Southern Sun Limited (SSU) Earnings Call Transcript & Summary

Okay. Welcome, everybody. I'm going to get started. We'll just -- Rosa will manage the few late comers. Thank you for joining our fixed results presentation since we unbundled from gaming. Obviously, we quite checked, we think the numbers are pretty good. I don't think it's going to be a terribly long presentation. I guess the highlight of the story is doing exactly what it is supposed to do. What is interesting is we had a revenue number of ZAR 6.6 billion in our budget that we set in February of last year it was about ZAR 50 million below this. So it was also ZAR 6.6 billion. We got the route different to what we thought with more performance in Cape Town. We didn't foresee Mozambique and Durban problems and so on. But in the end, we were only ZAR 50 million out on ZAR 6.6 billion budget. So the system is doing what it should do. As you can see on the cover, the headline numbers that we're quite proud of income up 9%. As we indicated, if you get reasonable revenue growth, the fixed cost base should give you good EBITDA growth. That's gone up 14% and adjusted earnings up 30% and then earnings per share up 34% as we're still benefiting from the buybacks we did last year. And then we have increased our dividend quite a lot. Obviously, we doubled that to ZAR 0.25, a function of being quite comfortable with the cash flows and also the fact that we started our dividend at a very low policy last year. So in discussion with the Board, we [ missed goal ] for our 1/3 policy. We can put it in place this year. As you'll see in the cash flow, we pretty much paid dividend and used all the cash for settling debt. So we're largely ungeared at the end of the year. We've got net debt of ZAR 260 million, which is as good as nothing. So we've increased our dividend to ZAR 0.25 a share, which is about 1/3 of earnings. So I think is a nice policy to stick to going forward. Okay. I'm going to run through the presentation, and then we'll take any questions at the end. I'm looking at the presentation. I can't see names or hands or anything. So I'll -- Laurelle [indiscernible] [ Rosy ] are here to guide me. A line of instruction, none of this has changed. We're still pretty much controlled by HCI together with the foundation, which they consolidate. So that's 45% of it and then 55% is the market. And we have an offshore division and an onshore division. Onshore is obviously the largest hotel operator in South Africa. Our Board also unchanged since last year, no change there. Portfolio unchanged from last year. The only change in it was that we opened Tanzania in the year, which was the last hotel that we hadn't opened since the COVID debacle. Otherwise, it's all stayed the same. We just had over 90 hotels, over 16,000 rooms which is under 17,000 rooms and 300 conference room and banquet facilities, et cetera. And I guess that really is -- if you look at the split in the Western Cape side, that is the heart of why we're doing better than, for example, the City Lodge is the nature of the portfolio. We've got a large amount of room stock in Cape Town, which is trading very well. And we've got a large amount of high-end large conferencing room stock, which is where the demand is. Our performance in the pure transient economy product is very much in line, I think, with what they are doing. So it's a nature of the portfolio that has worked well. We've done some checks, we think, quite well on revenue management and so. But overall, if we didn't have the big room stock in Cape Town and we didn't have the big convention and meeting hotels, you still got an underlying economy that's battling along. So we are finding ourselves in the right place, which is deals we did 10 years ago that got us there. Our brands have remained the same. I should really update us to include the brands that we don't manage where we manage the manager such as the Western and the 2 Radissons but those are trading very nicely, and we've worked very closely with those management companies to refine their international model for better local use. But the Western on the CTICC in Cape Town is a great property. And we converted the Radisson Waterfront hotel to a collection hotel, the first collection hotel in Africa, I think, which is good. So we probably add those brands in the future and give a bit more color on the thing. All right. As usual, I'm going to start with the cash flow because the income statement gets missed around by exceptional items and IFRS, probably the most ridiculous thing auditors have ever come up with is IFRS 16. EBITDA at 14%, 9% revenue growth, 14% EBITDA, which is exactly what we wanted to do. Property rentals is not that much up. If you remember, we've got a big portion of these rentals are -- and this is the cash rent. So this has not got IFRS 16 in it. A big chunk of this is what we pay Liberty for the Sandton strip and that portfolio was only up 1% in the year because the towers was closed for refurb for most of the year. So that portion of rent that we pay Liberty was kind of flat year-on-year in a buoyant market. And the fact that it was flat with one tower closed for refurb during the year, I think is a great performance and actually speaks to the underlying strength that we've had in the Sandton strip. But as a result, property rental, a lot of the EBITDA growth was not out of the strip, and you see it in our segmentation later. Working capital, we did give an indication that last year's working capital positive inflow was exceptionally strong. We had a very nice reduction in our debtors book last year, and you can't repeat that. So we haven't had a deterioration in debtors. We just haven't had as much of an inflow of debtor cash, but still positive working capital, but we did expect that to normalize to an extent, difficult to forecast, but nonetheless positive. And then dividend income from associates is our U.K. and that has come down as we've been exiting -- on the back of Starwood exiting properties in the U.K. The actual technical dividend when you look in the booklet is higher, but I've split it in these accounts between what was a return of profits from our management company and the hotel trading and what was a return of capital from selling hotels underneath. So you'll see a disposal line on the next page here, which I think that nature is important, even though technically, it's a dividend that we sell the hotel, we have cash, we pay a dividend out of the U.K. The return of capital should not be going into free cash flow. That's the sort of fundamental point. So cash generated from operations up nicely. Our finance cost comes down, obviously, as we now effectively declared. The only debt -- real debt we have left is the dollars in Mozambique and everywhere else we're on cash. Tax paid goes up along with profits and also with utilizing assessed losses. We've pretty much utilized them all. There are little pools of assessed loss sitting around that you're going to find that shield in the cash flow is largely gone now. So from now any increase in profits is going to equal cash increase. Our effective tax rate for the year, which I'll get to a bit later in the income statement is a bit higher than normal. And that's because of the poor performance of the offshore business. So losses in Mozambique, for example, are obviously not shielded by South African profits. We haven't recognized deferred tax assets on it. So if you have a bad performing hotel in South Africa, you offset those losses against other profits. You don't have that if it happens in the offshore jurisdictions. It's not material in our numbers, but it's -- you see a slight uptick in the effective tax rate because the losses are in countries where they're not shielded by the SA profits. Operating equipment as expected. And then maintenance CapEx below what I guided on the ban of my life. We've been saying we're going to spend around about ZAR 500 million a year. I'll give you some color on what we spent on, but we just don't seem to get to the spend as much as we think. And we -- as recently as 3 months ago, we still thought it was going to be about ZAR 520 million, and we came in with the saving by the end of the year. We did all the work that was on plan, but we -- the cash flow goes slower. Now that's very good for the accountants in us, but harder when I'm giving you guidance because at some point, I'm going to overshoot on this number because I'm going to catch up spend because nothing here has changed in what we're doing. We just haven't paid the supply. So that saving by and large, fall straight into the F '26 year. Probably what I forecast in F '26 will have some of it deferred into F '27 and so it goes. But at some point, I'm going to have a spike. And it's these savings that going to be in the back of our guidance is still north of ZAR 500 million in maintenance CapEx, and I'll talk to that a bit later. So free cash flow, just under ZAR 1 billion, ZAR 950 million, more or less the same as last year, even with the big increase in tax payments and a big increase in CapEx. Obviously, a lot more spend this year than last year. So we're pretty chucked with that. What do we do with the money? Well, we gave back to shareholders, ZAR 168 million in dividend. That's going to jump to ZAR 335 million in F '26 on the back of the dividend we declared now. And then a little bit of expansion activity, which I'll highlight in the next slide. But by and large, we took the balance of the cash flow and paid down debt. So we started the year with just over ZAR 1 billion net debt, and we finished the year with ZAR 266 million net debt. That's lower than what I gave is what I thought it would be. Couple of months ago, we were forecasting sort of ZAR 300 million to ZAR 400 million net debt. But it's the back of better working capital, lower CapEx, better trading, we're going to get this cash flow forecast right. But at ZAR 266 million net debt, we're effectively ungeared. What did we spend on investment activities? Well, we paid for that land that we bought in F '24 in [ Umhlanga ]. So we've got some future expansion land up on the ridge. We paid professional fees, which are capitalized in the Beverly Hills expansion. That's a lot of architects fees, town planning, fighting with the Oyster box and the objectives next door, all the usual things you need to do to get a project in executable form. And we continue to be the last resort timeshare units that go into distress stock. So we've got repos and some people don't want their timeshare because they want to pay the levy. We've been buying back that stock, and we spent about ZAR 5 million on that this year as we did last year. And then obviously, last year, we had the Birchwood acquisition. I have concluded a deal with the family that we bought Birchwood from to sell back 10% to them, which was going through in F '26. Kevin said we'd be happier owning Birchwood than sitting on lots of money. So we took some of these money back and get them back into the ownership structure. And then I run it. We manage to manage it there. So in F '26, you're going to see a cash inflow from selling 10% back to them at a marginally higher price than what we bought it from them. But I'm very comfortable with them owning and having skin in the business. So we've done that deal in April of this year. To talk about our maintenance CapEx. As I said, there's ZAR 450 million, which I thought would be higher and it's split essentially into 2 categories. You've got your ongoing maintenance CapEx further down the ZAR 273 million, which will give you some regional feel on. That is what we need to spend to keep the portfolio as it is and in good condition and alive. So that is everything from buying new beds, bird cages, those little things we move the trolleys on, fixing air handling plants, painting buildings, changing carpets in public areas. You don't get a substantial renovation of a hotel. You don't change -- you don't expand, you don't do a big modern upgrade, but there's a lot of maintenance that goes into just keeping the system going. Included in there is IT. We spent ZAR 20 million on the SAP upgrade this year, which [indiscernible]. That sort of thing all sits in that ZAR 300 million a year. It was ZAR 273 million this year, which is keeping the system working. And in addition to that, in the income statement, there's about ZAR 200 million of expense R&M, repairs and maintenance. So there's ZAR 500 million out of total cash a year, keeping this portfolio of properties in the condition that they are and they work and they're good. And that's very important spend. Then we have the major projects that we've highlighted about, and that's when we go and tackle a hotel. So most of you are well aware, we've done the Cullinan, the Rosebank, Sandton, Gautrain, Paradise Sun, we closed on 1st April to start the refurb, but we did a lot of procurement of FF&E and sanitaryware and all the stuff that we need to have the long lead time to get it imported into the Seychelles we actually paid for in the last quarter of F '25. So the cash flow has got in those individual projects. That's where you come out with a very different product at the end. We go from an old hotel to a new hotel, completely gutted and renovate and total upgrade. So we highlight those different, and that number can be quite volatile because it depends when we push the button. We've worked on these hotels. There are still things to finish. So currently we haven't finished all the rooms because you're going to get through so many in winter and then you need to stop back. So we'll finish those in F '26. But we have markups going from Mount Grace for Bloemfontein, for Pretoria, for Newlands, I forget there's a list and then we trigger. I think Newlands we've already started. They've stripped and they're working there Mount Bella in [indiscernible] Southern Sun, we've stripped half the rooms there, they're underway. So the major projects are I can switch them off and you can trade the hotels just for another year, 2 years, 3 years, whatever you want to do or you decide another time, do it and keep your product completely renovated. And you do those in sort of quite long cycles. So your stuff for example, be probably 12 years before you change it all out and your bathrooms can be 20 to 30 years. So we kind of split those 2 categories to give you some feel. And if you -- the ZAR 300 million a year ongoing maintenance CapEx should not have a big surprise other than, for example, you undergo a big IT refresh. The major projects is completely discretionary on our side in the short term as to whether we push the button or not, and we are focusing a lot on that at the moment. There is actually ZAR 66 million debt. It's effectively all offshore. We've got the U.S. dollar-based debt in Mozambique. We've got some rand-based facilities floating around, but that's offset by cash on hand in SA. And we've still got cash on hand that we've got offshore and a lot of that's going into the Seychelles refurb. And ultimately, surplus cash will come back or use for acquisitions or do something like that. But I haven't decided what to do with that dollar-based debt in Mozambique yet. For those of you that met with us, I said I'm not that comfortable having dollar debt around. I would prefer to turn it into rand debt. We need to understand what that does for the functional currency accounting in Mozambique and what the reserve bank laws in Mozambique are. So you are now building yourself with that whole project. But essentially, if we did, I'd like to get that thing sorted out. It's the last dollar liability that floats around in our books, which I think we should find some way to get rid of. We're doing some work on that. But basically ZAR 1 billion debt last year, ZAR 266 million this year. You might find that this number increases by at our half year numbers in F '26. In the first half of the year, as you will see in our income statement, we only make about 1/3 of our profits, 2/3 come in the second half of the year, but we are going to pay out all our STIs to staff now in end of May. So there's a big bonus run that goes. We pay our dividend in June, I think it is. That's a big check that goes. And we spend a lot of our CapEx in the winter months because that's when we can access the rooms. You don't want to be closing off rooms in Cape Town in summer until we're doing refurb. So you may well see an uptick in debt at the half year if the earnings don't cover all of those big payments, but then the big cash flows coming in the second half of the year. So don't take if you see our debt go up by the half year, it's just timing of cash flow. I think I've covered most of what's on here. I think what is important is at the bottom, we have cash and cash equivalents of ZAR 396 million, and we have ZAR 1.8 billion of unutilized facilities. And we've done a refinancing. So we've basically gone back to all the banks. We've got ZAR 1.5 billion of 2-year effectively access bond type revolving credit facilities. Pricing is coming great. So it's very easy to borrow from the banks when you don't have debt. It's a bit harder, but we've got a lot of debt. But at the moment, obviously, our credit risk is substantially reduced. And we've kept that as surplus facilities for if you want to do anything big or cover short-term cash flows up and down. But obviously, our liquidity is great and our leverage ratio is now [indiscernible] so we have debt-to-EBITDA of 0.1 and interest capital of 12.5x. Just a fantastic position compared to where we were 5 years ago today, where we had ZAR 3.5 billion worth of debt and our hotels open. So we are much, much happier than what we were then as are our shareholders. Talk a little bit to the trading. So it is -- we say another year of profits, I probably shouldn't deleted another year, it is a record year of profits. We are pretty [ chucked ] that we got to ZAR 1 billion bottom line. It's quite a notable achievement. We did indicate at the half year, the half year numbers didn't look that strong, but it was that don't worry, it's going to come. We opened up the Cullinan, we opened up the towers. Feedback has been fantastic. So we've seen good growth in that. All the upgrades have really been well received by the market and the customers. And I'll show you in some quarterly stats later, we actually saw acceleration in growth in the third quarter and then into the fourth quarter. So it was a good year. I mean Cape Town is the reason we look so clever. It was particularly strong. So we met our budget revenue within 1%, but it was an outperformance in Cape Town, which came along with increased profitability and an underperformance of KwaZulu-Natal in Mozambique and neither of those that we particularly [indiscernible] not a beachfront infrastructure, dirty water problem. It's a group and events problem. I did an interview with CNBC this morning. And we just had the Nedbank Cup in Durban and Africa Travel Endava, and we were basically full in all those beachfront hotels for about 10 days. The place just heaved and feedback is fantastic. We host the cocktail function on the Endava night. We had 300 guests that are magnificent. But if you don't have the activities, you can't drive activity there because your business market is stronger. So if you get those events right, if that ICC kicks in, Cape Town is full, Sandton is full and you need to get that ICC back and then you've got the events going. So Durban has disappointed. And I think the politics there has also been a problem because it's an unstable political coalition in many ways and you had the budget disaster and so you just have sort of negative spend in there. And Mozambique is an entire slippage swagger. We saw the reduction in demand that nobody saw the trouble coming. You got a guy with a Facebook account who brought the country into riots. It ended and I thought that the pent-up demand would come back and it didn't. We're still running at relatively low occupancies, 30% to 40% food and beverage is normalized. The people of Maputu are in our hotel eating, drinking, day conferencing, but we're not getting inbound visitors to build bedrooms. And I don't really know why that demand has not bounced back. And it's not just us we know from what's happening in the rest of the market, it's entire thing. It still has a lot of potential. The oil and gas is there. Total has been in, but it is a slower recovery than I would have thought. So great year, very good Cape Town, very nice recovery in Johannesburg, strong Gauteng numbers. In fact, the highest growth was Gauteng, but off a low base, but that has come back nicely to normalize and then weakness in Durban and particularly in Mozambique. What the overall income statement look like? So we did 60.8% occupancy. You can see on the right-hand side there. I think if Mozambique and Durban haven't faulted, we were hoping for closer to 62% and 61% occupancy. It's the first time since 2019 that we're above the 60%. So I'm quite pleased with that. The combination of occupancy and rate growth, about half-half between the 2 to get us to our rooms revenue growth of 10%. We did a lot of work with OTAs in the year, some more than others. I think we've gained market share. It's hard in this industry because it's not like the gaming stats we get a published number. But we worked very hard at making sure that every pipe comes into our dam and that every channel is clear, so we can get every bit of business that's out there. And I said in presentations before, we say around about 60%, 58.6% and 60.8% are both around about 60%, but the bottom line outcome of those 2 answers is very, very different. And it's just every incremental room that you sell with a fixed cost base, your flow-through is fantastic. You see that we had 5.5 million -- just over 5 million room nights available, and we sold just over 3 million room nights available. And the slight increase in the rooms available was bringing Tanzania back on to the system. So room revenue up 10%. Food and beverage, up 6%. There's not a problem in food and beverage. I didn't, until the very end of the year, give the chefs a price increase. So your increase in food and beverage revenue is by and large volume related because a big chunk of it, remember, we make our money out of breakfast, banqueting and beverages, food. The breakfast is an allocation by and large out of the room price. You as a guest, you get a bill for ZAR 2,500. I allocate ZAR 250 to the chef for the breakfast or ZAR 500 for the 2 of you in the room. I haven't moved that number for quite a long time. We have now given the chefs an increase because we keep that very tightly controlled because that's how you measure your cost -- your food cost percentages. And so the fact that we charged a lot more for the rooms, whether I charge you ZAR 3,000 for the room or ZAR 8,000 for the room, the chef still gets ZAR 250, he doesn't get a percentage of it. So you won't -- what you should see is exactly the same in F '26, you would have an increase in food and beverage because I had given them a price increase and a slightly less room revenue growth because the surplus didn't all go to them. Once you go down the [indiscernible] in the hotel accounting, but that's kind of the relationship between those 2. Overall, very happy with our food and beverage. I mean ZAR 1.6 billion a year of food and beverage turnover is significant. Property rental income, those are the properties where we still treat them as investment properties, essentially Birchwood on the back of having a full year of owning 100%. That will probably come down a bit because now 10% of those rentals are going to go back to [ Kevin Arnett ] and Radisson Collection performed very nicely. So we got -- we got a good growth there. And then our other income, which is everything from no shows to all the ancillary charges that you get meeting and event hire, et cetera. So that's your revenue growth of 9% overheads well controlled. Our single biggest overhead is still payroll. We did a 6% payroll increase last year. We're implementing 5.5% this year. And then after that, it's variable, controlling your variable hours. So making sure you don't roster too many staff if you're empty and if you roster enough when you're busy. But that line is under good control with great relationship with our workforce, union issues. We do try and be a very, very good employer. But that line is our #1 expense line is payroll. Other notable items in overheads like heat and power only went up 1%, which was a ZAR 36 million saving in diesel versus last year, offset by a ZAR 37 million increase in tariffs and rate costs purchase of Eskom and municipalities and so on. So net flat year-on-year and doesn't show any increase costs and all the usual pressures. But by and large, overhead is well controlled at 7%, and that's probably an inflationary type of increase of around 6% and another one relating to volume coming through. Property rentals, amortization and depreciation and interest line in this income statement, that's all posted out by IFRS 16. What we do note is you'll see a big increase -- sorry, a big decrease in property rentals and a big increase in depreciation. That was because the auditors came up with some bright idea that we've got to effectively straight line the deal we have with Liberty on the Sandton consortium strip, which would have meant me reporting double the profits that I actually make out of that for a few years and then half the profits was actually not doing it. So whatever they made is put through the rental line, we depreciate out. So what is in our income statement is what we have made as our profit out of that relationship that we have, no more, no less, require 29% saving on property rentals after IFRS and a 15% decline in depreciation. So we make sure that is just an ordinary income statement, which is as it should be. For exceptional items, there's a detailed explanation later. Finance cost has an IFRS 16 effect in it, but it's the same impact as what you saw in the cash flow. Much lower debt, so finance cost comes down. Share of earnings from associates also has a whole lot of exceptional stuff in it. The actual clean number there is about ZAR 38 million, which is lower than last year, as you would expect as we're selling off properties. And I've got an adjusted earnings number that takes all of this out. And then income tax is in line with the increase in profits. And when you flow that through to the bottom line, there's our proper adjusted earnings key number of ZAR 1 billion. If you look at what all those exceptions are, it's higher income statement, I don't think there's anything controversial there. We had fair value gain on investment properties. We had impairments on property, plant and equipment, essentially the renovations we've done in places like Rosebank. The value of the property hasn't changed, but I've spent a whole lot of cash on fully renovating rooms and things. So in order to say you got to write it off. I wouldn't have spent the cash if I thought it was a write-off, but anyway, less them. So we've written -- we've impaired it. But in truth, we think that property is going to quite well. So those are gain on the one impairments on the other. And then there's some fair value on derivative instruments and the exceptionals in the associates, quite a lot there because you've got impairments that have reversed, et cetera. But the team ordered that out. Most of it is profits that [indiscernible]. So in the end, adjusted earnings is a good number, just over ZAR 1 billion, 30% up from last year. And then the average number of shares comes down on the back of the buyback we did in F '24. So the earnings per share goes up to ZAR 0.756, 34% increase. And that ZAR 1 billion bottom line profit talks very nicely to our free cash flow of about ZAR 950 million. Largely our profits are matched by cash. Through -- I don't think through most of the explanations [indiscernible] you can kind of read it in your own time. There's an awful lot of explanation around IFRS and [indiscernible]. I mean the whole page in associates that makes us ZAR 40 million a year less. We give you all the details, so you can work it out on your own. If you have any questions on it, we'll try and answer it as much as we can. Covered all of that. This is quite interesting. It's a quarterly performance and this to some cautious happiness in the second half of the year. We had revenue growth in the first half, we reported 6% growth in income and 10% growth in EBITDA, and we're all very chucked with that. We said it will do better because towers will open, [indiscernible] will open. And we've got 12% growth in revenue in the second half of the year with occupancies at 62.7%, so nearly 63% and a 16% growth in EBITDA for the second half of the year and the last quarter being very strong. So that's good news. That's what we're looking for that we're pushing forward. I do just a sense of warning in here, we were very lucky in this year, and I didn't appreciate it until recently, we actually never had an Easter in our F '25 because Easter fell in March 2024 and in April 2025. So we had a full 12 months with no Easter. Easter is bad for us. That holiday month is not a good month because it interrupts business travel. So we fill up the resorts, we fill up the beach hotels. But I mean, we saw it now in April of '25, a terrible month because you've got a public holiday on the Monday, another public holiday on the Thursday, you are not going to get corporate travel. You're not going to a conference or a group event, you can hardly get people to come to work, to be honest. We were running an advertising campaign saying, take these 5 days off and you don't have to come to work for the whole of April. So not great for a business-related hotel. And this year actually had no Easter in it. And I think that's worth at least ZAR 0.01 to ZAR 0.015 a share in our bottom line earnings. We're going to go backwards just because you've got a month where you've got all the holidays are just the timing of the calendar. But nice second half, did what it's supposed to do and gives you a feel of that seasonality. And overall, our earnings came in 1/3, 2/3. At some point, I'm going to get caught out. I mean the math doesn't work perfectly every time. So at some point, it's only going to happen strong in the first half and move the number or weak in the first half and move the number. But it is a strong indication your peak periods of Q3 and Q4 compared to Q1 and Q2. So you always have this heavily weighting to the second half of the year. And we are seeing, like at the moment, the G20 stuff can kick in and out and change patterns a little bit because you get these big events in sort of times, which you don't have in a normal calendar. There is a segmental analysis. I've spoken to quite a lot of them. I've got some notes that I won't -- I'm not going to read the slides to you. But there's the consortium. So that's Sandton Sun Towers, Gardenport Sandton City and the Convention Center, flat year-on-year despite towers being closed for most of the year for a -- I do say it to ourselves beautiful renovation in that hotel, singularly impressive when you walk in that lobby and still flat. So that's good, and it's really trading well. Market is happy with it. It's going to be the home of G20, the bigger stuff in the latter half. It's got a lot of it coming in now. Even if the actual event happens at [indiscernible], we don't know yet, the accommodation is going to come to us. The big banquet stay stuff, et cetera, will come to us. So I'm not worried about the lack of growth there that was without 230 rooms in play. The Western Cape as you can see that growth off of a good year to come in 45% EBITDA margin, kept our efficiencies in place, that's the power of rate. If you get the proper rate, it works. Sad part is even at these prices, it's still a hard decision to build because your build cost is just so high. But we've got the stock. We bought it many, many years ago, in most cases, 10 years more. So we've done very well on that. Nearly half of our EBITDA coming out of the Western Cape now, [indiscernible] as I said, the disappointment of the year along with Mozambique and the offshore, down 25% on our EBITDA, and that's just the lack of events. This weekend with Endava and the last 2 weekends with Endava and Nedbank, it just shows you put the trigger of demand on the top and the whole thing works beautifully. If you don't have those events [indiscernible]. So we engage a lot with the city on that, and we're doing as much as we can to try and activate that. Gauteng, very good growth off a low base. We had Rosebank closed last year after the restaurant collapse. But across the board, we've seen [indiscernible] Street, Morningside, the airport node, [indiscernible] properties, they've all done well. So nice recovery from Gauteng. And then the other is all the outlying from [indiscernible] you can imagine. I'm a little disappointed with that. A lot of that business is government related. I think it's been impacted by elections, by budget constraints, by the budget not being passed. But one of the things I've been hoping for is that with the lifting of the government rate cap and the normalization of government procurement policies, we should be getting more than our fair share of that. What we found is just disarray within government department because treasury said make your own policy. We haven't had a policy. So we've been running workshops to try and explain to them how they should do their policy that the number that was the rate cap is available. The difference is we're going to yield you out if you're out of demand. So you need to book the book on the last minute, you're going to pay more. If you plan your travel, you pay less. We will always make sure we have a rate cap -- an old cap rates available. So the procurement systems don't get out of way. But there is a transition period to get lots of various government departments and provincial bureaucracy out of the way. So it's been a bit slower than I'd hoped. All of that said, government was up this year, but I think there's a lot of G20 on the back of that. If we took G20 out, government probably have been flat, and that's kind of reflected in that other segment there. And then offshore, the real disappointment in Mozambique. Tanzania lost as much money open when it was closed, but it is now open, and we think it will go to breakeven this year. That's the target. And Zambia actually had a very good year. Copper price or I mean last year had Cholera and all sorts of problems, but Zambia has been on the boil. Nice occupancy, a lot of conferencing. So I mean these little markets kick in and our Seychelles was great. I've got really high hopes of Seychelles when it reopens. It's now [indiscernible] 100 workers on site and kind of take a breath and haven't been broken down in years. But I think it's going to be magnificent when it opens. They've got a hard deadline to get this open by the end of August. So there's a lot of pressure on getting that project done. And then your central unrecovered cost has a lot to do with [ SUN rooms ] and bonuses, et cetera. So there's your overall 14% increase in EBITDAR and overall our margin up from 31% to 33%. I've covered all of these. There's some notes for you to understand what happened in all of the provinces. Prospects, I mean, this should continue. If we can get reasonable revenue growth slightly above our overhead growth, then you get the jaws effect and your EBITDAR improves. So that is going to blossom up in [ whole year and we are ] in the middle. Our long-term occupancies should still be sort of mid-60s, high 60s. We don't want to be a low 60s or worst 50s occupancy. This is the first time we've gone over 60% since 2019 and I think we were 63% or something in 2019. So it's been so long that you don't believe it's anymore. But actually, if you just get a little bit of government stability, if the Reserve Bank can just release the throttle a little bit on the economy and stop straggling the consumer to such an extent with high interest rates, if you could just basically have people not staff up too much, your demand in travel will go. Your local will flow, your international, there's such good work done by home affairs on increasing the visa availability, streamlining systems, all the potential is there. And then you have a GNU blow up and everyone gets nervous, and the rand falls out of bed and all that sort of stuff. So -- but if there was just a little bit of stability, it's not -- in the medium term, we should be trading in the mid- to high 60s, not in the low 60s. And that's really the big opportunity in, I think. Whether that will come in the next year, 2 years, 3 years [indiscernible]. What do we do? We're sticking with our strategy. We're very internally focused. You cannot rebuild what we got if I gave you ZAR 30 billion in 10 years. And we see that with acquisitions that are out there kind of look at why would I pay my own shares back off that price. It is a fantastic portfolio. The refurbs are paying off. In some cases, it's just eye watering what they cost, but the end product is great, and you've got all the Sun cost. I don't have to have land. I don't have to have infrastructure. I don't have to have staff, all of that there. So we remain very internally focused, and we spend a lot of time on our refurbs, less time on new build and acquisitions, but we don't ignore those. And we can switch ones on and off. I mean Newlands wasn't high on my list and it's traded well. We've got a great markup done. Designer was fantastic, and we pushed the button, so now it's underway. And then you can build what you want, you know the guys that's going to build [indiscernible] lose your customers. So very much focused on our internal proposition, customer service, our staff interact, our own management systems, your revenue management, your interaction with all the channels, how we deal with our suppliers as respectively as we deal with our customers because that's how we just push this business and make sure whatever is coming through the pipe as much as it possibly comes to us. And then capital allocation discipline is we will kind of stick to a third policy on our dividend. And the balance is in the absence of really great expansion ideas is share buybacks remain a very attractive option. We can see [ whether it be the power of ] income statement. Our share is still trading at a very attractive pretax cash flow yield, well above our cost of borrowings. So buybacks make sense. There's not a lot of liquidity out there, but every now and again, someone sells and like we just remain in the market. We didn't buy back any of this year, but we certainly will be there. And that's it. So I can't see you guys, but I don't know if there's any questions, I'm happy to answer any questions, but a relatively simple set of results for the year that we're quite happy with. Any questions? Very silent. Is anybody out there? Is the sound on?

A couple of questions. Maybe in the past, you've talked about the opportunity on the redevelopment of Beverly Hills, a new hotel potentially in uMhlanga and then the Cullinan land. I know these are all medium term, but just to get an idea of how you're thinking about those 3 and the relative capital spend that could come if those were all turned on.

It's a pretty big capital spend. Beverly Hills, I'm very keen to do, but I'm trying to get the capital cost down. So I mean we got to a point where we were sitting at ZAR 1.2 billion budget. And we've just gone back and reengineered it. We're down to ZAR 950 million now and I think they've got another ZAR 150 million to go. The problem in general with new build is that it is so expensive and your yields are low. So you've really got to be very convinced that it's very good for the portfolio long term and you're not doing an ego build and that your timing is right. What we do have is a balance sheet that can absolutely handle these things. I would prefer to have partners in with some of them, which we're working on. And I also need to be convinced that the market is stable or stable as it can be. I don't want to be in the middle of a crisis on floor 28 of a 40-story building. So all of this is we're working on it. We're doing a lot of work on it, but we are very cautious. So you're not going to see a gung-ho flurry of announcements saying we're doing ZAR 5 billion spend unless we've come to some remarkable arrangements in between. But these don't go away. We own all that land. It's not going to leave us. And it is important that we do the work in between. So that's how we think about it at the moment.

Okay. So if I look at your cash flow and your guide on about ZAR 500 million in maintenance CapEx, the business generates probably about ZAR 800-plus million in surplus cash per year, that's after your dividend. So as things stand, you're going to move into a net cash position. So how do we think then about how you allocate that to buybacks given the illiquidity of the share? I'm sure you don't want to get in a position where you're building up significant amounts of cash. So maybe just -- are you building cash...

I don't mind [indiscernible] problem with it, but I'm cool sitting on the cash. Yes. So it's not quite ZAR 800 million because the dividend is going up. I mean we've doubled that. So we look at it, we say that we make ZAR 900 million, we pay ZAR 350 million out as dividend, you've got ZAR 550 million of excess cash. And let's say we grow from here, that ZAR 550 million number and your ZAR 900 million should grow to ZAR 1 billion and so on. In the short, medium term, I don't mind sitting on cash. I've got a lot more ideas than I've got money, to be honest. That said, we're not going to waste it, and we're not trying to build an empire for the sake of it. Buybacks are very attractive until the price goes above our cost of debt and then that don't make sense because the income statement negative. The liquidity is low. But every now and again, somebody decides they made enough money and there's a chunk of shares that go. So we're probably more interested in those than [ sweeping half ] the daily 300,000 volume. And to the extent we don't have ideas or the ideas we have are not sufficient return for our capital, we can always special dividend or up the dividend policy. I'm pretty heavily invested personally in this company. I really don't mind dividend at all. What we don't want to do is it has a delicacy to hotels, and it is cyclical that you didn't have in the casino world. So I don't want to go into a big debt position. We are not going to grow earnings in a straight line for the rest of our lives. At some point, there's going to be a wobble. If you've got cash on hand, that's when you buy assets at very attractive prices and just understand that you are cyclical and know that it's going to come somewhere along the line or some other person is going to build a hotel right next to your main profit producer and you have to set that up for a while. So sitting on cash, I mean, I get the math sort of being a drag on returns and so on. If you're looking at sort of medium-term stuff, it really doesn't worry me. And it's easy enough to give it back to the shareholders.

Okay. And then one last question. You had a couple of leases which were coming up, Elangeni, the Oliver Tambo Airport. Can you maybe just update on what's happening on those leases?

Not a lot, but ongoing. I mean I was in Durban yesterday. We remain the preferred bidder and only bidder and I think only hope for the Durban beachfront. We are negotiating the lease with the city. That's going to take a while because there is a [ tornado ], but it's a slow and steady [ tornado ] between very different views on how the commercial world work. I think we are getting there, so that will carry on. Tambo, limited progress -- well, not limited progress, they have said they are going to go on tender, but they need to -- there's a lot of change happening within [ AXA ]. They've got a lot of stuff they need to put into tender. They understand that they are not going to -- they just don't have the capacity to get all the stuff in a hurry. So they are negotiating a temporary measure with us. They do have to go to tender in the end, just like the city of Durban because these all governed by treasury procurement laws. So we wait for those and we carry on in the meantime. So there's not a lot of update, but it's not totally idle. We are dealing with all those parties.

Okay. And I don't see any other questions. I'm going to ask one last one. I mean maybe you can just talk to your forward bookings. I don't know how much visibility you have with the G20 and so on. But I mean, net-net, are you feeling quite confident or comfortable with the state of things looking in the year ahead?

It's interesting. I started -- we had our Board meeting on Monday, and I started with -- with these spectacular results, Laurelle and I should be dancing around like we're just the heroes of the day type thing. So we don't feel like that. The numbers are good. It is what it should be doing, but it's a 61% performance. The potential is so much higher. It needs things that are beyond our control to happen to grow nicely. I don't see us falling apart. I don't see us going backwards. But the things that make it grow, can we get additional rate, additional volume in Cape Town? I think we absolutely can. Is picking a political fight with the Americans a good idea? It's the worst idea in the world. They are fantastic tourists. If the rand strengthens, we all feel much better. I'm not sure what that does to inbound tourism exactly. But it certainly helps the local economy, brings inflation down. If [indiscernible] go of the interest rate lease that's on the economy, I think that would just be wonderful. You get [ never mind ] 2 parts. You get proper economic stimulus just because the cost of capital at the moment is so high. All of these things are way out of my pay grade. But they -- do we see problems in our books? No, we don't. Do we see a rapid growth? Am I going to have a 20%, 30% increase in revenue? Absolutely not. So you kind of just tick along, you control your costs, you manage your channels, you push the guys on price, but it is sensitive. And if you go ZAR 50 too much, you lose the business, and there's always someone stopping from the side. So we think we're going to have another good year, but it does require particularly government to behave themselves. And that government includes a [ whole very ] lot of them, not just the [indiscernible]. They got to behave themselves and the potential is there.

And just related to Mozambique, what did the Mozambique lose this year? And just maybe a sense of do you expect those losses if there were losses to continue in the forthcoming year?

Yes, [ they've made EBITDAR of 8 ]. And at the moment, it's cash positive there, but it's not enough to cover interest on the loan. So we have -- since the start of the crisis, we've put $2.6 million cash into the country, pretty much to pay interest on the $26 million loan and initially some pretty heavy losses. We took a view, we didn't cut staff wages. We didn't cut their bonuses. I mean the strikes happened in November. That worked a year. And so we paid the Christmas bonuses. We treated our staff properly. That meant I had to send money from SA that wasn't going to come out of Mozambique. I'd hope that if the hassles continue, Mozambique should remain relatively cash neutral borrowing interest on the loan. Our forecast is that it goes back to cash positive and actually has a decent recovery. The violence is gone. I cannot get up here and answer why our volumes are not back to what they should be. And I'm not asking for 70% or 80%, like just back at the 55% and everything is normal. And that inbound just isn't happening. And I don't know why. [ I gained the knowledge right now ] but when I get back, I'm going to Mozambique and try and see If I can get a better feel for it. But I was with the [ GM in Durban ] last week, and he just started putting his [ hat ] and talked to everyone. Everyone is around, there's just no movement on it. I think it's just a shock factor. The shock as we were that this could happen to I think Mozambique, I'm shocked that this could happen there that we think worst case cash neutral. [indiscernible], you got a question?

You mentioned that your hotels that are in the similar -- or that your hotels that are similar to the City Lodge offering aren't performing as well. Would you just be able to, one, elaborate on which hotels or segments these are in? And two, your rationale of why this hotel market isn't performing as well.

Yes. So I mean in the brands, our brands that are similar to City Lodge are -- Garden Court and StayEasy are similar to City Lodge and Town Lodge. However, we have very different product. So something like Garden Court Sandton City, its location is super and [ pricey ]. Something like Garden Court Marine Parade or Sun Square City Bowl or PE King's Beach, it's still got pretty good conferencing facilities at big hotels, we have very good contracted business relationships, they work. Where you've got a like-for-like, 150-room Garden Court Hotel not in a very key business node that's got similar to what a City Lodge might have, let's say, couple of [indiscernible] or something that -- they generally don't have big hotels and they don't have the big conference facilities that we've got and all they're not attached to something like a Sandton Convention Center. And that gives us in that market, the big conferencing market and the upmarket, the 4 and 5 star, which they don't have, gives us a benefit because that's where the demand is at the moment. So City Lodge in -- for example, the City Lodge Waterfront Hotel, which is across the road from our big node opposite the CTICC, I'm pretty sure is doing just fine for them. It's in Cape Town. It's near the CTICC. I don't have any insight to the numbers, but I'd be astounded their hotel is not shooting the lights out. The big one on O.R. Tambo, I can guarantee you is printing a lot of money, probably makes 20% to 25% of their profit/loss [ from that hotel ] as do we from hotels in the O.R. Tambo, no. But when you start going into the Bryanston's and off node, in our case, the Morningside and so on, I reckon we're both sitting in that high 50s, maybe early 60s, not a lot of rate growth ticking along. I mean not a disaster, but not the type of market... I guess the end I'm trying to get to why are we at [ 60 ] and why they're at [ 56 ] because we have high-end stock and we have stock in great locations and we have a lot of stock in Cape Town. When you get that general economic growth, the market will come back. And you've got the transient business traveler person X running around once a room for ZAR 1,000. That market is weak, and it is -- now it gives a chance and glories to management and all that. But if you happen to have the right type of ship when the wings are sailing, then you sail faster. [ Miranda ], you got a question?

Yes. Just quick 2 on my side. The first one is just maybe a little bit more firm on numbers. So next year, if we're expecting like a recovery in Moz, annualization of the [indiscernible] markets boosted by G3 and seeing a recovery in other regions, where would you place occupancy if we're currently at 61%? Are we expecting around about 63% or is that too ambitious?

No, if I get to 63%, I'd be happy. If I get above that, I'd be really happy. If I didn't get to that, I'd be annoyed. I can't guarantee anything, but I think we should be ticking upwards. Unless something goes wrong, we should be ticking upwards. But it needs Mozambique to recover. It needs Durban to recover. It needs Cape Town to hold and probably do a little bit better, and it needs your outlying stuff to tick up in some form of economic stability, if not recovery. But I don't think 63% is a bad [ something ] to aim for. It's perfectly doable as long as the world doesn't blow up on us.

Okay. Perfect. And my next question is a bit more strategic. So you mentioned that we're benefiting from deals that we did in the last 10 years. Where do you see the market going in the next 10 years? And where should we be investing?

Yes, that's a great question. So that comes down to the build cost versus the low returns at the moment. When I sit with you guys and I say actually, I can build this thing and I get a 6% return, I can see [ mine ] turning green and going, please take away the checkbook. But if you don't take Beverly Hills, it's a 60-year-old hotel. It's got shower over the bath, and I get [ ZAR 10 ] in season for it. How much longer I'm going to do that? So 10 years from now, I don't see Beverly Hills looking the same as it is, I think we fell. So that project, whether it's 3 years out, 1 year out or 5 years out, has got to be done, but manage the cost to make sure we build the right thing, I've got to make sure I don't destroy the legacy that is Beverly Hills. I've got to go to [indiscernible] in that place, if you don't want to mess this thing up, but it has to be done. And that 10-year view is very important. You've got to be in the nodes that you think are going to grow. You've got to manage your out of nodes that you think are bad. And ultimately, it doesn't necessarily mean we have to have more stock, but we have to make sure we have the right stock. We do well out of big hotels in good locations. Those don't come along easily, so pay attention to it when the opportunity arises. But if we could, over a long period of time, reduce our shares in issue by 30% or 40%, grow our earnings by a reasonable rate, you can imagine what EPS does. And in between that, I've used surplus cash to build strategic new product, and it doesn't always have to be only our cash. I'm quite keen on partnerships with others who want to invest in the stock because it ramps up our yields and it lowers our risk, then I think we would have done a really good job in 10 years' time. And then the other unknown is just like 10 years ago, maybe more, it would have been 20, 25 -- 15 years ago, we knew hospitality fund was -- we have absolutely no interest in it whatsoever. So hospitality became interesting when the A and B Class shares fell apart and there was an opportunity. Nobody wrote that story in a strategy that said like we're focused on these guys. A and B shares are going to be the death knell of property industries now. But when the opportunity arose, we had the cash and hindsight -- insight to do it. So you also have to -- and that's where I'd rather take a beating from you guys for sitting on cash for 2 years, but that moment comes when the right asset pops up and you can execute is like a really important thing. And it will come. We don't know what it is, but there will be a chance.

Okay. And are we looking at any offshore expansion opportunities or are we focusing mainly in SA?

Focus is mainly in SA. I am uncertain of our U.K. strategy. We've got a good management company there, that's white label management company. We are riding on the hotels of Starwood in disposing the Travelodges and the last few hotels, but we're going to be left with 25% of 2 really good hotels, the Holiday Express in Edinburgh and the Hilton in Gatwick. And in this year, there's going to be a moment where they're going to say, right, as part of -- because they are part of these funds, you've got 7 years, you got to exit assets, et cetera. There's going to be a point where we're going to say, look, we're just going to take our GBP 10 million and leave or we're going to stump up GBP 20 million and go bigger. I'm not that excited about -- the GBP 20 million doesn't sound like a lot of ZAR 500 million, which you get going. I'm uncertain that we should just be exiting the U.K. We've got a very nice structure there. [indiscernible] have got great asset managers. The management company knows what they're doing. Again, it's too big for us to do on our own, but there are partners around that we can talk to. So I'm uncertain whether we should exit and call it quits or whether we should actually invest more. I'm very certain it's unlikely we're going to push money into new African markets or even into the markets we're in, but I don't really have appetite to sell those. For all my formas around Mozambique, I still think it's got a lot of potential. It's close to South Africa. It might be speaking Portuguese, but it is like a sister to South Africa. Zambia is fine. Seychelles is a wonderful product. We're putting a lot of money into that refurb there. It's about ZAR 100 million. Other than potentially U.K., I don't see big aggressive offshore expansion whatsoever. And even the U.K. stuff will be small measured in using a base that we already have.

Okay. Perfect. And I'm also assuming as the SA economy recovers, Mozambique also benefits from the SA market as well.

That must help. The cross-border traffic between [indiscernible] is important. And just stability. Stability is the biggest thing in all of this. If you -- we all notice economic theory that capitalize instability, et cetera, but people have instability. If you are scared and nervous [indiscernible] sentiment drives the desire to spend on business or leisure and stability gives you good sentiment.

And congrats again on great set of results.

A question from [indiscernible].

So obviously, in Cape Town, everybody thinks they are now hotel [ gods ]. And anybody who's got a piece of land and a dream wants to build a hotel on it because they know that tourism is booming in Cape Town. That said, there's not a lot of really meaningful new stock that I'm aware of. There's a Marriott hotel going into the V&A Waterfront. We see a lot of plans come across our desk, but I don't -- the people that would push the button on it are like property companies who think 8% yield funded by 7.5% debt is a great answer. And they're looking to use a bulk, but they haven't got any other ideas because they can't build more offices, and everyone's done with residential flats and they don't know what to do. So there's a bit of that around, but nothing big and meaningful. And certainly, if you don't have a plane in the ground at the moment, you're not going to get new stock out of the ground under 3 to 5 years. So new supply is a longer-term worry, but not a current worry. And I think the banks are relatively wary. I certainly [ pitch ] the lecture every time I meet with the banks that this is cyclical. This is not property like sign a 20-year lease and you're off to go. So hopefully, sense prevails. But as I've said often, if you're worried about competition, hotels is not the business for you because any hotel -- anybody can build a hotel and sooner or later, one will. So that risk remains. We're not seeing massive stuff at the moment, but there is a lot on paper. We're not seeing the building plans yet. And nodes we want to work ourselves out of? Not really. The individual -- I mean, in the Eastgate node, I was worried about, but it's actually ticked up quite nicely. It's not performing where it was long term ago, but it's no longer losing money. It's making money. So that makes it very hard to say, I know what this hotel would cost to rebuild. I know what this hotel is capable of doing, why would I give it away tomorrow. There are a couple of the small SUN1 properties that we are wanting to exit just because they're never going to come right. They don't lose money, but at some point, their CapEx is going to catch you. And we've had -- we've done a whole lot of work. We think these can be converted into residential and actually, we would sell out and -- just sell it to a residential developer, you can take. But it's not a lot. It's maybe 300 or 400 of the SUN1 rooms, a few of the smaller hotels. The core portfolio, I absolutely want to hold. And I'm pretty sure our SUN1s are performing like Road Lodges are. It's a battling market, but that can turn in a heartbeat. And your replacement cost on that is [indiscernible]. So I don't want to be selling that off for short term, particularly as we don't need the money. And then when the market turns and the bottom end comes back in because you are achieving 3% or 4% economic growth, we look like idiots because we can't get our hands on the stuff. So no, there's not a lot of actively out of the nodes if you want to get out. Laurelle and I every day do say a little prayer, thank you that we're out of Nigeria, just to remind ourselves the world can be very hard. So we don't miss Nigeria at all. But otherwise, we [ are fine in here ].

[indiscernible]

What are large independent -- I presume we're talking international brands. So international brands are the beaches of society. They sign contracts, they take fees, but they contribute for [ quote ]. They don't put any money in. They don't invest. So when you read a thing that international brand X is building a hotel somewhere, no, absolutely for sure, it is not their money. They have teams of exceptional salespeople who will sell us to the [ Eskimo ] that sign up contracts. We play in a completely different space. We're asset labeled, we own our assets and we manage our assets by and large ourselves. And where we don't is where we have long report hotels that have got long-term contracts in place like the Radissons and the Marriotts. I will honor those contracts, but we work very closely with the manager to say, in this market, we know how labor works. We know how unions work, we know how -- and you're not going to bulls*** us with STR stats, et cetera. This is where your rate profile needs to be. And it's not a hostile thing. They, in many ways, are not our competitors. Our competitors are the property developers who want to build more stock, who listen to the -- I mean I've never seen an international hotel group produce a feasibility that says the hotel won't work. Seen lots of international hotels do their best but [indiscernible] work. So our competitor is property developers with low yield expectations and access to large capital and risk appetite that we don't have more so than the international brands. I'm assuming that's what independents mean by brands. And then there is -- it is a very fragmented market. So just in case I misunderstood the question, you've got that branded hotel market, which includes us, which is formal hotels like we know them, we're about 1/3 of that in the country, maybe 30%. And then you've got a huge array of independently owned guest houses, actually, luxury hotels, 8, 9 rooms, 20 rooms in some cases, right down to caravan parks and Airbnbs and everything else it does. So it's a very fragmented market. But in our world of formal hotels, we are by far the biggest, and we think we're performing about the best if you take the whole country into account. I mean we don't get the rates that the hotels in the V&A get because they get their pure inbound tourist spend. I know the brands like to claim the reason that the inbound tourist is [indiscernible] because they have great hotels in a great facility [indiscernible] hotel and still make money. But that's just location. And I mean what I hear the Waterfront spending on the -- I think it's an Endeavor Marriott that they're building out on the key there is like ZAR 10 million to ZAR 12 million a key to build [indiscernible] proper money. You're going to need a rate of ZAR 50,000, ZAR 60,000 a night to start justifying spending that kind of money on...

[indiscernible]

I don't know. But we would hope to keep our costs in the, I guess, the sort of 6% to 7% mark. If our payroll is going up 5.5% and increase in volume, your overall payroll is probably going to hit up by 7% because you'll bring in more of your variable pay element. The costs that will hit us in the next year are like IT, we're spending a lot on IT, Software as a Service. I think our IT costs are going up by 10%. You might get -- if you get a rand strength, you get a benefit that kicks that because it's all dollar-based. But there's a lot of license renewals and you can't buy the licenses anymore. So you kind of got that moving around. But if our costs run at the 7%, then we can get revenue growth of 9%. I haven't worked out what it does to margin, but you can obviously see margin goes up. So in this year, it was 9% on costs and 7% on overheads, and that gave us 14% on EBITDAR and 2 percentage points on margin. It's also not directly related to occupancy. The one track everyone falls into [ bad hotels is ] talk about occupancy, far more important is rate. So one of the reasons our profits are so good is that the outperformance was in Cape Town and driven by rate. The underperformance was volumes in Durban and Mozambique. That incremental rate that I get in Cape Town is 100% flow through to EBITDAR with the exception of direct channel costs such as commission like a Booking.com commission or a credit card commission. But when you sit in that room, if I charge you [indiscernible] doesn't cost me anymore. You use the same amount of water, same amount of shampoo, wash the same amount of sheets back in the same carpet. That incremental flow-through is very strong. When I've got a reduction in volume, I can manage cost down. If I've got a reduction in rate, all I save is commissions and it works positively the other way. But we should keep the positive jaws effect if we can keep that a little bit of revenue above overhead. It doesn't have to be massively above. [indiscernible]. Last chance. If there's nothing else, then thank you very much for attending today. If you have any other more detailed questions, feel free to contact us, and we'll answer whatever we can. Thank you.