Wed | Sep 23, 2020

SVL diversifies into back-office services

Published:Friday | August 7, 2020 | 12:10 AMNeville Graham - Business Reporter

Supreme Ventures Limited, SVL, has added a new business line which will see the company providing back-office support services to clients.

Circumstances have forced the company to become more agile at a period when jobs and disposable income have been erased by COVID. And more challenges are coming for the SVL Group with the expected market entry of a rival in the near future, which will test the resilience of its hold on a lottery market in which it has reigned alone for some 19 years.

The business hub has been rolled out amid a decline in revenue for the gaming company that has seen a reduction in subscription to its lottery games occasioned by the coronavirus pandemic.

CEO of SVL Shared Services Limited, Dennis Chung, says the idea for the business hub emerged from a board mandate last year, and was meant to leverage the company’s technological expertise and assets into new revenue streams.

The new unit, which SVL spent $15 million to set up, will offer corporate secretarial, marketing, human resources and payroll, office administration, security and facilities management, among other services.

“We’re not selling just accounting or HR, but rather, a total back-office solution. When we do that, a business no longer has overheads like dedicated back-office personnel, office space or even parking,” Chung told the Financial Gleaner.

“We can say to a medium-sized business, it will cost you $300,000 per month and at the end of it we will provide everything, from financial statements, filing returns, and so on. All they will have to do is to meet with us once per month to review the numbers,” he added.

The hub will operate from Retirement Crescent where SVL expanded by 1,000 square feet, to 12,000 square feet, to accommodate the new operation. SVL is also relocating all its operations from the Sagicor Building in New Kingston to the complex.

“With work-from-home schedules being put in place, we consolidated all the staff at Retirement,” Chung said.

The hub marks a new phase in SVL Shared Services’ build-out, the unit having began with in-house services, inclusive of all the accounting, HR, finance, taxation and other administrative functions for all SVL divisions and the fledgling operations in Guyana.

Organisational changes

SVL Shared Services came out of organisational changes at the group level in November 2019. At that time, Chung was named to head up the division, and Xesus Johnston was named as CEO of Gaming and Operations. SVL Chairman Gary Peart, at the time, said the two divisions were created to drive revenue growth and support regional expansion.

SVL Shared Services has a staff of about 70, which Chung said represented the largest block of employees in the group. He says the $15 million spent on the move to Retirement Crescent is expected to pay for itself within a year.

He also said SVL Shared Services’ contribution to SVL Group’s profitability won’t be immediate, but should start manifesting in 2021 and beyond.

SVL is a two-decade-old business that has held a virtual monopoly over the lottery market. However, a second player, Mahoe Gaming, is set to enter the business, having made progress towards obtaining a licence from the Betting, Lotteries & Gaming Commission.

It spells future pressure on SVL’s revenues.

For the three months ending June, during which Jamaica was mostly on lockdown, SVL’s quarterly sales declined by more than 20 per cent, or $1.84 billion, to $7.41 billion.

COVID-19 impact

Chung says that, understandably, the COVID-19 pandemic dealt a heavy blow to the group’s operations.

Most of the gaming company’s six business segments were on lockdown, including horse racing, gaming machines deployed at bars, sports betting and gaming lounge operation.

Pin code sales and lottery games remained operational.

For the six months ending June, SVL made net profit of $929 million, down by 25 per cent year-on-year. Most of the decline came in the second quarter, where net profit shrank to $192 million compared to $624.27 million in the 2019 period.

Total revenue for the first six months of 2020 was $17.5 billion, down from $18.6 billion for the similar period in 2019.

Since June, the Government has been cautiously reopening various segments of the Jamaican economy. Horse racing has resumed without spectators, and bars and lounges are allowed to operate at about 25 per cent capacity, amid an 11 p.m. curfew.

Chung says the adjustment forced by COVID-19 convinced the SVL team that its back-end operations system could be extended as a service to small and medium sized businesses without disrupting their own in-house operations.

neville.graham@gleanerjm.com