AGTech posts sixteen-fold widened loss in 17Q1

Sunday 14th of May 2017

Lottery service provider AGTech Holdings posted a sixteen-fold widened loss for the three months ending March 31, 2017, due to an increase in staff costs as well as losses arising from the remeasurement of convertible bonds of the company.

The company says it saw a loss of HK$232.8 million (US$29.9 million) in the first quarter of 2017, a substantial increase from HK$14.4 million in 16Q1. The losses were a result of staff costs of approximately HK$37.5 million due to the group’s business growth and expansion; a loss of around HK$153.9 million from the remeasurement of the fair value of the convertible bonds of the company; and a loss of approximately HK$8.4 million from the remeasurement of the fair value of the outstanding contingent consideration payables under the Score Value Transaction.

Revenue of the group amounted to $14.9 million, down 23.6 percent from HK$19.5 million, due mainly to the reduced sales of lottery hardware products.

Last month, AGTech announced it had teamed up with SF Lottery (Shenzhen) Technology Development Company Limited to introduce a SF-Themed instant scratch lottery as part of its Games and Systems division.

In its distribution related business segment, the company says it recently launched a Sports Lottery distribution model in certain Village Taobao retail stores, adding it is excited by the initial response from store owners and the public.

“Village Taobao targets a physical network of massive rural locations in the coming years. Historically, rural areas of China have not been well served with lottery points of sale so there is huge room for expansion of this commission-driven, new physical lottery retail business.”

Looking ahead, AGTech says it has been closely monitoring policy developments in relation to the sales of lotteries through internet and mobile channels, and believes that new online and mobile channels for lottery sales are likely to be approved.

“We believe that any new games and systems that will be approved for online sales will require robust and scalable technology in order to deliver effective and efficient monitoring and control systems. We consider that the Group is well positioned to participate in these areas and this is only strengthened by our business partnership with the Alibaba Group and Ant Financial Group,” said AGTech.

The board did not recommend the payment of a dividend for the quarter.

Lottery Earnings & Filings