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Summary consolidated financial results for the year ended 30 June 2013 and dividend declaration
DISTRIBUTION AND WAREHOUSING NETWORK LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1984/008265/06)
(DAWN or the Group or the Company)
Alpha code: DAW
ISIN: ZAE000018834
E-mail: info@dawnltd.co.za
SUMMARY CONSOLIDATED FINANCIAL RESULTS FOR THE YEAR ENDED
30 JUNE 2013 AND DIVIDEND DECLARATION
COMMENTARY
INTRODUCTION
Distribution and Warehousing Network Limited (DAWN) is listed in
the Construction and Materials Building Materials and Fixtures
sector of the JSE Limited.
The Group manufactures and distributes quality branded hardware,
sanitaryware, plumbing, kitchen, engineering and civil products
through a national, strategically positioned branch network in
South Africa, as well as in selected countries in the rest of
Africa and Mauritius.
DAWN has significant proprietary brands and agency agreements
with prominent suppliers internationally and also sources branded
products from a well-established supplier network.
The Group has two main operating segments, namely Building and
Infrastructure, both being supported by the Solutions
segment.
The Building segment has three clusters Trading, Watertech and
Sanitaryware and two associates Heunis Steel and Saffer Union
in Nigeria. The Infrastructure segment consists of three
businesses, DPI, Incledon and Ubuntu Plastics and three
associates Sangio Pipe, Angolan-based Fibrex and IPS &
Distribution. The DAWN Solutions segment comprises DAWN Logistics
(DAWN Cargo and DAWN Distribution Centres), DAWN HR Solutions,
DAWN Business Systems, DAWN Marketing & Design, DAWN
Merchandising, DAWN Packaging, DAWN Projects and DAWN Financial
Solutions.
A focused cluster approach allows for the benefits of synergies
and cost reduction, while capacity is optimised at cluster
operations. DAWN Logistics provides a crucial competitive
advantage, enabling distribution costs which are significantly
below the logistics industry average. It also assists the Group
to contain costs across all businesses and to
significantly reduce stock losses.
RESULTS OVERVIEW
The Board is pleased with the improvement in results during the
year, with a 74% increase in headline earnings per share to 66,1
cents per share (F2012: 38,0 cents per share). The improvement
was achieved due to the Groups strong balance sheet, combined
with volume increases and improved working capital management.
The Building segment posted a 34% improvement in headline
earnings per share year-on-year, largely attributable to the R33
million turnaround in the Sanitaryware cluster, supported by 11%
growth in the Trading and Watertech clusters. The Infrastructure
segment performed very well, with headline earnings improving by
91% to the best levels seen in the last four years, due to the
effect of sustained, consistent higher operating volumes, the
consequent improvement in recoveries and successfully growing
higher-margin businesses.
BUILDING SEGMENT 56% OF GROUP REVENUE (BEFORE INTER-GROUP
ELIMINATIONS)
Market context
Total buildings completed in South Africa improved by 12% year-
on-year. Recorded additions and alterations moved from minus 8%
in F2012 to plus 4% in F2013. DAWN is most affected by homes
bigger than 80m², which grew at 10% year-on-year, and apartments
and townhouses, which grew at 27%. However, cheaper sourcing of
imported products by developers in these sectors was very
prominent during the year under review. This is currently
reversing due to the rising cost of imported goods, which will
have a positive impact on DAWN going forward.
Performance during the year
The Building segment grew revenue by a satisfactory 7% and
achieved a pleasing 32% increase in profit before interest and
taxation to R211 million (F2012: R160 million). Stronger market
demand translated into higher margins of 7,5% (2012: 6,1%).
Trading
Although volumes remained slow in the third and fourth quarter,
sound price increases were achieved and the cluster was able to
improve margins on the back of the sharply weaker exchange rate.
The Trading cluster managed to grow profit before interest and
taxation by 9%.
Watertech
The Watertech cluster showed a pleasant 12% increase in profit
before interest and taxation. This cluster comprises Cobra, the
high-end manufacturer of brassware in South Africa, and ISCA, the
assembler of imported componentry at lower price points. ISCA
improved its performance significantly by delivering a 44%
increase in profit before interest and taxation. Although market
conditions remain very competitive, ISCA grew gross margin for
the full year after importers were forced to pass through
significant price increases in the second half of the year due to
the weaker rand. Cobras market remains challenging, although its
product mix improved and its market share remained stable. Cobra
delivered a 3% increase in profit before interest and taxation.
Sanitaryware
The Sanitaryware cluster continued its strong turnaround,
producing a R33 million improvement from a loss of R21 million in
F2012 to a profit of R12 million in F2013. The Ceramics division
(comprising Vaal) achieved substantially improved profit before
interest and taxation margins through cost reductions and
productivity improvements. Manufacturing quality improvements
contributed to increased market demand and higher factory
throughput. The number of pieces sold increased by 14% year-on-
year. The Acrylics division (comprising Libra and Plexicor)
increased revenue by 26% year-on-year.
The biggest portion of this increase was in commodity products.
Gross margins increased by 9 percentage points as under-
recoveries in the factories reduced and price increases were
implemented. Overheads decreased by 23%, attributable to the
benefits of the Plexicor factory relocation to the same site as
Vaal in Meyerton. The Acrylics division is now one of the two
significant manufacturing players left in its market.
INFRASTRUCTURE SEGMENT 36% OF GROUP REVENUE (BEFORE INTER-GROUP
ELIMINATIONS)
Market context
Spend in the infrastructure segment of construction improved
significantly, with 32% growth in tenders awarded in the last
year. Market share of water projects as a percentage of total
construction increased from 25,7% in the fourth quarter of
calendar 2012 to 34% in the first quarter of calendar 2013.
Expectations are that this momentum will continue. (source:
Industry Insight).
Performance during the year
The increased spend by the Department of Water Affairs has a
direct effect on the throughput and profitability of the
Infrastructure segment. The Infrastructure segment therefore
improved its results for the sixth consecutive reporting period
since the lows of F2011. As expected, growth in profit before
interest and taxation normalised somewhat in H2 F2013 after the
sharp increases achieved over the last four years recovery
period. Profit before interest and taxation still improved by 48%
for the full year. The operating margin improved to 3,5% (2012:
2,6%).
DPI
DPI achieved a 12% improvement in revenue and a 22% increase in
profit before interest and taxation due to the improvement in
civil and mining demand, highlighted by tenders awarded and the
strong order book which has now been sustained for 12 months.
DPIs levels of capacity utilisation improved and capacity was
increased through purchasing additional selected large bore
equipment and acquiring control of Swan Plastics. Swan Plastics
expands DPIs PVC capacity without expanding total industry
capacity. DPIs stated strategy has been to increase the
throughput of higher margin fittings, which strategy is being
achieved.
Incledon
Incledons revenue increased by 8%, with the resulting economies
of scale flowing through to a 62% increase in profit before
interest and taxation. Activity has increased in all Incledons
target sectors of civil engineering, non-residential
development, agriculture and mining. Incledons order book is
currently at its highest level ever. Incledon has also been
expanding its offering into the industrial maintenance market,
which reduced the traditional soft spot in revenue over December.
This potential has however not yet been fully realised. Although
the cost reduction plan has started to generate savings, there is
still room for further improvements.
DAWN SOLUTIONS 8% OF GROUP REVENUE (BEFORE INTER-GROUP
ELIMINATIONS)
DAWN Solutions profit before interest and taxation increased
from a R1,6 million loss in F2012 to a pleasing R14 million
profit in the year under review. The operating margin improved to
3,8% (2012: 0,1%). The largest business in this segment, DAWN
Logistics, grew revenue by 16%, mainly on the back of strong
organic growth in services to the Sanitaryware cluster and DPI.
Even though the Group serviced more routes and brought previously
outsourced distribution in-house, costs only increased by 8%.
This was mainly due to better control over driver behaviour,
supported by optimal route planning as a direct consequence of
the new Transport Management System, as well as a greater
proportion of new vehicles in the fleet. This resulted in lower
maintenance costs. These actions significantly reduced the R13
million loss in DAWN Logistics in F2012 to a loss of R1 million
in the year under review.
Revenue in DAWN Financial Solutions, DAWN HR, DAWN Marketing &
Design, DAWN Business Systems, DAWN Merchandising, DAWN Packaging
and DAWN Projects increased by 41% and profit before interest and
taxation increased by 11%. Growth was mainly attributable to the
servicing of additional businesses inside the DAWN Group. The
process of aggressively eliminating the use of non-Group service
providers continues, which is increasing DAWN Solutions capacity
utilisation and economies of scale.
DAWN INTERNATIONAL
DAWN Internationals contribution is included in the Building and
Infrastructure segments results. To provide additional
disclosure, the revenue of this entity is discussed separately
and includes associates and joint ventures at 100%, as well as
inter-company sales.
Revenue from international activities increased from less than
R150 million in F2005 to R1,3 billion during the year under
review.
Exports from South Africa grew by 12% as a result of a concerted
initiative to expand the Group companies export footprint,
assisted by the weaker rand during the year. The DPI factories in
the rest of Africa grew revenue by 12%, with Namibia achieving a
particularly strong performance, closely followed by Tanzania.
The Botswana and Mauritius governments have restricted
infrastructure spend, which impacted revenue. The AST group
posted strong revenue growth of 35%, as these trading businesses
continue to reinforce their presence in their respective markets.
The strongest growth came from Zimbabwe and Zambia.
With the establishment of a greater foothold in these African
markets, the DAWN Group is fast becoming a solutions provider and
distribution channel of the DAWN product range into the rest of
Africa.
The Groups geographic footprint is being further expanded, with
current initiatives including the establishment of a DPI factory
in Zambia (together with Incledon International) to service the
mining and related industries, the opening of a second AST
trading operation in the north of Mozambique and the opening of
an additional AST operation in Kenya.
FINANCIAL RESULTS
Statement of comprehensive income
Group revenue increased by 8,5% to R4,6 billion (F2012: R4,2
billion), supported by a 1% improvement in volumes and an 8%
inflation in the Groups selling prices. Operating profit
increased by 55% to R253 million (F2012: R163 million). Operating
expenses were managed tightly and were successfully limited to a
7,7% increase after the prior years tight 3,5% increase. Over
the past two years the Group improved its revenue by 21%, while
limiting operating expense growth to 12% over the same period.
The Groups operating margin increased from 3,9% to 5,5%, with
the Building segments operating margin increasing to 7,5%, the
Infrastructure segment improving its performance with a 3,5%
operating margin and the Solutions segment achieving a profit
with an operating margin of 3,8%.
Net interest-bearing debt of R151 million as at 30 June 2013 was
at its lowest level since 2004. The Groups gearing ratio was
10,3%, reflecting a very healthy financial position. The Groups
debt capacity improved markedly which is further supported by
Standard & Poor's awarding a credit rating at national scale A-
for the Group. This is a significant step for DAWN, as it allows
the Group to correct its weighted average cost of capital rate
through a significant reduction in the cost of debt.
Income derived from associates improved significantly to R16,5
million, driven by a very strong performance from Sangio Pipe
through its infrastructure-related activities and Apex Valves
through its strategic supply into the water-heating industry.
New facilities and additional capacity at Sangio Pipe resulted in
much improved efficiencies and margins. Heunis Steel, a company
exposed mainly to the Building segment, performed well and
improved earnings in a tough market, as well as increased market
share. Fibrex, the Angolan-based pipe manufacturing company,
showed a very sound improvement.
Group earnings per share improved by 88% to 66,7 cents per share
(F2012: 35,5 cents per share). Headline earnings per share of
66,1 cents per share showed an increase of 74% from 38,0 cents
per share in the prior year.
Statement of financial position
The Group reported a very sound net working capital position at
the end of the reporting period. Net working capital at 80 days
meets the Groups working capital target. Debtors management
remains a key discipline of the Group and at 56 days it exceeds
the Groups objective of less than 55 days by one day due to
increased revenue, particularly in the last quarter of the year.
Bad debts remained below 0,1% of revenue.
The Groups inventory levels increased to a high of 101 days, a
reflection of the challenging second half in the market. During
the year a strategic decision was made to increase inventory in
the Watertech cluster to service improved demand, which led to
strong revenue growth in this cluster. The 48% weaker rand also
had an impact on inventory and accounted for no less than 5 days
movement. Funding obtained from the Groups creditors amounted to
77 days, exceeding the stated target range of 60 to 65 days, and
partly funded increased stock days.
Statement of cash flows
Cash generated from operations improved by 44% to R341 million,
reflective of the Groups strong cash generation. This relates
very strongly to the Groups EBITDA of R330 million. Net working
capital was managed tightly despite the increased levels of
inventory as a result of appropriate supplier funding. Investing
and financing activities totalling R173 million consisted of
investments in plant and equipment and software totalling R130
million pertaining to an investment to maintain current capacity
of R45 million and the investment to improve existing capacity of
R85 million.
PROSPECTS
Although the outlook for the DAWN Group is robust, the Board
remains cognisant of possible external risks the Group could
face. These include:
labour strike action in the face of wage negotiations could
impact the Group, its customers and suppliers. DAWN HR is
implementing measures across the Group to minimise the threat
of internal strikes;
the financially stretched consumers could continue limiting
their spend, although Building Plans Passed show substantial
increases; and
although the Group believes it is unlikely, delays in water
and sanitation infrastructure spend by provincial and central
government are always a possibility.
However, the Groups outlook, in general, is positive due to:
benefits arising from inflationary price increases on the back
of the weaker rand and rising input costs such as raw
materials, energy and transport;
the weaker rand benefiting the Group, as it makes it more
difficult for importers;
DAWN remaining in a strong strategic position in all its
markets;
all operations showing signs of further growth; and
a potential sharp reduction in finance costs due to the
Standard & Poor's rating achieved and the Groups possible
bond issue.
Moving from DAWNs short-term target margin range of 6% to 8% to
its medium-term target margin range of 8% to 10% is dependent on
volume growth. The Group is still operating on a low cost base,
instituted two years ago, and volume increases are therefore
magnified at profit before interest and taxation level. The Board
expects volume growth to increase in F2014, with even stronger
growth in F2015 and F2016.
This general forecast has not been reviewed nor audited by the
Companys auditors.
DIVIDEND
The Board declared a final gross dividend of 16,5 cents per ordinary
share, from income reserves, for the year ended 30 June 2013
(2012: Nil).
The dividend will be subject to the new Dividends Tax that was
introduced with effect from 1 April 2012. In accordance with
paragraphs 11.17(a)(i) and (x) and 11.17(c) of the JSE Listings
Requirements the following additional information is disclosed:
The dividend has been declared out of income reserves;
The local Dividend Tax rate is 15% (fifteen per centum);
The net local dividend amount is 14,025 cents per ordinary share
for shareholders liable to pay the Dividend Tax;
No Secondary Tax on Companies (STC) credits will be utilised;
DAWN has 241 442 904 ordinary shares in issue (which includes
7 726 146 treasury shares); and
DAWNs income tax reference number is 1984008266506.
In compliance with the requirements of Strate the following dates
are applicable:
Last date to trade CUM dividend Friday, 22 November 2013
Trading EX dividend commences Monday, 25 November 2013
Record date Friday, 29 November 2013
Dividend payment date Monday, 2 December 2013
No dematerialisation or rematerialisation of share certificates
will be allowed during the period Monday, 25 November 2013 to
Friday, 29 November 2013, both days inclusive. On behalf of the
Board
RL Hiemstra DA Tod
Independent Non-Executive Chairman Chief Executive Officer
Johannesburg
11 September 2013
The presentation to investors is available on the DAWN website.
www.dawnltd.co.za
SUMMARY CONSOLIDATED INCOME STATEMENT
for the year ended 30 June
Audited Audited
% 2013 2012
change R000 R000
Revenue 9 4 588 344 4 228 261
Cost of sales (3 396 154) (3 193 127)
Gross profit 1 192 190 1 035 134
Net operating expenses (939 530) (871 962)
Operating profit 55 252 660 163 172
Finance income 10 465 11 808
Finance expense (62 916) (63 774)
Profit after net financing costs 200 209 111 206
Shares of profits from associates 16 491 5 709
Profit before taxation 216 700 116 915
Income tax expense (57 465) (32 584)
Profit for the year 159 235 84 331
Profit attributable to:
Owners of the parent 156 296 83 033
Non-controlling interest 2 939 1 298
Profit for the year 159 235 84 331
SUMMARY CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 30 June
Audited Audited
% 2013 2012
change R000 R000
Profit for the year 159 235 84 331
Other comprehensive income:
Exchange differences on
translating foreign
operations 3 517 2 740
Effects of cash flow hedges 906 (683)
Taxation related to
components of other
comprehensive income (254) 191
Other comprehensive income for
the year net of taxation 4 169 2 248
Total comprehensive income 163 404 86 579
Total comprehensive income
attributable to:
Owners of the parent 160 393 85 109
Non-controlling interest 3 011 1 470
163 404 86 579
Included above:
Depreciation and amortisation 77 067 65 947
Operating lease rentals 89 853 81 678
Determination of
headline earnings
Attributable earnings 156 296 83 033
Adjustment for the after-tax
and non-controlling interest
effect of:
Net profit/(loss) on disposal of
plant and equipment (217) 3 567
Impairment of property,
plant and equipment 2 405
Net profit on derecognition of
previously held interests (1 074)
Headline earnings 155 005 89 005
Statistics
Number of ordinary shares (000)
in issue 241 443 240 243
held in treasury (7 726) (7 726)
Deferred ordinary shares
in issue (000) 800 2 000
Weighted average number
of shares (000)
for earnings per share 234 517 234 063
for diluted earnings
per share 237 875 238 567
Earnings per share (cents) 88 66,65 35,47
Headline earnings per
share (cents) 74 66,10 38,03
Diluted earnings per
share (cents) 89 65,71 34,80
Diluted headline earnings
per share (cents) 75 65,16 37,31
Operating profit (%) 5,5 3,9
SUMMARY CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE
Audited Audited
% 2013 2012
change R000 R000
ASSETS
Non-current assets 880 854 777 131
Property, plant and equipment 440 214 378 031
Intangible assets 279 954 247 778
Investments in associates 107 746 93 771
Deferred tax assets 52 940 57 551
Current assets 2 202 087 1 894 254
Inventories 978 366 826 711
Trade and other receivables 942 484 833 650
Cash and cash equivalents 275 510 231 518
Derivative financial
instruments 5 338 677
Current tax asset 389 1 698
Total assets 3 082 941 2 671 385
EQUITY AND LIABILITIES
Capital and reserves 1 467 385 1 272 241
Equity attributable to equity
holders of the Company 1 455 777 1 269 990
Non-controlling interest 11 608 2 251
Non-current liabilities 283 641 228 070
Borrowings 224 324 157 282
Deferred profit 26 150 31 943
Deferred tax liabilities 24 569 25 614
Retirement benefit obligation 5 518 6 223
Derivative financial instruments 3 080 7 008
Current liabilities 1 331 915 1 171 074
Trade and other payables 1 088 948 867 951
Current portion of borrowings 219 613 282 958
Derivative financial instruments 93 928
Deferred profit 5 793 5 793
Current tax liabilities 17 468 13 444
Total equity and liabilities 3 082 941 2 671 385
Capital commitments 126 205 36 504
Future commitments
Operating leases 456 702 428 138
Net cash 103 622 61 909
Net interest-bearing debt 150 675 201 053
Value per share
Asset value per share
net asset value (cents) 15 620,76 541,5
net tangible asset
value (cents) 501,38 435,88
market price (cents) 762 615
Market capitalisation (R000) 1 839 795 1 477 494
Financial gearing ratio (%)* 10,3 15,8
Current asset ratio (times) 1,7 1,6
* Includes cash and cash equivalents.
SUMMARY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30 June
Audited Audited
2013 2012
R000 R000
Balance at 1 July 1 272 241 1 174 930
Total comprehensive income
for the year 163 404 86 579
Changes in ownership interest
control not lost (522)
Non-controlling interest acquired
in business combinations 7 776
Share-based payment charge 25 916 11 493
Dividends paid to non-controlling
interest (1 430) (480)
Treasury shares acquired (281)
Treasury shares used to settle
share-based payment obligation 8 407
Settlement of share-based payment
obligation (8 407)
Balance at 30 June 1 467 385 1 272 241
SUMMARY CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 30 June
Restated*
Audited Audited
% 2013 2012
change R000 R000
Cash generated from
operations before working
capital changes 341 219 236 766
Working capital changes (29 358) 30 557
Net finance charges paid (46 914) (55 235)
Net income tax paid (50 312) (36 822)
Net cash generated from
operating activities 22 214 635 175 266
Net cash utilised in
investing activities (130 091) (15 261)
Net cash utilised in
financing activities (41 092) (61 112)
Increase in cash resources 43 452 98 893
Cash resources at
beginning of year 61 909 (34 526)
Translation effects on cash
and cash equivalents of
foreign operations (1 739) (2 458)
Cash resources at end of year 103 622 61 909
* Refer to note 2 on page 12.
SUMMARY CONSOLIDATED SEGMENTAL ANALYSIS
for the year ended 30 June
Head
Office
and
other
recon-
Infra- DAWN ciling
Building structure Solutions items* Total
R'000 R'000 R'000 R'000 R'000
2013
Revenue 2 811 697 1 811 211 365 421 (399 985) 4 588 344
Revenue after
intersegment
elimination
reallocated 2 526 437 1 720 510 341 397 4 588 344
Depreciation
and
amortisation (37 044) (22 840) (15 848) (1 335) (77 067)
Operating
profit/(loss) 211 186 63 574 14 036 (36 136) 252 660
Net finance
expense (35 108) (13 024) (2 183) (2 136) (52 451)
Share of profit
of associates 4 544 11 947 16 491
Tax expense (51 840) (16 607) (3 393) 14 375 (57 465)
Net profit/
(loss) after
tax 128 782 45 890 8 460 (23 897) 159 235
Assets 2 237 724 911 197 499 956 (565 936) 3 082 941
Liabilities 1 499 206 572 245 508 813 (964 708) 1 615 556
Capital
expenditure** 78 213 28 557 53 778 160 548
2012
Revenue 2 618 342 1 640 114 307 515 (337 710) 4 228 261
Revenue after
intersegment
elimination
reallocated 2 588 607 1 623 335 16 319 4 228 261
Depreciation
and
amortisation (31 668) (19 388) (13 382) (1 509) (65 947)
Operating
profit/(loss) 159 510 42 975 (1 634) (37 679) 163 172
Net finance
income/
(expense) (39 241) (18 761) (2 211) 8 247 (51 966)
Share of profit
of associates 2 483 3 226 5 709
Tax expense (35 480) (7 853) 2 302 8 447 (32 584)
Net profit/
(loss) after
tax 87 272 19 587 (1 543) (20 985) 84 331
Assets 1 890 471 765 725 403 769 (388 580) 2 671 385
Liabilities 1 305 119 487 936 421 605 (815 516) 1 399 144
Capital
expenditure** 71 823 3 191 15 897 90 911
* Other reconciling items consist of corporate and
consolidation adjustments. These predominantly include
elimination of intergroup sales, profits and losses and
intergroup receivables and payables and other unallocated
assets and liabilities contained within the vertically
integrated Group. Head office and other reconciling items is
not considered to be an operating segment.
** Includes expenditure on intangibles.
NOTES TO THE SUMMAY CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PREPARATION
The summary consolidated financial statements contained in
this SENS announcement are prepared in accordance with the
requirements of the JSE Limited Listings Requirements for
preliminary reports and the requirements of the Companies Act
applicable to summary financial statements. The Listings
Requirements require preliminary reports to be prepared in
accordance with the framework concepts and the measurement and
recognition requirements of International Financial Reporting
Standards (IFRS) and the SAICA Financial Reporting Guides as
issued by the Accounting Practices Committee and Financial
Pronouncements as issued by the Financial Reporting Standards
Council and to also, as a minimum, contain the information
required by IAS 34 Interim Financial Reporting. The accounting
policies applied in the preparation of the consolidated
financial statements from which the summary consolidated
financial statements were derived are in terms of
International Financial Reporting Standards and are consistent
with those accounting policies applied in the preparation of
the previous consolidated annual financial statements. The
preparation of the summary consolidated annual financial
statements has been supervised by the Group Financial
Director, JAI Ferreira CA(SA).
The summary consolidated financial statements for the year
ended 30 June 2013 have been audited by PricewaterhouseCoopers
Inc., who expressed an unmodified opinion thereon. The auditor
also expressed an unmodified opinion on the annual financial
statements from which these summary consolidated financial
statements were derived. A copy of the auditor's report on the
summary consolidated financial statements and of the auditor's
report on the annual consolidated financial statements are
available for inspection at the Companys registered office,
together with the financial statements identified in the
respective auditor's reports.
The auditors report does not necessarily cover all of the
information contained in this announcement. Shareholders are
therefore advised that in order to obtain a full understanding
of the nature of the auditors work they should obtain a copy
of that report together with the accompanying financial
information from the registered office of the Company.
2. RESTATEMENT OF CASH FLOWS
Net cash utilised in investing activities and net cash
utilised in financing activities for the year ended 30 June
2013 have been restated.
Intangible assets and property, plant and equipment additions
previously included acquisitions of assets that were financed
by instalment sale agreements and finance leases. In terms of
IAS 7, Statement of Cash Flows, only cash payments for assets
acquired should be included and not those financed by way of
finance lease or acquired on credit.
Additions financed by way of instalment sale agreements and
finance leases have been excluded from the restated net cash
utilised in investing activities.
Accordingly, borrowings raised included the gross amounts of
new instalments sale agreements and finance leases entered
into during the year and these have been excluded from the
restated cash utilised in financing activities line item.
The previously reported and restated line items are shown in
the table below:
2012
As previously As
reported restated
30 June Adjust- 30 June
2012 ment 2012
R000 R000 R000
Net cash utilised in
investing activities (35 112) 19 851 (15 261)
Net cash utilised in
financing activities (41 261) (19 851) (61 112)
The restatement had no impact on the net movement in cash, nor
the balance thereof at year-end.
3. BUSINESS COMBINATIONS AND DISPOSAL OF INVESTMENT IN JOINT
VENTURE
APEX VALVES (SOUTH AFRICA) (PTY) LTD
On 1 February 2013 the Group acquired an additional 11,4%
interest in Apex Valves (South Africa) (Pty) Ltd which
resulted in the Group obtaining control over Apex Valves
(South Africa) (Pty) Ltd, previously an associate. The total
consideration transferred amounted to R10 million, including
the fair value of previously held interest of R7,8 million.
Provisional goodwill of R4,4 million arose from the
acquisition and a gain of R1,7 million was recognised as a
result of measuring at fair value the Groups 49% equity
interest held before the business combination.
Apex Valves (South Africa) (Pty) Ltd contributed operating
profit of R0,7 million and revenue of R16,9 million since the
acquisition date. If the acquisition had occurred on 1 July
2012, Group revenue would have been R25,5 million more, and
operating profit for the period would have increased by R2,6
million. These amounts have been calculated based on
consistent application of the Groups accounting policies.
The fair value of assets acquired and liabilities assumed will
be finalised within the next financial year. The provisional
amount of net assets acquired amounted to R9,2 million and
non-controlling interests of R3,6 million was recognised.
Acquisition-related costs amounted to R0,3 million and have
been recognised as part of operating expenses in profit and
loss. Trade receivables with a fair value of R3,9 million has
been included and R0,2 million has been provided for as
doubtful.
UBUNTU PLASTICS (PTY) LTD
On 1 March 2013 the Group acquired a 51% interest in Ubuntu
Plastics (Pty) Ltd for a total consideration of R7,4 million.
Ubuntu Plastics (Pty) Ltd is principally involved in the
fabrication of pipe and pipe fittings.
A provisional goodwill allocation of R5,9 million arising from
the acquisition consists largely of the synergies and
economies of scale expected from combining the operations of
the entities.
Ubuntu Plastics (Pty) Ltd contributed an operating profit of
R0,7 million and revenue of R14,7 million since the
acquisition date. If the acquisition had occurred on 1 July
2012, Group revenue would have been R29,4 million more, and
operating profit for the period would have increased by R2,9
million. These amounts have been calculated based on
consistent application of the Groups accounting policies.
The fair value of assets acquired and liabilities assumed will
be finalised within the next financial year. The provisional
amount of net assets acquired amounted to R5,7 million and
non-controlling interests of R4,2 million was recognised.
Trade receivables with a fair value of R8,9 million has been
included and none of these considered doubtful.
DE-RECOGNITION OF DPI ICHWEBA (PTY) LTD JOINT VENTURE
On 31 January 2013, the Group disposed of its investment in
DPI Ichweba (Pty) Ltd for a consideration of R1 million. The
net carrying amount of the Groups interest disposed of
amounted to R1,7 million. The net loss on the disposal of the
investment amounted to R0,7 million.
4. EVENTS AFTER THE REPORTING DATE
A 51% share was acquired in Swan Plastics (Pty) Ltd for a cash
consideration of R20 million. Swan Plastics specialises in the
manufacture of PVC pipes and fittings. The effective date of
the transaction was 1 August 2013. The provisional amount of
net assets acquired amounted to R23,3 million.
The Board declared a final dividend of 16,5 cents per ordinary
share, from income reserves, for the year ended 30 June 2013
(2012: Nil).
On 11 September 2013 Standard &?Poor's awarded a credit rating
at national scale A- for the Group.
Dr SD Mthembi-Mahanyele resigned as Independent Non-Executive
Director on 11 September 2013. The Board wishes to express its
appreciation to Dr Mthembi-Mahanyele for her valuable
contribution to the Group and wish her every success in her
future endeavours.
Management is not aware of any other material events that
occurred subsequent to the end of the reporting period. There
has been no material change in the Groups contingent
liabilities since the year-end.
DISTRIBUTION AND WAREHOUSING NETWORK LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1984/008265/06)
(DAWN or the Group or the Company)
Alpha code: DAW
ISIN: ZAE000018834
E-mail: info@dawnltd.co.za
Registered office:
Cnr Barlow Road and Cavaleros Drive, Jupiter Ext 3, Germiston,
1401
Directors:
RL Hiemstra^ (Chairman), DA Tod (Chief Executive Officer), LM
Alberts^, M Akoojee*, OS Arbee^, JA Beukes, JAI Ferreira, VJ
Mokoena*, SD Mthembi-Mahanyele (resigned 11 September 2013), RD
Roos
* Non-executive ^ Independent non-executive
Company secretary:
iThemba Governance and Statutory Solutions (Pty) Ltd
Transfer secretaries:
Computershare Investor Services (Pty) Ltd, 70 Marshall Street,
Marshalltown, 2001 (PO Box 61051, Marshalltown, 2107)
Sponsor:
Deloitte & Touche Sponsor Services (Pty) Ltd
www.dawnltd.co.za
Date: 12/09/2013 09:02:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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