Posted: 2005-09-05 23:56 Peermont interim earnings up 52%  Presenter: Lindsay Williams Guest(s): Ernie Joubert Peermont interim headline earnings per share are up 52% for the six months to the end of June 2005. The interim dividend increases by 28%, and revenue across all divisions is up 26%. With Peermont chief executive Ernie Joubert, and Richard Hirsch from Standard Bank Equities and Derivatives LINDSAY WILLIAMS: Gaming group Peermont lists almost a year ago - it was a R5.20 stock in those days, but not for long. It shot up to a peak of R8.90 11 August 2005. Since then it’s been drifting a bit. Ernie, that headline earnings per share number - up 52% - was that skewed by the foreign exchange call option? ERNIE JOUBERT: That’s correct, therefore in the adjusted headline earnings per share - only up 18% - that’s where you can see the difference. LINDSAY WILLIAMS: So you made a good call on the market - unlike certain organisations in this country we could speak of! You made about R36-million - what was the reason for that European call option? ERNIE JOUBERT: We were compelled to do it because of the exchange rate risk - but we were just lucky with our timing. LINDSAY WILLIAMS: That’s good news. The highlight of the year, I suppose, was the increased stake in the Emperors Palace (previously Caesars) back in March 2005 - what sort of an impact has that had for you? ERNIE JOUBERT: Correct. It’s had a tremendous impact obviously on revenues, as well as earnings before interest, tax, depreciation and amortisation (Ebitda) profit, but you must remember that only three of the six months had that additional stake in it. In the next six months you’ll have this for six months in the figures. LINDSAY WILLIAMS: So we can expect greater things for the next six months - the second half of the year? ERNIE JOUBERT: Yes, that should be a bigger effect. LINDSAY WILLIAMS: Has the re-branding and revamp of the old Caesars - now Emperors Palace - been a success? ERNIE JOUBERT: Yes, it’s all gone very smoothly - we re-branded the property Emperors Palace in June 2005, and the market has accepted it very readily - really it’s business as usual, in fact revenues are up if anything. LINDSAY WILLIAMS: Talking about revenues, your gaming revenues across the board are up 24%. Are the other casinos also doing well? ERNIE JOUBERT: Yes, all of them are doing exceptionally well. LINDSAY WILLIAMS: Can you give us some idea, which ones in particular? ERNIE JOUBERT: Looking at the total revenue figures - which are dominated by gaming - Graceland’s revenues are up 15%, Botswana up 38%, and Emperors Palace up 10%. Then of those figures, you know gaming would be the dominant one. LINDSAY WILLIAMS: Non-gaming revenues are up 36% - beating the gaming revenues by some 50% - but that’s not really comparable because of the acquisitions? ERNIE JOUBERT: There was the impact of the additional stake in Emperors Palace, but then we also had three new hotels in Botswana all of which did very well, and started contributing - there’s the Metcourt Inn at The Grand Palm, and the two Syringa hotels that we purchased - everything adds up. LINDSAY WILLIAMS: Talking about the Metcourt Inn - that’s a relatively new three star venture for you, I understand it’s going particularly well with its 78% occupancy rate. You’re actually going to try and replicate that model elsewhere - is that right? ERNIE JOUBERT: That’s correct. We already have three Metcourts - one is in Francistown, one in Gaborone, and the other one here at Emperors Palace - the old Senator Hotel that we’ve rebranded the Metcourt Senator. We will now consider other growth opportunities for the Metcourt brand in Southern Africa. LINDSAY WILLIAMS: Talking about growth opportunities on the gaming side - what’s the regulatory situation with the Bethlehem casino? ERNIE JOUBERT: We hope to start construction in the middle of November - depending on whether we can come to terms with the Gaming Board on our licence conditions planned to take place at the end of October 2005. LINDSAY WILLIAMS: But you don’t foresee any problems there? ERNIE JOUBERT: No, we don’t foresee any problems. LINDSAY WILLIAMS: You’re going to have to obviously spend a bit of money putting up this casino - it’s not a cheap business! Your debt to equity ratio is up to 91% now - what’s the limit, what’s your target on that? ERNIE JOUBERT: Yes, at interest cover at present it’s 4.8 times - and we’re prepared to go to 3 times. At present the debt is only 36% of the market value of the equity - so we have some room to go, we can gear up the business with more. RICHARD HIRSCH: Ernie, congratulations on a great set of results. For me the best part about your results is that your business has become more diversified. If you have a look at Emperors Palace - the old Caesars - from last year’s results when it contributed 80% of total revenue it’s now down to 66%. What’s your target in diversifying Peermont further? ERNIE JOUBERT: We would like to see Emperors Palace accounting for not more than 50% within five years in the total business. LINDSAY WILLIAMS: Ernie, the Singapore business intrigues me. I think you’re down to the last twelve in the bidding war for the two licences up for grabs there - are you going to go any further? ERNIE JOUBERT: We will consider that at the end of the month - when we receive the request for proposals (RFP) documentation. We probably will be reluctant to go further unless we can secure participation in a consortium with a local joint developer and equity partner. We are talking to a party, but nothing has been concluded yet - so there is still a degree of uncertainty. LINDSAY WILLIAMS: That’s coming up at the end of September? ERNIE JOUBERT: Yes, that’s when we get the RFP - if we’re going to go forward it will be contingent upon us securing a local partner. Comments Related to this transcript: Comment on this transcript... Name : Email : Comments :