Supreme Ventures Limited was listed on the Jamaica Stock Exchange in 2006. The company now says it wants to create greater value in the stock. Here chairman Paul Hoo (left) and director Ian Levy add the stock to the JSE trading board in this February 28, 2006 Gleaner photo. - File
Supreme Ventures Limited, the gaming company, which says it wants to position as a stock that handsomely rewards shareholders with dividends, has announced plans for a major overhaul that will apparently lead to a flatter organisation and, hopefully, more cash at the bottom line.
The listed company this week told the Jamaica Stock Exchange of its reorganisation plan that will include the winding up of its Jamaica Lottery Company, Coral Cliff Entertainment and Village Square Entertainment subsidiaries.
SVL officials have so far declined to say what the restructured operation will look like, but it expected that the business segments be pulled under a handful of operating companies, particularly Supreme Venture Lotteries and Prime Sports Jamaica Limited.
Aiming to earn big
"It is anticipated that the cost reductions and other efficiencies and synergies resulting from the internal reorganisation will enhance the group's overall profitability and will impact favourably on SVL's capacity to make distributions to its shareholders, thereby enhancing shareholder value and benefitting all shareholders," directors said in their notice.
This is in line with the philosophy recently outlined to investors by the company's president and CEO, Brian George - that SVL wants to earn big profits and put most of it into the pockets of shareholders.
"We see ourselves becoming a dividend stock," George said at a recent briefing. "We intend to lay out 40 to 50 per cent of net earnings in 2008, with that rising to 60 per cent in 2009."
SVL last year returned net profit of $405.4 million, a jump of $240 million or 145 per cent over the after tax result of 2006 - the year of its listing.
The profit growth was on the back of a $3 billion or 19 per cent rise in revenue, to $18.94 billion. The company has projected a profit growth of around 20 per cent this year.
Growth of supreme ventures
Supreme Ventures started its first lottery games early this decade and quickly overtook the other player in the market, the Jamaica Lottery Company, which it soon acquired.
The 2005 Supreme Ventures bought the Meville family-owned Prime Sports, which ran a number of quasi casinos, called gaming lounges in Jamaica, and followed up with take-over of a number of other similar operations.
Coral Cliff was formerly owned by the late Lucille Lue.
Supreme Ventures also runs a money transfer and cambio operation, as well as provides pin code services to businesses.
But the lottery operation accounts for approximately 90 per cent of turnover.
The gaming lounges bring in the bulk of the rest.
It was not immediately clear, though, precisely how SVL will effect the savings from the restructuring.
The company said the process was not advanced far enough to give a proper reading.
"No further information can be released until the relevant authorities, example Stamp Office etc., have completed their part of the process," Sonia Davidson, vice-president, group corporate communications, told the Financial Gleaner, speaking, she said, on the advice of the company's legal counsel.
Group operating expenses for 2007, at $1.33 billion, were up just under $107 million, or around nine per cent.
On the other hand, its direct service expenses, which includes prize money, technical service contracts and marketing payments to GTECH Corporation, were up $2.5 billion or 17 per cent to $16.98 billion.
The big growth here, was 24 per cent jump in lottery prizes to $12.24 billion.
Significantly, the payment to GTECH, fell by $194 million,to $1.22 billion, after contract negotiations.
GTECH's service fee is based on weekly gross sales of SVL products.
The SVL stock, at its launch on the JSE, was priced at $4.81; it's currently trading at around $3.50.
susan.gordon@gleanerjm.com