JSE Sens

DISTRIBUTION AND WAREHOUSING NETWORK LIMITED - Unaudited Interim Results For The Six Months Ended 30 September 2018

07 December 2018 - 16:32 PM
DAW
Unaudited Interim Results For The Six Months Ended 30 September 2018

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

UNAUDITED INTERIM RESULTS
for the six months ended 30 September 2018

LETTER FROM EDWIN HEWITT TO ALL STAKEHOLDERS

Over the past 14 months I have continually brought to 
stakeholders? attention the risk that the adverse economic 
environment imposes to the group?s turnaround and prospects, both 
from a timing and implementation perspective. Since year-end, 
economic conditions have further deteriorated, and it is 
forecasted that the negative environment will prevail in the 
current financial year. Accordingly, in response to the continued 
decline in revenue as a consequence of the economic reality, the 
management team devised a further large-scale cost reduction 
plan, approved by the board of directors (?board?), in an 
endeavour to reposition the group for stability and recovery in 
line with its three-year turnaround plan. 

The revised response measures resulted in the retrenchment and 
termination of employment of more than 700 employees and labour 
broker staff across the group since the beginning of the 
financial year. The terminations were as a result of a variety of 
standard business reasons, but the largest portion of the 
terminations was based on operational requirements and the trade 
unions were engaged throughout the process. 

The high fixed costs and legacy issues remain an extensive burden 
on the group.  We have continued to actively engage with 
landlords, infrastructure and support service providers over the 
period to re-engineer costs to more affordable levels.  From a 
lease perspective, further agreements have been entered into 
terminating leases, sub-leasing unused properties and outsourcing 
excess warehouse capacity.  IT and support service agreements 
were also renegotiated to lower levels with the support of the 
relevant service providers. In addition, my management team has 
continued to make progress with legacy issues such as the DPI 
Plastics and Sangio Competition Commission legal matter which was 
concluded in the group?s favour.

Throughout H1 F2019, the management team and the board have 
continued to critically focus on liquidity management and 
exploring funding alternatives which has consumed a substantial 
portion of our time.  The debtors-based funding facility of R140 
million, provided by Absa Bank Limited, was successfully 
implemented and the overdraft of R100 million has been repaid. We 
have also actively engaged with credit insurers and suppliers to 
ensure adequate limits were allocated to the company. The support 
of these parties through a really challenging period is 
appreciated.

In addition to the initiatives at a group level, DAWN has 
continued implementing measures to refocus each subsidiary on its 
core competencies, as well as actively leverage synergies between 
the group?s subsidiaries, particularly its largest subsidiaries. 

Wholesale Housing Supplies (?WHS?), the main sanitaryware and 
hardware trading and distribution business in the group, was 
restructured further for improved accountability and processes 
re-engineered for simplicity. A core focus was consolidation of 
functions across the operating divisions. 

However, in H1 F2019, WHS was once again severely impacted by 
supply inconsistencies partially due to our largest supplier 
performance and also due to inadequate trading facilities as a 
result of the group?s challenged financial position. Access to 
adequate trading facilities and creditor terms are fundamental to 
the business model of WHS and therefore this limitation severely 
impacted on the results of the group.

From a service delivery perspective, WHS has been successful in 
significantly improving its performance to customers over the 
last six months through the realisation of benefits from 
previously implemented turnaround initiatives. DAWN Logistics has 
substantially improved its on-time and in-full delivery 
performance capability over the period. Inventory forward demand 
planning has shown immense progress with the only remaining 
limitations being the trading terms and financing facility 
elements. It is believed that WHS will continue to reap further 
benefits in terms of revenue and efficiencies as a result of this 
improved platform. 

Incledon, the group?s specialist water infrastructure trading and 
solutions business, continued to focus on delivery in terms of 
its turnaround strategy, yielding positive results. The business 
has continued its focus on the mining, agriculture and 
engineering sectors and its presence in the growth areas of 
Bloemfontein, Polokwane, Rustenburg and Steelpoort. A core 
priority has been improving the effectiveness of its imports in 
order to yield improved margins. Incledon was negatively affected 
by the seven-week ongoing strike in the plastics industry during 
October to December 2018 which impacted on the availability of 
PVC products, mainly pipe. The lack of access to funding for 
stock imports in H1 F2019 also severely affected the results for 
the six months, however I believe, with their current stock 
levels, Incledon is poised for significant growth and 
profitability.

My management team and the board focused extensively on DPI, the 
group?s pipe manufacturing business, during the reporting period. 
DPI?s fundamental decline in sales performance, high levels of 
scrap and its prevailing high cost structure, driven to a large 
extent by its very outdated and inefficient machinery, have been 
major areas of concern.  Furthermore, the cut-throat competitor 
activity, drove extremely low margins in the reporting period. 

The process of curtailing costs in DPI was started in 2017 with 
the closure of the Cape Town manufacturing plant. This business 
has been facing dire market and operating conditions as a result 
of reduced government spending. Added to this, a crippling strike 
action, lasting seven weeks so far (the strike is still ongoing 
in the plastics industry), placed severe strain on the business 
and the group. As an initial response to these conditions and in 
an attempt to rescue the business, the DPI management reduced and 
refocused its capacity towards its core capability being the 
polyvinyl chloride (PVC) pipe and the building fittings market. 
The high-density polyethylene (HDPE) plant, which operated in an 
extremely competitive market, had to be closed during September 
2018. DPI attempted to regain revenue by changing its route to 
market strategy through a collaboration with WHS, which provided 
a larger platform for the distribution of its products. Despite 
these actions, the business continued to be in a substantial 
loss-making position and consumed an unbearable level of the 
group?s cash flow, placing the sustainability of the group as a 
whole at risk.  As a result of the financial position, and with 
no other viable alternatives, management and the board decided to 
proceed with a closure process.  Accordingly, DPI is classified 
as a discontinued operation and disclosures performed in terms of 
IFRS 5 are shown in the enclosed results.

At the group level, management has continued to closely monitor 
DAWN?s performance, taking further corrective measures over the 
period, as required, in response to the group?s declining 
financial and, specifically, its liquidity position. These 
measures included exploring and obtaining additional funding via 
trade financing, renegotiation of creditors terms, investigating 
new revenue sources, enhancing the import strategy, renegotiation 
of lease, infrastructure and support agreements, securing third 
party logistics contracts to fill excess warehousing and 
distribution capacity, enhanced consignment stock initiatives and 
a general focus on a more demand-based, higher margin and better 
service business model.  

The above has positioned the group well for its turnaround but 
the lack of access to capital and ongoing cash flow challenges 
remain a significant threat to the group?s sustainability over 
the interim period.

The cash received by the group through the rights issue and 
proceeds from the sale of assets was used to repay the group?s 
existing debt and cover the transaction costs leaving little 
capital available to invest in the turnaround. Management has 
engaged extensively with various levels of financiers to obtain 
trade finance.  Financiers have been hesitant to offer financing 
facilities to DAWN until the turnaround has been manifested, 
leaving the group with limited access to further financing 
alternatives. 

As a result, the board duly and comprehensively investigated the 
options in light of the financial position of the group.  These 
included exploring options to sell the group as a whole, 
disposing of entities in the group separately and, at a worst-
case scenario, commencing with business rescue proceedings. The 
board?s objective was to ensure the best outcome collectively for 
the key stakeholder groupings namely the group?s shareholders, 
creditors, 1 250 employees as well as the  4 000 customers and 1 
000 suppliers which rely on its continued existence.

The board had to consider the viability of implementing each of 
the alternatives within the context of the forward-looking 
solvency and liquidity position.

OFFER FOR THE ACQUISITION OF THE GROUP

Notwithstanding progress made with the turnaround strategy and 
the creation of a platform from which growth can emanate, DAWN 
continues to face liquidity constraints and, unless there is a 
material turnaround in the company in the near future, it faces a 
looming solvency risk.

As mentioned in previous communications, the core requirements 
for a successful DAWN turnaround include:

?  Revenue improvement, which is challenged by an overtraded 
   market and underlying depressed economy; 
?  Improved supplier agreements/terms, which could be optimised 
   through further relationship building; 
?  Access to capital/funding;
?  Continued improvement of DAWN?s service levels (which has been
   largely achieved);
?  Ongoing operational efficiencies and optimisation (again this 
   has been largely achieved); and
?  Further cost restructuring such as onerous leases and high IT 
   costs amongst others (significant progress has already been 
   made in this regard).

Against the background of having re-engineered the group for 
future growth as well as an understanding of the key importance 
of each of the above factors, DAWN received a firm offer from 
Polanofield (Pty) Ltd to acquire the entire issued share capital 
of DAWN by way of a scheme of arrangement for an aggregate cash 
consideration of R5,8 million, as disclosed in more detail in the 
SENS announcement published on 3 December 2018. Polanofield?s 
share capital is owned by Derek Tod and Luis Baeta. Derek and 
Luis have extensive experience and expertise in the wholesale 
trading environment and offer a relationship differential that 
can strategically take DAWN forward from the base that has been 
created by DAWN?s current management. Through long-standing 
relationships in the industry, these individuals are well 
positioned to negotiate more favourable supply agreements and tap 
into solid customer relationships stretching over more than 25 
years. This could increase sales volumes and improve related 
discounts and rebates. 

It was concluded by the board that the offer would facilitate the 
required revenue volume growth to cover the high cost base as 
well as further improvements to reduce the fixed cost base.  It 
provides a reasonable prospect of success which cannot be 
achieved thought the current structure or through implementing 
any of the options that the board has previously considered as 
viable alternatives.  This option also has the support of DAWN?s 
major shareholders through irrevocable undertakings and letters 
of support. The company?s bankers, credit insurers and landlords 
have also shown their continued support throughout the transition 
process.

RESULTS

The results for the half year have been split between continuing 
and discontinued operations. Continuing operations, contributing 
an attributable loss of R116 million, are mainly attributable to 
WHS, head office (no recovery of costs) and Incledon (to a lesser 
extent). The other entities performed either at a profit or 
breakeven. The discontinued operations of DPI contributed a loss 
of R116 million. The group results included R65 million of once-
off costs comprising R11 million in continuing operations, 
including retrenchments in WHS and impairments of College of 
Production Technology. The balance of R54 million is in 
discontinued operations and include a reduction in inventory to 
realise stock for cash as well as scrap in excess of the norm 
generated, retrenchments, impairments of plant, lease 
settlements, site restorations and onerous lease provisions. 

The cost reduction resulting from the retrenchment of staff in 
WHS will impact in the second half of the year from October 2018 
and together with the proposed delisting, savings in head office 
costs as well as the proposed reduction in Germiston leases will 
save the group in excess of R80 million per year. The group?s 
largest property will have a 30% reduction in rent, effective 1 
March 2019, which will have a significant impact on the group?s 
fixed cost base.

In view of the results disclosed later in this document, the 
current net asset value of 12,73 cents per share could further 
reduce due to the cyclical nature of DAWN?s business with 
December and January being historically slow months. 

Taking into consideration the abovementioned, the DAWN board of 
directors is of the opinion that the offer is the most suitable 
option for the group in the collective interests of DAWN?s 
stakeholders. As a result of its reduced size, DAWN is no longer 
deemed suitable for listing, combined with the burden of listing 
fees and the associated costs of being a listed entity 
outweighing any benefits that being listed have, or could bring, 
in the foreseeable future. On implementation of the scheme, the 
DAWN shares will therefore be delisted from the main board of the 
Johannesburg Stock Exchange.

As outlined above, we have been actively addressing the group?s 
challenges through appropriate remedial actions. Bearing in mind 
that this was only year one of a three-year turnaround, the group 
has worked actively to position DAWN for the next phase of 
turnaround. For these actions, I thank my management team and all 
my colleagues at DAWN for their dedication to resiliently and 
tirelessly address the challenges we faced and for their time 
invested in the future of DAWN. I thank our bank, Absa, for their 
support during difficult times. Our creditors? and credit 
insurers? backing are greatly valued. I also thank the chairman 
and board for their expertise and sound advice as well as our 
shareholders for their support. 
Regards

Edwin Hewitt   
Chief executive officer
7 December 2018

RESULTS COMMENTARY 
for the six months ended 30 September 2018

INCOME STATEMENT

Revenue for the six months to 30 September 2018 declined by 21% 
to R1,4 billion (H1 F2018: R1,7 billion). The decline was due to 
continued subdued economic conditions and a competitive market in 
H1 F2019. The business was also negatively affected by supply 
disruptions due to lack of liquidity and reduced creditor 
funding.

As a results of the decline in revenue, the operational loss 
(before impairments and derecognitions) worsened from R27,1 
million to R109,5 million compared to H1 2018 and R168,0 million 
at the 2018 year-end. 

Against this, the group?s continued focus on cost control, which 
commenced in 2016, resulted in a pleasing decline in operating 
expenses. It should be noted that the current year operating 
expenses included the retrenchment and restructuring costs. 
However, due to the reduction in revenue levels, expenses as a 
proportion of revenue increased from 24,2% in H1 F2018 to 30,4% 
in H1 F2019. The benefit of lower costs post retrenchments is 
expected to materialise in the third quarter of the financial 
year.

Impairments and derecognitions amounted to a net R0,8 million, 
comprising impairments of R4,4 million and profit from 
derecognitions of R5,3 million. 

Income from associates and joint ventures reduced from a profit 
of R1,7 million in H1 F2018 to a profit of R0,09 million in H1 
F2019.

Most businesses are not in a tax expense position. The group?s 
effective tax rate, therefore, moved from 31,1% in H1 F2018 to -
2,8% in H1 F2019.

The loss from discontinued operations, relating to DPI Plastics, 
amounted to R115,9 million in H1 F2019 compared to R65,2 million 
in H1 F2018 which included a loss of R62,0 million for GDW and 
R3,2 million for DPI Plastics.

Non-controlling interest expense included Ubuntu Plastics of R0,3 
million in H1 F2019 compared to R6,4 million in H1 F2018. The 
prior year comparative period included Swan Plastics, which has 
been disposed of in the prior year, as well as Hamilton?s 
Brushware, where the group acquired the non-controlling interest.

As a result of sustained losses, the group?s attributable loss 
worsened by 109% to R232,5 million compared to R111,4 million in 
H1 F2018.

STATEMENT OF FINANCIAL POSITION

Property, plant and equipment and intangible assets (mainly 
computer software) reduced from R276,3 million to R60,3 million 
due to impairments at the end of F2018 and the reclassification 
of property, plant and equipment of DPI Plastics to assets of 
disposal group classified as held-for-sale.

Net working capital days at the reporting date were 40 days and 
comprised debtor days of 39 days and inventory days of 57 days, 
offset by creditor days of 56 days. Despite challenging economic 
conditions, debtors days improved following an increased focus on 
collection and the additional focus brought about by the invoice 
discounting facility. The inventory composition is healthier and 
more current than in H1 F2018.  Extended terms were arranged with 
some of the major creditors leading to an increase in creditor 
days. 

Accounts receivable days remained at 39 days despite a tough 
economy. Creditor days reflect the current liquidity position.  
Inventory for the group including the disposal group reduced by 
R63 million compared to H1 F2018.

The group?s net debt reduced from R169,3 million in H1 F2018 to 
R77,3 million at the reporting date The H1 F2018 results recorded 
debt facilities of R200 million, which reduced to R140 million in 
H1 F2019. 

Net gearing deteriorated from 26,5% at the end of H1 F2018 to 
94,7% at the end of H1 F2019, due to losses which reduced the 
equity value to R81,5 million from R638,6 million in H1 2018.

The group?s net asset value decreased by 87,3% to 12,73 cents per 
share at 30 September 2018 compared to 100,27 cents per share at 
30 September 2017. Tangible net asset value decreased by 85,8% to 
12,73 cents per share at 30 September 2018 compared to 89,88 
cents per share at 30 September 2017.

STATEMENT OF CASH FLOWS

Cash utilised in operations was R43,8 million in H1 F2019 
compared to an amount of R75,4 million utilised in H1 2018. This 
was as a result of trading losses, where cash utilised in 
operating activities before working capital changes was R210,7 
million compared to R8,7 million in the previous comparative 
period. Inflows from working capital amounted to R166,9 million. 
Net finance charges and taxation paid amounted to outflows of 
R11,4 million, giving rise to a cash utilisation from operating 
activities of R55,2 million. Investing and net finance activities 
resulted in an inflow of R82,1 million, mainly relating to the 
overdraft facility which was included in cash/overdraft in H1 
F2018. The overdraft was exchanged for a new debtors financing 
facility now classified under short-term borrowings. Investing 
activities include the proceeds from the disposal of Namibia 
Plastic Converters of R24,3 million and an outflow from capital 
expenditure of R24,5 million generated out of working capital. 

SIGNIFICANT CORPORATE ACTIVITY 

Namibia Plastic Converters Proprietary Limited 
During the reporting period, the group disposed of the assets 
(mainly plant and equipment) of Namibia Plastic Converters 
Proprietary Limited (NPC) and its wholly-owned subsidiary, 
Franmore Investments Proprietary Limited, for a consideration of 
R24,3 million, effective May 2018. The Namibian Competition 
Commission approved the proposed transaction on 17 April 2018.  A 
gain of R5,3 million was realised on the transaction. 

COMPETITION COMMISSION MATTER

DAWN appealed the Competition Tribunal?s decision handed down in 
respect of an allegation of market allocation arrangement 
affecting DAWN Consolidated Holdings, DPI Plastics and Sangio 
Pipe. On 4 May 2018, judgement was handed down in the Competition 
Appeal Court. The court upheld DAWN?s appeal and set aside the 
decision of the Tribunal, dismissing the complaint with costs. On 
25 May 2018, DAWN received notification that the Competition 
Commission had applied to the Constitutional Court for leave to 
appeal against the decision of the Competition Appeal Court. In 
an order dated 29 October 2018, the Constitutional Court 
dismissed the Competition Commission?s application for leave to 
appeal against the decision of the Competition Appeal Court, with 
costs.

RECLASSIFICATIONS

Reclassifications were required in respect of the disposal group, 
Grohe DAWN Watertech, as well as in respect of DPI Plastics, the 
discontinued operation, both disclosed as assets and liabilities 
of disposal group held-for-sale.

PROSPECTS

As outlined in the CEO?s letter, the board and management remain 
committed to ensuring a future for the group.  

Shareholders are referred to the announcement published on SENS 
on 3 December 2018, where they were advised that Polanofield 
(Pty) Ltd made a firm intention offer to acquire all of the 
issued shares of DAWN. The board believes that the offer received 
from Polanofield provides a strategic differentiator which can 
bring solvency, increased revenue and volume growth to cover its 
cost base and further improvements to reduce the fixed cost base. 

The offer has the support of major shareholders through 
irrevocable undertakings and letters of support. The company?s 
bankers, credit insurers and landlords have also shown their 
continued support. 

The salient dates pertaining to the scheme will be released on 
SENS and published in the press at the time of distribution of 
the circular, which is to be distributed to DAWN shareholders on 
or about 20 December 2018.

The going concern assessment is included in this condensed 
consolidated interim financial results.

Any forward-looking statement has not been reviewed or reported 
on by the company?s auditors.

CHANGES TO THE BOARD OF DIRECTORS

During the period under review:

?  Steve Naude was appointed as an independent non-executive 
   director of the board and member of the audit and risk on 
   1 August 2018. 
?  Ms Rene Roos, executive director and chief of staff, 
   participated in a voluntary retrenchment process being 
   undertaken by the company. Her resignation from the board came 
   into effect on 31 October 2018.
?  As part of the head office changes, Chris Booyens, the 
   financial director of DAWN, retired from the company on  
   31 August 2018.
?  Hanre Bester, the group financial manager and previous acting 
   chief financial officer, was appointed as financial director 
   with effect from 1 September 2018.

After the reporting date:

?  Charles Boles, the lead independent non-executive director, 
   resigned from the board with effect from 22 October 2018.
?  Dinga Mncube was appointed as lead independent non-executive 
   director on 13 November 2018.
?  Martin Mota was appointed as independent non-executive 
   director with effect from 13 November 2018. He resigned from 
   the board with effect from 15 November 2018.
?  Ms Nthabeleng Likotsi was appointed as an independent non-
   executive director of DAWN effective 27 November 2018.
?  Hanre Bester, the DAWN financial director has resigned with 
   effect from 31 January 2019, but will stay on as a non-
   executive director until 28 February 2019.

EVENTS AFTER THE REPORTING DATE
Refer to note 5.

DIVIDEND
No dividend has been proposed or declared.

For and on behalf of the board of directors

Theunis de Bruyn                  Edwin Hewitt 
Non-executive chairman            Chief executive officer   

Hanre Bester
Financial director

Germiston 
7 December 2018

CONDENSED consolidated INCOME STATEMENT
for the six months ended 30 September 2018
                                          Restated*    Restated*
                           Unaudited     Unaudited    Unaudited
                            6 months      6 months    12 months
                               ended         ended        ended
                        30 September  30 September     31 March
                                2018          2017         2018
                               R?000         R?000        R?000
Continued operations 
Revenue                    1 359 176     1 717 396    3 087 210 
Cost of sales             (1 055 760)   (1 329 122)  (2 411 365)
Gross profit                 303 416       388 274      675 845
Net operating expenses 
 before derecognition 
 of investments 
 and impairments            (412 929)     (415 349)    (843 774)
Operating loss before 
 derecognition of 
 investments and 
 impairments                (109 513)      (27 075)    (167 929)
Net gain on 
 derecognition of 
 subsidiaries and 
 associates                    5 335        12 615       25 178 
Impairments                   (4 460)       (1 370)     (54 224)
Operating loss              (108 638)      (15 830)    (196 975)
Finance income                 1 273         1 395        3 118
Finance expense              (12 513)      (17 138)     (32 748)
Loss after net 
 financing costs            (119 878)      (31 573)    (226 605)
Share of profit in 
 investments accounted 
 for using the equity 
 method                           90         1 669        5 488 
Loss before taxation        (119 788)      (29 904)    (221 117)
Income tax (income)/expense    3 467        (9 847)     (10 816)
Loss from continuing 
 operations                 (116 321)      (39 751)    (231 933)
Loss from discontinued 
 operations                 (115 873)      (65 229)    (194 529)
Loss for the period         (232 194)    (104 980)     (426 462)
 Loss attributable to:          ? 
Owners of the parent        (232 522)    (111 386)     (431 967)
Non-controlling interest         328        6 406         5 505 
Loss for the period         (232 194)    (104 980)     (426 462)
 Loss per share (cents)       (39,63)      (19,45)       (74,51)
 Loss per share from 
  continuing operations       (19,88)       (8,06)       (40,95)
 Loss per share from 
  discontinued operations     (19,75)      (11,39)       (33,56)
 Diluted loss per 
  share (cents)               (39,63)      (19,45)       (74,51)
 Loss per share from 
  continuing operations       (19,88)       (8,06)       (40,95)
 Loss per share from 
  discontinued operations     (19,75)      (11,39)       (33,56)
* Restatement relates to the reclassification of DPI Plastics as 
  an asset held-for-sale (refer note 2).

CONDENSED CONSOLIDATED STATEMENT OF  COMPREHENSIVE INCOME
for the six months ended 30 September 2018
                                          Restated*    Restated*
                           Unaudited     Unaudited    Unaudited
                            6 months      6 months    12 months
                               ended         ended        ended
                        30 September  30 September     31 March
                                2018          2017         2018
                               R?000         R?000        R?000
Loss for the period         (232 194)     (104 980)    (426 462)
Other comprehensive income:         
Items that will not be 
 reclassified to profit 
 or loss:         
 ? Effects of retirement 
    benefit obligations            ?             ?           82 
 ? Taxation related 
    to components                  ?             ?          (23)
   ?   ?    59 
Items that may be 
 subsequently 
 reclassified to profit 
 or loss: 
 ? Exchange differences 
   recycled through the  
   income statement                ?        (2 479)      (2 479)
 ? Exchange differences 
    on translating 
    foreign operations           772        (1 299)      (1 229)
 ? Cash flow hedging 
    reserve                        ?           165       (1 084)
 ? Tax-related components        (93)          (46)         320 
                                 679        (3 659)      (4 472)
Total other comprehensive
 (loss)/income                   679        (3 659)      (4 413)
Total comprehensive loss    (231 515)     (108 639)    (430 875)
Total comprehensive 
 (loss)/income 
 attributable to:          
Owners of the parent        (231 843)     (115 045)    (436 380)
Non-controlling interest         328         6 406        5 505 
                            (231 515)     (108 639)    (430 875)
Total comprehensive 
 (loss)/income 
 attributable to equity 
 holders arising from:          
 Continuing operations      (115 642)      (43 409)    (236 347)
 Discontinued operations    (115 873)      (65 230)    (194 528)
                            (231 515)     (108 639)    (430 875)
Included above:         
Depreciation and 
 amortisation                  9 281        25 256       46 948 
Operating lease rentals       39 725        42 849       81 724 
* Restatement relates to the reclassification of DPI Plastics as 
  an asset held-for-sale (refer note 2).  

CONDENSED consolidated STATEMENT OF FINANCIAL POSITION
as at 30 September 2018
                           Unaudited     Unaudited    Unaudited
                        30 September  30 September     31 March
                                2018          2017         2018
                               R?000         R?000        R?000
ASSETS         
Non-current assets            62 154       346 054       85 952 
Property, plant and 
 equipment                    60 381       215 368       79 103 
Intangible assets                  ?        60 952            ?
Investments in 
 associates and joint 
 ventures                      1 000         5 982        5 756 
Deferred tax assets              773        63 752        1 093 
Current assets               835 004     1 282 292    1 107 933 
Inventories                  375 504       518 805      478 040 
Trade and other 
 receivables                 419 219       656 998      515 145 
Cash and cash equivalents     37 511        98 335      113 960 
Derivative financial 
 instruments                     164         1 472            ? 
Current tax assets             2 606         6 682          788 
Assets of disposal group 
 classified as 
 held-for-sale               147 380       271 328       28 380 
Total assets               1 044 538     1 899 674    1 222 265 
EQUITY AND LIABILITIES         
Equity         
Capital and reserves          81 550       638 609      313 065 
Equity attributable to 
 equity holders of the 
 company                      74 706       588 344      306 556 
Non-controlling interest       6 844        50 265        6 509 
Non-current liabilities      119 875       282 898      148 950 
Borrowings                    10 979        53 976       23 768 
Derivative financial 
 instruments                       ?        72 217            ? 
Deferred profit               20 761        26 087       23 422 
Deferred tax liabilities       2 502        19 803        2 543 
Retirement benefit 
 obligation                        ?         5 066        4 895 
Share-based payment 
 liabilities                       ?         6 298            ? 
Operating lease 
 liabilities                  85 633        99 451       94 322
Current liabilities          679 975       978 167      754 554 
Trade and other payables     540 542       739 762      608 403 
Borrowings                   107 444       128 213       25 010 
Operating lease 
 liabilities                  11 182         7 503        9 606 
Derivative financial 
 instruments                  14 107           192        4 223 
Bank overdraft                     ?        90 321       94 342 
Deferred profit                5 327         5 327        5 327 
Current tax liabilities        1 373         6 849        7 643 
Liabilities of disposal 
 group classified as 
 held-for-sale               163 138             ?        5 696 
Total liabilities            962 988     1 261 065      909 200 
Total equity and 
 liabilities               1 044 538     1 899 674    1 222 265 

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 September 2018
                           Unaudited     Unaudited      Audited
                            6 months      6 months    12 months
                               ended         ended        ended
                        30 September  30 September     31 March
                                2018          2017         2018
                               R?000         R?000        R?000
Balance at beginning 
 of the period               313 065       423 122      394 676 
Total loss for the period   (232 194)     (104 980)    (426 462)
Other comprehensive 
 profit/(loss)                   679        (3 659)      (4 413)
Rights issue proceeds              ?       338 615      338 615 
Changes in ownership 
 interest ? control 
 not lost                          ?        (3 455)           ? 
Transactions with 
 non-controlling interest          ?        (4 672)      (6 000)
Share-based payment charge 
 and vesting of options            ?         1 786       (2 994)
Treasury shares acquired 
 and delivered                     ?        (8 148)      (8 148)
Put option released through 
 sale of Swan Plastics             ?             ?       72 217 
Derecognition through 
 disposal of subsidiaries          ?             ?      (44 420)
Dividends paid to 
 non-controlling interest 
 holders                           ?             ?           (6)
Balance at end of period      81 550       638 609      313 065 

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
for the six months ended 30 September 2018
                           Unaudited     Unaudited      Audited
                            6 months      6 months    12 months
                               ended         ended        ended
                        30 September  30 September     31 March
                                2018          2017         2018
                               R?000         R?000        R?000
Cash flows from 
 operating activities 
Cash utilised in 
 operations                  (43 831)      (75 390)    (265 361)
Finance income received        1 502         1 563        3 230
Finance expense paid         (10 439)      (25 439)     (43 461)
Income tax paid               (2 447)       (8 694)     (15 393)
Net cash utilised in 
 operating activities        (55 215)     (107 960)    (320 985)
Cash flows from 
 investing activities         
Additions to property, 
 plant and equipment         (23 685)         (914)     (20 736)
Additions and development 
 of intangible assets              ?        (2 009)      (2 975)
Proceeds on disposal of 
 property, plant and 
 equipment                       344         7 641       11 429 
Proceeds on disposal of 
 interest in associate 
 ? Fibrex                          ?        10 456       10 456 
Dividends received from 
 associates/joint ventures 
 ? College of Production 
 Technology                      329             ?          600 
Proceeds from disposal of 
 investment in Namibia 
 Plastic converters           24 361             ?            ?
Proceeds from disposal 
 of investment in 
 Boutique Baths                    ?         3 000        3 000
Proceeds from disposal 
 of investment in 
 Swan Plastics                     ?             ?       35 000
Proceeds from disposal 
 of Grohe DAWN Watertech           ?             ?      324 500
Net cash generated by 
 investing activities          1 349        18 174      361 274
Cash flows from 
 financing activities 
Proceeds from borrowings      95 309             ?            ?
Proceeds from rights offer         ?       358 130      358 130
Costs associated with 
 rights offer                      ?       (19 514)     (19 514)
Repayment of bridging 
 finance facility 
 ? Investec                        ?      (200 000)    (200 000)
Repayment of borrowings       (5 712)       (4 734)      (4 578)
Repayment of Absa facility         ?       (75 000)    (175 000)
Repayment of trade 
 finance facilities                ?       (31 958)     (31 958)
Instalment sale payments        (859)       (6 605)     (10 469)
Finance lease payments        (8 003)      (16 104)     (15 163)
Dividends paid to 
 non-controlling interest 
 holders                           ?             ?           (6)
Treasury shares acquired           ?        (8 148)      (8 148)
Acquisition of 
 non-controlling interest          ?        (6 000)      (6 000)
Net cash generated from/
 (utilised in) financing 
 activities                   80 735        (9 933)    (112 706)
Total cash movement for 
 the period                   26 869       (99 719)     (72 417)
Translation effects on 
 foreign cash and cash 
 equivalents balances           (354)         (960)        (195)
Cash and cash equivalents 
 derecognised on disposal 
 of subsidiaries                   ?             ?      (16 463)
Cash and cash equivalents 
 derecognised in 
 held-for-sale group          (8 622)            ?            ?
Cash and cash equivalents 
 at beginning of the period   19 618       108 693      108 693
Cash and cash equivalents 
 at end of the period         37 511         8 014       19 618

ADDITIONAL DISCLOSURE
                           Unaudited     Unaudited      Audited
                            6 months      6 months    12 months
                               ended         ended        ended
                        30 September  30 September     31 March
                     %          2018          2017         2018
                change         R?000         R?000        R?000

DETERMINATION OF 
HEADLINE EARNINGS            
Attributable 
 earnings                   (232 522)     (111 386)    (431 967)
Adjustment for 
 the after-tax 
 and non-
 controlling 
 interest effect 
 of:            
 Net profit on 
  disposal of 
  property, plant 
  and equipment                (136)        (3 399)     (7 433)
 Impairment of 
  intangible assets               ?              ?      50 527 
 Impairment of 
  property, plant 
  and equipment               6 101          3 349      81 891 
 Impairment of 
  available-for-
  sale assets                     ?         43 961           ? 
 Impairment of 
  other assets ? 
  Investment in 
  College of 
  Production 
  Technology                   4 517             ?           ? 
Impairment of 
 other assets                  2 143         1 377            ?
 Loss from 
  disposal of 
  discontinued 
  operation                        ?             ?       44 206 
Tax effect on 
 disposal of 
 property, plant 
 and equipment 
 and impairment 
 of intangible 
 assets (trademarks)              19            64          (34)
 Non-controlling 
  interest                        20            34           58 
 Net profit on 
  derecognition of 
  previously held 
  interest                    (5 335)      (12 615)     (25 178)
Headline earnings           (225 193)      (78 615)    (287 930)
Statistics            
Number of 
 ordinary 
 shares (?000)            
?  in issue                  600 372       600 372      600 372 
?  held in treasury          (13 629)      (13 629)     (13 629)
Number of shares 
 for net asset 
 value calcu-
 lation (?000)               586 743       586 743      586 743 
Weighted average 
 number of 
 shares (?000)            
?  for earnings 
    per share                586 743       572 713      579 709 
?  for diluted 
    earnings per 
    share                    586 743       572 713      579 709 
Earnings per 
 share (cents)    (104)       (39,63)       (19,45)      (74,51)
Headline earnings 
 per share 
 (cents)          (180)       (38,38)       (13,73)      (49,67)
Diluted earnings 
 per share 
 (cents)          (104)       (39,63)       (19,45)      (74,51)
Diluted headline 
 earnings per 
 share (cents)    (180)       (38,38)       (13,73)      (49,67)
Operating 
 profit (%)                    (7,99)        (0,92)       (6,38)

                           Unaudited     Unaudited      Audited
                        30 September  30 September     31 March
                     %          2018          2017         2018
                change         R?000         R?000        R?000

FUTURE 
COMMITMENTS        
Capital 
 commitments                   3 562         6 940       15 468 
Operating leases             464 608       543 766      539 574 
Net cash 
 (including 
 discontinued 
 operations)                  46 133         8 014       19 618 
Net debt 
 (including 
 discontinued 
 operations)                 (77 253)     (169 335)     (24 404) 
Value per share        
Asset value 
 per share        
? net asset 
   value (cents)   (87)        12,73        100,27        52,88 
? net tangible 
   asset value 
  (cents)          (86)        12,73         89,88        52,88 
? market price 
   (cents)                      9,00        112,00        78,00 
Market 
 capitalisation 
 (R?000)                      54 034       672 417      468 291 
Financial gearing 
 ratio (%) ^                    94,7         26,50         7,80 
Current asset 
 ratio (times)                   1,2           1,3          1,5 
^ Includes cash and cash equivalents

CONDENSED CONSOLIDATED SEGMENTAL ANALYSIS
for the six months ended 30 September 2018

The operating segments are based on reports reviewed by the 
executive committee who makes the strategic decision of the 
group, and who is therefore the chief operating decision-making 
body of the group.

6 months ? 30 September 2018 (Unaudited)        
                                               Head
                                             office
                                          and other
                                              recon-
                               Manu-         ciling
               Trading     facturing         items(1)     Total
                 R?000         R?000         R?000        R?000
Revenue      1 301 338       380 501       (86 454)   1 595 385 
Depreciation 
 and amorti-
 sation         (6 880)       (1 888)         (515)      (9 283)
Operating 
 (loss)/profit 
 before impair-
 ments and    
 derecognition 
 and re-recog-
 nition of 
 investments   (71 247)     (115 274)      (30 735)    (217 256)
Impairments 
 and 
 derecognition       ?        (2 966)       (4 460)      (7 426)
Operating loss 
 after impair-
 ments and 
 derecognitions 
 and re-recog-
 nition of 
 investments   (71 247)     (118 240)      (35 195)    (224 682)
Net finance 
 (expense)/
 income         (7 507)       (5 397)        1 835      (11 069)
Share of profit 
 from associates 
 and joint 
 ventures            ?             ?            90           90 
Tax expense/
 (income)         (156)         (290)        3 913        3 467 
Net loss after 
 tax from 
 continuing 
 operations    (78 910)     (123 927)      (29 357)    (232 194)
Net loss after 
 tax from 
 discontinued 
 operations          ?      (115 873)      115 873            ?
Net loss after 
 tax           (78 910)     (239 800)       86 516     (232 194)
Assets         753 053       223 689        67 796    1 044 538 
Liabilities    757 637       305 213       (99 862)     962 988 
Capital 
 expendi-
 ture(2)         5 390        19 082            29       24 501 

                                            Discon-
                                            tinued
                                             opera-
                                             tions        Total
                                             R?000        R?000
Revenue                                   (236 209)   1 359 176 
Depreciation and amortisation                1 017       (8 266)
Operating (loss)/profit before 
 impairments and derecognition and 
 re-recognition of investments             107 743     (109 513)
Impairments and derecognition                8 301          875 
Operating loss after impairments and 
 derecognitions and re-recognition of 
 investments                               116 044     (108 638)
Net finance (expense)/income                 (171)      (11 240)
Share of profit from associates and 
 joint ventures                                 ?            90 
Tax expense/(income)                            ?         3 467 
Net loss after tax from continuing 
 operations                               115 873      (116 321)
Net loss after tax from discontinued 
 operations                              (115 873)     (115 873)
Net loss after tax                              ?      (232 194)
Assets                                   (147 380)      897 158 
Liabilities                              (163 138)      799 850 
Capital expenditure(2)                    (17 707)        6 794 

(1) Other reconciling items consist of corporate and 
    consolidation adjustments. These predominantly include 
    elimination of intergroup sales, profits, 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.
(2) Includes expenditure on property, plant and equipment and 
    intangibles. 

6 months ? 30 September 2017 (Unaudited)    
                                               Head
                                             office
                                          and other
                                              recon-
                               Manu-         ciling
               Trading     facturing         items(1)     Total
                 R?000         R?000         R?000        R?000
Revenue      1 507 938       622 179      (202 492)   1 927 625 
Depreciation 
 and amorti-
 sation         (8 408)      (12 758)       (4 090)     (25 256)
Operating loss 
 before 
 impairments 
 and derecog-
 nition and 
 re-recognition 
 of investments (5 640)      (64 996)      (18 111)     (88 747)
Impairments 
 and 
 derecognition       ?         8 216          (320)       7 896 
Operating loss 
 after impair-
 ments and 
 derecognitions 
 and re-recog-
 nition of 
 investments    (5 640)      (56 780)      (18 431)     (80 851)
Net finance 
 (expense)/
 income        (23 958)      (13 643)       21 703      (15 898)
Share of 
 profit from 
 associates and 
 joint ventures      ?         1 376           293        1 669 
Tax expense/
 (income)       (2 259)       (3 918)       (3 733)      (9 910)
Net loss after 
 tax from 
 continuing 
 operations    (31 857)      (72 955)         (168)    (104 980)
Net loss after 
 tax from 
 discontinued 
 operations          ?        65 229       (65 229)           ? 
Net loss 
 after tax     (31 857)       (7 726)      (65 397)    (104 980)
Assets       1 159 551        88 771       651 352    1 899 674 
Liabilities  1 214 727       569 279      (522 941)   1 261 065 
Capital 
 expendi-
 ture(2)         8 372        13 100           157       21 629 

                                            Discon-
                                            tinued
                                             opera-
                                             tions        Total
                                             R?000        R?000
Revenue                                   (210 229)   1 717 396 
Depreciation and amortisation                    ?      (25 256)
Operating loss before impairments and 
 derecognition and  re-recognition of 
 investments                                61 672      (27 075)
Impairments and derecognition                3 349       11 245 
Operating loss after impairments and 
 derecognitions and re-recognition of 
 investments                                65 021      (15 830)
Net finance (expense)/income                   155      (15 743)
Share of profit from associates and 
 joint ventures                                  ?        1 669 
Tax expense/(income)                            53       (9 857)
Net loss after tax from continuing 
 operations                                 65 229      (39 751)
Net loss after tax from discontinued 
 operations                                (65 229)     (65 229)
Net loss after tax                               ?     (104 980)
Assets                                           ?    1 899 674 
Liabilities                                      ?    1 261 065 
Capital expenditure(2)                           ?       21 629 

(1) Other reconciling items consist of corporate and 
    consolidation adjustments. These predominantly include 
    elimination of intergroup sales, profits, 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.
(2) Includes expenditure on property, plant and equipment and 
    intangibles. 

12 months ended 31 March 2018 (Audited)     
                                               Head
                                             office
                                          and other
                                              recon-
                               Manu-         ciling
               Trading     facturing         items(1)     Total
                 R?000         R?000         R?000        R?000
Revenue      2 799 482       977 163      (298 019)   3 478 626 
Depreciation 
 and amorti-
 sation        (16 060)      (22 693)       (8 196)     (46 949)
Operating loss 
 before 
 impairments 
 and derecog-
 nition and 
 re-recognition 
 of 
 investments   (97 418)      (86 189)      (37 069)    (220 676)
Impairments 
 and derecog-
 nition         (2 720)      (70 333)      (34 187)    (107 240)
Operating loss 
 after 
 impairments 
 and derecog-
 nitions and 
 re-recognition 
 of 
 investments  (100 138)     (156 522)      (71 256)    (327 916)
Net finance 
 (expense)/
 income        (50 658)      (24 751)       44 851     (30 558)
Share of 
 (losses)/
 profit from 
 associates 
 and joint 
 ventures            ?         4 822           666       5 488 
Tax expense/
 (income)      (69 524)      (67 010)       63 058     (73 476)
Net loss 
 after tax 
 from 
 continuing 
 operations   (220 320)     (243 461)       37 319    (426 462)
Net loss 
 after tax 
 from discon-
 tinued 
 operations          ?       194 529      (194 529)          ?
Net loss 
 after tax    (220 320)       48 932      (157 210)    (426 462)
Assets         809 371       292 701       120 194    1 222 266 
Liabilities    733 119       251 037       (74 957)     909 199 
Capital expen-
 diture(2)      10 135        21 165           326       31 626 

                                            Discon-
                                            tinued
                                             opera-
                                             tions        Total
                                             R?000        R?000
Revenue                                   (391 416)   3 087 210 
Depreciation and amortisation               15 040      (31 909)
Operating loss before impairments and 
 derecognition and re-recognition of 
 investments                                52 747     (167 929)
Impairments and derecognition               78 194      (29 046)
Operating loss after impairments and 
 derecognitions and  re-recognition of 
 investments                               130 941     (196 975)
Net finance (expense)/income                   928      (29 630)
Share of (losses)/profit from associates 
 and joint ventures                              ?        5 488 
Tax expense/(income)                        62 660      (10 816)
Net loss after tax from continuing 
 operations                                194 529     (231 933)
Net loss after tax from discontinued 
 operations                               (194 529)    (194 529)
Net loss after tax                               ?     (426 462)
Assets                                           ?    1 222 266 
Liabilities                                      ?      909 199 
Capital expenditure(2)                           ?       31 626 

(1) Other reconciling items consist of corporate and 
    consolidation adjustments. These predominantly include 
    elimination of intergroup sales, profits, 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.
(2) Includes expenditure on property, plant and equipment and 
    intangibles. 

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PREPARATION
   These unaudited interim condensed consolidated financial 
   statements for the six months ended 30 September 2018 was 
   approved by the board on 4 December 2018.

   The interim condensed consolidated financial statements are 
   prepared in accordance with the requirements of the JSE 
   Limited?s (JSE) requirements for interim financial statements 
   and the requirements of the Companies Act applicable to 
   interim financial statements. The JSE requires interim 
   financial statements to be prepared in accordance with the 
   framework concepts, the measurement and recognition 
   requirements of International Financial Reporting Standards 
   (IFRS) as well as the SAICA Financial Reporting Guides as 
   issued by the Accounting Practices Committee and Financial 
   Reporting Pronouncements as issued by the Financial Reporting 
   Standards Council and must also, as a minimum, contain the 
   information required by IAS 34 Interim Financial Reporting. 
   The accounting policies applied in the preparation of the 
   interim condensed consolidated financial statements are in 
   terms of IFRS and are consistent with the accounting policies 
   applied in the preparation of the consolidated annual 
   financial statements for the year ended 31 March 2018.

   The preparation of the interim condensed consolidated 
   financial statements by Tintswalo Mohlakoana (CA(SA)), group 
   financial accountant, has been supervised by the financial 
   director, Hanre Bester (CA(SA)).

   The directors take full responsibility for the preparation of 
   the interim condensed consolidated financial statements.

   GOING CONCERN ASSESSMENT

   In determining the appropriate basis of preparation of the 
   interim financial statements, the directors are required to 
   consider whether the group can continue to operate as a going 
   concern for the foreseeable future, which is for the 12 months 
   following the date on which the interim financial statements 
   are signed.

   DAWN posted losses for the six months ended 30 September 2017 
   and for the year ended 31 March 2018 of R111,4 million and 
   R432,0 million respectively, and for the period ended 
   30 September 2018, DAWN reported an attributable loss of 
   R232,5 million.

   Management has performed an assessment of DAWN?s ability to 
   continue as a going concern.  

   In this regard ?

   (1)  Management prepared cash flows for each of the 
        subsidiaries and the corporate head office. These were 
        subjected to sensitivity tests and included the estimated 
        intra-month peak funding requirements. The cash flow 
        forecasts were compared to available facilities. 

   (2)  The board considered the business? ability to meet its 
        financial obligations as and when they fall due for the 
        12 months following the approval of the interim financial 
        statements. This analysis considered ?

        a.  the current challenging market conditions, which are 
            negatively affecting the performance of the DAWN 
            group;

        b.  the ability of management?s turnaround plan to be 
            executed in the required manner and timing, including 
            the realisation of further cost reductions and 
            optimisation of working capital;

        c.  available options for the further disposal of 
            investments and other assets; and

        d.  alternative strategic options including the injection 
            of capital by financiers and investors. 

   Whilst management has relentlessly executed its turnaround 
   plans and aggressively reduced costs, including large scale 
   retrenchments with a resultant positive cash flow impact, it 
   remains exposed to subdued market conditions and a high fixed 
   and legacy cost structure which is not aligned to current 
   activity and revenue levels. The resultant losses have 
   impacted the group?s solvency negatively.

   Liquidity was impacted positively by the invoice discounting 
   facility as well as support from creditors and suppliers 
   through the reported period. Liquidity constraints, however, 
   continue to persist due to inadequate capital funding, and 
   reduced negotiating power as a result thereof. Subsequent to 
   year-end, a further R25 million was made available through the 
   existing invoice discounting facility (see Events after the 
   reporting period note). 

   Other strategic options, such as disposal of investments, 
   require time and liquidity to implement successfully and the 
   board is of the view that this cannot be realised timeously 
   with the remaining solvency and liquidity levels.

   There is insufficient time and capital available to fully 
   realise the benefits of management?s turnaround plans in the 
   context of a slow economic recovery or a further deterioration 
   in the economic outlook of South Africa.  

   The factors outlined above thus present a material risk to 
   DAWN remaining as a going concern.

   Management refers to the offer by Polanofield Proprietary 
   Limited to acquire all of the issued shares of DAWN pursuant 
   to a scheme of arrangement (?Offer?). On the basis that 
   management views the Offer to be able to be successfully 
   implemented timeously in accordance with its terms (as a 
   result of minimal conditions other than regulatory conditions 
   and the provision of a bridge), management is of the view that 
   the resultant business post implementation of the Offer, with 
   its enhanced business plan as developed by the offeror, will 
   present a value-enhancing option for all stakeholders and one 
   which preserves the going concern nature of the business for 
   the benefit of the group?s employees, suppliers and customers.

   As a condition to the posting of the circular in the Offer, a 
   bridge of R25 million was required. Absa provided a facility 
   of R25 million in the context of the Offer (see Events after 
   the reporting period). The bridge is intended to cover 
   liquidity constraints until the implementation date of the 
   Offer. In addition, it is believed that a delisting from the 
   Johannesburg Stock Exchange will benefit DAWN both from a 
   cost-saving and operational focus perspective.

   At 30 September 2018, DAWN?s assets, fairly valued, exceeded 
   its liabilities, fairly valued. The forecast to December 2019 
   also projects that the group will be solvent, only if the 
   Offer is implemented on the basis of the enhanced business 
   plan being met.  The benefits of the Offer include an enhanced 
   revenue capability as a result of improved trading due to 
   supply agreements being implemented with improved terms or 
   improved volumes, further reduced costs and capital 
   investment.

   Accordingly, based on the assumptions used in the forecasts, 
   the Offer being timeously implemented and the enhanced 
   business plan being achieved whilst the funding facilities 
   remain intact, the directors are reasonably of the opinion 
   that the group would be able to continue to operate as a going 
   concern for the foreseeable future, which is for the 12 months 
   following the date on which the interim financial statements 
   are signed.

   These matters indicate that there is a material uncertainty 
   related to events or conditions that may cast significant 
   doubt about the group?s ability to continue as a going concern 
   and, therefore, that it may be unable to realise its assets 
   and discharge its liabilities in the normal course of 
   business.

2. DISPOSAL GROUP AND OTHER ASSETS HELD-FOR-SALE

   2018
   DAWN disposed of its investment in Grohe DAWN Watertech (GDW) 
   as at 19 December 2017 for a consideration of R324,5 million, 
   which consisted of R293,1 million of investment and R31,4 
   million of loans.

   The GDW group has been treated as an assets held-for-sale 
   since July 2017, and has subsequently, on 21 December 2017, 
   been derecognised as such.

   2019
   The board of directors of DAWN noted that by 30 September 2018 
   ?DPI had become a non-viable business? and that Edwin Hewitt, 
   the chief executive officer of DAWN, be mandated to 
   investigate the necessary measures to potentially wind up the 
   business of DPI Plastics.

   CASH FLOW OF DISPOSAL GROUP

                                        DPI Plastics

                              30 Sep        30 Sep       31 Mar
                                2018          2017         2018
                               R?000         R?000        R?000
   Operating cash flows      (68 512)      (20 495)     (54 961)
   Investing cash flows      (15 707)       (3 674)     (17 401)
   Financing cash flows       74 638        48 454       90 564 
   Total cash flows           (9 581)       24 285       18 202 

                                    Grohe DAWN Watertech

                              30 Sep        30 Sep       31 Mar
                                2018          2017         2018
                               R?000         R?000        R?000
(a) Assets of disposal 
    group classified as 
    held-for-sale      
    Property, plant and 
     equipment                     ?             ?            ?
    Intangible assets              ?             ?            ?
    Other non-current assets       ?             ?            ?
    Investment in associate        ?       271 328            ?
    Investment in joint venture    ?             ?            ?
    Inventory                      ?             ?            ?
    Cash and cash equivalents      ?             ?            ?
    Other current assets           ?             ?            ?
    Total                          ?       271 328            ?

(b) Liabilities of disposal 
    group classified as 
    held-for-sale      
    Non-current liabilities        ?             ?            ?
    Trade and other payables       ?             ?            ?
    Other current liabilities      ?             ?            ?
    Total                          ?             ?            ?

    An analysis of the result 
    of discontinued operations, 
    and the result recognised on 
    the re-measurement of assets 
    or disposal group, is as 
    follows:

    Revenue                        ?             ?            ? 
    Net operating expenses         ?       (62 313)       1 882 
    Operating loss of 
     discontinued operations       ?       (62 313)       1 882 
    Net financing costs            ?           191        1 693 
    Loss/(profit) before 
     tax of discontinued 
     operations                    ?       (62 122)       3 575 
    Income tax expense             ?           (53)     (65 612)
    Loss after tax of 
     discontinued operations       ?       (62 175)     (62 037)
    Attributable to:      
    Owners of the parent           ?       (62 175)     (62 037)
    Non-controlling interests      ?             ?            ? 
                                   ?       (62 175)     (62 037)

                                         DPI Plastics

                              30 Sep        30 Sep       31 Mar
                                2018          2017         2018
                               R?000         R?000        R?000
(a) Assets of disposal group
    classified as held-for-sale      
    Property, plant 
     and equipment            27 574             ?            ?
    Intangible assets              ?             ?            ?
    Other non-current assets       ?             ?            ?
    Investment in associate        ?             ?            ?
    Investment in joint 
     venture                       ?             ?            ?
    Inventory                 55 695             ?            ?
    Cash and cash 
     equivalents               8 622             ?            ?
    Other current assets      50 856             ?            ?
    Total                    142 747             ?            ?
(b) Liabilities of disposal 
    group classified as 
    held-for-sale      
    Non-current liabilities   9 630              ?           ?
    Trade and other 
     payables                144 620             ?           ?
    Other current 
     liabilities               8 888             ?           ?
    Total                    163 138             ?           ?
  
    An analysis of the 
    result of discontinued 
    operations, and the 
    result recognised on the 
    re-measurement of assets 
    or disposal group, is as 
    follows:      
        
    Revenue                  236 209       210 229     391 416 
    Net operating expenses  (352 253)     (212 937)   (524 238)
    Operating loss of 
     discontinued 
     operations             (116 044)       (2 708)   (132 822)
    Net financing costs          171          (346)     (2 621)
    Loss/(profit) before 
     tax of discontinued 
     operations             (115 873)       (3 054)   (135 443)
    Income tax expense             ?             ?       2 952 
    Loss after tax of 
     discontinued 
     operations             (115 873)       (3 054)   (132 491)
    Attributable to:      
    Owners of the parent    (115 873)       (3 054)   (132 491)
    Non-controlling 
     interests                     ?             ?           ? 
                            (115 873)       (3 054)   (132 491)

                              DPI Simba      DPI Fleet    NPC

                          30 Sep    31 Mar    31 Mar    31 Mar
                            2018      2018      2018      2018
                           R?000     R?000     R?000     R?000
(a) Assets of disposal 
    group classified as 
    held-for-sale      
    Property, plant and 
     equipment                 ?         ?     4 200    16 478 
    Intangible assets          ?         ?         ?         ?
    Other non-current assets   ?         ?         ?         ?
    Investment in associate    ?         ?         ?         ?
    Investment in joint 
     venture               4 633     4 323         ?         ?  
    Inventory                  ?         ?         ?     3 208 
    Cash and cash 
     equivalents               ?         ?         ?        88 
    Other current assets       ?         ?         ?        83 
    Total                  4 633     4 323     4 200    19 857 
(b) Liabilities of 
    disposal group 
    classified as 
    held-for-sale        
    Non-current liabilities    ?          ?        ?     4 221 
    Trade and other 
     payables                  ?          ?        ?        88 
    Other current 
     liabilities               ?          ?        ?     1 387 
    Total                      ?          ?        ?     5 696 
    
3.  NET GAIN ON DERECOGNITION OF INVESTMENT IN ASSOCIATES AND 
    SUBSIDIARIES
                                                   30 September
                                           Date of         2018
                                       recognition        R?000
    Carrying amount of 
     net asset value                                     14 569 
    Gain on the derecognition 
     of associates, joint 
     ventures and subsidiaries                            5 335 
    Net gain on derecognition 
     of investment in Namibia 
     Plastic Converters 
     Proprietary 
     Limited (NPC)          Subsidiary  April 2018        5 335

4.  CONTINGENCIES
    The group has contingent liabilities in respect of bank and 
    other guarantees and other matters arising in the ordinary 
    course of business. It is not anticipated that any material 
    liabilities will arise from the contingent liabilities.

    COMPETITION COMMISSION MATTER
    On 23 March 2017, the Competition Tribunal (?the Tribunal?) 
    handed down a decision in which it determined that DAWN 
    Consolidated Holdings Proprietary Limited (?DCH?), a 
    subsidiary of DAWN, through the wholly-owned subsidiary DPI 
    Plastics Proprietary Limited of DCH, engaged in a market 
    allocation arrangement with Sangio Pipe Proprietary Limited 
    (?Sangio?), in which DCH had a 49% interest at the time.

    DAWN appealed the Competition Tribunal?s decision handed down 
    in respect of an allegation of market allocation arrangement 
    affecting DAWN Consolidated Holdings, DPI Plastics and Sangio 
    Pipe.

    On 4 May 2018, judgment was handed down in the Competition 
    Appeal Court. The court upheld DAWN?s appeal and set aside 
    the decision of the Tribunal, dismissing the complaint with 
    costs. On 25 May 2018, DAWN received notification that the 
    Competition Commission had applied to the Constitutional 
    Court for leave to appeal against the decision of the 
    Competition Appeal Court.

    As published on SENS on 5 November 2018, DAWN shareholders 
    were advised that the Constitutional Court has, in an order 
    dated 29 October 2018, dismissed the Competition Commission?s 
    application for leave to appeal against the decision of the 
    Competition Appeal Court, with costs. 

5.  EVENTS AFTER THE REPORTING DATE

    CHANGES TO THE BOARD OF DIRECTORS
    Subsequent to the reporting date the following changes in the 
    board of directors occurred:

    ?  Charles Boles, the lead independent non-executive director 
       of DAWN,  resigned as a director with effect from 
       22 October 2018.

    ?  Martin Mota was appointed as independent non-executive 
       director with effect from 13 November 2018. He resigned 
       from the board with effect from 15 November 2018.

    ?  Ms Nthabeleng Likotsi was appointed as an independent non-
       executive director of DAWN effective 27 November 2018.

    ?  Hanre Bester, the DAWN financial director has resigned 
       with effect from 31 January 2019, but will stay on as a 
       non-executive director until 28 February 2019.

    BORROWINGS ? INVOICE DISCOUNTING (DEBTORS) FACILITY AND 
    BRIDGING FINANCE 

    During July 2018, the ABSA overdraft facility of R100 million 
    was repaid and replaced by an ABSA Invoice Discounting 
    Facility, subject to standard terms, to the value of R140 
    million. This facility is secured by a cession of insured 
    book debtors as well as further security in the form of 
    guarantees and notarial bonds. There are no financial 
    covenants applicable to the facility.  

    Subsequent to the reporting period in October 2018, an 
    additional R25 million was provided by ABSA under the Invoice 
    Discounting Facility, subject to enhanced security provided. 

    In lieu of the offer received by the group for the purchase 
    of the share capital of the listed entity, the group received 
    subsequent to the reporting period, a further R25 million 
    bridge financing facility under the Invoice Discounting 
    Facility from ABSA, subject to certain conditions being met, 
    including maintaining a debtors cover ratio of 1,7 times, 
    realisation of the offer, achievement of the cash flow 
    forecasts presented as well as additional security provided. 
    The bridge?s repayment due date is the earlier of the date of 
    cancellation or failure (if applicable) of the offer or 
    31 March 2019. At the time of this announcement ABSA is in 
    the process of finalising the formal facility letter. The 
    expectation is that the bridge proceeds will become available 
    in December 2018.

    FIRM INTENTION ANNOUNCEMENT

    Shareholders are referred to the announcement published on 
    SENS on 3 December 2018, being the joint announcement of a 
    firm intention offer by Polanofield (Pty) Ltd (?the offeror?)  
    to acquire all of the issued shares of DAWN excluding shared 
    held by the offeror, its related and inter-related persons 
    and persons acting in concert with any of them and any 
    treasury shares, for a cash consideration of R5 758 760,49.

    The offeror believes that DAWN will benefit from the 
    transaction by curtailing certain liquidity and solvency 
    risks of DAWN who disclosed certain excessive and onerous 
    liabilities that DAWN currently face. In addition, the 
    offeror believes a delisting from the Johannesburg Stock 
    Exchange will benefit DAWN both from a cost saving and 
    operational focus perspective.

    Subject to the fulfilment or waiver of certain suspensive 
    conditions by 7 December 2018, as outlined in the 
    announcement,  DAWN and the offeror will issue the circular 
    to DAWN shareholders, setting out the full terms and 
    conditions of the scheme of arrangement (?the scheme?) and 
    including the notice convening the scheme meeting, the form 
    of proxy in respect of the scheme meeting, and the form of 
    surrender and transfer for use by certificated DAWN 
    shareholders.

    The salient dates pertaining to the scheme will be released 
    on SENS and published in the press at the time of 
    distribution of the circular. The circular is to be 
    distributed to DAWN shareholders on or about 20 December 
    2018.

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: 
Theunis de Bruyn (chairman)*, Edwin Hewitt (chief executive 
officer),  Hanre Bester (financial director), Ms Nthabeleng 
Likotsi ^, Dinga Mncube ^, Steve Naude ^, George Nakos*

 * Non-executive      ^ Independent non-executive

PREPARER: 
Prepared by Tintswalo Mohlakoana (CA(SA)), group financial 
accountant, under the supervision of  Hanre Bester (CA(SA)), 
financial director 

COMPANY SECRETARY: 
Vanessa White (chief governance officer)

TRANSFER SECRETARIES:
Computershare Investor Services (Pty) Ltd, Rosebank Towers, 15 
Biermann Avenue, Rosebank, 2196
(PO Box 61051, Marshalltown, 2107)

SPONSOR: 
Deloitte & Touche Sponsor Services (Pty) Ltd

www.dawnltd.co.za

Date: 07/12/2018 05:32:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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