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CITY LODGE HOTELS LIMITED - UNAUDITED INTERIM REPORT FOR THE SIX MONTHS ENDED 31
DECEMBER 2003
CITY LODGE HOTELS LIMITED
Registration number 1986/002864/06
Share code : CLH ISIN : ZAE 000001483
Unaudited interim report for the six months ended 31 December 2003
* Average occupancies 77%
* Fully diluted headline EPS +19%
* Dividend per share +16%
Income statement
(Unaudited) (Unaudited) (Audited)
Six months Six months Year
R 000"s ended ended ended
31 December % 31 December 30 June
2003 change 2002 2003
Revenue 164 804 14 145 149 292 910
EBITDA 83 288 16 71 671 152 825
Depreciation and
amortisation (11 591) (11 623) (22 351)
Operating profit 71 697 19 60 048 130 474
Pre-opening expenses (797) (314) (314)
Interest income 4 111 3 245 7 827
Interest expense (3 952) (4 999) (9 775)
Income from joint
venture 1 268 1 491 3 501
Profit before
taxation 72 327 22 59 471 131 713
Taxation (26 064) (20 928) (44 261)
Net profit 46 263 20 38 543 87 452
Number of shares
in issue (000"s) 42 037 41 949 41 962
Weighted average
number of shares
in issue (000"s) 41 983 41 926 41 939
Basic and headline
earnings per
share (cents)
- fully diluted 109,0 19 91,3 207,0
- undiluted 110,2 20 91,9 208,5
Dividend declared
per share (cents) 43,0 16 37,0 122,0
Effective tax rate (%) 36,0 35,2 33,6
Note : Net profit equates to headline earnings and therefore no reconciliation
is required.
Balance Sheet
(Unaudited) (Unaudited) (Audited)
R000"s 31 December 31 December 30 June
2003 2002 2003
ASSETS
Non current assets 452 957 419 414 426 953
Operating assets 412 137 376 463 386 665
Investments and loans 36 927 39 317 36 524
Deferred taxation 3 893 3 634 3 764
Current assets 34 166 29 850 56 565
Trade receivables 15 838 14 324 15 100
Cash 10 690 9 618 33 557
Other 7 638 5 908 7 908
Total assets 487 123 449 264 483 518
EQUITY AND LIABILITIES
Shareholders" funds 356 310 315 004 345 026
Ordinary share capital
and premium 132 542 131 691 131 836
Accumulated profit 223 768 183 313 213 190
Non current liabilities 102 584 100 658 101 000
Deferred taxation 38 125 31 837 34 063
Borrowings 64 459 68 821 66 937
Current liabilities 28 229 33 602 37 492
Accounts payable and
accruals 21 101 24 978 24 042
Taxation 7 128 8 624 13 450
Total equity and
liabilities 487 123 449 264 483 518
Interest bearing debt
to total shareholders"
funds (%) 18 22 19
Net asset value per
share (cents) 848 751 822
Note: The company has authorised capital commitments of R37,0 million of which
approximately R32,0 million will be spent by 30 June 2004.
Summarised cash flow
(Unaudited) (Unaudited) (Audited)
R000"s 31 December 31 December 30 June
2003 2002 2003
Cash generated by operations 80 032 70 238 149 529
Net interest paid (244) (3 001) (5 798)
Dividends paid (35 685) (21 794) (37 314)
Taxation paid (28 453) (18 129) (34 539)
Net cash inflow from operating
activities 15 650 27 314 71 878
Cash utilised in investing
activities (36 745) (35 324) (56 094)
- investment to maintain
operations (3 749) (18 588) (24 099)
- investment to expand
operations (32 996) (16 736) (31 995)
Cash effects of financing
activities (1 772) 266 411
Net cash (decrease)/increase (22 867) (7 744) 16 195
Statement of changes in equity
Share capital Accumulated
R000"s and premium profit Total
Balance at 30 June 2003 131 836 213 190 345 026
Issue of new ordinary
shares 706 - 706
Net profit for the period - 46 263 46 263
Dividend paid - (35 685) (35 685)
Balance at 31 December 2003 132 542 223 768 356 310
COMMENTS
The results achieved for the six months ended 31 December 2003 were very
satisfactory. Group average occupancies were maintained at 77%, despite the fact
that the previous corresponding period included the one-off World Summit on
Sustainable Development.
Continued strong demand from local business and holiday travellers was
experienced across all four brands. International demand for the group"s value-
for-money accommodation was also buoyant despite the slow-down in foreign
arrivals.
Rooms sold increased by 4% as a result of the addition of 44 rooms to the City
Lodge V&A Waterfront, a full period contribution from Road Lodge Cape Town
Airport and a one month contribution from the recently opened, 168 room, City
Lodge Umhlanga Ridge. Turnover grew by 14% to R164,8 million and operating
margins improved by 2,1 percentage points to 43,5%.
Higher average cash balances together with lower interest rates resulted in
interest received exceeding that paid by R159 000, compared to the prior
corresponding period"s net interest paid of R1,75 million.
Earnings from the Courtyard Joint Venture were R232 000 below the previous year
which was primarily due to four of the five hotels having benefited from the
World Summit on Sustainable Development in the prior period.
Profit before tax increased by 22% to R72,3 million. Secondary Tax on Companies
rose by 64%, resulting in an effective tax rate of 36,0% compared to 35,2%
previously.
Net profit at R46,3 million was 20% higher which translated into an increase in
fully diluted headline earnings per share of 19% to 109,0 cents. The interim
dividend has been raised to 43 cents from 37 cents previously.
Cash generated by operations grew by 14% to R80,0 million of which R36,7 million
was utilised to fund capital expenditure.
Construction is underway on the 90-room Road Lodge Rustenburg which is expected
to open in June. The group"s "millennium" conversion programme has now been
implemented across the entire City Lodge brand, with City Lodge Morningside due
for completion shortly.
OUTLOOK
The ongoing demand for the group"s value-for-money hotels is likely to continue
which in turn should result in future earnings growth.
ACCOUNTING POLICIES
These unaudited interim financial statements have been prepared in accordance
with South African Statements of Generally Accepted Accounting Practice. The
accounting policies used are consistent with those used in the annual financial
statements for the year ended 30 June 2003.
DECLARATION OF DIVIDEND
Notice is hereby given that ordinary dividend no. 30 of 43,0 cents per share for
the six months ended 31 December 2003 (2002 - 37,0 cents) has been declared.
Shareholders are advised that the last day to trade cum dividend will be Friday,
12 March 2004. The shares will trade ex dividend as from Monday, 15 March 2004
and the record date will be Friday, 19 March 2004 .The dividend is payable on
Tuesday 23 March 2004.
Share certificates may not be dematerialised or rematerialised between Monday,
15 March 2004 and Friday, 19 March 2004, both days inclusive.
For and on behalf of the board
Hans R Enderle
Chairman
Clifford Ross
Chief Executive
13 February 2004
Registered office
38 Wierda Road West
Wierda Valley
Sandton, 2196
Transfer secretaries
Computershare Limited, Investor Services Division
70 Marshall Street, Johannesburg, 2001
Directors: HR Enderle (Chairman), C Ross (Chief Executive)*, DC Coutts-Trotter,
DA Hawton, FWJ Kilbourn, IN Matthews, Dr KIM Shongwe, AC Widegger* *
executive
Company Secretary: AC Widegger
Date: 13/02/2004 02:00:07 PM Produced by the JSE SENS Department
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