Malaysian lottery operator Magnum Bhd expects weakness in consumer spending to persist this year, as the country implements a 6-percent Goods and Services Tax (GST) on most consumer items – including gaming – with effect from April 1.
“This is likely to have a moderating effect on our sales,” Magnum said. It added: “The GST expense based on net gaming supplies – that will be absorbed by the company – will have an impact on our profitability for the coming financial year.”
So-called number forecast operators in Malaysia – including licensed lottery firms and pools operators – already pay an 8-percent gaming tax on total ticket sales and an 8-percent pool betting duty on net revenue.
Magnum reported a 15.9-percent increase in profit for the fourth quarter of 2014, even as revenue for the period went down slightly judged year-on-year.
Profit attributable to equity holders of the parent increased to MYR61.3 million (US$16.6 million), the company said in a statement on Thursday. Revenue for the period dropped by 1.9 percent to MYR727.4 million, compared to the prior-year period.
The group recorded a marginally higher pre-tax profit in the final quarter of 2014 of MYR85.7 million when compared to the MYR83.8 million achieved in the previous year’s corresponding quarter.
“The increase was mainly due to [a] lower prizes payout in the gaming segment net of losses incurred by the investment holdings segment,” the firm said.
Gaming pre-tax profit increased by MYR10.5 million to MYR89.9 million in the three months to December 31.
For full-year 2014, Magnum reported a profit attributable to owners of the parent company of MYR261.7 million, down by 6.4 percent from the previous year. Revenue fell by 3.3 percent year-on-year to MYR2.9 billion.
The company reported lower sales in the gaming segment for 2014, “as a result of cautious consumer spending and a relatively higher prize payout ratio”.
