| Wed 27 Sep 2006, 12:24 | | Don - Audited Financial Results for the year ended |
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DON
DON
Don - Audited Financial Results for the year ended 30 June 2006
The Don Group Ltd
Incorporated in the Republic of South Africa
(Registration No. 1946/023123/06)
Share Code: DON
ISIN: ZAE000008462
("Don" or "the Group")
Audited Financial Results for the year ended 30 June 2006
SUMMARISED CONSOLIDATED INCOME STATEMENT
Year Year
ended ended
June June
2006 2005
R"000 R"000
Revenue 49 252 45 232
Operating profit 8 785 3 989
Interest income 16 104
Finance expense (6 143) (1 910)
- Property (5 988) (1 773)
- Other (155) (137)
Depreciation (4 476) (2 426)
Loss before exceptional items (1 818) (243)
Exceptional item
Impairment of hotel equipment (611) (226)
Loss after exceptional items (2 429) (469)
Taxation (2 920) 795
Taxation - SA normal tax (2 339) (205)
Taxation - deferred (581) 1 000
(Loss)/Profit attributable to (5 349) 326
ordinary shareholders
Headline (loss)/profit (4 738) 1 373
Number of ordinary shares in issue 294 485 294 485
(000"s)
Weighted average number of ordinary 294 485 294 485
shares in issue (000"s)
(Loss)/Profit per share (cents) (1,82) 0,11
Headline (loss)/profit per share (1,61) 0,47
(cents)
Reconciliation of headline
profit/(loss)
(Loss)/Profit attributable to (5 349) 326
ordinary shareholders
Impairment of hotel equipment 611 226
Loan payable written back - (600)
Capital loss on loan written off - 1 421
Headline (loss)/profit (4 738) 1 373
Net asset value per share (cents) 0,237 0,255
Capital expenditure during the year 1 578 62 394
(R000"s)
- Property acquired during the year - 62 085
- Other fixed assets acquired during 1 578 309
the year
Directors" valuation of unlisted 1 437 1 437
investments
Rental commitments (R000"s)
Payable in the next year 512 511
Payable thereafter 1 506 474
CONSOLIDATED BALANCE SHEET
At 30 June 2006
June 2006 June 2005
R"000 R"000
Assets
Non-current assets
Property, plant and equipment 148 685 152 239
Unlisted investments 1 437 1 437
Deferred tax asset - 1 000
Current assets 8 056 6 253
- Inventory and accounts receivable 8 056 6 253
- Cash and cash equivalents - -
Total assets 158 178 160 929
Equity and liabilities
Capital and reserves 69 667 75 016
Non-current liabilities 50 945 53 802
- Interest free 2 390 2 390
- Interest bearing 48 555 51 412
Deferred tax 21 205 21 638
141 817 150 456
Current liabilities 16 361 10 473
- creditors and provisions 9 578 5 735
- short-term portion of non-current 3 998 3 548
liabilities
- bank overdraft 991 985
- taxation 1 794 205
Total equity and liabilities 158 178 160 929
SUMMARISED CONSOLIDATED CASH FLOW STATEMENT
June 2006 June 2005
R"000 R"000
Cash generated by operations 10 481 4 136
Net interest paid (5 090) (1 479)
Tax paid (750) -
4 641 2 657
Investing activities (1 203) (62 385)
Financing activities (3 444) 54 033
- Proceed from IDC loan - 57 525
- Repayments to IDC (3 444) (1 723)
- Transaction costs incurred - (1 193)
- Other loan finance transactions - (576)
Cash and cash equivalents - (985) 4 710
beginning of year
Cash and cash equivalents - end of (991) (985)
year
STATEMENT OF CHANGES IN EQUITY
June 2006 June 2005
R"000 R"000
Balance at the beginning of the 75 016 21 714
year
(Loss)/Profit for the year (5 349) 326
Revaluation surplus on property - 52 976
Balance at the end of the year 69 667 75 016
COMMENTARY
Financial results
The ongoing drive to sustain an incremental revenue stream was realised
during the reporting period ended 30 June 2006. This is reflected in an
8,9% increase from R45,2 million to R49,2 million. The operating profit
relative to turnover more than doubled due to the policy of effective cost
controls and benefits accruing from the centralised procurement. Operating
profit increased by 120% from R3,9 million to R8,7 million. However, the
risk of owning revalued and mortgaged properties was felt in the rising
depreciation charge on the property portfolio and higher finance charges on
the related borrowings. As a consequence there is an increase in the
depreciation charge based on a revalued asset of R2,05 million and the
finance charges also increased by R4,3 million from the previous period.
The situation was further worsened by the historic once off total tax
liability of R2 million dating back a decade, details of which were given
in the interim financial report.
Items of furniture from the closed hotels have been kept at the two
warehouses in Cape Town and Brits. Furthermore fire damage in one of the
warehouses in which Don stored surplus furniture after the close of 13
hotels caused an impairment adjustment of R611 000.
The year end result is a net loss of R5,3 million, from a profit of R326
000 in the previous year.
The balance sheet takes into account the increased depreciation charge on
revalued property resulting in a decrease in net asset value per share in
cents from 0,255 to 0,237.
Operations
Procurement continued to present the organisation with significant benefits
in terms of cost control. Testimonials from guests are consistently
confirming the success of the launch of food and beverage services.
Refurbishment remains a priority and resources have been put aside in
furtherance of these goals.
Prospects
The continuing growing trend in revenues and occupancies is pleasing in the
current financial year. The sales systems in place reinforce expectations
that the momentum characteristic of the current financial year will
continue.
The Group has successfully completed the difficult phase of dealing with
costly historic burdens. Encumbrances that have also been inherited by the
current management team have all been effectively dealt with. The road is
now open to turn the energies applied in resolving these issues into
improved financial performance and continued growth.
ACCOUNTING POLICIES
Basis of preparation
The consolidated financial statements of the Group have been prepared in
accordance with International Financial Reporting Standards ("IFRS") and
were adopted with effect from 1 July 2004.
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 operating companies expect to make
future taxable profits a deferred tax asset is recognised. This assessment
is performed annually and the asset impaired if this is considered
necessary. 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 2005. 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: These consolidated results have been audited by PKF (Jhb)
Inc. and their unqualified audit report is available for inspection at the
company"s registered office.
Dividends: No dividend has been declared or paid.
By order of the board
Dr Danisa Baloyi Thabiso Tlelai
Chairperson Chief Executive Officer
Johannesburg
26 September 2006
Directors: Dr Danisa Baloyi* (Chairperson), Thabiso Tlelai (Chief Executive
Officer), Professor Francois Viruly, Max Maisela* * Non-executive
director
Company Secretary: Whitney Green
Registered Office: 3 Cherry Place, Achter Road, Paulshof, 2157
Transfer Secretaries: Link Market Services (SA) (Proprietary) Limited
Date: 27/09/2006 12:24:07 PM Produced by the JSE SENS Department
