dawn annual financial statements 2016

PAGE

Certification by company secretary 1

Statement of responsibility and approval by the board of directors 2

Report of the audit committee 3

Directors’ report 6

Independent auditor’s report 14

Consolidated and separate income statements 15

Consolidated and separate statements of comprehensive income 16

Consolidated and separate statements of financial position 17

Consolidated statement of changes in equity – group 18

Consolidated statement of changes in equity – company 19

Consolidated and separate statements of cash flows 20

Accounting policies 21

Notes to the annual financial statements 40

Interest in subsidiaries, associate companies and joint ventures 127

Analysis of shareholding 129

Corporate information 131

CONTENTS TO THEANNUAL FINANCIAL STATEMENTS

2016

1

LeveL Of aSSuranCe

These annual financial statements have been audited in compliance with the applicable requirements of the CompaniesAct of South Africa.

auDITOrS

PricewaterhouseCoopers Inc.Registered Auditors

PreParer

Prepared by Yolandi van den Berg (CA(SA)), senior group financial accountant, under the supervision of Hanré Bester (CA(SA)),acting financial director.

PubLISheD14 July 2016

In terms of Section 88(2)(e) of the Companies Act 71 of 2008, as amended, I certify that, to the best of my knowledge and belief, thecompany has, in respect of the financial year reported upon, lodged with the Companies and Intellectual Property Commission allreturns required of a public company in terms of the Act and that all such returns are true, correct and up to date.

Claire Middlemiss

On behalf of: iThemba Governance and Statutory Solutions (Pty) LtdCompany secretary

14 July 2016

CERTIFICATION BYCOMPANY SECRETARY

2016

2

The directors are required in terms of the Companies Act, No 71 of 2008 to maintain adequate accounting records and are

responsible for the content and integrity of the annual financial statements and related financial information included in

this report. It is their responsibility to ensure that the annual financial statements fairly present the state of affairs of the

Group as at the end of the financial year and the results of its operations and cash flows for the period then ended, in

conformity with International Financial Reporting Standards. The external auditors are engaged to express an

independent opinion on the annual financial statements.

The annual financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) and are

presented in terms of the disclosure requirements as set out in the SAICA Financial Reporting Guides as issued by the

Accounting Practices Committee and Financial Reporting Pronouncements as issued by the Financial Reporting Standards

Council, the JSE Listings Requirements and the requirements of the Companies Act, 2008. The annual financial statements

are based upon appropriate accounting policies consistently applied and supported by reasonable and prudent

judgements and estimates.

The directors acknowledge that they are ultimately responsible for the system of internal financial control established by

the group and place considerable importance on maintaining a strong control environment. To enable the directors to

meet these responsibilities, the board of directors sets standards for internal control aimed at reducing the risk of error or

loss in a cost effective manner. The standards include the proper delegation of responsibilities within a clearly defined

framework, effective accounting procedures and adequate segregation of duties to ensure an acceptable level of risk. These

controls are monitored throughout the group and all employees are required to maintain the highest ethical

standards in ensuring the group’s business is conducted in a manner that in all reasonable circumstances is above

reproach. The focus of risk management in the group is on identifying, assessing, managing and monitoring all known

forms of risk across the group. While operating risk cannot be fully eliminated, the group endeavours to minimise it by

ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within

predetermined procedures and constraints.

The directors are of the opinion, based on the information and explanations given by management, that the system of

internal control provides reasonable assurance that the financial records may be relied on for the preparation of the annual

financial statements. However, any system of internal financial control can provide only reasonable, and not absolute,

assurance against material misstatement or loss.

The directors have reviewed the group’s cash flow forecast for the next 12 months and, in the light of this review and the

current financial position, they are satisfied that the group has or has access to adequate resources to continue in

operational existence for the foreseeable future. The going concern basis has therefore been adopted in preparing the

annual financial statements.

The external auditors are responsible for independently auditing and reporting on the group’s annual financial

statements. The annual financial statements have been examined by the group’s external auditors and their report is

presented on page 14.

The annual financial statements set out on pages 3 to 129, which have been prepared on the going concern basis, were

approved by the board of directors on 14 July 2016 and were signed on its behalf by:

Diederik fouché hanré besterChairman Acting financial director

STATEMENT OF RESPONSIBILITY ANDAPPROVAL BY THE BOARD OF DIRECTORSfor the twelve months ended 31 March 2016

2016

3

The audit committee was established with terms of reference from the board. The audit committee terms of reference was reviewed,updated and approved by the board on 14 July 2016 and is available for inspection at the company’s registered office.

PurPOSe

The audit committee meets three times during the financial year to discuss issues of accounting, auditing, internal controls and financialreporting. The audit committee’s terms of reference deals adequately with its membership, authority and duties.

The committee has an independent role with accountability to both the board and shareholders. The committee does not assume thefunctions of management, which remain the responsibility of the executive directors, officers and other members of seniormanagement.

The audit committee fulfils an oversight role regarding financial reporting risks, internal financial controls, fraud risk as it relates tofinancial reporting and information technology risks as it relates to financial reporting.

The committee considers whether or not the interim report should be subject to an independent review by the auditors.

Further information on risk policies, strategies, management and indicators appear in the corporate governance report of the integrated report.

MeMberShIP

Following Osman Arbee’s resignation as independent non-executive director and as chairman of the audit committee on 13 February2015, the lead independent director, Lou Alberts, in the interim assumed the role of chairman of the audit committee. Saleh Mayet wasappointed chairman of the audit committee on 29 May 2015. Tak Hiemstra’s retirement as chairman of the board and member of theaudit committee took effect from 1 November 2015. Dinga Mncube was appointed as a member of the audit committee to replace TakHiemstra on his retirement.

On 20 November 2015 shareholders approved the appointment of Saleh Mayet (chairman), Lou Alberts and Dinga Mncube as membersof the audit committee.

Saleh Mayet (Chairman), Lou Alberts and Dinga Mncube are proposed as members of the audit committee for the 2017 financial year.These directors’ brief curriculum vitae can be found in the integrated report. A resolution to this effect will be presented to shareholdersat the annual general meeting to be held on 18 November 2016.

The board is satisfied that the directors’ integrity, impartiality and objectivity are not in any way compromised and as such satisfies therequirements of section 94(4) of the Companies Act, 2008.

Attendance at meetings held during the period 1 April 2015 to 31 March 2016 was as follows:

19 Jun 4 nov 2015 2015

Saleh Mayet (chairman) √ √Lou Alberts √ √Tak Hiemstra ¹ apology n/aDinga Mncube √ √

¹ Retired on 31 October 2015.

The external auditors and appropriate members of executive management attend the meetings by invitation. Internal auditattends audit committee meetings and provides reports to the committee.

REPORT OF THEAUDIT COMMITTEEfor the twelve months ended 31 March 2016

2016

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Year unDer revIew

The audit committee has met periodically to consider and to act upon its statutory duties and functions and the board confirms that thecommittee has during the review year performed the duties mandated to it by the board.

The committee oversaw the integrated reporting process in accordance with its terms of reference and, in particular, the committee:

• regarded all factors and risks that may impact on the integrity of the Integrated Report, including factors that may predisposemanagement to present a misleading picture, significant judgements and reporting decisions made, as well as any evidence thatbrings into question previously published information and forward-looking statements or information;

• reviewed the annual financial statements and summarised integrated information;

• reviewed the disclosure of sustainability issues in the sustainability report and in the Integrated Report to ensure that it is reliableand does not conflict with the financial information;

• recommended the Integrated Report for approval by the board; and

• reviewed the content of the summarised financial information for whether it provides a balanced view.

The board has assigned oversight of the group’s risk management function to the risk committee. The chairman of the audit committeeis also the chairman of the risk committee and ensures that information relevant to these committees is transferred regularly.

external audit

In terms of the Companies Act, the Committee had nominated PricewaterhouseCoopers Inc. as the independent auditor and Mr I Buys as the designated partner, for appointment for the 2016 audit. This appointment was approved by shareholders at theannual general meeting on 20 November 2015. The committee has satisfied itself through enquiry that the auditor of DAWN isindependent as defined by the Companies Act 2008, as amended, and as per the standards stipulated by the auditing profession.

Requisite assurance was sought and provided by the auditor that internal governance processes within the audit firm support anddemonstrate the claim to independence.

The committee, in consultation with executive management, agreed to the engagement letter, terms, nature and scope of theaudit function and audit plan for the 2016 financial year. The budgeted fee is considered appropriate for the work that couldreasonably have been foreseen at that time. The final adjusted fee will be agreed on completion of the audit. Audit fees aredisclosed in note 4 on page 44 of the 2016 annual financial statements.

There is a formal procedure that governs the process whereby the auditor is considered for non-audit services and eachengagement letter for such work is reviewed and approved by the committee. Meetings are held with the auditor wheremanagement is not present and no matters of concern were raised. The external auditors have unrestricted access to the chairmanof the audit committee.

The committee has again nominated, for approval at the annual general meeting to be held on 18 November 2016,PricewaterhouseCoopers Inc. as the external auditor, and Isak Buys as the designated auditor, for the 2017 financial year. Thecommittee confirms that the auditor and designated auditor are accredited by the JSE Limited.

Internal audit

The group internal audit function operates within defined terms of reference in accordance with the internal audit charter and thegroup internal audit executive reports to the group risk and compliance officer on day-to-day activities and functionally to thechairman of the audit committee. The internal audit function is regarded as being sufficiently independent of activities audited.The internal audit plan is reviewed and adjusted on a continuous basis to ensure effectiveness and is based on the relevant degreeof inherent risk. The internal audit plan for the 2016 financial year was rev iewed and approved by the audit committee.

In compliance with internal auditing standards, the board, through its audit committee, ensures that the Internal audit function issubject to independent quality review at periods of at least once every five years, with the first review conducted in October 2013and the next one scheduled for March 2018.

Internal control

The group maintains systems of internal control, which include financial, operational and compliance controls.

The committee is responsible for reviewing the functioning of the internal control system, the reliability and accuracy of thefinancial information provided by management as well as that provided for dissemination to other users of financial information,whether the group should continue to use the services of the current external auditors, any accounting or auditing concernsidentified as a result of the external audit, the group’s compliance with legal and regulatory provisions, its memorandum ofincorporation, code of ethical conduct and by-laws.

The board of directors is accountable for establishing appropriate risk and control policies. Executive management is responsiblefor monitoring, reviewing and communicating these controls and policies through the organisation. Corrective actions are taken toaddress control deficiencies and other opportunities for improving the systems, as they are identified.

All processes have been in place for the year under review and up to the date of the approval of the annual financial statementsand the directors are not aware of and there is no known material breakdown in the functioning of the internal financial controlsthat has occurred during the year under review to render the control environment ineffective.

CONTINUED

REPORT OF THE AUDIT COMMITTEE

2016

5

CONTINUED

REPORT OF THE AUDIT COMMITTEE

annuaL fInanCIaL STaTeMenTS anD aCCOunTInG POLICIeS

The audit committee has reviewed the accounting policies and the financial statements of the group and the company and issatisfied that they are appropriate and comply with International Financial Reporting Standards.

The transactions described in the annual financial statements in note 44 – restatement, reclassification and consistency ofpresentation – under restatement 1 and 2, were initiated and executed at the time by certain executive directors and seniormanagement respectively. Both transactions were executed without the knowledge and approval of the board. A reportableirregularity has therefore been reported by the external auditors to the Independent Regulatory Board of Auditors with respect tothese transactions. The external auditors have also confirmed to the Independent Regulatory Board of Auditors that theseirregularities are not continuing. After considering the circumstances of these transactions, as a matter of good governance, theboard has instituted the following corrective actions:

• engaged with external legal counsel to clarify DAWN’s legal position with respect to these matters and its relationship withthe individuals in question, including DAWN’s right of recourse against any relevant individuals;

• engaged with parties involved in the above matters to ensure the board acts in the best interests of DAWN;

• accounted for and restated the comparative results in the annual financial statements for these transactions; and

• the internal audit department launched detailed investigations into these transactions.

The audit committee and the board are confident that it has taken and continues to take all the necessary steps to execute itsresponsibilities in terms of the Companies Act of South Africa and the principles of good governance as contemplated by the KingCode on Corporate Governance.

The JSE proactive monitoring panel reviewed DAWN’s 2015 annual financial statements and raised matters pertaining to additionaldisclosure, reclassification of entries and consistency of presentation in the annual financial statements. All the comments raisedhave been addressed by DAWN and the process has been concluded.

The audit committee has considered the JSE letter of 15 February 2016 (JSE Proactive Monitoring Process) and has taken theappropriate action.

The audit committee fulfilled its mandate and recommended the annual financial statements for the year ended 31 March 2016 forapproval to the board. The board approved the annual financial statements on 14 July 2016 and the financial statements will beopen for discussion at the annual general meeting.

evaLuaTIOn Of The fInanCIaL DIreCTOr anD The fInanCe funCTIOn

On 14 July 2016 the chief financial officer of the group, Dries Ferreira, resigned, effective 31 October 2016. On the same date HanréBester was appointed as acting financial director. The audit committee confirms that it has satisfied itself of the expertise andexperience of the acting financial director.

The audit committee has considered, and has satisfied itself of, the appropriateness of the expertise and adequacy of resources ofthe finance function and experience of the senior members of management responsible for the finance function.

whISTLe-bLOwInG

The code of ethical conduct and whistle-blowing policy are intended to assist individuals who believe they have discovered seriousmalpractice or impropriety to take the appropriate action. The committee is assured that these arrangements provide forproportionate and independent investigation of matters reported and for suitable follow-up action. The committee is satisfied thatinstances of whistle-blowing were appropriately dealt with during the year under review. Copies of the code of ethical conduct andfraud policy are available on the company’s website www.dawnltd.co.za.

aSSuranCe

The audit committee is satisfied that DAWN has optimised the assurance coverage obtained from management and internal andexternal assurance providers in accordance with an appropriate combined assurance model.

aPPrOvaL

The report of the audit committee has been approved by the board of directors of DAWN.

Signed for and on behalf of the audit committee

Saleh MayetChairman of the audit committee

14 July 2016

2016

6

Following the sale in November 2014 of 51% of DAWN’s Watertech and Sanware clusters to Grohe Luxemburg Four AG, Europe’s largest andthe world’s leading single-brand manufacturer and supplier of sanitary fittings, DAWN changed its year-end to 31 March, resulting in a nine-month reporting period for F2015. As per JSE requirements, the group is required to report its last publishedcomparative results. The annual financial statements are therefore prepared for the 12-months to 31 March 2016 compared to the nine-month period to 31 March 2015.

The directors take pleasure in presenting their report, which forms part of the summary consolidated financial statements for the year ended31 March 2016. The consolidated financial statements presented on pages 15 to 126 set out fully the financial position, results of operationsand cash flows of the group for the year ended 31 March 2016.

GrOuP reSuLTS SuMMarY

Restated 12 months 9 months ended ended 31 March 31 March 2016 2015 % r’000 R’000 change

Statement of financial positionTotal assets 2 685 644 3 759 015 (29)Total liabilities 1 629 432 1 874 478 (13)Financial gearing ratio (%) 29,5 8,4 >100Net asset value per share (cents) 440,66 794,97 (45)Net tangible asset value per share (cents) 412,95 788,68 (48)

Income statement Revenue 4 993 092 3 616 640 38Operating loss before impairments and derecognitions (23 948) (80 065) (70)Impairments and derecognitions (637 410) 534 388 >(100)Operating (loss)/profit (661 358) 454 323 >(100)Net finance charges (71 070) (36 484) 95Share of (loss)/profit in investments accounted for using the equity method (5 891) 10 877 >(100)Income tax (expense)/income (19 613) 23 328 >(100)Profit from discontinued operations (attributable to owners of the parent) – 27 438 (100)Attributable earnings (762 936) 479 120 >(100)Headline earnings (157 116) (66 508) >(100)Earnings per share (cents) (318,31) 202,11 >(100)Headline earnings per share (cents) (65,55) (28,1) >100

The group’s operations are classified into three main operating segments, namely building, infrastructure and solutions. The most prominentmarkets in which the building segment operates are the residential market and the recorded and unrecorded additions and alterations markets,whereas the infrastructure segment carries its dominant exposure to the civils sector, specifically the water and sewer-related infrastructure andallied market activity. Both the building and the infrastructure segments are supported by the solutions segment.

Details of the segmental analysis of the group are set out on page 40.

The table below summarises the impact of the impairments and write-downs on attributable earnings:

Centsr’m per share

attributable loss as reported (726,9) (318,3)Net impairments and other HEPS add-backs– controlled entities 155,6 64,9Net impairments and other HEPS add-backs – associates and joint ventures 450,2 187,8headline loss as reported (157,1) (65,6)Further write-downs undertaken (not qualifying for HEPS add-back) – controlled entities 155,9 65,1Further write-downs undertaken (not qualifying for HEPS add-back) – associates and joint ventures – –Core headline loss (1,2) (0,5)

DIRECTORS’ REPORTfor the 12 months ended 31 March 2016

2016

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The reconciliation of core headline earnings below includes non-headline earnings per share adjustments reviewed by the chief operatingdecision-maker, DAWN’s executive committee.

Core headline earnings

The core headline earnings presented above and below has been prepared for illustrative purposes only to provide information on how thecore headline earnings adjustments might have impacted on the financial results of the group. Because of its nature, the core headlineearnings may not be a fair reflection of the group’s results of operation, financial position, changes in equity or cash flows.

The underlying information used in the preparation of the core headline earnings has been prepared using the accounting policies thatcomply with International Financial Reporting Standards. These are consistent with those applied in the published consolidated groupresults of the group and company for the year ended 31 March 2016.

The directors are responsible for compiling the core headline earnings on the basis of the applicable criteria specified in the JSE ListingsRequirements and as described below.

The reconciliation of core headline earnings should be read in conjunction with the unmodified independent reporting accountants’ reportthereon, issued by PricewaterhouseCoopers Inc, which is available for inspection at DAWN’s registered office.

The table below summarises the reconciliation of headline earnings to core headline earnings:

Centsr’m per share

headline loss as reported (157,1) (65,6)Core headline earnings adjustments: 155,9 65,1

Onerous lease provisions raised on premises not in use by the group 11,1Remeasurement of a written put 37,8Additional working capital impairments due to the current economic conditions 56,4Additional provisions related to the sale of a subsidiary 14,7Derecognition of deferred tax assets 45,0Tax impact of the above adjustments (9,1)Core headline loss (1,2) (0,5)

TraDInG STaTeMenTThe measure adopted for the trading statement has not changed and will continue to be earnings per share and headline earnings pershare. For the 2016 financial year, core headline earnings and core headline earnings per share constituted additional disclosure due to thenumber of adjustments, as shown above.

Treasury shares

Shares repurchased by a subsidiary and held in treasury amounted to 5 498 937 shares (2015: Nil shares), which are disclosed as a reductionof equity in the statement of changes in equity. During the 2015 and 2016 financial years a further 1 137 174 and 5 498 937 shares,respectively, were acquired in order to cover the group’s obligations in terms of the share incentive schemes at a total cost of R7,02 (2015)and R5,61 (2016) per share. These obligations were settled in the respective years.

Year unDer revIewIn the interim results to 30 September 2015, DAWN reported significant progress in the implementation of its turnaround strategy. However,the second half of the financial year, was severely impacted by a sharp economic slowdown and a lag in government spend on waterprojects which resulted in losses in a number of businesses.

Grohe DAWN Watertech (GDW), in which DAWN holds a minority (49%) stake was also impacted by delayed approval of working capitalfunding, which disrupted the supply chain and had an impact on earnings at the associate company investment level as well as on thebuilding trading segment of DAWN, GDW’s largest customer.

Lower resource prices, foreign exchange volatility and scarcity, and political instability also impacted adversely on DAWN’s rest of Africabusiness.

Thus, group sales came under severe pressure in the second half. The management team responded by lowering prices to maintainhistorical volumes. This only served to exacerbate the impact of the reduction in sales by also reducing gross margins. Although the group’soperating expenses were trimmed back aggressively, it has a high fixed cost base which does not allow further cost reductions in the short-term. Group operating margin therefore decreased from 3,5% in H1 F2016 to a loss for F2016. The subsidiary businesses which moved intolosses were Sangio, Incledon, Pro-Max, Kitchen Fittings, DAWN Africa and DPI International as well as associates GDW and some Africaoperations. Total losses after tax (including GDW) amounted to R130,0 million. Based on historical results and future expectations ofinvestments, the board has decided to make significant impairments to the carrying value of these investments.

for the 12 months ended 31 March 2016

DIRECTORS’ REPORTCONTINUED

2016

8



These losses continued into the first quarter of F2017. Under the guidance of new management, the group prioritised plans to halt thelosses, move back into profit and bring working capital back to normal levels. A plan to achieve this was approved by the executivecommittee and the board of directors at the end of June 2016 and significant progress toward these goals is expected during the secondquarter of F2017.

Earnings for F2016 are therefore as follows:

• an operating loss before tax, interest, impairments and derecognitions of R23,9 million (nine months F2015: a loss of R80,1 million);

• a headline loss per share of 65,6 cents (nine months F2015: a headline loss of 28,1 cents per share); and

• a loss per share of 318,3 cents (nine months F2015: loss per share of 202,1 cents).

Income statement

Revenue for the 12 months increased by 38% to R5,0 billion, compared to the nine months to 31 March 2015. Volumes declined by 3%,price inflation amounted to 8% with the annualisation of the nine months added a further notional 33%.

Gross margins decreased to 21,9% from the 23,4% achieved during the nine months to 31 March 2015.

Net operating expenses reduced by 9% measured against an annualised 2015, reducing the expense to sales ratio from 34,1% in F2015 to22,4% in F2016. A total of R90 million in costs net of inflation and acquisitive increases (which amounted to R168 million in real terms) havebeen removed during the year under review.

Group PBIT, after the write-downs that do not qualify for headline earnings add-backs, was a loss of R23,9 million.

Impairments include an appropriate write-down of the group’s exposure to the rest of Africa operations.

Net finance costs increased by 2% to R37,1 million (F2015: R36,5 million) excluding the charge of R34,0 million relating to the increase invalue associated with the discovery of a written put over the remaining 49% of the equity in Swan Plastics (see restatements on page 121).

Income from associates and joint ventures decreased to a loss of R5,9 million (F2015: profit of R10,9 million) mainly as a result of the R32,2million loss (for DAWN’s 49%) by GDW.

As a result of the impairments and write-downs, the group’s effective tax rate is low at -2,6%.

Non-controlling interests’ share of group earnings increased from R1,7 million to R5,0 million, mainly reflecting an earnings increase fromSwan Plastics.

The group incurred a net loss after tax, impairments and write-downs of R757,9 million.

Statement of financial position

The reduction in net working capital during the 12 months to 31 March 2016 amounted to R55.0 million and a further reduction is targetedin F2017.

The group’s net working capital has come down from a high of 65 days in December 2014 to 59 days in March 2016. The group’s statedtarget for working capital is 55 days. The four days difference amounts to R54 million. Management has, however, identified a further R146million of working capital reduction opportunities (making a total of R200 million). The table below summarises the group’s working capitalmovements in days, calculated on a rolling 12-month basis.

Mar Sept Mar Dec2016 2015 2015 2014 Comment on working capital days

net working capital 59 57 62 65 Solid improvement

Debtors 45 51 49 46 Pressure as industry experiences cash constraints

Stock 71 69 82 74 R134,6 million reduction in stock levels; more planned

Creditors 57 63 69 55 Creditor funding reduced in line with recent stockreduction; objective is for stock and creditor days tocontract

The group’s net asset value decreased to R1 056,2 million as at 31 March 2016 compared to R1 884,5 million at 31 March 2015. The largereduction in net asset value stems mainly from the net impairments during the period, amounting to R637 million. Compared to thegroup’s net interest bearing debt, the financial position has deteriorated to a gearing ratio of 29,5% at 31 March 2016 (8,4% at 31 March2015).

Short-term debt amounts to R357,4 million (R277,4 million net of cash). Absa Bank Limited has, subsequent to year-end, renewed the R200million revolving credit facility (out of a total of R300 million working capital facilities) and requires repayment on an amortising profilebetween 7 October 2016 and 7 October 2017. DAWN has negotiated to repay R50 million by 31 March 2017 and the balance of R150 millionbetween 1 April 2017 and 7 October 2017 to align repayment commitments with the cash generation of the group.

2016

9

Statement of cash flows

Cash generated from operating activities before working capital changes was impacted by the losses incurred in the second half anddecreased to R49,0 million (F2015: R56,6 million). Working capital showed an inflow of R25,3 million (F2015: outflow of R297,5 million). Netfinance and tax payments amounted to R58,8 million (F2015: R59,1 million).

Investing and financing activities, however, showed a net inflow of R53.5 million (F2015: inflow of R104,3 million). Investing activitiesshowed a R89,9 million inflow for the period. Included in this number are the following main items:

• R45,4 million additions to property, plant and equipment and intangible assets. The capital expenditure comprised spend on thesoftware for the new ERP system, capital expenditure on fleet, plant and equipment and an outlay for generators, making the groupmore resilient to the effects of future power disruptions; and

• R119,5 million inflows from the repayment of loans owed to DAWN by associate investment companies.

Financing activities, on the other hand, amounted to a net outflow of R36,4 million and included:

• R209,2 million in proceeds from debt raising, offset by R207,0 million in repayments of various borrowings and finance leases;

• R30,9 million spent on treasury shares to acquire five million DAWN shares in the open market during F1 H2016; and

• R7,3 million in dividend payments to minority shareholders.

The group closed with a net cash of R69,9 million at 31 March 2016 compared to a net cash of R1,4 million at March 2015.

reSTaTeMenTS

During the year under review the comparative results were restated/reclassified for the following matters:

Otheras addendum restatements/

previously to lease written reclassi-stated agreement put fications restated

financial statement line item r’m r’m r’m r’m r’m

Statement of changes in equity

2014 (1 523,0) 78,5 31,2 – (1 413,3)2015 (2 004,1) 82,4 33,4 3,8 (1 884,5)


non-current assetsDerivative financial instruments 4,0 – – 25,9 29,9Deferred tax 71,1 32,1 – – 103,2

non-current liabilitiesDerivative financial instruments – – (30,0) (25,9) (56,0)

Deferred profit (16,0) (23,4) – – (39,4)Trade and other payables – – (3,3) – (3,3)Operating lease liability – (91,6) – (13,7) (105,2)

Current liabilitiesTrade and other payables (1 053,2) – – 15,4 (1 037,8)Borrowings (501,6) – – (3,8) (505,4)Operating lease liability – – – (1,8) (1,8)Deferred profit (5,8) 0,5 – – (5,3)

restatement 1

An addendum to the existing lease agreement on the Germiston Distribution Centre in 2009 was not disclosed to the board. As a result, thelease liability had to be restated based on a 15-year lease at an escalation of 8% per annum, ending in December 2023. Payments under theoperating lease are recognised as expenses on a straight-line basis over the lease term. The expense treatment therefore does not reflectthe cash profile of the lease. The difference between the cash and the expense is accounted for as a lease liability. The lease liability of R85,8million as at 31 March 2016 will reduce during the remaining period of the lease to Rnil. These entries do not affect DAWN’s historical orfuture cash flow and any increases or reduction in the lease liability will not impact on DAWN’s cash flow.



Restatement

2016

10



restatement 2

In August 2013, a subsidiary of DAWN gave the remaining 49% shareholders in Swan Plastics Pty Ltd (Swan) the right to put theirshares at a 5 price earnings ratio, based on the average of the prior two years’ earnings. This written put was not disclosed to theboard. The opposite entry to the written put liability is represented by a debit to equity. The put represents an asset in that theminority shareholders’ equity in Swan will belong to DAWN shareholders if the written put is triggered. The difference between thefinal purchase consideration and the value of the non-controlling interest in Swan will be accounted for as part of the Change inownership reserve.

restatement 3

An obligation was raised as a share-based payment obligation in equity to acquire the remaining non-controlling interestshareholding of 18,1% in DAWN Human Resource Solutions Proprietary Limited. The above treatment transferring the liability toequity was incorrect as per paragraph 4 of IFRS 2. DAWN has updated the statement of changes in equity (SOCIE) and share-basedpayment obligation. This incorrect treatment was highlighted by the JSE proactive monitoring process.

Other matters

The transactions described in 1 and 2 on page 9, respectively, were initiated and executed at the time by certain executive directorsand senior management respectively. Both transactions were executed without the knowledge and approval of the board. Areportable irregularity has therefore been reported by the external auditors to the Independent Regulatory Board of Auditors withrespect to these transactions. After considering the circumstances of these transactions, as a matter of good governance, the boardhas instituted the following corrective actions:

• engaged with external legal counsel to clarify DAWN’s legal position with respect to these matters and its relationship with theindividuals in question, including DAWN’s right of recourse against any relevant individuals;




Please refer to note 44 – restatement, reclassification and consistency of presentation – for further disclosure.

The board is confident that it has taken and continues to take all the necessary steps to execute its responsibilities in terms of theCompanies Act of South Africa and the principles of good governance as contemplated by the King Code on CorporateGovernance.

buSIneSS COMbInaTIOnS

boutique baths

On 1 April 2015, the group acquired a 76% share in Boutique Baths Proprietary Limited (Boutique Baths), a manufacturer offreestanding, skirted and solid cast baths with matching basin sets, for a consideration of R7 million.

Boutique Baths contributed operating profit of R0,7 million and revenue of R11,8 million since the acquisition date.

The amount of net assets acquired amounted to R5,6 million and non-controlling interests of R1,9 million was recognised. Goodwillrecognised on this acquisition amounts to R3,3 million.

Refer to note 36 for further disclosure.

SPeCIaL reSOLuTIOnS

At the annual general meeting of the company held on 20 November 2015, shareholders approved three special resolutions.

• Special resolution number 1 granted the company a general authority for the repurchase of its own shares.

• Special resolution number 2 approved the non-executive directors’ fees for the 2015 financial year.

• Special resolution number 3 granted the company the authority to provide financial assistance to any company or corporationwhich is related or inter-related to the company in terms of the requirements of section 45 of the Companies Act, No 71 of2008.

At the forthcoming annual general meeting of the company to be held on Friday, 18 November 2016, the special resolutions above

will again be presented to shareholders for approval.

2016

11

DIvIDenD

The group’s policy is to pay dividends once per year at year-end, on an approximately four times cover. The board considers it

prudent to conserve cash due to working capital requirements and therefore does not propose a dividend in respect of the 2016

financial year. It is the board’s intention to resume dividend payments in due course.

Share CaPITaL

Further details of the authorised and issued share capital of the company are provided in note 19 to the consolidated annual

financial statements.

Dawn Share SCheMe

The aggregate number of shares available to the scheme at year-end, but not issued, is outlined below. All the shares have been

taken up.

Restated

12 months 9 months

ended ended

31 March 31 March

2016 2015

’000 ’000

Aggregate number of shares available to the new scheme 18 793 18 793

Shares rights and awards granted (new schemes) (7 423) (16 010)

Number of share rights and awards available, but not engaged 11 370 2 783

DIreCTOrS

Date of Date of

Details of directors Designation appointment resignation

Mohammed Akoojee Non-executive director 23 June 2011 11 November 2015

Lou Alberts Lead independent director 30 August 2001

Hanré Bester Financial director 14 July 2016

Jan Beukes Risk and compliance officer 20 August 1998 14 July 2016,

effective 31 October 2016

Stephen Connelly Independent non-executive director

Interim CEO of DAWN 1 April 2016 1 June 2016

Dries Ferreira Financial director 30 November 2007 14 July 2016,

effective 31 October 2016

Diederik Fouché Non-executive chairman 1 November 2015

Tak Hiemstra Independent non-executive chairman 30 June 1998 Retired 31 October 2015

Gerhard Kotzee CEO Africa operations and

DAWN manufacturing 6 November 2014 29 February 2016

Saleh Mayet Independent non-executive director 29 May 2015

Dinga Mncube Independent non-executive director 1 May 2014

Veli Mokoena Non-executive director 22 June 2011

George Nakos Non-executive director 12 November 2015 Derek Tod Chief executive officer 30 June 1998 Retired

31 May 2016



2016

12

In terms of the company’s memorandum of incorporation, Veli Mokoena retires by rotation at the forthcoming annual generalmeeting. The retiring director is eligible and available for re-election. George Nakos was appointed to the board on 12 November2015 as a non-executive director. Stephen Connelly was appointed to the board on 1 April 2016 as an independent non-executivedirector and, subsequently, as interim chief executive officer effective 1 May 2016, following the announcement by the board ofDerek Tod’s retirement as chief executive officer, effective 31 May 2016. Hanré Bester was appointed to the board as actingfinancial director with immediate effect, following Dries Ferreira’s resignation as chief financial officer on 14 July 2016. Resolutionsfor ratification by shareholders of George, Stephen and Hanré’s appointments are included in the notice of annual general meetingin the integrated report.

SeCreTarYThe secretary of the company is iThemba Governance and Statutory Solutions (Pty) Ltd.

DIreCTOrS’ SharehOLDInG

The directors held in aggregate direct and indirect beneficial interests of 10,5% (2015: 10,5%) in the issued share capital of thecompany at the end of the reporting period. number of ordinary shares

beneficial

Direct Indirect Total

at 31 March 2016 14 197 970 5 234 840 19 432 810

Directors 13 168 654 5 234 840 18 403 494

Executive directors 11 157 598 5 034 840 16 192 438Jan Beukes ¹ 3 513 021 – 3 513 021Dries Ferreira 2 372 333 – 372 333René Roos 1 126 667 – 1 126 667Derek Tod 3 6 145 577 5 034 840 11 180 417

Non-executive directors 2 011 056 200 000 2 211 056Lou Alberts 1 989 285 – 1 989 285Diederik Fouché – 200 000 200 000Veli Mokoena 21 771 – 21 771

Prescribed officers 1 029 316 – 1 029 316Dave Ferguson 901 789 – 901 789Graeme Johnston 127 527 – 127 527

At 31 March 2015 17 563 038 7 851 116 25 414 154

Directors 16 464 765 5 034 840 21 499 605

Executive directors 13 496 892 5 034 840 18 531 732 JA Beukes 3 513 021 – 3 513 021 JAI Ferreira 1 206 627 – 1 206 627 RD Roos 1 126 667 – 1 126 667 DA Tod 7 245 577 5 034 840 12 280 417 GD Kotzee 405 000 – 405 000

Non-executive directors 2 967 873 – 2 967 873LM Alberts 1 766 285 – 1 766 285 RL Hiemstra 1 197 998 – 1 197 998 VJ Mokoena 3 590 – 3 590

Prescribed officers 1 098 273 2 816 276 3 914 549CJ Bishop – 2 816 276 2 816 276 DK Ferguson 970 746 – 970 746GR Johnston 127 527 – 127 527

¹ Resigned on 14 July 2016, effective 31 October 2016.2 Resigned on 14 July 2016, effective 31 October 2016.3 Retired on 31 May 2016.

The company has not been notified of any material change in directors’ interests during the period 31 March 2016 to the date ofthis report.



2016

13

DIreCTOrS’ eMOLuMenTSDetails of the directors’ emoluments are set out in note 42 on pages 117 to 120 of the annual financial statements and in the reportof the remuneration committee in the integrated report.

DIreCTOrS’ InTereST In COnTraCTSNo material contracts involving directors’ interest were entered into during the current year.

SharehOLDInG anaLYSISA presentation of the company’s shareholding is set out on page 129.

SubSIDIarIeS, aSSOCIaTe COMPanIeS anD JOInT venTureSDetails of the holding company’s interest in subsidiaries, associate companies and joint ventures are set out on pages 127 and 128 ofthe annual financial statements. Details of indebtedness to the holding company are set out on page 114 of the annual financialstatements.

evenTS afTer The rePOrTInG PerIOD

Changes to the board of directors

Chief executive officer

As announced on SENS on 26 April 2016, Derek Tod has taken a decision to retire as chief executive officer, effective 31 May 2016.He has agreed with the board that he will participate in an organised hand-over to the board and interim chief executive officer, asand when required.

Stephen Connelly, who was appointed to the board as independent non-executive director on 1 April 2016, has accepted the roleof interim chief executive officer of DAWN, effective 1 June 2016. He will fulfil this role until the board has selected a permanentsuccessor to Derek Tod. He will also assist the DAWN executive committee in the turnaround strategy, which commenced recently.

The board will immediately commence with the process of identifying and appointing a permanent successor and will in thisprocess consider both internal and external candidates.

Chief financial officer

The chief financial officer, Dries Ferreira, resigned from DAWN on 14 July 2016, but agreed to remain in employment until 31October 2016 to ensure a smooth transition. Hanré Bester ((CA (SA), MCom (Tax)), the group financial manager who joined DAWNduring 2010, has been appointed as acting financial director until a permanent placement can be made.

Risk and compliance officer

The risk and compliance officer and executive director, Jan Beukes, resigned from DAWN on 14 July 2016, but agreed to remain inemployment until 31 October 2016 to ensure a smooth transition. A suitable replacement will be recruited in due course.

borrowings – covenants

DAWN has breached some of its covenants and accordingly approached Absa for a waiver of the relevant covenant measures. On28 June 2016 Absa consented to the non-compliance (breach) of covenants and waived the event of default. DAWN’s currentfacility ends on 7 October 2016 and has been re-negotiated to 7 October 2017. The new facility has similar characteristics, but willhave a quarterly step-down of R25 million per quarter in respect of the revolving credit facility (RCF) starting 7 October 2016 andending 7 July 2017.

The pricing has provisionally been indicated and reflects a deteriorated credit position as well as movements in the general yieldcurve.

Disposal

Braveheart Financial Services Proprietary Limited – a DAWN investment of 30% was sold to the majority shareholder on 30 May2016 for an amount of R1 million.

auDITOrSThe auditors, PricewaterhouseCoopers Inc., and the designated auditor, Isak Buys, have indicated their willingness to continue in officefor the ensuing year. The audit committee has satisfied itself of the independence of the auditors and the designated auditor.

A resolution to reappoint them as auditors will be proposed at the next annual general meeting scheduled to take place on 18 November 2016.



2016

14

To the shareholders of Distribution and warehousing network Limited

We have audited the consolidated and separate financial statements of Distribution and Warehousing Network Limited set out onpages 15 to 128, which comprise the statements of financial position as at 31 March 2016, and the statements of comprehensiveincome, statements of changes in equity and statements of cash flows for the year then ended, and the notes, comprising a summary ofsignificant accounting policies and other explanatory information.

DIreCTOrS’ reSPOnSIbILITY fOr The fInanCIaL STaTeMenTS

The company’s directors are responsible for the preparation and fair presentation of these consolidated and separate financialstatements in accordance with International Financial Reporting Standards and the requirements of the Companies Act of South Africa,and for such internal control as the directors determine is necessary to enable the preparation of consolidated and separate financialstatements that are free from material misstatement, whether due to fraud or error.

auDITOr’S reSPOnSIbILITY

Our responsibility is to express an opinion on these consolidated and separate financial statements based on our audit. We conductedour audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirementsand plan and perform the audit to obtain reasonable assurance about whether the consolidated and separate financial statements arefree from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. Theprocedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financialstatements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to theentity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in thecircumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit alsoincludes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made bymanagement, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OPInIOn

In our opinion, the consolidated and separate financial statements present fairly, in all material respects, the financial position ofDistribution and Warehousing Limited as at 31 March 2016, and its financial performance and its cash flows for the year then ended inaccordance with International Financial Reporting Standards and the requirements of the Companies Act of South Africa.

OTher rePOrTS requIreD bY The COMPanIeS aCT

As part of our audit of the consolidated and separate financial statements for the year ended 31 March 2016, we have read the Directors’Report, the Audit Committee’s Report and the Company Secretary’s Certificate for the purpose of identifying whether there are materialinconsistencies between these reports and the audited financial statements. These reports are the responsibility of the respectivepreparers. Based on reading these reports we have not identified material inconsistencies between these reports and the auditedfinancial statements. However, we have not audited these reports and accordingly do not express an opinion on these reports.

rePOrT On OTher LeGaL anD reGuLaTOrY requIreMenTS

We report that we have identified certain items which constitute reportable irregularities (“RI”) in terms of the Auditing Profession Actand have reported such matters to the appropriate regulatory authority. Details relating to these RIs are more fully set out in note 44 tothe annual financial statements. The RIs are no longer continuing.

PricewaterhouseCoopers Inc. Director: I buysRegistered AuditorSunninghill

14 July 2016

INDEPENDENT AUDITOR’S REPORT

2016

15

GrOuP COMPanY

Restated 12 months 9 months 12 months 9 months ended ended ended ended 31 March 31 March 31 March 31 March 2016 2015 2016 2015 Note r’000 R’000 r’000 R’000

revenue 3 4 993 092 3 616 640 – –Cost of sales 4 (3 897 870) (2 771 312) – –

Gross profit 1 095 222 845 328 – –Operating expenses 4 (1 161 020) (945 223) (5 174) (29 680)

Administrative and selling expenses (649 620) (552 079) (2 728) (6 450)Distribution and warehousing expenses (490 801) (346 856) – –Other operating expenses (20 599) (46 288) (2 446) (23 230)

Other operating income 5 41 850 19 830 14 172 4 005

Operating (loss)/profit before impairments and derecognitions of previously held interests (23 948) (80 065) 8 998 (25 675)

Net (loss)/gain on derecognition of subsidiaries 4; 37 (4 592) 637 370 – –Impairments 4 (632 818) (102 982) (395 894) (13 532)

Operating (loss)/profit (661 358) 454 323 (386 896) (39 207)Finance income 6 3 460 15 710 50 694 61 514Finance expenses 7 (74 530) (52 194) (37 250) (34 549)

(Loss)/profit after net financing costs (732 428) 417 839 (373 452) (12 242)Share of (loss)/profit in investments accounted for

using the equity method 14 (5 891) 10 877 – –

(Loss)/profit before taxation (738 319) 428 716 (373 452) (12 242)Income tax (expense)/income 9 (19 613) 23 328 (4 340) (7 761)

(Loss)/profit from continuing operations (757 932) 452 044 (377 792) (20 003)Profit from discontinued operations 18 – 27 438 – –

(Loss)/profit for the year (757 932) 479 482 (377 792) (20 003)

Profit attributable to:Owners of the parent (762 936) 479 120 – –Non-controlling interests 5 004 362 – –


Earnings per share (cents) 10 (318,31) 202,11 – –Diluted earnings per share (cents) 10 (317,34) 200,25 – –

The notes as set out on pages 40 to 126 are an integral part of these consolidated financial statements.

CONSOLIDATED AND SEPARATEINCOME STATEMENTSfor the 12 months ended 31 March 2016

2016

16

GrOuP COMPanY



Other comprehensive income Items that will not be reclassified to profit or loss:Effects of retirement benefit obligations 26 1 009 (43) – –Tax related components (282) 12 – –

727 (31) – –

Items that may be subsequently reclassified to profit or loss:

Exchange differences recycled through profit/loss (6 611) (2 972) – –Exchange differences on translating foreign operations 626 277 – –Cash flow hedging reserve 23 (1 023) – – –Tax-related components 23 286 – – –

(6 722) (2 695) – –

Total other comprehensive loss (5 995) (2 726) – –

Total comprehensive (loss)/income (763 927) 476 756 (377 792) (20 003)

Total comprehensive (loss)/income attributable to:Owners of the parent (768 931) 476 394 – –Non-controlling interests 5 004 362 – –

(763 927) 476 756 – –

Total comprehensive income attributable toequity shareholders arising from:

Continuing operations (768 931) 448 956 – –Discontinued operations – 27 438 – –

(768 931) 476 394 – –


CONSOLIDATED AND SEPARATESTATEMENTS OF COMPREHENSIVE INCOMEfor the 12 months ended 31 March 2016

2016

17

GrOuP COMPanY

Restated Restated 31 March 31 March 30 June 31 March 31 March 2016 2015 2014 2016 2015 Note r’000 R’000 R’000 r’000 R’000

aSSeTSnon-current assetsProperty, plant and equipment 11 236 278 252 379 208 621 – –Intangible assets 12 66 433 149 060 175 326 – –Investments in subsidiaries 13 – – – 681 783 423 406Investments in associates and joint ventures 14 453 496 913 635 141 883 116 520 116 520Derivative financial instruments 23 34 380 29 890 – 34 380 29 890Deferred tax assets 25 98 400 103 157 70 069 – –Trade and other receivables 16 – – – 35 424 25 158

888 987 1 448 121 595 899 868 107 594 974

Current assetsInventories 15 800 082 930 543 665 107 – –Trade and other receivables 16 910 020 1 144 320 1 007 731 435 154 1 021 124Cash and cash equivalents 17 80 006 197 770 154 123 36 520 108 698Derivative financial instruments 23 249 44 223 8 910 –Current tax assets 6 300 3 880 7 988 1 988 –

1 796 657 2 276 557 1 835 172 482 572 1 129 822

assets of disposal group classified as held-for-sale 18 – 34 337 1 212 274 – –

Total assets 2 685 644 3 759 015 3 643 345 1 350 679 1 724 796

equITY anD LIabILITIeSequityCapital and reserves attributable

to equity holders of the companyShare capital 19 2 422 2 422 2 422 2 422 2 422Share premium 19 373 748 373 748 373 748 373 748 373 748Retained income 646 222 1 417 371 983 627 339 050 716 842Treasury shares (30 875) – (6 733) – –Share-based payment reserve 20 39 561 65 915 40 256 – –Hedging reserve 23 (737) – – – –Foreign currency translation reserve (6 267) (282) 2 413 – –Change in ownership reserve 21 (8 020) (8 378) (17 989) – –Retirement benefit obligation reserve 494 (233) (202) – –

Share capital and reserves 1 016 548 1 850 563 1 377 542 715 220 1 093 012 Non-controlling interests 21 39 664 33 974 35 756 – –

Total equity 1 056 212 1 884 537 1 413 298 715 220 1 093 012

LIabILITIeSnon-current liabilitiesBorrowings 22 75 859 65 471 447 090 31 924 6 509Derivative financial instruments 23 89 454 55 980 28 111 25 430 25 940Deferred profit 24 34 076 39 403 41 000 – –Deferred tax liability 25 22 185 17 969 22 804 2 548 737Retirement benefit obligation 26 5 100 6 035 5 820 – –Share-based payment liabilities 20 4 883 – – – –Operating lease liabilities 28 110 363 105 236 98 643 – –Trade and other payables 30 7 114 3 338 3 123 – –

349 034 293 432 646 591 59 902 33 186

Current liabilitiesTrade and other payables 30 890 581 1 037 780 974 319 29 811 31 697Borrowings 22 357 381 505 385 303 943 536 836 563 653Operating lease liabilities 28 2 776 1 754 – – –Derivative financial instruments 23 8 664 – 23 8 910 –Deferred profit 24 5 327 5 327 5 393 – –Current tax liabilities 7 728 12 463 2 872 – 3 248Share-based payment liabilities 20 7 941 – – – –

1 280 398 1 562 709 1 286 550 575 557 598 598

Liabilities directly associated with assets held-for-sale 18 – 18 337 296 906 – –

Total liabilities 1 629 432 1 874 478 2 230 047 635 459 631 784

Total equity and liabilities 2 685 644 3 759 015 3 643 345 1 350 679 1 724 796


CONSOLIDATED AND SEPARATESTATEMENTS OF FINANCIAL POSITIONas at 31 March 2016

2016

18

Attributable to owners of the parent

foreign Change retire-Share- currency in ment equity non-based trans- owner- benefit attribu- control-

Share Share Treasury payment hedging lation ship obligation retained table to lingcapital premium shares reserve reserve reserve reserve reserve earnings company interests Total

note r’000 r’000 r’000 r’000 r’000 r’000 r’000 r’000 r’000 r’000 r’000 r’000

balance at 1 July 2014 as reported 2 422 373 748 (6 733) 40 256 – 2 413 (17 989) (202) 1 093 315 1 487 230 35 756 1 522 986

restatements – – – – – – – – (109 688) (109 688) – (109 688)

restatement 1 – Operating lease liabilities

and deferred profit 44 – – – – – – – – (78 452) (78 452) – (78 452)

restatement 2 – written put 44 – – – – – – – – (31 236) (31 236) – (31 236)

balance at 1 July 2014 as restated 2 422 373 748 (6 733) 40 256 – 2 413 (17 989) (202) 983 627 1 377 542 35 756 1 413 298

Total comprehensive income for the period – – – – – (2 695) – (31) 479 120 476 394 377 476 771

Profit for the period – – – – – – – – 479 120 479 120 377 479 497

– Continuing operations – – – – – – – – 451 682 451 682 362 452 044

– Discontinued operations – – – – – – – – 27 438 27 438 15 27 453

Other comprehensive income for the period – – – – – (2 695) – (31) – (2 726) – (2 726)

Dividends paid – – – – – – – – (40 017) (40 017) – (40 017)

Total contributions by and distributions to

owners of the company recognised

directly in equity – – 6 733 25 659 – – 9 611 – (5 359) 36 644 (2 159) 34 485

Share-based payment – charge for the period – – – 30 592 – – – – 3 599 34 191 – 34 191

Share-based payment – vesting of options – – 14 717 (14 717) – – – – (8 958) (8 958) – (8 958)

Treasury shares acquired – – (7 984) – – – – – – (7 984) – (7 984)

Dividends paid to non-controlling interests – – – – – – – – – – (447) (447)

Transactions with non-controlling interests 21 – – – – – – (8 057) – – (8 057) (2 538) (10 595)

Business combinations 36 – – – – – – – – – – 727 727

Transfer from liabilities 20 – – – 9 560 – – – – – 9 560 – 9 560

Derecognition of subsidiary 20, 21 – – – 224 – – 17 172 – – 17 396 – 17 396

Derecognition of joint venture 21 – – – – – – 496 – – 496 – 496

Foreign currency translation reserve – – – – – – – – – – 99 99

balance at 31 March 2015 as restated 2 422 373 748 – 65 915 – (282) (8 378) (233) 1 417 371 1 850 563 33 974 1 884 537

balance at 1 april 2015 as reported 2 422 373 748 – 69 695 – (282) (8 378) (233) 1 533 177 1 970 149 33 974 2 004 123

restatements – – – (3 780) – – – – (115 806) (119 586) – (119 586)

restatement 1 to 3 – Prior year impact 44 – – – – – – – – (109 688) (109 688) – (109 688)

restatement 1 – Operating lease liabilities

and deferred profit 44 – – – – – – – – (3 976) (3 976) – (3 976)

restatement 2 – written put 44 – – – – – – – – (2 142) (2 142) – (2 142)

restatement 3 – acquisition vendor 44 – – – (3 780) – – – – – (3 780) – (3 780)

balance at 1 april 2015 as restated 2 422 373 748 – 65 915 – (282) (8 378) (233) 1 417 371 1 850 563 33 974 1 884 537

Total comprehensive income for the year – – – – (737) (5 985) – 727 (762 936) (768 931) 4 589 (764 342)

Profit for the year – – – – – – – – (762 936) (762 936) 5 004 (757 932)

Other comprehensive income for the year – – – – (737) (5 985) – 727 – (5 995) (415) (6 410)

Dividends paid – – – – – – – – (7 260) (7 260) – (7 260)


CONSOLIDATED STATEMENT OFCHANGES IN EQUITY – GROUPfor the 12 months ended 31 March 2016

2016

19

Share Share retained Total capital premium income Total equity r’000 r’000 r’000 r’000 r’000

balance at 1 July 2014 2 422 373 748 776 814 1 152 984 1 152 984

Total comprehensive income for the period – – (20 003) (20 003) (20 003)

Profit for the period – – (20 003) (20 003) (20 003)

Dividends – – (39 969) (39 969) (39 969)

balance at 31 March 2015 2 422 373 748 716 842 1 093 012 1 093 012

balance at 1 april 2015 2 422 373 748 716 842 1 093 012 1 093 012

Total comprehensive income for the year – – (377 792) (377 792) (377 792)

Profit for the year – – (377 792) (377 792) (377 792)

balance at 31 March 2016 2 422 373 748 339 050 715 220 715 220

Note 19 19


Attributable to owners of the parent

foreign Change retire-Share- currency in ment equity non-based trans- owner- benefit attribu- control-

Share Share Treasury payment hedging lation ship obligation retained table to lingcapital premium shares reserve reserve reserve reserve reserve earnings company interests Total

note r’000 r’000 r’000 r’000 r’000 r’000 r’000 r’000 r’000 r’000 r’000 r’000

Total contributions by and distributions to

owners of the company recognised

directly in equity – – (30 875) (26 354) – – 358 – (953) (57 824) 686 (56 723)

Share-based payment – charge for the year – – – 27 – – – – (953) (926) – (926)

Treasury shares acquired – – (30 875) – – – – – – (30 875) – (30 875)

Transfer to liability 20 – – – (26 381) – – – – – (26 381) – (26 381)

Transactions with non-controlling interests 21 – – – – – – 358 – – 358 (823) (465)

Business combinations 36 – – – – – – – – – – 1 924 1 924

balance at 31 March 2016 2 422 373 748 (30 875) 39 561 (737) (6 267) (8 020) 494 646 222 1 016 548 39 664 1 056 212

Note 19 19 20 23 21 21


CONSOLIDATED STATEMENT OFCHANGES IN EQUITY – COMPANYfor the 12 months ended 31 March 2016

CONSOLIDATED STATEMENT OFCHANGES IN EQUITY – GROUP continued


2016

20

GrOuP COMPanY


Cash flows from operating activitiesCash generated from operations 31 74 306 (240 910) 1 725 (4 755)Finance income received 3 460 11 839 50 694 61 514Finance expense paid (41 318) (52 403) (37 250) (34 549)Income tax paid 32 (20 950) (18 453) (7 766) (3 772)Dividends received – – – 583 044

net cash generated from/(utilised in) operating activities 15 498 (299 927) 7 403 601 482

Cash flows from investing activitiesAdditions to property, plant and equipment 33 (41 534) (46 414) – –Additions and development of intangible assets 35 (3 847) (29 200) – –Finance lease receipts – – 12 276 –Proceeds on disposals of property, plant and

equipment 34 6 245 14 182 – –Acquisition of businesses through business

combinations 36 (7 003) (43 642) – –Acquisition of interest in associates 14 – (20 982) – –Acquisition of further interest in subsidiary 13 – – (831 345) (443 222)Loan proceeds from subsidiaries – – 745 800 –Loan advances granted to joint ventures and

associates – (64 204) – (24 500)Loan proceeds from joint ventures and associates 119 487 – 111 934 –Proceeds on derecognition of investment in

Grohe DAWN Watertech – 880 000 – 296 956Disposal of held-for-sale asset 18 16 000 – – –Dividends received from associates/joint ventures 14 567 – – –

net cash generated by/(utilised in) investing activities 89 915 689 740 38 665 (170 766)

Cash flows from financing activitiesProceeds from borrowings 209 178 235 852 198 770 2 738 263Repayment of borrowings (179 129) (726 051) (150 893) (3 170 346)Instalment sale payments (15 342) (24 865) – –Finance lease payments (12 525) (9 733) (16 120) (45)Treasury shares acquired (30 875) (7 984) – –Acquisition of non-controlling interest 21 (465) (12 168) – –Dividends paid to non-controlling interest holders (7 260) (447) – –Dividends paid – (40 017) – (39 970)

net cash (utilised in)/generated by financing activities (36 418) (585 413) 31 757 (472 098)

Total cash movement for the year 68 995 (195 600) 77 825 (41 382)Translation effects on foreign cash and cash

equivalents balances (531) (518) – –Cash and cash equivalents of held-for-sale group

derecognised – (4 282) – –Cash and cash equivalents of disposal group held-for-sale

at end of the year – 80 063 – –Cash and cash equivalents at beginning

of the year 1 428 121 765 (41 302) 80

Cash and cash equivalents at end of the year 17 69 892 1 428 36 523 (41 302)


STATEMENTS OFCASH FLOWSfor the 12 months ended 31 March 2016

2016

21

1. SuMMarY Of SIGnIfICanT aCCOunTInG POLICIeS

The principal accounting policies adopted in the preparation of these consolidated financial statements are set outbelow. These policies have been consistently applied to all the years presented, unless otherwise stated.

1.1 basis of preparation

The consolidated financial statements have been prepared in accordance with International Financial ReportingStandards (IFRS) and the requirements of the South African Companies Act, as amended. These consolidatedfinancial statements have been prepared under the historical cost convention as modified by the revaluation offinancial assets and financial liabilities at fair value through profit or loss.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accountingestimates. It also requires management to exercise its judgement in the process of applying the group’s accountingpolicies. The areas involving a higher degree of judgement or complexity, or areas where assumptions andestimates are significant to the consolidated financial statements are disclosed in note 1.25 to the accountingpolicies.

Going concern

The group’s forecasts and projections, taking account of reasonably possible changes in trading performance, showthat the group should be able to operate within the level of its current financing. After making enquiries, thedirectors have a reasonable expectation that the group has adequate resources to continue in operationalexistence for the foreseeable future.

The group therefore continues to adopt the going concern basis in preparing its consolidated financial statements.

Accounting policy developments

Accounting policy developments include new standards issued, amendments to standards, and interpretationsissued on current standards. These developments resulted in the first time adoption of new and revised Standardswhich require additional disclosures.

Standards, amendments and interpretations effective in 2016

Amendment to IAS 19 – Employee benefits

These narrow scope amendments apply to contributions from employees or third parties to defined benefit plans.The objective of the amendments is to simplify the accounting for contributions that are independent of thenumber of years of employee service, for example, employee contributions that are calculated according to a fixedpercentage of salary.

The amendments had no impact on the group.

Standards and amendments issued but not effective

The group has evaluated the effect of all new standards, amendments and interpretations that have been issuedbut which are not yet effective. Based on the evaluation, management does not expect these standards,amendments and interpretations to have a significant impact on the group’s results and disclosures. The expectedimplications of applicable standards, amendments and interpretations are dealt with below.

NOTES TO THEANNUAL FINANCIAL STATEMENTSfor the 12 months ended 31 March 2016

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Amendments to IFRS 10 – Consolidated financial statements and IAS 28 – Investments in associates and joint ventures

The changes introduced by the IASB in 2014 through narrow-scope amendments to IFRS 10 ‘Consolidated FinancialStatements’ and IAS 28 ‘Investments in Associates and Joint Ventures’ have been postponed. Those changes affecthow an entity should determine any gain or loss it recognises when assets are sold or contributed between theentity and an associate or joint venture in which it invests. The changes do not affect other aspects of how entitiesaccount for their investments in associates and joint ventures.

The reason for making the decision to postpone the effective date is that the IASB is planning a broader review thatmay result in the simplification of accounting for such transactions and of other aspects of accounting forassociates and joint ventures.

Effective date has been postponed. The proposed amendments are not expected to have an impact on the group.

Amendments to IFRS 10 – Consolidated financial statements and IAS 28 – Investments in associates and joint ventures

The amendments clarify the application of the consolidation exception for investment entities and theirsubsidiaries.

Effective for annual periods beginning on or after 1 January 2016. The proposed amendment is not expected tohave an impact on the group.

Amendment to IFRS 11 – Joint arrangements

This amendment adds new guidance on how to account for the acquisition of an interest in a joint operation thatconstitutes a business. The amendments specify the appropriate accounting treatment for such acquisitions.


IFRS 14 – Regulatory deferral accounts

The IASB has issued IFRS 14, ‘Regulatory deferral accounts’ specific to first-time adopters (‘IFRS 14’), an interimstandard on the accounting for certain balances that arise from rate-regulated activities (‘regulatory deferralaccounts’).

Rate regulation is a framework where the price that an entity charges to its customers for goods and services issubject to oversight and/or approval by an authorised body.

Effective for annual periods beginning on or after 1 January 2016. The proposed new standard is not expected tohave an impact on the group.

Amendments to IAS 1 – Presentation of financial statements

In December 2014 the IASB issued amendments to clarify guidance in IAS 1 on materiality and aggregation, thepresentation of subtotals, the structure of financial statements and the disclosure of accounting policies.

Effective for annual periods beginning on or after 1 January 2016. Management is currently considering the effectof the changes. No significant impact is expected.

Amendment to IAS 16 – Property, plant and equipment and IAS 38 – Intangible assets

In this amendment the IASB has clarified that the use of revenue based methods to calculate the depreciation of anasset is not appropriate because revenue generated by an activity that includes the use of an asset generallyreflects factors other than the consumption of the economic benefits embodied in the asset. The IASB has alsoclarified that revenue is generally presumed to be an inappropriate basis for measuring the consumption of theeconomic benefits embodied in an intangible asset.

Effective for annual periods beginning on or after 1 January 2016. The amendments currently have no impact onthe group.


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Amendments to IAS 16 – Property, plant and equipment and IAS 41 – Agriculture

In this amendment to IAS 16 the IASB has scoped in bearer plants, but not the produce on bearer plants andexplained that a bearer plant not yet in the location and condition necessary to bear produce is treated as a self-constructed asset. In this amendment to IAS 41, the IASB has adjusted the definition of a bearer plant to includeexamples of non-bearer plants and remove current examples of bearer plants from IAS 41.

Effective for annual periods beginning on or after 1 January 2016. The proposed amendments are not expected tohave an impact on the group.

Amendments to IAS 27 – Separate financial statements

In this amendment the IASB has restored the option to use the equity method to account for investments insubsidiaries, joint ventures and associates in an entity’s separate financial statements.


Amendments to IAS 12 – Income taxes

The amendments were issued to clarify the requirements for recognising deferred tax assets on unrealised losses.The amendments clarify the accounting for deferred tax where an asset is measured at fair value and that fair valueis below the asset’s tax base. They also clarify certain other aspects of accounting for deferred tax assets.

The amendments clarify the existing guidance under IAS 12. They do not change the underlying principles for therecognition of deferred tax assets.

Effective for annual periods beginning on or after 1 January 2017. The proposed amendments are not expected tohave an impact on the group.

Amendment to IAS 7 – Cash flow statements

In January 2016, the International Accounting Standards Board (IASB) issued an amendment to IAS 7 introducing anadditional disclosure that will enable users of financial statements to evaluate changes in liabilities arising fromfinancing activities.

The amendment responds to requests from investors for information that helps them better understand changes inan entity’s debt. The amendment will affect every entity preparing IFRS financial statements. However, theinformation required should be readily available. Preparers should consider how best to present the additionalinformation to explain the changes in liabilities arising from financing activities.

Effective for annual periods beginning on or after 1 January 2017. Management is currently considering the effectof the standard. No significant impact is expected.

IFRS 15 – Revenue from contracts with customers

The FASB and IASB issued their long awaited converged standard on revenue recognition on 29 May 2014. It is asingle, comprehensive revenue recognition model for all contracts with customers to achieve greater consistency inthe recognition and presentation of revenue. Revenue is recognised based on the satisfaction of performanceobligations, which occurs when control of goods or services transfers to a customer.


IFRS 9 – Financial Instruments (2009 and 2010) – Financial liabilities, Derecognition of financial instruments, Financialassets, General hedge accounting

This IFRS is part of the IASB’s project to replace IAS 39. IFRS 9 addresses classification and measurement of financialassets and replaces the multiple classification and measurement models in IAS 39 with a single model that has onlytwo classification categories: amortised cost and fair value.


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The IASB has updated IFRS 9, ‘Financial instruments’ to include guidance on financial liabilities and derecognition offinancial instruments. The accounting and presentation for financial liabilities and for derecognising financialinstruments has been relocated from IAS 39, ‘Financial instruments: Recognition and measurement’, withoutchange, except for financial liabilities that are designated at fair value through profit or loss.


Amendment to IFRS 9 – 'Financial instruments', on general hedge accounting

The IASB has amended IFRS 9 to align hedge accounting more closely with an entity’s risk management. Therevised standard also establishes a more principles-based approach to hedge accounting and addressesinconsistencies and weaknesses in the current model in IAS 39.

Early adoption of the above requirements has specific transitional rules that need to be followed. Entities can electto apply IFRS 9 for any of the following:

• The own credit risk requirements for financial liabilities.

• Classification and measurement (C&M) requirements for financial assets.

• C&M requirements for financial assets and financial liabilities.

• The full current version of IFRS 9 (that is, C&M requirements for financial assets and financial liabilities andhedge accounting).

The transitional provisions described above are likely to change once the IASB completes all phases of IFRS 9.

Effective for annual periods beginning on or after 1 January 2018. The amendment currently has no impact on thegroup.

IFRS 16 – Leases

After ten years of joint drafting by the IASB and FASB they decided that lessees should be required to recogniseassets and liabilities arising from all leases (with limited exceptions) on the statement of financial position. Lessoraccounting has not substantially changed in the new standard.

The model reflects that, at the start of a lease, the lessee obtains the right to use an asset for a period of time andhas an obligation to pay for that right. In response to concerns expressed about the cost and complexity to applythe requirements to large volumes of small assets, the IASB decided not to require a lessee to recognise assets andliabilities for short-term leases (less than 12 months), and leases for which the underlying asset is of low value (suchas laptops and office furniture).

A lessee measures lease liabilities at the present value of future lease payments. A lessee measures lease assets,initially at the same amount as lease liabilities, and also includes costs directly related to entering into the lease.Lease assets are amortised in a similar way to other assets such as property, plant and equipment. This approachwill result in a more faithful representation of a lessee’s assets and liabilities and, together with enhanceddisclosures, will provide greater transparency of a lessee’s financial leverage and capital employed.

One of the implications of the new standard is that there will be a change to key financial ratios derived from alessee’s assets and liabilities (for example, leverage and performance ratios).

IFRS 16 supersedes IAS 17, ‘Leases’, IFRIC 4, ‘Determining whether an Arrangement contains a Lease’, SIC 15,‘Operating Leases – Incentives’ and SIC 27, ‘Evaluating the Substance of Transactions Involving the Legal Form of aLease’.

Effective for annual periods beginning on or after 1 January 2019. Management is currently considering the effectof the standard.


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Annual improvement project

Improvements to IFRSs were issued in December 2013 by the IASB as part the ‘annual improvements process’resulting in the following amendments to standards issued and effective for the first time for 31 March 2016 year-ends:

The following standards have been affected by the project:

• IFRS 8 – Operating segments

• IFRS 13 – Fair value measurement

• IAS 16 – Property, plant and equipment

• IAS 38 – Intangible assets

• IAS 24 – Related party disclosures

The amendments have been adopted by the group.

The IASB published the final standard for the 2011 – 2013 cycle of the annual improvements with amendments thataffected four standards issued and effective for the first time for 31 March 2016 year-ends:


• IFRS 1 – First-time adoption of International Financial Reporting Standards

• IFRS 13 – Fair value measurement

• IAS 40 – Investment property

• IFRS 3 – Business combinations

The amendments have been adopted by the group.

In September 2014, the IASB issued annual improvements to IFRSs 2012 – 2014 Cycle, which contains fiveamendments to four standards, excluding consequential amendments. The amendments are effective for annualperiods beginning on or after 1 January 2016.


• IFRS 5 – Non-current Assets Held-for-Sale and Discontinued Operations

• IFRS 7 – Financial Instruments; Disclosures

• IFRS 7 – Financial Instruments; Disclosures

• IAS 19 – Employee Benefits

• IAS 34 – Interim Financial Reporting

The amendments are effective for annual periods beginning on or after 1 January 2016. Management is currentlyconsidering whether any of these changes have an effect on the group.

1.2 Consolidation

Subsidiaries

Subsidiaries are all entities (including structured entities) over which the group has control. The group controls anentity when the group is exposed to, or has rights to, variable returns from its involvement with the entity and hasthe ability to effect those returns through its power over the entity. The existence and effect of potential votingrights that are currently exercisable or convertible are considered when assessing whether the group controlsanother entity.

Investments in subsidiaries are carried at cost in the separate financial statements of the parent company.

Subsidiaries are fully consolidated from the date on which control is transferred to the group and are no longerconsolidated from the date that control ceases.


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The acquisition method of accounting is used to account for the acquisition of subsidiaries by the group. Theconsideration transferred for the acquisition of a business is measured as the fair value of the assets transferred,equity instruments issued and liabilities incurred or assumed at the date of the exchange. The considerationtransferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement.Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingentliabilities assumed in a business combination are measured initially at their fair values at the acquisition date. On anacquisition-by-acquisition basis, the group recognises any noncontrolling interest in the acquiree either at fair valueor at the non-controlling interest's proportionate share of the acquiree's net assets. Subsequently, the carryingamount of non-controlling interest is the amount of the interest at initial recognition plus the non-controllinginterest's share of the subsequent changes in equity. Total comprehensive income is attributed to non-controllinginterest even if it results in the non-controlling interest having a deficit balance.

Investments in subsidiaries are accounted for at cost less impairment. Cost is adjusted to reflect changes inconsideration arising from contingent consideration amendments. Costs also include direct attributable costs ofinvestments.

The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and theacquisition date fair value of any previous equity interest in the acquiree over the fair value of identifiable net assetsacquired is recorded as goodwill. If this is less than the fair value of the net assets of the subsidiary acquired in thecase of a bargain purchase, the difference is recognised directly in the statement of comprehensive income.

Intercompany transactions, balances and unrealised gains on transactions between group companies areeliminated on consolidation.

Accounting policies of subsidiaries have been changed, where necessary, to ensure consistency with the policiesadopted by the group.

Refer to pages 127 and 128 for a list of the subsidiaries.

Transactions with non-controlling interests

The group treats transactions with non-controlling interests, that do not result in a loss of control, as transactionswith equity owners of the group. For purchases from non-controlling interests, the difference between anyconsideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recordedin equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.

When the group ceases to have control or significant influence, any retained interest in the entity is remeasured toits fair value, with the change in carrying amount recognised in profit or loss. The fair value is the initial carryingamount for the purposes of subsequently accounting for the retained interest as an associate, joint venture orfinancial asset. In addition, any amounts previously recognised in other comprehensive income in respect of thatentity are accounted for as if the group had directly disposed of the related assets or liabilities.

This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.

If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate shareof the amounts previously recognised in other comprehensive income are reclassified to profit or loss whereappropriate.

Associates

Associates are all entities over which the group has significant influence, but not control, generally accompanying ashareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for using theequity method of accounting and are initially recognised at cost. The group’s investment in associates includesintangible assets (net of any accumulated impairment loss) identified on acquisition (note 14).

The group’s share of its associates’ post-acquisition profits or losses is recognised in the income statement, and its


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share of post-acquisition movements in other comprehensive income is recognised in other comprehensiveincome. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment.When the group’s share of losses in an associate equals or exceeds its interest in the associate, including any otherunsecured receivables, the group does not recognise further losses, unless it has incurred obligations or madepayments on behalf of the associate.

Unrealised gains on transactions between the group and its associates are eliminated to the extent of the group’sinterest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of animpairment of the asset transferred.

Accounting policies of associates have been changed, where necessary, to ensure consistency with the policiesadopted by the group.

Dilution gains and losses arising in investments in associates are recognised in the income statement.

Refer to page 128 for a list of the associates.

Joint arrangements

The group has applied IFRS 11 to all joint arrangements as of 1 July 2013. Under IFRS 11 investments in jointarrangements are classified as either joint operations or joint ventures depending on the contractual rights andobligations of each investment. The group has assessed the nature of its joint arrangements and determined themto be joint ventures. A joint venture is a type of joint arrangement whereby the parties that have joint control of thearrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed sharing ofcontrol of an arrangement, which exists only when decisions about the relevant activities require unanimousconsent of the parties sharing control. The group’s interest in jointly controlled entities is accounted for by applyingthe equity method. In applying the equity method, account is taken of the group's share of accumulated retainedearnings and movements in reserves from the effective dates on which the companies became joint ventures andup to the effective dates of disposal. The group does not recognise its share of profits or losses from the jointventure that result from the group’s purchase of assets from the joint venture until it resells the assets to anindependent party. However, a loss on the transaction is recognised immediately if the loss provides evidence of areduction in the net realisable value of the current assets, or an impairment loss.

Under the equity method, the investment in joint ventures is initially recognised in the statement of financialposition at cost. Subsequent to acquisition date the carrying amount of the investment is adjusted with changes inthe group’s share of net assets of the joint venture. Goodwill relating to the joint venture is included in the carryingamount of the investment and is not amortised or separately tested for impairment. The share of the results ofoperations of joint ventures is reflected in profit or loss. This is the profit or loss attributable to equity holders ofjoint ventures and is therefore profit after tax and non-controlling interests in the subsidiaries of joint ventures.Accounting policies of joint ventures have been changed, where necessary, to ensure consistency with the policiesadopted by the group. After application of the equity method, the group determines whether it is necessary torecognise an impairment loss on the group’s investments in joint ventures. The group determines at each reportingdate whether there is any objective evidence that the investments in joint ventures are impaired. If this is the casethe group calculates the amount of impairment as the difference between the recoverable amount of jointventures and its carrying value and recognises the amount in profit or loss.

Upon loss of joint control over the joint venture, the group measures and recognises any remaining investment atits fair value. Any difference between the carrying amount of the joint venture upon loss of joint control and the fairvalue of the retained investment and proceeds from disposal, is recognised in profit or loss.

Refer to page 128 for a list of the joint ventures.


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Common control transactions

Where applicable, common control transactions are accounted for on a predecessor accounting basis.

1.3 black economic empowerment (bee)

Shares were issued to Ukhamba at par value during December 2004. These shares vested upon issuance. The groupelected to apply the exemption available in IFRS 1 to share-based payment transactions. The BEE transaction withUkhamba was therefore not subject to the provisions of IFRS 2 as the rights to the shares were granted and vestedprior to 1 January 2005.

1.4 Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chiefoperating decision-maker, who is responsible for allocating resources, assessing performance of the operatingsegments and making strategic decisions. The chief operating decision-maker has been identified as the executivecommittee.

1.5 foreign currency translation

Functional and presentation currency

Items included in the financial statements of each of the group’s entities are measured using the currency of theprimary economic environment in which the entity operates (‘the functional currency’). The consolidated financialstatements are presented in Rands, which is the company’s functional and presentation currency.

Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at thedates of the transactions. Foreign currency balances are translated into the functional currency using the exchangerates prevailing at the statement of financial position date. Foreign exchange gains and losses resulting from thesettlement of such transactions and from the translation at year-end exchange rates of monetary assets andliabilities denominated in foreign currencies are recognised in the income statement, except when deferred inother comprehensive income as qualifying cash flow hedges and qualifying net investment hedges.

Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in theincome statement within ‘finance income or cost’. All other foreign exchange gains and losses are presented in theincome statement within ‘other (losses)/gains – net’.

Changes in the fair value of monetary securities denominated in foreign currency classified as available for sale areanalysed between translation differences resulting from changes in the amortised cost of the security and otherchanges in the carrying amount of the security. Translation differences related to changes in amortised cost arerecognised in profit or loss, and other changes in carrying amount are recognised in other comprehensive income.

Translation differences on non-monetary financial assets and liabilities such as equities held at fair value throughprofit or loss are recognised in profit or loss as part of the fair value gain or loss. Translation differences on non-monetary financial assets, such as equities classified as available for sale, are included in other comprehensiveincome.

Group companies

The results and financial position of all the group entities (none of which has the currency of a hyperinflationaryeconomy) that have a functional currency different from the presentation currency are translated into thepresentation currency as follows:

• assets and liabilities for each statement of financial position presented are translated at the closing rate at thedate of that statement of financial position;

• income and expenses for each income statement are translated at average exchange rates (unless this averageis not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, inwhich case income and expenses are translated at the dates of the transactions); and

• all resulting exchange differences are recognised as a separate component of equity.


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On consolidation, exchange differences arising from the translation of the net investment in foreign operations aretaken to other comprehensive income. If a foreign entity were to be sold, such exchange differences would berecognised in the income statement as part of the gain or loss on sale.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilitiesof the foreign entity and are translated at the closing rate.

1.6 Property, plant and equipment

Property, plant and equipment are tangible assets held by the group for use in supply of goods or foradministrative purposes and are expected to be used during more than one period.

Land and buildings comprise mainly of factories and offices. Land and buildings are shown at historical cost lessdepreciation for buildings and impairments. Property, plant and equipment are stated at historical cost lessdepreciation and impairment. Historical cost includes expenditure that is directly attributable to the acquisition ofthe items.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, onlywhen it is probable that future economic benefits associated with the item will flow to the group and the cost ofthe item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs andmaintenance are charged to the income statement during the financial period in which they are incurred.

Land is not depreciated. Depreciation on other assets is calculated using the straight-line method to allocate theircost to their residual values over their estimated useful lives, as follows:

Item estimated useful life Buildings 10 to 25 years Plant and machinery 10 to 25 years Furniture and fixtures 3 to 5 years Motor vehicles – delivery 6 years; 20% residual – other 5 years

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each statement of financialposition date.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount isgreater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with carrying amounts and are recognised inthe income statement.

1.7 Intangible assets

Goodwill

Goodwill arises on the acquisition of subsidiaries, associates and joint ventures and represents the excess of theconsideration transferred over the group’s interest in net fair value of the net identifiable assets, liabilities andcontingent liabilities of the acquiree and the fair value of the non-controlling interest in the acquiree.

Goodwill on acquisition of subsidiaries is included in ‘intangible assets’.

Goodwill is tested annually for impairment and is carried at cost less accumulated impairment losses. Anyimpairment is recognised immediately in profit or loss, in the income statement, and is not subsequently reversed.Gains and losses on the disposal of an entity include the carrying amount of goodwill allocated to the entity sold.

Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made tothose cash-generating units or groups of cash-generating units that are expected to benefit from the businesscombination in which the goodwill arose, identified according to operating segment.

Trademarks, brand names and customer relationships

Trademarks, brand names and customer relationships are recognised at fair value of the intangible assets acquiredin business combinations. Certain trademarks and brand names have been assessed by management as indefiniteuseful life intangible assets.


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These indefinite life intangible assets are tested for impairment annually. Separately acquired trademarks andlicenses are shown at historical cost.

Software costs associated with maintaining computer software programmes are recognised as an expense asincurred.

Development costs that are directly attributable to the design and testing of identifiable and unique softwareproducts controlled by the group are recognised as intangible assets when the following criteria are met:

• it is technically feasible to complete the software product so that it will be available for use;

• management intends to complete the software product and use it or sell it;

• there is an ability to use or sell the software product;

• it can be demonstrated how the software product will generate probable future economic benefits;

• adequate technical, financial and other resources to complete the development and to use or sell the softwareproduct are available; and

• the expenditure attributable to the software product during its development can be reliably measured.

Directly attributable costs that are capitalised as part of the software product include the software developmentemployee costs and an appropriate portion of relevant overheads. Other development expenditures that do notmeet these criteria are recognised as an expense as incurred. Development costs previously recognised as anexpense are not recognised as an asset in a subsequent period.

Amortisation and useful lives

Amortisation is calculated using the straight-line method to allocate the cost of intangible assets over theirestimated useful lives. The useful lives of trademarks, brand names, customer relationships and software areassessed annually. The trademarks and brand names have estimated useful lives of between five and ten years andthe customer relationships' useful lives have been estimated between five and ten years. The software has anestimated useful life of between five and twelve years.

The useful lives of the above assets are reviewed at each reporting period to determine whether events andcircumstances continue to support an indefinite useful life assessment for that asset. If they do not, the change inthe useful life assessment from indefinite to finite will be accounted for as a change in an accounting estimate.Subsequently impairment reviews are undertaken annually or more frequently if events or changes incircumstances indicate a potential impairment (for indefinite life trademarks). Information used in post-tax discountrates are sourced from independent sources and calculated for each cash-generating unit based on current marketinformation and specific cash-generating unit risk.

Impairment of non-financial assets

Assets that have indefinite useful lives or intangible assets that are still in development are not subject toamortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed forimpairment whenever events or changes in circumstances indicate that the carrying amount may not berecoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds itsrecoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use.For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separatelyidentifiable cash flows (cash-generating units). The identified cash-generating units are not bigger than theidentified operating segments. Non-financial assets other than goodwill that could suffer potential impairment arereviewed for possible reversal of the impairment at each reporting date.

For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of thecash-generating units, or groups of cash-generating units, that is expected to benefit from the synergies of thecombination. Each unit or group of units to which the goodwill is allocated represents the lowest level within theentity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at theoperating segment level. Goodwill impairment reviews are undertaken annually or more frequently if events orchanges in circumstances indicate a potential impairment. The carrying value of goodwill is compared to therecoverable amount, which is the higher of value in use and the fair value less costs to sell. Any impairment isrecognised immediately as an expense and is not subsequently reversed.


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1.8 Government grants

Grants from the government are recognised as a receivable at their fair value when there is reasonable assurancethat the grant will be received and the group will comply with all the conditions attached to the grant.

Government grants relating to assets are deducted against the carrying amount of the assets.

1.9 Offsetting financial instruments

Financial assets and liabilities are offset and the net amount reported in the statement of financial position whenthere is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a netbasis or realise the asset and settle the liability simultaneously.

1.10 Impairment of financial assets

Assets carried at amortised cost

The group assesses at the end of each reporting period whether there is objective evidence that a financial asset orgroup of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairmentlosses are incurred only if there is objective evidence of impairment as a result of one or more events that occurredafter the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on theestimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

The criteria that the group uses to determine that there is objective evidence of an impairment loss include:

• significant financial difficulty of the issuer or obligor;

• a breach of contract, such as a default or delinquency in interest or principal payments;

• the group, for economic or legal reasons relating to the borrower’s financial difficulty, granting to theborrower a concession that the lender would not otherwise consider; and

• it becomes probable that the borrower will enter bankruptcy or other financial reorganisation.

The group first assesses whether objective evidence of impairment exists.

For loans and receivables category, the amount of the loss is measured as the difference between the asset’scarrying amount and the present value of estimated future cash flows (excluding future credit losses that have notbeen incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset isreduced and the amount of the loss is recognised in the consolidated income statement. If a loan has a variableinterest rate, the discount rate for measuring any impairment loss is the current effective interest rate determinedunder the contract.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectivelyto an event occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating),the reversal of the previously recognised impairment loss is recognised in the consolidated income statement.

1.11 financial instruments

Classification

The group classifies financial assets and financial liabilities into the following categories:

• Financial assets and liabilities at fair value through profit or loss

• Loans and receivables

Classification depends on the purpose for which the financial instruments were obtained / incurred and takes placeat initial recognition.

Classification is re-assessed on an annual basis, except for derivatives and financial assets designated as at fair valuethrough profit or loss, which shall not be classified out of the fair value through profit or loss category.


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Financial assets and liabilities at fair value through profit or loss

Financial assets and liabilities at fair value through profit and loss are financial assets and liabilities held for trading.These financial assets and liabilities are classified in this category if acquired principally for the purpose of selling orsettling in the short term. Derivatives are also classified as held for trading unless they are designated as hedges.Assets and liabilities in this category are classified as current assets and liabilities if they are expected to be settledwithin 12 months, otherwise they are classified as non-current.

Derivative financial instruments

Derivatives are initially recognised at fair value on the date a derivative contract is entered into and aresubsequently re-measured at their fair value. The method of recognising the resulting gain or loss depends onwhether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. Thegroup designates certain derivatives as either:

• hedges of the fair value of recognised assets or liabilities or a firm commitment (fair value hedge); or

• hedges of a particular risk associated with a recognised asset or liability or a highly probable forecasttransaction (cash flow hedge).

The group documents at the inception of the transaction the relationship between hedging instruments and thehedged items, as well as its risk management objectives and strategy for undertaking various hedging transactions.The group documents its assessments, both at hedge inception and on an ongoing basis, of whether thederivatives that are used in hedging transactions are highly effective in offsetting changes in fair value or cash flowsof hedged items.

The fair value of various derivative instruments used for hedging purposes is disclosed in note 23.

The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining hedgeditem is more than 12 months, and as a current asset or liability when the remaining maturity of the hedged item isless than 12 months. Trading derivatives are classified as a current asset or liability.

Cash flow hedge

The effective portion of changes in fair value of derivative financial instruments that are designated and qualify ascash flow hedges are recognised in other comprehensive income and are presented within equity in the hedgereserve. The cumulative gain or loss in the hedge reserve is recognised in the consolidated income statement in theperiods when the hedged item will affect the profit or loss (i.e. when the underlying income or expense isrecognised). Where the hedged item is of a capital nature, the cumulative gain or loss recognised in the hedgereserve is transferred to the carrying amount of the asset when the asset is recognised.

When a hedging instrument expires or is sold, or when the group revokes the designation of the hedge relationshipbut the hedged forecast transaction is still expected to occur, the cumulative gain or loss at that point remains inthe hedge reserve and is recognised in accordance with the above policy when the transaction occurs. If theunderlying hedged transaction is no longer expected to take place, the cumulative unrealised gain or lossrecognised in the hedge reserve with respect to the hedging instrument is recognised immediately in the incomestatement.

From time to time certain derivative financial instruments do not qualify for hedge accounting, notwithstandingthat the derivatives are held to hedged identified exposures. Any changes in the fair value of a derivativeinstrument, or part of a derivative instrument that do not qualify for hedge accounting are classified as 'ineffective'and recognised immediately in the income statement.

Fair value hedge – Foreign Exchange Contracts

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in theincome statement, together with any changes in the fair value of the hedged asset or liability that are attributed tothe hedged risk.


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Trade and other receivables

Trade receivables

Trade Receivables are amounts due from customers for merchandise sold or services rendered in the ordinarycourse of business. If collection is expected within one year (or in the normal operating cycle is longer), they areclassified as current assets. If not, they are presented as non-current assets. Trade and other receivables arerecognised initially at fair value and subsequently measured at amortised cost using the effective interest method,less provision for impairment. A provision for impairment of trade receivables is established when there is objectiveevidence that the group will not be able to collect all amounts due according to the original terms of receivables.Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financialreorganisation, and default or delinquency in payments are considered indicators that the trade receivable isimpaired. The amount of the provision is the difference between the asset’s carrying amount and the recoverableamount. The amount of the provision is recognised in the income statement within other ‘operating expenses’. Ifcollection is expected in one year or less, they are classified as current assets. If not, they are presented as non-current assets.

Other receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quotedin an active market.

They are included in current assets, except for maturities greater than 12 months after the end of the reportingperiod. These are classified as non-current assets. The group's loans and receivables comprise loans to groupcompanies which are recognised initially at fair value plus transaction costs and subsequently measured atamortised cost.

Cash and cash equivalents

Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquidinvestments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown withinborrowings in current liabilities on the statement of financial position.

Cash and bank overdraft balances per the bank statement at the reporting date are reflected as the cash andoverdraft balance.

Trade and other payables

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course ofbusiness from suppliers.

Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they arepresented as non-current liabilities.

Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost usingthe effective interest rate method.

Loans to/(from) group companies

These include loans to and from holding companies, fellow subsidiaries, subsidiaries, joint ventures and associatesand are recognised initially at fair value plus direct transaction costs.

Loans to group companies are classified as loans and receivables.

Loans from group companies are classified as financial liabilities measured at amortised cost.

1.12 Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is predominantly determined on aweighted average cost basis.

However for the manufacturing entities mainly standard costing is used which is evaluated against the first-in first-out (FIFO) method, the trading entities mainly use the weighted average method. The cost of finished goods and


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work-in-progress comprises raw materials, direct labour, transport and handling costs, other direct costs andrelated production overheads (based on normal operating capacity) and excludes borrowing costs.

Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable sellingexpenses.

1.13 Disposal groups held-for-sale

Disposal groups are classified as assets and liabilities held for sale when their carrying amount is to be recoveredprincipally through a sale transaction and a sale is considered to be highly probable. They are stated at the lower ofthe carrying amount and fair value less cost to sell.

In respect of the elimination of intercompany balances and intercompany transactions, the group elected to viewthe situation post-disposal. The group determined whether the arrangements between the continuing anddiscontinuing operations will continue subsequent to the disposal. If the arrangement is expected to continue, itrecorded the sales and costs in continuing operations and, therefore, recorded the elimination entries indiscontinued operations. This would give an indication of the results of the continuing business on an ongoingbasis. The results of the discontinued operation would include only those revenues and costs that will beeliminated from the group on disposal.

1.14 Share capital

Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax,from the proceeds.

1.15 Treasury shares

Shares in the company held by wholly-owned subsidiaries, are classified as treasury shares and are held at cost onconsolidation. These shares are disclosed as a deduction from the issued and weighted average number of sharesand the cost price of these shares is deducted from the group’s equity.

Dividends received on treasury shares are eliminated on consolidation.

1.16 borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequentlystated at amortised cost and any difference between the proceeds (net of transaction costs) and the redemptionvalue is recognised in the income statement over the period of the borrowings using the effective interest method.

Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of theliability for at least twelve months after the statement of financial position date.

1.17 Tax

Current income tax

The tax expense for the period comprises current and deferred tax. Tax is recognised in the income statement,except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In thiscase, the tax is also recognised in other comprehensive income or directly in equity, respectively.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at thestatement of financial position date in the countries where the company and its subsidiaries operate and generatetaxable income. Management periodically evaluates positions taken in tax returns with respect to situations inwhich applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basisof amounts expected to be paid to the tax authorities.

Deferred tax assets and liabilities

Deferred income tax is recognised, using the liability method, on temporary differences arising between the taxbases of assets and liabilities and their carrying amounts in the consolidated financial statements. However,deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill; deferred income tax isnot accounted for if it arises from initial recognition of an asset or liability in a transaction other than a businesscombination that at the time of the transaction affects neither accounting nor taxable profit or loss.


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Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted bythe reporting date and are expected to apply when the related deferred income tax asset is realised or the deferredincome tax liability is settled.

Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will beavailable against which the temporary differences can be utilised.

Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates,except for deferred income tax liabilities where the timing of the reversal of the temporary difference is controlledby the group and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current taxassets against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxeslevied by the same taxation authority on either the same taxable entity or different taxable entities where there isan intention to settle the balances on a net basis.

1.18 employee benefits

Pension obligations

The group pays fixed contributions into defined contribution plans (a defined contribution plan is a pension planunder which the group pays fixed contributions into a separate entity (a fund)). The group has no legal orconstructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employeesthe benefits relating to employee service in the current and prior periods.

The group pays the contributions to publicly administered pension insurance plans on a mandatory, contractual orvoluntary basis. The group has no further payment obligations once the contributions have been paid. Thecontributions are recognised as an employee benefit expense in the income statement when they are due.

Other post-employment obligations

The group provides post-employment medical care for certain of their retirees. The expected costs of these benefitsare accrued over the period of employment using a methodology similar to that of defined benefit pension plans.Typically, defined benefit plans define an amount of benefit that an employee will receive on retirement, usuallydependent on one or more factors such as age, years of service and compensation.

The liability recognised in the statement of financial position in respect of defined benefit post-employmentmedical aid obligations is the present value of the defined benefit obligation at statement of financial position dateadjusted for actuarial gains or losses.

The present value of the expected future defined benefit obligation is determined by discounting the estimatedfuture cash outflows using interest rates of government bonds. The expected costs of these benefits are accruedover the period of employment.

Actuarial profit and losses arising from experience adjustments, and changes in actuarial assumptions are chargedor credited to other comprehensive income in the period in which they arise.

Valuations of these obligations are carried out on a periodic basis by professionally qualified independent actuariesusing the projected unit credit method. The post-employment obligations are not funded.

Termination benefits

Termination benefits are payable when employment is terminated by the group before the normal retirement date,or whenever an employee accepts voluntary redundancy in exchange for these benefits. The group recognisestermination benefits when the entity can no longer withdraw the offer of these benefits and when the entityrecognises costs for a restructuring that is within the scope of IAS 37 and includes the payment of terminationbenefits.

Profit-sharing and bonus plans

The group recognises a liability and an expense for bonuses and profit-sharing, based on a formula that takes intoconsideration the profit attributable to the company’s shareholders after certain adjustments. The group recognisesa provision where contractually obliged or where there is a past practice that has created a constructive obligation.In instances where these liabilities are calculated with reference to DAWN shares, but to be settled in cash, theliability is disclosed as a share-based payment liability (note 20).


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Short-term employee benefits

Employee entitlements to short-term bonus, annual leave and long service awards are recognised when theyaccrue to employees.

An accrual is made for the estimated liability for short-term bonus, annual leave and long service awards as a resultof services rendered by employees up to the statement of financial position date.

Share incentive scheme

The group also operates a share incentive scheme through Share Appreciation Rights, Long-Term Incentive Plansand Deferred Bonus Plans. In terms of these schemes the beneficiaries are offered incentives for contributingtowards the group’s overall performance with specific reference to earnings growth expectations and shareperformance in comparison to peer groups. These schemes have vesting periods of three years and lapse afterseven years, if not exercised. The group’s intension is to settle these schemes with equity. IFRS 2 (share-basedpayments) is applied to account for these schemes. The IFRS 2 value is recognised in the income statement over thevesting period attached to each tranche of allocations. An IFRS 2 equity reserve is created in anticipation of settlingthe obligations created in terms of the abovementioned equity-settled schemes.

Non-market performance and service conditions are included in assumptions about the number of options that areexpected to vest. The total expense is recognised over the vesting period, which is the period over which all of thespecified vesting conditions are to be satisfied.

In addition, in some circumstances employees may provide services in advance of the grant date and therefore thegrant date fair value is estimated for the purposes of recognising the expense during the period between servicecommencement period and grant date.

At the end of each reporting period, the group revises its estimates of the number of options that are expected tovest based on non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, inthe income statement, with a corresponding adjustment to equity.

1.19 Provisions

Provisions are recognised when the group has a present legal or constructive obligation as a result of past events; itis more likely than not that an outflow of resources will be required to settle the obligation; and the amount hasbeen reliably estimated. Provisions are not recognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement isdetermined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of anoutflow with respect to any one item included in the same class of obligations may be small.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligationusing a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to theobligation. The increase in the provision due to passage of time is recognised as an interest expense.

Onerous contracts

A contract is considered as onerous when the expected economic benefits to be derived by the group from thecontract are lower than the unavoidable cost of meeting its obligations under the contract. The provision for anonerous contract is measured at the lower of the expected cost of terminating the contract and the expected netcost of continuing with the contract. The provision is calculated based on discounted cash flows to the end of thecontract.

Contingent assets and contingent liabilities are not recognised. Contingencies are disclosed in note 29.

1.20 revenue recognition

The group recognises revenue when the amount of revenue can be reliably measured, it is probable that futureeconomic benefits will flow to the entity and when specific criteria have been met for each of the group’s activitiesas described below. The amount of revenue is not considered to be reliably measurable until all contingenciesrelating to the sale have been resolved. The group bases its estimates on historical results, taking into considerationthe type of customer, the type of transaction and the specifics of each arrangement.

Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services inthe ordinary course of the group’s activities. Revenue is shown, net of value-added tax, estimated returns, rebatesand discounts and after eliminating sales within the group. Revenue is recognised as follows:


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Sales of goods

The vertically integrated group manufactures and distribute products through its operating segments namely, thebuilding and infrastructure segments. Building focuses on the manufacture and distribution of quality brandedsanitaryware, plumbing, hardware and kitchen products to building merchants, on a wholesale basis.

Infrastructure focuses on engineering and civil products, including pipes and pipe fittings, for a range of customers,including local and provincial governments and contractors. Refer to the segment note (note 2) for businesses inthe respective segments.

Sales of goods are recognised when a group entity has delivered products to the customer, the customer hasaccepted the products and all risks and rewards associated with them have been transferred from the entity to thecustomer, there is no further group management involvement in the products and collectability of the relatedreceivables is reasonably assured. Sales are recorded net of volume discounts. Sales are recorded based on pricesspecified in sales contracts, net of volume discounts. Volume discounts are assessed based on anticipated annualpurchases.

Products are often sold with a right of return. Accumulated experience is used to estimate and provide for suchreturns at the time of sale.

Services rendered

Services rendered are recognised in the accounting period in which the services are rendered, by reference to thestage of completion of the specific transaction, assessed on the basis of the actual service provided as a proportionof the total services to be provided. Services rendered by the solutions segment comprise of various logistical, IT,marketing, packaging and HR services to mainly in-group companies. Refer to the segment note (note 2).

Interest income

Interest income is recognised on a time-proportion basis using the effective interest rate method. When a loanreceivable is impaired, the group reduces the carrying amount to its recoverable amount, being the estimatedfuture cash flow discounted at original effective interest rate of the instrument, and continues unwinding thediscount as interest income. Interest income on impaired loans and receivables is recognised using the originaleffective interest rate.

Dividend income

Dividend income is recognised when the right to receive payment is established.

1.21 Cost of sales

Cost of sales includes the historical cost of merchandise and overheads appropriate to the distribution thereof.

1.22 Leases

Finance leases

The group leases certain property, plant and equipment. Leases of property, plant and equipment, where the grouphas substantially all the risks and rewards of ownership, are classified as finance leases. Finance leases arecapitalised at the lease’s commencement at the lower or the fair value of the leased property and the present valueof the minimum lease payments. Each lease payment is allocated between the liability and finance charges toachieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net of financecharges, are included in long-term payables. The interest element of the finance cost is charged to the incomestatement over the lease period so as to produce a constant periodic rate of interest on the remaining balance ofthe liability for each period. Depreciation is recognised over the shorter of the useful life of the asset or the leaseterm.

Operating leases

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classifiedas operating leases.

Payments made under operating leases (net of any incentives received from the lessor) are charged to the incomestatement on a straight-line basis over the period of the lease.

When an operating lease is terminated before the lease period has expired, any payment required to be made tothe lessor by way of a penalty is recognised as an expense in the period in which termination takes place.


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Deferred profit on sale-and-operating leaseback transactions

Profit in respect of properties sold in terms of sale-and-operating leaseback transactions are recognised in theincome statement on a straight-line basis over the term of the lease.

Finance lease agreements

DAWN leases property, plant and equipment to companies in the group through finance lease agreements.

These intercompany finance lease agreements are treated as receivables.

Finance income is allocated to accounting periods over the duration of the leases by the effective interest ratemethod, which reflects the extent and cost of lease finance income earned in each accounting period.

1.23 Dividend distribution

Dividend distribution to the company’s shareholders is recognised as a liability in the group’s financial statementsin the period in which the dividends are approved by the company’s shareholders.

1.24 borrowing costs

General and specific borrowing costs directly attributable to the acquisition, construction or production ofqualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intendeduse or sale, are added to the cost of those assets, until such time as the assets are substantially ready for theirintended use or sale. Investment income earned on the temporary investment of specific borrowings pending theirexpenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. All otherborrowing costs are recognised in profit or loss in the period in which they are incurred.

1.25 Critical accounting estimates and judgements

Management makes judgements, estimates and assumptions in the preparation of the financial statements thataffect the disclosures and amounts of assets, liabilities, income, expenses and equity.

Estimates and judgements are continually evaluated and are based on historical experience and other factors,including expectations of future events that are believed to be reasonable under the circumstances.

The group makes estimates and assumptions concerning the future. The resulting accounting estimates will, bydefinition, seldom equal the related actual results. The estimates and assumptions that have a significant risk ofcausing a material adjustment to the carrying amounts of assets and liabilities within the next financial year arediscussed below.

Estimated impairment of goodwill and intangible assets classified as having indefinite useful lives

The group tests annually whether goodwill and intangible assets with indefinite lives have suffered anyimpairment, in accordance with the accounting policy stated in note 1.7. The recoverable amounts of certain cash-generating units have been determined based on value-in-use calculations. These calculations require the use ofestimates (note 12).

The group assesses on an annual basis whether the classification of indefinite life intangible assets is appropriate.As per the group’s assessment, goodwill, trademarks and brand names are appropriately classified as indefinite lifeintangible assets.

Demand forecasting impacting on working capital investment and impairment

The group has made investment in working capital based on management’s assumptions and estimates of futuredemand for the group’s products and the customers’ ability to settle outstanding debts for credit sales when itbecomes due.

Impairment risk is managed through policies and provisions and raised based on various factors including age andquality of inventory and trade receivables.

Fair value of derivatives and the financial instruments

The fair value of financial instruments that are not traded in an active market is determined by using valuationtechniques. The group uses its judgement to select a variety of methods and make assumptions that are mainlybased on market conditions existing at the end of each reporting period. The group used various methods as setout in note 23.


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Taxation

Judgement is required in determining the provision for income taxes due to the complexity of legislation in variousjurisdictions where the group operates. There are many transactions and calculations for which the ultimate taxdetermination is uncertain during the ordinary course of business. The group recognises liabilities for anticipatedtax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of thesematters is different from the amounts that were initially recorded, such differences will impact the income tax anddeferred tax provisions in the period in which such determination is made.

The group recognises the net future tax benefit related to deferred income tax assets to the extent that it isprobable that the deductible temporary differences will reverse in the foreseeable future. Assessing therecoverability of deferred income tax assets requires the group to make significant estimates related toexpectations of future taxable income. Estimates of future taxable income are based on forecast cash flows fromoperations and the application of existing tax laws in each jurisdiction. To the extent that future cash flows andtaxable income differ significantly from estimates, the ability of the group to realise the net deferred tax assetsrecorded at the end of the reporting period could be impacted.

IFRS 2

Equity-settled schemes

IFRS 2 adjustments were calculated based on option pricing models for the share option schemes in operation.

The charge is based on certain assumptions applied to the calculation models such as vesting period, conditions,risk free rate, volatility factors and dividend yields. IFRS 2 charges are reversed to the income statement where thereis not an expectation, based on management’s earnings projections, of vesting. Refer to the share incentiveschemes (equity settled) note (note 20) for the major assumptions made on the new share incentive scheme.

Deferred profit

The deferred profit realised on the sale of property is recognised in the income statement on a straight line basisover the term of the lease. The term of the lease is based on management’s best estimate of the period ofoccupation, being the shortest renewable lease period from commencement (note 24).

Residual values and useful lives

The useful economic lives and residual values of items of property, plant and equipment and tangible assets areestimated annually. The actual lives and residual values may vary depending on a variety of factors.

Retirement benefit obligation

Certain of the employees of DPI Plastics Proprietary Limited are entitled to post-employment medical aid benefits. The present value of the obligation is based on the “projected unit credit basis” and depends on a number offactors that are determined on an actuarial basis using a number of assumptions. Any changes in theseassumptions will impact the carrying amount of the obligations. Actuarial valuations are carried out every threeyears. Additional information is disclosed in note 26.

Estimates made of contingent liabilities

By their nature, contingencies will only be resolved when one or more future events occur or fail to occur. Theassessment of such contingencies inherently involves the exercise of significant judgement and estimates of theoutcome of future events. Disclosure is made in note 29 of the contingent liabilities that the group is exposed to.


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2. SeGMenT InfOrMaTIOn The operating segments are based on reports reviewed by the executive committee who makes the strategic decisions of the

group, and who is therefore the chief operating decision-making body of the group.

reportable segments

The executive committee assesses the performance of these operating segments based on operating profit.

Corporate office and other reconciling items mainly comprise corporate office and other operating segments not meeting thequantitative thresholds required by IFRS 8.

Corporate office (1)

Discon- (3) and other Discon- (3)

Continuing tinued Infra- Dawn reconciling tinuedoperations operations Total structure Solutions items operations Total (4)

r’000 r’000 r’000 r’000 r’000 r’000 r’000 r’000

12 months ended31 March 2016

Revenue 2 530 920 – 2 530 920 2 420 004 571 360 (529 192) – 4 993 092Depreciation and amortisation (11 974) – (11 974) (34 017) (23 053) (368) – (69 412)Operating (loss)/profit before impairments

and derecognitions of previously heldinterests (54 128) – (54 128) (1 871) 4 586 27 465 – (23 948)

Impairments and derecognitions of previously held interests (410 406) – (410 406) (156 583) (65 829) (4 592) – (637 410)

Operating (loss)/profit after impairments and derecognitions of previously heldinterests (464 534) – (464 534) (158 454) (61 243) 22 873 – (661 358)

Net finance expense (25 766) – (25 766) (32 981) (1 885) (10 438) – (71 070)Share of (losses)/profit from associates

and joint ventures (12 171) – (12 171) 4 304 1 976 – – (5 891)Tax income/(expense) 7 880 – 7 880 (31 965) 16 216 (11 744) – (19 613)Net (loss)/profit after tax from continuing

operations (494 591) – (494 591) (219 096) (44 936) 691 – (757 932)Assets 1 157 172 – 1 157 172 961 776 582 561 (15 865) – 2 685 644Liabilities 1 394 930 – 1 394 930 747 848 649 354 (1 162 700) – 1 629 432Capital expenditure (2) 6 379 – 6 379 55 049 82 508 (3 997) – 139 939

9 months ended31 March 2015 (restated)

Revenue 1 826 897 334 681 2 161 578 1 751 379 380 061 (341 697) (334 681) 3 616 640 Depreciation and amortisation (9 544) (9 660) (19 204) (25 232) (13 365) (180) 9 660 (48 321)Operating profit/(loss) before

impairments and derecognition of previously held interests 30 750 37 521 68 271 8 044 (2 847) (113 895) (39 638) (80 065)

Impairments and derecognitionsof previously held interests (9 606) – (9 606) (720) – 544 714 – 534 388

Operating profit/(loss) after impairments and derecognitions of previously held interests 21 144 37 521 58 665 7 324 (2 847) 430 819 (39 638) 454 323

Net finance (expense)/income (20 318) (3 077) (23 395) (20 600) (2 047) 6 481 3 077 (36 484) Share of profit/(losses) from

associates and joint ventures 18 751 1 214 19 965 (8 079) 205 – (1 214) 10 877 Tax (expense)/income (3 633) (9 731) (13 364) 3 125 1 269 21 974 10 324 23 328Net profit/(loss) after tax from

continuing operations 15 944 – 15 944 (18 230) (3 421) 457 751 – 452 044Net profit after tax from

discontinued operations – 25 913 25 913 – – 1 525 – 27 438 Assets 1 591 137 – 1 591 137 1 250 276 592 332 325 270 – 3 759 015Liabilities 1 344 514 – 1 344 514 838 975 612 051 (921 062) – 1 874 478Capital expenditure (2) 8 325 35 917 44 242 50 442 34 722 22 (35 917) 93 511

(1) Other reconciling items consist of corporate and consolidation adjustments. These predominantly include elimination of intergroup sales, profits, losses and intergroup receivablesand payables and other unallocated assets and liabilities contained within the vertically integrated group. Corporate office and other reconciling items is not considered to be anoperating segment.

(2) Includes expenditure on property, plant and equipment and intangibles. Government grants received are deducted from the capital expenditure amount. (3) Discontinued operations include results from the Watertech group of companies as well as consolidation and elimination adjustments related to the Watertech group of companies. (4) ‘Total’ excludes the building segment’s discontinued operations amount.

building


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2. SeGMenT InfOrMaTIOn continued

reportable segments

The group is organised into three reportable segments:

• building segment: Consists of manufacture and wholesale trading of hardware, sanitaryware, bathroomware, plumbing,kitchen and other building materials

The building segment includes the following:

Trading

– Wholesale Housing Supplies (trading as Saffer Bathroom & Plumbing and WHDsa)

– DAWN Business Development – a division of Wholesale Housing Supplies (trading as Wholesale Building Materials,DAWN Power Tools, Electroline and Stability) and DAWN Kitchen Fittings (trading as AFF and Roco)

– Saffer International

– Distribution and Warehousing Network Africa (DAT) [formerly Africa Saffer Trading (AST)]

– Pro-Max Welding Consumables

– Hamilton’s Brushware

– Boutique Baths

Manufacturing

– Heunis Steel – associate

– Grohe DAWN Watertech – associate º Cobra º ISCA º Apex Valves º Vaal Sanitaryware (Ceramic) º Libra Bathrooms and Plexicor (Acrylic) º Exipro Manufacturing

• Infrastructure segment: Consists of manufacture and wholesale trading of engineering, civil products, piping systems, valvesand related accessories.

The infrastructure segment consists of trading and manufacturing clusters:

Trading

– Incledon

Manufacturing

– DPI (trading as DPI Plastics)

– DPI International

– Sangio Pipe

– Swan Plastics

– Ubuntu Plastics

• Solutions segment: Consists of services such as warehousing, distribution, marketing, IT support, pre-packaging,merchandising and HR, provided mainly to Group companies.

The solutions segment includes the following:

– DAWN Business Systems

– DMD Marketing SA

– DAWN Financial Solutions

– DAWN HR Solutions

– DAWN Logistics (DAWN Cargo and DAWN Distribution Centres)

– DAWN Merchandising

– DAWN Projects

– College of Production Technology – associate

Management has determined that the operating segments are sufficiently aggregated.


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2. SeGMenT InfOrMaTIOn continued

General

Intersegment transactions are entered into under the normal commercial terms and conditions. The revenue from externalparties is measured in a manner consistent with that in the income statement.

Segment assets consist primarily of property, plant and equipment, intangible assets (including goodwill), investments inassociates, deferred tax assets, inventories, trade and other receivables and cash and cash equivalents.

Segment liabilities comprise borrowings, deferred profit, deferred tax liabilities, derivative instruments, trade and otherpayables and income tax liabilities.

Capital expenditure comprises additions to property, plant and equipment and intangible assets (notes 11 and 12).

The group’s reporting currency is in South African Rand. The majority of group companies are domiciled in South Africaand mainly serve the South African market. The result of revenue from external customers in South Africa is R4,7 billion(2015: R3,4 billion) and the total revenue from external customers from other countries is R322,8 million (2015: R214,4million).

The total of non-current assets, other than financial instruments and deferred tax assets located in South Africa, is R715,6million (2015: R1,2 billion).

GrOuP

12 months 9 months 31 March 31 March 2016 2015 r’000 R’000

INCOME STATEMENTS

3. revenue Sale of goods 4 872 702 3 526 832 Services rendered 120 390 89 808

4 993 092 3 616 640

4. exPenDITure bY naTure Cost of sales Cost of goods and services sold Cost of inventories expensed during the period 3 648 947 2 629 306 Employee compensation and benefit expense (note 8) 133 907 87 329 Transportation expenses 91 827 40 856 Depreciation 23 189 13 821

3 897 870 2 771 312

Operating expenses a. Depreciation on property, plant and

equipment Depreciation for the group 55 393 35 491 Less: Depreciation included in cost of sales (23 189) (13 821) Less: Depreciation included in transportation expenses (9 747) (4 718)

22 457 16 952

b. Amortisation Intangible assets 13 757 12 681 Interest capitalised amortised 262 149

14 019 12 830


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GrOuP COMPanY

Restated 12 months 9 months 12 months 9 months 31 March 31 March 31 March 31 March 2016 2015 2016 2015 r’000 R’000 r’000 R’000

4. exPenDITure bY naTure continued

c. Auditors’ remuneration Audit fees – current 7 271 6 504 335 – – prior year 2 078 – – – Taxation services 16 90 – – Other services 389 988 – – Transaction-related fees – Grohe DAWN

Watertech – 1 946 – –

9 754 9 528 335 –

d. Operating lease rentals Land and buildings 98 576 79 927 * – – Plant, equipment and vehicles 13 730 10 959 – –

112 306 90 886 – –

e. Operating expenses Employee compensation and benefit

expense (note 8) 594 726 481 506 *# 1 452 1 082 Transportation expenditure (including

depreciation) 130 946 106 652 – – Computer expenditure 67 069 34 847 – – Onerous lease (note 30) 11 069 – – – Consultancy services 23 176 24 418 # – – Bad debts 22 575 30 164 – – Repairs and maintenance 19 274 14 928 – – Security 18 253 16 000 – – Communication 16 369 12 012 – – Travel 15 519 12 742 – – Insurance 13 579 10 821 – – Commissions to third parties 10 675 4 306 – – Impairment of receivable in respect of

Wilhelm Import Network Proprietary Limited available-for-sale asset 9 597 – 427 –

Electricity 9 230 7 538 – – Bank charges 7 190 8 769 364 5 140 Postage, printing and stationery 6 807 8 950 – – Legal fees 6 165 11 691 549 228 Advertising costs 4 960 5 565 – – Settlement of guarantee 1 194 – 1 194 – Corporate Social Investment (930) 1 189 825 – Facility fees – 1 140 – – Profit on disposal of property, plant and

equipment (1 623) (1 051) – – Contingencies relating to investments – – – 23 230 Other expenses 16 664 22 840 28 –

1 002 484 815 027 4 839 29 680

* For restatement detail see note 44. # For reclassification detail see note 44.


CONTINUED


2016

44

GrOuP COMPanY


4. exPenDITure bY naTure continued

f. Impairments and (gain)/loss on derecognition of subsidiaries, joint ventures and associates

Impairment of loans and other receivables – Wilhelm Import Network Proprietary Limited 7 395 – 3 698 –

Impairment of intangible assets (note 12) 127 480 96 915 – – Indefinite life 71 179 62 301 – – Defined life 56 301 34 614 – – Impairment of investment in associate (note 14) – Grohe DAWN Watertech 384 642 – – – – Fibrex S.A.R.L. 48 736 – – – Impairment of investment in joint venture

(note 14) – DPI Simba Limited 14 206 – – – – Aqualia DPI Proprietary Limited 2 630 – – – Impairment of property, plant and equipment

(note 11) 47 729 720 – – Impairment of assets held-for-sale (Saffer

Union (West Africa) Limited) – 5 347 – – Impairment on loan receivable – Incledon

(formerly IPS & Distribution) – – – 13 532Impairment of investment in subsidiary –

Wholesale Housing Supplies Proprietary Limited – – 248 397 – Impairment on loan receivables – – 143 799 –

Impairment on loan receivable – DAWN AfricaTrading (DAT) – – 79 149 –

Impairment on loan receivable – Pro-MaxWelding Consumables Proprietary Limited – – 45 286 –

Impairment on loan receivable – Sangio PipeProprietary Limited – – 19 364 –

Impairments 632 818 102 982 395 894 13 532

Net loss on derecognition of investment in Saffer Union (West Africa) Limited (SUWA) 7 399 – – –

Net (gain)/loss on derecognition of investment in Wilhelm Import Network Proprietary Limited (2 807) 7 091 – –

Net gain on derecognition of investment in Grohe DAWN Watertech – (629 416) – –

Net gain on derecognition of investment in Distribution and Warehousing Network Africa Proprietary Limited (formerly Africa Saffer Trading Proprietary Limited) – (15 045) – –

Derecognitions of net loss/(gain) on subsidiaries and associates (note 37) 4 592 (637 370) – –

Total impairments and derecognitions 637 410 (534 388) 395 894 13 532

net operating expenses 1 798 430 410 835 401 068 43 212

Total cost of sales, distribution costs, other operating expenses, impairments and derecognitions 5 696 300 3 182 147 401 068 43 212


CONTINUED


2016

45

GrOuP COMPanY


5. OTher OPeraTInG InCOMe Receipt of contingent asset (Grohe DAWN Watertech) 15 091 – – – Commission income – related parties (note 41) 8 488 – – – Commission income 347 3 952 – – Deferred profit released (note 24) 5 327 3 862 # – – Derivative financial instrument fair value

adjustment – put option 5 000 3 950 5 000 3 950 Prescription of old debtor balances 3 308 – – – Rental income 659 350 – – Management fees received – joint venture

(note 41) 276 2 718 – – Net foreign exchange (loss)/gain (848) 2 472 (214) 55 Other income 4 202 2 526 9 386 –

41 850 19 830 14 172 4 005

6. fInanCe InCOMe Related parties (note 41) 2 255 9 370 50 478 61 278 Bank deposits 738 3 696 216 236 Revenue authorities 7 61 – – Disposal group interest – 2 548 – – Other interest 460 35 – –

3 460 15 710 50 694 61 514

7. fInanCe exPenSeS Written put – Swan Plastics Proprietary Limited

(note 23) 33 984 1 928 – – Bank borrowings 23 993 26 751 20 855 20 295 Instalment sale agreements 5 056 4 246 – – Finance lease agreements 3 770 1 428 2 008 108 Trade finance 3 631 9 859 3 630 8 281 Post-employment benefit obligation 496 385 – – Related parties (note 41) 434 3 138 10 752 5 865 Revenue authorities 22 179 5 – Disposal group interest – 1 195 – – Other interest 3 144 3 085 – –

74 530 52 194 37 250 34 549

# For reclassification detail see note 44.


CONTINUED


2016

46

GrOuP COMPanY


8. eMPLOYee benefIT exPenSe Salaries and wages 609 439 448 757 * 1 452 1 082 Repayment of bonuses (Derek Tod and Dries Ferreira) (7 000) – – – Commissions to sales force 60 208 46 616 – – Pension costs – defined contribution plans 42 987 30 451 – – Net share-based payments – share scheme 27 3 409 – – – BEE scheme 4 883 – – – – Grohe DAWN

Watertech related ~ – 27 183 # – – Medical aid 17 910 12 261 – – Post-employment medical aid 179 158 – –

728 633 568 835 1 452 1 082

Included in: 728 633 568 835 1 452 1 082

Cost of sales 133 907 87 329 – – Operating expenses 594 726 481 506 *# 1 452 1 082

~ Relates to a once-off acceleration of vesting for participants employed in the Watertech division as a result of the Grohe transaction. * For restatement detail see note 44.

# For reclassification detail see note 44

Directors’ and prescribed officers’ emoluments are included in the above and also disclosed separately in note 42.

number of persons employed by subsidiaries of the group at year-end

GrOuP

Restated 12 months 9 months 31 March 31 March 2016 2015 number Number

Full-time 2 842 2 923 Fixed term 142 141

2 984 3 064

Angola 12 13 Botswana 20 55 Democratic Republic of the Congo 10 10 Mauritius – 10 Mozambique 22 27 Namibia 61 61 Nigeria – 5 South Africa 2 822 2 849 Zambia 37 34

2 984 3 064


CONTINUED


2016

47

GrOuP COMPanY

Restated 12 months 9 months 12 months 9 months 31 March 31 March 31 March 31 March 2016 2015 2016 2015 % % % %

9. InCOMe Tax exPenSe normal tax expense

Current tax

Current income tax – current period 15 386 8 937 2 530 7 024 Current income tax – arising from prior year

adjustments (2 341) (411) – –

13 045 8 526 2 530 7 024

Deferred tax

Originating and reversing temporary differences – current year 6 568 (33 350)* 1 810 737

Deferred tax arising from prior period adjustments – 1 496 – –

6 568 (31 854) 1 810 737

Tax expense/(income) for the period 19 613 (23 328) 4 340 7 761

Reconciliation of rate of taxation based on profit before tax and results of discontinued operations,associates and joint ventures

South African normal tax rate ~ 28,0 28,0 28,0 28,0

Adjusted for: Disallowed expenditure (23,2) 9,6 (29,2) (84,0)

– Capital items¹ (6,8) 5,4 (29,8) (53,1) – Impairments and derecognitions² (16,4) 4,2 0,6 (30,9)

Exempt income³ 0,4 (2,3) – 3,0 Prior year adjustments 0,4 0,3 – –

– Current tax 0,3 (0,1) – – – Deferred tax 0,1 0,4 – – Tax losses for which no deferred tax asset

was recognised⁴ (7,6) 1,0 – – Derecognitions⁵ – (44) – – Foreign tax rate difference⁶ (0,3) 0,2 – – Withholding tax (0,1) 0,1 – – Capital Gains Tax (0,2) 1,5 – (10,4)

Effective rate (2,6) (5,6)* (1,2) (63,4)

~ The effective tax rate reconciliation base rate is the South African statutory tax rate of 28%. * For restatement detail see note 44.

1 Disallowed expenditure – Capital items relate to expenditure of a capital nature not deductible for tax purposes.

2 Disallowed expenditure – Impairment and derecognitions relate to impairments of intangibles.

3 Exempt income relates to non-taxable income.

4 The group did not recognise deferred tax of R46,3 million (2015: R2,9 million) in respect of losses amounting to R165,3 million (2015:R11,7 million) which can be carried forward against future taxable income.

5 Derecognitions relate mainly to derecognition of subsidiaries and joint ventures.

6 The foreign tax rate difference adjustment relates to the difference between the South African tax rate and the various tax rates ofother countries.

Refer to note 23 for tax relating to components of other comprehensive income.


CONTINUED


2016

48

10. earnInGS Per OrDInarY Share basic

Basic earnings per ordinary share is calculated by dividing the profit attributable to equity holders of the company by theweighted average number of ordinary shares in issue during the year, excluding ordinary shares acquired by the company,incentive shares and treasury shares.

Diluted

Diluted earnings per ordinary share is calculated by adjusting the weighted average number of ordinary sharesoutstanding to assume conversion of all dilutive potential ordinary shares.

GrOuP

Restated 12 months 9 months ended ended 31 March 31 March 2016 2015

weighted average number of ordinary shares in issue (’000)

Number of shares in issue at the end of the year 242 243 242 243

242 243 242 243 Less: Treasury shares held in a subsidiary at the end of the year – weighted (2 557) (5 186)

weighted average number of ordinary shares in issue (’000) 239 686 237 057 Add: Shares to be issued in terms of share incentive schemes 731 2 206

weighted average number of ordinary shares for diluted earnings per share (’000) 240 417 239 263

basic earnings per share (cents) (318,31) 202,11

from continuing operations (cents) (318,31) 190,54

Attributable earnings (R’000) (762 936) 451 682 Weighted average number of ordinary shares in issue (’000) 239 686 237 057

from discontinued operations (cents) – 11,57

Attributable earnings (R’000) – 27 438 Weighted average number of ordinary shares in issue (’000) – 237 057

fully diluted earnings per share (cents) (317,34) 200,25

from continuing operations (cents) (317,34) 188,78

Attributable earnings (R’000) (762 936) 451 682 Weighted average number of ordinary shares in issue (’000) 240 417 239 263


Attributable earnings (R’000) – 27 438 Weighted average number of ordinary shares in issue (’000) – 239 263


CONTINUED


2016

49

GrOuP

Restated 12 months 9 months ended ended 31 March 31 March 2016 2015

10. earnInGS Per OrDInarY Share continued

headline earnings (r’000)

Attributable earnings (762 936) 479 120

Adjustment for the after-tax and non-controlling interest effects of: Net profit on disposal of property, plant and equipment (1 623) (1 051) Impairment of intangible assets 127 480 96 915 Impairment of property, plant and equipment 47 729 720 Impairment of assets held-for-sale – 5 347 Impairment of other assets 453 715 – Tax effect on disposal of property, plant and equipment and impairment of

intangible assets (trademarks) (20 545) (9 498) Non-controlling interest (949) (919) Net loss/(profit) on derecognition of previously held interest 4 592 (637 370) Headline earnings adjustments related to associates and joint ventures (4 579) 232 Headline earnings adjustments related to disposal group – (4)

headline earnings (157 116) (66 508)

headline earnings per share (cents) (65,55) (28,06)

from continuing operations (cents) (65,55) (39,63)

Headline earnings (R’000) (157 116) (93 942) Weighted average number of shares in issue (’000) 239 686 237 057


Headline earnings (R’000) – 27 434 Weighted average number of shares in issue (’000) – 237 057


CONTINUED


2016

50

STATEMENTS OF FINANCIAL POSITION

31 March 2016 31 March 2015

accumu- accumu- lated lated deprecia- deprecia- tion and tion and impair- Carrying impair- Carrying Cost ments value Cost ments value r’000 r’000 r’000 r’000 r’000 r’000

11. PrOPerTY, PLanT anD equIPMenT

GrOuP

Land and buildings 54 728 (31 783) 22 945 51 267 (14 236) 37 031 Plant and machinery 338 589 (209 272) 129 317 337 824 (201 129) 136 695 Furniture and fixtures 62 263 (42 670) 19 593 61 568 (36 174) 25 394 Motor vehicles 113 238 (48 815) 64 423 101 993 (48 734) 53 259

Total 568 818 (332 540) 236 278 552 652 (300 273) 252 379

furniture Land and Plant and and Motor buildings machinery fixtures vehicles Total r’000 r’000 r’000 r’000 r’000

reconciliation of property, plant and equipment – GrOuP 2016 Balance at the beginning of the year 37 031 136 695 25 394 53 259 252 379 Additions 6 778 56 834 5 479 26 780 95 871 Additions through business combinations

(note 36) – 4 044 29 121 4 194 Disposals (1 087) (1 774) (429) (1 332) (4 622) Disposals of subsidiaries – – (217) – (217) Transfers 70 (615) 545 – – Foreign exchange movements (42) 340 (131) (81) 86 Government grant received (2 417) (5 874) – – (8 291) Impairments (12 948) (33 232) (1 541) (8) (47 729) Depreciation (4 440) (27 101) (9 536) (14 316) (55 393)

balance at the end of the year 22 945 129 317 19 593 64 423 236 278

reconciliation of property, plant and equipment – GROUP 2015 Balance at the beginning of the period 30 111 109 155 25 591 43 764 208 621 Additions 6 004 40 066 6 539 23 360 75 969 Additions through business combinations

(note 36) 6 199 2 415 4 384 5 512 18 510 Disposals (129) (21) (488) (10 726) (11 364) Disposals of subsidiaries (148) – (2 492) (251) (2 891) Transfers (1 282) 1 311 79 (108) – Foreign exchange movements (137) 43 (15) (146) (255) Impairments (195) (525) – – (720) Depreciation (3 392) (15 749) (8 204) (8 146) (35 491)

balance at the end of the period 37 031 136 695 25 394 53 259 252 379


CONTINUED


2016

51

11. PrOPerTY, PLanT anD equIPMenT continued

Depreciation expense of R23,2 million (2015: R13,8 million) has been charged in cost of goods and services sold, R9,7million (2015: R4,7 million) in transportation expenses and R22,5 million (2015: R17,0 million) in operating expenses (refernote 4).

The group received grants from the Department of Trade and Industry (DTI) under its Manufacturing CompetitivenessEnhancement Programme (MCEP) for the construction of its long-term assets. The MCEP is one of the key actionprogrammes of the Industrial Policy Action Plan of the DTI. The MCEP encourages manufacturers to upgrade theirproduction facilities in a manner that sustains employment and maximises value-addition in the short and medium-term.MCEP grants to the value of R5,9 million (2015: R nil) have been deducted from the carrying value of machinery andequipment and R2,4 million (2015: R nil) have been deducted from the carrying value of land and buildings.

assets subject to finance lease

at 31 March 2016 At 31 March 2015

accumu- accumu- lated lated deprecia- deprecia- tion and tion and impair- Carrying impair- Carrying Cost ments value Cost ments value r’000 r’000 r’000 r’000 r’000 r’000

GrOuP

Land and buildings 2 224 (2 224) – 2 224 (1 555) 669 Plant and machinery 21 459 (17 298) 4 161 20 919 (12 390) 8 529 Furniture and fixtures 5 524 (4 571) 953 8 177 (5 670) 2 507 Motor vehicles 15 827 (4 608) 11 219 20 980 (7 132) 13 848

Total 45 034 (28 701) 16 333 52 300 (26 747) 25 553

A register containing the information required by Regulation 25(2) of the Companies Regulations, 2011 is available forinspection at the registered office of the company.

Assets acquired under instalment sale and finance lease agreements are encumbered as security for repayment of theinstalment sale and finance lease liabilities (note 22).

Lease rentals amounting to R98,6 million (2015: R79,9 million) relating to the lease of land and buildings and R13,7 million(2015: R11,0 million) relating to the lease of plant, equipment and vehicles are included in the income statement (note 4).


CONTINUED


2016

52


CONTINUED


11. PrOPerTY, PLanT anD equIPMenT continued

31 March 2016

Property, plant and equipment to the value of R47,7 million was impaired during 2016, consisting of leaseholdimprovements over property of R12,9 million, plant and machinery of R33,2 million, furniture and fittings of R1,5 millionand R0,008 million of motor vehicles. During 2015 impairment of property, plant and equipment of R0,7 million related toPipex Plastics Botswana Proprietary Limited.

furniture Land and Plant and and Motor buildings machinery fixtures vehicles Total r’000 r’000 r’000 r’000 r’000

Impairments breakdown

building 2 267 3 540 – 8 5 815

Pro-Max Welding Consumables Proprietary Limited 706 3 540 – 8 4 254

DAWN Africa Trading Mozambique LDA 1 561 – – – 1 561

Infrastructure 1 900 21 318 – – 23 218

Sangio Pipe Proprietary Limited 1 900 21 318 – – 23 218

Solutions 8 781 8 374 1 541 – 18 696

DAWN Distribution Centre, a division of Wholesale Housing Supplies Proprietary Limited 8 781 8 374 1 541 – 18 696

12 948 33 232 1 541 8 47 729

Impairments in the building, infrastructure and solutions segments amounted to R5,8 million, R23,2 million and R18,7million, respectively.

These assets were impaired on the basis that the discounted cash flows did not support the carry value of the property,plant and equipment of the businesses.

Pro-Max Welding Consumables Proprietary Limited, Distribution and Warehousing Network Africa Proprietary Limited andSangio Pipe Proprietary Limited had impairments in the prior year relating to intangibles. The further impairments werenecessitated by a deterioration in the markets the entities operate in, further losses and reduction in turnover volume. Dueto reduced volumes, but greater handling cost, the assets in DAWN Distribution Centre were impaired.

The following pre-tax discount rates were used for impairment testing purposes:

Pre-tax Company discount rate

Pro-Max Welding Consumables Proprietary Limited 29,54% DAWN Africa Trading Mozambique LDA 38,96% Sangio Pipe Proprietary Limited 25,12% DAWN Distribution Centre, a division of Wholesale Housing Supplies Proprietary Limited 26,45%

2016

53

Indefinite life Defined life

Trademarks Customer and brand Trade- relation- Goodwill names marks ships Software Total r’000 r’000 r’000 r’000 r’000 r’000

12. InTanGIbLe aSSeTS GrOuP

at 31 March 2016 Cost 55 388 17 166 18 257 38 485 109 692 238 988 Accumulated amortisation and

impairment (54 013) (17 166) (13 365) (30 502) (57 509) (172 555)

Carrying value 1 375 – 4 892 7 983 52 183 66 433

At 31 March 2015 Cost 114 424 17 166 36 484 59 129 57 253 284 456 Accumulated amortisation and

impairment (62 384) – (25 114) (41 992) (5 906) (135 396)

Carrying value 52 040 17 166 11 370 17 137 51 347 149 060

Indefinite life Defined life

Trademarks Customer and brand Trade- relation- Goodwill names marks ships Software Total r’000 r’000 r’000 r’000 r’000 r’000

at 31 March 2016 Balance at the beginning of the year 52 040 17 166 11 370 17 137 51 347 149 060 Additions – – – – 73 927 73 927 Additions through business

combinations (note 36) 3 348 – – 1 179 – 4 527 Interest capitalised – – – – 1 986 1 986 Government grants received – – – – (21 568) (21 568) Impairments (54 013) (17 166) (3 918) (5 151) (47 232) (127 480) Amortisation – – (2 560) (5 182) (6 277) (14 019)

balance at the end of the year 1 375 – 4 892 7 983 52 183 66 433

At 31 March 2015 Balance at the beginning of the period 66 650 17 166 22 696 34 839 33 975 175 326 Additions – – – – 17 542 17 542 Additions through business

combinations (note 36) 47 691 – 8 414 7 383 – 63 488 Interest capitalised – – – – 2 449 2 449 Impairments (62 301) – (15 766) (18 848) – (96 915) Amortisation – – (3 974) (6 237) (2 619) (12 830)

balance at the end of the period 52 040 17 166 11 370 17 137 51 347 149 060

Amortisation expense of R14,0 million (2015: R12,8 million) is included in operating expenses (note 4). Borrowing costs ofR2,0 million (2015: R2,4 million) directly attributable to the qualifying assets pertaining to the Enterprise Resource Planningproject, which take a substantial period of time before it is brought into use, were capitalised.


CONTINUED


2016

54

12. InTanGIbLe aSSeTS continued

31 March 2016

Intangible assets identified through business combinations

Additions to intangible assets through business combinations were as follows:

Customer Indefinite relation- Defined Goodwill life ships life Total r’000 r’000 r’000 r’000 r’000

GrOuP

Intangibles identified

at 31 March 2016

building 3 348 3 348 1 179 1 179 4 527

Boutique Baths Proprietary Limited 3 348 3 348 1 179 1 179 4 527

3 348 3 348 1 179 1 179 4 527

Additions to intangible assets through business combinations of R4,5 million in the current year relate to the acquisition ofa 76% share in Boutique Baths Proprietary Limited on 1 April 2015. Goodwill recognised on this acquisition amounts toR3,3 million. The pre-discount rate used was 25,5%.

Details relating to impairment of intangible assets were as follows:

Customer Trade- Indefinite Trade- relation- Defined Goodwill marks life marks ships Software life Total r’000 r’000 r’000 r’000 r’000 r’000 r’000 r’000

GrOuP

Impairments breakdown

at 31 March 2016

building 5 453 – 5 453 3 165 3 852 83 7 100 12 553

Hamilton’s Brushware Proprietary Limited 2 105 – 2 105 2 547 2 652 – 5 199 7 304

Boutique Baths Proprietary Limited 3 348 – 3 348 – 983 – 983 4 331

DAWN Business Development, adivision of Wholsesale Housing Supplies Proprietary Limited – – – 618 – – 618 618

WHS Trading, a division of Wholesale Housing Supplies Proprietary Limited – – – – 217 83 300 300

Infrastructure 48 560 17 166 65 726 753 1 299 – 2 052 67 778

Ubuntu Plastics Proprietary Limited 6 037 – 6 037 753 1 267 – 2 020 8 057

Incledon Proprietary Limited(IPS division) 2 250 – 2 250 – – – – 2 250

Incledon Proprietary Limited (Incledon division) 40 273 17 166 57 439 – 32 – 32 57 471

Solutions – – – – – 47 149 47 149 47 149

DAWN Business Systems, a division of Wholesale Housing Supplies Proprietary Limited – – – – – 47 149 47 149 47 149

54 013 17 166 71 179 3 918 5 151 47 232 56 301 127 480


CONTINUED


2016

55


Intangible assets totalling R7,3 million were impaired in Hamilton’s Brushware Proprietary Limited (Hamilton’s). Hamilton’sspecialises in the manufacturing and retail distribution of brushware. These intangible assets were impaired on the basisthat the discounted cash flows did not support the carry value of the non-monetary assets of the business. Synergiesidentified at acquisition did not materialise, further exacerbated by the current economic outlook.

Intangible assets totalling R4,3 million were impaired in Boutique Baths Proprietary Limited (Boutique Baths). BoutiqueBaths specialises in the manufacturing and distribution of unique, luxury baths. These intangible assets were impaired onthe basis that the business is not aligned with DAWN's model of distribution and wholesale on an economies of scale basisand did not meet the return criteria set at acquisition date.

Intangibles totalling R0,9 million were impaired in Wholesale Housing Supplies (Business Development and WHS Tradingdivisions). DAWN Business Development and WHS Trading are the wholesale distribution arms of DAWN focussing on thesanitaryware and hardware business. These intangible assets were impaired on the basis that the discounted cash flowsdid not support the carry value of the business units to which it relates to.

The discount rates used for additions during the year were as follows:


Hamilton’s Brushware Proprietary Limited 27,8% Boutique Baths Proprietary Limited 25,5% DAWN Business Development, a division of Wholesale Housing Supplies Proprietary Limited 26,8% WHS Trading, a division of Wholesale Housing Supplies Proprietary Limited 24,6%

Ubuntu Plastics Proprietary Limited fabricates pipe and pipe fittings in both PVC and HDPE markets. These intangibleassets were impaired on the basis that the discounted cash flows did not support the carry value of the non-monetaryassets of the business, mainly due to a slowdown in the HDPE market, also experienced in other areas of DAWN over thelast two years.

IPS and Incledon, both divisions of Incledon Proprietary Limited, are the wholesale arm of the infrastructure segment.Intangibles in this business were impaired due the losses incurred, mainly due to reduced government and mining spend,as well as losing market share.


Ubuntu Plastics Proprietary Limited 26,9% Incledon Proprietary Limited 23,5%

Impairments of R47,1 million in the solutions segment consisted mainly of impairments to the recently developed ITsoftware project in Incledon and DAWN Distribution Centres, where the the discounted cash flows did not support thecarry value of the non-monetary assets of the business unit.


DAWN Business Systems, a division of Wholesale Housing Supplies Proprietary Limited 21,3%


CONTINUED


2016

56


31 March 2015

Additional information is provided to expand on the published 2015 disclosure.

Intangible assets identified through business combinations

Additions to intangible assets through business combinations were as follows:


At 31 March 2015

Intangibles identified

building 45 441 – 45 441 8 414 7 383 – 15 797 61 238

Pro-Max Welding Consumables Proprietary Limited 9 609 – 9 609 5 139 3 974 9 113 18 722

DAWN Africa Trading Proprietary Limited 29 464 – 29 464 – – – – 29 464

Hamiltons Brushware Proprietary Limited 2 105 – 2 105 3 275 3 409 – 6 684 8 789

Saffer Union (West Africa) Limited 4 263 – 4 263 – – – – 4 263

Infrastructure 2 250 – 2 250 – – – – 2 250

IPS & Distribution Proprietary Limited 2 250 – 2 250 – – – – 2 250

47 691 – 47 691 8 414 7 383 – 15 797 63 488

Additions to intangible assets through business combinations of R18,7 million in the prior year relate to the acquisition of a60% share in Pro-Max (Pro-Max Welding Consumables Proprietary Limited and Weld-D Proprietary Limited) on 1 July 2014.Goodwill recognised on this acquisition amounts to R9,6 million and was subsequently impaired.

The group acquired an additional 39% shareholding in Africa Saffer Trading Proprietary Limited (AST) as at 31 October2014. The total goodwill attributed to this transaction amounts to R29,5 million and was impaired.

On 1 December 2014 the group acquired a 69% share in Hamilton’s Brushware SA Proprietary Limited (Hamilton’s) with agoodwill amount of R2,1 million recognised.

An additional 51% was also acquired in IPS & Distribution Proprietary Limited (IPS) as at 1 January 2015. The 49% disclosedas an investment in associate was derecognised. Subsequently, IPS was rerecognised as a 100% owned subsidiary withgoodwill to the value of R2,3 million recognised.

The group acquired an additional 50% in Saffer Union (West Africa) Limited (SUWA) on 31 March 2015. Goodwill of R4,2million was recognised on this transaction and was subsequently impaired (see below).

During the 2012 financial year the group initiated a project to consolidate all its computer systems into an EnterpriseResource Planning system. The total cost of the project is estimated at R118 million (2014: R118 million) and the phasedapproach is expected to be concluded within the next three years. The group’s transport and warehouse systems were alsoupgraded. Amortisation has been recognised to the extent that the software has been brought into use.

During the year there were additions to internally generated software of R17,6 million (2014: R20,5 million). Interestcapitalised to internally generated software amounted to R2,4 million (2014: R1,2 million) and will be amortised over theestimated useful life of the asset. Interest is capitalised at the prevailing prime interest rate of 9,25% (2014: 9%).

Software with a carrying value of R2,7 million (2014: R3,6 million) is subject to finance lease.


CONTINUED


2016

57


The discount rates used for additions during the year were as follows:


Pro-Max Welding Consumables Proprietary Limited 26,5% Africa Saffer Trading Proprietary Limited 23,5% Hamilton’s Brushware Proprietary Limited 17,9% IPS & Distribution Proprietary Limited 20,0% Saffer Union (West Africa) Limited 19,7% Sangio Pipe Proprietary Limited 20,3%

Impairment of intangible assets

Details relating to impairment of intangible assets were as follows:


building 43 336 – 43 336 4 497 3 477 – 7 974 51 310

Pro-Max Welding Consumables Proprietary Limited 9 609 – 9 609 4 497 3 477 – 7 974 17 583

Africa Saffer Trading Proprietary Limited 29 464 – 29 464 – – – – 29 464

Saffer Union (West Africa) Limited 4 263 – 4 263 – – – – 4 263

Infrastructure 18 965 – 18 965 11 269 15 371 – 26 640 45 605

Sangio Pipe Proprietary Limited 18 965 – 18 965 11 269 15 371 – 26 640 45 605

62 301 – 62 301 15 766 18 848 – 34 614 96 915

AST is the wholesale distribution business covering the rest of Africa and operates similarly to the South African tradingbusinesses. The control of AST is critical for the group to expand into Africa and to align the growth strategy into Africa.The step-up of DAWN’s interest, from a 51% joint venture to a 90% subsidiary, triggered new intangible assets which hadto be recognised. These intangible assets were impaired on the basis that the consideration paid did not support thediscounted cash flows of the business. Future expectations relating to business performance were also not materiallydifferent from the prior year, where an impairment of the investment in joint venture was accounted for. The SUWAacquisition was forced due to the fact that there was a contractual obligation to exit out of Nigeria as well as to settle aguarantee provided by DAWN before it could exit. Intangible assets to the value of R29,5 million were impaired in the ASTgroup and R4,2 million on SUWA, a subsidiary in the AST group.

Pro-Max was acquired to enhance and complement the wholesale of welding equipment already established in thewholesale distribution model. The Pro-Max impairment was due to the short delivery against an earn-out target not beingachieved as well as a business partner who did not share DAWN's views in running the business. The business partnersubsequently absconded and, on further consequential investigations, certain anomalies were uncovered whichnecessitated the impairment.


CONTINUED


2016

58


The following discount rates were used for impairment testing purposes:


Africa Saffer Trading Proprietary Limited 23,5% Saffer Union (West Africa) Limited 19,7% Pro-Max Welding Consumables Proprietary Limited 26,5%

Intangible assets to the value of R45,6 million were impaired at Sangio Pipe Proprietary Limited (Sangio Pipe), a companyin the infrastructure segment, consisting of R19,0 million of goodwill, R11,3 million of trademarks and R15,4 million ofcustomer relationships. The additional 51% in Sangio Pipe, a high density polyethylene (HDPE) manufacturer, was acquiredto complement the existing PVC and HDPE pipe ranges in the DAWN group. The impairment arose due to the slowdown inthe economy and, specifically, in the mining industry as well as a slowdown in exports.



Sangio Pipe Proprietary Limited 20,3%

General

Goodwill, trademarks and brand names are allocated to their respective underlying cash-generating units. The respective companies acquired are defined as the underlying cash-generating units which support the valuation of thegoodwill, trademarks and brand names.

Where a cash-generating unit is identified as a separate unit within a business, this unit is classified as a separate cash-generating unit.

Trademarks and brand names are recognised as indefinite useful life intangible assets when an analysis of the relevantunderlying factors confirm that there is no foreseeable limit to the period over which the asset is expected to generate netcash inflows for the entity. This assumption is further underpinned by the strong presence these trademarks and brandnames carry in the marketplace.

Goodwill and indefinite life intangible assets are allocated to the following cash-generating units:

Indefinite life goodwill and intangible assets

Trademarks and Goodwill brand names

31 March 31 March 31 March 31 March 2016 2015 2016 2015 r’000 R’000 r’000 R’000

building 13 2 118 – –

Wholesale Housing Supplies Proprietary Limited 13 13 – – Hamilton’s Brushware SA Proprietary Limited – 2 105 – – Boutique Baths Proprietary Limited – – – –

Infrastructure 1 230 49 790 – 17 166

Incledon Proprietary Limited (formerly Incledon a division of IPS & Distribution Proprietary Limited) – 42 523 – 17 166

Sangio Pipe Proprietary Limited – – – – Swan Plastics Proprietary Limited 1 230 1 230 – – Ubuntu Plastics Proprietary Limited – 6 037 – –

Solutions 132 132 – –

DAWN Human Resource Solutions Proprietary Limited 132 132 – –

1 375 52 040 – 17 166


CONTINUED


2016

59


The impairment test for goodwill, intangible assets and property, plant and equipment identifies the recoverable amountof a cash-generating unit determined based on value-in-use.

Value-in-use calculations use pre-tax cash flow projections based on financial budgets approved by management andcover a three-year period. Pre-tax discount rates are used which equate to the cash-generating unit’s Weighted AverageCost of Capital. The estimated growth rates applied are in line with that of the industry in which the cash-generating unitoperates and are materially similar to assumptions of external market sources. The cash-generating unit’s recoverableamount is most sensitive to the growth rate assumptions applied. Growth rates for impairment testing purposes beyondthree years were assumed at 6%.

Assumptions were based on management’s past experience and best estimates regarding forecasts. Managementdetermined budgeted gross margin based on past performance and its expectations of market developments. Thediscount rates used are pre-tax and reflect the appropriate risk associated with the industry and respective businesses.

A segment-level summary of the key assumptions used for value-in-use calculations is as follows:

Infra- building structure Solutions % % %

31 March 2016

Growth rate 1 6.0 6.0 6.0 Pre-tax discount rate 24,2 24,5 23,9

31 March 2015

Growth rate 1 6,0 6,0 6,0 Pre-tax discount rate 23,6 23,9 22,8

1 Compounded weighted average growth rate used to extrapolate cash flows beyond the budget period.

Intangible assets with defined useful lives and property, plant and equipment are tested for impairment if conditions areidentified which might be indicative of a potential reduction in the value in use or net realisable value compared to itscarrying value.

amortisation of intangible assets carried at defined useful lives:

Intangible assets recognised as defined life intangible assets are carried at cost less accumulated amortisation.Amortisation is calculated using the straight-line method to allocate the cost of these assets over their useful lives.Trademarks are amortised over periods ranging from six to twenty years and customer relationship over periods rangingfrom five to ten years.

The impairment calculations were tested for sensitivity to significant changes in the key assumptions used. The basis forsensitivity testing was the budgeted operating profit used in the value-in-use calculation which was 10% and 20% lower.

If the budgeted operating profit used in the value-in-use calculation had been 10% or 20% lower in the cash-generatingunits, this would have resulted in impairments over intangible assets and property, plant and equipment as follows:

Building segment – R60,4 million (2015: Rnil) and R1,3 million (2015: Rnil), respectively; and

Infrastructure segment – R71,4 million (2015: Rnil ) and R20,7 million (2015: R1,1 million), respectively.


CONTINUED


2016

60

GrOuP COMPanY


13. InveSTMenTS In SubSIDIarIeS Shares at cost less amounts written off – – 930 180 114 168 Impairment of investment in Wholesale Housing

Supplies Proprietary Limited – – (248 397) – Loans receivable from subsidiaries

(refer note 41 – related parties) * – – – 309 238

net investment in subsidiaries – – 681 783 423 406

Loans to the value of R816,0 million havebeen capitalised to the investment in the current year.

* Loans were repaid in the current financial year.

A listing of the group’s principal subsidiaries is set out on pages 127 and 128 of the annual financial statements.

14. InveSTMenTS In aSSOCIaTeS anD JOInT venTureS

The amounts recognised in the statement of financial position are as follows:

Associates 441 500 884 359 116 520 116 520 Joint ventures 11 996 29 276 – –

as at 31 March 453 496 913 635 116 520 116 520

reconciliation of investments in associates and joint ventures

GrOuP COMPanY

Joint associates ventures Total associates

r’000 r’000 r’000 r’000

as at 31 March 2016

Balance at the beginning of the year 884 359 29 276 913 635 116 520

Share of losses (9 096) (1 966) (11 062) –

Share of losses prior to amortisation (4 702) (1 966) (6 668) – Amortisation of intangible assets (net of deferred tax) (4 246) – (4 246) – Share of losses allocated against loan account (148) – (148) –

Foreign currency translation reserve (385) 2 089 1 704 – Dividend received (note 41) ^ – (567) (567) – Impairment of investments – Grohe DAWN Watertech (384 642) – (384 642) – – Fibrex S.A.R.L. (48 736) – (48 736) – – Aqualia DPI Proprietary Limited – (2 630) (2 630) – – DPI Simba Limited – (14 206) (14 206) –

balance at the end of the year 441 500 11 996 453 496 116 520

^ Dividend received by DPI Holdings Proprietary Limited from Aqualia DPI Proprietary Limited.


CONTINUED


2016

61

14. InveSTMenTS In aSSOCIaTeS anD JOInT venTureS continued

reconciliation of investments in associates and joint ventures (continued)

GrOuP COMPanY

Joint associates ventures Total associates r’000 r’000 r’000 r’000

As at 31 March 2015

Balance at the beginning of the period 91 526 50 357 141 883 –

Share of profits/(losses) 15 335 (2 508) 12 827 –

Share of profits/(losses) prior to amortisation 17 355 (2 508) 14 847 – Amortisation of intangible assets (net of deferred tax) (2 020) – (2 020) Share of losses allocated against loan account – – – –

Foreign currency translation reserve 2 480 1 164 3 644 – Loan capital advancement 8 454 ^ 194 8 648 – Acquisitions 766 564 # 8 305 * 774 869 116 520 Derecognition of investment in Distribution and

Warehousing Network Africa Proprietary Limited (DAT) (formerly Africa Saffer Trading Proprietary Limited (AST)) – (28 236) (28 236) –

Balance at the end of the period 884 359 29 276 913 635 116 520

# Acquisitions relate to the 49% re-acquired in the Grohe DAWN Watertech group for an amount of R741,7 million, a 49% share in Grome for R19,5million and a 49% share in CPT for R5,2 million.

* Acquisitions relate to investments held by the DAT group (formerly AST group) in DAT Tanzania and DAT Zimbabwe to the value of R8,3 millionincluded in the business combination of DAT (formerly AST).

^ Relates to loans advanced to Incledon Proprietary Limited (formerly IPS & Distribution Proprietary Limited).

Impairment of investments

31 March 2016

Associates

Impairment of investments in associates in the Building segment relates to investments in Grohe DAWN WatertechProprietary Limited (GDW) and in the Infrastructure segment in Fibrex S.A.R.L. (Fibrex).

GDW consists of the Watertech companies, mainly situated in South Africa, and includes brands like Cobra, ISCA, Grohe inSouth Africa, Vaal, Libra, Apex and Exipro. During October 2014, a transaction to dispose of 51% to Grohe LuxembourgFour S.A. (Grohe) was concluded. Synergies, including export opportunities, did not materialise. Management disruptions,supply chain and funding shortfalls caused severe losses, which will take some time to correct. This exacerbated price andvolume pressures.

Fibrex, a pipe factory in Angola experienced a reducing turnover profile over the last number of years, with majorpressures in respect of political instability, reduction in infrastructure spend by government, increased local competitionand availability of foreign exchange, all of which contributed to the impairment.

In both instances value-in-use calculations indicated that discounted cash flows did not support the carry value of theentities’ non-monetary assets nor its carry value.



Grohe DAWN Watertech Proprietary Limited 20,0% Fibrex S.A.R.L. 24,7%


CONTINUED


2016

62


Joint ventures

Impairment of investments in joint ventures occurred in the Infrastructure segment in respect of Aqualia DPI ProprietaryLimited and DPI Simba Limited.

Aqualia DPI Proprietary Limited is situated in Mauritius and the reduction in demand for infrastructure spend in the captivemarket, with reduced export opportunities, resulted in negative returns.

DPI Simba Limited is situated in Tanzania and political instability and elections dampened the demand for infrastructurespend and DPI Simba Limited experienced negative returns for consecutive years.

In both instances value-in-use calculations indicated that discounted cash flows did not support the carry value of theentities’ non-monetary assets nor its carry value.



DPI Simba Limited 24,5% Aqualia DPI Proprietary Limited 23,4%

Associates and joint ventures have control over their cash. Loan advances and receipts and dividends require the approvalof DAWN and the joint venture partners.

Associates and joint ventures may be subject to regularatory restrictions, including exchange control, in their respectivecountries from time to time.

Acquisitions and derecognitions of investments in associates and joint ventures

31 March 2016

No new acquisitions in associates or joint ventures have been made during the current year.

31 March 2015

Derecognition of IPS & Distribution Proprietary Limited (IPS)

An additional 51% was acquired in IPS as at 1 Jan 2015 for a cash consideration of R51. The 49% disclosed as an investmentin associate was subsequently derecognised. IPS was re-recognised as a 100% owned subsidiary.

Acquisition of Grohe DAWN Watertech

As part of the Grohe DAWN Watertech transaction the group disposed of 100% of their share in the Grohe DAWNWatertech group and re-acquired a 49% interest as an investment in associates for an amount of R741,7 million. Refer tonote 20 for additional information. The group also acquired a 49% share in Grome for R19,5 million.

Acquisition of College of Production Technology Proprietary Limited

A 49% share was acquired in College of Production Technology Proprietary Limited on 1 March 2015 for R5,2 million.College of Production Technology Proprietary Limited provides part-time courses to students of industry in the fields ofproduction, technology, logistics, quality, work engineering, human resources and strategic management. The outstandingamount has been disclosed as an acquisition vendor of R1,5 million, included in current borrowings and R2,5 million,included in non-current borrowings. An amount was R1,5 million was paid during the year.

Loans advanced to associates and joint ventures

31 March 2016

During the year no loans advanced to associates or joint ventures were capitalised to investments. The balance at the endof the year is nil.

31 March 2015

None of the loans are in default nor have they been impaired.

Loan to IPS & Distribution Proprietary Limited

The loan to IPS & Distribution was recognised as part of the investment in associate to the extent that losses of R8,5 millionwere incurred.

Refer to note 41 for additional disclosure on loans receivable from associates.


CONTINUED


2016

63


Summarised financial information for associates and joint ventures of the group *

heunisSteel GrOhe Total

Proprietary Dawn Other Joint 31 MarchLimited watertech associates ^ ventures # 2016

r’000 r’000 r’000 r’000 r’000

31 March 2016

Income statement information

Revenue 292 708 1 363 981 109 660 242 515 2 008 864

Finance income – 13 214 14 502 2 27 718

Finance expense (2 664) (52 249) (2 486) (7 193) (64 592)

Income tax expense (11 778) (31 096) (4 408) (1 457) (48 739)

Profit/(loss) after tax before non-controlling interest 30 287 (54 977) 12 476 (4 208) (16 422)

Profit/(loss) after tax after non-controlling interest 30 287 (53 729) 12 476 (4 208) (15 174)

Depreciation and amortisation (2 746) (46 196) (6 291) (8 439) (63 672)

Dividends received from joint venture – – – 567 567

Other comprehensive income/(loss) – – 11 836 (4 882) 6 954

Total comprehensive income/(loss) 30 287 (53 729) 24 312 (9 090) (8 220)

Statement of financial position information

Current assets 120 040 1 299 795 73 278 169 847 1 662 960

Non-current assets 52 000 1 521 084 152 256 53 472 1 778 812

Current liabilities 35 103 862 460 81 797 134 945 1 114 305

Non-current liabilities 18 343 224 677 38 098 32 772 313 890

Current financial liabilities (excluding trade and other payables

and provisions) 13 155 493 842 15 539 55 466 578 002

Non-current financial liabilities (excluding trade and other

payables and provisions) 18 343 195 674 38 098 29 018 281 133

Total cash/(overdraft) 32 666 (135 863) 15 077 (32 279) (120 399)

Net asset value (at 100%) 118 594 1 733 742 105 639 55 602 2 013 575

DAWN’s interest (%) 49 49 – – –

Net asset value of joint venture (at DAWN’s share) 58 111 849 534 51 758 28 832 988 234

Group adjustment to investment 19 663 (493 226) (44 340) (16 836) (534 739)

Intangible assets recognised net of deferred tax 25 587 – 4 795 – 30 382

Amortisation of intangible assets recognised net of deferred tax (5 924) (4 808) (382) – (11 114)

Control premium – (110 281) – – (110 281)

Net debt adjustment – 6 505 – – 6 505

Impairment of investment – (384 642) (48 736) (16 836) (450 214)

Equity accounted losses allocated against loan account – – (17) – (17)

Carrying amount of investment 77 774 356 308 7 418 11 996 453 496

* Only associates and joint ventures at year-end have been included in the summarised financial information.

^ Includes Fibrex S.A.R.L, DPI Rooftiles Proprietary Limited and College of Production Technology Proprietary Limited.

# Includes Aqualia DPI Proprietary Limited, DPI Simba Limited, ASTIZ (Private) Limited (formerly Africa Saffer Trading Proprietary Limited

(Zimbabwe)) and DAWN Africa Tanzania Limited (formerly Africa Saffer Trading Proprietary Limited (Tanzania)).


CONTINUED


2016

64


Summarised financial information for associates and joint ventures of the group *

heunisSteel GrOhe Total

Proprietary Dawn Other Joint 31 MarchLimited watertech associates ^ ventures # 2015

r’000 r’000 r’000 r’000 r’000

31 March 2015


Revenue 226 933 593 248 99 986 185 777 1 105 944

Finance income – 2 468 – 10 2 478

Finance expense (625) (12 131) (4 863) (4 672) (22 291)

Income tax expense (9 074) (10 567) (1 535) (1 279) (22 455)

Profit/(loss) after tax before non-controlling interest 23 969 27 106 8 146 (663) 58 558

Profit/(loss) after tax after non-controlling interest 23 969 27 106 8 146 (663) 58 558

Depreciation and amortisation (2 068) (13 506) (3 603) (6 169) (25 346)

Other comprehensive income/(loss) – – (7 300) (536) (7 836)

Total comprehensive income/(loss) 23 969 27 106 846 (1 199) 50 722

Statement of financial position information

Current assets 55 012 1 078 166 75 992 166 535 1 375 705

Non-current assets 101 588 1 403 088 126 944 38 588 1 670 208

Current liabilities 22 687 556 574 83 959 110 870 774 090

Non-current liabilities 45 606 132 122 31 565 37 179 246 472

Current financial liabilities (excluding trade and other payables

and provisions) 12 743 72 634 33 193 46 909 165 479

Non-current financial liabilities (excluding trade and other

payables and provisions) 20 357 58 867 31 565 33 128 143 917

Total cash/(overdraft) 14 766 (15 965) (19 717) (25 973) (46 889)

Net asset value (at 100%) 88 308 1 792 558 87 412 57 074 2 025 352

DAWN's interest (%) 49 49 – – –

Net asset value (at DAWN’s share) 43 271 878 354 42 865 29 276 993 766

Group adjustment to investment 20 132 (105 191) 4 928 – (80 131)

Intangible assets recognised net of deferred tax 25 587 – 4 799 – 30 386

Amortisation of intangible assets recognised net of deferred tax (5 455) (1 414) – – (6 869)

Control premium – (110 282) – – (110 282)

Net debt adjustment – 6 505 – – 6 505

Equity accounted losses allocated against loan account – – 129 – 129

Carrying amount of investment 63 403 773 163 47 793 29 276 913 635

* Only associates and joint ventures at year-end have been included in the summarised financial information.

^ Includes Fibrex S.A.R.L., DPI Rooftiles Proprietary Limited and College of Production Technology Proprietary Limited.

# Includes Aqualia DPI Proprietary Limited, DPI Simba Limited, Africa Saffer Trading Proprietary Limited (Zimbabwe) and Africa Saffer Trading

Proprietary Limited (Tanzania).

There are no contingent liabilities relating to the group’s interest in associates.

The year-end of Fibrex S.A.R.L. and Saffer Union (West Africa) Limited is 31 December, as required by legislation in Angolaand Nigeria, respectively.


CONTINUED


2016

65

GrOuP

31 March 31 March 2016 2015 r’000 R’000

15. InvenTOrIeS The amounts attributable to the different

categories are as follows: Raw materials 49 548 74 990 Components and consumables 3 419 2 002 Work-in-progress 909 207 Finished goods 746 206 853 344

800 082 930 543

Inventory balances are presented at the lower of cost and net realisable value.

The cost of inventories recognised as an expense and included in ‘inventories expensed during the year’ amounted to R3,6billion (2015: R2,6 billion) (note 4).

A write-down of inventories of R51,9 million (2015: R18,9 million) was recognised in cost of sales.

A general notarial bond has been registered as security over inventory (note 22).

GrOuP COMPanY


16. TraDe anD OTher reCeIvabLeS Trade receivables ~ 804 351 837 784 821 – Less: Provision for receivables impaired (78 249) (39 730) – –

Trade receivables – net 726 102 798 054 821 – Discounts receivable 47 324 21 821 – – Prepayments and deposits 42 643 38 119 – – Related party loans (note 41) – Current 41 299 207 940 416 996 1 012 462 – Non-current – – – 18 887 Insurance claims 13 264 15 472 – – Value Added Tax 30 768 30 008 – – Other receivables 8 620 32 906 2 914 7 298 Intercompany finance lease – Current – – 14 423 1 364 – Non-current – – 35 424 6 271

Trade and other receivables 910 020 1 144 320 470 578 1 046 282

Included in: Non-current assets – – 35 424 25 158 Current assets 910 020 1 144 320 435 154 1 021 124

910 020 1 144 320 470 578 1 046 282

~ Trade receivables are shown net of provisions for discounts and delayed discounts received.


CONTINUED


16. TraDe anD OTher reCeIvabLeScontinued

The fair values of current trade and other receivables approximate their carrying values.

Trade receivables have been ceded as security for borrowings (note 22).

Trade receivables that are within the prescribed trading terms are considered to be fully performing. As at 31 March 2016,trade receivables of R555,3 million (2015: R577,2 million) were fully performing.

Trade receivables can be categorised in the following performance categories:

Past due Impaired fully and not and partially r’000 performing impaired provided for Total

31 March 2016

Building 320 061 66 917 31 601 418 579 Infrastructure 233 992 99 768 39 250 373 010 DAWN Solutions 1 267 10 718 – 11 985 Corporate office and other reconciling items 2 775 – 777

555 322 178 178 70 851 804 351

31 March 2015

Building 288 713 63 880 16 368 368 961 Infrastructure 286 410 144 515 28 577 459 502 DAWN Solutions 1 309 1 376 183 2 868 Corporate office and other reconciling items 757 5 696 – 6 453

577 189 215 467 45 128 837 784

Credit quality of trade and other receivables

The credit quality of trade and other receivables that are neither past nor due nor impaired can be assessed by reference toexternal credit ratings (if available) or to historical information about counterparty default rates.

Trade receivables past due but not impaired

As at 31 March 2016, trade receivables of R178,2 million (2015: R215,4 million) were past due but not impaired. Theserelate to a number of independent customers for whom there is no recent history of default. Payment cessions overcontractors and credit insurance exist over these trade receivables.

2016

66


CONTINUED


2016

67

16. TraDe anD OTher reCeIvabLeS continued

The ageing analysis of these trade receivables is as follows:

GrOuP COMPanY


Up to three months 128 928 128 420 – – Three to six months 49 250 87 047 – –

Total past due but not impaired 178 178 215 467 – –

Trade and other receivables impaired

As at 31 March 2016, trade receivables of R70,9 million (2015: R45,1 million) were impaired and the risk component of R78,2 million (2015: R39,7 million) was provided for. The individually impaired receivables mainly relate to independent customers, who trade in difficult economic circumstances. It was assessed that a portion of the receivables is expected to be recovered.

The ageing of these receivables is as follows:

Three to six months 10 267 7 723 – – Over six months 60 584 37 405 – –

Total impaired and partially provided for 70 851 45 128 – –

There is no concentration of credit risk with respect to trade receivables, as the group has a large and fragmented number of customers.

The carrying amounts of the group’s trade and other receivables are denominated in the following currencies (all balances aredisclosed in South african rand):

South African Rand 866 802 1 075 154 470 578 1 046 282 Other currencies 43 218 69 166 – –

910 020 1 144 320 470 578 1 046 282


CONTINUED


2016

68

GrOuP COMPanY


16. TraDe anD OTher reCeIvabLeS continued

Movements on the group provision for impairment of trade receivables are as follows:

Balance at the beginning of the year 39 730 22 382 – – Held-for-sale – (3 509) – – Provision for receivables impaired 37 807 10 596 – – Receivables written off as uncollectible (3 738) 4 455 – – Acquisition of subsidiaries 301 6 021 – – Foreign exchange movements on conversion 313 (165) – – Unused amounts reversed 3 836 (50) – –

balance at the end of the year 78 249 39 730 – –

The creation and usage of provision for impaired receivables have been included in other operating expenses in the income statement. Amounts charged to the provision account are generally written off, when there is no expectation of recovering additional cash.

The other classes within trade and other receivables do not contain impaired assets. The maximum exposure to credit risk at the reporting date is the fair value of each class of receivable mentioned above.

Intercompany finance lease receivables

Gross finance lease liabilities – minimum lease payments

No later than one year – – 17 706 1 969 Later than one year and no later than two years – – 13 714 1 921 Later than two years no later than five years – – 26 266 5 494

– – 57 686 9 384 Future finance charges – – (7 839) (1 749)

Present value finance lease liabilities – – 49 847 7 635

The present value of finance lease liabilities is as follows:

No later than one year – – 14 423 1 364 Later than one year and no later than two years – – 11 420 1 428 Later than two years no later than five years – – 24 004 4 843

– – 49 847 7 635


CONTINUED


2016

69

GrOuP COMPanY


17. CaSh anD CaSh equIvaLenTS Cash and cash equivalents consist of:

Bank balances 80 003 197 767 36 520 108 698 Short-term bank deposits 3 3 – –

80 006 197 770 36 520 108 698

For purposes of the statements of cash flows, cash and cash equivalents include the following:

Cash at bank and on hand and short-termbank deposits 80 006 197 770 36 520 108 698

Bank overdrafts and call loans (included in note 22 (borrowings)) (10 114) (196 342) – (150 001)

69 892 1 428 36 520 (41 303)

The group’s bank balances are managed through a cash management process and interest is charged on a net basis.

The effective interest rate on short-term bank deposits averaged 7,3% (2015: 3,5%) for the year under review.

Unutilised bank overdraft facilities amounted to R100 million at 31 March 2016 (2015: R22,6 million). Bank overdraft facilities carry an interest rate at the prime rate less 1,5% (2015: 1,5%).

The carrying amounts of the group’s cash and cash equivalents are denominated in the following currencies (all balances aredisclosed in South african rand):

South African Rand 64 372 191 310 36 520 108 698 Other currencies 15 634 6 460 – –

80 006 197 770 36 520 108 698


CONTINUED


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70

18. DISPOSaL GrOuP anD OTher aSSeTS/LIabILITIeS heLD-fOr-SaLe 31 March 2016

The group has no disposal group or other assets/liabilities held for sale.

31 March 2015

Wilhelm Import Network Proprietary Limited (WiiN) As a requirement of the Grohe DAWN Watertech transaction, DAWN was required to exit out of any business ventures that

are in direct competition with Grohe. On 31 March 2015 DAWN entered into an agreement for the disposal of its 60%holding in WiiN for a cash consideration of R15 million. As a result, WiiN has been derecognised and classified as held-for-sale and a loss on derecognition of R7,1 million was realised.

Kew property As a requirement of the Grohe DAWN Watertech transaction, the group acquired ISCA’s premises, situated in Kew, for

R18,5 million based on the net book value of the property. Subsequently, the market value of the property was determinedto be R16 million. It is the group’s intention to dispose of this property and it was classified as held-for-sale upon initialrecognition.

GrOuP

31 March 31 March 2016 2015 r’000 R’000

SuMMarY

Total assets of disposal group classified as held-for-sale – 34 337 Total liabilities of disposal group classified as held-for-sale – 18 337

wilhelm Import network Proprietary Limited (wiin) (a) Assets of disposal group classified as held-for-sale – 18 337 (b) Liabilities of disposal group classified as held-for-sale – 18 337

Kew property (a) Assets of disposal group classified as held-for-sale – 16 000 (b) Liabilities of disposal group classified as held-for-sale – –

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

Grohe Dawn watertech Revenue – 334 681 Expenses – (296 904)

Profit before tax from discontinued operations – 37 777 Income tax expense – (10 324)

Profit after tax from discontinued operations – 27 453

Attributable to: Owners of the parent – 27 438 Non-controlling interests – 15

– 27 453

Operating cash flows – (67 480) Investing cash flows – (4 048) Financing cash flows – (4 459)

Total cash flows – (75 987)


CONTINUED


2016

71

18. DISPOSaL GrOuP anD OTher aSSeTS/LIabILITIeS heLD-fOr-SaLe continued

GrOuP

31 March 31 March 2016 2015 r’000 R’000

wilhelm Import network Proprietary Limited (wiin)

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 – 2 891 Inventory – 13 872 Cash and cash equivalents – 89 Other current assets – 1 485

Total – 18 337

(b) Liabilities of disposal group classified as held-for-sale Non-current liabilities – 16 455 Trade and other payables – 965 Other current liabilities – 917

Total – 18 337

Kew property

(a) Assets classified as held-for-sale – 16 000 (b) Liabilities classified as held-for-sale – –

Total – 16 000

GrOuP COMPanY


19. Share CaPITaL authorised at 31 March 725 893 603 ordinary shares of 1 cent each 7 259 7 259 7 259 7 259 10 000 000 deferred ordinary shares of

1 cent each 100 100 100 100

balance at the end of the year 7 359 7 359 7 359 7 359

Share premium 373 748 373 748 373 748 373 748


CONTINUED


2016

72

19. Share CaPITaL continued

The authorised share capital of the company consists of 725 893 603 ordinary shares of 1 cent each and 10 000 000deferred ordinary shares of 1 cent each.

number of Deferred

number of deferred Total Ordinary ordinary Share

ordinary ordinary number of shares shares premiums Total

Issued shares shares shares r’000 r’000 r’000 r’000

At 30 June 2014 241 842 904 400 000 242 242 904 2 418 4 373 748 376 170

Deferred ordinary shares

converted to ordinary

shares 400 000 (400 000) – 4 (4) – –

At 31 March 2015 242 242 904 – 242 242 904 2 422 – 373 748 376 170

at 31 March 2016 242 242 904 – 242 242 904 2 422 – 373 748 376 170

Shares repurchased by a subsidiary and held in treasury amounted to 5 498 937 shares (2015: Nil shares), which aredisclosed as a reduction of equity in the statement of changes in equity. During the 2015 and 2016 financial years a further1 137 174 and 5 498 937 shares, respectively, were acquired in order to cover the group’s obligations in terms of the shareincentive schemes at a total cost of R7,02 (2015) and R5,61 (2016) per share. These obligations were settled in therespective years.

Deferred ordinary shares were converted into ordinary shares in terms of shareholders' approval in 2015.

The remaining unissued shares are under the control of the directors until the next annual general meeting, subject to theListings Requirements of the JSE Limited.

20. Share-baSeD PaYMenT reServe anD Share-baSeD PaYMenT LIabILITY Share scheme (reserve)

Share incentives in the form of Share Appreciation Rights (SARs), Long-Term Incentive Plan (LTIPs) awards and DeferredBonus Plan (DBPs) awards are offered to directors and to selected employees with the aim to retain key skills in the groupand to create a proper reward system.

The schemes normally have a vesting period of three years and lapse after seven years, if not exercised. Allocation grantsare approved by DAWN’s remuneration committee.

The grant price of these rights and awards are equal to the five-day volume weighted average traded market price of theshares preceding the date of the grant. Rights and awards are conditional on performance conditions being met. Theconditions focus on the group’s earnings growth. The vesting price of these rights and awards is the five-day weightedaverage traded market price of the shares preceding the date of vesting. The values accruing to participants are as follows:– SAR: Appreciation between the strike price and the vesting price; – LTIP: Difference between zero strike price and vesting price; and– DBP: Appreciation between the strike price and the vesting price.

Other share-based payment related transactions (liability)

During the prior and current year, specific LTIP tranches were offered to employees which were modified during thecurrent year and transferred from the share-based payment reserve to a share-based payment liability. These were settledin cash during the current year.

During the prior year, shares were offered to employees employed by the Watertech structure, and due to the Watertechtransaction, received share options. These options were modified during the current year and transferred from the share-based payment reserve to a share-based payment liability. These were either settled in cash or will be settled in cash at afuture date.


CONTINUED


2016

73

20. Share-baSeD PaYMenT reServe anD Share-baSeD PaYMenT LIabILITY continued

Incledon Proprietary Limited entered into a transaction with a BEE partner on 1 April 2015 for the BEE partner to acquire49% of a subsidiary for a nominal amount of R49. The value of the assets acquired by the BEE partner is R9,7 million. At49% the value acquired is R4,9 million. The transaction is disclosed as a share-based payment transaction in terms of IFRIC 8.

Movements in the number of share options outstanding and their related weighted average grant prices are as follows:

Market 2 price per valuation4 Total risk- right and allocation 3 per right number free Divi- award (strike) per of rights interest vola- dend per share price at share granted rate tility yield cents vesting cents ’000

Share appreciation rights (Sars) 2011 rights granted 7,7 37 1,7 628 628 234 773 2014 rights granted 1 7,0 45,7 1,7 950 950 429 295

Total Sars 1 068

Long-Term Incentive Plans (LTIPs) 3

2014 rights granted 1 7,0 n/a 1,7 950 – 901 955 2015 rights granted 7,0 n/a 1,7 700 – 651 3 433 2016 rights granted 7,0 n/a 1,7 433 – 400 1 579

Total LTIPs 5 967

Deferred bonus Plan (DbPs)

2011 rights granted 7,0 n/a 1,7 700 – 651 388

Total DbPs 388

Total number of share options granted 7 423

1 Share grants are not expect to vest. 2 Market price at date of grant. 3 Valuation for IFRS 2 – Share-based payment charges to profit and loss. 4 LTIPs have a nil strike price.

DAWN’s share price at 31 March 2016 was 400 cents (31 March 2015: 650 cents).

Based on management’s earnings projections, it is estimated that the current and projected non-market vestingconditions relating to tranches 6 to 8 of the Share Appreciation Rights (SARs) and Long-Term Incentive Plan (LTIPs)schemes are unlikely to be achieved.

The volatility input to the pricing model is a measure of the expected price fluctuations of the DAWN share price over thelife option structure. Volatility is measured as the annualised standard deviation of the daily price changes in theunderlying shares.

The weighted average fair value of the rights and awards granted was determined using a modified binomial tree modelto value the SARs and the Monte Carlo valuation model for the valuation of the LTIPs.


CONTINUED


2016

74


The following table sets out the reconciliation of the share-based payment reserve:

Sar LTIP DbP Other Total r’000 r’000 r’000 r’000 r’000

31 March 2016

Share-based payment reserve reconciliation Opening balance 1 309 34 301 1 322 28 983 65 915 Income statement charge – (2 722) – – (2 722) Income statement charge – other retention schemes 1 – – – 2 749 2 749

Transferred from reserves to liability – – – (26 381) (26 381)

Specific LTIP tranches transferred to share-based payment liability 1 – – – (8 906) (8 906)

Watertech transaction scheme transferred to share-based payment liability 2 – – – (17 475) (17 475)

Closing balance 1 309 31 579 1 322 5 351 39 561

1 Other retention schemes relate to employee benefit schemes approved by the remuneration committee, forming part of the LTIP scheme,

subsequently transferred to share-based payment liability during 2016.

2 Watertech transaction scheme refers to specific Watertech-related share transactions and subsequently transferred to share- based paymentliability during 2016.


Share-based payment liability reconciliation Opening balance – – – – – Income statement charge – Incledon KZN

Proprietary Limited 3 – – – 4 883 4883 Specific LTIP tranches transferred from share-based

payment reserve to share-based payment liability 1 – – – 8 906 8 906 Watertech transaction scheme transferred from

share-based payment reserve to share-based payment liability 2 – – – 17 475 17 475

Settlement 4 – – – (18 440) (18 440)

Closing balance – – – 12 824 12 824

1 Other relates to employee benefit schemes approved by the remuneration committee, which do not form part of the LTIP/SAR share scheme. 2 Watertech transaction scheme refers to specific Watertech-related share transactions and subsequently transferred to share- based payment

liability during 2016.

3 Incledon KZN Proprietary Limited expense relates to a BEE transaction explained above.

4 Other retention schemes relate to employee benefit schemes approved by the remuneration committee, forming part of the LTIP scheme,subsequently transferred to share-based payment liability during 2016.

GrOuP

31 March 31 March 2016 2015 ’000 ’000

Included in: Non-current liabilities 4 883 – Current liabilities 7 941 –

12 824 –


CONTINUED


2016

75


The following table reconciles the number of shares and rights outstanding in respect of the share-based payment reserve:

Sar LTIP DbP Total number of number of number of Other number of shares shares shares schemes shares ’000 ’000 ’000 ’000 ’000

Share rights and awards granted Opening balance 933 5 723 484 1 669 8 809 Issued – 1 579 – 232 1 811 Transferred to share-based payment liability

and settled – – – (1 901) (1 901) Forfeited and cancelled (160) (6 542) (484) – (7 185)

Closing balance 773 761 – – 1 534

GrOuP

Restated 31 March 31 March 2016 2015 ’000 ’000

Aggregate number of shares available to the new schemes 18 793 18 793 Share rights and awards granted (new schemes) (7 423) (16 010)

Number of share rights and awards available, but not engaged 11 370 2 783

31 March 2015


Share-based payment reconciliation (restated) Opening balance 1 309 37 666 1 281 – 40 256 Income statement charge – share scheme – 3 368 41 7 984 •# 11 393 Income statement charge – other retention schemes – – – 19 199 +# 19 199 Income statement charge – Watertech-related – – – 224 224 Transfer from liabilities – employee benefit

obligations and non-controlling interests in termof share scheme – – – 9 560 ~# 9 560

Vested – (6 733) – (7 984) (14 717)

Closing balance 1 309 34 301 1 322 28 983 65 915

• 1 200 000 shares granted to Collin Bishop as part of the Grohe DAWN Watertech transaction. Refer to note 2 under the prescribed officers section. + Relates to a once-off acceleration of vesting for participants employed in the Watertech group as a result of the Grohe DAWN Watertech

transaction. ~ Other relates to employee benefit schemes approved by the remuneration committee which do not form part of the LTIP/SAR share scheme. # For reclassification detail see note 44.


CONTINUED


2016

76


The following table reconciles the number of shares and rights outstanding:

Sar LTIP DbP Total number of number of number of Other number of shares shares shares schemes shares ’000 ’000 ’000 ’000 ’000

Share rights and awards granted (restated) Opening balance 1 358 14 832 – – 16 190 Issued – 5 806 484 2 869 # 9 159 Forfeited and cancelled (425) (7 252) – – (7 677) Vested – (7 663) – (1 200)# (8 863)

Closing balance 933 5 723 484 1 669 8 809


21. nOn-COnTrOLLInG InTereSTS anD ChanGeS In OwnerShIP reServe

non-controlling interests

GrOuP

31 March 31 March 2016 2015 r’000 R’000

balance at the beginning of the year 33 974 35 756 Share of attributable earnings for the year – continuing operations 5 004 362 Share of attributable earnings for the year – discontinued operations – 15 Dividends – (447) Non-controlling interests in business combination (note 36) 1 924 727 Foreign currency translation reserve (415) 99 Non-controlling interests acquired in subsidiaries (823) (2 538)

balance at the end of the year 39 664 33 974

31 March 2016

The transactions with non-controlling interest acquired related to the acquisition of Boutique Baths Proprietary Limited(note 36 – Business Combinations). DAWN also acquired the remaining shareholding of 25,83% in Pro-Max WeldingConsumables Proprietary Limited which resulted in a R0,39 million change to non-controlling interest. An additional 5%was acquired in Hamilton’s Brushware SA Proprietary Limited for R0,38 million with a R0,43 million movement in non-controlling interest.

31 March 2015

The transactions with non-controlling interests acquired relate to the acquisition of Africa Saffer Trading ProprietaryLimited, Pro-Max Welding Consumables Proprietary Limited and Hamilton’s Brushware SA Proprietary Limited (note 36 –Business Combinations), the acquisition of the remaining shareholding in DAWN Human Resources and the disposal of a51% share in the Watertech companies.


CONTINUED


2016

77

21. nOn-COnTrOLLInG InTereSTS anD ChanGeS In OwnerShIP reServe continued

Summarised financial information for non-controlling interest of the group *

Distributionand Total

warehousing non-Swan boutique ubuntu hamilton’s network controlling

Plastics baths Plastics brushware africa interestsProprietary Proprietary Proprietary Proprietary Proprietary 31 March

Limited Limited Limited Limited Limited ** 2016r’000 r’000 r’000 r’000 r’000 r’000

31 March 2016


Revenue 374 559 11 833 62 529 66 713 175 150 690 784Finance income 1 037 – 8 45 36 1 126Finance expense (1 470) (57) (1 264) (2 525) (5 782) (11 098)Income tax (expense)/income (11 312) (176) (757) 450 1 479 (10 316)Profit/(loss) after tax before non-controlling interest 29 472 452 1 897 (1 301) (36 175) (5 655)Profit/(loss) after tax after non-controlling interest 29 472 452 1 897 (1 301) (28 067) 2 453Depreciation and amortisation (4 761) (461) (1 307) (359) (1 907) (8 795)Dividends paid to non-controlling interest 6 918 – – – – 6 918Other comprehensive income – – – – 3 598 3 598Total comprehensive income/(loss) 29 472 452 1 897 (1 301) (32 577) (2 057)

Statement of financial position informationCurrent assets 85 451 3 624 18 376 32 759 94 002 234 212Non-current assets 28 576 8 720 20 026 2 925 18 386 78 633Current liabilities 45 115 9 679 14 053 35 467 121 864 226 178Non-current liabilities 13 255 2 213 7 629 – 1 949 25 046

Current financial liabilities (excluding trade and other payables and provisions) 3 370 8 192 5 808 18 509 83 024 118 903

Non-current financial liabilities (excluding trade and other payables and provisions) 10 939 2 213 6 949 – 1 685 21 786

Total cash 5 856 5 535 2 578 9 287 18 261

Operating cash flows 20 181 16 (2 059) 3 490 (39 764) (18 136)Investing cash flows (4 576) (9 678) 1 824 (771) (889) (14 090)Financing cash flows (16 131) 9 668 2 339 (5 105) 51 565 42 336

Total cash flows (526) 6 2 104 (2 386) 10 912 10 110

* Only non-controlling interests at year-end have been included in the summarised financial information.** Formerly Africa Saffer Trading Proprietary Limited.


CONTINUED


2016

78


Pro-Max Total

wilhelm welding africa non-

Swan import ubuntu Consu- hamilton’s Saffer controlling

Plastics network Plastics mables brushware Trading interests

Proprietary Proprietary Proprietary Proprietary Proprietary Proprietary 31 March

Limited Limited Limited Limited Limited Limited 2015

r’000 r’000 r’000 r’000 r’000 r’000 R’000

31 March 2015


Revenue 207 628 5 407 44 896 121 797 60 834 61 573 502 135

Finance income 139 – 48 – 18 66 271

Finance expense (741) (2 504) (667) (4 212) (617) (2 158) (10 926)

Income tax expense (5 264) (1 430) (747) – (594) (508) (8 542)

Profit after tax before non-controlling

interest 13 525 (12 766) 1 888 (725) 1 518 (17 463) (14 023)

Profit after tax after non-controlling

interest 13 525 (12 766) 1 888 (725) 1 518 (16 619) (13 179)

Depreciation and amortisation (3 258) (1 283) (801) (1 386) (351) (857) (7 936)


Information

Current assets 75 453 15 446 17 247 76 114 32 350 104 789 321 399

Non-current assets 29 195 2 891 22 244 6 803 2 062 18 445 81 640

Current liabilities 49 846 1 882 21 387 87 995 30 394 101 170 292 674

Non-current liabilities 14 500 941 3 280 2 027 2 500 4 537 27 785

Current financial liabilities

(excluding trade and other

payables and provisions) 3 582 917 7 518 51 238 20 799 39 583 123 637

Non-current financial liabilities

(excluding trade and other

payables and provisions) 12 740 941 2 947 2 027 2 500 4 194 25 349

Total cash/(overdraft) 6 432 89 (1 596) 5 684 4 967 (2 309) 13 267

Operating cash flows 15 691 (12 879) 3 389 (10 731) (8 750) (18 220) (31 499)

Investing cash flows (19 446) 19 601 (3 604) 39 650 (84) (648) 35 469

Financing cash flows 13 948 371 (800) (870) 8 962 16 196 37 867

Total cash flows 10 193 7 093 (1 015) 28 049 128 (2 672) 41 777


CONTINUED


2016

79


Changes in ownership reserve

GrOuP

31 March 31 March 2016 2015 r’000 R’000

balance at the beginning of the year (8 378) (17 989) Current year transactions:

Transactions with non-controlling interest 358 (8 058)

Pro-Max Welding Consumables Proprietary Limited 310 (2 206) Hamilton’s Brushware SA Proprietary Limited 48 – DAWN Human Resource Solutions Proprietary Limited – (4 716) Apex Valves South Africa Proprietary Limited acquisition – (1 843) DMD Marketing SA Proprietary Limited – 707

Derecognition of subsidiary – 17 173

Disposal of Apex Valves South Africa Proprietary Limited – 1 843 Disposal of Grohe group – 15 330

Derecognition of joint venture – 496

Africa Saffer Trading Limitada (Mozambique)) – 496

balance at the end of the year (8 020) (8 378)

The changes in ownership reserve arise out of the additional shareholding acquired in subsidiaries, which did not result in a change of control.

balance at the end of the year comprises of: DAWN Human Resource Solutions Proprietary Limited (5 623) (5 623) Pro-Max Welding Consumables Proprietary Limited (1 896) (2 206) Wholesale Housing Supplies East London Proprietary Limited (978) (978) Electroline Proprietary Limited (278) (278) Hamilton’s Brushware SA Proprietary Limited 48 – DMD Marketing SA Proprietary Limited 707 707

(8 020) (8 378)

acquisition breakdown

amount paid effect per on non- effect on cash flow controlling changes in statement interest ownership acquisition of non-controlling interest in subsidiary r’000 r’000 r’000

Hamilton’s Brushware SA Proprietary Limited additional 5% investment (69% to 75%) 380 428 (48)

Pro-Max Welding Consumables Proprietary Limited additional 25,84% investment (74,16% to 100%) 85 395 (310)

breakdown as at 31 March 2016 465 823 (358)


CONTINUED


2016

80

21. nOn-COnTrOLLInG InTereSTS anD ChanGeS In OwnerShIP reServecontinued

31 March 2016

Additional shares of 12,5% and 13,33% were acquired in Pro-Max Welding Consumables Proprietary Limited on 30 June2015 and 31 March 2016, respectively. This resulted in a R0,3 million decrease in the changes in ownership reserve.

An additional share of 5% was acquired in Hamilton’s Brushware SA Proprietary Limited on 1 July 2015 for an amount ofR0,4 million. This resulted in a R0,05 million decrease in the changes of ownership reserve.

31 March 2015

An additional share of 14,16% was acquired in Pro-Max Welding Consumables Proprietary Limited on 28 February 2015.The acquisition vendor of R2,5 million was disclosed under current borrowings. This resulted in a R2,2 million increase inthe changes in ownership reserve.

Additional shares of 24% and 18,1% were acquired for R6,2 million in DAWN Human Resource Solutions ProprietaryLimited on 30 November 2014 and 31 March 2015. This resulted in a R4,7 million increase in the changes in ownershipreserve.

At 30 October 2014, an additional 40% share amounting to R6 million was acquired in Apex Valves which resulted in achange in ownership to the value of R1,8 million. The change in ownership was reversed as part of the disposal of theWatertech companies.

A 51% share of the Watertech companies was disposed of to Grohe Luxemburg Four S.A. as at 31 October 2014. Thisresulted in the changes in ownership to be reversed as part of the transaction.

The R0,5 million change in ownership in Africa Saffer Trading Limitada (Mozambique) was reversed upon the purchase ofthe additional 39% shares in Africa Saffer Trading group on 31 October 2014.

An additional share of 20% was acquired in DMD Marketing SA Proprietary Limited on 31 March 2015. This resulted in aR0,7 million reversal in the changes in ownership reserve.

GrOuP COMPanY

Restated 31 March 31 March 31 March 31 March 2016 2015 2016 2015 r’000 R’000 r’000 R’000

22. bOrrOwInGS non-current

Interest-bearing borrowings Bank borrowings 9 409 4 978 – – Instalment sale liabilities 25 354 37 633 – – Finance lease liabilities 38 453 17 847 31 924 6 509

73 216 60 458 31 924 6 509

Non-interest-bearing borrowings Related parties and non-controlling

shareholders’ loans (note 41) 1 343 276 – – Acquisition vendors 1 300 2 237 – – Other borrowings – 2 500 – –

2 643 5 013 – –

Total non-current borrowings 75 859 65 471 31 924 6 509


CONTINUED


2016

81

GrOuP COMPanY


22. bOrrOwInGS continued

Current

Interest-bearing borrowings Bank overdraft and call loans 10 114 196 342 – 150 001 Bank borrowings 199 889 6 224 198 770 – Instalment sale liabilities 20 024 21 534 – – Finance lease liabilities 18 834 6 826 14 181 1 229 Directors’ and family members’ loans (note 41) 5 329 5 634 – – Trade finance 86 228 226 531 86 228 226 531 Other borrowings 10 578 30 305 – – Related parties and non-controlling shareholders’

loans (note 41) – – 198 212 102 915

350 996 493 396 497 391 480 676

Non-interest-bearing borrowings Other borrowings 4 884 4 072 – – Acquisition vendors 1 300 7 780 * – – Related parties and non-controlling shareholders’

loans (note 41) 201 137 39 445 82 977

6 385 11 989 39 445 82 977

Total current borrowings 357 381 505 385 536 836 563 653

Total borrowings 433 240 570 856 568 760 570 162

Other interest-bearing borrowings bear an interest rate varying between 2,82% and 9,25% (2015: varying between 2,7% and 9,25%).

The security provided can be summarised as follows:

Inventory General notarial bonds 739 688 – – – Accounts receivable Cession of book debts 655 483 58 652 – –

1 395 171 58 652 – –

The security listed in the table covers the group’s:

Revolving credit facility 200 000 200 000 200 000 200 000 Asset finance 116 415 103 591 46 105 7 738

316 415 303 591 246 105 207 738

* For restatement detail see note 44.


CONTINUED


2016

82


31 March 2016

A revolving credit facility of R200 million was granted with Absa Bank Limited on 15 October 2015.

The current facility ends 7 October 2016 and has been re-negotiated to 7 October 2017. The new facility has similarcharacteristics but will have a quarterly step-down of R25 million per quarter in respect of the revolving credit facility (RCF)starting 7 October 2016 and ending 7 July 2017. Accounts receivable have been ceded and a general notarial bond hasbeen registered over inventory.

The details of the covenant measures are as follows:

31 March 31 March Covenant measures required 2016 Required 2015

Total debt/EBITDA < 2.5:1 In breach n/a n/a

Interest cover > 4.0:1 In breach n/a n/a

Accounts receivable and inventory > 3.0:1 4.3

Accounts receivable – CGIC covered debtors > 1.5:1 4.8

As indicated above DAWN has breached some of its covenants and accordingly approached Absa for a waiver of therelevant covenant measures.

Absa consented to the non-compliance (breach) of the covenants and waived the event of default.

The pricing has provisionally been indicated and reflects a deteriorated credit position as well as movements in thegeneral yield curve.

Security requirements remain unchanged.

The carrying amount of the loan in default is R200 million (R200 million of a RCF) and Rnil general banking limit (R100million of a general banking facility).

31 March 2015

The term debt and revolving credit facilities with Absa Bank Limited of R400,0 million and R200,0 million, respectively,were settled on 31 October 2014.


CONTINUED


2016

83

GrOuP COMPanY

Restated * 31 March 31 March 31 March 31 March 2016 2015 2016 2015 r’000 R’000 r’000 R’000


The exposure of the group’s borrowings to interest rate changes and the contractual repricing dates at the end of the reporting period is as follows:

Six months or less 131 573 474 837 291 420 480 008 Six to twelve months 219 423 18 559 205 971 668 One to five years 70 737 56 996 31 924 6 509 Over five years 2 479 3 462 – –

424 212 553 854 529 315 487 185

The maturity of non-current borrowings is as follows (excluding instalment sale and finance lease liabilities):

Later than one year and no later than two years 3 322 1 572 – – Later than two years and no later than five years 4 860 2 325 – – Later than five years 1 227 1 081 – –

9 409 4 978 – –

Instalment sale liabilities – minimum payments:

No later than one year 21 368 23 369 – – Later than one year and no later than two years 11 811 13 015 – – Later than two years and no later than five years 13 075 23 350 – – Later than five years 1 251 2 381 – –

47 505 62 115 – – Future finance charges (2 127) (2 948) – –

Present value of instalment sale liabilities 45 378 59 167 – –

The present value of instalment sale liabilities is as follows:

No later than one year 20 024 21 534 – – Later than one year and no later than two years 11 291 12 166 – – Later than two years no later than five years 12 812 23 086 – – Later than five years 1 251 2 381 –

45 378 59 167 – –

Gross finance lease liabilities – minimum lease payments:

No later than one year 23 574 8 661 18 369 1 785 Later than one year and no later than two years 16 965 9 400 13 808 1 920 Later than two years and no later than five years 27 399 11 413 23 320 5 702

67 938 29 474 55 497 9 407 Future finance charges (10 651) (4 800) (9 392) (1 669)

Present value of finance lease liabilities 57 287 24 674 46 105 7 738

* Refer to note 44 for details regarding restatements, reclassifications and consistency of presentation disclosure.


CONTINUED


2016

84

GrOuP COMPanY



The present value of finance lease liabilities is as follows:

No later than one year 18 834 6 826 14 181 1 229 Later than one year and no later than two years 13 815 7 846 11 056 1 431 Later than two years no later than five years 24 638 10 002 20 868 5 078

57 287 24 674 46 105 7 738

% % % % The effective annual interest rates at the

end of the reporting period were as follows:

Bank borrowings

Working capital facilities 9,0 7,8 9,0 7,8

Long-term debt 9,0 6,9 9,0 6,9

Short-term debt 9,0 9,1 – 9,1

Loans from shareholders, directors and

family members 8,5 7,3 9,0 –

Instalment sale liabilities 9,5 10,0 – –

Finance lease liabilities 9,5 10,7 9,2 10,7

Trade finance 13,4 10,3 13,5 10,3

Related party loans – – 7,0 6,3

Carrying amounts fair values


The carrying amounts and fair values of

non-current borrowings of the group are

as follows:

Bank borrowings 9 409 4 978 9 409 4 978

Instalment sale liabilities 25 354 37 633 25 354 37 633

Finance lease liabilities 38 453 17 847 38 453 17 847

73 216 60 458 73 216 60 458

The fair values of bank borrowings and related party loans are based on discounted cash flows using an appropriate

market-related interest rate at the reporting date.

The carrying amounts of current borrowings approximate their fair values, as the impact of discounting is not significant.

The fair values of finance lease and instalment sale obligations are estimated as the present value of future cash flows,

discounted at the market-related interest rate at the reporting date.


CONTINUED


2016

85

GrOuP COMPanY



The carrying amounts of the group’s borrowings are denominated in the following currencies (all balances are disclosed as South african rands):

South African Rand 412 954 541 907 * 568 760 570 162 Other currencies 20 286 28 949 – –

433 240 570 856 568 760 570 162

borrowing powers DAWN has unlimited borrowing powers

permitted in terms of the company’s memorandum of incorporation.

borrowing facilities The group has the following contracted

borrowing facilities:

Floating rate Expiring within one year 339 481 478 186 497 391 480 676 Expiring beyond one year 66 486 58 872 31 924 6 509

405 967 537 058 529 315 487 185

Fixed rate Expiring within one year 11 515 15 210 – – Expiring beyond one year 6 730 1 586 – –

18 245 16 796 – –

Total interest-bearing borrowings (excludingacquisition vendors) 424 212 553 854 529 315 487 185


23. DerIvaTIve fInanCIaL InSTruMenTS fair value estimation

The fair value of forward foreign exchange contracts is determined using quoted forward exchange rates to terminate thecontracts at the statement of financial position date.

Derivative financial instruments

The table below analyses financial instruments carried at fair value, by valuation method. The different levels have beendefined as follows:

• Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).

• Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly(that is, as prices) or indirectly (that is, derived from prices) (level 2).

• Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).


CONTINUED


2016

86

23. DerIvaTIve fInanCIaL InSTruMenTS continued

GrOuP

Restated 31 March 31 March 2016 2015 Level r’000 R’000

aSSeTS non-current assets Put option – Grohe DAWN Watertech 3 34 380 29 890 #

Current assets Forward foreign exchange contracts – valued at fair value through profit/loss 2 249 44

Total assets 34 629 29 934

LIabILITIeS non-current liabilities Call option – Grohe DAWN Watertech 3 25 430 25 940 #

Written put – Swan Plastics Proprietary Limited 3 64 024 30 040 *

Total non-current liabilities 89 454 55 980

Current liabilities Forward foreign exchange contracts – valued at fair value through profit/loss 2 7 272 –

Forward foreign exchange contracts – designated as cash flow hedges 2 1 392 –

Total current liabilities 8 664 –

Total liabilities 98 118 55 980



COMPanY

31 March 31 March 2016 2015 Level r’000 R’000

aSSeTS non-current assets Put option – Grohe DAWN Watertech 34 380 29 890

Current assets Forward foreign exchange contracts – valued at fair value through profit/loss 2 8 910 –

Total assets 43 290 29 890

LIabILITIeS non-current liabilities Call option – Grohe DAWN Watertech 3 25 430 25 940

Current liabilities Forward foreign exchange contracts – valued at fair value through profit/loss 2 8 910 –

Total liabilities 34 340 25 940

The fair value of financial instruments traded in active markets is based on quoted market prices at the statement offinancial position date. A market is regarded as active if quoted prices are readily and regularly available from an exchange,dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularlyoccurring market transactions on an arm’s length basis. The quoted market price used for financial assets held by thegroup is the current bid price. These type of instruments are included in level 1. DAWN carries no level 1 financialinstruments.

The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) isdetermined by using valuation techniques. These valuation techniques maximise the use of observable market data whereit is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value aninstrument are observable, the instrument is included in level 2. If one or more of the significant inputs is not based onobservable market data, the instrument is included in level 3.


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Specific valuation techniques used to value financial instruments include:

• Quoted market prices or dealer quotes for similar instruments.

• The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based onobservable yield curves.

• The fair value of forward foreign exchange contracts is determined using forward exchange rates at the statement offinancial position date, with the resulting value discounted back to present value.

• Other techniques, such as discounted cash flow analysis, are used to determine fair value for the remaining financialinstruments.

All of the resulting fair value estimates are included in level 2.

forward exchange contracts

The foreign exchange contracts in the above are shown at the year-end values for similar contracts maturing at the samedate.

Open forward exchange contracts (at contracted rates) can be analysed as follows:

weighted average rand foreign forward amount amount exchange ’000 ’000 rate

31 March 2016

US Dollar – buy 86 857 5 275 16,5 US Dollar – sell 28 901 1 810 15,9 Euro – buy 13 562 752 18,0

31 March 2015

US Dollar – buy 14 381 1 228 11,7 US Dollar – sell 1 316 113 11,6 Euro – buy 4 469 325 13,7 Euro – sell 1 306 98 13,4

31 March 2016

The settlement dates on open forward exchanges contracts range between one and six months from 31 March 2016.

31 March 2015

The settlement dates on open forward exchange contracts range between one and four months from 31 March 2015.

hedge reserve

At 31 March 2016, the group held derivative financial instruments that were designated as cash flow hedges of futureforecast transactions. These were hedging of:

• Future capital expenditure payments by forward foreign exchange contracts

• Future inventory payments by forward foreign exchange contracts

The effective portion of the cumulative net change in the fair value of derivative financial instruments designated as a cashflow hedge is included in the hedge reserve. The periods in which the related cash flows are expected to occur aresummarised below:

Less than one year Total

31 March 2016

Contracts to hedge

Future capital expenditure payments 465 465 Future inventory payments 272 272

Total net loss (net of tax) included within hedge reserve 737 737 Tax on cash flow hedge 286 286

Total loss included with hedge reserve 1 023 1 023


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hedge accounting

Change invalue of Change in Change in

the hedging value if the theinstrument hedge item value of

nominal used for used for the hedging hedgeamount Carrying calculating calculating instrument ineffective-

of hedging amount hedge hedge recognised in nessinstrument of the ineffective- ineffective- other com- recognisedand hedge hedging ness for ness for prehensive in profit

item hedge instrument * 2016 2016 income *** or loss **r’000 rates r’000 r’000 r’000 r’000 r’000

as at 31 March 2016

Cash flow hedgesCapital expenditure 8 652 Zar/eur 730 (730) 646 (646) (84)

(up to one year) 17,46 – 19,34

Inventory 3 484 Zar/eur 99 (99) 71 (71) (28)(up to three months) 17,40

Inventory 5 010 Zar/uSD 563 (563) 306 (306) (257)(up to five months) 16,84 – 17,37

* Hedging instruments are located with the derivative financial instruments caption on the statement of financial position. ** Hedge ineffectiveness is recognised in the other operating income (net foreign exchange loss/gain - note 5) caption in the income statement. *** Including deferred tax effect.

Carrying amount of the hedged item equals the nominal value of the hedging instrument.

Call and put option – Grohe Dawn watertech

The Watertech transaction included a call option in favour of Grohe to acquire an additional 24,1% indirect shareholding inthe Watertech companies from DAWN after a ten-year period and, if such option is exercised by Grohe, or if Grohe’sshareholding has otherwise increased to 75,1%, the option for DAWN to put its remaining 24,9% indirect interest in theWatertech companies to Grohe.

Put option of R34,4 million and a call option of R25,4 million were recognised at their fair values. A 50%/50% probabilitywas assumed and the consideration in future will be determined as an earnings multiple. The Monte Carlo valuationmethod was used and the assumptions are set out below.

Inputs and assumptions

31 March 31 March Materiality 2016 2015

Spot equity (100% holding) (R’000) Low 1 645 000 1 645 000Spot EBITDA (100% holding) (R’000) Low 200 000 182 778

Spot value of P/EBITDA (%) Low 8,2 9,0 Spot DAWN shareholding (%) High 49,0 49,0 Spot Acqui Co shareholding (%) High 51,0 51,0 Control premium (%) Medium 15,0 15,0

Case 2 probability High unspecified unspecified Long-term mean: P/EBITDA High 9,0 9,0 Reversion factor (%) High 40,0 40,0 Equity volatility (%) Medium 35,0 35,0 Probability: Growth in EBITDA per annum (%) Implied 40,0 60,0 Probability: Decline in EBITDA per annum (%) Implied 40,0 60,0 Risk-free rate Low BESA Swap Curve BESA Swap Curve Dividend yield (%) Low 0,0 0,0 Debt in cash High Section 5.10 Section 5.10


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written put – Swan Plastics

A written put relating to Swan Plastics Proprietary Limited (Swan) had to be accounted for. In August 2013, a subsidiary ofDAWN gave the remaining 49% shareholders in Swan the right to put their shares at a 5 price earnings ratio based on theaverage of the prior two years’ earnings. After six years there will be a deemed offer and a deemed acceptance of theremaining 49%. This written put was not disclosed to the board. At inception the valuation is accounted for in retainedearnings as part of equity and the profit and loss impact is accounted for as a finance expense and an employmentexpense. The written put is disclosed in derivatives and an employment liability in trade and other payables – non-current(note 30). Refer to restatement, reclassification and consistency of presentation (note 44).

GrOuP COMPanY


24. DeferreD PrOfIT The analysis of deferred profit is as follows: Balance at the beginning of the year 44 730 46 393 * – – Deferred profit released (5 327) (3 862)* – – Acquisition through held-for-sale investment – 2 199 – –

balance at the end of the period 39 403 44 730 – –

Deferred profit is reflected on the statement of financial position as follows:

Deferred profit – non-current portion 34 076 39 403 * – – Deferred profit – current portion 5 327 5 327 * – –

Deferred profit – total 39 403 44 730 – –


The deferred profit consists of the sale and operating lease-back of the Germiston property during 2009 and thePietermaritzburg property during 2010. The deferred profit is released to profit and loss on a straight-line basis overmanagement’s estimate of the remaining lease term.

Germiston property

The full lease period including all renewals is twenty years. It is the intention of the group to occupy the property for aperiod of fifteen years and the remaining balance will be amortised over a remaining period of seven years.

Pietermaritzburg property

The initial lease period is for ten years and the group has the option to renew the lease for a further five years. Theintention of the group is to occupy the property for ten years after which the change in circumstances and requirements ofthe group will be reconsidered.

As part of the Grohe DAWN Watertech transaction, the lease was ceded by Libra to Wholesale Housing SuppliesProprietary Limited.


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90

GrOuP COMPanY


25. DeferreD Tax net deferred tax asset

Net deferred tax is calculated on all temporary differences under the liability method using a South African statutory rate of 28% (2015: 28%).

The following amounts are shown in the consolidated statement of financial position (aggregated based on subsidiary companies):

The deferred tax assets and deferred tax liabilities are reflected on the statement of financial position as follows:

Total deferred tax assets 98 400 103 157 * – – Total deferred tax liabilities (22 185) (17 969) (2 548) (737)

net deferred tax assets 76 215 85 188 (2 548) (737)

The gross movement on the deferred tax account is as follows:

Balance at the beginning of the year 85 188 47 265 * (737) – Acquisition of subsidiary (330) 2 513 – – Disposal of subsidiary – 3 698 – – Income statement charge – temporary differences (6 179) 33 375 * (1 811) (737) Charged directly to equity 4 12 – – Prior year adjustments – (1 496) – – Deferred tax impact in associates and joint ventures (1 954) – – – Foreign exchange movement on conversion (125) (155) – – Income statement charge – change in tax rate (389) (24) – –

balance at the end of the year 76 215 85 188 (2 548) (737)


The group did not recognise deferred tax assets of R76,7 million (2015: R40,2 million) in respect of cumulative lossesamounting to R292,6 million (2015: R141,3 million) which can be carried forward against future taxable income.

Movement in deferred tax assets and liabilities

The movement in deferred tax assets and liabilities during the year, without taking into consideration the offsetting ofbalances within the same tax jurisdiction, is as follows:

Deferred tax liabilities

Intangible Capital assets and allowances other Total GrOuP r’000 r’000 r’000

at 1 July 2014 (24 025) (24 091) (48 116) (Debited)/credited to the income statement (5 666) 7 564 1 898 Change in tax rate 103 – 103 Exchange differences (75) (90) (165) Acquisition of businesses (479) (4 411) (4 890)

at 1 april 2015 (30 142) (21 028) (51 170) (Debited)/credited to the income statement 3 570 25 451 29 021 Change in tax rate (389) – (389) Exchange differences (70) – (70) Acquisition of businesses – (330) (330)

Derecognition of joint venture – (1 954) (1 954)

at 31 March 2016 (27 031) 2 139 (24 892)


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91

25. DeferreD Tax continued

Deferred tax assets

Deferred profit and GrOuP operating assessed lease losses Provisions liabilities and other Total r’000 r’000 r’000 r’000

at 1 July 2014 (restated) 46 123 * 41 129 8 129 95 381 (Debited)/credited to the income statement 1 910 983 27 087 29 980 Change in tax rate – – (127) (127) Exchange differences 11 – – 11 Acquisition of businesses 1 051 – 6 352 7 403 Disposal of subsidiary 3 698 – – 3 698 Charged to equity – – 12 12

at 1 april 2015 52 793 42 112 41 453 136 358 (Debited)/credited to the income statement (15 744) (181) (19 275) (35 200) Change in tax rate – – – – Exchange differences (55) – – (55) Acquisition of businesses – – – – Disposal of subsidiary – – – – Charged to equity – – 4 4

at 31 March 2016 36 994 41 931 22 182 101 107


Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current assets against currenttax liabilities and when the deferred taxes relate to the same fiscal authority.

recognition of deferred tax assets

The group discloses a deferred tax asset on the basis where:

• the utilisation of the deferred tax asset is dependent on future taxable profits in excess of the profits arising from thereversal of existing taxable temporary differences and that such deferred tax assets are expected to be utilised within aperiod not exceeding three years; and

• the entity has suffered a loss in either the current or preceding period in the tax jurisdiction to which the deferred taxasset relates.

COMPanY

Deferred tax is raised relating to a put option which is expected to materialise in future. Deferred tax has been raised at theSouth African capital gains tax rate.


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92

GrOuP

31 March 31 March 2016 2015 r’000 R’000

26. reTIreMenT benefIT ObLIGaTIOn Certain of the employees of DPI Plastics Proprietary Limited are entitled to medical aid

benefits in terms of the DPI group of companies’ post-employment medical benefit plan. The plan is unfunded.

The amounts recognised in the statement of financial position are determined as follows:

Present value of unfunded obligations 5 100 6 035

Movement for the year Balance at beginning of year 6 035 5 820 Benefits paid (457) (244) Movement directly through equity (1 009) 43

– changes in demographic assumptions (607) (38) – changes in financial assumptions (402) 81

Net expense recognised in profit or loss 531 416

balance at end of year 5 100 6 035

The amounts recognised in the income statement were as follows: Current service cost 34 31 Interest cost 497 385

Total included in employee benefits expense and interest 531 416

Increase Decrease r’000 r’000

The effects of a 1% movement in the assumed healthcare cost inflation rate were as follows:

Effect on the defined benefit obligation 12 12

The effects of a 1% movement in the assumed discount rate were as follows: Effect on the defined benefit obligation 368 328

The latest actuarial valuation of the post-employment medical benefit plan was carried out on 31 March 2016. The groupperforms a valuation at least every three years.

The expected contributions for the 2017 financial year are R0,46 million.

GrOuP

31 March 31 March 2016 2015 % %

The principal assumptions used in the valuation were as follows: Discount rates used 10,06 8,55 Healthcare cost inflation 8,50 8,50 Continuation of membership at retirement 100,00 100,00 Consumer price index inflation 7,47 6,06

Average retirement age 65 years 65 years

Mortality Various assumptions regarding future mortality experience were made. These are based on PA (90) ultimate tables for

interest of mortality after retirement and SA 70–90 (light) ultimate tables for rates of mortality before retirement.


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27. reTIreMenT funDS (defined contribution funds) The policy of the group is to provide retirement benefits to its employees. The group has been participating in various

Provident Funds. The majority of contributions are made to South African funds namely: The Sanlam Provident Fund (fromNovember 2011), The Metal Industries Provident Fund and The CIN Provident Fund. These funds are classified as definedcontribution funds.

The contributions paid by the group to fund obligations for the payment of retirement benefits are charged against theincome statement as and when incurred. The group contributed R44,0 million to the various funds (2015: R30,1 million) forthe year under review. Of these contributions, R42,1 million (2015: R28,6 million) was contributed to provident funds inSouth Africa and R1,9 million (2015: R1,5 million) was contributed to provident funds outside of South Africa.

additional information relating to provident fund contributions made to provident funds in South africa All the funds are in a sound financial position at their latest financial year-end.

A total of 2 357 employees (2015: 2 263 employees) are members of the above South African funds.

Below are the relevant funds as well as their latest financial status:

funding Funding number of Number of 2016 2015 employees employees % % 2016 2015

The Sanlam Provident Fund 100,0 100,0 2 087 2 049 The Metal Industries Provident Fund 100,0 100,0 204 209 The CIN Provident Fund 100,0 100,0 66 5

2 357 2 263

A total of 136 employees (2015: 166 employees) are members of foreign funds.

GrOuP

31 March 31 March 2016 2015 r’000 R’000

28. OPeraTInG LeaSe LIabILITIeS anD COMMITMenTS Capital commitments

Capital expenditure contracted for at the reporting date but not yet incurred and recognised in the financial statements is as follows:

Motor vehicles 4 178 3 442 Intangible assets – software 5 512 10 153

Total capital commitments 9 690 13 595

It is intended to finance capital expenditure from working capital generated within the group and available financefacilities.

Operating lease commitments

The group leases various premises, equipment and plant and machinery under non-cancellable operating leaseagreements.

The leases have varying terms and escalation clauses. The lease expenditure charged to the income statement during theyear is disclosed in note 4.

Leases have varying terms between current and December 2023. The leases with determinable escalations are charged tothe income statement on a straight-line basis and liabilities are raised for the difference between the lease payment andthe charge recognised in the income statement. The liabilities are classified based on the timing of the reversal which willoccur between short-term and long-term.


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28. OPeraTInG LeaSe LIabILITIeS anD COMMITMenTS continued

GrOuP

Restated 31 March 31 March 2016 2015 r’000 R’000

Operating lease liabilities Non-current 110 363 105 236 Current 2 776 1 754

113 139 106 990

The future aggregate minimum lease payments under non-cancellable operating leases are as follows:

No later than one year 103 550 96 461 Later than one year and not later than five years 484 556 493 440 Later than five years 70 500 147 107

658 606 737 008

29. 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.

GrOuP COMPanY


Bank guarantees issued 4 053 2 105 726 949 – Suretyships 5 500 5 500 – –

9 553 7 605 726 949 –

31 March 2016

The position as per the prior year has not changed.

31 March 2015

The Competition Commission of South Africa referred a complaint to the Competition Commission Tribunal regardingallegations of market allocation between DPI Plastics Proprietary Limited and Sangio Pipe Proprietary Limited. Based onlegal advice, the matter will be defended and the group expects that the matter will be favourably concluded.


CONTINUED


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95

GrOuP COMPanY

Restated31 March 31 March 31 March 31 March

2016 2015 2016 2015r’000 R’000 r’000 R’000

30. TraDe anD OTher PaYabLeSTrade payables 766 218 911 124 – 179Accrued expenses and other payables 75 345 87 929 * 29 811 31 518Leave accrual 21 798 22 910 – –Discounts payable 23 265 19 155 – –Onerous lease contracts 11 069 – – –

Total trade and other payables 897 695 1 041 118 29 811 31 697

Included in:Non-current assets 7 114 3 338 – –Current assets 890 581 1 037 780 29 811 31 697

897 695 1 041 118 29 811 31 697


Trade and other payables are unsecured and are payable within a period of twelve months.

GrOuP

31 March 31 March2016 2015

r’000 R’000

additional disclosure relating to onerous lease contracts

Balance at the beginning of the year – –Provisions made during the year 11 069 –

balance at the end of the year 11 069 –

The onerous lease contracts provision relates to two premises, located in Pietermaritzburg and Centurion, which wereraised against operating lease expenses.

The Pietermaritzburg lease, which ends on 31 March 2020, is included in the Solutions segment.

DAWN took over the lease as part of the Grohe transaction that occurred in the previous financial year. The lease on thisproperty is non-cancellable and is currently being partly sub-let until 29 February 2020. Only the unavoidable costs havebeen provided for.

The Centurion lease, which ends on 1 May 2018, is included in the infrastructure segment.

The IPS business was moved from the Centurion premises into the Incledon premises during the current financial year dueto the businesses merging. The property is currently vacant and the lease is non-cancellable. No sub-lease has beennegotiated.

The provision is expected to be utilised over the remaining lease periods and it has been discounted.


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30. TraDe anD OTher PaYabLeS continued

GrOuP COMPanY


The carrying amounts of trade and other payables approximate their fair value.

The carrying amounts of the group’s trade and other payables are denominated in the followingcurrencies (all balances are disclosed in South african rand):

South African Rand 733 300 882 527 – 179 Other currencies 32 918 28 597 – –

766 218 911 124 – 179

The carrying amounts of the group’s trade and other payables which are not financial instruments are denominated in South african rand and consist of:

Accrued expenses and other payables 75 656 87 929 * 29 811 31 518 Leave accrual 21 798 22 910 – – Discounts payable 23 265 19 155 – – Onerous lease contracts 10 758 – – –

131 477 129 994 29 811 31 518

Total trade and other payables 897 695 1 041 118 29 811 31 697



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97

GrOuP COMPanY


CASH FLOW STATEMENTS

31. CaSh GeneraTeD frOM OPeraTIOnS (including discontinued operations for the period ended 31 October 2014)

Profit before taxation (738 319) 466 493 *# (373 452) (12 242)– Continuing operations (738 319) 428 716 *# (373 452) (12 242)– Discontinued operations – 37 777 – –

Adjustments for: 787 335 (410 085)*# 377 450 5 847

Depreciation 55 432 44 087 – – Amortisation of government grants (39) (40) – – Amortisation 14 019 14 129 – – Impairment of property, plant and equipment 47 729 720 – – Impairment of intangible assets 127 480 96 915 – – Impairment of loan receivables – – 143 799 13 532 Net profit on disposal of property, plant and equipment (1 623) (1 220) – – Net share-based payment charge 4 910 30 343 # – – Deferred profit (5 327) (3 995)* – – Finance income (3 460) (12 533) (50 694) (61 514) Finance expense 74 530 53 503 * 37 250 34 549 Share of losses/(profit) of associates 5 891 (10 877) – – Share of profit of associate from disposal group – (1 214) – – Other employee benefit charges (4 744) 21 188 – – Operating lease liabilities 6 149 8 265 * – – Foreign exchange losses on operating activities 549 369 – – Fair value movement of derivative – call and put

option Grohe DAWN Watertech (5 000) (3 950) (5 000) (3 950) Contingencies released – – – 23 230 Write-off of acquisition vendor – Pro-Max – (8 359) – – Post-employment benefit obligation 179 158 – – Net gain on derecognition of previously held interest

– Grohe DAWN Watertech – (629 416) – – Net (gain)/loss on derecognition of previously held

interest – Wilhelm Import Network (2 807) 7 091 – – Net gain on derecognition of investment in

Africa Saffer Trading – (15 045) – – Net loss on derecognition of investment in Saffer

Union (West Africa) Limited (SUWA) 7 399 – – – Impairment of investment in subsidiary – Wholesale

Housing Supplies Proprietary Limited – – 248 397 Impairment of other assets – Wilhelm Import Network 7 395 – 3 698 – Impairment of investments in associates and joint ventures 450 214 – – – Derivative movements 8 459 (204) – –

Changes in working capital: 25 290 (297 318) (2 273) 1 640

Decrease/(increase) in inventories 134 555 (164 420) – – Decrease/(increase) in trade and other receivables 49 831 108 023 (656) (5) (Decrease)/increase in trade and other payables (159 096) (240 921) (1 617) 1 645

Cash generated from/(utilised in) operations 74 306 (240 910) 1 725 (4 755)




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98

GrOuP COMPanY


32. reCOnCILIaTIOn Of InCOMe Tax PaID DurInG The Year

Income tax liability/(asset) at beginning of year 8 583 6 955 3 248 (4)

– continuing operations 8 583 (5 116) 3 248 (4) – disposal group – 12 071 – –

Current tax for the year recognised inprofit or loss – continuing operations 13 045 8 526 2 530 7 024

Current tax for the year recognised in profit or loss – disposal group – 12 740 – –

Derecognition of subsidiary – (24 811) – – Business combinations – 7 014 – – Disposal of subsidiary – 11 369 – – Interest and other movements (203) (116) – – Tax relief on equity settled instruments 953 5 359 – – Income tax (liability)/asset at the end of the year

– continuing operations (1 428) (8 583) 1 988 (3 248)

Income tax paid during the year 20 950 18 453 7 766 3 772

Income tax was transferred to equity due to the taximpact of the difference between cash and equity settled share schemes.

33. aDDITIOnS TO PrOPerTY, PLanT anD equIPMenT Land and buildings 6 778 6 004 – – Plant and machinery 56 834 40 066 – – Furniture and equipment 5 479 6 539 – – Motor vehicles 26 780 23 360 – –

Additions to property, plant and equipment – continuing operations (note 11) 95 871 75 969 – –

Additions to property, pant and equipment – disposal group – 24 259 – –

Total additions 95 871 100 228 – – Non-cash additions financed by instalment sale

and finance leases – continuing operations (46 046) (46 576) – –

Non-cash additions financed by instalment sale and finance leases – disposal group – (7 238) – –

Government grants received (8 291) – – –

Total property, plant and equipment additions 41 534 46 414 – –


CONTINUED


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99


CONTINUED


GrOuP COMPanY


34. PrOCeeDS frOM DISPOSaLOf PrOPerTY, PLanT anD equIPMenT

Net book amount of assets disposed of 4 622 12 962 – –

– continuing operations 4 622 11 364 – – – disposal group – 1 598 – –

Net profit on disposal of plant and equipment 1 623 1 220 – –

– continuing operations 1 623 1 051 – – – disposal group – 169 – –

Total proceeds from sale of property, plantand equipment 6 245 14 182 – –

35. aDDITIOnS TO anD DeveLOPMenT Of InTanGIbLe aSSeTS

Software – continuing operations – additions 73 927 17 542 – –

– continuing operations – IT assets transferred (48 512) – – – – disposal group – 11 658 – – Government grants received (21 568) – – –

Total intangible additions 3 847 29 200 – –

2016

100

36. buSIneSS COMbInaTIOnS

31 March 2016

boutique baths Proprietary Limited

A 76% share was acquired in Boutique Baths Proprietary Limited (Boutique Baths) for a consideration of R7 million. Boutique Bathsspecialises in the manufacturing and distribution of unique, luxury baths. The effective date of the transaction was 1 April 2015.

Boutique Baths contributed operating profit of R0,7 million and revenue of R11,8 million since the acquisition date.

The amount of net assets acquired amounted to R5,6 million and non-controlling interests of R1,9 million was recognised. Goodwillrecognised on this acquisition amounts to R3,3 million. Intangible assets have been allocated in terms of IFRS 3(R).

Non-controlling interest has been calculated based on the proportional share in net assets. The goodwill is not expected to bededucted for income tax purposes.

The fair value of assets acquired, liabilities assumed, intangibles assets and the non-controlling interest at the acquisition date are setout below.

boutique baths Proprietary Limited Consideration at acquisition date: r’000

Cash 7 006

Total purchase consideration 7 006

recognised amounts of identifiable fair assets acquired and liabilities value assumed: r’000

Property, plant and equipment 4 194 Customer relationships 1 179 Inventory 1 611 Trade and other receivables 691 Cash and cash equivalents 3

assets 7 678

Trade and other payables (1 450) Deferred tax liabilities (330) Provisions and accruals (316)

Liabilities (2 096)

Total identifiable net assets 5 582 Less: Non-controlling interest (1 924) Goodwill 3 348

Purchase consideration 7 006

Cash flow from acquisitions Total purchase consideration 7 006 Less: Cash and cash equivalents acquired (3)

Total cash outflow from acquisitions 7 003


CONTINUED


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36. buSIneSS COMbInaTIOnS continued

31 March 2015

Pro-Max group (Pro-Max)

A 60% share was acquired in Pro-Max (Pro-Max Welding Consumables Proprietary Limited and Weld-D Proprietary Limited) for aprovisional cash consideration of R8,4 million. The cash consideration to be paid was dependent on Pro-Max meeting certain targets asset out in the sale of shares agreement between the group and Pro-Max. Pro-Max did not achieve the targets and the acquisitionvendor of R8,4 million was reversed through profit and loss.

Pro-Max specialises in the manufacturing and distribution of welding equipment and consumables. The effective date of thetransaction was 1 July 2014.

Pro-Max contributed operating profit of R3,6 million and revenue of R125,9 million since the acquisition date.

The amount of net liabilities acquired amounted to R6,9 million and non-controlling interests of R0,9 million was recognised.

The total fair value of identified intangible assets is R9,1 million. Goodwill recognised on this acquisition amounts to R9,6 million. Thetotal goodwill amount, trademarks to the value of R4,5 million and customer relationships of R3,5 million were impaired as at 31 March2015. A further 14,16% was acquired during February 2015 for a cash consideration of R2,5 million. This was accounted for as atransaction with non-controlling interest (note 21) and charged to the changes in ownership reserve. The R2,5 million is payable in fullby 1 September 2015.

hamilton’s brushware Sa Proprietary Limited (hamilton’s)

On 1 December 2014 the group acquired a 69% share in Hamilton’s Brushware SA Proprietary Limited for a cash consideration of R10million. Hamilton’s specialises in the manufacturing and retail distribution of brushware. Hamilton’s contributed operating profit ofR0,97 million and revenue of R18,4 million since the acquisition date. If the acquisition had occurred on 1 July 2014, group revenuewould have been R28,1 million more, and operating profit for the period would have increased by R1,4 million. The amount of netassets acquired amounted to R0,9 million and non-controlling interests of R2,3 million was recognised. Total fair value of intangiblesrecognised are R6,6 million, comprising customer relationships and tradenames.

The total goodwill attributed to this transaction amounts to R2,1 million.

apex valves (South africa) Proprietary Limited (apex valves)

An additional 39,53% shareholding was acquired in Apex Valves (South Africa) Proprietary Limited (Apex Valves) on 30 July 2014 inaddition to the 60,47% previously owned. This resulted in the group obtaining 100% control over Apex Valves. A cash consideration ofR6 million was paid on 31 October 2014.

africa Saffer Trading Proprietary Limited (aST)

The group acquired an additional 39% shareholding in AST as at 31 October 2014 for a cash consideration of R17,7 million. The 51%interest disclosed as an investment in joint venture was derecognised. Subsequently, AST was rerecognised as a subsidiary.

The group realised a net gain of R15,0 million on this transaction, consisting of a R5,0 million loss on derecognition of the joint ventureand a R20,0 million gain on rerecognition as a subsidiary.

The total goodwill attributed to this transaction amounts to R29,5 million and was impaired.

The AST group contributed an operating loss of R14,8 million and revenue of R61,6 million since the acquisition date.

If the acquisition had occurred on 1 July 2014, group revenue would have been R62,4 million more, and operating profit for the periodwould have decreased by R1,0 million.

IPS & Distribution Proprietary Limited (IPS)

An additional 51% was purchased in IPS as at 1 January 2015 for a cash consideration of R51. The 49% disclosed as an investment inassociate was derecognised. Subsequently, IPS was rerecognised as a 100% owned subsidiary.

The total goodwill attributed to this transaction amounts to R2,3 million.

IPS contributed an operating loss of R2,7 million and revenue of R30,8 million since the acquisition date.

Saffer union (west africa) Limited (Suwa)

The group acquired an additional 50% shareholding in SUWA as at 31 March 2015 for a cash consideration of R5,2 million. This resultedin the group obtaining 100% control over SUWA and recognised it as a subsidiary. SUWA is part of the AST group. If the acquisitionoccurred on 1 July 2014, group revenue would have been R5,5 million more and operating profit for the period would have decreasedby R21,8 million. The amount of net assets acquired amounted to R1 million. No identifiable intangibles were recognised. Totalgoodwill attributed to this transaction amounts to R4,3 million and was subsequently impaired.


CONTINUED


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102

36. buSIneSS COMbInaTIOnS continued

The fair value of assets acquired, liabilities assumed, intangibles assets and the non-controlling interest at the acquisition date are set outbelow.

africa Saffer hamilton’s Saffer union IPS & brushware Sa Trading (west Distribution Pro-Max Proprietary Proprietary africa) Proprietary group Limited Limited Limited Limited Total Consideration at acquisition date: r’000 r’000 r’000 r’000 r’000 r’000

Cash – 10 000 17 658 5 220 – 32 878 Fair value of previously held interest – – 20 080 – – 20 080 Loan amount acquired as part of

acquisition – (4 521) – – – (4 521)Contingent consideration

(acquisition vendor) 8 359 – – – – 8 359

Total purchase consideration 8 359 5 479 37 738 5 220 – 56 796

recognised amounts of identifiable fair fair fair fair fair fair assets acquired and liabilities value value value value value value assumed: r’000 r’000 r’000 r’000 r’000 r’000

Property, plant and equipment 8 008 2 100 7 064 201 1 129 18 502 Trademarks 5 139 3 275 – – – 8 414 Customer relationships 3 974 3 409 – – – 7 383 Investments in joint ventures – equity

accounted – – 8 305 – – 8 305 Deferred taxation 219 222 560 – 6 417 7 418 Inventory 30 623 12 875 54 385 3 719 26 386 127 988 Trade and other receivables 35 727 12 126 50 747 14 11 861 110 475 Cash and cash equivalents 26 4 845 4 504 447 5 986 15 808

assets 83 716 38 852 125 565 4 381 51 779 304 293

Borrowings (3 780) (14 337) (35 630) – (20 711) (74 458) Trade and other payables (50 730) (15 428) (58 786) (1 924) (32 179) (159 047) Current tax liabilities (3 442) (591) (2 981) – – (7 014) Deferred tax liabilities (2 552) (1 859) (494) – – (4 905) Bank overdraft (22 514) – (4 058) – – (26 572) Provisions and accruals (1 081) (912) (17 833) (1 500) (1 139) (22 465)

Liabilities (84 099) (33 127) (119 782) (3 424) (54 029) (294 461)

Total identifiable net assets (383) 5 725 5 783 957 (2 250) 9 832 Less: Non-controlling interest (867) (2 351) 2 491 – – (727) Goodwill 9 609 2 105 29 464 4 263 2 250 47 691

Purchase consideration 8 359 5 479 37 738 5 220 – 56 796

Cash flow from acquisitions Total purchase consideration 8 359 5 479 37 738 5 220 – 56 796 Less: Cash and cash equivalents

acquired 22 488 (4 845) (446) (447) (5 986) 10 764 Less: Loan amount acquired as part

of acquisition – 4 521 – – – 4 521 Less: Fair value of previously held

interest – – (20 080) – – (20 080)Less: Contingent consideration (8 359) – – – – (8 359)

Total cash outflow/(inflow) from acquisitions 22 488 5 155 17 212 4 773 (5 986) 43 642


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103

37. neT (LOSS)/GaIn On DereCOGnITIOn Of SubSIDIarIeS (LOSS Of COnTrOL) 31 March 2016

The group realised a net loss of R4,6 million with the derecognition of Wilhelm Import Network Proprietary Limited (WiiN)and Saffer Union (West Africa) Limited (SUWA).

Wilhelm Import Network was classified as held-for-sale in the prior year. WiiN was disposed of in September 2015 andaccordingly losses incurred during 2016 were derecognised, resulting in a gain on derecognition. SUWA was disposed of inJanuary 2016 and derecognised, resulting in a loss on derecognition.

31 March 2015

The group realised a net gain of R637,4 million (2014: R14,8 million) with the derecognition of the Grohe DAWN Watertechgroup, Wilhelm Import Network Proprietary Limited and Africa Saffer Trading Proprietary Limited.

GrOuP


Loan repayment – 583 044 Proceeds from transaction – 296 956

Proceeds on derecognition of investment in Grohe DAWN Watertech – 880 000 Consideration for new investment in Grohe DAWN Watertech and Distribution and

Warehousing Network Africa Proprietary Limited (formerly Africa Saffer Trading Proprietary Limited) – 761 794

Carrying amount of net asset value (4 592) (1 004 424)

(Loss)/gain on derecognition of subsidiaries (4 592) 637 370

Net loss on derecognition of investment in Saffer Union (West Africa) Limited (SUWA) (7 399) – Net gain/(loss) on derecognition of investment in Wilhelm Import Network

Proprietary Limited 2 807 (7 091) Net gain on derecognition of investment in Distribution and Warehousing Network

Africa Proprietary Limited (formerly Africa Saffer Trading Proprietary Limited) – 15 045 Net gain of derecognition of investment in Grohe DAWN Watertech – 629 416

assets at Loans fair value and through recei- profit or vables loss Total r’000 r’000 r’000

38. fInanCIaL aSSeTS bY CaTeGOrY The accounting policies for financial instruments have been

applied to the line items below:

GrOuP – 31 March 2016 Trade and other receivables 1 867 377 – 867 377 Cash and cash equivalents 80 006 – 80 006 Derivative financial instruments 2 – 34 629 34 629

Total 947 383 34 629 982 012

GrOuP – 31 March 2015 (Restated) Trade and other receivables 1 1 106 201 – 1 106 201 Cash and cash equivalents 197 770 – 197 770 Derivative financial instruments 2 – 29 934 29 934

Total 1 303 971 29 934 1 333 905

1 Excluding pre-payments. 2 Derivative financial instruments (note 23).


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104

Liabilities at Other fair value financial through liabilities profit and at amor- loss tised cost Total r’000 r’000 r’000

39. fInanCIaL LIabILITIeS bY CaTeGOrY

The accounting policies for financial instruments have been applied to the line items below:

GrOuP – 31 March 2016 Borrowings – 423 126 423 126 Trade and other payables 1 – 875 897 875 897 Bank overdrafts and call loans – 10 114 10 114 Derivate financial instruments 2 98 118 – 98 118

Total 98 118 1 309 137 1 407 255

GrOuP – 31 March 2015 (Restated) Borrowings – 370 734 370 734 Trade and other payables 1 – 1 018 208 * 1 018 208 * Bank overdrafts and call loans – 196 342 196 342 Derivative financial instrument 2 25 940 – 25 940

Total 25 940 1 585 284 1 611 224

1 Excluding leave pay. 2 Derivative financial instruments (refer note 23) * For restatement detail see note 44.

40. rISK ManaGeMenT

financial risk management

The group’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk,cash flow interest rate risk as well as price risk), credit risk and liquidity risk.

In 2014 the group adopted a centralised treasury structure which acts as an internal banker for the group with the objectiveof providing value-add on both a strategic and operational level. This was made possible with the outsourcing of all itstreasury activities and obtaining professional treasury expertise on a full time basis.

Dawn has implemented:

i) liquidity risk management with short-term and long-term cash flow forecasting;

ii) implementation of foreign payments factory;

iii) centralisation of all financial assets and liabilities, financial risk exposures, recording and report within the group;

iv) cash sweeping and pooling;

v) centralisation and consolidation of all treasury-related activities, processes, systems and information;

vi) consolidated monthly strategic and operational reporting;

vii) intercompany loan restructuring; and

viii) on boarding of new subsidiaries.


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40. rISK ManaGeMenT continued

The focus for the next period includes:

i) working capital management;

ii) incorporation of all foreign subsidiaries into the centralised treasury and restructuring of loans to foreignsubsidiaries;

iii) host-to-host connection with the transactional banker for all foreign and treasury related payments;

iv) closure of bank accounts with the former transactional bankers;

v) review of financial risk management policies and the implementation of an integrated risk management frameworkwithin the group; and

vi) implementation of a formalised, regular and dynamic risk management process with the objective of optimising theportfolios.

The group’s objective with financial risk management is to protect the underlying business operations against thosefinancial risks which may influence its income negatively.

Accordingly, the group does not assume speculative positions and hedge the exposures and risks expeditiously, wherepossible.

foreign exchange risk

The group operates internationally and is exposed to foreign exchange risk arising from various currency exposures.Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities and net investments inforeign operations. Exposures consist primarily of exposures with respect to the US Dollar and Euro as well as exposure toforeign exchange due to operations in African countries including Angola, Botswana, Democratic Republic of the Congo,Mauritius, Mozambique, Tanzania and Zambia.

To manage the group’s foreign exchange risk arising from future commercial transactions and recognised assets andliabilities, entities in the group use forward foreign exchange contracts, where available. Foreign exchange risk arises whenfuture commercial transactions and recognised assets or liabilities are denominated in a currency that is not the entity’s functional currency.

Forward foreign exchange contracts are entered into to manage exposure to fluctuations in foreign currency exchangerates on specific transactions. In general, the group’s policy is to enter into forward foreign exchange contracts to covernet foreign currency exposure.

Forward foreign exchange contracts are used to hedge the foreign exchange risk in cash flows for unrecognised firmcommitments relating to purchases of property, plant and equipment or inventory, with lead times of one month orgreater, denominated in a foreign currency. Purchases of property, plant and equipment dominated in a foreign currencymay be hedged out to one year using forward foreign exchange contracts.

For the year ended 31 March 2016, derivative financial instruments included derivatives used to hedge foreign currency,including hedging of future capital expenditure and inventory payments, totalling R1,4 million (net liability) (2015: nil).

The group has certain investments in foreign operations which results in exposure to foreign currency translation risk. It isthe group’s policy to source borrowing facilities in the respective countries which are in the name of the respective legalentities, where possible.


CONTINUED


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106


The group’s significant exposure to foreign currency risk was as follows:

Trade Trade foreign Cash and foreign and and overdrafts cash exchange other other and bank equiva- contracts – functional currency receivables payables borrowings lents net sell/buy Total rand exposed to: r’000 r’000 r’000 r’000 r’000 r’000

31 March 2016

Zambian Kwacha 13 477 (2 225) (1 112) 9 585 – 19 725 Botswana Pula 7 450 (2 578) (7 452) 16 (2) (2 566) Mozambican Metical 8 381 (954) (3 811) 589 – 4 205 Angolan Kwanza 853 (777) (3) 500 – 573 Congolese Franc 686 (1 923) (477) 17 – (1 697) US Dollar 683 (16 455) (4 852) 1 975 (7 438) (26 087) Mauritian Rupees 94 (60) (1 067) 4 – (1 029) British Pound – – – – (4) (4) Euro – (2 218) – – (971) (3 189)

Total 31 624 (27 190) (18 774) 12 686 (8 415) (10 069)

31 March 2015

Zambian Kwacha 18 229 (914) (1 536) 2 097 – 17 876 Mozambican Metical 13 543 (501) (6 615) 118 – 6 545 Botswana Pula 11 792 (2 473) (4 274) 11 – 5 056 US Dollar 3 861 (12 323) (4 017) 2 990 (50) (9 539) Angolan Kwanza 2 103 (473) – 704 – 2 334 Mauritian Rupees 147 (799) (2 680) 68 – (3 264) Nigerian Naira 14 (1 799) – 447 – (1 338) Congolese Franc – (1 128) (341) – – (1 469) Euro – (2 101) – – 94 (2 007)

Total 49 689 (22 511) (19 463) 6 435 44 14 194

GrOuP COMPanY


The group’s significant exposure to foreign currency risk was as follows:

Sensitivity analysis

A 10% weakening of the Rand against the above currencies as at 31 March 2016 (2015: 31 March) would have increased/(decreased) equity and post-tax profit by:

Zambian Kwacha 1 420 1 287 – –Mozambican Metical 303 471 – –Angolan Kwanza 41 168 – –Botswana Pula (185) 364 – –Mauritian Rupees (74) (235) – –Congolese Franc (122) (106) – –Euro (230) (145) – –US Dollar (1 878) (687) – –Nigerian Naira – (96) – –

Total (725) 1 021 – –


CONTINUED


2016

107


This analysis assumes that all other variables, in particular interest rates, remain constant.

A 10 percent strengthening of the Rand against the above currencies as at 31 March would have had the equal butopposite effect on the above currencies to the amounts shown above, on the basis that all variables remain constant. Theconcentration of risk in respect of foreign currencies is considered low.

The lack of liquidity experienced in the African countries had a negative effect on the availability of currency forrepatriation and repayment of foreign obligations as well as the availability of hedging instruments in the affected foreigncountries. Alternative hedging mechanisms were deployed to assist in the foreign exchange management.

Cash flow and fair value interest rate risk

The group’s interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the group tocash flow interest rate risk. Borrowings incurred at fixed rates expose the group to fair value interest rate risk. The group’sborrowings are denominated mainly in Rand and at variable interest rates.

The effective interest rates on bank overdrafts are disclosed in note 22.

Interest rates on other borrowings are disclosed in note 22.

Inter-company financial assistance is provided or similar terms and conditions and in specific the interest rates, to ensure(as provided in the market place) no interest rate mismatch is created.

The table below analyses the group’s sensitivity to interest rate movements with respect to variable rates. The group doesnot have significant exposure to fixed rate instruments.

GrOuP

Restated 31 March 31 March 2016 2015 r’000 R’000

at 31 March Total borrowings 433 240 570 856 Less: Fixed rate borrowings (18 245) (16 796) Less: Non-interest-bearing borrowings (9 028) (17 002)* Less: Cash and cash equivalents (80 006) (197 770)

net variable rate debt 325 961 339 288

net variable rate exposure 325 961 339 288

Interest rate change (2%) 6 519 6 786

negative impact on earnings (after tax) 4 694 4 886


For further details on borrowing exposures and related maturity dates refer to note 22.

Price risk

The group is not exposed to equity securities price risk as the group does not have investments classified on the consolidated statement of financial position either as available-for-sale or at fair value through profit and loss.

Credit risk management

i) Credit risk within the group towards financial institutions and service providers arises from cash and cash equivalents,derivative instruments and deposits.

The credit risk policy for financial institutions and service providers has the objective to minimise losses that couldresult from counterparty failure. All such counterparties are assessed on an annual basis to ensure credit worthinessand the evaluations will be based on the financial strength of the counterparty as published by a recognised ratingagency. Credit limits are set for individual counterparty legal entities and not on a counterparty group basis.

Transactions may be conducted with both local and international counter parties. No investment will be made withany counterparty with a short-term national rating of lower than: P-1 (Moody’s), A-1 (S&P), F1+ (Fitch).

The exposure to financial institutions and service providers are monitored on an ongoing basis and reported formallyon a monthly basis to the executive committee.


CONTINUED


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108


ii) Credit risk also arises within the group from outstanding receivables.

The granting of credit is controlled by a formal application process. If there is no independent rating, then risk controland the company executive committee assess the credit quality of the customer, taking into account its financialposition, past experience and other factors. Individual risk limits are set based on internal or external ratings in termsof the approved delegation of authority approved by the board. Ongoing credit evaluations are performed on thefinancial position of customers, taking into account its financial position, past experience and other factors. Trade andother receivables are covered by credit insurance according to group policy. When no insurance is available, amandate is approved within the delegation of authority framework. Potential concentration of credit risk consistsmainly within trade receivables. Trade receivables are presented net of the provision for doubtful debt.

iii) Credit risk also arises within the group towards subsidiaries, joint ventures, related parties and associates.

The intercompany loans are being restructured to support the DAWN treasury position as the internal banker for thegroup. Accordingly, the loans will vary from being short-term to five-year term debt with market-related interest rates,terms and conditions. Loans to associates and related parties are provided at market-related interest rates based on thecredit assessment of the entity and where required additional security such as general notarial bonds, cessions andpersonal suretyship by shareholders are obtained. Liquidity and solvency tests are assessed as part of the loan approvalprocess and minimum financial covenant criteria are required as part of on-going reporting and assessment. Short-termexposures have notional credit limits imposed which is monitored on an ongoing basis.

The exposure to subsidiaries, joint ventures, associates and related parties are monitored on an ongoing basis andreported formally on a monthly basis to the executive committee.

Credit quality of trade receivables can be analysed as follows:

GrOuP

31 March 31 March 2016 2015 r’000 R’000

Group 1 74 947 120 079 Group 2 573 822 519 443 Group 3 94 736 111 992 Group 4 60 846 86 270

Total 804 351 837 784

Group 1 – new customers (less than six months).

Group 2 – existing customers (more than six months) with no defaults (no bad debt write-offs/hand-overs) in the past.

Group 3 – existing customers (more than six months) with some defaults in the past.

Group 4 – customers with defaults, no trading and handed over. This category of trade receivables relates mainly to contractors and subcontractors exposed to statal and parastatal bodies. Appropriate security policies are in place to limit risks in this category.

The following cash balances were held with major banks of high quality located in South Africa (note 17) 64 372 191 310

Management does not expect any losses from non-performance by these counterparties.


CONTINUED


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109


national Credit ratings of banks where balances are held are:

31 March 2016 31 March 2015

Short-term national rating

Standard & Poor Barclays Africa Group a-2 Absa Bank Limited a-1 FirstRand Limited a-1 FirstRand Bank Limited a-2

Moody’s Absa Bank Limited P-1 P-2 FirstRand Bank Limited P-1 P-2 The Standard Bank of South Africa Limited P-1 P-2

Fitch Barclays Africa Group f1+ Absa Bank Limited f1+ F1+ Standard Bank Group Limited f1+ The Standard Bank of South Africa Limited f1+ F1+ First National Bank (a division of FirstRand Bank Limited) F1+

Liquidity risk management

Prudent liquidity management implies maintaining sufficient cash and availability of funding through an adequate amountof committed credit facilities and funding sources.

The group manages liquidity risk through the compilation and monitoring of cash flow forecasts, as well as ensuring thatadequate borrowing facilities are maintained. Borrowing powers are disclosed under note 22. Repayments of termborrowings are structured to match the expected cash flows from the operations to which they relate, where possible.

The group utilises the credit facilities of various financial institutions and has been able to operate within these facilities.There is currently a concentration of liquidity risk as a result of the restructured debt position and transactional bankingwith the same financial institution. This is being monitored and will be amended as soon as the group is in a position to doso. The group established facilities for specialised asset-based finance with financial institutions to reduce concentrationrisk.

The funding of growth in the group for working capital requirements will continue to use credit facilities from financialinstitutions as well as other feasible corporate market funding mechanisms for working capital. The funding of growth inthe group of capital nature will utilise suitable funding sources available in the corporate market and from financialinstitutions.


CONTINUED


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110


The table below analyses the group’s financial liabilities that will be expected to be settled on a net basis into relevantmaturity groupings based on the remaining period at reporting date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

Gross Less between Carrying contractual than two and Over amount cash flows one year five years five years r’000 r’000 r’000 r’000 r’000

at 31 March 2016

Overdraft 10 114 10 114 10 114 – – Borrowings (excluding overdraft) 423 126 423 126 347 267 73 380 2 479 Trade and other payables ~ 875 897 875 897 868 783 7 114 – Derivative financial instruments 63 489 63 489 63 489 – –

Total 1 372 626 1 372 626 1 289 653 80 494 2 479

At 31 March 2015 (R estated)

Overdraft 196 342 196 342 196 342 – – Borrowings (excluding overdraft) 374 514 374 514 309 051 62 001 3 462 Trade and other payables ~ 1 018 208 1 018 208 1 014 870 3 338 – Derivative financial instruments 26 046 26 046 26 046 – –

Total 1 615 110 1 615 110 1 546 309 65 339 3 462

~ Excludes post-employment medical aid, deferred profit and the accrual for leave.

An analysis of derivative financial instruments which will be settled on a gross basis follows in note 23.

fair value estimation

The fair value of forward foreign exchange contracts is determined using quoted forward exchange rates to settle thecontracts at the statement of financial position date.

The nominal value less impairment provision of trade receivables and payables are assumed to approximate their fairvalues.

The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows atthe current market interest rate that is available to the group for similar financial instruments.

Capital risk management

The group’s objectives when managing capital are to safeguard the group’s ability to continue as a going concern in orderto provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure toreduce the cost of capital.

The capital structure of the group consists of debt, which includes the borrowings (excluding derivative financial liabilities) disclosed in note 22, and equity as disclosed in the statement of financial position.

In order to maintain or adjust the capital structure, the group may adjust the amount of dividends paid to shareholders,return capital to shareholders, issue new shares or sell assets to reduce debt.

The group monitors capital structure on the basis of the gearing ratio and balanced with monitoring debt levels againstcash generation of the group.


CONTINUED


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111

GrOuP

Restated * 31 March 31 March 2016 2015 r’000 R’000


It is DAWN’s intention to maintain the gearing ratio below 2,5 times projected EBITDA.

The gearing ratio at 31 March 2016 (2015: 31 March) was as follows:

Total borrowings 433 240 570 856 Less: Cash and cash equivalents (80 006) (197 770) Less: Loans receivable (41 300) (214 220)

Net debt 311 934 158 866 Total equity 1 056 212 1 884 537

Net debt/equity ratio (%) 29,5 8,4

* Refer to note 44 for details regarding restatements, reclassifications and consistency of presentation disclosure.

41. reLaTeD ParTIeS The group entered into transactions and has balances with related parties as listed below. These include associates, joint

ventures and directors. Transactions that are eliminated on consolidation are not included. Transactions with relatedparties are effected on a commercial basis and related party debts are repayable on a commercial basis.

A listing of the group’s principal subsidiaries, joint ventures and associates is set out on pages 127 and 128 of the annual financial statements. For transactions with directors refer to note 42 (directors’ and prescribed officers’emoluments).

The following transactions were carried out with related parties:

GrOuP


a) Sales of goods and services

Joint ventures DPI group 3 764 2 433 Distribution and Warehousing Network Africa Proprietary Limited group 16 282 1 516

20 046 3 949

Associates Incledon Proprietary Limited – 99 Heunis Steel Proprietary Limited 36 172 Grohe DAWN Watertech group 146 490 53 648

146 526 53 919

Total sales of goods and services 166 572 57 868

b) Purchases of goods

Associates Heunis Steel Proprietary Limited 7 662 4 748 Grohe DAWN Watertech group 534 705 209 643

Total purchases of goods 542 367 214 391


CONTINUED


2016

112

GrOuP


41. reLaTeD ParTIeS continued

c) Commission paid

Braveheart Financial Services Proprietary Limited (group’s insurance broker) 1 278 909

Total commission paid 1 278 909

d) Commission received

Distribution and Warehousing Network Africa Proprietary Limited received fromGrohe DAWN Watertech group 6 523 –

Namibia Plastic Converters Proprietary Limited received from Grohe DAWN Watertech group 1 409 –

Wholesale Housing Supplies Proprietary Limited commission received from Distribution and Warehousing Network Africa Proprietary Limited 556 1 216

Total commission received 8 488 1 216

e) Interest received

Joint ventures Distribution and Warehousing Network Africa Proprietary Limited group – 735

– 735

Associates IPS & Distribution Proprietary Limited – 1 860 Grohe DAWN Watertech group 2 098 6 660

2 098 8 520

Other

Interest received from directors via DAWN Share Trust 157 115

– JAI Ferreira (note 42) 78 63 – RD Roos (note 42) 79 52

157 115

Total interest received (refer note 6) 2 255 9 370

f) Interest paid

Associates Grohe DAWN Watertech group 18 2 760

18 2 760

Other Interest paid to shareholders 416 378

416 378

Total interest paid 434 3 138

g) Management fees received

Joint ventures Distribution and Warehousing Network Africa Proprietary Limited group 276 2 665

276 2 665

Associates Grohe DAWN Watertech group – 53

– 53

Total management fees (refer note 5) 276 2 718


CONTINUED


2016

113

GrOuP



h) Dividends received

Joint Ventures DPI group 567 –

Total dividends received (refer note 14) 567 –

i) Discounts received

Associates Grohe DAWN Watertech group 90 129 25 681 Fibrex S.A.R.L. 75 –

Total discounts received 90 204 25 681

Year-end balances arising from sales/purchases of goods/services

j) Trade and other receivables

Joint Ventures Distribution and Warehousing Network Africa Proprietary Limited group 16 336 8 332 DPI group 2 195 2 210

18 531 10 542

Associates Heunis Steel Proprietary Limited 37 75 Fibrex S.A.R.L. 234 52 Grohe DAWN Watertech group 16 910 16 643 College of Production Technology Proprietary Limited 1 –

17 182 16 770

Total trade and other receivables 35 713 27 312


CONTINUED


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114


CONTINUED


GrOuP



k) Loans to other related parties and non-controlling shareholders

Joint ventures Distribution and Warehousing Network Africa Proprietary Limited group 928 98 DPI group 635 –

1 563 98

Associates Grohe DAWN Watertech group 36 356 204 376 DPI Rooftiles Proprietary Limited – 277

36 356 204 653

Other Loans to directors via DAWN Share Trust – unrestricted share scheme funding: * 2 899 2 742

– JAI Ferreira (note 42) 1 447 1 369 – RD Roos (note 42) 1 452 1 373

Braveheart Financial Services Proprietary Limited (insurance broker) 481 447

3 380 3 189

Total loans to other related parties and non-controlling shareholders 41 299 207 940

* The terms of the trust deed of the DAWN Share Trust (the Trust), as amended by DAWN

shareholders on 6 December 2006, stipulate that employees may obtain funding from the

Trust to procure unrestricted shares. The terms of these loans are at arm’s length and

repayable within seven years or when employment terminates.

l) Trade and other payables

Associates Fibrex S.A.R.L. – 45 Grohe DAWN Watertech group 138 758 199 773 Heunis Steel Proprietary Limited 325 362

Total trade and other payables 139 083 200 180

m) Loans from other related parties, associate and non-controlling shareholders Distribution and Warehousing Network Africa Proprietary Limited group –

non-controlling shareholders 1 543 341Swan Plastics Proprietary Limited – non-controlling shareholders – 72

Total loans from other related parties and non-controlling shareholders 1 543 413

2016

115


CONTINUED


GrOuP



n) Loans from related parties

Loans from directors and key management of the group (and their families): Balance at the beginning of the period 5 634 5 074 Loans received from directors during the period 14 024 6 436 Loan repayments to directors (14 745) (6 191) Interest paid 416 315

Total loans from related parties 5 329 5 634

Loans from directors and family members are unsecured and have no specific terms of repayment, bearing interest at8,50% (2015: 7,25%). The loans are payable on demand. As a result, the loans are recorded at their nominal value (note 22).

COMPanY


o) Interest received Subsidiaries 48 403 54 542 Associates 2 075 6 736

Total interest received 50 478 61 278

p) Interest paid Subsidiaries 10 734 2 721 Associates 18 3 144

Total interest paid 10 752 5 865

r) Loans receivable

Loans receivable classified as investments by Distribution and Warehousing Network Limited from – 309 238

Wholesale Housing Supplies Proprietary Limited – 309 238

Loans receivable classified as trade and other receivables by Distribution and Warehousing Network Limited 416 996 1 031 349

Subsidiaries 387 698 890 639 Associates 29 298 140 710

Total loans receivable 416 996 1 340 587

2016

116


CONTINUED


COMPanY



s) Loans payable

Loans payable classified as borrowings by Distribution and Warehousing Network Limited

Subsidiaries 237 657 185 892

Total loans payable 237 657 185 892

t) Directors’ and prescribed officers’ emoluments

– Non–executive directors – Executive directors – Prescribed officers

(note 42)

u) Directors’ and prescribed officers’ shareholding

(refer to the Directors’ report – page 12)

v) Share Incentive Schemes (equity settled)

(note 20)

w) Interest in subsidiaries, associates and joint ventures

(pages 127 and 128)

x) analysis of shareholders

(page 129)

2016

117116


CONTINUED


42. DIreCTOrS’ anD PreSCrIbeD OffICerS’ eMOLuMenTS Directors’ emoluments for the period ended 31 March 2016 are outlined as follows:

Committees

Social, remunera- ethics board audit tion and and member and nomi- Transfor- fees advisory risk nation mation Total r’000 r’000 r’000 r’000 r’000 r’000

non-executive directors

12 months ended 31 March 2016

M Akoojee ¹ 72 – – – – 72 LM Alberts 124 118 74 80 – 396 DJ Fouché ² 104 – – 34 – 138 RL Hiemstra ³ 143 – 43 29 – 215 S Mayet ⁴ 104 – 104 42 – 250 DM Mncube 124 – 31 – – 155 VJ Mokoena 124 – – – 50 174 G Nakos ⁵ 52 – – – – 52

31 March 2016 847 118 252 185 50 1 452

9 months ended 31 March 2015

M Akoojee 90 – – – – 90 OS Arbee ⁶ 90 – 90 36 – 216 LM Alberts 90 87 54 59 – 290 RL Hiemstra 180 – 54 36 – 270 DM Mncube ⁷ 90 – – – – 90 VJ Mokoena 90 – – – 36 126

31 March 2015 630 87 198 131 36 1 082

¹ Resigned 11 November 2015.

² Appointed 1 November 2015.

³ Retired 31 October 2015.

4 Appointed 29 May 2015.

5 Appointed 12 November 2015.

6 Resigned 13 February 2015.

7 Appointed 1 May 2014.

2016

118

42. DIreCTOrS’ anD PreSCrIbeD OffICerS’ eMOLuMenTS continued

Share options

vested –retire- cumula-

ment tive gainsand Specific realised

medical fee 2 over aaid contri- Sub- repay- Other three-

Salary bonus bution total ment Total services Total yearr’000 r’000 r’000 r’000 r’000 r’000 r’000 r’000 period

executive directors

12 months ended 31 March 2016JA Beukes 3 675 – 477 4 152 – 4 152 – 4 152JAI Ferreira 2 158 – 295 2 453 (2 000) 453 – 453GD Kotzee 1 2 253 – 333 2 586 – 2 586 – 2 586RD Roos 1 635 – 256 1 891 – 1 891 – 1 891DA Tod 4 227 – 818 5 045 (5 000) 45 – 45

31 March 2016 13 948 – 2 179 16 127 (7 000) 9 127 – 9 127

Prescribed officersCJ Bishop 1 092 – 104 1 196 – 1 196 109 1 305DK Ferguson 1 616 – 246 1 862 – 1 862 – 1 862GR Johnston 1 427 – 211 1 638 – 1 638 – 1 638

31 March 2016 4 135 – 561 4 696 – 4 696 109 4 805

executive directors

9 months ended 31 March 2015JA Beukes 1 695 725 343 2 763 – 2 763 1 859JAI Ferreira 1 418 731 213 2 362 2 000 4 362 7 379GD Kotzee 1 1 584 1 375 261 3 220 – 3 220 2 760RD Roos 1 168 300 185 1 653 – 1 653 6 758DA Tod 3 073 2 086 603 5 762 5 000 10 762 14 064

31 March 2015 8 938 5 217 1 605 15 760 7 000 22 760 32 820

Prescribed officersCJ Bishop 1 833 1 188 233 3 254 10 122 3 13 376 10 484DK Ferguson 1 216 120 174 1 510 – 1 510 2 760GR Johnston 955 150 139 1 244 – 1 244 –

31 March 2015 4 004 1 458 546 6 008 10 122 16 130 13 244

1 Resigned with effect from 29 February 2016.

2 Specific bonuses paid in respect of the executive’s contribution to facilitate the Grohe DAWN Watertech transaction, was paid back during the year.

3 Bishop Corporate Finance Proprietary Limited (Mr CJ Bishop is a related party) received a fee amounting to R10,1 million for the advisory role played in the GroheDAWN Watertech transaction. This fee was paid from the proceeds of a share incentive tranche of 1,2 million LTIPs awarded to Mr Bishop and approved by theRemuneration Committee in June 2013.The fee was disclosed to shareholders in the circular for the Grohe DAWN Watertech transaction. Shareholders approved thetransaction at the general meeting on 15 September 2014.


CONTINUED


2016

119


Executive directors and prescribed officers participate in share incentive schemes, designed to recognise the contributions of senior staff tothe growth of the company’s equity.

Within limits imposed by shareholders, rights are allocated to directors and senior staff. The equity-linked compensation benefits for executivedirectors and prescribed officers are set out below. Refer to note 20 – share-based payment reserve.

number number

Opening of share of share Closing

Grant Grant number options options number

Type date date of awarded exercised of

of share strike valuation share during during share

Grant vesting incentive price price options the year the year options

date date note scheme^ cents cents ‘000 ‘000 ‘000 ‘000

executive directors

12 months ended

31 March 2016

Ja beukes 1 122 – – 1 122

24 Jun 2011 30 Jun 2014 SAR 628 233 160 – – 160

12 Apr 2012 30 Jun 2015 1 LTIP – 611 500 – – 500

4 Dec 2014 31 Dec 2017 1 LTIP – 651 399 – – 399

4 Dec 2014 31 Dec 2017 1 DBP – 310 63 – – 63

JaI ferreira 1 681 – – 1 681

24 Jun 2011 30 Jun 2014 SAR 628 233 160 – – 160

12 Apr 2012 30 Jun 2015 1 LTIP – 611 750 – – 750

1 Dec 2013 1 Dec 2016 1 LTIP – 611 400 – – 400

4 Dec 2014 31 Dec 2017 1 LTIP – 651 312 – – 312

4 Dec 2014 31 Dec 2017 1 DBP – 310 59 – – 59

rD roos 964 – – 964

24 Jun 2011 30 Jun 2014 SAR 628 233 160 – – 160

12 Apr 2012 30 Jun 2015 1 LTIP – 611 500 – – 500

4 Dec 2014 31 Dec 2017 1 LTIP – 651 280 – – 280

4 Dec 2014 31 Dec 2017 1 DBP – 310 24 – – 24

Da Tod # 2 393 – – 2 393

24 Jun 2011 30 Jun 2014 SAR 628 233 294 – – 294

12 Apr 2012 30 Jun 2015 1 LTIP – 611 1 250 – – 1 250

4 Dec 2014 31 Dec 2017 1 LTIP – 651 680 – – 680

4 Dec 2014 31 Dec 2017 1 DBP – 310 169 – – 169

^ LTIP: Long-Term Incentive Plans, SAR: Share Appreciation Rights; DBP: Deferred Bonus Plan.

1. As a result of poor earnings, management and the remuneration committee have decided that these tranches will not vest.

# Retired 31 May 2016.


CONTINUED


2016

120


number number

Opening of share of share Closing

Grant Grant number options options number

Type date date of awarded exercised of

of share strike valuation share during during share

Grant vesting incentive price price options the year the year options

date date note scheme^ cents cents ‘000 ‘000 ‘000 ‘000

Prescribed officers

DK ferguson 579 – – 579

12 Apr 2012 30 Jun 2015 1 LTIP – 611 250 – – 250

1 Dec 2013 31 Dec 2016 1 LTIP – 901 20 – – 20

4 Dec 2014 31 Dec 2017 1 LTIP – 651 299 – – 299

4 Dec 2014 31 Dec 2017 1 DBP – 310 10 – – 10

Gr Johnston 466 400 – 866

12 Apr 2012 30 Jun 2015 1 LTIP – 611 300 – – 300

1 Dec 2013 31 Dec 2016 1 LTIP – 901 20 – – 20

4 Dec 2014 31 Dec 2017 1 LTIP – 651 134 – – 134

4 Dec 2014 31 Dec 2017 1 DBP – 310 12 – – 12

1 Dec 2015 31 Mar 2018 LTIP – 433 – 400 – 400

^ LTIP: Long-Term Incentive Plans, SAR: Share Appreciation Rights; DBP: Deferred Bonus Plan.

1. As a result of poor earnings, management and the remuneration committee have decided that these tranches will not vest.

A prescribed officer, in terms of the Companies Act no 71 of 2008, as amended, means the holder of an office, within a company. DAWN hasidentified its prescribed officers as the members of the executive committee and cluster heads. Prescribed officers are designated to be keymanagement personnel in terms of IAS 24.

All executive directors are eligible for an annual performance-related bonus payment linked to appropriate group and business sector targets. The structure of the individual annual bonus plans and awards are decided by the group remuneration committee revolving credit facility.

Directors’ and prescribed officers’ emoluments are paid by various subsidiaries within the group.

43. evenTS afTer The rePOrTInG PerIOD Changes to the board of directors

Chief executive officer

As announced on SENS on 26 April 2016, Derek Tod has taken a decision to retire as chief executive officer, effective 31 May 2016. He hasagreed with the board that he will participate in an organised hand-over to the board and interim chief executive officer, as and whenrequired.

Stephen Connelly, who was appointed to the board as independent non-executive director on 1 April 2016, has accepted the role of interimchief executive officer of DAWN, effective 1 June 2016. He will fulfil this role until the board has selected a permanent successor to DerekTod. He will also assist the DAWN executive committee in the turnaround strategy, which commenced recently.

The board will immediately commence with the process of identifying and appointing a permanent successor and will in this processconsider both internal and external candidates.

Chief financial officer

The chief financial officer, Dries Ferreira, resigned from DAWN on 14 July 2016, but agreed to remain in employment until 31 October 2016 to ensure a smooth transition. Hanré Bester ((CA (SA), MCom (Tax)), the group financial manager who joined DAWN during2010, has been appointed as acting financial director until a permanent placement can be made.

Risk and compliance officer

The risk and compliance officer and executive director, Jan Beukes, resigned from DAWN on 14 July 2016, but agreed to remain inemployment until 31 October 2016 to ensure a smooth transition. A suitable replacement will be recruited in due course.


CONTINUED


43. evenTS afTer The rePOrTInG PerIOD continued

borrowings – covenants

DAWN has breached some of its covenants and accordingly approached Absa for a waiver of the relevant covenantmeasures. On 28 June 2016 Absa consented to the non-compliance (breach) of covenants and waived the event of default.DAWN’s current facility ends on 7 October 2016 and has been re-negotiated to 7 October 2017. The new facility has similarcharacteristics, but will have a quarterly step-down of R25 million per quarter in respect of the revolving credit facility (RCF)starting 7 October 2016 and ending 7 July 2017.

The pricing has provisionally been indicated and reflects a deteriorated credit position as well as movements in thegeneral yield curve.

Disposal

Braveheart Financial Services Proprietary Limited – a DAWN investment of 30% was sold to the majority shareholder on 30 May 2016 for an amount of R1 million.

44. reSTaTeMenT, reCLaSSIfICaTIOn anD COnSISTenCY Of PreSenTaTIOn

reSTaTeMenTS (nOTeS 1 TO 3)

1. restatement 1 – Operating lease liability (note 28) and deferred profit (note 24)

An operating lease liability is required for leases with escalation clauses. An addendum to the existing leaseagreement on the Germiston Distribution Centre in 2009 was not disclosed to the board. As a result, the leaseoperating liability (note 28) and related deferred tax had to be restated based on a minimum 15-year lease period atan escalation of 8% per annum, ending in December 2023. To improve disclosure, the operating lease liability hasbeen disclosed as a separate item on the face of the statement of financial position and a description of the liability isincluded in note 28.

Deferred profit relating to the initial sale of the Germiston Distribution Centre had to be restated based on a 15-yearamortising profile instead of 10 years as previously reported. This is in line with the operating lease liability. Deferredprofit (note 24) and the relating deferred tax (note 25) were restated.

The financial impact in the affected periods are as follows:

31 March 30 June 2015 2014 r’000 r’000

Statement of changes in equity (3 976) (78 452)

2. restatement 2 – written put (note 23)

A written put relating to Swan Plastics Proprietary Limited (Swan) had to be accounted for. In August 2013, asubsidiary of DAWN gave the remaining 49% shareholders in Swan the right to put their shares at a 5 price earningsratio, based on the average of the prior two years’ earnings. After six years there will be a deemed offer and a deemedacceptance of the remaining 49%. This written put was not disclosed to the board. At inception the valuation isaccounted for in retained earnings as part of equity and the profit and loss impact is accounted for as a financeexpense and an employment expense. The written put is disclosed in derivatives (note 23) and an employmentliability in trade and other payables – non-current.


31 March 30 June 2015 2014 r’000 r’000

Statement of changes in equity (2 143) (31 236)

2016

121


CONTINUED


2016

122

44. reSTaTeMenT, reCLaSSIfICaTIOn anD COnSISTenCY Of PreSenTaTIOn continued

3. restatement 3 – acquisition vendor disclosure in share-based payment reserve (note 20)

An obligation was raised as a share-based payment obligation in equity to acquire the remaining non-controllinginterest shareholding of 18,1% in DAWN Human Resource Solutions Proprietary Limited. The above treatmenttransferring the liability to equity was incorrect as per paragraph 4 of IFRS 2. DAWN has updated the statement ofchanges in equity (SOCIE) and share-based payment obligation. This incorrect treatment was highlighted by the JSEproactive monitoring process.


31 March 30 June 2015 2014 r’000 r’000

Statement of changes in equity (3 780) –

reCLaSSIfICaTIOnS (nOTeS 4 TO 8)

4. Grohe put (note 23)

During 2015 the Grohe put valuation (note 23) was calculated based on a Black Scholes valuation model. A moreappropriate valuation model namely, Monte Carlo valuation method, was used. During the prior year a net put assetwas disclosed. To enhance disclosure, the put was disclosed as an asset and the call as a liability in the current year.The valuation was re-performed for the comparative period and a call option disclosed under assets and a put optiondisclosed under liabilities was recognised. The net amount remained unchanged with no profit and loss impact.

5. Consulting fees and share-based payment disclosure (SOCIe, note 4, 8)

Consulting fees should have been disclosed as a share-based payment expense under IFRS 2 for Collin Bishop inrespect of services rendered for the Grohe DAWN Watertech transaction. This incorrect treatment was highlighted bythe JSE proactive monitoring process.

6. acquisition and delivery of treasury shares (SOCIe)

Historically DAWN disclosed the movement in treasury shares between acquisition and delivery of shares and in theSOCIE they were set-off against each other. IAS 1.15 however, requires fair presentation through faithfulrepresentation of the effects of transactions, other events and conditions that occurred during a financial period. IAS1.106(d) specifically requires the SOCIE to reflect a reconciliation separately disclosing the changes between theequity position at the beginning and end of the year. The restatement separates the disclosure in the SOCIE. Thisincorrect treatment was highlighted by the JSE proactive monitoring process.

7. Treasury shares purchased (cash flow)

Treasury shares were historically incorrectly included in investing activities and have been reclassified to financingactivities. This incorrect treatment was highlighted by the JSE proactive monitoring process.

8. acquisition of non-controlling interests (cash flow)

Acquisition of non-controlling interest was historically incorrectly included in investing activities and has beenreclassified to financing activities. This incorrect treatment was highlighted by the JSE proactive monitoring process.


CONTINUED


2016

123


COnSISTenCY Of PreSenTaTIOn (nOTe 9)

9. Tax impact in equity (SOCIe)

The tax impact in equity relating to treasury shares and share-based payment have been identified separately andaligned with the applicable category instead of a separate line item where it was offset. Capital Gains Tax (CGT)relating to the disposal of treasury shares is accounted for in equity on the basis that at a group level shares aredisclosed at cost and delivered at cost. There is therefore no resultant CGT charge at group level. DAWN has disclosedthe CGT difference against the share-based payment – vesting of options line in SOCIE. The tax impact relating to thedifference in tax treatment between group (equity-settled) and company (cash-settled) is accounted for in equity.DAWN has disclosed the equity/cash-settled difference against the share-based payment – charge for the period linein SOCIE. This incorrect treatment was highlighted by the JSE proactive monitoring process.

OTher MaTTerS

The transactions described above in 1 and 2 were initiated and executed at the time by certain executive directors andsenior management, respectively. Both transactions were executed without the knowledge and approval of the board. Areportable irregularity has therefore been reported by the external auditors to the Independent Regulatory Board ofAuditors with respect to these transactions. The external auditors have also confirmed to the Independent RegulatoryBoard of Auditors that these irregularities are not continuing. After considering the circumstances of these transactions, asa matter of good governance, the board has instituted the following corrective actions:

• engaged with external legal counsel to clarify DAWN’s legal position with respect to these matters and its relationshipwith the individuals in question, including DAWN’s right of recourse against any relevant individuals;




The board is confident that it has taken and continues to take all the necessary steps to execute its responsibilities in termsof the Companies Act of South Africa and the principles of good governance as contemplated by the King Code onCorporate Governance.

IMPaCT On InCOMe STaTeMenT

restated reported 31 March 31 March 2015 2015 Difference note r’000 r’000 r’000

Operating expenses 1, 2 (945 223) (939 836) (5 387) Administration and selling expenses 1 (552 079) (546 906) (5 173) Other operating expenses 2 (46 288) (46 074) (214)

Other operating income 3 862 4 211 (349)Operating profit/(loss) before impairments and

de-recognition of previously held interest 1, 2 (80 065) (74 329) (5 736) Operating profit/(loss) 1, 2 454 323 460 059 (5 736) Finance expense 2 (52 194) (50 266) (1 928) Profit/(loss) after net finance costs 1, 2 417 839 425 503 (7 664) Profit/(loss) before taxation 1, 2 428 716 436 380 (7 664) Income tax (expense)/income 1, 2 23 328 21 782 1 546 Profit/(loss) from continuing operations 1, 2 452 044 458 162 (6 118) Profit/(loss) for the period 1, 2 479 482 485 600 (6 118)

Profit attributable to: Owners of the parent 1, 2 479 120 485 238 (6 118)

Profit/(loss) for the period 479 482 485 600 (6 118)


CONTINUED


2016

124


CONTINUED



COnSOLIDaTeD anD SeParaTe STaTeMenT Of COMPrehenSIve InCOMe


Profit for the year 1, 2 479 482 485 600 (6 118) Total comprehensive income 1, 2 476 756 482 874 (6 118)

Total comprehensive income attributable to: Owners of the parent 1, 2 476 394 482 512 (6 118)

1, 2 476 756 482 874 (6 118)

Total comprehensive income attributable to equity shareholders arising from:

Continuing operations 1, 2 448 956 455 074 (6 118)

1, 2 476 394 482 512 (6 118)

IMPaCT On STaTeMenT Of fInanCIaL POSITIOn


non-current assets Derivative financial instruments 4 29 890 3 950 25 940 Deferred tax assets 1 103 157 71 101 32 056

1, 4 1 448 121 1 390 125 57 996

Total assets 1, 4 3 759 015 3 701 019 57 996

Opening retained earnings 2014 1, 2 983 627 1 093 315 (109 688) Opening retained earnings 2015 1, 2 1 417 371 1 533 177 (115 806) Share-based payment reserve 3 65 915 69 695 (3 780) Share capital and reserves 1 850 563 1 970 149 (119 586)

Total equity 1 884 537 2 004 123 (119 586)

non-current liabilities Derivative financial instruments 2, 4 55 980 – 55 980 Deferred profit 39 403 16 013 23 390Operating lease liability 1 105 236 – 105 236 Trade and other payables 3 338 – 3 338

293 432 105 488 187 944

Current liabilities Trade and other payables 1 1 037 780 1 053 210 (15 430) Operating lease liability 1 1 754 – 1 754 Borrowings 3 505 385 501 605 3 780 Deferred profit 1 5 327 5 793 (466)

1 562 709 1 573 071 (10 362)

Total liabilities 1 874 478 1 696 896 177 582

Total equity and liabilities 3 759 015 3 701 019 57 996

2016

125


CONTINUED



IMPaCT On STaTeMenT Of ChanGeS In equITY

Share- equity based attribu- non- Treasury payment retained table to controlling shares reserve earnings company interest Total note r’000 r’000 r’000 r’000 r’000 r’000

restated

balance at 30 June 2014 1, 2 – – 983 627 1 377 542 35 756 1 413 298 Total comprehensive income

for the year 1, 2 – – 479 120 476 394 377 476 771 Profit for the year 1, 2 – – 479 120 479 120 377 479 497 Continuing operations 1, 2 – – 451 682 451 682 362 452 044 Total contributions by and

distributions to owners of the company recognised directly in equity – 25 659 – 36 644 – 34 485

Share-based payment – charge for the period 3, 9 – 30 592 3 599 34 191 – 34 191

Share-based payment – vesting of options 6, 7, 9 14 717 (14 717) (8 958) (8 958) – (8 958)

Treasury shares acquired 5 (7 984) – – (7 984) – (7 984)

balance at 31 March 2015 – 65 915 1 417 371 1 850 563 33 974 1 884 537

reported

balance at 30 June 2014 – – 1 093 315 1 487 230 35 756 1 522 986 Total comprehensive income

for the year – – 485 238 482 512 377 482 889 Profit for the year – – 485 238 485 238 377 485 615 Continuing operations – – 457 800 457 800 362 458 162 Total contributions by and distributions

to owners of the company recognised directly in equity – 29 439 – 40 424 – 38 265

Share-based payment – charge for the period – 22 608 – 22 608 – 22 608

Share-based payment – vesting of options 6 733 (6 733) – – – –

Tax impact in equity – – (5 359) (5 359) – (5 359) Treasury shares acquired – – – – – –

balance at 31 March 2015 – 69 695 1 533 177 1 970 149 33 974 2 004 123

2016

126


CONTINUED



IMPaCT On STaTeMenT Of ChanGeS In equITY (continued)

Share- equity based attribu- non- Treasury payment retained table to controlling note shares reserve earnings company interest Total

Difference

balance at 30 June 2014 2, 3 – – (109 688) (109 688) – (109 688) Total comprehensive

income for the year 2, 3 – – (6 118) (6 118) – (6 118) Profit for the year 2, 3 – – (6 118) (6 118) – (6 118) Continuing operations 2, 3 – – (6 118) (6 118) – (6 118) Total contributions by and

distributions to owners of the company recognised directly in equity – (3 780) – (3 780) – (3 780)

Share-based payment – charge for the period 5, 8 – 7 984 3 599 11 583 – 11 583

Share-based payment – vesting of options 5, 8 7 984 (7 984) (8 958) (8 958) – (8 958)

Treasury shares acquired 1, 7 (7 984) – – (7 984) – (7 984) Tax impact in equity 8 – – 8 958 8 958 – 8 958

balance at 31 March 2015 – (3 780) (115 806) (119 586) – (119 586)

IMPaCT On STaTeMenT Of CaSh fLOwS


Cash flows from investing activities Treasury shares acquired 7 – (7 984) 7 984 Acquisition of non-controlling interests 8 – (12 168) 12 168

net cash generated by investing activities 689 740 669 588 20 152

Cash flows from financing activities Treasury shares acquired 7 (7 984) – (7 984) Acquisition of non-controlling interests 8 (12 168) – (12 168)

net cash utilised in financing activities (585 413) (565 261) (20 152)

2016

127

Percentage interest Activities 12 months 9 months Issued ended ended share Class 31 March 31 March capital of 2016 2015 (Rands) share Country

1. Subsidiaries in which Distribution and warehousing network Limited has a direct interest

DAWN Consolidated Holdings Proprietary Limited H 100 100 381 Ord RSA Wholesale Housing Supplies Proprietary Limited B 100 100 1 000 Ord RSA

2. Subsidiaries in which Distribution and warehousing network Limited has an indirect interest

Subsidiaries Distribution and Warehousing Network Africa

Proprietary Limited H 90 90 500 Ord RSA Shares held by Distribution and Warehousing Network Africa

Proprietary Limited in: Africa Swiss Trading Limitada B 100 100 9 000 Ord Angola Distribution and Warehousing Network Africa Trading

Congo S.A.R.L. B 51 51 177 049 Ord Congo DAWN Africa Mozambique, LDA B 90 90 11 906 Ord Mozambique DAWN Africa Proprietary (Zambia) Limited B 100 100 8 440 Ord Zambia Africa Saffer Trading (Mauritius) Limited B 90 90 2 850 Ord Mauritius Boutique Baths Proprietary Limited B 76 – 100 Ord RSA DAWN Human Resource Solutions Proprietary Limited A 100 100 1 000 Ord RSA DMD Marketing SA Proprietary Limited A 100 100 Ord RSA DPI Holdings Proprietary Limited H 100 100 1 000 Ord A RSA DPI International Limited H 100 100 1 031 Ord Mauritius DPI Plastics Proprietary Limited C 100 100 2 479 Ord RSA Franmore Investments Proprietary Limited A 100 100 100 Ord Namibia Hamilton’s Brushware Proprietary Limited B 74 69 100 Ord RSA Incledon DPI Proprietary Limited B 100 100 1 000 Ord RSA Incledon DPI Proprietary Limited A 100 100 100 Ord Botswana Incledon KZN Proprietary Limited B 51 – – Ord RSA Incledon Zambia Limited B 100 100 16 951 Ord Zambia Incledon Proprietary Limited B 100 100 1 000 Ord RSA Namibia Plastic Converters Proprietary Limited C 100 100 201 Ord Namibia Pipex Plastics Botswana Proprietary Limited C 100 100 742 391 Ord Botswana Pro-Max Welding Consumables Proprietary Limited B 100 74 120 Ord RSA Saffer Union (West Africa) Limited B – 50 946 522 Ord Nigeria Sangio Pipe Proprietary Limited C 100 100 51 Ord RSA Swan Plastics Proprietary Limited C 51 51 1 000 Ord RSA Ubuntu Plastics Proprietary Limited C 51 51 100 Ord RSA Wilhelm Import Network Proprietary Limited B – 60 100 Ord RSA

3. Subsidiaries, associates and joint ventures which are dormant and in the process of deregistration

Almar Aluminium Proprietary Limited D 100 100 1 461 696 Ord RSA Almar Extrusions Proprietary Limited D 100 100 1 000 Ord A RSA Almar Marketing Proprietary Limited D 100 100 100 Ord RSA Avrutec Proprietary Limited D 100 100 1 Ord RSA Bathing Paradise Proprietary Limited D 100 100 100 Ord RSA City Non-Ferrous Metals Proprietary Limited D 100 100 2 000 Ord RSA City Wires Proprietary Limited D 100 100 100 Ord RSA Caslead Properties Proprietary Limited D 100 100 100 Ord RSA Cobra Brands Proprietary Limited D 100 100 37 609 Ord A RSA Courier Internet Exchange Proprietary Limited D 100 100 100 Ord RSA DAWN 101 Investments Proprietary Limited

(Formerly Springset Proprietary Limited) D 100 100 170 000 Ord RSA DAWN Cargo Proprietary Limited D 100 100 100 Ord RSA DAWN Consolidated Properties Proprietary Limited D 100 100 100 Ord RSA DAWN Kitchen Fittings Proprietary Limited B 100 100 100 Ord RSA DAWN Logistics Proprietary Limited D 100 100 1 000 Ord RSA DAWN Management Services Proprietary Limited D 100 100 100 Ord RSA Delivery Deluxe Proprietary Limited D 100 100 100 000 Ord RSA DPI Kwanzi Proprietary Limited D 100 100 100 Ord RSA

INTEREST IN SUBSIDIARIES, ASSOCIATES ANDJOINT VENTURESfor the 12 months ended 31 March 2016

2016

128


CONTINUED

INTEREST IN SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES

Percentage interest Activities 12 months 9 months Issued ended ended share Class 31 March 31 March capital of 2016 2015 (Rands) share Country

3. Subsidiaries, associates and joint ventures which are

dormant and in the process of deregistration continued Electroline Proprietary Limited B 100 100 100 Ord RSA Geyser Technology Proprietary Limited D 100 100 100 Ord RSA Incledon Proprietary Limited D 100 100 46 Ord RSA Inex Trading Proprietary Limited D 100 100 68 000 Ord RSA Insyst Cape Town Proprietary Limited D 100 100 100 Ord RSA Insyst Durban Proprietary Limited D 100 100 100 Ord RSA Insyst Johannesburg Proprietary Limited D 100 100 100 Ord RSA La-Co Africa Marketing Proprietary Limited D 100 100 1 000 Ord RSA Monocraft Proprietary Limited D 100 100 400 Ord RSA Romson Properties Proprietary Limited D 100 100 100 Ord RSA Royal Express Services Proprietary Limited D 100 100 2 Ord RSA Saffer Angola S.A.R.L.* D 100 50 115 278 Ord Angola Saffer International Proprietary Limited D 100 100 1 000 Ord RSA Skillco Proprietary Limited D 100 100 100 Ord RSA Springset (Natal) Proprietary Limited D 100 100 20 000 Ord RSA Springset Alloys Proprietary Limited D 100 100 100 Ord RSA Stability Hardware Wholesale Proprietary Limited D 100 100 10 200 Ord RSA Stylus Industries Proprietary Limited D 100 100 300 000 Ord RSA Vaal Mac Holdings Proprietary Limited D 100 100 10 000 Ord RSA Veloset Proprietary Limited D 100 100 100 Ord RSA Wholesale Housing Supplies East London Proprietary Limited D 100 100 100 Ord RSA

4. Joint ventures Shares held by Distribution and Warehousing Network Africa

Proprietary Limited in: DAWN Africa Tanzania Limited B 51 51 225 328 Ord Tanzania ASTIZ (Private) Limited B 55 55 1 530 Ord Zimbabwe Aqualia DPI Proprietary Limited C 50 50 251 366 Ord Mauritius DPI Simba Limited C 50 50 5 600 000 Ord Tanzania Aqua Science Proprietary Limited C 50 50 5 100 000 Ord Mauritius

5. associates Grohe DAWN Watertech Proprietary Limited H 49 49 490 Ord RSA Shares held by Grohe DAWN Watertech Proprietary Limited in: Apex Valves South Africa Proprietary Limited C 100 100 300 000 Ord RSA Cobra Watertech Proprietary Limited C 100 100 51 918 Ord RSA Exipro Manufacturing (Swaziland) Proprietary Limited C 49 49 100 Ord Swaziland Grohe South Africa Proprietary Limited B 100 100 300 Ord RSA ISCA Proprietary Limited C 100 100 518 Ord RSA Libra Bathrooms Proprietary Limited C 100 100 3 549 Ord RSA Vaal Sanitaryware Proprietary Limited C 100 100 212 Ord RSA Braveheart Financial Services Proprietary Limited A 30 30 30 Ord RSA College of Production Technology Proprietary Limited A 49 49 300 Ord RSA DPI Rooftiles Proprietary Limited B 39 39 1 000 Ord RSA Heunis Steel Proprietary Limited B 49 49 100 Ord RSA Shares held by Plastic Investments International Limited H 49 49 25 Ord Mauritius Fibrex – Fabrica deArt.De.F.b. Sinteticas, S.A.R.L. C 100 100 174 Ord Angola

activitiesA – Other; B – Wholesale trading; C – Manufacturing; D – Dormant; H – Investment holding company

Percentage interest reflects voting power.

* The DAWN Group has effective control of the board of directors of Saffer Angola S.A.R.L. by means of an additional deciding vote.

2016

129

Listed below is an analysis of holdings extracted from the register of ordinary shareholders at 31 March 2016.

number of % number of %Portfolio size shareholders of total shares held of total

1 – 1 000 543 36,57 213 076 0,09 1 001 – 10 000 shares 541 36,43 1 945 769 0,80 10 001 – 100 000 shares 261 17,58 10 090 151 4,17100 001 – 1 000 000 shares 109 7,34 35 024 748 14,46 1 000 001 shares and over 31 2,08 194 969 160 80,48

Total 1 485 100,00 242 242 904 100,00

DISTrIbuTIOn Of SharehOLDerSBanks/brokers 23 1,55 1 601 720 0,66Close corporations 24 1,62 489 392 0,20Empowerment 2 0,14 78 133 488 32,25Endowment funds 22 1,48 1 438 875 0,59Individuals 1 124 75,69 17 823 264 7,36Insurance companies 9 0,61 6 376 694 2,63Investment companies 3 0,20 677 224 0,28Medical schemes 7 0,47 574 282 0,24Mutual funds 63 4,24 65 904 070 27,21Other corporations 11 0,74 1 030 446 0,42Private companies 29 1,95 7 574 213 3,13Public companies 2 0,13 920 000 0,38Retirement funds 82 5,52 15 522 423 6,41Share trust 1 0,07 23 372 701 9,65Trusts 83 5,59 20 804 112 8,59

Total 1 485 100,00 242 242 904 100,00

PubLIC/nOn-PubLIC SharehOLDerSnon-public shareholders 11 0,74 103 065 235 42,55

Directors and associates 7 0,47 18 403 494 7,60Prescribed officers 1 0,13 1 029 316 0,42Empowerment 2 0,07 78 133 488 32,25Treasury shares 1 0,07 5 498 937 2,27

Public shareholders 1 474 99,26 139 177 669 57,45

Total 1 485 100,00 242 242 904 100,00

In accordance with section 56(7)(b) of the Companies act and paragraph 8.63 of the JSe Listings requirementsholdings greater than 5% of issued shares have to be disclosed. Dawn has elected to disclose holdings greater than3%.

benefICIaL SharehOLDerS wITh a hOLDInG GreaTer Than 3% Of ISSueD ShareS

number of % shares held of total

Ukhamba Holdings (Pty) Ltd 78 133 488 32,25Coronation Fund Managers 37 986 438 15,68Boles Family Trust 13 260 000 5,47DA Tod 11 180 417 4,62Investec 9 735 320 4,02

Total 150 295 663 62,04

ANALYSIS OF SHAREHOLDING

2016

130

2016

131

CORPORATE INFORMATION

DISTrIbuTIOn anD warehOuSInG neTwOrK LIMITeD Incorporated in the Republic of South AfricaRegistration Number: 1984/008265/06Listed on the JSE Limited JSE share code: DAWISIN: ZAE000018834

COMPanY SeCreTarYiThemba Governance and Statutory Solutions (Pty) LtdMonument Office ParkBlock 5, Suite 10279 Steenbok AveMonument ParkPretoriaPO Box 25160Monument Park, 0105

reGISTereD OffICe Cnr Barlow Road and Caveleros DriveJupiter Ext 3 Germiston, 1401 PostNet Suite number 100Private Bag X1037Germiston, 1400 Tel: +27 11 323 0450Fax: +27 11 323 0466Website: www.dawnltd.co.za

DIreCTOrS

Diederik fouchéCnr Barlow Road and Caveleros DriveJupiter Ext 3 Germiston, 1401

Stephen Connelly(appointed with effect from 1 April 2016)Cnr Barlow Road and Caveleros DriveJupiter Ext 3 Germiston, 1401

Lou albertsCnr Barlow Road and Caveleros DriveJupiter Ext 3 Germiston, 1401

hanré bester(appointed with effect from 14 July 2016)Cnr Barlow Road and Caveleros DriveJupiter Ext 3 Germiston, 1401

Saleh Mayet44 Main StreetMarshalltown, 2107

Dinga MncubeCnr Barlow Road and Caveleros DriveJupiter Ext 3 Germiston, 1401

veli Mokoena32 Electron RoadIsando, 1609

George nakos79 Boeing Road EastBedfordview, 2007Johannesburg

rené roosCnr Barlow Road and Caveleros DriveJupiter Ext 3 Germiston, 1401

InTerneT Website: www.dawnltd.co.zae-mail: [email protected]

auDITOrS PricewaterhouseCoopers Inc.2 Eglin RoadSunninghill, 2157Johannesburg

TranSfer SeCreTarIeSComputershare Investor Services (Pty) Ltd 70 Marshall StreetMarshalltown, 2001PO Box 61051Marshalltown, 2107Tel: +27 11 370 5000Fax: +27 11 370 5271

SPOnSOrDeloitte & Touche Sponsor Services (Pty) Ltd Building 8, Deloitte Place The Woodlands 20 Woodlands Drive Woodmead, 2196Private Bag X6Gallo Manor, 2052Tel: +27 11 806 5000Fax: +27 11 806 5666

2016

GRAPHICULTURE

dawn annual financial statements 2016

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