Wrap Text
Results for the six months ended 31 December 2018
AVI LIMITED
ISIN: ZAE000049433 JSE and A2X share code: AVI
Registration number: 1944/017201/06
("AVI" or "the Group" or "the Company")
For more information, please visit our website: http://www.avi.co.za/investor/results-and-presentations/current-year
RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2018
KEY FEATURES
- Like-for-like revenue growth of 0,2%:
- Pressure on sales volumes in constrained consumer environment most notably in December
- Carefully balanced value versus volume across key categories
- Gross profit margins protected despite the difficult environment
- Selling and administrative costs well managed, up 3,1% on a like-for-like basis, including:
- Restructuring costs at Green Cross
- Unrealised loss from mark-to-market of I&J's fuel hedges
- Operating profit down 6,4% on a like-for-like basis
- Cash generated by operations up 0,9% on a like-for-like basis
- Continued investment to grow and sustain our businesses with capital expenditure of R290,4 million
- Negligible impact of new accounting standards on headline earnings
- Headline earnings per share down 6,2% to 305,5 cents
- Interim dividend cover maintained, interim dividend of 165 cents per share
AVI has adopted the following new accounting standards with effect from 1 July 2018:
- IFRS 15 - Revenue from Contracts with Customers;
- IFRS 16 - Leases;
- IFRS 9 - Financial Instruments.
While the impact at a headline earnings level is negligible for AVI, IFRS 15 and 16 have a material impact on many of
the items reported in the financial statements, rendering direct comparison to last year's results meaningless for these
lines. Additional tables and schedules have been included in this report to assist in comparing the results to those
for last year on a like-for-like basis. Where comparisons to prior year results are made on a like-for-like basis in
the commentary, this is before taking reclassifications in terms of the new revenue and lease accounting standards into
account. The illustrative F19 information presented on a like-for-like basis is the responsibility of the directors
of AVI, and does not constitute financial information fairly presented in accordance with International Financial
Reporting Standards.
GROUP OVERVIEW
Group revenue for the semester was 0,2% higher than for the same period last year on a like-for-like basis. The
trading environment remained difficult with continued pressure on consumer spending resulting in sales volume weakness
in many of our businesses, exacerbated by competitor discounting in some categories. In particular, December's sales
volumes were lower than last year particularly in Spitz, which was unable to repeat record December 2017 sales volumes.
Selling prices were increased in selected categories where there was a need to ameliorate accumulated cost pressures,
but were maintained throughout the period for the most part.
Gross profit margins were well protected reflecting generally low raw material cost inflation and good cost control,
with the consolidated gross profit margin decreasing slightly from 45,0% to 44,3% on a like-for-like basis.
Despite tight management of selling and administrative costs, which increased by 3,1% on a like-for-like basis,
like-for-like operating profit was 6,4% lower than for the first semester of the last financial year due to the impact
of lower sales volumes, provisions for the significant restructuring at Green Cross, and an unfavourable movement in the
mark-to-market adjustment on I&J's fuel hedges as a result of the low oil price at the end of the period.
The new accounting standards had a negligible impact on headline earnings. Headline earnings declined by 5,6% from
R1,06 billion to R1,00 billion with the decrease in operating profit partially offset by an increase in earnings from
I&J's Australian joint venture. Headline earnings per share decreased 6,2% from 325,6 cents to 305,5 cents with a
0,6% 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 increased by 0,9% to R1,57 billion on a like-for-like basis. Working capital rose
R57,8 million due mostly to higher stock on hand resulting from constrained sales volumes in the second quarter of
the financial year. Capital expenditure amounted to R290,4 million, reflecting continued investment across the Group
to sustain and improve our businesses. Other material cash outflows during the period were an ordinary dividend of
R855,9 million, a special dividend of R822,9 million and taxation of R344,5 million. Net debt at the end of
December 2018 was R2,51 billion compared to R1,21 billion at the end of December 2017, including R466,5 million
of lease liabilities recognised in terms of the new lease accounting standard adopted on 1 July 2018.
DIVIDEND
Cash generation remains healthy and AVI has maintained its normal interim dividend cover. Accordingly, an interim
dividend of 165 cents per share has been declared.
SEGMENTAL REVIEW
Segmental revenue and operating profit for each business are presented below on a like-for-like basis.
Six months ended 31 December
Segmental revenue Segmental operating profit
2018 2017 % 2018 2017 %
Rm Rm change Rm Rm change
Food & Beverage brands 5 548,6 5 413,6 2,5 1 042,7 1 054,9 (1,2)
Entyce Beverages 2 116,9 2 039,0 3,8 467,0 424,3 10,1
Snackworks 2 258,4 2 176,5 3,8 429,2 452,0 (5,0)
I&J 1 173,3 1 198,1 (2,1) 146,5 178,6 (18,0)
Fashion brands 1 763,8 1 886,8 (6,5) 399,2 482,7 (17,3)
Personal Care 624,5 631,4 (1,1) 128,4 140,3 (8,5)
Footwear and Apparel 1 139,3 1 255,4 (9,2) 270,8 342,4 (20,9)
Corporate - - (10,3) (7,4)
Group like-for-like 7 312,4 7 300,4 0,2 1 431,6 1 530,2 (6,4)
Impact of new accounting standards (243,8) - 24,0 -
Group as reported 7 068,6 7 300,4 (3,2) 1 455,6 1 530,2 (4,9)
Entyce Beverages
Revenue increased 3,8% to R2,12 billion while operating profit increased 10,1% to R467,0 million with the operating
profit margin at 22,1% compared to 20,8% in the prior year.
Tea revenue grew by 2,3% due mainly to selling price increases taken in the prior financial year in response to higher
rooibos and black tea prices, offset by a 3,5% decrease in volumes. The premium Five Roses and Freshpak tea brands
performed well in terms of margin contribution but saw increasing volume pressure at higher price points with some demand
moving to lower priced offerings. Gross profit margin improved with lower black tea input costs ameliorating some of the
pressure from increased rooibos raw material prices. Operating profit growth was healthy and the operating profit margin
improved.
Coffee revenue and operating profit were lower than last year, due mainly to margin pressure on mixed instant coffee
and sales volume pressure on premium coffee from sustained aggressive competitor activity. The out of home and affordable
coffee categories both achieved growth for the semester, and the overall profitability of the coffee business remains
sound.
Creamer benefited from a significant increase in demand following competitor supply issues and sales volumes were
22,5% higher than in the first half of last year. Profit margins improved due to the volume leverage and contributed to
strong operating profit growth for the semester.
Snackworks
Revenue of R2,26 billion was 3,8% higher than last year while operating profit decreased 5,0%, from R452,0 million to
R429,2 million. The operating profit margin decreased from 20,8% to 19,0%.
Biscuits revenue grew by 4,4% due to a 3,9% increase in sales volumes, however the gross profit margin decreased due
to a temporary period of poor yields in the Isando factory and commissioning write-offs in the Westmead factory where
the new chocolate lines are ramping up to normal production. Notwithstanding tightly controlled selling and administrative
costs, this resulted in a decrease in operating profit and the operating profit margin for the semester.
Snacks revenue grew 1,8% due mainly to 1,9% growth in sales volumes. Gross profit margin was slightly lower than last
year, yielding a small increase in gross profit that was insufficient to cover the increase in selling and
administrative costs, resulting in a small decrease in operating profit and the operating profit margin.
I&J
Revenue decreased by 2,1% from R1,20 billion to R1,17 billion while operating profit decreased from R178,6 million to
R146,5 million. The operating profit margin decreased from 14,9% to 12,5%.
The revenue decrease is mainly attributable to lower fish trading and by-catch sales, while core hake revenue was
slightly up on last year, despite lower quota, due to an improved sales mix and better export exchange rates achieved.
Fishing performance was inconsistent, with an initial period of good catch rates and improved size mix offset by lower
catch rates in the second quarter. Gross profit margin was in line with last year.
Selling and administrative costs excluding unrealised losses on fuel hedges were lower than last year, however the low
oil price at the end of the period resulted in an unfavourable movement in the mark-to-market adjustment on I&J's fuel
hedges that largely accounts for the decrease in operating profit.
Personal Care
Indigo's revenue decreased by 1,1% from R631,4 million to R624,5 million due mainly to volume pressure on fragranced
body sprays resulting from aggressive discounting by competitors, mostly in the first quarter of the financial year.
This was partially offset by good growth in roll-ons and body lotions and recovery in some export markets. The gross
profit margin decreased slightly due to changes in the sales mix and together with lower sales volumes resulted in
a decrease in operating profit from R140,3 million to R128,4 million. The operating profit margin decreased from
22,2% to 20,6%.
Footwear and Apparel
Revenue in the Footwear and Apparel category decreased by 9,2% to R1,14 billion while operating profit decreased by
20,9% from R342,4 million to R270,8 million. The operating profit margin decreased from 27,3% to 23,8%.
The Spitz business saw revenue decline by 7,8% due largely to an 8,2% drop in footwear sales volumes. Selling prices
of core ranges have not been increased since April 2016, however consumer demand was subdued and the business was not
able to repeat last year's record December sales performance. Gross profit margin was maintained in line with last year
and selling and administrative expenses increased by only 1,3%, however the lower volumes and consequent decline in gross
profit resulted in a 15,4% decrease in operating profit, from R334,6 million to R283,1 million. The operating profit
margin decreased from 32,3% to 29,7%.
Green Cross revenue decreased by 20,4% largely due to lower sales volumes. Sales volumes were impacted by soft demand
and widespread discounting in the mid-price comfort footwear segment, exacerbated by poor performance of the summer
range in retail doors. Fixed costs were tightly managed and decreased compared to last year, before taking restructuring
costs into account. In November Green Cross embarked on a consultation process with affected employees following an
in-principle decision to stop all manufacturing operations at its facility in Epping, Cape Town. Restructuring provisions
of approximately R15 million have been included in the first half result pending finalisation of the consultation process.
Including these costs, Green Cross recorded an operating loss of R18,8 million compared to a profit of R4,4 million last
year. Cash flow for the period was positive due mainly to a further reduction in stock levels.
OUTLOOK
The trading environment is expected to remain difficult, with constrained consumer spending. Our expectation is that
many of our categories will continue 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 majority of the
second semester's import requirements have been covered at rates that support sound levels of profitability, subject to
acceptable demand and sales volumes. There is a reasonable prospect of a stronger second semester than in the prior year
should current sales volumes be sustained and I&J's catch rates remain as per forecasts. 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 and current financial years, we will continue
to review organisational structures and fixed overhead costs to identify opportunities 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 while sustaining strong profit margins.
I&J's prospects remain materially dependent on fishing performance and exchange rates. Notwithstanding some periods of
poor catch rates in the first semester, we remain of the view that the performance of the hake resource is set to
improve over the next few years. Export exchange rates secured for the second semester are at levels that support sound
profitability and the more recent Rand weakness provides some upside potential. The hake long-term rights application
process, to allocate rights from 2021, has commenced but without much structure or detail to date, and is not expected to
impact on operations in this financial year.
The Green Cross consultation process should be completed before the end of the year allowing for more accurate
recognition of restructuring costs.
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
11 March 2019
CONDENSED CONSOLIDATED BALANCE SHEET
Unaudited at Audited
31 December at 30 June
2018* 2017 2018
Rm Rm Rm
Assets
Non-current assets
Property, plant and equipment 3 475,1 3 455,8 3 403,6
Right-of-use assets 370,1 - -
Intangible assets and goodwill 916,8 993,3 926,2
Investments 384,9 365,3 360,0
Deferred taxation 31,1 17,2 24,3
5 178,0 4 831,6 4 714,1
Current assets
Inventories and biological assets 2 183,4 1 869,2 2 165,4
Trade and other receivables including derivatives 1 949,2 2 423,4 2 442,3
Cash and cash equivalents 335,3 334,2 342,8
4 467,9 4 626,8 4 950,5
Total assets 9 645,9 9 458,4 9 664,6
Equity and liabilities
Capital and reserves
Total equity 4 439,7 5 129,8 5 146,4
Non-current liabilities
Cash-settled share-based payment liability 38,9 - 38,9
Lease liabilities 300,1 - -
Operating lease straight-line liabilities - 13,6 14,3
Employee benefit liabilities 389,4 386,6 382,3
Deferred taxation 424,5 405,9 389,2
1 152,9 806,1 824,7
Current liabilities
Current borrowings including short-term portion of lease liabilities 2 547,2 1 542,9 1 612,6
Trade and other payables including derivatives 1 444,3 1 897,6 2 031,8
Current tax liabilities 61,8 82,0 49,1
4 053,3 3 522,5 3 693,5
Total equity and liabilities 9 645,9 9 458,4 9 664,6
Movement in net debt
Opening balance 1 269,8 1 444,1 1 444,1
IFRS 16 lease liability movements 466,5 - -
Short-term funding raised/(repaid) 768,2 (147,9) (78,2)
Decrease/(increase) in cash and cash equivalents 6,2 (91,2) (95,3)
Translation of cash equivalents of foreign subsidiaries 1,3 3,7 (0,8)
Net debt** 2 512,0 1 208,7 1 269,8
* These figures include the impact of changes in accounting policies following the implementation of new
accounting standards in the current year (refer to note 9). The annexure sets out the financial statements
on a like-for-like basis.
** Comprises current borrowings plus long-term lease liabilities, less cash and cash equivalents.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Audited
six months ended year ended
31 December 30 June
2018* 2017 % 2018
Rm Rm change Rm
Revenue 7 068,6 7 300,4 (3,2) 13 437,5
Cost of sales (4 103,6) (4 018,4) 2,1 (7 498,0)
Gross profit 2 965,0 3 282,0 (9,7) 5 939,5
Selling and administrative expenses (1 509,4) (1 751,8) (13,8) (3 387,0)
Operating profit before capital items 1 455,6 1 530,2 (4,9) 2 552,5
Interest received 3,4 2,4 41,7 5,7
Finance costs (97,8) (74,3) 31,6 (132,4)
Share of equity-accounted earnings of joint ventures 37,1 25,4 46,1 56,3
Capital items (11,1) 3,4 (426,5) (136,6)
Profit before taxation 1 387,2 1 487,1 (6,7) 2 345,5
Taxation (393,0) (423,6) (7,2) (669,7)
Profit for the period 994,2 1 063,5 (6,5) 1 675,8
Profit attributable to:
Owners of AVI 994,2 1 063,5 (6,5) 1 675,8
Other comprehensive (loss)/income, net of tax (14,3) (59,4) 33,0
Items that are or may be subsequently
reclassified to profit or loss
Foreign currency translation differences (9,2) (29,4) 3,8
Cash flow hedging reserve (7,1) (41,7) 29,0
Taxation on items that are or may be
subsequently reclassified to profit or loss 2,0 11,7 (8,1)
Items that will never be reclassified to profit or loss
Actuarial gain recognised - - 11,5
Taxation on items that will never be
reclassified to profit or loss - - (3,2)
Total comprehensive income for the period 979,9 1 004,1 (2,4) 1 708,8
Total comprehensive income attributable to:
Owners of AVI 979,9 1 004,1 (2,4) 1 708,8
Depreciation and amortisation of
property, plant and equipment, right-of-use assets,
fishing rights and trademarks included
in operating profit 296,6 207,5 42,9 412,9
Earnings per share
Basic earnings per share (cents)# 303,2 326,2 (7,1) 513,1
Diluted basic earnings per share (cents)## 301,7 324,2 (6,9) 510,1
Headline earnings per share (cents)# 305,5 325,6 (6,2) 543,1
Diluted headline earnings per share (cents)## 304,1 323,6 (6,0) 540,0
# Basic earnings and headline earnings per share are calculated on a weighted average of 327 951 933
(31 December 2017: 325 996 202 and 30 June 2018: 326 624 426) ordinary shares in issue.
## Diluted basic earnings and diluted headline earnings per share are calculated on a weighted average of
329 528 005 (31 December 2017: 328 029 825 and 30 June 2018: 328 520 186) ordinary shares in issue.
* These figures include the impact of changes in accounting policies following the implementation of new
accounting standards in the current year (refer to note 9). The annexure sets out the financial statements
on a like-for-like basis.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Audited
six months ended year ended
31 December 30 June
2018* 2017 % 2018
Rm Rm change Rm
Operating activities
Cash generated by operations 1 677,6 1 560,3 7,5 2 691,9
Interest paid (97,8) (74,3) 31,6 (132,4)
Taxation paid (344,5) (330,0) 4,4 (620,9)
Net cash available from operating activities 1 235,3 1 156,0 6,9 1 938,6
Investing activities
Interest received 3,4 2,4 41,7 5,7
Property, plant and equipment acquired (290,4) (193,2) 50,3 (419,9)
Additions to intangible assets (3,3) - (14,6)
Proceeds from disposals of property,
plant and equipment 10,6 3,0 253,3 14,8
Contributions to Enterprise and Supplier
Development initiatives - - (8,6)
Movement in joint ventures and other investments 10,9 19,1 (42,9) 83,9
Net cash used in investing activities (268,8) (168,7) 59,3 (338,7)
Financing activities
Proceeds from shareholder funding 21,2 47,2 (55,1) 59,9
Short-term funding raised/(repaid) 768,2 (147,9) (619,4) (78,2)
Lease liabilities repaid (83,3) - -
Payment to I&J BBBEE shareholders - - (65,0)
Ordinary dividends paid (855,9) (795,4) 7,6 (1 421,3)
Special dividend paid (822,9) - -
Net cash used in financing activities (972,7) (896,1) 8,5 (1 504,6)
Decrease/(increase) in cash and cash equivalents (6,2) 91,2 (106,8) 95,3
Cash and cash equivalents at beginning of period 342,8 246,7 246,7
336,6 337,9 342,0
Translation of cash equivalents of foreign subsidiaries (1,3) (3,7) (64,9) 0,8
Cash and cash equivalents at end of period 335,3 334,2 342,8
* These figures include the impact of changes in accounting policies following the implementation of new
accounting standards in the current year (refer to note 9). The annexure sets out the financial statements
on a like-for-like basis.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
I&J
Share BBBEE
capital and Treasury Retained share- Total
premium shares Reserves earnings holders equity
Rm Rm Rm Rm Rm Rm
Six months ended 31 December 2018
Balance at 1 July 2018 280,3 (486,5) 534,1 4 925,1 (106,6) 5 146,4
Impact of changes in
accounting policies (note 9) - - - (56,9) - (56,9)
Balance at 1 July 2018 (restated) 280,3 (486,5) 534,1 4 868,2 (106,6) 5 089,5
Profit for the period - - - 994,2 - 994,2
Other comprehensive income
Foreign currency translation differences - - (9,2) - - (9,2)
Cash flow hedging reserve, net of tax - - (5,1) - - (5,1)
Total other comprehensive income - - (14,3) - - (14,3)
Total comprehensive income for the period - - (14,3) 994,2 - 979,9
Transactions with owners, recorded
directly in equity
Share-based payments - - 18,9 - - 18,9
Deferred taxation on Group
share scheme recharge - - 9,0 - - 9,0
Dividends paid - - - (1 678,8) - (1 678,8)
Own ordinary shares sold by
AVI Share Trusts - 21,9 - (0,7) - 21,2
Total contributions by and
distributions to owners - 21,9 27,9 (1 679,5) - (1 629,7)
Balance at 31 December 2018 280,3 (464,6) 547,7 4 182,9 (106,6) 4 439,7
Six months ended 31 December 2017
Balance at 1 July 2017 280,3 (541,9) 449,9 4 666,1 (2,7) 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) 412,7 4 936,9 (2,7) 5 129,8
Year ended 30 June 2018
Balance at 1 July 2017 280,3 (541,9) 449,9 4 666,1 (2,7) 4 851,7
Profit for the year - - - 1 675,8 - 1 675,8
Other comprehensive income
Foreign currency translation differences - - 3,8 - - 3,8
Actuarial gain recognised, net of tax - - 8,3 - - 8,3
Cash flow hedging reserve, net of tax - - 20,9 - - 20,9
Total other comprehensive income - - 33,0 - - 33,0
Total comprehensive income for the period - - 33,0 1 675,8 - 1 708,8
Transactions with owners,
recorded directly in equity
Share-based payments - - 37,0 - - 37,0
Deferred taxation on Group
share scheme recharge - - 14,2 - - 14,2
Dividends paid - - - (1 421,3) - (1 421,3)
Own ordinary shares sold by
AVI Share Trusts - 55,4 - 4,5 - 59,9
I&J BBBEE shareholders - - - - (103,9) (103,9)
Total contributions by and
distributions to owners - 55,4 51,2 (1 416,8) (103,9) (1 414,1)
Balance at 30 June 2018 280,3 (486,5) 534,1 4 925,1 (106,6) 5 146,4
SUPPLEMENTARY NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the six months ended 31 December 2018
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.
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 2017 and the annual financial
statements for the year ended 30 June 2018 except for the changes due to the adoption of new
accounting standards per note 9.
New standards and interpretations in issue not yet effective
The standards, amendments and interpretations issued but not yet effective have been assessed for
applicability to the Group and management has concluded that they are not applicable to the business
of the Group and will therefore have no impact on future financial statements.
2. Segmental results
Segmental revenue and operating profit for the six months ended 31 December 2018 presented per the
new accounting standards implemented in the current year (refer to note 9):
Unaudited Audited
six months ended year ended
31 December 30 June
2018 2017 2018
As reported As reported % As reported
Rm Rm change Rm
Segmental revenue
Food & Beverage brands 5 345,1 5 413,6 (1,3) 10 282,5
Entyce Beverages 2 032,7 2 039,0 (0,3) 3 834,1
Snackworks 2 130,6 2 176,5 (2,1) 3 960,8
I&J 1 181,8 1 198,1 (1,4) 2 487,6
Fashion brands 1 723,5 1 886,8 (8,7) 3 155,0
Personal Care 584,2 631,4 (7,5) 1 190,6
Footwear and Apparel 1 139,3 1 255,4 (9,2) 1 964,4
Group 7 068,6 7 300,4 (3,2) 13 437,5
Segmental operating profit before capital items
Food & Beverage brands 1 051,0 1 054,9 (0,4) 1 922,6
Entyce Beverages 468,1 424,3 10,3 792,6
Snackworks 430,1 452,0 (4,8) 705,0
I&J 152,8 178,6 (14,4) 425,0
Fashion brands 414,9 482,7 (14,0) 645,0
Personal Care 128,4 140,3 (8,5) 250,3
Footwear and Apparel 286,5 342,4 (16,3) 394,7
Corporate and consolidation (10,3) (7,4) (39,2) (15,1)
Group 1 455,6 1 530,2 (4,9) 2 552,5
Segmental revenue and operating profit for the six months ended 31 December 2018 presented per the old
basis of accounting, excluding the impact of the new accounting standards implemented in the
current year:
Unaudited Audited
six months ended year ended
31 December 30 June
2018 2017 2018
Like-for-like As reported % As reported
Rm Rm change Rm
Segmental revenue
Food & Beverage brands 5 548,6 5 413,6 2,5 10 282,5
Entyce Beverages 2 116,9 2 039,0 3,8 3 834,1
Snackworks 2 258,4 2 176,5 3,8 3 960,8
I&J 1 173,3 1 198,1 (2,1) 2 487,6
Fashion brands 1 763,8 1 886,8 (6,5) 3 155,0
Personal Care 624,5 631,4 (1,1) 1 190,6
Footwear and Apparel 1 139,3 1 255,4 (9,2) 1 964,4
Group 7 312,4 7 300,4 0,2 13 437,5
Segmental operating profit before capital items
Food & Beverage brands 1 042,7 1 054,9 (1,2) 1 922,6
Entyce Beverages 467,0 424,3 10,1 792,6
Snackworks 429,2 452,0 (5,0) 705,0
I&J 146,5 178,6 (18,0) 425,0
Fashion brands 399,2 482,7 (17,3) 645,0
Personal Care 128,4 140,3 (8,5) 250,3
Footwear and Apparel 270,8 342,4 (20,9) 394,7
Corporate and consolidation (10,3) (7,4) (39,2) (15,1)
Group 1 431,6 1 530,2 (6,4) 2 552,5
3. Revenue
Following the implementation of IFRS 15 on 1 July 2018 (refer to note 9), AVI is required to disaggregate
revenue from contracts with customers ("revenue") into categories that depict how the nature, amount,
timing and uncertainty of revenue and related cash flows are affected by economic factors.
The following table sets out revenue by geographical market:
Unaudited
Six months ended 31 December 2018
Entyce Personal Footwear
Geographical market Beverages Snackworks I&J Care and Apparel Total
Rm Rm Rm Rm Rm Rm
South Africa 1 769,1 1 908,8 425,4 518,7 1 131,7 5 753,7
Other African countries 260,3 216,4 19,3 65,5 7,6 569,1
Rest of the world 3,3 5,4 737,1 - - 745,8
Total revenue 2 032,7 2 130,6 1 181,8 584,2 1 139,3 7 068,6
The majority of revenue comprises revenue from the sale of goods. Less than 2% of total revenue compromises
income arising from services, rental agreements and trademark licence agreements.
4. Determination of headline earnings
Unaudited Audited
six months ended year ended
31 December 30 June
2018* 2017 % 2018
Rm Rm change Rm
Profit for the year attributable to owners of AVI 994,2 1 063,5 (6,5) 1 675,8
Total capital items after taxation 7,8 (2,1) 98,1
Net loss/(gain) on disposal of property,
plant and equipment 0,4 (3,4) (13,4)
Impairment of property, plant and equipment 10,7 - -
Impairment of Green Cross trademark** - - 150,0
Taxation attributable to capital items (3,3) 1,3 (38,5)
Headline earnings 1 002,0 1 061,4 (5,6) 1 773,9
Headline earnings per ordinary share (cents) 305,5 325,6 (6,2) 543,1
Diluted headline earnings per ordinary share (cents) 304,1 323,6 (6,0) 540,0
Number Number % Number
of shares of shares change of shares
Weighted average number of ordinary shares 327 951 933 325 996 202 0,6 326 624 426
Weighted average diluted number of
ordinary shares 329 528 005 328 029 825 0,5 328 520 186
* These figures include the impact of changes in accounting policies following the implementation of new
accounting standards in the current year (refer to note 9).
** The Green Cross trademark was recognised on acquisition of the business on 1 March 2012. As part of the
annual review for the year ended 30 June 2018 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. Cash generated by operations
Unaudited Audited
six months ended year ended
31 December 30 June
2018* 2017 % 2018
Rm Rm change Rm
Cash generated by operations before working
capital changes 1 735,4 1 736,4 (0,1) 3 031,2
Change in working capital (57,8) (176,1) (67,2) (339,3)
Cash generated by operations 1 677,6 1 560,3 7,5 2 691,9
* These figures include the impact of changes in accounting policies following the implementation of new
accounting standards in the current year (refer to note 9).
Prior to preparing the results for the year ended 30 June 2018, adjustments for non-cash items took into
account the income statement charge for incentive provisions and earnings-linked performance bonuses, as
well as the current service cost and interest cost relating to the Group's post-retirement medical aid
obligation, without adjusting for related cash payments. This has been correctly accounted for in the
current year, however, the prior year has been restated. Accordingly, an adjustment of R134,1 million
has been processed between "Cash generated by operations before working capital changes" and "Changes in
working capital" as reported in the prior year, to more appropriately account for cash payments within
"Cash generated by operations before working capital changes". "Cash generated by operations"
remains unchanged.
6. Commitments
Unaudited Audited
six months ended year ended
31 December 30 June
2018 2017 2018
Rm Rm Rm
Capital expenditure commitments for property, plant and equipment 183,2 251,1 371,4
Contracted for 103,3 153,5 143,3
Authorised but not contracted for 79,9 97,6 228,1
It is anticipated that this expenditure will be financed by cash resources, cash generated from operating
activities and existing borrowing facilities. Other contractual commitments have been entered into in the
normal course of business.
7. 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 using a forward pricing model with
reference to quotes from financial institutions. Significant inputs into the Level 2 fair value measurement
include yield curves as well as market interest rates and foreign exchange rates. The estimated fair values
of recognised financial instruments approximate their carrying amounts based on the nature or maturity
period of the financial instruments.
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 2018.
8. Post-reporting date events
No significant events that meet the requirements of IAS 10 have occurred since the reporting date.
9. Changes in accounting policies
The Group has changed its accounting policies following the adoption of the following new accounting
standards, including any consequential amendments to other standards, in the preparation of these interim
results. The annexure to these condensed consolidated financial statements sets out the results for the
six months ended 31 December 2018 per the old basis of accounting.
IFRS 15 - Revenue from Contracts with Customers
This standard combines, enhances and replaces previous guidance on recognising revenue with a single
revenue standard that introduces a new revenue recognition model for contracts with customers.
The standard is mandatory for accounting periods beginning on or after 1 January 2018 and therefore
has been adopted by AVI for the year ended 30 June 2019. The Group has applied the standard
retrospectively and assessed the cumulative effect of initially applying the standard on 1 July 2018
to be Rnil, without any adjustment to retained earnings on this date.
The core principle of IFRS 15 is that an entity recognises revenue from contracts with customers to
depict the transfer of control of promised goods or services to customers for an amount that
reflects the consideration to which an entity expects to be entitled to in exchange for those
goods or services. The model features a contract-based five step analysis of transactions to
determine whether, how much and when revenue is recognised.
The implementation of the new standard has not impacted the measurement and timing of revenue recognition,
however, it had the following impact on the presentation of the consolidated financial statements:
(i) An amount of R278,9 million in payments to customers for the six months ended 31 December 2018
previously treated as selling and distribution costs has been reclassified as a deduction from
revenue due to clarity provided by IFRS 15 regarding "identifiable" and "separable" not provided
by IAS 18.
Related to this, an amount of R427,5 million of accruals and provisions for payments to customers as
at 31 December 2018, previously included in trade and other payables has been offset against trade
and other receivables.
(ii) An amount of R35,1 million relating to transport and insurance costs for the six months
ended 31 December 2018 previously offset against revenue has been reallocated to cost of sales
due to clarity provided by IFRS 15 regarding agent versus principal.
IFRS 9 - Financial Instruments
IFRS 9 addresses the accounting principles for the financial reporting of financial assets and financial
liabilities, including classification, measurement, impairment, derecognition and hedge accounting.
IFRS 9 replaces earlier versions of IFRS 9 and completes the IASB's project to replace IAS 39 Financial
Instruments: Recognition and Measurement.
The standard is mandatory for accounting periods beginning on or after 1 January 2018 and has therefore
been adopted by AVI for the year ended 30 June 2019. The Group has applied the standard retrospectively
as at 1 July 2018, however, with no restatement of comparative information for prior years. AVI has
elected to retain the hedge accounting requirements of IAS 39.
IFRS 9 replaces the current IAS 39 categories of financial assets with three principle classification
categories - measured at amortised cost, fair value through other comprehensive income and fair value
through profit or loss. Financial assets held by the Group have been assessed, considering contractual
cash flow characteristics and the business models for managing financial assets and it was concluded
that there is no impact on the measurement of financial assets as a result of the adoption of IFRS 9.
IFRS 9 replaces the "incurred loss" model of IAS 39 with a forward looking "expected credit loss" model
to measure impairment losses on financial assets. The majority of the Group's financial assets are
trade receivables for which IFRS 9 requires the simplified approach to be applied, measuring the
impairment loss allowance based on lifetime expected credit loss. Further to this, as a practical
expedient, AVI has applied a provision matrix assessing historical credit losses per aged bucket of
trade debtors and overlayed this with AVI's assessment of general economic conditions to estimate
expected future losses. The implementation of IFRS 9 resulted in a R4,5 million increase in the
impairment loss allowance on 1 July 2018, and a R3,2 million decrease in retained earnings after
adjusting for deferred tax of R1,3 million.
IFRS 16 - Leases
IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases
for both parties to a contract, i.e. the customer ("lessee") and the supplier ("lessor"). IFRS 16 replaces
the previous leases standard, IAS 17, and related interpretations.
The standard is mandatory for accounting periods beginning on or after 1 January 2019, however the Group
has early adopted the standard for the year ended 30 June 2019 with the date of initial application
1 July 2018. The Group has applied the standard retrospectively recognising the cumulative effect of
initially applying the standard in retained earnings at the date of initial application (modified
retrospective approach).
IFRS 16 has one model for lessees which results in leases previously classified as operating leases and
recorded off-balance sheet being capitalised on the balance sheet, requiring a lessee to recognise a
right-of-use asset and a concomitant lease liability. The standard has the most significant impact in
AVI's retail businesses which lease all their retail doors.
As prescribed by IFRS 16, lease liabilities are measured at the present value of remaining lease payments
discounted at the incremental borrowing rate at the date of initial application. AVI elected to measure
right-of-use assets on transition date at their carrying amounts as if IFRS 16 had applied since the
lease commencement dates, discounted using the incremental borrowing rate at the date of initial application.
Right-of-use assets relating to new leases are measured as the amount of initial measurement of the lease
liability plus initial direct costs.
As part of the modified retrospective transition approach, AVI has elected to apply the practical
expedient which allows a single discount rate to be applied to a portfolio of leases with reasonably
similar characteristics.
As an accounting policy election, AVI has applied the following recognition exemptions which allow for
certain lease payments to be expensed over the lease term as opposed to recognising a right-of-use asset
and related lease liability on the lease commencement date:
- Short-term leases - these are leases with a lease term of 12 months or less; and
- Leases of low value assets - these are leases where the underlying asset is of low value.
At transition date, the adoption of IFRS 16 resulted in the recognition of right-of-use assets to the
value of R367,1 million and lease liabilities of R465,0 million. This, together with the derecognition
of operating lease straight-line liabilities of R23,3 million and adjustments for deferred tax, resulted
in a R53,7 million decrease in retained earnings on transition date.
As a result of adopting IFRS 16, operating profit for the six months ended 31 December 2018 has increased
by R24,0 million due to the replacement of operating lease expenses with depreciation on right-of-use
assets. This increase is partly offset by an interest expense on lease liabilities of R20,6 million,
resulting in an after-tax gain in earnings of R2,4 million. On the statement of cash flows, lease
payments of R103,9 million, previously included in cash generated by operations, have been disclosed
under financing activities (R83,3 million relating to the principal portion of lease payments) and
interest paid (R20,6 million).
Opening retained earnings impact of change in accounting policies
The impact of the change in accounting policies on retained earnings at 1 July 2018 due to the adoption
of the new accounting standards is as follows:
Increase/
(decrease)
in retained
earnings
Rm
Adoption of IFRS 15 - Revenue from Contracts with Customers -
Adoption of IFRS 9 - Financial Instruments (3,2)
Adoption of IFRS 16 - Leases (53,7)
(56,9)
10. Dividend declaration
Notice is hereby given that a gross interim ordinary dividend No 92 of 165 cents per share
for the six months ended 31 December 2018 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 132 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 Service 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 352 665 190 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 Monday, 15 April 2019
First trading day ex dividend on the JSE Tuesday, 16 April 2019
Record date Thursday, 18 April 2019
Payment date Tuesday, 23 April 2019
In accordance with the requirements of Strate Limited, no share certificates may be dematerialised
or rematerialised between Tuesday, 16 April 2019, and Thursday, 18 April 2019, 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 Tuesday, 23 April 2019.
11. 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.
11 March 2019
ADMINISTRATION AND PRINCIPAL SUBSIDIARIES
ADMINISTRATION PRINCIPAL SUBSIDIARIES Fashion Brands
Company registration Food & Beverage Brands Personal Care
AVI Limited ("AVI") National Brands Limited Indigo Brands Proprietary Limited
Reg no: 1944/017201/06 Reg no: 1948/029389/06 Reg no: 2003/009934/07
Share code: AVI (incorporating Entyce
ISIN: ZAE000049433 Beverages and Snackworks) 16 - 20 Evans Avenue
Epping 1 7460
Company Secretary 30 Sloane Street
Sureya Scheepers Bryanston 2021 PO Box 3460
Cape Town 8000
Business address and PO Box 5159
registered office Rivonia 2128 Managing director
2 Harries Road John Knox
Illovo Managing director Telephone: +27 (0)21 507 8500
Johannesburg 2196 Gaynor Poretti Telefax: +27 (0)21 507 8501
South Africa Telephone: +27 (0)11 707 7200
Telefax: +27 (0)11 707 7799 Footwear and Apparel
Postal address A&D Spitz Proprietary Limited
PO Box 1897 I&J Reg no: 1999/025520/07
Saxonwold 2132 Irvin & Johnson Holding
South Africa Company Proprietary Limited 29 Eaton Avenue
Reg no: 2004/013127/07 Bryanston 2021
Telephone: +27 (0)11 502 1300
Telefax: +27 (0)11 502 1301 1 Davidson Street PO Box 782916
E-mail: info@avi.co.za Woodstock Sandton 2145
Website: http://www.avi.co.za Cape Town 7925
Acting managing director
Auditors PO Box 1628 Simon Crutchley
Ernst & Young Inc. Cape Town 8000 Telephone: +27 (0)11 707 7300
Telefax: +27 (0)11 707 7763
Sponsor Managing director
The Standard Bank of Jonty Jankovich Green Cross Manufacturers
South Africa Limited Telephone: +27 (0)21 440 7800 Proprietary Limited
Telefax: +27 (0)21 440 7270 Reg no: 1994/008549/07
Commercial bankers
Standard Bank 26 - 30 Benbow Avenue
Nedbank Epping Industria
7460
Transfer secretaries
Computershare Investor PO Box 396
Services Proprietary Limited Epping Industria 7475
Business address
Rosebank Towers Acting managing director
15 Biermann Avenue Simon Crutchley
Rosebank Telephone: +27 (0)21 507 9700
Johannesburg 2196 Telefax: +27 (0)21 507 9707
Postal address
PO Box 61051
Marshalltown 2107
South Africa
Telephone: +27 (0)11 370 5000
Telefax: +27 (0)11 370 5271
DIRECTORS
Executive Independent non-executive
Simon Crutchley Gavin Tipper1
(Chief Executive Officer) (Chairman)
Owen Cressey James Hersov2
(Chief Financial Officer)
Adriaan Nuhn1, 4
Michael Koursaris
(Business Development Director) Mike Bosman2
Andisiwe Kawa1, 5
Abe Thebyane1
Neo Dongwana2, 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 27 February 2018
Annexure
This annexure sets out the illustrative financial results for six months ended 31 December 2018 per the
old basis of accounting, including adjustments to the reported results for the impact of new accounting
standards implemented in the current year (refer to note 9), to allow for a like-for-like comparison to
the results reported in prior periods. This illustrative financial information is the responsibility
of the directors of AVI Limited and does not constitute financial statements fairly presented in
accordance with IFRS. The financial statements fairly presented in accordance with IFRS are included
on pages 6 to 18.
Condensed consolidated balance sheet (like-for-like)
Unaudited at Audited
31 December at 30 June
2018* 2018
As reported Adjustments** Like-for-like 2017 2018
Rm Rm Rm Rm Rm
Assets
Non-current assets
Property, plant and equipment 3 475,1 - 3 475,1 3 455,8 3 403,6
Right-of-use assets 370,1 (370,1) - - -
Intangible assets and goodwill 916,8 - 916,8 993,3 926,2
Investments 384,9 - 384,9 365,3 360,0
Deferred taxation 31,1 (8,2) 22,9 17,2 24,3
5 178,0 (378,3) 4 799,7 4 831,6 4 714,1
Current assets
Inventories and biological assets 2 183,4 - 2 183,4 1 869,2 2 165,4
Trade and other receivables
including derivatives 1 949,2 428,8 2 378,0 2 423,4 2 442,3
Cash and cash equivalents 335,3 - 335,3 334,2 342,8
4 467,9 428,8 4 896,7 4 626,8 4 950,5
Total assets 9 645,9 50,5 9 696,4 9 458,4 9 664,6
Equity and liabilities
Capital and reserves
Total equity 4 439,7 54,7 4 494,4 5 129,8 5 146,4
Non-current liabilities
Cash-settled share-based payment liability 38,9 - 38,9 - 38,9
Lease liabilities 300,1 (300,1) - - -
Operating lease straight-line liabilities - 16,0 16,0 13,6 14,3
Employee benefit liabilities 389,4 - 389,4 386,6 382,3
Deferred taxation 424,5 12,9 437,4 405,9 389,2
1 152,9 (271,2) 881,7 806,1 824,7
Current liabilities
Current borrowings including short-term
portion of lease liabilities 2 547,2 (166,4) 2 380,8 1 542,9 1 612,6
Trade and other payables
including derivatives 1 444,3 433,4 1 877,7 1 897,6 2 031,8
Current tax liabilities 61,8 - 61,8 82,0 49,1
4 053,3 267,0 4 320,3 3 522,5 3 693,5
Total equity and liabilities 9 645,9 50,5 9 696,4 9 458,4 9 664,6
Movement in net debt
Opening balance 1 269,8 - 1 269,8 1 444,1 1 444,1
IFRS 16 lease liability movements 466,5 (466,5) - - -
Short-term funding raised/(repaid) 768,2 - 768,2 (147,9) (78,2)
Decrease/(increase) in cash
and cash equivalents 6,2 - 6,2 (91,2) (95,3)
Translation of cash equivalents of
foreign subsidiaries 1,3 - 1,3 3,7 (0,8)
Net debt*** 2 512,0 (466,5) 2 045,5 1 208,7 1 269,8
* These figures include the impact of changes in accounting policies following the implementation of new accounting
standards in the current year (refer to note 9).
** Adjustments include the following:
- reclassification of accruals and provisions for payments to customers from trade and other receivables to
trade and other payables in line with the disclosure applied prior to the implementation of IFRS 15;
- reversal of the increase in impairment loss allowance recognised against trade receivables following the
implementation of IFRS 9;
- reversal of IFRS 16 right-of-use assets and concomitant lease liabilities, and reinstatement of IAS 17 operating
lease straight-line liabilities; and
- deferred tax adjustments relating to the above.
*** Comprises current borrowings plus long-term lease liabilities, less cash and cash equivalents.
This annexure sets out the illustrative financial results for six months ended 31 December 2018 per the old
basis of accounting, including adjustments to the reported results for the impact of new accounting standards
implemented in the current year (refer to note 9), to allow for a like-for-like comparison to the results
reported in prior periods. Thi sillustrative financial information is the responsibility of the directors
of AVI Limited and does not constitute financial statements fairly presented in accordance with IFRS.
The financial statements fairly presented in accordance with IFRS are included on pages 6 to 18.
Condensed consolidated statement of comprehensive income (like-for-like)
Unaudited Audited
six months ended year ended
31 December 30 June
2018* 2018 2017 2018
As reported Adjustments** Like-for-like As reported % As reported
Rm Rm Rm Rm change Rm
Revenue 7 068,6 243,8 7 312,4 7 300,4 0,2 13 437,5
Cost of sales (4 103,6) 28,6 (4 075,0) (4 018,4) 1,4 (7 498,0)
Gross profit 2 965,0 272,4 3 237,4 3 282,0 (1,4) 5 939,5
Selling and administrative expenses (1 509,4) (296,4) (1 805,8) (1 751,8) 3,1 (3 387,0)
Operating profit before capital items 1 455,6 (24,0) 1 431,6 1 530,2 (6,4) 2 552,5
Interest received 3,4 - 3,4 2,4 41,7 5,7
Finance costs (97,8) 20,6 (77,2) (74,3) 4,0 (132,4)
Share of equity-accounted
earnings of joint ventures 37,1 - 37,1 25,4 46,1 56,3
Capital items (11,1) - (11,1) 3,4 (426,5) (136,6)
Profit before taxation 1 387,2 (3,4) 1 383,8 1 487,1 (7,0) 2 345,5
Taxation (393,0) (1,0) (392,0) (423,6) (7,5) (669,7)
Profit for the period 994,2 (2,4) 991,8 1 063,5 (6,7) 1 675,8
Profit attributable to:
Owners of AVI 994,2 (2,4) 991,8 1 063,5 (6,7) 1 675,8
Other comprehensive (loss)/income, net of tax (14,3) - (14,3) (59,4) 33,0
Items that are or may be subsequently
reclassified to profit or loss
Foreign currency translation differences (9,2) - (9,2) (29,4) 3,8
Cash flow hedging reserve (7,1) - (7,1) (41,7) 29,0
Taxation on items that are or may be
subsequently reclassified to profit or loss 2,0 - 2,0 11,7 (8,1)
Items that will never be reclassified
to profit or loss
Actuarial gain recognised - - - - 11,5
Taxation on items that will never be
reclassified to profit or loss - - - - (3,2)
Total comprehensive income for the period 979,9 (2,4) 977,5 1 004,1 (2,6) 1 708,8
Total comprehensive income attributable to:
Owners of AVI 979,9 (2,4) 977,5 1 004,1 (2,6) 1 708,8
Depreciation and amortisation of property,
plant and equipment, right-of-use assets,
fishing rights and trademarks included in
operating profit 296,6 (81,8) 214,8 207,5 3,5 412,9
Headline earnings 1 002,0 (2,4) 999,6 1 061,4 (5,8) 1 773,9
Headline earnings per share (cents)# 305,5 (0,7) 304,8 325,6 (6,4) 543,1
* These figures include the impact of changes in accounting policies following the implementation of new accounting
standards in the current year (refer to note 9).
** Adjustments include the following:
- reclassification of payments to customers from revenue to selling and administrative expenses in line with the
disclosure applied prior to the implementation of IFRS 15;
- reclassification of transport and insurance costs from cost of sales to revenue in line with the disclosure
applied prior to the implementation of IFRS 15;
- reversal of IFRS 16 depreciation on right-of-use assets and finance costs on related lease liabilities, and
reinstatement of operating lease straight-line expenses per IAS 17; and
- deferred tax adjustments relating to the above.
# Headline earnings per share is calculated on a weighted average of 327 951 933 (31 December 2017: 325 996 202
and 30 June 2018: 326 624 426) ordinary shares in issue.
This annexure sets out the illustrative financial results for six months ended 31 December 2018 per the old basis
of accounting, including adjustments to the reported results for the impact of new accounting standards implemented
in the current year (refer to note 9), to allow for a like-for-like comparison to the results reported in prior
periods. This illustrative financial information is the responsibility of the directors of AVI Limited and
does not constitute financial statements fairly presented in accordance with IFRS. The financial statements
fairly presented in accordance with IFRS are included on pages 6 to 18.
Condensed consolidated statement of cash flows (like-for-like)
Unaudited Audited
six months ended year ended
31 December 30 June
2018* 2018 2017 2018
As reported Adjustments** Like-for-like As reported % As reported
Rm Rm Rm Rm change Rm
Operating activities
Cash generated by operations 1 677,6 (103,9) 1 573,7 1 560,3 0,9 2 691,9
Interest paid (97,8) 20,6 (77,2) (74,3) 3,9 (132,4)
Taxation paid (344,5) - (344,5) (330,0) 4,4 (620,9)
Net cash available from operating activities 1 235,3 (83,3) 1 152,0 1 156,0 (0,3) 1 938,6
Investing activities
Interest received 3,4 - 3,4 2,4 41,7 5,7
Property, plant and equipment acquired (290,4) - (290,4) (193,2) 50,3 (419,9)
Additions to intangible assets (3,3) - (3,3) - (14,6)
Proceeds from disposals of property,
plant and equipment 10,6 - 10,6 3,0 253,3 14,8
Contributions to Enterprise and
Supplier Development initiatives - - - - (8,6)
Movement in joint ventures and other investments 10,9 - 10,9 19,1 (42,9) 83,9
Net cash used in investing activities (268,8) - (268,8) (168,7) 59,3 (338,7)
Financing activities
Proceeds from shareholder funding 21,2 - 21,2 47,2 (55,1) 59,9
Short-term funding raised/(repaid) 768,2 - 768,2 (147,9) (619,4) (78,2)
Lease liabilities repaid (83,3) 83,3 - - -
Payment to I&J BBBEE shareholders - - - - (65,0)
Ordinary dividends paid (855,9) - (855,9) (795,4) 7,6 (1 421,3)
Special dividend paid (822,9) - (822,9) - -
Net cash used in financing activities (972,7) 83,3 (889,4) (896,1) (0,7) (1 504,6)
Decrease/(increase) in cash and cash equivalents (6,2) - (6,2) 91,2 (106,8) 95,3
Cash and cash equivalents at beginning of period 342,8 - 342,8 246,7 39,0 246,7
336,6 - 336,6 337,9 (0,4) 342,0
Translation of cash equivalents of
foreign subsidiaries (1,3) - (1,3) (3,7) (64,9) 0,8
Cash and cash equivalents at end of period 335,3 - 335,3 334,2 0,3 342,8
* These figures include the impact of changes in accounting policies following the implementation of new accounting
standards in the current year (refer to note 9).
** Adjustments include the following:
- reclassification of cash flows relating to lease payments from lease liabilities repaid and interest paid
(disclosure required by IFRS 16) to cash generated by operations as previously disclosed under IAS 17.
For more information, please visit our website: http://www.avi.co.za
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