| Mon 30 Sep 2002, 16:39 | | Don Group Ltd - Audited Results For The Year Ended |
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DON GROUP LTD - AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2002
Don Group Ltd
("Don") (Registration No. 1946/023123/06)
Share code: Don ISIN:ZAE000008462
Audited results for the year ended 30 June 2002
Summarised consolidated income statements
Year ended Year ended
30 Jun 2002 30 Jun 2001
Audited Audited
R000s R000s
Revenue 41 959 48 167
Operating profit 3 128 13 087
Depreciation (2 758) (3 767)
Net finance costs (97) (10 885)
Income from associate 63 85
Profit/(loss) before exceptional
items 336 (1 480)
Exceptional items 874 (78 412)
Profit/(loss) attributable
to ordinary shareholders* 1 210 (79 892)
Headline profit/(loss) 336 (1 480)
Number of ordinary shares
in issue (000s) 294 485 294 485
Weighted average number
of ordinary shares
in issue (000s) 294 485 294 485
Headline profit/(loss)
per share (cents) 0,11 (0,50)
Profit/(loss) per share (cents) 0,41 (27,13)
Reconciliation of
headline profit/(loss)
Profit/(loss) attributable
to ordinary shareholders 1 210 (79 892)
Provision against employee
share incentive scheme 210 -
Profit arising on group
restructuring (1 048) -
Profit arising on sale
of assets (36) -
Impairment of assets - 79 217
Profit arising on settlement
of historical claim - (848)
Loss on restructure of dormant
companies - 43
Headline profit/(loss) 336 (1 480)
No normal taxation is payable because of prior year losses carried
forward
Consolidated balance sheets
Year ended Year ended
30 Jun 2002 30 Jun 2001
Audited Audited
R000s R000s
Assets
Non-current assets 23 089 132 383
Property, plant and equipment 21 477 130 624
Investment in associate 1 437 1 374
Loan receivable 175 385
Current assets 9 391 5 474
Accounts receivable 5 897 5 330
Notice deposits 2 171 -
Cash and cash equivalents 1 323 144
Total assets 32 480 137 857
Equity and liabilities
Capital and reserves 24 873 23 663
Non-current liabilities 2 990 80 128
Interest bearing liabilities 600 77 801
Interest-free liability 2 390 2 327
Current liabilities 4 617 34 066
Accounts payable 4 617 6 037
Bank overdraft - 28 029
Total equity and liabilities 32 480 137 857
Net asset value per share (cents) 8,4 8,0
Capital expenditure during the year
(R000s) 1 223 737
Capital committed and authorised
(R000s) - 250
Directors valuation of unlisted
investments (R000s) 1 437 1 374
Rental commitments (R000s)
Payable in the next year 7 060 8 393
Payable thereafter 9 674 34 487
Contingent liabilities (R000s) - 948
Consolidated cash flow statements
Year ended Year ended
30 Jun 2002 30 Jun 2001
Audited Audited
R000s R000s
Cash flows from operating activities 1 153 (10 417)
Cash flows from investing activities (637) (618)
Cash flows from financing activities 28 692 11 354
29 208 319
Opening cash and cash equivalents (27 885) (28 204)
Closing cash and cash equivalents 1 323 (27 885)
Consolidated statements of changes in equity
Share Share Non-distributable Accumulated
Capital Premium Reserves Loss Total
R000s R000s R000s R000s R000s
30 June 2000 36 811 119 103 13 658 (66 017) 103 555
Net loss for year (79 892) (79 892)
Transfer from NDR (6 051) 6 051 -
30 June 2001 36 811 119 103 7 607 (139 858) 23 663
Net profit
for year 1 210 1 210
Transfer from NDR (7 607) 7 607 -
30 June 2002 36 811 119 103 - (131 041) 24 873
Comments
Financial results
The directors are pleased to report that Don moved into profit for the
first time since the change in control in 2000. In judging performance,
a year-on-year comparison must take into account the reduction in size
from 13 owned suite hotels to nine leased units through the well-
documented disposal of its properties, except one, to Ellwain
Investments (Pty) Ltd, and a programme of re-financing and re-
construction which eliminated onerous debt and rendered Don cash
positive during the current financial year.
At 30 June 2002, profit attributable to ordinary shareholders amounted
to R1,2-million against a prior year loss of R79,9-million (arising in
part from the implementation of various new accounting statements). The
results fully vindicate the decision to remove non-profitable assets
from the business. The major overhaul carried with it a price in once-
off consultancy fees and other re-structuring related expenses. However,
furniture to the value of R1,7-million from closed hotels was placed in
storage for future replenishment purposes. Headline earnings per share
of 0,11 cents reflect an improvement when compared with the prior year
headline loss of 0,50 cents per share. Similarly the net asset value per
share increased by five percent from 8 cents at 30 June 2001 to 8,4
cents at 30 June 2002.
Although these results are modest in themselves, they illustrate how far
the Group has advanced from a succession of loss-dominated reporting
periods during which shareholders were kept informed of the
determination to progressively reduce substantial losses. The welcome
elimination of negative results in key income statement ratios is
reflected in a cash-positive balance sheet, with the Group showing cash
holdings of R3,4-million compared with a R28-million bank overdraft in
the prior year. On the trading front, the nine suite hotels delivered
revenue of R41,9-million, a considerable achievement given comparative
earnings of R48,2-million by 13 hotels for the year ended 30 June 2001.
Overall, the revenue result is a measure of the Group`s inherent
strength and of the efficacy of Don`s policy of `fetching, pleasing and
retaining` guests through a high level of service by motivated and
dedicated staff complementing the top-class quality of Don suites.
Guest exit questionnaires point to many instances of service going
beyond expectations.
Operations
Post 11 September 2001 shocks globally and domes-tically made trading in
the financial year difficult.
Nevertheless, occupancies increased year-on-year by six percent and room
rate revenue by 16 percent. Barring unforeseen political and economic
impediments, we expect this improvement to be bettered as resources
being applied to sales and marketing take effect in the business and
tourism market domestically as well as in Africa and abroad.
With the disposal of non-core properties, the head office was moved from
Melrose North to Sunninghill, Sandton. By year-end, restaurants were
functioning at all hotels and pubs are being rolled out to augment the
chain`s suite accommodation. These facilities have been welcomed by
regular guests, and are already attracting new clientele. Business
centres at all hotels provide comprehensive office and communication
facilities at minimal cost through the Group`s Diginet link. Numerous
other services intended to enhance the attraction of staying at a Don
and to sharpen the chain`s competitive edge are being undertaken.
Directorate
In April we appointed as independent non-executive directors Dr Danisa
Baloyi, board member of S A Tourism and TBCSA among others; and Mr Max
Maisela, executive chairman and CEO of NBC Holdings Limited. We welcome
the experience and knowledge that they are bringing to the affairs of
the Group, especially now that Don is poised for growth.
Prospects
The financial and operating costs of re-structuring and re-financing
have been filtered out of the Group`s operations. We now have a business
based on well-grounded hotel management and operational policies
conducive to growth in profitability. This unencumbered springboard is
already proving beneficial in performance two months into the first
quarter of the 2003 financial year, with income comfortably exceeding
expenditure. We have set ourselves challenging budgets as a spur to
delivering the best possible positive results by 30 June 2003.
The way is now open to make Don, as a black-owned and managed chain, a
real force in the South African and continental hospitality industry.
Basis of preparation of financial statements
The financial statements have been prepared in accordance with South
African Statements of Generally Accepted Accounting Practice and the
accounting policies used are consistent with the prior year other than
as set out below.
Change in accounting policy
In accordance with recently amended South African Statements of
Generally Accepted Accounting Practice with regard to depreciation of
property, the Group has changed its policy and it now provides for
depreciation of property. This change has resulted in an additional
charge to the income statement for the current year of R205 000.
Audit report
The consolidated results for the year have been audited by Fisher
Hoffman PKF (Jhb) Inc., and their unqualified audit report is available
for inspection at the company`s registered office.
Acknowledgements
None of this could have been achieved without the guidance and support
of my fellow directors and an enthusiastic staff. To them, I offer my
sincere thanks.
On behalf of the board
Thabiso Tlelai, Chairman and Chief Executive Officer
Johannesburg
30 September, 2002
Directors: Thabiso Tlelai (chairman) Danisa Baloyi* Sidney Ellerine*
Errol Grolman* Max Maisela* Marc Wainer* Company Secretary: Whitney
Green
Registered Office: 3 Cherry Place, Achter Road, Sunninghill, 2157
Transfer secretaries: Ultra Registrars (Pty) Ltd. 11 Diagonal Street,
Johannesburg 2001
*non-executive directors
Date: 30/09/2002 03:59:00 PM Produced by the JSE SENS Department
Don Group Moves Into Profit For First Time Since
Don Group moves into profit for first time since
NEWS RELEASE
change in control in 2000
DETERMINED efforts to eliminate years of substantial losses and restore
the Don Group to profitability finally paid off in the financial year 30
June 2002 when the slimmed down suite hotel chain declared a profit
attributable to ordinary shareholders of R1,2 million against a prior
year loss of R79,9-million.
The losses reported last year in part were distorted by implementation
of various new accounting statements.
The result is a watershed for the only black-owned and managed hotel
group listed on the JSE Securities Exchange South Africa.
Chairman and CEO Thabiso Tlelai, who is also the controlling
shareholder, said: "We said at the time control of the company changed
hands in 2000 that we intended to move into profit within two-three
years. We have now delivered. Conclusion of the re-financing and re-
structuring programme carried out during the financial year means we can
now move forward to make Don a real force in the South African and
continental hospitality industry."
He said that in judging performance year-on-year, comparison should take
account of the reduction in size of the Group from 13 suite hotels to
nine through the disposal of its properties, except one, to Ellwain
Investments (Pty) Ltd in a deal which removed "onerous debt and finance
charges" and made Don cash positive.
"The welcome elimination of negative results in key income statement
ratios at 30 June 2002 is reflected in a cash-positive balance sheet,
with the Group showing cash holdings of R3,4-million, compared with a
R28-million bank overdraft in the prior year.
Don Group Monday, September 30, 2002
Don Suite Hotels
"The major overhaul carried with it a price in considerable once-off
consultancy fees and other re-structuring expenses. On the plus side,
furniture from closed hotels was placed in storage for future
replenishment purposes."
After reconciliation, the bedrock headline earnings declared amounted to
R336 000 compared with a financial year 2001 loss of R1,5-million.
This translates into headline earnings per share of 0,11 cents, which
reflect an improvement when compared with the prior year headline loss
of 0,50 cents. Similarly, the net asset value per share increased by
five percent from 8.0 cents to 8,4 cents.
Tlelai said: "Although these results are modest in themselves, they
illustrate how far the Group has advanced from a succession of loss-
dominated reporting periods, during which we kept shareholders informed
of our determination to achieve profitability."
On the trading front, despite a year made difficult by post September 11
2001 and the economic aftershocks that followed, occupancies increased
year-on-year by six percent and room rate revenue by 16 percent.
The nine leased suite hotels delivered revenue of R41,9-million, no mean
achievement when compared with earnings of R48,2 million by 13 hotels
for the year ended 30 June, 2001.
Tlelai said: "Overall, the revenue result is a measure of the Group`s
inherent strength and the efficacy of its policy of fetching, pleasing
and retaining guests through a high level of service by motivated and
dedicated staff complementing the top class quality of Don suites."
Tlelai said guest exit questionnaires pointed to many instances of
service going beyond clients expectations.
Business centres provide comprehensive office and communication
facilities at minimal cost. By year-end, restaurants were functioning at
all hotels to augment suite accommodation.
"These facilities have been welcomed by regular guests and are already
attracting new clientele," Tlelai said.
The board had also been strengthened by the appointment of Dr Danisa
Baloyi, a board member of S A Tourism and TBCSA among others, and Max
Maisela, executive chairman and CEO of NBC Holdings Limited.
"With a clean balance sheet now a reality and with a strong board, we
now have a business based on well-grounded management and operational
policies conducive to growth in profitability. This unencumbered
springboard is already proving beneficial in performance two months into
the new financial year, with income comfortably exceeding expenditure,"
Tlelai said.
ends
Date: 30/09/2002 04:00:00 PM Produced by the JSE SENS Department
