| Thu 2 Jul 2009, 15:18 | | DAW - Distribution and Warehousing Network Limited - Trading Statement for the |
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DAW
DAW
DAW - Distribution and Warehousing Network Limited - Trading Statement for the
twelve months ended 30 June 2009
Distribution and Warehousing Network Limited
(Incorporated in the Republic of South Africa)
(Registration number 1984/008265/06)
Share code: DAW & ISIN code: ZAE000018834
("Dawn" or "the Company")
Trading Statement for the twelve months ended 30 June 2009
In accordance with paragraph 3.4 (b) of the Listings Requirements of the JSE
Limited, shareholders are advised that the Company`s headline earnings per share
for the twelve months ended 30 June 2009, is expected to be 30% to 40% lower
than the reported headline earnings per share for the prior comparative period.
Earnings per share are expected to be 40% to 50% lower than the reported
earnings per share for the prior comparative period.
Results drivers
The past six months have been characterised by a further tightening of general
trading conditions as well as the effect of delayed spending from the elections
and reduced trading days, which affected April`s performance. Against these
factors, Dawn maintained positive growth in revenue for the year under review.
Performance in building related activities, Dawn`s traditional businesses,
continued to show some resilience over the past six months, against the
background of a sharp decline in recorded building activities, mainly supported
by a continuation of demand in the building refurbishment and upgrade sector,
most of which is unrecorded.
Operating profit before a fair value adjustment of an investment is expected to
be 20% to 30% lower than the reported operating profit for the prior comparative
period.
The main impacts on the decline in headline earnings per share resulted from the
following three factors:
* Continued delays and non-awarding of tenders, specifically in government
spend on water in sewer related projects. This severely affected the
performance of Incledon and DPI. Targeted programmes resulted in increased
market share in trading and engineering products.
* The impact of the downturn in demand from the European market on the
performance of the predominant export-based acrylic products division was
compounded by difficulties experienced with export quality and recovery.
Steps are in progress to reposition this business for the local market.
* Increased funding cost, driven mainly by higher average rates of funding
during the period.
Earnings per share were further affected by a fair value adjustment on an
investment.
The industries in which Dawn operates have been affected by ongoing destocking
throughout most of the period, mainly due to a decline in resource prices and
the resultant deflationary impacts on revenue and margins of stockists. The
prices of copper, steel and PVC are however on the rise, which is expected to
support increased demand when restocking occurs in the industry`s supply chain.
Whilst no meaningful recovery is expected from building related activities
before the start of the new calendar year, the lower interest rate environment
should contribute to an improvement in consumer confidence and the general
trading environment. With the successful conclusion of the election and settling
down and positioning of central and local government decision making powers, it
is anticipated that government spending on water and sewer, as well as housing
projects will support increased demand in this sector over the next financial
year.
Dawn will benefit from the lower cost of funding, both through the reduction of
interest rates. The group is well positioned to benefit from increased trading
volumes on the back of anticipated improvement in trading conditions, mainly
from the second half of the new financial year.
The financial information on which this trading statement is based has not been
reviewed by the Company`s auditors. The Company`s results will be released on or
about 8 September 2009.
Johannesburg
2 July 2009
Sponsor
Deloitte & Touche Sponsor Services (Pty) Limited
Date: 02/07/2009 15:18:01 Produced by the JSE SENS Department.
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