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BOWLER METCALF LIMITED - Condensed unaudited consolidated results for the six months ended 31 December 2018 and Dividend Declaration

Release Date: 28/02/2019 17:30
Code(s): BCF     PDF:  
 
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Condensed unaudited consolidated results for the six months ended 31 December 2018 and Dividend Declaration

Bowler Metcalf Limited
REG NO : 1972/005921/06               ALPHA CODE : BCF                          ISI N COD E : ZAE000030797


CONDENSED UNAUDITED CONSOLIDATED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2018 AND  DIVIDEND DECLARATION



HEPS Continued Operations up 1% year on year
                                                                                           15.00c Interim Dividend per share


                                                                                                          R mil               %                               R mil
                                                                                                       31-12-18             Change                         30-06-18

CONDENSED STATEMENT OF FINANCIAL POSITION
Non-current Assets                                                                                        166.9                 -2                            169.7
Property, plant & equipment                                                                               155.5                                               158.0
Investment properties                                                                                       5.3                                                 5.6
Intangible assets                                                                                           4.9                                                 4.9
Deferred taxation                                                                                           1.2                                                 1.2

 
Current Assets                                                                                            647.3                 55                            416.5
Inventories                                                                                                93.8                                                86.6
Trade and other receivables                                                                               114.3                                               119.6
Prepayments                                                                                                 7.2                                                 5.7
Cash and cash equivalents                                                                                 428.5                                               202.9
Taxation                                                                                                    3.5                                                 1.7

Assets Held for Sale                                                                                          -                                               298.1
Investment in associate                                                                                       -                                               233.3
Related party loans                                                                                           -                                                64.8
                                                                                               --------------------        --------------------
Total Assets                                                                                               814.2                -8                            884.3
                                                                                                       ============          ============

Total Equity                                                                                               674.1                -12                           766.1


Non-current Liabilities                                                                                     21.7                -64                            61.0
Deferred taxation                                                                                           21.7                                               61.0


Current Liabilities                                                                                        118.4                107                            57.2
Trade and other payables                                                                                    36.0                                               56.1
Taxation                                                                                                    82.4                                                1.1
                                                                                               --------------------        ------------------- 
Total Equity & Liabilities                                                                                 814.2                -8                            884.3
                                                                                                      ============          ============

CONDENSED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME FOR THE SIX MONTHS ENDED 31 DECEMBER 2018                                                       31-12-18               %                            31-12-17
                                                                                                         R mil              Change                            R mil
Continuing operations
Revenue                                                                                                   267.7                 -6                            283.8
Other income                                                                                                0.2                                                 0.4
Operating costs                                                                                          (151.1)                 1                           (152.7)
Depreciation                                                                                              (11.5)                                               (9.8)
Rent and property finance                                                                                  (2.9)                                               (3.6)
Staffing Cost                                                                                             (70.5)                                              (72.8)
Profit from operations                                                                                     31.9                -30                             45.3
Net finance income                                                                                         19.2                                                 6.7
                                                                                               --------------------                                --------------------
Profit before tax                                                                                          51.1                 -2                             52.0
Taxation                                                                                                  (14.3)                                              (15.5)
                                                                                               --------------------                                --------------------
Profit for the period - continuing operations                                                              36.8                  1                             36.5
                                                                                               --------------------                                --------------------
Discontinued operations
Share of profit of associate                                                                                  -                                                13.0
Profit on disposal of investment in associate                                                             180.1                                                   -
Net finance income from associate                                                                             -                                                 4.8
                                                                                               --------------------                                --------------------
Profit before tax                                                                                         180.1                912                             17.8
Taxation                                                                                                  (41.2)                                               (4.2)
                                                                                               --------------------                                --------------------
Profit for the period - discontinued operations                                                           138.9                921                             13.6
                                                                                               --------------------                                --------------------
                                                                                               --------------------                                --------------------
Attributable to equity holders of parent                                                                  175.7                251                             50.1
                                                                                                     ============                                        ============

NOTES TO THE CONDENSED STATEMENT OF COMPREHENSIVE INCOME                                                    31-12-18                                        31-12-17
                                                                                                              R mil                                           R mil
Related party transactions
SoftBev (Pty) Ltd (associate)
- finance income                                                                                                  -                                             4.8

Quality Beverages 2000 (Pty) Ltd (other related party)
- revenue                                                                                                       6.3                                            20.7
- rental income                                                                                                 0.8                                             2.6
 
Receipt of related party loan receivable                                                                       64.8                                             0.1

The related party relationship with SoftBev (Pty) Ltd and Quality Beverage 2000 (Pty) Ltd
ceased during the year. (Refer note on disposal of investment in associate.)

Disaggregate revenue sources
Plastic Packaging and Related Products                                                                        264.9                                           281.2
Property Leases                                                                                                 2.8                                             2.6
                                                                                                              267.7                                           283.8

Disposal of associate investment in SoftBev (Pty) Ltd

During the period under review, the disposal of the 41.4% associate investment in SoftBev (Pty) Ltd was completed. Final proceeds on the disposal
were received on 15 November 2018. The loan receivable amounting to R64.8m at the June 2018 year end was paid on 15 August 2018.


                                                                                                               R mil                                            R mil
Gross proceeds on disposal                                                                                     418.5                                                -
Transaction cost                                                                                                (1.4)                                               -
Operating cost associated with the disposal of the investment in associate                                      (3.7)                                               -
Net proceeds on disposal                                                                                       413.4                                                -

Carrying value of investment classified as
held for sale                                                                                                  233.3                                                -

Profit before tax realised on disposal of associate                                                            180.1                                                -
Taxation                                                                                                       (41.2)                                               -
Net profit on disposal of investment in associate                                                              138.9                                                -

CONDENSED STATEMENT OF CHANGES IN EQUITY (R mil)
                                                                                           Share               Retained                  Treasury                   Total
                                                                                         Capital               Earnings                    Shares                  Equity

Balance as at 30 June 2017                                                                  21.5                  675.3                     (35.6)                  661.2
Cancellation of treasury shares                                                             (5.4)                     -                       5.4                       -
Comprehensive profit for the year to 30 June 2018                                              -                  140.3                         -                   140.3
Dividends paid                                                                                 -                  (35.4)                        -                   (35.4)
                                                                             --------------------   --------------------      -----------------------   --------------------
Balance as at 30 June 2018                                                                  16.1                  780.2                     (30.2)                  766.1
Comprehensive profit for the six months ending 31 December 2018                                -                  175.7                         -                   175.7
Dividends paid                                                                                 -                 (267.7)                        -                  (267.7)
                                                                             --------------------   --------------------      -----------------------   --------------------
Balance as at 31 December 2018                                                              16.1                  688.2                     (30.2)                  674.1
                                                                                        ===========           ============              =============           ============

                                                                                                              R mil                     %                           R mil
CONDENSED STATEMENT OF CASH FLOWS                                                                          31-12-18                 Change                       31-12-17

Operating Activities                                                                                         (242.3)                                                 18.0
Profit before tax                                                                                             231.2                                                  69.8
Non-cash items * #                                                                                           (168.4)                                                 (3.2)
Working capital changes                                                                                       (22.0)                                                 (8.6)
Dividends paid                                                                                               (267.7)                                                (18.9)
Taxation paid                                                                                                 (15.4)                                                (21.1)

Investing Activities                                                                                          467.9                                                 (10.8)
Property, plant and equipment - additions                                                                      (8.8)                                                 (7.6)
Proceeds on disposal of property, plant and equipment                                                             -                                                   0.1
Net proceeds on disposal of associate held for sale                                                           413.4                                                     -
Movement in prepayments                                                                                        (1.5)                                                 (3.3)
Receipts from related party loans #                                                                            64.8                                                  12.0
Advances on related party loans #                                                                                 -                                                 (12.0)

Net increase in cash and cash equivalents                                                                     225.6                                                   7.2
Opening balance                                                                                               202.9                                                 152.0
                                                                                                     --------------------                                  --------------------
Closing balance                                                                                               428.5                                                 159.2
                                                                                                          ============                                          ============
Comprising:
Cash & cash equivalents                                                                                       428.5                                                 159.2
                                                                                                          ============                                          ============
Net cash flows from discontinued operations included in above cash flow
Operating Activities                                                                                              -                                                   0.6
Investing Activities                                                                                          478.2                                                   0.1
                                                                                                     --------------------                                  --------------------
                                                                                                              478.2                                                   0.7
                                                                                                          ============                                          ============
*Non-cash items
Profit on disposal of investment in associate                                                                (180.1)                                                    -
Depreciation                                                                                                   11.5                                                   9.8
Share of profit of associate                                                                                      -                                                 (13.0)
Other                                                                                                           0.2                                                     -
                                                                                                             (168.4)                                                 (3.2)
# - Refer note on restatement

HEADLINE EARNINGS RECONCILIATION                                                                          R mil             %                          R mil
                                                                                                        31-12-18           Change                    31-12-17
Continuing operations
Profit for the period - continuing operations                                                               36.8                                         36.5
Net profit on disposal of plant & equipment                                                                    -                                         (0.1)
Profit on disposal                                                                                             -                                         (0.1)
Taxation                                                                                                       -                                            -
                                                                                              --------------------                         --------------------
Headline earnings - continuing operations                                                                   36.8             1                           36.4
                                                                                              --------------------                         --------------------
Discontinued operations
Profit for the period from discontinued operations                                                         138.9                                         13.6
                                                                                              --------------------                         --------------------
Net profit on disposal of investment in associate                                                         (138.9)                                           -
Profit on disposal of investment in associate                                                             (180.1)                                           -
Taxation                                                                                                    41.2                                            -

Headline earnings - discontinued operations                                                                    -           -100                          13.6
                                                                                              --------------------                         --------------------
Headline earnings - attributable to holders of the parent                                                   36.8            -26                          50.0
                                                                                                      ============                                  ============

BASIC & DILUTED HEADLINE EARNINGS PER SHARE (c)                                                       31-12-18                                     31-12-17
                                                                                                         CPS                                          CPS
Earnings & diluted earnings per share (c)
- Continuing operations                                                                                   44.9                1                         44.5
- Discontinued operations                                                                                169.4                                          16.5
                                                                                              --------------------                         --------------------
                                                                                                         214.3              251                         61.0
                                                                                                    ============                                   ============
HEADLINE EARNINGS PER SHARE RECONCILIATION (c)

Continuing operations
Earnings per share                                                                                        44.9                                          44.5
Net profit on disposal of plant & equipment                                                                  -                                          (0.1)
                                                                                              --------------------                         --------------------
Basic & diluted headline earnings per share-continuing operations                                         44.9                1                         44.4
                                                                                              --------------------                         --------------------
Discontinued operations
Earnings per share                                                                                       169.4                                          16.5
Net profit on disposal of investment in associate                                                       (169.4)                                            -
                                                                                              --------------------                         --------------------
Basic & diluted headline earnings per share-discontinued operations                                          -                                          16.5
                                                                                              --------------------                         --------------------
Basic & diluted headline earnings per share -
attributable to holders of the parent                                                                     44.9              -26                         60.9
                                                                                                     ============                                  ============
 
CONDENSED SEGMENTAL                               Plastic      Discontinued         Property
ANALYSIS (Rmil)                                 Packaging         Beverages       Investment            Holdings          Eliminations                Total

Revenue

Jul-Dec 18                                          264.9                 -              2.8                   -                     -                267.7
- total revenue                                     264.9                 -             12.9                   -                     -                277.8
- intersegment                                                                         (10.1)                  -                     -                (10.1)

Jul-Dec 17                                          281.2                 -              2.6                   -                     -                283.8
- total revenue                                     281.2                 -             12.1                   -                     -                293.3
- intersegment                                          -                 -             (9.5)                  -                     -                 (9.5)

Operating Profit
Jul-Dec 18                                           46.6             180.1              4.4                (0.7)                (18.4)               212.0
 - continuing operations                             46.6                 -              4.4                (0.7)                (18.4)                31.9
 - discontinued operations                              -             180.1                -                   -                     -                180.1
Jul-Dec 17                                           38.2              13.0              8.5                (0.4)                 (1.0)                58.3
 - continuing operations                             38.2                 -              8.5                (0.4)                 (1.0)                45.3
 - discontinued operations                              -              13.0                -                   -                     -                 13.0
                                               =============      ============       ============     ============          =============          ============
Attributable Profit
Jul-Dec 18                                           38.9             138.9              3.2                13.1                 (18.4)               175.7
 - continuing operations                             38.9                 -              3.2                13.1                 (18.4)                36.8
 - discontinued operations                              -             138.9                -                   -                     -                138.9
Jul-Dec 17                                           29.1              10.1              6.1                 5.8                  (1.0)                50.1
 - continuing operations                             29.1                 -              6.1                 2.3                  (1.0)                36.5
 - discontinued operations                              -              10.1                -                 3.5                     -                 13.6
                                               =============         ============    ============     ============           =============         ============
                                                              
                                                                 Held for
Total Assets                                                         Sale
31 Dec 18                                           683.6               -             102.9                405.7                (378.0)               814.2
- total assets                                      374.3               -              34.2                405.7                     -                814.2
- intersegment                                      309.3               -              68.7                    -                (378.0)                   -

30 Jun 18                                           663.6           298.2             100.1                197.4                (375.0)               884.3
- total assets                                      348.6           298.2              35.2                197.4                     -                879.4
- intersegment                                      315.0               -              64.9                    -                (375.0)                 4.9
                                              ============      ============     ============         ============           =============         ============
Capital Expenditure
Jul-Dec 18                                            5.0               -               3.8                   -                       -                 8.8
Jul-Dec 17                                            7.3               -               0.3                   -                       -                 7.6
                                              =============     ============     ============         ============           =============         ============
                                                                                                                              %
ADDITIONAL INFORMATION                                                                                    31-12-18          Change                  31-12-17

Ordinary dividend / share paid (c)                                                                           21.50             -7                      23.10
Special dividend / share paid (c)                                                                           305.00                                        -
Ordinary dividend / proposed (c)                                                                             15.00            -27                      20.48
Dividend cover (times) from continuing operations                                                             2.99                                      2.17
Weighted shares in issue (mil)                                                                               82.00                                     82.00
Capital commitments (Rmil)                                                                                    5.70                                     10.80
Closing share price (c)                                                                                        790                                       750



CEO'S COMMENTARY
A bittersweet half year is reflected on the one hand by the positive effects of the finalisation of the SoftBev deal. In the end, the final deal surpassed our
high road predictions – time and effort well spent. The special dividend pay-out of 305 cps has found much favour with investors. R17.1m of this special
dividend is included in the Operating and Attributable Profits of the Plastics Packaging Segment. Sufficient liquidity is retained in the business fo r an
intensified focus on the continuing operations in which expansion possibilities are actively pursued in consonance with the proven expertise and required
alignment.
On the other hand, the packaging business has endured the combined negative effects of subdued sales (6% decline) emanating from poor retail
performances and down buying, rampant raw material price increases (at times exceeding 20%) driven by foreign exchange rate volatility and sadly,
the most protracted and violent industrial action yet witnessed in our industry. The combined effects have constrained the business performance. The
correction and return to stable performance will be the key focus in the second half. The business remains focussed on profitable niche products within
the FMCG markets.
The NUMSA led industrial action in the industry has affected various converters and their customers in different ways. Despite various contingency
measures taken by the business, the situation was costly and challenging beyond normal business management demands. Bowler’s Gauteng plant
was particularly affected by unprecedented regional levels of violence and intimidation. The stalemate in negotiations leading to the excessive duration
of the strike sets an uncomfortable precedent from an employment and an investment perspective. It can only be wished that the actions have the result
of a constructive labour / business partnership for the good of the Plastics Industry and its employees in the long term.
Despite the financial effects of the above mentioned, the group posts earnings from continuing operations in line with the previous period.


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 Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council and in the manner required by the
Companies Act (Act 71 0f 2008) and the Johannesburg Stock Exchange Listings Requirements. The condensed report has been prepa red 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, except for the changes on adoption of IFRS 15 Revenue from Contracts with Customers and IFRS 9 Financial Instruments. The condensed
report has not been audited or reviewed by the auditors.

                                                                                                                                                       R mil
RESTATEMENT OF MOVEMENT IN RELATED PARTY LOAN                                                                                                       31-12-17

Previously reported as                                                                                                                                   0.1

Currently reported as:

Investing Activities
Receipts from related party loans                                                                                                                       12.0
Advances on related party loans                                                                                                                        (12.0)

Included in non-cash items
Transactional related party recharges                                                                                                                    0.1

Total movement in related party loan                                                                                                                     0.1

In the statement of cash flows, the cash movement in related party loan has been restated for the prior financial period to separate the receivable
related party loans from the payable related party loans. The previous interpretation of the related IFRS standards allowed for the offset of these
amounts at the prior reporting date. The interpretation has now been corrected in accordance with IAS7. Therefore the prior year has been restated
for comparative purposes. These restatements does not impact the other statements presented.

ACQUISITIONS AND DISPOSALS
There have been no business additions during the period under review, and no other disposals apart from the disposal of the associate investment
in SoftBev (Pty) Ltd.

TAXATION PAYABLE
The large increase in taxation payable emanates from the capital gains tax payable on the disposal of the associate investment in Softbev (Pty) Ltd.

DEFERRED TAXATION
The reduction in the deferred taxation liability for the period relates mainly to the conversion of the capital gains tax on t he associate moving from
deferred taxation payable, to short term taxation payable on the profit realised on the disposal of the investment in associate.

NEW STANDARDS AND INTERPRETATIONS

IFRS 9 Financial Instruments
Classification of financial assets

The new standard does away with the rule-based classifications for financial assets previously seen under IAS 39 and, instead, requires principle-
based classifications which are driven by cash flow characteristics of the instrument and the Group business model. The measurement classes for
financial assets under the new standard comprise amortised cost, fair value through profit or loss and fair value through other comprehensive
Impairment
The group was required to revise its impairment methodology under IFRS 9 for its financial assets. The group’s significant financial assets consists
of trade and other receivables and cash and cash equivalents. In terms of its revised methodology the group applies the IFRS 9 simplified
approach to measuring expected credit losses, which uses a lifetime expected loss allowance for all trade receivables.
While the loss allowance has increased on this basis as a result of the general earlier recognition of credit losses, the impact has not been material.
The group expects to provide additional disclosures in the annual report regarding the calculation of the expected credit los s and the judgements
that have been made as a result of the new standard.

The group has not restated comparatives for the adoption of IFRS 9.

IFRS 15 Revenue from Contracts with Customers
Contract revenue
This is a new standard that establishes a single, comprehensive and robust framework for the recognition, measurement and disclosure of revenue.
The group adopted the new standard on its effective date, being for years beginning on or after 01 January 2018.

Sale of goods
The group currently recognises revenue on the sale of goods on delivery, which is when control of the goods passes to the customer. An
examination of the Group’s terms and conditions of sale has led the group to conclude that control of the goods passes to the customer upon
delivery. There has therefore been no significant impact on the recognition and measurement of revenue on the adoption of IFRS 15.

IFRS 16 Leases
IFRS 16 provides the principles for the recognition, measurement, presentation and disclosure of leases. The standard introduces a single
accounting model for lessees building on the principle that all leases result in the lessee being entitled to use an asset an d, if lease payments are
made over time, obtaining financing. The standard eliminates the distinction of operating and financing leases for lessees resulting in a more fai thful
representation of the lessee’s assets and liabilities and improved transparency regarding the lessee’s financial leverage and capital employed.
Lessor accounting is left largely unchanged from its predecessor (IAS 17 Leases).

The Group does not expect the adoption of this standard to have a material impact on its financial position or results because:
1. The Group has evaluated its leases and many of its leases meet the definition of “short term leases” and leases of low value assets that meet the
   exemption to be expensed as incurred in terms of IFRS 16. The group expects to make use of these exemptions where possible;
2. The premises on which the operations are conducted, are owned by the group and would therefore only result in additional disclosure under IFRS
   from a group perspective;
3. The group’s remaining lease payments have been assessed and are not material.


ISSUE OF SHARES
There has been no new issues of ordinary shares during the period.

CASH DIVIDEND DECLARATION
Following the special dividend pay-out from the SoftBev disposal, we are proposing an ordinary interim gross cash dividend as defined by the Income
Tax Act, of 15.00 cents per share ("cps") (2017: 20.48 cps) for the six months ended 31 December 2018 and is payable to shareholders on Monday,
25 March 2019. The last day to trade will be Monday, 18 March 2019. "Ex" dividend trading begins on Tuesday, 19 March 2019 and the record date
will be Friday, 22 March 2019. Share certificates may not be dematerialised or re-materialised between Tuesday, 19 March 2019 and Friday, 22 March
2019, 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 15.00 cps. Dividend Withholding Tax (DWT) is 20%. The net local cash
dividend to shareholders liable for DWT will therefore be 12.00 cps.

The number of shares in issue at the date of declaration is 81 995 105 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)
PF SASS (Chief Executive Officer)                                                                                        Company Tax No: 9775130710
Cape Town, 28 February 2019                                                                                        Prepared by: AC September (CA) SA

REGISTERED AUDITOR                                           TRANSFER SECRETARIES                                                           SPONSORS
Mazars                                                       Computershare Investor Services (Pty) Ltd              Arbor Capital Sponsors (Pty) Ltd
Partner: Yolandie Ferreira (Registered Auditor)              P.O. Box 61051, Marshalltown, 2107                     20 Stirrup Lane, Woodmead Office
Mazars House, Rialto Road,                                                                                          Park, c/o Woodmead Drive and Van
Grand Moorings Precinct, Century City, 7441                                                                                 Reenens Avenue, Woodmead

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