City Lodge Hotels : Unaudited interim report for the six months ended 31 December 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 31 December 2021

• Revenue R436.0m 2021: R215.6m
• Headline loss per share 6c 2021: 60c
• Loss per share 6c 2021: 128c
• Average group occupancies 30% 2021: 17%
• Average occupancies open hotels Group 34%
  2021: 27%
• Dividend Nil 2021: Nil

Commentary

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

As infection rates steadily declined, travel confidence returned. This positively impacted occupancies and pricing, and resulted in additional hotel re-openings.

Average occupancies for the interim period at our South African operations, based on total hotel room inventory, was 32%, with the low of 16% in July and a high of 43% in November. The discovery of the Omicron variant in South Africa in late November 2021, and the almost overnight shut-down of international travel routes to South Africa, resulted in a setback in demand, which was substantially picked up by the domestic leisure market. December 2021 occupancies for all South African open hotels averaged 43% with 53 hotels open, and 5 hotels open in the Rest of Africa.

Financial review

The steady improvement in occupancies and demand for hospitality services over the last few months has led to average group occupancies for all hotels in the group of 30% for the six month period to December 2021 (December 2020: 17%) and open hotels 34% (December 2020: 27%). As at December 2021 the group had 92% of the hotels in its portfolio

of hotels open, compared to 74% in the prior period.

Total revenue for the period doubled to R436 million compared to R215.6 million for the prior period. Operating costs excluding depreciation and amortisation decreased by 11%, compared to the prior six months, however, excluding unrealised foreign exchange gains and losses on intercompany loans, increased by 40%. Operating costs per room sold

excluding unrealised foreign exchange gains and losses reduced by 22% compared to last year.

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

The group incurred 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% from the prior year.

Headline loss decreased by 88% to R33.7 million. Diluted and undiluted headline loss per share improved by 90% to a loss of 6 cents compared to an adjusted loss of 60 cents in the prior period.

The results above include the operational performance of the disposal groups in Kenya and Tanzania. The disposals are subject to the fulfilment of customary conditions precedent, which includes approvals or consents from competition on anti-trust authorities to the extent legally required. By the end of January 2022 the transaction received the unconditional approval from the competition commissions in Kenya and Tanzania. Due to the delays in the competition commission approvals, the long stop dates have been extended to 31 May 2022. However, the remaining conditions precedent are in the process of execution, and it is anticipated that the sale will complete by the end of April 2022.

R320 million of the total outstanding interest-bearing borrowings are due for repayment within the next 12 months. The proceeds from the disposal of the East African operations are planned to be utilised to settle the debt. All original debt covenants have been waived for all measurement periods up to and including September 2022. The new loan to value covenant has been met for all measurement periods during the reporting period.

Strategic developments

Guests have received our enhanced food and beverage offering with enthusiasm and appetite. Food and beverage revenue has increased by 128% compared to the prior year.

Our Best Available Rate (BAR) initiative, which went live in June 2021, considers market trends and demands for accommodation to calculate the best rates for our guests, rather than applying a single rate philosophy. This benefits our guests by providing them with more competitively priced accommodation at all times, while optimising revenue yields for the group.

For this purpose, we are leveraging predictive analytics and machine learning to inform our pricing decisions. Our new BI tool helps to analyse key clients, track new business and personalise offerings for guests, corporate clients and agents.

Outlook

South Africa has remained on Covid-19 alert level 1 since 1 October 2021, and on 30 December 2021 government further removed all curfew and alcohol restrictions. Internationally, there has been a move by some countries in Europe towards removing almost all Covid-19 mandates and restrictions. These developments have been in response to the significantly reduced severity of infections, hospitalisations and deaths among fully vaccinated individuals during the fourth wave of infections.

January 2022 occupancies had a slow start with total group occupancies at 30%, however demand has gained momentum as more corporates and government departments return to their offices and travel schedules resume to re-ignite operational capacity which has lagged over the past two years. The group has re-opened all its 56 South African hotels, and has six

of the seven hotels opened in Rest of Africa. To date, for the month of February 2022, South African occupancies are running at 46%. We anticipate improved monthly occupancy and pricing recovery during the next two trading quarters.

The group looks forward to the anticipated completion of the disposal 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 refurbishment plans.

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

Additional information

This short-form announcement is the responsibility of the directors and is only a summary of the information 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 accesseddirectly 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 published on the JSE link above and on the company's website.

For and on behalf of the board
Bulelani Ngcuka	Andrew Widegger
Chairman	Chief executive	officer
25 February 2022

Registered office: 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: B T Ngcuka (Chairman), A C Widegger (Chief executive officer)*, S J Enderle^ , G G Huysamer, A R Lapping, F W J Kilbourn (Deputy chairman), M S P Marutlulle, N Medupe, S G Morris, D Nathoo*, L G Siddo* *Executive ^South African and Swiss

Company secretary: MC van Heerden

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

www.clhg.com