City Lodge H1 dil HEPS up 104% to 206.1c (2)

City Lodge operating profit up 37% to R146.8m

City Lodge interim dividend 150c

City Lodge Hotels on Thursday reported diluted headline earnings per share of 206.1 cents for the six months ended December 2009, up 104% from 100.8 cents a year ago. However, normalised headline earnings fell by 14% to R106.1 million and fully diluted normalised headline earnings per share also decreased by 14% to 246.1 cents per share.

Despite weak trading conditions as a result of the slump in the domestic and global economies, City Lodge's turnover slipped just 1% to R339 million. Operating profit was 37% higher at R146.8 million.

An interim dividend of 150 cents was declared, 26% lower than in the previous corresponding period, due to a reduction in the payout ratio from 70% to 60% of normalised headline earnings.

While occupancies across the group's four brands - Courtyard, City Lodge, Town Lodge and Road Lodge - fell to 70% from 81% a year earlier, they remained well above the South African hotel industry average.

Meanwhile, the group said the biggest ever expansion programme in its near-25 history is on track to lift its number of hotels to 52 with 6,442 rooms by the end of 2010. The group currently has 44 hotels offering 4,989 rooms.

In the second half of the current financial year to June 30, it will fully open City Lodge Fourways (211 rooms), City Lodge at OR Tambo Airport (303 rooms), Road Lodge Bloemfontein Airport (66 rooms), Road Lodge Port Elizabeth (90 rooms) and Road Lodge Southgate (118 rooms).

It will also partially open City Lodge Lynnwood (205 rooms), with half of is rooms expected to be available for the 2010 FIFA Soccer World Cup, and add 70 rooms to Town Lodge Grayston.

By the end of calendar 2010, it will fully open City Lodge Lynnwood, City Lodge Hatfield (187 rooms) and Town Lodge Port Elizabeth (203 rooms).

The group continues to research opportunities in other parts of the world, including in neighbouring countries and in emerging markets, such as India.

Commenting on the upcoming 2010 FIFA Soccer World Cup, City Lodge CEO Clifford Ross said the group is "fully primed and prepared" for the event, which will straddle the current financial year and the 2011 financial year.

"Bookings for the duration of the tournament are looking promising, especially in the major host cities. In the smaller cities, there are still rooms available for normal business and leisure travel throughout the tournament," he said.

"It is important to note that throughout the event in all parts of the country, there are opportunities for normal business travel to take place, keeping the wheels of commerce and industry turning."

Ross said that while trading conditions remained tough in January and the first half of February, it was anticipated that demand for hotel accommodation could increase in the lead-up to the Soccer World Cup, enabling the group to achieve an improved performance in the second half of the financial year.

Source: I-Net Bridge