DISTRIBUTION AND WAREHOUSING NETWORK LTD 
By | SENS- Thursday, 12 September 2013 |
| DISTRIB. AND WAREHOUSING NETWORK LD - Summary consolidated financial results for the year ended 30 June 2013 and dividend declaration |
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DAW 201309120006A 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
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
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.
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
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'). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS. |
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