GGRAsia – Malaysia lottery’s Magnum says GST to dampen 2015 sales

Malaysia lottery’s Magnum says GST to dampen 2015 sales

Mar 13, 2015 Newsdesk Latest News, Rest of Asia, Top of the deck

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”.