City Lodge is a quality business and has been ever since its inception back in 1985, when it was formed by Swiss hotelier Hans Enderle. The recent interim results to December 31 2018 were disappointing but largely reflect the poor state of the SA economy: fewer corporates are travelling and for shorter periods of time. Ventures into the rest of Africa have been reasonably successful, but here, too, subdued local economies have depressed occupancy levels. Once the SA economy turns, City Lodge is well poised to benefit. The group is very lowly geared and when room occupancies improve, so do rates. Total group revenue rose 3% to R807m, while normalised pre-tax profit decreased 6% to R226m. Operating profit margin is still a very healthy 28.7%, even though it has fallen from the year end figure of 31.2% and the previous interim margin of 32.8%. Fully diluted normalised headline earnings per share fell 6% to 375.1c. The interim dividend was cut by 9% to 229c per share; debt/equity is a l...

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