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DON - The Don Group Limited - Unaudited Condensed Consolidated Interim Results
for the Six Months Ended 31 December 2010
The Don Group Limited
Incorporated in the Republic of South Africa
(Registration number: 1946/023123/06)
Share code: DON ISIN: ZAE000008462
("the Don" or "the Group")
Unaudited Condensed Consolidated Interim Results for the Six Months
Ended 31 December 2010
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the period ended 31 December 2010
Dec 10 Dec 09 June 10
Unaudited Unaudited Audited
R`000 R`000 R`000
Revenue 48 842 46 467 171 486
(Loss)/Profit before interest (2 739) (8 813) 10 043
and tax
Interest received 25 146 601
Interest paid (2 743) (3 999) (9 111)
(Loss)/Profit before tax (5 457) (12 666) 1 533
Taxation 268 1 183 (4 002)
Taxation - Current - - (1 318)
Taxation - Deferred 268 1 183 (2 684)
Net loss for the period (5 189) (11 483) (2 469)
Other comprehensive income - - -
Total comprehensive loss for the (5 189) (11 483) (2 469)
period
Attributable to:
- Equity holders of parent (5 061) (10 444) (9 201)
- Non-controlling interests (128) (1 039) 6 732
(5 189) (11 483) (2 469)
Number of ordinary shares in
issue (000`s) 294 485 294 485 294 485
Weighted average number of
ordinary shares in issue (000`s) 294 485 294 485 294 485
Loss per share (cents) (1.72) (3.55) (3.12)
Headline loss per share (cents) (1.72) (3.55) (3.10)
Reconciliation of headline loss
Net loss for period
attributable to ordinary (5 061) (10 444) (9 201)
shareholders
Loss/(Profit) on disposal of - (11) 138
assets
Tax effect of above - 3 (38)
Non controlling interest effect
of above - - (28)
Headline loss (5 061) (10 452) (9 129)
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 31 December 2010
Dec 10 Dec 09 June 10
Unaudited Unaudited Audited
R`000 R`000 R`000
ASSETS
Non-current assets 344 120 350 367 347 364
Property, plant and equipment 337 887 338 235 341 131
Goodwill 2 338 2 338 2 338
Other intangible assets 176 176 176
Deferred tax asset 3 719 9 618 3 719
Current assets 17 869 22 159 43 704
Other financial assets 3 130 1 035 1 244
Inventories 414 575 559
Trade and other receivables 2 546 13 656 19 183
Cash and cash equivalents 11 779 6 893 22 718
Total assets 361 989 372 526 391 068
EQUITY AND LIABILITIES
EQUITY
Share capital and reserves 179 509 183 327 184 570
Non-controlling interests 10 565 2 922 10 693
190 074 186 249 195 263
LIABILITIES
Non-current liabilities 139 823 126 317 132 739
Interest bearing liabilities 74 779 57 676 66 129
Deferred tax liability 65 044 68 641 66 610
Current liabilities 32 092 59 960 63 066
Trade and other payables 16 503 35 301 38 038
Short-term portion of interest 8 640 11 172 13 841
bearing liabilities
Short-term portion of non - - 1 843
interest bearing liabilities
Current tax payable 2 709 1 008 2 445
Bank overdraft 4 240 12 479 6 899
Total equity and liabilities 361 989 372 526 391 068
Net asset value per share (cents) 64.54 63.25 66.31
Net tangible asset value per
share (cents) 63.69 62.39 65.46
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the period ended 31 December 2010
Dec 10 Dec 09 June 10
Unaudited Unaudited Audited
R`000 R`000 R`000
Attributable to equity holders of
parent:
Balance at beginning of period 184 570 193 771 193 771
Total comprehensive loss for the (5 061) (10 444) (9 201)
period
Balance at end of period 179 509 183 327 184 570
Non-controlling interests
Balance at beginning of period 10 693 3 961 3 961
Total comprehensive (loss)/income
for the period (128) (1 039) 6 732
Balance at end of period 10 565 2 922 10 693
Total equity 190 074 186 249 195 263
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
for the period ended 31 December 2010
Dec 10 Dec 09 June 10
Unaudited Unaudited Audited
R`000 R`000 R`000
Operating activities (7 013) 2 747 18 210
Investing activities (2 873) (760) (9 627)
Financing activities 1 606 (5 708) 9 101
Net cash (outflow)/inflow (8 280) (3 721) 17 684
Cash and cash equivalents at the 15 819 (1 865) (1 865)
beginning of the period
Cash and cash equivalents at the 7 539 (5 586) 15 819
end of the period
CONDENSED SEGMENTAL ANALYSIS
for the period ended 31 December 2010
Dec 10 Dec 09 June 10
Unaudited Unaudited Audited
R`000 R`000 R`000
Segmental Revenue
Hotels 28 166 26 929 58 648
Travel & Tourism 20 676 19 538 112 838
Net revenue 48 842 46 467 171 486
Segmental (loss)/profit before
interest and tax
Hotels (2 458) (6 377) (9 271)
Travel & Tourism (281) (2 436) 19 314
(Loss)/Profit before interest and
tax (2 739) (8 813) 10 043
COMMENTARY
Trading conditions have been very weak since the 2010 FIFA Soccer World Cup
("SWC"). This is evident from the occupancies that continue to fall in the
hotels segment from 36% for the period ending 31 December 2009 ("prior
reporting period") to 27% for the period ending 31 December 2010 ("current
reporting period"). The overall lack of economic activity in South Africa, the
trend towards consolidation and cost-cutting with little expansion taking
place in many businesses and an oversupply of hotel rooms in certain parts of
the country are affecting occupancies in the current economic climate for the
entire industry.
Despite the lower occupancies, the after effects of the SWC still continued up
to the end of September 2010 which boosted current reporting period revenue to
R48.8 million compared to R46.5 million for the prior reporting period. The
tour operator subsidiary, iKapa Tours & Travel (Proprietary) Limited
("iKapa"), contributed R20.7 million towards the current reporting period
Group revenues, up from the prior reporting period of R19.5 million.
Although the Don continues to incur losses, drastic cost cutting measures and
tighter management controls have resulted in a 55% reduction in losses since
the prior reporting period of R5.1 million. iKapa contributed R0.277 million
towards these losses compared to the prior reporting period of R2.1 million.
Aggressive marketing and strategic plans are in progress in this segment, and
should reflect an improvement in revenue towards the later part of 2011.
The Group`s non-current asset base is currently at R344.12 million.
Net asset value per share is 64.5 cents (31 December 2009: 63.3 cents).
BOARD MEMBERSHIP
There have been no changes to the board of directors during this period.
BASIS OF PREPARATION
The accounting policies applied in the preparation of these unaudited
condensed consolidated interim financial statements, which are based on
reasonable judgments and estimates, are in accordance with International
Financial Reporting Standards ("IFRS") and are consistent with those applied
in the annual financial statements for the year ended 30 June 2010. These
unaudited condensed consolidated interim financial statements as set out in
this report have been prepared in terms of IAS 34 - Interim Financial
Reporting, the Companies Act, 1973 (Act 61 of 1973), as amended, and the
Listings Requirements of JSE Limited.
These interim results have not been audited or reviewed by the Group`s
auditors.
DIVIDENDS
No dividend has been declared or paid.
SUBSEQUENT EVENTS
The management contract in respect of Heritage Square in Krugersdorp and the
rental agreement for Sir Lowry Restaurant in Cape Town will be terminated, by
mutual agreement, as at 31 March 2011 as a result of continued losses that are
being incurred from both these properties.
PROSPECTS
The Group benefited considerably from contracts for the SWC signed by iKapa
and the hotels division. This stimulus reflected positively in the financial
results for the year ended 30 June 2010 and in the first quarter of the
financial year ending 30 June 2011.
The Board and management acknowledged in the previous report that they
confronted a significant task in recovering from recent losses. Efforts have
and continue to be doubled to contain operational costs in the face of large
increases in electricity, other municipal charges, fuel and dwindling
occupancies.
Due to a saturated hotel market the Group has been forced to consider
alternative revenue generating ventures. In light of this, the Group has moved
towards leveraging on the suite configuration of a Don apartment by converting
certain hotels to residential apartments. To that end, the Don has embarked on
a process of letting certain properties as residential apartments. The Don has
entered into an agreement with a well-known residential letting agent with a
view to let out poor performing assets as residential property from 1 April
2011. This will ensure a consistent revenue stream, projected at R11.3 million
per annum and a major cost reduction in the affected properties. The
properties earmarked are Arcadia 1, Sandton IV and Eastgate.
The letting of the above properties as residential properties will see an
improvement in the occupancies of the hotels that are in the vicinities of the
affected properties i.e. the clientele from the affected properties mentioned
above will move to the properties that will continue to be operated as hotels,
therefore improving these properties revenues.
Furthermore, the Don is reviewing its Head Office structure and its
effectiveness. Further staff reductions will take place in this cost centre
once the review is completed and a revised structure is implemented.
Currently, Head Office salaries are approximately R9.6 million per annum. The
net result of this reduction will see this cost being reduced to approximately
R7.2 million per annum therefore reducing other Head Office costs in
proportion to this reduction.
General cost cutting measures have already been implemented by the Don by way
of retrenchments across the board and a 20% salary cut for executive committee
members that have seen staff costs being reduced from R28.8 million per annum
R20.4 million per annum. As at January 2011, the Don`s staff complement was
200 (June 2010: 315).
In addition to reducing Head Office staff costs, the Don`s Head Office has
relocated, effective from 7 March 2011, to the Don Hotel in Isando. This move
results in a cost saving of approximately R4.8 million per annum on Head
Office costs.
By order of the board
Salukazi Dakile-Hlongwane Thabiso Tlelai
Chairperson Chief Executive Officer
29 March 2011
Directors:
Salukazi Dakile-Hlongwane* (Chairperson), Thabiso Tlelai (Chief Executive
Officer), Uviwe Mzilikazi (Financial Director), Professor Francois Viruly*>,
Max Maisela*, Carel van Zyl*
*Independent Non-Executive Directors >Dutch
Company Secretary: Whitney Green
Registered Office:
65 Kyalami Boulevard, Kyalami Business Park, Kyalami, 1684
Transfer Secretaries:
Link Market Services South Africa (Proprietary) Limited
Sponsor: Merchantec Capital
Date: 29/03/2011 16:51:01 Supplied by www.sharenet.co.za
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