South African distribution company Distribution and Warehousing Network on Tuesday reported a 35 percent rise in headline earnings per share to 149.3 cents for the year ended June from 110.5 cents a year ago.

The board has recommended a capital distribution of 35 cents, up from 2007's 25 cents per share, subject to shareholder approval at the next annual general meeting.

The group's revenue increased by 31 percent to R3.9-billion, while operating profit was 27 percent higher at R411-million. Headline earnings increased by 39 percent to R261-million.

Dawn said its strong performance is largely attributable to organic revenue growth of 24 percent, resulting in organic operating profit growth of 30 percent.

A substantial portion of the revenue of the Manufacturing division is intergroup and is eliminated on consolidation.

Attributable profit was up 34 percent at R267-million.

Cash generated from operations, excluding working capital changes, increased by 34 percent to R461-million.

The financial gearing ratio increased from 37 percent recorded at the end of December 2007 to 68.2 percent at 30 June 2008. Management is, however, aiming to restore the financial gearing ratio to between the 30 percent and 40 percent levels through improved working capital management. Acquisitions made during the year (R72-million) also impacted on gearing.

Looking ahead, the group said it is anticipated that future growth in the construction and infrastructure markets would be driven by projects which include power generation, road infrastructure and water-related investments by the public sector and from private sector investments relating to industrial and mining projects.

The Board remains positive about Dawn's long-term growth prospects as it is well positioned to have significant participation in the infrastructure programme.

It added that benefits derived from the group's backward integration strategy will, once gearing has moderated to acceptable levels, be further enhanced through selective acquisitions and with the diversification into related target markets.

In addition, an increased export drive on the back of the depreciating rand as well as new product offerings will result in a broadened geographical footprint.

The directors remain confident about achieving earnings growth which is above the industry average as Dawn's integrated supply model with premium brands and balanced exposure across different industries provide the group with a competitive advantage.

"Whilst the group is cognisant of factors beyond its control, our internal objective for earnings growth remains at the 30 percent to 40 percent level," it concluded.

I-Net Bridge