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BOWLER METCALF LIMITED - Condensed unaudited consolidated results for the six months ended 31 December 2016 and Dividend Declaration

Release Date: 10/03/2017 07:05
Code(s): BCF     PDF:  
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Condensed unaudited consolidated results for the six months ended 31 December 2016 and Dividend Declaration

BOWLER METCALF LIMITED
(Registration number 1972/005921/06)
Share code: BCF ISIN number: ZAE000030797
(“Bowler Metcalf” or “the Company”)

CONDENSED UNAUDITED CONSOLIDATED RESULTS FOR THE SIX MONTHS ENDED
31 DECEMBER 2016 AND DIVIDEND DECLARATION



Revenue            + 14%                            Dividend            + 5%

CONDENSED STATEMENT OF FINANCIAL POSITION

                                                     R mil       %               R mil
                                                  31/12/16     Change         30/06/16
Non-current Assets                                   414.9       -2              422.2
Property, plant & equipment                          145.9                       130.7
Investment properties                                  6.0                         6.2
Investment in associates                             187.2                       279.6
Related party loan                                    70.1                           -
Deferred tax                                           0.8                         0.8
Intangible assets                                      4.9                         4.9
Current Assets                                       316.4       -21             401.3
Inventories                                           77.7                        68.8
Trade and other receivables                          124.4                       106.2
Prepayments                                            2.7                        21.3
Cash and cash equivalents                            111.6                       158.2
Related party loan                                       -                        46.8
                                                         -                           -
Total Assets                                         731.3       -11             823.5

Total Equity                                         647.0       -7              699.0
Non-current liabilities                               45.7                        60.7
Deferred Tax                                          45.7                        60.7
Current Liabilities                                   38.6       -39              63.8
Trade and other payables                              38.1                        59.2
Taxation                                               0.5                         4.6
                                                         -                           -
Total Equity & Liabilities                           731.3                       823.5


NOTES TO THE CONDENSED STATEMENT OF FINANCIAL POSITION
Prepayments are comprised of:
- advance payments - capital                           1.5                        19.3
- advance payments - expenses                          1.2                         2.0

CONDENSED STATEMENT OF CHANGES IN EQUITY (R mil)

                                          Share    Retained         Treasury      Total
                                        Capital    Earnings           Shares     Equity

30 Jun 15                                  21.5       676.3            (30.2)     667.6
Comprehensive Income                          -        65.5                -       65.5
Dividends                                     -       (34.3)               -      (34.3)
                                              -           -                -          -
30 Jun 16                                  21.5       707.5            (30.2)     699.0
Comprehensive Income                          -       (36.8)               -      (36.8)
Dividends                                     -       (15.2)               -      (15.2)

31 Dec 16                                  21.5       655.5            (30.2)     647.0


CONDENSED STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED
31 DECEMBER 2016

                                                       31/12/16       %        31/12/15
                                                          R mil     Change        R mil

Continuing operations
Revenue                                                   291.7      +14          254.8
Other income                                                0.5                     1.1
Operating costs                                          (166.6)                 (148.6)
Depreciation                                              (12.6)                  (11.0)
Impairment of investment in associate                     (72.3)                      -
Rent & property finance                                    (1.3)                   (1.1)
Staffing costs                                            (66.7)                  (61.6)
Share of (loss)/profit of associate                       (20.1)                    14.5
                                                              -                        -
(Loss) / Profit from operations                           (47.4)     -199           48.1
Net finance income                                          9.6                      8.2
 - income                                                   9.6                      8.2

Net (loss) / profit before tax                            (37.8)     -167           56.3
Income tax expense                                          1.0                    (11.5)

(Loss) / Profit for the period from continuing
operations                                                (36.8)     -182           44.8

Discontinued operations
Income tax expense                                             -                    (8.0)

Loss for the period from discontinued operations               -                    (8.0)
                                                                                       -
Attributable to equity holders of parent                   (36.8)    -200           36.8

(Loss) / Earnings & diluted (loss) / earnings per
share                                                        CPS                     CPS
- Continuing operations                                    (44.4)    -182           54.1
- Discontinued operations                                      -                    (9.7)                                                                                 -
                                                           (44.4)    -200           44.4
                                                                               

NOTES TO THE CONDENSED STATEMENT OF COMPREHENSIVE INCOME

                                                    R mil                   R mil
Related party transactions
Quality Beverages 2000 (Pty) Ltd (subsidiary of
associate)
- revenue                                            29.1                    33.1
- rental income                                       2.3                     2.2
- finance income                                      3.4                     2.9


CONDENSED STATEMENT OF CASH FLOWS
Operating Activities                                  4.3                    13.6
Profit before tax                                   (37.8)                   56.3
Non-cash items                                      104.9                    (3.2)
Working capital changes                             (29.6)                   (7.9)
Taxation paid                                       (18.0)                  (12.6)
Dividends paid                                      (15.2)                  (19.0)
Investing Activities                                (50.9)                  (27.6)
Property plant and equipment - additions            (27.6)                  (37.5)
Property plant and equipment - disposals                -                     9.9
Related party loans                                 (23.3)                      -
Financing Activities                                    -                    (1.1)
Borrowings                                              -                    (1.1)
                                                        -                       -
Net Cash Flow                                       (46.6)                  (15.1)
Opening balance                                     158.2                   139.6

Closing balance                                     111.6                   124.5

Comprising:
Cash & cash equivalents                             111.6                   124.5

HEADLINE EARNINGS

                                                        R mil     %         R mil
                                                     31/12/16   Change   31/12/15
Continuing operations
(Loss) / Profit for the period from continuing
operations                                              (36.8)               44.8
Profit on disposal of plant & equipment                     -                 0.2
profit                                                      -                 0.3
tax                                                         -                (0.1)
Impairment of investment in associate                    56.1                   -
loss                                                     72.3                   -
tax                                                     (16.2)                  -
Impairment within equity accounted profits               13.4                   -
loss                                                     13.4                   -
tax                                                         -                   -

Headline earnings - continuing operations                32.7     -27        45.0

Discontinued operations
Loss for the period from discontinued operations            -                (8.0)
Tax rate adjustment - disposal of subsidiary                -                 8.0

Headline earnings - discontinued operations                 -                   -

Headline earnings - attributable to holders of the
parent                                                   32.7     -27        45.0


BASIC & DILUTED HEADLINE EARNINGS PER SHARE (c)

                                                         CPS                 CPS
Continuing operations
(Loss) / Earnings per share                            (44.4)               54.1

HEADLINE EARNINGS RECONCILIATION
Impairment of investment in associate per share         83.9                   -
Profit on disposal of plant & equipment                    -                 0.2

Basic & diluted headline earnings per share-
continuing operations                                   39.5     -27        54.3

Discontinued operations
Earnings per share                                         -                (9.7)
Tax rate adjustment - disposal of subsidiary               -                 9.7

Basic & diluted headline earnings per share-
discontinued operations                                    -                   -


Basic & diluted headline earnings per share -
attributable to holders of the parent                   39.5     -27        54.3

ADDITIONAL INFORMATION

Dividend/share paid (c)                                18.       -         23.00
Ordinary dividend proposed (c)                         19.3                18.40
Dividend cover (times)                                                      2.95
Weighted shares in issue (mil)                            8                82.80
Capital commitments (Rmil)                              1.70               10.90
Current ratio                                                               8.78
Return on equity (%)                                                       10.74
Closing share price (cents)                                                1,060


CONDENSED SEGMENTAL ANALYSIS

                                                                              Un-allocated
                                   Plastic                       Property                &
(Rmil)                           Packaging     Beverages       Investment     Eliminations           Total
Revenue
Jul-Dec 15                           252.6             -              2.2                -           254.8
- total revenue                      252.6             -             10.7                -           263.3
- intersegment                           -             -             (8.5)               -            (8.5)
Jul-Dec 16                           289.4             -              2.4                -           291.7
- total revenue                      289.4             -             11.4                -           300.7
- intersegment                           -             -             (9.0)               -            (9.0)


Operating Profit
Jul-Dec 15                            26.9         14.5               8.0             (1.3)           48.1
 - continuing operations              26.9         14.5               8.0             (1.3)           48.1
Jul-Dec 16                            37.5        (92.4)              8.5             (1.0)          (47.4)
 - continuing operations              37.5        (92.4)              8.5             (1.0)          (47.4)


Attributable Profit
Jul-Dec 15                            25.8          6.5               5.8             (1.3)           36.8
 - continuing operations              25.8         14.5               5.8             (1.3)           44.8
 - discontinued operations               -         (8.0)                -                -            (8.0)
Jul-Dec 16                            34.1        (76.3)              6.2             (0.7)          (36.8)
 - continuing operations              34.1        (76.3)              6.2             (0.7)          (36.8)


Total Assets
30 Jun 16                            508.2         279.6             78.0            (42.4)          823.5
- total assets                       505.4         279.6             33.6              0.0           818.6
- intersegment                         2.8             -             44.4            (42.4)            4.9
31 Dec 16                            522.1         187.2             82.0            (60.1)          731.3
- total assets                       435.8         187.2             33.2             70.1           726.4
- intersegment                        86.3             -             48.8           (130.2)            4.9


Capital Expenditure
Jul-Dec 15                            37.5             -                -                -            37.5
Jul-Dec 16                            27.6             -                -                -            27.6

CEO'S COMMENTARY
The SA retail trading environment, and more specifically the FMCG element, can best be described
as capricious and uncertain over the last 6 months. This economic reality, together with new
challenges such as the pending sugar tax, has impeded and slowed progress, delaying the targets
that formed the basis of merger profitability projections in respect of the SoftBev beverages
business, especially in the Inland region. The directors of Bowler Metcalf considered it appropriate to
impair the Company’s 42.06% stake in SoftBev by R56.12m (after tax). Together with the
impairment within SoftBev itself, a total HEPS adjustment of R69.5m (after tax) is applicable to the
impairment of the SoftBev beverages business.

The core Bowler Plastics business has demonstrated robust interim growth in turnover of 15% and a
concomitant operating profit growth of 39%.

Plastic Packaging - Bowler Plastics
The reconstructed packaging business achieved its earnings growth in a generally difficult market
during this period. A good spread of niche business and a portfolio of strong customers have proved
to be invaluable. Growth has been well spread amongst all Bowler operational plants. The majority
of key projects have reached their production phases. The Gauteng plant expansion has resulted in
a regional activity growth of close to 50% on Prior Year (“PY”), laying the foundation for a stronger
regional presence in the future. Operational costs have been generally well controlled despite some
higher levels of new project industrialisation costs. Controlling operational costs will remain a
continued focus area. Raw material prices have been relatively stable, and that augers well for the
future. The increased activity levels in all plants have necessitated a focus on the expansion of
facilities, which is currently in progress.

Beverages - SoftBev
The merged SoftBev business is in the second year of national operation. The merger objectives
envisaged show potential of being achieved, be it at a slower pace than anticipated. This needs to
be understood in the context of national demographics, unrecoverable sugar price increases, the
influence of sugar tax, disposable income driven market contraction and resulting aggressive
competitor behaviour, all of which was not evident at the time of the merger. Despite this, SoftBev
has successfully focussed on brand growth, achieving 14% on PY. This has however come with
some margin loss, and pressure on operational costs, which were aggravated by drought related
water restrictions and capacity constraints. The management team continues in its aggressive steps
to address these business challenges head on. In November a R90mil filling line was successfully
added to the Gauteng operation, which will address certain of the operational issues.

A highlight in the SoftBev business has been the encouraging growth of the energy drink business
(Reboost).

Outlook
Bowler Plastics and SoftBev are not immune to the severe economic pressures prevalent in the
retail and manufacturing industries. These show little sign of abating in the immediate future. Both
management teams remain undeterred in their pursuit to achieve the respective objectives set for
the businesses, with the support of stable and experienced teams.

Bowler Plastics continues to focus on niche market growth with its focus on technology solutions
and operational cost optimisations.

SoftBev’s focus is directed towards brand growth particularly in the Inland while following a prudent
rightsizing of the business to prevailing market realities.

BASIS OF PREPARATION
The condensed unaudited consolidated results have been prepared in accordance with and
containing information required by 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, 2008 and the Johannesburg Stock Exchange’s Listings Requirements. The
condensed report has been prepared using accounting policies and methods of computation that are
in terms of IFRS and which are consistent with those of the previous annual financial statements.
The condensed report has not been audited or reviewed by the auditors.
ACQUISITIONS AND DISPOSALS
There have been no additions or disposals during the period under review.

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

ISSUE AND RE-PURCHASE OF TREASURY SHARES
There were no issues or re-purchases of treasury shares during the period.

CASH DIVIDEND DECLARATION
An interim gross cash dividend of 19.32 cents per share ("cps") (2015: 18.4 cps) has been declared
for the six months ended 31 December 2016 and is payable to shareholders on Monday, 3 April
2017. The last day to trade will be Tuesday, 28 March 2017. "Ex" dividend trading begins on
Wednesday, 29 March 2017 and the record date will be Friday, 31 March 2017. Share certificates
may not be dematerialised or re-materialised between Wednesday, 29 March 2017 and Friday, 31
March 2017, both days inclusive. Directors confirm that the solvency and liquidity test is satisfied at
the date of this report.

This dividend will be made from income reserves. The gross dividend is 19.32 cps. Dividend
Withholding Tax (DWT) is 20%. The net local cash dividend to shareholders liable for DWT will
therefore be 15.456 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.

BJ FROST (Non-Exec Chairman)                                     Company Tax No: 9775130710
PF SASS (Chief Executive Officer)          Prepared by: CA Bothma (Professional Accountant (SA))

CAPE TOWN
10 March 2017


REGISTERED AUDITOR                                                            TRANSFER SECRETARIES
Mazars - Partner Jaco Cronje - Registered Auditor        Computershare Investor Services (Pty) Ltd
Mazars House, Rialto Road,                                        PO Box 61051, Marshalltown, 2107
Grand Moorings Precinct, Century City, 7441


SPONSOR
Arbor Capital Sponsors Proprietary Limited

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