Okay. Thanks, everybody, for joining our half-year earnings call this morning. I'm not entirely sure if I shouldn't put these back into in-person presentations, but it seems to be easier if we want to go through the thing online, and then those of you that want to talk to us, just make contact with Candy or with me directly, and we're happy to set up meetings. We're seeing quite a few of you, so I should think I'll just go straight into the presentation. I know we're going to push the right button here. Hopefully, this all works. The URL told me if this is working. Not. Wait. There we go. Okay. Technical issue. Working. Okay. Rather than putting together this presentation, one of the, I guess, the comments I made to it was terribly boring.
There's not a lot of excitement to put into this, even though it's actually all, and it's boring because it's doing what it's supposed to do, and we have given guidance into what was coming. We put out a trading update in September prior to the RMB Morgan Stanley Conference, and it's kind of all flowed with a bit of upside in September to what we expected. So there's great news and shocking excitement in the presentation. It's doing what we were hoping it would say on the tin that it would do. There's quite a bit of detail in here, and I'll give you some sort of guidance as to what we're looking at going forward. But essentially, it's a slow and steady recovery, and all the work we've done in prior months is paying off and is essentially doing what it's supposed to do with our results.
So the usual disclaimer: you can't sue us with the like or don't like effects that we present. Our group structure hasn't changed. HCI is still sitting, including their foundation, around 45%. There's been quite a bit of churn in the public shareholding. As you've, I think, the PIC gave us notification they went over 5%, but I'm not surprised. I mean, the share price sort of doubled over the last year, so I guess some are taking profits and other new ones are coming in. Board of directors hasn't changed, so it's all very stable. And quite frankly, the portfolio hasn't changed. It's all very stable. Still the largest hotel group, great distribution across the country, and we own hotels operated by Marriott and Radisson in addition to the large portfolio that we operate ourselves. Our brands are the same, so there's no change there.
Let's get into the numbers. I'm starting with the cash flow because I still believe the lessons we learned in COVID are important. We manage everything on the basis of cash. We've given the half-year numbers here with a comparison for last year, and I've also included the full year just so that you can keep track. We still have this situation where our first half year is our weakest. We've got winter in there, which is tough, particularly in Cape Town. and then you've got the full summer and all your peak months, your October, November, and your February, March are in the second half of the year. So we still say we make roughly, and you can't hold me to it, but roughly 1/3 of our profits in the first half of the year and 2/3 in the second half of the year at the bottom line.
Obviously, your revenue isn't split there dramatically, but your incremental profit in the second half of the year pretty much flows right through because of your operational gearing and your fixed cost base. So it's just important to keep what half-year numbers look like relative to what a full year last year looked like. So EBITDA per income statement, 822, up from 745. Probably rentals are spread rather evenly. Working capital, quite heavily negative in the first half of the year. A large portion of that was management bonuses paid out. You're accruing for this year's STR, but we hit our stretch targets last year, so there was quite a large STR payment. This should convert into a positive working capital by the end of the year, not as big as last year. We had very strong data collection towards the end of last year.
It's possible you get it again, but I don't see it repeating. But it is worth bearing in mind, as the business grows, we do generate positive working capital inflow. I mean, the sort of basics of the business is you pay for the room you're sleeping in tonight, but I only pay all the suppliers and the cleaning and everything else a month later. So as our volumes go up, we have a positive working capital cash flow event. It looks different in the half-year, but by full year, that should be positive. Dividends from associates is our U.K. business. It's obviously sold quite a lot of the properties in there, so that is coming down. I'll talk more about that in the income statement. Finance costs are likely looking at the cash flow because it doesn't have all the IFRS nonsense in it.
Essentially down ZAR 20 million in the first half because we've got ZAR 500 million less debt on average for the first half of the year. Tax paid goes up because we pretty much used up all of our assessed losses. So there's rats and mice around, but by and large, our cash tax paid will kind of largely equal our 27% because there's no assessed losses that we're mopping up. Operating equipment. In CapEx, we spent a lot in the first half year. The development team had been working very hard. I mean, Keith was saying to me the other day, it's not all ours because we also have managed properties, but we've renovated over 1,000 rooms in the last year, including places like Cabana Beach, which is virtually a brand new resort. And I've got some detail there in the maintenance CapEx.
That's our spend, but we've been doing a lot of work on the portfolio. And you get a lot done in the winter months because you're not displacing, and then you slow down, particularly on room refurbs in summer because you need the rooms to sell. You can't take them out of stock. I've got some detail on expansion CapEx. What obviously also affected cash in the first six months is we paid our maiden dividend. So ZAR 167 million went out in dividends. In the prior year, we were still buying back shares. I think that last lot was at like 4.80 or something. So we did ZAR 389 million worth of buybacks in the second half of last year.
That's why you also in the income statement get a kicker in your EPS because we have a lower average number of shares in this six months versus the same six months last year. And we closed off debt at ZAR 995 million. As I said, majority of profits come through in the second half of the year. It's also your cash flow is stronger. So we expect that debt to drop down to probably somewhere between ZAR 300 million-ZAR 400 million by the end of the year, depending on what happens with CapEx timing of spend and working capital and so on. But your big cash inflows happen now in the next six months. So we would expect at least in South Africa to be largely degeared by March. The investment activity that we capitalised some fees on Beverly Hills, which is that big expansion project.
We've got our demolition permit, and we've got our building plan process underway, but that's when the whole project's still a way off, but we are carrying on with that. The prior year had the Birchwood acquisition. In the balance of the year, we are expecting that uMhlanga land acquisition to follow through. The prior year shows the ZAR 5 million deposit. It's taken forever to get clearance. This is that piece of land up on the ridge. It has now lodged for transfers, so we expect that money to flow in the next week or so to be ZAR 31 million. There's a little bit of expansion CapEx in the second half of the year. Our maintenance CapEx. I've pulled out the major refurbs here just to give you a feel of what's the large refurb work relative to the normal spend of keeping everything going.
The projects we're really working on are Cullinan, Rosebank, and Southern Sun Sandton. Radisson Gautrain and small in there, but the cash is flowing in the second half of the year. Quite a lot of the rooms have already been done. We just haven't paid for them yet. So those are the big refurbs in our own portfolio. As I said, in addition, we're doing a lot of work on the managed portfolio. So the timeshare resorts have been redone. Sandton Towers is nearly finished. I think we opened that again on the 3rd of December. It's going to look magnificent. So developments had a pretty busy time.
And then outside of the major projects, that balance of the CapEx is all the work we do on replacing everything from beds and air conditioners to heat pumps, water systems, pooling, all the stuff you've got to do to keep a large multi-billion-rand hotel portfolio going. We're still on track that we think full year will spend in the region of just over ZAR 500 million. It could be a little bit less or a little bit more depending on timing of cash flow in the second half, but I think given the guidance before, you've got to work on at least ZAR 500 million a year, and that's kind of what our forecasts are saying. At ZAR 215 million, we'll finish off at about ZAR 520 million, I think, is our last forecast.
Our debt position at half year, the dollar debt in Maputo, sitting at ZAR 424 million, and then the rand-based facilities in South Africa, which we expect to pretty much pay off in the next six months. Laurelle and I were talking we were going to do probably a full refinance in the first thing in the new year. These packages we put in place a couple of years ago coming out of COVID, and we've degeared a lot faster than we thought. So we're going to just relook at all our funding packages and make sure they fit for purpose. So we'll do that refinance in January and also make sure we've got enough capacity for expansion and development and acquisitions, etc. At the moment, we've obviously got a lot of surplus facilities, probably too much because we've degeared so quickly.
We intend to remain multi-banked, and certainly all the lenders we've spoken to are very supportive of us, given how the balance sheet looks post-COVID, so we're quite a good spot now, I think, so we talk a little bit about operations. The six months was pretty good. For those of you that did attend the RMB conference, I mean, we put out the guidance so that it was in the public. Sort of low occupancy growth, a little bit of rate growth. It was impacted by the BRICS in the prior year, which was a very high rate, very good earnings potential, and then that, like the Towers, actually closed in this year. So you're going to get a lower impact from that. Cullinan was closed for a month, which is an important hotel. In general, slowdown around the elections.
All of that said to still have rooms revenue growth of 7% and overall revenue growth of 6%, translating into EBITDA of 10%. I'm very happy with that. As I said, this starts a bit of a boring presentation, but that's exactly what it's meant to do. And if we get that in the six months, it's a nice base. And the second six months are the ones that really count. And so far, it's doing well. September was surprisingly good. The month came through very strong. Our entire SA portfolio was sitting, I think, at 69% occupancy. We did over 75%, close to 78% in Cape Town, which for September is unusually strong. October was similar, but that's normal. November's on track. I'll talk a little bit about Maputo later. But outside of Maputo, everything seems to be ticking very nicely, and the forward stuff for December is good.
So it's all working as it should. Food and beverage revenue is up 4%. I just want to comment on this for a moment because I think, well, not really relevant now, but it is going to come next year. We haven't adjusted the breakfast allocations for quite some time, and we are going to do that with the effect from, I think, 1 February. The way that works is when you pay, I don't know, ZAR 2,000 bill and you leave, we take out that, and then we allocate out the breakfast allocation to the F&B department, and the balance goes to room revenue. That allocation is usually less than what the door price is, but it's an important decision because it allocates the revenue to the F&B department, which we measure all their cost and profitability and their ratios and making sure everything works.
We haven't adjusted those for a number of years and effectively giving all the chefs an increase in their allocation. But from an accounting point of view, it takes an extra ZAR 30 or something out of room revenue and puts it into F&B. So there'll be a slight adjustment in that going forward. Net money flows is exactly the same, but you might see a change in room growth versus F&B growth, and it's one of your reasons your F&B growth here is slower than your room revenue because I didn't give them the price increase. So they only get volume increases. Their pricing is exactly the same. Cost controlled well. We had overall 5% cost increase in the six months. We did have a benefit, no load shedding, but it is offset by higher volumes and higher electricity prices.
So the net difference isn't that big, but it means that you've only got a 2% increase in your heat, light, and power versus you would have had a much higher increase if you still had all the diesel costs, etc. So that's good. And we are seeing the benefit of not having load shedding. It's all the other crap you don't have to put up with of broken equipment and generators needing additional servicing and PC boards blowing. I mean, it really is destructive to the assets, the on-off, on-off. And we haven't had that, and it's remarkable. That level of repair work has just come down. It's a long way that lost. Well, that gives us a 10% increase in EBITDA with a slight improvement in margin.
Below that, the property rentals and depreciation has got a big IFRS impact into it, which is why I tend to focus on the cash flow. But the 10% in EBITDA did work its way through, after an interest saving on the debt levels that comes down to ultimately a strong growth in bottom line, which is exactly what we want. There's a bit of noise in between. So the IHL portfolio gives you a lower set of earnings at 18 million versus 26, but we've sold assets there. So in that UK business, it's got around 45 million GBP worth of net assets after debt. So we've probably got about GBP 10 million-GBP 12 million invested in that, which is less than what we had. So the RBH management company is performing really nicely, and the equity earnings from the property company come down as we sell the assets.
And we think that'll continue when we get more capital returned from the UK to us. Income taxes are in line. We should have an effective tax rate of around about the 27%, and a lot of it will now be pure cash because we don't have the assessed losses. So all of that brings your operating profits at 19%, but your bottom line at 31, and then ultimately your EPS at 39 as the benefit of the share buybacks kick in. And that's always, as I said, a lot of this is work we've done three years ago. It's getting the structure right. It's getting the operational costs right. It's the buyback. It's degearing. All of that is flowing through and giving what this group should be producing. And we're very happy with ZAR 0.25. And we hope that the second half doesn't present any major traumas.
We're not seeing any at the moment. It all looks like it should continue as forecast. I have put the quarterly stuff in. I didn't do it in the half year last year, but it shows that difference between a first quarter, which is traditionally our weakest quarter, and a second quarter. That's not the strongest of the year by any measure, but still did nicely come in at 62.6% occupancy. So if we can start getting four quarters of the year above 62, I mean, then you're cooking with gas. So we think at the end of the year, we'll end up with above 60 occupancy. We don't make any promises, but it's all trending the right way. And you can see how the profitability changes between a 55 and a 62, and you just make a lot more money. And then we're now going into our peak periods.
So we hope that continues. What does the actual income statement look like for all of that detail? The table on the right is the important one. It gives you that idea of the operational gearing. We have the 2.5 million room nights available for the six months or 5 million room nights for the full year, as you've heard me talk about before. And if we set at around about 60% occupancy, we're selling 3 million room nights. And if you can get rates upside and you can get occupancy upside, the flow through is very, very strong. So overall, 6% revenue growth, 10% at EBITDA, and it all works nicely down the income statement. Adjusted earnings at ZAR 0.25. The segmental analysis is talking to our regions a little bit. Obviously, Cape Town's still the part that makes us look very clever.
We've got a large exposure to Cape Town, and it is working. And it's driven by both local and international visitors. And a lot of that international visitors is not just leisure. I mean, it is full of tourists, which is fantastic. But the CTICC, the convention centre opposite the Cullinan here, is flying. That and the Sandton Convention Centre are both doing very well. And as long as those are going, the demand for large exhibition conference facilities in Cape Town is excellent. It's a great destination for that. There's a lot of international type conferences that come through, and it really works exceptionally well for us with our concentration on this node. And we think that's going to carry on going forward. It's interesting, December this year, which traditionally for us, because of our city-based nature, is not a terribly great month, has a really strong first half.
Both the Sandton Convention Centre right up to the middle of the month with the BRICS launch and that sort of thing and a couple of other events and the Cape Town Convention. I think they close here on the 13th of December. They've got a lot of activities. So that December stuff's looking good. Then we get a bit of a lull, and then we go into peak season. So touch wood, it's all doing what it should do. The weak points in that slide is KZN. We have been battling in Durban. It just hasn't got that traction post the elections. And it's very much a Durban beachfront problem versus a stronger issue, and you're just missing any sort of conferencing and group stuff that we rely on there. The Durban Convention Centre, in comparison to Sandton and Cape Town, is not working.
It's got very limited big events. There's almost nothing on the books for next year, whereas the other two are fully booked out. So it needs focus there, and we're trying to sort of help wherever we can. I do think, however, that the Durban season is going to be quite good. Let me not jump ahead. I'll talk about those in a bit. The other good performer on this was Gauteng, which had still an element of recovery in it. The Southern Sun Sandton has done well, which has picked up. So there you can see we've gone from ZAR 172 million EBITDA to ZAR 232 million in our Gauteng node. The airport region has done very well. It continues to be extremely strong. Places like Birchwood, the InterContinental at the airport and so on have really performed nicely.
So if Cape Town's working and Gauteng's kicked in, we've done really well. Durban's the only one lagging a little bit, and I'm still relatively optimistic that will turn. Now to the notes on the regions. So Gauteng, as I said, the airport node particularly strong. Convention Centre's given us a boost. The only sort of weak part in Gauteng at the moment is Rosebank, but it's a lot less weak than it was. So we're sitting in the sort of mid-50s there month to month instead of in the mid-30s. So even that has come right nicely. That's some pictures of our new fresh restaurant. We had that collapse there about a year ago. So the place is looking great, and I think it's going to do pretty well. Cape Town, as I said, inbound travel has been very good.
Not just international inbound travel. Local travel to Cape Town remains very popular, but your conferences and your group stuff down there has been very strong. This goes back to great governance in a well-run province. It's doing what it needs to do. KZN, we've battled. I do think that this is possibly turning. Our summer sale had, and it's a small sample. It's a three-day. To our frequent guest members. Take it from whence it comes. It had a 20% increase in demand for Durban. I think the driver of that is better PR. There's less extreme negative reporting around Durban. There's an acknowledgement that the city's getting a lot of its problems sorted out, if not completely sorted out, much improved. There's also an impact on pricing.
Last year, people were nervous about everything from security to the quality of the beaches. With that negativity going away, you end up with a really good value proposition for Durban. It's expensive to go to Cape Town, both to get there and when you're there. And a lot of your traditional market, I think, is going to go back to Durban. So I'm relatively hopeful on this. We had our management conference in Durban. I want to enforce the thing to our own team. I made everyone walk the promenade from Elangeni all the way to the end where the harbor is. And people were blown away how magnificent that beachfront can be. So I'm hoping that this is starting to turn. It's not to underplay the problems in Durban, but it's a definite better environment than it has been.
If we can get that ICC going, that would also make a great difference to our business levels there. Other segments, obviously, your outlying stuff, your Mpumalanga, Kimberley, Bloemfontein, Polokwane, all impacted by the elections and general government uncertainty, but I think a lot of this is going to do quite nicely. Government has lifted the rate cap, which has been a thorn in our side for a long time. They have delayed the decision to January, I think, but ultimately, that will be the right thing to do. I mean, you've got to let market forces dictate pricing on this. We're helping them a lot where we can to try and get their policies and so on in place because each department has to do it now, so we've had a number of government forums where we have had the bookers.
We've worked with the travel management companies to try and make sure that they don't essentially fall apart in how they manage their travel and they still get value. And what drives, if you book properly, you get the best deals. If you book badly, it's going to cost you more. So we've been doing a lot of education with various government departments on that. And I think a lot of that will normalize. So I'm feeling relatively comfortable there. Offshore, Mozambique is a thorn in the side at the moment. I mean, I'm very unhappy with the situation there. I didn't see Mozambique going into anything like this sort of disruption and violence. In fact, we had our sales conference in August. It was fantastic. We walked from the Southern Sun to the StayEasy up the road. It's about a three-kay walk or something.
The city is really gorgeous. There was a crowd who wanted us to look at a site across the bay, and then the boat coming back in, and you look at the skyline of Maputo. I mean, I counted something like 30 or 40 building cranes going. Everything just ticking in the right direction, and then you get this nonsense around the election and the violence associated with it and so on. I mean, hopefully, get that sorted out. It is impacting us at the moment. It's probably between ZAR 10 million and ZAR 15 million a month difference in EBITDA because it virtually shut down. We were running most of November between 5% and 10% occupancy in Maputo. The only people that were there were the ones that didn't want to leave, and everybody else was gone out of town.
Hopefully, that sorts itself relatively quickly because it's a great city, and I've got a lot of faith in it, and I hope that it gets restored if they can sort out their political trauma there. It's a city that's been very peaceful for like 30 years, and they don't need this in their lives. Balance of offshore funds, Seychelles has been doing well. We're busy with the mock-ups for the refurb there next year, but all trading going pretty well there. Prospects, as I said, it is doing what it's supposed to do. It's doing what we hoped it would do when we did all the work in the last three years. September occupancy at 68% is fantastic.
I mean, when hotels like I'm in the Cullinan at the moment, there was a week in early November, late October, where just about the whole week, it was the first week of November, every hotel in Cape Town ran at 100%. It was just full. And it's such a joy to see it when it works like it's supposed to work. So we do think things are positive. All our forward bookings, all our forward forecasts look good. Can change in a heartbeat if someone does something silly, but we don't see any of that. Yeah, we're having a bit of an argy-bargy with some of the OTAs because they're also seeing the market boom, so they're trying to flex, and we'll just deal with that as it goes. You've got your normal day-to-day worries, but actually, things are working well.
One of the greatest things the GNU did was the Department of Home Affairs simplifying visa requirements, putting the international embassies under the cosh to go and make sure that they apply the rules as they're supposed to and don't make up their own requirements. I think in the next year or two, you get a really positive upside, particularly from the Indian and Chinese markets because you've taken away this almost impossibility of getting a visa, and you've facilitated it. So I think that's just great news for us. Talking to Jacques, the GM here, I mean, we've got something like 81 ships docking in Cape Town over the season. You've got 28 flights a week directly in here, and there'll be more to come. The Jo'burg flights are picked up substantially. Lufthansa put on four times a week from Munich.
So it's all looking good, and hopefully, they'll stick with it. And then the G20 starting in this December, carrying on for a year, is very good for the country. And I'm very glad that that's been decided to hold that conference in November next year in Jo'burg. First of all, Cape Town doesn't need another conference in November. You would just be displacing. We're full here anyway. And secondly, it'll hopefully force the City of Jo'burg to clean up its act a bit. You're going to have the world leaders there. You better get the thing painted and fixed. So I think that's going to be good for Jo'burg. And then there are about 100 events that DIRCO manages around the country. So that'll be a big thing for everybody next year and hopefully drive positive sentiment a little bit like a World Cup does.
We haven't heard any more detail, but we did see the announcement from Kyalami that they are proceeding with the upgrade of the track to Formula 1 status. So I can't imagine Toby spending that money for the love of it. So I would hope there's going to be some news coming from there. All of these things just build on that momentum that says we should be going into a more positive future than what we've had. Our strategy remains the same, very inward-focused. We're spending money on CapEx. We're refurbishing rooms. We're carrying on with that. I've got a lot of decisions to make in the new year as to which ones we prioritize. We're doing mock-up rooms all over the place. I think we've got about 10 hotels with mock-up rooms in. And then you've got to pick which one you do first.
Do you accelerate it? Do you slow them down? Do you do them over a period of time? And we're still a little bit wary in that we've had one good year, and this is our second good year. We don't want to go bet the whole farm. But we do think it's the right thing as these hotels renovate. You can see the positive guest feedback. Internal services, operations, etc., all got a strong focus on. And our frequent guest program, we've enhanced the offering to the Rewards members. We've included greater reward benefits on some of the budget hotels. And we are launching quite a bit of not launching, but we've enhanced the benefits on the business rewards too so that PCOs, conference organizers, and business reward customers are getting bigger benefits on the thing. And I think that's going to all just help drive that business.
I do think we took market share in the last six months. It's very hard to prove because no one has an overall stat of what the market is. But if you could get the public stats of a City Lodge or a property and so on, I've got a feeling that we've done better. And it's not necessarily moving a customer from one type of hotel to us, but us being in the right place and doing better than what perhaps some of the others are. I do think we're doing better than what the overall market is doing at the moment.
And hopefully, that certainly continues. So that's a pretty simple presentation. I mean, there's no big surprises in there. I'm happy to take any questions if I can find my way back to the screen that shows everybody there. Or you might have to help me here. There we go. I'm happy to take any questions if anybody has. Warren?
Hi, Marcel. How are you doing?
All right. And you?
Good. And you spoke to the September occupancy that's 68%. I mean, can you maybe just talk to what you see in October and November and into the forward bookings into, I guess, the rest of the festive season? Are things looking as positive?
Yeah. So September was a surprisingly high, 68%. It's not one of the peak. It's a good month, but it's not a peak month. October was an unsurprising close to 68%-69%, something like that, but it's meant to be. It's a peak month. And forward bookings are looking strong. So what we call, I get my terminology wrong here, and then the hoteliers are going to laugh at me, but essentially the pace.
So we've got more business on the books for December now than what we had at this time last year for that December. Now, if that business is not going to be added to, it just booked earlier, then you're not any better off. But that generally doesn't happen. So if you've got higher booking levels at this point in time, as you get closer to the day, it fills up more.
And particularly that first half of December, which is kind of the one that makes or breaks. Your leisure period from the 20th onwards is always good because everyone eventually goes on holiday. But the business period from the 1st to the 15th can be great or can be bad. At the moment, it looks really good because there's big events that are keeping it filled. So that all looks positive. And then February, March next year looks like they should be doing exactly what they need to be doing. So I say we're relatively comfortable that what we've done should continue.
Okay. And the outlook for room rates, given kind of an improving environment, are you starting to see some strengthening there as well?
Not really. There are periods where when you hit that boom time and you're running 100% in Cape Town, you can charge anything you want. But that is not happening often enough. And we're a little bit wary of being too aggressive on rate. I'd rather grow volume at the moment and just make sure we don't mess up as we go along here. So it's all looking so good. I don't want to be cocky about it, to put it bluntly. And the system works.
So when the opportunity to yield is there, we definitely take it. But we're not being silly aggressive on rates. And like this government thing, the fact that they've lifted the rate cap doesn't mean we're going to go and gouge on them. And we're working very hard with them to say, "How you manage your travel and how you book is important." We don't want to price gouge you, and we don't. But if you book two rooms and you forget to cancel the other one, you're going to pay twice. So it's not an aggressive type of approach to it.
I mean, maybe just one more question. The rooms available, have you got now the Cullinan back in as well as the InterContinental? Those properties, are they going to be back in for your peak season now?
Yeah. Cullinan's in, and it's done. So we've got about, I think, about 100 rooms left or something out of 400 to do at Cullinan. Those will only be done next winter. So we're at full capacity here. The Sandton Towers opens on the 3rd of December, particularly for all the big event stuff in early December. So that's on track. And so that one is still out at the moment, but we've got 20 days to go, and they're getting beaten daily to get the thing open on time.
Okay. Thanks so much.
Okay. Leander?
Yeah. Thanks, Marcel. And well done on a great set of results. Just two questions on my side. The first one is on your thoughts around continuing share buybacks, given that the stock is now re-rated quite strongly. Will we be seeing more share buybacks, or will we see a change in the dividend payout? So that's the first question.
No, we haven't bought back any shares in the first six months. It's not that I don't see value in the share, but there's obviously less value than there was a year ago when it was screamingly cheap. We'll just wait and see. The nice thing about share buybacks is you can do it when you feel comfortable, and there's no policy involved. I don't have to declare a change in our approach, etc. So at the moment, it's just run so fast we haven't even thought about it. We just pay off our debt and see what happens. But if you enter a crisis and there's a little market dip or something, we have facilities available, and we know what we think the share is worth very comfortably, and it's a great backstop for use of capital. The dividend policy, we haven't decided yet. We declared 25% last year.
I think that's going to drift upwards to closer to 30-35. I don't think it'll happen all this year, but I mean, we've had discussions with Johnny. The dividend needs to be stable and maintained. It won't be as high. When we used to be the bigger group, I would say 50% because casinos have a higher cash conversion rate. Hotels have less while we've got CapEx and so on. But the dividend should continue probably growing a little bit faster than earnings, I would hope.
Okay. Perfect. And then the second one is just looking at some of the macro changes that we're seeing in India, tourists, Chinese coming through. What is your thoughts around the growth versus the prior year, also factoring in that interest rates are being cut? So speaking around December, January, and February next year, do you think there's more upside risk than downside risk to your guidance of just about 60% occupancy?
It's a very hard question. If everything works like it's supposed to work, there should be upside. I'm not happy with a 61%-62% occupancy business. I mean, it should be much higher. It should be north of 65%. I think if you get to the 70%, you're probably undercapacitised. You need to build more stock. But it should be north of 60%. And South Africa is not there yet. But our portfolio is very diverse. And I'm doing those numbers and more in Cape Town, but I'm not doing those in the economy sector, particularly in the balance of the country. In some hotels, I'm doing 80%-90% year-round occupancy, but I haven't had any rate upside.
So overall, I think there's more upside. If the government holds and they do everything that they say they're doing, South Africa has enormous potential with this. If you get to 2%-3% GDP growth, those of you with longer history in the markets just have to go back to 2006, 2007, and 2008 before the financial crisis. I mean, as a group, we used to do 25% RevPAR growth a year for three years when we were running at GDP of north of 3. So you just get a great flow of business activity if that comes through. That's not our base forecast. It's not how we run the business, but it has that potential there.
On the other hand, if they get silly in Home Affairs and do bad things like they used to do and make barriers to entry for people coming into the country, if they don't control safety and security, if they don't have airline capacity into it, and all the other things that could go wrong, then you're just going to drift along at the current levels and possibly tick down. So we're very proud of what the business has done, but ultimately, that macro is very important to us. You can't grow this thing. I think I gave the story maybe a year ago. There's one or two percentage points occupancy you can take by market share. The balance, you need the market to grow. We need a bigger pie.
But we do think that you're more likely to do better in the years to come than to do worse because it all seems to be going the right way. But you take your easy chances.
100%. Thanks, Marcel.
Yeah.
Marcel, Sven Thordsen, yeah?
Yep, Sven?
Marcel, you say, I mean, obviously, the shares re-rated a lot in the last year and a half. What do you think it's worth at the moment?
I can't tell you that. No way. Nice driving now.
You know, because when we saw Johnny Copelyn in Cape Town, he said he had a NAV of ZAR 16 a share.
Maybe he's got a different NAV to me. No, look, I mean, if I was to take our entire portfolio and say, which I do, I keep a running schedule, and I say, "These are all the hotels we own." And if it was for sale in the market at this price, I would definitely buy it. And I go down that list, and I add it all up, and I divide by the number of shares, etc. You get to like ZAR 12, ZAR 15, ZAR 13 or something.
And that's not replacement cost. It's not any scientific thing. It's like if I... And that doesn't take into account the brand and the management fee. It just says, "If Cullinan was for sale for ZAR 2 billion, would I buy it?" Probably. So you got to... That's a bad example. It's a Westin is worth ZAR 2 billion. Cullinan's worth, I don't know, ZAR 1.6 or something.
But that's not a scientific way to do it. And I can't give you a forecast on what the share price is worth. But the earnings are there. The whole thing's working. And you can see the difference if you just go up a little bit of occupancy. Now, if we jump to 67-68 occupancy, we'll make substantially more money than we are now. We will also see cranes everywhere in building hotels. And we're seeing a little bit of that. That new supply's a way off. But everyone's got stars in their eyes, particularly in Cape Town, about hotels just the greatest thing ever. They forget the dark days. So that cycle's coming again. But at the moment, it's all working.
I'm quite pleased to hear you guys on gouging on pricing because I hear the Cape Grace from the 21st of December is charging ZAR 50,000 a night for a room.
Superb. It makes us look like a bargain at... I don't know what we're going to charge.
No, no. That's what I was thinking.
The more they charge, we just look great.
Thank you.
Okay. And Paul? I think Paul was...
Hi, Marcel.
Yep.
Yes. So the growth rate in Gauteng seems to be skewed by the inclusion of the investment properties. Sort of want to understand what would the growth rate would have been if you didn't include the Birchwood Hotel?
No, in comparison too. That's like for like. We didn't just add it to this year. We restated the comparatives to include it too. The reason Gauteng looks so good is you're also coming off a low base, particularly Southern Sun Sandton, Garden Court Morningside, Southern Sun Katherine Street. The first half of last year, those hotels were sitting in low occupancies. Sandton was the last market to recover properly. And I'm not saying they're sitting in the 80s now, but a hotel that was in the 30s that's now in the 50s, it just does a lot better. You go from making no money to actually making money. So that Sandton performance has an element of the last of the recovery from a COVID decline in the thing.
Okay. Thanks, Marcel.
Yep. Cerin? Cerin, are you there?
Hi there, Marcel. Sorry . I dropped off a little earlier, so I missed the comments on Mozambique. Can you reiterate some comments on the impact of Mozambique and your perceptions going forward? Then considering what one of the last questions were about peaks in rates in Cape Town for the Cape Grace and others, just a question on development. I know you said it's ongoing, a little spending over different years, but when can we look at those CapEx plans come in officially, like 2026 or something like that?
And I'm not just talking Beverly Hills and that uMhlanga site, but you did mention in the previous results about potential development next door to the Cullinan in Cape Town, considering how well Cape Town is doing, especially within the context of the city also giving a leasing deal to one of its CTICC sites, which also includes a hotel going forward.
I'll come back to Mozambique. Let's start with your last question. So we're not committing to a date for any of the big developments. As we said, we've got two large new developments that we are working on. One is the Beverly Hills redevelopment. The other one's a site outside the Cullinan here. They're big. So they're in the order of, if you put them all together, close to ZAR 3 billion.
We are doing all the work, a lot of design work, a lot of costing planning, your town planning, etc., but we have not pushed the button, and we won't push the button until we're comfortable and make sure we understand exactly what's happening in the market and our own capacity to do it, and alternative uses of capital. So if there's a big market crash tomorrow and all the shares drop back down, considering I'm not going to be building new buildings, I'm going to be buying back shares hand over fist. So we're not going to commit to that.
And I'm also a little bit worried. Those type of projects are complicated. And once you start, you don't want to stop. So if you're putting up a 40-story building, you better make sure you've got it planned right to the nth degree before you dig a hole in the ground. So I can't give you a date on those, but we are working on them. And ultimately, as I think I said before, we probably need partners in some ways. I'm not sure we can carry all of that or that we want to carry all of that on our own balance sheet. We did a lot of fix-up work on this business, and I'm not going to put it at risk with a big build program rushing out. So to put it bluntly, we'll tell you when we're ready.
On Mozambique, yeah, so my point is, look, I didn't see this level of violence and disruption coming. And it's not even the traditional FRELIMO or RENAMO issue. It's a new independent in between. I have no view on how free and fair the elections were or not. But it's the level of disruption in the city and the violence. It's been such a peaceful place, and it was at the one stage the poorest country in the world and really totally destroyed by civil war.
And such good development and growth there and all the potential of oil and gas that seeing people being shot and smoke bombs and stuff in the city is just not great. The impact to us, probably around between ZAR 10 million and ZAR 15 million a month in lost profits. I mean, the hotel went virtually empty because everybody left town after the elections.
And the borders are being closed, and all that natural trade and travel doesn't flow. So hopefully, it gets sorted out quickly. They settle whatever disputes they've got, and it gets back to normal. I still think it's a city with a lot of potential, but it kind of throws your confidence when you see it deteriorate this quickly and suddenly you've got riots in the streets and so on. I mean, we don't judge too viciously. KZN was a similar bloody mess three years ago. So it's just not acceptable to fix that. That's me and my soapbox. That's Mozambique.
Just to follow up on that development, I've got a provocative question. Your comments previously about getting into the Cape Town Waterfront, considering now the InterContinental coming in. Obviously, the group had a relationship with InterContinental in the past. Are you going to focus just on the Cullinan, or are you still pushing David Green & Co. to get into it?
We're still pushing David Green & Co. But I mean, look, the international brands are just that. They're just brands. They don't do anything. They just put a sign up, and they don't put any money in. That money is V&A money. Their current strategy, they want to be the international brand hub because they believe that that will drive the foreigners, and the V&A is very much the touristy foreigner thing. I think their obsession about international brands is wrong. They offer value, but they are very expensive for that value that they offer. All of that said, I mean, we've got the Radisson Waterfront right on their doorstep, which is part of that whole Granger Bay development.
We're changing that from a Radisson Blu to a Radisson Collection. They just upgraded all the rooms. We've restocked public areas and so on. So it's not like we're not exposed to that market strongly. But our real core operational focus is here in the CTICC area where we've got the Westin, the Cullinan, the Waterfront, and the other hotels up the road. And that's also doing very well. So that's okay. I think we'll convince them eventually. Just nag. They'll let us in.
Thank you.
Okay. Kirsten?
How is it. I just wanted to ask, if you're looking at the Department of Home Affairs visa scheme for Indian and Chinese tourists, how much of your expectations in growth and occupancy for the second half of this year or FY26 and beyond is going to be coming from a successful implementation of the scheme? If you exclude the impact of the scheme on occupancy and average room rates, what do your growth expectations look like?
I have absolutely no idea. We can't quantify it like that. We don't know what it could lead to, and we are so diverse with so many different revenue streams that it's just not something we can sit down and say, "Look, there'll be this many tourists, and we think this many will come to us," etc. We're actually quite big in the Indian market as it is in off-season where we have a lot of leisure business that comes through and the MICE stuff, so incentive groups that come out of India as sort of rewarding for staff and so on. This just makes that all easier. What it's actually going to do, which hotels they're going to target and so on, we don't know.
But in all of this, I think the description I've given in the past, filling a hotel is like filling a dam. The more hose pipes you've got going into it, the quicker you're going to fill it. And this is just a clear market where there are vast numbers of potential tourists, and we are getting a very, very small part of that. And if we just get a slightly bigger part of that, it could be material to South Africa. Where they'll go, how they'll travel, when they'll travel, we don't know. But the concept of having a bad visa regime is obviously bad. And fixing that is all just good. But we don't model it like that.
Okay. Perfect. Thanks.
Marcel, Warren here. I just want to clarify your answer on Mozambique there. I heard ZAR 10million-ZAR 15 million per month. Is that a loss of revenue?
Yeah. That's the difference between what we thought we'd make and what we're going to make if they carry on with all the nonsense.
Okay. And then in terms of bottom line impact, if things stay closed for a number of months, I mean, is it?
So that's at EBITDA level. So that's loss of revenue minus what we pull out of cost savings.
Okay.
And if it carries on for a long time, we can pull out a lot more costs. But at the moment, we're paying staff, even though we're running on 5% occupancy. We're not going to stop paying the staff because there's a three-week trauma. If it's a six-month trauma, it's a different discussion around how that hotel is structured and what it does. But I highlight it because I can exceed my budget in Cape Town by ZAR 20 million in a month and lose it all in Maputo because there's a bit of drama there.
So as it stands right now, kind of that's the run rate you're losing, ZAR 10 million-ZAR 15 million a month there?
Versus what we thought we were going to make, yeah. So it's not net loss, but it's profit I don't have. So yeah.
Okay. Okay. Thanks.
Inosh?
Hello. Can you hear me?
Yeah.
All right. Great. No, thanks. Apologies if this question was asked before. Just on the KZN region, the traffic has been quite subdued there, particularly in Durban. Can you share any initiatives that you have in place to attract tourists? We have noticed a trend for all-inclusive holiday packages in other African markets, such as Kenya and Tanzania, where they're trying to attract European tourists, and this seems to be working. Have you considered implementing similar products to draw more visitors into the country?
So we don't do all-inclusive. I mean, we used to do that in Seychelles. It's quite a specialist type of thing. But what we have done, we've focused a lot on KZN in our summer sale. And as I said, that was up 20% compared to last year. It's a small sample. It's our database, three-day sale. But bookings are up 20% year- on- year. So I do think there's a flow back. A lot of Durban's problem is PR. And it is turning.
I mean, at the moment, the engagement I have with city officials and so on, we're talking about getting Blue Flag status back. Now, if you mentioned Blue Flag two years ago, you would shout at that as a neo-colonialist oppressor of the poor type of thing because they just didn't want to admit the problems. Whereas now, they're actually saying it's not that hard to get Blue Flag status back. The sea is going to go brown if you've got a lot of rain because it'll wash down the rivers. But that's been like that since I was a child, and it's been like that forever. If they get the basic infrastructure fixed, which they're working on, it's not a hard fix for Durban. So I think a lot of that is turning. It's a relatively fragile coalition government in KZN.
You've only got one vote in place to keep the right people in power. So hopefully, that holds. But our work with the city and the promoting tourism there and so on seems to be paying off. The business side of things still needs a lot of work. The ICC in Durban should be doing a hell of a lot better, and it's not. They do not have the forward booking systems that we are seeing in Sandton and what we're seeing in Cape Town. And those things are long-term. If you get it all right now, you're going to see that benefit two years out because these big events are not booked a month out. They're booked years in advance. You've got to be on the road to the international trade shows. You've got to be developing that order pipeline with a lot of foresight.
And that's not happening at the moment in Durban. And hopefully, that can turn because that ICC is a great facility. And that should be driving the business tourism into Durban on top of just your leisure and your beachfront sort of holidaymaker stuff.
Yeah. Thank you. Perfect.
How do we see those?
Hi, Marcel. I'm...
Thulani. Yeah.
Just a quick one on my end. Would you be open to any opportunistic acquisition opportunities that are obviously accretive to your earnings if they present themselves? Or is the focus just to, I guess, improve the average occupancy of the hotels? Would you rather spend that money, I guess, in paid marketing your hotels there? Thanks.
Yeah. So our strategy is internally focused. Renovate our stock, focus on what we've got because it's a lot lower risk than buying somebody else's problems. That said, everything that comes to market, we've looked at. There's nothing that we've wanted so far. Or if we've thought it's worthwhile, we haven't thought the price is worth it.
So I'm not saying no to acquisitions, but the hurdle rate is high because we've got a great portfolio. So it'd better be a very good asset to make it worth it for us. And certainly, while our share was so depressed, we were buying back shares on a 17%-20% free cash flow yield after tax. So unless you're selling your hotel at four times EBITDA, there's no attraction to us to buy that. And we haven't seen anything of real sort of out there where we said, "Look, that's the one we've got to do from third-party assets." So I'm not saying no to acquisitions, but they have a high hurdle rate to pass.
Perfect. Thank you.
Michelle?
Hi, Marcel. Thanks for the presentation. So you guys spoke about how the high electricity costs are offsetting your diesel costs because there's no load shedding. Could you outline for us what your electricity spend has looked like over the past couple of years? And also, what is your view generally on the higher electricity tariffs right now?
That's an easy answer. My view is very nonsense. So I'd say I don't have a particular view on electricity, but the administered cost has run ahead of rate growth for a number of years. Our number one cost in our business is payroll people. That's our biggest expense. Then it dissipates into a whole lot of other costs, from IT to repairs and maintenance to everything else. Your administered cost in terms of heat, light, and power or material, and your property rates and taxes on material.
And both of those have been running ahead of inflation and ahead of our rate growth for a number of years. So they've been deteriorating your margins over a 10-year period, and that cannot carry on forever. So South Africa used to be a cheap electricity country. Now we're an expensive electricity country or relatively expensive electricity country. The question that I don't know the answer to is, what do we do about it? So we've put all the efficiency stuff in place, the LED lighting and the heat pumps that are much more efficient versus the old systems. And we've got all the tech we can. What we haven't done strongly is going to self-generation. So we've just put a solar plant into Birchwood, which is our first solar plant that we're actually running. And we'll see how that goes.
But I'm very nervous of this because where I've watched other groups do it, there's a lot of fanfare, a lot of PR, a lot of rah-rah, but actually, there's an enormous amount of CapEx spend, and then it covers 10% or 15% of the actual usage because your solar, for example, doesn't work on skyscrapers, and secondly, your big usage is early morning and late evening with hot water, and then there's no sun, so you've got to put batteries in, etc.
So I'm not convinced that we have the ability to actually generate ourselves, and I don't think we should be generating our own power. Ultimately, government needs to sort the grid out, and you could do things like wheeling where you source renewable energy, but through the transmission system. But it is a burden at the moment. I'm a little bit lost as to how to attend to it other than try to keep ourselves as efficient as we can.
Okay. Thanks for that, Marcel.
Sure. Are there any other hands up? No.
In the chat, but there's one more from DM who asks, "There was an article recently about additional flights coming into London from halfway through next year. Additional flights today, is that being contributed?"
So I don't know the specific details of flights that are coming in. The question we're also straight out is additional flights from London next year. What we do need is more flight capacity. And we see as soon as the airlines put it on, it gets taken up. We have seen a moderation, slight moderation in pricing, but we're still an expensive destination to get to.
We're a great value destination when you're here, but it's pricey to get here. We are seeing continuous increases in capacity. And it's not always additional flights. It's just changes. For example, Emirates going from 777s back to 380s. It adds hundreds of seats per week. Hopefully, any of that legacy stuff of closed skies and trying to protect SAA and all that gets dropped because there is no SAA to protect. And certainly, your Middle East airlines and your flights out of Europe direct, if you increase capacity there, you bring the price down, and people will take it up. And I think you are going to see more flights coming through. Ultimately, the market sorts that out. If there's demand, they are going to put new supply.