Finweek English Edition - - Companies & markets - MICHAEL COUL­SON

THE SIX MONTHS TO De­cem­ber ex­tended this com­pany’s re­mark­able growth record, with a best-ever room oc­cu­pancy of 83% (80% a year be­fore). Even though there were only 120 more rooms than a year ago, as the only open­ing was the Ge­orge Town Lodge, rev­enue rose a healthy if not ex­cit­ing 15%.

But thanks to tight cost con­trol, this was topped by a 21% gain at op­er­at­ing level, and with a marginally lower tax rate HEPS rose 24% to give a rolling 12-month fig­ure of 377c. The in­terim div­i­dend is up from 117c to 145c, to make 266c for the past 12 months, in line with the pol­icy to dis­trib­ute about 70% of avail­able earn­ings. A for­mal process has been started to in­tro­duce a “sig­nif­i­cant” BEE own­er­ship. OP­POR­TU­NI­TIES City Lodge says it’s en­tered its big­gest ex­pan­sion phase for many years, which will see the num­ber of ho­tels grow from 38 to 42 and the num­ber of rooms from 4 169 to 4 772. The to­tal cost of this pro­gramme will be about R171m, of which R20m has al­ready been spent. • The com­pany is con­tin­u­ing to look for fur­ther pos­si­ble ex­pan­sion sites. Like most of the leisure sec­tor, City Lodge should ben­e­fit from the 210 Soc­cer World Cup. In the shorter term, City Lodge says trad­ing con­di­tions for the rest of the fi­nan­cial year should re­main “favourable”. RISKS Frankly, none are ap­par­ent, though there’s al­ways the po­ten­tial for an ad­verse re-rat­ing of the share (un­likely) or a gen­eral mar­ket down­turn (un­con­trol­lable). But in­vestors must al­ways re­mem­ber that even the best run com­pa­nies can en­counter un­ex­pected set­backs – there’s no such thing as a risk-free in­vest­ment.


Source: I-Net Bridge

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