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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