GAMBLING: Caledon Turns Out To Be A Good Deal
Recent Western Cape Business News
SOME observers frowned when Cape-based empowerment group Hosken Consolidated Investments (HCI) offered to buy the Caledon and Newcastle casinos from US-based Century Casinos at the end of 2008.
HCI had already marched into Tsogo Sun (and Johnnic) to build a formidable presence in the SA gaming market.
What was the point of buying two relatively small casinos when huge money-spinners like the SunCoast in KwaZulu-Natal and Montecasino in Johannesburg were already on the books?
With the benefit of hindsight it would seem HCI did very well out of that R472 million transaction.
One only has to look at the numbers for the nine months to end June 2009 – which were recently disclosed in the year to end March 2010 results for Tsogo Sun.
Incremental revenue from the Caledon and Newcastle casinos was collectively R165 million, while operating profits came in at an impressive R54 million.
On an annualised basis the casinos would have generated a not insubstantial R72 million – a performance that puts the original purchase price into perspective.
It also seems the Caledon casino is getting a major makeover under Tsogo’s direction.
Already 14 rooms have been added by relocating the popular Caledon spa, and there are plans for a golf course adjoining the casino premises.
A recent investor presentation by Tsogo Sun noted the Caledon casino still owned 450 acres of surplus land, adding that there was potential for a Southern Sun Lifestyle Resort at the venue.
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