City Lodge results yesterday

City Lodge results yesterday, they were pretty well telegraphed in a trading update not so long ago. 750 million Rands in sales. Earnings per share of 459 cps, dividends for the full year 327 cents, the final dividend showing a 12 percent increase on this time last year, but flat for the year. 1.7 times dividend cover, which is handsome by any measure, but lower than last year's 1.5 times, that is largely due to more debt as a result of a ramp up and an empowerment transaction. The board values the replacement cost of the buildings at 3.5 billion Rands,
that is above the current market cap of 3.3 billion Rands. Even though NAV is at 1882 cps, but that uses as per the SENS "the depreciated historical cost of buildings".



City Lodge's interest bill has picked up, as you would expect, their maintenance bill halved but their ramp up bill ("investment to expand operations") increased more than fourfold to 314 million Rands. Think 7 more hotels, the big three being Lynwood, OR Tambo airport and Fourways. OK, into the operational nitty gritty, occupancies at 70 percent versus 77 percent last year. But remember that there are 24 percent more rooms, so on pure number of rooms sold, much better.



The commentary for the next year and a half is muted, after having admitted that the World Cup was disappointing: "While it is difficult to predict, trading conditions are not expected to normalise until the second half of 2011. The significantly enlarged group is well positioned to benefit from any upturn in the economy." And the only big surprise is that they mention India as a place that looks like it has potential. Along with existing markets.