Gamma Civic declares Q1 losses amid tough conditions for lottery & contracting firms
Gamma Civic Ltd realised losses of Rs 39.5 million for the quarter ended 31 March 2015, against profits of Rs 26.47 million a year ago, upon subdued performance of its major segment, the lottery sector, together with tough conditions in its historical mainstay, the contracting segment. (Image: Company )
For the period under review, Mauritian conglomerate Gamma Civic Ltd recorded a drop of 45.8% in revenue to reach Rs 655.8 million, while operating losses of Rs 31.3 million were recorded against a profit of Rs 17.95 million in the year-ago period.
A segmental analysis shows that the contracting business, which comprises the buildings and civil divisions, posted operating losses of Rs 50.7 million upon negative contribution of Gamma Construction Ltd with losses of Rs 52.0 million upon lower work volumes.
Moving to the major revenue generating cluster, the lottery business – which accounts for 80.5% of total revenue – lower profit of Rs 18 million was recorded as sales fell. In addition, the company was unable to execute its Quick Win games launch plan in the first quarter of 2015 as the Gambling Regulatory Authority (“GRA”) did not approve any new games, which adversely affected sales of Quick Win games in the quarter under review.
The building materials and cement businesses remain the main pillars of the group, and, despite the continuing downturn in the construction industry, both delivered a strong financial performance. The building materials segment declared profits of Rs 9 million whilst the cement business registered profits of Rs 60 million.
However, the contribution by associates and joint ventures dropped to Rs 25.4 million against Rs 34.3 million in 2014 in terms of their share of profit mapped to Gamma Civic. This was attributable largely to Morning Light Co Ltd, an associate company which owns the “Hilton Mauritius Resort & Spa”, that reported a negative performance with losses of Rs 15 million due to a lower Euro-Rupee exchange rate, besides escalating finance costs as a result of the renovation.
The future outlook of the Gamma Civic group remains challenging, where the financial statement notes that, “The Board is monitoring the situation closely and the respective companies will take further action if business conditions deteriorate.”
“The existing provisions of the GRA Act 2007, the conditions of the licence and the agreement reached before the Mediation Division of the Supreme Court in October 2012 provide that Lottotech Ltd must advertise its products and offer Quick Win games,” it goes on to add, on a mitigating note.
In conclusion, the present government is against the gambling predilections displayed by a “Nation Zougadere” and has already confirmed its intention to abolish Quick Win games in due course. Besides, the added impact of the ban on advertising will continue to cause sales of Lottotech to deteriorate, as an inescapable fact.
However, a silver lining in the cloud is that Gamma is waiting in the wings to acquire 51% shareholding of Holcim Group in Holcim (Mauritius) Ltd and negotiations are still ongoing as a part of the worldwide merger between the Holcim Group and the Lafarge Group.
Finally, Gamma is currently reviewing the organisational structure of the investment holding company with the aim of substantially reducing costs and is confident that the businesses, following their respective restructuring programmes, will prove well-equipped to withstand the pressures of the continuing poor economic conditions.