Avi Ltd Unsp/Adr

Good morning everybody and welcome to AVI's year-end results to June 2025. Also welcome to everybody online. I'm joined by a few of my colleagues. So if there are any difficult questions, I'll make sure that they answer those. We've got a pretty typical format, if I could get this to go. I'll take you through some key features, Dustin will go through the group's financial results in a little bit more detail, and then I'll talk to business unit specific performance, a few comments on prospects, and then happily take questions and answers. As we said, I guess in the sense, it's I think a sound performance off a very tough annualized base with the growth that Justin will talk about. Last year some 22% EBIT growth. Revenue obviously constrained by volume challenges across the portfolio and I'll go into that in some detail as will Justin. But pleasing management of gross margin, something we focus on. We're playing the long game here. Fundamentally the most important thing we try and do is to preserve the group's gross margins because that's the long-term embedded value of the company. It was a very tough year for the fashion brands portfolio. Spitz in particular obviously impacted in the first semester which is so critical to its performance by supply chain challenges and then of course the costs following our decision to close the Green Cross retail portfolio. IJ, nice to see some improving catch rates after a very long and torrid period of poor catch rates, but still not where they need to be. And of course, Abalone, that market still remains very challenging. We'll cover that often in some more detail. Very pleasing to see our innovation efforts, which are both at the top and the bottom end, both in convenience formats, gaining momentum and driving incremental growth in some of our categories. We continue to restructure AVI. We're trying to make sure that our business and how it's run and operated is as effective as it can be, confronting the realities and challenges of a low growth environment. And we invested some 42 million rand in the year, not all of which will have been benefiting this past financial year. So group operating profit just under 8% of the 21.7% of the prior year. The margin improved around 6.7%, which was pleasing, lifting headline earnings from 6.1% to $0.729. Importantly, strong cash flow generation was sustained. Slightly bigger capex than we've had more recently, but a significant portion of that was the new Umlungisi freezer vessel investment that we made in INJ. Final dividend, pretty much up in line with The headline earnings and strong capital returns sustained, I think one of the highest that we've had with a continuity of the dividend yield. That's the history, obviously the COVID bump, but pleasing to see the recovery in some of the businesses and the sustained improvement in both margins and growth in operating profit compounding some 11% now for over 20 years. The return on capital employed, I touched on it. I guess it speaks for itself. And then, of course, cash conversion, slightly lower than last year, but that's simply, I think, to do with the rollover date. Not always does the financial year end with all of our receivables being paid to us, but nonetheless, a very strong cash conversion. That's the dividend history, and that's based on, obviously, the 94-13 at the end of June, and excludes share buyback. I guess if you add back the share buybacks, which have been reasonably repetitive, sometimes we've also obviously bought shares in the market where we thought there was value. But what's interesting is in AVI, if you present value our dividends and returns for the last 21 years, we've paid 36.5 billion Rand back to shareholders and obviously still have the market cap. So I think that's a credit to the strength of the cash flows that have been, I guess, produced in AVI over a long period of time. About five billion rand returned to shareholders in the last two years. Let me give you to Justin. By the way, that's not our latest Spitz fashion innovation.

Thank you, Simon, and good afternoon, everybody. I think, as Simon has highlighted, a sound performance for the year, particularly given the constrained demand environment that we've operated in and the high and strong prior year base. Revenue grew 1% on the prior year, largely a function of selling price increases taken to recover input cost pressures, and that was partly offset by lower volumes in most of our categories. Gross profit grew ahead of the top line, as Simon has highlighted. continued focus on protecting and managing our gross margins and pleasing to see our gross margin improving to 42.7%. Selling and administrative expenses decreased 1% on the previous year. A lot of focus on managing costs throughout the business. That was despite the increase in marketing spend to support our brands and some of the innovation that Simon has spoken to. In addition, we incurred some once-off restructuring costs. I'll talk a little bit to that later on. And operating profits growing 7.8% to just under R3.6 billion for the year, with the operating profit margin improving to 22.2%. As expected, net finance costs increased on the previous year. You'll recall in October last year, we paid a special dividend to shareholders that increased our net borrowing levels and resulted in a higher finance cost for the year. There was a partial offset from lower average borrowing rates with some benefits as interest rates came off during the year. The capital items, not significant, but does include a profit of 12.6 million Rand. We reported on that in the first semester results. related to the disposal of the squid fishing business that was conducted by INJ's joint venture and the effective tax rates increasing marginally but remaining largely in line with the corporate rate of 27%. Headline earnings grew 6.4% to 2.4 billion rand and headline earnings per share at a slightly lower 6.1% as a result of dilution from shares issued in respect of the various group share incentive schemes. The graph here depicts the movement in operating profits for the first and second semesters compared to the previous year. I think as Simon has highlighted and the importance to note is that the prior year base grew 21.7% on the prior year. Also, the first semester had delivered 17% growth and the second semester, 29% growth. So, pleasing to see that we were able to deliver growth across both the first and the second half of the financial year. Overall compound annual growth of 14.5% delivered across the last two years. You can see that a strong performance coming from our Thai beverages business. and a stronger performance in Snackworks, which helped to recover the first semester shortfall. Improved tax rates, favorable currency realization, lower fuel prices, and some benefits from the additional vessel that we added into the INJ fleet supported an improvement in fishing profits. Unfortunately, there was an offset there, and that was with regards to the Avalone business. Lower selling prices also negatively impacted on our biological fair value adjustment with 38 million Rand unfavorable revaluation recognized in the year.

Personal care difficult year.