By Thom McLachlan

THE Don Group, owner of The Don hotel chain, has managed to shake off last year’s loss, posting a R5,1m profit for the year to June.

The company, which faced a loss of R5,3m after incurring deferred tax of R2m last year, declared a 74% increase in operating profit yesterday.

This is the third year that the company’s operating profit has increased, despite last year’s dip into the red, growing from 2005’s R3,9m to this year’s R15,3m.

Revenue increased 27% to R62,6m for the year, compared with the previous year’s R49,3m as a result of an incremental increase in the group’s suite rates, the company said in a statement to the JSE.

Group CEO Thabiso Tlelai said the improvement in profit was due to “a number of instances”, including the fact that the deferred tax which dated back to the group’s operations in the early 1990s , before Tlelai’ s involvement with the group, had been paid out.

Tlelai said that after having “been held back by things we had no control over”, the intention in the immediate future was to pursue “incremental improvement” across various business sectors over the next few years in order to maintain stability.

Tlelai said the group had not declared a dividend because money would be needed to upgrade areas of the hotel group ahead of the 2010 Fifa World Cup, for which it had been awarded accreditation as an accommodation provider.

This year it said it had pumped R3,2m into upgrading its properties, mainly in Cape Town.

Those in Johannesburg, Sandton and Pretoria were also receiving attention, for which R10m, funded from internal resources had been budgeted, the company said.

Available cash flow moved from cash negative at the beginning of the 2006 financial year to R3,4m at the end of this financial year.

Tlelai took over as CEO of the group in 2000, when it had liabilities exceeding R100m.

He is the largest single shareholder, with 40% of the total shares listed under his name.

Tlelai also controls 62% of the voting rights.

Business Day