Lottotech’s earnings dented by tight measures on gaming sector in Mauritius Budget 2015
Mauritian gaming major Lottotech sees its financial performance dampened as the government tightens control on the gaming industry, leading to a 54.4% drop in profits and a 26.9% decline in gross ticket sales for the quarter ended March 2015. (Image:Company)
Mauritius gaming major Lottotech Ltd has seen profits decline54.4% to Rs 17.6 million and net income down 29.5% to Rs 134.9 million for the first quarter from January to March 2015, upon drastic measures taken against a ‘Nation Zougadere’(literally translating to ‘Gambling Nation’) in Budget 2015.
Lottotech recorded a drastic drop in gross tickets sales which declined by 26.9% to reach Rs 528.2 million, leading to lower profits for the quarter ended March 2015.This was mainly attributed to lower sales upon decline in aggregate jackpots being advertised. Further, the prior quarter saw a record jackpot of Rs 80 million, causing gross ticket sales to be higher for the preceding quarter.
Besides, another factor adversely impacting the financial position was that the entity was unable to execute its quick win games launch plan, as the Gambling Regulatory Authority (GRA) did not provide approval for any new games.
Upon lower sales levels, Lottotech Ltd’s operating profit dropped by almost half from Rs 48.3 million to Rs 20.7 million, and net profit of the company stood at Rs 17.6 million, representing a 54.4% dip against a figure of Rs 38.7 million in 2014.
The balance sheet side shows shareholder funds of Rs 118.0 million and, compounded by an unfavourable cash flow position, the earning per share now stands at a reduced Rs 0.05 per share against Rs 0.11 in 2014.
It is to be recalled that the government declared that regulations for the gaming industry included a total ban on advertising and issue of license for a period of 5 years (except for new casinos) making it difficult for both new entrants and existing players.Existing players will also be impacted by an increase in license and fees together with limitation on range of games given a ban on scratch card games and relocation of all gaming house outside city centers.
Given tight measures imposed by the government, Lottotech Ltd is still awaiting clarification from the GRA.
Lottotech Ltd, listed on the Stock Exchange of Mauritius since 11 June 2014 after a successful public offering with a subscription ratio of 2.99 times, has seen a tumble in its share price on the Stock Exchange of Mauritius (SEM), following the measures announced in the budget against the gambling industry.
Finally, the shares are now trading at Rs 5.90 representing a drop of 43.8% since the beginning of 2015, amidst rumours of the government taking control of the company and also uncertainty plaguing the gaming industry as a whole in Mauritius.
Lottotech was incorporated on 8 April 2008 by Gamma-Civic Ltd (“Gamma”) for the purpose of operating lotteries and generally doing all related activities within the gaming industry.
In April 2009, the Gambling Regulatory Authority (“GRA”) issued an exclusive license to Lottotech to operate the Mauritius National Lottery for a period of 10 years, renewable for further successive periods not exceeding 5 years each.In October 2009, Lottotech launched La Loterie Nationale in Mauritius and Rodrigues with the sale of lottery games through an initial network of 542 retailers.
Lottotech is a member of the World Lottery Association (“WLA”), the global authority on lottery business.