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CLH
CLH
City Lodge Hotels Limited - Unaudited Interim Results For The Six Months Ended
31 December 2005
CITY LODGE HOTELS LIMITED
Registration number 1986/002864/06
Share code: CLH
ISIN: ZAE000001483
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2005
- Average occupancies 80%
- Fully diluted headline EPS up 25%
- Dividend per share up 24%
INCOME STATEMENT
(Restated) (Restated)
Six months Six months Year
ended ended ended
31 Dec % 31 Dec 30 June
R000"s 2005 change 2004 2005
Revenue 219 311 13 194 296 390 934
Administration and
marketing costs (17 598) (15 654) (31 363)
Operating costs (85 023) (79 026) (153 269)
116 690 17 99 616 206 302
Depreciation and
amortisation (12 924) (12 909) (24 892)
Operating profit 103 766 20 86 707 181 410
Interest income 4 505 3 503 7 508
Interest expense (2 915) (1 653) (4 138)
Income from joint
venture 1 817 1 218 3 151
Profit before
taxation 107 173 19 89 775 187 931
Taxation (36 908) (33 630) (65 342)
Net profit 70 265 25 56 145 122 589
Number of shares in
issue (000"s) 42 305 42 194 42 214
Weighted average
number of shares in
issue (000"s) 42 275 42 166 42 186
Basic and headline
earnings per share
(cents)
- fully diluted 164,4 25 131,7 287,4
- undiluted 166,2 25 133,2 290,6
Dividend declared per
share (cents) 117,0 24 94,0 203,0
Effective tax
rate (%) 34,4 37,5 34,8
Note: Net profit equates to headline earnings and therefore no reconciliation is
required.
BALANCE SHEET
(Restated) (Restated)
31 Dec 31 Dec 30 June
R000"s 2005 2004 2005
ASSETS
Non-current assets 489 200 472 160 477 580
Property, plant and equipment 443 948 427 820 432 610
Investments and loans 42 388 41 468 42 150
Deferred taxation 2 864 2 872 2 820
Current assets 100 579 55 146 82 544
Trade receivables 20 262 17 338 19 741
Cash 70 190 29 233 54 955
Other 10 127 8 575 7 848
Total assets 589 779 527 306 560 124
EQUITY AND LIABILITIES
Shareholders" funds 441 231 387 983 415 662
Share capital and premium 135 587 134 573 134 777
Accumulated profit 303 669 252 744 279 507
Other reserves 1 975 666 1 378
Non-current liabilities 104 627 103 433 102 801
Deferred taxation 43 866 40 373 41 486
Borrowings 54 869 54 218 54 537
Other 5 892 8 842 6 778
Current liabilities 43 921 35 890 41 661
Accounts payable and accruals 28 244 23 687 22 548
Taxation 15 677 12 203 19 113
Total equity and liabilities 589 779 527 306 560 124
Interest-bearing debt to total
shareholders" funds (%) 12 14 13
Net asset value per share (cents) 1 043 920 985
Note: The company has authorised capital commitments of R82,0 million of which
approximately R21 million has been contracted. It is anticipated that
approximately R48 million will be spent by 30 June 2006.
SUMMARISED CASH FLOW
(Restated) (Restated)
Six months Six months Year
ended ended ended
31 Dec 31 Dec 30 June
R000"s 2005 2004 2005
Cash generated by operations 121 114 94 627 199 193
Net interest received 1 376 1 381 2 395
Dividends paid (46 103) (52 712) (92 393)
Taxation paid (38 008) (29 314) (53 065)
Net cash inflow from
operating activities 38 379 13 982 56 130
Cash utilised in investing
activities (23 954) (4 920) (21 869)
- investment to maintain
operations (4 852) (4 863) (20 743)
- investment to expand
operations (19 102) (57) (1 126)
Cash effects of financing
activities 810 (6 061) (5 538)
Net cash increase 15 235 3 001 28 723
STATEMENT OF RECOGNISED GAINS AND LOSSES
Six months Six months Year
ended ended ended
31 Dec 31 Dec 30 June
R000"s 2005 2004 2005
Actuarial gains on defined
benefit plan - - 280
Net income recognised directly
in equity - - 280
Restated net profit and
reserves for the period 70 265 56 145 66 444
Net profit for the year as
previously reported 70 265 56 909 65 889
Straight-lining of operating
leases (169) -
IFRS adjustments - IAS 19 (323) (432)
- IFRS 2 39 1 287
Prior period adjustments (311) (300)
Total recognised income and
expenses for the period 70 265 56 145 66 724
RECONCILIATION OF MOVEMENT IN CAPITAL AND RESERVES
Share capital Other Accumulated
R000"s and premium reserves profit Total
Balance
at 30 June 2004 as previously
reported 133 736 - 257 123 390 859
Adjustments at
1 July 2004:
IFRS adjustments
- IAS 19 343 (343) -
- IFRS 2 (2 840) (2 840)
Prior period
adjustments (4 629) (4 629)
Restated balance
at 1 July 2004 133 736 343 249 311 383 390
Issue of new
ordinary shares 837 837
Recognised gains
and losses 56 145 56 145
Share compensation
reserve 323 323
Dividends paid (52 712) (52 712)
Restated balance at
31 December 2004 134 573 666 252 744 387 983
Issue of new
ordinary shares 204 204
Recognised gains
and losses 280 66 444 66 724
Share compensation
reserve 432 432
Dividends paid (39 681) (39 681)
Restated balance
at 30 June 2005 134 777 1 378 279 507 415 662
Issue of new
ordinary shares 810 810
Net profit for
the period 70 265 70 265
Share compensation
reserve 597 597
Dividends paid (46 103) (46 103)
Balance at
31 December 2005 135 587 1 975 303 669 441 231
COMMENTS
Buoyant trading conditions stimulated by the strong domestic economy enabled the
group to achieve highly satisfactory results for the six months to 31 December
2005. Average occupancies rose three percentage points from the previous interim
period to 80%, the highest level since 1996. All four of the group"s brands
contributed to this increase.
Despite no new hotels being opened during the period, higher occupancies led to
more rooms being sold which, together with higher achieved average room rates,
resulted in revenue increasing by 13% to R219,3 million.
The higher occupancies contributed to an improvement in the operating profit
margin which had the effect of increasing the operating profit by 20%.
Interest received increased to R4,5 million from R3,5 million due to higher
average cash balances, but interest paid also increased by R1,3 million to R2,9
million as a result of the once-off credit to interest paid of R2,3 million in
the previous year, which arose following the refinancing of certain of the long-
term borrowings.
Higher Courtyard occupancies boosted income from the joint venture by 49% to
R1,8 million.
The effective tax rate for the group decreased by three percentage points to
34,4% as a direct result of the lower corporate tax rate as well as a lower STC
charge brought about by the change in dividend policy which came into effect in
the prior period.
Net profit increased by 25% to R70,3 million resulting in a 25% rise in fully
diluted headline earnings per share to 164,4 cents from 131,7 cents. An interim
dividend of 117,0 cents per share was declared compared to 94 cents in the
previous first half.
Cash generated by operations grew by 28% to R121,1 million, contributing to a
cash balance of R70,2 million at 31 December 2005.
OUTLOOK
The first 30 rooms of the 120-room Town Lodge George have opened and the hotel
will be fully operational by early March. Construction has begun on the 106-room
Town Lodge Roodepoort which is scheduled to open by the fourth quarter of the
calendar year.
An agreement has been signed for the purchase of a site in East London on which
a 90-roomed Road Lodge will be built. These three projects represent an
investment of R93 million.
Significant expansion opportunities still exist in various parts of South Africa
and the group continues to seek suitable sites to expand its footprint which
currently comprises 38 hotels offering 4,169 rooms across all nine provinces. In
addition, the extension of certain existing hotels is currently being planned.
Favourable trading conditions are anticipated for the remainder of the financial
year, albeit that, on a comparable basis, the group enjoyed very buoyant demand
in the corresponding period last year.
DIRECTORATE
Messrs Buddy Hawton and David Coutts-Trotter resigned from the board following
the disposal by Sun International Limited of its shareholding in the company.
The board is pleased to announce the appointment of Mrs Ndumi Medupe and Mr
Stuart Morris as independent non-executive directors with effect from 1 March
2006.
BASIS OF PREPARATION
These condensed interim financial statements have been prepared in accordance
with International Financial Reporting Standards ("IFRS") with the date of
transition to IFRS for the group being 1 July 2004. Current application of IFRS
may differ from that applied at 30 June 2006 due to ongoing review. Should the
application change, the reported results may also change.
These are the group"s first interim financial statements prepared in accordance
with IFRS and therefore in terms of IFRS 1 First time adoption of IFRS, the
group has restated the opening reserves at 1 July 2004, the consolidated balance
sheets as at 31 December 2004 and 30 June 2005 and the consolidated income
statements and cash flow statements for the periods then ended.
EFFECT OF THE FIRST TIME ADOPTION OF IFRS
IAS 19 - Employee benefits
IFRS 1 allows an option for a once-off recognition of all existing actuarial
gains and losses at the transitional balance sheet date without having to change
the accounting policy of the entity. The group has elected to recognise all
actuarial gains and losses at date of transition. The group has also elected to
recognise all existing actuarial gains and losses as they arise, directly in
equity in a statement of recognised gains and losses.
IFRS 2 - Share based payments
In accordance with the transitional provisions, the group has elected to apply
IFRS 2 to all grants of equity-settled awards granted after 7 November 2002,
which were unvested as of 1 July 2004. Expenses relating to share-based payments
are now recognised in the income statement.
PRIOR PERIOD ADJUSTMENTS
The revised IAS 16 Property, plant and equipment now emphasises that property,
plant and equipment should be componentised and useful lives and residual values
considered. Accordingly, depreciation rates have been adjusted to align with the
revised IAS 16.
The net effect of the asset replacement reserves previously created in the
joint ventures has been reversed, resulting in an increase in joint venture
earnings for the period and a resultant tax charge.
DECLARATION OF DIVIDEND
Notice is hereby given that ordinary dividend no. 34 of 117,0 cents per share
for the six months ended 31 December 2005 (2004 - 94,0 cents) has been declared.
Shareholders are advised that the last day to trade cum dividend will be Friday,
17 March 2006. The shares will trade ex dividend as from Monday, 20 March 2006
and the record date will be Friday, 24 March 2006 .The dividend is payable on
Monday 27 March 2006.
Share certificates may not be dematerialised or rematerialised between Monday,
20 March 2006 and Friday, 24 March 2006, both days inclusive.
For and on behalf of the board
Hans R Enderle Clifford Ross
Chairman Chief executive
17 February 2006
Registered office Transfer secretaries
38 Wierda Road West Computershare Investor Services 2004
Wierda Valley (Pty) Limited
Sandton, 2196 70 Marshall Street, Johannesburg, 2001
Directors: H R Enderle (Chairman), C Ross (Chief executive)*, F W J Kilbourn, I
N Matthews, Dr K I M Shongwe, A C Widegger*
Company Secretary: M C van Heerden * Executive
Date: 17/02/2006 05:02:29 PM Produced by the JSE SENS Department
