| Fri 23 Sep 2005, 15:13 | | Don - Audited results for the year ended 30 June 2 |
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Don - Audited results for the year ended 30 June 2005
DON GROUP LIMITED
(`Don` or `the company`) (Registration No. 1946/023123/06
Share code: Don ISIN: ZAE000008462
Audited results for the year ended 30 June 2005
CONSOLIDATED INCOME STATEMENT
Year ended Year ended
30 Jun 2005 30 Jun 2004
R000s R000s
Revenue 45 232 41 249
Operating profit 3 989 (1 217)
Net finance (expense)/income (1 806) 218
Depreciation (2 426) (2 356)
Loss before exceptional items (243) (3 355)
Exceptional items (226) (758)
Loss after exceptional items (469) (4 113)
Taxation - SA normal tax (205) -
Taxation - deferred 1 000 -
Profit/(loss) attributable
to ordinary shareholders 326 (4 113)
Headline profit/(loss) 1 373 (3 355)
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) 0,11 (1,39)
Headline profit/(loss)
per share (cents) 0,47 (1,14)
Reconciliation of headline
profit/(loss)
Profit/(loss) attributable
to ordinary shareholders 326 (4 113)
Impairment of hotel equipment 226 758
Net capital loss on loan
settlement 821 -
Headline profit/(loss) 1 373 (3 355)
CONSOLIDATED BALANCE SHEETS
30 Jun 2005 30 Jun 2004
R000s R000s
Assets
Non-current assets
Property, plant and equipment 152 238 17 887
Unlisted investment 1 437 1 437
Deferred tax asset 1 000 -
Current assets 6 253 9 507
- Inventory and accounts
- receivable 6 253 4 797
- Cash and cash equivalents - 4 710
Total assets 160 928 28 831
Equity and liabilities
Capital and Reserves 75 015 21 714
Non current liabilities 53 802 2 990
- Interest free 2 390 2 390
- Interest bearing 51 412 600
Deferred tax 21 638 -
150 455 24 704
Current liabilities 10 473 4 127
- Short term portion of
non current liabilities 3 548 -
- Creditors and provisions 5 735 4 127
- Bank overdraft 985 -
- Taxation 205 -
160 928 28 831
Net asset value per share (cents) 0,255 0,074
Capital expenditure during
the year (000s) 62 385 779
- Property acquired during
- the year (000s) 62 085 -
- Other fixed assets acquired
- during the year 300 779
Directors valuation of
unlisted investments 1 437 1 437
Rental commitments (000s) 985 3 025
Payable in the next year 511 2 246
Payable thereafter 474 779
CONSOLIDATED CASH FLOW STATMENTS Year ended Year ended
30 Jun 2005 30 Jun 2004
R000s R000s
Cash generated by operations 2 657 2 139
Investing activities (62 385) (659)
Financing activities 54 033 -
- Proceeds from IDC loan 57 525 -
- Repayments to IDC (2 916) -
- Other loan finance transactions (576) -
Cash and cash equivalents - beginning
of year 4 710 3 230
Cash and cash equivalents - end of year (985) 4 710
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY Year ended Year ended
30 Jun 2005 30 Jun 2004
R000s R000s
Balance at the beginning of the year 21 714 25 827
Profit/(loss) for the year 326 (4 113)
Revaluation surplus 52 975 -
Balance at the end of the year 75 015 21 714
COMMENTARY
Financial results: The half-year turnaround from loss to profit that
distinguished the interim report to shareholders continued to the con-clusion of
the financial year ended 30 June 2005: The Don Group (Don) recorded a gratifying
headline profit of R1,4-million (0,47 cents a share) against a comparative 30
June 2004 headline loss of R3,4-million (-1.14 cents a share).
This result was achieved on a 10 percent growth in revenue to R45,2-million from
R41,2-million, a result assisted by a moderate increase in suite tariffs,
enhanced occupancies, and better than expected returns on the investment in food
and beverage.
The substantial improvement was reflected in the reversal of a 2004 operating
loss into a 2005 operating profit of nearly R4-million.
Net asset value per share improved to 0,255 cents from 0,074 cents.
A feature of the second half-year was the final transfer of ownership from
Ellwain Investments (Pty) Limited of eight hotel properties in Cape Town,
Johannesburg, Sandton and Pretoria (the property in the proximity of
Johannesburg International Airport was already owned by Don).
Lease payments to Ellwain ceased at the end of February 2005. Lower service
charges in respect of the Industrial Development Corporation (IDC) funding of
R57-million for the property buy-back during the remaining second half-year
period represented a monthly reduction in finance charges of R0,125-million.
Don utilised a significant portion of its cash reserves of R4,7-million to
bridge the difference between the IDC loan and the Ellwain settlement amount, to
cover property guarantee obligations, and to meet bond and legal costs: a
proportion of these costs was capitalised to the property and the liability.
The purchase cost of R73,1-million was revalued by R74,7-million to R147,8-
million when Ellenberger & Kahts, professional valuers and estate agents, valued
the group`s entire property portfolio in June 2005. Therefore, no depreciation
has been provided on the revaluation surplus on the properties.
This acquisition and revaluation of the eight properties helped transform total
assets in the consolidated balance sheet to R160,9-million from R28,8-million.
The upshot at financial year-end is a Don that is `master of its own house`, one
that is standing on solid financial foundations.
Operations: Don is fully responsive to guest feedback and has plans to
accommodate specific market demands intended to improve average suite
occupancies.
Overall, Don has tightened `backroom` activities. Control measures and
compliance with policies and procedures are strictly applied, as are robust cost
control tools to keep operating costs within budget bounds without compromising
service delivery.
Basis of preparation of financial statements: The financial statements of the
Company have been prepared in accordance with South African Statements of
Generally Accepted Accounting Practice on a basis consistent with the prior year
ended 30 June 2004, except for the adoption of the new accounting policies set
out below.
Accounting policies
Owner-occupied property: Owner-occupied property is recognised initially at
cost. Thereafter the property is carried at a revalued amount, as determined by
professional valuers to reflect the values of the properties had they been
converted into residential units. Depreciation is provided at 2% per annum.
The revaluation and related deferred tax have been recognised in equity.
Deferred taxation: Where the group expects to make profits for the next three
years a deferred tax asset has been recognised. A deferred tax liability is
recognised on revaluation surpluses on property.
Financial liabilities: Financial liabilities are initially measured at their
cost, which is the fair value of the consideration received, less transaction
costs. Thereafter these are measured on the amortised cost basis. Interest
expense is charged to the income statement.
Investment in associate company: The Group continued to hold this investment as
no application for formal de-registration has been made. Accordingly, there has
been no change in the accounting for this asset and financial liability since
June 2004. The Group is seeking to minimise any obligations arising from the de-
registration and these are not expected to exceed R0,28-million.
Audit report: The consolidated year-end to 30 June 2005 results have been
audited by PKF and their unqualified audited report is available for inspection
at the company`s registered office.
Dividends: No dividend has been declared or paid.
HIV/AIDS responsibilities: The prevailing status in respect of training and
education was set out in the 2004 annual report and is unchanged.
BEE status: Your board points out with pride that Don`s sturdy improvement was
achieved amid intensifying hospitality sector transfor-mation driven largely by
black economic empowerment (BEE) initiatives.
While this laudable economic redress is gaining momentum nationally, The Don
Group`s leadership status is reinforced by its standing in the top three
companies listed on the JSE Limited in terms of black economic empowerment and
the top company in terms of employment equity according to Empowerdex and
Financial Mail ratings.
The overall positive response by the hospitality sector to BEE requirements
presents Don with a challenge to maintain its leadership status.
Corporate governance and board membership: The composition of the board is: Non-
executive Chairperson: Dr Danisa Baloyi; Chief Executive Officer: Thabiso
Tlelai; Non-Executive members: Errol Grolman and Max Maisela.
Prospects: It is pleasing to note that the stronger occupancy and suite rate
trend of the second half-year has continued through to the current financial
year. Don, now unencumbered by the historical baggage that hindered progress in
previous years, can look forward to a period of consolidation and furtherance of
its objectives in making the black-owned and managed Group the pre-eminent
operator in the suite hotel business. Supported by well-trained hospitality
personnel, Don is intent on creating new classes of customer beyond its
discerning core business traveler. The hard work required to achieve these goals
continues.
Dr Danisa Baloyi Thabiso Tlelai,
Chairperson Chief Executive Officer
Johannesburg
21 September 2005
Directors: Danisa Baloyi* (Chairperson) Thabiso Tlelai (Chief Executive Officer)
Errol Grolman* Max Maisela* Company Secretary: Whitney Green
Registered Office: 3 Cherry Place, Achter Road, Paulshof, 2157 Transfer
Secretaries: Ultra Registrars (Pty) Ltd. 11 Diagonal Street, Johannesburg 2001
*independent non-executive directors
Date: 23/09/2005 03:05:13 PM
Produced by the JSE SENS Department
