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DON - Don Group Limited - Unaudited condensed consolidated interim results for
the six months ended 31 december 2011
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 2011
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the period ended 31 December 2011
Six Months Six months Year
Ended Ended Ended
31 December 31 December 30 June
2011 2010 2011
Unaudited Unaudited Audited
R`000 R`000 R`000
CONTINUING OPERATIONS
Revenue - - -
Expenses from continuing operations ( 404) ( 476) ( 808)
Loss before tax ( 404) ( 476) ( 808)
Loss for the period from continuing ( 404) ( 476) ( 808)
operations and total comprehensive loss
for the period
Attributable to:
- Equity holders of parent ( 404) ( 476) ( 808)
- Non-controlling interests - - -
( 404) ( 476) ( 808)
DISCONTINUED OPERATIONS
Revenue 25 640 48 842 90 015
Operating loss before impairment and ( 13 006) ( 2 263) ( 21 630)
disposal of discontinued operation
Interest received 22 25 323
Loss on disposal of business ( 2 635) - -
Impairment loss - - ( 2 338)
Interest paid ( 4 662) ( 2 743) ( 8 090)
Loss before tax ( 20 281) ( 4 981) ( 31 735)
Taxation 215 268 ( 3 170)
Loss for the period from discontinued ( 20 066) ( 4 713) ( 34 905)
operations
Attributable to:
- Equity holders of parent ( 18 211) ( 4 585) ( 33 657)
- Non-controlling interests ( 1 855) ( 128) ( 1 248)
( 20 066) ( 4 713) ( 34 905)
Other comprehensive loss: - - ( 17 454)
- Gross revaluation loss - - ( 57 540)
- Deferred taxation - - 40 086
Loss for the period from discontinued ( 20 066) ( 4 713) ( 52 359)
operations
Total comprehensive loss from discontinued
operations attributable to:
- Equity holders of parent ( 18 211) ( 4 585) ( 51 111)
- Non-controlling interests ( 1 855) ( 128) ( 1 248)
( 20 066) ( 4 713) ( 52 359)
Total comprehensive loss from continued ( 20 470) ( 5 189) ( 53 167)
and discontinued operations
Total comprehensive loss from continued
and discontinued operations attributable
to:
- Equity holders of parent ( 18 615) ( 5 061) ( 51 919)
- Non-controlling interests ( 1 855) ( 128) ( 1 248)
( 20 470) ( 5 189) ( 53 167)
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) ( 6.32) ( 1.72) ( 11.70)
Headline loss per share (cents) ( 5.85) ( 1.72) ( 10.97)
Loss per share from continuing operations ( 0.14) ( 0.16) ( 0.27)
(cents)
Headline loss per share from continuing ( 0.14) ( 0.16) ( 0.27)
operations (cents)
Reconciliation of headline loss
Loss for the period attributable to ( 18 615) ( 5 061) ( 34 465)
ordinary shareholders
Impairment of assets - - 2 338
Loss on disposal of assets 2 593 - 58
Tax effect of above 53 - ( 103)
Minority effect of above ( 1 254) - ( 130)
Headline loss ( 17 223) ( 5 061) ( 32 302)
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
as at 31 December 2011
31 December 31 December 30 June
2011 2010 2011
Unaudited Unaudited Audited
R`000 R`000 R`000
ASSETS
Non-current assets 10 231 344 120 274 553
Property, plant and equipment 10 231 337 887 198 658
Investment properties - - 75 736
Goodwill - 2 338 -
Other intangible assets - 176 159
Deferred tax asset - 3 719 -
Current assets 4 295 17 869 15 309
Other financial assets 1 434 3 130 5 718
Inventories - 414 289
Trade and other receivables - 2 546 7 910
Cash and cash equivalents 2 861 11 779 1 392
Non-current assets held for sale 244 340 - -
Total assets 258 866 361 989 289 862
EQUITY AND LIABILITIES
EQUITY
Share capital and reserves 114 610 179 509 133 225
Non-controlling interests - 10 565 7 849
114 610 190 074 141 074
LIABILITIES
Non-current liabilities 26 020 139 823 28 863
Interest bearing liabilities 2 083 74 779 3 274
Deferred tax liability 23 937 65 044 25 589
Current liabilities 34 942 32 092 119 925
Trade and other payables 23 614 16 503 28 637
Short - term portion of interest - - 8 640 81 878
bearing liabilities
Non - interest - bearing liabilities 2 065 - 2 214
Provisions 3 707 - 2 239
Current tax payable 2 131 2 709 1 795
Bank overdraft 3 425 4 240 3 162
Current liabilities held for sale 83 294 - -
Total equity and liabilities 258 866 361 989 289 862
Net asset value per share (cents) 38.92 64.54 47.91
Net tangible asset value per share 38.92 63.69 47.85
(cents)
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
for the period ended 31 December 2011
Six Months Six months Year
Ended Ended Ended
31 December 31 December 30 June
2011 2010 2011
Unaudited Unaudited Audited
R`000 R`000 R`000
Attributable to equity holders of
parent:
Balance at beginning of period 133 225 184 570 184 570
Further acquisition of subsidiary - - 574
shares
Total comprehensive loss for the (18 615) (5 061) (51 919)
period
Balance at end of period 114 610 179 509 133 225
Non-controlling interests
Balance at beginning of period 7 849 10 693 10 693
Further acquisition of subsidiary - - (1 153)
shares
Total comprehensive loss for the (1 855) (128) (1 248)
period
Dividends paid to non-controlling - - (443)
shareholders
Disposal of business (5 994) - -
Balance at end of period - 10 565 7 849
Total equity 114 610 190 074 141 074
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
for the period ended 31 December 2011
Six Months Six months Year
Ended Ended Ended
31 December 31 December 30 June
2011 2010 2011
Unaudited Unaudited Audited
R`000 R`000 R`000
Cash outflow from operating (5 422) (7 013) (18 481)
activities
Cash inflow/(outflow) from investing 3 791 (2 873) (4 661)
activities
Cash inflow from financing activities 2 838 1 606 5 553
Net cash inflow/(outflow) 1 207 (8 280) (17 589)
Cash and cash equivalents at (1 770) 15 819 15 819
beginning of period
Cash and cash equivalents at end of (563) 7 539 (1 770)
period
CONDENSED SEGMENTAL ANALYSIS
for the period ended 31 December 2011
Dec-11 Dec-10 Jun-11
Unaudited Unaudited Audited
R 000 R 000 R 000
Segmental Revenue
Hotels 11 079 28 166 50 280
Travel & Tourism 11 782 20 676 39 618
Residential letting 2 779 - 117
Net Revenue 25 640 48 842 90 015
Segmental loss before interest and tax
Hotels ( 9 510) ( 2 458) ( 19 139)
Travel & Tourism ( 1 397) ( 281) ( 3 370)
Residential letting ( 2 503) - 71
Loss before interest and tax ( 13 410) ( 2 739) ( 22 438)
DISPOSAL OF IKAPA BUSINESS
Property, plant and equipment 15 266
Intangible assets 153
Current assets 8 923
Current liabilities ( 9 713)
Net assets disposed of 14 629
Non - controlling interest ( 5 994)
Loss on disposal ( 2 635)
Proceeds 6 000
Net cash disposed of ( 2 169)
Net cash received 3 831
COMMENTARY
Given the challenges facing the tourism sector, the Don resolved in 2011 to
change direction and exit the saturated hotel industry into the property
management sector, particularly the residential leasing space, in view of
growing opportunities identified in the broader property industry sector. This
entailed ceasing all hotel operations, resulting in staff retrenchments in its
remaining six properties effective 31 October 2011 and making the properties
available for residential leasing. Three of these properties were converted
into residential letting apartments during April 2011.
As a result of the Don`s new long-term strategy of diversifying away from the
hotel and leisure sector, a decision was made to dispose of the investment in
iKapa Tours & Travel Proprietary Limited ("iKapa"), effective 1 November 2011,
as the purpose for which iKapa was originally acquired is no longer in line
with the Group`s strategy.
The hotel segment revenue for the six month period ended 31 December 2011
("period under review") amounted to R11 million compared to the six month
period ended 31 December 2010 ("prior period") of R28 million. The decline is
in line with expectations due to the hotels only operating for four months
during the period under review compared to the six months in the prior period.
The same is true for the Travel and Tourism segment which operated for four
months of the period under review prior to disposal. Its revenue declined from
R20,6 million in the prior period to R11,8 million in the period under review.
Residential letting revenue is reported at R2,8 million for the period under
review with a vacancy percentage of 34%. As the Don is expecting to dispose of
its properties, the Group has reflected the residential letting segment as a
discontinued operation as well.
As expected, cost of sales also decreased by 40% while staff costs remained
relatively high as a result of the mass retrenchment to the effect of R6,3
million that occurred at the end of November 2011. Furthermore, group loss
before interest and tax increased from R2,7 million in the prior period to R16
million in the current period. R4,3 million of the loss can be attributed to
the loss incurred on the disposal of iKapa.
BOARD MEMBERSHIP
During the period under review, Mr Hatla Ntene was appointed as an independent
non-executive director on 22 November 2011.
There were no other changes to the Board of Directors ("the Board").
BASIS OF PREPERATION
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 2011. 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, 2008 (Act 71 of 2008), 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
No significant events have occurred between the end of the period under review
and the date of this report.
PROSPECTS
Since ceasing its hotel operations, the Don has been leasing all of its
properties as furnished residential apartments. This is a temporary
arrangement while the company considers alternative strategies in order to
unlock value for its shareholders. Shareholders are referred to the renewal of
cautionary announcement released on SENS on 19 March 2012 and are advised to
continue to exercise caution when dealing in The Don`s securities until a
further announcement is made.
In addition to leasing, the Don has also been in the process of disposing of
some of its properties. A number of exciting, and some unconditional, offers
were received from prospective buyers; some of which exceeded JHI valuations.
There are no exclusivity agreements with any of the offering parties. The best
offers will be considered for the approval of the Board.
By order of the board.
Salukazi Dakile-Hlongwane Thabiso Tlelai
Chairperson Chief Executive Officer
2 April 2012
Directors: Salukazi Dakile-Hlongwane* (Chairperson),
Thabiso Tlelai (Chief Executive Officer),
Uviwe Mzilikazi (Financial Director), Carel van Zyl*, Hatle Ntene*
* Independent Non-Executive Directors
Company Secretary: Whitney Green
Registered Office: 6 Electron Avenue, Isando
Transfer Secretaries: Link Market Services South Africa
(Proprietary) Limited
Sponsor: Merchantec Capital Proprietary Limited
Auditors: PKF (Johannesburg) Inc.
Date: 02/04/2012 08:59:01 Supplied by www.sharenet.co.za
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