Distribution and Warehousing Network Limited (Dawn) is listed in the Construction and Materials – Building Materials and Fixtures sector of the JSE Limited (JSE).

The strategy of the Group is centred on the manufacturing and wholesale distribution of quality branded hardware, sanitaryware, plumbing, kitchen, engineering and civil products through a national, strategically positioned branch network as well as in selected African countries and Mauritius. Dawn adds significant value to the distribution channel through its optimised logistics services and, by acquiring leading brand manufacturers, it is able to reduce duplication and enhance efficiencies between the production and distribution of the Group’s products. Through selective equity ownership, Dawn is able to share in the value of the optimised supply-chain that is created.

Its subsidiary businesses complement each other’s product ranges and therefore create significant cross-selling opportunities and a total solution package offering. Service functions such as warehousing, distribution and administration are shared, allowing for maximum efficiency through economies of scale.

Manufacturing Companies:




Cobra retains its status as the leading South African brand in taps and plumbing accessories. Competitive advantages reside in its locally based, world-class manufacturing capability, strong service support, reliable quality products and professional, committed staff contingent. Many of the 1 300 employees boast impressive service records with the Dawn Group.

Cobra is strongly represented in the residential, commercial and infrastructural sectors. The business is able to benefit from the differing cycles of these segments which do not always coincide, providing a balanced exposure of products to the market.

During the year under review, the residential sector has shown a marked decline, following general international trends. However, work required by projects for the 2010 World Cup and increased government spending on infrastructure, including hospitals and correctional facilities, has kept the commercial and infrastructural sectors buoyant.

A substantial portion of this commercial and infrastructural market share has been captured by the strong specifications department.

Export markets continue to flourish, with deliveries being routed to six different continents: South America, West Indies, South East Asia, the Middle East, Africa and China. Constant scrutiny of cost efficiencies and refinement of products, processes and systems keep Cobra competitive against imports, enabling it to compete effectively in terms of both quality and cost, and gain market share. The drive has been assisted by a weaker Rand, with importers reducing the quantity of their imports.

Further factors contributing to growth and increased market share have been a focus on procurement to keep input prices as low as possible, a marked improvement in working capital management and a more refined stock balancing policy. These have also resulted in an increase in customer service levels. The overall effect of synergies within the Dawn Group has borne fruit during the year, leading to a number of areas in which targeted cost reductions have been achieved.

A significant milestone was achieved when Cobra completed its supply to South Africa’s only 7-star hotel, the ‘One and Only’ hotel in Cape Town.

Cobra has targeted growth in its export markets during the year ahead, mainly through expanding current markets and opening selected new markets. Its focus in Africa will increase through its partnership with Africa Swiss Trading (AST).

Investment in latest technologies will continue to be a priority together with ongoing productivity improvements to bolster existing competitiveness. To ensure that it continues to take advantage of reduced process costs, Cobra will pursue its consolidation and rationalisation of operations.

DPI Plastics celebrated its 20th anniversary in October 2008. It manufactures a wide product range which includes PVC-M, PVC-U and PVC-O pressure pipes, mining pipes, building fittings and multi-layer building pipes. It operates a unique business distribution model/network with factories in Tanzania, Mauritius, Angola, Botswana and Namibia.

Demand in the building sector and government spend are major market drivers. Demand is also affected by gold and platinum prices and by the diamond price in Botswana. Foreign aid to Tanzania, Angola and Namibia has boosted government spending in those countries, providing a further growth spurt to DPI Plastics’ cross-border activities. An additional impetus was given by the weak Rand, which stimulated exports.

Among challenges DPI Plastics has had to manage have been the increase in PVC polymer, exchange rate fluctuations and the number of small competitors selling on price.

The Competition Board’s investigation into the plastic pipe industry was widely reported, but DPI received exempt status. Though one competitor has stopped production of PVC pipe, DPI Plastics’ market share decreased as a result of new, small low-cost entrants. The market itself is also shrinking due to the economic recession.

While the weak Rand has initially helped exports, the banks' reduced ability to lend money has had a generally negative effect on the industry.

During the year under review, DPI Plastics witnessed increased sales to the Department of Water Affairs (DWAF) and has also won the DWAF’s tender for the next three years. Subsidiaries in Angola, Botswana and Tanzania performed very well on the back of infrastructure spend, but the economies in Namibia and Mauritius have been badly affected by the recession, lower government spend and availability of foreign exchange. Mining sales in South Africa have also declined as a result of cost savings by mining groups. This has been countered somewhat by an increase in export sales into southern Africa. South African factories have also embarked on a cost reduction exercise to align operating expenses with revenue levels.

DPI Plastics has launched a campaign to brand the DPI name rather than its individual products.

DPI Plastics is also faced with a demand for more environmentally friendly products and as such has changed PVC formulations to be lead free. This type of product has been posted in Switzerland as environmentally friendly and thus preferred. DPI Plastics’ Roodekop factory received the OHSAS 18001 accreditation for its environmental control system. Its in-house training programme has also been registered with Merseta and has resulted in the multi-skilling of the factory workforce.

Libra is the preferred manufacturer of acrylic baths and spa tubs in South Africa, specialising in high-quality branded bathroom products.

The bath industry revolves around the residential market which has experienced a notable slowdown in the current economic climate. The large over-supply of capacity in South Africa brought margins under pressure despite some raw material decreases. Libra’s general upmarket product base did, however, allow it to improve its local market share.

Export demands on issues regarding specific qualifications and quality resulted in substantial inefficiencies in the factory. As a result, United Kingdom demand, which formed a large percentage of Libra’s turnover, slowed substantially. This, coupled with some non-payments from Europe, has had a negative impact on results, which initiated a focus change in Libra to enable it to become more flexible and restore income levels.

The export order intake was scrutinised rigorously to select only premier customers. More emphasis was concentrated on capturing local market share utilising the logistical strength of Dawn Cargo and the Dawn Group’s warehousing infrastructure, together with Libra’s technological competitive advantages.

During the year under review, Libra moved its complete warehousing function and transport to Dawn companies and its sales operations to the Dawn specification showrooms. This has improved both sales focus and customer delivery service nationwide.

Despite the tighter residential market, Libra captured a significant portion of the volume of luxury hotel upgrades, including City Lodge, Southern Sun, Monte Casino and the Da Vinci hotels.

A major restructuring of Libra has been concluded and the closure of the Cape Town plant and the integration of Libra onto the Vaal site is in progress.

Libra's objective for the year ahead is focused primarily on maintaining its leadership position in southern Africa, but will also include a drive to increase its footprint in Africa through the Dawn network.




Vaal manufactures and distributes ceramic sanitaryware, including vitreous china and fireclay products. Its competitive advantages lie in its strong brand, market routes, product portfolio and specifying capabilities.

Vaal remains the only sanitaryware supplier offering medical and fireclay products. It is the sole South African manufacturer to carry the SABS mark and boast ISO 9001:2000 compliance. One of only two local ceramic manufacturers, it works closely with architects and interior designers to provide sanitaryware solutions. Its ability to remain in touch with European trends provides a further edge in developing products accordingly.

During the year under review Vaal has been able to offer existing and new customers an improved basket of products. Branding has been strengthened through its signature range of upmarket luxury goods and products.

The market has experienced a general drop in demand, with imports declining and bath exports to the United Kingdom and Europe slumping dramatically due to the economic recession and its accompanying pressures.

Numerous customer and wholesaler operations destocked and now require just-intime delivery which has led to additional distribution at a cost.

Despite the generally depressed conditions, Vaal has grown its market share, taking a percentage from importers, by having stock available, shortening lead times and offering competitive pricing.

Vaal has expanded the exposure of displays in customers’ showrooms and its new aspirational and lifestyle marketing literature has been well accepted in the market, particularly by professionals.

Vaal has benefited from the general decline in imports. To capitalise on this, it has reinforced bulk supply of product and incentivised customers with forward orders to assist when planning production. To a certain extent this has helped to counter negative factors such as sliding demand levels and loading on the factory.

Vaal’s main challenges consist of managing cash flow constraints within its customer base, the uncertainty relating to demand levels and poor service delivery by government, which restricts development.

An improved firing capacity was installed at Vaal and the new shuttle kiln is now fully operational, producing excellent yields. Additional operational improvements have been achieved through improved supervisory and management capacity.

Vaal has developed a new low-entry-level sanitaryware suite and also launched an upmarket signature sanitaryware range. The former was driven by the pricesensitivity to lower- to mid-level product ranges and the latter by the market trend in upmarket luxury ranges.

Two new close couple suites are being introduced and a new back-to-wall toilet pan complete with thermoset toilet seat has been launched. A new corner basin replaces the bulky old-style product and a building cloakroom basin has been re-introduced.

Innovations include waterless urinals and electronically operated products.

Vaal is able to meet the stiff requirements for mid-market products, where fit, form, function and pricing determine success. Vaal occupies a dominant position in the commercial sector where professionals specify its product range. With the recovery of the residential market, expected in the second to third quarter of next year, this status will be further improved.

Vaal is also a leader in the institutional sector, with products being specified for hospitals, clinics, schools and correctional facilities. It has enjoyed a significant presence on all projects relating to soccer stadia for the 2010 World Cup Soccer, including new structures and upgrades.

The negative impact caused by the decline in the residential sector has been partially offset by progress in the commercial and infrastructural sectors.

Internally, Vaal has focused on containing manufacturing costs and monitoring labour productivity levels and factory loading.

Credit risk has been carefully managed because many customers are under cash flow pressure due to the credit crunch. Steps have been taken to correct perceived quality or delivery problems which could have presented reputational risks. Vaal is environmentally friendly, complying with all requirements concerning disposal of slip and waste. The prevailing skills shortage has led to the development of retention policies to retain technical, supervisory and general production skills.

Constant improvement of safety and health issues remains a priority. Systems have been implemented to minimise any possible adverse impact on the environment such as slippages. Vaal focuses on general training with a specific emphasis on shopfloor employees. Performance parameters are monitored on a daily basis to achieve constantly improved efficiencies.

While Vaal expects improved levels of demand as the economy recovers, there are aspects which could impact negatively on business in the year ahead. Foreign exchange volatility will continue to boost imports by competitors. Labour problems and disruptions could become a negative factor and electrical and gas supply problems are also foreseen.

Numerous initiatives are in place to create value. These include a continued focus on quality improvement, a focus on expanding the external customer base, improvements in product costing, cost containments of waste disposal and a restructuring of prices on commodities to grow market share, possibly selling production capacity. Systems to streamline management of working capital are also running smoothly.

There are four major targets for reinforcing Vaal's market position for the coming year.

•The brand identity will be strengthened to become brand of choice, guaranteeing value and customer satisfaction. This is expected to increase market share and promote penetration of the upmarket luxury ranges.
•Expansion of the customer base will be under the spotlight.
•Optimum utilisation of the improved capacity.
•A renewed emphasis on staff will reinforce loyalty and dedication leading to heightened output and efficiency levels.
Factory improvements and industry benchmarks will assist in attaining these new targets.

The planned expansion of Vaal’s signature range will be combined with the integration of Vaal and Libra resources to offer cost-effective, profitable packages to the market.

The Dawn Group of Companies

Phone: +27 (0) 11 323 0470
Website: www.dawnltd.co.za
Email: bhill@dawnssd.co.za