GAMBLING: GrandWest Shines For The Sun
Recent Western Cape Business News
SUN International’s decision to buy an extra slice of the action of SunWest – which operates the GrandWest Casino in Cape Town – looks like paying off.
For the six months to end December 2011 GrandWest managed to push up revenue 6% to R883 million with improved slots revenues after the introduction of new machines.
More impressive was that gross operating profit came in 17% higher at R367 million with the margin jumping 4% to 41.6% – a development that re-establishes GrandWest as one of the most profitable casinos in SA.
But the increased margin was helped substantially by the new management fee arrangement thrashed out with empowerment partner Grand Parade Investments (GPI). GPI sold a portion of its stake in SunWest to Sun International near the end of 2011 as part of a deal that also saw Sun International acquire GPI’s shareholding in gaming investment company RAH.
Sun International pointed out that if the revised management fees were excluded, the margin for GrandWest would have been 0.6 percentage points lower than last year.
Sun International’s management fees and related income of R292 million was 4% lower than last year due to lower development fees and the restructure of the management contracts for the SunWest casinos – GrandWest and Worcester.
The Golden Valley Casino in Worcester – one of Sun International’s newest and smallest operations – also put in a plucky performance.
Revenue was up to R66 million (last year R62 million), while gross profits of R15 million and operating profits of R6 million were both improvements on the corresponding period in 2010.
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