Caledon still spinning money

Cape Town – The little Caledon Casino – often overlooked in the greater scheme of the vibrant SA gaming sector – is still spinning strong profits. Controlled by the US based Century Casinos, Caledon last month reported casino revenue up a whopping 22% to $3.9 million for the second quarter of 2006 compared to $3.2 million reported in the second quarter of 2005. For local punters that means that Caledon’s quarterly increase was 22% to R25 million (compared to R20 million previously).

The performance for the quarter, according to Century Casino’s latest financial statements, included a 28% increase in total table wins and a 16% increase in slot machines.

The Caledon casino continues to be well managed with rand expenses only increasing 18%, although this was somewhat offset by a near 30% hike in general and administrative costs to R5.5 million on the back of the outsourcing of security services, continued maintenance expenditures and increased gaming taxes.

The biggest achievement for Caledon was the improvement in margins to 60% in dollar terms – which ranks Caledon alongside the top ‘smaller’ casinos like Mykonos, The Boardwalk (PE), Hemmingways (East London) and Golden Horse (Pietermaritzburg).

Net earnings in the second quarter of 2006 were R6.4 million, which suggests Caledon could conceivably generate annual profits of over R30 million in the medium term. Certainly R25 million for this financial year is on the cards.

Caledon’s profits for the six months to end June 2006 already topped R12 million – and that’s using a rand/dollar exchange rate of R6.41/$.

The performance of Caledon will certainly please Sun International, whose new casino in Worcester is set to open near the end of the year. For a while there seemed very little enthusiasm for the Worcester casino licence after the original operators dropped by the wayside.

Once again the Caledon Casino shows that if capital expenditure for the initial outlay is properly budgeted and management keeps a lid on expenses, the small town casinos can hold their own in terms of relative profitability. Perhaps more so in the Cape, where the quainter, small towns are increasingly being sought out by international visitors as genuine tourist attractions. These smaller casino resorts may well be viewed in time as alternative gaming stops away from the madding crowds.

The successes so far – probably more importantly – bodes very well for Century Casino’s latest SA investment in Newcastle.

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