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THE GOOD, THE BAD AND THE UGLY

HARDLY LIMITED ALTHOUGH OVERSHADOWED by the large Tsogo Sun casino interests, HCI’s limited payout gaming (LPG) interests are starting to churn over some promising profits. Initial scepticism suggested the LPG sector would be a poor cousin to the mainstream casino sector, especially since the LPG machines are scattered around pub ‘n grub outlets that big rollers are hardly likely to frequent for a flutter. But the latest financial figures from HCI suggest that the LPG sector is indeed very viable – even if the trading margins aren’t quite at the 40% plus levels associated with casino operations. Vukani, HCI’s 100% owned LPG operator, generated turnover of R121m in the year to end-March 2007 – more than 30% up on the previous year. Vukani – which holds and operates licences in five provinces in SA – posted R8m in profits, a major turnaround from last year’s R 13,5m loss. HCI directors reckon the roll-out of LPG machines has been slower than expected, but believe those will increase in its new financial year. If the roll-out rate does pick up, we bet that profits could as much as double, with directors also reporting that gross gaming revenue per machine “continues to grow steadily on a month-on-month basis”. Vukani may well present a nice opportunity for HCI to spin off a highly profitable niche business in the years ahead.

Source: Finweek – Marc Hasenfuss