| Wed 26 Sep 2007, 13:13 | | DON - The Don - JSE-listed all-suite hotel Don Gro |
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DON
DON
DON - The Don - JSE-listed all-suite hotel Don Group converts R5.3-million loss
to R5.1-million Profit at Year-end 30 June 2007
Press Release
The Don Group Limited
Incorporated in the Republic of South Africa
(Registration Number 1946/023123/06)
Share code: DON & ISIN: ZAE000008462
("The Don")
Issued by The Don Group
Contact: Thabiso Tlelai
JSE-listed All-Suite Hotel Don Group converts R5.3-million loss to
R5.1-million Profit at Year-end 30 June 2007
The JSE-listed all-suite hotel Don Group today posted a profit of R5.1-million
for the financial year ended 30 June 2007. This represents a swing of more than
R10-million in performance from a loss at 30 June 2006 of R5.3-million.
Chief Executive officer Thabiso Tlelai said that this outstanding achievement
vindicated his belief that the potential of the Don Group`s nine all- suite
hotels in Cape Town, Johannesburg, Sandton and Pretoria at last was being fully
realised.
Tlelai took over as CEO and controlling shareholder of the Group in 2000, when
the then 14 suite hotels were saddled with liabilities exceeding R100-million.
"This financial year`s performance is the first real proof of the inherent
strength of the group. In retrospect, the numerous legacy impediments to profit
growth with which we had to contend over the last six years really were
daunting. The numbers we report today are the first unencumbered by any historic
problems and fully vindicate the faith in the Don suite-hotel concept held by
the board, the staff and shareholders.
"Our small group is now beginning to pack a real competitive punch," Tlelai
said.
With the resignation of non-executive chairperson Dr Danisa Baloyi earlier in
the year ("her contribution to Don`s development and achievements thus far is
acknowledged"), Don appointed two new directors: Ms Salukazi Dakile-Hlongwane,
who becomes non-executive chairperson, and Wayne Roderick Wright. Other non-
executive directors are Max Maisela and Professor Francois Viruly.
Based on a core asset base of the nine suite hotels, Tlelai and Salukazi Dakile-
Hlongwane say that in the coming financial reporting period "management is
intent on maximising income and profit growth. The promise held out to the
hospitality industry by stabilised economic growth, the 2010 World Cup (Don
Group has been granted FIFA accreditation for the event), and burgeoning tourism
point to opportunities in
which Don fully intends to share. The positive results have given management and
staff a solid platform from which to achieve that objective,
"The most worrying aspect is the possibility of worsening inflation.
Nevertheless, through tried and tested management and operational tools,
including an effective cost master programme, and a dedicated staff, Don has
every confidence of improving on the achievements of 2006-2007."
Commenting on the financial results, Tlelai and Salukazi Dakile-Hlongwane said:
"The most pleasing feature that closed the financial year ended 30 June 2007 has
been the significant improvement in operating profit: up 74 percent to R15.3-
million from R8.8-million in the previous year.
"The growth path in operating profit is reflected by the results for the last
three financial years - 2005: R3.9-million; 2006: R8.8-million and 2007: R15.3-
million."
The conversion of substantial loss to substantial profit created by the
operating profit platform "is testimony to the inherent strength of the Don
Group as the premier JSE-listed all-suite hotel group. The Group has now dealt
with a once-off legacy impediment of a tax liability of R2-million in respect of
a matter going back many years. This was a prime contributor to the R5.3-million
loss reported in the prior year.
"The swing from loss to profit translates into a headline profit of 1,74 cents
compared with a prior year loss of 1,61 cents.
"Again, it is instructive to see how shaking off historic problems affected
financial performance by rating bottom line results over the last three years -
2005: R300 000 profit; 2006: R5.3-million loss; 2007: R5.1-million profit.
"Net asset value improved to 25,4 from 23,7 cents per share."
The Group had also moved from a cash negative to a cash positive position.
"The current result squares neatly with the comment made a year ago in which we
said the removal of historic impediments would leave the road open to the
Group`s management turning its energy to improving financial performance and
continued profit growth. The basis for this achievement rests on the 27 percent
rise in revenue to R62.6 million from R49.3 million.
"The main contributors were modest increases in suite rates, as well as good
rate yield management," the directors said.
The foundation of Don`s objective of incremental profit growth was its product:
well-designed, superbly furnished studio, one-, two- and three-bedroomed suites
complete with well-equipped self-catering kitchens, supported by dining and
beverage services.
"There are few competitors in the hospitality market able to offer self-catering
and conventional hotel facility options at rates based not on per person but on
"key to the door" rates.
"Accordingly, great attention has been given to improving the quality of the
product. Capital expenditure of R3.2-million focused on upgrading property has
been incurred, particularly on the Don Beach Road Hotel in Cape Town. These new-
look premises, to be re-launched in October, set a new standard for a Don Suite
Hotel.
"The other eight suite hotels in Johannesburg, Sandton and Pretoria are all
receiving upgrading and improvement attention, for which R10-million, funded
from internal resources, has been
budgeted," the directors said.
ends
Date: 26/09/2007 13:13:01 Produced by the JSE SENS Department.
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