| Wed 9 Dec 2020, 15:11 | | CITY LODGE HOTELS LIMITED - Voluntary trading update, and trading statement, update on unsolicited non-binding offer and renewal of cautionary |
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Voluntary trading update, and trading statement, update on unsolicited non-binding offer and renewal of cautionary
City Lodge Hotels Limited
“City Lodge” or the “Group”
(Reg. No. 1986/002864/06)
(Incorporated in the Republic of South Africa)
Share Code: CLH ISIN Code: ZAE000117792
VOLUNTARY TRADING UPDATE, AND TRADING STATEMENT, UPDATE ON UNSOLICITED NON-BINDING OFFER
AND RENEWAL OF CAUTIONARY ANNOUNCEMENT
Trading update
COVID-19 and the accompanying lockdown regulations have continued to have a devastating
impact on the hospitality industry and on our Group.
The easing of restrictions over the last few months, has enabled the gradual and phased re-
opening of our hotels. Hotels have been opened as demand increased due to the easing of
travel restrictions, the resumption of inter-provincial travel and, most recently, the
opening of international and regional borders to receive international guests.
Occupancies at our South African operations, based on all the hotels’ room inventory,
have steadily improved each month, from 4% in the last quarter of the 2020 financial
year, to 7% in July 2020 and recently to 28% in November 2020. Achieved occupancy, in
November 2020, based on the rooms available at our 42 open hotels in South Africa was
37%. December 2020 occupancies to date have continued to improve and bookings for the
upcoming festive season at our coastal hotels are steadily increasing.
Weekend domestic leisure travel has improved as local travellers capitalise on discounted
rates, and the need to escape the confinement of their homes during lock-down. Corporate
travel remains limited as many companies continue to work remotely in the short-term.
The Group also has 4 hotels open in the rest of Africa, namely Fairview (Nairobi), City
Lodge Hotel Dar-es-Salaam, Town Lodge Gaborone and Town Lodge Windhoek.
Projected breakeven EBITDA levels are still anticipated to be achieved during the second
quarter of the 2021 calendar year.
Strict cost containment measures continue to be enforced to help preserve and improve
liquidity. One of the measures implemented was 50% salary reductions for all employees who,
due to the nature of their work, are not able to work remotely, with effect from April 2020
for an initial period of three months, and extended by a further two months from July 2020.
Salaries were increased to 60% for September 2020 and October 2020, and subsequently
increased to 70% from November 2020. The salary reductions are subject to ongoing reviews.
To assist with limiting the effect of the reduction in employee earnings, the Company is
assisting with applications for the revised UIF benefits.
The Group remains well-positioned to re-open its hotels at short notice and it is anticipated
that all of the South African hotels will re-open by February 2021.
Trading statement
In terms of the JSE Limited Listings Requirements, companies are required to publish a
trading statement once satisfied that a reasonable degree of certainty exists that the
financial results for the current reporting will differ by at least 20% from reported
financial results for the previous corresponding period.
Shareholders are advised that City Lodge’s headline earnings per share (HEPS) and earnings
per share (EPS) for the six months ending 31 December 2020 are expected to be more than 20%
lower than the reported HEPS and EPS for the comparable period. A further trading statement
with specific guidance for the ranges will be released once reasonable certainty regarding
the extent of the decline has been achieved.
The Group expects to publish the interim financial results for the six months ended 31
December 2020 on or about 26 February 2021.
The information contained in this announcement has not been reviewed or reported on by the
Company’s auditors.
Update on unsolicited offer and renewal of cautionary announcement
Shareholders are advised that the due diligence and negotiations associated with the
unsolicited non-binding offer for the proposed acquisition of City Lodge’s East African
operations, comprising of its hotels situated in Kenya and Tanzania, are progressing and it
is expected that a further announcement will be released in due course. Accordingly,
shareholders are advised to continue to exercise caution when dealing in the Company’s
securities until such further announcement.
Bryanston
09 December 2020
Sponsor
Nedbank Corporate & Investment Banking
Date: 09-12-2020 03:11:00
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