| Thu 14 Aug 2008, 14:45 | | CLH - City Lodge Hotels Limited - Reviewed group preliminary results for the |
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CLH
CLH
CLH - City Lodge Hotels Limited - Reviewed group preliminary results for the
year ended 30 June 2008
City Lodge Hotels Limited
Registration number 1986/002864/06
Share code: CLH
ISIN: ZAE000117792
Reviewed group preliminary results for the year ended 30 June 2008
Average Occupancies 82%
ROE 39%
HEPS +27%
Dividends +27%
Income statement
Year Year
ended ended
30 June % 30 June
R000`s 2008 Change 2007
Revenue 599 902 18 509 711
Administration and marketing (46 002) (42 714)
costs
Operating costs (214 801) (185 938)
339 099 21 281 059
Depreciation (26 934) (26 672)
Operating profit 312 165 23 254 387
Interest income 14 592 11 953
Interest expense (1 338) (3 772)
Share of profit from joint 8 527 7 611
venture
Profit before taxation 333 946 24 270 179
Taxation (108 299) (92 260)
Profit for the period 225 647 27 177 919
Headline earnings reconciliation
Net profit 225 647 177 919
Profit on sale of equipment (188) (270)
Taxation effect 53 78
Headline earnings 225 512 27 177 727
Number of shares in issue (000`s) 42 602 42 482
Weighted average number of
shares in issue (000`s) 42 519 42 416
Fully diluted weighted average
number
of shares in issue (000`s) 42 965 43 030
Basic earnings per share (cents)
- fully diluted 525,2 27 413,5
- undiluted 530,7 27 419,5
Headline earnings per share
(cents)
- fully diluted 524,9 27 413,0
- undiluted 530,4 27 419,0
Dividends declared per share 371,0 27 293,0
(cents)
Effective tax rate (%) 32,4 34,1
Balance sheet
30 June 30 June
R000`s 2008 2007
ASSETS
Non-current assets 695 142 564 545
Property, plant and equipment 647 159 517 717
Investments and loans 45 042 43 850
Deferred taxation 2 941 2 978
Current assets 83 391 109 571
Inventory 1 625 1 493
Trade receivables 25 472 23 855
Other receivables 5 437 4 831
Cash and cash equivalents 50 857 79 392
Total assets 778 533 674 116
EQUITY AND LIABILITIES
Capital and reserves 626 527 534 440
Share capital and premium 140 434 138 008
Retained earnings 480 399 392 910
Other reserves 5 694 3 522
Non-current liabilities 104 256 97 945
Interest-bearing borrowings 40 000 40 000
Other non-current liabilities 6 710 5 859
Deferred taxation 57 546 52 086
Current liabilities 47 750 41 731
Trade and other payables 45 763 30 746
Taxation 1 987 10 985
Total equity and liabilities 778 533 674 116
Interest-bearing debt to total
capital and reserves (%) 6 7
Net asset value per share (cents) 1 471 1 258
Note: The company has authorised capital commitments of R397 million of which
approximately R45 million has been contracted.
It is anticipated that approximately R252 million will be spent
by 30 June 2009.
Cash flow statement
Year Year
ended ended
30 June 30 June
R000`s 2008 2007
Cash generated by operations 364 088 298 059
Net interest received 11 714 8 181
Taxation paid (111 250) (85 016)
Dividends paid (138 158) (112 821)
Cash inflow from operating activities 126 394 108 403
Cash utilised in investing activities (157 380) (89 006)
- investment to maintain operations (21 568) (27 382)
- investment to expand operations (134 620) (60 651)
- investments and loans (1 192) (973)
Cash flows from financing activities 2 451 (13 847)
Net (decrease)/increase in cash (28 535) 5 550
Statement of recognised gains and losses
Year Year
ended ended
30 June 30 June
R000`s 2008 2007
Actuarial loss on defined benefit plan (2 004) (1 150)
Deferred taxation thereon 561 333
Deferred taxation - rate change (12) -
Net loss recognised directly in equity (1 455) (817)
Profit for the period 225 647 177 919
Total recognised income and expense for the 224 192 177 102
period
Reconciliation of movement in capital and reserves
Share
capital
and Other Retained
R000`s premium reserves earnings Total
Balance at 30 June 136 409 2 298 327 812 466 519
2006
Issue of new 1 599 1 599
ordinary shares
Profit for the 177 919 177 919
period
Recognised gains (817) (817)
and losses
Share compensation 2 041 2 041
reserve
Dividends paid (112 821) (112 821)
Balance at 30 June 138 008 3 522 392 910 534 440
2007
Issue of new 2 426 2 426
ordinary shares
Profit for the 225 647 225 647
period
Recognised gains (1 455) (1 455)
and losses
Share compensation 3 627 3 627
reserve
Dividends paid (138 158) (138 158)
Balance at 30 June 140 434 5 694 480 399 626 527
2008
COMMENTARY
Strong demand for the group`s four brands continued during this financial year
notwithstanding tighter economic conditions. This enabled the group to maintain
its average annual occupancy rate at 82% in the year to 30 June 2008, matching
the record level set in the previous financial year.
Occupancy in the second half was marginally lower than the first half which was
mainly due to the dilutionary effect of the additional capacity. The 118-room
Road Lodge Centurion and the 90-room Road Lodge Richards Bay opened in March and
extensions at City Lodge Johannesburg Airport (59 rooms), City Lodge GrandWest
(56 rooms) and Road Lodge Nelspruit (27 rooms) were added between March and May.
The additional capacity did however result in more rooms being sold than in the
prior year, which together with increased achieved room rates, led to revenue
rising by 18% to R599,9 million. The operating profit margin increased by two
percentage points to 52% and operating profit rose by 23% to R312,2 million.
As a result of higher average cash balances and higher interest rates, net
interest received increased by R5,1 million.
Although occupancies continue to improve within the Courtyard brand, income from
the joint venture was affected by a non-recurring write-off of R900 000. Despite
this, the share of profit from the joint venture rose by 12% to R8,5 million.
The group`s effective tax rate declined to 32,4% from 34,1% due to the reduction
in the corporate tax rate to 28% and a decline in the STC rate to 10% for the
interim dividend. There was also a R1,7 million credit to the opening deferred
tax balance as a consequence of the change in tax rate.
Profit for the period and fully diluted headline earnings per share both
increased by 27% to R225,6 million and 524,9 cents respectively. Cash generated
by operations rose by 22% to R364,1 million.
The dividend payout for the year has been maintained at 70% of net profit
resulting in a 27% increase in the annual distribution to 371 cents. The final
dividend for the year has been increased by 31% to 194 cents.
OUTLOOK
Positive trading conditions have continued into the first six weeks of the new
financial year which will be boosted by full contributions from additional
capacity added in the past financial year.
Construction of Road Lodge Potchefstroom is well underway and it is due to open
by early November. Construction on the 204-room Town Lodge Port Elizabeth will
commence shortly with completion expected by early 2010.
Regulatory approvals are still being awaited for previously announced Road
Lodges at Southgate (Johannesburg) and Gateway (Umhlanga). It is anticipated
that construction will begin in the first quarter of the new financial year.
Negotiations are at an advanced stage for the development of City Lodges in
Fourways-Johannesburg (200 rooms), Lynnwood-Pretoria (200 rooms) and Hatfield-
Pretoria (150 rooms). The two Pretoria hotels will be land and building leases.
Construction of all three of these hotels is expected to commence by the end of
calendar 2008.
The group currently has 42 hotels offering 4 773 rooms across its four brands.
On successful conclusion of the expansion plans mentioned above, the portfolio
will rise to 49 hotels offering 5 855 rooms across South Africa by the
commencement of the FIFA 2010 Soccer World Cup.
It is anticipated that occupancies will remain at similarly high levels in the
new financial year. Excluding the accounting effects of the successfully
concluded BEE transaction, satisfactory earnings growth is anticipated for the
year ahead, whilst the newly announced expansion initiatives should underpin
longer term earnings prospects.
POST-BALANCE SHEET EVENT
Following shareholder approval of the BEE transaction on 26 June, the High Court
sanctioned the scheme of arrangement on 8 July and the scheme was implemented on
28 July.
The participants in the scheme are the Injabulo Staff Trust (6%), Vuwa
Investments (Pty) Limited (6%) and an Education Trust to be established to
benefit primarily black students of the University of Johannesburg`s School for
Tourism and Hospitality (3%).
This represents 15% of the current issued share capital and translates into a
22,4% black ownership if mandated investments, as defined in the DTI`s Codes of
Good Practice, are excluded from the company`s shareholder structure.
The shares were acquired at a price of R76,06 per share with a total value of
approximately R490 million. Of this amount, the group has guaranteed the funding
to the three participants to the extent of R440 million and Vuwa Investments has
contributed equity of R50 million.
DIRECTORATE
Mr Bulelani Ngcuka, chairman of Vuwa Investments, was appointed as a non-
executive director with effect from 1 August 2008.
BASIS OF PREPARATION
These condensed annual financial statements have been prepared in accordance
with the recognition and measurement requirements of International Financial
Reporting Standards ("IFRS") and have been prepared in accordance with the
presentation and disclosure requirements of IAS 34 Interim Financial Reporting.
The accounting policies used are consistent with those used in the annual
financial statements for the year ended 30 June 2007.
AUDIT REVIEW
The group`s auditors KPMG Inc. have reviewed the preliminary results for the
year ended 30 June 2008. A copy of the unmodified review report is available for
inspection at the company`s registered office.
DECLARATION OF DIVIDEND
Notice is hereby given that ordinary dividend number 39 of 194,0 cents per share
for the year ended 30 June 2008 has been declared.
Shareholders are advised that the last day to trade cum dividend will be Friday,
12 September 2008. The shares will trade ex dividend as from Monday, 15
September 2008 and the record date will be Friday, 19 September 2008. The
dividend is payable on Monday, 22 September 2008.
Share certificates may not be dematerialised or rematerialised between Monday,
15 September 2008 and Friday, 19 September 2008, both days inclusive.
For and on behalf of the board
Hans R Enderle Clifford Ross
Chairman Chief executive
14 August 2008
Registered office: "The Lodge", Bryanston Gate Office Park,
corner Homestead Avenue and Main Road, Bryanston
Transfer secretaries: Computershare Investor Services (Pty) Limited, 70 Marshall
Street, Johannesburg, 2001
Directors: HR Enderle (Chairman), C Ross (Chief executive)*,
FWJ Kilbourn, IN Matthews, N Medupe, SG Morris, BT Ngcuka,
Dr KIM Shongwe, AC Widegger* *Executive
Company secretary: MC van Heerden
www.citylodge.co.za
Date: 14/08/2008 14:45:02 Produced by the JSE SENS Department.
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