| Tue 26 Mar 2002, 0:00 | | Don - Unaudited Interim Results For The Six Months |
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Don Group Ltd
(Registration No. 1946/023123/06)
("Don")
JSE Share code: DON
ISIN: ZAE000008462
Unaudited interim results for the six months ended 31 December 2001
Consolidated Income Statements
Unaudited Unaudited Audited Proforma1
Six months Six months Year-end Six months
31 Dec 2001 31 Dec 2000 30 June 2001 31 Dec 2001
R'000 R'000 R'000 R'000
Revenue 22 729 23 569 48 167 22 729
Operating income 5 251 5 354 13 087 2 358
Depreciation (1 554) (2 226) (3 767) (1 554)
Net finance costs (3 054) (5 806) (10 885) (161)
Income from
associate - - 85 -
Income/(loss)
before taxation
and exceptional
items 643 (2 678) (1 480) 643
Exceptional items - - (78 412) 2 117
Income /(loss)
before taxation 643 (2 678) (79 892) 2 760
Taxation - - - -
Net Income/(loss)
attributable to
ordinary
shareholders 643 (2 678) (79 892) 2 760
Headline
profit/(loss) 643 (2 678) (1 480) 643
Number of ordinary
Shares
in issue (000) 294 485 294 485 294 485 294 485
Weighted
average number of
ordinary shares
in issue (000) 294 485 294 485 294 485 294 485
Profit/(loss)
per share (cents) 0,22 (0,91) (27,13) 0,94
Headline profit
/(loss) per
share (cents) 0,22 (0,91) (0,50) 0,22
Reconciliation
of headline
profit/(loss)
Net income/(loss)
attributable to
ordinary
shareholders 643 (2 678) (79 892) 2 760
Impairment
of assets - - 79 217 -
Profit arising
on settlement
of historical
claim - - (848) -
Loss on
Restructure
of dormant
companies - - 43 -
Income arising
from Group
restructuring - - - (2 117)
Headline
profit/(loss) 643 (2 678) (1 480) 643
Note 1
The proforma financial details are for information only, assuming the
Ellwain transaction had been concluded at 22 August 2001.
Condensed Consolidated Cash Flow Statements
Unaudited Audited Proforma1
Six months Year-end Six months
31 Dec 2001 30 June 2001 31 Dec 2001
R'000 R'000 R'000
Cash flows from
operating activities (974) (10 417) (974)
Cash flows from investing
activities (360) (618) (360)
Cash flows from financing
activities 28 658 11 354 28 658
27 324 319 27 324
Opening cash and cash
equivalents (27 885) (28 204) (27 885)
Closing cash and
cash equivalents (561) (27 885) (561)
Consolidated Balance Sheets
Unaudited Audited Proforma1
Six months Year-end Six months
31 Dec 2001 30 June 2001 31 Dec 2001
R'000 R'000 R'000
Assets
Non-current assets 130 888 132 383 24 492
Property, plant and
equipment 129 129 130 624 22 733
Investment in associate 1 374 1 374 1 374
Long term receivables 385 385 385
Current assets 8 656 5 474 8 656
Inventory and accounts
receivable 6 543 5 330 6 543
Notice deposit 2 050 - 2 050
Cash and cash equivalents 63 144 63
Total assets 139 544 137 857 33 148
Equity and Liabilities
Capital and reserves 24 306 23 663 26 423
Non-current liabilities 2 390 80 128 2 390
Interest bearing liabilities - 77 801 -
Interest-free liability 2 390 2 327 2 390
Current liabilities 112 848 34 066 4 335
Accounts payable 3 711 6 037 3 711
Short term borrowings 108 513 - -
Bank overdrafts 624 28 029 624
Total equity and liabilities 139 544 137 857 33 148
Net asset value per
share (cents) 8,3 8,0 9,0
Interest bearing debt
less cash on hand
to total shareholders'
funds (%) 449 447 2
Capital expenditure
during the period (R'000) 59 737 59
Capital committed and
authorised (R'000) - 250 -
Directors' valuation of
unlisted investments 1 374 1 374 1 374
Rental commitments (R'000)
Payable in the next year 825 8 393 7 153
Payable thereafter 591 34 487 12 347
Contingent
liabilities (R'000) - 948 -
Statements of Changes in Equity
Unaudited Audited Proforma1
Six months Year-end Six months
31 Dec 2001 30 June 2001 31 Dec 2001
R'000 R'000 R'000
Opening balance 23 663 103 555 23 663
Net income/(loss)
attributable to
ordinary shareholders 643 (79 892) 2 760
Closing balance 24 306 23 663 26 423
Overview
Introduction
At the close of the financial year ended 30 June 2001, the Don announced a
re-structuring and re-financing transaction (`the transaction') in which it
is disposing of its property portfolio to Ellwain (Pty) Ltd (`Ellwain').
The effect was to immediately reduce the number of hotels to nine viable
operations based in Cape Town, Johannesburg, Sandton and Pretoria; remove
debt and onerous finance charges; and render Don cash positive.
Conclusion of the transaction, mainly concerned with formal transfer of
title deeds, is in progress.
For reporting purposes, pending this conclusion, the interim results to 31
December 2001, are presented in two forms to show an `actual' and a
`proforma' result - that is, had transfer of the properties or property-
owning company been concluded at 22 August 2001. The variances do not
materially affect the interim profit performance and headline profits.
Column 1: `actual' unaudited consolidated results with operating income and
net finance costs that exclude rental due, but includes interest payable, to
Ellwain.
Column 4: proforma results, which reflect the unaudited consolidated
position, assuming the Ellwain transaction had been concluded, and which
takes into account the rental that would have been paid to Ellwain.
Either way, the results fully justify the promise of a greatly improved
performance implicit in the radical restructuring being undertaken by Don.
These show that in nearly every key area of operation, the slimmed-down
hotel chain posted better results than those recorded by the group when it
operated with 13 hotels although, because of the reduction in Don's size,
the outcome year-on-year is not strictly comparable.
Accounting policies
The accounting policies at 31 December 2001 correspond with those applied at
30 June 2001. The results have been prepared in accordance with Generally
Accepted Accounting Practice.
Financial Results
It is pleasing to note that the outcome of the half-year to 31 December
2001, highlights the inherent capability of a leaner, black-owned and
managed Don in working towards restoration of profitability.
Unaudited revenue of R22,7-million to 31 December 2001 came close to the
R23,6-million earned in the same period a year previously.
Don recorded net income attributable to shareholders of R643 000, compared
with a loss in the comparative review period of R2,7 million. (In proforma
terms, the net income attributable to shareholders would have been R2,8-
million, which includes an `exceptional item' of R2,1-million arising from
the Ellwain transaction.)
The considerable swing in improvement led to a headline profit per share of
0,22 cents , compared with a loss of 0,91 cents per share at 31 December,
2000.
Fixed expenses have been drastically reduced. At the half-year stages these
were more than halved from the R10,6 million incurred at 31 December 2000.
Net asset value per share stood at 8,3 cents (proforma:9 cents) against 8
cents at 30 June 2001.
Operations
The overall results reflect a pleasing continuation of a turnaround, based
on sound operational excellence, which was strongly evident prior to the
Ellwain transaction.
A positive first quarter to 30 September 2001 offset the effect in the
second quarter of the 11 September tragedy in the United States and its
aftermath on travel; the impact of currency depreciation; the fall off in
occupancies during the traditional quiet December holidays; and re-location
costs. This resulted in a healthy operating income of R5,2-million delivered
by nine hotels (2000: R5,4-million from 13 hotels).
The most notable feature of the review period was the high level of Monday-
to-Friday occupancies, resulting in instances of some hotels occasionally
being full. The fall-off in weekend custom reduced occupancies for the
review period to an average of 60 percent (rising in some months to above 70
percent), which is still the best overall performance by the chain in recent
years.
This trend has continued into the second half year, with February posting
occupancies of 70,85 percent and the highest revenue in a single month
recorded by Don.
It is worth noting that the half-year achievement has been accomplished
without tariff increases or the benefit of above-the-line-advertising, which
reflects well on the efforts of Don's small but capable marketing team in
developing and expanding relationships within its core corporate market.
These efforts have been augmented by highly motivated hotel staff going `the
extra mile' in guest care, with discernible benefits in increased
reservations from key organisations.
Don enters the second half year with all hotels featuring restaurant and bar
facilities, which are expected to strengthen the appeal of world-class suite
accommodation, excellent locale and top-class service, all features that
help strengthen Don's growing market share in a tight competitive market.
Prospects
Don's progress is subject to improvement in the uneasy global and domestic
economies. The half-year performance is nevertheless an excellent platform
from which to go forward and take advantage of continued and growing support
from the corporate market and the travel industry. Continuation of the trend
to higher occupancies can only benefit Don's bottom line.
Acknowledgments
The knowledge that Don is now free of any restraints has done wonders for
enthusiastic commitment in implementing what it does best, the management of
a successful suite hotel chain, still the largest of its kind in the
country.
I wish to express my appreciation for the support of my fellow board members
and that of the hard-working staff, who have spared no effort in delivering
service of high quality.
Thabiso Tlelai
Chairman and Chief Executive Officer
Johannesburg
26 March 2002
Trimmed Down Leaner Don Hotel Group Forges Into Profit
News Release
Issued On Behalf Of
The Don Group
Don Suite Hotels
Tuesday, March 26 2002
TRIMMED DOWN LEANER DON HOTEL GROUP FORGES INTO PROFIT
A LEANER Don suite hotel group moved into the black at the financial half-
year stage to December 31 2001,with a headline profit of R643 000 against a
loss of R2,7-million recorded a year previously.
This swing in improvement equates to a headline profit per share of 0,22
cents per share against a loss of 0,91 cents per share in 2000.
Chairman and chief executive Thabiso Tlelai, who assumed control as the
majority shareholder of the black-owned and managed group in 2000, said the
results fully justified the promise implicit in radical restructuring and
refinancing initiated last year.
This was centred on a transaction in which Don is transferring its property
portfolio to Ellwain (Pty) Limited.
The immediate result was to make Don cash positive, free of debt and onerous
finance charges, and to trim the chain from 13 to nine viable suite hotels
located in Cape Town, Johannesburg, Sandton, Pretoria, and near the
Johannesburg International Airport. Conclusion of the transaction, mainly
relating to the transfer of title deeds, is nearing completion.
For this reason, Don publishes the actual results for the interim period as
well as a proforma result, showing the effect had the Ellwain transaction
been in place at August 22, 2001. The `actual' and proforma variances do not
materially affect the half-year headline profit result.
One difference lies in operating income: in proforma terms this is shown as
R2,4-million (`actual': R5,3-million) and takes into account the rental that
would have been paid to Ellwain had the property portfolio transfer been in
place.
In the proforma result, there is a R2,1-million `exceptional item' arising
from the Ellwain transaction which would have helped deliver net income
attributable to shareholders of R2,8-million (`actual': R643 000), but the
headline profit remains the same as the `actual' amount of R643 000.
Likewise, the `actual' balance sheet reflects short -term borrowings of
R108,5-million, but this vanishes in the proforma result.
Tlelai said that in nearly every key area of operations, Don had posted
better `actual' results than those recorded by the group when it operated
with 13 hotels.
Because of the reduction in size, the outcome year-on-year is not strictly
comparable.
Nevertheless, revenue (`actual') of R22,7-million in the period to December
31, 2001 came close to matching the R23,6-millon earned in the comparable
period a year earlier.
Fixed expenses were drastically reduced. At the half-year stage, these were
more than halved from the R10, 6-million incurred at December 31, 2001.
Net asset value stood at a realistic 8,3 cents a share compared with 8 cents
at June 30, 2001 (Proforma NAV: 9 cents).
In `actual' terms, Don produced a healthy operating income of R5,3-million
delivered by nine hotels compared with R5,4-million from 13 hotels a year
previously.
This was achieved despite the tragic events of September 11 2001 in the U S
and their aftermath depressing business travel; the impact of currency
depreciation; re-location costs; and the fall-off in occupancies in the
traditionally quiet December holidays.
The most notable feature in the review period was the high level of Monday-
to-Friday occupancies, with hotels in some instances occasionally being
full.
The traditional decline in weekend custom reduced overall occupancies to an
average of 60 percent (rising in some months to 70 percent), which was still
the best performance by the chain in recent years.
Tlelai said: "This trend has continued into the second half-year, with
February posting overall occupancies of 70,85 percent - and the highest
revenue in a single month recorded by Don."
The steadily improving performance, based in sound operational excellence
strongly evident before the Ellwain transaction, was achieved without tariff
increases or the benefit of above-the-line advertising.
"This reflects well on the efforts of the small but capable marketing team
in developing and expanding relationships within Don's core corporate
market.
"These efforts have been augmented by highly motivated staff going `the
extra mile' in guest care. We can directly attribute increasing reservations
from key organisations to recognition of this high level of service," Tlelai
said.
Don enters the second half-year with all hotels featuring restaurant and bar
facilities that neatly supplement the fully serviced self-catering suite
concept on which the chain's operation is founded.
"These features are expected to strengthen the appeal of our world-class
suite accommodation, excellent locale and top-class service.
"The half-year performance is an excellent platform from which to go forward
and take advantage of continued and growing support from the corporate
market and the travel industry. Continuation of the trend in high
occupancies can only benefit Don's bottom line."
But he said progress was subject to no unpleasant surprises - and an
improvement - in the "uneasy global and domestic economies."
Ends
