Home' Trinidad and Tobago Guardian : May 10th 2015 Contents MAY 10 • 2015 www.guardian.co.tt SUNDAY BUSINESS GUARDIAN
STOCKS | SBG11
This Felix Pereira column appears
once again because several paragraphs
of the original article did not appear
in last week s publication. The Sunday
Business Guardian sincerely apologises
for the omission.
The legal gaming business is a
significant source of revenue
for many governments. Locally,
we are familiar with the NLCB,
which offers most of our
opportunities in this area. In
the background, GTECH Corporation, a sub-
sidiary of Lottomatica Group, provides the
In Jamaica, a listed company, Supreme Ven-
tures Ltd (SVL) provides similar, but broader
services than the NLCB, while GTECH also
supplies most of the technical support. SVL
and its subsidiaries operate under licences from
the Betting, Gaming and Lotteries Commis-
Since February 2010, SVL s major shareholder
has been the Greek gaming company, Intralot,
via its subsidiary Intralot Caribbean Ventures
Ltd. ICVL owns 49.90 per cent of SVL or
1,315,895,445 stock units. Socrates Kokkalis
owns 20 per cent of Intralot SA, which also
supplies some technical services to SVL.
The other large shareholders in SVL are Ian
Kent Levy with 318,929,440 shares or 12.09
per cent; Paul Hoo owns 227,568,959 shares
(8.63 per cent); Janette Stewart holds
179,622,545 shares (6.81 per cent) and Stephen
Roger Castagne has 138,360,498 stock units
or 5.25 per cent.
We will now review SVL s performance for
the year ended December 31, 2014.
Changes in financial position
Total assets rose from J$5.32 billion to J$5.9
billion last December, reflecting an increase of
10.8 per cent.
The largest component, cash and cash equiv-
alents, advanced to J$2.2 billion from the 2013
figure of J$1.47 billion. The major component
of J$1.59 billion is held in interest-bearing
accounts. A further J$771 million is restricted;
most of this figure, J$751 million, is held as
reserves to pay prizes and taxes. The group
also holds J$39.4 million in resale agreements.
The value of the group s property and equip-
ment declined from J$1.84 billion to last year s
J$1.7 billion. The value of leasehold buildings
fell from J$101.8 million to zero; this occurred
consequent to the group s decision to buy the
former leased property. In addition, leasehold
improvements contracted to J$188 million from
J$237.8 million as at December 2013.
Intangible assets declined marginally to
J$644.9 million from J$650.8 million previously.
The largest component, trademarks and
licences, declined from J$400.7 million to
J$396.8 million. Goodwill was unchanged at
J$190 million. Software usage rights fell to
J$48.3 million from the previous level of J$56.4
Total liabilities rose to J$1.86 billion from
the 2013 figure of J$1.68 billion. The major
component, trade and other payables, increased
marginally to J$1.14 billion from J$1.13 billion.
Within this category, the main elements were
trade payables and service contractor fees. The
former advanced to J$617.2 million from J$555.6
million while the latter increased from J$130.7
million to J$162.5 million as at December 2014.
Another significant component, prize lia-
bilities, rose to J$599.1 million from J$320.6
million as at the end of 2013. The 2014 figure
saw local lotto games balances jump from
J$130.8 million to J$339.5 million; this figure
includes an amount accrued for an advertised
jackpot of J$175 million.
In addition, the multi-jurisdictional lottery
game increased to J$255.3 million from J$188
million as at December 2013. This game is
played in several countries outside Jamaica,
including the Dominican Republic, Paraguay
and Barbados. (Subsequently, on March 6, 2015,
the jackpot of J$179.5 million (BDS$3.11 million)
was won by a Barbados national.)
Stockholders equity advanced to J$4.05 bil-
lion from the previous level of J$3.64 billion.
Retained earnings improved by a net of
J$402.5 million to close 2014 at J$2.02 billion.
The current year s profit of J$929.9 million
boosted this figure while dividends to share-
holders of J$527.5 million lowered the net result.
With 2,637,254,926 shares outstanding, each
share has a book value of J$1.53 (2013: J$1.38).
Income and profits
Total revenues advanced by 21 per cent to
reach J$41.3 billion from 2013 s J$34.1 billion.
The largest component, Cash Pot, generated
revenues of J$26.3 billion versus J$23 billion
previously. Two new games also made signif-
icant contributions. Money Time, which started
in October 2014, garnered J$1.18 billion in rev-
enues to the year-end. In addition, Top Draw,
which started in June 2014, brought in revenues
of J$759 million.
However, total direct expenses clawed back
J$37.59 billion in 2014; this was 22 per cent
greater than the J$30.81 billion incurred for
Among the more significant direct expenses
were lottery and sports betting prizes (2014:
J$24.8 billion; 2013: J$20.7 billion), pin codes
(2014: J$4.72 billion; 2013: J$3.34 billion) and
lottery and gaming taxes (2014: J$2.21 billion;
2013: J$1.82 billion).
These changes allowed SVL to report a 2014
gross profit of J$3.72 billion; this was 11.8 per
cent greater than the J$3.33 billion earned for
Operating expenses declined to J$2.65 billion
from 2013 s J$2.77 billion. Core expenses, such
as staff cost and rental and utilities, did increase;
the former rose to J$668.9 million from J$627
million while the latter moved to J$292.7 million
from J$286 million.
On the other hand, many expenses did
decline. These included professional fees,
irrecoverable general consumption tax (GCT),
local and foreign travel, complimentary tokens,
security and bank charges. The wide range of
expenses that fell suggests that a general mood
of cost consciousness must have infused the
organisation during the past year!
These changes allowed SVL to register a
profit from operations of J$1.07 billion; this
result is J$510.7 million or 90.7 per cent greater
than the 2013 result of J$563.3 million.
In line with higher cash balances, interest
income rose to J$75.7 million from 2013 s J$46.4
million. The slower rate of devaluation of the
Jamaican dollar during 2014 contributed to a
decline in net foreign exchange gains, which
registered at a modest J$6 million, down from
J$30.7 million in 2013.
Finance costs also moved down to J$16.3
million from the previous level of J$28.5 million.
Meanwhile, other gains, mainly GTECH reim-
bursements and bad debt recoveries, came in
at J$76.5 million, down from J$99.2 million in
These movements saw the pre-tax profit
for 2014 register at J$1.22 billion; this result
was 71 per cent greater than the J$711 million
recorded for 2013.
Helped by a lower primary tax rate of 25 per
cent and an employment tax credit of almost
J$50 million, the effective tax rate dropped to
23.5 per cent (2013: 32.1 per cent); this resulted
in SVL recording an after-tax 2014 profit of
J$929.9 million. This was 92.7 per cent greater
than the J$482.6 million recorded for 2013.
These results translated into 2014 EPS of
J$0.3526 versus J$0.1830 for 2013.
Using only about half of SVL s total assets,
the largest segment, lottery, generated sub-
stantially all of the company s pre-tax prof-
it. Pin codes generated a strong improvement
in revenues accompanied by a useful contri-
bution to profits.
Both gaming and hospitality and sports bet-
ting appear to be "treading water" and have
not yet begun to make a contribution to the
Dividends and share price
During calendar 2013, SVL paid dividends
totalling J$0.21. In calendar 2014, dividends
disbursed were J$0.23. In March 2015, the
Board of SVL agreed to pay a regular dividend
of J$0.08 and a special dividend of J$0.23;
these payments reflect the strong results gen-
erated during 2014.
Almost exactly one year ago, on May 6, 2014,
SVL s share price was J$2.10. This price closed
at J$3.50 on April 29, 2015, reflecting a capital
appreciation of almost 67 per cent.
Over the one-year period, investors have
enjoyed a total return of J$1.63, comprising
the dividends paid in 2014 of J$0.23 together
with a capital gain of J$1.40. This represents
a percentage gain of 77.6 per cent. If we were
to include the dividends paid or announced in
early 2015, the total returns would be much
Dividends paid with respect to the 2014
fiscal period totalled J$0.48; when we relate
those payments to the recent price of J$3.50,
investors derive a yield of 13.71 per cent. This
high yield strongly suggests that the share price
is (or, was) significantly under-valued.
Last Thursday, April 30, SVL s Board also
met to evaluate its first quarter s performance
and to determine the payment of its first interim
dividend for 2015.
On April 18, 2011, SVL signed a new con-
tract with GTECH, which extends their rela-
tionship to 2026. This creates a high level of
predictability for the gaming industry in
One of the societal contributions from this
industry is that it funds a CHASE fund in
Jamaica, which provides financing for projects
in the areas of culture, health, arts, sports
and early childhood education.
These connections with the wider society
help mitigate any harmful side effects with
which the gaming (alcohol and tobacco)
industries are sometimes associated.
Supreme Ventures Ltd gets boost from...
Cash Pot revenues, cost controls
Links Archive May 9th 2015 May 11th 2015 Navigation Previous Page Next Page