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AVI LIMITED - Voluntary Trading Update And Statement For The Year Ended 30 June 2018

Release Date: 25/07/2018 16:08
Code(s): AVI     PDF:  
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Voluntary Trading Update And Statement For The Year Ended 30 June 2018

AVI Limited
(Incorporated in the Republic of South Africa)
(Registration number 1944/017201/06)
Share code: AVI
ISIN: ZAE000049433
(“AVI” or “the Group”)


Revenue growth for the 2018 financial year was constrained by a challenging trading environment. Poor
consumer demand and aggressive competition limited volume growth in many of our key categories. Our
consumers have been impacted by a pro-longed period of price inflation driven by the effect of the weaker Rand
on input costs, the VAT increase and higher fuel prices, and compounded by the impact of job losses.

Group revenue rose by 1,9% largely due to the annualisation of selling price increases taken during the prior
financial year but partially offset by lower sales volumes in some categories. Selling price increases were only
taken in categories affected with specific raw material cost pressures and in most cases, selling prices were
maintained throughout the year to support sales volumes.

Despite lower price inflation and limited gains in sales volumes, the ongoing efforts to reduce procurement costs
and improve factory efficiencies supported an improvement in the consolidated gross profit margin for the year.
Improved exchange rates compared to last year and benign inflation in our basket of key raw materials priced in
foreign currencies contributed further to this improvement. Selling and administrative costs were tightly managed
and benefitted from the restructuring initiatives completed in the prior financial year. All business units achieved
operating profit growth and the Group’s consolidated operating profit margin improved over the prior year.

Both Entyce and Snackworks delivered sound operating profit growth in the context of the tough trading
environment, with particularly pleasing performances from the tea and snacks categories underpinning growth for
the year. I&J had a strong second semester supported by improved fishing and cost savings, resulting in good
growth in operating profit despite the adverse impact of a stronger Rand on export sales. Indigo Brands delivered
a solid performance in a highly competitive category. Spitz achieved good full year profit growth, notwithstanding
a subdued second half with footwear sales volumes under pressure following a very strong December

Green Cross had a disappointing year. However, the business remains profitable and cash generative and the
operational changes made during the year will significantly improve core operating performance and working
capital levels. A further impairment of R108,0 million after tax has been made against this investment in
recognition of the extended period it will take to return the business to acceptable profitability from the current
base. The impairment will be recorded as a non-cash capital item.

The weighted average number of shares in issue during the period was 0,7% higher than in the same period last
year due to the issue of new shares in terms of the Group’s various share incentive schemes, including the
black staff empowerment share scheme.

The following disclosure is made in accordance with Section 3.4 (b) of the Listings Requirements of the JSE

     -   Consolidated headline earnings per share for the year ended 30 June 2018 are expected to increase by
         between 6,5% and 7,5% over the prior year, translating into an increase from last year’s 507,7 cents to a
         range between 541 and 546 cents per share; and

     -   Consolidated earnings per share for the year ended 30 June 2018, including capital gains and losses, are
         expected to increase by between 6,5% and 7,5% over the prior year, translating into an increase from
         last year’s 479,0 cents to a range between 510 and 515 cents per share.

It is expected that AVI will release its results for the year ended 30 J u n e 2018 on or about 1 0 September

The information above has not been reviewed and reported on by the Group’s auditors.

25 July 2018

Sponsor                  The Standard Bank of South Africa Limited
Enquiries                +(27) 11 502 1300

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