Peermont Global completes takeover, eyes more casinos
September 5, 2006
By AUDREY D’ANGELO
Cape Town - Gaming and resort group Peermont Global, which lifted revenue by 24.4 percent to R697.4 million in the six months to June 30, and fully diluted earnings a share by 8.5 percent to R37.1 million, is preparing for further expansion.
It completed the acquisition of the Tusk Group in August, with the exception of Tusk Taung for which conditions have to be met before the sale is completed next year. It is also bidding for casino licences in Kuruman, Mthatha, Queenstown and Burger's Fort in Limpopo.
Its Frontier Hotel and casino in Bethlehem in the Free State, on which R26.3 million has been spent during the first half, is expected to open in the last quarter of this year at a total cost of R103 million.
Peermont chief executive Ernie Joubert said yesterday that the directors expected consumers' disposable incomes to be "moderately affected" by the recent increases in fuel and interest rates, and the fall of the rand against the dollar.
Despite this they expected "real growth" in revenue and profits for the full year, after considering inflation, interest rates, personal taxation levels and probable salary and wage increases.
"We are pleased with our performance at Emperors Palace [casino]," Joubert said. "The additional positions we added last year contributed to strong growth in gross gaming revenue of 12.6 percent.
"The Mondior Concorde [hotel] at Emperors Palace has performed to expectation since opening in March. Trading conditions at Graceland and in Botswana have continued to be tough. We implemented the acquisition of the Tusk Group in August and believe it will add to earnings.
"We aim to achieve real growth in group revenues and profits for the full year after considering the current economic outlook."
An interim dividend of 18.6c a share has been declared, compared with 14.6c for the six months to June 1 last year.
The bulk of the revenue of R697.4 million came from gaming, which accounted for R556.9 million compared with R54.5 million for hotel rooms, R63.4 million for food and beverages, and R22.6 million from entertainment and other services.
Operating costs rose by 23.4 percent to R468.4 million, but operating profit was up by 26.8 percent to R229.2 million.
But the directors said marketing spend for the current year had been heavily weighted towards the first half.
Graceland revenues grew by 5 percent to R55.8 million. The Botswana operations lifted revenue growth in pula terms by 12 percent to 60.2 million pula (R74 million), but the weakening of the local currency reduced this to 7 percent in rand terms.
Joubert said competition for new licences was strong. "Gaming is a very competitive industry. We were the first to realise the potential of casinos in small towns and others have learned from us."
Group financial director Anthony Puttergill said this had been "our most successful year in terms of rands, and one of our most successful in terms of growth".
Peermont Global gained 2.49 percent to R9.45 yesterday. The hotel and leisure sector added 2.2 percent.
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