| Wed 26 Mar 2008, 14:15 | | DON - The Don Group - Reviewed Interim Results for the six months |
|
DON
DON
DON - The Don Group - Reviewed Interim Results for the six months
ended 31 December 2007
The Don Group Limited
Incorporated in the Republic of South Africa
(Registration number: 1946/023123/06)
Share Code: DON
ISIN: ZAE000008462
("The Don" or "the Group")
Reviewed Interim Results for the six months ended 31 December 2007
SUMMARISED CONSOLIDATED INCOME STATEMENT
Six months Six months Year
ended ended ended
Dec 2007 Dec 2006 June 2007
Reviewed Reviewed Audited
R`000 R`000 R`000
Revenue 34 477 30 441 62 578
Operating profit 7 969 6 353 15 329
Net finance (expense) (3 014) (2 663) (5 959)
Depreciation (2 391) (2 213) (4 470)
Profit before taxation 2 564 1 477 4 900
Taxation 145 216 211
Taxation - SA normal tax (71) - (221)
Taxation - deferred 216 216 432
Profit attributable to ordinary 2 709 1 693 5 111
shareholders
Headline profit 2 709 1 693 5 111
Number of ordinary shares in 294 485 294 485 294 485
issue (000`s)
Weighted average number of 294 485 294 485 294 485
ordinary shares in issue (000`s)
Profit per share (cents) 0,92 0,57 1,74
Headline profit per share 0,92 0,57 1,74
(cents)
CONSOLIDATED BALANCE SHEET
At 31 December 2007
Dec 2007 Dec 2006 June 2007
Reviewed Reviewed Audited
R`000 R`000 R`000
Assets
Non-current assets
Property, plant and equipment 147 167 147 599 147 375
Unlisted investments 1 437 1 437 1 437
Current assets 9 815 7 821 8 553
- Inventory and accounts 4 136 4 221 5 184
receivable
- Cash and cash equivalents 5 679 3 600 3 369
Total assets 158 419 156 857 157 365
Equity and liabilities
Capital and reserves 77 487 71 360 74 778
Non-current liabilities 47 405 49 047 48 269
- Interest free 2 390 2 390 2 390
- Interest bearing 45 015 46 657 45 879
Deferred tax 20 556 20 989 20 772
145 448 141 396 143 819
Current liabilities 12 971 15 461 13 546
- Creditors and provisions 9 238 9 920 9 247
- Short-term portion of non- 2 920 3 998 3 536
current liabilities
- Taxation 813 1 543 763
Total equity and liabilities 158 419 156 857 157 365
SUMMARISED CONSOLIDATED CASH FLOW STATEMENT
Dec 2007 Dec 2006 June 2007
Reviewed Reviewed Audited
R`000 R`000 R`000
Cash generated by operations 6 099 5 088 8 126
Investing activities (2 151) (1 128) (3 157)
Financing activities (1 638) (1 898) (3 138)
- Capital repayments to
Industrial Development
Corporation (1 638) (1 898) (3 138)
Cash and cash equivalents - 3 369 1 538 1 538
beginning of period
Cash and cash equivalents - end 5 679 3 600 3 369
of period
Net asset value per share 26,3 24,2 25,4
(cents)
Capital expenditure during the 2 201 1 141 3 157
period
- Other fixed assets acquired 2 201 1 141 3 157
during the period
Directors` valuation of unlisted 1 437 1 437 1 437
investments
Rental commitments
Payable in the next year 984 1 506 975
Payable thereafter 1 502 493 2 736
SUMMARISED STATEMENT OF CHANGES IN EQUITY
Dec 2007 Dec 2006 June 2007
Reviewed Reviewed Audited
R`000 R`000 R`000
Balance at the beginning of the 74 778 69 667 69 667
period
Profit for the period 2 709 1 693 5 111
Balance at the end of the period 77 487 71 360 74 778
COMMENTARY
FINANCIAL RESULTS
The highlight of the Group financial performance for the six months to December
2007 is the 13% increase in revenue to R34,5 million from R30,4 million. The
operating profit, as a direct result of the revenue increase, improved from R6,4
million to R8,0 million. This was a healthy growth of 25% on the previous six
month period. Net profits increased by 60% from R1,7 million to R2,7 million.
These results were achieved amid a general increase in input costs such as suite
accommodation, food and interest rates. Overall, this growth pattern stems from
the suite rate increase from the previous period. Better yields achieved per
suite sold, an increase in revenue generated from food and beverage operations,
guest transport and conferencing income contributed to the growth in revenue.
The large square metre size of each suite, ensures that The Don is a value-for-
money alternative to a conventional hotel room. The Don also benefits from prime
locations in Cape Town, Johannesburg, Sandton, Pretoria and the OR Tambo
International Airport precinct.
It is evident from the results and all recent previously published reports that
a continuation of the upward trends in revenue, operating profits and headline
profits is being sustained and bettered. The foundation laid in the previous
full-year financial results continues to provide positive financial growth from
hotel operations.
As reported in September 2007, great attention is being given to the condition
of The Don Suite Hotel product. Capital expenditure for refurbishment in the
half-year reporting period was R2,2 million, double the R1,1 million incurred
previously. Further improvements for all The Don Suite Hotels are planned.
The Group has been recording an increasing trend in its profits, breaking the
trend of past losses. Whilst this is likely to continue, greater certainty will
have been established by the year end. Accordingly, no deferred tax asset
recognition has taken place at the interim date.
Net asset value increased from 25,4 cents in June 2007 to 26,3 cents per share.
OPERATIONS
In line with the capital expenditure strategy, the upgrading of the first hotel,
Don Beach Road Hotel, has been completed, with refinements that include
installation of air conditioners, modern furniture and carpets. It is pleasing
to note from exit questionnaires the pleasure and satisfaction expressed by
guests about the four-star ambience and service they experience. It is also
gratifying to welcome back guests who had previously decided against staying at
The Don Suite Hotel.
The Don Eastgate Hotel in Bruma, Johannesburg is the latest property to undergo
refurbishment. The lessons learnt on the Cape Town project have led to
significant efficiencies in the Eastgate project, most notably planning and
execution, which is expected to significantly reduce turnaround time and
inconvenience to guests.
The Don has upgraded its property management software in pursuit of improving
customer service and integration of back office accounting systems.
The Group continues to embrace staff training dedicated to rendering top-class
service. While management is never complacent about service delivery, the
pleasing benefit from this considerable investment is recurring compliments
about efficient, caring and friendly service from competent staff.
Business from countries across the African continent is developing into an
important revenue stream. The Don Suite Hotel joined with the Big Brother Africa
reality TV show that was broadcast from August to November. The Group enjoyed
Africa-wide visibility. This has led to a marked increase in cross-border
bookings that has continued beyond the Big Brother Africa broadcast `window`.
BOARD MEMBERSHIP
The composition of the board is: Ms Salukazi Dakile-Hlongwane* (Non-Executive
Chairperson); Thabiso Tlelai (Chief Executive Officer); Max Maisela*, Professor
Francois Viruly* and Wayne Wright* (* Non-Executive Directors).
ACCOUNTING POLICIES
Basis of preparation: The consolidated interim financial statements have been
presented in accordance with the Group`s policies, and are consistent with the
policies adopted at 30 June 2007. These comply with International Financial
Reporting Standards, IAS 34 and the Companies Act of South Africa.
Change in presentation: The offset of certain current assets in the prior year
has been adjusted in the prior year and has now been presented separately. The
directors have determined that the adjustment of the offset results in more
transparent financial reporting. This has affected cash and cash equivalents and
inventory and accounts receivable. The effects of the policy changes are shown
below:
Balance Sheet effects
Previously
Adjusted Adjustments reported
Dec 2006 Dec 2006
R`000 R`000 R`000
Inventory and accounts receivable 4 221 (2 529) 6 750
Cash and cash equivalents 3 600 2 529 1 071
Owner-occupied property: Owner-occupied property is recognised initially at
cost. Thereafter, the property is carried at a re-valued amount, as determined
by professional valuers to reflect the values of the properties had they been
converted into residential units. Depreciation is provided at 2% per annum. The
revaluation and related deferred tax have been recognised in equity.
Deferred taxation: Deferred tax liabilities are recognised for all taxable
temporary differences and deferred tax assets are recognised to the extent that
it is probable that taxable profits will be available against which deductible
temporary differences can be utilised.
Financial liabilities: Financial liabilities initially are measured at their
cost, which is the fair value of the consideration received, less transaction
costs. Thereafter, these are measured on the amortised cost basis. Interest
expense is charged to the income statement.
Investment in associate company: The Group continued to hold this investment as
no application for formal de-registration has been made. Accordingly, there has
been no change in the accounting for this asset and financial liability since
June 2003. The Group is seeking to minimise any obligations should de-
registration take place and these are not expected to exceed R0,28 million.
Review report: The consolidated interim results to 31 December 2007 have been
reviewed by PKF (Jhb) Inc. and their unqualified review report is available for
inspection at The Don`s registered office.
Dividends: No dividend has been declared or paid.
PROSPECTS
The Don management is monitoring the unsettling upward inflation trend fuelled
by, among other factors, escalating oil prices. Subject to any untoward risk to
the economy, The Don is well placed to continue along the financial path seen in
the first six months. It has a growing loyal customer support base. Aggressive
marketing in existing and new markets based on its value-for-money suites as
well as reliance on well-proven tight cost control and careful management of its
procurement practices - without compromising service - provide a sound platform
for continuing growth in the remainder of the financial year to 30 June 2008.
By order of the board
Ms Salukazi Dakile-Hlongwane Thabiso Tlelai
Non-Executive Chairperson Chief Executive Officer
26 March 2008
Directors:
Ms Salukazi Dakile-Hlongwane* (Non-Executive Chairperson), Thabiso Tlelai (Chief
Executive Officer), Professor Francois Viruly*+, Max Maisela*, Wayne Wright*
* Non-executive Directors + Dutch
Company Secretary:
Whitney Green
Registered Office:
65 Kyalami Boulevard, Kyalami Business Park, Kyalami, 1684
Transfer Secretaries:
Link Market Services South Africa (Proprietary) Limited
Sponsors:
Merchant Sponsors (Proprietary) Limited
Date: 26/03/2008 14:15:06 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
