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Reviewed Condensed Consolidated Results for the year ended 30 June 2013
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”)
Reviewed Condensed Consolidated Results for the year ended 30 June
2013
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 30 June 2013
Year Year
Ended Ended
30 June 30 June
2013 2012
Reviewed Audited
CONTINUING OPERATIONS R 000 R 000
Loss before taxation (2 740) (3 988)
Loss for the year from
continuing operations and
total comprehensive loss for
the year (2 740) (3 988)
Attributable to:
- Equity holders of parent (2 740) (3 988)
- Non-controlling interests - -
(2 740) (3 988)
DISCONTINUED OPERATIONS
Revenue 13 926 34 154
Operating loss before
impairment, fair value
adjustments and loss on
disposal of discontinued
operation and assets (351) (13 511)
Loss on disposal of assets
held for sale (8 368) -
Loss on disposal of business - (2 635)
Impairment loss (309) (1 116)
Fair value adjustment on
investment-property
classified as assets held
for sale (8 002) (10 288)
Operating loss from
discontinued operations (17 030) (27 550)
Interest received 21 44
Interest paid (6 332) (8 528)
Loss before taxation (23 341) (36 034)
Taxation 8 839 (608)
Loss for the year from
discontinued operations (14 502) (36 642)
Attributable to:
- Equity holders of parent (14 502) (34 787)
- Non-controlling interests - (1 855)
(14 502) (36 642)
Other comprehensive income/
(loss) from discontinued
operations: 12 604 (20 869)
- Gross revaluation loss - (18 349)
- Deferred taxation 12 604 (2 520)
Total comprehensive loss for
the year from discontinued
operations (1 898) (57 511)
Total comprehensive loss
from discontinued operations
attributable to:
- Equity holders of parent (1 898) (55 656)
- Non-controlling interests - (1 855)
(1 898) (57 511)
Loss for the year from
continued and discontinued
operations attributable to: (17 242) (40 630)
- Equity holders of parent (17 242) (38 775)
- Non-controlling interests - (1 855)
(17 242) (40 630)
Total comprehensive loss for
the year from continued and
discontinued operations
attributable to: (4 638) (61 499)
- Equity holders of parent (4 638) (59 644)
- Non-controlling interests - (1 855)
(4 638) (61 499)
Number of ordinary shares in
issue (000’s) 294 485 294 485
Weighted average number of
ordinary shares in issue
(000’s) 294 485 294 485
Loss per share (cents) (5.85) (13.17)
Headline loss per share
(cents) (1.26) (8.52)
Loss per share from
continuing operations
(cents) (0.93) (1.35)
Loss per share from
discontinued operations
(cents) (4.93) (11.82)
Headline loss per share from
continuing operations
(cents) (0.93) (1.35)
Headline loss per share from
discontinued operations
(cents) (0.33) (7.17)
Reconciliation of headline
loss
Loss for the year
attributable to ordinary
shareholders (17 242) (38 775)
Impairment of assets 309 1 116
Fair value adjustment on
investment properties
classified as held for sale 8 002 10 288
Change in CGT inclusion rate
– deferred tax investment
properties - 897
Loss on disposal of assets
in iKapa - (322)
Loss on disposal of assets 8 368 2 957
Tax effect of impairment of
assets (86) -
Tax effect on fair value
adjustment (1 494) -
Tax effect on loss on
disposal of assets (1 562) 53
Non-controlling interest
effect of above - (1 303)
Headline loss (3 705) (25 089)
There were no instruments in issue at current period end that
would have a dilutive effect on the earnings measures reflected
above.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 30 June 2013
30 June 30 June
2013 2012
Reviewed Audited
R 000 R 000
ASSETS
Non-current assets - 387
Property, plant and
equipment - 387
Current assets 20 406 548
Other financial assets - 165
Trade and other receivables 389 288
Cash and cash equivalents 20 017 95
Non-current assets held for
sale 70 929 222 017
Total assets 91 335 222 952
EQUITY AND LIABILITIES
EQUITY
Share capital and reserves 68 943 73 581
68 943 73 581
LIABILITIES
Non-current liabilities 5 396 28 353
Deferred tax liability 5 396 28 353
Current liabilities 16 996 35 657
Trade and other payables 13 816 24 840
Interest – bearing
liabilities - 1 780
Non – interest – bearing
liabilities - 1 987
Provisions - 3 819
Current tax payable 3 180 1 665
Bank overdraft - 1 566
Liabilities associated with
non-current assets held for
sale - 85 361
Total liabilities 22 392 149 371
Total equity and liabilities 91 335 222 952
Net asset value per share
(cents) 3.41 24.99
Net tangible asset value per
share (cents) 23.41 24.99
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30 June 2013
Year Year
Ended Ended
30 June 30 June
2013 2012
Reviewed Audited
R 000 R 000
Attributable to equity
holders of parent:
Balance at beginning of year 73 581 133 225
Total comprehensive loss for
the year (4 638) (59 644)
Balance at end of year 68 943 73 581
Non-controlling interests
Balance at beginning of year - 7 849
Total comprehensive loss for
the year - (1 855)
Change in ownership interest - (5 994)
Balance at end of year - -
Total equity 68 943 73 581
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 30 June 2013
Year Year
Ended Ended
30 June 30 June
2013 2012
Reviewed Audited
R 000 R 000
Cash outflow from operating
activities (24 184) (8 076)
Cash inflow from investing 134 800 3 831
activities
Cash (outflow)/inflow from
financing activities (89 128) 4 544
Net cash inflow 21 488 299
Cash and cash equivalents
at beginning of year (1 471) (1 770)
Cash and cash equivalents
at end of year 20 017 (1 471)
CONDENSED SEGMENTAL ANALYSIS
for the year ended 30 June 2013
30 June 30 June
2013 2012
Reviewed Audited
R 000 R 000
Segmental Revenue
Hotels - 11 326
Travel & Tourism - 11 782
Residential letting 13 926 11 046
Net Revenue 13 926 34 154
Segmental loss before impairment,
fair value adjustments, and loss
on disposal of business, interest
and taxation
Hotels - (8 148)
Travel & Tourism - (1 397)
Residential letting (3 091) (7 954)
Operating loss before impairment,
fair value adjustments and loss
on disposal of discontinued
operations (3 091) (17 499)
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
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.
Revenue achieved for the year under review is R13.9 million in
comparison to the R34.2 million achieved in the prior comparative
period. Prior year revenue was made up of the following 3 segments
Hotel (R11.3 million), Travel & Tourism (R11.8 million) and
Residential Letting (R11.0 million). 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 a General
Meeting on 24 October 2012 of the disposal of, inter alia, 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. In addition, the disposal of
the properties that were transferred during the reporting period
resulted in a loss for the Group of R8.4 million, therefore
inflating expenditure.
A loss of R17.2 million is reported reflecting the marked decrease
in overall Group revenue and marked decrease in operating expenses
in line with the change from hotel operations to the rental
operations. A loss of R8.4 million resulted from the disposal of
non-current assets held for sale.
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 while 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
15 February 2013.
The following properties were transferred during the reporting
period; Beach Road Property (November 2012), Sandton 3 and Sandton
1 Properties (February 2013), Sandton 4 (March 2013), Isando (May
2013) and Arcadia 2 (June 2013). As at 30 June 2013, the Group was
awaiting transfer of the remaining three properties; Arcadia 1,
Eastgate and Rosebank Properties, and thus the assets were still
held for sale at such reporting date.
As at 15 August 2013, the last of the properties had been
transferred and accordingly, with effect from such date, The Don
has been classified as a “cash shell” in terms of the Listings
Requirements of the JSE Limited (“JSE”). The Don has until
15 February 2014 to enter into an agreement and make an
announcement relating to the acquisition of viable assets that
satisfy the conditions for listing in terms of the JSE Listings
Requirements, failing which its listing will be suspended.
Proceeds from the disposals by The Don of its nine hotel
properties (“Disposals”) have been utilised to substantially
settle all liabilities. As at reporting date, the Industrial
Development Corporation of South Africa Limited (“IDC”) liability
was settled, this was classified as the liabilities associated
with non-current assets held for sale on the statement of
financial position.
The Board will determine the way forward for the Group.
REPORTABLE IRREGULARITY
The Group’s auditors, have reported a reportable irregularity to
the Independent Regulatory Board for Auditors. This arose in the
previous financial period and has continued in the current
financial period with regards to the amounts owing to SARS. This
related specifically to the Group being in arrears with certain
provident fund contributions and certain statutory deductions
owing to SARS which constitutes a contravention of the Pension
Funds Act and the Income Tax Act.
Management have settled the full amounts of the provident fund
contributions during the current reporting period and have
subsequently settled a substantial amount of the SARS amounts.
Management have agreed on payment terms in relation to amounts due
to SARS.
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 PREPERATION
The accounting policies applied in the preparation of these
reviewed condensed consolidated financial results, 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 2012. These reviewed condensed
consolidated financial results as set out in the report have been
prepared in terms of IAS 34 Interim Financial Reporting, SAICA
Financial Reporting Guides as issued by the Accounting Practices
Committee, the requirements of the Companies Act, 2008 (Act 71 of
2008), as amended and the JSE Listings Requirements.
These reviewed condensed consolidated financial results have been
prepared by Uviwe Mzilikazi, CA(SA), the Group’s part-time
Financial Director.
DIVIDENDS
No dividend has been declared or paid.
PROSPECTS
The Board will carefully consider all options available to the
Company to unlock value for its shareholders going forward.
SUBSEQUENT EVENTS
On 26 July 2013, shareholders were notified that as a result of
The Don having obtained shareholder approval to dispose of its
nine hotel properties in terms of the circulars to shareholders
dated 25 September 2012 and 22 January 2013 and, as a consequence,
the duties of the Financial Director having been substantially
reduced, the JSE granted approval to The Don in terms of paragraph
4.8(b) of the Listings Requirements to employ its Financial
Director, Uviwe Mzilikazi, on a part-time basis.
Other than the transfer of the remaining three properties becoming
effective, no material disclosable occurrence has come to the
Board’s attention from year end to the date of issue of these
reviewed condensed consolidated financial results.
EXTRACTS FROM AUDITOR’S REVIEW REPORT
The Group’s condensed annual financial statements for the year
ended 30 June 2013 have been reviewed by the Group’s auditors,
Grant Thornton (Jhb) Inc. The auditors’ modified review report on
the Group’s condensed consolidated financial results is available
for inspection at the Group’s registered office.
The modification is extracted below:
“REPORTABLE IRREGULARITY
In accordance with our responsibilities in terms of sections 44(2)
and 44(3) of the Auditing Profession Act, we reported that in the
previous year, we identified certain unlawful acts or omissions by
persons responsible for the management of Don Group Limited which
constituted a reportable irregularity in terms of the Auditing
Professions Act, and we have reported such matters to the
Independent Regulatory Board for Auditors. The matter pertaining
to the reportable irregularity and the actions taken by management
have been described in the condensed financial information.”
By order of the Board.
Salukazi Dakile-Hlongwane Thabiso Tlelai
Chairperson Chief Executive Officer
27 September 2013
Directors: Salukazi Dakile-Hlongwane* (Chairperson), Thabiso
Tlelai (Chief Executive Officer), Uviwe Mzilikazi (Financial
Director), Hatla Ntene*, Magdelin Thandi (“Thandi”) Khumalo*
* Independent Non-Executive Directors
Company Secretary: Whitney Green
Registered Office: 57 Kyalami Boulevard, Kyalami Business Park,
Kyalami
Transfer Secretaries: Link Market Services South Africa
Proprietary Limited
Sponsor: Merchantec Capital
Auditors: Grant Thornton (Jhb) Inc.
Date: 27/09/2013 09:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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