AVI LIMITED - Unaudited interim results for the six months ended 31 December 2017

Release Date: 12/03/2018 07:05
Code(s): AVI
 
Wrap Text
Unaudited interim results for the six months ended 31 December 2017

AVI Limited
ISIN: ZAE000049433
Share code: AVI 
Registration number: 1944/017201/06
("AVI" or "the Group" or "the Company")

UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2017 

KEY FEATURES

- Sound profit growth in a challenging demand environment                           
- Well managed balance of value versus volume across key categories                 
- Revenue up 2,3% to R7,30 billion                                                  
- Gross profit margin recovery in line with easing of Rand driven cost pressures    
- Operating profit up 8,7% to R1,53 billion                                   
- Cash from operations up 12,1% to R1,87 billion                              
- Capital expenditure of R193,2 million to grow and sustain our businesses    
- Return on capital employed of 28,5%                                         
- Headline earnings per share up 7,5% to 325,6 cents                          
- Interim dividend up 8,0% to 175 cents per share               

GROUP OVERVIEW
AVI sustained profit growth in a challenging environment characterised by low economic growth and constrained 
consumer spending. 

Group revenue for the semester increased by 2,3%, from R7,13 billion to R7,30 billion. It was encouraging to see
volume growth again in the Spitz business, with customers responding positively to stable selling prices, however sales
volumes declined in some key food and beverage categories following several years of above inflation price increases to
offset severe cost pressures from a weakening Rand and higher raw material prices. These pressures abated considerably 
in the semester, and consequently there were few selling price increases, with most of the price inflation reflecting
increases implemented in the last financial year. The continued strength of the Rand supports stable selling prices 
into the next financial year, which should result in improved demand for our brands. Less pressure on unit cost of 
sales allowed some recovery of accumulated cost pressures and the gross profit margin improved from 43,8% to 45,0%. 
In addition, selling and administrative costs were well controlled and included savings from restructuring 
initiatives during the previous financial year. Operating profit increased 8,7% from R1,41 billion to 
R1,53 billion and the operating profit margin improved from 19,7% to 21,0%.

The overall performance from Entyce and Snackworks was sound, with good growth in operating profit despite pressure 
on sales volumes in the biscuit, tea and coffee categories. I&J benefited from the non-recurrence of the unprotected
strike at its fishing operations in August 2016, which resulted in an increase in operating profit notwithstanding 
the impact of the stronger Rand on export revenue. Indigo Brands performed well in the domestic market to offset 
pressure in several key export markets and match a strong first half in the prior financial year. Spitz had a 
pleasing first half supported by stable selling prices in line with the stronger Rand, which resulted in sales 
volume growth and an increase in the gross profit margin. Green Cross had a poor semester, failing to achieve 
sales and profitability targets.

Headline earnings rose 8,3%, from R0,98 billion to R1,06 billion, with the growth in operating profit and lower
finance costs partially offset by a decline in earnings from I&J's Australian joint venture. Headline earnings 
per share increased 7,5% from 302,9 cents to 325,6 cents with a 0,8% increase in the weighted average number of 
shares in issue due to the vesting of employee share options, including the AVI Black Staff Empowerment Scheme.

Cash generated by operations, before working capital changes, increased 12,1% to R1,87 billion. Working capital rose
R310,2 million, mostly due to an increase in debtors payments deferred to the first business day in January. Capital 
expenditure of R193,2 million, which included capacity and efficiency projects in the manufacturing operations 
as well as new and refurbished stores in the retail businesses, was lower than last year due mainly to different 
timing of spend, with the full year forecast in line  with last year. Other material cash outflows during the period 
were dividends of R795,4 million and taxation of R330,0 million. Net debt at the end of December 2017 was 
R1,21 billion compared to R1,49 billion at the end of December 2016.

DIVIDEND 
An interim dividend of 175 cents per share has been declared, an increase of 8,0% on last year's 
interim dividend. 

SEGMENTAL REVIEW
Six months ended 31 December
                                    Segmental revenue                  Segmental operating profit                             
                               2017         2016           %         2017         2016           %    
                                 Rm           Rm      change           Rm           Rm      change    
Food & Beverage brands      5 413,6      5 326,2         1,6      1 054,9        968,8         8,9    
Entyce Beverages            2 039,0      1 987,8         2,6        424,3        389,0         9,1    
Snackworks                  2 176,5      2 195,1        (0,8)       452,0        412,4         9,6    
I&J                         1 198,1      1 143,3         4,8        178,6        167,4         6,7    
Fashion brands              1 886,8      1 808,4         4,3        482,7        449,7         7,3    
Personal Care                 631,4        620,9         1,7        140,3        140,1         0,1    
Footwear & Apparel          1 255,4      1 187,5         5,7        342,4        309,6        10,6    
Corporate                         -            -                     (7,4)       (10,8)               
Group                       7 300,4      7 134,6         2,3      1 530,2      1 407,7         8,7    

Entyce Beverages
Revenue increased 2,6% to R2,04 billion while operating profit increased 9,1% to R424,3 million with the 
operating profit margin at 20,8% compared to 19,6% in the prior year.

Tea revenue grew by 8,3% due mainly to selling price increases implemented in the prior financial year, offset 
by a 4,1% decrease in volumes. The premium Five Roses and Freshpak tea brands continued to perform well considering 
the significant price inflation over the last three years. Better import exchange rates ameliorated raw material 
cost pressures, and the gross profit margin improved. Together with well controlled selling and administrative 
costs, including savings from the restructuring completed in the prior financial year, this resulted in good 
growth in operating profit and an improved operating profit margin.

Coffee revenue and operating profit were lower than the first half of last year, due mainly to significant pressure 
on mixed instant volumes from sustained aggressive competitor activity. This was partially offset by growth from the 
Hug In A Mug speciality coffee range. Price points for our mixed instant coffee brands were reduced late in the semester 
to improve demand going into the second half of the year. Overall coffee profit and profit margins remain healthy, and 
the stronger Rand together with lower coffee bean prices secured for the second half will provide opportunity to increase 
volumes and improve profit margins. 

Creamer performance for the semester was solid, with effective promotional activity resulting in flat sales volumes
despite aggressive competitor activity. Raw material cost pressures abated in line with better import exchange rates
achieved, resulting in a slight improvement in gross profit margin. Operating profit was in line with the first half 
of last year. 

Snackworks
Revenue of R2,18 billion was 0,8% lower than last year while operating profit rose 9,6%, from R412,4 million to 
R452,0 million. The operating profit margin increased from 18,8% to 20,8%.

Biscuits revenue decreased by 3,1% due to an 8,4% decrease in sales volumes, with constrained consumers migrating to
lower priced offerings, partially offset by higher prices attributable to increases implemented in the prior financial
year. Raw material cost pressures abated with lower wheat prices and better import exchange rates partially offset by 
high butter prices, resulting in an increase in the gross profit margin that, with the benefit of well controlled 
selling and administrative costs, produced solid operating profit growth and an increase in the operating profit margin.

Snacks revenue grew 7,1% due mainly to price increases implemented in the prior financial year and a small increase 
in sales volumes. Gross profit margin improved with better import exchange rates achieved and lower maize prices
offsetting other cost pressures. Selling and administrative costs were well controlled, contributing to strong 
growth in operating profit for the semester.

I&J
Revenue increased by 4,8% from R1,14 billion to R1,20 billion while operating profit increased from R167,4 million 
to R178,6 million. The operating profit margin increased from 14,6% to 14,9%.

Revenue growth stems from higher sales volumes and higher selling prices in domestic and export markets, partially
offset by lower Rand exchange rates achieved on export sales in line with the strengthening of the Rand. Sales volumes
increased, despite lower quota, due to the non-recurrence of the unprotected strike in August 2016.

Operating profit increased despite the stronger Rand due to non-recurrence of the unprotected strike in August 2016,
supported by sound performance from the fishing and processing operations and good cost control. 

Abalone profit declined due to the impact of the stronger Rand that reduced current period revenue and resulted in a
negative fair value adjustment to the value of live abalone on hand at the end of December.

Personal Care
Indigo's revenue from owned brands grew by 4,7% due to volume growth from gains in market share in key categories and
price increases implemented in the last financial year. Total revenue growth was lower at 1,7% due to lower growth in
Coty revenue. Export sales volumes declined with less launch activity and due to higher price points in some markets in
line with the stronger Rand. This offset operating profit growth of 4,5% in the domestic market, resulting in a slight
increase in operating profit for the semester. The operating profit margin decreased from 22,6% to 22,2%.

Footwear and Apparel 
The Footwear and Apparel category increased revenue by 5,7% to R1,26 billion while operating profit increased by 
10,6% from R309,6 million to R342,4 million. The operating profit margin increased from 26,1% to 27,3%.

The Spitz business grew revenue by 6,8% as a result of higher sales volumes, particularly in the core Carvela and
Lacoste brands, and a change in sales mix, with lower volumes sold through end of season sales. Selling prices of 
core ranges have not been increased since April 2016, resulting in improved demand in the semester and a particularly 
strong December performance. Gross profit margin improved in line with better exchange rates achieved and selling 
and administrative costs included savings from restructuring work completed last year. Consequently, operating 
profit for the semester grew by 15,2% from R290,4 million to R334,6 million, and the operating profit margin 
improved from 29,9% to 32,3%.

Green Cross operating profit declined from R18,7 million to R4,2 million primarily due to poor performance of the
Summer 2017 range which resulted in a decline in sales volumes as well as gross profit margin. Costs were well 
controlled but savings were insufficient to offset the decline in gross profit margin. Subsequent to the end of 
the semester, reporting lines for key activities in Green Cross have been changed to provide direct oversight 
from the Spitz management team and we are optimistic that this will yield material improvements in merchandise 
planning, stock turn over and retail trading densities in the next twelve months. 

Cash flow for the period was positive due mainly to reduction in stock levels and we do not foresee that Green 
Cross will require material funding through a period of recovery as cash will be generated from the reduction 
of high inventory levels and capital expenditure requirements are insignificant.

OUTLOOK
The trading environment is expected to remain difficult through the second semester and into the next financial year.
Recent political developments whilst positive are unlikely to materially change consumer spending in the short term and
the increase in the VAT rate may further dampen spending. Our expectation is that many of our categories are likely to
have low, or even negative, growth rates until there is a meaningful improvement in the economy. Notwithstanding this,
our brands remain healthy and appealing to many consumers and the exchange rates secured for the second semester are at
better levels than for the same period in the prior financial year, which will support stable selling prices and improved
demand without sacrificing profitability. We will continue to react quickly to market changes as we pursue the most
appropriate balance of price, sales volumes and profit margins for each of our brands.

We will sustain investment that underpins our manufacturing capacity, product quality and service levels. In addition
to the savings being realised from restructuring completed in the prior financial year, we will continue to review
organisational structures and fixed overhead costs to improve operational effectiveness and reduce our cost base. 
AVI International, supported by our South African manufacturing capabilities, remains focused on steadily building 
our brands' shares in export markets whilst sustaining strong profit margins.

I&J's prospects remain materially dependant on exchange rates and fishing performance. Notwithstanding the stronger
Rand, taking account of currency hedges and assuming reasonably consistent catch rates, I&J should be able to achieve
another semester of sound profit performance supported by an improved sales mix, increases in export selling prices 
and cost saving initiatives.

Projects to provide alternative water supply to the group's Cape Town operations will be commissioned in March 2018.
Provided these projects meet the planned design outputs, the impact of restricted municipal water supply on our
operations will not be significant.

The Board is confident that AVI remains well positioned to compete effectively; prudently manage fixed and variable
costs; and, recognising the challenging environment, be alert for appropriate 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

12 March 2018

CONDENSED CONSOLIDATED BALANCE SHEET
                                                                                Unaudited at             Audited       
                                                                                 31 December          at 30 June    
                                                                             2017           2016            2017    
                                                                               Rm             Rm              Rm    
Assets                                                                                                              
Non-current assets                                                                                                  
Property, plant and equipment                                             3 455,8        3 433,8         3 480,8    
Intangible assets and goodwill                                              993,3        1 143,5           994,0    
Investments                                                                 365,3          394,4           376,9    
Deferred taxation                                                            17,2           16,8            24,1    
                                                                          4 831,6        4 988,5         4 875,8    
Current assets                                                                                                      
Inventories and biological assets                                         1 869,2        1 828,5         2 068,8    
Trade and other receivables including derivatives                         2 423,4        2 132,7         2 074,9    
Cash and cash equivalents                                                   334,2          412,8           246,7    
                                                                          4 626,8        4 374,0         4 390,4    
Total assets                                                              9 458,4        9 362,5         9 266,2    
Equity and liabilities                                                                                              
Capital and reserves                                                                                                
Total equity                                                              5 129,8        4 785,8         4 851,7    
Non-current liabilities                                                                                             
Operating lease straight-line liabilities                                    13,6           15,0            12,8    
Employee benefit liabilities                                                386,6          353,2           379,7    
Deferred taxation                                                           405,9          412,1           375,6    
                                                                            806,1          780,3           768,1    
Current liabilities                                                                                                 
Current borrowings                                                        1 542,9        1 902,0         1 690,8    
Trade and other payables including derivatives                            1 897,6        1 829,1         1 925,8    
Current tax liabilities                                                      82,0           65,3            29,8    
                                                                          3 522,5        3 796,4         3 646,4    
Total equity and liabilities                                              9 458,4        9 362,5         9 266,2    
                                                                                                                    
Net debt*                                                                 1 208,7        1 489,2         1 444,1    
* Comprises current borrowings less cash and cash equivalents.          

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME                                             
                                                                     Unaudited                           Audited       
                                                                  six months ended                    year ended    
                                                                     31 December                         30 June       
                                                                2017            2016           %            2017
                                                                  Rm              Rm      change              Rm    
Revenue                                                      7 300,4         7 134,6         2,3        13 184,6    
Cost of sales                                               (4 018,4)       (4 011,0)        0,2        (7 422,4)    
Gross profit                                                 3 282,0         3 123,6         5,1         5 762,2    
Selling and administrative expenses                         (1 751,8)       (1 715,9)        2,1        (3 376,9)    
Operating profit before capital items                        1 530,2         1 407,7         8,7         2 385,3    
Interest received                                                2,4             2,1        14,3             5,1    
Finance costs                                                  (74,3)          (82,0)       (9,4)         (157,5)    
Share of equity-accounted earnings of joint ventures            25,4            42,2       (39,8)           63,2    
Capital items                                                    3,4            11,9       (71,4)         (127,5)    
Profit before taxation                                       1 487,1         1 381,9         7,6         2 168,6    
Taxation                                                      (423,6)         (393,9)        7,5          (615,4)    
Profit for the period                                        1 063,5           988,0         7,6         1 553,2    
Profit attributable to:                                                                                             
Owners of AVI                                                1 063,5           988,0         7,6         1 553,2    
Other comprehensive income, net of tax                         (59,4)          (29,6)                      (59,2)    
Items that are or may be subsequently                   
reclassified to profit or loss                                                
Foreign currency translation differences                       (29,4)          (47,0)                      (37,5)    
Cash flow hedging reserve                                      (41,7)           24,2                        (8,7)    
Taxation on items that are or may be subsequently       
reclassified to profit or loss                                  11,7            (6,8)                        2,4    
Items that will never be reclassified to profit or loss                                                             
Actuarial losses recognised                                        -               -                       (21,4)    
Taxation on items that will never be                    
reclassified to profit or loss                                     -               -                         6,0    
Total comprehensive income for the period                    1 004,1           958,4         4,8         1 494,0    
Total comprehensive income attributable to:                                                                         
Owners of AVI                                                1 004,1           958,4         4,8         1 494,0    
Depreciation and amortisation of                        
property, plant and equipment, fishing rights           
and trademarks included in operating profit                    207,5           195,7         6,0           397,4    
Earnings per share                                                                                                  
Basic earnings per share (cents)#                              326,2           305,4         6,8           479,0    
Diluted basic earnings per share (cents)##                     324,2           302,9         7,0           475,2    
Headline earnings per share (cents)#                           325,6           302,9         7,5           507,7    
Diluted headline earnings per share (cents)##                  323,6           300,4         7,7           503,6    
#  Basic earnings and headline earnings per share are calculated on a weighted average of 325 996 202 
   (31 December 2016: 323 496 762 and 30 June 2017: 324 230 182) ordinary shares in issue.                          
## Diluted basic earnings and diluted headline earnings per share are calculated on a weighted average 
   of 328 029 825 (31 December 2016: 326 188 161 and 30 June 2017: 326 828 137) ordinary shares in issue.                 

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                                                                      Unaudited                          Audited       
                                                                  six months ended                    year ended    
                                                                     31 December                         30 June      
                                                                2017            2016          %             2017    
                                                                  Rm              Rm      change              Rm    
Operating activities                                                                                                
Cash generated by operations before working                                            
capital changes                                              1 870,5         1 669,3        12,1         2 993,6    
Increase in working capital                                   (310,2)         (433,4)      (28,4)         (675,0)    
Cash generated by operations                                 1 560,3         1 235,9        26,2         2 318,6    
Interest paid                                                  (74,3)          (82,0)       (9,4)         (157,5)    
Taxation paid                                                 (330,0)         (289,2)       14,1          (546,7)    
Net cash available from operating activities                 1 156,0           864,7        33,7         1 614,4    
Investing activities                                                                                                
Interest received                                                2,4             2,0        20,0             5,1    
Property, plant and equipment acquired                        (193,2)         (284,0)      (32,0)         (545,6)    
Additions to intangible assets                                     -               -                        (2,3)    
Proceeds from disposals of property,                                                   
plant and equipment                                              3,0             4,9       (38,8)           18,0    
Movement in joint ventures and other investments                19,1            36,8       (48,1)           79,1    
Net cash used in investing activities                         (168,7)         (240,3)      (29,8)         (445,7)    
Financing activities                                                                                                
Proceeds from shareholder funding                               47,2            35,2        34,1            63,3    
Short-term funding (repaid)/raised                            (147,9)          164,3      (190,0)          (46,9)    
Dividends paid                                                (795,4)         (716,0)       11,1        (1 244,5)    
Net cash used in financing activities                         (896,1)         (516,5)       73,5        (1 228,1)    
Increase/(decrease) in cash and cash equivalents                91,2           107,9       (15,5)          (59,4)    
Cash and cash equivalents at beginning of period               246,7           309,1                       309,1    
                                                               337,9           417,0                       249,7    
Translation of cash equivalents of                                                     
foreign subsidiaries                                            (3,7)           (4,2)      (11,9)           (3,0)    
Cash and cash equivalents at end of period                     334,2           412,8                       246,7    
                                                                                       
                                                                                       
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
                                                        Share                                                         
                                                  capital and    Treasury                  Retained        Total      
                                                      premium      shares    Reserves      earnings       equity      
                                                           Rm          Rm          Rm            Rm           Rm     
Six months ended 31 December 2017                                                                                   
Balance at 1 July 2017                                  280,3      (541,9)      447,2       4 666,1      4 851,7    
Profit for the period                                       -           -           -       1 063,5      1 063,5    
Other comprehensive income                                                                                          
Foreign currency translation differences                    -           -       (29,4)            -        (29,4)    
Cash flow hedging reserve, net of tax                       -           -       (30,0)            -        (30,0)    
Total other comprehensive income                            -           -       (59,4)            -        (59,4)    
Total comprehensive income for the period                   -           -       (59,4)      1 063,5      1 004,1    
Transactions with owners, recorded                                                                     
directly in equity                                                                                     
Share-based payments                                        -           -        17,6             -         17,6    
Deferred taxation on Group share                                                                       
scheme recharge                                             -           -         4,6             -          4,6    
Dividends paid                                              -           -           -        (795,4)      (795,4)    
Own ordinary shares sold by AVI Share Trusts                -        44,5           -           2,7         47,2    
Total contributions by and                                                                             
distributions to owners                                     -        44,5        22,2        (792,7)      (726,0)    
Balance at 31 December 2017                             280,3      (497,4)      410,0       4 936,9      5 129,8    

Six months ended 31 December 2016                                                                                   
Balance at 1 July 2016                                  114,3      (435,9)      456,7       4 354,4      4 489,5    
Profit for the period                                       -           -           -         988,0        988,0    
Other comprehensive income                                                                             
Foreign currency translation differences                    -           -       (47,0)            -        (47,0)    
Cash flow hedging reserve, net of tax                       -           -        17,4             -         17,4    
Total other comprehensive income                            -           -       (29,6)            -        (29,6)    
Total comprehensive income for the period                   -           -       (29,6)        988,0        958,4    
Transactions with owners, recorded                                                                     
directly in equity                                                                                     
Share-based payments                                        -           -        12,1             -         12,1    
Deferred taxation on Group share                                                                       
scheme recharge                                             -           -         6,6             -          6,6    
Dividends paid                                              -           -           -        (716,0)      (716,0)    
Issue of ordinary shares to AVI Share Trusts            166,0      (166,0)          -             -            -    
Own ordinary shares sold by AVI Share Trusts                -        35,7           -          (0,5)        35,2    
Total contributions by and                                                                             
distributions to owners                                 166,0      (130,3)       18,7        (716,5)      (662,1)    
Balance at 31 December 2016                             280,3      (566,2)      445,8       4 625,9      4 785,8    

Year ended 30 June 2017                                                                                             
Balance at 1 July 2016                                  114,3      (435,9)      456,7       4 354,4      4 489,5    
Profit for the year                                         -           -           -       1 553,2      1 553,2    
Other comprehensive income                                                                                          
Foreign currency translation differences                    -           -       (37,5)            -        (37,5)    
Actuarial losses recognised, net of tax                     -           -       (15,4)            -        (15,4)    
Cash flow hedging reserve, net of tax                       -           -        (6,3)            -         (6,3)    
Total other comprehensive income                            -           -       (59,2)            -        (59,2)    
Total comprehensive income for the period                   -           -       (59,2)      1 553,2      1 494,0    
Transactions with owners, recorded                                                                     
directly in equity                                                                                     
Share-based payments                                        -           -        28,0             -         28,0    
Deferred taxation on Group share                                                                       
scheme recharge                                             -           -        21,4             -         21,4    
Dividends paid                                              -           -           -      (1 244,5)    (1 244,5)    
Issue of ordinary shares to AVI Share Trusts            166,0      (166,0)          -             -            -    
Own ordinary shares sold by AVI Share Trusts                -        60,0           -           3,3         63,3    
Transfer between reserves                                   -           -         0,3          (0,3)           -    
Total contributions by and                                                                             
distributions to owners                                 166,0      (106,0)       49,7      (1 241,5)    (1 131,8)    
Balance at 30 June 2017                                 280,3      (541,9)      447,2       4 666,1      4 851,7    
                                                                           

SUPPLEMENTARY NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the six months ended 31 December 2017                     
AVI Limited ("AVI" or "the Company") is a South African registered company. These condensed consolidated interim 
financial statements 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 condensed consolidated interim financial statements have been prepared in accordance with the recognition and 
   measurement criteria of International Financial Reporting Standards, the presentation and disclosure requirements 
   of IAS 34 - Interim Financial Reporting, the SAICA Financial Reporting Guides as issued by the Accounting Practices 
   Committee, the Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council, the 
   Listings Requirements of the JSE Limited (the "JSE") and the Companies Act of South Africa. These condensed 
   consolidated interim financial statements have not been reviewed or audited by the 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, biological assets and liabilities for 
   cash settled share-based payment arrangements, which are measured at fair value.                 

   The accounting policies used in the preparation of these interim financial statements are in terms of International 
   Financial Reporting Standards and are consistent with those applied in preparing the interim financial statements 
   for the six months ended 31 December 2016 and the annual financial statements for the year ended 30 June 2017.    

   The Group has adopted the following new accounting standards, including any consequential amendments to other 
   standards, in the preparation of these interim results, all of which became effective for the Group from 1 July 2017:  
   
   Amendments to IAS 7 (Disclosure Initiative) 
   The amendments to IAS 7 provide for disclosures that enable users of financial statements to evaluate changes in 
   liabilities arising from financing activities, including both changes arising from cash flow and non-cash changes. 
   This includes providing a reconciliation between the opening and closing balances for liabilities arising from 
   financing activities.   
   
   Annual improvements to IFRSs: 2014 - 2016 (Amendments to IFRS 12 Disclosure of Interests in Other Entities)  
   The new cycle of improvements provides clarity that the IFRS 12 disclosure requirements for interests in other 
   entities also apply to interests that are classified as held for sale or distribution.  
   
   The new and revised standards described have been adopted in accordance with IAS 8 - Accounting Policies, Changes 
   in Accounting Estimates and Errors as well as the specific requirements of each individual standard. They have had 
   no impact on the condensed interim results disclosure.  
   
   The remaining standards, amendments and interpretations, which became effective in the interim period ended 
   31 December 2017 were assessed for applicability to the Group and management concluded that they were not 
   applicable to the business of the Group and consequently have no impact. 
   
   New standards and interpretations in issue not yet effective  
   A number of new standards, amendments to standards and interpretations are not yet effective for the six months 
   ended 31 December 2017. These include the following key standards that are applicable to the business of the Group.                        

                                                           Effective date           
                                                                  periods          
                                                                beginning           Effective     
   Standard                                                   on or after      date for Group    
   IFRS 15      Revenue from contracts with customers      1 January 2018        30 June 2019    
   IFRS 9       Financial Instruments                      1 January 2018        30 June 2019    
   IFRS 16      Leases                                     1 January 2019        30 June 2020    
   The Group is currently performing a detailed assessment of the impact of the changes and related disclosures 
   required by the above standards.                                                                                        

3. Segmental results                                                                                            
                                                                  Unaudited                          Audited       
                                                              six months ended                    year ended    
                                                                 31 December                         30 June       
                                                             2017           2016           %            2017 
                                                               Rm             Rm      change              Rm      
   Segmental revenue                                                                                            
   Food & Beverage brands                                 5 413,6        5 326,2         1,6        10 076,0    
   Entyce Beverages                                       2 039,0        1 987,8         2,6         3 757,1    
   Snackworks                                             2 176,5        2 195,1        (0,8)        3 956,2    
   I&J                                                    1 198,1        1 143,3         4,8         2 362,7    
   Fashion brands                                         1 886,8        1 808,4         4,3         3 108,6    
   Personal Care                                            631,4          620,9         1,7         1 194,5    
   Footwear & Apparel                                     1 255,4        1 187,5         5,7         1 914,1    
   Corporate and consolidation                                  -              -                           -    
   Group                                                  7 300,4        7 134,6         2,3        13 184,6    
   Segmental operating profit before capital items                                                              
   Food & Beverage brands                                 1 054,9          968,8         8,9         1 790,6    
   Entyce Beverages                                         424,3          389,0         9,1           735,1    
   Snackworks                                               452,0          412,4         9,6           666,4    
   I&J                                                      178,6          167,4         6,7           389,1    
   Fashion brands                                           482,7          449,7         7,3           607,5    
   Personal Care                                            140,3          140,1         0,1           241,5    
   Footwear & Apparel                                       342,4          309,6        10,6           366,0    
   Corporate and consolidation                               (7,4)         (10,8)       31,5           (12,8)    
   Group                                                  1 530,2        1 407,7         8,7         2 385,3    
                                                                                                                        
4. Determination of headline earnings                                                                                        
                                                                 Unaudited                           Audited  
                                                              six months ended                    year ended
                                                                 31 December                         30 June
                                                             2017           2016           %            2017   
                                                               Rm             Rm      change              Rm   
                                                         
   Profit for the year attributable to owners of AVI      1 063,5          988,0         7,6         1 553,2    
   Total capital items after taxation                         2,1            8,2                       (92,8)    
   Net gain / (loss) on disposal of property,                                        
   plant and equipment                                        3,4           (3,2)                        9,7    
   Impairment of property, plant and equipment                  -              -                        (2,3)    
   Impairment of Green Cross trademark*                         -              -                      (150,0)    
   Joint venture capital profit                                 -           15,1                        15,1    
   Taxation attributable to capital items                    (1,3)          (3,7)                       34,7    
   Headline earnings                                      1 061,4          979,8         8,3         1 646,0    
   Headline earnings per ordinary share (cents)             325,6          302,9         7,5           507,7    
   Diluted headline earnings per ordinary share (cents)     323,6          300,4         7,7           503,6    
                                                    
                                                           Number         Number           %          Number     
                                                        of shares      of shares      change       of shares    
   Weighted average number of ordinary shares         325 996 202    323 496 762         0,8     324 230 182    
   Weighted average diluted number of                                                          
   ordinary shares                                    328 029 825    326 188 161         0,6     326 828 137    
   * The Green Cross trademark of R399,7 million was recognised on acquisition of the business on 1 March 2012. 
     As part of the annual review for the year ended 30 June 2017 of the carrying amounts of trademarks with 
     indefinite useful lives, an impairment of R150 million was raised against the trademark in recognition 
     of the longer period required to grow the business to AVI's target profitability in the current 
     constrained environment.                                                                           

5. Commitments                                                                                               
                                                                              Unaudited              Audited    
                                                                           six months ended       year ended    
                                                                              31 December            30 June    
                                                                           2017         2016            2017    
                                                                             Rm           Rm              Rm 
   Capital expenditure commitments for                           
   property, plant and equipment                                          251,1        250,9           351,8    
   Contracted for                                                         153,5        169,1            97,6    
   Authorised but not contracted for                                       97,6         81,8           254,2    
   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.                                                

6. Fair value classification and measurement                                                    
   The Group measures derivative foreign exchange contracts, fuel swaps and biological assets at fair value. 
   The fair value of foreign exchange contracts and fuel swaps is determined based on inputs as described in 
   Level 2 of the fair value hierarchy being quotes from financial institutions. Similar contracts are traded 
   in an active market and the quotes reflect the actual transactions on similar instruments. The carrying 
   values of all other financial assets or liabilities approximate their fair values based on the nature or 
   maturity period of the financial instrument.                                                

   Biological assets comprise abalone which is farmed by I&J. These assets are disclosed as Level 3 financial 
   instruments with their fair value determined using a combination of the market comparison and cost technique 
   as prescribed by IAS 41.                                                

   There were no transfers between Levels 1, 2 or 3 of the fair value hierarchy during the six months ended 
   31 December 2017.                                                

7. Post-reporting date events                                                                                       
   No significant events that meet the requirements of IAS 10 have occurred since the reporting date.     

8. Dividend declaration                                                                                             
   Notice is hereby given that a gross interim ordinary dividend No 89 of 175 cents per share for the six months
   ended 31 December 2017 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 20%. Consequently 
   a net interim dividend of 140 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. AVI's issued share capital at the declaration date is 351 673 245 
   rdinary 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                  Tuesday, 17 April 2018
   First trading day ex dividend on the JSE                 Wednesday, 18 April 2018
   Record date                                                 Friday, 20 April 2018
   Payment date                                                Monday, 23 April 2018       

   In accordance with the requirements of Strate Limited, no share certificates may be dematerialised or 
   rematerialised between Wednesday, 18 April 2018 and Friday, 20 April 2018, 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, 23 April 2018.                            

9. Preparation of financial statements
   These condensed consolidated interim financial statements have been prepared under the supervision of 
   Owen Cressey CA(SA), the AVI Group Chief Financial Officer.                                                

   12 March 2018
      
ADMINISTRATION AND PRINCIPAL SUBSIDIARIES

ADMINISTRATION                                                                       
 
Company registration
AVI Limited ("AVI")
Reg no: 1944/017201/06
Share code: AVI
ISIN: ZAE000049433

Company secretary
Sureya Scheepers

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
Ernst & Young Inc.
Appointed 30 January 2018

Sponsor
The Standard Bank of South Africa Limited

Commercial bankers
Standard Bank
FirstRand Bank

Transfer secretaries
Computershare Investor Services Proprietary Limited
Business address
Rosebank Towers
15 Biermann Avenue
Rosebank
Johannesburg 2196

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 and Snackworks)

30 Sloane Street
Bryanston 2021

PO Box 5159
Rivonia 2128

Managing director
Gaynor Poretti
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 7925

PO Box 1628
Cape Town 8000

Managing director
Jonty Jankovich
Telephone: +27 (0)21 440 7800
Telefax: +27 (0)21 440 7270

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

Managing director
John Knox
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

Acting managing director
Simon Crutchley 
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    
Business Development Director

Independent non-executive

Gavin Tipper 1
(Chairman)
James Hersov 2
Adriaan Nuhn 1,4
Mike Bosman 2
Andisiwe Kawa 1,5
Abe Thebyane 1
Neo Dongwana 2,3

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 Resigned 28 February 2018

For more information, please visit our website: www.avi.co.za
Date: 12/03/2018 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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