| Wed 16 Aug 2006, 14:30 | | City Lodge Hotels Limited - Reviewed Group Prelimi |
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CLH
CLH
City Lodge Hotels Limited - Reviewed Group Preliminary Results For
The Year Ended 30 June 2006
CITY LODGE HOTELS LIMITED
Registration number 1986/002864/06
Share code: CLH & ISIN: ZAE000001483
Reviewed group preliminary results for the year ended 30 June 2006
- Average occupancies 79%
- HEPS + 18%
- Dividends + 17%
INCOME STATEMENT
(Restated)
Year Year
R 000"s ended ended
30 June % 30 June
2006 change 2005
Revenue 442,122 13 390,934
Administration and marketing costs (37,406) (31,363)
Operating costs (167,734) (153,269)
236,982 15 206,302
Depreciation & amortisation (25,469) (24,892)
Operating profit 211,513 17 181,410
Interest income 9,267 7,508
Interest expense (5,844) (4,138)
Income from joint venture 5,347 3,151
Profit before taxation 220,283 17 187,931
Taxation (76,359) (65,342)
Net profit 143,924 17 122,589
Headline earnings reconciliation
Net profit 143,924 122,589
Loss on sale of equipment 889 -
Taxation effect (258) -
Headline earnings 144,555 18 122,589
Number of shares in issue (000"s) 42,368 42,214
Weighted average number of
shares in issue (000"s) 42,300 42,186
Basic earnings per share (cents)
fully diluted 336.5 17 287.4
undiluted 340.2 17 290.6
Headline earnings per share (cents)
fully diluted 337.9 18 287.4
undiluted 341.7 18 290.6
Dividends declared per share
(cents) 238.0 17 203.0
Effective tax rate (%) 34.7% 34.8%
BALANCE SHEET
(Restated)
R000"s 30 June 30 June
2006 2005
ASSETS
Non current assets 501,862 477,580
Property, plant and equipment 456,086 432,610
Investments and loans 42,877 42,150
Deferred taxation 2,899 2,820
Current assets 105,208 82,544
Trade receivables 24,092 19,741
Cash 73,842 54,955
Other 7,274 7,848
Total assets 607,070 560,124
EQUITY AND LIABILITIES
Shareholders" funds 466,519 415,662
Share capital and premium 136,409 134,777
Accumulated profit 327,812 279,507
Other reserves 2,298 1,378
Non current liabilities 105,944 102,801
Borrowings 55,153 54,537
Other 5,360 6,778
Deferred taxation 45,431 41,486
Current liabilities 34,607 41,661
Accounts payable and accruals 23,957 22,548
Taxation 10,650 19,113
Total equity and liabilities 607,070 560,124
Interest bearing debt to total
shareholders" funds (%) 12 13
Net asset value per share (cents) 1,101 985
Note : The company has authorised capital commitments of R143 million of
which approximately R41 million has been contracted. It is anticipated that
approximately R128 million will be spent by 30 June 2007
CASH FLOW STATEMENT
(Restated)
30 June 30 June
R000"s 2006 2005
Cash generated by operations 240,844 199,193
Net interest received 3,423 3,370
Dividends paid (95,619) (92,393)
Taxation paid (80,832) (53,065)
Net cash inflow from operating
activities 67,816 57,105
Cash utilised in investing
activities (50,561) (22,844)
- investment to maintain operations (9,004) (20,393)
- investment to expand operations (40,830) (1,126)
- increase in investments and loans (727) (1,325)
Cash effects of financing
activities 1,632 (5,538)
Net increase in cash 18,887 28,723
RECONCILIATION OF MOVEMENT IN CAPITAL AND RESERVES
Share
capital Accu-
R"000 and Other mulated
premium Reserves profit Total
Balance as previously
reported at
30 June 2004 133,736 257,123 390,859
Adjustments at
1 July 2004:
IFRS adjustments
- IAS 19 (2,840) (2,840)
- IFRS 2 343 (343) -
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 1,041 1,041
Recognised gains
and losses 280 122,589 122,869
Share compensation
reserve 755 755
Dividends paid (92,393) (92,393)
Restated balance at
30 June 2005 134,777 1,378 279,507 415,662
Issue of new ordinary
shares 1,632 1,632
Net profit for the
period 143,924 143,924
Recognised gains and
losses (302) (302)
Share compensation
reserve 1,222 1,222
Dividends paid (95,619) (95,619)
Balance at 30 June 2006 136,409 2,298 327,812 466,519
STATEMENT OF RECOGNISED GAINS AND
LOSSES
(Restated)
Year ended Year ended
30 June 30 June
2006 2005
Actuarial (loss)/gain on defined
benefit plan (302) 280
Net income recognised directly in
equity (302) 280
Net profit and reserves for
the period 143,924 122,589
Total recognised income and
expenses for the period 143,622 122,869
RECONCILIATION OF OPENING ACCUMULATED PROFIT
30 June 30 June
2006 2005
Accumulated profit at beginning of year
under SA GAAP as previously reported 287,359 257,123
(2,612) (3,183)
IFRS adjustments
- recognition of actuarial losses (IAS 19) (1,514) (2,840)
- recognition of share based payments
(IFRS 2) (1,098) (343)
Prior period adjustments (5,240) (4,629)
Accumulated profit at beginning of year
under IFRS as currently reported 279,507 249,311
RECONCILIATION OF NET PROFIT
Year ended
30 June
2005
Profit under SA GAAP for the year ended
30 June 2005 as previously reported 122,629
571
IFRS adjustments
- recognition of actuarial gains (IAS 19) 1,326
- recognition of share based payments (IFRS 2) (755)
Prior period adjustments (611)
Profit under IFRS for the year ended
30 June 2005 as currently reported 122,589
COMMENTS
The group produced very satisfactory results for the year to 30 June 2006,
aided by the buoyant domestic economy and strong demand for quality hotel
accommodation from both business and leisure travelers.
This strong performance, which saw average occupancies rise to 79% from 77%
a year earlier, was achieved with only one new hotel coming on stream. The
120-room Town Lodge George, the 38th hotel in the group, opened in March.
Occupancies in the second half were marginally below the first half of the
financial year, partly due to there being more public holidays in the second
half, including this year the March mid-week public holiday for municipal
elections and partly due to the slower than expected start for Town Lodge
George.
The number of rooms sold during the year rose due to the higher occupancies
and the new capacity in George. This contributed to revenues rising by 13%
to R442.1 million. The higher occupancies also contributed to an improvement
in the operating profit margin which led to operating profit increasing by
17%.
While interest received increased by R1.8 million due to higher cash
balances, interest paid increased by R1.7 million due to a once-off credit
to interest paid of R2.3 million in the previous year following the
refinancing of certain of the long-term borrowings.
There was a meaningful improvement in income from the Courtyard Joint
Venture with the combination of higher occupancies and higher achieved
average room rates resulting in an increase in the contribution of 70% to
R5.3 million.
The group"s effective tax rate at 34.7% was in line with the previous year
and is above the standard corporate tax rate of 29% due to the STC charge on
dividends paid during the period.
Net profit increased by 17% to R143.9 million, which translated into an 18%
increase in fully diluted headline earnings per share to 337.9 cents.
A final dividend of 121.0 cents has been declared bringing total shareholder
distribution for the year to 238.0 cents, an increase of 17% on the previous
year.
OUTLOOK
Although Town Lodge George has experienced a slow start, its occupancies are
expected to improve as it establishes a presence for itself in that market.
Construction is well under way on the 106-room Town Lodge Roodepoort which
is scheduled to open in the last quarter of this calendar year. Construction
has also started on the 90-room Road Lodge East London with the first rooms
expected to open prior to Christmas and full opening scheduled for January
next year.
The addition of 24 rooms to Road Lodge Germiston will commence shortly and a
site has been acquired in Richards Bay where a 90-room Road Lodge will be
built once the necessary regulatory approvals are in place.
With a view to further expansion, appropriate sites around the country
continue to be evaluated and the extension of a further three existing
hotels is currently under consideration.
While the group"s earnings are coming off a high base, driven by high
occupancy levels, the addition of new capacity and the continuation of
favourable trading conditions should result in satisfactory earnings growth
in the year ahead.
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") with the date of transition to IFRS for the
group being 1 July 2004 and have been prepared in accordance with the
presentation and disclosure requirements of IAS 34 Interim Financial
Reporting.
These are the group"s first annual 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 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 early adopted an amendment to IAS 19 and 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.
AUDIT REVIEW
The group"s auditors KPMG Inc. have reviewed the preliminary results for the
year ended 30 June 2006. 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 no. 35 of 121.0 cents per
share for the year ended 30 June 2006 has been declared.
Shareholders are advised that the last day to trade cum dividend will be
Friday, 15 September 2006. The shares will trade ex dividend as from Monday,
18 September 2006 and the record date will be Friday, 22 September 2006. The
dividend is payable on Tuesday 26 September 2006.
Share certificates may not be dematerialised or rematerialised between
Monday, 18 September 2006 and Friday, 22 September 2006, both days
inclusive.
For and on behalf of the board
Hans R Enderle Clifford Ross
Chairman Chief executive
16 August 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: HR Enderle (Chairman), C Ross (Chief executive)*, FWJ Kilbourn,
IN Matthews, N Medupe, SG Morris, Dr KIM Shongwe, AC Widegger*
* executive
Company Secretary: M C van Heerden
Sponsor: J.P.Morgan Equities Limited
Date: 16/08/2006 02:30:09 PM Produced by the JSE SENS Department
