Mauritian civic major Gamma declares losses of Rs 112.5 mn for half year to June 2015
Mauritian conglomerate Gamma Civic Ltd incurred losses of Rs 112.5 million for the half year ended 30 June 2015, against profits of Rs 28.3 million realised a year ago, upon subdued performance of its major segment, the lottery sector, together with tough conditions in its historical mainstay, the contracting segment, comprising Roads, Building and Civil Engineering. (Image: Company)
For the half year ended 30 June 2015, Gamma Civic incurred losses of Rs 112.5 million, primarily owing to an exceptional cost item of Rs 51 million that was recognised in the semi-annual group statement for profit or loss and other comprehensive income.
For the period under review, Mauritian conglomerate Gamma Civic Ltd recorded a drop of 53.6% in revenue to reach Rs 61.2 billion, while operating losses of Rs 74.8 million were recorded against a profit of Rs 17.8 million in the year-ago period.
Losses for the period under review amounted to Rs 112.5 million, against a profit of Rs 28.3 million in 2014.
A segmental analysis shows that the Contracting business — comprising Roads, Building and Civil Engineering divisions — faced an extremely tough year, with minimal ongoing infrastructure and building works in the economy.
These factors have adversely impacted Gamma Construction Ltd, which has suffered significant losses of Rs 64 million for the half year ended 30 June 2015, with management carrying out a restructuring exercise for the quarter ended 30 June 2015 in order to right size the cost structure.
The restructuring costs, which were recognised as an exceptional item in the statement of profit or loss and other comprehensive income in the quarter ended 30 June 2015, amounted to Rs 19 million.
Moving to the major revenue generating cluster, the gaming sector, Lottotech Ltd suffered a huge drop in its financial performance as there was a significant inventory write-off of scratch cards and restructuring costs, amounting to Rs 32 million. This was a direct result of the government’s decision to ban scratch cards and advertising for the gaming industry. This has been recognised as an exceptional cost item in the statement of profit or loss and other comprehensive income and has adversely affected the overall results for the half year ended 30 June 2015.
The building materials and cement businesses remain the main pillars of the group’s operations. Despite the continuing downturn in the construction industry, Gamma’s building materials and cement businesses delivered a strong financial performance and profits. Both of these businesses have contributed significantly and positively to group results. Gamma Materials Ltd, the group’s building materials business, made a net profit after tax of Rs 48 million whilst the cement business registered a net profit after tax of Rs 112 million
The hospitality segment of the conglomerate is represented by Morning Light Co Ltd, which is an associate of Gamma-Civic Ltd and owns the “Hilton Mauritius Resort & Spa,” with the hotel managed and operated by global hospitality group Hilton International. The conditions for the hotel industry were challenging during the half year under review, which negatively impacted the revenues and profits of the company, causing it to declare a loss after tax of Rs 40 million for the half year ended 30 June 2015.
The local environment in which Gamma’s businesses operate remains very challenging. The board noted that it is monitoring the situation closely and the respective companies will take further action if business conditions deteriorate. The management of Gamma Construction is expecting more visibility in terms of future work opportunities by the end of August 2015.
As for Lottotech Ltd, it has recently implemented various initiatives to restore its profitability over the next six months. Loto remains the strong flagship brand of the company. The board continues to work with management to ensure that the company is taking appropriate actions to mitigate the impact of government measures and protect the value of the company.
Morning Light Co Ltd, for its part, is committed to taking advantage of the increase in the number of Chinese tourists coming to Mauritius. In addition, following several marketing events and the renovation of the hotel last year, Morning Light Co Ltd is well positioned to improve its financial performance in the future.
Finally, management has stated, “We are confident that our businesses, following their respective restructuring programmes, are well-equipped to withstand the pressures of the continuing poor economic conditions. Our new organisational structure comprising an investment committee and a new management team is now in place in line with our vision of creating a fit-for-purpose investment holding company.”
“We remain cautiously confident of our ability to grow earnings over the short to long term whilst continuing to create value for our shareholders. The long term growth and sustainability of Gamma Group remains our focus,” concluded management.