Supreme Ventures posts lower profit in first quarter
Published: Friday | March 20, 2009
Brian George, CEO of Supreme Ventures Limited. - File
Gaming company, Supreme Ventures Limited (SVL), has recorded depressed first quarter results showing net profits tumbling 19.56 per cent in the period to the end of January, reflecting anaemic revenue growth and burgeoning pay-outs particularly on its Cash Pot lottery game, SVL said. The lottery company's results would have been worse had the firm not taken steps recently to slash cost and improve efficiencies.
For the reporting period net profit totalled $172.9 million, down from $214.9 million for the same period last year. According to the sole lottery operator, the company's bottom line was negatively affected by the growing pay-out liability of its popular Cash Pot game, run three times a day. For the quarter, SVL said this item reflected at 2.2 per cent rise moving to 74.2 per cent of its total game liability from its established 72 per cent game design level.
The company said it paid out approximately $3.6 billion in lottery prizes over the quarter, 9.6 per cent up on the winnings pay-out for the previous corresponding period November 2007 to January 2008. Lottery prizes, which form the bulk of the company's $5.14 billion direct expenses rose from $ 4.7 billion for previous period.
With upward movement also recorded in other expenses, SVL's operating profit also plummeted 12.8 per cent or approximately $42.9 million to $291million.
Other expenses jumped to $551.9 million from $476.9 million in the previous comparative period, despite restructuring efforts to contain cost and reduce inefficiencies.
Meanwhile, revenue performance was not enough to withstand the sizeable jumps in expenses as total revenues for the quarter came in at $5.9 billion, a marginal improvement on the $5.5 billion earned in the previous first quarter, bearing out earlier projections made in October last year by the SVL boss, Brian George, that the gaming sector would take a hit as tourism receipts and remittances slide this year.
Most of the company's business segments contributed positively to revenue except for hospitality, which reflecting a 5.5 per cent dip to $40.9 million from $43.3 million. SVL operates restaurants and bars at its gaming lounges and in January closed down its loss-making Ma Lou restaurant at its Coral Cliff facility in Montego Bay. Some 43 staff positions were also eliminated as the company restructured Coral Cliff.
The cost cuts also saw the discontinuation of the daily and prime time bingo games citing declining profitability. Consequently, the SVL's latest quarterly financials reflected an $89 million write-off for consolidation adjustment activities.
Lottery games, one of the primary revenue segments, accounted for 88 per cent ($5.2 billion) of total revenue followed by a relatively small $271.6 million earnings from slot machines.
With its acquisition of Big A Track Limited and a contract through INTRALOT, Supreme Ventures has in recent times positioned itself to enter the arena of sports betting.
The company's total assets stood at $4.6 billion at the end of January.