Lavern Clarke, Business Editor
Sonia Davidson, vice- president of group corporate communications at Supreme Ventures, says the gaming company has lost $50 million of revenue per day for five days between August 1 and September 3. - File
Supreme Ventures Limited lost five days of sales in August and September, an average of $50 million per day, for which the gaming company has blamed the general elections, the storm, and intervening public holidays.
The company's spokeswoman told the Financial Gleaner that the losses could well climb above the initial $250 million estimate, saying some of SVL's agents were yet to resume selling the instant games.
The company said on that basis it was unable to provide an outlook on its fourth quarter.
"As we assess the effects of 'Dean'," said vice-president for corporate communications Sonia Davidson, "we are still not up to the full complement of agents as some on the south coast were displaced due to the effects of the hurricane. Some still do not have electricity to run the terminals."
The company will add a new product to its lineup for a new income stream, but even if the game is an immediate hit, its market entry at the tailend of SVL's financial year, October, makes it unlikely that Bingo will have any real impact on revenue performance.
Bingo's starting jackpot will be $300,000; tickets will cost $30, the same as lotto, which has a starting prize of $7 million, and will be sold from the same terminals.
"Players will bet to match game patterns similar to the traditional Bingo game and all prizes will be paid parimutuel," said Davidson. "The full house pattern will see players winning from a starting jackpot of $300,000."
Other patterns will earn subsidiary prizes.
Gamblers luck ran high in the third quarter, resulting in Supreme Ventures Limited shelling out 83 per cent in prizes on its most lucrative game Cash Pot, the highest payout ratio in the game's history.
The results might have been good news for players of the instant game, but bad for SVL, which would have had to give over in prizes some of the 28 per cent of revenues it uses to finance Cash Pot's operation and from which it carves profits.
In fact, SVL said the higher payouts — or what the company calls prize liability', which ran 11 per cent above the game design average of a 72 per cent — resulted in $250 million more in additional prizes as well as higher fees, likely linked to commission paid to agents.
The result was a plunge in third quarter pre-tax profits to $7 million, from $27 million, and net profit of $4.7 million, which was less than one-third the $15.7 million the company made in the May-July 2006 period.
"Whilst the game design is forecasted at 72 per cent prize liability and the game continues to show sustained growth in revenue, the third quarter saw the highest average liability in the history of the game, that is, 83 per cent," said SVL.
"The performance of the Cash Pot game with respect to 'volatile' swings in prize liabilities on a quarter by quarter basis underscores the challenges that the management experiences in accurately forecasting the quarterly profit."
But SVL has signaled that it expected to see a rebalancing of the payout ratio by October, its financial year end.
"The management has no direct control over daily game liability but is cognisant however that over the years, the average prize liability has usually ended within the rules of game design."
The game is into its fourth year. For the first, 2004, the prize liability was 73 per cent, but it averaged 72 per cent in each of the last two years, according to SVL data.
The company's nine-month results were more encouraging, with recorded net profit of $233.7 million (2006: $129 million) from improved revenues of $14.2 billion, up from $12 billion.
Winnings overall were $9.22 billion, a 23 per cent increase on last year's $7.5 billion.
SVL's hospitality segment, which covers the restaurant and bar operations at all gaming facilities, including the Coral Cliff hotel in Montego Bay, continued to be a drag on profits despite improved revenues — losing $31 million in nine months, compared to an operating loss of $20 million in the year ago period.
The biggest money spinner remained the online lottery and instant win games at $12.7 billion, but it was the video lottery terminals or slot machines which had the strongest revenue growth of 52 per cent, coming from $394 million to $602 million.
In fact, the Coral Cliff gaming lounge, said Davidson, "continues to perform extremely well" with net win of US$120 per machine at July 31.
The fortunes of Acropolis, which returned disappointing returns last year, was on the mend and is now showing revenue growth. The gaming lounge's net win is up to US$87.64 per machine, compared to last year's US$37.42 per machine, said Davidson.
lavern.clarke@gleanerjm.com
Supreme Ventures Limited Nine-Month July 2007
Stock Price $2.63
Revenues $14.2 billion
Net Profit $233.7 million
Net Profit Margin 1.6%
EPS: 9 cents
Total Assets $3.8 billion
Equity $2.2 billion
