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Condensed Abridged Report of Audited Consolidated Results for the Year Ended 30 June 2017 and Dividend Declaration
Bowler Metcalf Limited
REG NO : 1972/005921/06 ALPHA CODE : BCF ISIN CODE : ZAE000030797
CONDENSED ABRIDGED REPORT OF AUDITED CONSOLIDATED RESULTS
FOR THE YEAR ENDED 30 JUNE 2017 AND DIVIDEND DECLARATION
%
R mil 30 June 17 Change 30 June 16
CONDENSED STATEMENT OF FINANCIAL POSITION
Non-current Assets 400,4 422,2
Property, plant & equipment 147,7 130,7
Investment properties 5,7 6,2
Intangible assets 4,8 4,9
Investment in associates 162,3 279,6
Related party loans 79,1 -
Deferred tax 0,8 0,8
Current Assets 358,1 401,3
Related party loan 0,8 46,8
Inventories 82,4 68,8
Trade and other receivables 110,6 106,2
Prepayments 12,3 21,3
Cash and cash equivalents 152,0 158,2
Total Assets 758,5 -8 823,5
Total Equity 661,2 -5 699,0
Non-current liabilities 39,8 60,7
Deferred Tax 39,8 60,7
Current Liabilities 57,6 63,8
Trade and other payables 54,6 59,2
Taxation 3,0 4,6
Total Equity & Liabilities 758,6 823,5
%
R mil 30 June 17 Change 30 June 16
CONDENSED STATEMENT OF COMPREHENSIVE INCOME
Continuing operations
Revenue 580,7 * 16 499,4
Other income 0,8 2,7
Operating costs (473,5) (432,0)
Impairment of investment in associate (57,7) -
Associated company (loss)/profit (59,6) 9,2
- share of post-tax (loss)/profit before impairments (17,1) 9,2
- share of associate's impairment loss, net of tax (42,5) -
(Loss)/Profit from operations (9,3) - 112 79,3
Net interest 19,4 17,5
Net profit before tax 10,1 96,8
Taxation (11,2) (23,3)
Total (loss)/profit - continuing operations (1,1) - 101 73,5
Discontinued operations
Net profit before tax - -
Taxation - (8,0)
Total profit/(loss) - discontinued operations - (8,0)
TOTAL COMPREHENSIVE (LOSS)/INCOME ATTRIBUTABLE
TO OWNERS OF PARENT (1,1) - 102 65,5
(Loss)/Earnings & diluted (loss)/earnings per share (c)
(Loss)/Earnings & diluted (loss)/earnings per share (c) (1,29) - 102 79,20
- continuing operations (1,29) 88,86
- discontinued operations - (9,66)
R mil
CONDENSED STATEMENT OF CHANGES IN EQUITY
Share Retained Treasury Total
Capital Earnings Shares Equity
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
Comprehensive Loss - (1,1) - (1,1)
Dividends - (31,3) - (31,3)
Purchase of treasury shares - - (5,5) (5,5)
30 June 17 21,5 675,4 (35,7) 661,2
%
30 June 17 Change 30 June 16
HEADLINE EARNINGS (R mil)
(Loss)/Earnings attributable to parent:
Continuing operations (1,1) 73,6
Disposal of assets - (0,2)
- gross - (0,2)
- tax - -
Disposal of assets (beverages) (0,1) -
- gross (0,1) -
- tax 0,0 -
Impairment of investment in associate 44,8 -
- loss 57,7 -
- tax (12,9) -
Impairment within equity accounted profits 33,0 -
- loss 42,5 -
- tax (9,5) -
Headline earnings - continuing operations 76,6 *4 73,4
Discontinued operations - (8,0)
Disposal of assets - 8,0
- gross - -
- tax - 8,0
Headline earnings - discontinued operations - -
Headline earnings (R'mil) 76,6 *4 73,4
HEADLINE (LOSS)/EARNINGS PER SHARE (HEPS)
(Loss)/Earnings attributable to parent:
Continuing operations (1,29) 88,86
Disposal of assets - net of outside interests (0,04) (0,11)
Impairment of investment in associate 54,07 -
Impairment within equity accounted profits 39,85 -
HEPS - continuing operations (cents) 92,59 *4 88,75
Discontinued operations - (9,66)
Disposal of assets - net - 9,66
HEPS - discontinued operations - -
Basic & diluted headline earnings (c) 92,59 *4 88,75
R mil
CONDENSED SEGMENTAL ANALYSIS
Plastic Unallocated/
Packaging Beverages Property Eliminations Total
2017
Continuing Operations
Revenue 575,9 - 4,8 - 580,7
Impairment on investment - (57,7) - - (57,7)
Intersegment revenue - - 18,0 (18,0) -
Other income 2,9 - - (2,1) 0,8
Expenses (486,1) - (5,4) 18,0 (473,5)
Share of loss of associate - (59,6) - - (59,6)
Operating income/(loss) 92,7 (117,3) 17,4 (2,1) (9,3)
Net finance income 14,4 - - 5,0 19,4
Taxation (29,2) 24,2 (4,8) (1,4) (11,2)
Profit for the year - continuing operations 77,9 (93,1) 12,6 1,5 (1,1)
Attributable to parent 77,9 (93,1) 12,6 1,5 (1,1)
Total assets 587,4 241,4 87,4 (157,7) 758,5
Total liabilities 236,1 23,5 1,4 (163,7) 97,3
2016
Continuing Operations
Revenue 495,1 - 4,3 - 499,4
Intersegment revenue - - 17,0 (17,0) -
Share of profit of associate - 9,2 - - 9,2
Other income 5,0 - - (2,3) 2,7
Expenses (443,5) - (5,5) 17,0 (432,0)
Operating income 56,6 9,2 15,8 (2,3) 79,3
Net finance income 17,5 - - - 17,5
Taxation (18,9) - (4,4) - (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 461,4 326,4 * 78,0 (42,3) 823,5
Total liabilities 125,7 47,8 4,4 (53,4) 124,5
* The related party loan previously included in the Plastic Packaging segment, has been reallocated to the Beverages
segment
R mil
CONDENSED STATEMENT OF CASH FLOWS 30 June 17 30 June 16
Operating Activities 53,4 52,6
Profit before tax 10,1 96,8
Non-cash items 133,2 14,5
Working capital changes (25,2) (1,9)
Taxation paid (33,5) (22,5)
Dividends paid (31,2) (34,3)
Investing Activities (54,1) (32,9)
Property plant and equipment (32,7) (51,1)
Proceeds on disposal of assets - 19,6
Loan advances (33,0) (0,3)
Advance payments 11,6 (1,1)
Financing Activities (5,5) (1,1)
Borrowings - (1,1)
Treasury shares - acquisitions (5,5) -
Net Cash Flow (6,2) 18,6
Opening balance 158,2 139,6
Closing balance 152,0 158,2
Comprising:
Cash & cash equivalents 152,0 158,2
RELATED PARTY TRANSACTIONS
Associate
SoftBev (Pty) Ltd
Finance income 4,9 -
Subsidiary of associate:
Quality Beverages 2000 (Pty) Ltd
Revenue 58,2 63,7
Rental income 4,8 4,3
Finance income 2,8 6,1
%
30 June 17 Change 30 June 16
ADDITIONAL INFORMATION
Ordinary dividend/share paid (c) 37,72 41,40
Ordinary dividend/share proposed (c) 42,02 * 14 36,80
Basic dividend cover (times) (0,03) 2,41
Weighted shares in issue (mil) 82,795 82,799
Capital expenditure (Rmil) 32,66 - 36 51,06
Capital commitments (Rmil) 1,60 - 89 14,40
CEO'S COMMENTARY
Lamenting the South African political and economic environments is so “in vogue” that the many good stories seem to
miss the radar – or should I say the twitter screens. I, for one, admire those many voices that are creating forums to
stand up for principle and justice, providing much needed guiding light and hope for our rainbow nation. Leading
organisations with courage during this VUCA (Volatile, Uncertain, Complex, Ambiguous) reality demands resolve and
integrity while still simultaneously implementing and delivering on sustainable business solutions. This surely must
bear testimony to the character and makeup of good teams. I experience good news in my many dealings with
companies in our supply chain who display this courage.
In this fast changing environment Bowler Metcalf’s two key business interests have commendably mastered their
respective challenges, be it at different levels of visibility. The Bowler Plastics Packaging business has excelled with
a 16% revenue growth on the back of good opportunity development in an otherwise flat sector.
The associate business SoftBev has been cause for much speculation. The economic realities dampened the merger
projections therefore slowing progress, particularly in the Gauteng market. While remaining tactically alert to the
market dynamics, management required space to steer a strategic and bold process of competitive positioning in a
short period. The business incurred significant planned costs in this process as a consequence of the intensely
competitive and sieged nature of the Carbonated Soft Drinks (CSD) Beverages industry in a difficult economy. The
teams did well to finalise the necessary consolidations while also growing market share across their wide spectrum of
brands. These costs, however, bear heavily on the final earnings. The reshaped business is mainly cause for the total
pre-tax impairment of R100.2m, including the impairment incurred within SoftBev.
Both businesses emerge with strength. Bowler Plastics (Pty) Ltd acquired a further R5.5mil treasury shares which at
14% discount to NAV of 793c/share represented good opportunity.
Plastic Packaging – Bowler Plastics
All plants have achieved high activity levels – managing a remarkable 15% organic unit growth in this period. Good
cost controls combined with new manufacturing approaches have reinforced the company’s focus on furthering good
supply chain integrations. This exciting development is a wonderful credit to the Bowler teamwork.
The business is adjusting to the rapid changes in the South African FMCG market. In this period, 2 large global
converters have entered the commodity rigid plastics packaging supply market by acquisition. It will change the
industry landscape in the years to come. Bowler Plastics remains focussed and believes itself well positioned in its
niche packaging field.
Some multinational FMCG Personal Care and Household brand holders have discussed moving manufacturing sites
for their products elsewhere. This development needs to be strongly discouraged and only collaborative strategies
between government, labour and industry stakeholders can make a difference. Initiatives are currently underway to
position the industry competitively and protect the employment which it sustains.
A Capex spend of R33m in the past year focussed on capacity expansion and modernisation.
Beverages – SoftBev
A perfect storm was brewing in the B-Brand CSD market, catalysed by the strategies implemented after The Coca-
Cola Beverages Africa merger, along with uncertainties surrounding the sugar tax proposals, and stirred by significant
sugar price increases. As followers in the sector, these Brands have endured immense pricing pressures in a
depressed economic environment.
SoftBev chose to focus on and protect its brands even if it was to the short term detriment of margins, meanwhile it
consolidated its operations and positioned the brands appropriately in the new environment. Pleasingly, all brands
have shown good to exceptional growth driving a turnover increase by 20% on 2016. Incidental costs of over R100mil
flowing from the completed strategies of organisational restructure, product reformulations and plant optimisations
are all accounted for in this period. The interventions have had a positive effect.
The R100mil capacity build in Gauteng is complete and operational, while the Cape Town plant upgrade was
satisfactorily finalised. Economies of scale for Gauteng have improved after the successful procurement of contract
filling for another national retailer brand and good growth in the licensed brands.
The SoftBev energy drink brand Reboost continues its exceptional growth.
Outlook
The economic realities of South Africa demand a focussed management approach. Bowler Metcalf believes in
progressing the next phase of expansion of the Plastic Business. This will require investment into expansion of
facilities and business opportunities. The management is critically appraising its continued involvement in the
beverages business.
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 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 correctly extracted
from the underlying audited AFS.
TREASURY SHARES
An additional 803,958 treasury shares were taken up by Bowler Plastics (Pty) Ltd at an average price of R6,84 per share.
CASH DIVIDEND DECLARATION
A final gross cash dividend, as defined by the Income Tax Act, of 22.7 cents per share ("cps") for the year ended 30
June 2017 (2016: 18.4 cps) has been declared and is payable to shareholders on Monday, 30 October 2017. The
last day to trade will be Tuesday, 24 October 2017, the ex date is Wednesday, 25 October 2017 and the record date
will be Friday, 27 October 2017. Share certificates may not be dematerialised or re-materialised between Wednesday,
25 October 2017 and Friday, 27 October 2017, both days inclusive.
This dividend will be made from income reserves. The gross dividend is 22.7 cps. Dividend Withholding Tax (DWT) is
20%. The net local cash dividend to shareholders liable for DWT will therefore be 18.16 cps.
Number of shares in issue at the date of declaration is 87 624 108 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 Annual Report will be released on the same day as this announcement. The twenty-seventh annual general
meeting of shareholders (AGM) will be held at the company’s head office, Harris Drive, Ottery, Cape Town at 09:00
on Wednesday, 8 November 2017. The record date for purposes of determining which shareholders are entitled to
participate and vote at the AGM is Friday, 3 November 2017. The last day to trade in order to be eligible to vote at the
AGM will accordingly be Tuesday, 31 October 2017.
B.J. Frost (Non-Exec Chairman)
P.F. Sass (Chief Executive Officer)
Cape Town
29 September 2017 Prepared by: CA Bothma PA (SA)
REGISTERED AUDITOR SPONSOR
Mazars - Partner FJ Cronje - Registered Auditor Arbor Capital Sponsors (Pty) Ltd
Mazars House, Rialto Road, 20 Stirrup Lane, Woodmead Office Park
Grand Moorings Precinct, Century City, 7441 Woodmead, 2157
TRANSFER SECRETARY
Computershare Investor Services (Pty) Ltd
P.O. Box 61051
Marshalltown, 2107
Date: 29/09/2017 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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