A WEE DRAM
CHRIS GILMOUR: The old and the new weigh up the task of turning around downsized Dawn
The recent appointment of asset-management specialist Charles "Chukky" Boles as independent nonexecutive director is a good one.
Dawn’s results for the year to March 2017 were not pretty. The group manufactures and distributes quality branded hardware, sanitaryware, plumbing, kitchenware, engineering and civil products through a branch network in SA and selected countries in the rest of Africa, including Mauritius.
Following profound downsizing and the closures of certain operations, group revenue fell 14% to R4.3bn. Operational profit, excluding R352m in post-tax restructuring costs, impairments and write-downs, plummeted 306% to a loss of almost R120m. Earnings per share improved slightly, from a loss of 318c in 2016 to a loss of 269c. Debt covenants with banks were breached and auditors flagged an "emphasis of matter". Since July 2014, Dawn’s share price has slumped from 846c to 100c. The one bright spot was the debt-to-equity ratio, which fell from 87% to 10% by April 2017, thanks to a R358m rights issue after the year end. New CEO Edwin Hewitt, chosen by the group’s bankers as chief restructuring officer in January 2017 and appointed permanent CEO in April, gave analysts a realistic and sombre outlook. After immersing himself in the business and its relevant markets, analysing deep-seated problems and engaging with many stakeholders, he conceded some key troubles. "The fundamental busines...
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