)# 210,2 194,2 8 320,0
Diluted headline earnings per share from continuing
operations (cents)## 200,5 186,8 7 305,2
* Discontinued operations comprise the fresh fruit juice manufacturing business of Real Juice which was disposed with effect
from 1 October 2012 and the fresh, canned and value-added mushroom business conducted by Denny, which was disposed of
with effect from 1 July 2011.
# Basic earnings and headline earnings per share is calculated on a weighted average of 304 503 220 (31 December 2011:
296 405 261 and 30 June 2012: 299 228 661) ordinary shares in issue.
## Diluted basic earnings and headline earnings per share is calculated on a weighted average of 319 214 311 (31 December
2011: 308 126 447 and 30 June 2012: 313 746 916) ordinary shares in issue.
CONDENSED GROUP STATEMENT OF CASH FLOWS
Unaudited
six months ended Audited
31 December Year ened
Restated % 30 June
2012 2011 change 2012
Rm Rm Rm
Continuing operations
Operating activities
Cash generated by operations before working
capital changes 969,8 916,2 6 1 678,9
Increase in working capital (207,5) (138,7) 50 (226,3)
Cash generated by operations 762,3 777,5 (2) 1 452,6
Interest paid (28,5) (15,3) 86 (28,1)
Taxation paid (215,2) (205,8) 5 (396,3)
Net cash available from operating activities 518,6 556,4 (7) 1 028,2
Investing activities
Cash flow from investments 4,5 2,4 88 15,0
Property, plant and equipment acquired (309,9) (290,8) 7 (541,1)
Proceeds from disposals of property, plant
and equipment 20,5 5,2 294 8,4
Acquisition of Green Cross (344,8)
Movement in joint ventures and other investments 10,6 45,0 (76) 66,7
Net cash used in investing activities (619,1) (238,2) 160 (451,0)
Financing activities
Net increase in shareholder funding 22,8 18,6 23 99,9
Short-term funding raised/(repaid) 1 124,5 (383,7) (393) (524,2)
Own ordinary shares purchased by the Company (100,7) (100,7)
Dividends paid (926,2) (221,5) 318 (475,5)
Net cash generated by/(used in) financing activities 221,1 (687,3) (132) (1 000,5)
Discontinued operations*
Cash flows from operating activities (18,7) (12,2) (53) (3,4)
Cash flows from investing activities 0,2 0,4 (50) 0,9
Cash flows from financing activities (4,6) (0,4) 1050 (6,0)
Proceeds on disposal of discontinued operation 62,3 261,9 261,9
Cash flows from discontinued operations 39,2 249,7 (84) 253,4
Total operations
Increase/(decrease) in cash and cash equivalents 159,8 (119,4) (234) (169,9)
Cash and cash equivalents at beginning of period 242,1 404,1 (40) 404,1
401,9 284,7 234,2
Translation of cash equivalents of foreign
subsidiaries at beginning of period 2,9 8,8 (67) 7,9
Cash and cash equivalents at end of period 404,8 293,5 242,1
Attributable to:
Continuing operations 404,8 293,5 38 242,1
Discontinued operations**
* Discontinued operations comprise the fresh fruit juice manufacturing business of Real Juice which was disposed with effect from
1 October 2012 and the fresh, canned and value-added mushroom business conducted by Denny, which was disposed of with effect from
1 July 2011.
** 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 Total Non- Total
capital and shares Rm earnings Rm controlling equity
premium Rm Rm interests Rm
Rm Rm
Six months ended 31 December 2012
Balance at 1 July 2012 29,5 (621,2) 223,2 3 983,6 3 615,1 (17,8) 3 597,3
Profit for the period 683,2 683,2 0,1 683,3
Other comprehensive income
Foreign currency translation differences 20,1 20,1 20,1
Cash flow hedging reserve (16,5) (16,5) (16,5)
Total other comprehensive income 3,6 3,6 3,6
Total comprehensive income for the period 3,6 683,2 686,8 0,1 686,9
Transactions with owners, recorded
directly in equity
Share-based payments 8,2 8,2 8,2
Deferred taxation on Group share scheme recharge 4,1 4,1 4,1
Dividends paid (926,2) (926,2) (926,2)
Own ordinary shares sold by AVI Share Trusts (net) 23,5 (0,7) 22,8 22,8
Total contributions by and distributions to owners 23,5 12,3 (926,9) (891,1) (891,1)
Changes in ownership interests in subsidiaries
Disposal of Real Juice 17,7 17,7
Total transactions with owners 23,5 12,3 (926,9) (891,1) 17,7 (873,4)
Balance at 31 December 2012 29,5 (597,7) 239,1 3 739,9 3 410,8 3 410,8
Six months ended 31 December 2011
Balance at 1 July 2011 (Restated) 29,5 (707,8) 69,7 3 475,3 2 866,7 (19,8) 2 846,9
Profit for the period 595,2 595,2 0,2 595,4
Other comprehensive income
Foreign currency translation differences 54,0 54,0 54,0
Cash flow hedging reserve 27,6 27,6 27,6
Total other comprehensive income 81,6 81,6 81,6
Total comprehensive income for the period 81,6 595,2 676,8 0,2 677,0
Transactions with owners, recorded
directly in equity
Share-based payments 8,7 8,7 8,7
Deferred taxation on Group share scheme recharge 6,5 6,5 6,5
Dividends paid (221,5) (221,5) (221,5)
Own ordinary shares sold by AVI Share Trusts (net) 16,7 1,9 18,6 18,6
Total transactions with owners 16,7 15,2 (219,6) (187,7) (187,7)
Balance at 31 December 2011 29,5 (691,1) 166,5 3 850,9 3 355,8 (19,6) 3 336,2
Year ended 30 June 2012
Balance at 1 July 2011 29,5 (707,8) 69,7 3 475,3 2 866,7 (19,8) 2 846,9
Profit for the period 970,5 970,5 2,0 972,5
Other comprehensive income
Foreign currency translation differences 59,7 59,7 59,7
Actuarial gains recognised 23,6 23,6 23,6
Cash flow hedging reserve 17,6 17,6 17,6
Total other comprehensive income 100,9 100,9 100,9
Total comprehensive income for the period 100,9 970,5 1 071,4 2,0 1 073,4
Transactions with owners, recorded
directly in equity
Share-based payments 18,1 18,1 18,1
Deferred taxation on Group share scheme recharge 34,5 34,5 34,5
Dividends paid (475,5) (475,5) (475,5)
Own ordinary shares sold by AVI Share Trusts 86,6 13,3 99,9 99,9
Total transactions with owners 86,6 52,6 (462,2) (323,0) (323,0)
Balance at 30 June 2012 29,5 (621,2) 223,2 3 983,6 3 615,1 (17,8) 3 597,3
SUPPLEMENTARY NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended 31 December 2012
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 Groups 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 and disclosure requirements of IAS 34 Interim Financial Reporting, the SAICA Financial
Reporting Guides, the Listing Requirements of the JSE Limited (the JSE) and the South African
Companies Act. These condensed interim financial statements have not been reviewed or audited by the
Groups auditors.
2. Basis of preparation
The condensed consolidated interim financial statements are prepared in millions of South African
Rands (Rm) on the historical cost basis, except for derivative financial instruments which are
measured at fair value and non-current assets and disposal groups held-for-sale which are stated
at the lower of carrying amount and fair value less costs to sell.
The accounting policies used in the preparation of these results are consistent with those presented
in the annual financial statements for the year ended 30 June 2012 and have been applied consistently
to the periods presented in these condensed consolidated interim financial statements by all Group
entities.
3. Changes in accounting policies
In the 2012 financial year the Group adopted the option to recognise immediately in other comprehensive
income actuarial gains and losses arising from the defined benefit post retirement medical aid plan, in
accordance with the allowed alternative under the existing IAS 19 Employee Benefits. In prior years,
the Group applied the corridor method to recognise actuarial gains or losses in profit or loss.
The change in accounting policy was applied retrospectively with the restatement of comparatives. The
impact of the restatement on comparatives was reported in the Groups results for the year ended 30 June
2012 and therefore the table below summarises the adjustment made to the balance sheet at 31 December 2011.
Net
deferred Retained
Employee taxation earnigs/
benefots asset/ profit or
liability (liability) loss Reserves
Rm Rm Rm Rm
Balance as reported at 31 December 2011 (297,3) (57,5) (3 841,6) (228,0)
Effect of change in accounting policy (72,5) 20,3 (9,3) 61,5
Restated balance at 31 December 2011 (369,8) (37,2) (3 850,9) (166,5)
The change in policy had no effect on the statement of comprehensive income, basic earning per share and diluted earnings
per share for the six months ended 31 December 2011.
4. Determination of headline earnings
Unaudited
six months ended Audited
31 December Year ended
Restated 30 June
2012 2011 % 2012
Rm Rm change Rm
Profit for the year attributable to equity
holders of AVI 683,2 595,2 15 970,5
Total capital items included in earnings 42,8 18,9 7,1
Net surplus/(loss) on disposal of investments,
properties, vessels and plant and equipment 1,4 0,5 (1,8)
Net surplus on disposal of assets classified
as held-for-sale 1,1 0,3
Profit on disposal of Denny - 27,3 27,3
Profit on disposal of Real Juice 40,9
Impairment of plant and equipment, investments,
intangible assets and assets classified as
held-for-sale (13,5)
Other 1,2 1,3
Capital items attributable to non-controlling
interests (0,1)
Taxation attributable to capital items (0,6) (10,1) (6,4)
Headline earnings 640,4 576,3 11 963,4
Attributable to:
Continuing operations 640,0 575,6 11 957,5
Discontinued operations 0,4 0,7 5,9
640,4 576,3 11 963,4
Headline earnings per ordinary share (cents) 210,3 194,4 8 322,0
Continuing operations (cents) 210,2 194,2 8 320,0
Discontinued operations (cents) 0,1 0,2 2,0
Diluted headline earnings per ordinary
share (cents) 200,6 187,0 7 307,1
Continuing operations (cents) 200,5 186,8 7 305,2
Discontinued operations (cents) 0,1 0,2 1,9
5. Segmental results
Six months ended
31 December Year ended
Restated 30 June
2012 2011 % 2012
Rm Rm change Rm
CONTINUING OPERATIONS
Segmental revenue
Food and beverage brands 3 454,1 3 264,8 6 6 274,8
Entyce 1 310,0 1 225,4 7 2 330,7
Snackworks 1 424,4 1 290,3 10 2 428,7
I&J* 719,7 749,1 (4) 1 515,4
Fashion brands 1 431,7 1 148,5 25 2 005,2
Personal care 515,8 487,5 6 918,1
Footwear and apparel** 915,9 661,0 39 1 087,1
Corporate and consolidation 5,8 3,2 7,1
Group 4 891,6 4 416,5 11 8 287,1
Segmental operating profit before capital
items
Food and beverage brands 539,8 548,9 (2) 922,5
Entyce 247,4 244,9 1 415,4
Snackworks 245,9 203,2 21 328,5
I&J* 46,5 100,8 (54) 178,6
Fashion brands 394,1 316,9 24 463,6
Personal care 91,1 85,9 6 155,7
Footwear and apparel** 303,0 231,0 31 307,9
Corporate and consolidation (12,6) (11,8) (13,6)
Group 921,3 854,0 8 1 372,5
Discontinued operations
Segmental revenue
Real Juice 33,6 76,3 146,2
Segmental operating profit before
capital items
Real Juice 0,6 1,0 8,1
* Following the disposal of the fresh, canned and value-added mushroom business conducted by Denny on 1 July
2011 the Chilled and frozen convenience brand segment only comprises the I&J business and therefore the segment
has been renamed to I&J.
** Includes Green Cross with effect from 1 July 2012.
The fresh fruit juice manufacturing business of Real Juice was sold with effect from 1 October 2012. As a result,
Real Juice was disclosed as a discontinued operation in AVIs results for the year ended 30 June 2012, and
comparatives for the six months ended 31 December 2011 in the statements of comprehensive income and cash flows
have been restated accordingly.
6. Investment activity
Acquisition of Green Cross
Effective 1 March 2012 AVI Limited entered into an agreement in terms of which it acquired 100% of the issued share
capital and shareholders loans of Green Cross. Since the acquisition of A&D Spitz Proprietary Limited (Spitz) in
July 2005, AVIs premium branded footwear and apparel portfolio has contributed meaningfully to the Groups growth
in profitability. The transaction represented a rare opportunity to acquire an established, category leading brand
of relevant scale with a solid record of profitable operations.
The purchase consideration payable by AVI was an initial amount of R382,5 million plus a contingent earn-out payment
of a maximum amount of R35,0 million, payable in March 2013 subject to certain profit hurdles being achieved in Green
Cross financial year ending 28 February 2013. The transaction was subject to the fulfilment of certain conditions
precedent which occurred during July 2012 and consequently the transaction has been accounted for from 1 July 2012.
Green Cross contributed revenue of R171,0 million, operating profit of R47,6 million and profit after taxation of
R36,3 million to the Group for the six months ended 31 December 2012. The Green Cross balance sheet at the date of
acquisition was as follows:
Carrying
amount
Rm
Non-current assets 45,6
Current assets 129,2
Non-current liabilities (3,4)
Current liabilities (33,1)
Net identifiable assets and liabilities 138,3
Trademark recognised on acquisition 399,7
Deferred taxation on trademark recognised (111,9)
Total consideration 426,1
Less: Contingent purchase consideration recognised on acquisition (35,0)
Total consideration paid on 27 July 2012 391,1
Less: Cash and cash equivalents in business acquired (46,3)
Cash outflow from the group on acquisition 344,8
Disposal of Real Juice Co Holdings Proprietary Limited
On 31 May 2012 AVI entered into an agreement with Clover S.A. Proprietary Limited (Clover), a subsidiary of Clover
Industries Limited, in terms of which 100% of the equity in and shareholders loans against Real Juice Co. Holdings
Proprietary Limited (Real Juice) were disposed of for a consideration of R62,3 million (after adjustments and interest).
The conditions precedent to the transaction were fulfilled during September 2012 and consequently the transaction was
effective from 1 October 2012. The value of the net assets disposed of at the effective date amounted to R3,7 million
and a capital profit of R40,9 million was earned, after derecognising the accumulated non-controlling interest of R17,7
million. Real Juice has been disclosed as a discontinued operation in the Groups results for the six months ended 31
December 2012 with the comparatives for the six months ended 31 December 2011 being restated accordingly.
Other than the above transactions there were no significant changes to investments during the period.
7. Commitments
Six months ended
31 December Year ended
Restated 30 June
2012 2011 2012
Rm Rm Rm
Capital expenditure commitments for
property, plant and equipment 161,0 287,4 302,4
Contracted for 138,0 214,8 175,0
Authorised but not contracted for 23,0 72,6 127,4
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.
8. Post-balance sheet events
No significant events outside the ordinary course of business have occurred since the balance sheet date.
9. Dividend declaration
Notice is hereby given that a gross interim ordinary dividend No 78 of 90 cents per share for the six months ended 31
December 2012 has been declared payable to shareholders of ordinary shares. The dividend has been declared out of income
reserves and will be subject to dividend withholding tax at a rate of 15%. The Company has no secondary tax credits available
and consequently a net interim dividend of 76,5 cents per share will be distributed to those shareholders who are not exempt
from paying dividend tax. In terms of dividend tax legislation, the dividend tax amount due will be withheld and paid over
to the South African Revenue Services by a nominee company, stockbroker or Central Securities Depository Participant (CSDP)
(collectively Regulated intermediary) on behalf of shareholders. However, all shareholders should declare their status to
their regulated intermediary, as they may qualify for a reduced dividend tax rate or exemption. AVIs issued share capital at
the declaration date is 343 953 141 ordinary shares. AVIs tax reference number is 9500/046/71/0. The salient dates relating to the
payment of the dividend are as follows:
Last day to trade cum dividend on the JSE Wednesday, 27 March 2013
First trading day ex dividend on the JSE Thursday, 28 March 2013
Record date Friday, 5 April 2013
Payment date Monday, 8 April 2013
In accordance with the requirements of Strate Limited, no share certificates may be dematerialised or rematerialised between
Thursday, 28 March 2013 and Friday, 5 April 2013, 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, 8 April
2013.
10. Preparer of financial statements
These condensed consolidated financial statements have been prepared under the supervision of Owen Cressey CA(SA), the AVI Group
Chief Financial Officer.
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
Email: 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 Proprietary 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 & 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)11 807 3915
I&J
Irvin & Johnson Holding Company Proprietary 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 Cosmetics Proprietary Limited
Reg No: 2003/009934/07
16-20 Evans Avenue
Epping 1 7460
PO Box 3460
Cape Town 8000
Telephone: +27 (0)21 507 8500
Telefax: +27 (0)21 507 8501
A&D Spitz Proprietary 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
Green Cross
Incorporating the following legal entities:
Green Cross Manufacturing Proprietary Limited
Reg No: 1994/08549/07
Green Cross Properties Proprietary Limited
Reg No: 1994/09874/07
Green Cross Retail Holdings Proprietary Limited
Reg No: 1998/003766/07
26 30 Benbow Avenue
Epping Industria
7460
PO Box 396
Eppingdust 7475
Managing director
Gunter Zeppel
Telephone: +27 (0)21 507 9700
Telefax: +27 (0)21 507 9707
Directors
Executive
Simon Crutchley (Chief executive officer)
Owen Cressey (Chief financial officer)
Independent non-executive
Gavin Tipper1 (Chairman)
Angus Band1 (Resigned 2 November 2012)
James Hersov2
Kim Macilwaine5 (Resigned 2 November 2012)
Adriaan Nühn1, 4
Mike Bosman2
Andisiwe Kawa1
Abe Thebyane1
Neo Dongwana2, 3
Barry Smith3
1 Member of the Remuneration, Nomination and Appointments Committee
2 Member of the Audit and Risk Committee
3 Social and Ethics Committee
4 Dutch
5 British
For more information, please visit our website:
www.avi.co.za
Date: 11/03/2013 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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