REXLot prepares investors for profit decrease

Lottery company REXLot Holdings announced that it expects to record a decrease in net profit for 2014 compared to the previous year’s following a suspension of its Internet sales by China’s provincial lottery centers.

The company said the decrease in net profit is primarily attributable to the impairment loss of goodwill and intangible assets.

“The decrease in net profit of the Group is primarily attributable to the impairment loss of goodwill and intangible assets, which relate to the Group’s operating unit engaged in the internet lottery distribution services in China.”

“The goodwill and intangible assets of this operating unit as at 31 December 2013 were approximately HK$726,530,000 and HK$143,169,000 respectively.”

The company said it is necessary to evaluate the goodwill and intangible assets since a self-inspection program began by provincial lottery centers in China, in which lottery companies have had their internet sales suspended.

“As a result, the Group’s internet based lottery distribution unit has temporarily suspended its internet lottery distribution services effective from March 2015. It is uncertain when the operation of the Group’s internet based lottery distribution unit will resume. However, the Suspension does not affect the distribution of lottery tickets through any other distribution channels within the Group.”

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