China LotSynergy continues focus on new media lottery opportunities

20th August 2014 8:33 am GMT

Alongside posting a 35 per cent increase in turnover to HK$460.5m (€44.5m) for the first half of 2014, lottery supplier China LotSynergy Holdings said that it is currently facing “unprecedented opportunities and transformations” in the Chinese lottery sector due to the development of new mobile and internet channels.

The company said that the ‘new media’ lottery sector is expected to thrive in 2014, with the lottery industry witnessing an “accelerated integration” of online and offline businesses.

“The group is poised to strengthen its existing businesses and earnings base, while striving to capture new business opportunities to achieve new growth drivers, thus creating greater value for its shareholders,” said China LotSynergy. “We believe that the group’s commitment and dedication to China’s lottery market will eventually prove to be very fruitful.”

The company believes that traditional lottery will continue to grow alongside the rapidly growing new media lottery, as the development of the two businesses are complementary to each other rather than competing.

According to China LotSynergy, this combination of online and offline businesses, which it has termed online-to-offline (O2O), is the next major trend of the lottery industry.

“The group will focus on actively modelling its products and system after the O2O concept,” the company said.
With China’s lottery sector undergoing twenty years of strong growth, China LotSynergy said that the advent of the internet age means that the industry is currently facing “unprecedented opportunities and transformations.”

“As a participant at all levels of the lottery industry chain, the group is poised to seize this historic opportunity to create new development initiatives with determination and focus,” it said.

As part of its future development, the company will focus on new games and continuous innovation, as well as complementary new terminals and platform systems which require constant upgrading and replacement.

In addition, the company will utilize self-built and jointly-built channels to develop the scale of the group’s connected new media user base, as well as to increase the number of players by enhancing the user experience.

“The group firmly believes that new lottery game types that are geared specifically towards mobile and internet channels, which are different to traditional offline lottery types, will be the fundamental driving force for the development of new media lottery,” said China LotSynergy.

In its results for the first six months of 2014, turnover rose by 35 per cent to $460.5m, most of which was generated from the provision of lottery terminals and lottery sales channels.

Cost of sales and services rose 52 per cent to $128.9m, while general and administrative expenses were up 2 per cent to $100.2m. Operating profit climbed 29 per cent to $232.3m, with profit for the period up 32 per cent to $160.0m, of which $54.9m is attributable to owners of the company.

H1 2014 Results

Hong Kong Dollars (HK$) H1 2013H1 2014
Turnover 341.6m460.5m
Cost of Sales and Services (85.0m)(128.9m)
Gross Profit 256.6m331.7m
Other Income 11.2m12.0m
Other Gains/(Losses) 15.4m(9.6m)
General and Administrative Expenses (98.5m)(100.2m)
Share Option Expenses (4.9m)(1.5m)
Operating Profit 179.9m232.3m
Profit for the Period 121.4m160.0m
Basic EPS 0.540.72

“The group is slated to maintain its development momentum in the second half of 2014, by fully utilizing its partnership resources, promotion of further sales growth, and, based on the enhancement and development of its telephone lottery product, the incorporation of new business models, such as WeChat Payment, among others,” said the company. “The group will strive to achieve even better performance, and aims to make more contributions to the development of the new media lottery business for China’s lottery industry.”

As at June 30th the company held cash and cash equivalents of $597.3m compared to $284.9m a year ago.

Shares in China LotSynergy Holdings Limited (HGK:1371) closed at $0.67 per share earlier Wednesday in Hong Kong.

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