JOHANNESBURG, September 11, 2025: As City Lodge Hotels celebrates its 40^th year, the focus has been on sustainable investment in its well-equipped portfolio of 58 hotels, with 30% of the rooms either newly constructed or refurbished within the last eight years. In the year under review, the group has invested in six newly renovated and modernised hotels, and the commercial areas at two hotels, which has helped to drive strong, above inflation, room rate growth of 7%.

Highlights of the annual results for the year to 30 June 2025, announced today (11 September) are as follows:

• Revenue: R2.0bn (up 3%); 2024: R1.9bn
• Group occupancy: 56% (down 2% points); 2024: 58%
• Adjusted EBITDAR: R589m (up 0.4%); 2024: R586m
• Profit for the year: R213m (up 13%); 2024: R189m
• Earnings per share (diluted): 38.3c (up 15%); 2024: 33.2c
• Headline earnings per share (diluted): 33.1c; 2024: 33.2c
• Adjusted headline earnings per share (diluted): 34.6c (up 9%); 2024: 31.8c
• Return on equity: 17.5% (up 1% point) 2024: 16.5%
• Dividends:
• • Final: 9c; 2024: 9c
  • Interim: 6c; 2024: 6c

Andrew Widegger, Chief Executive Officer, reports, “City Lodge Hotels has navigated the complex, shifting international and local economic pressures and delivered a stable performance during the year. The group has invested in eight new strategic refurbishments, a refreshed website, returned value to shareholders by repurchasing R30 million of our shares, declaring steady dividends, and remains debt free and ready to capitalise on growth opportunities in key strategic locations.”

However, he notes that global geo-political tensions, uncertainty of trade tariffs and international relations with the US, and reduced NGO funding have disrupted international travel patterns, and investor interest in South Africa.

“Whilst there are encouraging shoots for growth in the South African economy from interest rate cuts, low inflation and a more stable electricity supply, the political noise of the Government of National Unity (GNU) continues to curb economic prospects. Business and investor confidence ebbed and flowed to the rollercoaster of GNU sustainability concerns, and the unprecedented political challenges,” he adds.

Regionally, the group’s hotels in the Western Cape, Free State and Gauteng have experienced above average growth in revenue. Refurbishments at four hotels in the Western Cape were completed, which has enabled strong growth in room rates. KwaZulu Natal occupancies have remained subdued, but has seen some positive movement in the last few months. The delivery of the refurbished City Lodge Hotel (CL) Umhlanga Ridge has been well-received and has already experienced good rate growth due to the refreshed product.

Financial Review

Dhanisha Nathoo, Chief Financial Officer, shares how the group has fared financially: “The geo-political uncertainty dampened occupancy during the year, which was down by two percentage points to 56% (2024: 58%). The group had 48 748 (2024: 33 353) room nights (2% of total room night inventory) out of inventory during the year due to refurbishments at eight hotels. This partial recovery in occupancy follows the 4% point decrease in the first six months, and was further mitigated by average room rate increases of 7% (2024: 9%) for the year, resulting in growth in rooms revenue of 2%.”

She adds, “Total revenue for the year ended 30 June 2025 increased by 3% to R2.0 billion (2024: R1.9 billion). Food and beverage (F&B) has now established itself in all brands over the last two years. Growth has stabilised but continues to show good prospects for further improvement, delivering an increase of 8% to R393.2 million (2024: R363.3 million), despite the lower occupancies and now accounting for 20% (2024: 19%) of total revenue.”

Cost containment has been a key focal point over the year, with total operating costs increasing by only 4%. Salaries and wages increased by 6% to R588.5 million (2024: R553.3 million) which was in-line with the annual salary increase. Property costs increased by 13.1% to R181.6 million due to higher utility costs, but marginally offset by lower diesel consumption for generators. The group has solar panels installed at 41 of its hotels.

“Rooms related costs and F&B costs are largely variable in nature. The lower occupancies resulted in a 10% decrease in room related costs of R204.3 million (2024: R226.2 million). F&B gross profit margins have improved to 62% from 60% in the prior year, resulting in volume variable F&B costs increasing by only 3% to R150.7 million (2024: R146.2 million),” says Dhanisha.

The group generated EBITDAR of R641.5 million (2024: R574.4 million) for the year, and an EBITDAR margin of 32.1% (2024: 29.8%). Adjusted EBITDAR margin which excludes unrealised losses on foreign exchange, the sale of CL Katherine Street, and the derecognition of the lease liability on the purchase of the CL Fourways land, was 29.5% (2024: 30.4%).

Depreciation for the year of R180.3 million (2024: R171.3 million) includes depreciation of capitalised leases. The 5% increase relates to capital expenditure incurred on refurbishments.

Lease related expenses (i.e. depreciation on right-of-use assets of R92.4 million and interest expense on leases of R128.8 million) exceed cash lease payments of R175.6 million by R45.6 million.

Taxation amounting to R98.4 million (2024: R65.8 million) increased by 50%. Taxation includes R9.6 million of capital gains tax on the sale of CL Katherine Street, and a R13.5 million impairment of the deferred tax asset in Namibia due to changes in the tax legislation relating to the treatment of assessed losses.

Dhanisha notes, “Profit after tax of R213.0 million (2024: R188.7 million) increased by 12.9%, and diluted earnings per share increased by 15.4% to 38.3 cents (2024: 33.2 cents).”

Diluted headline earnings per share remained fairly flat at 33.1 cents (2024: 33.2 cents), whilst adjusted headline earnings per share, excluding unrealised losses on foreign exchange and exceptional items (the derecognition of lease liability on the purchase of CL Fourways land and the impairment of the deferred tax asset in Namibia) has increased by 9% to 34.6 cents (2024: 31.8 cents).

Adjusted diluted headline earnings per share recovered in the second half of the year, delivering a 26% increase, compared to the second half of 2024.

Strategic Update

The group has refinanced its interest-bearing borrowings on more favourable commercial terms and retains access to R600 million in debt facilities which mature between three and five years. The group also has access to R115 million overdraft facilities, and is debt-free as at 30 June 2025.

“We have actively managed our cash generated by operations of R548.6 million (2024: R576.7 million) by strengthening the balance sheet, returning capital to shareholders, repurchasing and cancelling R30 million of our shares at an average price of R3.92 per share and completing eight refurbishments,” explains Dhanisha.

The strategic focus for the year has been the modernisation and refurbishment of eight hotels, and delivering the new brand standard for the next generation hotels. These projects included CL Lynnwood, Town Lodge (TL) Bellville, Road Lodge (RL) N1 City, RL Durban, TL George and CL Umhlanga Ridge, as well as the commercial areas at Courtyard Hotel (CY) Sandton and CL V&A Waterfront. Two additional floors were completed at CL Maputo, adding an additional 54 rooms into inventory, and the remaining floor with 26 rooms is scheduled for completion in Q1 FY26.

The group spent R282.9 million (2024: R164.9 million) on capital expenditure during the year. The delays to planned capital projects in 2025 were mainly due to long lead times for Council approvals, and supply chain lead times. Major refurbishments at CL Johannesburg Airport and CY Gqeberha are currently in progress.

Andrew is delighted to report that the group has achieved its best ever B-BBEE scorecard rating of a Level 1 during the year, due to enhanced investment and support to developing small black owned enterprises through the SATSA Incubator program and educational initiatives to develop and provide experience to young learners.

Outlook

Looking ahead, Andrew says, “The economic outlook has improved for FY26, as the GNU’s sustainability, although having been tested over the last 12 months, prevailed. In addition, further interest rate cuts are expected. The upcoming G20 summit in November will deliver demand for hospitality services, and boost business confidence in the region.”

Total capital commitments of R296.6 million have been authorised for the 2026 financial year. The funds will be applied to projects focused on deriving value through the refurbishment of a further five hotels. Further technology innovation and investment is planned.

He adds, “Environmental sustainability and resilience solutions remain a priority, as we initiate Phase 3 of the solar installations, including the addition of more water sustainability solutions.”

The group continues to seek and actively pursue selected opportunities for new hotels in high growth areas within South Africa.

“The 2026 financial year has commenced positively with occupancies for July 2025 and August 2025 each up four percentage points, to 60% and 59%, respectively (July 2024: 56% and August 2024: 55%). Similarly, occupancies up to 10 September 2025 are up by four percentage points to 63% (2024: 59%). Food and beverage revenues are up 16% and 14% respectively, for July and August 2025. We are optimistic that these positive trends will continue,” comments Andrew.

Declaration of Dividend

The board has approved and declared a final dividend of 9.00 cents per ordinary share (gross) (2024: 9.00 cents) in respect of the year ended 30 June 2025. The dividend will be subject to Dividend Tax.