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17.11.2017

Unaudited interim results for the six months ended

30 September 2017

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 2017

RESULTS COMMENTARY for the six months ended 30 September 2017

NATURE OF BUSINESS

Distribution and Warehousing Network Limited, which is listed on

the JSE ("DAW:), manufactures and distributes quality branded

hardware, sanitaryware, plumbing, kitchen, engineering and civil

products throughout South Africa and to selected countries in the

rest of sub-Saharan Africa. The group operates through two

segments: trading and manufacturing. These segments leverage off

common pools of expertise, allowing each segment to focus on its

core market and areas of specialisation. The trading segment

markets a comprehensive range of products, sourced locally from

the group's manufacturing segment as well as other local

manufacturers and imports. The manufacturing segment produces

mainly PVC and HDPE water reticulation and drainage pipe and

fitting systems. A large range of customers are served through a

national footprint of outlets under the names of WHS (trading as

WHD, Saffer and Stability), Incledon and DPI Plastics.

INTRODUCTION

Growth in the South and Southern African economies remained

subdued for the period. The South African growth rate for 2017

was adversely affected by downgrades in sovereign ratings and

political instability, which also impacted on business confidence

and made trading conditions extremely challenging. The effect of

the ongoing economic situation in the country has put pressure on

disposable income with consumers being more selective on how they

spend their hard-earned money.

The sustained adverse performance in F2016 and F2017 resulted in

DAWN having to approach shareholders for a rights issue of R358

million in April 2017, of which R200 million was required to

repay bridging finance, R75 million to reduce other debt and the

balance to fund operations. The overall focus remains on

returning the group to sustainable profitability.

FINANCIAL REVIEW

In line with the trading statement issued on 13 November 2017,

the group recorded an earnings per share (EPS) loss of 19,5 cents

per share compared to the EPS loss in the comparable period in

the previous financial year of 111,8 cents per share. Headline

earnings per share (HEPS) was a loss of 13,7 cents per share in

H1 2018 compared to a HEPS loss in H1 2017 of 98,1 cents per

share.

Revenue for the six months to September 2017 declined by 19,8%,

compared to the corresponding period in the previous financial

year. In monetary terms revenue is at R1,9 billion for H1 2018,

down from R2,4 billion for the first half of the previous fiscal

year and includes the effect of businesses closed and disposed

of. Cost of goods sold of R1,5 billion was down from the

comparative 2017 figure of R2,0 billion and reflects a reduction

in volumes offset by an increase in unit costs. The gross margin

percentage improved by six percentage points to 22,2%. The margin

includes the partial clean out of slow-moving and obsolete

inventory and the reversals of related provisions. It also

reflects the effect of the loss of the Gardena distributorship,

which ended in August 2017.

The trading segment revenue declined by 14% compared to the

corresponding annualised figure in the previous year. WHS and

Incledon revenues declined, attributable to the tougher trading

conditions, internal inefficiencies, the impact of lost market

share as a result of previous reputational damage with customers

and suppliers, as well as supplier underperformance on certain

key product categories. Revenue from the manufacturing segment,

which mainly comprises DPI and Swan Plastics, also declined, with

DPI Plastics contributing a double digit decline attributable to

a lack of government water infrastructure spend. Margin

deterioration in a very competitive market remains a concern.

Expenses decreased considerably and reflects the intense focus on

cost reduction and operational efficiencies. The main expense

drivers remain employment costs, vehicle transportation

expenditure and occupancy costs, which account for 87% of total

expenses.

Once-off restructuring costs amounted to a profit of R12,6

million and comprises the impairment of investments and property,

plant and equipment, offset by a profit on the disposal of Fibrex

in Angola, Aqualia in Mauritius and Boutique Baths in South

Africa.

The EBITDA loss of continuing operations amounted to R1,2 million

compared to R264,2 million in the comparable period in the

previous financial year. The operating loss for the year to

September 2017 was R18,5 million compared to a loss of R338,1

million for H1 F2017.

In the first half of F2018, the operational loss (after

impairments and restructure costs) improved from a loss in H1

F2017 of R52,1 million to a loss in H1 F2018 of R26,4 million.

Net finance charges amounted to R16,1 million, compared to R29,2

million in H1 F2017. This was attributable both to the proceeds

from the rights issue in April 2017 and a reduced usage of trade

finance.

Profit from associates amounted to R1,7 million and compares to a

loss of R8,1 million in F2017. Heunis Steel posted a pleasing

performance in H1 F2017, but was subsequently disposed of in

January 2017 to raise funding.

Discontinued operations refer to the GDW investment which is

accounted for as a disposal group held-for-sale.

CORPORATE ACTIVITY

During the period under review, the group disposed of Fibrex in

Angola for a cash consideration of R10,5 million at a profit of

R12,2 million, Aqualia in Mauritius and Boutique Baths in South

Africa and acquired the remaining 26% share in Hamilton's for R6

million. The group announced the disposal of its remaining 49%

shareholding in GDW, including its loan account, for a

consideration of R324,5 million. Swan Plastics was disposed of

after the reporting period during October 2017 for R35 million,

of which R30 million was received in October 2017.

STATEMENT OF FINANCIAL POSITION

The statement of financial position reflected that the group was

solvent and was strengthened by the rights issue early in the

current financial year which also addressed the liquidity

constraint. It is essential that the group must return to

sustainable profitable operations to remain both solvent and

liquid.

Property, plant and equipment decreased from R225,5 million at

September 2016 to R215,4 million at the half year-end. Additions

on machinery in DPI and Swan Plastics, additions to the vehicle

fleet and leasehold improvements amounted to R21,6 million in H1

F2018.

Intangible assets comprise goodwill of R1,3 million, trademarks

of R2,5 million, software of R53,5 million and customer

relationships of R3,7 million, totalling R61 million.

Net working capital days at September 2017 were 60 days, and

comprised debtor days of 46 days and inventory days of 60 days,

offset by creditor days of 46 days. Due to the lower revenue,

inventory days increased despite a 13,1% decrease in monetary

terms. After a focused stock clean-up, which is still ongoing,

the inventory mix is healthier and more current than the

comparable period in F2017.

Accounts receivable collection period showed an increase of eight

days over that of the previous year, also despite a reduction in

monetary terms. Creditor funding in monetary terms and days

outstanding decreased considerably as a result of creditors now

being paid on terms and a reduction in purchases to align

inventory to the lower revenue levels.

As a result of trading losses, cash generated from operations was

negative by R9 million. Investment in working capital amounted to

R66 million. Net finance charges and taxation paid amounted to

outflows of R24 million and R9 million, respectively. Investing

and net finance activities resulted in an inflow of R7 million,

mainly comprising inflows from the rights issue offset by loan

and bridging and trade finance repayments and capital

expenditure.

Cash balances are managed on a daily basis and the management

committee meets at least weekly to review the cash flow

projections.

PROSPECTS

Most businesses are underperforming as a result of the tough

economic environment as well as the legacy issues still impacting

the businesses after the appointment of new management. The group

has commenced the implementation of a new plan to return all

operations to sustainable profitability. The implementation

commenced a few months ago and is expected to take longer than

initially envisaged. The disposal of GDW and Swan Plastics is

expected to result in cash inflows of approximately R360 million,

which will be utilised to repay the group's debt and fund future

growth. The board anticipates a gradual recovery in the year

ahead that will remain challenging and competitive.

The cash inflow of R324,5 million from the disposal of the GDW

shares, still subject to approval, is expected to be received by

the end of December 2017. R30 million of the Swan Plastics

proceeds has been received in October 2017.

DAWN has irrevocable undertakings from 75% of shareholders.

Any forward-looking statement has not been reviewed or reported

on by the company's auditors.

CHANGES TO THE BOARD

With effect from 20 July 2017, Charles Boles has been appointed

as an independent non-executive director and Theunis de Bruyn as

a non-executive director of the board.

Charles is a qualified Chartered Accountant and holds an MBA

degree. Charles has extensive experience in corporate finance and

asset management. He founded his own investment firm in 1999 and,

through his holdings in various small to mid-cap listed entities,

he has had exposure to the industries and markets where DAWN is

positioned. Charles currently serves as a non-executive director

of Hulamin Ltd and Interwaste Holdings Ltd.

Theunis is also a qualified Chartered Accountant and has many

years of financial and investment experience. He currently serves

as non-executive director on several boards across a wide range

of industries, including RECM and Calibre Ltd, ELB Group Ltd and

Sentula Mining Ltd.

The board is confident that these appointments will add

significant knowledge and new points of view going forward.

Veli Mokoena, a non-executive director of DAWN, has tendered his

resignation, to pursue personal interests, with effect from 16

November 2017.

The chairman and board would like to express sincere gratitude to

Veli for his input and contribution over the period of his tenure

as a director.

For and on behalf of the board of directors

Diederik Fouchι Edwin Hewitt

Independent non-executive chairman Chief executive officer

Chris Booyens

Chief financial officer

Germiston

20 November 2017

SUMMARY CONSOLIDATED INCOME STATEMENT

Unaudited Unaudited Audited

6 months 6 months 12 months

ended ended ended

30 September 30 September 31 March

2017 2016 2017

R'000 R'000 R'000

Continued operations

Revenue 1 927 625 2 402 825 4 300 864

Cost of sales (1 498 978) (2 013 296) (3 523 327)

Gross profit 428 647 389 529 777 537

Net operating expenses

before derecognition and

re-recognition of

investments and

impairments (455 081) (681 572) (1 176 393)

Operating loss before

derecognition and

re-recognition of

investments and

impairments (26 434) (292 043) (398 856)

Net gain/(loss) on

derecognition of

subsidiaries and

associates 12 615 (10 114) 1 202

Impairments (4 719) (35 947) (63 309)

Operating loss (18 538) (338 104) (460 963)

Finance income 1 372 2 118 989

Finance expense (17 461) (31 300) (61 904)

Loss after net financing

costs (34 627) (367 286) (521 878)

Share of profit in

investments accounted

for using the equity

method 1 669 8 117 14 731

Loss before taxation (32 958) (359 169) (507 147)

Income tax (expense)/income (9 847) 19 872 (51 272)

Loss from continuing

operations (42 805) (339 297) (558 419)

Loss from discontinued

operations (62 175) (27 498) (61 637)

Loss for the period (104 980) (366 795) (620 056)

Loss attributable to:

Owners of the parent (111 386) (369 047) (637 371)

Non-controlling interest 6 406 2 252 17 315

Loss for the period (104 980) (366 795) (620 056)

SUMMARY CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Unaudited Unaudited Audited

6 months 6 months 12 months

ended ended ended

30 September 30 September 31 March

% 2017 2016 2017

change R'000 R'000 R'000

Loss for

the period (104 980) (366 795) (620 056)

Other compre-

hensive income:

Items that will

not be

reclassified to

profit or loss:

– Effects of

retirement

benefit

obligations – – 91

– Taxation related

to components – – (25)

– – 66

Items that may

be subsequently

reclassified

to profit or

loss:

– Exchange

differences

recycled

through

the income

statement (2 479) 7 957 7 164

– Exchange

differences on

translating

foreign

operations (1 299) 2 874 (1 423)

– Cash flow hedging

reserve 165 433 858

– Tax-related

components (46) – (240)

(3 659) 11 264 6 359

Total other

comprehensive

(loss)/income (3 659) 11 264 6 425

Total

comprehensive

loss (108 639) (355 531) (613 631)

Total

comprehensive

loss attri-

butable to:

Owners of

the parent (115 045) (357 783) (630 946)

Non-controlling

interest 6 406 2 252 17 315

(108 639) (355 531) (613 631)

Included above:

Depreciation and

amortisation 25 256 30 887 54 939

Operating lease

rentals 42 849 48 279 90 012

DETERMINATION OF

HEADLINE EARNINGS

Attributable

earnings (111 386) (369 047) (637 371)

Adjustment for

the after-tax and

non-controlling

interest effect of:

Net (profit)/loss

on disposal of

property, plant

and equipment (3 399) 605 (7 256)

Impairment of

intangible assets – – 290

Impairment of

property, plant

and equipment 3 349 4 956 6 455

Impairment of

available-for-sale

assets 43 961 – –

Impairment of

other assets 1 377 30 992 67 651

Tax effect on

disposal of

property, plant

and equipment and

impairment of

intangible assets

(customer

relationships) 64 (1 316) 332

Non-controlling

interest 34 – 1 747

Net (profit)/loss

on derecognition

of previously

held interest (12 615) 10 114 (1 202)

Headline earnings

adjustments

relating to

associates and

joint ventures – (10) –

Headline earnings (78 615) (323 706) (569 354)

STATISTICS

Number of

ordinary shares

('000)

– in issue 600 372 242 243 242 243

– held in treasury (13 629) (5 499) (5 499)

Number of shares for

net asset value

calculation ('000) 586 744 236 744 236 744

Weighted average

number of shares

('000)

– for earnings

per share 572 713 329 984* 329 984*

– for diluted

earnings per share 572 713 329 984* 329 984*

Earnings per

share (cents) 83 (19,45) (111,84)* (193,15)*

Headline earnings

per share (cents) 86 (13,73) (98,10)* (172,54)*

Diluted earnings

per share (cents) 83 (19,45) (111,84)* (193,15)*

Diluted headline

earnings per

share (cents) 86 (13,73) (98,10)* (172,54)*

Operating

profit (%) (0,96) (14,07)** (10,72)**

* Recalculated due to rights issue

** Recalculation due to disclosure of discontinued operation

SUMMARY CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Unaudited Unaudited Audited

30 September 30 September 31 March

% 2017 2016 2017

change R'000 R'000 R'000

ASSETS

Non-current

assets 346 054 854 839 674 594

Property, plant

and equipment 215 368 225 493 225 794

Intangible assets 60 952 67 632 65 126

Investments in

associates and

joint ventures 5 982 403 646 296 261

Derivative

financial assets – 34 380 19 115

Deferred tax assets 63 752 123 688 68 298

Current assets 1 282 292 1 435 988 1 297 183

Inventories 518 805 597 001 519 378

Trade and other

receivables 656 998 748 321 660 325

Cash and cash

equivalents 98 335 85 872 108 741

Derivative

financial

instruments 1 472 535 632

Current tax

assets 6 682 4 259 8 107

Assets of

disposal group

classified as

held-for-sale 271 328 29 561 6 652

TOTAL ASSETS 1 899 674 2 320 388 1 978 429

EQUITY AND LIABILITIES

Equity

Capital and

reserves 638 609 697 657 423 122

Equity attributable

to equity holders

of the company 588 344 655 143 375 147

Non-controlling

interest 50 265 42 514 47 975

Non-current

liabilities 282 898 329 566 302 995

Borrowings 53 976 68 327 58 275

Derivative financial

instruments 72 217 93 554 78 217

Deferred profit 26 087 31 414 28 749

Deferred tax

liabilities 19 803 17 626 25 762

Retirement benefit

obligation 5 066 5 100 5 066

Share-based

payment

liabilities 6 298 4 883 5 329

Operating lease

liabilities 99 451 108 662 101 597

Current liabilities 978 167 1 282 008 1 250 724

Trade and other

payables 739 762 898 785 785 735

Borrowings 218 534 358 285 448 176

Operating lease

liabilities 7 503 5 100 5 204

Derivative financial

instruments 192 3 960 588

Deferred profit 5 327 5 327 5 327

Current tax

liabilities 6 849 6 366 5 694

Share-based

payment liabilities – 4 185 –

Liabilities of

disposal group

classified as

held-for-sale – 11 157 1 588

Total liabilities 1 261 065 1 622 731 1 555 307

TOTAL EQUITY

AND LIABILITIES 1 899 674 2 320 388 1 978 429

FUTURE COMMITMENTS

Capital commitments 6 940 18 171 9 998

Operating leases 543 766 613 236 576 023

Net cash 8 014 50 393 108 693

Net debt 169 335 307 971 367 453

Value per share

Asset value per

share

– net asset value

(cents) (64) 100,27 276,73 158,46

– net tangible

asset value

(cents) (64) 89,88 248,16 130,95

– market price

(cents) 112 253 101

Market capitalisation

(R'000) 672 417 612 875 244 665

Financial gearing

ratio (%)* 26,5 44,1 86,8

Current asset ratio

(times) 1,3 1,1 1,0

* Includes cash and cash equivalents.

SUMMARY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Unaudited Unaudited Audited

6 months 6 months 12 months

ended ended ended

30 September 30 September 31 March

2017 2016 2017

R'000 R'000 R'000

Balance at beginning

of the period 423 122 1 056 212 1 056 212

Total loss for

the period (104 980) (366 795) (620 056)

Other comprehensive

(loss)/income (3 659) 11 264 6 585

Rights Issue proceeds 338 615 – –

Changes in ownership

interest – control not

lost (3 455) – –

Transactions with

non-controlling interest (4 672) 605 (350)

Share-based payment

charge and vesting

of options 1 786 5 866 2 700

Treasury shares acquired

and delivered (8 148) – –

Dividends paid to

non-controlling interest

holders – (9 495) (21 969)

Balance at end of period 638 609 697 657 423 122

SUMMARY CONSOLIDATED STATEMENT OF CASH FLOWS

Unaudited Unaudited Audited

6 months 6 months 12 months

ended ended ended

30 September 30 September 31 March

2017 2016 2017

R'000 R'000 R'000

Cash utilised in

operations before

working capital changes (8 679) (19 728) (89 735)

Working capital changes (66 711) 102 334 134 242

Net finance costs paid (23 876) (23 460) (51 435)

Net taxation paid (8 694) (9 468) (22 268)

Net cash (utilised in)/

generated from operating

activities (107 960) 49 678 (29 196)

Net cash generated by/

(utilised in) investing

activities 12 174 (13 711) 29 680

Net cash (utilised in)/

generated from financing

activities (3 933) (50 530) 42 423

(Decrease)/increase in

cash resources (99 719) (14 563) 42 907

Cash resources at

beginning of the period 108 693 69 892 69 892

Translation effects on

cash and cash

equivalents balances (960) (838) (1 344)

Cash and cash equivalents

of disposal group

held-for-sale at end

of period – (4 098) (2 762)

Cash resources at

end of period 8 014 50 393 108 693

Cash resources

comprise of: 8 014 50 393 108 693

Cash and cash equivalents 98 335 85 872 108 741

Bank overdraft included

in borrowings (90 321) (35 479) (48)

SUMMARY CONSOLIDATED SEGMENTAL ANALYSIS

The executive committee, being the chief operating decision-

making body of the group, assessed the reportable segments of the

group and determined that reporting from a trading and

manufacturing perspective would be more meaningful. These

segments are therefore also reported this year, as it constitutes

the future disclosure.

Head

office

and other

recon-

Manu- ciling

Trading facturing items(1) Total

R'000 R'000 R'000 R'000

6 months –

30 September

2017

(Unaudited)

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)/profit

before

impairments

and derecog-

nition

and re-recog-

nition of

investments (5 640) (2 683) (18 111) (26 434)

Impairments and

derecognition – 8 216 (320) 7 896

Operating loss

after impairments

and derecog-

nitions and

re-recognition

of investments (5 640) 5 533 (18 431) (18 538)

Net finance

(expense)/

income (23 958) (13 834) 21 703 (16 089)

Share of

profit from

associates and

joint ventures – 1 376 293 1 669

Tax expense/

(income) (2 259) (3 855) (3 733) (9 847)

Net loss after

tax from

continuing

operations (31 857) (10 780) (168) (42 805)

Net loss after

tax from

discontinued

operations – (62 175) – (62 175)

Assets 1 159 551 88 771 651 352 1 899 674

Liabilities 1 214 727 569 279 (522 941) 1 261 065

Capital expen-

diture(2) 8 372 13 100 157 21 629

6 months –

30 September

2016

(Unaudited)

– Restated

Revenue 1 751 969 841 112 (190 256) 2 402 825

Depreciation

and amorti-

sation (10 105) (12 842) (7 941) (30 887)

Operating

loss before

impairments

and derecog-

nition and

re-recog-

nition of

investments (215 638) (34 296) (42 109) (292 043)

Impairments

and derecog-

nition (12 294) (33 461) (306) (46 061)

Operating

loss after

impairments

and derecog-

nitions and

re-recog-

nition of

investments (227 932) (67 757) (42 415) (338 104)

Net finance

(expense)/

income (24 924) (12 899) 8 641 (29 182)

Share of

(losses)/

profit from

associates

and joint

ventures 26 738 (18 949) 328 8 117

Tax expense/

(income) 21 784 868 (2 780) 19 872

Net loss

after tax

from

continuing

operations (204 334) (98 737) (36 226) (339 297)

Net loss

after tax

from

discontinued

operations – (27 498) – (27 498)

Assets 1 286 676 216 428 817 284 2 320 388

Liabilities 1 239 437 562 813 (179 517) 1 622 731

Capital

expen-

diture(2) 5 648 15 582 10 726 31 957

12 months

ended

31 March

2017 (Audited)

– Restated

Revenue 3 142 060 1 461 433 (302 629) 4 300 864

Depreciation

and amorti-

sation (17 196) (27 705) (10 038) (54 939)

Operating

loss before

impairments

and derecog-

nition and

re-recog-

nition of

investments (328 066) (17 699) (53 091) (398 856)

Impairments

and derecog-

nition 10 371 (71 909) (569) (62 107)

Operating

loss after

impairments

and derecog-

nitions and

re-recog-

nition of

investments (317 695) (89 608) (53 660) (460 963)

Net finance

(expense)/

income (45 337) (31 640) 16 061 (60 916)

Share of

(losses)/

profit from

associates

and joint

ventures 54 732 (39 970) (31) 14 731

Tax expense/

(income) 61 430 (9 782) (102 919) (51 272)

Net loss

after tax

from

continuing

operations (246 870) (171 000) (140 549) (558 419)

Net loss

after tax from

discontinued

operations – (61 637) – (61 637)

Assets 1 230 640 802 630 (54 841) 1 978 429

Liabilities 1 255 378 525 380 (225 451) 1 555 307

Capital

expendi-

ture(2) 13 079 45 076 11 787 69 942

(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. Government grants received are deducted from the

capital expenditure amount.

NOTES TO THE SUMMARY CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PREPARATION

These unaudited interim summary consolidated financial

statements for the 6 months ended 30 September 2017 was

approved by the board on 16 November 2017.

The interim summary 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), 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

summary 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 2017.

The preparation of the interim summary consolidated financial

statements by Tintswalo Mohlakoana (CA(SA)), group financial

accountant, has been supervised by the group financial

manager, Hanrι Bester (CA(SA)) and the chief financial

officer and financial director, Chris Booyens (CA(SA)).

The directors take full responsibility for the preparation of

the interim summary consolidated financial statements.

GOING CONCERN ASSESSMENT

In determining the appropriate basis of preparation of the

half year financial statements, the directors are required to

consider whether the group can continue to operate as a going

concern for the foreseeable future.

DAWN posted significant losses in F2016 and F2017, mainly

because of the costs of the necessary restructuring of the

group to allow it to cope with the difficult economic

environment. The results for the first half of F2018, whilst

still unsatisfactory, represent a considerable improvement

over the corresponding period in the previous financial year.

After the rights issue which was concluded in April 2017,

from which the group received R358 million, the group had

banking facilities available amounting to R200 million,

comprising a revolving credit facility and general banking

facility of R100 million each.

Management has proceeded with the implementation of a

turnaround plan, which was approved by the board. It is,

however, still in its early stages of implementation and

there is a considerable gap between current levels of revenue

and profitability and those targeted in the turnaround plan.

The plan is being executed in an increasingly challenging

economic, socio-political and competitive environment and,

consequently, the turnaround is expected to take longer than

initially expected.

As part of the turnaround plan, during F2018, DAWN disposed

of its shareholdings in Swan Plastics and GDW. Of the R35

million proceeds from the disposal of Swan, R30 million has

already been received and the remaining R5 million will be

paid in April 2018. The R325 million proceeds from the

disposal of GDW is forecast to be received in December 2017,

once the transaction becomes unconditional. R100 million of

the proceeds have been ceded to ABSA in settlement of their

revolving credit facility.

Although the board has approved cash flow forecasts which it

believes to be both rational and reasonable, the ability of

the underlying businesses to meet the forecasts in the

current economic, socio-political and competitive environment

inevitably gives rise to uncertainty. If the forecasts are

not achieved, there will be a risk regarding the group's

ability to continue as a going concern.

Having considered all the above, the board concluded, based

on the forecasts for the next 12 months and on the cash

inflows resulting from the disposal of the Swan and GDW

shares, that DAWN will be solvent and liquid for the 12

months to November 2018.

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

The group has taken a decision to dispose of its 49%

shareholding in Grohe DAWN Watertech. It is the group's

intention to dispose of this investment in the near future.

30 September 30 September 31 March

2017 2016 2017

R'000 R'000 R'000

Grohe DAWN Watertech (GDW)

(a) Loss from

discontinued operations

Profits in stock – (1 125) (1 125)

Effects of call and

put options – – 3 232

Share of losses (18 352) (26 690) (54 648)

Held-for-sale

impairment (43 961) – –

Impairment – – (11 087)

Interest 191 3 2 328

Tax expense (53) 314 (337)

Total (62 175) (27 498) (61 637)

GDW Boutique

Baths

Boutique Baths was

a held-for-sale

asset in March 2017,

that was subsequently

disposed of in April 2017.

GDW was classified as

held-for-sale in

June 2017.

(a) Assets of disposal

group classified as

held-for-sale 271 327 – 6 652

(b) Liabilities of

disposal group

classified as

held-for-sale – – 1 558

The cash flows as

well as the income

statement results

have been included

in the group results

(a) Assets of disposal

group classified as

held-for-sale

Property, plant and

equipment – – 3 768

Investment in

associates 272 220 – –

Derivative

non-current asset

financial

instrument 19 113 – –

Derivative

non-current

liability financial

instrument (6 000) – –

Loan receivable 29 953 – –

Held-for-sale

impairment (43 961) – –

Inventory – – 2 056

Cash and cash

equivalents – – 7

Other current assets – – 821

Total 271 327 – 6 652

(b) Liabilities of

disposal group

classified as

held-for-sale

Non-current

liabilities – – –

Trade and other

payables – – 802

Other current

liabilities – – 786

Total – – 1 588

3. NET GAIN ON DERECOGNITION OF INVESTMENT IN ASSOCIATES AND

SUBSIDIARIES

30 September

Date of 2017

derecognition R'000

Carrying amount of

net asset value 841

Gain on the

derecognition of

associates and

subsidiaries 12 615

Net loss on

derecognition of

investment in

Boutique Baths

Proprietary

Limited Subsidiary 28 April 2017 (320)

Net gain on sale

of shares in

Fibrex Angola

– Fabrica

deArt.De.F.b.

Sinteticas,

S.A.R.L. Associate 15 June 2017 12 248

Net gain on sale

of shares in

Aqualia DPI

Proprietary

Limited Associate 30 May 2017 687

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 TRIBUNAL

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.

On 9 October 2017, DAWN formally notified the Competition

Appeal Court of its intention to appeal the Tribunal's

decision. The Group believes, supported by legal advice that

the appeal will be successful.

5. EVENTS AFTER THE REPORTING DATE

GROHE DAWN WATERTECH (GDW)

Shareholders are referred to the announcements released on

SENS on 14 September 2017 and 18 September 2017,

respectively, wherein they were advised that DAWN had

concluded a share purchase agreement and ancillary

transaction agreements with LIXIL Corporation, the 51%

controlling shareholder of GDW.

Under the terms of the share purchase agreement, LIXIL will

acquire the remaining 49% of the issued ordinary shares in

GDW held by DAWN and GDW will repay DAWN's shareholder loan

claim against GDW, pursuant to which DAWN will receive an

aggregate consideration of R324,5 million.

The transaction is a category 1 transaction in accordance

with the JSE Listings Requirements of the JSE therefore a

general meeting of Shareholders will be convened to propose

the requisite resolutions to implement the transaction.

Written undertakings have been procured from five

shareholders holding 72,5% of the total DAWN shares in issue

to vote the shares held by them, as of the general meeting

record date, in favour of the transaction. It is, therefore,

anticipated that the resolutions necessary to implement the

transaction will be passed at the general meeting.

Further details in respect of these written undertakings will

be included in the circular to shareholders containing the

full details of the transaction, and incorporating a notice

convening the general meeting, which will be posted to

shareholders in due course.

SWAN PLASTICS

Shareholders are referred to the announcements released on

SENS on 5 October 2017 and 20 October 2017, respectively,

whereby they were advised that DAWN Consolidated Holdings

Proprietary Limited (DCH), a wholly-owned subsidiary of DAWN,

entered into a sale of shares and claims in Swan Plastics

agreement with Michael Swanson, Phillip Cotterill and Desmond

Robins, being the minority shareholders in Swan Plastics, for

the disposal of DCH's 51% equity shareholding in Swan

Plastics, which disposal became effective on 19 October 2017.

The purchase price for the shares and claims is R35 million,

payable in cash as follows:

– R30 million within 7 days of signature date of the sale

agreement which amount was received on 25 October 2017; and

– R5 million by 3 April 2018, which amount will bear interest

at the prime rate and will be calculated from the signature

date of the sale agreement until the date of payment.

Title to the shares and claims passed upon payment of the R30

million. Payment of the R5 million is to be secured to DAWN's

satisfaction.

DAWN intends to use the sale proceeds towards working

capital, thereby reducing the company's interest burden and

associated gearing levels.

As at 30 September 2017, DCH's investment in Swan Plastics

reflected a carrying amount of R20 million.

The total profit after tax of Swan Plastics for the six

months ended 30 September 2017 amounted to R11,4 million, and

the net asset value of Swan Plastics as at 30 September 2017

amounted to R59 million.

CONDONATION OF BANK COVENANT BREACH

As announced on SENS on 27 October 2017, DAWN advised

shareholders that, as necessitated by the JSE Listings

Requirements and further to the related announcement of

2 August 2017, the group had received formal condonation from

Absa Bank Ltd (Absa) regarding a breach at the September 2017

measurement date of one of the financial covenants contained

in the group's banking facilities.

The condonation obtained from Absa is conditional upon a

cession of R100 million of the GDW disposal proceeds in

favour of Absa and forms part of the R200 million debt

repayment envisaged from the GDW proceeds to make the group

debt free.

The circular relating to the GDW transaction announced on

14 September 2017 is expected to be distributed to

shareholders in due course and subject to the required

approvals, funds are expected to flow late in December 2017.

In addition, R30 million has been received on the disposal of

the Group's 51% shareholding in Swan Plastics, as announced

on 5 and 20 October 2017, respectively. This cash will be

re-invested in DAWN for future growth and working capital

purposes.

6. DIVIDENDS

The Group has a policy not to pay a dividend at the interim

stage.

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: Diederik Fouchι ^ (chairman), Stephen Connelly (deputy

executive chairman), Lou Alberts ^ (lead independent director),

Edwin Hewitt (chief executive officer), Chris Booyens (chief

financial officer and financial director), Charles Boles ^,

Theunis de Bruyn*, Dinga Mncube ^, Akhter Moosa ^, George Nakos*,

Renι Roos

* Non-executive ^ Independent non-executive

PREPARER: Prepared by Tintswalo Mohlakoana (CA(SA)), group

financial accountant, under the supervision of Hanrι Bester

(CA(SA)), group financial manager, and Chris Booyens (CA(SA)),

chief financial officer and financial director

COMPANY SECRETARY: iThemba Governance and Statutory Solutions

(Pty) Ltd

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: 20/11/2017 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (‘JSE').

The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of

the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,

indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,

information disseminated through SENS.