| Tue 22 Mar 2005, 14:18 | | Don Group Limited - News Release |
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Don Group Limited - News Release
DON GROUP LIMITED
Registration No. 1946/023123/06
Share code: Don ISIN: ZAE000008462
(`Don`)
DON GROUP SWINGS TO HEADLINE R116 000 PROFIT FROM R3,4-MILLION HEADLINE LOSS AT
HALF-YEAR TO DECEMBER 31, 2004
TRUE to expectations expressed at year-end 30 June 2004 and in the annual
report, The Don Group reversed a loss-making trend and moved into a slim profit
for the half year to 31 December 2004.
The improvement in performance turned a headline loss of R3,4-million at year-
end 30 June 2004 into a headline profit of R116 000 (31 December 2003: a loss of
R505 000).
Chief executive Thabiso Tlelai said the performance turnaround was `gratifying`.
`The transformation at half-year operating profit level is also satisfying with
a profit of R1,1-million against a 2004 year-end loss of R1,2-million. The
turnaround performance is even more meritorious when placed against the fact
that the group`s revenue for the 2004 half year period was R22,6-million against
the interim R21,4-million recorded a year previously, although this does reflect
a six percent improvement.`
Tlelai said that an increase in the tariff also helped, as did the absence of
extraneous negative factors which featured heavily in the 2003-2004 reporting
periods (and on which the Group reported in detail).
`The real pay-off came from extremely hard work by the Don team. Everyone
focused on the goal of returning the hotel group to profitability through
tighter control of expenses, excellent service delivery and greater efficiency.
`We knew it was never going to be easy. However, we had an advantage. All the
behind-the-scenes activities and investment by way of in-depth training, better
technology resources and expanded guest facilities, including restaurants, that
were so much a feature of operations in 2004, came together to give the team a
solid working base.
Dealing with the buy back of the properties housing eight of Don`s nine suite
hotels leased from Elwain Investments, Tlelai said: `Direct ownership will
provide security of tenure and replace the increasing cost of leases and
escalations with the less expensive servicing of the IDC loan.`
He pointed out that lease costs had been a significant curtailing factor on the
interim profit.
`There was a further cost in that funds amounting to R2,2-million had to be
drawn from cash reserves to meet guarantee requirements. This is reflected in
cash and cash equivalents standing at R2,3-million as against R4,7-million at
year-end December 31, 2004.`
Tlelai said: `We can look back with pride on the achievements of the Don team in
turning the corner from loss to profit, small though this may be. Once the
transfer of the re-purchased eight properties is done, the change from lease to
lower debt servicing costs is projected to contribute significantly to the cash
flow.
`In terms of much-used jargon, the Don Group `sweated the assets` in the first
half of the financial year.
`The remainder of the financial year to June 30, 2005 will require the same
effort and more to ensure that the momentum is carried forward and that the good
work is further consolidated to realise the potential inherent in the Don`s core
business of suite hotels. By that time, no doubt, we will be mopping our
collective brows from a re-doubled effort.`
The current board comprises Dr Danisa Baloyi as non-executive chairperson,
Thabiso Tlelai as chief executive and Errol Grolman and Max Maisela, serving as
non-executive directors.
Ends
Date: 22/03/2005 12:47:02 PM
Produced by the JSE SENS Department
