The Don hotel group (DON) has reported a 4.7 million rand headline loss for the year ended June after a 326,000 rand profit the previous year.
 
This equated to a headline loss per share of 1.61 cents compared to earnings of 0.47 cents per share in 2005.
 
The group said the ongoing drive to sustain an incremental revenue stream had been realised during the reporting period. This was reflected in an 8.9% increase in revenue from 45.2 million rand to 49.2 million rand.
 
"The operating profit relative to turnover more than doubled due to the policy of effective cost controls and benefits accruing from the centralised procurement. Operating profit increased by 120% from 3.9 million rand to 8.7 million rand.

"However, the risk of owning revalued and mortgaged properties was felt in the rising depreciation charge on the property portfolio and higher finance charges on the related borrowings. As a consequence there is an increase in the depreciation charge based on a revalued asset of 2.05 million rand and the finance charges also increased by 4.3 million rand from the previous period.

"The situation was further worsened by the historic once off total tax liability of 2 million rand dating back a decade, details of which were given in the interim financial report.

"Items of furniture from the closed hotels have been kept at the two warehouses in Cape Town and Brits. Furthermore fire damage in one of the warehouses in which Don stored surplus furniture after the close of 13 hotels caused an impairment adjustment of 611,000 rand. The year-end result is a net loss of 5.3 million rand, from a profit of 326 000 in the previous year," the group said.

On its future prospects, it said: "The continuing growing trend in revenues and occupancies is pleasing in the current financial year. The sales systems in place reinforce expectations that the momentum characteristic of the current financial year will continue.

"The Group has successfully completed the difficult phase of dealing with costly historic burdens. Encumbrances that have also been inherited by the current management team have all been effectively dealt with. The road is now open to turn the energies applied in resolving these issues into improved financial performance and continued growth."

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