Wrap Text
Results for the year ended 30 June 2014
AVI Limited
Share code: AVI
ISIN: ZAE000049433
Registration number: 1944/017201/06
(“AVI” or “the Group” or “the Company”)
Results for the year ended 30 June 2014
Key features
Revenue from continuing operations up 11,4% to R10,27 billion
Operating profit from continuing operations up 12% to R1,71 billion
Headline earnings per share from continuing operations up 12,2% to 384 cents
Sound group performance notwithstanding pressure on consumers and rising input costs
R532 million investment in capacity and efficiency
Capital profit of R150 million following revision of Coty licence agreement
Total dividend up 15% to 300 cents per share - final dividend of 180 cents
Group overview
AVI’s results for the twelve months ended 30 June 2014 reflect a sound overall performance in a
period of increasing pressure on consumer spending and rising input costs stemming largely from
the weaker Rand.
Revenue from continuing operations rose by 11,4%, from R9,22 billion to R10,27 billion with
selling price increases across the portfolio and volume growth in most of our categories. Gross
profit rose by 7,8% to R4,43 billion with the consolidated gross profit margin declining from
44,6% to 43,1% due mainly to input cost pressure from the weaker Rand and the change in Indigo’s
trading model with Coty which reduced the gross profit margin, but positively impacted operating
profit. Operating profit increased by 12,2%, from R1,53 billion to R1,71 billion with volume
leverage supported by good containment of selling and administrative expenses across the Group.
The operating profit margin increased from 16,6% to 16,7%.
Snackworks delivered an excellent result with strong volume growth in Biscuits and sustained
margin improvement in Snacks. I&J benefited from the weaker Rand as well as improved fishing
and processing to deliver an improved result notwithstanding unusually bad weather in the first
semester, which adversely impacted the fishing performance of the wet vessel fleet. Entyce had
strong volume growth in Tea, Coffee and Creamer in the second semester which underpinned a good
full year result.
At Indigo, the Coty profit contribution was preserved in the new relationship, while owned
brands performed well in body sprays and colour cosmetics. Margins in the footwear and apparel
businesses were impacted by the weaker Rand and increasing pressure on consumer spending, with
some amelioration as a result of space growth in Kurt Geiger and Spitz.
Headline earnings from continuing operations rose by 14,9%, from R1,05 billion to R1,20 billion
due to a lower effective tax rate, higher earnings from I&J’s joint venture with Simplot in
Australia and lower net finance costs. Headline earnings per share from continuing operations
increased 12,4% from 341,2 cents to 383,6 cents with a 2,2% increase in the weighted average
number of shares in issue due to the vesting of employee share options, particularly in the
AVI Black Staff Empowerment Scheme.
Indigo’s long relationship with Coty as a licensee was changed to a full service agency agreement
with effect from November 2013, resulting in a capital receipt of R150,0 million and a reduction
in Indigo’s working capital. The overall profit contribution from the Coty business was preserved.
Cash generated by operations increased 28,6% to R2,00 billion after a net working capital increase
of R101,1 million. The working capital increase reflects revenue growth and higher input costs,
offset by a reduction in stock and debtors attributable to the Coty business. Capital expenditure
of R531,9 million includes payments of R107,7 million for I&J’s vessels on order, as well as
ongoing investment in capacity and efficiency across the Group. An amount of R150,0 million was
received from Coty on revision of their commercial relationship with Indigo. Other material cash
out-flows during the period were dividends of R910,2 million and taxation of R465,1 million. Net
debt at the end of June 2014 was R365,2 million compared to R697,2 million at the end of
June 2013.
DIVIDEND
The dividend pay-out ratio has been maintained at the level of 1,25 times covered by diluted
headline earnings from continuing operations that was implemented with last year’s final dividend.
Accordingly, a final dividend of 180 cents per share has been declared, bringing the
total dividend for the year to 300 cents, an increase of 15,4% on last year’s
normal dividend.
Segmental review - continuing operations
Year ended 30 June
Segmental revenue Segmental operating profit
2014 2013 % 2014 2013 %
Rm Rm change Rm Rm change
Food & beverage brands 7 598,4 6 688,4 13,6 1 161,5 951,5 22,1
Entyce beverages 2 717,4 2 414,9 12,5 442,4 397,8 11,2
Snackworks 3 057,9 2 681,6 14,0 474,5 387,9 22,3
I&J 1 823,1 1 591,9 14,5 244,6 165,8 47,5
Fashion brands 2 659,3 2 518,2 5,6 560,1 576,9 (2,9)
Personal care 1 043,8 982,1 6,3 172,0 167,1 2,9
Footwear & apparel 1 615,5 1 536,1 5,2 388,1 409,8 (5,3)
Corporate 9,7 11,7 (9,1) (2,2)
Group 10 267,4 9 218,3 11,4 1 712,5 1 526,2 12,2
Entyce beverages
Revenue increased 12,5% to R2,72 billion while operating profit increased by 11,2% to R442,4
million with the operating profit margin at 16,3% compared to 16,5% in the prior period.
Tea revenue grew 15,8% due to volume growth of 6,7% and price increases necessary to offset rising
black tea and rooibos tea input costs. Coffee revenue was 6,8% up with mixed instant coffee volumes
recovering off a low base in the second half of the last financial year, and price increases to
ameliorate the impact of the weaker Rand on raw material costs. Creamer revenue rose by 18,6% due to
increased sales volumes.
Gross profit margin decreased with the weaker Rand resulting in higher raw material costs that
were partially absorbed to support volumes in a constrained environment. Selling and administrative
cost increases were well contained and profit margins in absolute terms remain at strong levels. The
increase in operating profit was largely attributable to a strong tea category performance with
smaller contributions from coffee and creamer where profit growth was constrained by sustained
pressure from competitors and limited coffee category growth.
Snackworks
Revenue of R3,06 billion was 14,0% higher than last year while operating profit rose by 22,3%,
from R387,9 million to R474,5 million. The operating profit margin increased from 14,5% to 15,5%.
Biscuits revenue grew 15,0% with a 9,4% increase in sales volumes and higher selling prices.
Volumes benefited from strong category growth as well as increased market share. Snacks revenue
increased 11,0% with sustained higher pricing in the category supported by volume growth of 3,7%.
Gross profit margin was slightly below last year due to stronger volume growth of the more
affordable biscuit products, however leverage from higher volumes resulted in further improvement
in the operating profit margin.
I&J
Revenue increased by 14,5% from R1,59 billion to R1,82 billion while operating profit increased
from R165,8 million to R244,6 million. The operating profit margin increased from 10,4% to 13,4%.
Revenue growth largely reflects the benefit of the weaker Rand on export sales, supported by
limited increases in selling prices and a 1,5% increase in sales volumes. Notwithstanding the
adverse impact of unusually bad weather on wet fleet catch rates in the first semester, fishing
fleet availability and freezer vessel catch rates improved, resulting in an increase in overall
tons caught.
Fishing and processing cost efficiency improved over last year, despite the adverse
impact of higher fuel prices due to the weaker Rand. Selling and administrative expenses were
well managed but increased ahead of inflation as the prior financial year benefited from the
once-off inclusion of a pension fund surplus of R24,7 million.
Fashion brands (Personal care, Footwear and apparel)
Revenue rose by 5,6% to R2,66 billion while operating profit decreased 2,9% to R560,1 million.
The operating profit margin decreased from 22,9% to 21,1%.
In the Personal care category, Indigo’s revenue grew by 6,3% to R1,04 billion while operating
profit increased by 2,9% to R172,0 million. The operating profit margin for the period decreased
from 17,0% to 16,5%. Revenue growth reflects volume growth and price increases on owned brands
offset by a reduction in Coty related revenue following the commencement of new trading terms
with effect from November 2013. Revenue growth excluding Coty, on a like-for-like basis, was 7,7%.
Body spray volumes recovered notwithstanding the competitive environment and Yardley colour cosmetics
also performed well.
Gross profit margin came under pressure from the weaker Rand however this was largely offset by
well managed selling and administrative expenses.
In the Footwear and apparel category, revenue increased by 5,2% to R1,62 billion while operating
profit decreased by 5,3% from R409,8 million to R388,1 million. The decrease is due to gross
margin pressure from the weaker Rand and lower footwear sales volumes. The operating profit margin
decreased from 26,7% to 24,0%.
In the Spitz business revenue grew 6,5% as a result of higher selling prices and increased trading
space offset by lower footwear demand with consumer spending under pressure. Kurt Geiger clothing
revenue increased by 21,1% due to maturing revenue from stores opened last year and new stores
opened in the current period. Footwear gross margins were materially impacted by the weaker Rand,
with higher costs absorbed in key product ranges to support sales volumes. This resulted in a
decline in gross profit margin from the high base built on an extended period of Rand stability.
Footwear sales volumes decreased by 5,8% due to reduced consumer spending. Operating profit
decreased from R326,4 million to R322,6 million and operating profit margin declined from
27,9% to 25,9%.
In Green Cross the retail stores performed soundly, achieving revenue growth in a constrained
consumer environment, and the first new design store opened in June 2014. Wholesale volumes
decreased due to lower demand, increased competition and non-recurrence of bulk orders
recorded in the prior year. Selling and administrative expenses increased at a rate above
inflation with investment in people to support medium-term growth targets.Operating profit
decreased from R80,0 million to R58,8 million and operating profit margin decreased from 24,4%
to 18,0%.
OUTLOOK
We expect the current constrained consumer demand environment to persist and possibly worsen
given rising interest rates and a pull-back in unsecured lending. The pressure on profit margins
from the weaker Rand will be ameliorated by selling price increases taken across the Group during
the fourth quarter of the last financial year, however any further Rand weakness will increase
margin pressure.
At I&J, catch rates were reasonable in the second semester and should these catch rates continue,
the increased volumes, together with the benefit of foreign currency exchange rates already
secured, will support a strong performance in the year ahead.
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. Indigo is
maintaining its strong body spray position and performing well in colour cosmetics. Spitz, Kurt
Geiger and Green Cross will benefit from new store openings, while the Green Cross wholesale
business will benefit from increased focus in the year ahead. Our international business is
targeting a strong year on the back of improved distribution in several export markets.
Notwithstanding expectations of a difficult trading environment we remain confident that our
unique brand portfolio can continue to deliver growth in key categories. This will be
supported by ongoing improvements in manufacturing capability and procurement activity.
Accordingly the board is confident that AVI is well positioned to weather a difficult trading
environment while continuing to pursue growth opportunities from the current brand portfolio
and remaining vigilant for brand acquisition opportunities both domestically and regionally.
The above outlook statements have not been reviewed or reported on by AVI’s auditors.
Gavin Tipper Simon Crutchley
Chairman CEO
8 September 2014
PRELIMINARY SUMMARISED GROUP BALANCE SHEET
Audited Audited
at 30 June at 30 June
2014 2013
Rm Rm
Assets
Non-current assets
Property, plant and equipment 2 317,1 2 088,2
Intangible assets and goodwill 1 146,6 1 145,6
Investments 406,8 375,1
Deferred taxation 41,8 45,4
3 912,3 3 654,3
Current assets
Inventories and biological assets 1 382,7 1 270,7
Trade and other receivables including derivatives 1 509,1 1 425,8
Cash and cash equivalents 298,5 212,4
Other assets classified as held-for-sale* - 5,6
3 190,3 2 914,5
Total assets 7 102,6 6 568,8
Equity and liabilities
Capital and reserves
Total equity 4 216,2 3 677,6
Non-current liabilities
Operating lease straight-line liabilities 16,2 16,1
Employee benefits 348,5 347,9
Deferred taxation 269,8 240,3
634,5 604,3
Current liabilities
Current borrowings 647,5 893,5
Trade and other payables including derivatives 1 599,8 1 375,7
Current tax liability 4,6 17,5
Other liabilities classified as held-for-sale - 0,2
2 251,9 2 286,9
Total equity and liabilities 7 102,6 6 568,8
Net debt** 365,2 697,2
* Other assets held-for-sale comprise property held for disposal.
** Comprises 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
2014 2013 %
Rm Rm change
Continuing operations
Revenue 10 267,4 9 218,3 11,4
Cost of sales 5 839,6 5 110,5 14,3
Gross profit 4 427,8 4 107,8 7,8
Selling and administrative expenses 2 715,3 2 581,6 5,2
Operating profit before capital items 1 712,5 1 526,2 12,2
Income from investments 7,6 10,4 (26,9)
Finance costs (56,0) (63,1) (11,3)
Share of equity accounted earnings of joint ventures 28,5 23,9 19,2
Capital items 138,0 (4,6)
Profit before taxation 1 830,6 1 492,8 22,6
Taxation 514,9 448,6 14,8
Profit from continuing operations 1 315,7 1 044,2 26,0
Discontinued operation*
Profit from discontinued operation - 41,6 (100,0)
Profit for the year 1 315,7 1 085,8 21,2
Profit attributable to:
Owners of AVI 1 315,7 1 085,7 21,2
Non-controlling interests - 0,1 (100,0)
1 315,7 1 085,8 21,2
Other comprehensive income net of tax 17,5 53,5 (67,3)
Items that are or may be subsequently reclassified
to profit or loss
Foreign currency translation differences 41,3 48,5
Cash flow hedging reserve (31,3) 0,7
Taxation on items that are or may be subsequently
reclassified to profit or loss 8,8 (0,3)
Items that will never be reclassified to profit or loss
Actuarial (loss)/gain recognised (1,8) 6,4
Taxation on items that will never be reclassified
to profit or loss 0,5 (1,8)
Total comprehensive income for the year 1 333,2 1 139,3 17,0
Total comprehensive income attributable to:
Owners of AVI 1 333,2 1 139,2 17,0
Non-controlling interests - 0,1 (100,0)
1 333,2 1 139,3 17,0
Depreciation and amortisation of property, plant and equipment,
fishing rights and trademarks included in operating profit
from continuing operations 286,1 259,0 10,5
* The discontinued operation comprised the fresh fruit juice
manufacturing business of Real Juice which was disposed of
with effect from 1 October 2012.
Earnings per share
Basic earnings per share from continuing operations (cents)# 419,3 340,1 23,3
Diluted earnings per share from continuing operations (cents)## 409,3 325,5 25,8
Basic earnings per share (cents)# 419,3 353,6 18,6
Diluted earnings per share (cents)## 409,3 338,4 21,0
Headline earnings per share from continuing operations (cents)# 383,6 341,2 12,4
Diluted headline earnings per share from continuing
operations (cents)## 374,5 326,5 14,7
# Basic earnings and headline earnings per share are calculated on a weighted average of 313 804 047
(30 June 2013: 306 993 534) ordinary shares in issue.
## Diluted earnings and headline earnings per share are calculated on a weighted average of 321 421 910
(30 June 2013: 320 859 312) ordinary shares in issue.
PRELIMINARY SUMMARISED GROUP STATEMENT OF CASH FLOWS
Audited Audited
Year ended Year ended
30 June 30 June
2014 2013 %
Rm Rm change
Continuing operations
Operating activities
Cash generated by operations before working capital changes 2 102,8 1 750,6 20,1
Increase in working capital (101,1) (194,1) (47,9)
Cash generated by operations 2 001,7 1 556,5 28,6
Interest paid (56,0) (63,1) (11,3)
Taxation paid (465,1) (406,6) 14,4
Net cash available from operating activities 1 480,6 1 086,8 36,2
Investing activities
Interest received 7,6 10,4 (26,9)
Property, plant and equipment acquired (531,9) (566,9) (6,2)
Additions to intangible assets (4,0) -
Proceeds from disposals of property, plant and equipment 13,8 20,9 (34,0)
Payment from Coty on revision of commercial relationship 150,0 -
Acquisition of Green Cross (net of cash acquired) - (379,8) (100,0)
Movement in joint ventures and other investments 27,1 23,1 17,3
Net cash used in investing activities (337,4) (892,3) (62,2)
Financing activities
Proceeds from shareholder funding 93,9 85,9 9,3
Short-term funding (repaid)/raised (246,1) 830,9 (129,6)
Special dividend paid - (550,0) (100,0)
Ordinary dividends paid (910,2) (645,4) 41,0
Net cash used in financing activities (1 062,4) (278,6) 281,3
Discontinued operation*
Cash flows from discontinued operation - 39,3 (100,0)
Increase/(decrease) in cash and cash equivalents 80,8 (44,8) (280,4)
Cash and cash equivalents at beginning of year 212,4 242,1 (12,3)
293,2 197,3 48,6
Translation of cash equivalents of foreign subsidiaries 5,3 15,1 (64,9)
Cash and cash equivalents at end of year 298,5 212,4 40,5
* The discontinued operation comprised the fresh fruit juice manufacturing business of Real Juice which was disposed of with
effect from 1 October 2012.
Cash flows between continuing and discontinued operations are eliminated on consolidation. In the current year there are no
discontinued operations and consequently no cash flows (2013: R39,3 million) have occurred from discontinued operations to
continuing operations.
PRELIMINARY SUMMARISED GROUP STATEMENT OF CHANGES IN EQUITY
Share
capital 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 2014
Balance at 1 July 2013 29,5 (538,2) 309,0 3 877,3 3 677,6 - 3 677,6
Profit for the year 1 315,7 1 315,7 - 1 315,7
Other comprehensive income
Foreign currency translation differences 41,3 41,3 41,3
Actuarial losses recognised, net of tax (1,3) (1,3) (1,3)
Cash flow hedging reserve, net of tax (22,5) (22,5) (22,5)
Total other comprehensive income - - 17,5 - 17,5 - 17,5
Total comprehensive income for the year - - 17,5 1 315,7 1 333,2 - 1 333,2
Transactions with owners, recorded
directly in equity
Share-based payments 13,0 13,0 13,0
Group share scheme recharge 8,0 8,0 8,0
Dividends paid (910,2) (910,2) (910,2)
Own ordinary shares sold by AVI
Share Trusts 90,1 4,5 94,6 94,6
Total contributions by and
distributions to owners - 90,1 21,0 (905,7) (794,6) - (794,6)
Balance at 30 June 2014 29,5 (448,1) 347,5 4 287,3 4 216,2 - 4 216,2
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, net of tax 4,6 4,6 4,6
Cash flow hedging reserve, net of tax 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
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
SUPPLEMENTARY NOTES TO THE PRELIMINARY SUMMARISED CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2014
AVI Limited (“AVI” or the “Company”) is a South African registered company. The preliminary summarised consolidated
financial statements of the Company comprise the Company and its subsidiaries (together referred to as the “Group”)
and the Group’s interest in joint ventures.
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 2014 and have been applied consistently to the years presented
in these preliminary summarised consolidated financial statements by all Group entities.
The Group has adopted the following new accounting standards, including any consequential amendments to other
standards, with a date of initial application of 1 July 2013, in the preparation of these results:
- IAS 19 - Employee Benefits (as revised in 2011)
- IAS 28 - Investments in Associates and Joint Ventures (2011)
- Presentation of items of Other Comprehensive Income (Amendments to IAS 1)
- Amendments to IAS 36 - Recoverable amount disclosures for non-financial assets (early adoption)
- IFRS 10 - Consolidated Financial Statements
- IFRS 11 - Joint Arrangements
- IFRS 13 - Fair Value Measurement
The adoption of the above accounting standards had no impact on the Group’s results. The remaining standards,
amendments and interpretations, which became effective in the year ended 30 June 2014 were assessed for
applicability to the Group and management concluded that they were not applicable to the business of the Group
and consequently will have no impact.
3. Determination of headline earnings
Audited Audited
Year ended Year ended
30 June 30 June
2014 2013 %
Rm Rm change
Profit for the year attributable to owners of AVI 1 315,7 1 085,7 21,2
Total capital items after taxation 111,9 37,7
Net loss on disposal of property, plant and equipment (5,1) (1,2)
Net profit on disposal of assets of disposal groups held-for-sale - 0,2
Payment from Coty on revision of commercial relationship 150,0 -
Profit on disposal of Real Juice - 40,9
Impairment of assets (6,9) (3,6)
Other - 0,2
Taxation attributable to capital items (26,1) 1,2
Headline earnings 1 203,8 1 048,0 14,9
Attributable to:
Continuing operations 1 203,8 1 047,5 14,9
Discontinued operation - 0,5
1 203,8 1 048,0 14,9
Headline earnings per ordinary share (cents) 383,6 341,4 12,4
Continuing operations (cents) 383,6 341,2 12,4
Discontinued operation (cents) - 0,2
Diluted headline earnings per ordinary share (cents) 374,5 326,7 14,6
Continuing operations (cents) 374,5 326,5 14,7
Discontinued operation (cents) - 0,2
Number Number %
of shares of shares change
Weighted average number of ordinary shares 313 804 047 306 993 534 2,2
Weighted average diluted number of ordinary shares 321 421 910 320 859 312 0,2
4. Segmental results
Audited Audited
Year ended Year ended
30 June 30 June
2014 2013 %
Rm Rm change
CONTINUING OPERATIONS
Segmental revenue
Food & beverage brands 7 598,4 6 688,4 13,6
Entyce beverages 2 717,4 2 414,9 12,5
Snackworks 3 057,9 2 681,6 14,0
I&J 1 823,1 1 591,9 14,5
Fashion brands 2 659,3 2 518,2 5,6
Personal care 1 043,8 982,1 6,3
Footwear & apparel 1 615,5 1 536,1 5,2
Corporate and consolidation 9,7 11,7
Group 10 267,4 9 218,3 11,4
Segmental operating profit before capital items
Food & beverage brands 1 161,5 951,5 22,1
Entyce beverages 442,4 397,8 11,2
Snackworks 474,5 387,9 22,3
I&J 244,6 165,8 47,5
Fashion brands 560,1 576,9 (2,9)
Personal care 172,0 167,1 2,9
Footwear & apparel 388,1 409,8 (5,3)
Corporate and consolidation (9,1) (2,2)
Group 1 712,5 1 526,2 12,2
5. Discontinued operation
The disposal of the fresh fruit juice manufacturing business of Real Juice with effect from 1 October 2012 resulted
in the operation being classified as a discontinued operation in the previous financial year. The composition of the
profit and cash flows from the discontinued operation presented in the comparative period was as follows:
3 months
to
1 October
2012
Rm
Revenue 33,6
Operating profit before capital items 0,6
Income from investments 0,5
Finance costs (0,6)
Capital items 41,1
Profit before taxation 41,6
Taxation -
Profit from discontinued operation 41,6
Summarised cash flow statement
Cash flows from operating activities (18,7)
Cash flows from investing activities 0,2
Cash flows from financing activities (4,6)
Proceeds on disposal of discontinued operation 62,4
Net cash flows from discontinued operation 39,3
6. Payment from Coty on revision of commercial relationship
Effective 31 October 2013, AVI Limited and Coty Inc. agreed to a revision of their existing commercial relationship
whereby AVI ceased to be the exclusive licensee of Coty in South Africa and was appointed as the exclusive
manufacturer, importer, distributor and marketer of Coty’s value branded portfolio in South Africa and 13 other
African countries. The core rationale for the revision was:
- Coty’s desire to have direct control and ownership of its South African business; - the desire of the parties
to meaningfully expand the presence and sales of Coty’s value brand portfolio in certain African countries in
the short term; and
- the opportunity for the parties to continue to extract material synergistic benefits from the sharing of AVI’s
manufacturing and route to market infrastructure.
As compensation for the revision Coty made a once-off pre-tax payment to Indigo of R150,0 million in November 2013.
The transitional agreement in place between the parties expires on 1 December 2014. It is the intention of the
parties to conclude a final agreement for a period of no less than five years, commencing on 2 December 2014. The terms
of the transitional agreement result in the same operating profit being earned by Indigo as it would have earned had the
original licence agreement remained in place, and it is expected that the final agreement will achieve a similar result.
Following the revision Indigo no longer reports revenue and profit associated with the sale of Coty branded product but
instead recognises revenue and profit in relation to the services provided to Coty by Indigo. The impact on the individual
lines disclosed in AVI’s consolidated statement of comprehensive income for the year ended 30 June 2014 is not significant
and is not expected to be significant going forward.
The impact on Group results for the year ended 30 June 2014 is as follows:
Rm
Payment from Coty on revision of commercial relationship 150,0
Less: Capital gains taxation (28,0)
Net capital profit 122,0
7. Commitments
Audited Audited
Year ended year ended
30 June 30 June
2014 2013
Rm Rm
Capital expenditure commitments for property, plant and equipment 562,1 208,8
Contracted for 436,9 130,2
Authorised but not contracted for 125,2 78,6
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.
8. Post-balance sheet events
No events that meet the requirements of IAS 10 have occurred since the balance sheet date.
9. Dividend declaration
Notice is hereby given that a gross interim dividend No 81 of 180 cents per share for the year ended 30 June 2014 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 153 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. AVI’s issued share capital
at the declaration date is 344 938 392 ordinary shares. AVI’s 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, 10 October 2014
First trading day ex dividend on the JSE Monday, 13 October 2014
Record date Friday, 17 October 2014
Payment date Monday, 20 October 2014
In accordance with the requirements of Strate Limited, no share certificates may be dematerialised or rematerialised between
Monday, 13 October 2014 and Friday, 17 October 2014, 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 CSDP or broker credited on Monday, 20 October 2014.
10. Reports of the independent auditors
The unmodified audit reports of KPMG Inc., the independent auditors, on the annual financial statements and the preliminary
summarised financial statements contained herein for the year ended 30 June 2014, dated 5 September 2014, are available for
inspection at the registered office of the company.
11. Preparer of financial statements
These summarised financial statements have been prepared under the supervision of Owen Cressey CA(SA), the AVI Group
Chief Financial Officer.
12. Annual report
The annual report for the year ended 30 June 2014 will be posted to shareholders on or about Tuesday, 30 September 2014. The
financial statements will include the notice of the annual general meeting of shareholders to be convened on Thursday,
30 October 2014.
Administration and principal subsidiaries
Administration
Company registration
AVI Limited (“AVI”)
Reg no: 1944/017201/06
Share code: AVI
ISIN: ZAE000049433
Company Secretary
Sureya Naidoo
Business address and registered office
2 Harries Road
Illovo
Johannesburg 2196
South Africa
Postal address
PO Box 1897
Saxonwold 2132
South Africa
Telephone: +27 (0)11 502 1300
Telefax: +27 (0)11 502 1301
E-mail: info@avi.co.za
Website: www.avi.co.za
Auditors
KPMG Inc.
Sponsor
The Standard Bank of South Africa Limited
Commercial bankers
Standard Bank
FirstRand Bank
Transfer secretaries
Computershare Investor Services 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 & beverage brands
National Brands Limited
Reg no: 1948/029389/06
(incorporating Entyce beverages & Snackworks)
30 Sloane Street
Bryanston 2021
PO Box 5159
Rivonia 2128
Managing Directors
Sarah-Anne Orphanides (Entyce beverages)
Telephone: +27 (0)11 707 7100
Telefax: +27 (0)11 707 7799
Gaynor Poretti (Snackworks)
Telephone: +27 (0)11 707 7200
Telefax: +27 (0)11 707 7799
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 Brands 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
Managing Director
Robert Lunt
Telephone: +27 (0)21 507 8500
Telefax: +27 (0)21 507 8501
Footwear & apparel
A&D Spitz Proprietary Limited
Reg no: 1999/025520/07
29 Eaton Avenue
Bryanston 2021
PO Box 782916
Sandton 2145
Acting Managing Director
Simon Crutchley
Telephone: +27 (0)11 707 7300
Telefax: +27 (0)11 707 7763
Green Cross Manufacturers Proprietary Limited
Reg no: 1994/08549/07
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)
Michael Koursaris (Appointed 9 September 2013)
(Business Development Director)
Independent non-executive
Gavin Tipper1 (Chairman)
James Hersov2
Adriaan Nühn1, 4
Mike Bosman2
Andisiwe Kawa1
Abe Thebyane1
Neo Dongwana2, 3
Barry Smith3
Richard Inskip (Appointed 18 June 2014)
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
For more information, please visit our website: www.avi.co.za
Date: 08/09/2014 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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