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CLH
CLH
CLH - City Lodge Hotels Limited - Unaudited interim results for the six
months ended 31 December 2006
City Lodge Hotels Limited
Registration number 1986/002864/06
Share code: CLH
ISIN: ZAE000001483
Unaudited interim results for the six months ended 31 December 2006
Average occupancies 83 percent
Fully diluted headline EPS up 24 percent
Dividend per share up 24 percent
Income statement
Six months Six months Year
ended ended ended
31 Dec % 31 Dec 30 June
R 000`s 2006 change 2005 2006
Revenue 251 448 15 219 311 442 122
Administration and
marketing
costs (20 782) (17 598) (37 406)
Operating costs (92 132) (85 023) (167 734)
138 534 19 116 690 236 982
Depreciation (13 314) (12 924) (25 469)
Operating profit 125 220 21 103 766 211 513
Interest income 5 993 4 505 9 267
Interest expense (2 860) (2 915) (5 844)
Share of profit from
joint
venture 3 458 1 817 5 347
Profit before 131 811 23 107 173 220 283
taxation
Taxation (44 387) (36 908) (76 359)
Profit for the period 87 424 24 70 265 143 924
Headline earnings
reconciliation
Net profit 87 424 70 265 143 924
Loss on sale of - - 889
equipment
Taxation effect - - (258)
Headline earnings 87 424 70 265 144 555
Number of shares in
issue (000`s) 42 419 42 305 42 368
Weighted average
number of
shares in issue 42 389 42 275 42 300
(000`s)
Fully diluted
weighted average
number of shares in 42 967 42 752 42 777
issue (000`s)
Basic earnings per
share (cents)
- fully diluted 203,5 24 164,4 336,5
- undiluted 206,2 24 166,2 340,2
Headline earnings per
share (cents)
- fully diluted 203,5 24 164,4 337,9
- undiluted 206,2 24 166,2 341,7
Dividend declared per
share (cents) 145,0 24 117,0 238,0
Effective tax rate 33,7 34,4 34,7
(%)
Balance sheet
R 000`s 31 Dec 31 Dec 30 June
2006 2005 2006
ASSETS
Non-current assets 526 370 489 200 501 862
Property, plant and equipment 480 092 443 948 456 086
Investments and loans 43 339 42 388 42 877
Deferred taxation 2 939 2 864 2 899
Current assets 122 317 100 579 105 208
Trade receivables 22 403 20 262 24 092
Other receivables 9 452 10 127 7 274
Cash and cash equivalents 90 462 70 190 73 842
Total assets 648 687 589 779 607 070
EQUITY
Capital and reserves 502 706 441 231 466 519
Share capital and premium 137 025 135 587 136 409
Other reserves 1 722 1 975 2 298
Accumulated profit 363 959 303 669 327 812
LIABILITIES
Non-current liabilities 109 406 104 627 105 944
Interest-bearing borrowings 55 446 54 869 55 153
Other non-current liabilities 5 478 5 892 5 360
Deferred taxation 48 482 43 866 45 431
Current liabilities 36 575 43 921 34 607
Trade and other payables 25 450 28 244 23 957
Taxation 11 125 15 677 10 650
Total equity and liabilities 648 687 589 779 607 070
Interest-bearing debt to total
shareholders` funds (%) 11 12 12
Net asset value per share (cents) 1 185 1 043 1 101
Note: The company has authorised capital commitments of R151 million of
which approximately R32 million has been contracted. It is anticipated that
approximately R77 million will be spent by 30 June 2007.
Summarised cash flow statement
R 000`s
31 Dec 31 Dec 30 June
2006 2005 2006
Cash generated by 142 831 121 114 240 844
operations
Net interest received 3 133 1 376 3 423
Dividends paid (51 277) (46 103) (95 619)
Taxation paid (40 901) (38 008) (80 832)
Cash inflow from 53 786 38 379 67 816
operating activities
Cash utilised in (37 782) (23 954) (50 561)
investing activities
- investment to (8 293) (4 852) (9 004)
maintain operations
- investment to expand (29 027) (19 102) (40 830)
operations
- investments and loans (462) - (727)
Cash flows from 616 810 1 632
financing activities
Net cash increase 16 620 15 235 18 887
Statement of recognised
gains and losses
R 000`s Six Six Year ended
months months
ended ended
31 Dec 31 Dec 30 June
2006 2005 2006
Actuarial loss on
defined benefit plan
recognised directly in (1 405) - (302)
equity
Profit for the period 87 424 70 265 143 924
Total recognised gains
and losses
for the period 86 019 70 265 143 622
Reconciliation of movement in
capital and reserves
Share Other Accumulated
capital
R000`s and profit Total
premium reserves
Balance at 30 June 134 777 1 378 279 507 415 662
2005
Issue of new ordinary 810 810
shares
Net profit for the 70 265 70 265
period
Share compensation 597 597
reserve
Dividends paid (46 103) (46 103)
Balance at 31 135 587 1 975 303 669 441 231
December 2005
Issue of new ordinary 822 822
shares
Net profit for the 73 659 73 659
period
Recognised gains and (302) (302)
losses
Share compensation 625 625
reserve
Dividends paid (49 516) (49 516)
Balance at 30 June 136 409 2 298 327 812 466 519
2006
Issue of new ordinary 616 616
shares
Net profit for the 87 424 87 424
period
Recognised gains and (1 405) (1 405)
losses
Share compensation 829 829
reserve
Dividends paid (51 277) (51 277)
Balance at 31 137 025 1 722 363 959 502 706
December 2006
Commentary
Results
Continued strong trading conditions enabled the group to boost average room
occupancy levels to a record high of 83% in the six months to 31 December
2006. This compares with 80% in the previous interim period and 79% in the
previous financial year.
The only additional capacity relative to the prior interim period was the
120-room Town Lodge George which opened in the first quarter of 2006.
Despite the lack of new capacity, the higher occupancies and higher
achieved room rates at the group`s four brands - Courtyard, City Lodge,
Town Lodge and Road Lodge - led to revenue increasing by 15% to R251,5
million.
The higher occupancies contributed to an increase in the operating margin
which resulted in operating profit improving by 21%. As a result of higher
average cash balances and higher interest rates, interest received
increased to R6,0 million from R4,5 million whilst interest paid was in
line with the prior year.
The combination of higher occupancies and higher achieved room rates also
resulted in a significant improvement in the contribution from the
Courtyard joint venture, which rose by 90%, to R3,5 million.
The group`s effective tax rate declined marginally to 33,7% from 34,4% and
is above the standard corporate tax rate of 29% due to the STC charge on
dividends paid during the period.
Profit for the period increased by 24% to R87,4 million resulting in a 24%
rise in fully diluted headline earnings per share to 203,5 cents. An
interim dividend of 145 cents per share has been declared compared to 117
cents in the previous first half.
Cash generated by operations grew by 18% to R142,8 million.
Outlook
The group has entered its biggest expansion phase for many years, which
will see the number of hotels increasing from 38 to 42 and the number of
rooms increasing by 603 to 4 772 rooms.
The total investment in new hotels and additions to existing hotels will be
approximately R171 million of which R20 million has been spent to date.
The 106-room Town Lodge Roodepoort was fully opened in January and its
early trading has been encouraging. Weather related delays have held back
the opening of the 90-room Road Lodge East London - the group`s 40th hotel
- but it should be fully operational during March 2007.
Earthworks have begun on the 118-room Road Lodge Centurion and will
commence shortly for the development of the 90-room Road Lodge Richards
Bay. Both hotels are expected to be operational during the last quarter of
the calendar year.
The extension to Road Lodge Germiston - increasing it to 98 rooms from 68
rooms - will be completed by the end of the month and work has begun on
increasing capacity at Courtyard Port Elizabeth by 27 rooms for completion
in about October 2007.
Work will also commence in this quarter for the addition of 60 rooms to
City Lodge Airport - Johannesburg for completion during the last quarter of
2007. Final approvals are being sought from local authorities to expand
Road Lodge Nelspruit by 24 rooms and City Lodge GrandWest by 58 rooms. It
is anticipated that both extensions will be completed by the end of
calendar 2007 or early 2008.
Additional expansion opportunities still exist in various parts of the
country and the group is continually seeking and evaluating suitable sites.
The group has embarked upon a formal process to introduce significant BEE
ownership.
Favourable trading conditions are expected for the remainder of the
financial year, whilst the addition of new capacity bodes well for longer
term earnings prospects.
Given the current expansion programme and the BEE initiatives underway, the
board has resolved to retain its existing dividend policy of a 70 percent
payout ratio.
Declaration of dividend
Notice is hereby given that ordinary dividend no. 36 of 145.0 cents per
share for the six months ended 31 December 2006 (2005 - 117,0 cents) has
been declared.
Shareholders are advised that the last day to trade cum dividend will be
Thursday, 15 March 2007. The shares will trade ex dividend as from Friday,
16 March 2007 and the record date will be Friday, 23 March 2007. The
dividend is payable on Monday, 26 March 2007.
Share certificates may not be dematerialised or rematerialised between
Friday, 16 March 2007 and Friday, 23 March 2007, both days inclusive.
Basis of preparation
These condensed, unaudited interim financial statements have been prepared
in accordance with the recognition and measurement requirements of
International Financial Reporting Standards ("IFRS") and 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 2006.
For and on behalf of the board
Hans R Enderle Clifford Ross
Chairman Chief executive
15 February 2007
Registered office: "The Lodge" Bryanston Gate Office Park,
cnr. Homestead Avenue and Main Road, Bryanston
Transfer secretaries: Computershare Investor Services 2004
(Pty) Limited, 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: MC van Heerden
www.citylodge.co.za
15 February 2007
Sponsor: J.P.Morgan Equities Limited
Date: 15/02/2007 14:38:01 Produced by the JSE SENS Department.
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