Philippine lottery firm Pacific Online Systems Corp. reports H1 2024 loss ??

Jenny Ortiz August 6, 2024

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Philippine lottery firm Pacific Online Systems Corp. reports H1 2024 loss ??

Philippine lottery firm Pacific Online Systems Corp. (POSC) reported a net loss of PHP226,088 (€3,577) in the first half of 2024, a stark contrast to the PHP145.5 million (€2.3 million) profit recorded in the same period last year. This downturn is attributed to increased operational expenses and a significant drop in revenue.

The company’s performance was also influenced by the delisting of its majority stakeholder, Premium Leisure Corp. (PLC), earlier this year. The delisting had a cascading effect on POSC’s financial health, adding to the challenges faced during the period.

Interest expenses and revenue transition?

POSC incurred an interest expense of PHP20.5 million (€324,398) due to loans taken by its joint operation, PinoyLotto Technologies Corp. (PinoyLotto), to fund capital expenditures and nationwide operations. This expense contributed to the overall financial strain on the company.

First-half revenues fell by 17 percent to PHP259.1 million (€4.1 million) from PHP 310.8 million (€4.9 million). The report said the decline was primarily due to the transition from the legacy lottery system to the nationwide lottery system under PinoyLotto.

Increase in operational costs?

The report also noted operating costs surging by 45 percent to PHP251.7 million (€3.9 million). This increase was driven by the nationwide operations of PinoyLotto’s Philippine Lottery System (PLS) for the Philippine Charity Sweepstakes Office (PCSO), which began in October of the previous year. The company faced higher depreciation expenses due to new equipment deployment and increased variable costs, including communications, repairs, and maintenance, as required by the PCSO for the PLS.

Sharp decline in operating income?

Operating income plummeted by 94.6 percent, dropping to PHP7.4 million (€117,099) by the end of June from PHP136.6 million (€2.1 million) in the same period last year. This sharp decline underscores the financial challenges POSC is grappling with during this transitional phase.

E-lotto contract and trial period?

In May, POSC emerged as the sole bidder for PCSO’s five-year lease of the web-based application program, e-lotto. The company received the notice of award in June 2024 for a PHP4.088-billion (€64.7 million) contract. E-lotto, a digitized version of traditional lottery games, offers players convenience, security, and transparency in electronic betting.

The trial period for the e-lotto ended on July 12, as instructed by the PCSO, which aims to enhance the e-lotto services and transition to a new platform. This development is expected to impact POSC’s operations and financial outlook moving forward.