GAMING outfit Supreme Ventures has attained the double feat of becoming one of Jamaica’s premier corporations while seeing its brand ascend to one of the most recognisable in the country. Last month it celebrated its 10th anniversary and during that decade its revenues moved from J$6 billion to J$26 billion. For the financial year 2010, audited accounts show Supreme Ventures posting revenues of J$25.4 billion with a gross profit of J$2.9 billion and EBITDA of J$855.6 million.

Over the last decade Supreme Ventures has paid out over J$100 billion in prize money and contributed over J$125 billion to the Jamaican economy. During that period it has also contributed over J$6 billion to the CHASE Fund. Supreme Ventures CEO Brian George also points out that the company has paid over J$8 billion in gaming taxes and over J$1.5 billion in fees to the Betting Gaming and Lotteries Commission (BGLC).

During the early years, Supreme Ventures crossed swords with the Jamaica Lottery Comany (JLC). While lawsuits were flying around from JLC, Supreme Ventures set about acquiring its rival and eventually did so, thereby becoming the unassailable leader in its field.

Cash Pot

The game Cash Pot has become a national phenomenon which today enjoys islandwide participation. Supreme Ventures chairman Paul Hoo explained that it was originally an underground cultural game brought over to the West by the Chinese. Wherever the Chinese settled it was played, albeit illegally.

“There is a one-in-36 chance that you can win with Cash Pot, which makes it very popular and in fact justifies the game. One of the problems we faced with Cash Pot was our agents would take all this small change to the bank and they would not be accommodated. They claimed that they needed to hire a separate teller to deal with these transactions and so it was not a cost-effective enterprise. I guess if you are depositing J$500,000 in 10- and 20-dollar coins they would see it that way,” said the chairman of Supreme Ventures, Paul Hoo.

His president and CEO Brian George further added: “Eighteen months into Cash Pot we had a situation where there was a malfunction in the machines with 32 numbers coming up. Now bear in mind that the system can only pay one number. Paul (Hoo) made it clear that there could be no question about our willingness to pay, so he mobilised staff and set up payment desks in the Sagicor building and had people working all-night for a week making payouts. That gave people the confidence that we were true to our word and would make payments if they produced winning numbers. Now not a lot of people know that about Paul Hoo, and he should be given credit for it. That is the manner of the man.

“I can also recall in 2003 Paul’s presentation to a parliamentary committee on the win tax where it was dropped by 52 per cent. That again gave Paul tremendous credibility. It demonstrated that he had a total understanding of both the business and the psychographics of those who play our games. There were many factors that spawned the illegal market which has taken us years to correct.

It really is about connecting with the playing public. He might not appreciate this, but it has to be said: Barry Chisolm, who was the manager of Scotiabank, New Kingston branch, was most helpful. He stuck with us even when at one time we went into J$30 million negative cash flow. In those early days the operation drained our account but he kept faith and was supportive. Ultimately he believed in Paul because he was the face of the company.”

Testing times

Those early years were tough, and looking back Hoo sees it as a triumph of the will. He recalls in their second year they had a trying time with the weather causing regular power cuts from Jamaica Public Service on a daily basis. People were turning up at terminals but could not buy a ticket. The business back then had to be conducted one hour at a time. Added to that were delays in the construction of the offices so people had to sit on boxes, but morale remained good and Paul Hoo and his team persevered.

George credits the mobile telephone service provider Digicel with playing a pivotal role in making the Jamaican public au fait with modern technology, particularly with the use of GPRS which made Supreme Ventures’ operations more resilient to hurricanes and other acts of nature.

“It looks easy now 10 years on, but people have no comprehension of what it was like for us back then.There were times when we were not getting any signals from the towers and the batteries back then were huge and cumbersome. We had to bring in generators, an expense we did not account for largely because of JPSs’ shortcomings at the time. Those frequency issues were most disturbing and had us worried,” said the Supreme Ventures’ chairman.

Dynamic duo

Hoo and George make a good team and that is easy to see. Both men are convivial, get on and understand each other which creates for the basis of effective management. They are both known and recognised as the faces of Supreme Ventures and are known on a first-name basis on the business scene. They both refrain from verbose pronouncements as to how well Supreme Ventures has done over the years, opting instead for an understated approach crediting the team and not themselves for the accolades and recognition bestowed upon the company. Next to Richard Byles and Donovan Perkins of Sagicor Jamaica, they are the other dynamic duo on the local corporate landscape. So how important is that element of symbiosis and how do both men view their working relationship?

“At the end of the day, Paul was the founding president of the company and he was operationally involved in it. That means there are operational issues that cause us to have to work together. When I became president of Supreme Ventures, Paul because of his humility, did not feel he had to assert himself and allowed me to get on with the job at hand. People raised the spectre of cultural issues and how it would play out, but we were more amused by that, than anything else.

“Now we all have egos particularly the higher up you go, but it was such that Paul did not have the type of ego that would have created a contentious situation. Paul’s instincts for the business are different from mine. We have always been able to discuss issues and respect each other’s view and that may well be why we work well as a team. Because he smokes like a chimney and I don’t,we would stand outside the building thrashing out issues and strategising.”

With a wry smile, Hoo sums it up: “It’s really simple, we both have the same child! Whether we agree or disagree it’s all about what is beneficial for that child and that will always come above everything else.”

Listing on the JSE

Back in 2006, Supreme Ventures listed on the main Jamaica Stock Exchange (JSE) and so this marks its fifth anniversary as a listed company. Chris Williams who at the time was with NCB Capital Markets handled the listing and there was much fanfare surrounding it. But by the time Supreme Ventures’ IPO came out, the market had crashed. This was not an auspicious start to life as a publicly listed entity.

“When we listed back in 2006, Paul was very clear that we needed to build the business above the brand. People saw the Lotto company and the Cash Pot company and we wanted to co-brand them as Supreme Ventures because back then we did not have it as an identifiable brand. Paul gave me plenty of support on this. We took the decision that we would take an aggressive position with sponsorships and that we would build our brand at the community level, but it must be done around the Supreme Ventures brand. In fact we were mandated to list largely because we had acquired JLC, but in effect voluntarily listed Supreme Ventures. We established Supreme Ventures as an overarching brand. It become synonymous with things that have a unique interest in Jamaica. When people thought that carnival was dying, we stepped in as title sponsor. Back then we were putting in J$15 million a year into carnival. At the same time no one would touch track and field athletics but we got behind JAAA. Mind you, this is before Usain Bolt, Asafa Powell and Shelly-Ann Fraser Price.

“We sought to establish a corporate image, bearing in mind that we were the sole player in our field. It really was about building a business into an industry. It was vitally important that when we spoke about gaming we were able to do so with credibility. We saw that it was important to diversify and Paul was the one who saw what VLTs could do for our business,” said George, reflecting on those early years.

Hoo sanguinely declared that those who came in at the private placement and the IPO were certainly disappointed. “They didn’t perceive that we had achieved the level of growth we had going in. I attribute that to all stocks dropping precipitously back then. There were things that we hoped to accomplish which did not materialise at the time. We had talked about applying to the PowerBall Association for participation in the United States. Also the VLTs didn’t take off as we had hoped they would. What has happened since then is that we have profiled this company as a dividend-paying one. Those who have stayed the course with us have seen the dividend policy and have benefited. Many listed companies have been unable to pay a dividend, so you see, Supreme Ventures ended up being a good investment.

“The whole financial market has changed. One can no longer reap handsome returns from fixed deposits. Mayberry had a private placement where they issued shares at J$2.00, but when the IPO came out the shares went up as high as J$8.00 so people cashed out their profit and retained their shares. Just around the time we were about to list, the shares dropped dramatically and the whole market crashed. We didn’t see that coming. We couldn’t foresee that short-term investment approach. We have, however, maintained our policy on dividends. If you did an analysis right now in terms of a dividend policy, our returns are better than what currently prevails on fixed deposits.”

Supreme Ventures to double profits

Speaking at its AGM last week, George made a bullish forecast that Supreme Ventures expects to double its profit from J$420 million to J$840 million this year, predicated on an aggressive business development plan. He is looking to upgrade its gaming lounges, introduce Pick 4 and add 200 terminals by the end of this year. In 2004, Supreme Ventures acquired Prime Sports and made a move into establishing gaming emporiums, such as Acropolis and Coral Cliff, again broadening their offerings and turning a business into an industry. The VLTs were an addition to the gaming industry and spoke to Supreme Ventures’ ambitious vision.

“Going that route was not as easy as we envisioned and we faced many challenges. With lotteries we could launch a game and modify it according to how the public reacted to it. With VLTs that cannot be the case. VLTs are very capital-intensive and the facilities can be costly, but herein lies the importance of branding and we have done well with that. We have recently signed an agreement with Intralot which will see us upgrading all of our lounges. We have Coral Cliff in Montego Bay and Acropolis in May Pen, Portmore and Barbican in Kingston,” explained George. “What we are doing now is consolidating and upgrading the facilities. Right now we are taking a step back and looking at where the strengths and weaknesses are. What I can say most affirmatively is that we have learnt the hospitality business. We are very grateful for the capital expenditure that will be made by Intralot. This means that we don’t have to put pressure on our dividend policy in order to retool our operations. We can now keep pace with what is done internationally,” added Hoo.