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Cape Town - Gaming investment company Grand Parade Investments (GPI) believes opportunities in the fledgling limited payout machine (LPM) sector could pay big dividends in years to come.
Addressing shareholders at an annual general meeting (AGM) on Tuesday evening, GPI chairperson Hassen Adams said the group's LPM interests - held via Thuo Gaming (which trades as GrandSlots) - were doing exceptionally well in the Western Cape.
"The LPM business is showing strong growth on a monthly basis. We believe LPMs are where the growth will be in gaming during the next few years."
Significantly, Thuo is one of the bidders for LPM licences in Gauteng, arguably the most valuable province in terms of potential revenues.
LPM machines - which have a maximum winning limit of R500 - are mainly found in pubs and restaurants.
These "mini-casinos" do not generate revenue anywhere near the levels of urban casinos, but they are far less capital-intensive, cost less to operate and generate good cash flows.
GPI holds a 25,1% of Thuo Gaming (which currently operates in the Western Cape) and indirect stake (via Akhona GPI) in Thuo Gaming KZN.
The main shareholder in Thuo is Australian based gaming giant, Tattersall's.
Adams said: "We are speaking to the Aussies to try get more equity in Thuo. We think we can."
In a broader overview of prospects, Adams said GPI remained determined to pay out dividends and still pursue acquisition opportunities in the market.
He reminded shareholders that the group increased its dividend 33% in the last financial year.
"It will be very difficult to continue at this pace. But I guarantee I will be there to make sure you have a dividend."
He said although a few potential deals had been dangled (see next week's Finweek for more details), GPI would prefer, for now, to concentrate on maximising the potential of current operations.
Presumably this would include GPI buying back its own shares, which at times have looked vulnerable to bouts of panic selling during periods of market stress.
Adams stressed GPI's endeavours would revolve mainly around extracting more income from existing assets. "I hopefully will be saying to you at next year's AGM that we have weathered the storm, and have reaped the benefits of what we are doing now."
- Fin24.com