|
|
| |
|
FINANCIAL REVIEW |
|
| |
|
| Continuing operations |
|
Revenue rose by 13,8% from R5,9 billion
to R6,7 billion as a result of volume
growth, particularly in the tea, biscuits,
creamer and personal care categories, and
higher selling prices in all categories. The
consolidated gross profit margin declined
from 42,7% of revenue to 41,3% as a
result of cost pressures which were largely
offset by selling price increases and
volume leverage. Operating profit
rose by 13,7%, from R702,3 million to
R798,7 million and the operating profit
margin was maintained at 12,0%.
Net financing costs increased from
R23,2 million in 2007 to R64,0 million as
a result of higher interest rates and an
increase in the Group’s gearing to fund
working capital and capital expenditure
requirements.
AVI’s share of the equity accounted
earnings of joint ventures was a net
profit of R17,2 million compared to a
loss of R21,4 million in the prior period.
The improvement is due to a better
performance from I&J’s joint venture with
Simplot (Australia) Pty Ltd (“Simplot”),
which achieved better processing
efficiencies, market share gains and higher
than usual sea-food trading profits in 2008.
The effective tax rate of 34,7% is slightly
higher than last year with an earnings shift
towards higher tax jurisdictions and lower
capital profits, which are taxed at lower
rates, offset by the reduction in the South
African corporate tax rate from 29% to 28%.
Headline earnings increased by 12,0%
from R434,4 million to R486,7 million while
the weighted average number of shares
in issue decreased by 2,5% as a result of
the share buyback. Consequently headline
earnings per share increased by 14,9% to
159,0 cents per share.
The capital items of R13,7 million before
tax largely comprise profits on the sale
of trawlers as I&J matches its fleet size to
lower quota levels.
Cash generated by operations before
working capital changes increased by
18,3% to R1,02 billion. Working capital
has increased by R354,7 million reflecting
both higher input costs and quantities of
stock on hand at year end as well as high
sales in June at Entyce, Snackworx and I&J,
resulting in a temporary increase in the
trade debtors balance. Net working capital
at the end of June increased from 17,3%
of sales in 2007 to 19,7% of sales. Other
material cash out-flows during the year were the return of capital to shareholders
totalling R549,7 million, normal dividends
of R233,4 million, capital expenditure
of R271,6 million and taxation of
R247,4 million. Net debt at the end of
June 2008 was R724,4 million compared
to R83,5 million at the end of June 2007.
Capital expenditure of R271,6 million
included mainly replacement expenditure
as well as the new biscuit line at Isando
and new stores for Spitz. |
|
| |
|
| Discontinued operation |
|
Alpesca’s results declined significantly in
2008 as result of reduced quota, lower
catch rates, wage inflation and lower
shrimp prices. This operation made an
operating loss of R10,2 million in 2008
compared to a profit of R33,1 million
in 2007. The prior year’s results have
been re-presented to reflect Alpesca’s
contribution to Group results as results
from discontinued operations.
I&J is in negotiations with prospective
buyers for Alpesca. Management is of
the view that no impairment of I&J’s
investment in Alpesca is required. |
|
| |
|
| Segmental review – continuing operations |
|
| Year ended 30 June |
|
| |
|
Segmental revenue |
|
Segmental operating profit |
| |
|
2008
Rm |
|
2007
Rm |
|
Change
% |
|
2008
Rm |
|
2007
Rm |
|
Change
% |
| Food & beverage brands |
|
5 392,8 |
|
4 769,0 |
|
13,1 |
|
612,5 |
|
510,0 |
|
20,1 |
| Entyce |
|
1 547,5 |
|
1 339,1 |
|
15,6 |
|
189,1 |
|
160,6 |
|
17,7 |
| Snackworx |
|
1 677,2 |
|
1 394,2 |
|
20,3 |
|
185,8 |
|
156,8 |
|
18,5 |
| Chilled & frozen convenience brands |
|
1 775,4 |
|
1 690,8 |
|
5,0 |
|
194,9 |
|
139,1 |
|
40,1 |
| Out of home |
|
392,7 |
|
344,9 |
|
13,9 |
|
42,7 |
|
53,5 |
|
(20,1) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Fashion brands |
|
1 253,3 |
|
1 058,1 |
|
18,4 |
|
206,3 |
|
208,4 |
|
(1,0) |
| Personal care |
|
623,5 |
|
555,9 |
|
12,2 |
|
73,4 |
|
63,3 |
|
16,0 |
| Footwear & apparel |
|
629,8 |
|
502,2 |
|
25,4 |
|
132,9 |
|
145,1 |
|
(8,4) |
| Corporate |
|
14,5 |
|
24,8 |
|
|
|
(20,1) |
|
(16,1) |
|
|
| Group |
|
6 660,6 |
|
5 851,9 |
|
13,8 |
|
798,7 |
|
702,3 |
|
13,7 |
|
|
| |
|
DEFINITIONS |
|
Number of ordinary shares issued |
|
| Total issued ordinary share capital at end
of year. |
|
| |
|
Weighted average number of ordinary
shares in issue |
|
| The time weighted average number of
ordinary shares in issue, excluding shares
held by the AVI share trusts. |
|
| |
|
Earnings per ordinary share |
|
| • |
Earnings and headline earnings
respectively for the year in cents divided
by the weighted average number of
ordinary shares in issue. |
| • |
Diluted earnings and diluted headline
earnings per ordinary share is calculated
taking account of the unexercised share
options as disclosed in the directors’
report, duly adjusted to
take account of the shares to be issued at
fair value calculated in accordance with
International Accounting Standard 33. |
|
|
| Calculations are presented in note 29 of
the annual financial statements. |
|
| |
|
Dividend cover |
|
| Headline earnings per share from
continuing operations divided by the
dividends per share declared to ordinary
shareholders of the Company in respect of
the results for the year. |
|
| |
|
Financial ratios |
|
| • |
Operating margin
Operating profit as a percentage of
revenue. |
| • |
Return on capital employed
Headline earnings from continuing
operations, as a percentage of average
capital employed.
Capital employed is total equity plus net
debt. |
| • |
Net working capital
Inventories and trade receivables, less
trade payables. |
| • |
Free cash flow
Cash available from operating
activities and investments, less capital
expenditure incurred to maintain
operations. |
| • |
Free cash flow per ordinary share
Free cash flow for the year divided by the
weighted average number of ordinary
shares in issue. |
| • |
EBITDA
Operating profit before capital items and
depreciation and amortisation. |
| • |
Net debt/(cash)
Financial liabilities and borrowings and
current borrowings less cash and cash
equivalents. |
| • |
Interest cover ratio
EBITDA divided by net finance costs. |
| • |
Debt/equity ratio
Net debt divided by total equity. |
|
|
| |
|
| Key statistics |
|
| |
2008* |
2007* |
2006 |
2005 |
2004 |
| Financial ratios |
|
|
|
|
|
| – operating margin (%) |
12,0 |
12,0 |
9,6 |
9,9 |
9,3 |
| – return on capital employed (%) |
16,3 |
16,3 |
14,9 |
18,8 |
16,1 |
| – net working capital as a percentage of revenue (%) |
19,7 |
17,3 |
14,7 |
14,7 |
13,8 |
| – EBITDA |
965,4 |
852,3 |
685,5 |
623,0 |
545,9 |
| Liquidity |
|
|
|
|
|
| – free cash flow (Rm) |
204,1 |
231,4 |
297,0 |
353,7 |
335,4 |
| – free cash flow per ordinary share (cents) |
66,7 |
73,7 |
95,1 |
113,5 |
106,2 |
| – net debt/equity ratio (%) |
30,8% |
8,4% |
11,5% |
(11,9%) |
(13,0%) |
| – interest cover ratio |
15,1 |
36,7 |
20,5 |
33,3 |
34,1 |
| Employees at 30 June |
|
|
|
|
|
| – South Africa |
7 661 |
8 023 |
7 595 |
7 675 |
6 052 |
| – International |
18 |
50 |
1 813 |
1 756 |
1 641 |
| |
7 679 |
8 073 |
9 408 |
9 431 |
7 693 |
| Revenue per employee (R’000) |
867 |
725 |
571 |
499 |
562 |
|
|
| *excluding Alpesca |
|
|
|
