Welcome everybody. I just see there's still a few people joining, just give it a minute and see that it all stops clicking away on the screen.

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I'm gonna start. 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, but I got quite a few people telling me not to do that.

It's in the same order. We'll talk to cash flow first, then we'll talk to income statement, bit of trading.

Overall we had a very good year. The second half was particularly strong.

If you remember our half-year results were a bit wishy-washy. We had 5% revenue growth, flat EBITDA.

We had Seychelles closed, all sorts of excuses around costs and so on. As I've pointed out over the last few years, the second half is really the part that make our money in.

We make about two-thirds of our cash in the second half of the year, one-third in the first half. Our second half came through [unclear].

Candy, will you just keep—

I am, yeah.

Okay. Overall the end results were great, and they're kind of what we hoped 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%. The final score was a good one.

Group very stable from last year. HCI, including the foundation, still 46% shareholding, the public 54.

No real change in the group. The short story is we made good cash this year and we used it all to renovate hotels, pay dividends, and buy back shares.

That's the kind of story in a nutshell. There was one change on the board.

Rob Nicolella stepped off and Kevin Govender came on, part of HCI, so that's a little internal restructure there with Rob [unclear] oil and gas or something. Our portfolio hasn't changed, 95 hotels, just under 17,000 rooms.

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 Blu.

This previously showed what we operated directly, but I discussed with the team, let's just put all the brands on that fall in us so that certainly from a shareholder point of view these all matter. We've added Western, Radisson Collection, Radisson Blu, as well as eKomi Hotel that run a couple of Sun1s for us, and the Birchwood Conference Centre out at the airport, which is what I call the horizontal Sandton, 660 keys and huge conferencing.

I'll start with our cash flow. EBITDA up 12% on 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.

The Sandton strip, you'll see in our segmental report too, was very strong in the year for two reasons: the Towers opened, which had been closed in the prior year for a refurb, you had the full 557 five-star room stock back, and you had B20 and G20, which brought a lot of business to the Sandton strip. The G20 function was out at Nasrec, but we had all the heads of state and European Union and everybody else sitting here in Sandton.

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 with 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 20 million, and you got a substantial discount versus what you would have paid if you paid annually.

That caused a negative working capital, but then we don't pay anything again for 5 years relating to our internet IP for rooms and so on. We made a conscious decision to take the big upfront discount upfront, and that's why working capital is unusually negative for us.

Normally we positively generate working capital. Dividend from associates, that's our little UK business.

For those of you that read the actual booklet, the IFRS format of the accounts, the dividend from offshore was 91 million or something, but a big chunk of that was returning capital from having sold three hotels in the UK 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.

The 15 that sits under cash generated from operations is true cash received from the UK business as trading income. Then interest obviously came right down.

We now effectively de-geared, we finished the year on a net cash position of 86 million. We had some debt during the year, but essentially we are now de-geared.

Going forward we should be producing interest income. We will, I think now in the first quarter, probably go slightly back into debt because we pay our dividend, and ramping up our capex spend now again in the first half of the year.

You see things like the Southern Sun Waterfront in Cape Town, you can't renovate in summer, you need the rooms, you spend a lot of your maintenance capex in the winter months. Essentially we are now de-geared, we should start earning interest and not paying interest.

Tax paid got up quite a bit more than earnings, two 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, you're now at the full whack. Then some places like Tanzania where we make a loss, or Seychelles where we made a loss while it was closed, you account for deferred tax, but you obviously don't get a cash cheque from the relevant government, your cash tax paid is higher than your income statement tax will be.

Pretty normal, our overall tax rate I think was 26%, which is pretty close to the 27, and cash isn't that far off. Operating equipment is just your normal odds and sods in the hotels.

Then capex was a big feature of the year. We jumped from 450 million to 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 500 mark, there was an element of underspend last year because we rolled forward. As recently as 3 months ago we thought this year would be closer to 650, but yeah again, you have the roll forward, the cash just doesn't flow as fast as we ever think it does.

I'll get to that further down. There's some big projects, and Seychelles was the biggest one, where we spent over 100 million in Seychelles.

I'll talk quite a bit on capex of splitting that 600 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 being completely involuntary, and the second part you can delay refurbs and so on if you want to, although probably be accelerating stuff.

Capex up in the year, and that brings you overall to free cash flow just over a billion. If you reconcile free cash flow to earnings, profit for the year is 1.2 billion, that difference of 300 million really is the excess of capex over depreciation.

We run somewhere around a 300 million depreciation charge in the income statement, and we have about 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% 25 cents a share.

Last year we paid the 344, and then we did 359 million of buybacks. We didn't have that many, I think we had about 76 million at the half-year.

After the Pareto deal was cancelled, we're like, "Well, we're not going to spend 700 million on buying hotels in Sandton, best we do buybacks." Then the Iran war started, and it must have shaken somebody because we suddenly got quite a bit of volume.

We were quite chuffed about that. We bought 37 million shares in the month of March, and we've bought another 3 or 4 million, just looking at Laurelle how much, 4 million shares in the month of April.

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 1.5 billion after the HPI 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.

That's our hurdle for acquisitions or new builds or anything is your buyback better than what else you spend the money on. April, March we spent close to 400 million on share buybacks.

If we hadn't done that, obviously our cash position which ended the year at 86 million would have been closer to 400 million, would have had 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's working furiously and hard and being motivated there, so that was good.

That money went into Birchwood, we now own it 90/10 with the family. That money's being spent on refurbs and a redevelopment of a really big conference facility there, which will come through in the FY 2027 year.

Expansion capex, some small odds and ends on really fees and so on around Beverly Hills. Then the money that came out of the UK from the disposals, that brought us from 266 million debt last year to 86 million cash this year, with the vast majority of it going into capex and return to shareholders.

Oh, the button. Sorry, now my clicker doesn't work.

Let's find out why. There we go.

There was the expansion capex. Maintenance capex, I spend a lot of my life on analyzing this, thinking about this, and working on this.

The pure maintenance capex you see at the top, that is what keeps the buildings alive. That includes everything from new beds, the birdcages that they load the luggage on, the kitchen equipment that breaks and burns out and putting new stuff.

Basically you had something, it's worn out, you've got something going. Repairs, maintenance that you capitalize versus ones that go through the income statement, there's another 200 million sitting in the income statement of pure R&M that we expense.

Then in this year 63 million, 61 million of IT. We have ramped up our IT spend quite a lot.

In FY 2026 we did a lot of work on the internet services to the hotels and the whole infrastructure for that, and your IPTVs, your smart TVs, so that you get a much better, clearer picture. In FY 2027 we're going to be spending a whole lot on our networks.

Our servers are 16 years old and end of life, Terry's got a huge budget for network replacements, and then we go back to IPTVs after that. That number of 227 million is a little bit lower than it would be normally because of the amount of refurbs we do.

The major projects below that will also include work that will then be wrapped into the refurb project that you would have spent. If we hadn't renovated Paradise Sun, in theory the project of 112 would have not happened, but we still would have spent other money on repairs and maintenance, etc., that we have encapsulated in the project.

There's always going to be something breaking, needing replacement. They've got a whole new kitchen here, where they would have needed new kitchen equipment anyway.

That 227 is lower because the 373 is high, but it's not a material part. I think in general if you think about this business, you're going to be spending 300 million a year without enhancing anything, just keeping the system alive.

That's kind of what our depreciation numbers running at at the moment. Then you put money into refurbs, and you hope to get a better result and a new product out of the refurb.

Over time your depreciation number is going to go up as that refurb money gets spent. You can delay refurbs, you can prioritize this one versus that one, but they're not going away, they are coming.

The end of 5 years we'll have a glorious looking portfolio, but something that looked fine 3 years ago is then going to be up for refurb, this never goes away. Then total there you can see the major projects we did, we ended up at 600 million.

I'd say you're very unlikely to see a number below 500 million over the next 5 to 10 years. That sort of number is 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 and see where the market is, which one become more priority, who's aged well, who hasn't. These are the ones we prioritized at the moment, and it's quite a lot.

We did I think of our own portfolio we did 652 rooms in the year, you add in Towers at 852 rooms. We've been running at a probably about 1,000 rooms a year run rate out of our total estate portfolio of 17,000 rooms.

We refurbish about 1,000 rooms a year, the development department's been pretty busy. I'll show some pictures and so on of these various refurbs a bit further on.

Debt, now becoming a bit of a nonsense, or not a nonsense, no story here. Laurelle's looking at me, cuz she runs the debt, like, "What's nonsense about it?"

We don't have debt anymore, in October we settled the last of our dollar debt in Mozambique, we have no dollar debt and no debt offshore. In fact we have net cash sitting mainly in euros in Mauritius.

At year-end we had 500 million drawn down in SA, with 1.5 billion of unutilized facilities, and we've subsequently settled that. You can see we had cash on hand there and that year.

As of today we have zero debt drawn down and net cash in the books. That's a great position to be in.

Whatever the future holds, you can make more money, less money, you can be super profitable, grow fast, grow slower, and have wars in Iran, you don't have debt. You just existentially are not facing the kind of risks you do if you have overgearing.

I'm pretty chuffed about that position. Trading, yeah, it was a strong performance, particularly in the second half of the year.

Overall income up 9%, occupancy at 62.9%. I'm a bit irritated we didn't get 63.

What is good is in South African operations we were actually over 64, we did 64.3, and then the offshore operations were 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, your occupancy is rooms sold over rooms available.

If it's closed for less than 6 months you don't take the stock out of rooms available. Essentially Seychelles sat in the system showing zero occupancy for the 6 months that 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 there's still some room to grow there. Obviously as you get higher and higher in occupancy your pricing power should start coming through, you get an increase in rates.

Our 5% increase in average rates in the year, a little disappointing to me, I'm trying to push rates more, but we think we 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. We have a large chunk of business that comes directly to us through what we call the transient travel, just people going about their business, and then we have all the contracted stuff.

Our sales team has been very busy, and that is quite a competitive market. You've got to be keen on pricing.

I also think as inflation's coming down, 5% used to be a terrible rate increase, it's now 2% above inflation. Inflation was 3% last year.

Certainly when you're dealing with the procurement departments of corporates, SOEs, etc., they're not interested in you coming along with a double-digit price increase when inflation's sitting at 3. We do ameliorate that when we have high bar periods because nobody gets last-room availability, 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.

Now overall, good increase in occupancy, decent increase in rate, and that gave us a 9% revenue increase, which is I guess three times inflation. That we pretty chuffed with.

Seychelles, I'll refer to a couple of times because of its impact of being closed. Mozambique and Tanzania 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 had currency shortages.

It is difficult. We're making money there, but 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 had just the most awful violence around the election, and it just 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 massive for us, particularly for us because we host teams and the media and so on. There's always something new that comes in, whether it's maybe not as big as G20, but there are some big events coming down the line.

The story of FY 2026 anyway, G20 was good for us. Not ramble on too much about that.

Seychelles did really well post opening. We opened it on the 15th of September, by October we were running huge volumes, 80%, 85% occupancy almost immediately, great rate, fantastic feedback from the guests, and it's a really successful refurb.

Going like a Boeing, and then everything shut down because the Middle East war started. 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 still doing quite a bit better than the market there because we have a very European focus in that hotel. Our key markets are Italy, France, Germany, and the UK.

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's gone into distress because of the Middle East war, they're battling with that. Ultimately until that settles down, disruption of the Middle East airlines is really not great 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 10 million rand.

We haven't seen a decline in tourist numbers, we haven't seen a decline in bookings, even our forward bookings are good. May is turning out to be a spectacular month in Cape Town.

That's all working fine. There's been disruption of some of the air capacity, which is big.

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, and I guess maybe I'm still with my old casino days in my head, when you have big fuel costs going up and so on, it's terrible for the consumer.

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 R35 a liter.

What happens to local demand if interest rates stay high and inflation goes up instead of 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. 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 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 either at the end of last year or at the half-year, I think, we gave an increased allocation to the breakfast and dinner allocations on our packages.

When you book a bed and breakfast rate, say 1,500 bucks, we take out VAT, and then we allocate 185 or 225, whatever it is, to breakfast, and the balance is what we record as room revenue. Now that number had been static for a number of years.

You use that number, it goes to the chef, and is recorded as breakfast revenue, and that's the measure against your food cost percentage 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 his revenue he can work with.

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 a inflated revenue number. It's something we watch quite closely.

Anyway, long story short, I increased those allocations in this year. If we hadn't done that, you would have had a slower F&B growth and a higher room revenue growth.

It's pretty marginal thing, and that's why rooms go up by 8 and F&B goes up by 9. Employee costs, controlled at 4% for the year.

Ja, I did this one, ja. Oh, I just need them to be whole.

Can you just mute that? Keep this as well.

Let's see what's in. Off.

It's quite interesting how they budget for civils on hotels and stuff. Sorry, can just whoever is talking just mute yourself?

Okay. Employee costs came in net 4%.

We gave higher than that increases, but our STIs for the year sadly are lower than last year. Our STIs largely financial are based on achievement of budget.

We hit our budgets this year, but we didn't hit the stretch exceeding over budget that we had in the prior year. Our total bonus pool reduced from something like 127 million to 109 million.

That and we had an overprovision in the prior year. What ends up is that your overall cost in the year brings down your payroll costs.

Payroll is still our biggest number in our income statement, control to 4% is pretty good. We've implemented sub-5% wage increases for FY 2027, and that's all done and across the board.

We try to give above inflation pay increases. With inflation coming down, means the pay increases are lower than in the past, but they're still 1.5% above inflation that we've issued in FY 2027, yeah.

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. 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, you have zero negotiating power with Microsoft.

Across the board our IT license fees went up, plus Laurelle did the SAP HANA upgrade, there was an increase in license fees and so on related to that. Property costs, your rates taxes weren't too bad, but your administered costs, electricity, water, etc., went up double digits, well above inflation.

On top of that we had the impact of water shortages and supply breakages particularly in Sandton, where we then have to truck in water. Trucking in water is like 10 times the cost of just having water come out the taps.

At the moment in Sandton City, for example, we're installing another 350,000 L storage capacity, at least you can run down your storage and hopefully refill that with municipal water when the supply disruptions over, as opposed to having to truck the stuff in, because it's proper expensive. It was 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.

We do have I think in our group how many boreholes? About 20 properties that run on boreholes, but this administered cost of electricity and water is like a continuous burn on us.

Then lastly, our channel costs went up because 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, etc., that's bad for you because you go from zero 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.

It brings additional business in that has a lower margin because of the channel cost, but overall is still 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, you can price up on the OTAs.

You don't have to have the same pricing as on your direct, you can offer the best through direct, and you price up on OTAs. That often works well because the OTAs will then take some of their commission and put it back into the pricing to try and compete with you.

OTA's been a good strategy for us and they've actually worked very well with us, particularly Booking.com. We were off Expedia for a year because we had a 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.

Booking.com's been going great guns, and they work very nicely with us. There's definitely a market that we won't get, particularly foreigners may not know our brands, their Genius program is strong, If you're on Booking.com you get access to 5,000 hotels.

It's definitely a market we have to be in that we have to manage. Does result in an increased cost, but it's pretty good business for us.

South African EBITDA overall 13% up. We were 12 for the group, obviously offshore is quite small.

The cash flow was strong, and we spent a lot of that, I've covered in the cash flow, on refurbs and projects, giving out dividends and buybacks. I've covered most of this slide.

What are some of those projects in themselves? You won't see the Radisson Collection one in our cash flow because it's an investment property, its replacement reserve sits at property level and we just record what we receive as distributions from it.

It had a lobby and public area refurb plus I think 95 of the rooms, 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 foreshore there, it is spectacular location.

Paradise, I've referred to several times, so that was a very successful refurb. Once the Middle East settles down, I think that's going to go absolute great guns for us.

We're hoping for probably north of 3 million euros a year out of that business, which is not bad for a little 80-room property. Mbombela, small hotel in Nelspruit, 109 rooms, we redid all of those.

The Gautrain hotel got a full refurb. Cullinan was a big one last year, we finished that off in this year.

Birchwood has done, oh, I think 200 or so rooms out of the 600, and now their big project this coming year is going to be the Terminal A, the 2,000-seat conference facility that's going here. That's just a little bit on the Radisson Collection, there's that location, which on a good day is just magnificent.

Cullinan largely covered, Mbombela, Paradise. What are the others we're working on?

Newlands, we did about half the rooms this year. That's half the hotel, it's about half the rooms.

We'll finish the next half now in FY 2027. As I said, in Cape Town you can really only work in winter because you need the stock in summer, demand is so high.

You stop all renovating work in summer, and then you go back now in the early part of winter. Newlands will finish off this year.

For those of you that attend the RMB conference, by the time that happens you should have a fully refurbed hotel. It was quite a laugh at that investor conference last year because a lot of people staying at our hotel, and you could see the ones that had the new room versus the ones that had the old room.

There was a bit of misery, but everyone will have a new room this year. Hazyview wasn't on the list, but we had a bit of a roof problem, some structural issues, we thought, "Oh, if we've got to take the roof off to fix it, we may as well do that entire block."

We're doing 24 rooms there, and then we'll do another 30, I think, rooms next year. Waterfront's the big one, so that's the 500-room hotel next to the Cullinan.

That's going to take us 3 years. I've signed off the mockup, that's all looking great, but again it's 504 keys.

You just don't get that done in a year, and so development told me they need three winter seasons to get through it, but we'll start in this winter. Mount Grace is also a multi-year project.

We have just finished all the bar, lounge, public areas, we've done about a third of the rooms, we're busy with the restaurant now. We're trying to get this thing up to a single good standard.

It's one of those properties where you can see these rooms were 30 years built, and these ones were 20 years ago, and these are 10. By the end of this they'll all look good.

It's going to take another 2 years as we access the rooms, but it is coming out beautifully. 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 Grace is.

Hyde Park, we've been faffing around because we can't really understand what to do on the level 6, which is all the restaurant and so on. We just said instead of holding back, we've done the mockup room for the bedrooms there, and it's looking absolutely beautiful.

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, we going to do the rooms this year, and we'll figure out what to do with the lounge and the public areas, cuz they're working fine.

The big unknown is, do you put a whole new concept in there or do you just renovate what you've got, put in new carpets, furniture, etc. The bedrooms, it was built in a bit of a grand scale, they're a nice size.

I think once we push that button this hotel's going to see pretty good rate upside, because it's essentially a deluxe hotel on Hyde Park shopping centre there. Then Elangeni Maharani, after signing the new 50-year lease, we've now started with that.

Whether it's a fudge 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, we walked away from Durban, this wouldn't be there, and 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.

There's 255 million that we have to spend in the next 3 years. Overall we're going to spend about 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 a almost like a new acquisition.

A lot of the first money that's going into there is going into pure infrastructure. Your IT, probably I'd say close to 30 million just on IT, between internet, TVs, door locks, etc., to modernize all that.

You've got vast public areas, you've got two big buildings with big lobbies, you've got 11 food and beverage outlets and 734 keys. 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, I said becoming a little bit irrelevant because we have settled everything, but we do have 2 billion of unutilized facilities, possibly too much, but you never know what comes along.

We could do a billion, billion and a half acquisition very easily. We do keep ourselves quite well funded.

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 don't really need any of that debt unless we buy something big. The income statement, so that was all the cash flow and kind of way we think about business.

Room revenue up 8%, as I said your occupancy at 62.9, not helped by a 39% offshore, which is not helped by Seychelles being at 0% for 6 months, but overall 8% growth in room revenue, 9 in food and beverage, as I explained the allocation part was different. Property rental income, which is the hotels that we treat as investment properties, also 8%, kind of straight move there.

Then other revenue surprising 14% up. This covers everything, but we did well in our management fees go up because some of the managed properties did better.

Our golf revenue was much higher. Arabella is now the number six golf course in the country.

That hotel's a remarkable growth in profitability, popularity. 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 guests to be there, but people that just book, pay, and then don't arrive, so that had an increase in the year, which is also a function of just volumes going up. We had 14% increase in other revenue, overall 9% up in income.

Overheads at 7, particularly payroll being controlled at 4% on the back of lower bonuses. Says Laurelle and I gritting our teeth.

That's obviously how you control your costs, and then EBITDA coming in at 12, the jaws effect doing exactly what it should. Property rentals and amortization, this has got all the IFRS stuff in it, I hardly look at it.

I look at the cash flow number for rentals, which I showed was 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 refer to the cash flow for the real items. Exceptional items, by and large is all year-end adjustments from the auditors.

We had a write-up of some 75 million of our investment properties, and a write-down of 37-odd or something of our property, plant, and equipment, 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 refurbs, we had to write off the refurb in one go. The valuers have got a 14.5% discount rate on this stuff, which I think is a bit ludicrous, and the base discount rates have not come down even though interest rates have come down.

At some point we're either going to have a massive revaluation of assets because they do bring the base rates down, or if the rates go up we're not going to have any change on the properties because these discount rates are so high. You don't argue with it, the valuers do what they do and the auditors ticket, those move up and down are all non-cash that sit in exceptional items, and we take it out of adjusted earnings.

Associate earnings lower than last year because we have a much smaller portfolio, we've sold those hotels in the UK 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 receive. The management company RBH in the UK 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 Redefine International portfolio, the management company was running those hotels, and you had a risk of losing management contracts there. They've restructured themselves not to be as reliant on Starwood, and they've done a really good job.

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. It's a nice little business.

It's not big in our lives, we get maybe a million pounds a year in dividends, but about 750,000 pounds in dividends, but it's a really nice business to be involved in. 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 when you have deferred tax on offshore losses you don't get cash back to you in cash by those revenue authorities.

The adjustments between normal profit and adjusted earnings are those fair value adjustments and then these little odds and ends. Overall 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's 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.

We issued about 10 million shares to share scheme participants in the year. Overall you went up by 10 in issues, and you bought back about 50 million or in total 40 million, and then that's your net number out.

You don't see a change in weighted average here, but you will see a change in your 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.

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.

Very strong growth in our peak months. Some of the months were just astounding how 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, it seems pretty good at the moment.

Q3 had G20 in it, Q4 did not. By the end of November, I think it was, G20 was completely done and finished.

Q4 is straight, there's no big eventing or things that I can think of there. That was straight transient, domestic, cross-the-board demand.

We just did well everywhere. There is some accounting benefit that you get in the last month because we clean out provisions that we built up in the year and so on.

Laurelle and I looked, can we try get that a little bit more evenly, but it really doesn't change the numbers by much. It'll affect a quarter, but you accrue for marketing expenses based on your budget as you go, and you release it every quarter, and then you get to end of the year and you go, "Oh, you actually had more accruals and you didn't spend any of it," so you release all of that.

That's not what's impacted here. This was just really good demand, good pricing in Q4.

We pretty chuffed about that. From a regional point of view, obviously the consortium is a very strong growth, the EBITDA's up 31%.

As I said, that's the Towers being reopened plus G20. The SA portfolio, if you include the Manco benefit across SA on its own, excluding offshore, was 11% up and so it was about 10% in revenue and 11% up in EBITDA.

Every region had growth. Cape Town came in at 9, which I'm very chuffed with if you consider the pretty exceptional growth we've had for the last few years.

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, chuffed 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 their allocations, first quarter was very very hard, and came through strongly in the 9 months after that.

KZN came in at 15% EBITDA growth, albeit FY 2025, which we pointed out at the time, was a bit of a low base. Nice growth in KZN, 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, a very nice profitability out of those, offset a little bit by slow growth on the Pretoria and some of the East Rand market.

The East Rand, some of that government conferencing and so on slowing down a bit, but hotels like Southern Sun OR Tambo we've been running at higher volumes anyway, there's not a lot of growth there. Then Pretoria we have a issue or two that we need to address.

Overall Gauteng at 9, but still very nice very nice numbers. If you include the Sandton strip into that, the 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, Sandton. Sandton rates are not where they should be, we trying to push that quite strongly.

Then your Manco costs, the unallocated portion largely comes down on the back of lower unallocated short-term incentives, Laurelle and I getting lower bonuses. There you can see SA at the bottom, 10% up in revenue, 13% in EBITDA, and offshore negative principally because of the Seychelles closure.

I would anticipate, assuming we don't have a really long dragged out Middle East issue, that offshore will show very nice growth in FY 2027 just because you've got a full year's 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 Joburg market.

Cape Town did pretty well. Some large-scale events didn't happen, but they've done I think well in the year to maintain off of that high base.

Then KwaZulu-Natal, the highlight for Shirley was signing the Elangeni lease. We don't pay any rent for the first 3 years, we are spending 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.

Your Polokwanes, Bloemfonteins, Ulundis, and Mthathas, all that trade is continuing and it is you'd think back a little bit on this year, but I'd say at the moment sentiment's a bit weak and you've got this Iran 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, you definitely get a volume uptick in travel. It's not just the economic circumstances, it's how people feel that drives a lot of business travel.

Just you've got good sentiment, we boom. Income statement, very hard for me to talk to all of this.

As I said, there's detail in the booklet on the leases, but they're so impacted by IFRS 16. The Sandton strip is essentially 100% variable lease.

What we earn in 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. I just strongly look at the cash flow and say, what is the real cash move on interest, depreciation, and rent.

The exceptional items I've covered. Pretty much covered all of this.

Finance costs, share of profit from associates, I've covered all of that, so that's all fine. Share buybacks, as I said you won't see it in this year, but you'll see it fully next year, and overall 41 million shares down.

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.

I know I've jumped through all of all of that a bit, but it's it's kind of a very repeat record story. The revenue performs and we control the costs, everything flows where it's supposed to go.

It's what we do with the money, and our strategy remains internally focused. We'd say we have an irreplaceable portfolio of hotels.

I've said this publicly lots, if you if I gave you 40 billion rand and 10 years you couldn't rebuild what we've got. We think investing money into that is a 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, if you spend this much capex, what's your IRR, what's your return on investment immediately?" It it's hard to claim that it immediately jumps up.

Cullinan had 15% growth in EBITDA, and it had that on the back of a refurb. It must have been a genius move to refurb it.

You would have had growth because the Cape Town market's strong if you hadn't refurbed it. Ultimately you have to spend money on the properties.

To claim that, look, the refurb did this and therefore automatically we went up, I I don't think that's true. Keeping your portfolio as good as you possibly can's 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. 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. That's what we're going to do carry on going forward.

We do have the the larger development projects, but they're not a lot of them. We're working with Vivian and Co on the Oceans Oceans development, 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. The cranes are up, I think that building's up to nearly the 20th story or something already.

Signed off the mockups, it's all looking very good. Then the planning for Beverly Hills is continuing.

We are us and the city are fighting with Oyster Box next door, they're fighting with us, we telling them they're wrong because they're trying to question our rights. That will all pass.

Beverly Hills, I'm I'm very keen to do. We've got to pick our timing right, but we think we can do it for under a billion rand, and the the designs and stuff look really great.

It is without a doubt the best location in KZN. That's one we are we are working on, although we haven't pushed the the button yet.

Then obviously our Cape Town joint venture with do we want to do with Growthpoint in the foreshore area, that land that we've got outside Cullinan, where we planning a mixed-use 330-room five-star hotel plus offices for a single tenant, and they've got retail at the back, and we working on that. We are we've looked at a couple of acquisitions in the year, there's stuff floating around, we haven't bought anything.

I do think not all bad when you have a bit of a wobble in the market and a little bit of nervousness around interest rates and a little bit of—Laurelle, your battery's going flat here, you need to plug this thing in. Sorry, I'm on Laurelle's computer and the battery's going low here.

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 we've particularly done at the moment. Sorry, crisis around the battery dying has just been averted.

The Middle East war is exactly that type of crisis. I don't think we would have got 40 million shares if they hadn't at the price we did if there hadn't been a bit of a Middle East wobble in the last month.

We do try 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 that come out. Like you definitely, if you're in a time of uncertainty, you want to be facing it with zero debt.

I think it may just shake through some some opportunities for us. If we don't get them, and we sit on cash, special dividends and buybacks are are the default, that makes it to the shareholders.

That is pretty much the presentation. It is same-same as last year, but that we're very happy with, the growth continues.

It's just been an astounding recovery from the COVID days, and long may it last. At the moment we we're not seeing any let-up.

We should be get reaching normalized levels, and and that's still a way off. I remember trading at 68 occupancy was the norm, and we're only at 64 in SA, there's still upside, provided you don't have any catastrophes in the world and so on.

I can't see anything on the screen here, but I'm happy to take questions. You may have muted everybody.

Has

anybody got questions?

Yes.

Yep.

Marcel, is there an estimated completion date, once you get all of these things good to go? Then how profitable do you think it'll be?

I'm not going to answer the second one, but look, it's a great location. The big decision you've got 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.

You spend a couple of hundred million on it, and it is what it is. What we're planning is an entire redesign, completely strip the existing tower, virtually bare concrete, expand it from 89 keys to 177 keys, redo the whole swimming pool, resort-style area, new F&B offerings, take away the cabanas, move them closer to the poolside.

If we do that, that's about, as I say, current budget sitting on 950 million, I think, which almost guarantees you it's going to be a billion when you're done. It obviously needs to become a substantially more profitable hotel.

That sort of scale hotel could easily make somewhere between 120 and 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. 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.

This, the new build in Cape Town, we're doing all the work as in right down to detailed building plan, designs, and submissions. We've 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 m in a town known for gale-force winds and so on. Just sort of construction risk and understanding all of that is it's an easier build.

Those are the only two large-scale projects that we would go at, and we haven't made the call when to start yet. We'll do it when we're ready.

The nice thing about both Cape Town and this is that we own it. Nobody's 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 you 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.

Like Sandton. I'm 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, not that it's doing terribly, I think it's picked up a lot, but the direct flights.

I met Patricia de Lille on the airline coming back from Mauritius the other day, and it makes no sense, they're absolutely pumping it. Durban has a severe shortage of international flights, and I told her, "What is holding it back?"

She didn't really have an exact answer for me. No,

neither do I. 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.

Normally Air France and Club Med hunt in a pack, wherever the one goes the other one gives the flights. Air France has said they're not doing it.

Whether that'll change in the future or not, I don't know. At the moment, 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 if that doesn't affect the North Coast.

It doesn't have the reputation that Cape Town's got, and it hasn't marketed itself and built itself like Wesgro has done for Cape Town. They've had a direct air access program sponsored by the DA government there and pushed very hard, and a lot of private input into it to get those direct flights in.

Cape Town today is just substantially differently thought of to what it was 20 years ago. 20, 25 years ago it was a backwater dorpie 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.

Durban's got a lot of work, but it has that potential. My views on whether Club Med will be successful or not are neither here nor there.

Club Med is great for tourism for Durban. It's another reason to put KZN on the map.

Hopefully these things will come in in time.

Marcel, Minister de Lille also mentioned to me that Air France is planning to have direct flights to South Africa.

I'm not sure it'll go to Durban. We'll see.

Suren, 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, the spending on Elangeni, but there was a figure of a billion rand mentioned, which will include other hotel revamps.

Is that still going to go ahead? 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.

Some color from that perspective. You mentioned Club Med, there are developments further around there with Zimbali.

Would Southern Sun consider further investments up the North Coast considering the boom around Ballito and that sort of thing, especially with international players looking to enter? Thank you.

Yes, we would look up north. International players look to do anything but spend their own money.

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. Suddenly became the Pilanesberg resorts and that sort of thing.

You'll get more and more growth up there, 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 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. The corporate market is in Umhlanga, it's not Ballito.

At the moment if you were to put a hotel up in Ballito, I think you'd bleed. Because you cannot rely just on leisure and visiting friends and family.

You need to be in Umhlanga for that because you need all the sources. You need to be able to do business travel, conferences, groups, and leisure.

That market is in Umhlanga, not up north. Our focus will be down here.

On Oceans, it's not a lease, it's a management agreement and we take a stake. 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. It's not a lease, it's a management agreement.

That will come first because the building's going up. I don't think they're that far away from topping out at the top of the building.

We have a penciled in opening date of May next year. There's lots of paperwork and contracts and all that still happening, and IDC funding and so on, but Vivian's building away furiously while he's doing it.

Back to the Durban beachfront, yeah, they like quoting the billion rand number, and it included, first of all, in our bid, 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.

There's a chunk in there for existing investment in the property that nobody else could compete with. Then as you say, over and above the 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're owned properties.

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, would have sold everything and walked, and I think that would have been the death of the beachfront.

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. That's why we will now spend money on the other properties too, but there's no time frame on that.

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's the big machine, and that's what we're going to spend the money on. The trading down there has been spectacular.

In December on the beachfront hotels, just the beachfront hotels, we were 84% occupancy. That is just transient, leisure, business, Durban beachfront.

I know people in Cape Town battle to understand where Durban is, and Joburg can be the same, but it is volume and it works, and so it's money that we pretty happy to spend. I was there last week for Indaba, when you have that wind-still day and you've got a function out on that Elangeni pool deck, I think it's got to be one of the greatest locations we have.

All of that money will flow in in good time, and it's that and Umhlanga are our key focus. There will be stuff up north, but it's not high on the priority list at the moment.

Marcel, just to add, sorry to jump in ahead of anyone else for questions, with the Oceans having the group's first aparthotel 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 aparthotel players and the number of apartment hotel developments happening in the Western Cape.

Nowhere else. If an opportunity comes along, we didn't plan this thing.

Vivian came to see us and he had a design that another unnamed hotel group has put forward, which was really really crap. We said, "No, 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 are not interested in planting flags, we are not interested in building new stock just for the sake of it. Very much inward focus on getting more out of what we've got, because you simply cannot replace what we've got.

Then the expansion opportunities are the ones I've highlighted, and they are very particular and very focused on areas where we own land. We do not have this thing saying we're going to have 30 new hotels in Cape Town.

We have an incredibly strong balance sheet and we have a long track record of acquisitions and so on. If somebody wobbles, we're 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. We don't have a strategy of going and building apartment hotels.

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 at what we've got.

We're not I 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 it was driven in Cape Town by Section 12J. Section 12J was SARS put out a 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 flat in Cape Town and claiming it for tax.

SARS shut down 12J. Without that, I think there's going to really has been quite a distinct slowdown in it.

At the moment Cape Town market is booming and everyone therefore thinks they can be a hotelier, you are going to see new supply come in. A lot of it won't matter, it'll be in the wrong locations and badly operated.

It 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 anyway.

Rowan, would you like to go ahead?

Yes, thanks. 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.

With the supply backdrop, 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're seeing in Cape Town.

Cape Town is running at high occupancies, and ultimately does need more stock. I think it's reached the point where this stuff is going to come.

The question is, is it going to do the usual hoteliers 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'll take at least 3 years for much of 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 six or seven new hotels go onto 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 V&A is exceptional. They've been really really strong on rate growth, and that's helping the whole market.

I have no doubt that if they hit a 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.

In many ways Cape Town's become a stronger brand than South Africa. When you say, "I come from South Africa," people look at you.

If you say, "I come from Cape Town," "Ah!" 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're scared of competition hotel business is not for you, because there's zero barriers to entry. Anybody can build a hotel, and often fools do.

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, some of that can end up being acquisition opportunities for us.

It was interesting, I'm quoting old stats now, but in 20 in 20 in 2000, I think there was I don't know 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 had a third of that. You roll forward 15, 20 years, the market's gone to like 62,000 rooms, and we still had like a third of that, and I'm including when 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. 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 what is now the Southern Sun Rosebank was the Crowne Plaza, the Westin, the Arabella, the Victoria Junction, these are all hotels that were built around us, they're all part of us now.

New supply is coming, but we'll just navigate it.

Thanks. Maybe just one follow-up on your capex outlook.

I just wanted to get a clearer picture. You spent 600 million this year.

For '27 and '28, what is the kind of rough guide? Also if you could just add if those three big opportunities come through: the JV in Cape Town, the KZN Sun hotels and residences, and then the Beverly Hills.

If you can kind of maybe separate that, just give us a sense of what the group will be spending cumulatively over the next 2 to 3 years.

Maintenance capex line, the equivalent of the 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. 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. 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.

Long term, if you're building a model, you don't go below 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 1.5 billion rand project.

If we JV with Growthpoint, it's 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 a billion rand, all ours, would take at least a year to start and 2 years to roll out. 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 I don't want to disclose it yet. There are a couple of other things floating around.

We're buying the land that the Cape Sun sits on from the City of Cape Town, we're spending 180 million there. We're looking at a new hotel in Stellenbosch with Remgro, adding onto that small little all-suite hotel we have there, that'll be the old Distell building.

We haven't pushed the button on that, but we could well co-invest some 250 million in that. That all sits in our expansion capex line.

What we do say is that, assuming we don't go into a COVID world or outright war and all that, we should be generating, after maintenance capex, comfortably generating 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.

We can fund all of this out of our existing cash flows. The decision really is, is it better to give a cheque back to shareholders or spend it on these items.

We should be generating around about a billion a year in free cash after maintenance, growing going forward, assuming there's no crisis. It fits into all of that.

Thanks, that's very clear. Thanks a lot.

Dirk, would you like to go ahead, please?

Thanks. Hi Marcel, if you could dig a little bit deeper into the Gauteng market.

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. You tell if you need to get back to that 68%, you need Gauteng to be firing.

Just some detail there would be useful.

G20 was a meaningful number in the year, but it was all these things. I think the phrase I used before was that 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 60 million rand. On a 7.5 billion rand group, it's a number that moves in the world, but I think the New Zealand tour is going to get us just about the same amount of cash, to be honest.

I don't want to understate, but also not overstate what these events are. There's always another event.

The Gauteng market was quite pleasing, particularly the Southern Sun Sandton and the Southern Sun Rosebank. Those two hotels were battling coming out of COVID, and I've put a lot of money into both of them.

Sandton's completely refurbed, Rosebank had that complete lobby done, and then we closed it in COVID and we redone I think the North Tower, I forget it's North or South Tower, built new restaurant in there, and so on. 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 20 million EBITDA to suddenly making 40, getting to 50 million EBITDA. Then that means it's doing what it's supposed to do.

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 Skye thing next door. The five-star is running like a dream.

The convention centre had its absolute record year, and it didn't host the G20, it did host the B20, and it's really doing nicely. Sandton is improving.

Rosebank's still a tough node, but it's definitely improving. The airport node, I think can do better, particularly our little Garden Court.

The Southern Sun does well, and it's pure transient 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 two. It did well.

Pretoria was 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.

Then the Vaal, a small hotel, but Riverside, it was decline on last year, but it had a shoot-the-lights-out year last year, over a sort of three-year period it's still looking pretty good. Joburg has picked up nicely, but there is still upside here, and particularly in rate.

The Cullinan four-star in Cape Town achieves a higher net rate on an annual basis than the Sandton Sun & Towers achieves in Sandton. That's just tells you Sandton's wrong, Sandton prices need to go up.

You can't just do it on your own, you need to get the market to develop.

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

It's business travel here, they 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, it's not a Southern Sun genius thing.

Our good trick we get is we didn't miss the tide. We weren't shackled and asleep to it, but everything in Cape Town just goes up.

Our little Sun1s can achieve a rate of over 1,000 rand on certain peak periods. I've never seen a Sun1 ever get anywhere near 1,000 rand 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. Government has rate caps and so on, and like Bloemfontein, I've used the example before, it runs at very high occupancy, but half its business is government.

If I increase the price there by 100 rand I don't go from 90% to 85, I go to naught, because I'm at the caps on the thing.

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

Not just 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. Outside of that, we've seen pretty good business travel in Sandton.

Our volumes are up, and I'm not entirely sure how much of it is us taking market share from others, because we don't subscribe to the STR stats anymore. 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 Joburg, and it carried on into Q4. December, it didn't die off like it normally does.

We had conferences and events and all sorts of stuff well into December, which is unusual, what we haven't seen for a while. I think South Africans are a little bit 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.

Then just as it seems to work, then some other trauma comes along like Middle East wars and things. We are seeing improvement here, and it's still got a long way to go, but it's looking pretty good,

so. Great.

Maybe just one quick follow-up, just on the Durban beachfront. You obviously are 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, the city manager is really really competent. You are still on a knife-edge there, I'd say if MK takes over after the local government elections we probably going to go into a spiral, who knows?

What happened is basically they let Musa get on with it. They dealt with their infrastructure problems.

We generally, and I say this carefully, we don't have a crime problem there. I don't know when last there was a mugging 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. If you go one row back the city's 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 Umhlanga.

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, there's nothing you can do about it. All that sewage problem and so on, Durban sneezes and everyone reports that it's dead.

There's more shit 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.

Great. Thanks very much.

David, would you like to proceed, please?

Thanks. 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. Does that mean there's kind of an active process in play, or is it kind of business as usual from your perspective?

If somebody knocks on your door you kind of refer them to them? 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 how it is at the moment?

Johnny is in Cape Town in Sea Point, I'll send you his number. You can ask him.

I'm not getting into shareholder matters. Deal with HCI on that, they have their views, and they must do what they must do.

We carrying on, yeah, I don't know what they're doing.

Slondiwe, please ask your question.

Hi, good day. 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. Maybe can we use that as—

No, that's not true at all. We paid lower bonuses than the prior year.

We paid about 109 million in bonuses, the prior year was 126 million. Your provision is lower because we didn't exceed budget by as much as we had in the prior year, but we certainly paid bonuses.

Overall

Oh, they just

they had a lower provision, correct.

When you say lower provision, is that a non-cash element part? No,

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

Yes, yes. No, I understand, I misheard you earlier.

Thank you for clarifying. Then on the share buybacks, there was some that you bought back for your share incentive scheme.

Then I just want to clarify that the post-period, or towards the latter end, are those ones just for capital allocation purposes?

You

are All of them were for the share incentive scheme?

No, 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 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.

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

Correct.

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's cashed out. They're not directly correlated.

No, thank you for that clarity.

Okay.

Luyanda, please go ahead.

Thanks Marcel and Laurelle for a great set of results. Just 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 are 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.

It's quite hard to answer that. If I take our South African portfolio that we operate, exclude the ones that are operated 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.

Contracted means you've got a deal, there's a rate code associated with your booking. Standard Bank, Nedbank, Transnet, any sort of government, corporate, SOEs, even small businesses and so on, you have a price.

When you book, you're doing it through your travel management company, 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'll say, "Look, if I guarantee you all the winter business in Cape Town, can you give me a better rate in summer?"

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's empty."

Then there's a rate code associated with that. That is about a third of our business, or 30%.

Groups are 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 what we normally think about groups, conference that has rooms associated with it, sports team, anything like that.

It's over 10 rooms, that's groups, that's about a third of our business. Now both of those categories you are dealing directly with a customer.

There's a rate code, or someone's approached Elangeni, they want a group of 400, there's a deal, there's a price, there's a room allocation, there's a conference, etc. The balance of the uncontracted, you're coming through the public market.

You're either going through OTAs, you're coming to our website direct, or you're going through a travel agent, etc. In that contracted space, it will never be exclusive with us.

Transnet will have contracts with us, but they'll have contracts with all the hotel groups. There's an agreed price, and then when the employee goes onto the travel management system they have got a pick of three hotels: Southern Sun, Protea, and City Lodge, or whatever the choice is.

That business, usually location and service and so on gets them to come to you. Of that contracted business, our loyalty program touches 70% of that business.

It's a big driver. At the point you go onto the travel IT system and you say, "Where am I going to stay?"

, you choose Southern Sun because you want sunRands. So 70% of that contracted business has sunRands associated with it, and that's a very powerful tool we've got, and I'd say we are way better than the other groups in the country, including the internationals.

You can have 5,000 Marriott hotels and you don't have the distribution we've got in this market. That's very powerful for us.

The part of the contracted stuff that's not got sunRands associated with it are generally because there's no point. For example, an airline crew.

The air staff are not going to sign up to sunRands because they're here today and they're in Taiwan tomorrow and they're in South America the next day. There's a contracted price, they're arriving at 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. I'd say it's probably about 20%.

That also the loyalty factor on government is very big. They like the sunRands program.

The government employee gets just like the corporate employee, you get the sunRands yourself. You don't get many other perks in government, but you get your sunRands.

That makes it a very valuable tool for us. Did I answer your question there?

Yes, you did, and thank you very much for that color. Then maybe 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 market.

That's the other part of your question. No, that's the hard one to do.

If you say before we worry about international/local, say, "What's leisure and what's business?" 20 years ago I'd say, "Well, let's have a look at weekends versus the week, because during the week people are working, on weekends they're there."

That is simply not the case. I always use the example of a sports team.

There's a big test coming up, I've got the Springboks 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 SARU contract. That is their job.

Everyone from Malcolm Marx right down to the physio, everybody is at work for that weekend test. It's not leisure.

You and your mates going to watch the rugby, that's leisure. 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's going there for work other than if you probably work for Southern Sun and you've gone there for a reason.

It gets much harder in urban hotels and in even your coastal properties. The best way this was described to me once by one of our GMs, a 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. We are interested in how you come to us: did you book through an OTA, did you book direct, are you a contract?

Cruise liner business is big for us in Cape Town, where they come off the ship and there's a swap around on ships, etc., and you'll have 400 people checking into the Cullinan, 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. I think 30% is probably leisure and 70% business, but I 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%, I must actually try 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 Indaba, it is full of foreigners, but they didn't try and find their way to South Africa, Anglo's has booked them all in.

They are foreigners, they're here for conferences and work, but the booking comes through the local channels. Very different to I guess the game lodges, where they have strong sales representation into the European markets and so on, where they're bringing foreigners in to stay.

Different to some of the V&A boutique properties that are trying to target Cape Grace. They'd be 80% foreigners and it'll be either Europe and GCC countries and that sort of thing, and that's why they get 30,000 rand a night, the location is special and all that sort of stuff.

Us, the fact that it's foreign or local, it's more important where's the booking coming from. Most of it is local bookings, doesn't matter that it's a foreigner that's staying in the hotel.

No, perfect. Thanks, Marcel, thanks for that.

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?

Downside risk? First I should say I'm very much more comfortable than what I was 6 years ago, because I don't have 3.3 billion debt.

My ability, whatever the risk may be, to withstand it is substantially improved. In fact, a little bit of market wobble would hurt us in trading, but I think that flushes out opportunity for us.

That's when some of these highly geared new build stuff out there suddenly comes to market. 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, 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 zero.

I worry about that. I worry about staff costs, because one of the factors of new supply coming into Cape Town is we are the industry supplier of expertise.

Where are they going to come and poach? They're going to come poach from us.

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. I've got to look after my people, and I've got to make sure that they don't get poached by the flags that are putting up flags where we don't need hotels.

Then it's just whatever crisis could come that I don't know about. I'm not sure what happens if you have a severe inflation shock or a actual run out of fuel.

Those are so out of our control and so yeah, I don't really think about it. I would probably be more losing sleep about it if I was sitting on 3 billion debt, but I'm not.

If those things happen, we make less money, but we don't face existential threat that we can see.

Okay. No, thanks, Marcel.

Appreciate it.

Cool.

Thanks, Marcel. Just a quick one.

The delta on the offshore portfolio, I think you kind of phrased that the Seychelles asset was marginal this year, its contribution, and I think you made EBITDA of 46 million. In FY 2024 offshore made close to 100 million.

How do you think about what you'd like to see that print in FY

2027? It should be north of 100.

Look, if Seychelles was trading normally, I'd say it's worth 50, 60 million in its own right. Maputo should be a 50 million business, 15 out of Lusaka, and let's say you get to break even in Tanzania, that would be nice.

Then you're sitting on 125. Now Maputo is not at 50, it's kind of sitting at 30, I think.

Seychelles would have gotten there, I think, other than this Middle East stuff. I've got nights where I'm running at 75 at the moment, but we can't with consistency say that Seychelles is just fine.

This Middle East thing is hurting it. Last year, when we were closed, we lost 40 million EBITDA in Seychelles.

We're not going to have that again. If nothing else happens, I think it does 100 this year, but it's a volatile market and it can change quickly, so.

Then

just last one, kind of your buyback. How do you think about the kind of trigger to stop the buyback?

What type of valuation level do you 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'm not going to give you the price. The way we think about it anyway is I look at my free cash flow in my cash flow number, add back tax to get a pre-tax 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 we don't have any debt. 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?

Then 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, you always 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.

I don't think we're anywhere near that point, so.

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

Thank you.

Hours on Twitter watching Warren Buffett.

Thank you.

We don't have any more questions, except that we do have a few that have been posted in the chat, I'll read through them, Marcel. The first one is from Tsepo, and he says that with the recent cleanup in Durban and the local government seeking investment in infrastructure, is there interest in a partnership with the municipality to turn around 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. Their 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. Anything they do would have to require, first, the political will, and I'm not sure KZN is as pro-privatization as Cape Town is.

Secondly, would require public participation process. Needs a tender, as Elangeni did.

Truth is there're 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. Are we committed to helping them in every way?

We are.

Great, thank you. Then we have a question from Willem, and he says, "Why did the Sandton Consortium transaction fall through?

One would have thought that matters like preemptives, etc., would have been addressed before the deal was announced to the market."

Yes, Willem, I am a deal-making idiot and we got caught. No, I'll tell you what happened.

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 something, CompCom approved the thing in 2 weeks flat and announced it publicly.

I had to announce the deal before I had a signed agreement, because CompCom went public with it. Normally we would not announce the deal until everything signed up.

We did have agreement that they were waiving their preemptive, that's why the application went in. Pareto, 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 early on 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.

Sometimes people change their mind, it's their prerogative. It would normally never have been in the public like this, and that's why it's a valid question, Willem, it shouldn't have been announced and then cancelled.

I was forced into an announcement because it was over 5%, it was a Category 2. If it was under 5% I would have ignored it then still, and not announced it, but it was Category 2 and CompCom went public, we got pressure from JSE and we announced.

You live and learn, anyway. Next question?

Then he has a follow-up question, which says, "Why don't you subscribe to STR anymore? Don't you need the industry data for planning in your business?"

First thing is STR are the most arrogant crowd you could ever imagine. One of these big software platforms out of the US, they charge a fortune, and they demanded that we submit daily stats instead of monthly stats.

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 aggregated. 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, we cancelled on them.

He says, "Understood, thank you." 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.

Good. Laurelle and I have got a flight to catch back.

Thank you all, thank you for attending. Thank you for the interactions, and we'll talk to you in 6 months.

Thanks.