Ashford W. Meikle, Business Reporter

Brian George, president and CEO of Supreme Ventures Limited (SVL). - File

Supreme Ventures' retention of foreign investment bankers UBS is being taken as a signal by market analysts that the lottery company is ready to execute plans for regional expansion.

"I think what they are doing now is that they are getting ready to move in on their previously-announced plans. You don't get a big high-profile firm like that unless you mean business, so things are about to happen," said investment analyst Orville Johnson of Today's Money Limited.

"Those ventures in the international arena need the expertise of companies like UBS who have the technical know-how."

The lottery company, which listed this year on the Jamaica Stock Exchange, has seen its earnings falling flat and its share price plummeting by almost $3.

SVL's opting for UBS as its adviser, however, has already boosted market confidence somewhat.

"To take one UBS to guide their portfolio decision, investment-wise, is commendable for a company that is seeking to sustain some level of growth going forward, to the extent that they have not been able to drive profits in the current year," said research manager at Mayberry Investments, Rex Shettlewood.

For its unaudited nine months to July 31, Supreme Ventures earned revenue of just over $12 billion, eight per cent up from the $11 billion it earned for the comparative period last year. But for its nine months this year, there was a 21 per cent drop in its net profit which dipped from just under $20 million last year to almost $16 million this year.

Supreme Ventures went public in January when only 37 per cent of its shares were taken up by the public. Its lead broker, NCB Capital Markets, picked up the remaining shares which were in the public pool.

But, the company has seen a 60 per cent erosion in its list price of $4.81 to $1.99 on Tuesday.

Up shareholder value

Brian George, SVL chief executive officer, explaining the company's decision to hire UBS, said it was looking at ways to maximise shareholder value.

"In order to realise the full potential of our company, we are evaluating the alternatives available to us, to best deliver full value to our shareholders," George said in last Friday's statement.

Earlier this year, at an investors' forum, the CEO spoke of the Supreme Ventures' plans to offer online games in Nicaragua, its ongoing bid for lottery gaming in Ecuador, Panama and Guyana, as well as participation in multi-state lotteries in the United States.

The company is also in partnership with the CEL consortium to lease and manage Caymanas Track Limited, where it hopes become the exclusive operator of some 750 VLT machines.

Attempts by Wednesday Business to get an update on those plans yesterday were unsuccessful - the senior management was said to be in a meeting.

But in its press release, Supreme Ventures said that in its decision to hire UBS, it "does not currently intend to disclose developments with respect to the exploration of strategic alternatives unless and until its board of directors has approved a specific transaction."

Still, according to a Wednesday Business source, "the recent outlawing of online gaming in the United States is going to create a boom for onsite gaming in the region. UBS seems to be positioning themselves to be the deal makers in the industry."

According to a recent Associated Press report earlier this month, the Las Vegas-based casino company, Harrah's Entertainment, recently retained UBS Securities as its adviser after the gaming company received a US$15 billion buyout offer from two private-equity firms.

But, at least one market analyst is expressing caution.

"I don't know to what extent foreigner are going to be interested in investing ... you may find one or two [and] I am not a 100 per cent for local shareholders seeing any significant benefit until the SVL begins to show some profitability," said John Jackson, publisher of Investors Choice magazine.

Jackson said SVL was operating in a fairly mature equities market, suggesting that there were limits to its growth potential.

"It's one thing to show forecasts and get people to buy stocks. It's an entirely different scenario for management to deliver," said the analyst and magazine publisher.

"What has happened here is that there is this huge credibility gap that exists in the marketplace from this company."

- ashford.meikle@gleanerjm.com