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BOWLER METCALF LIMITED - Audited Summarised Consolidated results for the year ended 30 June 2014

Release Date: 29/09/2014 17:08
Code(s): BCF     PDF:  
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Audited Summarised Consolidated results for the year ended 30 June 2014

Bowler Metcalf Limited
REG NO : 1972/005921/06       ALPHA CODE : BCF      ISIN CODE : ZAE000030797

CONDENSED REPORT OF AUDITED CONSOLIDATED RESULTS FOR THE YEAR ENDED 30 JUNE 2014
                                                           %
R mil                              30 June 14          Change        30 June 13

CONDENSED STATEMENT OF
FINANCIAL POSITION
Non-current Assets                      196.6                            212.7
Property, plant & equipment             173.0                            181.0
Deferred tax                              7.7                              6.3
Intangible assets                        15.9                             15.9
Loan                                        -                              9.5

Current Assets                          356.9                            301.2
Inventories                             100.2                             78.9
Trade and other receivables              95.1                             90.3
Prepayments                              24.2                              7.1
Cash and cash equivalents               126.2                             74.3
Other financial assets                      -                             50.0
Loan                                      9.5                                -
Taxation                                  1.7                              0.6
                                        ---------                        ---------
Total Assets                            553.5             +8             513.9
                                        ======                           ======

Total Equity                            459.9             +8             424.4
Non-current liabilities                  15.0                             30.4
Deferred Tax                             13.2                             12.7
Borrowings                                1.8                             17.7

Current Liabilities                      78.6                             59.1
Trade and other payables                 62.4                             50.0
Borrowings                               13.8                              6.8
Taxation                                  2.4                              2.3
                                        ---------                        ---------
Total Equity & Liabilities               553.5                           513.9
                                        ======                           ======
Prepayments are comprised of:
- advance payments - capital              20.6                             4.0
- advance payments - expenses              3.6                             3.1
                                        ======                           ======

CONDENSED STATEMENT OF
COMPREHENSIVE INCOME
Revenue                                  726.3          + 12              650.4
Other income                               9.7                              3.2
Operating costs                         (628.4)                          (545.1)
Depreciation                             (32.3)                           (38.6)
                                      ---------                           ---------
Profit from operations                    75.3                             69.9
Net interest                               5.3                              8.5
                                       ---------                          ---------
Net profit before tax                     80.6            +3               78.4
Taxation                                 (20.4)                           (20.9)
                                       ---------                          ---------
Total profit and comprehensive income     60.2                             57.5
Attributable to non-controlling interests    -                             (2.6)
                                       ---------                          ---------
Attributable to parent                    60.2          + 10               54.9
                                         ======                           ======

Earnings & diluted earnings per share (c)73.26            +9               67.35
                                         ======                            ======
HEADLINE EARNINGS
Earnings attributable to parent           60.2                              54.9
Profit on disposal of plant & equipment    1.3                               0.1
loss/(profit)                              1.6                               0.2
tax and outside interests                 (0.3)                             (0.1)
                                        ---------                        ---------
Headline earnings (R'mil)                 61.5          + 12                55.0
                                          ======                          ======
Earnings per share(c)                     73.26                             67.35
Disposal of plant and equipment (c)        1.61                              0.15
                                          ---------                      ---------
Basic & diluted headline earnings (c)     74.87         + 11                67.50
                                          ======                          ======

ADDITIONAL INFORMATION
Ordinary dividend/share paid (c)          34.20           -9                37.50
Ordinary dividend/share proposed (c)      35.00           +5                33.30
Basic dividend cover (times)               2.14                              2.03
Capital expenditure (Rmil)                28.97                             24.81
Capital commitments (Rmil)                 6.99                              5.15

CONDENSED STATEMENT OF CHANGES IN EQUITY
                                                      Share              Non-
                              Share    Retained    Treasury             Based          controlling         Total
                             Capital   Earnings       Shares         Payments            Interests        Equity
30 June 12                      21.5      434.8        (37.0)             1.2                 13.7         434.2
Comprehensive 
Income                             -       54.9            -                -                  2.6          57.5
Acquisition of
non-controlling
interests                          -      (22.6)                                             (16.3)        (38.9)
Dividends                          -      (30.6)           -                -                    -         (30.6)
Disposals                          -          -          2.0                -                    -           2.0
Other                              -        0.4            -             (0.2)                   -           0.2
              -------------------------------------------------------------------------------------------------------------------
30 June 13                      21.5      436.9        (35.0)             1.0                 (0.0)        424.4
Comprehensive
Income                             -       60.2            -                -                    -          60.2
Dividends                          -       28.2)           -                -                    -         (28.2)
Disposals                          -          -          3.4                -                    -           3.4
Other                              -        0.7            -             (0.6)                   -           0.1
              -------------------------------------------------------------------------------------------------------------------
30 June 14                      21.5      469.6        (31.6)             0.4                 (0.0)        459.9
              ================================================+++++++++++++++++++++++++++++=======================

CONDENSED SEGMENTAL ANALYSIS

                                Plastic
                              Packaging     Beverages      Property     Unallocated               Total

Revenue
  2013                            275.2         374.9           0.3               -               650.4
- total revenue                   369.6         374.9           18.4              -               762.9
- intersegment                    (94.4)            -          (18.1)             -              (112.5)

  2014                            303.3         422.8            0.2              -               726.3
- total revenue                   419.3         422.8           19.9              -               862.0
- intersegment                   (116.0)            -          (19.7)             -              (135.7)
                                  ======================================================================
Operating Profits
2013                               45.0          11.5           13.4              -                69.9
2014                               47.7           8.8           14.8            4.0                75.3
                                  =====================================================================
Attributable Profits
 2013                              42.2           3.5            9.3           (0.1)               54.9
 2014                              41.3           4.6           10.7            3.6                60.2
                                  =====================================================================
Total Assets
 2013                             368.5         135.7           97.0          (87.3)              513.9
- total assets                    319.9         135.2           42.9           15.9               513.9
- intersegment                     48.6           0.5           54.1         (103.2)                  -

  2014                            398.9         148.2          104.1          (97.7)              553.5
- total assets                    349.0         148.2           40.4           15.9               553.5
- intersegment                     49.9             -           63.7         (113.6)                  -
                                  =====================================================================

CONDENSED STATEMENT OF CASH FLOWS

                                         30 June 14                      30 June 13
Operating Activities                           44.6                            60.1
Profit before tax                              80.6                            78.4
Non-cash items                                 28.6                            36.6
Working capital changes                       (14.1)                           (4.1)
Taxation paid                                 (22.3)                          (20.2)
Dividends paid                                (28.2)                          (30.6)

Investing Activities                            8.8                             3.9
Property plant and equipment                  (42.5)                          (27.1)
Transfer to/from income funds                  51.3                            31.0

Financing Activities                           (1.5)                          (32.7)
Borrowings                                     (4.9)                           (3.5)
Acquisition - minority interest                   -                           (31.2)
Treasury shares - disposals                     3.4                             2.0

Opening balance                                74.3                            43.0
                                             ---------                      ----------
Closing balance                               126.2                            74.3
                                              ======                          ======
Comprising:
Cash & cash equivalents                       126.2                            74.3
                                              ======                          ======
CEO'S COMMENTARY
In a year where the fortunes of industrial companies, who were linked to the FMCG market were very
mixed. Bowler Metcalf has again delivered good results, posting a 12% growth in revenue and a 12%
growth in headline earnings. The challenging circumstances in South Africa, being sustained labour unrest,
a marked deterioration in the Rand, aggressive competitor pricing (in both packaging and beverages) and
raw material margin squeezing, has made these results even more meritorious. The debilitating knock on
effect of the labour unrest has contributed to a first quarter GDP contraction in South Africa, with a
concomitant reduction in disposable income, severely affecting all aspects of the Bowler Metcalf business.

Group revenue grew from R650m to R726m, attributable profit 10% to R60.2m and EPS increased 9% from
67.35 cents to 73.26 cents per share and HEPS 11% from 67.5 to 74.87 cps. Working capital management
was good and cash flow remained positive.

Plastic Packaging
The adverse trading climate for plastic packaging suppliers is well documented and major companies have
produced overall losses in this period. Bowler Plastics conducted their business well but despite a revenue
growth of 10% (R303m), earnings were flat at R41.3m (2013 – R42.2m). Management had anticipated
these pressures, triggered by the anticipated loss of a significant account, and much successful work is
being done to position Bowler Plastics correctly for 2015. It is common cause that increases in the cost of
major inputs of manufacturing concerns, being labour, raw materials and electricity have an immediate
negative effect on the bottom line. Packaging manufacturers are reticent to pass these on and they suffer
for that folly. Bowler Plastics has been in this cycle before and we are confident that we can handle this
situation. To position ourselves, we have spent some R29m on capital expenditure in the year to date, with
a further R50m planned for 2015.

We have successfully commissioned the first digitally printed laminated tube line in Southern Africa as well
as a new Masterbatch manufacturing plant, which will reduce our reliance on outside companies. Other
projects in process (many with blue-chip companies) at the present time represent an additional 40% on
the current volume being manufactured by Bowler Plastics nationwide. We are confident that the vast
majority of these will be brought to fruition.

Beverages
Quality Beverages maintained and expanded their dominant position in the Western Cape. The Jive brand
performed well in the highly competitive carbonated soft drink market, posting a 13% growth in revenue,
not won on the back of price discounting. Notwithstanding the strength of the brand, additional plans are
being put in place to protect our market in the Western and Eastern Cape. Our Johannesburg CSD
operation performed less well, posting a substantial loss despite a promising growth of 11% in revenue.
The Johannesburg plant possesses an exceptional bottling facility and measures have been put in place to
get the plant past the critical mass point.

Prospects
Following a sustained period of trading under a cautionary announcement, the Board was delighted to
announce on Friday 26th September 2014 the successful conclusion to negotiations with MIF Holdings
Proprietary Limited, the parent of Shoreline Sales and Distribution Proprietary Limited (SL), for the disposal
of 100% of Quality Beverages (QB), simultaneously with that of SL, into a new national beverage company
called SoftBev, to be settled by shares in SoftBev.

QB has run its course under its current structure and day to day demands are eroding the focus of key
Bowler Plastics personnel, to the detriment of the plastics packaging business. SL runs a remarkably
parallel operation to QB, primarily in the KZN, an area where QB is not active. Should the deal be approved
by the Bowler Metcalf shareholders and the Competition Commission, SoftBev will be one of the largest
independent locally owned soft drink company in South Africa. It will have a nationwide representation
both in terms of bottling facilities and consumer foot prints with commensurate benefits, once the usual
formalities have been attended to and the company is combined. Bowler Metcalf will retain a strategic
shareholding in the new combined entity.

Bowler Plastics will have the unfettered chance to build on its expertise and well-earned reputation as the
pre-eminent specialist rigid plastic packaging company in South Africa. With more focused management
time, coupled with the exciting projects in development, I have every reason to believe that this will be
achieved quite rapidly.

BASIS OF PREPARATION AND AUDIT REPORT
The condensed consolidated results have been prepared in accordance with the Framework concepts and
the measurement and recognition requirements of the International Financial Reporting Standards,
containing information required by the IAS 34 Interim Financial Reporting, the SAICA Financial Reporting
Guides as issued by the Accounting Practices Committee and in the manner required by the Companies Act
and the Johannesburg Stock Exchange Listings Requirements.

Operating segments in the segmental analysis have been changed from Plastics and Filling to Plastic
Packaging and Beverages respectively to more accurately describe their respective businesses.

This results announcement, itself not audited, is extracted from the audited Annual Financial Statements
(AFS). The AFS, together with the unqualified audit report of the company's auditors, Mazars Inc., is
available for inspection at the company's registered office. The auditor’s report does not necessarily report
on all of the information contained in this condensed report. Shareholders are therefore advised that in
order to obtain a full understanding of the nature of the auditor’s engagement they should obtain a copy of
the auditor’s report together with the accompanying financial information from the company’s registered
office. The directors take full responsibility for this report extracted from the underlying audited AFS.

This condensed report has been prepared using the same accounting policies and methods of computation
as used in the audited AFS from which the condensed report is extracted, and should be read in
conjunction with this condensed report.

CHANGES TO THE BOARD
There were no changes to the Board during the year.


TREASURY SHARES
Disposals of treasury shares were in respect of the exercise of share options.


EVENTS AFTER THE REPORTING DATE
Under the cautionary announcements and renewal cautionary announcements, the company has
negotiated and agreed to amalgamate its filling division with a KZN based filler, Shoreline Sales and
Distribution Proprietary Limited, by disposing of its entire interest in the Quality Beverages Group, with the
exception of Postal Presents Proprietary Limited, in return for a strategic 42% shareholding in a newly
formed and enlarged national entity. The effective date of the proposed transaction will be the last day of
the month in which the last condition precedent, including Competition Commission and shareholder
approval, is met.

The sale consideration is valued at R274m which will be settled through the issue of approximately 42% of
shares in a new company in the process of incorporation. The transaction is considered to be at fair value
between a willing buyer and a willing seller. The transaction value is subject to a claw back for non-
performance in the Company's undertaking to set up an integrated PET blowing and filling line at QB by no
later than the end of September 2015. The transaction also provides for a bottle supply contract until the
commissioning of the new line, and thereafter for the supply of preforms.

The disposal group comprises the Beverages segment as disclosed in the Segmental Report. It is not yet
possible to estimate the financial effects of the transaction. The pro forma financial effects of this
transaction will be published in due course.

Full details will be included in a circular to be sent to shareholders in due course, including a notice of a
General Meeting and a form of proxy.

CASH DIVIDEND DECLARATION
A final gross cash dividend, as defined by the Income Tax Act, of 16.6 cents per share ("cps") for the year
ended 30 June 2014 (2013: 15.8 cps) has been declared and is payable to shareholders on Monday, 3
November 2014. The last day to trade will be Friday, 24 October 2014 "Ex" dividend trading begins on
Monday, 27 October 2014 and the record date will be Friday, 31 October 2014. Share certificates may not
be dematerialised or re-materialised between Monday, 27 October 2014 and Friday, 31 October 2014, both
days inclusive. Directors confirm that the solvency and liquidity test is satisfied at the date of this report.
The test will be performed again at the payment date.
This dividend will be made from income reserves. The gross dividend is 16.6 cps. Dividend Withholding Tax
(DWT) is 15%. There are no Secondary Tax on Companies (STC) credits available for set off against the DWT.
The net local cash dividend to shareholders liable for DWT will therefore be 14.110 cps.

Number of shares in issue at the date of declaration is 88 428 066 shares.

Unless otherwise requested in writing, individual dividend cheques of less than R50 will not be paid but
retained in the company's unclaimed dividend account. Accumulated unpaid dividends in excess of R200
may be claimed in writing from the Transfer Secretaries.

B.J. Frost (Non-Exec Chairman)
P.F. Sass (Chief Executive Officer)

Cape Town
29 September 2014
Prepared by: LV Rowles CA(SA)

REGISTERED AUDITOR
Mazars Inc. - Director Jaco Cronje - Registered Auditor
Mazars House, Rialto Road,
Grand Moorings Precinct, Century City, 7441

SPONSORS
Arcay Moela Sponsors (Pty) Ltd
Ground floor, Woodmead North Office Park
54 Maxwell Dr, Woodmead, 2157

TRANSFER SECRETARIES
Computershare Investor Services (Pty) Ltd
P.O. Box 61051, Marshalltown, 2108

COMPANY TAX NUMBER
9775130710

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