Wrap Text
DISTRIBUTION AND WAREHOUSING NETWORK LIMITED
DISTRIBUTION AND WAREHOUSING NETWORK LIMITED - INTERIM RESULTS FOR THE SIX
MONTHS ENDED 31 DECEMBER 1999
RESULTS FROM ONGOING OPERATIONS
TURNOVER - UP BY 24% OPERATING PROFIT - UP BY 55%
HEADLINE EARNINGS PER SHARE - UP BY 86%
INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 1999
COMMENTS
THE GROUP REPORTS SATISFACTORY RESULTS FOR THE SIX-MONTH PERIOD ENDED 31
DECEMBER 1999 DESPITE THE FACT THAT CONSUMER MARKETS REMAINED SUBDUED DURING
THE THIRD QUARTER OF 1999, WITH THE REDUCTION IN INTEREST RATES FAILING TO
MATERIALLY IMPACT ON CONSUMER DEMAND. GROUP OPERATIONS HOWEVER EXPERIENCED A
CONSIDERABLE IMPROVEMENT IN TRADING LEVELS OVER THE LAST QUARTER OF 1999.
THE BUILDING AND CONSTRUCTION INDUSTRY CONTINUED TO BE DEPRESSED THROUGHOUT THE
REPORTING PERIOD, BUT MANAGEMENT IS CAUTIOUSLY OPTIMISTIC THAT THIS ELEMENT OF
THE MARKET SECTOR IN WHICH THE COMPANY OPERATES, WILL CONTRIBUTE POSITIVELY
TOWARDS TRADING VOLUMES DURING THE FINAL QUARTER OF THE FINANCIAL YEAR.
FINANCIAL
THE RESULTS FOR THE SIX MONTHS TO 31 DECEMBER 1999 WERE IN LINE WITH
EXPECTATIONS WITH AN INCREASE OF 45% IN HEADLINE EARNINGS TO R20,6 MILLION, AND
AN INCREASE OF 86% IF DISCONTINUED OPERATIONS ARE EXCLUDED.
OPERATING PROFIT FROM ONGOING OPERATIONS AT R26,1 MILLION REPRESENTS AN
INCREASE OF 55%, MAINLY DUE TO A 24% INCREASE IN TURNOVER AS WELL AS
IMPROVEMENT IN THE OPERATING MARGIN FROM 5,3% TO 6,6%. IMPROVEMENT IN OPERATING
EFFICIENCIES AND EFFECTIVE OVERHEAD CONTROL CONTRIBUTED TO THE IMPROVEMENT IN
OPERATING MARGIN.
INTEREST-BEARING DEBT INCREASED BY R7,7 MILLION TO R13,4 MILLION OVER THE
REPORTING PERIOD. THIS WAS MAINLY AS A RESULT OF THE PAYMENT OF THE R13,1
MILLION OUTSTANDING PURCHASE PRICE ON THE ACQUISITION OF HARDWARE DISTRIBUTORS
AND AN INCREASE IN WORKING CAPITAL LEVELS IN ORDER TO AVAIL ITSELF OF LOWER
STOCK COSTS AHEAD OF PRICE INCREASES. THE GROUP'S INTEREST-BEARING DEBT
POSITION AT THE END OF THE REPORTING PERIOD HOWEVER COMPARED FAVOURABLY WITH
THE COMPARATIVE PERIOD WITH A R25,1 MILLION REDUCTION IN DEBT RESULTING IN AN
IMPROVEMENT IN GEARING FROM 26,3% TO 13,9%.
THE WORKING CAPITAL AND CASH FLOW POSITION FOR THE DECEMBER REPORTING PERIOD IS
NOT COMPARABLE WITH THE FINANCIAL YEAR END POSITION, DUE TO THE TRADITIONAL
IMPACT OF:
- PRUDENT STOCK BUYING IN ANTICIPATION OF NEW YEAR PRICE INCREASES BY SUPPLIERS
- IMPROVEMENT IN TRADING LEVELS TOWARDS THE END OF THE FINANCIAL YEAR RESULTING
IN AN INCREASE OVER AVERAGE LEVELS OF ACCOUNTS RECEIVABLE
- DIFFICULTY IN COLLECTING RECEIVABLES BEFORE THE DECEMBER CUT OFF, BECAUSE OF
GENERAL CASH FLOW PRESSURE DURING THIS TIME OF THE YEAR AS WELL AS THE SEASONAL
CLOSING OF BUSINESSES.
BUSINESS REVIEW
TRADING CONDITIONS IMPROVED IN THE LAST QUARTER OF 1999, CULMINATING IN STRONG
PERFORMANCES ACROSS ALL TRADING OPERATIONS. MANAGEMENT IS OPTIMISTIC THAT THE
STRENGTHENING IN THE TRADING ENVIRONMENT WILL CONTRIBUTE TOWARDS IMPROVED
EARNINGS AND ORGANIC GROWTH DURING THE SECOND HALF OF THE FINANCIAL YEAR.
THE IMPROVEMENT IN THE COMPANY'S BALANCE SHEET AND CASH FLOW SITUATION
POSITIONED THE GROUP TO TAKE ADVANTAGE OF PRUDENT STOCK PURCHASING WHICH SHOULD
CONTRIBUTE TO IMPROVED OPERATING MARGINS IN THE CURRENT PERIOD.
IN LINE WITH THE GROUP'S OBJECTIVE OF EXPANDING TRADING ACTIVITIES INTO
COUNTRIES NORTH OF THE SOUTHERN AFRICAN BORDERS, INFRASTRUCTURE IN MPUMALANGA
HAS BEEN EXPANDED TO OTHER GROUP OPERATIONS IN ORDER TO SUPPORT AND BENEFIT
FROM INCREASED TRADING OPPORTUNITIES, BOTH LOCALLY AND IN MOZAMBIQUE.
GROWTH EXPECTATIONS AS WELL AS INCREASED LOCAL TRADING VOLUMES, RESULTED IN THE
POSITIONING OF A NEW OPERATION IN GABORONE, BOTSWANA. FURTHER EXPANSION OF THE
GROUP'S DISTRIBUTION INFRASTRUCTURE IN THE NORTHERN PARTS OF THIS REGION IS
BEING EXPLORED. BOTH THESE NEW OPERATIONS ARE EXPECTED TO CONTRIBUTE POSITIVELY
TOWARDS GROUP EARNINGS BEFORE THE END OF THE CURRENT FINANCIAL YEAR.
SIGNIFICANT PROGRESS HAS BEEN MADE IN THE UPGRADING OF THE COMPUTER SYSTEMS IN
THE WHOLESALE TRADING DIVISION AND IT IS ANTICIPATED THAT THE IMPLEMENTATION
PROCESS WILL BE COMPLETED TOWARDS THE END OF THE FINANCIAL YEAR. POTENTIAL
BENEFITS FROM THE NEW SYSTEM INCLUDE IMPROVED STOCK MANAGEMENT AND PURCHASE
PLANNING AS WELL AS A FOUNDATION FOR THE GROUP'S E-COMMERCE INITIATIVES. THE
BENEFITS OF THE NEW SYSTEM ARE EXPECTED TO MATERIALISE IN THE NEXT FINANCIAL
YEAR.
ACQUISITIONS AND DISPOSALS
CONTINUED EFFORTS TO DISPOSE OF THE MANUFACTURING OPERATIONS RESULTED IN THE
SALE OF THE PLASTIC EXTRUSION OPERATION. THE DISPOSAL WAS EFFECTIVE FROM 31
DECEMBER 1999 WITH PROCEEDS OF R8,5 MILLION. THE CASH INFLOW WILL HOWEVER ONLY
OCCUR AFTER THE REPORTING DATE. NEGOTIATIONS FOR THE DISPOSAL OF THE REMAINING
MANUFACTURING OPERATION ARE ONGOING AND THE RESULTS OF THIS OPERATION ARE STILL
INCLUDED IN CONTINUING OPERATIONS.
BASED ON THE OPTIMISTIC ECONOMIC OUTLOOK TOGETHER WITH THE ANTICIPATED GROWTH
IN DEMAND, MANAGEMENT BELIEVE THAT THE GROUP WILL BENEFIT FROM THE SEPARATION
OF THE LOGISTICS AND SERVICE FOCUS, FROM THE TRADING ACTIVITIES. MANAGEMENT
THEREFORE DECIDED TO CONTINUE TO INVESTIGATE THE ACQUISITION OF THE
CAPABILITIES AND INFRASTRUCTURE OF A NATIONALLY POSITIONED LOGISTICS OPERATION,
WHICH WILL PROVIDE THE FUNDAMENTALS FOR THE LOGISTICS REQUIREMENTS OF THE
COMPANY'S E-COMMERCE STRATEGY. IT IS ANTICIPATED THAT THE IMPLEMENTATION OF
THIS STRATEGY WILL CONTRIBUTE TO IMPROVED EFFICIENCIES IN THE LOGISTICS
ACTIVITIES THROUGH MORE EFFECTIVE FLEET UTILISATION, AS WELL AS GROWTH IN
TRADING ACTIVITIES THROUGH IMPROVED SALES FOCUS.
PROSPECTS
ALL ECONOMIC PROJECTIONS ANTICIPATE AN IMPROVING ECONOMIC ENVIRONMENT WHICH
SHOULD IMPACT POSITIVELY ON CONSUMER DEMAND. TRADING VOLUMES TOWARDS THE END OF
THE REPORTING PERIOD INDICATED A RECOVERY IN BUSINESS CONFIDENCE AS WELL AS
INCREASED CONSUMER DISPOSABLE INCOME. THIS IS EXPECTED TO BE CARRIED FORWARD
INTO THE SECOND HALF OF THE FINANCIAL YEAR AND BEYOND. IN ADDITION, MANAGEMENT
IS OF THE VIEW THAT THE COMPANY IS EXTREMELY WELL POSITIONED TO BENEFIT FROM
THE ANTICIPATED OPPORTUNITIES OF AN IMPROVING ECONOMY. THIS POSITION WILL BE
FURTHER COMPOUNDED THROUGH THE EXPANSION OF THE LOGISTICS CAPABILITIES AND
SERVICE FOCUS, WHICH WILL ENSURE THAT THE COMPANY REMAINS THE LEADER IN ITS
CURRENT FIELD OF ACTIVITY AND BECOMES A SIGNIFICANT LINK IN THE SECTOR SUPPLY
CHAIN.
MANAGEMENT IS CONFIDENT THAT THE GROWTH PERFORMANCE ACHIEVED OVER THE REPORTING
PERIOD WILL BE MAINTAINED.
DIVIDENDS
NO INTERIM DIVIDEND HAS BEEN DECLARED IN LINE WITH THE GROUP'S POLICY NOT O
DECLARE INTERIM DIVIDENDS. AT THIS STAGE IT IS ANTICIPATED THAT DIVIDEND
PAYMENTS WILL BE RESUMED AT YEAR END.
YEAR 2000 COMPLIANCE
THE GROUP DID NOT EXPERIENCE ANY PROBLEMS OR DISRUPTIONS AS A RESULT OF THE
ARRIVAL OF THE YEAR 2000.
ON BEHALF OF THE BOARD
CPJ VAN DER MERWE DA TOD
CHAIRMAN CHIEF EXECUTIVE OFFICER
JOHANNESBURG
3 MARCH 2000
GROUP INCOME STATEMENT
UNAUDITED UNAUDITED AUDITED
SIX MONTHS SIX MONTHS 18 MONTHS
31 DECEMBER 31 DECEMBER 30 JUNE
R000 1999 1998 1999
TURNOVER 402 047 336 649 799 107
- ONGOING OPERATIONS 395 280 319 615 24% 750 053
- DISCONTINUED OPERATIONS 6 767 17 034 49 054
OPERATING PROFIT 26 510 20 232 52 261
- ONGOING OPERATIONS 26 142 16 849 55% 47 352
- DISCONTINUED OPERATIONS 368 3 383 4 909
NET FINANCE COSTS (1 998) (3 708) (10 360)
PROFIT BEFORE EXCEPTIONAL
ITEMS 24 512 16 524 48% 41 901
EXCEPTIONAL ITEMS 2 035 (1 192) (8 789)
PROFIT BEFORE TAXATION 26 547 15 332 33 112
TAXATION (3 882) (2 306) (4 835)
EARNINGS FOR THE PERIOD 22 665 13 026 28 277
ADJUSTMENT FOR EXCEPTIONAL
ITEMS (2 035) 1 192 8 789
HEADLINE EARNINGS 20 630 14 218 45% 37 066
INCLUDED ABOVE:
DEPRECIATION 2 596 2 035 6 267
OPERATING LEASE CHARGES 4 253 4 844 12 700
EXCEPTIONAL ITEMS
- PROFIT ON SALE OF
SUBSIDIARY 2 511 - -
- RATIONALISATION
EXPENDITURE (476) (411) (812)
- LOSS ON DISCONTINUED
OPERATIONS - (781) (8 669)
- INCOME FROM INVESTMENT - - 692
2 035 (1 192) (8 789)
GROUP BALANCE SHEET
UNAUDITED UNAUDITED AUDITED
31 DECEMBER 31 DECEMBER 30 JUNE
R000 1999 1998 1999
CAPITAL EMPLOYED
CAPITAL AND RESERVES 87 086 70 943 64 412
CONVERTIBLE DEBENTURES 9 931 9 931 9 931
OUTSIDE SHAREHOLDERS'
INTEREST 37 129 129
TOTAL SHAREHOLDERS' FUNDS 97 054 81 003 74 472
LONG-TERM LIABILITIES -
INTEREST-BEARING 3 870 4 727 4 590
DEFERRED TAXATION 6 990 731 5 557
107 914 86 461 84 619
EMPLOYMENT OF CAPITAL
FIXED ASSETS 19 662 32 208 21 663
INVESTMENTS AND LOANS 524 524 524
NET CURRENT ASSETS 87 728 53 729 62 432
CURRENT ASSETS 232 164 196 875 216 591
CURRENT LIABILITIES 144 436 143 146 154 159
- INTEREST-BEARING 9 586 20 407 1 176
- OTHER 134 850 122 739 152 983
107 914 86 461 84 619
LEASE COMMITMENTS
FINANCE LEASES 3 396 5 098 5 509
OPERATING LEASES 46 909 44 522 39 192
50 305 49 620 44 701
STATISTICS
NUMBER OF SHARES (000)
- IN ISSUE 277 565 276 702 276 702
- WEIGHTED AVERAGE 277 565 276 702 233 891
EARNINGS PER SHARE (CENTS) 8,17 4,71 73% 12,09
HEADLINE EARNINGS PER
SHARE (CENTS)
- TOTAL GROUP 7,43 5,14 45% 15,85
- ONGOING OPERATIONS (CENTS) 7,30 3,92 86% 13,75
OPERATING MARGIN FROM
ONGOING OPERATIONS (%) 6,50 5,00 5,93
VALUE PER SHARE
- NET ASSET VALUE (CENTS) 34,95 29,23 26,87
- MARKET PRICE (CENTS) 50 58 50
FINANCIAL GEARING RATIO (%) 13,86 26,32 7,74
CURRENT ASSET RATIO (TIMES) 161 1,38 1,40
TOTAL ASSETS (R000) 252 350 229 607 238 778
SUMMARISED GROUP
CASH FLOW STATEMENT
UNAUDITED UNAUDITED AUDITED
SIX MONTHS SIX MONTHS 18 MONTHS
31 DECEMBER 31 DECEMBER 30 JUNE
R000 1999 1998 1999
CASH FLOW FROM OPERATING
ACTIVITIES (14 404) (1 373) 21 292
TRADING ACTIVITIES (12 496) 2 876 32 072
NET FINANCE COST (1 998) (3 708) (10 360)
TAXATION PAID 90 (541) (420)
CASH FLOW FROM INVESTING
ACTIVITIES 6 713 116 1 323
CASH FLOW FROM FINANCING
ACTIVITIES (479) 5 058 (2 028)
INCREASE/(DECREASE) IN CASH
RESOURCES (8 170) 3 801 20 587
DISTRIBUTION AND WAREHOUSING NETWORK LIMITED
INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA
REG NO 84/08265/06 (FORMERLY CITY INVESTMENT HOLDINGS LIMITED)
REGISTERED OFFICE 2 KEEROM ROAD HERIOTDALE EXT 10 CLEVELAND JOHANNESBURG
DIRECTORS CPJ VAN DER MERWE* (CHAIRMAN) DA TOD (CHIEF EXECUTIVE OFFICER)
JA BEUKES RL HIEMSTRA* NM INGLEDEW* *NON-EXECUTIVE
E-MAIL DAWN@WHS.CO.ZA
WEBSITE WWW.DAWNLTD.CO.ZA
TEL +2711 622 6680
FAX +2711 622 3864
Sharenet Sites 
