Wrap Text
Preliminary results for the year ended 30 June 2013
AVI Limited
ISIN: ZAE000049433 Share code:
AVI Registration number: 1944/017201/06
(AVI or the Group or the Company)
www.avi.co.za
Results for the year ended 30 June 2013
Key features
Revenue from continuing operations up 11% to R9,22 billion
Operating profit from continuing operations up 11% to R1,53 billion
Headline earnings per share from continuing operations up 7% to 341 cents
Solid group performance notwithstanding pressure on Entyce Beverages and I&J
Capital expenditure of R567 million with ongoing investment in capacity and efficiency projects
Green Cross included in results from 1 July 2012
Increased distributions to shareholders:
Dividend cover reduced from 1,5 to 1,25 times covered by earnings;
Final dividend of 170 cents per share
Group overview
AVIs results for the year reflect a solid overall performance notwithstanding a difficult
first semester for I&J and a challenging trading environment characterised by constrained
consumer spending, increased competition in some categories and increased pressure on input
costs stemming from the weaker Rand.
Snackworks delivered an excellent result for the year with strong volume growth supported
by improved factory performance. Spitz also achieved high volume growth from new trading
space and enduring strong demand for its core brands, resulting in leverage and profit
growth despite the material negative impact of a weaker Rand on gross profit margins. Entyce
had a more difficult year, having to contend with significant increases in tea input costs
and increased competition in all of its categories which led to a small decrease in operating
profit. I&J had an improved second semester, recovering much of the decline in first half
results. Green Cross was included from 1 July 2012 and made a contribution to the Group result
for the year in line with our expectations at acquisition.
Increased focus on our business in selected African markets yielded pleasing results with
revenue growing 14,7% and operating profit 9,7%.
Revenue from continuing operations rose by 11,2%, from R8,29 billion to R9,22 billion
with mostly cost driven selling price increases and volume growth in most categories. Gross
profit rose by 9,2% to R4,11 billion with the consolidated gross profit margin declining from
45,4% to 44,6% primarily due to higher fishing costs at I&J and the decision to absorb part of
the impact of a weaker Rand at Spitz to support sales volumes. Operating profit increased by
11,2%, from R1,37 billion to R1,53 billion with the consolidated operating profit margin
maintained at 16,6%.
Headline earnings from continuing operations rose by 9,4%, from R957,5 million to R1,05
billion due to higher net finance costs and lower earnings from I&Js joint venture with
Simplot in Australia, partially offset by a lower effective tax rate with Withholding Tax
on Dividends replacing Secondary Tax on Companies. Headline earnings per share from continuing
operations increased 6,6% from 320,0 cents to 341,2 cents with more shares in issue due to the
vesting of employee share options.
Cash generated by operations remained strong, increasing by 7,2% to R1,56 billion. Working
capital increased by R194,1 million reflecting volume growth and higher stock levels at year
end in some of the businesses. Capital expenditure increased to R566,9 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 R1,20 billion (including the special dividend of 180 cents
per share), the acquisition of Green Cross for R379,8 million net of cash acquired, and taxation
of R406,6 million. Net debt at the end of June 2013 was R697,2 million compared to net cash of
R163,2 million at the end of June 2012.
Segmental review - continuing operations
Year ended 30 June
Segmental revenue Segmental operating profit
2013 2012 % 2013 2012 %
Rm Rm change Rm Rm change
Food & beverage brands 6 688,4 6 274,8 6,6 951,5 922,5 3,1
Entyce beverages 2 414,9 2 330,7 3,6 397,8 415,4 (4,2)
Snackworks 2 681,6 2 428,7 10,4 387,9 328,5 18,1
I&J 1 591,9 1 515,4 5,0 165,8 178,6 (7,2)
Fashion brands 2 518,2 2 005,2 25,6 576,9 463,6 24,4
Personal care 982,1 918,1 7,0 167,1 155,7 7,3
Footwear & apparel 1 536,1 1 087,1 41,3 409,8 307,9 33,1
Corporate 11,7 7,1 (2,2) (13,6)
Group 9 218,3 8 287,1 11,2 1 526,2 1 372,5 11,2
Entyce beverages
Revenue increased 3,6% to R2,41 billion while operating profit decreased by 4,2% to R397,8 million
with the operating profit margin at 16,5% compared to 17,8% in the prior period.
Tea revenue grew 11,2% due to good rooibos volume growth and price increases taken to recover
increased costs of both rooibos and black tea. Coffee revenue was 4,2% lower than last year due to
lower sales volumes with the category impacted by increased competition and lower overall consumer
demand following several years of steep price inflation. Creamer revenue grew 7,6% due to price
increases and higher sales volumes.
Gross profit margin decreased with higher input costs, particularly tea, not fully recovered in
a constrained environment and due to lower fixed cost recovery in the coffee category in line with
lower volumes. With selling and administration costs increasing in line with inflation this resulted
in a reduction in operating profit in the tea and coffee categories that was partially offset by
higher creamer profit, with this category benefiting from better prices and lower production costs.
Profit margins in absolute terms remain at strong levels and ongoing investment in manufacturing
capability will support Entyces competitive position in these categories in future years.
Snackworks
Revenue of R2,68 billion was 10,4% higher than last year while operating profit rose by 18,1%,
from R328,5 million to R387,9 million. The operating profit margin increased from 13,5% to 14,5%.
Biscuit revenue grew 11,8% due mainly to a 10,1% increase in biscuit sales volumes. In addition to
strong category growth, volumes responded well to focused price promotion and benefited from
improved service levels and not having the disruption of gas shortages experienced in the first half
of last year. The overall increase in cost for the biscuits basket of raw materials was limited and
the leverage from higher volumes, together with sustained good factory performance, resulted in
improved gross profit and operating profit margins.
The snacks category achieved 6,5% revenue growth due mainly to better pricing in the category as
a whole, with sales volumes slightly higher than last year. The benefit of better prices was
reduced by higher raw material costs, but still led to an improvement in gross profit margin and
a meaningful contribution to Snackworks overall profit for the year.
The Isando packaging automation and Westmead line upgrades were completed during the year with
limited disruption and are contributing to improved yields, service levels and throughput. Further
projects at Westmead are in the approval phase.
I&J
Revenue increased by 5,0% from R1,52 billion to R1,59 billion while operating profit decreased
from R178,6 million to R165,8 million. The operating profit margin decreased from 11,8% to 10,4%.
Export selling prices remained constrained by pressure on consumer demand and increased supply of
other white fish species.
I&J had a difficult first semester impacted by low fishing fleet availability, lower catch rates
and higher fuel costs. In the second semester fishing performance was better, exchange rates
were favourable and the relative increase in fuel costs was lower, however, operating costs were
adversely impacted by the once-off Marel project commissioning activity and increased volumes
of quota caught by third parties. This was largely offset by recognition of a pension fund surplus
of R24,7 million. As a result the first half decline in operating profit of R54,3 million was
reduced to a R12,8 million decline for the full year.
The new Marel fish processing line was successfully commissioned during the second half and is
operating at levels that will deliver the expected savings in the new financial year.
Fashion Brands, including Green Cross from 1 July 2012 (personal care, footwear and apparel)
Revenue rose by 25,6% to R2,52 billion and operating profit increased by 24,4%, from R463,6
million to R576,9 million. The operating profit margin decreased slightly from 23,1% to 22,9%.
In the personal care category, Indigos revenue grew by 7,0% to R982,1 million while operating
profit increased by 7,3% to R167,1 million. The operating profit margin for the year was maintained
at 17,0%. The category saw extensive promotional activity in response to constrained consumer
spending.
Indigos revenue growth is largely attributable to price increases and volume growth in colour
cosmetics, offset by lower fragranced body spray sales volumes that resulted from the constrained
environment and increased competition. Gross profit margin decreased marginally owing to pressure
from the weaker Rand and the sales mix change, however, this was offset by more focused marketing
spend and good cost control.
In the footwear and apparel category, revenue increased by 41,3% to R1,54 billion and operating
profit increased by 33,1% from R307,9 million to R409,8 million. The increase is due to the
acquisition of Green Cross which added R327,5 million of revenue and R80,0 million of operating
profit for the year, 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 28,3%
to 26,7%.
In the Spitz business total revenue grew by 12,1% with the Spitz stores growing by 8,9% and the
Kurt Geiger stores by 47,9%. Footwear sales volumes grew by 6,6% with good performance from the core
Carvela and Lacoste ranges while Kurt Geiger clothing revenue increased due to maturing revenue from
stores opened last year and six new stores opened in the current period. Clothing gross profit
margins were maintained, however footwear gross profit margins were materially impacted by the weaker
Rand with higher costs absorbed in key product ranges for much of the year to support sales volumes.
This pressure was ameliorated with price increases taken in the fourth quarter, and leverage from
volume growth resulted in a 7,2% increase in operating profit from R304,6 million to R326,4 million,
while operating profit margin declined from 29,2% to 27,9%.
Green Cross performed soundly, with the previous owners managing the business up to completion of
the earn-out period at the end of February 2013 and then assisting with the transition to AVI
appointed management by the end of the financial year. Selling prices increased in line with rising
input costs in a difficult consumer environment, however, sales volumes declined due to constrained
consumer demand and limited growth in trading space with only one new store compared to last year.
Combined with higher employee costs incurred to transition the business into the Group, this restricted
operating profit for the year to R80,0 million with an operating profit margin of 24,4%. Investment in
the product offering and retail format to leverage the growth opportunities inherent in the Green
Cross brand will commence in the 2014 financial year.
DISCONTINUED OPERATIONS (REAL JUICE AND DENNY)
Year ended 30 June
Segmental Segmental Capital items
revenue operating profit
2013 2012 2013 2012 2013 2012
Rm Rm Rm Rm Rm Rm
Real Juice 33,6 146,2 0,6 8,1 41,1 0,1
Denny - - - - - 27,3
33,6 146,2 0,6 8,1 41,1 27,4
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 R62,4 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 board of directors of AVI (the Board) has approved a reduction in AVIs annual dividend
pay-out ratio from 1,5 to 1,25 times covered by diluted headline earnings from continuing
operations.
This is intended to return cash to shareholders more evenly, noting the frequent special
dividends and share buy-backs over the last few years, and recognises the Groups strong
cash-generating ability and capacity for further gearing should attractive acquisition
opportunities arise.
In terms of this new policy a final dividend of 170 cents per share has been declared,
bringing the total normal dividend for the year to 260 cents, 28,1% higher
than last year.
OUTLOOK
We expect the current constrained consumer demand environment and heightened competition for
market share to persist in the new financial year. 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 many of our categories.
Notwithstanding expectations of a difficult trading environment we remain optimistic that our
unique brand portfolio will continue to deliver growth in key categories. This will be
supplemented by a detailed review of our procurement activity and ongoing capital investment
to improve quality, capacity and efficiency.
At business unit level, Entyce and Snackworks have well established capabilities to defend market
share and profit margins and will be seeking to grow sales volumes where there is opportunity.
I&J will benefit from the weaker Rand, increased sales volumes and more efficient processing at
Woodstock. Indigo is working hard to build momentum in aerosol volumes and will benefit from a
number of meaningful new product initiatives. The Spitz and Kurt Geiger businesses continue to
expand the footprint of their premium footwear and apparel brands while investment in Green
Crosss growth opportunities will gather momentum. In addition we have built a strong presence
in selected African markets and will continue growing our brands in these and other targeted
countries.
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
9 September 2013
PRELIMINARY SUMMARISED GROUP BALANCE SHEET
Audited Audited
at 30 June at 30 June
2013 2012
Rm Rm
Assets
Non-current assets
Property, plant and equipment 2 088,2 1 756,9
Intangible assets and goodwill 1 145,6 748,6
Investments 375,1 328,4
Deferred taxation 45,4 47,2
3 654,3 2 881,1
Current assets
Inventories and biological
assets 1 270,7 1 042,0
Trade and other receivables
including derivatives 1 425,8 1 315,6
Cash and cash equivalents 212,4 242,1
Assets of discontinued
operations
classified as held-for-sale* - 43,4
Other assets classified as
held-for-sale** 5,6 5,7
2 914,5 2 648,8
Total assets 6 568,8 5 529,9
Equity and liabilities
Capital and reserves
Attributable to equity holders
of AVI 3 677,6 3 615,1
Non-controlling interests - (17,8)
Total equity 3 677,6 3 597,3
Non-current liabilities
Borrowings and operating lease
straight-line liabilities 16,1 15,7
Employee benefits 347,9 349,7
Deferred taxation 240,3 90,9
604,3 456,3
Current liabilities
Current borrowings 893,5 63,2
Trade and other payables
including derivatives 1 375,7 1 338,7
Corporate taxation 17,5 15,3
Liabilities of discontinued
operations classified as
held-for-sale* - 58,9
Other liabilities classified
as held-for-sale 0,2 0,2
2 286,9 1 476,3
Total equity and liabilities 6 568,8 5 529,9
Net debt/(cash)*** 697,2 (163,2)
* 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 of with effect from 1 October 2012.
** Other assets held-for-sale comprise equipment and properties held for disposal.
*** Comprises borrowings and operating lease straight-line liabilities and current
borrowings less cash and cash equivalents.
PRELIMINARY SUMMARISED GROUP STATEMENT OF COMPREHENSIVE INCOME
Audited Audited
Year ended Year ended
30 June 30 June
2013 2012 change
Rm Rm %
Continuing operations
Revenue 9 218,3 8 287,1 11,2
Cost of sales 5 110,5 4 524,3 13,0
Gross profit 4 107,8 3 762,8 9,2
Selling and administrative expenses 2 581,6 2 390,3 8,0
Operating profit before capital items 1 526,2 1 372,5 11,2
Income from investments 10,4 13,8 (24,6)
Finance costs (63,1) (28,1) 124,6
Share of equity-accounted earnings of
joint ventures 23,9 46,8 (48,9)
Capital items (4,6) (13,8) (66,7)
Profit before taxation 1 492,8 1 391,2 7,3
Taxation 448,6 443,6 1,1
Profit from continuing operations 1 044,2 947,6 10,2
Discontinued operations*
Revenue 33,6 146,2 (77,0)
Operating profit before capital items 0,6 8,1 (92,6)
Income from investments 0,5 2,2 (77,3)
Finance costs (0,6) (2,5) (76,0)
Capital items 41,1 27,4 50,0
Profit before taxation 41,6 35,2 18,2
Taxation - 10,3 (100,0)
Profit from discontinued operations 41,6 24,9 67,1
Profit for the year 1 085,8 972,5 11,7
Profit attributable to:
Owners of AVI 1 085,7 970,5 11,9
Non-controlling interests 0,1 2,0 (95,0)
1 085,8 972,5 11,7
Other comprehensive income net of tax 53,5 100,9 (47,0)
Foreign currency translation differences 48,5 59,7 (18,8)
Actuarial gain recognised 6,4 32,7 (80,4)
Cash flow hedging reserve 0,7 24,4 (97,1)
Income tax on other comprehensive income (2,1) (15,9) (86,8)
Total comprehensive income for the year 1 139,3 1 073,4 6,1
Total comprehensive income attributable to:
Owners of AVI 1 139,2 1 071,4 6,3
Non-controlling interests 0,1 2,0 (95,0)
1 139,3 1 073,4 6,1
Basic earnings per share from
continuing operations (cents)# 340,1 316,7 7,4
Diluted earnings per share from
continuing operations (cents)## 325,5 302,0 7,8
Basic earnings per share (cents)# 353,6 324,3 9,0
Diluted earnings per share (cents)## 338,4 309,3 9,4
Depreciation and amortisation of
property, plant and equipment, fishing
rights and trademarks included in
operating profit from continuing
operations 259,0 220,7 17,4
Headline earnings per share from
continuing operations (cents)# 341,2 320,0 6,6
Diluted headline earnings per share
from continuing operations (cents)## 326,5 305,2 7,0
* Discontinued operations comprise the fresh fruit juice manufacturing business of
Real Juice which was disposed of 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 are calculated on a
weighted average of 306 993 534 (30 June 2012: 299 228 661) ordinary shares in issue.
## Diluted earnings and headline earnings per share are calculated on a weighted
average of 320 859 312 (30 June 2012: 313 746 916) ordinary shares in issue.
PRELIMINARY SUMMARISED GROUP STATEMENT OF CASH FLOWS
Audited Audited
year ended year ended
30 June 30 June
2013 2012 change
Rm Rm %
Continuing operations
Operating activities
Cash generated by operations before
working capital changes 1 750,6 1 678,9 4,3
Increase in working capital (194,1) (226,3) (14,2)
Cash generated by operations 1 556,5 1 452,6 7,2
Interest paid (63,1) (28,1) 124,6
Taxation paid (406,6) (396,3) 2,6
Net cash available from operating
activities 1 086,8 1 028,2 5,7
Investing activities
Interest received 10,4 15,0 (30,7)
Property, plant and equipment acquired (566,9) (541,1) 4,8
Proceeds from disposals of property,
plant and equipment 20,9 8,4 148,8
Acquisition of Green Cross (net of
cash acquired) (379,8) -
Movement in joint ventures and other
investments 23,1 66,7 (65,4)
Net cash used in investing activities (892,3) (451,0) 97,8
Financing activities
Proceeds from shareholder funding 85,9 99,9 (14,0)
Short-term funding raised/(repaid) 830,9 (524,2) (258,5)
Own ordinary shares purchased by
the company - (100,7) (100,0)
Special dividends paid (550,0) -
Ordinary dividends paid (645,4) (475,5) 35,7
Net cash used in financing activities (278,6) (1 000,5) (72,2)
Discontinued operations*
Cash flows from operating activities (18,7) (3,4) 450,0
Cash flows from investing activities 0,2 0,9 (77,8)
Cash flows from financing activities (4,6) (6,0) (23,3)
Proceeds on disposal of discontinued
operation 62,4 261,9 (76,2)
Cash flows from discontinued operations 39,3 253,4 (84,5)
Decrease in cash and cash equivalents (44,8) (169,9) (73,6)
Cash and cash equivalents at beginning
of year 242,1 404,1 (40,1)
197,3 234,2 (15,8)
Translation of cash equivalents of foreign
subsidiaries 15,1 7,9 91,1
Cash and cash equivalents at end of year 212,4 242,1 (12,3)
Attributable to:
Continuing operations 212,4 242,1 (12,3)
Discontinued operations** - -
* Discontinued operations comprise the fresh fruit juice manufacturing business
of Real Juice which was disposed of 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. These amounted to R39,3 million (2012: R277,4 million) net cash
flow from discontinued operations to continuing operations.
PRELIMINARY SUMMARISED GROUP STATEMENTS OF CHANGES IN EQUITY
Share Non-
capital and Treasury Retained controlling Total
premium shares Reserves earnings Total interests equity
Rm Rm Rm Rm Rm Rm Rm
Year ended 30 June 2013
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 year 1 085,7 1 085,7 0,1 1 085,8
Other comprehensive income
Foreign currency translation differences 48,5 48,5 48,5
Actuarial gains recognised 4,6 4,6 4,6
Cash flow hedging reserve 0,4 0,4 0,4
Total other comprehensive income - - 53,5 - 53,5 - 53,5
Total comprehensive income for the year - - 53,5 1 085,7 1 139,2 0,1 1 139,3
Transactions with owners, recorded
directly in equity
Share-based payments 13,4 13,4 13,4
Deferred taxation on Group share scheme
recharge 18,9 18,9 18,9
Dividends paid (1 195,4) (1 195,4) (1 195,4)
Own ordinary shares sold by AVI Share Trusts 83,0 3,4 86,4 86,4
Total contributions by and distributions
to owners - 83,0 32,3 (1 192,0) (1 076,7) - (1 076,7)
Changes in ownership interests
in subsidiaries
Disposal of Real Juice - 17,7 17,7
Total transactions with owners - 83,0 32,3 (1 192,0) (1 076,7) 17,7 (1 059,0)
Balance at 30 June 2013 29,5 (538,2) 309,0 3 877,3 3 677,6 - 3 677,6
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 year 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 year - - 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 contributions by and distributions
to owners - 86,6 52,6 (462,2) (323,0) - (323,0)
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 PRELIMINARY SUMMARISED CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2013
AVI Limited (AVI or the Company) is a South African registered company. The
preliminary summarised consolidated financial statements of the Company comprise
the Company and its subsidiaries (together referred to as the Group) and the
Groups interest in jointly controlled entities.
1. Statement of compliance
The preliminary summarised consolidated 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.
2. Basis of preparation
The preliminary summarised financial statements are prepared in millions of
South African Rands (Rm) on the historical cost basis, except for derivative
financial instruments, biological assets and liabilities for cash settled
share-based payment arrangements 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 financial statements for the year ended 30 June 2013
and have been applied consistently to the years presented in these preliminary
summarised consolidated financial statements by all Group entities.
3. Determination of headline earnings
Audited Audited
Year ended Year ended
30 June 30 June
2013 2012 %
Rm Rm change
Profit for the year attributable
to owners of AVI 1 085,7 970,5 11,9
Total capital items after taxation 37,7 7,1
Net loss on disposal of investments
and property, plant and equipment (1,2) (1,8)
Net profit on disposal of assets
of disposal groups held-for-sale 0,2 0,3
Profit on disposal of Denny - 27,3
Profit on disposal of
Real Juice 40,9 -
Impairment of assets (3,6) (13,5)
Other 0,2 1,3
Capital items attributable to
non-controlling interests - (0,1)
Taxation attributable to
capital items 1,2 (6,4)
Headline earnings 1 048,0 963,4 8,8
Attributable to:
Continuing operations 1 047,5 957,5 9,4
Discontinued operations 0,5 5,9
1 048,0 963,4 8,8
Headline earnings per ordinary
share (cents) 341,4 322,0 6,0
Continuing operations (cents) 341,2 320,0 6,6
Discontinued operations (cents) 0,2 2,0
Diluted headline earnings per
ordinary share (cents) 326,7 307,1 6,4
Continuing operations (cents) 326,5 305,2 7,0
Discontinued operations (cents) 0,2 1,9
4. Segmental results
Audited Audited
Year ended Year ended
30 June 30 June
2013 2012 change
Rm Rm %
CONTINUING OPERATIONS
Segmental revenue
Food and beverage brands 6 688,4 6 274,8 6,6
Entyce beverages 2 414,9 2 330,7 3,6
Snackworks 2 681,6 2 428,7 10,4
I&J* 1 591,9 1 515,4 5,0
Fashion brands 2 518,2 2 005,2 25,6
Personal care 982,1 918,1 7,0
Footwear and apparel** 1 536,1 1 087,1 41,3
Corporate and consolidation 11,7 7,1
Group 9 218,3 8 287,1 11,2
* 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 I&J.
** Includes Green Cross with effect from 1 July 2012.
Audited Audited
Year ended Year ended
30 June 30 June
2013 2012 change
Rm Rm %
Segmental operating profit
before capital items
Food and beverage brands 951,5 922,5 3,1
Entyce beverages 397,8 415,4 (4,2)
Snackworks 387,9 328,5 18,1
I&J* 165,8 178,6 (7,2)
Fashion brands 576,9 463,6 24,4
Personal care 167,1 155,7 7,3
Footwear and apparel** 409,8 307,9 33,1
Corporate and consolidation (2,2) (13,6)
Group 1 526,2 1 372,5 11,2
Discontinued operations
Segmental revenue
Real Juice 33,6 146,2 (77,0)
33,6 146,2 (77,0)
Segmental operating profit
before capital items
Real Juice 0,6 8,1 (92,6)
0,6 8,1 (92,6)
* 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 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 and has consequently been disclosed as part of discontinued
operations in both the current and prior years.
5. Investment activity
Acquisition of Green Cross
Effective 1 March 2012 AVI 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. In total the Group paid a consideration
of R428,3 million for the business with an initial payment of R391,1 million paid
in July 2012 and the remaining R37,2 million (R35,0 million contingent consideration
plus interest of R2,2 million) paid in May 2013 following the achievement of the
required profit target. In line with the requirements of accounting standards the
interest paid in respect of the contingent consideration was expensed in the period
and consequently a consideration of R426,1 million is reflected. 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 R327,5 million, operating profit of R80,0 million
and profit after taxation of R60,1 million to the Group for the year ended 30 June 2013.
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 on 27 July 2012
and 2 May 2013 426,1
Less: Cash and cash equivalents in
business acquired (46,3)
Cash outflow from the Group on
acquisition 379,8
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 R62,4 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 R3,8 million and a capital profit of R40,9 million was earned, after derecognising
the accumulated non-controlling interest of R17,7 million. In line with last year
Real Juice has been disclosed as a discontinued operation in the Groups results for
the year ended 30 June 2013.
Other than the above transactions there were no significant changes to investments
during the period.
6. Commitments
Audited Audited
Year ended Year ended
30 June 30 June
2013 2012
Rm Rm
Capital expenditure commitments for
property, plant and equipment 208,8 302,4
Contracted for 130,2 175,0
Authorised but not contracted for 78,6 127,4
It is anticipated that this expenditure will be financed by cash resources, cash
generated from activities and existing borrowing facilities. Other contractual
commitments have been entered into in the normal course of business.
7. Post-balance sheet events
No significant events outside the ordinary course of business have occurred since
the balance sheet date.
8. Dividend declaration
Notice is hereby given that a gross final dividend No 79 of 170 cents per share
for the year ended 30 June 2013 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 dividend of 144,5 cents per share will be
distributed to those shareholders who are not exempt from paying dividend tax. In terms
of the dividend tax legislation, the dividends tax amount due will be withheld and paid
over to the South African Revenue Services by a nominee company, stockbroker or Central
Security 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 Friday, 11 October 2013
First trading day ex dividend on the JSE Monday, 14 October 2013
Record date Friday, 18 October 2013
Payment date Monday, 21 October 2013
In accordance with the requirements of Strate Limited, no share certificates may be
dematerialised or rematerialised between Monday, 14 October 2013 and
Friday, 18 October 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, 21 October 2013.
9. Reports of the independent auditors
The unmodified audit reports of KPMG Inc., the independent auditors, on the financial
statements and the preliminary summarised financial statements contained herein for
the year ended 30 June 2013, dated 6 September 2013, are available for inspection at
the registered office of the company.
10. Preparation of financial statements
These preliminary summarised financial statements have been prepared under the
supervision of Owen Cressey CA (SA), the AVI Group Chief Financial Officer.
11. Annual report and notice of annual general meeting
The annual report for the year ended 30 June 2013 will be posted to shareholders on
or about Monday, 30 September 2013. The financial statements will include the notice
of the annual general meeting of shareholders to be convened at 11h00 on Wednesday,
30 October 2013 at 2 Harries Road, Illovo, Johannesburg.
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 and Snackworks)
30 Sloane Street
Bryanston 2021
PO Box 5159
Rivonia 2128
Telefax: +27 (0)11 707 7799
Managing Directors
Sarah-Anne Orphanides (Entyce beverages)
Telephone: +27 (0)11 707 7100
Gaynor Poretti (Snackworks)
Telephone: +27 (0)11 707 7200
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
Jonty Jankovich
Telephone: +27 (0)21 402 9200
Telefax: +27 (0)21 402 9282
Fashion brands
Personal care
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
Footwear & apparel
Divisional Managing Director
Robert Lunt
Telephone: +27 (0)11 707 7300
Telefax: +27 (0)11 707 7763
A&D Spitz Proprietary Limited
Reg No: 1999/025520/07
29 Eaton Avenue
Bryanston 2021
PO Box 782916
Sandton 2145
Managing Director
Paul Presbury
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
Epping Industria 7475
Managing Director
Greg Smith
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 Tipper(1)
(Chairman)
Angus Band(1)(Resigned 2 November 2012)
James Hersov(2)
Kim Macilwaine(5)(Resigned 4 December 2012)
Adriaan Nühn(1,4)
Mike Bosman(2)
Andisiwe Kawa(1)
Abe Thebyane(1)
Neo Dongwana(2,3)
Barry Smith(3)
(1) Member of the Remuneration, Nomination and Appointments Committee
(2) Member of the Audit and Risk 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: 09/09/2013 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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