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Unaudited condensed consolidated interim results for the six months ended 31 December 2012
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 Company”)
UNAUDITED CONDENSED CONSOLIDATED INTERIM RESULTS FOR THE SIX
MONTHS ENDED 31 DECEMBER 2012
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME for the
period ended 31 December 2012
Six months Six months Year
ended ended ended
Dec-12 Dec-11 Jun-12
Unaudited Unaudited Audited
R 000 R 000 R 000
CONTINUING OPERATIONS
Revenue - - -
Loss for the period
from continuing
operations and total
comprehensive loss for
the period (550) (404) (3,998)
Attributable to:
- Equity holders of
parent (550) (404) (3,998)
- Non-controlling
interests - - -
(550) (404) (3,998)
DISCONTINUED OPERATIONS
Revenue 8,059 25,640 34,154
Operating loss before
impairment, fair value
adjustments and
disposal of
discontinued operations (1,789) (13,006) (13,511)
Impairment loss - - (1,116)
Fair value adjustment
on investment property
classified as held for
sale - - (10,288)
Profit/(Loss) on
disposal of asset 14,224 - -
Profit/(Loss) on
disposal of subsidiary - (2,635) (2,635)
Interest received 12 22 44
Interest paid (4,207) (4,662) (8,528)
Profit/(Loss) before
tax 8,240 (20,281) (36,034)
Taxation (2,050) 215 (608)
Taxation - Current (2,050) 215 (53)
Taxation - Deferred - - (555)
Profit/(loss) for the
period from
discontinued operations 6,190 (20,066) (36,642)
Attributable to:
- Equity holders of
parent 6,190 (18,211) (34,787)
- Non-controlling
interests - (1,855) (1,855)
6,190 (20,066) (36,642)
Other comprehensive
loss for the period - - (20,869)
- Gross revaluation
loss - - (18,349)
- Deferred taxation - - (2,520)
Total comprehensive
income/(loss) for the
period from
discontinued operations 6,190 (20,066) (57,511)
Total comprehensive
income/(loss) for the
period from
discontinued operations
attributable to:
- Equity holders of
parent 6,190 (18,211) (55,656)
- Non-controlling
interests - (1,855) (1,855)
6,190 (20,066) (57,511)
Total comprehensive
income/(loss) for the
period from continuing
and discontinued
operations 5,640 (20,470) (61,499)
Total comprehensive
income/(loss) for the
period from continuing
and discontinued
operations attributable
to:
- Equity holders of
parent 5,640 (18,615) (59,644)
- Non-controlling
interests - (1,855) (1,855)
5,640 (20,470) (61,499)
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
Earnings/(Loss) per
share (cents) 1.92 (6.32) (13.17)
Headline loss per share
(cents) (2.22) (5.85) (8.52)
Loss per share from
continuing operations
(cents) (0.19) (0.14) (1.35)
Headline loss per share
from continuing
operations (cents) (0.19) (0.14) (1.35)
Reconciliation of
headline loss
Comprehensive
income/(loss) for
period attributable to
ordinary shareholders 5,640 (18,615) (38,775)
Impairment of assets - - 1,116
Fair value adjustment
on investment property
classified as held for
sale - - 10,288
Change in CGT inclusion
rate - deferred tax on
investment - - 897
Profit/(Loss) on
disposal of assets (14,224) 2,593 2,635
Tax effect of above 2,050 53 53
Non-controlling
interest effect on the
above items - (1,254) (1,303)
Headline loss (6,534) (17,223) (25,089)
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
at 31 December 2012
Dec-12 Dec-11 Jun-12
Unaudited Unaudited Audited
Dec 2012 Dec 2011 June 2012
R 000 R 000 R 000
ASSETS
Non-current assets - 10,231 387
Property, plant and equipment - 10,231 387
Current assets 2,859 4,295 548
Other financial assets 165 1,434 165
Trade and other receivables 474 - 288
Cash and cash equivalents 2,221 2,861 95
Non-current assets held for
sale 209,312 244,340 222,017
Total assets 212,721 258,866 222,952
EQUITY AND LIABILITIES
EQUITY
Share capital and reserves 79,771 114,610 73,581
Non-controlling interests - - -
79,771 114,610 73,581
LIABILITIES
Non-current laibilities 28,353 26,020 28,353
Interest bearing liabilities - 2,083 -
Deferred tax liability 28,353 23,937 28,353
Current liabilities 30,241 34,942 35,657
Trade and other payables 23,650 23,614 24,840
Short-term portion of
interest -
bearing liabilities 1,879 - 1,780
Non - interest - bearing
liabilities 747 2,065 1,987
Provisions - 3,707 3,819
Current tax payable 3,882 2,131 1,665
Bank overdraft 83 3,425 1,566
Liabilities associated with
non-current
assets held for sale 74,356 83,294 85,361
Total equity and liabilities 212,721 258,866 222,952
Net asset value per share
(cents) 27.09 38.92 24.99
Net tangible asset value per
share (cents) 27.09 38.92 24.99
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
for the period ended 31 December 2012
Dec-12 Dec-11 Jun-12
Unaudited Unaudited Audited
R 000 R 000 R 000
Attributable to equity holders
of parent:
Balance at beginning of period 73,581 133,225 141,074
Total comprehensive
income/(loss) for the
period 6,190 (18,615) (61,499)
Disposal of subsidiary - - (5,994)
Balance at end of period 79,771 114,610 73,581
Non-controlling interests
Balance at beginning of period - 7,849 7,849
Further acquisition of
subsidiary shares - - -
Total comprehensive loss for the
period - (1,855) (1,855)
Dividends paid to non-
controlling shareholders - - -
Disposal of subsidiary - (5,994) (5,994)
Balance at end of period - - -
Total equity 79,771 114,610 73,581
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
for the period ended 31 December 2012
Dec-12 Dec-11 Jun-12
Unaudited Unaudited Audited
R 000 R 000 R 000
Operating activities (4,391) (5,422) (8,076)
Investing activities 23,000 3,791 3,831
Financing activities (15,000) 2,838 4,544
Net cash inflow 3,609 1,207 299
Cash & cash equivalents at
beginning of
period (1,471) (1,770) (1,770)
Cash & cash equivalents at end of
period 2,138 (563) (1,471)
CONDENSED SEGMENTAL ANALYSIS
for the period ended 31 December 2012
Dec-12 Dec-11 Jun-12
Unaudited Unaudited Audited
R 000 R 000 R 000
Segmental Revenue
Hotels - 11,079 11,326
Travel & Tourism - 11,782 11,782
Residential letting 8,059 2,779 11,046
Net Revenue 8,059 25,640 34,154
Segmental loss before interest
and tax
Hotels - (9,510) (8,148)
Travel & Tourism - (1,397) (1,397)
Residential letting (1,789) (2,503) (7,954)
Loss before interest and tax (1,789) (13,410) (17,499)
DISPOSAL OF IKAPA BUSINESS
Dec-11
Unaudited
R 000
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
In 2011, The Don converted all its properties from hotels to
rental apartments as a result of the challenges facing the tourism
sector and in view of growing opportunities identified in the
broader property industry sector.
Rental revenue achieved during the six month period ended December
2012 (“the reporting period”) is R8.1 million in comparison to the
R2.8 million achieved in the prior comparative period. The marked
increase in rental revenue is as a result of improved vacancy
percentages as the conversion to rental leasing was completed in
the 2012 year. The barter agreement between Club Leisure Group
(“Club Leisure”) and the Group for 14 suites in the Sandton 3
Property in exchange for hotel rooms in Oceanic, was cancelled
effective November 2012 following the approval by shareholders of
The Don in general meeting on 24 October 2012 of the disposal of
the Sandton 4 Property, the detail of which was set out in the
circular to shareholders of The Don dated 25 September 2012.
Expenses have reduced substantially since the conversion of the
hotels to rental apartments. However, due to the continuing cash
flow challenges the Group is still burdened with legacy costs that
stem from the hotel operations.
A loss of R1.8 million is reported reflecting the marked increase
in rental revenue and marked decrease in operating expenses in
line with the change from hotel operations to the rental
operations.
As set out in the circular to shareholders of The Don dated 25
September 2012 regarding the disposal by The Don of four of its
nine hotel properties (being the Sandton 3 and Sandton 1
Properties, the Beach Road Property and the Sandton 4 Property),
and as set out in the circular to shareholders of The Don dated 22
January 2013 regarding the disposal by The Don of its remaining
five hotel properties (being the Rosebank Property, the Isando
Property, the Arcadia 1 Property, the Eastgate Property and the
Arcadia 2 Property) respectively, the total purchase consideration
for the disposals by The Don of its nine hotel properties
(including their respective furniture and fittings), amounts to
R210.9 million.
The disposals of the Sandton 3 and Sandton 1 Properties, the Beach
Road Property and the Sandton 4 Property were approved by
shareholders in General Meeting on 24 October 2012. However, only
the disposal of the Beach Road Property, which was transferred at
the end of November 2012, was completed during the reporting
period. The transfers of the Sandton 3 and Sandton 1 Properties
took place subsequent to the reporting period i.e. in February
2013. As at 31 December 2012, the Group is awaiting transfer and
thus the assets are still held for sale at this reporting date.
Subsequent to the reporting period, the disposals of the Rosebank
Property, the Isando Property, the Arcadia 1 Property, the
Eastgate Property and the Arcadia 2 Property were approved by
shareholders in General Meeting on 20 February 2013. No transfer
lodging has taken place yet for these properties.
Proceeds from the disposals by The Don of its nine hotel
properties (“Disposals”) will be utilised to substantially settle
all liabilities. The implementation of the Disposals will result
in The Don being classified as a “cash shell” in terms of the
Listings Requirements of the JSE Limited (“JSE”) and should The
Don, within a period of six months after such classification, fail
to enter into an agreement relating to the acquisition of viable
assets that satisfy the conditions for listing in terms of the JSE
Listings Requirements, its listing will be suspended.
The Board will determine the way forward for the Group.
BOARD MEMBERSHIP
On 16 November 2012, shareholders were notified that Ms Magdelin
Thandi (“Thandi”) Khumalo had been appointed as an independent
non-executive director with immediate effect.
BASIS OF PREPARATION
The unaudited condensed consolidated results for the six months
ended 31 December 2012 have been prepared by the Financial
Director, Uviwe Mzilikazi, CA(SA), in accordance with Financial
Reporting Standards (“IFRS”), IAS 34 – Interim Financial Reporting,
the SAICA Financial Reporting Guides as issued by the Accounting
Practices Committee, the Companies Act, 2008 (Act 71 of 2008), as
amended, and the Listings Requirements of JSE. The interim results
have not been audited or reviewed by the Group’s auditors.
ACCOUNTING POLICIES
The accounting policies and methods of computation applied in the
preparation of these unaudited condensed consolidated financial
results for the six months ended 31 December 2012, which are based
on reasonable judgments and estimates, are in accordance with IFRS
and are consistent with those applied in the preparation of the
Group’s annual financial statements for the year ended 30 June
2012.
DIVIDENDS
No dividends have been declared or paid during the reporting
period.
SUBSEQUENT EVENTS
Other than the transfer of the Sandton 3 and Sandton 1 Properties
which occurred in February 2013, the Board is not aware of any
other material events that have occurred after the reporting
period, up to and including the date of this report.
By order of the Board.
Salukazi Dakile-Hlongwane Thabiso Tlelai
Chairperson Chief Executive Officer
22 March 2013
Directors:
Thabiso Tlelai (Chief Executive Officer), Uviwe Mzilikazi
(Financial Director), Salukazi Dakile-Hlongwane (Chairperson)*,
Thandi Khumalo*, Hatla Ntene*
* Independent Non-Executive
Registered office:
65 Kyalami Boulevard
Kyalami Business Park
Kyalami, 1684
Company Secretary:
Whitney Green
Transfer secretaries:
Link Market Services South Africa Proprietary Limited
Date: 22/03/2013 11:50:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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