Southern Sun Limited ($SSU)

All right. Welcome, everybody. Thank you for joining the Southern Sun results presentation. The presentation looks very much as the previous ones have. I was going to change the order of things around. I've got quite a few people telling me not to do this. So it's in the same order, we'll talk to cash flow first, and we'll talk to income statement that are trading. I mean overall, we had a very good year. The second half was particularly strong. If you remember, our half year results were a bit whishywashy. We had like 5% revenue growth, flat EBITDA. We had [indiscernible] closed with some excuses around cost. But over the last few years, the second half is really the part that we make our money. We make about 2/3 of our cash in the second half of the year and 1/3 in the first half and our second half [indiscernible]. So overall, the end results were great, and they're kind of what we hope they would be, high single-digit revenue growth, double-digit EBITDA and then just under 20% growth in adjusted earnings, and we increased our dividend by 20%. So the final score was a good one. Group very stable from last year. I mean [ HCI ] including the foundation still 46% shareholding, the public 54%. No real change in the group. I mean the short story is we made good cash this year, and we used it all to renovate hotels, pay dividends and buy back shares. And that's the kind of story in a nutshell. The Board hasn't changed. -- well, there was one change on the Board. Rob Nicolella stepped off and Kevin Govender came on as part of HCI. So that's a little internal restructure there. [indiscernible] oil and gas. Our portfolio hasn't changed. So 95 hotels, just under 17,000 rooms and the portfolio very much the same. What we have done on our brand slide is add in just the Western, the Radisson Collection and the Radisson Blue. This previously showed what we operated directly, but I discussed around this is, put all the brands on that fall in us so that certainly from a shareholder point of view, these all matters. So we've added Western Radisson Collection and Radisson Blue as well as Echo Motel that run a couple of Sun ones for us and the Birchwood Conference Center out at the airport, which is what I call the horizontal [indiscernible] 660 keys and huge conferencing. Okay. I'll start with our cash flow. So EBITDA up 12% -- 9% revenue. SA much stronger than offshore, but good cash production there. Our property rentals are up more because we've got the variable leases on the Sandton strip. So the Sandton strip, you'll see in our segmental report too was very strong in the year for 2 reasons. The towers opened, which had been closed in the prior year were refurbed. So you had the full 557 5-star room stock back and you had B20 and G20, which brought a lot of business to the Sandton strip. I mean the G20 function was out at [indiscernible], but we had all the heads of state and European Union and everybody else in Sandton. So that was big for us. And obviously, we pay out a lot of that as a variable lease to the Liberty consortium. So that's the jump in cash rentals relating to normalizing of the Sandton strip. Working capital, normally when we're growing, we should be generating positive working capital. We had quite a good deal on some IT licensing costs that we paid for in March, where we prepaid about 5 years' worth of licensing fees. The total was just over ZAR 20 million, and you got a actual discount versus what you would have paid if you paid annually. So that caused a negative working capital, but then you have -- we don't pay anything again for 5 years relating to our Internet IP for rooms and so on. So we made a conscious decision to take the discount upfront, and that's why working capital is unusually negative for us. Normally, we positively generate working capital. Dividend from associates is our little U.K. business. For those of you that read the actual booklet, the IFRS format of the accounts, the dividend from offshore was ZAR 91 million or something, but a big chunk of that was returning capital from having sold 3 hotels in the U.K. business. I've put that further down the cash flow under associate JV loans and investments as a return of cash because it's not trading profit. It was selling hotels and extracting the proceeds. So the ZAR 15 million cash generated from operations is true cash received from the U.K. business as trading income. And interest obviously comes right down. We're now effectively de-geared. So we finished the year on a net cash position of ZAR 86 million. So we had some debt during the year, but essentially, we are now de-geared. And going forward, we should be producing interest income. We will, I think, now in the first quarter, probably got slightly back into debt because we pay our dividend, but ramping up our CapEx spend now again in the first half year. We see things like the Sun Waterfront in Cape Town, you can't renovate in summer, you need the rooms. So you spend a lot of your maintenance CapEx in the winter months. But essentially, we are now [indiscernible], so we should start earning interest and not paying interest. Tax paid got up quite a bit more than earnings, 2 reasons. One, we were still utilizing assessed losses in the prior year, which are now pretty much all gone. I don't think we have any assessed losses left. So you're now at the full WACC. And in some places like Tanzania, where we make a loss of Seychelles, where we made a loss while it was closed, and you would account for deferred tax, but you obviously don't get a cash check from the relevant government. So your cash tax paid is higher than your income statement tax will be. But pretty normal overall tax rate, I think it was 26%, pretty close to the 27% and cash isn't that far off. Operating equipment, just normal [indiscernible] the hotels. And then CapEx was a big feature of the year. So we jumped from ZAR 450 million to ZAR 600 million spend. I would have pointed out at the end of last year, we really think long-term CapEx is sort of closer to the ZAR 500 million mark. So there was an element of underspend last year because we rolled forward. And as recently as 3 months ago, we thought this year would be closer to ZAR 650 million. But here again, we have to roll forward the cash just doesn't flow as fast as we ever think it does. But I'll get you further down, there's some big projects in Seychelles. It was the biggest one where we spent over ZAR 100 million in Seychelles. And I'll talk quite a bit on CapEx of splitting that ZAR 600 million between what we think is what you're spending to keep your business the same versus what you're spending to enhance your business, with the first part almost completely involuntary and the second part, you can delay refurbs and so on if you want to probably be accelerating stuff. So CapEx up in the year, and that brings you overall to free cash flow just over ZAR 1 billion. If you reconcile free cash flow to earnings, our profit for the year is ZAR 1.2 billion. That difference of ZAR 300 million really is the excess of CapEx over depreciation. We run somewhere around a ZAR 300 million depreciation charge in the income statement, and we had about ZAR 600 million of CapEx. And that's because we're investing heavily in the product at the moment with all these refurbs. Otherwise, earnings basically equals cash. Then looked after our shareholders, paid our dividend. That was a 25% -- ZAR 0.25 a share last year that we paid the ZAR 344 million. And then we did ZAR 359 million of buybacks. We didn't have that many. I think we had about ZAR 76 million at the half year. After the [indiscernible] deal was canceled, well, we're not going to spend ZAR 700 million on buying hotels in Sandton. Yes, we do buybacks. And then the Iran war started, and it must have shaken somebody because we suddenly got quite a bit of volume. So we were quite [ upset ] about that. We bought 37 million shares in the month of March, and we bought another 3 million or 4 million, just looking at Laurelle, how much, 4 million shares in the month of April. So we've managed to reduce our share count by another 40 million shares. I think as of today, we've got 1.310 billion shares in issue. And that was ZAR 1.5 billion after the HBF swap up a couple of years ago. I think in this environment, it's quite a good use of cash. The yield on us is still much higher than you can get on most other assets in the market that we would be able to buy. And that's our hurdle for acquisitions or new builds or anything is you buy back better than else spend the money on. So in April, March, we spent close to ZAR 400 million on share buybacks. If we hadn't done that, obviously, our cash position, which ended the year at ZAR 86 million would have been closer to ZAR 400 million. We would have a lot more cash, but we figure that was a good allocation of resources. Disposal proceeds, we sold 10% of Birchwood back to the founding family and Kevin is working furiously and hard and be motivated there. So that was good. That money went into Birchwood. So we now own at 90-10 with the family, and that money has been on a redevelopment of a very big conference facility there, which will come through in the F '27 year. Expansion CapEx and small odds and ends on really fees and so on around Beverly Hills. And then the money that came out the U.K. from the disposals that brought us from ZAR 266 million debt last year to ZAR 86 million cash this year with the vast majority of it going into CapEx and returned to shareholders. There was expansion CapEx. Maintenance CapEx. So this is -- I spent a lot of my life on analyzing this, thinking about this and working on this. So the pure maintenance CapEx you see at the top that is what keeps the buildings alive that is you have to spend that as long [indiscernible] so that includes everything from new beds, the bird cages that the luggage on the kitchen equipment that breaks and burns out and put in new stuff, basically, you had something, it's worn out, you've got something going. Repairs, maintenance that you capitalize versus one that goes through the income statement. There's another ZAR 200 million sitting in the income statement of pure R&M that we expense. And then in this year, ZAR 63 million, ZAR 61 million of IT. We ramped up our IT spend quite a lot. So in F '26, we did a lot of work on the Internet services to the hotels and the whole infrastructure for that and your IPTV, your smart TV so you get a much better clearer picture. In F '27, we're going to be spending a whole lot on our networks. Our servers are 16 years old and end of life. So clearly we've got a huge budget for network replacements and then we go back to IPTVs after that. But that number of ZAR 227 million, if you -- is a little bit lower than it would be normally because of the amount of refurbs we do. So the major projects below that will also include work that will then be wrapped into the refurb project that you would have spent. So if we hadn't renovated Paradise Sun, we would have -- in theory, the project of ZAR 112 million would have not happened, but we still would have spent other money on repairs and maintenance, et cetera, that we had encapsulated in the project. There's always going to be something breaking needing replacement. They've got a whole new kitchen here, but they would have needed new kitchen equipment anyway. So that ZAR 227 million is lower because the ZAR 373 million is higher, but it's not a material part. And in general, if you think about this business, you're going to be spending ZAR 300 million a year without enhancing anything, just keeping the system alive, and that's kind of what our depreciation number is running at, at the moment. And then you put money into refurbs and you hope to get a better result and a new product out of the refurb. And over time, your depreciation number is going to go up as that refurb money gets spent. You can't -- you can delay refurbs, you can prioritize this one versus that one, but they're not going away. They are all coming. And at the end of 5 years, we'll have a glorious-looking portfolio, but something that looked fine 3 years ago, they're going to be up. So this never goes away. In total, there you can see the major projects we did. We ended up at ZAR 600 million. I'd say you're very unlikely to see a number below ZAR 500 million over the next 5 to 10 years with that sort of number escalating. We have a quite clear vision of the hotels. We want to tackle in the next 3 to 4 years, it becomes more opaque after that to kind of see where the market is, which one become more priority, who's aged well, who hasn't. But these are the ones we prioritized at the moment. And it's quite a lot. So we did -- I think of our own portfolio, we did 652 rooms in the year, adding towers at 852 rooms. So I mean we've been running at probably about 1,000 rooms a year run rate out of our total estate portfolio of 17,000 rooms, we're refurbishing about 1,000 rooms a year. So the development department has been pretty busy. I'll show some pictures and some of these various refurbs further on. Debt now becoming a bit of a nonsense or no story here [indiscernible] nonsense about it, we don't have debt anymore. So we settled the -- in October, we settled the last of our dollar debt in Mozambique. So we have no dollar debt and no debt offshore. In fact, we have net cash sitting mainly in euros in Mauritius. And we have -- at year-end, we had ZAR 500 million drawn down in SA with ZAR 1.5 billion of unutilized facilities, and we've subsequently settled that. You can see we had cash on hand there in that. So as of today, we have 0 debt drawn down and net cash in the books. So that's a great position to be in. And whatever the future holds, you can make more money, less money, you can be super profitable, grow fast, grow slower, [indiscernible]. You don't have debt. Just existentially you aren't facing the kind of risk you do get over gearing. So I'm pretty tracked about that position. Trading. So yes, it was a strong performance, particularly in the second half of the year. Overall income up 9%. Occupancy at 62.9%, which is just under [indiscernible] 63%. But what is good is in fact and then the offshore operations we're sitting at 39.5%. And that's a bit of an artificially low number. The Seychelles that was closed for the 6 months, the rooms available stayed in the denominator. So occupancy is rooms sold over the rooms available. If it's closed for less than 6 months, you don't take the stock out of rooms available. So essentially Seychelles had in the system showing 0 occupancy for the 6 months it was closed instead of taking it out of the numerator and the denominator. So 39.5% is a little artificially low. But 64% in SA is great. We think your pricing power should start coming through that we get an increase in rents. Our 5% increase in average rates in the year, a little disappointing to me. I'm trying to push rates more, but we are -- we think we're taking market share or at least we're getting new aspects to the market that we didn't have before, and some of that is coming at a price. So we have a large chunk of business that comes directly to us through what we call the transient travel, so just people going about their business. And then we have all the contracted stuff. And our sales team has been very busy. And that is quite a competitive market. We've got to be keen on [indiscernible]. And I also think as inflation is coming down, that we start -- 5% used to be a terrible rate increase. It's now 2% above inflation. Inflation was 3% last year. So certainly when you're dealing with the procurement departments of corporates, SOEs, et cetera, they're not interested in you coming along with a double-digit price increase when inflation is sitting at 3%. We do ameliorate that when we have high bulk rates because nobody gets lost room availability. So we can yield you out, but your average contracted rates, you battle a lot to get significant price increases unless you are sitting in a very high demand market. So overall, increase in occupancy, decent increase in rate, and that gave us a 9% revenue increase, which is, I guess, 2x inflation. So that we're pretty [indiscernible]. Seychelles, I'll refer to a couple of times because of its impact of being closed. Mozambique and Tanzania is still tough. Mozambique had a relatively good second half of the year actually. There was some quite nice recovery. The December trading was good, but the market is still in distress. It hasn't recovered from that election-based violence. It's got fuel shortages there at the moment. It's got currency shortages. So it is difficult. We are not -- we're making money there. We're not making the kind of money we should do. Tanzania, we're not making money. We're actually losing money, and it's very, very difficult in Tanzania. They've just the most awful violence around the election, and this remains a very, very difficult market. Obviously, a story of the year, you'll hear over and over again is the G20. It's not just the big summit that happened in Sandton. It's about 100 events that happened over the course of the year all across the country. So that was good business. That obviously creates a bar that we have to cross in this coming financial year. But we've got things like the New Zealand rugby tour coming to South Africa, which is like massive for us, particularly for us because we host teams and the media and so on. So there's always something new that comes in, whether it is not as big as G20, but there are some big events coming down the line. But the story of F '26 anyway, G20 was good for us. Not ramble on too much about that. Seychelles did really well post opening. So we opened it on the 15th of September. By October, we were running like huge volumes, 85% occupancy almost immediately, great rate, fantastic feedback from the guests and a really successful refurb going like a Boeing and then everything shut down because the Middle East war started. So everything -- it's not as bad as that. We went from probably 75% occupancy to 55% occupancy, but a large amount of your airlift into the Seychelles comes from the Middle East. We're still doing quite a bit better than the market there because we have a very European focus in that hotel. So our key markets are Italy, France, Germany and the U.K. Some of the very high-end stock in Seychelles had pivoted a lot of its sales and marketing effort into the GCC and now the GCC has got into stress because of the Middle East war. So they're back into that. But ultimately, until that settles down, disruption of the middle East is really not that for Seychelles. We haven't seen much impact in South Africa. We've had some cancellations, but if I was to add it up in my head of what people have told me, I don't think it's ZAR 10 million. So we haven't seen a decline in tourist numbers. We haven't seen a decline in bookings. Even our forward bookings are good. I mean, May is turning out to be a spectacular month in Cape Town. So that's all working fine. So I'm not -- there's been disruption of some of the air capacity, which is big. I mean I think the Middle East makes a big chunk of our air capacity coming in here, but it doesn't seem to have affected inbound travel into SA. What we're not certain about, I guess maybe I'm still -- I've got my old casino days in my head when you have big fuel costs going up and so on, that's just terrible for the consumer. So I'm not entirely sure what all this volatility does to the SA economy. It's not so much that we won't have foreign travelers in Cape Town. It's what happens to local travel because diesel is ZAR 35 a liter. What happens to local demand if interest rates stay high and inflation goes up, expecting to carry on declining. Food prices, taxi fares, everything else. That's the bigger concern about because a large portion of our business is still exposed to the SA economy and local travel. So that's a bigger worry about the Middle East impact than actual flights into Cape Town or Joburg. There's some detail on our income statement later that I'll show, but food and beverage went a little bit faster than room revenue, but that's not because we sold more food and beverage. I think I mentioned it at the -- either at the end of last year or at the half year things, we gave an increased allocation to the breakfast and dinner allocations on our packages. So when you book a bed and breakfast rate, say, ZAR 1,500, we take out that and then we allocate ZAR 185 or ZAR 225, whatever it is, through breakfast and the balance is what we record as room revenue. Now that number has been static for a number of years. You use that number goes to the chef and is recorded as breakfast revenue, and that's the measure against your food cost percentage is how you control your costs in the kitchens. if you're too tight on that and you allocate too little, the chef will ultimately underdeliver because that's the revenue you can work with. And if you're too generous, you'll find you overdeliver and you lose control of your costs. And you think you've got a great 28% cost of sales in food and beverage, but actually, it's 28% of our inflated revenue number. So it's something we watch quite closely. Anyway, long story short, I increased those allocations in this year. So if we hadn't done that, you would have had a slower F&B growth and a higher room revenue growth, but it's pretty marginal thing, and that's why rooms go up by 8% and F&B goes up by 9%. Employee cost came in a net 4%. We gave higher net increases, but our STIs for the year, sadly, are lower than last year. Our STIs largely financial based on achievement of budget. We hit our budget this year, but we didn't hit the stretch exceeding over budget that we had in the prior year. So our total bonus pool reduced from something like ZAR 127 million to ZAR 109 million. So that -- and we had an overprovision in the prior year. So what ends up is that your overall cost in the year comes [indiscernible] down your payroll cost. And payroll is still our biggest number in our income statement. So controlled at 4% is pretty good. We have implemented sub-5% wage increases for F '27, and that's all done and across the board. So we are -- we try to give above inflation pay increases with inflation coming down means pay increases are lower than in the past, but they were still 1.5% above inflation that we've allocated -- that we issued in F '27 year. I spoke about this quite a bit at the half year. Operating cost pressures came from some unexpected places. One was IT costs, which was really my fault that it wasn't expected because it was clearly coming, I should have seen it. But essentially, our license fees go up dollar pricing with high dollar inflation, offset a little bit by rand strength, but generally Software as a Service, so you have zero negotiating power with Microsoft and across the board, our IT license fees went up, plus the [indiscernible] of the SAP HANA upgrade. So there was an increase in license fees and so on related to that. Property costs, your rates, taxes weren't too bad, but your administrative costs like electricity, water, et cetera, went up double digits, well above inflation. And on top of that, we had the impact of water shortages and supply breakages, particularly in Sandton, where we then had to trucking water. And trucking in water is like 10x the cost of just having water come up the taps. So at the moment, in Sandton City, for example, we're installing another 350,000 liter storage capacity. So at least you can run down your storage and hopefully refill that with municipal water when the supply disruption is over as opposed to having to truck the stuff in because it's [ properly ] expensive. It's interesting, I spoke to Kevin from Birchwood this week, and he said they are basically completely off grid on water now. They're totally self-sufficient and actually producing bottled water there. So we do have, I think, in our group, how many boreholes, 20 properties that run on boreholes. But this administered cost of electricity and water is like a continuous burden on us. And then lastly, our channel costs went up because we -- part of the reason we've done so well in revenue is we have opened up the OTA channels more effectively, those come with a cost. Now if you just move existing business from direct to OTA, Booking.com, et cetera, that's bad for you because you go from 0 channel cost to a high channel cost. However, we don't believe that's happened. We think we've accessed a channel we wouldn't have had before. So it brings additional business in that has a lower margin because of the channel cost. But overall, it's still a high-margin business and not as high as direct, but it's good to have. We are also not a rate parity country, thanks to CompCom. So you can price up on the OTAs. You don't have to have the same pricing as on your direct. So you can offer the best through direct and price up on OTAs. And that often works well because OTAs will then take some of their commission and put it back into the pricing to try and compete with you. So OTA has been a good strategy for us and quite -- they've actually worked very well with us, particularly Booking.com. We were off Expedia for a year because we had severe disagreement on fee structure, and we are now back on Expedia because everyone's come to their senses. But that's going to take a while to get back to its normalized levels. But Booking.com has been going great guns, and they work very nicely with us. And there's definitely a market that we won't get, particularly foreigners may not know our brands. The Genius program is strong. So there are people that just -- if you're on Booking.com, you get access to 5,000 hotels. There's definitely a market we have to be in that we have to manage. Those result in an increased cost, but it's a pretty good business for us. South African EBITDA overall 13% up. We were 12% for the group, obviously, offshore is quite small, but the cash flow was strong, and we spent a lot of that -- i covered in the cash flow on refurbs and projects, giving out dividends and buybacks. So I've covered most of this slide. What are some of those projects themselves? So you won't see the Radisson Collection one in our cash flow because it's an investment property. So its replacement reserve sits at property level, we just record what we receive the distributions from it. But it had a lobby and public area refurb plus, I think, 95 of the rooms. So it's looking quite beautiful. It's the only Radisson Collection, I think, on the African continent. But given the location of that hotel on the [indiscernible] I mean, it is a spectacular location. Paradise, I've referred to several times. So that was a very successful refurb. And once the Middle East settles down, I think that's going to be absolutely great guns for us. We're hoping for probably north of ZAR 3 million a year out of that business, which is not bad for a 80-room property. Mbombela, small hotel in indiscernible], 109 rooms. We redid all of those. The Gautrain hotel got a full refurb. Cullinan was the big one last year. We finished that off in this year. And Birchwood has done, I think, 200-or-so rooms out of the 600. And then the big project this coming year is going to be the Terminal A, the 2,000-seat conference facility that's going there. That's just a little bit on the Radisson Collection. There's that location, on a Good day, it's just magnificent. Cullinan largely covered, Mbombela and Paradise. And what are the others we're working on? So Newlands, we did about half the rooms this year. We're going to -- these are about half the rooms. We finished the next half now in F '27. As I said in Cape Town, you can really only work in winter because you need the stock in summer, demand is so high. So you stop all renovating work in summer and then you go back in the early part of winter. So Newlands will finish off this year. For those of you that attend the RMB conference, by the time that happens, we should have a fully refurbed hotel. It was quite a lot at that investor conference last year because there were a lot of people staying at our hotel, you could see the ones that have the new room versus ones that had the old room. So a bit of misery, but everyone will have a new room this year. Hazyview, it wasn't on the list, but we had a bit of a roof problem that some structural issues. So we said we've got to take the roof off to fix it. We may as well do that entire block. So we're doing 24 rooms there, and then we'll do another 30, I think, rooms next year. Waterfront is the big one. So that's the 500-room hotel next to the Cullinan. That's going to take us 3 years. Signed Off for markup. That's all looking great. But again, it's 504 keys. It's just -- you just don't get that done in a year. And so development told me they need 3 winter seasons to get through it that will start in this winter. Mount Grace is also a multiyear project. We have just finished all the bar, lounge public areas. We've done about 1/3 of the rooms. We're busy with the restaurant now. I mean we're trying to get this thing up to a single good standard. It is one of those properties where you see these rooms were 30 years built and these ones were 20 years ago and these are 10. By the end of this, they all look good. It's going to take another 2 years as we access the rooms, but it is coming out beautifully, and it is such a gorgeous property in such a gorgeous location that I think this is going to be a total relaunch and reimagination of what Mount Brace is. Hyde Park, fetting around because we can't really understand what to do on the Level 6, which is all the restaurants and so on and just instead of holding back, we've done the markup room for the bedrooms there, and it's looking absolutely beautiful. So we're going to push ahead and do the rooms. It's not a terribly big hotel. I think it's 135 keys or something. So we're going to do the rooms this year, and we'll figure out what to do with the lounge and the public area because they're working fine. The big unknown is you put a whole new concept in there or you just renovate what you've got, putting new carpets, furniture, et cetera. But the bedrooms that was built in a bit of a grand scale. So they are a nice size. I think once you push that button, this hotel is going to see pretty good rate upside because it's essentially a Deluxe hotel on my Park shopping center there. And then Elangeni & Maharani after signing the new 50-year lease, we now started with that. Whether it's [indiscernible] or not, what I have done is I'm going to disclose Elangeni & Maharani under expansion CapEx. The logic being that if we hadn't signed a new lease, if we walked away from Durban, this wouldn't be there. And we have essentially got to -- it's not build a whole new hotel because there are structures and so on there. But we have underspent on that property for a long time because of the uncertainty over the lease tenure. So there's ZAR 255 million that we have to spend in the next 3 years. Overall, we're going to spend about ZAR 500 million on that property. And we're just keeping this as a separate line item because the choice was either walk away and you have nothing or treat it as almost like a new acquisition. A lot of the first money that's going into there is going into pure infrastructure. [indiscernible] close to ZAR 30 million just on IT between Internet TVs, door locks, et cetera, to modernize all that. You've got vast public areas. You got 2 big buildings with big lobbies. You've got 11 food and beverage outlets and 734 keys. So it's a big project over the next few years. I'm personally very excited about it because it is one of my favorite hotels. And there's going to be quite a lot of focus on that over the next period. Debt facilities, as I said, becoming a little bit irrelevant because we have settled everything, but we do have ZAR 2 billion of unutilized facilities, possibly too much, but you never know what comes along. We could do a ZAR 1 billion, ZAR 1.5 billion acquisition very easily. So we do keep ourselves quite well funded. And then there'll be a little bit of working capital move in the first half of the year. But certainly, at the moment, our cash flows are so strong, we could -- we don't really need any of that debt unless we buy something big. Okay. On the income statement. So that was all the cash flow and the kind of way we think about business. Room revenue up 8%. I said the occupancy at 62.9%, not helped by 39% offshore, which is not helped by Seychelles being at 0% for 6 months. But overall, 8% growth in rooms revenue, 9% in food and beverage, as I explained, the allocation part is different. Property rental income, which is the hotels that we treat as investment properties, also 8%, kind of straight move there. And then other revenue is driving 14% up. This covers everything, but we did well in our management fees go up because I managed some of the managed properties did better. Our golf revenue was much higher. Arabella has now been now the #6 golf course in the country. That hotel is like a remarkable growth in profitability, popularity. So golf revenue is up. We make a bizarre amount of money out of no-show and cancellation fees, which is not really how you want to make your money, you want the guest to be there. But people that just book, pay and then don't arrive. So that had an increase in the year, which is a function of just volumes going up. So we had a 14% increase in other revenue. So overall, 9% up in income. Overheads at 7%, particularly payroll being controlled at 4% on the back of lower bonuses. Laurelle and [indiscernible]. But that's obviously how you control your cost and the EBITDA coming in at 12%. So the jaws effect doing exactly what it should. Property rentals and amortization, I mean this has got all IFRS stuff in it. I hardly look at it. I look at the cash flow number for rentals, which showed 20-odd percent increase because of the variable rentals on the Sandton strip. There's quite a lot of IFRS adjustments in here. We try to set out in as much detail as we can in the commentary and so on as to what those are. But essentially, property rentals, amortization, depreciation and interest are all impacted by IFRS 16 on the leases, and I just referred to the cash flow for the real items. The exceptional items, by and large, all year-end adjustments from the auditors. We had a write-up of some ZAR 75 million of our investment properties and a write-down of 37-odd or something of our property, plant and equipment, which was -- a big chunk of that was the Radisson Gautrain hotel where the valuation of the hotel hasn't changed, but we spent a whole lot of money on refurb. So we had to write off the refurb in one go. The value, we have got a 14.5% discount rate on the stuff, which I think is a [indiscernible]. And the base discount rates have not come down, even though interest rates have come down. So at some point, we are going to have a massive revaluation of assets because they do bring the base rates down or if the rates go up, but we're not going to have any change on the properties because these discount rates are so high. But you don't argue that the valuers do what they do in the auditors ticket. So those move up and down all noncash that's. Exceptional items, then we take it out of adjusted earnings. Associate earnings lower than last year because we have a much smaller portfolio. We sold those hotels in the U.K., and we got the money back in. So that number comes down, and we really think mostly about the cash number of the dividend we received. The management company, RBH in the U.K. is doing very well. We did a bit of a cost restructure there and just a refocus because as Starwood disposes of a lot of the old redefined international portfolio, the management company was running those hotels and you had a risk of losing management contracts there. But they've restructured themselves not to be as reliant on Starwood. And they've done a very good job. I mean they're signing up a couple of management contracts a month in many cases, and they've got a really lean structure going there. And some very innovative stuff that I'm actually getting learnings out of in terms of automation of processes and so on. So it's a nice little business that's doing -- I mean it's not big in our lives. We get maybe ZAR 1 million a year in dividends, but it's quite about ZAR 750,000 in dividends, but it's a very nice business to be involved in. And then income tax, as I said, is not much change in the income statement because you kind of just follow your earnings, but in the cash flow, quite an increase because we've used up the assessed losses and you don't get -- when you have deferred tax on offshore losses, you don't get paid back to you in cash by those revenue authorities. The adjustments between normal profit and adjusted earnings are those fair value adjustments and the [indiscernible] so overall, ZAR 1.2 billion profit. The number of shares in issue don't change from a weighted average point of view because we did the big buybacks all in the last month. Laurelle included on the slide here at dividend declaration date, we had 1.3 billion shares left. So that's down from about 40 million from last year. And we issued about 10 million shares to share scheme participants in the year. So overall, you went up by 10 million in issues and you bought back about 50 million or in total, 40 million and then that's your net number out. So you don't see a change in the weighted average here, but you will see a change in the weighted average in the coming year, obviously, because that kicks in immediately from 1 April. Some quarterly numbers. And there, you can see the big acceleration in the second half. So the first half was 5% revenue growth, flat on EBITDA, flat on bottom line. Second half was 12% revenue growth, 20% on EBITDA and 29% on the bottom line. So very strong growth in our peak month. And some of the months were just like astounding last minute just pick up volumes. March was an amazing month. This has continued into the new year. April, we are well up on last year, and May is looking to be a pretty spectacular month, not in every region, but Cape Town itself is just shooting the lights out. So it seems pretty good at the moment. Q3 had G20 in it. Q4 did not. So by the end of November, I think it was G20 was completely done and finished. Q4 is straight -- there's no big event or things that I can think of there. That was straight transient, domestic across the board demand, did well everywhere. So there is some accounting benefit that you get in the last month because we clean up provisions that we built up in the year and so on. Laurelle and I look to try to get that a little bit more evenly, but it really doesn't change the numbers by much affect the quarter, but you accrue for marketing expenses based on your budget as you go and you release it every quarter. And you get to end the year actually had more accruals and you didn't spend any of it, so you release all of that. But that's not what's impacted here. This was just like really good demand, good pricing in Q4. So we're pretty chuffed about that. From a regional point of view, obviously, the consortium was a very strong growth. The EBITDA is up 31%. As I said, that the tower has been reopened plus G20. The SA portfolio, if you include the Manco benefit across SA on its own, excluding offshore, was like 11% up and -- sorry, about 10% in revenue and 11% up in EBITDA. So every region had growth. Cape Town came in at 9%, which are very chuffed if you consider the pretty exceptional growth we've had for the last few years. And in this period, we had certain nonrecurring sports events, some of the events at the CTICC didn't have as much delegate take-up and so on, and it still produced 9% EBITDA growth off of that high. So talked about that. KwaZulu-Natal started weak. The first quarter, it seems so long ago now, but remember, we had a budget that was declined twice in parliament. We had delays in municipalities getting the allocations like first quarter was very, very hard and came through strongly in the 9 months after that. So KwaZulu came in at 15% EBITDA growth, albeit F '25, which we pointed out at the time was a bit of a low base. Nice growth in KwaZulu, most of that coming straight out the beachfront. Gauteng overall, 9%, much stronger in Sandton and Rosebank. The Southern Sun Sandton and the Southern Sun Rosebank had fantastic years. They're performing at levels that they should be at now. So very nice profitability out of those, offset a little bit by slow growth on the Pretoria and some of the Eastrand market. Eastrand, some of that government conferencing and so on slowing down a bit. But hotels like Southern Suntambo [indiscernible] running at higher volumes anyway. So there's not a lot of growth there. And in Pretoria, we have an issue or 2 that we need to address. So overall, Gutent at 9%, but still very nice numbers. And if you include the Sandton strip into that, Johannesburg area really performed well. I still think that's probably one of our biggest upsides, if you can start getting decent rate growth because the rates are Cape Town the highest, Durban next and then Joburg and Sandton rates are not where they should be. So we're trying to push that quite strongly. And then costs, the unallocated portion largely comes down on the back of lower unallocated short-term incentives getting lower bonuses. At the bottom, 10% up in revenue, 13% in EBITDA and offshore negative, principally because of the Seychelles closure. So I would anticipate, assuming we don't have a really long dragged out Middle East issue that the offshore will show very nice growth in F '27 just full year trading of Seychelles. And it looks like Mozambique is doing better, if not brilliantly, and Tanzania is what it is. I've spoken to these. Gauteng did very well out of conferencing impacted a little bit by water issues, but we need to get some volume and rate into -- more into this market and it's done well on the refurbs we've done here. Quite a lot of our CapEx in the last year or so has gone into the market. Cape Town did pretty well. Some large-scale events didn't happen, but they're done, I think, well in the year to maintain that high base. And then the highlight was really was signing the Elangeni lease. We don't pay any rent for the first 3 years. We are spending ZAR 255 million in the first 3 years, and that's all actively going. So I think I've largely covered this. The outside areas did pretty well. I mean [indiscernible], all that trade is continuing. Think back a little bit on this year, but I'd say at the moment, sentiment is a bit weak and you've got stuff and high petrol prices and so on, but it's amazing how as the sentiment bounced up like it did going into December and so on, like you definitely get a volume uptick in travel. It's not just the economic circumstances, how people feel that drives a lot of business travel. Just you got good sentiment. Income statement, very hard for me to talk to all of this. So there's detail in the booklet on the leases, but they're so impacted by IFRS 16. We've got this -- I mean the Sandton strip is essentially 100% variable lease. What we earn EBITDA, we can keep our management fees and we pay it out in rent to them. But because you've got a fixed and variable portion within a year, the auditors make us do all sorts of adjustments, which we get a credit in the rental and then a depreciation charge to write it off so that you don't have any income statement impact. Otherwise, I'd be making profits that I'm never going to realize. But I just strongly look at the cash flow and say what is the real cash move on interest depreciation and rent and the exceptional items I've covered -- pretty much covered all of this. Finance costs, share profit from associates, I have covered all of that. Share buybacks, as I said, you won't see it in this year, but you will see it next year. And overall, 41 million shares down. And we'll continue to buy back as long as we see really good value in it. Definitely one of the better ways we can allocate our capital. Okay. So I'll jump through all of that a bit, but it's kind of a very repeat record story. The revenue performs and we control the cost, everything flows where it's supposed to go. It's what we do with the money, and our strategy remains internally focused. So we say we have an irreplaceable portfolio of hotels, I've said this publicly a lot. If you -- I gave you ZAR 40 billion in 10 years, you couldn't rebuild what we've got. So we think investing money into that is the right way to go, and we're seeing good returns on the properties we have put in. I do get asked a lot, well, do you spend this much CapEx, what's your IRR or what's your return on investment immediately. It's hard to claim that it immediately jumps up. So Cullinan had 15% growth in EBITDA and it goes on the back of a refurb. So it must have been a genius move to refurb it, you would have had growth because the cap on market strong if you hadn't refurbed it. But ultimately, you have to spend money on the properties. So to claim that, look, the refurb did this and therefore, automatically we went up, I don't think that's true. But keeping your portfolio as good as you possibly can got to be the right long-term strategy, particularly in a market like Cape Town where you're going to get new stock coming down the line, you don't want to be competing with that with old stock. You want to be competing with new stock. So we still think you just can't get what we've got. We're the lowest cost producer and spending money on the properties is the right way for us to go. And that's what we're going to do -- carry on going forward. We do have the larger development projects, but they're not a lot of them. So we're working with [ Sullivan ] and Co on the Oceans developments, that middle tower, where we will take an equity stake plus have a management contract of the entire tower. That's all still in progress, even though the cranes up, I think that buildings up to nearly the 20th story or something, already sign of the markups, all looking very good. And then the planning for Beverly Hills is continuing. We are in the city are fighting with Oyster box next door. They're fighting with us. We're telling them they're wrong because they're trying to question [indiscernible]. But that will all pass. Beverly Hills, I'm very keen to do. We've got to pick our timing right, but we think we can do it for [ ZAR 100 million ] and the design and stuff look really great. So and it is without a doubt the best location. So that's one we are working on, but we haven't pushed the button yet. And then obviously, our Cape Town joint venture with -- we want to do with Growthpoint in the Forshore area, that land that we've got outside Cullinan, where we're planning a mixed-use 330-room 5-star hotel plus offices for a single tenant. And they've got we at the back and we're working on that. And there are -- we've looked at a couple of acquisitions in the year. There's stuff floating around. We haven't looked anything. But I do think we have a bit of a wobble in the market and a little bit of nervousness around interest rates and a little bit of the -- Laurelle, batteries going slightly, we need to establish it again.. A little bit of a shake in the market could just shake out some acquisition opportunities for us, but there's nothing that we've particularly done at the moment. Crisis around the battery [indiscernible] has been averted. And the Middle East was exactly that type of prices. I don't think we would have got 40 million shares if they hadn't -- at the price we did, there hadn't been a bit of a Middle East wobble in the last month. So we do try to take advantage of that. We don't know what the impact of it will be. As I said, it's more impact on the South African economy and so on, but we've got a bulletproof balance sheet, and we'll see if it gives advantages that come out. Like you definitely in a time of uncertainty, you want to be facing it with 0 debt. And I think it may just shake through some opportunities for us. And if we don't get them and we sit on cash, special dividends and buybacks are the default to the shareholders. Okay. So that is pretty much the presentation. if you understand last year, but that we're very happy with the growth continues. And I mean, it's just been an astounding recovery from the COVID days and long may it last. At the moment, we're not seeing any latter, we should be reaching normalized levels. And that's still a way off. I mean I remember trading at 68% occupancy was the norm, and we're only at 64%. So there's still upside provided you don't have any catastrophes in the world and so on. Okay. I can't see anything on the screen here, but I'm happy to take questions.

Marcel, so the Beverly Hills, just the estimated completion date, I mean, once you get all these things good to go, and then how profitable do you think they'll be?

I'm not going to answer the second one. But I mean, look, it's a great location. The big decision you're going to make on Beverly Hills, I can either renovate what I've got, which is a 90-room hotel, spectacular location, 60-year history, glorious feel, lots of customer loyalty. We spend a couple of hundred million on it, and it is what it is. What we're planning is a entire redesign. So completely strip the existing tower, virtually bare concrete, expand it from 89 keys to 177 keys, redo the whole swimming pools, resort style area, new F&B offerings, take away the cabanas, move them closer to the pool side. So if we do that, that's about, as I say, current budget sitting on ZAR 950 million, I think. That's almost guaranteed you're going to ZAR 1 billion when you've done. It obviously needs to become a substantially more profitable hotel. That sort of scale hotel could easily make somewhere between ZAR 120 million and ZAR 150 million a year if your market holds and your rate holds and all that sort of thing. It's a great location, 177 keys is not a big ask for volume. So you could get a very nice yield on your spend there. It would take us 2 years to do at least because it is a big chunk of new build. With all of this, once you start, you don't want to stop. So this, the new building in Cape Town, -- we're doing all the work as in right down to detailed building plan designs and submissions. We just got to pick our day when we're going to start. Beverly Hills is lower risk because it's not a skyscraper in Cape Town that goes up 150 meters in a town, [indiscernible] wings and so on. So just sort of construction risk and understanding all of that is it's an easier build. But those are the only 2 large-scale projects that we would go at. And we haven't made the call when to start. We'll do it when we're ready. The nice thing about both Cape Town and this is that we own it. So nobody is going to take it away from us. We don't have to make a decision to buy or not buy. It's not like if we do it this year or next year, it really doesn't matter. It's ours, and we can do it when we feel like it.

Sorry about that. If nobody else has a question, just another one. Just on the direct flights to Durban, I feel like what's holding back tourism a lot to Durban. I mean not that it's doing terribly. I think it's picked up a lot, but the direct flights, and I met Patricia de Lille on the airline. I was coming back from Mauritius the other day. And I mean it makes no sense. They're absolutely pumping it, but Durban has a severe shortage of international flights. And I told them what is holding it back and she didn't really have an exact answer for me.

No, neither do I. I mean the truth is if there was demand for those routes, the airlines would put it on. I know Turkish was flying in there, but it was a hop from Joburg. Emirates was doing direct. I don't understand what triggers an airline to do it or not. What's interesting is with Club Med opening up the road, Air France is not doing direct flights. And normally, Air France and Club Med hunt in a pack. So wherever the one goes, the other one gives a flight. And Air France has said they're not doing it. Whether that will change in the future or not, I don't know. But at the moment, I mean, our Durban market is virtually all local. It's not an international destination, not helped to a large extent by Durban's past bad PR around infrastructure and so on. Even that doesn't affect the North Coast, it doesn't have the reputation that Cape Town has got. And it hasn't marketed itself and built itself like [ Wescrow ] has done for Cape Town. They've had a direct air access program sponsored by the DA government and pushed very hard and a lot of private input into it to get those direct flights in. And Cape Town today is just substantially differently thought of to what it was 20 years ago. 20, 25 years ago, it was a backwater [indiscernible] at the end of thing that you certainly didn't want to go anywhere near in winter, and it's just a totally different market now. So Durban has got a lot of work, but it has that potential. And my views on whether Club Med will be successful or not now there. Club Med is great for tourism for Durban. It's another reason to put KZN on the map. So hopefully, these things will come in time.

Marcel, Minister [indiscernible] mentioned to me that Air France is planning to have direct flights to South Africa.

Yes, but I'm not sure it will go to Durban, but we'll see.

Saran, do you want to go ahead?

Sorry, I was also plugging in my computer. Marcel, just some more color on KZN, the beachfront. You mentioned spending on Elangeni, but there was a figure of ZAR 1 billion mentioned, which will include other hotel revamps. Is that still going to go ahead? And then the plans for the Oceans development when -- obviously, it's not as much CapEx because it's a lease, but that's quite a big development and it's likely to happen before Beverly Hills from what I understand. So some color from that perspective. And you mentioned Club Med, there are developments further up around there with Zimbali. Is -- would Southern Sun consider further investments up the North Coast considering the boom around Balito and that sort of thing, especially with international players looking to enter.

So yes, we would look up north. International players look to do anything but spend their own money. So you can count them out as long as they can find somebody else to spend the money, they'll put a flag on anything that moves. We would look up north. I think what Club Med is going to do is unlock a new node, very much like Sun City did around it, which suddenly became the [indiscernible] resorts and that sort of thing. So you'll get more and more growth. And at some point, we will go into that. I think it is very dangerous to rely completely on leisure up north. Beverly Hills is -- it's a resort hotel and it's going to be a beautiful resort hotel, but it's still going to get more than 50% of its business is going to be business-related travel, people coming for work. And the corporate market is in Flunga. It's not Balito. At the moment, if you were to put a hotel up in Ballito, I think you bleed because you cannot rely just on leisure and visiting friends and family. You need to be [indiscernible] for that because you need you need all the sources. You need to be able to do business travel, conferences, groups and leisure. And that market is in Flunga, not up north. So our focus will be down here. On oceans, it's not a lease. It's a management agreement, and we take a stake. So we are going to co-invest with the IDC and the developers in the property. We will own somewhere between 25% and 40% of it, which is uncertain at the moment. And we then operate the entire building, but it's not a lease. It's a management agreement. That will come first because the building is going up. I don't think they're that far away from topping out at the top of the building. We have penciled in opening date of May next year. So there's lots of paperwork and contracts and all that still happening and the IDC funding and so on, but it's Vivian is building away furiously while he's doing it. Back to the Durban Beachfront, yes. So they like quoting the ZAR 1 billion number. I mean it included, first of all, in our Birch, we had a fully functioning, fully kitted out, fully operational hotel. If they didn't allocate it to us, we take all that kit away. So there's a chunk in there for existing investment in the property that nobody else could compete with. And then as you say, over and above the ZAR 500 million we spend on Beverly Hills, we will spend money on Edward and on South Beach. But they don't form part of the lease obligations because they own properties. But ultimately, the decision for us was if we stayed in Elangeni, we are committed to the Durban Beachfront. If we were out, I suspect we would have pulled out of the entire beachfront. I would have sold everything and walked. And I think that would have been the death of the beachfront. So the decision for us was very much we're in this and we're going to make this whole thing work or we're out completely. And that's why we will now spend money on the other properties, too. But there's no time frame on that. I mean I've already got designs for Edward and so on that are just spectacularly beautiful. But we have to allocate and prioritize our CapEx as we go along. And in the short term, Elangeni & Maharani is the big machine, and that's what we're going to spend the money on. The trading down there has been spectacular. I mean in December, on the beachfront hotels, just the beachfront hotels, we were 84% occupancy. That is just transient leisure business, Durban Beachfront. So I know people in Cape Town battle to understand where Durban is and Joburg can be the same, but like it is volume and it works. And so it's money that we're pretty happy to spend. I was there last week for Endava. I mean it is that [indiscernible], you've got a function out on that you don't get Elangeni. It's got to be one of the greatest locations we have. So all of that money will flow in good time. And it's -- that in our key focus. There will be stuff up north, but I'm not -- it's not at the high on the priority list at the moment.

Marcel, just to -- sorry to jump in ahead of anyone else for questions. With the Oceans having the group's first hotel component, where else are you looking for introducing that in the rest of your portfolio because that's quite a big thing in Cape Town with quite strong competition from the apartment hotel players and the number of apartment hotel developments happening in the Western Cape.

Nowhere else. So if an opportunity comes along like we didn't plan this thing. [indiscernible] came to see us and he had a design that another unnamed hotel group had put forward, which was really, really fair. We said, we can fix this thing. And we came up with a whole new better design, and now we're in Oceans. I don't have a plan to roll out additional stock. And I think that's actually a very important point. Our strategy is not to go from 95 to 200 hotels. We're not interested in planting flags. We're not interested in building new stock just for the sake of it. It's very much inward focus on getting more out of what we've got because you simply cannot replace what we've got. And then the expansion opportunities are the ones I've highlighted, and they are very particular and very going to add 30 new hotels in Cape Town. We have an incredibly strong balance sheet, and we have a long track record of acquisitions and so if somebody wobbles, we are the ones who are going to sort out that market if we get a chance. That would be my hope. We've done very well on acquisitions over the last 15 years in the hotel space. I think the hospitality fund was the biggest hotel deal ever done and it is in South Africa, and it has been very good for us. Not in every way that we thought it was because nobody's got perfect foresight, but that's how you really make money. You wait for a distressed moment and you buy. But we don't have a strategy of going and building apartment hotels.

And conversions considering the size of the Southern Sun Waterfront or the Garden Court Waterfront?

No, we're happy with what we've got. We trade very high volumes and good rates of what we've got. We're not -- the apartment hotel thing is a lot of nonsense in many cases. And that's a terrible thing for me to say. But like it was driven in Cape Town by Section 12J. And Section 12J was [indiscernible] put out a whole scheme to develop ultimately investments that you could tax deduct by investing into small businesses that you were going to grow and people started using their holiday tax in Cape Town and claiming it for tax. That's why shut down 12J. Without that, I think there's going to -- there has been quite a distinct slowdown in it. At the moment, Cape Town market is booming and everyone, therefore, thinks they can be a hotel here. So you are going to see new supply come in, but a lot of it won't matter. It will be in the wrong locations and badly operated. We very much stick to our knitting, inward focused, improve what we've got and don't get too distracted by the latest fads is our approach.

Brian, would you like to go ahead?

Yes. Marcel, maybe on that topic of Cape Town, -- you've seen the Marriott coming in with the Waterfront hotel opening later this year and then the Intercontinental reopening. I mean the supply backdrop, are you -- do you have any concerns there? I know you kind of did answer that question, but maybe you can just delve a bit deeper into what you see in Cape Town?

So Cape Town is running at high occupancies and ultimately does need more stock. I think it's reached a point where the stuff is going to come. The question is, is it going to do the usual hotelier's trick and going to oversupply and then it takes a couple of years to then wind out the system. I think it probably is what's going to happen. It will take at least 3 years for much of that stock -- any meaningful stock to come into the market. The waterfront stuff is there. But ultimately, if they do all that land reclamation and so on, you could see 6 or 7 new hotels go on to the thing. Over a long term, the market has to grow. So that doesn't worry me. In the short term, be aware that you can end up with oversupply and that puts pressure on pricing. At the moment, the pricing in the VNA is exceptional. I mean they've been really, really strong in rate growth, and that's helping the whole market. I have no doubt that if they hit the wobble, they're going to drop pricing and then you're going to have a bit of a price war in the thing. I don't see it as a collapse. Cape Town is -- in many ways, Cape Town has become a stronger brand than South Africa. And if you walk in and say I come from South Africa, people look at, they come from Cape Town. It's -- they have done an incredible job on promoting it as a global destination, and they continue to do that. We have to navigate our way through whatever happens with stock. But if you scared to competition, hotel business is not for you because there's 0 barriers to entry. Anybody can build a hotel and often pools do. So we just have to deal with that. And I think in the next 3 years, you will see some more stock coming in many ways, so some of that can end up being acquisition opportunities for us. It was interesting, I'm quoting old stats now. But in 2000, I think there was something when the first STR stats came out. But basically, the market in South Africa per STR was like 30,000 rooms and Southern Sun had 1/3 of that. And you roll forward 15, 20 years, the market has gone to like 62,000 rooms, and we still had like 1/3 of that. And I'm including in the gaming portfolio was part of us. Over very long term, we've maintained our high volume of ownership and management in the industry despite the growth with all the volatility in between. If you take hotels like the Southern Sun Sandton was the Holiday Inn built for World Cup. The Radisson Gautrain was built for World Cup. The redevelopment of the -- what is now the Southern Sun Rosebank was the Crowne Plaza, the Western, the Arabella, Victoria Jun, these are all hotels that were built around us. It wasn't -- they're all part of us now. So the new supply is coming, but we'll just navigate it.

And maybe just one follow-up on your CapEx outlook, I just wanted to get a clearer picture. I mean you spent ZAR 600 million this year. For '27 and '28, what is the kind of rough guide? And also if you could just add if those 3 bigger opportunities come through, the JV in Cape Town, the KZN, the Suns and residences and then the Beverly Hills, if you can kind of maybe separate that. So just give us a sense of what the group will be spending cumulatively over the next 2 to 3 years.

So maintenance CapEx line, the equivalent of the ZAR 600 million you see there is probably going to stay at a similar sort of level for another 2 years and then it drops off. It depends what I activate and don't activate. I can accelerate that by bringing projects forward and I can slow it down by delaying them. But you are looking at that sort of level over the next 2 years, at least with the elevated IT spend, and then it comes off as the IT stuff slows down. But long term, if you're building a model like you don't go below ZAR 500 million, you need to put some inflation escalation in that. If we then look at specific -- and that includes all these renovations and so on. Over and above that, Cape Town is a ZAR 1.5 billion project. If we JV with Growthpoint, ZAR 750 million for us, it would take at least a year to start and 3 years to build with phased cash flow out. Beverly Hills is ZAR 1 billion, all ours would take at least a year to start and 2 years to roll out. And I don't have a clear view on what year those cash flows fall into. We haven't made that decision yet. Oceans, I can't give you a number because we -- I don't want to disclose it yet. And there are a couple of other things floating around. We're buying the land that the Cape Town sits on from the city of Cape Town. We're spending ZAR 180 million there. We're looking at a new hotel in [ Stalenbosch ] with Remgro, adding on to those -- that small little all-suite hotel we have there that will be the Old [ Distell ] building. But we haven't pushed the button on that, but we could well co-invest some ZAR 250 million in that. But that all sits in our expansion CapEx line. What we do say is that assuming we don't go into a COVID world or upright war and all that, we should be generating after maintenance CapEx, comfortably generating ZAR 5 billion plus over the next few years. If we did all our expansions and all our acquisitions and Elangeni and the other stuff in Durban and paid our third dividend, we'd still end up with net cash. So we can fund all of this out of our existing cash flows. The decision really is, is it better to give a check back to we should be generating around about ZAR 1 billion a year in free cash after maintenance growing going forward, assuming there's no price. So it fits into all...

Derrick, would you like to go ahead, please?

I just wanted to -- if you could dig a little bit deeper into the Sandton market. I mean, clearly, G20 has helped a lot in that region this year. But maybe just a little bit more on what you're seeing there, the kind of outlook supply-demand. And clearly, if you need to get back to you need Sandton to be firing. So yes, just some detail there would be useful.

So yes, I mean, G20 was a meaningful number in the year, but with all these things, I think the phrase I used before was with us, nothing is material. There isn't anything material that can really move the needle on this group. So that makes everything material. G20 in our own revenue that we put into these numbers, probably ZAR 60 million. So on a ZAR 7.5 billion group, it's a number that moves in the world. But it's not -- I think the New Zealand tour is going to get us just about the same amount of cash, to be honest. So I don't want to underestimate, but also understate but also not overstate what these events are. There's always another event. The housing market was quite pleasing, particularly the Southern Sun Sandton and the Southern Sun Rosebank. Those 2 hotels were battling coming out of COVID, and I put a lot of money into both of them. And Sandton completely refurbed. Rosebank had that complete lobby done and then we closed it in COVID and we've redone, I think the North Tower, forget North or South Tower, built new restaurant in there and so on. And they both did really, really nicely. They're sort of trading at the mid-60s occupancies. We're starting to get some rate growth. And it means a property like that goes from making ZAR 20 million EBITDA to suddenly making ZAR 40 million, getting to ZAR 50 million EBITDA. That means doing what it's supposed to do. So those were good for us. The Sandton strip, the disappointment of not buying it is there, but the refurb on the towers is gorgeous and the strip is doing really, really well. The Garden Court has totally shaken off any impact from that Sky thing next door. The 5 Star is running [indiscernible] convention center had its absolute record year, and it didn't host the G20. It did host the B20. And it's really doing nicely. So Sandton is improving. Rosebank is still a tough node, but it's definitely improving. The airport node, I think, can do better, particularly out of little Garden Court. The Southern Sun does well, and it's pure transient just stuff out of the airport. The Garden Court need a bit of focus on, and I need to spend some money on it, too. And we actually want to expand it a bit. Birchwood had a good year, not phenomenal growth, but it maintained its very high levels of trading. And I think it's going to have a step up when we put the new facilities in over the next year or 2. So it did well. Pretoria is where we battle a little bit. I've got some own issues there, but Pretoria needs some focus at the Southern Sun. The Garden Court did well. And then the Vale, it's a small hotel, but Riverside, it was decline on last year, but it had a shoot the lights year last year. So over a sort of 3-year period, it's still looking pretty good. So Joburg has picked up nicely, but there is still upside here and particularly in rate. I mean the airline -- the Cullinan 4 star in Cape Town achieves a higher net rate on an annual basis than the Sandton Sun and Towers achieved in Sandton. And that just tells you Sandton's [indiscernible]. Sandton prices need to go up. But you can't just do it on your own. You need to get the market to follow.

Always tells you not a lot of tourists go there in summer.

Yes, but it's business travel here. So it should be less price sensitive. The market in Cape Town, it's an astounding thing to watch how that pricing has just adapted. And it is a rising tide thing. So it's not a sudden sun genius thing. What we -- the good tick we get is we didn't miss the tide. We weren't shackled in the sleep to it, but everything in Cape Town just goes up. A Little Sun ones can achieve a rate of over ZAR 1,000 on certain peak periods. I've never seen a Sun ever go anywhere near ZAR 1,000 anywhere else in the country. That's not tourists. That's local travel. Somehow once the market gets that pricing right, it just goes. And we need to drive that elsewhere. In some cases, we can't. I mean government has rate caps and so on. And like B, used an example before, runs at very high occupancy, but half of its business is government. If I increase the price of ZAR 100, I don't go from 90% to ZAR 85, I got because I just lose I'm out the caps on the thing.

Sorry, in, are you seeing a resumption of corporate travel like you haven't seen before? Is it kind of going back to where it was?

Not yet back to where it was, but we definitely saw -- and obviously, the G20 was active in town and the mayor started fixing traffic lights and all that sort of stuff. But outside of that, we've seen pretty good business travel in Sandton. Our volumes are up and I'm not entirely sure whether how much of it is us taking market share from others. But I don't -- because we don't subscribe to the STR stats anymore. But I do think there's an uptick in Joburg, and it felt better when the sentiment was better that Q3, so that up to December was really great for Rana, and it carried on into Q4. December, it didn't go off like it normally does. We had conferences and events and all sorts of stuff well into December, which is unusual, or we haven't seen for a while. So it doesn't take -- I think South Africans are a little bit like battered and bruised because we've had so many bad years. you just can't believe what a little bit of positive sentiment and positive news flow and economic activity and reduced interest rates and coming off the gray list does for demand. And then just as it seems to work, we have some other trauma comes along like Middle East wars and things. But we are seeing improvement here. And it's still got a long way to go, but it's looking pretty good.

Okay. Great. And maybe just one quick follow-up. Just on the Durban Beachfront, you're obviously now investing a substantial amount of money there. What has structurally changed in your mind that this region or that area of the city is suddenly now likely to be a much nicer place to go and visit?

Good governance for the first -- like the city manager is really, really competent. You are still [indiscernible]. I'd say if NK takes over after the local government elections, we're probably going to go into a spiral, who knows. But what happened is basically, they let [indiscernible] get on with it. They dealt with the infrastructure problems. We generally, and I say this carefully, we don't have a prime problem there. I don't know when last there was a lagging in Durban. I go running on that beachfront when I go down there, and it is beautiful. It's spotless. It's been cleaned all the time. Yes, if you go one row back, the city has got a lot of degeneration in it. And there's a long way to go, and it's never going to become a corporate hub because that's moved to [indiscernible]. But the Beachfront itself is well maintained. The lighting works, it's clean, it's popular. The conferencing works down there. They are focusing on getting events back into the ICC there that they haven't focused on for a while. The beaches were only closed for 10 days last year, and you're always going to have them closed for some days because when you get the big storms, the rivers come down, nothing you can do about it. But all that sewage problem and so on, which the media goes -- I mean, if Durban sneezes and everyone reports that it's dead. There's more s*** in the Cape Town water than there is in the Durban water. That has been addressed. And if that continues, I think there's a lot of upside there.

David, would you like to proceed?

Thanks, Marcel And the team for a great set of results. Your controlling shareholder has said that for sort of fair value, they would certainly entertain a sort of bid for the company. I mean, does that mean there's kind of an active process in play? Or is it kind of business as usual from your perspective? And if somebody knocks in your door, you kind of refer them to them? I mean is it just no real difference to your life, you continue to manage the business as you would otherwise. And if anyone knocks down, you just refer them to them. Is that how it is at the moment?

So Johnny is in Cape Town in Seapoint. I'll send you his number. You can ask him. I'm not getting into shareholder matters with HCI on that. They have their views and do what do.

We're carrying on, yes. So I don't know what...

[indiscernible] please ask your question.

I wanted to follow up on your employee costs. You indicated earlier that the reason why it was controlled, it was because you didn't pay performance bonuses or bonuses in general. So maybe can we use that...

That's not true at all. We have paid lower bonus in the prior year. We paid about ZAR 109 million in bonuses. The prior year was ZAR 126 million. So provision is lower because we didn't exceed budget by as much as we had in the prior year, but we certainly paid bonuses. But overall -- there's a lower provision, correct.

Okay. So when you say lower provision, is that like a noncash element...

Lower -- the charge in the income statement is lower than the prior year, and that all sits in the employee cost line. So because it's -- you go up by your wage inflation. And then if you had ZAR 130 million last year and you've got ZAR 100 million this year, you've got negative percentage growth on your bonus. So your overall number, if you gave a 6% increase now comes in at 4% overall on the cost.

Yes. Yes. No, I understand it. I misheard you earlier. Thank you for clarifying. And then on the share buybacks, there was some that you bought back for your share incentive scheme. And then I just want to clarify that the post period or towards the latter end, are those ones just for capital allocation? -- purposes for the share incentive scheme.

No. So we don't buy for the share scheme. When we issue shares, we issue new shares. But so if I didn't do any buybacks, your share count would tick up -- would have gone up by 10 million because I would have issued 10 million new shares. Separate to that, I buy back shares, and that brings the overall thing down, but we don't buy for the scheme. It's just the movement in your shares is opening balance plus what you issue minus what you buy back, which we cancel equals closing balance.

Okay. No, got it. So it's not necessarily your intention that you would want to offset that shares that you issued as part of your incentive scheme. It just happened to be that as part of your capital allocation that...

And you could have a year where we don't do buybacks but we still issue in part of the scheme or you could have a year where we do buybacks and we don't issue in the scheme because nobody is cashed out. They're not directly correlated.

A great set of results. Just a quick one on my side. From an occupancy point of view, what percentage of occupancies would you say is linked to the corporate contracts that you're aggressively getting? And how much of it is linked to government? I'm just trying to get a sense of the pricing going forward and also the sensitivity to occupancy from foreign travel versus domestic travel.

Yes, it's quite hard to answer that. So if I take our South African portfolio, that we operate. So exclude the ones that operate by Marriott and Radisson, exclude offshore, just our South African in the system portfolio. We have about 27% of our business is contracted, about 30% is groups and the balance, which is about 40%, 43% is uncontracted transient just moves through. So contracted means you've got a deal, there's a rate code associated with your booking. So Standard Bank, Nedbank, Transnet, any sort of government corporate SOEs, even small businesses and so on, you have a price. And when you book, you're doing it through your travel management company or -- but there's a rate loaded for you in the system. It's not a public rate. often guys will come to us and they say if I guarantee you all the winter business in Cape Town, can you give me a better rate in summer. And we say, cool, you stay with us. You don't pay the spike pricing in summer, but you better stay with us in winter where you could have gone and found something cheaper because everybody is empty type of thing. So then there's a [indiscernible] code associated with that. That is about 1/3 of our business or 30% Groups or anything over 10 rooms. Now that could be you and 10 of your mates going to play golf at Arabella. It could be a wedding or it's like what we normally think about groups, conference that has rooms associated with it, sports team, anything like that, but it's over 10 rooms. That's group, that's about 1/3 of our business. Now both of those categories you are dealing directly with a customer. There's a rate code or someone's approached to Elangeni, they want a group of 400, there's a deal. There's a price, there's a room allocation, there's a conference, et cetera. The balance of the uncontracted, you're coming through the public markets. You're either going through OTAs, you're coming to our website direct or you're going through a travel agent, et cetera. In that contracted space, it will never be exclusive with us. So Transnet will have contracts with us, but they have contracts with all the hotel groups, but there's an agreed price. And then when the employee goes on to the travel management system, they've got to pick of 3 hotels, Southern Sun and City Lodge or whatever the choice is. That business is -- there you try us the location and service and so on gets them to come to you. Of that contracted business, -- our loyalty program captures 70% of that business. So it's a big driver. At the point you go into the travel IT system and you say, where am I going to stay? You choose Southern Sun because you want Sun rents. So 70% of that contracted business has Sun rents associated with it. And that's a very powerful tool we've got. And I'd say it's the thing that is that just we are way better than the other groups in the country, including the internationals because they don't have -- you can have 5,000 Marriott hotels and that you don't have the distribution we've got in this market. So that's very powerful for us. And the part of the contractor stuff that's not got Sun Rents associated with it but generally because there's no point. So for example, an airline crew, the air staff are not going to sign up to Sun Rent because they're here today and they're in Taiwan tomorrow and they're in South America the next day. But there's a contracted price, they're arriving it because we've done a deal with Qatar or Emirates or British Airways or whatever it is. The government part of the business for us is in total, probably 20% of our business, if you include SOEs in the South African market. Yes, I'd say it's probably about 20%. And that also the loyalty factor on government is very big. They like the Sun Rent program. The government employee gets -- just like the corporate employee, you get the Sun Rent yourself. So you don't get many other perks in government, but you get your Sun Rent. So that makes it a very valuable tool for us. Did I answer your question there?

Yes, you did. And then just in terms of occupancy, would you say that less than 30% is driven by tourism and 70% is domestic? I'm just trying to get a sense of the sensitivity to the domestic.

That's the other part of your question, Jan, that's a hard one to do. So if you say like before we worry about the international and local, say, what's leisure and what's business. 20 years ago, I said, well, let's have a look at weekends versus the week because during the week, people are working and the weekends they are there. That's simply not the case. So I could have -- and I always use the example of a sports team. So there's a big test coming up. I've got the Springbox in Hyde Park. I've got New Zealand in Sandton Sun. I've got media, I've got everything, and so I'm full up on the weekend. Those people are working. It's contracted business because we have a contract. That is their job. Everyone from Mark Alexandra right down to the physio, everybody is at work for that weekend test. It's not leisure. You and your mate is going to watch the rugby, that's leisure. And it's quite hard for us to say. We think it's roughly 70-30 between people at work versus people at leisure, but we don't really know. It's very obvious in Seychelles, 99.9% are there for holiday. Nobody is going there for work other than if you probably work for Southern Sun that you've gone there for a reason. But it gets much harder in Durban hotels and in even your coastal properties. I mean the best way this was described to me once by one of our hotel is like a dam. You've got to put every pipe into it and fill it. And we service every market. We don't really care whether you're there for work or leisure or we are interested in how you come to us. Did you book through an OTA, did you book direct? Are you a contract? Cruise line of business is big for us in Cape Town, where they come off the ship and there's a swap around on ships, et cetera, and you have 400 people checking into the current and 400 checking out. That is leisure, but it's not leisure for us advertising into the leisure world. We do a deal with the cruise liner to host their guests with us. It's a contracted amount. So yes, I think 30% is probably leisure and 70% business, but I've got no science behind that because we don't track your reason for stay. We track how you got to us, more importantly. In Cape Town, I'd say the majority, we used to have a stat of 60%, but I must actually try to find a way to reprove it. Majority of people sleeping in our hotels probably have a foreign passport. But only 10% of those are booking through foreign channels. You take the [ mining endeavor ], it is full of foreigners, but they're not booking through -- they're trying to find their way to South Africa anglos have booked them all in. So they are foreigners. They have for conferences and work, but the booking comes through the local channels. Very different to, I guess, the game lodgers, where they have strong sales representation into the European markets and so on where they bring in foreigners in to stay. Different to some of the V&A boutique properties that are trying to target like Cape Grace. I mean be 80% foreigners and it will be out of Europe and GCC countries and that sort of thing. And that's why they get ZAR 30,000 a night and location is special and all that sort of stuff. the fact that it's foreign or local, it's more important where is the booking coming from. And most of it is local bookings. It doesn't matter that it's a foreigner that's staying in the hotel.

Perfect. And then maybe last question, if I may. Top of mind for you, what do you think is potentially the biggest downside risk that we should be thinking about over the next 12 months.

Yes. So first, I should say I'm very much more comfortable than what I was 6 years ago because I don't have ZAR 3.3 billion debt. So my ability, wherever that risk may be to withstand it is substantially improved. And in fact, a little bit of market wobble would hurt us in trading, but I think that fleshes out opportunity for us. That's when some of these highly geared new build stuff out there suddenly comes to market. So -- so I don't generally feel threatened in the medium term, which means the thing that I should be worrying about, I don't know about at all. It's some event that we haven't even considered. What do I worry about? I worry about cost pressure to an extent, like it's just relentless on the administered costs from government, the IT costs, the ability to negotiate that with the foreign big software providers is like 0. So I worry about that. I worry about staff costs because when you -- one of the factors of new supply coming into Cape Town is we are the industry supplier of expertise. Where they're going to come and push? They're going to come push from us. So I'm going to experience some wage pressure in markets where they're going to look for people and the first thing they're going to do is come to us. So I look after my people, and I've got to make sure that they don't get pushed by the by the flags that are running up, putting up place where we don't need hotels. And then it's just whatever crisis could come that I don't know about. Like I'm not sure what happens if you have a severe inflation shock or an actual run out of fuel or -- but those are so out of our control and so I don't really think about it. And I would probably be more losing sleep about it if I was sitting on ZAR 3 billion debt, but I'm not. So if those things happen, we make less money, but we don't face existential threat that we can see.

Just a quick one. The delta on the offshore portfolio. I mean I think you kind of phrased it that the Sales asset was marginal this year, its contribution. And I think you made EBITDA of ZAR 46 million. FY '24 offshore made close to ZAR 100 million. I mean how do you think about what we'd like to see that print in FY '27?

Yes, it should be north of ZAR 100 million. Look, Seychelles was trading normally, I'd say it's worth ZAR 50 million, ZAR 60 million in its own right. Maputo should be a ZAR 50 million business, ZAR 15 million out of [indiscernible] and let's say you get to breakeven in Tanzania, that would be nice. Then you're sitting on ZAR 125 million number, which is not at ZAR 50. It's kind of sitting at ZAR 30 million, I think. Seychelles would have gotten there, I think, other than this Middle East stuff, and I don't know how that's going to -- I've got nice when I'm running at ZAR 75 million at the moment, but we can't with consistency say that Seychelles is just fine. This Middle East thing is hurting it. But it is going to -- last year, when we were closed, we lost ZAR 45 million EBITDA in Seychelles. We're not going to have that again. So if nothing else happens, I think it does ZAR 100 million this year. But it's a volatile market and it can change quickly.

And then just last one, kind of your buyback. I mean, how do you think about the kind of trigger to stop the buyback? What type of valuation level do you get to pull back? Obviously, where it is today, still looks quite attractive.

I don't know if I can answer that. I don't think I want to answer that, no. I think price. But the way we think about it anyway, I look at my free cash flow and my cash flow number, add back tax, a pretax number and look at CapEx and say, what is normal? Take that as a yield on the enterprise value, which is equal to the equity value because you don't have any debt. So what is that yield relative to what I can get on paying off debt before, which I don't have now versus sitting on cash or buying other hotels. And then which is -- if it's marginal, what is better, give it to the shareholders in dividend or just keep buying back shares. From a company point of view, buying back is always better than dividend because I get a long-term benefit from a reduced share count. If I just ignore shareholders completely. If you could almost overpay for shares because you're reducing the share count, so you will do better. Obviously, you don't want to do that because there's a point where if it was overvalued, rather give the money to the shareholders and put it in something else. But I don't think we're anywhere near that point.

I think just a comment, there's not many CEOs on the JSE who understand capital allocation and could explain it how you did now. So that's appreciated.

Hours on Twitter watching Warren Buffett.

Okay. We don't have any more questions, except that we do have a few that have been posed in the chat, so I'll read through them, Marcel. The first one is from [indiscernible]. And he says that with the recent cleanup in Durban and the local government seeking investment in infrastructure, is there interest in the partnership with the municipality to turn around the uShaka Marine World? He goes on to say, I would also assume it would drive up demand for KZN consumers as they hope to turn around Durban and push more investment in other areas of KZN.

The short answer is yes, we would work with them on uShaka, on the ICC, and we do work with them a lot in terms of business government liaison bodies, that presidential working group we had input on. Samantha who runs that region is very involved in dealing with the municipality and with people there. The ability to do deals and say, look, can we take over operating this or that is not that easy because they operate under the PFMA. So anything they do would have to require, first, the political will. And I'm not sure KZN is as privatization as Cape Town is. And secondly, would require a public participation process. So as -- it needs a tender as Elangeni did. Truth is there are not too many people putting up their hands, but it's not as easy as going in and saying, right, guys, we can help you here what do you want to do. I can do a private sector to private sector deal with a Growthpoint or a Pareto or anybody very quickly. It's quite hard to do something with municipalities. You've got to navigate that regulations quite well. But are we committed to helping them in every way? Yes, we are.

Great. Thank you. Then we have a question from Phil. And he says, why did the Phantom Consortium transaction fall through? One would have thought that matters like preemptives, et cetera, would have been addressed before the deal was announced to the market.

Yes, Phil, I'm a dealmaking idiot. We got caught. Now I'll tell you what happened. So first of all, we announced it too early, but I pushed everybody to get the CompCom application in December because CompCom always takes the longest. For whatever reason, maybe they ran out of work or and CompCom approved the thing in like 2 weeks, flat and announced it publicly. So I had to announce the deal before I had a signed agreement because CompCom went public with it. So normally, we would not announce a deal until everything signed up. We did have agreement that they were waiving their preemptive. That's why the application went in. Farita, for their own reasons, changed their mind. And they are perfectly entitled to do that. They are a very big property player. They've got government employee pension fund money. They owned 25% of it and it was going to be 50-50 they decided they want to only own the thing. I'm still operating it. They are still my client. I'm not ever going to go to war with them. They are our single biggest management client. And sometimes people change their mind. It's just -- it's their prerogative. It would normally never have been in the public like this, and that's why it's a valid question, like it shouldn't have been announced and then canceled. But I was forced into announcement because CompCom put it -- sorry, and it was over 5%, it was category 2. If it is under 5%, I would have ignored it then still not announced it, but it was category 2 and CompCom went public. So we've got pressure from JSE and we announced. You live and learn anyway. Next question.

Okay. And he has a follow-up question, which says, why don't you subscribe to FCR anymore? Don't you need the industry data for planning in your business?

First thing is STR, the most arrogant crowd you could ever imagine. One of these big software platforms out of the U.S., they charge a fortune and they demanded that we submit daily stats instead of monthly stats. First of all, I think daily is a big potential red flag for the Competition Commission. They don't like industry sharing stats. They're okay with it if it's historical and aggregate it. These guys want every hotel every day, and we're not prepared to do that. We think you're going to run into competition problems with that. Secondly, we are the market. Why should I pay them to give them our stats? I don't need the stats. I've got enough information around the place. I can go find out what I need to find out if I want to. They do not have a valid set of stats without us. They should be paying us for the information, not the other way around. They clearly didn't see it that way, so we canceled on them.

And From the chat box, that is all that we have there. And so far, I don't see any further questions in the audience. Okay. I think that concludes it.

That's it. Perfect. Thank you all. Thank you for attending. Thank you for the interactions, and we'll talk to you in 6 months. Thanks.