City Lodge Hotels: Unaudited Interim Report for the six months ended December 31, 2021

City Lodge Hotels Limited Registration Number: 1986/002864/06 Incorporated in the Republic of South Africa Share Code: CLH

ISIN: ZAE000117792

(“City Lodge” or the “Company” or the “Group”)

Unaudited interim report for the six months ended December 31, 2021

  • Turnover of R436.0 million in 2021: R215.6 million
  • Overall loss per 6c share 2021: 60c
  • Loss per share 6c 2021: 128c
  • Average occupancy rate of groups 30% 2021: 17%
  • Average occupancy of open hotels Group 34%
    2021: 27%
  • Dividend None 2021: None

Remark

The new fiscal year got off to a particularly tumultuous start due to the severe third wave of Covid-19 infections and hospitalizations caused by the Delta variant. This caused travel hesitancy and Tier 4 lockdown restrictions, which banned leisure travel to and from Gauteng during the key winter school holiday period. Violent civil unrest in South Africa in July increased the negative impact on business operations, albeit temporarily.

As infection rates steadily declined, traveler confidence returned. This had a positive impact on occupancy rates and prices, and resulted in the reopening of additional hotels.

Average occupancy for the interim period of our South African operations, based on total hotel room inventory, was 32%, with a low of 16% in July and a high of 43% in November . The discovery of the Omicron variant in South Africa at the end of November 2021 and the almost overnight closure of international travel routes to South Africa led to a decline in demand, which was significantly taken up by the domestic market for Hobbies. In December 2021, the occupancy rate of all open hotels in South Africa averaged 43% with 53 hotels open and 5 hotels open in the rest of Africa.

Financial analysis

The steady improvement in occupancy rates and demand for hospitality services over the past few months has led to average group occupancy rates for all hotels in the group of 30% for the six month period to in December 2021 (December 2020: 17%) and hotels open by 34% (December 2020: 27%). In December 2021, the group held 92% of the hotels in its portfolio

hotels opened, compared to 74% during the previous period.

Total revenue for the period doubled to R436 million from R215.6 million for the previous period. Operating expenses excluding amortization and impairment were down 11% from the prior six months, but excluding unrealized foreign exchange gains and losses on intercompany loans, were up 40%. Operating costs per room sold

excluding unrealized foreign exchange gains and losses down 22% compared to last year.

The group generated operating profit before interest, tax, depreciation and amortization (EBITDA) for the six months to December 2021 of R122.6 million, compared to an EBITDA loss of R131.7 million. during the previous period.

The group suffered a net loss after tax for the six months ended 31 December 2021 of R33.7 million (2021: R550.4 million), a decrease of 94% compared to the previous year.

The overall loss decreased by 88% to R33.7 million. Overall diluted and undiluted loss per share improved 90% to a loss of 6 cents from an adjusted loss of 60 cents in the prior period.

The results above include the operational performance of the elimination groups in Kenya and Tanzania. The divestitures are subject to the satisfaction of customary conditions precedent, which include competition approvals or consents to anti-trust authorities to the extent legally required. At the end of January 2022, the transaction received unconditional approval from the competition commissions in Kenya and Tanzania. Due to delays in Competition Commission approvals, the long shutdown dates have been extended to May 31, 2022. However, the remaining conditions precedent are being fulfilled and the sale is expected to be finalized by the end of April 2022. .

R320 million of the total outstanding interest-bearing borrowings are due to be repaid within the next 12 months. The proceeds from the sale of the East Africa operations should be used to settle the debt. All initial debt covenants have been waived for all rating periods up to and including September 2022. The new loan-to-value covenant was met for all measurement periods during the reporting period.

Strategic developments

Customers received our enhanced food and beverage offerings with enthusiasm and appetite. Restaurant revenues increased by 128% over the previous year.

Our Best Available Rate (BAR) initiative, launched in June 2021, takes into account market trends and accommodation demands to calculate the best rates for our customers, rather than applying a one-size-fits-all rate philosophy. This benefits our customers by providing them with more competitively priced accommodation at all times, while maximizing group revenue.

To that end, we leverage predictive analytics and machine learning to inform our pricing decisions. Our new BI tool helps analyze key customers, track new business and customize offers for guests, corporate clients and agents.

Outlook

South Africa has remained at Covid-19 Alert Level 1 since October 1, 2021, and on December 30, 2021 the government further removed all curfews and alcohol restrictions. Internationally, some countries in Europe have moved to remove almost all Covid-19 mandates and restrictions. These developments were in response to the significantly reduced severity of infections, hospitalizations and deaths among fully vaccinated people during the fourth wave of infections.

January 2022 occupancy got off to a slow start with an overall group occupancy of 30%, but demand has accelerated as more businesses and government departments return to their offices and travel schedules are resuming to revive operational capacity that has lagged over the past two years. The group has reopened all of its 56 South African hotels and has six

of the seven hotels opened in the Rest of Africa. To date, for the month of February 2022, South African occupations are running at 46%. We expect monthly occupancy to improve and prices to recover over the next two quarters.

The group looks forward to the expected completion of the divestiture of its East Africa operations before the end of April 2022. The proceeds will be applied to strengthen our financial position and enable us to resume hotel renovation plans.

The CLHG family remains committed to providing exceptional accommodation services and welcoming our guests to tantalize their taste buds with our new food and beverage offerings.

Further information

This abbreviated announcement is the responsibility of the administrators and is only a summary of the information contained in the full announcement and does not contain full or complete details. The full announcement is available on the company’s website www.clhg.com. The full announcement can also be accessed directly using the following JSE

link: https://senspdf.jse.co.za/documents/2022/jse/isse/CLH/ie2022.pdf. Any investment decision should be based on the full announcement posted on the JSE link above and on the company’s website.

For and on behalf of the council

Bulelani Ngcuka

Andrew Wideger

President

General manager

officer

February 25, 2022

Headquarters: The Lodge, Bryanston Gate Office Park, corner Homestead Avenue and Main Road, Bryanston, 2191

transfer secretaries; Computershare Investor Services Proprietary Limited, Rosebank Towers, 15 Biermann Avenue, Rosebank, 2196

Directors: BT Ngcuka (Chairman), AC Widegger (Managing Director)*, SJ Enderle^ , GG Huysamer, AR Lapping, FWJ Kilbourn (Vice-Chairman), MSP Marutlulle, N Medupe, SG Morris, D Nathoo*, LG Siddo* *Executive ^South African and Swiss

General Secretary: MC van Heerden

Sponsor: Nedbank Corporate and Investment Banking, a division of Nedbank Limited

www.clhg.com

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