DAWN saw full year revenue slips to ZAR4.301 billion

DAWN saw full year revenue slips to ZAR4.301 billion

DAWN in its financial report for the full year 2016 said that its revenue for the year lowered to ZAR4.301 billion compared to ZAR4.993 billion recorded.

Gross profit fell to ZAR777.5 million against ZAR1.095 billion reported the previous year.

The operating loss decreased to ZAR468.8 million in contrast to a loss of ZAR661.4 million reported in the fiscal year 2016, profit attributable to owners of the parent narrowed to ZAR637.4 million against loss of ZAR762.9 million in the year before.

Headline loss per share shot up to 240.49 cents per share compared to a headline loss of 65.55 cents per share posted in 2016.

Dividend
No dividend has been proposed or declared. Resumption of dividend payments is dependent on the boardÆs future views of when the majority of DAWNÆs underlying businesses will be firmly in profit.

Prospects
The second part of the turnaround plan focuses on restoring fundamentals from both a strategic and an operational perspective. Operational focus areas include:
The focus in the manufacturing segment will be on actively improving efficiencies, to re-engineer the operations for lower factory breakeven points and to significantly rationalise the product spread.
û In the trading segment, it will be crucial to reclaim the master distributor status. Customers and suppliers require DAWN to fulfil the master distributor role. The team will also focus on addressing its on-time-in-full delivery, just-in-time delivery, re-energising staff, restoring supplier and customer relationships and actively manage volume-related term agreements.

Strategic focus areas include:
û Implementing the decentralisation of the business structure, with an emphasis on authority and accountability.
û Driving cross-selling to regain market share.
û Transforming the business and implementing further rightsizing to operate successfully in a tough economy.

The management team is mindful that they have to meet the bank covenants on EBITDA and working capital, with these areas receiving particular attention. The restructuring and improvements already made, together with the key strategic and operating initiatives, have ensured that the group is doing all it can to return the business to sustainable profitability. Care has been taken to retain the group footprint to ensure that, when growth returns to the groupÆs markets, it is well positioned to capitalise on the opportunities which will arise.

DAWN is not anticipating any meaningful improvement in the economy in F2018. This will result in the group continuing to experience difficult trading conditions in a very competitive environment. As a management team, the focus is firmly on delivering on the short-term action plan and to complete the turnaround and achieve at least a breakeven position in F2018, provided there will be no further significant weakening of the economy. The second half is also seasonally weaker. Wage negotiations have started in July which, at times in the past, have led to strike action if not successfully concluded. As outlined in the trading update published on SENS on 12 July 2017, although the board believes the group is solvent and liquid for the 12 months following the date of the auditors signing of this yearÆs results on 14 July 2017, certain potential events and conditions give rise to a material uncertainty that may cast significant doubt on the groupÆs ability to continue as a going concern based on cash flow forecasts prepared against the backdrop of available facilities. Refer to note 1 æBasis of preparationÆ for the section on æGoing concern assessmentÆ. Management is actively addressing the groupÆs short-term challenges, with actions including corporate restructuring activities and alternative funding options.

Over the medium-term, the group will focus on achieving profitability in F2019 and meeting profit before interest and tax target margins in F2020 of 5% in the trading segment and 12% in the manufacturing segment.