Wrap Text
Distribution and Warehousing Network Limited
Incorporated in the Republic of South Africa
Reg. no 1984/008265/06
Interim results for the six months ended 31 December 2000
TURNOVER 11%
OPERATING PROFIT 13%
HEADLINE EARNINGS PER SHARE 13%
Comments
The group continued to improve profitability in the second half of 2000.
Operating profit from continuing operations increased by 13% to R28,8 million,
while headline earnings improved by 12% to R23,1 million. This result was
achieved in the face of another extremely difficult trading period and weak
economic conditions, exacerbated by the change in consumer spending trends.
The group experienced an improvement in trading conditions towards the latter
part of the previous financial year which was sustained into the first quarter
of the current financial year. The traditional cyclical upswing in trading
levels did however not materialise during the second half of the review period,
which affected the group's performance, more specifically when compared with
the corresponding period in the previous financial year during which trading
levels performed above expectations.
Review of results
The group increased its turnover from continuing operations by 11% to R391
million in a period during which continued harsh trading conditions as well as
the impact of diversionary attractions on consumer spending have affected the
groups performance. Operating margins have however been improved by 12% from
6,59% to 7,36%.
Headline earnings per share from continuing operations increased by 13% from
7,1 cents per share to 8 cents per share, which takes into account the full
dilutionary effect of the issue of 17,38 million shares as part of the group's
implementation of a share incentive scheme.
Significant rationalisation and consolidation of activities have been
undertaken during the review period. Restructuring cost to the value of R3,1
million has been incurred and is disclosed as an exceptional item. In addition,
the group's earnings were affected by the following exceptional provisions:
- The disposal of the aluminium extrusion division was announced in the press
on 28 July 2000. The purchaser was subsequently provisionally liquidated on 24
January 2001 and a provision of R4 million has been made for potential
exposures in this regard.
- The group embarked on the implementation of a new computer system. Certain
delays with the implementation resulted in a duplication of network and related
costs. A provision of R1,8 million has been made for remaining onerous network
and system obligations.
- Certain recently acquired businesses were combined and restructured, and
provision has been made for retrenchments and vacant property leases amounting
to R1,5 million.
An increase in stock as a result of the negative trading levels during the last
quarter of 2000 affected the group's cash flow and resulted in higher than
expected financing cost. This together with the cyclical increase in working
capital requirements during this time of the year, as well as a disbursement of
approximately R9,7 million to shareholders, contributed to a net cash outflow
of R9,5 million during the review period. Gearing at 16,5% still however
represents a 37% improvement over the corresponding period. The interim
financial statements comply with South African Statements of Generally Accepted
Accounting Practice, and the accounting policies used are consistent in all
material respects with those used for the June 2000
financial statements.
Prospects
Management is confident that the economy is now entering a recovery phase and
is gearing up for growth as evidenced by the improvement in trading levels
since the beginning of the new year. Expectations are that the building and
construction industry will emerge from the recessionary phase over the short to
medium term, which should benefit all the group's operations substantially.
Dawn is expected to capitalise from the change in the industry supply chain
model, where an uncertain and volatile trading environment demands much greater
emphasis on working capital management. This will ensure increased reliance on
Dawn's capabilities of cost-effective break bulk just-in-time national
distribution as well as credit management. The group has made a significant
investment in operations and infrastructure in ensuring that the group is ready
and able to take advantage of an improving economy.
Dawn will continue to focus on revenue growth, while an aggressive approach on
cost containment and improvement of efficiencies is expected to contribute
towards further improvements in margin. Growth is expected from new
opportunities arising from the expanded distribution and IT network, while
selected strategic acquisitions will also be pursued.
The group has experienced increased economic activity in January and February
this year, which if sustained, will contribute toward a sound second-half
performance, and in the absence of unforeseen circumstances, Dawn will continue
to deliver sound earnings growth for the current financial year.
Dividend
It is the group's present policy to declare a single annual dividend based on
the full year's results.
Changes in directorate
The board is pleased to announce the appointment of Mr Mike Woods, a recently
retired senior partner of an international auditing and accounting firm, as
non-executive director with effect from 19 February 2001. Mr Norman Ingledew
resigned from the board during October 2000, and the board wants to extend its
appreciation for the valuable contribution over the period of his involvement.
Strate
Shareholders are advised that the company's shares will be dematerialised with
effect from 26 March 2001, with electronic trading and settlement commencing on
17 April 2001 and 24 April 2001 respectively.
On behalf of the board
CPJ van der Merwe DA Tod
Chairman Chief Executive Officer
Johannesburg
8 March 2001
Group income statement
Unaudited Unaudited Audited
Six months Six months Twelve months
31 December 31 December 30 June
R000 2000 % 1999 2000
Turnover 391 383 402 047 734 429
- Continuing operations 391 383 11 352 964 685 346
- Discontinued operations - 49 083 49 083
Operating profit 28 807 26 510 49 915
- Continuing operations 28 807 13 25 567 49 680
- Discontinued operations - 943 235
Net finance costs (2 089) (1 998) (4 408)
Profit before exceptional
items 26 718 24 512 45 507
Exceptional items (13 498) 2 035 (11 224)
Profit before taxation 13 220 26 547 34 283
Taxation (3 098) (3 882) (4 673)
Earnings for the period 10 122 22 665 29 610
Adjustment for exceptional
items 12 972 (2 035) 11 081
Headline earnings 23 094 12 20 630 40 691
Included above
Depreciation 2 815 2 596 4 658
Operating lease charges 5 133 4 253 9 464
Exceptional items
- Loss on sale of business 5 210 - 11 382
- Rationalisation expenditure 4 634 476 476
- Profit on sale of business - (2 511) (2 534)
- Provision for loss on
investment - - 1 900
- Provision for onerous
obligations iro delay of
computer system
implementation 3 654 - -
13 498 (2 035) 11 224
Tax relief (526) - (143)
12 972 (2 035) 11 081
Statistics
Number of shares (000)
- in issue 294 945 277 565 277 565
- weighted average 288 805 277 565 277 565
Headline earnings per
share (cents) 8,00 8 7,43 14,66
Headline earnings
per share from continuing
operations (cents) 8,00 13 7,09 14,58
Attributable earnings
per share (cents) 3,50 8,17 10,67
Operating profit (%) 7,36 6,59 6,80
Unaudited Unaudited Audited
31 December 31 December 30 June
R000 2000 1999 2000
Group balance sheet
Assets
Non-current assets
Property, plant and
equipment 19 605 19 662 13 986
Intangible assets 900 - -
Investments 524 524 524
Current assets 230 117 232 164 218 904
Inventory 101 704 87 942 78 283
Receivables and prepayments 128 413 144 222 137 357
Cash and cash equivalents - - 3 264
251 146 252 350 233 414
Equity and liabilities
Capital and reserves
Ordinary shareholders'
equity 92 853 79 079 87 840
Outside shareholders'
interest - 37 -
Non-current liabilities 16 891 15 349 13 196
Interest-bearing liabilities 7 853 3 877 4 158
Convertible debentures 4 482 4 482 4 482
Deferred tax liabilities 4 556 6 990 4 556
Current liabilities 141 402 157 885 132 378
Trade and other payables 130 113 142 850 123 211
Convertible debentures - 5 449 5 449
Current portion of borrowings 5 027 2 552 3 718
Bank overdraft 6 262 7 034 -
251 146 252 350 233 414
Future commitments
Finance leases 12 122 3 396 6 152
Operating leases 49 871 46 909 48 194
61 993 50 305 54 346
Value per share
Asset value per share
- Net asset value (cents) 31,48 28,49 31,65
- Market price (cents) 58 50 53
Financial gearing ratio (%) 16,51 26,36 12,32
Current asset ratio (times) 1,63 1,47 1,65
Statement of changes
in equity
Opening balance 87 840 64 405 64 405
Attributable earnings 10 122 14 665 29 610
Repayment of share premium (10 323) - -
Net shares issued/(redeemed) 5 214 9 (175)
Goodwill written off - - (6 000)
92 853 79 079 87 840
Abridged group cash flow statement
Cash flow from operating
activities (15 711) (14 404) 17 923
Cash flow from investing
activities 1 181 6 713 (14 844)
Cash flow from financing
activities 5 004 (479) (175)
Increase/(decrease) in
cash resources (9 526) (8 710) 2 904
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* MJ Woods*
Non-executive
E-mail info@dawnltd.co.za
Website www.dawnltd.co.za
Tel +27 11 622 6680
Fax +27 11 622 3864
Sharenet Sites 
