HK$840m write-down puts LotSynergy in red

PUBLISHED : Tuesday, 10 March, 2009, 12:00am
UPDATED : Tuesday, 10 March, 2009, 12:00am

China LotSynergy Holdings, the monopoly supplier of slot-machine-like video lottery terminals to the mainland's state-owned welfare lottery, swung to a loss last year after taking an HK$840 million write-down on the value of the business.

Beijing launched a crackdown in February last year on halls operating video lottery terminals, curtailing opening hours, lowering bet limits and removing the most popular games on the machines.

LotSynergy, which receives 2 per cent of gross gaming revenue from the machines it supplies to the welfare lottery, said profit from the business plunged 65 per cent last year to HK$99.16 million from HK$284.16 million in 2007.

The firm wrote down the carrying value of the business, causing intangible assets to fall to HK$337.15 million at the end of last year from HK$1.18 billion a year earlier.

'The management considered it is necessary to conservatively revalue its intangible assets relating to [the welfare lottery] video lottery business,' the company said yesterday in its results announcement. 'Nevertheless, the management believes [video lottery terminals], as the new trend in lotteries, still enjoy bright prospects in China.'

In May 2007, LotSynergy sold a 5 per cent stake and convertible bonds to Nevada-based IGT, the world's largest maker of slot machines, in an HK$802.2 million deal. IGT wrote down the value of its LotSynergy shares last year to US$12.2 million, compared with the US$33.6 million it paid for the stake.

As a result of the write-down and the decline in turnover from the lottery terminals, LotSynergy booked a net loss of HK$930.73 million for last year, down from a profit of HK$132.09 million in 2007.

Shares in LotSynergy were unchanged yesterday at 14.7 HK cents.