| Mon 1 Oct 2001, 0:00 | | Don Group Ltd - Results And Review For The Year En |
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("The Don Group") ("Don") (Registration No. 1946/023123/06)
Results and review for the year ended 30 June 2001
Share code: Don ISIN:ZAE000008462
Summarised Year ended Year Ended
Consolidated June 2001 June 2000
income statement Audited Audited
R000s R000s
Revenue 48 167 44 562
Operating profit 13 088 8 533
Net finance costs (10 885) (12 140)
Depreciation (3 768) (4 602)
Equity income 85
Loss before exceptional items (1 480) (8 210)
Exceptional items (78 412) (1 888)
Profit/(loss) after exceptional
Items (79 892) (10 097)
Taxation (STC) (72)
Profit/(loss) attributable to
ordinary shareholders (79 892) (10 169)
Headline loss (1 480) (8 281)
Number of ordinary shares in
issue (000s) 294 485 294 485
Weighted average number of
ordinary shares in issue (000s) 294 485 294 485
Profit/(loss) per share (cents) (27,1) (3,45)
Headline loss per share (cents) (0,5) (2,81)
Reconciliation of headline loss
Profit/(loss) attributable to
ordinary shareholders (79 892) (10 169)
Impairment of property, plant &
Equipment 79 217
Settlement of laundry claim (848)
Costs of winding down dormant
companies 43
Loss on food division 1 714
Loss on disposal of properties 174
Headline loss (1 480) (8 281)
First six months (2 678) (6 592)
Second six months 1 198 (1 689)
Consolidated Year ended Year Ended
balance sheet June 2001 June 2000
Audited Audited
R000s R000s
Assets
Property plant and equipment 130 624 207 841
Unlisted investments 1 374 1 289
Long-term receivables 385 385
Current assets - -
- Inventory and accounts
receivable 5 330 7 311
-Cash and cash equivalents 144 439
Total assets 137 857 217 265
Equity and liabilities
Shareholders interest 23 663 103 555
Long-term borrowings 80 128 68 697
- Interest free 2 327 2 255
-Interest bearing 77 801 66 442
Current liabilities 34 066 45 013
-Creditors 4 162 12 643
-Provisions 1 875 3 652
-Short-term borrowings - 75
-Bank overdraft 28 029 28 643
137 857 217 265
Interest bearing less cash on hand
to total shareholders' funds (%) 447 91
Net asset value per share (cents) 8,0 35,2
Capital expenditure during
the year (R000s) 737 6 377
Capital committed and authorised
(R000s) 250 60
Directors valuation of unlisted
investments (R000s) 1 374 1 289
Rental commitments (R000s)
Payable in the next year 8 393 7 605
Payable thereafter 34 487 41 666
Contingent liabilities (R000s) 948 6 174
Consolidated Year ended Year Ended
cash flow June 2001 June 2000
statement Audited Audited
R000s R000s
Cash utilised by operations (10 417) (8 612)
Investing activities (619) (5 360)
Financing activities 11 356 2 502
320 (11 470)
Cash equivalents at
beginning of year (28 204) (16 734)
(27 884) (28 204)
CONSOLIATED Share Share Accumulat Non- Total
STATEMENT OF Capital Premium ed Profit distribu
CHANGES IN EQUITY table
Reserves
30 June 1999 36,811 119,103 (51,512) 9,322 113,724
Net loss for year - - (10,169) - (10,169)
Transfer to non- (4,336) 4,336 -
distributable
reserve
30 June 2000 36,811 119,103 (66,017) 13,658 103,555
Net loss for year (79,892) (79,892)
Transfer from non- 1,284 (1,284) -
distributable
reserve
30 June 2001 36.811 119,103 (144,624) 12,374 23,663
Overview
Post balance sheet developments
In terms of a cautionary notice published on August 22, 2001, now withdrawn,
subject to the approval of the JSE Securities Exchange, South Africa, and
shareholder approval, the Don Group has concluded refinancing and
restructuring arrangements. The outcome is that Don is no longer encumbered
with debt; is cash positive; has disposed of some of its portfolio of
hotel properties to Ellwain Investments (Pty) Ltd ("Ellwain"). Further
information of the Ellwain transaction is detailed in a separate
announcement published today. It follows that the results for the financial
year ended June 30, 2001, should be considered in the light of this
refinancing and restructuring of the Don Group.
financial results at 30 June 2001
Second half year profit
The above results have been audited by Fisher Hoffman PKF (JHB) Inc., and it
has been indicated that the opinion will be unqualified. These statements
comply with Statements of Generally Accepted Accounting Principles.
Performance for the financial year ended June 30, 2001, was marked by a
significant turnaround in the second half year which resulted in a profit of
R1,2m, compared with a loss of R1,7m for the same review period a year ago.
The first half year loss was lowered 59 percent to R2,7m from R6,6m, which
reflects the downward trend in a number of other key ratios, and illustrates
how effectively the company has been working towards a return to
profitability.
Lower headline earnings loss
Don posted a sharply reduced loss in headline earnings by 82 percent to
R1,5m from R8,3m in the previous financial year. In line with expectations,
operating profit rose by 54 percent to R13,1m from R8,5m on the strength of
an increase in turnover to R48m (2000: R45m). Stringent management control,
the first increase in tariffs in two years, growing support from the travel
trade sector, and increased patronage by business travellers, were important
contributors to the return to profitability in the last six months of the
review period. A long-standing claim by a laundry supplier (now liquidated)
was settled. The provision for this carried in the previous year's accounts
was transferred to income, in effect adding one cent per share to the second
half-year profit.
Accounting statements
New statements of Generally Accepted Accounting Practice have been
implemented in the above results. In compliance with the revised statement
AC105, leases that were previously considered as operating leases, are now
capitalised. This has been applied retrospectively, which required a re-
statement of the comparatives, reflecting additional gearing of R30m. The
new statement AC128, dealing with "impairment of assets" was implemented
prospectively in the current year, resulting in a once-only write-off in
the review period of R79m, which is shown as "Exceptional Items". The effect
was to distort the loss attributable to shareholders which, before
implementation of the new accounting statement, stood at R675 000, and to
reduce net asset value to 8 cents per share from 35 cents per share in the
previous review period.
Company structure
Internal restructuring continued and several dormant companies were wound
down at a cost of R43 000. This, and the implementation of the new
accounting statements on leases and asset value provide a cleaner, clearer
picture of the company's structure going forward.
Gearing
Net finance costs were reduced by 10 percent to R10,9m from R12.1m, a
decrease which also contributed to a reduction in the loss before
exceptional items to R1,5m from R8,2m. Once again, Don's transparent
measures to turn the company around were supported by the bank consortium to
which it was indebted. At July 22, 2001, the agreement by Ellwain to acquire
from the bank consortium all of the rights, title, interest and claims in
respect of Don provided the Group with immediate relief from bank debt.
Prospects
Since Don came under its present black ownership and management in late
1999, it has had to contend with a heavy debt burden and difficult trading
conditions in a tight economy. It has since attained sound operational
excellence (and with this steady progress towards viability) and addressed
and removed indebtedness. With a fresh unencumbered dispensation and a
realistic NAV of 9,2 cents a share (post the Ellwain transaction), the focus
now will be on a smaller high quality hotel base in good locations
delivering excellent service, and a debt-free, cash positive platform from
which to maximise support from its growing traditional client base. The
profitable results achieved in the second half year in review points the Don
Group in the direction of positive territory.
Acknowledgements
It is appropriate to express appreciation to the bank consortium for its
support during difficult times and to shareholders for their patience as Don
sought to return to profitability. Don's undoubted progress towards becoming
a viable leading suite hotel group is due entirely to the hard work and
loyalty of a dedicated team and to the guidance and support of the Board of
Directors. I extend my warmest thanks to them all for a year that shows some
light at the end of the tunnel.
Thabiso Tlelai, Chairman and
Chief Executive Officer
Johannesburg
September 28, 2001
Directors: Thabiso Tlelai (chairman), Errol Grolman, Sidney Ellerine, Marc
Wainer, Company Secretary: Whitney Green
Registered Office: 1 Kernick Avenue, Melrose North, Johannesburg 2196
Transfer secretaries: Ultra Registrars (Pty) Ltd. 11 Diagonal Street,
Johannesburg 2001
