GGRAsia – AGTech slims 1Q loss, upbeat on China lottery future

AGTech slims 1Q loss, upbeat on China lottery future

May 12, 2015 Newsdesk Industry Talk, Latest News, Rest of Asia, Top of the deck

AGTech Holdings Ltd, a Hong Kong-listed equipment supplier to mainland China’s regulated lottery market, narrowed its loss in the first quarter when judged year-on-year.

The firm reported a loss attributable to owners of the company for the three months to March 31 of approximately HKD37.3 million (US$4.8 million), compared to a loss of HKD45.9 million in the prior-year period.

It said the first quarter 2015 loss was “primarily due” to share-based payments totalling approximately HKD22.3 million (in 2014, approximately HKD29.0 million) in the form of options granted to directors, eligible employees and other eligible participants. It also cited “major expenses including staff costs, office costs and research and development costs in line with the organic growth of the group’s business and as a result of the consolidation of the expenses of Score Value Ltd following completion of its acquisition on 8 January 2015”.

The AGTech board did not recommend the payment of an interim dividend for the period.

During the quarter under review, the group said it continued to supply its virtual sports lottery games e-Ball Lottery and Lucky Racing to lotteries in the mainland provinces of Jiangsu and Hunan. It said the two games and the underlying betting transaction system on which they are run are supplied by AGT, the group’s majority-owned joint venture with Ladbroke Group Plc, a United Kingdom-based sports betting and gaming firm.

John Sun, chairman and chief executive of AGTech, said in a press statement following the first quarter results: “We expect 2015 to be a year of significant regulatory progress in the China lottery industry.”

On April 3, eight Chinese central government agencies issued a joint public announcement demanding all “unauthorised” online sale of state lottery tickets cease. Prior to that, in February, provincial sports lottery administration centres in China had ordered the suspension of online sales of tickets.

China’s official lottery sales dropped to RMB30.81 billion (US$5.03 billion) in March, down 6.3 percent year-on-year, reported Chinese news agency Xinhua, quoting official data.

But some investors see the suspension of most online sales of mainland lottery as an opportunity to replace a sometimes informal and experimental approvals system – of the sort introduced for online seller Shenzhen-based 500.com Ltd by the Ministry of Finance in 2012 – with a better-regulated and monitored one.