Wrap Text
Reviewed Group preliminary results for the year ended 30 June 2012
CITY LODGE HOTELS LIMITED
Registration number 1986/002864/06
Share code : CLH
ISIN : ZAE 000117792
www.citylodge.co.za
Reviewed Group preliminary results for the year ended 30 June 2012
COMMENTARY
Occupancies for the current year increased by three percentage points to 59%, whilst occupancies in the second half were five percentage points better than the prior year. Encouragingly, there have been higher occupancies in each of the months since September 2011, than the corresponding month of the prior year.
Revenue for the year rose by 11% to R875.8 million, mainly as a result of the higher occupancies and the resultant increase in the number of rooms sold. Average room rates achieved were marginally higher notwithstanding the group's decision not to raise rates in August 2011.
The normalised EBITDA margin increased by 0.3% points to 42.1% resulting in normalised EBITDA of R368.9 million, an increase of 12% on the previous year. In spite of operating cost pressures, especially from rising electricity tariffs and property rates, operating costs per room sold were contained to a rise of just 3.2%, benefitting from group-wide energy efficiency initiatives introduced over the past year. Electricity costs per room sold were up by just 8.2%.
Depreciation rose by 7.2% and normalised operating profit rose by 13%. Interest income was R2.9 million higher than in the previous year while the interest expense was roughly in line with the prior year. The Courtyard joint venture generated a profit of R948 000 in the second six months, which reduced the loss of R1.1 million at the half year, to a loss of just R125 000 for the full year.
Profit before tax on a normalised basis increased by 14% whilst normalised headline earnings rose by 17% to R191.7 million. Normalised diluted headline earnings per share increased by 17% to 442.8 cents.
Cash generated by operations rose by 15% to R387.4 million.
In line with the group's policy of distributing 60% of normalised earnings, a final dividend of 133 cents has been declared. The total dividend for the year amounts to 268 cents, which is 18% higher than the previous year.
OUTLOOK
The improving occupancy trend has continued into the first two months of the new financial year.
Construction of the 106-room Town Lodge Gaborone in Botswana is progressing well and the hotel is on track for all rooms to be opened by early February 2013.
The joint venture transaction in Kenya, which includes the acquisition of a 50% stake in the Fairview Hotel and the Country Lodge in Nairobi, is now unconditional and a positive contribution to earnings is anticipated in the 2013 financial year.
There is continuing emphasis on investigating expansion opportunities in East and West Africa, as well as in the SADC region and the group is confident that these efforts will be rewarded in the years ahead.
Within South Africa, the hospitality industry continues to experience inconsistent demand along with oversupply in certain areas. Despite this, the group is well positioned for any improvement in market conditions.
BASIS OF PREPARATION
These condensed consolidated financial statements have been prepared in accordance with the recognition and measurement requirements of International Financial Reporting Standards ("IFRS") and with the presentation and disclosure requirements of IAS 34 Interim Financial Reporting, the Listings requirements of the JSE Limited, the AC500 standards issued by the Accounting Practices Board and the Companies Act of South Africa 2008, as amended. These condensed results were prepared under the supervision of Mr AC Widegger CA (SA), in his capacity as group financial director.
The accounting policies used are consistent with those used in the annual financial statements for the year ended 30 June 2011.
AUDIT REVIEW
The group's auditors KPMG Inc. have reviewed these condensed financial statements for the year ended 30 June 2012. The review was conducted in accordance with ISRE 2410: Review of interim financial information performed by the independent auditor of the entity. A copy of their unmodified review report dated 15 August 2012 is available for inspection at the company's registered office.
DECLARATION OF DIVIDEND
The board has approved and declared a final dividend of 133 cents per ordinary share (gross) in respect of the year ended 30 June 2012.
The dividend will be subject to the new Dividends Tax that was introduced with effect from 1 April 2012. In accordance with paragraphs 11.17 (a) (i) to (x) and 11.17(c) of the JSE Listings Requirements the following additional information is disclosed:
- The dividend has been declared out of income reserves;
- The local Dividends Tax rate is 15% (fifteen per centum);
- There are no Secondary Tax on Companies (STC) credits utilised;
- The gross local dividend amount is 133 cents per ordinary share for shareholders exempt from the Dividends Tax;
- The net local dividend amount is 113.05 cents per ordinary share for shareholders liable to pay the Dividends Tax;
- The Company currently has 42 988 803 ordinary shares in issue; and
- The Company's income tax reference number is 9041001711.
Shareholders are advised of the following dates in respect of the final dividend:
Last date to trade cum dividend Friday, 7 September 2012
Shares commence trading ex dividend Monday, 10 September 2012
Record date Friday, 14 September 2012
Payment of dividend Monday, 17 September 2012
Share certificates may not be dematerialised or rematerialised between Monday, 10 September 2012 and Friday, 14 September 2012, both days inclusive.
For and on behalf of the board
Bulelani Ngcuka Clifford Ross
Chairman Chief executive
15 August 2012
Consolidated statement of comprehensive income
(Reviewed) (Audited)
Year Year
R 000's ended ended
30 June % 30 June
2012 change 2011
Revenue 875 822 11 790 198
Administration and marketing costs (63 967) (60 110)
BEE transaction charges Note 2 8 660 (3 805)
Operating costs excluding depreciation (444 785) (400 925)
375 730 15 325 358
Depreciation (78 375) (73 078)
Operating profit 297 355 18 252 280
Interest income 8 602 5 679
Total interest expense (71 491) (67 911)
Interest expense (17 639) (17 726)
Notional interest on BEE shareholder loan Note 2 (2 817) (2 452)
BEE preference dividend Note 2 (51 035) (47 733)
Share of (loss)/profit from joint venture (125) 642
Profit before taxation 234 341 23 190 690
Taxation (84 566) (82 162)
Profit for the period 149 775 38 108 528
Other comprehensive income
Defined benefit plan actuarial losses (8 395) (9 214)
Income tax on other comprehensive income 2 351 2 580
Total comprehensive income for the period 143 731 101 894
SUPPLEMENTARY INFORMATION:
1. Headline earnings reconciliation
Profit for the period 149 775 108 528
Profit on sale of equipment (121) (1 430)
Taxation effect 34 214
Headline earnings 149 688 39 107 312
Number of shares in issue (000's) 42 989 42 929
Weighted average number of shares in
issue for EPS calculation (000's) Note 3 36 437 36 464
Weighted average number of shares in
issue for diluted EPS calculation (000's) Note 3 36 898 36 655
Basic earnings per share (cents)
- undiluted 411,1 38 297,6
- fully diluted 405,9 37 296,1
Headline earnings per share (cents) Note 4
- undiluted 410,8 40 294,3
- fully diluted 405,7 39 292,8
2. Normalised headline earnings reconciliation
Headline earnings 149 688 107 312
BEE transaction charges (8 660) 3 805
- (Profit)/Loss on fair value of interest rate swap (8 964) 3 667
- Sundry expenses 304 138
Notional interest charge on BEE shareholder loan 2 817 2 452
Preference dividends paid/payable by
the BEE entities 51 035 47 733
Deferred tax on BEE transactions (5 078) 553
- Notional interest charge (789) (687)
- STC on preference dividends payable (4 289) 1 240
IFRS 2 share based payment charge for
the 10th anniversary employee share trust 1 867 1 277
Normalised headline earnings 191 669 17 163 132
3. Number of shares (000's)
Weighted average number of shares in
issue for EPS calculation 36 437 36 464
BEE shares treated as treasury shares 6 390 6 390
Weighted average number of shares in
issue for normalised EPS calculation 42 827 42 854
Weighted average number of shares in
issue for diluted EPS calculation 36 898 36 655
BEE shares treated as treasury shares 6 390 6 390
Weighted average number of shares in
issue for diluted normalised EPS calculation 43 288 43 045
4. Normalised headline earnings per share (cents)
- undiluted 447,5 18 380,7
- fully diluted 442,8 17 379,0
5. Dividends declared per share (cents) 268,0 18 228,0
- interim 135,0 9 124,0
- final 133,0 28 104,0
6. Dividend cover (times)
- calculated on normalised headline earnings 1,7 1,7
7. Effective tax rate (%)
- calculated on normalised profit before taxation 31,9 33,2
8. Interest bearing debt to total capital and
reserves (%)
- calculated on a normalised basis 13,7 23,8
9. Return on equity (%)
-calculated on a normalised basis 21,8 19,8
10. Net asset value per share (cents)
- calculated on a normalised basis 2 129 1 958
Note: Net asset value is calculated using the depreciated historical cost of buildings and not the directors current estimated replacement cost of R3.8 billion.
Consolidated statement of financial position
(Reviewed) (Audited)
R000's 30 June 30 June
2012 2011
ASSETS
Non current assets 1 149 887 1 173 923
Property, plant and equipment 1 092 492 1 118 902
Investments in jointly controlled entities 34 285 34 779
Loan receivable 20 046 17 212
Deferred taxation 3 064 3 030
Current assets 142 633 75 733
Inventories 2 772 2 387
Trade receivables 59 965 42 380
Other receivables 17 483 15 436
Cash and cash equivalents 62 413 15 530
Total assets 1 292 520 1 249 656
EQUITY AND LIABILITIES
Capital and reserves 301 712 252 029
Share capital and premium 148 794 147 601
BEE investment and incentive scheme shares (503 145) (486 051)
Retained earnings 563 270 506 913
Other reserves 92 793 83 566
Non-current liabilities 717 731 821 091
Interest-bearing borrowings - 125 000
BEE preference shares 425 100 425 200
BEE shareholder's loan 21 764 18 947
BEE preference share dividend accrual 93 238 64 305
Fair value of BEE interest rate swap 3 464 44 992
Other non-current liabilities 94 581 56 178
Deferred taxation 79 584 86 469
Current liabilities 273 077 176 536
Interest-bearing borrowings 125 000 75 000
Fair value of BEE interest rate swap 46 258 -
Trade and other payables 89 401 94 930
Taxation payable 12 418 6 606
Total liabilities 990 808 997 627
Total equity and liabilities 1 292 520 1 249 656
Note: The company has authorised capital commitments of R129 million of which approximately R20 million has been contracted. It is anticipated that the entire authorised commitments will be spent by 30 June 2013.
Consolidated statement of cash flows (Reviewed) (Audited)
Year ended Year ended
30 June 30 June
R000's 2012 2011
Cash generated by operations 387 355 335 698
Interest received 5 768 3 245
Interest paid (32 615) (34 909)
Taxation paid (83 322) (72 494)
Dividends paid (87 354) (109 727)
Cash inflow from operating activities 189 832 121 813
Cash utilised in investing activities (51 350) (119 206)
-investment to maintain operations (49 421) (29 220)
-investment to expand operations (2 888) (90 576)
-investments and loans 494 (1 618)
-proceeds on disposal of property, plant and equipment 465 2 208
Cash outflow from financing activities (91 599) (29 536)
-proceeds on issue of shares 1 193 2 464
-purchase of incentive scheme shares (17 672) -
-repayment of interest-bearing borrowings (75 000) (30 000)
-redemption of BEE preference shares (100) (2 000)
-distribution by BEE SPV (20) -
Net increase/ (decrease) in cash and cash equivalents 46 883 (26 929)
Cash and cash equivalents at beginning of period 15 530 42 459
Cash and cash equivalents at end of period 62 413 15 530
Consolidated statement of changes in equity
Share capital Treasury Other Retained
R000's and premium shares reserves earnings Total
Balance at 1 July 2010 145 137 (486 051) 78 771 514 746 252 603
Total comprehensive income for the period - - - 101 894 101 894
Profit for the period 108 528 108 528
Recognised IAS 19 gains and losses (6 634) (6 634)
Transactions with owners, recorded directly in equity 2 464 - 4 795 (109 727) (102 468)
Issue of new ordinary shares 2 464 2 464
Share compensation reserve 4 795 4 795
Dividends paid (109 727) (109 727)
Balance at 30 June 2011 147 601 (486 051) 83 566 506 913 252 029
Total comprehensive income for the period - - - 143 731 143 731
Profit for the period 149 775 149 775
Recognised IAS 19 gains and losses (6 044) (6 044)
Transactions with owners, recorded directly 1 193 (17 094) 9 227 (87 374) (94 048)
Issue of new ordinary shares 1 193 1 193
Share compensation reserve 9 805 9 805
Incentive scheme shares (17 094) (578) (17 672)
Dividends paid (87 354) (87 354)
Distribution by BEE SPV (20) (20)
Balance at 30 June 2012 148 794 (503 145) 92 793 563 270 301 712
Segment report
Central office
R000's City Lodge Town Lodge Road Lodge and other Total
2012 2011 2012 2011 2012 2011 2012 2011 2012 2011
Revenue 481 682 423 206 161 851 153 882 214 720 193 891 17 569 19 219 875 822 790 198
EBITDAR 285 274 243 539 78 106 75 587 124 527 109 938 (51 624) (49 514) 436 283 379 550
Land and hotel building rental 60 553 54 192 60 553 54 192
EBITDA 375 730 325 358
Depreciation 25 570 22 532 7 046 7 487 10 609 9 682 35 150 33 377 78 375 73 078
Share of (loss)/profit from Courtyard joint venture (125) 642 (125) 642
EBITDAR represents earnings after BEE transaction charges but before interest, taxation, depreciation and rental.
EBITDA represents earnings after BEE transaction charges but before interest, taxation and depreciation.
Registered office Transfer secretaries
"The Lodge", Bryanston Gate Office Park, Computershare Investor Services
cnr. Homestead Avenue and Main Road (Proprietary )Limited
Bryanston, 2191 70 Marshall Street, Johannesburg, 2001
Directors: BT Ngcuka (Chairman), C Ross (Chief executive)*, FWJ Kilbourn, IN Matthews,
N Medupe, SG Morris, Dr KIM Shongwe, W Tlou, AC Widegger*
Company Secretary: MC van Heerden * executive
Date: 15/08/2012 03:37:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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