GPI adds Mpumalanga and a new Gauteng slot route to its stable

(Cape Town, 5 August 2013) JSE-listed investment and empowerment group Grand Parade Investments Limited (GPI) today announced that it had expanded its footprint in the Limited Payout Machine (LPM) industry with the acquisition of two new LPM Route Operator licences.

The licences, one in Gauteng and one in Mpumalanga, were acquired by GPI’s wholly-owned subsidiary GPI Slots (Pty) Ltd, and brings to four the number of provinces in which the company has a footprint in the LPM market.

GPI Chairman Hassen Adams said: “In June 2010, when GPI first entered the LPM market as an operator, we owned licences for 2,000 LPMs. With the acquisition of these two new licences, GPI has moved significantly closer to achieving our stated objective of acquiring LPM route operator licences for 7,500 machines in the medium term. Following these two transactions we are now able to roll-out as many as 6,000 LPMs, or double our current allocation.

“Our success in this market is partly attributable to our stringent site selection process and a better product mix. We’ve proved this through increased Gross Gaming Revenue (GGR) from each new licence we acquired, and our site-owner partners have likewise benefitted through increased operating profits”. Since acquiring its first Gauteng route operator licence in April 2011, GPI increased its annual average GGR per LPM per day in the Province by almost 10% from July 2011 to June 2012 and by just under14% for the same period to June 2013.

In the first of the two new route operator licences acquired by GPI, the Mpumalanga Gambling Board approved the transfer of the licence, currently held by Zimele Slots Mpumalanga (Pty) Ltd to the GPI subsidiary Grand Gaming Mpumalanga (Pty) Ltd at the end of July. The licence is one of two in the province that grants permission for up to 2,000 LPMs.

“Mpumalanga has performed consistently well in the LPM sector with the estimated provincial average GGR generated per machine per day the 4th best in the country. We believe that the Zimele acquisition, although small in terms of current active LPMs, will provide us with a great opportunity to grow revenues quite quickly”, said GPI Chief Executive Officer, Alan Keet. At present Zimele operate 40 LPMs in Mpumalanga, but a further 30 are already licenced and will be rolled out as quickly as possible once GPI takes over operations.

The Gauteng acquisition, which is still subject to the fulfilment of certain conditions precedent including Gauteng Gambling Board approval, was secured through an agreement with Bohwa 1 Gaming (Pty) Ltd, trading as Hot Slots. This route operator licence will give GPI 1,000 additional LPMs, of which 348 are currently active. Once concluded, it will bring to 2,000 the number of LPM licences owned by GPI in Gauteng. As at the end of June, GPI’s existing LPM operation in Gauteng, Grand Gaming: Slots operated 229 LPMs of its licenced 1,000.

“What is extremely encouraging in Gauteng is that the delay in LPM roll-out over the past 12-odd months is now a thing of the past and we look forward to a steady roll-out over the next four or five months as the Gauteng Gambling Board looks to address the back-log. We estimate that between Grand Gaming Slots, and Hot Slots, we should see an increase from their current combined number of active LPMs of 577 as at end June to around 800 before the end of the year,” said Keet. At end June 2013 the estimated Provincial GGR per LPM per day in Gauteng was almost R500, compared to just over R400 last year with almost the same number of active machines.

Adams added: “we will leverage the collective knowledge and skills of management teams to elevate GPI into the position of LPM market leader in Gauteng and Mpumalanga, in keeping with our position as market leaders in both the Western Cape and KwaZulu-Natal.

“The two additional route operator licences support our slot machine manufacturing joint-venture with German-based gaming manufacturer and operator Merkur Gaming GmbH, which was signed late last year. We will soon be able to not only provide ourselves with better priced LPMs, and as a result have far better control over our largest expense, but we will also be securing additional jobs and support in the local manufacturing sector”. Grand Merkur is expected to produce its first locally assembled LPM before the end of the calendar year.

GPI expects to commence operations in Mpumalanga during August 2013 and to take over the operations of Hot Slots before the end of the calendar year.