Johannesburg - South African gaming and resorts group Peermont Global on Monday reported a 38.7 percent increase in adjusted headline earnings per share to 81.5 cents for the year ended December from 58.7 cents a year ago.
A final dividend of 10 cents per share was declared, compared with 17.8 cents a year earlier.
Revenue was up 32 percent to R1.633 billion, while operating profit rose 37.8 percent to R553.9 million. Earnings before interest, taxation, depreciation, amortisation and rentals (EBITDAR) increased by 35.7 percent to R655.8 million.
After adjusting for the effects of the prior period foreign currency option profit, pre-opening expenses and other minor non-recurring items, adjusted headline earnings increased by 38.7 percent to R268.8 million.
"We are delighted with this strong set of results including the full effects of a further 20.7 percent interest in Emperors Palace acquired in April 2005.
Tusk was brought to book for four months and the performance of these units was ahead of our initial expectations. In addition, Emperors Palace produced a strong set of results, particularly in the second half of the year. The business as a whole is on a sound footing to enter the next phase of its growth cycle," said managing director Ernie Joubert.
Gaming revenue increased by 32.1 percent to R1.3 billion and non-gaming revenue increased by 31.6 percent to R330.5 million.
Investment activity consisted mainly of the construction of the Frontier Inn in Bethlehem, Free State, in respect of which R77.9 million was spent during the period. Construction - at a total cost of R102 million - began in November 2005 and the property opened to the public a year later.
Revenues at Emperors Palace grew by 17.1 percent to R1.465 billion, while gross gaming revenues grew by 16 percent to R1.267 billion, largely due to strong tables growth - up 29 percent on the prior year. Rooms revenue increased 41.1 percent to R67.8 million. The Mondior Concorde hotel opened in March 2006 and contributed revenue of R16.6 million since opening. Revenue from the new hotel is expected to continue to grow as occupancies increase.
Operating profits at Emperors Palace increased by 23.3 percent to R506.2 million.
Graceland's revenues grew by 10.8 percent to R122.4 million.
The Botswana operations experienced revenue growth of 6.7 percent in 122.7 million pula, which was reduced to growth of 0.3 percent in rand terms following the relative devaluation of the pula.
Gaming revenues increased by only 2.8 percent year on year largely due to pressure on disposable income in the local economy, as well as intensified competitive activity. Non-gaming revenues grew by 9.2 percent to 78.3 million pula, assisted by the inclusion of the Syringa acquisition for an additional two months as compared to the prior period.
Tusk revenues are included for the four months that commenced on 1 September 2006. The main contributors were Tusk Rio at R42.6 million, Tusk Umfolozi at R35.1 million and Tusk Mmabatho at R23.6 million.
Bethlehem operations commenced on 16 November 2006, and marketing efforts to increase the customer base are ongoing. The complex generated revenues of R4 million in 2006 and incurred an EBITDAR loss of R5.8 million mainly due to pre-opening costs of R4.5 million being immediately expensed.
Head office includes revenues from Peermont Global head office and Peermont Global Management. Head office revenues increased by 33.7 percent to R108 million, mainly as a result of increased fees from Emperors Palace and Graceland.
Looking ahead, the group said while it is anticipated that the disposable income levels of consumers may be moderately affected by higher level of interest rates and fuel cost increases and the decline in the rand / dollar exchange rate, the group should continue to benefit from anticipated real growth in disposable income levels.
In addition, the group should benefit in the year ahead from the full year's impact of the Tusk acquisition, which is expected to continue to be earnings accretive, the opening of the Frontier Inn and Casino in Bethlehem and continued degearing of the business.
Since its listing on the JSE in 2004, the group has grown HEPS by a compound annual rate of 28.7 percent.
"The outstanding assets owned and operated by the Group together with the excellence of its personnel should see the continuation of positive earnings performance into the future," it said. - I-Net Bridge