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DISTRIBUTION AND WAREHOUSING NETWORK LIMITED - INTERIM RESULTS FOR THE SIX
MONTHS ENDED 31 DECEMBER 2004
DISTRIBUTION AND WAREHOUSING NETWORK LIMITED
(`DAWN` or `the Group`)
(Incorporated in the Republic of South Africa)
(Registration number 1984/008265/06)
SHARE CODE: DAW ISIN CODE: ZAE 000018834
DISTRIBUTION AND WAREHOUSING NETWORK LIMITED
Just-in-time distribution
Interim results for the six months ended 31 December 2004
Revenue up 35%
Attributable earnings up 63%
Headline earnings per share up 61%
GROUP INCOME STATEMENT
Unaudited Unaudited Audited
6 months 6 months 12 months
31 December 31 December 30 June
2004 2003 2004
R`000 R`000 R`000
Revenue 35 677 880 509 675 1 047 417
- Continuing operations 662 448 489 348 1 008 829
- Discontinued operations 15 432 20 327 38 588
Operating profit 56 014 32 282 62 696
- Continuing operations 65 53 218 32 265 59 939
- Discontinued operations 2 796 17 2 757
Net finance costs (4 521) (2 453) (5 813)
Income from associates 7 637 7 046 14 513
Profit before taxation 59 130 36 875 71 396
Taxation (18 698) (11 350) (22 617)
Profit after taxation 40 432 25 525 48 779
Minority interest (2 904) (2 466) (3 157)
Attributable earnings 63 37 528 23 059 45 622
Included above:
Depreciation 5 135 4 453 9 199
Operating lease charges 5 235 5 319 9 176
Reconciliation of headline
earnings
Earnings for the period 37 528 23 059 45 622
Adjustment for the after
tax effect of:
- Profit on sale of business (863) - -
- Amortisation of goodwill - 519 -
Headline earnings 56 36 665 23 578 45 622
Statistics
Number of ordinary shares (`000)
- in issue 169 013 179 232 169 013
- held in treasury 7 726 16 771 7 726
- share incentive scheme 12 323 13 577 12 807
Deferred ordinary shares
in issue 10 000 - -
Weighted average number
of shares 158 883 164 720 149 445
Headline earnings per
share (cents) 61 23,08 14,31 30,53
Attributable earnings
per share (cents) 69 23,62 14,00 30,53
Operating profit (%) 8,3 6,3 6,0
GROUP CASH FLOW STATEMENT
Unaudited Unaudited Audited
31 December 31 December 30 June
2004 2003 2004
R`000 R`000 R`000
Cash generated from
operations 25 236 18 032 52 488
Net finance charges paid (3 376) (2 453) (4 061)
Taxation paid (13 982) (9 317) (16 623)
Cash flow from operating
activities 7 878 6 262 31 804
Cash flow from investing
activities (203 914) (24 586) (24 916)
Cash flow from financing
activities 163 965 21 748 19 666
Capital distribution - - (7 169)
Shares repurchased - (5 393) (7 509)
Increase/(decrease) in
cash resources (32 071) (1 969) 11 876
Cash resources at beginning
of period 26 250 14 374 14 374
Cash resources at end
of period (5 821) 12 405 26 250
GROUP BALANCE SHEET
Unaudited Unaudited Audited
31 December 31 December 30 June
2004 2003 2004
R`000 R`000 R`000
Assets
Non-current assets 137 975 44 301 44 479
Property, plant and equipment 75 366 22 221 21 456
Investment in associates 27 874 22 080 23 023
Intangible assets 34 735 - -
Current assets 478 911 293 990 326 643
Inventory 264 483 155 819 132 566
Receivables and prepayments 214 428 125 766 167 827
Cash and cash equivalents - 12 405 26 250
Total assets 616 886 338 291 371 122
Equity and liabilities
Capital and reserves
Ordinary shareholders`
equity 162 551 110 426 124 778
Minority interest 2 617 - 12
Non-current liabilities 130 537 44 400 37 659
Interest-bearing liabilities 112 812 23 589 22 133
Non-interest-bearing
liabilities 14 450 16 234 12 310
Deferred tax liabilities 3 275 4 577 3 216
Current liabilities 321 181 183 465 208 673
Trade and other payables 235 381 158 563 183 932
Current portion of borrowings 30 836 5 012 9 113
Tax liability 49 143 19 890 15 628
Bank overdraft 5 821 - -
Total equity and liabilities 616 886 338 291 371 122
Capital commitments 13 860 8 545 14 589
Future commitments 96 533 94 585 92 390
Finance leases 19 777 16 190 14 510
Operating leases 76 756 78 395 77 880
Value per share
Asset value per share
- net asset value (cents) 109,12 74,17 84,04
- net tangible asset
value (cents) 85,80 74,17 84,04
- market price (cents) 550 170 240
Market capitalisation (R`000) 929 572 304 694 405 631
Financial gearing ratio (%) 69,40 25,90 29,04
Current asset ratio (times) 1,49 1,60 1,57
STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited Audited
31 December 31 December 30 June
2004 2003 2004
R`000 R`000 R`000
Opening balance 124 778 92 286 92 286
Attributable earnings 37 528 23 059 45 622
Issue of deferred ordinary
shares 100 - -
Share incentive scheme 145 474 1 548
Capital distribution - - (7 169)
Treasury shares acquired - (5 393) (7 509)
Balance at the end of
the period 162 551 110 426 124 778
COMMENTARY
GROUP PROFILE
The Dawn Group is a leading brand distributor and supplier of plumbing, hardware
and related materials to the building and construction sectors of the economy.
The product and customer base include supply into the petrochemical,
agricultural and mining sectors of the market, as well as into infra-structural
development, locally and in selected African countries.
The Group has also embarked on a strategy to move closer to selected major
suppliers in an effort to minimize duplication of resources and to obtain the
necessary efficiencies and synergies to enhance the Group`s competitive
advantage.
FINANCIAL OVERVIEW
The Group remains in a favourable market environment resulting in buoyant
trading conditions during the period. In addition, the benefits of the
Amalgamated Fasteners & Fittings and La-Co acquisitions are also now apparent.
The effect of the Cobra acquisition on the income statement during the reporting
period is minimal, as the acquisition only became effective on 1 December 2004.
Turnover increased from R489 million to R662 million, resulting in a 35%
increase on continuing operations.
Operating profit as a percentage of turnover increased from 6% to 8%, whilst
attributable earnings of R37,5 million is 63% higher.
Headline earnings of R36,7 million were achieved, an increase of 56%, whereas
headline earnings per share of 23 cents increased by 61%.
Net asset value of 109 cents per share is 47% higher.
The debt ratio increased from 26% to 70%, mainly as a result of the Cobra
acquisition. In line with anticipated cash inflow, the Board expects the gearing
to reduce to previous levels by year-end, as the benefits of the Cobra
acquisition are realised.
ACCOUNTING POLICIES
The interim results have been prepared in accordance with South African
statements of Generally Accepted Accounting Practice. The accounting
policies used are consistent with those used in the comparative period and for
the year ended 30 June 2004.
Prospects
The Group anticipates the building, construction and property sectors to
continue its momentum in the foreseeable future. In addition, benefits from the
Cobra acquisition, as well as from the participation of its BEE partner Ukhamba
Holdings (Proprietary) Limited, should also become more apparent during the
remainder of this year. As a result, the Group is well positioned to continue
its strong improvement in earnings for the foreseeable future.
DISTRIBUTION TO SHAREHOLDERS
No interim dividend is payable, as the Group`s policy is to distribute dividends
at year-end.
BOARD OF DIRECTORS
In terms of the agreement between Dawn and Ukhamba, Mr Alan Lishman resigned
from the Board and Messrs Veli Mokoena and Osman Arbee were appointed as non-
executive directors, all effective 15 December 2004. We thank Alan for his
valuable contribution during his tenure.
As a result of the Cobra acquisition, Mr Mike Field joins the Board as executive
director, whilst Mr Tubby Boynton-Lee joins as non-executive director, both
effective from 10 February 2005.
We welcome these gentlemen to the Board and look forward to working with them as
our new partners.
On behalf of the Board
LM Alberts DA Tod Johannesburg
Chairman Chief Executive 10 February 2005
DISTRIBUTION AND WAREHOUSING NETWORK LIMITED
(`DAWN` or `the Group`)
(Incorporated in the Republic of South Africa)
(Registration number 1984/008265/06)
Registered office: 2 Keerom Road, Heriotdale Ext 10, Cleveland, Johannesburg
2001
Transfer secretaries: Computershare Investor Services 2004 (Pty) Limited, 70
Marshall Street, Marshalltown 2001 (PO Box 61051, Marshalltown 2107)
Directors: LM Alberts* (Chairman), DA Tod (Chief Executive), OS Arbee*, JA
Beukes, AS Boynton-Lee*, ML Field, RL Hiemstra*, VJ Mokoena* *Non-executive
E-mail: info@dawnltd.co.za
Share code: DAW
ISIN: ZAE000018834
www.dawnltd.co.za
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