GGRAsia – China Vanguard posts loss as policy uncertainty stays

China Vanguard posts loss as policy uncertainty stays

May 17, 2016 Newsdesk Latest News, Rest of Asia, Top of the deck

Hong Kong-listed China Vanguard Group Ltd, a company providing services to the mainland China lottery market, posted a loss attributable to shareholders of HKD24.93 million (US$3.21 million) for the three months ended March 31. That compares to a profit of HKD16.15 million in the prior-year period, the firm said in a filing on Friday.

China Vanguard reported revenue of HKD4.34 million for the three-month period, down 92 percent from a year earlier.

Mainland China’s total sales of official lottery products fell by 13.9 percent year-on-year to approximately RMB55.1 billion for the first two months this year, the latest available data from the country’s Ministry of Finance shows.

The substantial decline in China Vanuard’s reported revenue was due to the voluntary suspension of part of its self-service lottery operations, the company explained in its filing.

“On the eve of an official policy framework from the central government that would allow… online distribution… most lottery administrative offices have opted to adhere to the strictest guidelines according to the latest official commentaries [namely]… the traditional approach through the over-the-counter paper lottery ticket distribution,” China Vanguard stated.

The suspension of online lottery sales in mainland China was confirmed in April last year and described at the time as “temporary”. Reasons given were the need to streamline government supervision and to curb fraud by unlicensed sellers.

But a report published by Chinese business newspaper The Economic Observer last month said the Chinese authorities were mulling partially lifting the current ban on online lottery sales. The news outlet cited a source for the information, but didn’t name the source. Its report also stated that Chinese officials planned to launch pilot programmes later this year to resume online lottery sales.

In the Friday filing, China Vanguard said its management has been “closely working with the regulatory authorities in seeking for clarity in future self-service lottery business development”.

China Vanguard’s unaudited consolidated revenue for the nine months ended March 31 was HKD25.5 million, a decrease of 79.2 percent against the prior-year period, when it was HKD122.4 million.

“The decrease in revenue was due to the significant decline in revenue from our self-service lottery business and no contribution from property related business during the period,” said the company in its latest filing to the Hong Kong Stock Exchange.

The company added that during the reporting period it had provided lottery-related services in 21 Chinese provinces and regions.