CE Thabiso Tlelai said yesterday that a presence there "would give the marketing effort more scope in targeting foreign visitors and would strengthen corporate client loyalty, since this sector appreciates the value of a favoured, one-brand geographical spread".

The group was considering alliances with operators outside SA, and was pursuing opportunities to expand into areas that did not require a heavy capital investment.

Tlelai said that the group had developed a consistent formula for its operations, and it would approach those groups that met its requirements.

The group's balance sheet at the end of June shows its cash resources are meagre, although it is almost ungeared. Don Group improved its total cash holdings, including deposits and cash equivalents, to R4,1m at end-June from R3,4m a year ago.

But cash flow from operating activities eased to R848000 on a reduced number of rooms from R1,2m. In the 2002 financial year Don Group undertook a financial restructuring to eliminate its debt burden by selling all 13 of its hotels to Ellwain Investments and leasing back nine of them.

Group turnover, which is derived mainly from corporate travellers, slipped to R40,9m for the year compared with R42m in the previous year, but this was achieved on almost half as many suites as it had previously.

The group has 420 suites now compared with more than 700 before its restructuring. It does not disclose its occupancy levels for competitive reasons.

The operating margin fell to 6,8% from 7,4% because certain fixed costs could be eliminated even though the scale of operations has been cut back.

However, interest was earned on cash this year whereas interest was paid last year, and the depreciation charge was also lower. This resulted in a trebling of headline earnings to 0,38c a share from 0,11c previously, but the dividend was again passed.

Tlelai said the group's objective was to strengthen suite occupancy and rates so as to deliver improved revenue and profits.

Business Day