President and CEO of Supreme Ventures Limited, Brian George. - File AshfordW. Meikle, Business Reporter
After several disappointing periods which saw its profits dragged down by rising expenses, Supreme Ventures Limited (SVL) has posted improved second-quarter earnings, bolstered by increased revenues from its various business segments.
The lottery and gaming company has reported a strong six-months performance, in which revenue grew by 15 per cent, to $9.1 billion.
Net profit increased by over a 100 per cent, to $229 million, compared to $113 million last year.
In terms of the performance from its various segments, revenue from lottery and gaming was up by 16 per cent, to $8.7 billion.
Lottery revenue was up by 13 per cent, to $8.1 while its video lottery terminal (VLT) revenue amounted to $379.4 million, an increase of almost 50 per cent.
Supreme Ventures also saw a 12 per cent increase in revenue from pin codes, which posted earnings of $446 million, as well as its smaller hos-pitality and financial services operations.
At the same time, SVL paid out $5.7 billion in lottery winnings, a 17 per cent increase over last year.
"What you are seeing here is the coming together of [a number] of things: the high lotto jackpot in the second quarter which brought with it increased sales; the implementation of the agreement we had with Gtech in which we were able to cut our expenses significantly over last year; and, the continued improvement in the VLT machines at our outlets," Supreme Ventures' President and CEO, Brian George, told Wednesday Business yesterday in a telephone interview from Costa Rica.
Liability swings
Still, George admitted that the liability swings associated with Cash Pot payout - roughly 72 per cent, in line with the company's projections - is likely to impact on SVL's net income.
"What you find that can happen, is that in a quarter it could be 79 per cent, which means you are operating five or six per centage over your budgeted number and while sales may be high because of your high liabilities, it will erode your profit.
So that is why on a quarter-to-quarter basis it is really difficult to predict Cash Pot accurately."
However, he said that the restructuring with GTECH would lessen the wide swings in profitability.
The company's expenses rose by over 15 per cent to $658 million in the period.
"We are constantly looking at ways in which we can reduce expenses, but you must recognise that increased revenues come with increased expenses, such as higher levels of commission [and] higher levels of other direct costs related to sales," said George.
He predicted that the company would have an equally strong third quarter.
"If you look at our sales over the last couple years, we have been trending up. Right now, at $229 million, we have exceeded our profits for all of last year."
Turning to the strategic direction of the company, George says that he expects Supreme Ventures to finalise the set-up of its lottery operations in Guatemala and El Salvador shortly, as well as exploring investments from international investors.
"You have a lot of money out there that is looking for a home. In the stock market business, you will find that the stock market tends to have very good returns. We also have high risk so we are positioning our business as an emerging business in an emerging nation that will have a lot of upside. But clearly, a lot international investors are cautious."
But he refused to to be drawn on whether the company - which hired the international investment bank, UBS, last October as its financial adviser - is up for sale.
"Once you are a publicly-traded company, your shares are always for sale," he said. "The only difference for us is we recognise in order to give value to our shareholders, particularly our local shareholders, that we need to widen the net of potential investors."
ashford.meikle@gleanerjm.com
