City Lodge to report losses in annual results
DURBAN - City Lodge Hotels has warned that it will report losses for the year to end June as the Covid-19 pandemic hit its earnings, particularly in the last three months of the reporting period.
City Lodge said on Friday that it expected its normalised headline earnings to decline by between 126 percent and 132 percent during the year.
As a result, City Lodge expected a normalised headline loss of between R70.1 million and R86.1m, down from last year’s normalised headline earnings of R267.1m and a 25 percent decline in revenue to R1.16 billion, down from R1.55bn compared to last year.
The group said the global economy, and specifically the hospitality industry, had been heavily impacted by the Covid-19 pandemic after President Cyril Ramaphosa declared a national state of disaster on March 15. This was shortly followed by the announcement of strict lockdown protocols and travel restrictions commencing on March 27 and similar lockdown protocols were announced in all other countries in which the company operates.
“These measures resulted in the initial temporary closure of all hotels to the public. Four hotels remained open to provide support to government authorities and essential and critical business
continuity services, and to provide other enabling services in the form of quarantine facilities or to provide accommodation to international tourists unable to return to their home countries,” the group said.
The group also expected its normalised diluted headline earnings per share to decline by between 126 percent and 132 percent, to a loss of between 161.5 cents a share and 198.4c compared to normalised diluted Heps of 613.4c reported last year.
Its basic earnings per share (Eps) was forecast to fall by between 333 percent and 339 percent to a loss of between 1 310.8c and 1 344.5c compared to last year’s basic Eps of 562c with its basic headline earnings per share (Heps) to decline by between 166 percent and 172 percent, to a loss of between 369.6c and 403.3c compared to basic Heps of 561.7c reported last year.
City Lodge's basic Eps results were hurt by exceptional losses of R344.6m net of tax related to the impairment of property, plant and equipment and right-of-use assets of some hotels.
“In addition, we have recognised an impairment of deferred tax assets of R47m. The impairments are due to management’s assessment of the negative impact of Covid-19 on forecast cash flows to be generated by the underlying hotels and increased risk assessments that have had a material impact on the valuation discount rates applied across the portfolio,” the group said.
City Lodge expects to release its full-year results on August 27.