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Condensed provisional report of audited consolidated results for the year ended 30 June 2016
Bowler Metcalf Limited
REG NO : 1972/005921/06 ALPHA CODE : BCF ISIN CODE : ZAE000030797
Condensed provisional report of audited consolidated results for the year ended 30 June 2016
%
R mil 30 June 16 Change 30 June 15
CONDENSED STATEMENT OF FINANCIAL POSITION
Non-current Assets 422.2 405.2
Property, plant & equipment 130.7 122.4
Investment properties 6.2 6.7
Intangible assets 4.9 4.9
Investment in associates 279.6 270.4
Deferred tax 0.8 0.8
Current Assets 401.3 365.4
Related party loan 46.8 46.5
Inventories 68.8 56.9
Trade and other receivables 106.2 103.1
Prepayments 21.3 19.2
Cash and cash equivalents 158.2 139.6
Taxation - 0.1
----------------- -----------------
Total Assets 823.5 +7 770.6
Total Equity 699.1 +5 667.7
Non-current liabilities 60.7 53.4
Deferred Tax 60.7 53.4
Current Liabilities 63.8 49.5
Trade and other payables 59.2 45.1
Borrowings - 1.2
Taxation 4.6 3.2
----------------- -----------------
Total Equity & Liabilities 823.6 770.6
%
R mil 30 June 16 Change 30 June 15
CONDENSED STATEMENT OF COMPREHENSIVE INCOME
Continuing operations
Revenue 499.4 +0 498.0
Other income 2.7 2.6
Operating costs (431.9) (408.3)
Associated company profit/(loss) 9.2 (4.3)
----------------- -----------------
Profit from operations 79.4 - 10 88.0
Net interest 17.5 13.1
----------------- -----------------
Net profit before tax 96.9 101.1
Taxation (23.3) (29.1)
----------------- -----------------
Total profit - continuing operations 73.6 +2 72.0
Discontinued operations
Profit on disposal of subsidiary - 194.1
Net profit before tax - 12.2
Taxation (8.0) (43.0)
----------------- -----------------
Total profit - discontinued operations (8.0) 163.3
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO
OWNERS OF PARENT 65.6 - 72 235.3
Earnings & diluted earnings per share (c)
Earnings & diluted earnings per share (c) 79.20 - 72 285.28
- continuing operations 88.86 87.28
- discontinued operations (9.66) 198.00
CONDENSED STATEMENT OF CHANGES IN EQUITY
R mil Share
Share Retained Treasury Based Total
Capital Earnings Shares Payments Equity
30 June 14 21.5 469.6 (31.6) 0.4 459.9
Comprehensive Income - 235.3 - - 235.3
Dividends - (28.8) - - (28.8)
Disposals - - 1.4 - 1.4
Other - 0.3 - (0.4) (0.1)
----------------- ----------------- ----------------- ----------------- -----------------
30 June 15 21.5 676.4 (30.2) - 667.7
Comprehensive Income - 65.6 - - 65.6
Dividends - (34.2) - - (34.2)
------------------ ------------------ ------------------ ------------------ ------------------
30 June 16 21.5 707.8 (30.2) - 699.1
========== ========== ========== ========== ==========
%
30 June 16 Change 30 June 15
HEADLINE EARNINGS (R mil)
Earnings attributable to parent:
Continuing operations 73.6 72.0
Disposal of assets (0.2) -
- gross (0.2) -
- tax - -
--------- ----------
Headline earnings - continuing operations 73.4 +2 72.0
========= =========
Discontinued operations (8.0) 163.3
Disposal of assets 8.0 (154.3)
- gross - (194.1)
- tax 8.0 39.8
----------------- -----------------
Headline earnings - discontinued operations - 9.0
=============== =================
Headline earnings (R'mil) 73.4 -9 81.0
=============== =================
HEADLINE EARNINGS PER SHARE (HEPS)
Earnings attributable to parent
Continuing operations 88.86 87.28
Disposal of assets - net of outside interests (0.11) 0.05
----------------- -----------------
HEPS - continuing operations (cents) 88.75 +2 87.33
================ =================
Discontinued operations (9.66) 198.00
Disposal of assets - net 9.66 (187.11)
----------------- -----------------
HEPS - discontinued operations - 10.89
================= =================
Basic & diluted headline earnings (c) 88.75 - 10 98.22
================= ================
CONDENSED SEGMENTAL ANALYSIS
R mil
Plastic Unallocated/
Packaging Beverages Property Eliminations Total
2016
Continuing Operations
Revenue 495.1 - 4.3 - 499.4
Intersegment revenue - - 17.0 (17.0) -
Other income 5.0 - - (2.3) 2.7
Expenses (443.5) - (5.5) 17.0 (432.0)
Share of profit of associate - 9.2 - - 9.2
------------------ ------------------ ------------------ ------------------ ------------------
Operating income 56.6 9.2 15.8 (2.3) 79.3
Net finance income 17.5 - - - 17.5
Taxation (18.9) - (4.40) - (23.3)
------------------ ------------------ ------------------ ------------------ ------------------
Profit for the year - continuing operations 55.2 9.2 11.4 (2.3) 73.5
------------------ ------------------ ------------------ ------------------ ------------------
Discontinued Operations
Profit - discontinued ops - - - - -
Taxation - (8.0) - - (8.0)
------------------ ------------------ ------------------ ------------------ ------------------
Profit for the year - discontinued
operations - (8.0) - - (8.0)
------------------ ------------------ ------------------ ------------------ ------------------
Attributable to parent 55.2 1.2 11.4 (2.3) 65.5
========== ========== ========== ========== ==========
Total assets 508.2 279.6 78.0 (42.3) 823.5
Total liabilities 125.7 47.8 4.4 (53.4) 124.5
========== ========== ========== ========== ==========
2015
Continuing Operations
Revenue 493.9 - 4.1 - 498.0
Intersegment revenue - - 16.0 (16.0) -
Share of loss of associate - (4.3) - - (4.3)
Other income 4.7 - - (2.1) 2.6
Expenses (418.8) - (5.5) 16.0 (408.3)
------------------ ------------------ ------------------ ------------------ ------------------
Operating income 79.8 (4.3) 14.6 (2.1) 88.0
Net finance income 12.7 - 0.4 - 13.1
Taxation (24.9) - (4.2) - (29.1)
------------------ ------------------ ------------------ ------------------ ------------------
Profit for the year - continuing
operations 67.6 (4.3) 10.8 (2.1) 72.0
------------------ ------------------ ------------------ ------------------ ------------------
Discontinued Operations
Disposal of subsidiary - 194.1 - - 194.1
Profit - discontinued ops - 12.2 - - 12.2
Taxation - (43.0) - - (43.0)
------------------ ------------------ ------------------ ------------------ ------------------
Profit for the year - discontinued
operations - 163.3 - - 163.3
------------------ ------------------ ------------------ ------------------ ------------------
Attributable to parent 67.6 159.0 10.8 (2.1) 235.3
========== ========== ========== ========== ==========
Total assets 464.4 270.7 69.4 (33.9) 770.6
Total liabilities 96.0 39.8 7.0 (40.0) 102.8
========== ========== ========== ========== ==========
CONDENSED STATEMENT OF CASH FLOWS Rmil 30 June 16 30 June 15
Operating Activities 52.6 42.0
Profit before tax 96.8 307.7
Non-cash items 14.50 (164.6)
Working capital changes (1.9) (44.3)
Taxation paid (22.5) (28.2)
Dividends paid (34.3) (28.6)
Investing Activities (32.9) (17.2)
Property plant and equipment (51.1) (27.7)
Disposal of subsidiary - 4.8
Proceeds on disposal of assets 19.6
Loan repayments (0.3) 5.7
Advance payments (1.1) -
Financing Activities (1.1) (11.4)
Borrowings (1.1) (12.9)
Treasury shares - disposals - 1.5
----------------- -----------------
Net Cash Flow 18.6 13.4
Opening balance 139.6 126.2
----------------- -----------------
Closing balance 158.2 139.6
================= ==================
Comprising:
Cash & cash equivalents 158.2 139.6
================= ==================
RELATED PARTY TRANSACTIONS
Subsidiary of associate:
Quality Beverages 2000 (Pty) Ltd
Revenue 63.7 9.1
Rental income 4.3 0.3
Finance income 6.1 0.5
======== =========
Comparative figures are for one month.
%
30 June 16 Change 30 June 15
ADDITIONAL INFORMATION
Ordinary dividend/share paid (c) 41.40 35.00
Ordinary dividend/share proposed (c) 36.80 - 11 41.40
Basic dividend cover (times) 2.41 2.10
Weighted shares in issue (mil) 82.799 82.481
Capital expenditure (Rmil) 51.06 + 55 32.92
Capital commitments (Rmil) 14.40 + 114 6.74
CEO'S COMMENTARY
The year under review can be summarised as a year of implementations. The Bowler Group was restructured
while assisting with the new national beverages group SoftBev.
With shareholder approval in 2015, a significant blowing operation business of Plastics PET Division was
transferred into SoftBev (as per the BBPA terms) while simultaneously balancing lost activities at Bowler Plastics
(Pty) Ltd (“Bowler Plastics”) with a drive for new business activations. As noted in our recent trading statement, the
sale of Quality Beverages in the previous financial year and the fact that the resulting profit on disposal will not
reoccur in the current financial year, had a once-off correcting effect on our earnings per share.
Disruptions prevention and shareholder value preservation remained foremost considerations along with
employment security. A reinvigorated and strategically focused Bowler Metcalf in the South African Packaging
environment formed the key objective. This all in response to the increasingly uncertain and volatile business
conditions both locally and globally.
The presentation format of this report does not fully give credit to the achievements by the business in managing
the multitude of complexities within the timeframe pressures of this endeavor. In scenario planning terms, I am very
pleased that we travelled the high road in 2016.
Continuing Operations
The local filling industries and the closely associated packaging industry have been majorly challenged by the
combined effects of the collapse of the oil price, volatility in the financial markets, the currencies, weakening
demand in South Africa, cash flow challenges in the surrounding regions, and hesitant collaborative problem-
solving approaches with government and labour. Raw material volatility had a direct impact resulting from some of
these dynamics. Yet, against these realities and the backdrop of the aforementioned business structural changes, it
is with pride that Bowler Plastics can report an unchanged topliner performance during this year. Replacement
business made up a staggering 24% of production activity in the product offerings from the prior year with
sustainable long-term business and stable margins. A R51mil capex implementation supported numerous new
technologies. The majority of these activities came on line during the year with good growth for 2017 and beyond
programmed.
Additional incidental business building operations cost were linked to the doubling in capacity of the Gauteng
plant, with the addition of a PET plant, high speed moulding equipment and various downstream, value add
solutions. Manufacturing in Durban ceased in favour of an expansion in warehouse and distribution capacity for
the KZN region. Investment in advanced moulding equipment in Cape Town continued while a dedicated facility in
Ottery was established to further the engineering ability of Bowler Plastics in packaging solutions, standardisation
of equipment, product optimisation and skill development. All these developments while having long-term benefits
kept the bottom-line at bay.
The late delivery, by an international machinery supplier, of a critical filling line component triggered delays and
caused complexities in the commissioning of the line by SoftBev, thereby straining all parties involved. All resulting
stock-out claims were settled in this financial year. The project will be finalised later in 2016.
High activity levels will strain manufacturing operations during 2017 as many projects settle into full year
production. Benefits from the economies of scale created and vigorous focus on Operational efficiencies should be
evident in the next period.
The demand for Bowler Plastic’s service model, positions the company particularly well in the current South African
custom packaging sector and will serve the business well for the next phase of its development.
Finally, the industry awarded Bowler Plastics the 2015 SA Goldpack Trophy for its innovative packaging solution in
digital printing amongst two further category awards. This bears testimony to the nature of the solutions-driven
focus of the business in a time when South Africa needs to find its rightful place in the competitive global business
environment.
Associate company - SoftBev
The Bowler Metcalf team continued with close links to the management team of SoftBev during the business
forming period of 2016. From the outset, timeframes for project implementations were ambitious. Consequently, a
delayed readiness for the Pepsi business, a delayed effectiveness of the production ability of the Western Cape
operation and a delayed start-up of Capri Sun all contributed to lower than expected performance for the first
year. Credit however to the new national team of SoftBev for protecting the business brands through effective
contingency measurements. These inevitable and other incidental infrastructural costs have impacted the bottom
line for 2016.
Whilst it is commendable of the SA Government to promote awareness to health risks from sugar consumption, the
proposed approach of a consumer tax of 20% (SSB tax) targeting the beverages industry specifically, must in my
opinion be seriously questioned. The financial and employment impact of such an approach will be far reaching to
the industry and the economy as a whole. This view is shared by BEVSA who has engaged with the government in
reviewing this proposal (the submission is available on www.bowlermetcalf.co.za ). Clearly the entire industry is
faced with a challenge and with various possibilities available, the dynamics will provide many interesting
developments.
Despite this, the seasoned SoftBev team is focused on an extensive penetration strategies for the key brands
Pepsi, Coo-ee, Jive, Capri-Sun, Reboost (energy drink) on a national scale. The growth of business in Gauteng
necessitated the investment of new capacity in excess of R 80mil to be commissioned later this year. The
business long-term plans remain on track.
Conclusion
Gratifyingly the objectives for both businesses have visibility of being met in the near future. In the current period of
instability I am honoured to be partnered with strong and focused teams of competencies whom I thank for their
support.
BASIS OF PREPARATION AND AUDIT REPORT
The condensed consolidated results have been prepared in accordance with the Framework concepts, the
measurement and recognition requirements of International Financial Reporting Standards and the SAICA
Financial Reporting Guides as issued by the Accounting Practices Committee. They contain the information
required by IAS 34 Interim Financial Reporting and have been prepared in the manner required by the Companies
Act and the Johannesburg Stock Exchange’s Listings Requirements.
The accounting policies and methods of computation applied in the preparation of the results are consistent with
the those applied in the audited annual financial statements for the year ended 30 June 2016.
This condensed report has been prepared using the same accounting policies and methods of computation as
used in the audited annual financial statements from which the condensed report is extracted, and should be read
in conjunction with the annual financial statements.
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, 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.
RESTATEMENT
Following the sale of the beverage segment in 2015 and in keeping with our peers in the plastic packaging sector,
the statement of comprehensive income has been restated on a "by function" basis to better express the Group's
operations. The comparative figures for 2015 have consequently been restated as follows:
Operating costs (Rmil) Restated 2015
Cost of sales 355 -
Operating costs 53 -
Raw materials and other operating costs - 243
Staffing costs - 116
Rental and property finance - 2
Depreciation 20
Maintenance - 14
Transport - 13
408 408
TREASURY SHARES
There was no change to the holding of treasury shares.
CASH DIVIDEND DECLARATION
A final gross cash dividend, as defined by the Income Tax Act, of 18.4 cents per share ("cps") for the year ended
30 June 2016 (2015: 23.0 cps) has been declared and is payable to shareholders on Monday, 31 October 2016.
The last day to trade will be Tuesday, 25 October 2016, "Ex" dividend trading begins on Wednesday,
26 October 2016 and the record date will be Friday, 28 October 2016. Share certificates may not be
dematerialised or re- materialised between Wednesday, 26 October 2016 and Friday, 28 October 2016, 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 18.4 cps. Dividend Withholding Tax
(DWT) is 15%. The net local cash dividend to shareholders liable for DWT will therefore be 15.6400 cps.
The 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.
COMPANY TAX NUMBER
9775130710
ANNUAL REPORT
The company is preparing the Annual Report and will announce details of the Annual General Meeting in due
course.
B.J. Frost (Non-Exec Chairman)
P.F. Sass (Chief Executive Officer)
Cape Town
26 September 2016 Prepared by: LV Rowles CA(SA)
REGISTERED AUDITOR SPONSOR
Mazars - Partner Jaco Cronje - Registered Auditor Arbor Capital Sponsors (Pty) Ltd
Mazars House, Rialto Road, Ground floor, Woodmead North Office Park
Grand Moorings Precinct, Century City, 7441 54 Maxwell Dr, Woodmead, 2157
TRANSFER SECRETARY
Computershare Investor Services (Pty) Ltd
P.O. Box 61051
Marshalltown, 2107
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