Southern Sun Interim Results

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myself for speaking to us this evening. Now you've attributed your positive results to the increased demand by international and domestic travellers. Talk to us about the main drivers behind this performance, especially considering the significant challenges that have been posed by the COVID-19 pandemic. Yeah, so these are our results for the first six months. These are a week period here in the year, because you've got winter, particularly winter and get jobs are all spread. But we've seen increased demand in

Even Katan Winters this year, on last year, we've seen a good improvement in the Samsung mode, which has been business travel related, even with bricks in the prior year. So across the board, it's been an uptick in local business-related travel, and quite a strong international interest in the, I think in the country, post the election, to be honest, you've seen this sentiment that changed. So overall, we picked up occupancy a little bit more. We make most of our money in the second half of the year, but if the strength continues, and that goes well for that too.

And speaking of the regions, I just want to look at the Western Cape because you've highlighted as a standout performer, I just want to know why is this and what your outlook is in for the other regions. So the Western Cape is we've got a very big exposure to the Western Cape, particularly around the CTRCC, the Convention Centre in Cape Town, and that Convention Centre, as well as the Standard Convention Centre that you run into and have both seen very high occupancy levels.

It's a feature that we picked up post-COVID, where you will launch a suggestion with big conferencing, and they come back very, very strongly. And both those conferencences are doing fairly well, and they drive a lot of demand. Cat-time itself has done very well in positioning itself as a global conference and event destination. The big stuff that goes into the CQRCC, but also things that take up the meeting rooms and things on it as well. So as a destination, it's definitely on the world map.

I think was more of a recovery story. And then the reason that battling this in the Durban Beach Front, in slung this British song, but the Durban Beach Front has been a week. And I think a lot of that is to do with the politics of KZN, the uncertainty around this. But even though we think it's turned, there's been quite a lot of positive sentiment. It's been good work done on fixing the infrastructure on the Beach Front. And post the elections, you've seen some pretty good progress from what you mean in the KZN area.

as a weakest region, I think even if couldn't go. Yeah. And then looking in terms of your offshore operations there, looking at Mozambique, you noted during the presentation today that it's been challenging there. And that's due to the political instability in Mozambique. Talked us about sort of the operations in Maputo. Yes. I mean, it is really sad. We are the biggest hotel operator in Mozambique, but three hotels with some 500 rooms. I have

And I still do, but it's shaken a little bit, had a lot of confidence that no one beat was really on the edge of greatness. They've got spectacular oil and gas funds, I'm sure. They've been dealing with the insurgency up north. You kind of just felt like you were waiting for this market to truly boom. A lot of construction happening, but it is a beautiful city, well-run. And I had this post-election, disputes and violence and so on, and it's really given confidence in that area.

Will you have that sort of disruption in border closed and port disruptive and then we get answers and the 10% occupancy and it's just a tragedy. We're looking for strong upside being experience in sort of COVID like closed down features. Hopefully they, they switch out whatever the issues are quickly and move on. But I do think it's a country and particularly a city with a lot of potential. But we didn't see this coming and we just got to manage through it.

Yeah, definitely. But looking at the numbers then, adjusted headline earnings per share grew by 39%. How sustainable is this growth? And what should investors anticipate moving forward? During COVID, we did a lot of restructuring. And we were set at a point where Martin Wies from two visits, we like a start up to 50 years experience. Then we went down to an absolute war basis. And we restructured this whole business from top to bottom.

We cleaned up that dual listing structure. We had hospitality fund and service fund. We sold some hotels that broke down our debt dramatically. All of those activities during the COVID period are what's driving our earnings growth now. And it is a loss of the business coming back to a more sustainable level. And we think the debt growth is still there. So in a position now where if we get reasonable top-line growth,

Inflation plus a couple of points. So we did 6% revenue growth in these six months, but it was 10% at the EBITDA level, 30% at the bottom line. And in the J-Barback, we did push it up even more. As long as we can get reasonable revenue growth, the operational gearing in this business is enormous. We've got a fixed cost base, so your incremental revenue strikes the bottom line. And we think we're in for a good period if everything holds.

Yeah, definitely. We'll look out for that. And then operational review highlights a capital allocation to key properties to ensure they remain a best best in class. Could you share more details about which properties are being prioritized and the scale of these investments? So we've done a lot of these. They've been the period. The Cullinan was the biggest one. We called it for a month. It can actually be beautiful. The whole hotel's been being redone. We've done 7th and 7th and Rosebank.

The Fenton Towers, which we rebranded from an intercontinental to Fenton Towers, will be opened by the 3rd of December. It's completely 232 new five-star rooms. It's going to be the prettiest five-star term in Fenton. So our view on our portfolio is that if I gave you 30 per year grant and 10 years, you couldn't rebuild what we've got. We've got locations, we've got really good products in the market. We've seen more than you're putting money into renovating and upgrading our existing product and trying to build

news from scratch or to turn by somebody. And we've got about seven hotels that we are planning further with tuition and time. We can mock up rooms and so on. We've got to decide on the priorities that places everywhere from blimp and time to non-grace. We're doing a lot of work on this. And we think investing back in our business is going to get to put us in a good position to with we think harvest increased to bond over the next few years.

If the industry is still trading below its long-term average, we're hoping to be 61%, 60% occupancy this year, we should be in the high 60s, not below 60s. And with that operation getting at the start of the moment to get there, to get that right, the bottom line's substantially better. So you're going to do that based on the product and based on the public and the future.

Yeah, definitely investment to key there. But you've also welcomed the recent announcements by the Department of Home Affairs, simplifying requirements for port of entry visas and visa regulations. Talk to us about that. So how much they've seen help bent on chasing every tourist away and that's a monumental change of attitude and heartache. The first thing they did was simply to inform the embassies and the conflict around the world to apply the rules as they stand and not make up their own rules.

So what you need for a visa, if you are a country that requires a visa, is your passport, a return flight ticket, improve your funds, not your parents' birth and death certificate, but they're giving you an option to be lost. So we simplify that. They've brought in the trust of two operators system that allows two operators to organize the user for a group without even a member of their two parents to go to a consulate. And also, they've been moving towards a complete EV system, which is exactly what a country like our needs.

that has to make it impossible for tourists to come to the country under the auspices of national security, that's just not them. You've got to make it as easy as you can. You're competing with a large number of very attractive countries around the world. If you give an administrative burden, you're doing this industry no good. And there's been such a turnaround in the animal sales department. It doesn't mean that the tourists arrive tomorrow, but we already did. That's positive feedback from our source markets. We think there's going to be good kind of out of that.

I'd say for our world to be in the highlights of the B&U. All right. And then on that note, just finally, with interest rate cuts and stronger economic growth anticipated, what's in your outlook for the group's performance over the next six to 12 months? I think we carry on much the same. Improved occupancy, reasonable rate growth, leading to good bottom line earnings growth, provided everything goes as it should. A median current outlook is that the SA economy is desperately in need of growth.

The reform seems to be coming through. There's very positive sentiment towards investment in the country versus what there was six months ago. For this reason, we would have left a bigger interest rate test. Our inflation is not driven by over exceeded demand. It's been by important inflation. I think it's room for that interest rate to come down and really give us economy a bit of a basis in a long time, because we've seen two or 3% economic growth. But if you have there,

everything changes. We've been able to build and travel activity levels, people in common with everything data. We hope it will get coming in the next few years. All right, Marcel, that's all the time we have this evening. But thank you so much for coming on the show. Thank you very much for having me. Fantastic. That was Marcel von Oluk, CEO at Southern Sun, talking to us about their interim financial results for the six months ended September.

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