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DISTRIB. AND WAREHOUSING NETWORK LD - Unaudited interim results for the six months ended 31 December 2013

Release Date: 13/03/2014 08:00
Code(s): DAW     PDF:  
Wrap Text
Unaudited interim results for the six months ended 31 December 2013

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
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 
2013
COMMENTARY
INTRODUCTION
Distribution and Warehousing Network Limited 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 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. 
RESULTS OVERVIEW
Group revenue for the six months to December 2013 improved by 17% 
to R2,6 billion (H1 2013: R2,2 billion), while operating profit 
improved by 18% to R158,9 million (H1 2013: R134,5 million). 
Profit before interest and taxation (PBIT) margin increased 
slightly from 6,0% to 6,1%.
These results were achieved against three major market impacts:
1.  The sudden, sharp decline in the Rand resulted in a delay in 
selling price recovery. The average Rand in the period under 
review declined by 19% against the US dollar. Although DAWN 
generally experiences a net benefit from a weak Rand, it did 
not materialise during the period. Due to a deliberate 
strategy in the Watertech cluster to increase market share, 
price increases were delayed. Following three recent 
subsequent price increases the benefit of higher volumes and 
prices is therefore expected to flow through from the second 
half of F2014.
2.  The Building market performing below expectation, with 
consumers under severe strain and continuing strike action 
across industries.
3.  Rising input costs of over 10%. Price increases were felt 
across polyvinyl chloride (PVC), high-density polyethylene 
(HDPE), fuel and electricity. As input price increases came 
at a rapid pace, the benefits of the compensating selling 
price increases will only flow through in the second half of 
F2014.
These benefits are expected to be negated slightly by the second 
half earnings, which is normally lower than that of the first 
half.
Against this background, the Group achieved an 8% increase in 
headline earnings per share (HEPS) to 41,1 cents per share (H1 
F2013: 38,1 cents per share). The Group’s performance for H1 
F2014 compares to a strong recovery period in the comparative 
period of F2013.
Building segment – 53% of Group revenue (before inter-group 
eliminations)
Market context 
Market conditions remained tough. Buildings Completed measured in 
square metres continued to be flat after the market declined by 
around 50% since the peak in 2007.  
Due to the impact of inflation on the Rand value of Buildings 
completed and Building plans passed, Buildings completed is 
starting to grow sluggishly. However, even with the push from 
inflation, the value of Buildings completed and Building plans 
passed has not returned close to the highs reached in 2009.
Performance during the period 
Revenue grew by 7% to R 1,5 billion (H1 F2013: R 1,4 billion) and 
PBIT declined by 5% from R122,5 million to R115,6 million. This 
resulted in the Building operating margin declining from 8,7% in 
H1 F2013 to 7,6% in H1 F2014, although still in line with the 
Group’s short-term target of 7-9% for this segment. 
Trading
Volumes increased by 2% and selling prices increased by 5% due to 
inflation driven by the weaker Rand. Revenue increased by 7% and 
PBIT by 6%. 
Watertech
Watertech increased volumes by 3%, with selling prices down by 
2%. Apex Valves, which was included for the first time as a 
subsidiary rather than an associate, contributed a further 4% 
growth in revenue. 
Cobra’s results include the effect of the lag in price increases 
due to the weak Rand. The higher stock levels to service the 
anticipated stronger demand resulted in higher stock levels in 
Cobra. 
Isca’s market was also soft. As an importer of product, operating 
margins declined as some of the initial cost inflation caused by 
the swift, sharp decline of the Rand could not be passed on 
immediately. 
Based on these factors, Watertech’s PBIT declined by 7% from the 
loss of margin due to the lag in price increases. 
Sanitaryware
Sanitaryware experienced improved recoveries in the factories 
based on higher volume throughput, which resulted in a 4% volume 
increase for this cluster. PBIT increased by 24%. 
Volume growth was achieved at Ceramics (Vaal) and PBIT was 
therefore up strongly on the back of improved utilisation of 
plant, improved productivity and taking volume from competitors 
that import product.  
Acrylics (consisting of Libra and Plexicor) saw the largest 
portion of their increase in revenue through the improvement in 
commodity products sales. PBIT was negatively affected by the 
delayed price increases following the impact of the weaker Rand. 
Infrastructure segment – 39% of Group revenue (before inter-group 
eliminations)
Market context 
Infrastructure services both the civil and the mining sectors. 
Civil demand improved strongly, which was highlighted by tenders 
awarded and sales increases. Water spend in the areas that the 
Group services has been robust for the last few years, with spend 
up 46% year-on-year. Water-related projects have increased from 
25,7% of total construction spend in 2012 to 33,7% in F2014.
Mining sector off-take, however, was severely affected by strikes 
during the period.
Performance during the period
Based on the strong water spend, Infrastructure achieved a 
pleasing 106% growth in PBIT from R26,1 million to R53,6 million. 
Margins responded strongly by increasing to 4,8%, which is in the 
upper range of the Group’s short-term target of 3-5%. 
DPI
DPI enjoyed organic volume increases of only 3% due to capacity 
constraints. To address these constraints, the Group acquired 
Ubuntu Plastics in March 2013 and Swan Plastics in August 2013 to 
achieve a further 34% volume growth. The acquisitions added R129 
million to revenue during the period and expanded the Group’s PVC 
capacity without expanding the total industry capacity. 
During the period, price increases of 14% in DPI grew margins and 
assisted in improving PBIT by a very strong 70%. 
Incledon
Incledon saw the largest improvement in like-for-like 
performance, with 22% growth in revenue, a 15% improvement in 
volumes and price increases of 7%. PBIT therefore increased by a 
strong 141%. This was achieved even against the mining product 
division still recovering from the impact of the strikes 
experienced by clients over the first half. 
The growth was largely due to the inflow of R87 million from the 
last part of the Sekhukhune bulk water supply ductile iron 
pipeline project. 
During the period, Incledon delivered on two significant 
commitments from year-end, which was to drive operating expenses 
down by almost 15% and expanding into the Industrial maintenance 
market. The traditional soft spot in revenue over December is 
therefore now more muted.
DAWN Solutions – 8% of Group revenue (before inter-group 
eliminations)
DAWN Solutions posted revenue growth of 21%, consisting of 
organic growth of 6% and non-organic growth of 15%. 
The non-organic growth was mainly achieved through Logistics 
transferring the servicing of the Group’s Infrastructure cluster 
in-house. PBIT increased by 11%. 
The higher level of capacity utilisation at Logistics produced a 
pleasing 45% increase in PBIT after taking over the management of 
29 trucks from the DAWN Infrastructure cluster and increasing the 
number of owner-drivers. 
DAWN’s new Transport Management System has now been fully 
implemented, reducing the cost base and allowing better control 
over driver behaviour, as well as optimal route planning.      
The other businesses in DAWN Solutions showed 26% growth in 
revenue, largely as a result of the new Financial Solutions and 
Projects businesses, as well as the new IT offering. PBIT 
declined by 4%, mainly due to a decrease in Marketing PBIT 
following a high base created by new showroom roll outs in Africa 
in the prior period.
DAWN International
DAWN International’s contribution is included in the Building and 
Infrastructure segments’ results. This segment’s revenue 
represented 21% of Group revenue during the period. 
Exports from South Africa grew by 14% as DAWN continued to expand 
the export footprint of Group companies, assisted by the weaker 
Rand. The DPI factories in the rest of Africa grew revenue by 14% 
due to generally increased demand and AST posted strong revenue 
growth of 26%. The strongest growth came from Zambia and Angola, 
which recovered off a low base.
During the period, the Group established an Incledon Trading 
company in Zambia, with a production facility to follow. In 
Mozambique the Group is establishing an Incledon Trading company 
and an AST trading outlet in the north. Trading is growing 
steadily in the DRC and Tanzania. 
FINANCIAL RESULTS
Statement of comprehensive income
Group revenue for the six months improved by 17% to R2,6 billion 
(H1 2013: R2,2 billion), supported by 7% volume increases, 5% 
price increases and a 5% contribution from acquisitions. 
Operating profit improved by 18% to R158,9 million (H1 2013: 
R134,5 million), while the Group’s overall PBIT margin increased 
slightly to 6,1%. Organic operating expense growth was kept to 
9,9%. The cost of acquisitions increased costs by a further 6,7%.
The Building segment decreased its margin from 8,7% to 7,6%, 
while Infrastructure’s margin increased from 3,1% to 4,8% and the 
Solutions’ margin decreasing somewhat from 5,0% to 4,6%.
Average net interest-bearing debt during the period increased to 
R575 million (average H1 F2013: R412 million). This was on the 
back of solid growth in revenue, which absorbed working capital, 
as well as a capital expenditure programme through which the 
Group invested R141 million in expansionary capital expenditure 
over the last rolling 12 months. 
The Group’s gearing ratio remained low at 18%. 
Income from associate investments decreased by 17% to R9,1 
million (H1 2013: R11,0 million), mainly due to Apex Valves now 
being consolidated as a subsidiary (no longer reported as an 
associate investment), Fibrex’s poor performance in Angola due to 
slow government spend and AST where a generally very strong 
performance in all businesses was negated by a poor performance 
in Nigeria. Sangio Pipe experienced a tougher period, with 
earnings flat period-on-period, while Heunis Steel posted a 
strong performance. DPI International’s joint venture factories 
performed well.
As a result, Group earnings per share of 41,4 cents per share 
were up 9% from 38,0 cents per share and headline earnings per 
share of 41,1 cents per share were up 8% from 38,1 cents per 
share.
Statement of financial position
The ratio of net working capital to revenue remained sound at 
20.1% and the overall working capital remained within the Group’s 
target of 80 days. Debtors’ days at 51 days reflects the 17% 
revenue growth and is still within the Group’s maximum of 55 
days. With bad debt write-offs still remaining at less than 0,1% 
of revenue, credit risk remains well managed.
Stock days at 102 exceeded the Group’s self-imposed limit of 90 
days. This was due to a tougher building market during the six 
months, exacerbated by a material cost inflation of over 10% 
across the board. In addition, as outlined, Watertech ended the 
period with high inventory levels. This pushed inventory carry 
higher than planned. 
Creditors’ days stabilised at 77 days, well ahead of the Group’s 
target of 65 days, as investment in inventory grew and improved 
terms were achieved in some businesses.  
Statement of cash flows
Cash generated from operations improved by 16% to R207,9 million 
(H1 2013: R179,6 million) for the six months under review. 
Earnings before interest, taxation depreciation and amortisation 
(EBITDA) of R343 million for the 12-month rolling period of 31 December 
2013 improved from the R277 million for the comparative rolling 
12-month period.
Working capital expanded by 14% as a result of the growth seen in 
the Group’s revenue. Investing and financing activities showed a 
net inflow of R248 million mainly due to the bank refinancing exercise 
completed during October 2013, which achieved much better 
borrowing rates.
Financing activities include R41 million in dividends paid to 
shareholders and R424 million inflow from refinancing the Group’s 
bank debt. Investment activities includes R30 million paid for 
the new small businesses acquired and R101 million capital 
expenditure, part of the Group’s strategic decision to increase 
capacity in certain areas of the Group. 
PROSPECTS
The outlook for DAWN is robust due to improved margins as a 
result of better price recovery. 
Despite consumers remaining financially stretched, Building will 
be growing off a weaker base in the corresponding period. DAWN’s 
outlets are experiencing demand from property developers for its 
specified products, as well as from mine housing developments in 
sub-Saharan Africa, including South Africa.
At Infrastructure, the Group continues to expect increased levels 
of activity and the benefits of volume throughput, even though it 
will be growing off a high base in Incledon. DAWN anticipates 
that the strong levels of water and sanitation spend will create 
an infrastructural base to support the inherent demand for 
dwellings when economic conditions improve.
DAWN has sufficient capacity at both Building and Infrastructure, 
with the benefit of higher volume throughput already evident in 
Infrastructure. The key management focus will be to address 
volume growth in Building. 
DAWN continues to grow strongly in various regions in the rest of 
Africa, with scope to further expand on the continent. 
Against these factors, the Group anticipates sound earnings 
growth in the second half of F2014.
This general forecast has not been reviewed nor audited by the 
Company’s auditors.
EVENTS AFTER THE REPORTING DATE
Management is not aware of any material events that occurred 
subsequent to the end of the reporting period. There has been no 
material change in the Group’s contingent liabilities since the 
period-end.
DIVIDEND
The Group has a policy not to pay a dividend at the interim 
stage. 
On behalf of the Board
RL Hiemstra                              DA Tod                  
Independent Non-Executive Chairman       Chief Executive Officer 
Johannesburg
12 March 2014
The presentation to investors is available on the DAWN website.
www.dawnltd.co.za
CONDENSED CONSOLIDATED INCOME STATEMENT
                              Unaudited    Restated    Restated
                               6 months    6 months   12 months
                            31 December 31 December     30 June
                          %        2013        2012        2013
                     change       R’000       R’000       R’000
Revenue                  17   2 620 503   2 235 373   4 447 187
Cost of sales                (1 937 051) (1 650 836) (3 294 538)
Gross profit                    683 452     584 537   1 152 649
Net operating expenses         (524 572)   (450 064)   (908 867)
Operating profit         18     158 880     134 473     243 782
Finance income                    2 265       1 807      10 517
Finance expense                 (33 908)    (24 566)    (60 451)
Profit after net 
 financing costs         14     127 237     111 714     193 848 
Share of profit from 
 associates and 
 joint ventures                   9 094      10 978      18 592
Profit before taxation   11     136 331     122 692     212 440 
Income tax expense              (36 726)    (32 528)    (53 188) 
Profit for the period    10      99 605      90 164     159 252 
Profit attributable to:
Owners of the parent             96 953      89 231     156 296 
Non-controlling interest          2 652         933       2 956 
Profit for the period            99 605      90 164     159 252
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
                              Unaudited    Restated    Restated
                               6 months    6 months   12 months
                            31 December 31 December     30 June
                          %        2013        2012        2013
                     change       R’000       R’000       R’000
Profit for 
 the period                      99 605      90 164     159 252 
Other comprehensive 
 income:
– Exchange differences 
   on translating 
   foreign operations             3 966         490       3 445
– Effects of cash 
   flow hedges                    2 536       1 288         906
     Hedge movement 
      through equity                  –         106         106
     Recycling of 
      hedge through 
      the income statement        2 536       1 182         800
– Taxation related 
   to components of 
   other comprehensive 
   income                          (710)       (372)       (254)
Other comprehensive 
 income for the 
 period net of 
 taxation                         5 792       1 406       4 097
Total comprehensive 
 income for the period          105 397      91 570     163 349
Total comprehensive 
 income attributable to:
Owners of the parent            102 745      90 637     160 393
Non-controlling interest          2 652         933       2 956
                                105 397      91 570     163 349
Included above:
Depreciation and 
 amortisation                    35 662      34 414      73 442
Operating lease rentals          54 489      42 104      86 182
Determination of 
 headline earnings 
Attributable earnings            96 953      89 231     156 296
Adjustment for the 
 after-tax and 
 non-controlling 
 interest effect of:
Net profit/(loss) on 
 disposal of plant and 
 equipment                         (493)        (94)       (199)
Net profit on 
 derecognition of 
 previously held 
 interests                            –           –      (1 074)
Share of profit/(loss) 
 of associates and 
 joint ventures                     (64)        245         (18)
Headline earnings         8      96 396      89 382     155 005
Statistics
Number of ordinary 
 shares (’000)
– in issue                      241 843      241 443    241 443
– held in treasury               (8 793)      (7 726)    (7 726)
Deferred ordinary 
 shares in issue (’000)             400          800        800
Weighted average number 
 of shares (’000)
– for earnings per share        234 455      234 517    234 517
– for diluted earnings 
   per share                    241 029      234 517    237 875
Earnings per share 
 (cents)                  9       41,35        38,05      66,65
Headline earnings per 
 share (cents)            8       41,11        38,11      66,10
Diluted earnings per 
 share (cents)            8       40,22        37,33      65,71
Diluted headline 
 earnings per share 
 (cents)                  7       39,99        37,40      65,16
Operating profit (%)                6,1          6,0        5,5
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
                              Unaudited     Restated   Restated
                            31 December  31 December    30 June
                          %        2013         2012       2013
                     change       R’000        R’000      R’000
ASSETS
Non-current assets            1 000 444      824 834    902 792
Property, plant 
 and equipment                  473 882      375 177    423 454
Intangible assets               306 265      244 225    271 356
Investments in 
 associates                      94 766      104 648    103 526
Investments in 
 joint ventures                  81 386       48 384     52 246
Deferred tax assets              44 145       52 400     52 210
Current assets                2 419 293    1 856 575  2 114 804
Inventories                   1 068 621      877 625    929 630
Trade and other 
 receivables                    946 876      710 327    909 868
Cash and cash equivalents       395 029      268 333    269 579
Derivative financial 
 instruments                      1 704           93      5 338
Current tax assets                7 063          197        389
Total assets                  3 419 737    2 681 409  3 017 596
EQUITY AND LIABILITIES
Capital and reserves          1 547 708    1 374 548  1 467 177
Equity attributable to 
 equity holders of 
 the Company                  1 523 435    1 371 516  1 455 777
Non-controlling interest         24 273        3 032     11 400
Non-current liabilities         511 110      268 095    273 122
Borrowings                      454 254      200 987    215 746
Deferred profit                  23 254       29 047     26 150
Deferred tax liabilities         26 552       26 242     22 684
Retirement benefit 
 obligation                       5 340        6 141      5 462
Derivative financial 
 instruments                      1 710        5 678      3 080
Current liabilities           1 360 919    1 038 766  1 277 297
Trade and other payables      1 074 276      766 440  1 060 654
Current portion of 
 borrowings                     257 672      245 106    195 865
Derivative financial 
 instruments                        420        1 397         93
Deferred profit                   5 793        5 793      5 793
Current tax liabilities          22 758       20 030     14 892
Total equity and 
 liabilities                  3 419 737    2 681 409  3 017 596
Capital commitments              87 087       38 807    126 205
Future commitments
Operating leases                464 513      374 939    449 628
Net cash                        382 157       59 341    116 225
Net interest-bearing 
 debt                           280 480      171 127    131 508
Value per share
Asset value per share
– net asset value 
  (cents)               14       648,50       568,04     602,96
– net tangible asset 
   value (cents)        11       518,13       466,89     490,56
– market price (cents)  53          950          620        762
Market 
 capitalisation (R’000)       2 297 508    1 489 506  1 839 795
Financial gearing ratio (%)*       18,1         12,4        9,0
Current asset ratio (times)         1,8          1,8        1,7
* Includes cash and cash equivalents.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
                              Unaudited     Restated   Restated
                               6 months     6 months  12 months
                            31 December  31 December    30 June
                                   2013         2012       2013
                                  R’000        R’000      R’000
Balance at beginning 
 of the period                1 467 177    1 272 088  1 272 088 
Total comprehensive 
 income for the period          105 397       91 570    163 349 
Changes in ownership interest
 – control not lost                   –            –       (522) 
Non-controlling interest 
 acquired in business 
 combinations                    10 220         (457)     7 776 
Share-based payment charge       16 141       11 922     25 916 
Treasury shares acquired        (10 142)           –          –
Dividends paid to 
 non-controlling interest        (2 333)        (575)    (1 430)
Dividends paid                  (38 752)           –          –
Balance at end of period      1 547 708    1 374 548  1 467 177 
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS 
                              Unaudited     Restated   Restated
                               6 months     6 months  12 months
                            31 December  31 December    30 June
                                   2013         2012       2013
                                  R’000        R’000      R’000
Cash generated from
 operations before 
 working capital 
 changes                        207 877      179 574    327 711
Working capital changes        (127 650)     (78 923)   (33 201)
Net finance costs paid          (35 953)     (22 760)   (44 553)
Net income tax paid             (28 787)     (16 539)   (46 402)
Net cash generated from 
 operating activities            15 487       61 352    203 555
Net cash utilised in 
 investing activities          (122 807)     (49 826)  (125 114)
Net cash generated from/
 (utilised in) financing 
 activities                     371 120      (33 229)   (44 168)
Increase/(decrease) in 
 cash resources                 263 800      (21 703)    34 273
Cash resources at 
 beginning of the period        116 225       80 865     80 865
Exchange gains on cash 
 and cash equivalents             2 132          179      1 087 
Cash resources at end 
 of period                      382 157       59 341    116 225
CONDENSED CONSOLIDATED SEGMENTAL ANALYSIS
                                                 Head 
                                           Office and
                                                other
                                     DAWN       recon-
                         Infra-      Solu-     ciling
           Building  structure      tions       items*     Total
              R'000      R'000      R'000       R'000      R'000
6 months –
31 December 
 2013 
(Unaudited)
Revenue   1 516 698  1 108 985    218 326    (223 506) 2 620 503
Revenue 
 after 
 inter-
 segment 
 elimi-
 nation 
 reallo-
 cated    1 518 315  1 087 843     14 345           –  2 620 503
Depre-
 ciation 
 and 
 amorti-
 sation     (15 624)   (11 273)    (8 580)       (185)   (35 662)
Operating 
 profit/
 (loss)     115 618     53 556     10 073     (20 367)   158 880
Net finance 
 expense    (22 324)    (8 022)    (1 552)        255    (31 643)
Share of 
 profit from 
 associates 
 and joint 
 ventures     2 002      7 092          –           –      9 094
Tax 
 expense    (26 370)   (12 634)    (2 477)      4 755    (36 726)
Net profit/
 (loss) 
 after tax   68 926     39 992      6 044     (15 357)    99 605
Assets    2 401 271    944 129    530 085    (455 748) 3 419 737
Liabili-
 ties     1 635 363    535 208    532 898    (831 440) 1 872 029
Capital 
 expendi-
 ture**      35 678     27 233     38 146          27    101 084
6 months – 
 31 December 
 2012 
(Restated)
Revenue   1 409 612    844 509    181 238    (199 986) 2 235 373
Revenue 
 after 
 inter-
 segment 
 elimi-
 nation 
 reallo-
 cated    1 393 309    835 708      6 356           –  2 235 373
Depre-
 ciation 
 and 
 amorti-
 sation     (16 379)    (9 550)    (7 827)       (658)   (34 414)
Operating 
 profit/
 (loss)     122 084     26 065      9 099     (22 775)   134 473
Net finance 
 expense    (12 783)    (6 564)      (997)     (2 415)   (22 759)
Share of 
 profit from 
 associates 
 and joint 
 ventures     3 782      7 196          –           –     10 978
Tax 
 expense    (30 974)    (5 848)    (2 356)      6 650    (32 528)
Net profit/
 (loss) after 
 tax         82 109     20 849      5 746     (18 540)    90 164
Assets    1 998 802    684 688    453 816    (455 897) 2 681 409
Liabili-
 ties     1 345 056    384 405    466 095    (888 695) 1 306 861
Capital 
 expendi-
 ture**      23 703      4 049     20 932         364     49 048
12 months –
 June 2013
 (Restated)
Revenue   2 748 889  1 731 121    365 421    (398 244) 4 447 187
Revenue 
 after 
 inter-
 segment 
 elimi-
 nation
  reallo-
 cated    2 718 331  1 713 192     15 664           –  4 447 187
Depre-
 ciation 
 and 
 amorti-
 sation     (35 308)   (20 951)   (15 848)     (1 335)   (73 442)
Operating 
 profit/
 (loss)     207 216     58 665     14 036     (36 135)   243 782
Net finance 
 expense    (33 962)   (11 652)    (2 183)     (2 137)   (49 934)
Share of 
 profit 
 from 
 associates 
 and joint 
 ventures     4 915     13 677          –           –     18 592
Tax 
 expense    (49 355)   (14 815)    (3 393)     14 375    (53 188)
Net profit/
 (loss) 
 after 
 tax        128 814     45 875      8 460     (23 897)   159 252
Assets    2 184 404    869 508    499 956    (536 272) 3 017 596
Liabi-
 lities   1 468 106    530 577    508 813    (957 077) 1 550 419
Capital 
 expen-
 diture**    76 755     22 484     53 778           –    153 017
* 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 CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1.  BASIS OF PREPARATION
The condensed consolidated interim financial statements are 
prepared in accordance with the requirements of the JSE Limited 
(JSE) for condensed consolidated interim financial statements and 
the requirements of the Companies Act applicable to condensed 
consolidated interim financial statements, International 
Financial Reporting Standard, IAS 34 Interim Financial Reporting, 
the SAICA Financial Reporting Guides as issued by the Accounting 
Practices Committee and Financial Pronouncements as issued by the 
Financial Reporting Standards Council. The accounting policies 
applied in the preparation of these condensed consolidated 
interim financial statements are in terms of International 
Financial Reporting Standards and are consistent with those 
applied in the previous consolidated annual financial statements 
(except for the change in accounting policy explained in note 2 
below). The preparation of the condensed consolidated interim 
financial statements has been supervised by the Group Financial 
Director, JAI Ferreira CA(SA). 
2.  RESTATEMENT – ADOPTION OF IFRS11
On 1 July 2013, the accounting policy for joint ventures was 
changed to be in line with the requirements of IFRS11. 
Previously, investments in joint ventures were proportionately 
consolidated by the Group. In terms of IFRS11, proportionate 
consolidation is no longer allowed. The equity method of 
accounting for investments in joint ventures has been adopted by 
the Group and comparative results have been restated accordingly. 
The effects of the change in accounting policy on the 
consolidated income statements, statements of financial position 
and cash flow statements for the comparative periods are 
disclosed below:
IMPACT ON STATEMENT OF FINANCIAL POSITION
                                               Pre- 
                                            viously    Increase/
                               Restated    reported   (decrease) 
                                 31 Dec      31 Dec      31 Dec
                                   2012        2012        2012 
                                  R’000       R’000       R’000
ASSETS
Property, plant and equipment   375 177     385 338     (10 161)
Intangible assets               244 225     253 414      (9 189)
Investments in associates       104 648     109 514      (4 866)
Investments in joint ventures    48 384           –      48 384 
Deferred tax assets              52 400      53 049        (649)
Inventories                     877 625     920 017     (42 392)
Trade and other receivables     710 327     732 859     (22 532)
Cash and cash equivalents       268 333     272 735      (4 402)
Derivative financial instruments     93          93           –
Current tax assets                  197         312        (115) 
EQUITY
Equity attributable to equity 
 holders of the Company       1 371 516   1 371 516           –
Non-controlling interest          3 032       3 125         (93)
LIABILITIES
Borrowings                      200 987     207 774      (6 787)
Deferred profit                  29 047      29 047           –
Deferred liabilities             26 242      27 209        (967)
Retirement benefit obligation     6 141       6 236         (95) 
Derivative financial instruments  5 678       5 678           –
Trade and other payables        766 440     789 715     (23 275) 
Current portion of borrowings   245 106     257 047     (11 941) 
Derivative financial 
 instruments                      1 397       1 397           – 
Deferred profit                   5 793       5 793           – 
Current tax liabilities          20 030      22 794      (2 764) 
IMPACT ON STATEMENT OF FINANCIAL POSITION (continued)
                                               Pre-
                                            viously    Increase/
                               Restated    reported   (decrease)
                                 30 Jun      30 Jun      30 Jun
                                   2013        2013        2013
                                  R’000       R’000       R’000
ASSETS
Property, plant and equipment   423 454     440 214     (16 760) 
Intangible assets               271 356     279 954      (8 598)
Investments in associates       103 526     107 746      (4 220)
Investments in joint ventures    52 246           –      52 246
Deferred tax assets              52 210      52 940        (730)
Inventories                     929 630     978 366     (48 736)
Trade and other receivables     909 868     942 484     (32 616)
Cash and cash equivalents       269 579     275 510      (5 931)
Derivative financial 
 instruments                      5 338       5 338           –
Current tax assets                  389         389           –
EQUITY
Equity attributable to equity 
 holders of the Company       1 455 777   1 455 777           –
Non-controlling interest         11 400      11 608        (208)
LIABILITIES
Borrowings                      215 746     224 324      (8 578)
Deferred                         26 150      26 150           –
Deferred liabilities             22 684      24 569      (1 885)
Retirement benefit obligation     5 462       5 518         (56) 
Derivative financial 
 instruments                      3 080       3 080           –
Trade and other payables      1 060 654   1 088 948     (28 294)
Current portion of borrowings   195 865     219 613     (23 748)
Derivative financial 
 instruments                         93          93           –
Deferred profit                   5 793       5 793           –
Current tax liabilities          14 892      17 468      (2 576)
IMPACT ON INCOME STATEMENT
                                               Pre- 
                                            viously    Increase/
                               Restated    reported   (decrease) 
                                 31 Dec      31 Dec      31 Dec
                                   2012        2012        2012 
                                  R’000       R’000       R’000
Revenue                       2 235 373   2 303 390     (68 017) 
Cost of sales                (1 650 836) (1 699 623)     48 787
Gross profit                    584 537     603 767     (19 230)
Net operating expenses         (450 064)   (465 809)     15 745
Operating profit                134 473     137 958      (3 485)
Finance income                    1 807       1 784          23 
Finance expense                 (24 566)    (25 917)      1 351 
Profit after net financing 
 costs                          111 714     113 825      (2 111) 
Share of profit from 
 associates and joint ventures   10 978      10 628         350 
Profit before taxation          122 692     124 453      (1 761)
Income tax expense              (32 528)    (34 304)      1 776 
Profit for the period            90 164      90 149          15 
Profit attributable to:
Owners of the parent             89 231      89 231           – 
Non-controlling interest            933         918          15 
Profit for the period            90 164      90 149          15 
There has been no impact on previously reported earnings per 
share and attributable earnings to equity holders of the Company.
IMPACT ON INCOME STATEMENT (continued)
                                               Pre-
                                            viously    Increase/
                               Restated    reported   (decrease)
                                 30 Jun      30 Jun      30 Jun
                                   2013        2013        2013
                                  R’000       R’000       R’000
Revenue                       4 447 187   4 588 344    (141 157)
Cost of sales                (3 294 538) (3 396 154)    101 616
Gross profit                  1 152 649   1 192 190     (39 541)
Net operating expenses         (908 867)   (939 530)     30 663
Operating profit                243 782     252 660      (8 878)
Finance income                   10 517      10 465          52
Finance expense                 (60 451)    (62 916)      2 465
Profit after net 
 financing costs                193 848     200 209      (6 361)
Share of profit from 
 associates and joint ventures   18 592      16 491       2 101
Profit before taxation          212 440     216 700      (4 260)
Income tax expense              (53 188)    (57 465)      4 277
Profit for the period           159 252     159 235          17
Profit attributable to:
Owners of the parent            156 296     156 296           –
Non-controlling interest          2 956       2 939          17
Profit for the period           159 252     159 235          17
There has been no impact on previously reported earnings per 
share and attributable earnings to equity holders of the Company.
IMPACT ON STATEMENT OF CASH FLOWS
                                               Pre- 
                                            viously    Increase/
                               Restated    reported   (decrease) 
                                 31 Dec      31 Dec      31 Dec
                                   2012        2012        2012 
                                  R’000       R’000       R’000
Cash generated from 
 operations before working 
 capital changes                179 574     183 336      (3 762)
Working capital changes         (78 923)    (66 658)    (12 265)
Net finance costs paid          (22 760)    (24 327)      1 567
Net income tax paid             (16 539)    (18 135)      1 596
Net cash generated from 
 operating activities            61 352      74 216     (12 864)
Net cash utilised in 
 investing activities           (49 826)    (53 033)      3 207
Net cash utilised in 
 financing activities           (33 229)    (26 359)     (6 870)
(Decrease)/increase in 
 cash resources                 (21 703)     (5 176)    (16 527)
Cash resources at beginning 
  of the period                  80 865      61 909      18 956
Exchange gains/(losses) on 
 cash and cash equivalents          179        (241)        420
Cash resources at end 
 of period                       59 341      56 492       2 849
IMPACT ON STATEMENT OF CASH FLOWS (continued)
                                               Pre-
                                            viously    Increase/
                               Restated    reported   (decrease)
                                 30 Jun      30 Jun      30 Jun
                                   2013        2013        2013
                                  R’000       R’000       R’000
Cash generated from 
  operations before  
  working capital changes       327 711     341 219     (13 508)
Working capital changes         (33 201)    (29 358)     (3 843)
Net finance costs paid          (44 553)    (46 914)      2 361
Net income tax paid             (46 402)    (50 312)      3 910
Net cash generated from 
 operating activities           203 555     214 635     (11 080)
Net cash utilised in 
 investing activities          (125 114)   (130 091)      4 977
Net cash utilised in 
 financing activities           (44 168)    (41 092)     (3 076)
(Decrease)/increase in 
 cash resources                  34 273      43 452      (9 179)
Cash resources at beginning 
 of the period                   80 865      61 909      18 956
Exchange gains/(losses) on cash 
 and cash equivalents             1 087      (1 739)      2 826
Cash resources at end 
 of period                      116 225     103 622      12 603
3.  RESTATEMENT OF CASH FLOWS
Net cash utilised in investing activities and net cash utilised 
in financing activities were restated for the period ended 
31 December 2012. Property, plant and equipment and intangible 
assets 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 net cash utilised in 
investing activities. Accordingly, borrowings raised included the 
gross amounts of new instalment sale agreements and finance 
leases entered into during the period 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:
                                Adjustment
                                       for
                 As previously     finance                    As
                      reported  leases and    IFRS 11   restated
                        31 Dec  instalment     adjust-    31 Dec
                          2012       sales      ments       2012
                         R’000       R’000      R’000      R’000
Net cash utilised 
 in investing 
 activities            (53 033)      4 349     (1 142)   (49 826) 
Net cash utilised 
 in financing 
 activities            (26 359)     (4 349)    (2 521)   (33 229)
The restatement related to finance leases and instalment sales 
had no impact on the net movement in cash, nor the balance 
thereof at period-end.
4.  BUSINESS COMBINATIONS
    Swan Plastics (Pty) Ltd
    On 1 August 2013 the Group acquired a 51% share in Swan 
Plastics (Pty) Ltd for a cash consideration of R20 million.  
Swan Plastics specialises in the manufacture of PVC pipes and 
fittings.
A provisional goodwill allocation of R10,2 million arising 
from the acquisition largely consists of the synergies and 
economies of scale expected from the acquisition.
Swan Plastics (Pty) Ltd contributed operating profit of R1,4 
million and revenue of R100,7 million since the acquisition 
date. If the acquisition had occurred on 1 July 2013, Group 
revenue would have been R2,7 million more, and operating 
profit for the period would have increased by R0,2 million. 
These amounts have been calculated based on consistent 
application of the Group’s 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 R20,9 
million and non-controlling interests of R10,2 million was 
recognised.
Acquisition-related costs amounted to R1,6 million and have 
been recognised in profit and loss. Trade receivables as at 
the date of the acquisition has a fair value of R 45,0 
million.
5.  EVENTS AFTER THE REPORTING DATE 
Management is not aware of any material events that occurred 
subsequent to the end of the reporting period.
There has been no material change in the Group’s contingent 
liabilities since period-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*, 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

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