| Tue 30 Sep 2003, 13:12 | | Audited results for the year ended 30 June 2003 |
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Don Group Ltd - Audited results for the year ended 30 June 2003
Don Group Ltd
(Registration No. 1946/023123/06)
Share code: Don ISIN:ZAE000008462
("Don")
Audited results for the year ended 30 June 2003
Summarised consolidated income statements
Year ended Year ended
30 Jun 2003 30 Jun 2002
Audited Audited
R000s R000s
Revenue 40 875 41 959
Operating profit 2 832 3 128
Net finance income/(costs) 535 (97)
Depreciation (2 252) (2 758)
Investment Income - 63
Profit before exceptional items 1 115 336
Exceptional items (175) 874
Profit after exceptional items 940 1 210
Taxation - prior year over-provision 14 -
Profit attributable to ordinary shareholders 954 1 210
Headline profit 1 129 336
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 per share (cents) 0,38 0,11
Profit per share (cents) 0,32 0,41
Reconciliation of headline profit
Profit attributable to ordinary shareholders 954 1 210
Provision against loan to employee share
incentive scheme 175 210
Profit arising on group restructuring - (1 048)
Profit arising on sale of assets - (36)
Headline profit 1 129 336
Consolidated balance sheets
Year ended Year ended
30 Jun 2003 30 Jun 2002
Audited Audited
R000s R000s
Assets
Non-current assets 21 765 23 089
Property, plant and equipment 20 328 21 477
Unlisted investments 1 437 1 437
Long term receivables - 175
Current assets 11 827 9 391
Inventory and accounts receivable 7 687 5 897
Cash notice deposits 4 094 2 171
Cash and cash equivalents 46 1 323
Total assets 33 592 32 480
Equity and liabilities
Capital and reserves 25 827 24 873
Non-current liabilities 2 990 2 990
Interest bearing liabilities 600 600
Interest-free liability 2 390 2 390
Current liabilities 4 775 4 617
Creditors and provisions 3 865 4 617
Bank overdrafts 910 -
Total equity and liabilities 33 592 32 480
Net asset value per share (cents) 8,8 8,4
Capital expenditure during the year 1 190 1 223
Directors valuation of unlisted investments 1 437 1 437
Rental commitments 9 032 16 734
Payable in the next year 7 613 7 060
Payable thereafter 1 419 9 674
Consolidated cash flow statements
Year ended Year ended
30 Jun 2003 30 Jun 2002
Audited Audited
R000s R000s
Cash flows from operating activities 848 1 153
Cash flows from investing activities (1 112) 1 534
Acquisition of equipment (1 203) (1 223)
Proceeds on disposal of equipment 91 2 757
Cash flows from financing activities - 28 692
Increase in notice deposits (1 923) (2 171)
(2 187) 29 208
Opening cash and cash equivalents 1 323 (27 885)
Closing cash and cash equivalents (864) 1 323
Consolidated statements of changes in equity
Share Share Non-distri- Accumu-
butable lated
Capital Premium Reserves Loss Total
R000s R000s R000s R000s R000s
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
Net profit for year 954 954
30 June 2003 36 811 119 103 - (130 087) 25 827
Comments
Introduction:
The qualities inherent in the Don Group"s nine suite hotels, namely, prime
positions in Cape Town, Johannesburg, Sandton, Pretoria and near Johannesburg
International Airport, four-star standard accommodation, and added amenities
such as restaurants and conference venues represent a brand typical of the Group
going forward.
Although the group"s performance continued on an upward trend characteristic of
results since 2000, growth for the financial year to 30 June 2003 was flatter
than expected, and was reliant chiefly on the loyalty of its strong corporate
client base, which kept suite revenues fairly steady.
The absence of Don from other metropoles, especially those which are major
tourism destinations, has become even more apparent since this factor was noted
in the commentary on the interim financial results. There is no question that a
Don presence in Western Province, Eastern Cape, KwaZulu-Natal, Limpopo and
Mpumalanga, would give the marketing effort more scope in targeting foreign
visitors, and would strengthen corporate client loyalty, since this sector
appreciates the value of a favoured one-brand geographical spread.
On the other hand, Don"s positioning as a leading suite hotel operator brought
to the fore strong demand for cross-border operational alliances which are kept
under consideration, while opportunities for expansion into new locations that
do not require heavy capital expenditure are being actively pursued. Details
will be released if and when finality in negotiations on these opportunities are
reached.
The group continues to enjoy leadership status as an empowerment company by way
of various awards and nominations in assessment categories.
Taking all the above together, the group"s cash positive status has been
strengthened and all necessary internal structuring has been completed to
eliminate much of the historic baggage that hitherto has coloured investment
market sentiment. Don now has a foundation on which to realise steady growth
over time.
Accounting policies:
These consolidated audited financial statements are prepared in accordance with
accounting policies adopted in the preparation of its 30 June 2002 financial
statements and comply in all material aspects with South African Statements of
Generally Accepted Accounting Practice.
No provision has been made for taxation as the group has large accumulated tax
losses available for offset against taxable income. No deferred tax asset has
been raised in terms of AC102 due to uncertainty as to when these losses are
expected to be utilised.
Financial Results:
The guest loyalty factor was a major contributor to maintenance of revenue of
R40,88-million, almost equal to the R41,96-million posted a year previously. It
is worth noting this revenue was earned from suites that are almost half the
number in operation compared with a year ago. Operating profit of R2,83-million
(R3,13-million) was offset by depreciation of R2,25-million (R2,76-million),
finance income of R535 000 against a 2002 expense of R97 000, and an exceptional
item provision of R175 000 against the loan to the employee share incentive
scheme.
This resulted in a headline profit of R1,13 million against R336 000 (a
comparison distorted by exceptional income items in the previous year).
Headline profit per share improved to 0,38 cents from 0,11 cents a share. Net
asset value is virtually constant at 8,8 cents a share compared with 8,4 cents
at 30 June 2002.
Dividend:
No dividend was declared or paid.
Operations:
The Group continued to deliver service of quality, which was recognised by
positive exit questionnaires, with attentive staff constantly focused on
ensuring guest satisfaction.
A centralised procurement programme ensures that all hotels now follow
standardised procedures.
The www.don.co.za website has been upgraded for easier, faster access and
includes facilities for guests to register online as well as providing world-
wide credit card payment facilities.
Prospects:
The task ahead for this small yet influential hotel group is to strengthen suite
occupancies and suite rate levels that will deliver improved revenue and profit
streams.
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.
Acknowledgement:
Once again, I am indebted to my fellow directors for their advice and support
and to the staff who continue to support the group"s article of faith, namely
`to fetch them and please them happily".
On behalf of the board
Thabiso Tlelai, Chairman and
Chief Executive Officer
30 September, 2003
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, Paulshof, 2157 Transfer
secretaries: Ultra Registrars (Pty) Ltd. 11 Diagonal Street, Johannesburg 2001
*non-executive directors
The don Group
NEWS RELEASE
Tuesday, September 30, 2003
Don Group delivers headline profit of R1,13-millionfor year end 30 June 2003.
THE DON SUITE HOTEL CHAIN, the only black empowered and managed hotel group
listed on the JSE Security Exchange South Africa, ended the financial year to
June 30 2003 with a headline profit of R1,13-million, up 336 percent from R336
000 posted a year previously.
Based on income from suites in operation that were almost half in number
compared with a year ago, the hotel group delivered turnover of R40,88-million,
nearly equal to the R41,96-million posted at year-end 2002
Although the results strengthened the group"s cash positive status, with R4-
million held in notice deposits, up from R2,2-million at year-end 2002, the
board had resolved not to declare or pay dividends.
The Group has large accumulated tax losses available to offset against taxable
income, but no deferred tax asset had been raised because of uncertainty as to
when these losses would be utilised.
Don chairman and chief executive Thabiso Tlelai said that while these results
confirmed the continuing upward trend in financial performance since 2000, the
outcome was flatter than expected and had been reliant chiefly on the loyalty of
its strong corporate client base which had kept suite revenues fairly steady.
He singled out Don"s absence from the major metropolitan centres, especially
those that had become major destinations for foreign visitors as a factor
contributing to limiting growth.
The don Group
Don Suite Hotels
Tuesday, September 30, 2003
Tlelai said: "We drew attention to this factor in our interim announcement and
the consequences of not having a geographic spread have become even more
apparent. There is no question that a Don presence in the Western Cape, Eastern
Cape, KwaZulu-Natal, Limpopo and Mpumulanga would give our marketing effort more
scope in targeting foreign visitors and would strengthen corporate client
loyalty, a market which appreciates the value of a favoured one-brand
geographical spread."
Two factors ran counter to this deficiency.
Don"s positioning as a leading suite hotel operator had brought to the fore
strong demand for cross-border operational alliances, which were being kept
under consideration.
Secondly, opportunities for expansion into new locations that did not require
heavy capital expenditure were being actively pursued.
"Details will be released if and when finality in negotiations on these
opportunities are reached," Tlelai said.
For the time being, the focus would be on strengthening suite occupancies and
suite rate levels to deliver improved revenue and profit, based on the nine four
star quality suite hotels holding prime positions in Cape Town, Johannesburg,
Sandton, Pretoria and near Johannesburg International Airport and offering in
addition to suite hotel accommodation restaurants and conference venues.
"Overall, all the necessary structuring within the group has been completed,
which helps to eliminate much of the historic baggage that has coloured
investment market sentiment, and we now have the foundation on which to realise
steady growth over time," Tlelai said.
The don Group Tuesday, September 30, 2003
Don Suite Hotels
Post year end, Don provided accommodation for the 12 `Big Brother Africa"
competitors when not in the Big Brother house in return for broadcast exposure
on DSTV to a daily continent-wide audience at any one time exceeding 25-millon
viewers, the majority of whom were South African viewers.
In addition, the BBA website provided a link to the revamped Don website
www.don.co.za.
Tlelai said the arrangement had paid handsome dividends in creating nationwide
and cross border awareness, with internet reservations showing a sharp increase,
a benefit that had been strengthened by the re-vamped website, which now
featured easier and faster access, was more informative, and provided
registration facilities for regular guests as well as world-wide online payment
facilities.
ends
Date: 30/09/2003 01:00:10 PM Produced by the JSE SENS Department
