EXECUTIVE CHAIRMAN’S REPORT

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Annual Report 2020

GROUP STRUCTURE

ABOUT US

EXECUTIVE CHAIRMAN’S REPORT

MANAGEMENT DISCUSSION AND ANALYSIS

RISK MANAGEMENT

CORPORATE GOVERNANCE REPORT

DIRECTORS’ REPORT

HUMAN RESOURCES REPORT

BOARD OF DIRECTORS

SENIOR MANAGEMENT

SHAREHOLDINGS

CORPORATE LISTING

SUPREME AT A GLANCE

PRIME SPORTS STRIDES INTO THE FUTURE

SUPREME VENTURES BUSINESS HUB

SV GAMES 2.0 LAUNCHED

BEATING THE ODDS - CAYMANAS PARK

CAYMANAS PARK CLOSES 2020 WITH EPIC BETMAKERS DEAL

SUPREME VENTURES FOUNDATION

MAKING WINNERS EVERY DAY

CONSOLIDATED FINANCIAL STATEMENTS 2020

TABLE OF CONTENTS

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OUR MISSION

CORE VALUES

Create value for our stakeholders through innovative gaming solutions for the Caribbean.

OUR PURPOSEMaking Winners Every Day

Winning Attitude We approach every situation with a positive mindset. We include and depend on our team members to find the best solutions that deliver the most favourable outcomes in the shortest possible time.

Continuously Innovate We work every day on improving what currently exists by testing our products and processes for our market, as well as for more efficient and effective ways of doing business for both our internal and external customers.

Passion and Fun We are enthusiastic about creating and maintaining an enjoyable work environment by deliberate acts of playfulness.

Holding Ourselves Accountable We first admit to the part we play when things go wrong, and quickly fix it instead of blaming others. We then seek feedback and look for opportunities to learn and grow.

Straightforward We communicate with others in a genuine and caring manner that promotes well-being, especially when providing feedback. We care enough for each other to be gently truthful, to ensure that unfavourable behaviour is not repeated.

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GroupStructure

PRIME SPORTS(JAMAICA)

LIMITED

SUPREME VENTURESRACING &

ENTERTAINMENTLIMITED

SUPREME VENTURESSERVICES LIMITED

SUPREME GROUP

INCORPORATED

POSTTOPOSTBETTINGLIMITED

SUPREME ROUTE

LIMITED

SUPREME GUYANA

INCORPORATED

SUPREME VENTURES

GUYANA HOLDINGS

INC.

SUPREME VENTURES

ENTERPRISEINC.

100% OWNED 51% OWNEDKEY

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Supreme Ventures Limited, Jamaica’s premier gaming and entertainment group of companies, has been the market leader for the gaming sector since its incorporation in 2001.SVL, which began with a focus on numeric lottery games, gaming lounges and sports betting, has broadened its operations to alternative business lines in various territories outside of Jamaica.

The year 2020 was a pivotal year for the world and businesses across the globe; Supreme Ventures was no different. Built on tenacity and the resilience of the Jamaican spirit, SVL continued to make strides in spite of the mounting challenges posed by the global pandemic, COVID-19.

Change and progress looked very different in 2020, nonetheless, major milestones were attained.

SVL maintained its profit-making momentum, and continued to impact the local business sector with innovation and expansion. We built on the progress made in previous years and continued to Game On!

Significant strides were made in 2020. We reported the success of virtual gaming on our upgraded JustBet Mobile App, successfully launched a new pick-one game, Hot Pick; revamped and relaunched the SV Games App with improved functionalities, an expanded game portfolio and increased accessibility for users on Android, iOS and Windows operating systems.

One of our landmark successes was the launch of our super popular Cash Pot game in South Africa. This move, part of the Group’s expansion strategy, demonstrates the dexterity of our brand in entering international markets. Our subsidiaries - key among them, Supreme Ventures Racing and Entertainment Limited - has captured the imagination of international investors who also took the leap and signed on as long-term partners to continue the development of one of Jamaica’s oldest sporting brands. We will seek out more borderless partnerships in the future as we encourage persons across the world to join our vision and Game On!

Internally, there were several adjustments that had to be made to sustain operational excellence. SVL was one of the few Jamaican companies that successfully implemented a work-from-home programme for over 90% of its staff complement – a feat that was noted in the media and has proven the strength and capacity of Team Supreme.

About UsWe progressed in the face of adversity, continued with strong and stable profits and remained on course with our operational excellence, growth and expansion.

In the midst of the strategic and business moves, SVL did not lose sight of its core – the people of Jamaica. We continue to connect with our stakeholders, including our 1,200-strong retail network, lending a hand to help them navigate the strange and unusual waters of the pandemic. We also kept our eyes on our heart – the children of Jamaica, who were severely impacted by the effects of the pandemic. The Supreme Ventures Foundation shifted into high gear to mitigate the effects on the loss of structure, assistance, and resources available to children, especially those in State care, due to the closure of school and school-based assistance and restricted access to children’s homes islandwide.

The year 2020 was a year in which we demonstrated the strength and compassion of the SVL brand – a brand that has improved the lives of thousands with life-changing winnings, entrepreneurial opportunities and outreach and will continue to be part of the fabric of the Jamaican society and the world as we continue to Game On!

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Annual Report 2020

Executive Chairman’sReport

Without a doubt, 2020 was a year like no other for the Supreme Ventures team. Even within the context of an ever-changing landscape, we moved our strategy into full gear, focusing on digital transformation, expansion, innovation and rolling out new products and channels that support our customers’ needs. The result was a job well done across the Group over this unprecedented period.

Innovation, investments, expansion, resilience, strength and customer satisfaction, are all adjectives that represent the impact of Supreme Ventures Limited’s 2020 footprint in Jamaica and our overseas markets. Like every business both locally and across

the rest of the world, we were affected by the onset of COVID-19. Our Group faced and withstood the challenges as they came, proving without a doubt the Group’s ability to pivot, adapt and evolve, strengthening and cementing its position in the Jamaican market.

No one could have predicted the global pandemic, no one foresaw the economic impact as a result of COVID-19 and no one expected that the imitable strength that is within us a people to “wheel and come again” would be tested resulting in many victories, no matter how small, and for that, we laud all our internal and external stakeholders.

Without a doubt, 2020 was a year like no other for the Supreme Ventures team. Even within the context of an ever-changing landscape, we moved our strategy into full gear, focusing on digital transformation, expansion, innovation and rolling out new products and channels that support our customers’ needs. The result was a job well done across the Group over this unprecedented period.

Whilst we experienced a myriad of challenges during the year, we also experienced significant achievements with total winnings to our loyal customers amounting to $51.7 billion, an increase of 1.84% over prior year. While dividend payouts to our shareholders totaled 80 cents for the year, our net profit after tax was $2.42 billion representing a decline of $52.69 million or 2.13% over prior year. Our contributions to Government agencies and related bodies saw an increase of 5.23%, or $409.86 million over 2019. We continue to make a major positive impact on all stakeholders within our operational ecosystem, standing by our values of operational excellence and innovation.

Operationally, the restructuring of the Group took shape with each company focusing on its core mandate, goals and objectives. Under the leadership of Prime Sports (Jamaica) Limited CEO, Xesus Johnston, we saw the implementation of several key launches and innovations which energized our customer base and motivated our retailers. Our foray into the South African market with the Cash Pot product was a game changer, leveraging the long-standing affinity between Jamaica and South Africa as well as our best-in-

GARY PEART

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class live Draw operation. This move signalled the first of many numbers games that we will be exporting outside of our shores. Our digital transformation continued in earnest in 2020 as the new release of our online lottery channel SV Games provided a simpler registration process, more payment options with the introduction of debit and credit cards, and a simpler interface for our customers to enjoy our well-loved games with added convenience. The JustBet online platform deepened its share of wallet, increasing revenues as our customers became more familiar with the channel and utilized it as an option for entertainment during lockdown periods. The company also launched the Supa Sellaz, an exciting mobile street team that moved the boundaries of the traditional retail store and enabled us to bring the product out to the customer.

The channel was a success out of the gate, as new and existing customers immediately recognized the value, steadily increasing revenues week after week. As a result, all segments reported an increase of 10.32%, in comparison to the previous financial year. Our lotteries and PINS segments saw an increase of 26.47% over the prior year with earnings of $4.45 billion. The commitment and drive that produced these earnings while other companies were forced to make drastic cutbacks to survive the pandemic, must be highly commended.

WE CONTINUE TO EVOLVE….

Supreme Ventures Racing and Entertainment Limited, SVREL under the expert guidance of Chairman Solomon Sharpe and the stewardship of General Manager Lorna Gooden, implemented their business continuity plan and performed credibly despite the lockdown of the track for a few months. Fortunately, we were able to re-open Caymanas Park to spectator racing after the development and approval of strict national health protocols and were able to re-establish some of the momentum being experienced pre-Covid. A critical ecosystem that is depended on by thousands, Caymanas Park’s ability to operate successfully in the “new normal” has set the standard for horse racing operations across the globe. Our landmark deal with Australian horse racing betting solutions provider, BetMakers Limited was the perfect topping for the year as this deal is expected to revolutionise and transform the racing experience at the 61-year-old track. The agreement will include an additional betting structure, construction of new infrastructure and event sponsorship until 2025. Betmakers will implement, manage and distribute a fixed odds betting system that will give punters more choices when placing their bets. Betmakers will also enjoy sponsor benefits for the Triple Crown series, which comprises the 1000/2000 Guineas; the Jamaica Derby; and the Jamaica St Leger; the Quarterly Championship and the naming of one race for each race day for the entire year.


$64.4B

In 2020 our lotteries and PINS grossed the business a total of

$51.7B

The total winnings paid out to customers in 2020 was

$2.42B

Despite the challenges of 2020 the company earned a net profit of

SVL Executive Chairman Gary Peart (right) and Mary-Ann Meggs, Assistant Vice President, Retail present an award for the top performing retailer in St. Thomas for 2019 to Wayne Hayles during an islandwide retailer tour in 2020.

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The SV Business Hub was launched in the third quarter with Supreme Ventures Services Limited CEO, Dennis Chung leading the charge, another innovative move by Supreme which targets small and medium sized businesses to provide back-office solutions. We continue to see great strides with our investment in Guyana, with the expansion of our retail network in that country during 2020. We forged ahead with our expansion strategy as we acquired the assets of Champion Gaming Limited; a move that followed the acquisition of 51% of the shareholding in Posttopost Betting Limited in the year prior.

During the year, we earned another notch as regional credit rating body, Caribbean Information & Credit Rating Services Limited (CariCRIS) assigned an A- and overall high rating of ‘good creditworthiness’ to Supreme Ventures as a result of the Group’s ongoing positive financial performance, our solid technological infrastructure and structured operations in an industry that has shown resilience in difficult times. Our team continues to transform and innovate in how we do business. The year in review saw the implementation of our work from home policy just in time to successfully manage

our pandemic response. The company was able to quickly and efficiently organize over 90% of the team in a work from home environment in early 2020, resulting in increased productivity and minimal interruption in operations. The consolidation of the corporate office and our relocation to Supreme’s original home at Retirement Crescent, was also smoothly completed during the year, enabling the company to fully leverage the benefits of the team working remotely.

We also saw a re-energizing of our team and our corporate social responsibility efforts within the communities that we serve. Observing strict national health protocols, we engaged the children and administrators at State run children’s homes, supporting them with much needed health supplies as well as gifting the hardworking administrators for their devotion, steadfastness and dedication. We remain constant in our efforts to address the various needs that emerged due to the pandemic and lockdowns and will maintain our commitment to assist our fellow Jamaicans as soon as the need arises. In the year in review, the Group worked closely with the Private Sector Organisation of Jamaica, PSOJ to provide critical food supplies and other

SVL Executive Chairman Gary Peart (left) and General Manager of Supreme Ventures Racing and Entertainment Limited, Lorna Gooden (right) present a care package with basic food items to a member of the Gregory Park community in the environs of Caymanas Park in May 2020. SVL partnered with the Private Sector Organisation of Jamaica (PSOJ) on their COVID-19 relief efforts and provided packages to 300 residents for 12 weeks.


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essentials, including locally grown fresh vegetables and fruits for the communities surrounding Caymanas Track during the lockdown period.

The Board of Directors must be commended as their corporate governance expertise continues to be the bedrock of the Group. I thank them and also thank Director Emeritus, Ian Levy who retired in 2020. As one of the founders of the company, Ian served Supreme with integrity and commitment, and we thank him for his service to the board and the Supreme Ventures brand.

As we look to 2021, we do not see challenges but opportunities, opportunities to service our customers in a new and ever-changing paradigm, one that will certainly establish new horizons for us to conquer. Our strategic plan has proven itself to be the right direction for the company, and we will continue to focus on the areas of growth and expansion through acquisition and innovation. We look forward to another year filled with success as we have the right team, the right leaders and the right Board of Directors to face any challenge as we continue to “make winners every day.”

Gary Peart (Mr.)Executive ChairmanSupreme Ventures Limited


As we look to 2021, we do not see challenges but opportunities, opportunities to service our customers in a new and ever-changing paradigm, one that will certainly establish new horizons for us to conquer. Our strategic plan has proven itself to be the right direction for the company, and we will continue to focus on the areas of growth and expansion through acquisition and innovation.

SVL Executive Chairman, Gary Peart presents an award to one of SVL top retailer Peter Leo Hugh, of Sispet Services in Gordon Town, St. Andrew and his wife, Siska Hugh. Mr. Hugh was the top performing retailer for the parish of St. Andrew in 2019.

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MANAGEMENT DISCUSSIONAND ANALYSIS

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The presentation and content of this Management Discussion and Analysis (MD&A) is the responsibility of the management of Supreme Ventures Limited and its subsidiaries (“SV Group”, “the Supreme Ventures Group”, “the Group”, “we” and “our”). The objective of this MD&A is to provide more context for the Group’s performance for its 2020 financial year relative to previous years as well as to highlight significant components of the Group’s financial position as at 31 December 2020. This MD&A should be read in conjunction with the Group’s financial statements and accompanying notes which have been prepared in accordance with International Financial Reporting Standards (IFRS) and audited by PricewaterhouseCoopers. All amounts are represented in Jamaica dollars, unless otherwise indicated.

INTRODUCTIONSupreme Ventures Limited, Jamaica’s premier gaming and entertainment company, was incorporated in 1995 and began operations in June 2001 with three of its current games Cash Pot, Lucky 5 and Dollaz. The Group has seen exponential growth over the past 19 years, as it has added to its offering 8 additional numbers games, sports betting, gaming lounges and other entertainment. Supported by a retailer base of over 1100 stores and 7 company operated locations, Supreme Ventures is in every “nook and cranny” of Jamaica and is growing fast in Guyana.

The pivotal success of the operations is supported by strategic partnerships with key service providers, complemented by a team of over 500 working to deliver world class products and channels that promote the ease of use and doing business in the space. The Group prides itself in being an innovator and market leader in the delivery of mobile betting options across the various business segments. As the Group continues to solidify its position in the market, the focus remains on the timely execution of the strategic plans to provide favorable returns to our stakeholders. We will continue to support the growth and development of the economies in which we operate and enrich the lives of every customer that participates in our products. The COVID-19 pandemic underscores the importance of adaptability, innovation and transformation throughout the sphere of what we do. These principles have always been a part of our organisation and will continue to be the driving force forward.

MACROECONOMIC ENVIRONMENTThe SV Group, like other entities in the Jamaican economy, was negatively impacted by the onset of COVID-19 in early March 2020, which resulted in a downward growth trend throughout the rest of the year. This challenging economic environment would have impacted the operations during the year. The overall economy was characterised by uncertainty, particularly in the context of increased COVID-19 cases domestically as well as more stringent measures taken by the Government to contain the spread of the virus. The key economic indicators were impacted by lower trade levels, contraction of the tourism industry and a general downturn in employment levels throughout the year.

The GDP saw a major reduction of 18% at the end of June 2020, the first quarter impacted by COVID-19, as a result of the declines in the goods and services industries. For the quarter ending December 2020, there was a slight improvement recording a contraction between 7.5% and 8.5%. The near-term outlook is for real GDP to contract in the range 10.0% – 12.0% for FY2020/21 and is expected to partially recover the following year. The Jamaican economy is not expected to return to pre-COVID-19 GDP levels before FY2022/23. Over the medium term (the next three years), GDP growth is projected to average in the range 2% to 4% per year, which is above the previous projections. This growth largely reflects the expected rebound in tourism and related industries as well as higher growth in mining.

Jamaica’s unemployment rate as at October 2020 increased to 10.7%, 3.5% higher than the similar period in October 2019. This increase in the unemployment rate saw effectively 96.2 thousand persons less in the labour force. There were also lowering of income in some households as individuals took salary reductions to maintain employment. The duration of the global pandemic remains highly uncertain and there is much risk of a stronger resurgence of new cases as governments attempt to restart their economies.

The annual point to point inflation closed December 2020 at 5.20%, an improvement of 1% when compared to the comparative period of 6.20%. The Bank of Jamaica’s (BOJ) target range is 4% to 6%. These movements were a factor of the lower demand, border restrictions resulting in reduced travel, lower prices for goods and services as well as other fiscal and monetary policies implemented by the Government. Inflation is largely expected to remain subdued as the effects of the pandemic continue to depress

MANAGMENT, DISCUSSION AND ANALYSIS

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commodity prices. However, heavy rains and a sharp rise in the price of agricultural produce given the fall in production could cause inflation in Jamaica to temporarily rise to the top end or breach the upper end of BOJ’s target range.

Tourism arrivals fell by 3.1 million or 73.6% when compared to the similar period in 2019. The sector has recorded the largest negative impact and the Government, through its accommodative support has enabled some properties to remain open during the pandemic. It is projected that this sector will see improvements in the near future following the development and roll out of the vaccinations across the globe.

The exchange rate market saw the continuation of two-way movements in the exchange rate with its major trading counter part, the United States Dollar. The BOJ led several interventions (B-FXITT) totalling over US$380 million since the start of COVID-19 in March 2020. There was an average depreciation of 7.6% over 2019 closing at $142.65.

Business and consumer confidence indices continue to decline, reflecting economic and social uncertainties relating to the global pandemic. Among the contributors to

the decline in business confidence is decreased optimism regarding companies’ financial standing and future profits, which have not been at expected levels, as well as the expectation of a downturn in future business conditions within a year. Consumers are concerned about their income and future job prospects, and cited cuts in their salaries or suffered job losses due to the crisis. Even though confidence slid, some businesses are anticipating recovery within 1 – 3 years.

Local stock markets, similar to overseas markets reflected a decline when compared to the similar period in 2019. The onset of COVID-19 in Jamaica on March 10 prompted fear among investors, which saw a large sell-off of Jamaican equities. Most companies with listed securities have reported year-over-year contractions in earnings, and in some cases losses. Despite the downturn in the market, several companies successfully raised equity financing during the period and saw relative improvements in the latter half of the year. The main JSE index closed 2020 at 395,614.93 points representing a decline of 22.4% over prior year.

Indicator 2021 2020 Change

GDP Growth (estimated) 1.50% 1.00% 0.5pp

Debt to GDP 94.40% 91.50% 2.90%

Inflation 5.20% 6.20% -1.00pp

Debt 2.025Tn 1.947 Tn 4%

Exchange Rate $142.65 J$132.57 -7.60%

NIR US$3,126.13mn US$3,162.53mn -1.15%

Unemployment Rate 10.70% 7.20% 3.50pp

Tourist Arrivals 1,116,344 4,233,266 -73.63%

Stock Market Performance (Main Market) 395,614.93 509,916.44 -22.42%

Business & Consumer Confidence 128.3 & 131.7 131.3 & 180 - 2.28pp & -26.83 pp

Macroeconomic Indicators

1. GDP is at market prices at 2019/2020 fiscal year end (March) and Debt is measured at December 2020. The GDP Estimates were later revised to a contraction of 7.9%2. Unemployment rate was last measured at October 2020

Summary of key macroeconomic indicators as at December 2020:

FIVE YEAR STATISTICAL REVIEW

2020 2019 2018 2017 2016

Consolidated Income Statement Summary J$’000

Net Profit 2,420,947 2,473,634 2,098,408 1,398,656 1,178,468

Gross Ticket Sales 76,314,994 73,157,007 62,960,996 56,164,724 44,921,339

Gross Profit 8,751,754 7,902,274 6,492,047 5,628,522 4,108,502

Net interest income 68,268 69,231 63,476 90,995 66,553

Non-interest income 58,400 104,876 160,569 124,755 184,940

Operating Expenses (1) 4,248,240 4,013,983 3,550,247 2,599,945 2,480,403

Depreciation, amortisation and lease finance cost 805,185 568,708 349,907 355,432 241,676

EBITDA 4,595,237 4,020,972 3,165,845 2,931,574 1,903,568

Taxation expenses 1,178,124 988,076 790,030 647,713 483,424

Consolidated Statement of Financial Position Summary J$’000

Total Assets 15,577,810 9,421,680 6,615,444 6,175,160 5,433,350

Long Term Liabilities 5,489,159 2,161,331 503,220 592,583 26,604

Working Capital 4,005,106 2,253,657 1,107,164 1,396,777 965,449

Stockholders Equity 4,197,739 3,696,288 3,285,158 3,121,224 3,800,201

Trade and Other Receivables 1,453,888 1,640,922 805,333 1,002,229 864,100

Cash and Cash Equivalents 6,255,623 3,592,465 2,979,524 2,440,750 1,499,908

Retained Earnings 2,122,083 1,666,619 1,255,489 1,091,555 1,767,052

Cash provided by Operating Activities 3,608,968 2,163,361 2,679,408 2,416,475 894,412

Capital Expenditure 1,419,846 635,115 423,052 522,948 183,286

Profitability Ratios %

Return on Equity 56.64% 66.06% 63.88% 44.81% 31.01%

Return on Assets 15.54% 26.25% 31.72% 22.65% 21.69%

Current Ratio 1.97 1.70 1.39 1.57 1.60

Effective Tax Rate 32.73% 29.36% 27.35% 35.11% 29.09%

Operating Expenses Ratio 5.57% 5.49% 5.64% 4.63% 5.52%

Stock Unit Information (J$, unless otherwise stated)

Earnings per stock (cents) 90.15 92.59 79.57 53.03 44.69

Dividends per stock (cents) 72.14 77.00 78.00 82.00 36.00

Book Value Per Stock ($) $1.59 $1.40 $1.25 $1.18 $1.44

Closing share price at December 31 - Jamaica Stock Exchange (JSE) (*) $17.61 $25.50 $17.28 $11.53 $5.25

Percentage change in stock price -30.94% 47.57% 49.87% 119.62% 13.15%

Price Earnings Ratio 19.53 27.54 21.72 21.74 11.75

Dividends paid(2) (J$'000) 1,902,515 2,030,686 1,819,706 1,476,864 949,412

Special Dividends ($J'000) - - 237,353 685,686 -

Dividend Yield [%] 4.10% 3.02% 4.51% 7.11% 6.86%

Dividend Payout Ratio [%] 80.02% 83.16% 86.72% 105.60% 80.55%

Total annual shareholders return [%] -28.11% 52.03% 56.63% 135.24% 101.80%

Consolidated Statement of Financial Position Ratios (%)Fixed and intangible assets as a percentage of total assets 42.00% 31.01% 23.22% 4.65% 5.44%

Other StatisticsInflation Rate (Twelve months ended December 31) [%] 1.3% 6.2% 2.4% 5.2% 1.7%

USD foreign exchange rate at December 31 $142.65 $133.26 $128.62 $125.33 $128.44

JSE Index at December 31 (**) 395,614.93 509,916.44 379,790.86 288,381.97 192,276.64JSE Index annual movement (Twelve months ended December 31) [%] (***)

0.51% 0.57% 2.71% 1.38% 1.78%

Cash Pot Liability 70.75% 72.18% 71.38% 71.21% 71.61%

(1) Operating Expenses excludes depreciation & amortization(2) Dividends represented here reflect the amounts declared and paid in respect of each year


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Gross Ticket Sales

REVIEW OF FINANCIAL PERFORMANCEWhile the year saw huge uncertainties and downturn in the general economy, the SV Group remained solid and delivered a strong performance across its subsidiaries.

For 2020, the Group recorded Gross Ticket Sales of $76.3 Billion, a 4.3% growth over 2019. The increase in Gross Ticket Sales of $3.2 Billion, year over year, was driven mainly by Lottery ($2 Billion, 4.0%) and an increase of $1.2 billion or 44% in Sports Betting revenues. Profit After Taxation (Total Comprehensive Income) for the Group remained flat, coming in at $2.4 Billion, a marginal decrease of $52.7 million or 2.1% from 2019. This Profit After Tax, resulted from EBITDA of $4.6 Billion, an increase of 15.3% over 2019. This performance showed the resilience of the Group operations to the financial shock created by COVID-19.

For 2020, the Group paid over approximately $8.3 Billion in fees and taxes to the Government, representing an increase of 5% over 2019. The amount paid to the Government is 3.4 times more than the Group’s Profit After Tax, signifying the important contribution that the Group makes to the

Government’s coffers in general. We remain proud as a key contributor to the Jamaican economy.

The Lottery segment, which is the core of the Group’s operations, continues to perform well. We expect this trend to continue as SVL holds its market leader position.

Similarly, we saw significant year over year growth in the Sports Betting operations, with revenues climbing by 8.5%. Sports Betting has proven to be the fastest growing market segment in terms of revenue growth, and we expect that this trend will continue due to its target market appeal and the improved distribution channels. The take-up of the Mobile product has increased five fold.


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EBITDA & NET PROFIT

The Group’s performance was driven by deliberate actions aimed at improving revenue growth and cost containment. These initiatives included the following:

i. Continued focus on expanding the footprint for our lottery products throughout Jamaica, supported by marketing and promotional efforts.

ii. Export of the local horse racing product to North America, made possible by the implementation of a state-of-the-art tote system, which also improved our tracking and reporting capabilities. There was also continued efforts to improve the operational efficiencies at Supreme Ventures Racing and Entertainment Limited, SVREL.

iii. Strategic initiatives in Sports Betting one of the fastest growing gaming segments globally and locally, to capture a higher market share among younger millennials, resulting in greater focus on cost management and creating operational efficiencies internally. The Mobile platform user base increased exponentially during the year.

The Group’s Operating Expense Efficiency (excluding depreciation and impairment) ratio remained flat YoY at 5.6%. The stringent cost management practices have yielded positive results for the year.

OPEX EFFICIENCY RATIO

5.5% 5.6%5.5% 5.6%

4.6%

During the year, we incurred costs relating to the business acquisitions and infrastructural changes, both of which will set a platform for growth within the Group.

Our previous investments in our human resource capacity, marketing and business development have delivered significant results with respect to our positioning as the market leader.

Selling General & Administrative Expenses 4,952,476

Less: Depreciation & Amortization (726,294)

Add: Impairment Losses 22,057

Operating Expenses 4,248,240


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FIVE YEAR FINANCIAL PERFORMANCE

2020 F 2019 A 2018 A 2017 A 2016 A

Revenue - Non-fixed odd wagering games, horse racing and pin codes 22,846,440 23,289,501 19,484,179 17,755,425 11,489,076

Income from fixed odd wagering games, net of prizes 16,513,756 15,226,809 13,451,851 11,925,402 10,166,014

Total Gaming Income 39,360,196 38,516,310 32,936,030 29,680,827 21,655,090

Direct Costs (30,608,442) (30,614,036) (26,443,983) (24,074,214) (17,546,588)

Gross profit 8,751,754 7,902,274 6,492,047 5,606,613 4,108,502

Other Income 126,668 174,107 224,045 237,659 251,493

Selling, general and administrative expenses (4,952,476) (4,436,894) (3,844,128) (3,423,659) (2,709,768)

Net Impairment losses on financial assests (22,057) (41,426) - (318,107) 11,988

Operating Profit 3,903,889 3,598,061 2,871,964 2,102,506 1,662,215

Finance costs (269,872) (145,797) (56,026) (60,863) (323)

Revaluation gain investment property (34,946) 9,446 72,500 4,726

Profit before taxation 3,599,071 3,461,710 2,888,438 2,046,369 1,661,892

Taxation (1,178,124) (988,076) (790,030) (647,713) (483,424)

Net Profit, being Total Comprehensive Income for the Year

2,420,947 2,473,634 2,098,408 1,398,656 1,178,468

Net Profit, being Total Comprehensive Income for the Year is Attributable to

Stockholders of parent company 2,377,494 2,441,816 2,098,408 1,398,656 1,178,468

Non-controlling interest 43,453 31,818

2,420,947 2,473,634 2,098,408 1,398,656 1,178,468

Earnings per Stock (Cents) 90.15 cents 92.59 cents 79.57 cents 53.03 cents 44.69 cents

Our careful management of the business saw an increase in our cash balances of $2.7 Billion (including net loan proceeds), while maintaining an enviable dividend payment record and an acquisition of assets in Champion Gaming Limited. We continue to maintain a healthy Current ratio

at 1.97:1 (1.70:1 in 2019) and Return on Equity of 56.64% (66.06% in 2019). The Return on Assets fell to 15.54% (26.25% in 2019) as a result of the significant increase in the asset base during the year.


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Annual Report 2020

Total Assets increased by $6.2 billion to $15.6 billion. The significant increase in assets is attributable to the current year acquisition of the Champion Gaming Limited assets and the proceeds of the bonds issued in October 2020. Trade and Other Receivables balances decreased by $187 million or 11% to close at $1.5 billion. Of this amount, $678 million represents activities within the normal trade and are due to the increase in our Gross Revenues over prior year of $3.2 billion, or 4.3%. This resulted from continued focus specifically on receivables management, which reduced the number of days that cash is tied up in credit and to the ability to earn interest income or deploy additional value-added use to the cash.

Total Assets

Working capital increased by $1.8 billion or 78%. Cash and cash equivalents remained strong despite paying out dividends, servicing of long-term loans, and funding the operations and capital requirements of Guyana and SVREL (Caymanas Park). SVL also received cash proceeds from the corporate bond issued in October 2020 for the purpose of funding several acquisitions. There was no default on debts and obligations during the year and cash generated from operations were sufficient to meet all ongoing operational needs.

Prize Liabilities and Trade and other payables increased year over year, due to the increased activity in the operations. The current liabilities were covered by current assets at a healthy 197%, with most of the current assets being represented by cash balance. The strength of this position is reflected in a Quick Asset ratio of 1.87 times at the end of 2020 (1.65 times at the end of 2019).

Equity Attributable to Stockholders of the Parent

Total Stockholders’ equity increased by $1.9 billion or 46.9% to close the year at $6.0 billion. The equity attributable to stockholders of the company grew by $501 million or 14% to close at $4.2 billion. The return on equity for the Group decreased by 9.4% to close at 56.64%.

Long Term Liabilities increased by $3.3 billion or 154% and represents the approach of the company to fund targeted acquisitions using external funds.

DIVIDENDS & STOCKHOLDERS’ RETURNSThe total earning per share of 90.15 cents allowed shareholders to receive dividends of 80 cents for the year. Total dividends paid to stockholders during the year amounted to $1.9 billion, representing a dividend yield of 4.1%. The share price, impacted by the downward trends in the Equity market as a result of COVID-19, closed at $17.61(2019: $25.50) representing a falloff from the previous 5 years of growth with price earnings of $19.53 (2019: $27.54).

Share Price Movement


Annual Report 2020

2020

SEGMENT RESULTSLOTTERYThe Lottery segment continued to be the greatest contributor to Group revenues, with Gross Ticket sales accounting for 69.2% of overall Gross Sales, compared to 69.4% in 2019. The segment recorded an increase of 4%, which was thwarted by the impact of COVID-19 and the resulting curtailment of operations in Q2.

In July 2020, our new game “Hot Pick” was launched, giving gamers an exciting new addition to our portfolio. In December 2020, the Mega ball feature was added to boost winnings for persons choosing this game option. In Q4, 2020, the company also relaunched the SV Games Mobile app which offered a smooth and efficient sign up and verification process allowing account holders the ease and convenience of purchasing Cash Pot and Money Time on the go. It is expected to have all gaming options available on the platform in the upcoming year.

The Group continued its distribution network expansion and promotional activities aimed at bringing greater access and awareness to the Lottery games. The attractiveness of the promotions, plus easier access contributed to the growth in Lottery, with most games recording double digit increases during the year.

Based on the performance of the Lottery segment, there is no doubt that it remains of significant value and a very attractive entertainment offering to the public. The segment continues to contribute the lion’s share of the overall results, showing a segment result of $4.2 billion (2019: $3.4 billion), whilst earning gross revenues of approximately $52.8 billion.

SPORTS BETTINGThe segment recorded results of $338.5 million, an increase of $420 million over prior year.

This performance far exceeds expectations during a pandemic and in a non-World Cup year. The product has continued to show greater popularity among gamers seeking greater skills based and more engaging product offerings. As this market segment’s average income levels increase, this becomes a much more attractive market to be in and remains an important focus for the Group.

The growth rates have showed the resilience of the operations and we continue to build further capacity and drive the momentum for continuous growth.

PIN CODESRevenues from the PIN Codes segment represent sale of phone credit from telecommunications providers. We recorded an increase of 2.4% over 2019 to achieve revenues of $11.6 billion. With the onset of COVID-19 and more persons being home, there was an obvious increase in demand for data and reduced talk time as persons opted to use Over The Top (OTT) and free wifi to make calls. The segment produced a positive segment result of $256.6 Million ($132.8 Million in 2019), as a result of the increased activity and incentives received from the distributors during the year.

UNALLOCATED‘Unallocated’ refers to all revenues and costs not tied directly to a segment. It includes net rental income from investment properties, income and expenses associated with sub-leased properties.

STRATEGIC OUTLOOKThe Supreme Ventures Group delivered a strong performance in 2020; a year of continued and dynamic growth, strategic priorities and new directions. The company’s core purpose “making winners every day” was achieved through historically high pay-outs to our customers, increased investment in the social welfare of the communities we serve through our donations, historically high contributions to the Government through taxes and fees, and the growth of countless small businesses who make their living by being part of our retail network. The impact of our own growth maximizes the returns for all our stakeholders, and SV Group is committed to ensuring the continued delivery of double digit growth each year.

For 2020, the Group maintained the three main strategic themes in accordance with our 2018 – 2020 strategic plan:

� Execution Excellence

� Building Strong Relationships

� Market Dominance


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These themes governed and guided our goals and objectives within the following main strategic initiatives:

1. Strengthening the Group’s institutional capacity,

innovative and competitive capabilities to sustain

or improve our competitive advantage in all market

segments namely

a. Driving digital optimization and enhanced technological

platforms

b. Establishing and preparing the Group to enter the world

of online, interactive gaming

2. Strengthening and leveraging the SV Group brand

through effective corporate social responsibility (CSR) by

a. Maximizing the presence of the Group’s Foundation to

increase our social impact in the country

b. Strengthening the Group’s Brand Architecture to

maximize its impact and appeal

3. Achieving profitability in the non-profitable segments through product improvement and content delivery while

ensuring mobile betting channel development in each

segment.

4. Preparing the Group for entering new markets by

streamlining products, delivery channels and core

infrastructure

a. Infrastructure through continued investment in

leadership training; governance and risk management

focus; business diversification and new product/channel development

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RISKMANAGEMENT

RISK MANAGEMENT

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Our ApproachWe consider risk as anything that could significantly affect the achievement of our business objectives. Therefore, the Group is exposed to many different types of risks through the various activities performed in fulfilment of its objectives. We classify our business objectives into four main areas:

1. Strategic Objectives – high-level organizational goals,

aligned with the Group’s vision and mission

2. Operating Objectives – internal standards of efficiency and effectiveness

3. Financial Reporting Objectives – internal and external

reporting requirements

4. Compliance Objectives – adherence to statutory and

regulatory requirements

Our risk management framework is geared towards effective management of the risks related to the above objectives. The Group takes an enterprise-wide approach to the identification, assessment, treatment and communication of risks. The framework is developed based on the nature and extent of the Group’s activities and takes authoritative reference and/or guidance from the following sources:

�Companies Act, 2004 �Jamaica Stock Exchange rules and regulations �Other local statutory and regulatory requirements �Sarbanes Oxley Act (particularly, sections 302 and

404) �COSO Framework �ISO 31000:2009

Our Risk Management StructureOne of the main objectives of our risk management framework is to enhance our confidence and risk intelligence in seeking to maximize stakeholder returns while safeguarding existing assets. The framework is administered through its different components, which are:

�Board of Directors including its Audit, Risk and Compliance Committee

�Senior Management & Business Units �Risk Management function

The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework. One of the Board’s critical responsibilities is to set the Group’s risk appetite, which includes managing the risks affecting the Group’s strategic objectives. The Board’s risk management mandate is carried out primarily through

its Audit, Risk and Compliance Committee (ARCC).

The ARCC Committee has oversight for the management of risks relating to the Group’s financial reporting and internal control objectives. This includes monitoring the systems for ensuring the integrity of the financial statements, reviewing the effectiveness of the systems of internal control, overseeing the risk management program as well as setting and monitoring risk limits and controls. Risk limits and controls are integral to the risk management process, as they characterize the Board’s risk tolerance as well as that of the regulators.

Senior management and the Group’s business units support the entity’s risk management framework, promote compliance with its risk appetite, and manage risks within their spheres of responsibility based on risk limits set by the ARCC. Business units are responsible for the day-to-day identification and response to risk exposures within their limits and the prompt communication of issues to senior management. The Group’s business units are intimate with the changing nature of risks facing the business and are often the first point of engagement, thereby being best able to act on our behalf in managing and mitigating those risks. The Group’s Regulatory Compliance function provides specific oversight and management of the Group’s adherence to regulatory requirements, including compliance with provisions of our trade licences, anti-money laundering requirements, reporting to the competent authority and overall effective engagement of regulatory bodies. Ongoing risk management support and oversight is provided by the finance function. One of the critical responsibilities of the finance function is to establish and maintain effective systems for promoting risk intelligence and proper risk communication across the Group.

The scope and direction of all internal audit work is set and reviewed by the ARCC, which is carried out by our internal auditors. A key responsibility of our Internal Audit function is to provide objective assurance to the Board (through ARCC) on the effectiveness of the Group’s risk management activities, to verify that key business risks are being managed appropriately and that the system of internal control is operating effectively.

Therefore, internal audit plays a key role in evaluating the Group’s risk management processes and advocating for their continued improvement. However, to preserve its organizational independence and objectivity, the internal

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audit function does not take any direct responsibility for making risk management decisions or executing the risk management processes. Other key elements of the Group’s operational and strategic risk management framework include:

�Core Values �Business Continuity Planning, including succession

planning and emergency preparedness & recovery plan

�Systems Security – Information and Physical

Core ValuesOur core values guide our activities and actions and are at the heart of the Group’s risk management policy.The Group’s core values are:

�A Winning Attitude �Passion & Fun �Continuously Innovate �Holding Ourselves Accountable �Be Straightforward

Integral to our success, sustainability and vision, is operating with integrity and using world-class business practices.

Business Continuity PlanningThe Group’s business continuity framework includes succession planning, emergency preparedness and recovery planning, insurance risk management, business impact and scenario analyses. Our approach to business continuity planning (BCP) is to identify risks that can cause damage to the business and implement steps to mitigate these risks.

Emergency Preparedness & Recovery PlanningIn practical terms, a disaster is anything that can cause a disruption in the normal operations of a business. The Group’s emergency preparedness tools range from HR disaster and recovery plan, information technology security and redundancy plans and physical security systems. For business continuity, consideration is given to all critical resources required to keep our business going. These considerations include the health and safety of our people, the integrity and stability of our product distribution systems, the security of our facilities and physical environment, and the reliability and safety of our information systems.

Succession PlanningThe Group continuously develops its talent pool, building levels of feeder-groups across the entire leadership progression. Our succession planning process includes the following key elements:

1. Identification of key roles for succession planning2. Definition of competencies and personnel profile required to perform effectively in these roles

3. Identify pools of talent with potential to perform

effectively in these roles

4. Develop pools of talented employees for progression

into these roles – (experience and skill sets)

Our succession planning not only incorporates planned availability, as people get promoted or retire, but it also includes unplanned vacancies due to resignations, terminations or even death.

Security Controls – Information & Physical SystemsThe Group classifies its general and information security controls in different ways to increase the resilience and agility of our systems. Controls are classified and assessed by the timing of when they are activated relative to the occurrence of a security incident:

a. before the event (preventive)b. during the event (detective)c. after the event (corrective)

The Group also classifies and assesses its security controls by their nature:

a. Physical controls, i.e. locks, doors, physical storage of critical resources.b. Procedural controls, i.e. incident response protocols, security awareness and training, management review systems.c. Technical controls, i.e. user authentication (login) and logical access controls, anti-virus software, firewalls.d. Legal, Regulatory and Compliance controls i.e. data confidentiality, privacy laws, human rights.

The effectiveness of the Group’s information security systems is a critical part of the annual internal audit programme. Recommendations are implemented on a timely basis and follow-up reviews are done by the internal auditors to confirm that changes are effected in accordance

RISK MANAGEMENT

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Annual Report 2020

with the objectives. Information systems security checks include:

�User access controls �Password controls �Data back-up �Incident response �System and information integrity

The Group also places strong emphasis on physical security, incorporating the use of several layers of interlocking systems which include onsite and remote surveillance systems, armed and unarmed security guards, protective barriers, access control protocols and strategic collaborations with the armed forces. Our physical security systems are generally designed to:

1. Deter potential intruders, e.g. warning signs, restricted

access points, perimeter markings

2. Detect intrusions and monitor intruders e.g. alarms,

CCTV systems, and

3. Trigger appropriate incident responses (e.g. by Group

security personnel, guards and police.)

The Role of Policies & ProceduresPolicies define and express the Group’s overall risk appetite and are developed based on the risk culture of our business units, and subject to the relevant regulatory requirements. Policies set the boundaries on the types of risks the Group is prepared to assume and specify the manner in which the Group assumes these risks. Appropriate policies and procedures are established throughout the organization and are approved by the Board of Directors.

Management of Business RisksThe main risks faced by the Supreme Ventures Group are identified as: financial risk (including credit risk, market risk, and liquidity risk), operational risk, regulatory and legal risk, and reputational risk. These are described below.

Operational RiskOperational risk is the risk of loss from inadequate or failed internal processes, people and systems or from external events. Operational risk is embedded in all our activities and failure to manage it can result in direct or indirect financial loss, business disruption, regulatory censure, theft and fraud, workplace injury, penalties and corporate image impact. In managing this risk, we maintain a formal enterprise-wide operational risk management framework that emphasizes

a strong risk management and internal control culture throughout the Group.

Regulatory and Legal RiskRegulatory risk is the risk of not complying with the regulatory and comparable requirements. Legal risk is the risk of non-compliance with legal requirements, including the effectiveness of preventing and handling litigations. The Betting, Gaming and Lotteries industries are among the most closely regulated industries, locally and internationally, and the management of our business is expected to meet high standards in all business dealings and transactions. A failure to meet regulatory and legal requirements poses a risk of censure and penalty and may also represent a reputational risk. Business units are responsible for managing day-to-day regulatory and legal risk, while the Compliance and Finance Units along with our external advisory teams assist them by providing advice and oversight.

Prime Sports (Jamaica) Limited (PSJL), the Group’s principal operating subsidiary, is licensed by the Betting, Gaming and Lotteries Commission and complies with strict regulatory requirements, with specific regards to its lottery licence, as shown below.

Minimum Reserve

Requirement2020 2019

Requirement Met

Liquidity Ratio (cash to current liabilities)

75% 152% 112%

Dedicated funding for Prizes and gaming taxes

100% 151% 163%

Reputational RiskReputational risk is the potential that negative publicity, whether true or false regarding the institution’s business practices, action or inaction will or may cause a decline in the institution’s value, liquidity or customer base. All risks can have an impact on the company’s reputation, which in turn can impact the brands, earnings and capital. The management of reputational risk is overseen by the Board of Directors and the senior management team.

Management of Financial RisksThe Group has exposure to the following risks from its use of financial instruments: credit risk, liquidity risk and market risk including interest rate risk, currency risk and price risk. Information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and processes for measuring and managing risk is detailed.

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The Group’s activities expose it to a variety of financial risks and those activities involve the analysis, evaluation, acceptance and management of some degree of risk or combination of risks. Taking risk is core to the business and the operational risks are an inevitable consequence of being in business. The Group’s aim is therefore to achieve an appropriate balance between risk and return and minimise potential adverse effects on the Group’s financial performance.

The Group’s financial risk management policies are designed to identify and analyse these risks, to set appropriate risk limits and controls, and to monitor the risks and adherence to limits by means of reliable and up-to-date information systems. The Group regularly reviews its risk management policies and systems to reflect changes in markets, products and emerging best practices.

An enterprise-wide risk management approach is adopted which involves employees at all levels. This framework is supported by sound risk management practices which include the establishment of enterprise-wide policies, procedures and limits, monitoring and measurement of exposure against established limits, ongoing realignment of business strategies and activities and the reporting of significant exposures to senior management and the Board of Directors.

The ARCC has oversight for the integrity of the financial statements and reviews the adequacy and effectiveness of internal controls and risk management procedures. The Committee also ensures compliance with internal, legal and regulatory policies, identifying, monitoring, measuring and reporting significant risk exposure and making recommendations in relation to management of risk. This Committee also oversees the management of financial instrument risk which includes credit, market and liquidity risks.

Credit RiskThe Group is exposed to credit risk, which is the risk that its customers or counterparties may default and could cause a financial loss for the Group by failure to discharge their contractual obligations. This arises principally from cash and cash equivalents, trade receivables, and long-term receivables. Credit risk is an important risk for the Group’s business and management.

The Group controls credit exposure by maintaining a strict collection process. Lottery sale agents are required to remit cash collections weekly which are monitored on a weekly basis by identification and transfer to designated bank accounts. A process of suppression of agent activity is triggered for non-compliance.

The Group’s credit risk is managed through a framework, with particular emphasis on the following items:

Cash and cash equivalents - The Group maintains cash resources with reputable financial institutions. The credit risk is considered to be low.

Trade and long-term receivables - The Group establishes policies and procedures which govern standards for granting credit and the process of continuous monitoring and measurement in relation to credit quality through industry delinquency and debt recovery management. Trade receivables are monitored and managed by the Finance Department in collaboration with the Business Development and Customer Support teams, which has responsibility for, amongst other things, liaising with the sales agents.

Ageing 2020 2019

Up to 30 days 97.09% 98.21%

31 – 60 days 2.27% 1.54%

61 – 90 days 0.64% 0.26%

Over 90 days 0.00% 0.00%

100.00% 100.00%

Market RiskMarket risk arises from changes in market prices and rates (including interest rates and foreign exchange rates), the correlations among them and their levels of volatility. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return on risk.

The Board and management have responsibility for the monitoring of market risk exposures by way of measurements through sensitivity analysis. Market information and additional analysis are also used to manage risk exposure and mitigate the limitation of sensitivity analysis.

2020 USD‘000 2019 USD‘000

Assets 21,897 3,635

Liabilities (310) (616)

Net exposure 21,587 3,020

RISK MANAGEMENT

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Annual Report 2020

There has been no material change to the Group’s exposure to market risks or the manner in which it manages and measures risk.

Liquidity RiskLiquidity risk is the risk that the Group is unable to meet its financial obligations in a timely manner at reasonable prices. Financial obligations include prize liabilities, other trade payables, long-term loans and leases. Effective liquidity risk management is essential in order to maintain the confidence of our customers and counterparties, and improves our ability to continue to generate revenue, even under adverse conditions. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities. The Board of Directors approves the Group’s liquidity and funding management policies and establishes risk limits.

The Finance function has direct responsibility for the management of the day-to-day liquidity. The ARCC provides added oversight over the Group’s liquidity risk exposure within the policy and limits frameworks established by the Board.

The management of liquidity risk is carried out through various methods which include:

1. Day-to-day funding, managed by monitoring future cash

flows to ensure that requirements can be met;2. Maintaining a portfolio of highly marketable assets

that can easily be liquidated as protection against any

unforeseen interruption to cash flow within the local and international markets;

3. Monitoring statement of financial position liquidity ratios against internal and regulatory requirements; and

4. Maintenance of liquidity and funding contingency

plans.

CORPORATEGOVERNANCEREPORT

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CORPORATE GOVERNANCE

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Annual Report 2020

INTRODUCTIONThe Board of Directors of Supreme Ventures Limited (SVL) remains committed to maintaining and abiding by good corporate governance principles as we recognize that a strong governance framework is critical to the Group’s longterm success, sustainability and the engendering of trust and confidence in our shareholders and many stakeholders.

The Board has established a corporate governance framework consisting of appropriate policies, practices and processes to inform and guide its leadership and strategic direction of the Group. A proactive approach is adopted by the Board in enhancing the framework to ensure that governance standards continue to be relevant, comply with laws and regulations and respond to any changes in our business environment and operating structure.

ROLE OF THE BOARDThe role of the Board is to establish the Group’s strategic plan, and to provide direction and oversight throughout the year to Management in its execution and achievement of the agreed company goals and objectives. As part of our governance framework, the Board considers in the pursuit of our strategic objectives, the interests and any emerging areas affecting our stakeholders including shareholders, employees, customers and the wider community.

In executing its collective responsibility, our Directors are expected to exercise sound, independent business

judgement in the interests of the Company and to offer fresh perspectives informed by their respective skills and experience while balancing stakeholders’ interests. As the focal point for governance, the Board actively engages with the Management of the Company, and our valued stakeholders, to ensure that we are operating within an environment where challenges and risks are understood, and opportunities for growth and continued success are maximized. We believe that this involved approach is vital to preserving shareholder value and engendering confidence in the Group.

MAIN ACTIVITIES OF THE BOARD FOR THE YEARFor the year under review, the Board deliberated on several key matters in keeping with its core mandate. These include:

�Execution of the Group’s strategy and long-term outlook

�Financial and operational performance against approved plans

�Group expansion �External Financing �Review and approval of group-wide policies �Optimization of Group Structure �Payment of dividends �Integrity of internal controls and risk management �Regulatory and Compliance matters �Financial reporting

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Subsidiary GovernanceThe Board adopts a comprehensive approach to subsidiary governance with the implementation of a uniformed governance framework applicable to the Group of companies.

Within this framework, all operating subsidiaries are expected to implement Group policies and are governed by active Boards of Directors which meet regularly to oversee subsidiary performance against established targets and initiatives.

During the year, the Company established the following Group Policies to guide its subsidiaries:

�Group Delegated Authority Policy which sets out the matters reserved for the Company’s Board and the financial and non-financial authorities delegated across the Group

�Internal Dividend Policy which guides the declaration of dividends by subsidiaries

�Compliance Policy which forms part of the Group’s enterprise-wide approach to regulatory compliance

BOARD COMPOSITION

The size and composition of the Board are determined based on the Company’s Articles of Incorporation and the need for Directors to collectively bring an appropriate balance of expertise, professionalism, skills, independence and diversity to the Board.

The Company’s Articles permit a maximum of fifteen Directors to be appointed to the Board. As at December 31, 2020, the Board’s membership consisted of ten Directors. The Board has an optimal balance of Non-executive and executive Directors on the Board with nine Non-executive Directors and one Executive Director, being the Executive Chairman Mr. Gary Peart. A Non-executive Director has no executive responsibilities in the Company while an Executive Director is involved in the day-to-day management of the Company’s affairs.

The Non-executive Independent Directors on the Board consist of half of the membership which is consistent with governance best practices.

50% Independent Non-executive ( 5 persons)

40% Non-executive (4 persons)

10% Executive (1 person)

Board ChairmanThe Board appointed Gary Peart to serve as an Executive Chairman effective March 23, 2020. Prior to this appointment, he served as Chairman of the Board. As Executive Chairman, he is primarily responsible for leading the Board, and in ensuring that its operations allow for the effective execution of its responsibilities. He also has executive duties in the day-to-day management of the Company’s affairs. The Board believes that although the Executive Chairman is not an independent Director according to our criteria, there is a suitable mix of Non-executive (including independent members) and executive Directors such that there is an appropriate level of challenge and independence brought to the Board’s decision-making.

Lead Independent DirectorIn keeping with the PSOJ’s Corporate Governance Code which recommends that the Board appoint a lead independent Director where the Chairman is not independent, the Board appointed Mr. Duncan Stewart during the year to serve in this role. As lead independent Director, he is responsible to be a sounding board to the Executive Chairman, and to be an intermediary with other Directors where necessary.

Independence The Board has adopted best practices in establishing the criteria for assessing Directors’ independence which is generally consistent with the PSOJ’s Corporate Governance Code. The Board is responsible to identify the Non-executive Directors which it considers to be independent by considering a number of factors which are relevant in ascertaining whether there are any relationships or circumstances which are likely to affect or could appear to affect the director’s judgment. The factors set out in our Corporate Governance Code are whether the Director:

�Is or has been an employee or Executive of the Company and its subsidiaries within the last three (3) years;

�Receives or has received during the twelve (12) months prior to his appointment any compensation from the Company other than Board membership fees approved by the Shareholders of the Company at its Annual General Meeting;

�Has or had within the past year a material business relationship with the Company or its subsidiaries, particularly as a significant client, supplier or consultant or as a partner, shareholder, Director or Executive of an entity that has such a relationship with the Company or its subsidiaries;


Gary Peart * * * * * * *

Duncan Stewart * * * * *

W.D. McConnell * * * * *

Brent Sankar * * * * * * * *

Christopher Berry * * * * * * * *

Damian Chin-You * * *

Eroleen Anderson * *

Lance Hylton * * * * *

Nicholas Mouttet * * * * * * *

Peter McConnell * *

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Annual Report 2020

�Has been the external auditor of the Company or its subsidiaries or has been a partner or employee of a firm that provides external auditing services to the Company or its subsidiaries within the last three (3) years;

�Controls directly or indirectly through connected/related parties, more than 5% of the voting rights of the Company or represents a significant shareholder of the Company or its subsidiaries. For the duration of their term, independent Directors should not hold more than 5% of the share capital of the Company, whether directly or indirectly;

� Has a second degree kinship with or is the spouse of a non-independent Director, Senior Executive, adviser or significant shareholder of the Company or its subsidiaries.

The Board has identified the following Non-executive Directors as independent:-

�Duncan Stewart �Eroleen Anderson �Lance Hylton �W. David McConnell �Peter McConnell

Board Expertise Our Directors are drawn from diverse backgrounds and industries thereby ensuring that the Board’s composition is aligned with the Company’s long-term strategy. Directors are recognized as knowledgeable leaders in their respective fields. In their roles, they are expected to make positive contributions to the Board to support effective decision making and challenge.


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Changes in DirectorshipsThe appointment and retirement of our Directors are governed by the Company’s Articles of Incorporation, best practices as outlined in our Corporate Governance Code, regulatory considerations and the evolving needs of the business.

During the year, there were changes to the composition of the Board by virtue of one appointment and four departures. Ms. Eroleen Anderson was elected as a Director by the Board in February 2020 and elected by the shareholders at the Company’s 2020 Annual General Meeting. Persons who departed were Mrs. Ann Dawn Young Sang (resigned effective March 20, 2020), Mr. Ian Kent Levy, former Deputy Chairman (retired effective July 11, 2020 on reaching age limit), Mr. Ian Moore (resigned effective July 30, 2020 in completing 7-year tenure) and Mr. Steven Hudson (not re-elected at 2020 AGM).

Term LimitsThe Board utilizes term limits as a way of infusing fresh perspectives and refreshing its membership. Under the Company’s Board Charter, Non-executive Independent Directors can serve on the Board for a period of seven years, after which the Director should resign or not offer themselves up for re-election. The Charter also outlines the retirement policy of the Board for Directors who attain the age of seventy-five (75) years.

BOARD EVALUATION

As part of our continuing efforts to improve the Board’s efficiency and value, our annual evaluation was conducted to assess the operations and performance of the Board and its Committees, and to allow Directors to self-assess their performance.

The evaluation was facilitated internally by the Company Secretary and administered in the form of an electronic survey in January 2020 which assessed the following areas:

�Governance �Information and meetings �Structure and dynamics �Board and committee operations �Relationship with management and performance �Internal Controls, Risk Management and Financial

reporting, and �Individual member performance

The results of the survey showed that Directors were generally satisfied with the performance of the Board. Areas for greater focus and attention were identified and presented to the Board for discussion along with actions to be taken for improvements in those areas.

INDUCTION AND CONTINUING DEVELOPMENT

Newly appointed Directors to the Board are required to participate in an induction programme aimed at deepening their understanding of the business, structure, strategic plans, and material risks of the Company, along with their rights, duties and responsibilities, the roles of Board Committees, and responsibilities of Senior Executives. This process is guided by an established Induction Checklist.

It is the responsibility of the Board to ensure that there is appropriate training of Directors each year to enable them to continually update their skills and knowledge necessary to fulfill their role on the Board and Board Committees. Training and development of Directors may take the form of attendance at workshops or conferences, presentations at Board meetings or sharing of publications. Training may be provided on any area considered to be relevant or useful for Directors including corporate governance, director duties, board responsibilities, the regulatory landscape affecting the Company and industry developments.


ATTENDANCE SCHEDULE (JANUARY 2020 - DECEMBER 2020)

Board

Audit, Risk &

Compliance

Committee

Human Resources

& Compensation

Committee

Governance &

Nomination

Committee

Information

Technology

Committee

Annual General

Meeting

Number of Meetings 12 11 5 3 2 1

GARY PEART 11/12 - - 1/1

IAN LEVY 8/8 5/5 - 3/3 -

ANN DAWN YOUNG-SANG 1/1 - - - -

W. DAVID MCCONNELL 12/12 11/11 - - -

BRENT SANKAR 12/12 11/11 - 3/3 -

CHRISTOPHER BERRY 11/12 - 5/5 3/3 2/2

DAMIAN CHIN-YOU 12/12 - - - 2/2

DUNCAN STEWART 12/12 10/11 5/5 - -

EROLEEN ANDERSON 8/11 - - - -

IAN MOORE 9/10 - - - 1/1

LANCE HYLTON 11/12 - 5/5 -

NICHOLAS MOUTTET 12/12 - 5/5 - 2/2

PETER MCCONNELL 12/12 11/11 - - -

STEVEN HUDSON 10/10 - - 3/3 -

1Physical attendance at our AGM was limited given the COVID-19 pandemic. Directors were required to join via our live-stream access.

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Annual Report 2020

ATTENDANCE AT BOARD AND COMMITTEE MEETINGSFOR THE YEARDuring the financial year, the Board of Directors surpassed its minimum meeting requirements of four per year and convened twelve meetings to carry out its mandate, one of which was a dedicated Strategic Planning Session with Senior Management.

The attendance record of our Directors is presented below.

DIRECTORS’ COMPENSATIONThe HR & Compensation Committee is responsible for establishing the compensation structure for Non-executive Directors across the Group taking into consideration a number of factors:

�Commitment and expected workload of Directors �Size and business of company; �Fairness and competitiveness to attract skilled and experienced Directors

There are no share options or profit-sharing elements applicable to Non-executive Directors. Executives who serve as Directors within the Group do not receive directors’ remuneration.

Directors’ compensation for the year under review is to be approved by the shareholders of the Company at the next Annual General Meeting.

Directors’ fees paid to SVL Directors J $81,483,000

Total Directors’ fees paid across Group J $113,171,000


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COMMITTEES OF THE BOARDTo assist in the effective discharge of its responsibilities of oversight and governance, the Board has established four standing Committees. Each Committee has delegated responsibilities over specific areas which are critical to the continued success and good governance of the Group. The authority, functions and responsibilities of each Committee are clearly outlined in its own Committee Charter which are available on the Company’s website at www.supremeventures.com.

AUDIT, RISK & COMPLIANCECOMMITTEE REPORT

Composition:W. David McConnell Committee Chairman / Non-executive

Independent Director

Peter McConnell Non-executive Independent Director

Duncan Stewart Non-executive Independent Director

Brent Sankar Non-executive Director

In keeping with best standards, the Committee comprises four Non-executive Directors, three of whom are independent including the Committee Chairman. The quorum for all meetings of this Committee is three, two of whom must be independent Non-executive Directors.

Purpose:The Committee plays an integral role in assisting the Board in its oversight of the Group’s internal systems of control; financial processes and reporting; risk management systems, external audit process and compliance with relevant laws and regulations.

During the year, the Committee convened 11 meetings, which exceeded the minimum requirement of four.

Functions: �Monitoring the integrity of the financial reporting of

the Group in keeping with accounting standards; �Reviewing findings of the external auditors and in

particular initiating discussions with Management and the auditors as necessary on issues which may have arisen during the audit, including accounting and auditing judgements and levels of errors identified;

�Monitoring and reviewing the adequacy and effectiveness of established systems of internal controls and risk management which involves examining steps taken by the Board and Executive

Management to address areas of concern and to control or mitigate any risk exposures;

�Ensuring that there is compliance with relevant laws and regulations;

�Monitoring and reviewing the effectiveness, objectivity and independence of the external auditor and the internal audit function;

�Considering and making recommendations where necessary to the Board with respect to matters for approval at General Meetings including the appointment, re-appointment and removal of the external auditors;

�Overseeing the selection process for new auditors and investigating any issues which may affect the independence of the auditors or events leading to any resignation;

�Approving the annual internal audit plan and ensuring that the function operates with the appropriate levels of resources, independence and autonomy and;

�Reviewing significant related party transactions;

Summary of the Committee’s activities for FY 2020:

Financial Reporting The Committee reviewed and recommended the quarterly unaudited financial statements and the annual audited financial statements to the Board for approval and disclosure. In doing so, the Committee satisfied itself that financial results were reported fairly and in accordance with IFRS and other standards. The Committee also reviewed accompanying reports to stockholders. Proposed dividend payments to shareholders were reviewed by the Committee to ensure conformity with the Company’s Dividend Policy.

Enterprise Risk Management Specific attention was given to the Committee’s mandate to oversee and guide the continued build-out and strengthening of the Group’s Enterprise Risk Management framework. To aid in the implementation of ERM and to improve the maturity of the framework, the Committee approved the engagement of PricewaterhouseCoopers (PwC) to provide consultancy services. The scope and fees of the consultancy services were reviewed and approved by the Committee along with expected key deliverables and outcomes. The implementation of the framework will continue into the subsequent financial year.


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Annual Report 2020

Internal Control The Committee led the process to identify and recruit an in-house Internal Auditor who was onboarded during the financial year. The internal audit function had previously been outsourced and performed by KPMG. The proposed Internal Audit Plan and resource allocation for the FY2021 were considered and accepted by the Committee.

Review of Charter & PoliciesThe Committee reviewed and recommended changes to its Charter to ensure that it remained current. In addition, the Committee reviewed and recommended group policies to the Board for approval, namely, changes to the Group Delegated Authority Policy and the Internal Dividend Policy applicable to subsidiaries.

Other ActivitiesThere was reporting to the Committee on a quarterly basis on regulatory compliance matters including areas affecting AML/CFT compliance.

All significant related party transactions were presented to the Committee for their review and recommendations made to the Board for final approval. In addition, where requested by Management, the Committee reviewed proposals regarding Group expansion via acquisition and made recommendations to the Board for approval.

During the year, the Committee also reviewed and recommended proposals to obtain external financing.

EXTERNAL AUDITORAt the last Annual General Meeting of the Company, the shareholders approved the re-appointment of the external auditors PwC to continue in office. The proposed scope and fees for PwC to carry out the audit of the Group’s year-end financial statements were reviewed and approved by the Committee.

As part of the Committee’s oversight of the external audit process, the lead Audit partner and PwC team met with the Committee during the year without Management present to discuss the audit process and any issues that may have arisen. The Committee reviewed and discussed PwC’s internal control memorandum with Management and the actions required to address their recommendations.

The Committee reviewed the work undertaken by the external auditor and each year assesses its independence, objectivity and performance. In doing so, it takes into account relevant professional and regulatory requirements and the relationship with the auditor as a whole, including the provision of any non-audit services. The Committee monitors the auditor’s compliance with relevant regulatory, ethical and professional guidance on the rotation of partners, as well as assessing annually its qualifications, expertise, resources and the effectiveness of the audit process. As part of our review exercise, we also routinely tender for audit services to allow for natural rotation of our auditors.

The Committee recommends the re-appointment of PwC to continue as the external auditor for the subsequent financial year.

W. David McConnell

ChairmanAudit, Risk and Compliance Committee


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HUMAN RESOURCES AND COMPENSATIONCOMMITTEE REPORT

Composition:

Christopher Berry Committee Chairman

Lance Hylton Non-executive Independent Director

Duncan Stewart Non-executive Independent Director

Nicholas Mouttet Non-executive Director

In keeping with best standards, the Committee comprises four Non-executive Directors, two of whom are independent. The quorum for all meetings of this Committee is majority and such majority shall include a Non-executive Independent Director.

Purpose:

The Committee assists the Board in its oversight of the effectiveness and integrity of the administration of compensation policies and programmes for Directors, Executives and general staff. The Committee monitors adherence to established principles and policies within the Group, specifically as it concerns fair and competitive compensation to Directors and Executives, and general employee welfare and benefit plans.

The Committee surpassed its minimum meeting requirement of three meetings per year and convened five times to carry out its work.


�Reviewed the job descriptions, employment agreements and compensation structure for Executives consequent on changes to the Group’s organizational structure

�Reviewed recommendations for a performance incentive payment

�Reviewed company structures within the Group �Recommended the alignment of salaries for new

subsidiary with established pay scales �Reviewed HR policies to ensure business continuity

in light of COVID-19, namely Work From Home Policy, Flexible Working Schedule Policy and COVID-19 Response Protocol

�Reviewed recommendations for promotion and hiring of Executives

�Reviewed recommendation to undertake job analysis and compensation review

�Considered proposals to establish a training unit

GOVERNANCE AND NOMINATION COMMITTEE REPORT

Composition:

Christopher Berry Committee Chairman

Eroleen Anderson Non-executive Independent Director

Brent Sankar Non-executive Director

The Committee is comprised of three Non-executive Directors which includes one Non-executive Independent Director. The Committee Chairman is not an independent Director according to our criteria, however, the Board believes that the composition of all Non-executive members enables it to carry out its responsibilities effectively.

Purpose:

The Committee assists the Board in ensuring that its composition, structure, policies and processes are suitable to meet its needs, legal and regulatory requirements and also gives oversight of the governance framework to ensure the adoption of best practices and standards.

During the year, the Committee convened three meetings.

Summary of the Committee’s activities for the FY 2020:

�Reviewed changes to the Company’s Code of Corporate Governance and Board Charter and recommended the amalgamation of both policies into the Corporate Governance Policy

�Assessed candidates for appointment and made recommendations to the Board on Director nominations

�Reviewed and recommended the format for the 2020 AGM to the Board

�Reviewed the policy approach to treat with non-compete applicable to Directors and Senior Management


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Annual Report 2020

INFORMATION TECHNOLOGYCOMMITTEE REPORT

Composition:

Damian Chin-You Committee Chairman

Christopher Berry Non-executive Director

Nicholas Mouttet Non-executive Director

The Committee comprises three Non-executive Directors.

Purpose:

The Information Technology Committee oversees the quality and effectiveness of the information technology infrastructure by ensuring that the Company’s technology programs support the Company’s business objectives and strategies, risks and disaster recovery capabilities are adequately managed and that systems and policies are in place to provide for appropriate levels of security, privacy and control.

The Committee convened two meetings for the year.


�Reviewed proposals for improved digitisation and back-office cloud-based solution

�Reviewed recommendations for the infrastructure for work from home

�Reviewed recommendations for the development and improvement of gaming platforms

�Approved the upgrade of the Accounting, Payroll, CRM, HR and Helpdesk Software (Office 365)

�Reviewed and approved a new HR management system for implementation

�Reviewed and approved the implementation of accounting software

�Considered proposals for a document management system

OUR STAKEHOLDERS

ShareholdersAs the stewards of shareholder value, the Board is constantly seeking to engage deeper with the owners of the business and to ensure that there is timely dissemination of information which is of interest to our shareholders. The Directors encourage open dialogue with our shareholders to garner greater insight and understanding of their views on the performance and direction of the Group and to foster a relationship of trust and transparency.

The Board is constantly evaluating channels of engagement and uses its Annual General Meeting as its primary opportunity to communicate with our shareholders to understand their views on the performance and long-term strategy of the Group.

Annual General MeetingGiven the onset of COVID-19 and to preserve the health, safety and well-being of all involved, the Company hosted its 2020 Annual General Meeting in a modified format with a physical meeting and only a limited number of shareholders present coupled with online streaming via the Company’s website which was accessible by all shareholders. The AGM was chaired by our Executive Chairman who attended in person, along with Senior Executives. All other Directors were able to join the AGM via live-stream due to the restrictions on gathering.

With this modified format, the Company gave shareholders the opportunity to submit their AGM questions via a dedicated email address. The responses to questions received via this medium were provided during the AGM proceedings. Shareholders were also encouraged to submit their proxy forms indicating their vote on each resolution proposed at the meeting.

Access to InformationThere are multiple avenues available to shareholders to keep abreast of the company’s financial performance, business highlights and governance policies. Information is made available in the following ways:

�Investor Centre on our website )))))))))))))))))) www.supremeventures.com

�Disclosures on the Jamaica Stock Exchange’s website

�Media releases �Press conferences and radio interviews

A shareholder may request a copy of the Minutes of the Company’s Annual General Meeting by sending an email to [email protected]

For investor relations, shareholders may send their communication to our Company Secretary via email [email protected]


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EmployeesOur employees are our most critical resource and play an important role in organizational governance, culture, strategy and success. The workplace behaviours which employees are encouraged and expected to display are guided by the Company’s Code of Conduct which establishes the framework of ethical practices, professional standards and values governing the relationship with staff, business partners, customers and the public at large. Customers The Group has regard to its many customers in ensuring that good relationships are fostered, and that there is appropriate levels of engagement in understanding customers’ views and the impact of decisions on the interests of these stakeholders.

Community The Board recognizes the importance of the community and environment and through our Supreme Ventures Foundation, focus is given to embarking on initiatives and projects which will bring lasting and positive impact to those affected by our operations and the persons living in communities in which we operate.

OUR POLICIES

Board Charter and Corporate Governance CodeThe Board has an approved Board Charter and Corporate Governance Code which establishes the overarching principles and standards guiding the operations and governance practices of the Board.

Code of ConductIn keeping with our philosophy of sound governance and to reflect the high standards of how we do business, the Board has approved a Code of Conduct which applies to all Directors and employees within the Group. The Code is made available to all employees on onboarding.

The Code of Conduct is centred on the following key ethical values which underpin and inform the behaviours and practices that are expected within all levels of the organization:

�Integrity �Responsibility �Respect �Compliance �Confidentiality �Trust

Training in Ethics and ComplianceWe operate within a regulated industry, and as part of the orientation process of team members, it is the policy of the Company that there is mandatory training on the business operations of the Company.

This involves an introduction to employees of our compliance obligations within the relevant legislative framework within which we operate, namely betting, gaming and lotteries with particular focus on regulatory obligations relating to Anti-money Laundering / Countering-financing of terrorism.

Whistle-blowing PolicyThe Company has an approved Protected Disclosures Policy and Procedure which provides a mechanism for employees to disclose events of suspected fraud, bribery, unethical conduct, illegal activities and other forms of improprieties.

The Policy outlines the safeguards for the protection of employees and their rights under the Protected Disclosures Act and establishes suitable arrangements for proper investigation of any such disclosures.

Dividend PolicyThe Board has an approved Dividend Policy which outlines its approach to distributing dividends to shareholders. Dividends are declared to shareholders at the discretion of the Board of Directors and are paid out of retained earnings. Through this Policy, the Board reflects its commitment to preserve shareholder value and to maximise returns in a prudent and transparent manner. We have established a dividend pay-out rate in any given year of ninety percent (90%) of profit after tax (less any non-cash adjustments), paid quarterly. Final adjustments are made at year-end to conform with this rate. To ensure prudence in capital management, the Board may alter this policy at its discretion.


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Annual Report 2020

Human Resources PoliciesThere is an established framework of policies and programmes reflecting our standards and guiding principles for effective and efficient management of our valuable human resources. This framework is applied consistently across the Group and facilitates an environment within which employees are valued, treated equitably and high productivity is encouraged. Our policies govern key themes including: Workplace Expectations; Employee Benefits; Workplace Safety; Performance Management; Use of Social Media and Staff Training and Development.

Sustainability PolicyThe Company has an approved Sustainability Policy which outlines its approach and commitment to being a corporate citizen operating in a responsible, prudent and ethical manner in the conduct of its business affairs. This commitment is manifested in our social, environmental, and economic values and practices.

Our principles of sustainability inform how it is that we:

�create a safe, healthy and conducive environment

to promote the welfare and productivity of our

employees

�maintain awareness of our environmental

impact with focus on environmental awareness and

responsibility

�support our community through philanthropy

�provide long-term value to our shareholders by

achieving financial objectives.

Articles of IncorporationAt the Company’s Annual General Meeting held on September 10, 2020, the shareholders resolved to amend the Company’s Articles of Incorporation to allow the Company to communicate with shareholders using electronic means.

Access to PoliciesYou may access our Policies and the Company’s Articles of Incorporation from the Investor Centre on our website: www.supremeventures.com

DIRECTORS’REPORT

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The Directors of Supreme Ventures Limited are pleased to present their report and to submit the Consolidated Income Statement and the Consolidated Statement of Financial Position of the Company and its subsidiaries for the year ended 31st December 2020.

OPERATING RESULTS $‘000

DIRECTORS’ REPORT

DIVIDENDS

The following interim dividends were paid for the year under review:

�$0.25 per stock unit paid on June 12, 2020 �$0.07 per stock unit paid on September 4, 2020 �$0.20 per stock unit paid on December 4, 2020 �$0.28 per stock unit on March 23, 2021

The Directors recommend that the interim dividends be ratified and declared as final and that no further dividend be paid in respect of the year under review.

The Board of Directors as at December 31, 2020 were:

Mr. Gary Peart – Executive ChairmanMr. Duncan Stewart – Lead Independent DirectorMr. W. David McConnellMr. Brent SankarMr. Christopher BerryMr. Damian Chin-YouMs. Eroleen AndersonMr. Lance HyltonMr. Nicholas MouttetMr. Peter McConnell

Gross Profit 8,751,754

Profit before taxation 3,599,071

Taxation (1,178,124)

Profit for the year 2,420,947

Earnings per stock 90.15 cents

Pursuant to Articles 105 and 106 of the Company’s Articles of Incorporation, one-third of the Directors (or the number nearest to one-third) will retire at the Annual General Meeting. The Directors retiring, who being eligible, offer themselves for re-election are Messrs. Gary Peart, Lance Hylton and Duncan Stewart.

EXTERNAL AUDITORS

The Auditors, PricewaterhouseCoopers, have indicated their willingness to continue in office and offer themselves for re-appointment.

ACKNOWLEDGEMENT

The Board of Directors expresses its gratitude and appreciation to our shareholders, stakeholders, customers and staff for their commitment and partnership in making 2020 a winning year.

BY ORDER OF THE BOARDDated this 26th day of February 2021

Nyssa-Kaye DarbyCompany Secretary

For The Year Ended December 31, 2020

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Annual Report 2020

The Human Resources and Administration Department of the Supreme Ventures Group helps ensure that the strategic goals of the Company are met, through its policies and procedures and effective management of the Group’s human resources.

Guided by the three pillars of success, Execution Excellence, Building Strong Relationships and Market Dominance, we focus on delivering a high-performance workforce that functions in a healthy, safe and productive environment delivering maximum value to our business operations. The areas of focus aligned with our pillars of success are as follows:

1) Execution Excellence (Performance Driven)

�Performance Management �Customer Service Delivery �HR Technology, Infrastructure and Analytics

2) Building Strong Relationships (Having the Best People)

�Talent Management �Organization Structure �Employee Engagement

3) Market Dominance (Employee Experience) �Learning and Development

Execution Excellence

Performance Management The formal annual performance review process which began in 2018 has continued to improve with employees understanding its value and the importance of targets being aligned to achieve the overarching goals and objectives of the company.

Customer Service Delivery 1) The Annual Satisfaction Survey through which the employees can share their views was administered. The results of the 2020 survey were analyzed and programmes put in place to address staff concerns and to improve overall service to staff. With 2020 being so disruptive due to the COVID-19 pandemic, a weekly and monthly Supreme Pulse newsletter was implemented in an effort to keep

Human Resources Report

staff informed of the latest happenings and news across the Group.

2) New policies were introduced to ease the disruption of the pandemic and to ensure that there was business continuity with minimal impact on operations.

�The COVID-19 Response Guidelines �The Work from Home Policy �The Flexible Work Arrangement

3) Focus was placed on updating existing policies in keeping with the company’s strategic direction:

�OSHA (Occupational, Safety & Health Administration) Procedures which assist in ensuring a safe and healthy work environment by setting and enforcing standards and providing education, training, and assistance.

�Disciplinary Action Policy - This policy guides how we manage incidents that violate company policies and procedures.

�Performance Management Policy - This policy

establishes the framework within which employees’

performance is managed and rewarded.

HR Technology, Infrastructure and AnalyticsThe move from a complete manual HR system to an automated solution begun in earnest in 2020 with implementation to begin in 2021. This system will ensure the immediate production of all HR data garnering real time information to assist with strategic planning and decision making.

A dedicated HR email was created for employees to facilitate information requests and to lodge complaints, while an HR Helpdesk was implemented towards the end of the year to enable the department to measure and respond quickly to employee requests.

Annual Report 2020

4242

Building Strong Relationships

Talent Management The company’s talent management mandate focusses on recruiting the right people, onboarding through orientation and monitoring their performance with the annual performance review system. This system includes a bi-annual check-in, and constant revision of job descriptions to ensure changes in roles and responsibilities are adequately addressed.

Organization Structure The continued growth of the Group requires that the department maintains focus on any need that may require realignment in department structures and people to ensure that synergies are recognized and business operations are adequately supported.

Employee Engagement Given the COVID-19 pandemic, it was critical for the department to switch to virtual engagement activities to ensure that the staff remained connected in a remote working environment. These virtual activities allowed for the usual Anniversary and Christmas celebrations to be hosted in a modified way. In addition, the company held its very first virtual Annual Staff meeting which was used to recognize and reward employees who have delivered excellent service from 10 years and up to 24 years.

Market Dominance

Learning and Development The company continues to develop its employees by offering the necessary training opportunities to succeed in their current roles. Professional development and growth continue to be key areas of focus for the Learning & Development Unit in supporting the business in the achievement of its strategic growth objectives.

Execution Excellence

Building Strong Relationships

Market Dominance

HUMAN RESOURCES REPORT

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Annual Report 2020

BOARD OFDIRECTORS

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4444

BOARD OF DIRECTORS

GARY PEART | Executive ChairmanGary H. Peart is the Executive Chairman of the Board of Directors. He is also the Chief Executive Officer of Mayberry Investments Limited and a member of the Board of Mayberry Group Limited. He has over 20 years of corporate finance experience in the Jamaican Financial Industry. Mr. Peart also currently serves as a Director on the Boards of the Jamaica Stock Exchange, Lasco Distributors Limited and Ironrock Insurance.

Executive Director | Appointment: October 23, 2017

DUNCAN STEWART | Lead Independent DirectorDuncan has over 30 years of experience in Sales, Marketing, Finance and Fixed-Operations. He played an integral role in expanding Stewart Automotive Group of Companies and held several high-level positions including Director and General Manager.

Duncan currently serves on several boards within the Stewart’s Automotive Group of Companies. He also holds directorship on the boards of Automobile Dealers Association, Barita Investments Limited, Precision Logistics Limited and General Accident Insurance Company Limited.

Independent Non-Executive Director | Appointment: December 1, 2018

W. DAVID McCONNELLW. David McConnell is Co-Managing Director and Co-Founder of Select Brands Limited, a leading Wines and Spirits Company in Jamaica. He also sits on the Boards of Scotia Group Jamaica, Scotia Investments Jamaica Limited and IronRock Insurance Company Limited amongst others.

Independent Non-Executive Director | Appointment: November 7, 2017

BRENT SANKARTrinidadian Brent Sankar has over 29 years’ experience in the financial, accounting and auditing industries. He held the position of Partner/Director in a consultancy company, as well as Finance Director of one of the largest private companies in Trinidad. He had an integral part of the restructuring of various companies within that Group. He is the Chief Financial Officer of a Trinidadian entity with investments throughout the Caribbean.

Non-Executive Director | Appointment: November 3, 2016

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Annual Report 2020

BOARD OF DIRECTORS

CHRISTOPHER BERRYChristopher is the Executive Chairman of Mayberry Investments Limited and also serves on the Boards of Apex Health Care Associates, Apex Pharmacy, Caribbean Producers Limited, IronRock Insurance Company Limited and Mayberry Jamaican Equities Limited.

Non-Executive Director | Appointment: October 23, 2017

DAMIAN CHIN-YOUDamian Chin-You is the Chairman of Posttopost Betting Limited, Supreme Route Limited and Chairman and Co-Founder of Champion Gaming Company Limited. He has over 20 years’ experience in the betting & gaming sector. In 2013, he was at the helm of Posttopost during the merger of three (3) other betting companies which saw the company becoming the largest bookmaker in Jamaica.

Non-Executive Director | Appointment: June 13, 2019

EROLEEN ANDERSONEroleen Anderson is the Chief Executive Officer of Interiors by Eroleen Limited, a business that encompasses manufacturing of PPE garments and products for the fight against COVID.

She brings to the Board over thirty years’ experience in numerous areas including business development, project and property management, human resources, strategic planning, interior design, construction, and overseeing a varsity of buildings and real estate assets across various countries. She also serves on several Homeowners Associations and Proprietor Strata Plans and was recently appointed to the Land Development and Utilization Commission under the Ministry of Economic Growth and Job Creation.

Independent Non-Executive Director | Appointment: February 28, 2020

LANCE HYLTONLance Hylton is senior partner of Hylton & Hylton Attorneys-at-Law and specializes in commercial and trust law. He has served as a director of several listed companies and government agencies or corporations. He is vice chairman of the Jamaica College Board of Governors and a Past President of Rotary.

Independent Non-Executive Director | Appointment: April 1, 2018

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BOARD OF DIRECTORS

PETER McCONNELLPeter McConnell is the Managing Director of Trade Winds Citrus Ltd. and the Chairman of Worthy Park Estates Ltd. His service to the nation includes Chairmanship of the Linstead Public Hospital, the Jamaica Citrus Protection Agency and the Supreme Ventures Foundation. He was recently appointed as a Director to the Sugar Industry Authority Board.

Independent Non-Executive Director | Appointment: November 7, 2017

NICHOLAS MOUTTETNicholas brings a wealth of knowledge and experience in business management and strategy.

He is the Chairman and primary shareholder of Agri-Link Ltd which is a major supplier in the poultry and swine industries in Trinidad and Tobago and the wider Caribbean. Nicholas is the owner of Tropical Self Storage and serves as a Director of Zodiac International Investments & Holdings Limited.

He is also a Director and Shareholder of Green Clean Caribbean Limited, a supplier of green cleaning chemicals, and Glass Unlimited, a supplier of high-end glass fixtures and enclosures.

Non-Executive Director | Appointment: November 1, 2019

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Annual Report 2020

SENIORMANAGEMENT

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SENIOR MANAGEMENT

GARY PEARTExecutive Chairman – Supreme Ventures Limited

XESUS JOHNSTONCEO – Prime Sports (Jamaica) Limited

DENNIS CHUNGCEO – Supreme Ventures Services Limited

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Annual Report 2020

SENIOR MANAGEMENT

PRESTON CHIN General Manager – Supreme Route Limited

HEATHER GOLDSONDeputy CEO and Chief Marketing Officer Supreme Ventures Services Limited

LORNA GOODENGeneral Manager – Supreme Ventures Racing & Entertainment Limited

Annual Report 2020

5050

SENIOR MANAGEMENT

DON MARK SMITH General Manager – Posttopost Betting Limited

DUSTANNI BARROW General Manager – Supreme Ventures Enterprise Inc.

NICKESHA EULETTE Senior Vice President – Finance

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Annual Report 2020

SENIOR MANAGEMENT

KATHERINE FRANCIS Senior Vice President – Legal, Regulatory and Compliance

TONI SPENCERSenior Vice President – Human Resources & Administration

DAMIAN DUNCANSenior Vice President – Prime Sports (Jamaica) Limited

Annual Report 2020

5252

SENIOR MANAGEMENT

NYSSA-KAYE DARBY Company Secretary – Supreme Ventures Limited

KRISTA-GAYE FISHER Company Secretary – Supreme Ventures Enterprise Inc.

MICHELLE YEOVice President – Human Resources & Administration

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Annual Report 2020

SENIOR MANAGEMENT

ADEN WHITTAKER Vice President – Operations & I.T. Services

STEFAN MILLER Vice President – Product Management & Business Development

GAIL ABRAHAMS Vice President – Marketing, Communications & Sponsorships

Annual Report 2020

5454

SENIOR MANAGEMENT

ANDREW BROMLEY Vice President – Security & Surveillance

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Annual Report 2020

Annual Report 2020

5656

SHAREHOLDINGS

SHAREHOLDING REPORT

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Annual Report 2020

SUPREME VENTURES LIMITED TOP 10 SHAREHOLDING As at December 31, 2020

NAME VOLUME PERCENTAGE

Zodiac Caribbean Ventures Limited 807,601,713 30.623

807,601,713 30.623

Mayberry Jamaican Equities Limited 401,956,017 15.242

401,956,017 15.242

Ian Kent Levy 320,541,171 12.154

Ian Kent Levy 4,000,000 0.152

324,541,171 12.306

Janette Stewart 62,580,991 2.373

Janette Stewart 104,117,228 3.948

166,698,219 6.321

Stephen Castagne 94,052,136 3.566

94,052,136 3.566

St. Elizabeth International Limited 61,258,495 2.323

200,000 0.007

61,458,495 2.330

Sagicor Pooled Equity Fund 48,950,421 1.856

48,950,421 1.856

PWL Bamboo Holdings Group Limited 28,043,151 1.063

28,043,151 1.063

MF&G Trust & Finance Ltd – A/C 58 13,906,533 0.527

13,216,876 0.501

27,123,409 1.028

Sunfisher Corporation 24,648,118 0.935

24,648,118 0.935

Total Combined Holding 1,985,072,850 75.270

SHAREHOLDING REPORT

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SUPREME VENTURES LIMITED DIRECTORS’ SHAREHOLDINGS As at December 31, 2020

DIRECTOR NAME PRIMARY HOLDERJOINT HOLDER/CONNECTED

INTERESTSVOLUME PERCENTAGE

Gary Peart Gary Peart Self 1,082 0.0000

VDWSD Ltd Shareholder 22,255,640 0.8439

Mayberry Jamaican Equities Limited Connected 401,956,017 15.2415

Mayberry Investments Limited Pension Scheme Connected 2,413,603 0.0915

Mayberry Investments Limited Retirement Scheme Connected 1,237,133 0.0469

Mayberry Investments Limited Connected - -

Mayberry Pension Limited I.R.P Connected 1,530,612 0.0580

Mayberry Managed Clients Account Connected 11,746,907 0.4454

The Mayberry Foundation Ltd. Connected 3,000,504 0.1138

Ironrock Insurance Company Limited Director / Shareholder 900,000 0.0341

Lasco Distributors Ltd Director / Shareholder 5,000,000 0.1896

Mayberry Managed Employee Portfolio Connected - -

450,041,498 17.0647

W David McConnell W David McConnell Self - -

St. Elizabeth International Ltd Director / Shareholder 61,458,495 2.3304

Ironrock Insurance Company Limited Director / Shareholder 900,000 0.0341

Scotia Investments Limited Director - -

Scotia Group Director - -

St. Elizabeth Holding Ltd Director / Shareholder - -

62,358,495 2.3645

Peter McConnell Peter McConnell Stephanie McConnell 6,429,498 0.2438

United Estates Ltd Pension Plan Connected 638,224 0.0242

Trade Winds Citrus Ltd, Pension Fund Connected 591,121 0.0224

Wakefield Farms Ltd. Connected 2,000,000 0.0758

Worthy Park Estate Director / Shareholder - -

RSF Holdings Director / Shareholder - -

Fraser Nicholas McConnell Connected - -

Stephanie Ann McConnell Connected - -

9,658,843 0.3662

Brent Sankar Brent Sankar Self - -

Zodiac Caribbean Ventures Limited Officer 807,601,713 30.6228

Colin Mouttet Connected 13,787,078 0.5228

Ice Jamaica Ltd Director - -

821,388,791 31.1456

Eroleen Anderson Eroleen Anderson Self - -

Interiors by Eroleen Limited Director - -

- -

Lance Hylton Lance Hylton Self - -

Hylton & Hylton Attorneys-At-Law Connected - -

- -

SHAREHOLDING REPORT

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Annual Report 2020

SUPREME VENTURES LIMITED DIRECTORS’ SHAREHOLDINGS CONT’D As at December 31, 2020

DIRECTOR NAME PRIMARY HOLDERJOINT HOLDER/CONNECTED

INTERESTSVOLUME PERCENTAGE

Christopher Berry Christopher Berry Self - -

Mayberry Jamaican Equities Limited Director 401,956,017 15.2415

PWL Bamboo Group Holdings Limited Director 28,043,151 1.0633

Apex Pharmacy Shareholder 5,000,000 0.1896

Apex Health Care Shareholder - -

Konrad Limited Connected 2,000,000 0.0758

Broadleaf Properties Connected - -

Konrad Berry Connected 24,145,689 0.9156

A+ Plus Medical Centre Ltd Shareholder 500,000 0.0190

Mayberry Investments Ltd Director - -

Caribbean Producers Jamaica Director - -

Ho Choi Ltd Shareholder 12,565,400 0.4765

Mayberry Investments Limited Pension Scheme Sponsor Trustee 2,413,603 0.0915

Mayberry Investments Limited Retirement Scheme Sponsor Trustee 1,237,133 0.0469

Mayberry Pension Limited I.R.P Sponsor Trustee 1,530,612 0.0580

Mayberry Managed Clients Account Connected 11,746,907 0.4454

The Mayberry Foundation Ltd. Connected 3,000,504 0.1138

Mayberry Managed Employee Portfolio Connected - -

Ironrock Insurance Company Limited Director 900,000 0.0341

Green Shoots Jamaica Limited Chairman - -

Patricia Yap Connected - -

William Berry Connected - -

Lauren Berry Connected - -

495,039,016 18.7710

Duncan Stewart Duncan Stewart Self - -

San Dollars Investments Limited Director 20,526,316 0.7783

20,526,316 0.7783

Damian Chin-You Damian Chin-You Self 1,000,000 0.0379

Posttopost Betting Limited Director - -

1,000,000 0.0379

Nicholas Mouttet Nicholas Mouttet Self - -

Agri-Link Limited Director - -

Tropical Self Storage Director - -

Nika Limited Director/ Shareholder - -

Zodiac International Investments & Holdings Director - -

Zodiac Caribbean Ventures Limited Director/ Shareholder 807,601,713 30.6228

807,601,713 30.6228

Total Combined Holding 1,436,328,183 54.4630

SHAREHOLDING REPORT

Annual Report 2020

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SUPREME VENTURES LIMITED SENIOR MANAGEMENT’S SHAREHOLDINGS As at December 31, 2020

NAME JOINT HOLDER/CONNECTED INTERESTS VOLUME PERCENTAGE

Dennis Chung Self - -

Heather Goldson David L Goldson 685,200 0.0260

Lorna Gooden Gregory Paul Anthony Gooden 8,300 0.0003

Self 18,300 0.0007

26,600 0.0010

Katherine P.C. Francis Self 30,000 0.0011

Toni Spencer Adrian Spencer 592,698 0.0225

Xesus Johnston Self 14,863 0.0006

Nyssa-Kaye Darby Self 5,692 0.0002

Nickesha Eulette Self - -

Damian Duncan Self - -

Don Mark Smith Self - -

Preston Chin Self - -

Dustanni Barrow Self - -

Total Combined Holding 1,355,053 0.0514

CORPORATELISTING

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Annual Report 2020

CORPORATE LISTING

Gary Peart (Executive Chairman)

Duncan Stewart

W. David McConnell

Brent Sankar

Christopher Berry

Damian Chin-You

Eroleen Anderson

Lance Hylton

Nicholas Mouttet

Peter McConnell

Nyssa-Kaye Darby, Attorney-at-Law

Jamaica Central Securities

Depository Limited

40 Harbour Street

Kingston, Jamaica

PricewaterhouseCoopers

Scotia Centre

Cnr. Duke & Port Royal Streets

Kingston, Jamaica, W.I.

BANKERS

Bank of Nova Scotia

Jamaica Limited

2 Knutsford Boulevard

Kingston 5, Jamaica, W.I.

National Commercial Bank

Jamaica Limited

Private Banking

32 Trafalgar Road


CIBC First Caribbean

International Bank



Sagicor Bank

17 Dominica Drive


JMMB Bank

6-8 Grenada Way


Citizens Bank Guyana

Lot 231-233 Camp Street

and South Road

Lacytown, Georgetown

Guyana

INVESTMENT BANKERS

Barita Investments Limited


7th Floor, Kingston 5

Mayberry Investments Ltd

1-1/2 Oxford Road

Kingston 5, Jamaica

JMMB Bank

6-8 Grenada Way

Kingston 5

Sagicor Investments Jamaica Limited

17 Dominica Drive

Kingston 5

REGISTRAR AND

TRANSFER AGENT

EXTERNAL AUDITOR

COMPANY SECRETARYBOARD OF DIRECTORS

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REGISTERED OFFICES OF OVERSEAS

SUBSIDIARIES

Supreme Group Incorporated

Supreme Guyana Incorporated

C/O PKF Corporate Services Limited

Meridian Place, Choc Estate

P.O. Box Choc 8243

Castries LC02 801

Saint Lucia

Supreme Ventures Guyana Holdings

Inc.

Supreme Ventures Enterprise Inc.

17B Croal Street

Stabroek

Georgetown, Guyana

South America

Walter H. Scott, Q.C.

Attorney-at-Law

22 Trafalgar Road, Suite #13

2nd Floor


Livingston Alexander & Levy

72 Harbour Street

Kingston, Jamaica, W.I.

Hylton & Hylton

19 Norwood Avenue


Hart Muirhead Fatta

Victoria Mutual Building, 2nd Floor


Kingston 5

Supreme Ventures Limited

Registered Office:

9A Retirement Crescent


Tel: (876) 754-6526

Fax: (876) 754-2143

REGISTERED OFFICES OF LOCAL

OPERATING SUBSIDIARIES

Prime Sports (Jamaica) Limited



Tel: (876) 754-6526

Fax: (876) 754-2143

Posttopost Betting Limited

9 Barbados Avenue


Tel: (876) 929-0370-3

Supreme Route Limited

Registered Office:9A Retirement Crescent


Business Operations:Sovereign Commercial Center

9-11 Barbican Road, Unit 6


Tel: (876) 620-6859 / (876) 622-8073

Supreme Ventures Services Limited



Tel: (876) 754-6526

Fax: (876) 754-2143

Supreme Ventures Racing &

Entertainment Limited

Registered Office:9A Retirement Crescent


Tel: (876) 754-6526

Fax: (876) 754-2143

Business Operations:Caymanas Park

Gregory Park, Portmore

St. Catherine, Jamaica, W.I.

Tel: (876) 988-2524-6

Fax: (876) 988-7781

CORPORATE OFFICES

CORPORATE LISTING

ATTORNEYS

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Annual Report 2020

CORPORATE LISTING

New Kingston

(Prize Payment Centre)

1st Floor, R. Danny Williams Bldg.

28-48 Barbados Avenue


Tel: (876) 754-6526

Portmore:

Shop #6, McMaster Centre

Portmore Town Centre,

Portmore,


Tel: (876) 622-1426

Half Way Tree:

State Mall

15 Half Way Tree Road


Tel: (876) 920-3500

Fax: (876) 960-9417

RETAIL CENTRES

Montego Bay:

Shop #40

City Centre Mall

St. James Street

St. James, Jamaica, W.I.

Tel: (876) 622-7783

Ocho Rios:

Shop # 3

Ocean Village Shopping Centre

Main Street, Ocho Rios

St. Ann, Jamaica, W.I.

Tel: (876) 630-7985

Acropolis Barbican:

Barbican Centre

29 East Kings House Road

Kingston 5

Jamaica, W.I.

Tel: (876) 978-1299

Fax: (876) 946-9896

Spanish Town:

37 Young Street

Spanish Town


Tel: (876) 618-9384

Savanna-la-Mar:

Shop 16A, Hendon Mall

Savanna-la-Mar,

Westmoreland,

Jamaica, W.I.

Tel: (876) 918-0232

Fax: (876) 918-0233

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SUPREMEAT A GLANCE

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Annual Report 2020

PRIME SPORTSSTRIDES INTO THE FUTURE

The year 2020 was a watershed year for the gaming arm of Supreme Ventures Limited, Prime Sports (Jamaica) Limited. The subsidiary manages the gaming assets and operations, and took steps to lay a foundation for success in both the short and long term.

Even in the face of COVID-19 that threatened brick-and-mortar sales with movement restrictions implemented nationwide by the Government, all portfolios performed credibly, and the subsidiary continued to execute their strategic plans for expansion and growth.

The subsidiary’s online customer base, which includes registered users on the SV Games and the JustBet Mobile platform, increased by over 500%. This performance was driven by aggressive marketing campaigns and promotions on the ground and in the digital space. At the end of the year, online accounted for 60% of JustBet revenues with sport

lovers turning to the mobile platform in favour of store-front operations during the series of lockdowns.

The surge in traffic to SV Games, especially in the last quarter of 2020, was due to a new release of Jamaica’s premier gaming app. The upgraded app features a sleeker more user-friendly interface, an easier registration process, more games, and increased synergies that allowed customers to top up and claim winnings using their local bank account. The newly developed app was also expanded with versions for iOS and Windows, capturing the operating systems of the majority of online players. The launch was backed by several social media registration drives and promotions that rewarded persons for signing up and playing on a consistent basis.

As Prime Sports continued to innovate, following the mission and vision of parent company Supreme Ventures,

Primed For Greatness

Annual Report 2020

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the subsidiary introduced a new sales channel, Supa Sellaz. Supa Sellaz expands the reach of the company across Jamaica by using advanced technology to enable customers to buy games on the spot.

The new channel literally “takes gaming to the streets”, a first by any company in Jamaica, allowing SVL retailers to move beyond the doors of their brick-and-mortar establishments and provide Jamaica’s favourite games to their customers while they are on the move. The channel will expand the company’s sales network to remote areas and service rural communities, providing jobs for micro entrepreneurs and heightened convenience for players.

In addition to making bold moves on local soil, Supreme Ventures continues to expand its horizons beyond Jamaica’s shores. In August of 2020, Supreme Ventures exported its mega popular game, Cash Pot to South Africa. Gaming patrons in South Africa now have access to the live broadcast of the draw and can purchase their winning tickets from over 200 locations in that country.

This transaction is an important game-changer for the Supreme Ventures Group as we continue our expansion strategy into new markets.

CEO of Prime Sports (Jamaica) Limited, Xesus Johnston and retailer and owner of Circles Bar and Gaming, George Graham pose with a cut-out of Hot Pick ambassa-dor, Spice. Hot Pick, SVL’s newest pick-one game, was launched in July of 2020.

Supreme Ventures Customer Service Representative Wilbourne Williams (right) introduces the JustBet Mobile Platform to patrons at an event.

60%Of JustBet’s revenues came from online, with sport lovers turning to the mobile platform in favour of store-front operations during the series of lockdowns.

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Annual Report 2020

The Supreme Ventures Group expanded its horizon with the official launch of the Supreme Ventures Business Hub in the third quarter of 2020.

The Hub, which is headed by CEO of Supreme Ventures Services Limited, Dennis Chung, extended the Group’s premium back-office services to medium and small businesses in Jamaica and the region.

The Hub has been a vision for the Group as part of its diversification strategy for its revenue portfolio to extend beyond gaming.

In addition, the strength of the Group’s back-end operations during the COVID-19 pandemic provided the perfect launching pad for the initiative.

Supreme Ventures Business Hub

The Hub is aimed at providing support to small to medium-sized businesses which may not have the resources and time to dedicate to such areas of business operations such as taxation, payroll, receivables, collections and others.

The Hub offers support services such as Finance, Technology, Marketing, Human Resources & Payroll, Office Administration, Security and Facilities Management.

The Hub has begun to attract several prospective clients since its phased launch in July 2020 and has put the internal resources in place to service the business.

CEO of the Supreme Ventures Services Limited and head of the Supreme Ventures Services Hub, Dennis Chung and JMMB Group SME Resource Centre Senior Corporate Manager, Shani Duncan Falcolner examine signed copies of a memorandum of understanding between the two organisations. Looking on are Kevin Foreman, country SME relationship specialist, JMMB Bank (left) and Chantal Simpson, SVS Legal Officer (right).

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Supreme Ventures’ groundbreaking gaming app, SV Gameswas reloaded and relaunched in 2020 with new features that offered gamers a more streamlined registration and optimum gaming experience.

The online portal that was launched April of 2019, underwenta major upgrade that allowed the app to be accessible to more mobile users with even better built-in payment optionsand more games layered in by the end of 2020.

Android users can download the new app from the SV Games website, while iPhone and Windows users are able to game by accessing the online platform supremegames.com from any browser.

SV Games now features new payment gateways which allow users to link their VISA or Mastercard credit and debit cards to their profile to game. Users top up their accounts via the linked cards. Persons who prefer to use cash will have to visit their nearest Regional Office to top up their account or cash out their winnings. The new SV Games app is part of the Group’s strategy to provide access to its gaming products via the digital space and connect with more customers.

With a brick-and-mortar network of 1,200 retail locations island wide, the Group has seized the opportunity to reach new demographics who prefer the convenience of online transactions.

Supreme Ventures’ increasing presence in the digital space in 2020 proved successful as registration and usage increased exponentially over the year.

SV Games 2.0 Launched

The new SV Games app is part of the Group’s strategy to provide greater access to its games through digital channels.

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Annual Report 2020

The year 2020 presented the Supreme Ventures Racing and Entertainment Limited (SVREL) with a unique set of challenges. Under the leadership of Chairman, Solomon Sharpe and General Manager, Lorna Gooden, the company’s business continuity plan kicked into high gear resulting in notable successes, despite the impact of COVID-19.

The year in review brought movement restrictions, curfews and even a full lockdown of the sport and the park operations in April and May. However, even in the face of these difficulties and groundbreaking changes, the company produced commendable results which came to the fore by the third and fourth quarter. Horse racing at Caymanas Park was the only sport to resume spectator meets during the pandemic and the team ensured that all stakeholders maintained strict adherence to national health protocols, social distancing and curfews, resulting in the Park remaining operational for the rest of the year.

The strides made in the development of the racing product and the infrastructure of Caymanas Park were unparalleled in 2020.

The decision to adjust racing days from Wednesdays and Saturdays to Saturdays and Sundays created a streamlined weekend of exciting racing which not only gave more racing fans an opportunity to watch the races live and at OTBs island wide but also resulted in more robust wagering that positively impacted revenues.

The management also embarked on a campaign to revamp all the bet types and winning scenarios to entice more persons to the sport and to re-energize the regular punters. First on the list was the launch of Reggae 6 in October which replaced the Sunrise 6.

Caymanas Park

BEATINGTHE ODDS

Annual Report 2020

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This superstar bet type has won the hearts of new and existing punters with its minimum wager of $10 and extremely high payouts. This exotic bet comes with its own unique features such as:

�Minimum guaranteed payout of $3M �Mandatory payout each month which constantly

exceeds $15M �Low take out rate

Reggae 6 is currently the leading bet type that has created the most millionaires with over $104M paid out to punters within the first four months of its existence.

SVREL principals were also busy making key strides behind the scenes, seeking to infuse technology into the racetrack. Building on the $2.2 Billion invested in the country’s sole horse racing outfit, the parent company invested a further

$600 Million in stable management technology, facilities, roadways and betting structure.

At the launch of the Jamaica Derby in October, Chairman Sharpe introduced the media to a new stable management online portal, Caymanas Park Management System (CPMS). The stable management software gives down-to-the-minute detail on the care and fitness of horses located at the Caymanas stables. The details provided by the software, which includes health status, exercise patterns, past performances and stakes information gives SVREL a better handle on the business.

$600M

in 2020 SVREL invested in technological and infrastructural development, such as stable management technology,

facilities, roadways and betting structure at a cost of

$104M

In just the first four months of its existence, the Reggae 6 bet type created the most millionaires with

payouts amassing over

While the software is closed to only SVREL employees, punters stand to gain the most as it enables the Racing Department to build better, more competitive race cards facilitating more bets, higher payouts and higher revenues.

SVREL has followed the charge of its parent company, Supreme Ventures Limited, in moving several aspects of its business, both operational and revenue-based, to the digital space. The CPMS is in line with the recent operational strategy to increase efficiency, ease of access to information and accountability.

SVREL also landed several wins in upgrading the infrastructure of the track, key to which was the repair of the roadway in the Northern stable area and patching of the Central stable area, providing a safer and more conducive roadway for horsemen and other stakeholders.

The manure skip construction programme also saw the build-out of 15 skips in 2020, creating a more sanitary and aesthetically pleasing area. Thirty stalls were redeveloped during the year, coupled with major repairs to other existing stables.

The work to bring the racing product to premium status continued, unwavering and steady even in the face of a crippling pandemic. Caymanas Park became an exemplary beacon of performance for the year.

Chairman of Supreme Ventures Racing and Entertainment Limited (SVREL), Solomon Sharpe (right) makes a point to SVREL General Manager, Lorna Gooden during a press conference to launch the 100th Running of the Jamaica Derby in October 2020.

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Annual Report 2020

In an epic close to the year, Supreme Ventures Racing & Entertainment Limited (SVREL) inked a historic deal with horse racing betting solutions provider, BetMakers Technology Group Limited, which includes the provision of fixed odds betting to local horse racing, as well as other overseas tracks, and a 5 year sponsorship component that is expected to revolutionize the racing experience at the 61-year-old track.

The five-year deal will see the Australia-based wagering technology company engaging SVREL in a one-of-a-kind partnership that will include construction of new infrastructure and event sponsorship until 2025.

The direct benefits of this agreement will see the construction of a trainers’ pavilion and feature race sponsorship with BetMakers implementing, managing, and distributing a fixed odds betting solution that will give punters more choices when placing their bets.

Caymanas Park Closes 2020 With Epic Betmakers’ Deal

BetMakers will enjoy sponsor benefits for the Triple Crown series, which comprises the 1000/2000 Guineas; the Jamaica Derby; and the Jamaica St Leger; the Quarterly Championship and the naming of one race for each race day for the entire year.

The partnership will transform the local horse racing industry, with Caymanas Park being one of the first tracks in the Western hemisphere to implement fixed-odds horse racing alongside tote betting. The agreement reaffirms the strength of the Caymanas brand and its potential, which expands beyond the shores of Jamaica. Caymanas has started the journey to become the jewel of the Caribbean and the deal with BetMakers will aid in propelling the company towards that goal.

The BetMakers deal will further enhance the betting menu offered at the track and at OTBs.

The top brass of Supreme Ventures Group and horseracing subsidiary, Supreme Ventures Racing and Entertainment Limited (SVREL) celebrate after the announcement of a multimillion-dollar deal between the horseracing operators and BetMaker Technology Group. At the press conference from left to right are SVREL Chairman, Solomon Sharpe; SVREL Director, Matthew Levy; SVREL General Manager, Lorna Gooden; Chairman of WAGS International, Kimani Robinson; and SVL Executive Chairman, Gary Peart.

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The corporate social responsibility (CSR) arm of SVL, the Supreme Ventures Foundation (SVF), redirected its energies and purpose in 2020 as the global pandemic arrived on Jamaica’s shores. In addition to the strategic focus on children in state care and social sustainability in the communities we serve, the SVF deepened its commitment and embraced its indelible responsibility to inspire hope and support the wellbeing of Jamaicans negatively impacted by COVID-19.

In response to national breaking news that the pandemic had reached Jamaican shores resulting in a slate of lockdowns and restrictions, the SVF machinery sprung into action making key donations to severely affected vulnerable groups. The Foundation’s first move was to make a donation to the Programme for Advancement Through Health and Education (PATH), which ensured that the thousands of students who depend on the school feeding programme, received the nutritional allocation at home when schools were ordered closed in March.

The next move was to safeguard the health of children in state care with a million-dollar donation to the Child Protection and Family Services Agency (CPFSA) to aid in the procurement of medicines, health aides and personal care items from the National Health Fund and CariMed for thousands of children across the island.

Child’s Month, which would see Team Supreme visiting wards of the State to donate goodies and connect with the young charges, took on a very different look, because of the need to maintain social distance. The team delivered gifts and toys to several homes to help administrators distract the children from the monotony of the Government ordered lockdown. Mother’s Day was also different as SVF highlighted the hard work of the dedicated house mothers and administrators. Almost 100 self-care baskets were given to these frontline workers who care for the nation’s children in institutionalized care on a daily basis.

Supreme Ventures Foundation

INSPIRING HOPEIN OUR CHILDREN

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Annual Report 2020

A favourite of the SVF, Read Across Jamaica Day went fully online where social media and technology were utilised to highlight literacy and the fun of leisure reading. Friends of the Foundation, youth advocate and Chairperson of the Maxfield Park Children’s Home, then-Chairperson Empress Golding and motivational life coach Dr. Terri-Karelle Reid joined us for reading sessions on the SVF social media.

Smiles were brought to the faces of the children during this activity which connected the children in a socially distant reality. Christmas was not to be undone as a shopping spree extravaganza was created for several young ladies in state care. The spirit of the holiday was brought to them in their homes by this unique shopping experience.

CEO of Prime Sports (Jamaica) Limited, Xesus Johnston (right) assists an elderlyresident of Caymanas Gardens in St Catherine with her care package. SVL in association with the Private Sector Organisation of Jamaica’s COVID-19 Relief Programme, handed out hundreds of care packages in Gregory Park.

Supreme Ventures’ Vice President of Marketing, Communcations & Sponsorships, Gail Abrahams shares her storybook with the thousands of viewers who tuned into the Surpeme Ventures Foundation’s Instagram Live for Read Across Jamaica Day 2020. The SVF took their story reading outreach to their social media platforms in light of school closures and movement

restrictions implemented to stem the spread of COVID-19, coronavirus.

PSOJ COVID-19 Relief In addition to creating memories, SVF sought to step into the gap for persons and communities, buckling under the weight of the pandemic. With the closure of all entertainment and sporting venues, persons who made their livelihood from horse racing at Caymanas Park were adversely affected.

Supreme discovered an opportunity to make a difference by partnering with the Private Sector Organisation of Jamaica (PSOJ) under their COVID19 Relief programme in May. The multimillion dollar donation to the PSOJ saw Supreme funding the provision of hampers of basic food and personal items to over 300 residents in the environs of Caymanas Park every two weeks for 12 weeks. The assistance was handed out to residents in need identified with the help of the Caymanas Park Police Station and community volunteers.

The first donation was spearheaded by SVG Executive Chairman, Gary Peart and SVREL General Manager Lorna Gooden who assisted team members, community volunteers and the police in distributing over 300 bags of food items and toiletries. The Group went a step further and added a hamper of fresh produce to add to the recipients’ nutritional needs with the assistance of Prime Sports (Jamaica) Limited, Xesus Johnston and head of Supreme Ventures Services Limited, Dennis Chung.

300+Residents in the environs of Caymanas Park were provided with hampers of food and personal items

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Fire Safety MilestoneThe SVF’s flagship Fire Safety programme was slowed down in 2020 due to restricted access to the nation’s children’s homes for their protection due to the pandemic. The programme was however able to secure a big win in January, completing the installation of its most complex system to date at the Maxfield Park Children’s Home, one of Jamaica’s largest homes. The system was installed to span the 6 ½ acre property with synchronized pull stations, fire alarms, strobe lights and signage to keep the over 100 children and their caregivers safe in the event of a fire emergency. The handover event was well attended by the then Minister of State in the Ministry of Education, Youth and Information, the Hon. Alando Terrelonge, CEO of the CPFSA Rosalee Gage-Gray and Jamaica Fire Brigade top brass. The programme was suspended for several months, but once the Foundation received the go ahead to resume installations in the last quarter of 2020, the work resumed on the homes. The programme is on track to complete installations at all 30 homes in the year 2021.

The Supreme Heroes ProgrammeIn 2020, we took our support for the small business owner to the next level with the launch of the SVF Supreme Heroes

Programme. The programme’s main aim is to boost the capacity of small Jamaican businesses who also made an indelible mark on their community through outreach and giving of themselves. Four Jamaicans were identified and engaged for six months.

The selected participants were Jennifer ‘Miss Jenny’ Brown from Norwood, St James who used the resources from her small shop to help persons in need; Elma ‘Miss T’ Thompson who operates a hardware and also sews uniforms for students in her community; New Horizons Christian Outreach in Spanish Town that assists unattached youth with skills training and Life Yard, an eco-tourism destination on Fleet Street that assists the neighbourhood children with meals and homework.

Facilitated by the Mona Entrepreneurial and Commercialization Centre, MECC, at the University of the West Indies, each participant received business capacity training which includes guidelines on taxation and how to register a business. The SVF heroes also received laptops and other business tools as part of their training.

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Annual Report 2020

The SVF Supreme Heroes programme has broughtawareness to Jamaica’s unsung heroes – the small businesses that not only generate revenue and service their community, but the business owners who stretch their resources to lend a hand to those in need around them. Our Supreme Heroes truly embody the values we hold dear at Supreme –the same values that will propel Jamaica to achieve its full potential as an industrious and compassionate nation.

The Supreme Ventures Foundation will continue to find ways to assist, and encourage Jamaicans from all walks of life who are in need. No need is too great, or too small for our outreach arm to reach out and make an impact on the community.

See below a snapshot of the SVF team and participants in the Supreme Heroes Programme for 2020.

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Supreme Ventures is in the business of bringing the dream of financial freedom, wealth and entertainment through games of chance to Jamaicans and players from other participating territories across the region.

Since starting operations in 2001, Supreme has provided a suite of exciting lottery games that provide our players with quick wins or life changing jackpots and in 2020, these winnings were manifested and aligned with the performance of our lottery portfolio which increased by 4% over the previous year (2019).

The real winners of the uptick in lottery revenues were our players, especially the Lotto and Super Lotto games. In 2020, Jamaicans won a total of $959.4 Million.

The first winner to receive their multimillion dollar payday in 2020 was G. Byfield who came through with the winning

numbers on the last day and subsequently the last draw for 2019. Mr Byfield, an avid player for several years said he always knew that he would win and encouraged his fellow Super Lotto players to believe in their bet.

The other Super Lotto winners for the year were A. Graham who won $225.5 Million on March 13, 2020 and G. Samuels who won an astronomical $301.5 Million on December 11, 2020. Mr Samuels’ win captured the imagination of the nation and the world with news of his mega jackpot covered by news outlets locally and abroad.

Players of our Lotto game were not to be outdone, there were four (4) Lotto winners who won a total of $280 Million. W. Walker won $79 Million on February 29; W. Brown won $95 Million on July 4; H. Wilson won $33 Million on July 27 and R. Jarret won $73 Million October 17.

Making Winners Every Day

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Annual Report 2020

Our winners, although they came from varying walks of life all had the common trait of believing that one day they would snag a multimillion ticket to their dreams and change their lives forever.

Supreme Ventures’ fourth Lotto winner for 2020, D. Jarrett poses with his $73 Million cheque at the Supreme Ventures head office. Jarrett, who won on October 17 with winning numbers 04, 13, 14, 19, 27 and 30 for draw #1724, came to the SVG Retirement Crescent headquarters dressed as Spiderman.

Team Supreme celebrates with the last Super Lotto winner of 2019, E. Byfield (centre) during the cheque presentation for his $152.4 Million jackpot at the Spanish Court Hotel on Tuesday, January 28. From left is Gabrielle Waite, Events and Promotions Officer, Gail Abrahams, Supreme Ventures Group (SVG) Vice President, Marketing, Communication and Sponsorships; Heather Goldson, Deputy CEO and Chief Marketing Officer, SVG; Kerry-Ann Levene, Executive Assistant; Aden Whittaker, Vice President, Operations and IT Services; Andrew Bromley, Security & Surveillance and Jhana Edwards, Planning and Activations Officer.

CEO of Prime Sports (Jamaica) Limited, Xesus Johnston (right) and Lisa-Marie Brown, Marketing Manager, International Game Technology maintain social distance while celebrating with the latest Super Lotto winner, S. Graham. Mr. Graham won $225.5 million on Friday, March 13, with numbers 03, 05, 13, 14, 25 and Super Ball 06.

Supreme Ventures Vice President of Marketing, Communications and Sponsorship, Gail Abrahams (right) joins in the celebration with the $95 million Lotto winner, W. Brown. Mr. Brown dressed as the Star Wars villain Darth Vader, purchased the lucky numbers 08, 09, 10, 19, 27 and 30 from Di Endz Sports Bar in May Pen, Clarendon.

CEO of Supreme Ventures Services Limited Dennis Chung (left) ‘touches elbows’ with the first Lotto winner for 2020, G. Walker. Mr. Walker won $79 million with lucky numbers 04, 09, 14, 20, 32 and 36 for draw #1658. He said the numbers were from previous tickets that he mixed and matched over the years.

CEO of Supreme Ventures subsidiary, Prime Sports (Jamaica) Limited, Xesus Johnston (right) celebrates with the latest jackpot winner G. Samuels (left) at the Super Lotto jackpot presentation on Friday, January 8. Mr Samuels, who won the jackpot in December, purchased the numbers 03, 14, 25, 33, 35 and Super Ball 02. He is the second Super Lotto winner for 2020.

01

02

03

04

05

06

06

04 05

03

02

01

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Consolidated Financial Statements31 December 2020

Annual Report 2020

8080

Supreme Ventures Limited Consolidated Financial Statements 31 December 2020

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Supreme Ventures Limited Index 31 December 2020

Page

Independent Auditor’s Report to the Members

Financial Statements

Consolidated statement of comprehensive income 1

Consolidated statement of financial position 2-3

Consolidated statement of changes in equity 4

Consolidated statement of cash flows 5-6

Company statement of comprehensive income 7

Company statement of financial position 8

Company statement of changes in equity 9

Company statement of cash flows 10

Notes to the financial statements 11 - 81

91

92-93

95-96

91

97

98

99

100

101-171

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L.A. McKnight B.L. Scott B.J. Denning G.A. Reece P.A. Williams R.S. Nathan C.I. Bell-Wisdom G.K. Moore T.N. Smith DaSilva K.D. Powell.

Independent auditor’s report To the Members of Supreme Ventures Limited

Report on the audit of the consolidated and stand-alone financial statements

Our opinion In our opinion, the consolidated financial statements and the stand-alone financial statements give a true and fair view of the consolidated financial position of Supreme Ventures Limited (the Company) and its subsidiaries (together ‘the Group’) and the stand-alone financial position of the Company as at 31 December 2020, and of their consolidated and stand-alone financial performance and their consolidated and stand-alone cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS) and with the requirements of the Jamaican Companies Act.

What we have audited

The Group’s consolidated and stand-alone financial statements comprise:

• the consolidated statement of financial position as at 31 December 2020;

• the consolidated statement of comprehensive income for the year then ended;

• the consolidated statement of changes in equity for the year then ended;

• the consolidated statement of cash flows for the year then ended;

• the company statement of financial position as at 31 December 2020;

• the company statement of comprehensive income for the year then ended;

• the company statement of changes in equity for the year then ended;

• the company statement of cash flows for the year then ended; and

• the notes to the financial statements, which include significant accounting policies and other explanatory information.

Basis for opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of

the consolidated and stand-alone financial statements section of our report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

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Independence

We are independent of the Group in accordance with the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants (IESBA Code). We have fulfilled our other ethical responsibilities in accordance with the IESBA Code.

Our audit approach

Audit scope As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the consolidated and stand-alone financial statements. In particular, we considered where management made subjective judgements; for example, in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits, we also addressed the risk of management override of internal controls, including, among other matters, consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud.

How we tailored our group audit scope We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the consolidated financial statements as a whole, taking into account the structure of the Group, the accounting processes and controls, and the industry in which the Group operates. The Group is comprised of 15 reporting components (6 components representing inactive entities) of which, we selected 5 components for testing. These 5 components represent the principal business units within the Group and are all Jamaican entities.

A full scope audit was performed for Prime Sport (Jamaica) Limited, Supreme Ventures Racing and Entertainment Limited, and Supreme Ventures Services Limited (formerly Big ‘A’ Track 2003 Limited) as these entities were determined to be individually financially significant. Additionally, based on our professional judgement, Post to Post Betting Limited and Supreme Route Limited (formerly Bingo Investments Limited) were selected and audit procedures were performed on specific account transactions and balances due to the significance of certain individual amounts to the consolidated financial statements. All of the in-scope components were audited by PwC Jamaica. In establishing the overall Group audit strategy and plan, we determined the type of work required to be performed at the component level by the Group engagement team and by the component auditors. The team members on the component audit teams performing the full scope audits were also the same as those on the Group audit team.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated and stand-alone financial statements of the current period. These matters were addressed in the context of our audit of the consolidated and stand-alone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

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Key audit matter How our audit addressed the key audit matter

Business combination (Group)

Refer to notes 2 (b), 4 (vi) and 36 to the

consolidated and stand-alone financial statements

for disclosures of related accounting policies,

judgements, estimates and balances.

On 2 January 2020, the Group, through Supreme Route Limited (formerly Bingo Investments Limited) acquired selected assets of Champion Gaming Limited (Champion Gaming) for a total consideration of $2.78 billion. The consideration consisted of $1.42 billion of cash and 49% equity allocated to Champion Gaming in Supreme Route Limited (SRL) valued at $1.36 billion. The fair value of the equity consideration was determined using a capitalisation of EBITDA method. With the significant shareholding and certain changes to the composition of SRL’s board, management

concluded that it retains control of SRL, and consequently, that SRL remains a subsidiary of the Group. The accounting for the acquisition was a key

audit matter given the significance of the

transaction and the financial and operational

impacts on the Group. We focused on this

area due to the nature of the business

combination, the accounting requirements of

which can be complex and require

management to exercise judgement in

determining certain estimates. The complex

judgements include determining, identifying

and estimating the fair value of the intangible

assets acquired from Champion Gaming. The

Group was assisted by external valuation

experts in this process.

With the assistance of our valuation experts, we tested the fair value of the intangible assets recognized, as follows: • Assessed the competence and capability of

management’s valuation experts. • Evaluated the application of the valuation

methodology utilised to derive the fair value of identified intangible assets.

• Tested the reasonableness of valuation assumptions and inputs by: o Referencing management’s cash flow

projections to historical trends and other supporting documents and information;

o Corroborating the revenue forecasts, expense forecasts including payout ratios and capital and growth rates by comparison to industry and independent economic and statistical data;

o Evaluating the reasonableness of the determined discount rate; and

o Evaluating the reasonableness of the useful life of each intangible asset identified.

• Tested the mathematical accuracy of management’s discounted cash flows by reperforming the underlying calculations.

In addition, we performed the following procedures: • Assessed the reasonableness of the fair value

of the equity consideration by: o Agreeing the EBITDA used in the

calculation to historical information; and o Comparing the multiplier to that used by

other relevant market participants. • Evaluated the appropriateness of

management’s consolidation of SRL in light of the requirements of the applicable accounting standards.

Based on the procedures performed, management’s accounting for the acquisition, in our view, was not unreasonable.

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Impairment Assessment of Goodwill (Group & Company)

Refer to notes 2(g), 4(ii) and 19 to the consolidated and stand-alone financial statements for disclosures of related accounting policies, judgements, estimates and balances.

Goodwill accounts for $2,054 million or 13.2% of total assets for the Group and $190 million or 2.3% of total assets for the Company as at 31 December 2020. Management performs an annual impairment analysis over the goodwill balance. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. We focused on this area as the goodwill balance increased significantly following the acquisition of Champion Gaming and because the assessment of the carrying value of goodwill involves significant judgement and estimation, is sensitive to changes in key assumptions and due to the challenges involved in determining the impact of COVID-19 on these assumptions. The key assumptions were assessed by management as being: • Pre-tax discount rate; • Terminal value growth rate; and • EBITDA growth rate in the terminal year.

We tested management’s assumptions used in their impairment testing model for goodwill, including the future cash flow projections, discount rates and growth rates applied. With the assistance of our valuation experts, we performed the following procedures:

• Obtained management’s discounted cash flow

model (DCF) including qualitative and quantitative analyses and obtained an understanding of the process used by management to determine value-in-use of each cash generating unit.

• Agreed the 31 December 2020 base year financial

information to current year results and compared

the current year and previous forecasts to actual

results to assess the performance of the business

and the accuracy of management’s forecasting.

• Tested management’s assumptions, including the

impact of COVID-19 on those assumptions as

follows:

➢ Pre-tax discount rate – performed an analysis to evaluate the reasonableness of management’s determined rate.

➢ Terminal value growth rate – evaluated management’s terminal value, whereby we developed a range of parameters using available market inputs and historical information and performed sensitivity analyses using these parameters to determine the reasonableness of management’s assumptions.

➢ EBITDA growth rate in the terminal year – compared the growth rates to historical EBITDA growth and evaluated management’s estimated future growth rates which included an assessment of management’s business plans.

• We further checked management’s impairment

testing model calculations for mathematical

accuracy and considered the sensitivity of the

calculations by varying the key assumptions and

adjustments within management’s forecast.

Based on the procedures performed, management’s

assumptions and judgements relating to the carrying

value of goodwill, in our view, were not unreasonable.

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Valuation of investment properties (Group)

Refer to notes 2(f), 4(i) and 18 to the consolidated and stand-alone financial statements for disclosures of related accounting policies, judgements, estimates and balances.

Investment properties represented $867 million or 5.6% of total assets for the Group as at 31 December 2020. The determination of the fair value of investment properties requires significant judgement and is inherently subjective due to, among other factors, the individual nature of each property, its location and the expected future rental income for each property. This, combined with the fact that a small percentage difference in individual property valuation assumptions, when aggregated, could result in a material misstatement, is why we have focused on this area. Management, with the assistance of independent valuation experts, used different methods to value two investment properties as follows:

• For one property, the market comparison approach was combined with a residual approach to determine the fair value. The market comparison approach relies on suitable and substantial sales evidence of comparable properties within the geographic location, adjusting for certain pertinent factors, to form a basis for comparison. The residual approach is based on the residue or difference between the gross development value of the ‘highest and best use’ development of the site less its gross development costs.

• For the other property, the investment approach was used. The investment approach capitalises the net income from the investment over its projected useful life and takes into consideration a number of factors which require estimation and judgement. The key factors include estimation of rental income, determination of a capitalization rate, and discount rates.

We engaged independent qualified valuation experts to assist us in evaluating the work of management’s experts. With the aid of our valuation experts, we performed the following procedures: • Evaluated the competence and objectivity of

management’s experts. This included confirming that they are appropriately qualified and not affiliated to the Group.

• Obtained an understanding of the valuation

methods used by management along with

significant developments within the industry. This

included evaluating the appropriateness of the

valuation methodology used and its suitability for

determining market value in accordance with the

financial reporting framework.

• Evaluated management’s assumptions for the

market comparison approach by performing

comparisons to properties within similar

geographical locations.

• Assessed the appropriateness of the inputs used

in the residual approach in determining the gross

development value and the gross development

costs with focus on the capital value per square

foot and basic building costs. This involved

evaluating the inputs against suitable market

information.

• Agreed the inputs used in the investment

approach to relevant market information for the

key factors being the estimation of rental income,

the capitalisation factor and the discount rates.

Based on the procedures performed, management’s assumptions and judgements relating to the valuation of investment properties, in our view, were not unreasonable.

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Other information Management is responsible for the other information. The other information comprises the Annual Report (but does not include the consolidated and stand-alone financial statements and our auditor’s report

thereon), which is expected to be made available to us after the date of this auditor’s report.

Our opinion on the consolidated and stand-alone financial statements does not cover the other information and we will not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated and stand-alone financial statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the consolidated and stand-alone financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

When we read the Annual Report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.

Responsibilities of management and those charged with governance for the consolidated and stand-alone financial statements Management is responsible for the preparation of the consolidated and stand-alone financial statements that give a true and fair view in accordance with IFRS and with the requirements of the Jamaican Companies Act, and for such internal control as management determines is necessary to enable the preparation of consolidated and stand-alone financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated and stand-alone financial statements, management is responsible for assessing the Group and Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group and Company’s financial

reporting process.

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Auditor’s responsibilities for the audit of the consolidated and stand-alone financial statements Our objectives are to obtain reasonable assurance about whether the consolidated and stand-alone financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but

is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated and stand-alone financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated and stand-alone financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group and Company’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group or Company’s ability to continue as a going

concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated and stand-alone financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may

cause the Group or Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the consolidated and stand-alone financial statements, including the disclosures, and whether the consolidated and stand-alone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

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We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated and stand-alone financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on other legal and regulatory requirements

As required by the Jamaican Companies Act, we have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit.

In our opinion, proper accounting records have been kept, so far as appears from our examination of those records, and the accompanying consolidated and stand-alone financial statements are in agreement therewith and give the information required by the Jamaican Companies Act, in the manner so required.

The engagement partner on the audit resulting in this independent auditor’s report is Leighton McKnight.

Chartered Accountants 1 March 2021 Kingston, Jamaica

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Page 1

Supreme Ventures Limited Consolidated Statement of Comprehensive Income Year ended 31 December 2020 (expressed in Jamaican dollars unless otherwise indicated)

Note 2020 $’000

2019 $’000

Revenue - Non-fixed odd wagering games, horse racing and pin codes 6 22,846,440 23,289,501

Income from fixed odd wagering games, net of prizes 7 16,513,756 15,226,809

Total Gaming Income 39,360,196 38,516,310

Direct Costs 9 (30,608,442) (30,614,036)

Gross Profit 8,751,754 7,902,274

Other income 10 126,668 174,107

Selling, general and administrative expenses 11 (4,952,476) (4,436,894)

Net Impairment losses on financial assets 11 (22,057) (41,426)

Operating Profit 3,903,889 3,598,061

Finance costs 13 (269,872) (145,797)

Revaluation (loss)/gains on investment properties 18 (34,946) 9,446

Profit before Taxation 3,599,071 3,461,710

Taxation 14 (1,178,124) (988,076)

Net Profit, being Total Comprehensive Income for the year 2,420,947

2,473,634

Net Profit, being Total Comprehensive Income for the year is

Attributable to:

Stockholders of parent company 2,377,494 2,441,816


2,420,947 2,473,634

Earnings per stock unit attributable to owners of the

parent during the year Basic and fully diluted

16

90.15 cents

92.59 cents

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Page 2

Supreme Ventures Limited Consolidated Statement of Financial Position 31 December 2020 (expressed in Jamaican dollars unless otherwise indicated)

Note 2020 $’000

2019 $’000

Non-Current Assets

Property and equipment 17 2,839,201 1,828,585

Investment properties 18 867,000 901,946

Goodwill and intangible assets 19 3,703,009 1,093,199

Long-term receivables 20 27,958 28,493

Financial assets at amortised cost 1,883 1,883

Other investments 21 16,341 17,140

Deferred tax assets 22 - 101,058

7,455,392 3,972,304

Current Assets

Inventories 23 335,190 191,900

Trade and other receivables 24 1,453,888 1,640,922

Current portion of long-term receivables 20 1,117 1,117

Taxation recoverable 23,668 22,972

Restricted cash 41 52,932 -

Cash and cash equivalents 25 6,255,623 3,592,465

8,122,418 5,449,376

Current liabilities

Prize liabilities 26 600,455 532,173

Contract liabilities 4,342 7,089

Trade and other payables 27 2,844,938 2,290,569

Current portion of lease liabilities 31 181,986 104,814

Current portion of long-term loans 30 224,300 94,120

Income tax payable 261,291 166,954

4,117,312 3,195,719

Net Current Assets 4,005,106 2,253,657

11,460,498 6,225,961

Annual Report 2020

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93

Annual Report 2020

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Annual Report 2020

9494

Page 5

Supreme Ventures Limited Consolidated Statement of Cash Flows Year ended 31 December 2020 (expressed in Jamaican dollars unless otherwise indicated)

Note 2020 $’000

2019 $’000

Cash Flows from Operating Activities

Profit for the year 2,420,947 2,473,634

Adjustments for:

Depreciation of property and equipment 17 470,964 341,990

Amortisation of intangible assets 19 255,330 80,921

Write off of property and equipment 17,806 -

Share based option 26,472 -

Gain on disposal property and equipment 10 (1,264) (1,660)

Revaluation loss/(gain) on investment property 34,946 (9,446)

Bad debts recognised 22,057 41,426

Net foreign exchange gain on cash and cash equivalents (234,135) (15,884)

Interest income 10 (68,268) (69,231)

Interest expense 13 238,783 145,797

Taxation 14 1,178,124 988,076

Operating cash flow before movement in working capital 4,361,762 3,975,623

Change in non-cash working capital balances:

Inventories (143,290) (60,811)

Trade and other receivables 167,782 (854,818)

Trade and other payables 487,383 263,573

Prize liabilities 68,282 (27,230)

Other Investments 799 (840)

Cash generated by operations 4,942,718 3,295,497

Interest paid (204,026) (111,859)

Taxation paid, net (1,129,724) (1,020,277)

Cash provided by operating activities 3,608,968 2,163,361

Cash Flows from Investing Activities

Payment for acquisition of subsidiary, net of cash acquired (1,311,609) (442,609)

Acquisition of property and equipment (1,384,630) (627,431)

Acquisition of intangible assets (35,216) (7,684)

Proceeds on disposal of property and equipment 1,264 11,086

Long-term receivables 535 664

Interest received 65,463 70,188

Cash used in investing activities (2,664,193) (995,786)

Cash flows from operating and investing activities carried forward to page 6 944,775 1,167,575

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Page 6

Supreme Ventures Limited Consolidated Statement of Cash Flows (Continued) Year ended 31 December 2020 (expressed in Jamaican dollars unless otherwise indicated)

2020 $’000

2019 $’000

Cash flows from operating and investing activities brought forward from page 5 944,775 1,167,575

Cash Flows from Financing Activities

Repayment of long-term payables (120,193) (147,867)

Addition of long-term liabilities 3,505,795 1,450,000

Dividends paid (1,902,515) (2,064,164)

Additions to finance lease 235,325 327,003

Repayment of finance lease (214,547) (135,490)

Cash provided by/(used in) financing activities 1,503,865 (570,518)

NET INCREASE IN CASH AND CASH EQUIVALENTS 2,448,640 597,057

Effect of exchange rate changes on cash and cash equivalents held in foreign currency 214,518 15,884

Cash and cash equivalents at the beginning of the year 3,592,465 2,979,524

CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 6,255,623 3,592,465

Total non-cash transactions included the transfer of 4.9million shares in Supreme Route Limited for a value of $1.3 billion (See note 36).

Annual Report 2020

9696

Page 7 Supreme Ventures Limited Company Statement of Comprehensive Income Year ended 31 December 2020 (expressed in Jamaican dollars unless otherwise indicated)

Note 2020 $’000

2019 $’000

Income 8 2,584,728 2,976,913

Operating expenses 11 (749,119) (427,566)

Net impairment losses on financial assets (16,207) -

Operating profit 1,819,402 2,549,347

Other income 10 97,097 14,778

Finance costs 13 (200,160) (37,430)

Profit before taxation 1,716,339 2,526,695

Taxation 14 27,730 (21,031)

Net Profit, being Total Comprehensive Income 1,744,069 2,505,664

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Annual Report 2020

Annual Report 2020

9898

Page 9 Supreme Ventures Limited Company Statement of Changes in Equity Year ended 31 December 2020 (expressed in Jamaican dollars unless otherwise indicated)

Number of Shares

‘000

Share Capital $’000

Capital Reserve $’000

Retained Earnings

$’000 Total $’000

Balance at 31 December 2018 2,637,255 1,967,183 62,486 776,887 2,806,556

Profit for the year and total comprehensive income - - - 2,505,664 2,505,664

Transactions with stockholders

Distributions (note 34) - - - (2,030,686) (2,030,686)

Balance at 31 December 2019 2,637,255 1,967,183 62,486 1,251,865 3,281,534

Profit for the year and total comprehensive income - - - 1,744,069 1,744,069

Transactions with stockholders

Distributions (note 34) - - - (1,902,515) (1,902,515)

Balance at 31 December 2020 2,637,255 1,967,183 62,486 1,093,419 3,123,088

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Page 10 Supreme Ventures Limited Company Statement of Cash Flows Year ended 31 December 2020 (expressed in Jamaican dollars unless otherwise indicated)

Note 2020 2019

$’000 $’000

CASH FLOWS FROM OPERATING ACTIVITIES

Profit for the year 1,744,069 2,505,664

Items not affecting cash:

Depreciation 17 8,863 4,997

Amortisation of intangible assets 19 7,206 6,182

Dividend income 8 (2,108,000) (2,541,078)

Gain on disposal of property and equipment 8 (510) (1,642)

Net foreign exchange gain on cash and cash equivalents (140,292) (390)

Interest income 10 (97,097) (14,778)

Interest expense 13 154,637 36,172

Taxation 14 (27,730) 21,031

Operating cash flow before movement in working capital (458,854) 16,158

Change in non-cash working capital balances:

Due from subsidiaries 68,791 102,349

Trade and other receivables 661,852 (700,399)

Income tax recoverable (37,345) (751)

Due to subsidiaries 128,370 72,513

Trade and other payables (23,832) (12,711)

Cash generated by/ (used in) operations 338,982 (522,841) Taxation paid (18,888) -

Interest paid (119,881) (36,172) Cash provided by/ (used in) operating activities 200,213 (559,013)

Cash Flows from Investing Activities

Payment for acquisition of subsidiary - (572,218)

Acquisition of property and equipment (229,202) (6,759)

Acquisition of intangible assets (466) (98)

Proceeds on disposal of property and equipment 536 10,796

Long-term receivables (754,464) 13,273

Dividends received 2,108,000 2,541,078

Interest received 91,794 14,791

Cash provided by investing activities 1,216,198 2,000,863

CASH FLOWS FROM FINANCING ACTIVITIES

Dividends paid (1,902,515) (2,030,769)

Advance to subsidiary (144,000) (400,482)

Addition of lease liabilities 25,718 -

Addition of long-term liabilities 3,500,000 1,450,000

Repayment of lease liabilities (2,313) -

Loan repaid (109,781) (143,287)

Cash provided by/(used) in financing activities 1,367,109 (1,124,538)

NET INCREASE IN CASH AND CASH EQUIVALENTS 2,783,520 317,312 Effect of exchange rate changes on cash and cash equivalents held in foreign currencies

138,896

473

Cash and cash equivalents at the beginning of the year 376,822 59,037

CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 3,299,238 376,822

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Page 11 Supreme Ventures Limited Notes to the Financial Statements 31 December 2020 (expressed in Jamaican dollars unless otherwise indicated)

1. Identification and Activity

Supreme Ventures Limited (the Company) is a public limited liability company which is listed on the Jamaica Stock Exchange. The Company’s registered office is located at 9A Retirement Crescent, Kingston 5, Jamaica, W.I. The Company and its subsidiaries are collectively referred to as “the Group”. The main activities of the Group comprise betting, gaming and lottery operations. The subsidiaries and their principal activities are as follows:

Name of company Principal activity Country of

Incorporation

Percentage

Ownership

2020

%

Percentage

Ownership

2019

%

Prime Sports (Jamaica) Limited

and its subsidiaries:

Betting, gaming and

lottery

operations licensed by

the Betting,

Gaming and Lotteries

Commission

(BGLC)

Jamaica 100 100

Supreme Route Limited (formerly Bingo

Investments Limited)

Betting & Gaming Jamaica 51 51

Chillout Ventures Limited Not trading Jamaica 100 100

Supreme Ventures Financial Services Limited Not trading Jamaica 100 100

Supreme Ventures Lotteries Limited Not trading Jamaica 100 100

Transtel Jamaica Limited Not trading Jamaica 100 100

Supreme Ventures Services Limited (formerly Big A

Track A 2003 Limited)

Sale of pin codes and shared

services

Jamaica 100 100

Supreme Ventures Racing and Entertainment

Limited

Betting and horse-racing

operations

licensed by BGLC and

Jamaica Racing

Commission

(JRC)

Jamaica 100 100

Jamaica Lottery Company Holdings Limited Not trading Jamaica 100 100

Supreme Group Incorporated Holding Company St. Lucia 100 100

Supreme Guyana Incorporated Holding Company St. Lucia 100 100

Supreme Ventures Guyana Holdings Inc Holding Company Guyana 100 100

Supreme Ventures Enterprise Inc Betting & Gaming Guyana 100 100

Post to Post Betting Limited Betting & Gaming Jamaica 51 51

The shareholdings for all subsidiaries are the same as they were in the prior year, with the exception of Supreme Route Limited (formerly Bingo Investments Limited), which was a 100% subsidiary. Note 36 provide further details of the acquisition of Champion Gaming Assets and the allotment of shares.

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2. Significant Accounting Policies

The principal accounting policies applied in the preparation of these consolidated financial statements, herein after referred to as the financial statements, are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. (a) Basis of preparation

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and interpretations of IFRS Interpretations Committee (IFRIC IC) applicable to companies reporting under IFRS. The consolidated financial statements have been prepared under the historical cost convention, as modified by the revaluation of certain items of investment property, and certain available-for-sale investments in the prior year. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. Although these estimates are based on managements’ best knowledge of current events and action, actual results could differ from those estimates. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 4.

Standards, interpretations and amendments to published standards effective in current year Certain new standards, amendments and interpretations to existing standards have been published that became effective during the current financial year. The Group has assessed the relevance of all such new standards, interpretations and amendments and has effected the following, which are immediately relevant to its operations: • Amendment to IAS 1 and IAS 8 on the definition of material (effective for annual periods beginning or after

January 1, 2020). This amendment to IAS 1, ‘Presentation of financial statements’, and IAS 8, ‘Accounting policies, changes in accounting estimates and errors’, and consequential amendments to other IFRS: i) use a consistent definition of materiality throughout IFRS and the Conceptual Framework for Financial Reporting; ii) clarify the explanation of the definition of material; and iii) incorporate some of the guidance in IAS 1 about immaterial information.The adoption of this amendment did not have a significant impact on the Group.

• Amendment to IFRS 3 –definition of a business (effective for annual periods beginning or after January 1, 2020).

This amendment revises the definition of a business. According to feedback received by the IASB, application of the previous guidance is commonly thought to be too complex, and it results in too many transactions qualifying as business combinations. The adoption of this amendment did not have a significant impact on the Group.

• Amendment to IFRS 9, IAS 39 and IFRS 7 (effective for annual periods beginning or after January 1, 2020) –

Interest rate benchmark reform. The reliefs relate to hedge accounting and have the effect that IBOR reform should not generally cause hedge accounting to terminate. However, any hedge ineffectiveness should continue to be recorded in the income statement. Given the pervasive nature of hedges involving IBOR based contracts, the reliefs will affect companies in all industries. The adoption of this amendment did not have a significant impact on the Group.

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2. Significant Accounting Policies (Continued)

(a) Basis of preparation (continued)

Standards, interpretations and amendments to published standards that are not yet effective and have not been early adopted by the Group

• Amendments to IFRS 16, ‘Leases’ – COVID-19 related rent recession, (effective for annual periods beginning

on or after 1 June 2020). As a result of the coronavirus (COVID-19) pandemic, rent concessions have been granted to lessees. Such concessions might take a variety of forms, including payment holidays and deferral or lease payments. On 28 May 2020, the IASB published an amendment to IFRS 16 that provides an optional practical expedient for lessees from assessing whether a rent concession related to COVID-19 is a lease modification. Lessees can elect to account for such rent concessions in the same way as they would if they were not lease modifications. In many cases, this will result in accounting for the concession as variable lease payments in the period(s) in which the event of condition that triggers the reduced payment occurs. The adoption of this amendment is not expected to have a significant impact on the Group.

• Amendment to IAS 1 –Presentation of Financial Statements, classification of liabilities as current or non-current (effective for annual periods beginning or after January 1, 2022). This amendment clarifies that liabilities are classified as either current or non-current, depending on the rights that exist at the end of the reporting period. Classification is unaffected by the expectations of the entity or events after the reporting date. The amendment also clarify what IAS 1 means when it refers to the settlement of a liability. The adoption of this amendment is not expected to have a significant impact on the Group.

• Amendment to IAS 16 Property, Plant and Equipment (PP&E) (effective for annual periods beginning or after

January 1, 2022). This amendment prohibits an entity from deducting from the cost of an item of PP&E any proceeds received from selling items produced while the entity is preparing the asset for its intended use. It also clarifies that an entity is ‘testing whether the asset is functioning properly’ when it assesses the technical and physical performance of the asset. The financial performance of the asset is not relevant to this assessment. Entities must disclose separately the amounts of proceeds and costs relating to items produced that are not and output of the entity’s ordinary activities. The adoption of this amendment is not expected to have a significant impact on the Group.

• Amendment to IAS 37- Onerous Contracts, cost of fulfilling a contract (effective for annual periods beginning or after January 1, 2022) – This amendment clarifies that the direct costs of fulfilling a contract include both the incremental costs of fulfilling a contract and an allocation of other costs directly related to fulfilling contracts. Before recognising a separate provision for an onerous contract, the entity recognises and impairment loss that has occurred on assets used in fufilling the contract. The adoption of this amendment is not expected to have a significant impact on the Group.

There are no other new or amended standards and interpretations that are published but not yet effective that would be expected to have an impact on the accounting policies or financial disclosures of the Group.

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(b) Consolidation (i) Subsidiaries

Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

The acquisition method of accounting is used to account for business combinations involving third parties by the

Group. The consideration transferred for the acquisition of a subsidiary is the fair value of previously held interest, plus fair value of consideration transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair value at the acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net assets.

For business combination achieved in stages, which is also referred to as a 'step acquisition', the Group remeasures the previous non-controlling interest at its acquisition-date fair value and any resulting gain or loss recognised in profit or loss or other comprehensive income (OCI) as if the non-controlling interest was directly disposed of. The non-controlling interest after remeasurement to its acquisition-date fair value is included as a part of the overall consideration for obtaining control.

The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If this is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in profit or loss, in the statement of comprehensive income.

Inter-company transactions, balances and unrealised gains on transactions between Group companies are

eliminated. Unrealised losses are also eliminated.

In the Company’s stand-alone statement of financial position, investments in subsidiaries are accounted for at cost less impairment.

(ii) Disposal of subsidiaries

When the Group ceases to have control or significant influence, any retained interest in the entity is re-measured to its fair value at the date when control is lost, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss. If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income are reclassified to profit or loss where appropriate.

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2. Significant Accounting Policies (Continued) (c) Foreign currency translation

(i) Functional and presentation currency Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which each entity operates (‘the functional currency’). The consolidated financial statements are presented in Jamaican Dollars, which is the Company’s functional and presentation currency.

(ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are re-measured. At the statement of financial position date, monetary assets and liabilities denominated in foreign currencies are translated using the weighted average closing exchange rate. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates, of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.

(iii) Group companies

The results and financial position of all the Group entities (none of which has the currency of a hyper-inflationary economy) that have a functional currency different from the presentation currency are translated as follows:

a) Assets and liabilities for each statement of financial position presented are translated at year end rates, b) Items affecting the statement of comprehensive income are translated at average rates, and c) The resultant gains or losses are recognised in other comprehensive income as translation gains or losses.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. Exchange differences arising are recognised in other comprehensive income.

(d) Revenue recognition

Revenue is measured at the fair value consideration received or receivable for sale of goods and services in the ordinary course of the Group’s activities and comprise the following elements:

(i) Lottery

Lottery games comprise non fixed odd wagering and fixed odd wagering games for both of which income is recognized on a draw by draw basis, at the point the draw takes place. Income for non-fixed odd games is recorded at the gross ticket sales amount and for fixed odd games at the gross ticket sales amount net of prize payouts. Fixed odd wagering games relates to games where the customer is placing a bet with the Group (at a particular win rate) and is therefore entering into a derivative. No particular good or service is provided to a customer as the customer is taking a position against the Group.

Fixed odd wagering games are the games in which the winning amount is known to the player at the time of play

while non-fixed odd wagering games are the games in which the winning amount is unknown to the player at the time of play.

Where players wager in advance, this income is deferred and only recognised in the Statement of Comprehensive Income once the draw has taken place. Lottery tickets are sold to players by contracted retail agents and company owned locations.

Unclaimed prizes- as outlined in clause number 28 of the lottery licence held by Prime Sports (Jamaica) limited, winning tickets must be redeemed within 90 days of the relevant draw unless otherwise notified. Any valid winning ticket presented after expiration of this period maybe paid provided payment is made within 180 days of the draw, after which prizes may be paid only with the written approval of the BGLC. Fifty percent (50%) of unclaimed prizes (net of taxes where applicable) is paid over to the Consolidated Fund and the remaining fifty percent (50%) paid to the BGLC.

(ii) Video Lottery Terminal (VLT) gaming VLT games are offered at gaming lounges and food and beverage operations. Income is recognised as the net win from gaming activities, which is the difference between gaming wins and losses before deducting costs and expenses at the end of each gaming day.

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2. Significant Accounting Policies (Continued) (d) Revenue recognition (continued)

(iii) Slots

Slots revenue is considered fixed odd wagering game. Income is recognized as the net win from gaming activities which is the difference between gaming wins and losses before deducting costs and expenses.

(iv) Horseracing

Sales from the pari-mutuel pools operated at the track and off-track, are recognised upon sale of tote tickets or on performance of the underlying service.

(v) Sports betting Sports betting relates to wagers on local and international sporting events offered through the agents’ network.

Revenue represents the net winnings from bets taken on the local and international sporting events at all branches and agents, net of refunds. Revenue is recognised when the events have taken place.

(vi) Pin codes

Pin codes are sold to the public by contracted retail agents. Revenue is recognized gross when pin codes are sold.

(vii) Hospitality and related services Hospitality and related services include beverage sales and are recognised when the goods/services are provided.

(viii) Management fees

The Group provides management services to its subsidiaries. Fees are recognised when services are provided.

(ix) Interest income Interest income is accrued by reference to the principal outstanding and at the effective interest rate applicable, which is the expected rate that exactly discounts estimated future cash receipts through the life of the financial asset to that asset’s net carrying amount.

(x) Rental income

Rental income from investment properties is recognised as revenue on a straight-line basis over the term of the lease.

(xi) Dividend income Dividend income is recognised when the right to receive payment is established.

(e) Property, plant and equipment

Land and buildings comprise mainly offices. Property, plant and equipment are stated at historical cost less accumulated depreciation and impairment losses. The assets residual values and useful lives are revisited and adjusted if appropriate, at the end of each reporting period. Land, art and paintings are not depreciated as they are deemed to have indefinite lives. For all other property, plant and equipment, depreciation is calculated at annual rates on the straight-line basis to write-off the cost of the assets to their residual values over their estimated annual useful lives as follows:

Freehold buildings 20-40 years Video lottery terminal equipment 5-10 years Furniture, fixtures machinery & equipment 3-10 years Computer equipment 3-5 years Motor vehicles 5-8 years Signs & posters 5-10 years Leased assets Shorter of lease term and useful lives Leasehold improvements Shorter of lease term and useful lives

.

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(e) Property, plant and equipment (continued) Gains and losses on disposal of property, plant and equipment are determined by comparing proceeds with the carrying amount and are included in operating profit. Repairs and maintenance expenditure is charged to profit or loss during the financial period in which it is incurred. The cost of major renovations is included in the carrying amount of the asset when it is probable that future economic benefits in excess of the originally assessed standard of performance of the existing asset will flow to the Group.

(f) Investment properties

Investment properties, comprising freehold lands and buildings, are held for long-term rental yields. They are carried at fair value. Changes in fair values are presented in profit or loss as part of other income.

(g) Intangible assets

(i) Goodwill

Goodwill is recorded at cost and represents the excess of the value of consideration paid over the Group’s interest in the fair value of the Group’s share of the net identifiable assets and liabilities and contingent liabilities of the acquiree and the fair value of the non-controlling interest in the acquiree. Goodwill on acquisition of subsidiaries is included in intangible assets. Separately recognised goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose.

(ii) Trademarks and licences Trademarks and licences with finite useful lives are measured at cost less accumulated amortisation and accumulated impairment losses. Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate, with the effect of any changes in estimate being accounted for on a prospective basis. Amortisation is charged on the straight-line basis over the estimated useful lives. Useful lives are currently estimated as follows:

Licenses and permits 5 years Trademarks 10 - 15 years

Trademarks, licences and permits with indefinite useful lives are measured at cost less accumulated impairment losses. The useful lives of such assets are reviewed at each reporting date to determine whether events and circumstances continue to support an indefinite useful life assessment for those assets. If they do not, the change in the useful life assessment from indefinite to finite is accounted for as a change in an accounting estimate.

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(g) Intangible assets (continued)

(iii) Other intangible assets Other intangible assets are measured at cost less accumulated amortisation and accumulated impairment losses. Amortisation is charged on the straight-line basis over its estimated useful life. Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate, with the effect of any changes in the estimate being accounted for on a prospective basis.

The amortisation rates are as follows:

Computer software 1 - 3 years Gaming software 5 – 10 years Software usage rights 10 years Branch Network 11 Years Non-Competitive Agreement 2 - 3 years

(iv) Derecognition of goodwill and intangible assets

Intangible assets (excluding goodwill) are derecognised on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from the derecognition of intangible assets, measured as the difference between the net proceeds and the carrying amount of the asset, are recognised in profit or loss when the asset is derecognised.

(h) Impairment of non-financial assets

Under IFRS 9 the Group applies an impairment model that recognises expected credit losses (“ECL”) on financial assets measured at amortised cost and FVOCI and financial guarantees which were previously provided for under IAS 37 Provisions, Contingent Liabilities and Contingent Assets.

At initial recognition, an allowance is required for ECL resulting from default events that are possible within the next 12 months (or less, where the remaining life is less than 12 months) (’12-month ECL’).

In the event of a significant increase in credit risk (SICR) an allowance is required for ECL resulting from all possible default events over the expected life of the financial instrument (‘lifetime ECL’). Financial assets where 12-month ECL is recognised are considered to be ‘stage 1’; financial assets which are considered to have experienced a significant increase in credit risk are in ‘stage 2’; and financial assets for which there is objective evidence of impairment and are therefore considered to be in default or otherwise credit-impaired are in stage 3’. To determine whether the life-time credit risk has increased significantly since initial recognition, the Group considers reasonable and supportable information that is available, including information from the past as well as forward-looking information. Factors such as whether payments of principal and interest are in delinquency, an adverse change in credit rating of the borrower and adverse changes in the borrower’s industry and economic environment are considered in determining whether there has been a significant increase in the credit risk of the borrower. Definition of default The Group determines that a financial instrument is in default, credit-impaired and in stage 3 by considering relevant objective evidence, primarily whether: • contractual payments of either principal or interest are past due for 90 days or more; • there are other indications that the borrower is unlikely to pay such as that a concession has been granted to the

borrower for economic or legal reasons relating to the borrower’s financial condition; and • the financial asset is otherwise considered to be in default. If such unlikeliness to pay is not identified at an earlier stage, it is deemed to occur when an exposure is greater than 90 days past due.

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(h) Impairment of non-financial assets (continued) Write-off Financial assets (and the related impairment allowances) are normally written off, either partially or in full, when there is no realistic prospect of recovery. Recognition and Measurement of ECL The general approach to recognising and measuring ECL reflects: • An unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes; • The time value of money; • Reasonable and supportable information that is available without undue cost or effort at the reporting date about past

events, current conditions and forecasts of future economic conditions. Expected credit losses are calculated by multiplying the following three main components: • the probability of default (“PD”) • the loss given default (“LGD”) and • the exposure at default (“EAD”), discounted at the original effective interest rate.

Management has calculated these inputs based on the estimated forward looking economic and historical experience of the portfolios adjusted for the current point in time. A simplified approach to calculating the ECL is applied to other receivables which do not contain a significant financing component. Generally, these receivables are due within 12 months unless there are extenuating circumstances. Under this approach, an estimate is made of the life-time ECL on initial recognition. For ECL provisions modelled on a collective basis, a grouping of exposures is performed on the basis of shared risk characteristics, such that risk exposures within a group are homogeneous. The PD, LGD and EAD models which support these determinations are reviewed periodically. Therefore, the underlying models and their calibration, including how they react to forward-looking economic conditions remain subject to review and refinement. This is particularly relevant for lifetime PDs, which have not been previously used in modelling and for the incorporation of scenarios which have not generally been subject to experience gained through stress testing. The exercise of judgement in making estimations requires the use of assumptions which are subjective and sensitive to risk factors, in particular to changes in economic and credit conditions across geographical areas. Many of the risk factors have a high degree of interdependency and there is no single factor to which impairment allowances as a whole are sensitive. Therefore, sensitivities are considered in relation to key portfolios which are particularly sensitive to a few factors and these results are not extrapolated to the wider population of financial assets.

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(h) Impairment of non-financial assets (continued)

The measurement of expected credit losses for each stage and the assessment of significant increases in credit risk consider information about past events and current conditions as well as reasonable and supportable forecasts of future events and economic conditions. For defaulted financial assets, based on management’s assessment of the borrower, a specific provision of expected life-time losses is calculated and recorded as the ECL. The resulting ECL is the difference between the carrying amount and the present value of expected cash flows discounted at the original effective interest rate.

Forward looking information The estimation and application of forward-looking information requires significant judgment. PD, LGD and EAD inputs used to estimate Stage 1 and Stage 2 credit loss allowances are modelled based on the macroeconomic variables (or changes in macroeconomic variables) that are most closely correlated with credit losses in the relevant portfolio. Each macroeconomic scenario used in the expected credit loss calculation have forecasts of the relevant macroeconomic variables. The estimation of expected credit losses in Stage 1 and Stage 2 is a discounted probability-weighted estimate that considers a minimum of three future macroeconomic scenarios. The base case scenario is based on macroeconomic forecasts that are publicly available. Upside and downside scenarios are set relative to the base case scenario based on reasonably possible alternative macroeconomic conditions. Scenario design, including the identification of additional downside scenarios occurs on at least an annual basis and more frequently if conditions warrant. Scenarios are probability-weighted according to the best estimate of their relative likelihood based on historical frequency and current trends and conditions. Probability weights are updated on an annual basis or more frequently as warranted. The base scenario reflects the most likely outcome and is assigned the highest weighting. The weightings assigned to each economic scenario as at December 31, 2020 is as follows:

Base Optimistic No default Pessimistic Scenarios 95% 97% 100% 90%

Impairment on financial assets measured at amortized cost and FVOCI, recognize impairment gains and losses are recognized in the statement of profit and loss. Unrealised gains and losses arising from changes in fair value on FVOCI assets are measured in other comprehensive income and the loss allowance is recycled to profit and loss in the credit loss provision line. When the asset is sold, the cumulative gain or loss is reclassified to investment income and the impairment on these financial assets will be reversed to provision for credit losses in the profit and loss.

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(i) Financial instruments

A financial instrument is any contract that gives rise to both a financial asset in one entity and a financial liability or equity of another entity. Financial assets The Group’s financial assets comprise cash and cash equivalents and other investments, trade and other receivables, long term receivables and amounts due from related parties. Financial liabilities The Group’s financial liabilities comprise payables, contract liabilities, prize liabilities, lease liabilities, amounts due to related parties and borrowings.

(i) Classification of financial instruments

The Group classifies its financial assets as those to be measured at amortised cost.

The classification depends on the business model used for managing the financial assets and the contractual terms of the cash flows. The Group reclassifies debt investments only when its business model for managing those assets changes.

Recognition and derecognition Regular way purchases and sales of financial assets are recognised on trade-date, the date on which the Group commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership.

Impairment The Group assesses on a forward-looking basis the expected credit losses associated with its debt instruments carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk.

The Group classifies its debt instruments at amortised cost.

Assets that are held for collection of contractual cash flows, where those cash flows represent solely payments of principal and interest, are measured at amortised cost. Interest income from these financial assets is included in the income statement using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss. Impairment losses are presented as a separate line item in the statement of comprehensive income.

Other financial liabilities: Long-term liabilities are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, long-term liabilities are measured at amortised cost using effective interest method. Prize liabilities, Contract liabilities, Trade and other payables, and Due to subsidiaries are measured at amortised cost. Lottery and sports betting prizes All prizes are recorded at the actual amount except for the annuity-funded prize (PayDay), which is paid out on a deferred basis. The actual prize expense for this type of prize is based on the present value of an annuity using the interest yield on the investment acquired to fund the annuity.

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(j) Financial liabilities

The Group’s financial liabilities are initially measured at fair value and are subsequently measured at amortised cost using the effective interest method.

(k) Inventories

Inventories are measured at the lower of cost and net realisable value. Costs are assigned to inventories by the method most appropriate to the particular class of inventory, being valued on a first-in, first-out basis (FIFO). Net realisable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale.

(l) Trade receivables

Trade receivables are carried at original invoice amount less provision made for expected credit losses of these receivables based on a review of all outstanding amounts at the year-end. The Group holds the trade receivables with the objective to collect the contractual cash flows and therefore measures them subsequently at amortised cost using the effective interest method, less loss allowance. Details about the Company’s impairment policies and the calculation of the loss allowance are provided in Note 3(a).

(m) Cash and cash equivalents

Cash and cash equivalents include cash on hand and short-term deposits with original maturities of three months or less, net of bank overdrafts. In the consolidated statement of cash flows, cash and cash equivalents include cash in hand and at bank and short-term bank deposits. Bank overdrafts are shown in current liabilities on the statement of financial position.

(n) Income taxes

Taxation expense in the statement of comprehensive income comprises current and deferred tax charges.

Current tax charges are based on taxable profits for the year, which differ from the profit before tax reported because it excludes items that are taxable or deductible in other years, and items that are never taxable or deductible. The Group’s liability for current tax is calculated at tax rates that have been enacted or substantively enacted at the date of the statement of financial position.

Deferred tax is the tax expected to be paid or recovered on differences between the carrying amounts of assets and liabilities and the corresponding tax bases. Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Currently enacted or substantively enacted tax rates are used in the determination of deferred income tax.

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(n) Income taxes (continued) Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which

the temporary differences can be utilised. Deferred income tax is provided on temporary differences arising on investments in subsidiaries, except where the timing

of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.

Current and deferred tax assets and liabilities are offset when they arise from the same taxable entity, relate to the same

tax authority and when the legal right of offset exists.

Deferred tax is charged or credited to profit or loss, except where it relates to items charged or credited to other comprehensive income, in which case, deferred tax is also dealt with in other comprehensive income.

(o) Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made. Where the Group expects a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain.

(p) Share capital

Ordinary stock units are classified as equity when there is no obligation to transfer cash or other assets. Incremental costs directly attributable to the issue of new stock units or to the acquisition of a business are shown in equity as a deduction, net of tax, from the proceeds.

(q) Borrowings

Borrowings are recognised initially at cost, being their issue proceeds, net of transaction costs incurred. Subsequently, borrowings are stated at amortised cost and any difference between net proceeds and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest method.

(r) Employee benefit costs

(i) The Group is the sponsoring employer of a defined contribution pension scheme under the control of trustees and

administered by a licensed organisation. Contributions are recognised as an expense by the employer as incurred.

(ii) Employee leave entitlements are recognised when they accrue to employees. A provision is made for the estimated liability for vacation leave as a result of services rendered by employees up to the reporting date.

(iii) The Board of Directors has approved a long-term incentive plan for its senior managers and above (excluding

executive Directors). Under the plan, participants are granted allotted shares which only vest if certain performance standards are met. An expense is recognised in the profit or loss statement for these shared based payments.

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(s) Leases

Lessee The Group leases various retail locations and equipment. Rental contracts are typically made for fixed periods of five years but may have extension options. Contracts may contain both lease and non-lease components. The Group allocates the consideration in the contract to the lease and non-lease components based on their relative stand-alone prices. However, for leases of real estate for which the Group is a lessee, it has elected not to separate lease and non-lease components and instead accounts for these as a single lease component. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants other than the security interests in the leased assets that are held by the lessor. Leased assets may not be used as security for borrowing purposes. Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments: - fixed payments (including in-substance fixed payments), less any lease incentives receivable, and - payments of penalties for terminating the lease, if the lease term reflects the Group exercising that option.

Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability. The lease payments are discounted using the lessee’s incremental borrowing rates, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions. Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. Lessor Lease income from operating leases where the Group is a lessor is recognised in income on a straight line basis over the lease term (note 18). Initial direct costs incurred in obtaining an operating lease are added to the carrying amount of the underlying asset and recognised as expense over the lease term on the same basis as lease income. The respective leased assets are included in the statement of financial position based on their nature. The Group did not need to make any adjustments to the accounting for assets held as lessor as a result of adopting the new leasing standard.

(t) Finance costs

Finance costs includes interest payable on borrowings calculated using the effective interest method, interest on finance leases, material bank charges and foreign exchange gains and losses recognised in profit or loss.

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(u) Dividend distribution

Dividend distribution is recognised as equity in the financial statements in which the dividends are approved by the shareholders of the Group.

(v) Offsetting financial instruments

Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the company or the counterparty.

(w) Earnings per share

Earnings per share is calculated by dividing:

• the profit attributable to owners of the Company, excluding any costs of servicing equity other than ordinary shares

• by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year and excluding treasury shares.

(x) Segment reporting

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. An operating segment’s results are reviewed regularly to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. Segment results are reported to the Group’s executive management (collectively considered the chief operating decision maker) which includes items directly attributable to a segment as well as those that can be allocated on a reasonable basis. All transactions between business segments are conducted on an arm’s length basis, with intersegment revenue and cost eliminated on consolidation. Income and expenses directly associated with each segment are included in determining business segment performance.

Overseas entities are not considered material at this time.

The presentation of the segments was adjusted due to changes in how the segments are managed. The current year disclosure notes have been updated to reflect these Group changes and the prior year has been restated.

The Group’s reportable segments under IFRS 8 are as follows:

(i) Lottery - Lottery games offered through the agents’ network.

(ii) Sports betting - Wagers on local and international sporting events offered through the agents’ network, local horseracing races, and simulcast horseracing races, Video Lottery Terminal (VLT) games offered at gaming lounges, and food and beverage operations.

(iii) Pin codes - Sale of pin codes through the agents’ network.

(iv) Other - All other income.

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3. Financial Risk Management

Financial risk factors

Financial risk management objectives The Group has exposure to the following risks from its use of financial instruments: credit risk, liquidity risk and market risk including interest rate risk, and currency risk. Information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and processes for measuring and managing risk is detailed below. The Group’s activities expose it to a variety of financial risks and those activities involve the analysis, evaluation, acceptance and management of some degree of risk or combination of risks. Taking risk is core to the business and the operational risks are an inevitable consequence of being in business. The Group’s aim is therefore to achieve an appropriate balance between risk and return and minimise potential adverse effects on the Group’s financial performance. The Group’s risk management policies are designed to identify and analyse these risks, to set appropriate risk limits and controls, and to monitor the risks and adherence to limits by means of reliable and up-to-date information systems. The Group regularly reviews its risk management policies and systems to reflect changes in markets, products and emerging best practices. A risk management approach is adopted which involves employees at all levels. This framework is supported by sound risk management practices which include the establishment of enterprise-wide policies, procedures and limits, monitoring and measurement of exposure against established limits, ongoing realignment of business strategies and activities and the reporting of significant exposures to senior management and the Board of Directors. The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework. The Board’s risk management mandate is principally carried out through the Audit Committee. Audit, Risk and Compliance Committee The Audit, Risk and Compliance Committee has oversight for the integrity of the financial statements and reviews the adequacy and effectiveness of internal controls and risk management procedures. The Committee also ensures compliance with internal, legal and regulatory policies, identifying, monitoring, measuring and reporting significant risk exposure and making recommendations in relation to management of risk. This Board Committee also has direct responsibility for the management of financial instrument risk which includes credit, liquidity and market risks.

(a) Credit risk

The Group is exposed to credit risk, which is the risk that its customers or counterparties may default and could cause a financial loss for the Group by failure to discharge their contractual obligations. This arises principally from cash and cash equivalents, trade receivables, other investment and long-term receivables. Credit risk is an important risk for the Group’s business and management therefore carefully monitors its exposure to credit risk.

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3. Financial Risk Management (Continued)

(a) Credit risk (continued)

The Group controls credit exposure by maintaining a strict collection process. Lottery sale agents are required to remit cash collections weekly which are monitored on a weekly basis by identification and transfer to designated bank accounts. A process of suppression of agent activity is triggered for non-compliance.

Credit review process

The Group has four types of financial assets that are subject to the expected credit loss model: i. trade receivables, ii. long term receivables, iii. Intercompany and related party balances, and iv. other debt instruments carried at amortised cost.

While cash at bank is also subject to the impairment requirements of IFRS 9, the identified expected credit loss was immaterial. The Group’s credit risk is managed through a framework which incorporates the following: (i) Cash and cash equivalents

The Group maintains cash resources with reputable financial institutions. The credit risk is considered to be low.

(ii) Trade and long-term receivables

The Group establishes policies and procedures which govern standards for granting credit and the process of continuous monitoring and measurement in relation to credit quality through industry delinquency and debt recovery management. Trade receivables are monitored and managed by the Finance Department in collaboration with the Field Area Management team, which has responsibility for liaising with the sales agents. The Group’s average credit period on the sales of services is seven days. The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected credit loss allowance for all trade receivables. To measure the expected credit losses, the Group first considers whether any individual customer accounts require specific provisions. Loss rates are then assigned to these accounts based on an internal risk rating system considering various qualitative and quantitative factors. All other non-specific trade receivables are then Grouped based on shared credit risk characteristics and the days past due. The expected loss rates are based on the payment profiles of sales over a period of 24 months before 1 January 2019 and the corresponding historical credit losses experienced within this period. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic and other factors affecting the ability of the customers to settle the receivables. The Group has identified the GDP growth to be the most relevant factor, and accordingly adjusts the historical loss rates based on expected changes in this factor.

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On that basis, the loss allowance as at 31 December 2020 and 31 December 2019 was determined as follows for trade receivables:

31 December 2020 Current

More than

30 days

past due

More than

60 days

past due

More than

90 days

past due

Total

Expected loss rate 0.00% 15.86% 29.76% 98.39% 42.83%

Gross carrying amount $’000 –

trade receivables 658,355

15,750 6,712 109,459

790,276

Loss allowance provision $’000 - 2,498 1,998 107,693 112,189

31 December 2019 Current

More than

30 days

past due

More than

60 days

past due

More than

90 days

past due

Total

Expected loss rate 0.15% 35.06% 57.16% 100% 52.65%

Gross carrying amount $’000 –

trade receivables 395,744

9,514 2,438 442,067

849,763

Loss allowance provision $’000 600 3,336 1,394 442,067 447,397

The closing loss allowance provision for trade receivables as at 31 December 2020 reconciles to the opening loss allowance for that provision as follows:

2020 2019

$’000 $’000

Opening loss allowance at 1 January 447,397 417,224

Increase in loss allowance recognised in profit or loss during the period 18,253 60,669

Receivables written off during the year as uncollectible (351,939) -

Unused amounts reversed (1,522) (30,496)

Closing loss allowance at 31 December 112,189 447,397

Trade receivables are written off when there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include, amongst other, the failure of a debtor to engage in a repayment plan with the Group, and a failure to make contractual payments for a period of greater than 360 days past due. The Board of Prime Sports (Jamaica) Limited approved the write-off of delinquent debts which were previously included in the provisions. All reasonable efforts were made to collect these balances but were unsuccessful. This adjustment did not affect the current year profits of the Group.

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Trade receivables (continued) Expected credit losses on trade receivables are presented as net impairment losses within operating profit. Subsequent recoveries of amounts previously written off are credited against the same line item.

The ageing analysis of trade receivables is as follows:

2020 2019

$’000 $’000

Current 583,647 354,022

8 to 30 days 74,708 41,722

31 to 60 days 17,859 9,514

61 to 90 days 6,712 2,438

Over 90 days 107,350 442,067

790,276 849,763

Other debt instruments at amortised cost

Other financial assets at amortised cost include balances due from related parties, long term receivables, short term investments and other receivables.

All of the entity’s debt instruments at amortised cost are considered to have low credit risk and the loss allowance recognised during the period was therefore limited to 12 months expected losses. Management considers these instruments ‘low credit risk’ when there is a low risk of default and the issuer has a strong capacity to meet its contractual cash flow obligations in the near term. There was no opening loss allowances calculated on balances due from related parties and short term investments and no movement during the current year. The loss allowance for other debt instruments at amortised cost as at 31 December reconciles to the opening loss allowance as follows:

The Group The Company

2020 2019 2020 2019

$’000 $’000 $’000 $’000

Opening loss allowance at 1 January 19,410 8,241 - -

Increase in loss allowance recognised

in profit or loss during the period -

11,169

16,207

-

Closing loss allowance at 31 December 19,410 19,410 16,207 -

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Annual Report 2020



(a) Credit risk (continued) Long term receivables The loss allowance for long term receivables as at 31 December reconciles to the opening loss allowance as follows:

The Company

2020 2019

$’000 $’000

Opening loss allowance at 1 January - -

Increase in loss allowance recognised in

profit or loss during the period

16,207

-

Closing loss allowance at 31 December 16,207 -

Credit exposure for trade receivables

The credit exposure for trade receivables at their carrying amounts, as categorised by the customer sector, was as follows:

The Group

2020 2019

$’000 $’000

Lottery agents 672,735 707,978

VLT Gaming Customers 30,702 23,707

Sports Betting Agents 32,773 66,756

Off-Track Betting Parlours 54,066 51,322

790,276 849,763

Less: Provision for expected credit losses (112,189) (447,397)

678,087 402,366

Credit exposure for long-term receivables

The credit exposure for long-term receivables at its carrying amount, as categorised by the related party, was as follows: The Company

2020 2019

$’000 $’000

Supreme Ventures Racing and Entertainment Limited

436,779

-

Less: Provision for expected credit losses

(16,207)

-

420,572

-

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(b) Liquidity risk Liquidity risk is the risk that the Group is unable to meet its payment obligations associated with its financial liabilities when they fall due. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities. There has been no material change in the Group’s exposure to liquidity risk or the manner in which it measures and manages liquidity risk.

(i) Management of liquidity risk

The Board of Directors approves the Group’s liquidity and funding management policies and establishes risk limits. The Group’s Finance Department has direct responsibility for the management of the day-to-day liquidity. The Audit Committee provides added oversight over the Group’s liquidity risk exposure, within the policy and limits frameworks established by the Board.

The management of liquidity risk is carried out through various methods which include:

- Day-to-day funding, managed by monitoring future cash flows to ensure that requirements can be met;

- Maintaining a portfolio of highly marketable assets that can easily be liquidated as protection against any unforeseen interruption to cash flow within the local and international markets;

- Monitoring statement of financial position liquidity ratios against internal and regulatory requirements; and

- Maintenance of liquidity and funding contingency plans.

An analysis of the undiscounted cash flows of the Group’s financial liabilities on the basis of their earliest possible contractual maturity is presented below. The analysis provided is by estimating timing of the amounts recognised in the statement of financial position. The Group does not expect that its creditors will demand the payment of funds at the earliest date possible.

The Group

Less than 6

Months 6-12

Months 1-2

Years 2-5

Years Over

5 Years

Total Contractual Cashflows

Carrying amount

(assets)/ Liabilities

$’000 $’000 $’000 $’000 $’000 $’000 2020

Prize liabilities 600,455 - - - - 600,455 600,455 Trade and other

payables

2,789,223 - - - - 2,789,223 2,789,223 Contract liabilities 4,342 - - - - 4,342 4,342 Long term payables 118,289 165,331 294,343 4,084,565 588,475 5,251,003 4,913,769 Lease liabilities 87,225 75,346 126,602 293,923 439,461 1,022,557 922,277

3,599,534 240,677 420,945 4,378,488 1,027,936 9,667,580 9,230,066

2019 Prize liabilities 532,173 - - - - 532,173 532,173 Trade and other

payables

1,792,307 - - - - 1,792,307 1,792,307 Long term payables 41,499 59,619 299,304 767,382 743,105 1,910,909 1,522,813 Lease liabilities 105,311 69,593 153,078 313,483 912,233 1,553,698 837,452

2,471,290 129,212 452,382 1,080,865 1,655,338 5,789,087 4,684,745

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(b) Liquidity risk (continued)

The Company

Less than 6 Months

6-12 Months

1-2 Years 2-5 Years

Over 5 Years

Total Contractual Cashflows

Carrying amount

(assets)/ Liabilities

$’000 $’000 $’000 $’000 $’000 $’000

2020 Trade and other payables

136,762 - - - - 136,762 136,762

Due to related party 203,569 - - - - 203,569 203,569

Long term payables 112,641 157,697 270,337 4,055,637 558,712 5,155,024 4,840,219

Lease liabilities 3,764 5,434 9,468 5,598 - 24,264 22,377

456,736 163,131 279,805 4,061,235 558,712 5,519,619 5,202,927

2019

Trade and other payables

103,397 - - - 103,397 103,397

Due to related party 75,199 - - - 75,199 75,199

Long term payables 36,688 52,883 288,089 732,584 701,361 1,811,605 1,450,000

215,284 52,883 288,089 732,584 701,361 1,990,201 1,628,596

(c) Market risk

Market risk is the risk that changes in market prices such as foreign exchange rates and interest rates will affect the

Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return on risk.

The Board and management have responsibility for the monitoring of market risk exposures by way of measurements

through sensitivity analysis. Market information and additional analysis are also used to manage risk exposure and mitigate the limitation of sensitivity analysis.

There has been no material change to the Group’s exposure to market risks or the manner in which it manages and

measures risk.

(i) Foreign currency risk

Foreign currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. The Group is exposed to foreign currency risk as a result of transactions that are denominated in a currency other than the Jamaica dollar. The main currency giving rise to the exposure in the current year was the United States dollar. Foreign currency risk management The Group manages its foreign currency risk by ensuring that the net exposure in foreign currency denominated assets and liabilities is kept to an acceptable level by monitoring currency positions.

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(c) Market risk (continued)

Foreign currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. The following table summarises the Group’s exposure to foreign currency exchange rate risk:

The Company

2020 2019

USD USD

J$‘000 J$‘000

Assets

Cash and cash equivalents 2,007,388 12,968

Liability

Trade and other payables (686) (2,872)

Net exposure 2,006,702 10,096

The Group

2020 2019

USD USD

J$‘000 J$‘000

Assets

Cash and cash equivalents 3,123,578 479,850

3,123,578 479,850

Liabilities

Trade and other payables (44,217) (81,270)

(44,217) (81,270)

Net exposure 3,079,361 398,580

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Annual Report 2020




The Group's sensitivity to a 2% revaluation or 6% devaluation (2019: 4% revaluation or 6% devaluation) of the Jamaica dollar against the USD is demonstrated below and represents management's assessment of the possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign-currency-denominated monetary items and adjusts the translation at period end for a 2% increase or 6% decrease (2019: 4% increase or 6% decrease) in the foreign exchange rates. The increase or decrease in the relative value of the Jamaica dollar on the foreign currency exposure would have an effect on profit/loss before tax as reflected below:

The Group

2020 2019

Devaluation Revaluation Devaluation Revaluation

6% (2%) 6% (4%)

$’000 $’000 $’000 $’000

USD 184,762

(61,587)

23,915

(15,943)

The Company

2020 2019

Devaluation Revaluation Devaluation Revaluation

6% (2%) 6% (4%)

$’000 $’000 $’000 $’000

USD 120,402 (40,134) 606 (404)

(ii) Interest rate risk

Interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in interest rates. The Group is exposed to the effects of fluctuations in the prevailing levels of market interest rates on its financial position and cash flows. Mismatch of positions between assets and liabilities in periods of rising or declining interest rates may also result in loss of earnings. Management sets limits on the level of mismatch of interest rate re-pricing that may be undertaken. This is monitored on a periodic basis.

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Management of interest rate risk

Interest rate risk exposure is measured using sensitivity analysis.


Carrying value Carrying value

2020 2019 2020 2019

$’000 $’000 $’000 $’000

Fixed rate instruments:

Financial assets 2,308,947 1,695,128 1,410,428 37,221

Financial liabilities 5,970,051 2,304,591 4,862,597 1,450,000

Variable rate:

Financial assets 2,404,312 649,813 1,863,627 328,462

Interest rate sensitivity analysis Interest rate sensitivity has been determined based on the exposure to interest rates for the Group’s long-term loan receivable and short-term deposits at the end of the reporting period as these are substantially the interest sensitive instruments impacting the Group’s financial results. For floating rate assets, the analysis assumes the amount of asset outstanding at the statement of financial position date was outstanding for the whole period. A 100 basis point increase or 100 basis point decrease is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonable possible change in interest rates.

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(i) Interest rate risk (continued) If market interest rates had been 100 basis points higher or lower and all other variables were held constant, the effect on the Group’s profit before tax would have been as follows:


2020 2019 2020 2019

$’000 $’000 $’000 $’000

Effect of increase of 100 basis points (2019:100 basis points on profit) on profit

24,043 6,498 18,636 3,285

Effect of decrease of 100 basis points (2019:100 basis points on profit) on profit

(24,043)

(6,498) (18,636) (3,285)

(d) Capital management The capital structure of the Group consists of equity attributable to the stockholders of the parent company comprising issued capital, reserves and retained earnings. The Group’s objectives when managing its capital structure, which is a broader concept than the ‘equity’ on the face of the statement of financial position, are:

(i) To comply with the capital and cash reserve requirements set by the regulators;

(ii) To safeguard the Group’s ability to continue as a going concern so that it can continue to provide returns for stockholders and benefits for other stakeholders; and

(iii) To maintain a strong capital base to support the development of its business in accordance with licensing requirements.

There were no other material changes to the Group’s approach to capital management during the year. The Group is exposed to externally imposed capital requirements through debt covenants as outlined in the loan agreement with Sagicor and Barita Investments. The financial covenants include: the Minimum debt service coverage ratio, Current ratio, maximum leverage ratio, maintenance of minimum cash balance, minimum interest coverage and maximum debt to Earnings before Interest, Tax, Depreciation and Amortization. The Group was in compliance with the financial covenants as at the year end.

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(e) Fair value measurement

‘Fair value’ is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or, in its absence, the most advantageous market to which the Group has access at that date. The fair value of a liability reflects its non-performance risk. When available, the fair value of an instrument is measured by using the quoted price in an active market for that instrument. A market is regarded as active if transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. If there is no quoted price in an active market, valuation techniques are used that maximise the use of relevant observable inputs and minimise the use of unobservable inputs. The chosen valuation technique incorporates all of the factors that market participants would take into account in pricing a transaction. The best evidence of the fair value of a financial instrument at initial recognition is normally the transaction price - i.e., the fair value of the consideration given or received. If it is determined that the fair value at initial recognition differs from the transaction price and the fair value is evidenced neither by a quoted price in an active market for an identical asset or liability nor based on a valuation technique that uses only data from observable markets, then the financial instrument is initially measured at fair value, adjusted to defer the difference between the fair value at initial recognition and the transaction price. Subsequently, that difference is recognised in profit or loss on an appropriate basis over the life of the instrument but no later than when the valuation is wholly supported by observable market data or the transaction is closed out.

Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:

• Level 1 – Quoted market price (unadjusted) in an active market for identical assets or liabilities.

• Level 2 – Valuation techniques based on observable inputs, either directly (i.e., as prices) or indirectly (i.e., derived from

prices). This category includes instruments valued using quoted market prices in active markets for similar instruments; quoted prices for identical or similar instruments in markets that are considered less than active; or other valuation techniques where all significant inputs are directly or indirectly observable from market data.

• Level 3 – Valuation techniques using significant unobservable inputs. This category includes all instruments where the

valuation technique includes inputs not based on observable data and the unobservable inputs have a significant effect on the instrument’s valuation. This category includes instruments that are valued based on quoted prices for similar instruments where significant unobservable adjustments or assumptions are required to reflect differences between the instruments.

Transfers between levels of the fair value hierarchy are recognised at the end of the reporting period during which the change has occurred. Valuation techniques include net present value and discounted cash flow models, comparison to similar instruments for which market observable prices exist and other valuation models. Assumptions and inputs used in valuation techniques include risk-free and benchmark interest rates, credit spreads, and other premiums used in estimating discount rates. Considerable judgment is required in interpreting market data to arrive at estimates of fair values. Consequently, the estimates arrived at may be significantly different from the actual price of the instrument in an arm’s length transaction.

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(e) Fair value measurement(continued)

The following methods and assumptions have been used:

(i) The fair value of cash and cash equivalents, trade and other receivable, other investment and trade and other payable are assumed to approximate their carrying values due to their relatively short-term nature.

(ii) The carrying value of long-term receivables, contingent consideration payable, long-term payables and prize

liabilities approximate their fair values as they are carried at amortised cost and the interest rates are reflective of current market rates for similar transactions.

As at the reporting date, the Group has contingent consideration payable under the Caymanas Track Limited deed. (See note 36)

4. Critical Accounting Judgements and Key Sources of Estimation Uncertainty

The key sources of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on amounts recognised in the financial statements, or which have a risk of material adjustment in the next year, are as follows:

(i) Revaluation of investment properties

The Group uses a professional valuator to determine the fair value of its investment properties. Valuations are determined through the application of a variety of different valuation methods which are all sensitive to the underlying assumptions chosen.

(ii) Impairment of goodwill and intangible assets

Impairment of goodwill and intangible assets is dependent upon management’s internal assessment of future cash flows from the cash-generating units that gave rise to the goodwill and intangible assets. That internal assessment determines the amount recoverable from future use of those units. In addition, the estimate of the amount recoverable from future use of those units is sensitive to the discount rates used.

(iii) Allowance for expected credit losses on receivables

The loss allowances for financial assets are based on assumptions about risk of default and expected credit loss rates. The Group uses judgement in making these assumptions and selecting the inputs to the expected credit loss calculation, based on the Group’s history, existing market conditions as well as forward looking estimates at the end of each reporting period. Details of the key assumptions and inputs used are disclosed in Note 3.

(iv) Determining the lease term

In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option. Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated). For leases of administrative offices, retail stores and equipment, the following factors are normally the most relevant:

• If there are significant penalties to terminate (or not extend), the Group is typically reasonably certain to extend (or not terminate).

• If any leasehold improvements are expected to have a significant remaining value, the Group is typically reasonably certain to extend (or not terminate).

• Otherwise, the Group considers other factors including historical lease durations and the costs and business disruption required to replace the leased asset. Most extension options in offices and vehicles leases have not been included in the lease liability, because the Group could replace the assets without significant cost or business disruption.

Annual Report 2020

128128


4. Critical Accounting Judgements and Key Sources of Estimation Uncertainty (Continued)

(v) Income taxes The Group is subject to income taxes in the jurisdictions it operates. Significant judgement is required in determining the provision for income taxes. The Group recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. The Group has recognised deferred tax assets on tax losses carried forward as it anticipates making future taxable income to offset these losses. The Group continues to assess the impact of the losses carried forward for those amounts not currently recognized in the financial statements.

(vi) Asset acquisition versus Business Combination

In determining if the acquisition of selected assets of Champion Gaming met the definition of a business, the Group assessed the inputs, processes and outputs and whether or not Supreme Route Limited has significant control over these activities. The Group treated the transaction as a business combination in accordance with IFRS 3 – Business Combination standard. Supreme Route Limited) acquired a number of gaming machines with the gaming software which operates these machines. The machines are branded “Champion” to which the agent network and customers are familiar, and this trade name was retained as a part of the acquisition. The acquisition came with the following: • existing agent network of a number of locations which sells the product as well as the existing human resource from

the prior entity, and

• the operating processes and protocols for machine operation and maintenance as well as the processes surrounding revenue generation via the machines and recognition and reconciliation processes based on the activity of the machine.

(vii) Revenue recognition – distribution of telecommunication products

A portion of the Group’s revenue arises from the distribution of airtime (via phone cards and electronic pins) for certain telecommunications companies. Management has considered the guidance in IFRS 15, ‘Revenue from Contracts with Customers’, to determine whether the Group is acting as a principal or an agent in the distribution of these products. Management has determined that the Group is acting as principal and the gross presentation of revenue more faithfully represents the substance of the arrangements for distribution of airtime as: i. The entity is primarily responsible for fulfilling the promise to provide the specified good or service. This typically includes

responsibilities for acceptability of the specified good or service (for example, primary responsibility for the good or service meeting customer specification);

ii. The entity has inventory risk before the specified good or service has been transferred to a customer, or after transferring the control to the customer (for example, if the customer has a right of return);

iii. The entity has discretion in establishing the prices for the specified goods or services. This determination involves the exercise of significant judgement. Had management determined that the Group was acting in the capacity of an agent in the distribution of airtime, revenue and direct expenses would have been reported on a net basis as commission income. Accordingly, revenue and direct expenses would have been reduced by $11,624,441,000 (2019: $11,351,275,000) and $10,768,889,000 (2019: $10,520,546,000).

129

Annual Report 2020

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Annual Report 2020

130130

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131

Annual Report 2020

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Annual Report 2020

132132


6. Revenue - Non-Fixed Odd Wagering Games, Horse Racing and Pin Codes The group recognised non-fixed odds revenue of $22.85 billion in 2020 (2019: $23.29 billion).

Revenue is recognised at a point in time. Tickets purchased prior to year end for which draws remain open have been reflected as contract liabilities.

7. Income from Fixed Odd Wagering Games

The group recognised gross sales from fixed odds wagering games of $53.47 billion (2019: $49.89 billion) and after prize pay-outs of $36.95 billion (2019: $34.66 billion), resulting in net gaming income of $16.51 billion (2019: $15.23 billion) Positions placed during the year for which draws have not been completed at the year end are reflected as contract liabilities.

8. Income

The Company

2020 2019

$’000 $’000 Gain on disposal of property, plant and equipment

510 1,642

Management fee income

476,141 434,193

Dividend income

2,108,000 2,541,078

Miscellaneous income 77 -

2,584,728 2,976,913

133

Annual Report 2020


9. Direct Costs

The Group

2020 2019

$’000 $’000

Lottery and Sports betting prizes 1,454,623 1,408,314

Horseracing dividends 4,330,615 5,047,042

Pin Codes 10,768,889 10,520,546

Gross Profit surcharge 3,775,835 3,737,421

Agents’ commissions 3,898,557 3,268,413

Service contractor fees 2,743,926 2,667,882

Good cause fees 1,934,474 1,860,223

Contributions to Guyana Gaming Authority 1,877 174

Contributions to BGLC 978,556 941,671

Horseracing purse fees 506,391 726,115

Horseracing satellite services 81,446 300,757

Contributions to JRC 62,729 74,992

Others 70,524 60,486

30,608,442 30,614,036

10. Other Income


2020

2019

2020

2019

$’000

$’000

$’000

$’000

Interest income

68,268

69,231

97,097 14,778

Rental income

37,800

36,958

-

- Gain on disposal of property, plant and

equipment

1,264

1,660 - -

Miscellaneous income 19,336 66,258 - -

126,668 174,107 97,097 14,778

Annual Report 2020

134134


11. Expenses by Nature/ Selling, General and Administrative Expenses


2020

2020

2019 2019

$’000

$’000 $’000 $’000

Staff costs (Note 12) 1,711,120

1,571,248 117,403 146,789

Rental and utilities 398,536

341,415 11,156 5,547

Auditors’ remuneration 49,620

41,227 11,356 16,298

Depreciation and amortisation (Note 17 & 19) 726,294

422,911 16,069 11,179

Professional fees 418,224

233,713 316,663 97,723

Marketing and business development 320,666

423,139 19,894 13,594

Draw expenses 253,966

224,380 - -

Subscription and donations 183,869

207,478 2,967 9,155

GCT irrecoverable 151,014

164,453 37,912 17,815

Security 106,515

129,772 6,107 7,777

Licences and other fees 119,030

100,400 260 168

Local and foreign travel 21,260

42,350 142 2,125

Repairs and maintenance 149,521

191,621 1,152 76

Equipment and motor vehicle expenses 36,788

21,869 1,046 1,298

Directors' fees 113,171

106,966 81,483 80,732

Bank charges 61,971

51,499 3,341 848

Internal audit remuneration (2,141)

2,134 (2,141) 2,134

Administrative expenses 97,218

116,594 13,016 11,874

Insurance 28,277

38,005 1,471 1,763

Net impairment losses on financial assets 22,057 41,426 16,207 -

Shared Services Recharge - - 109,045 -

Others 7,558

5,720 777 671

4,974,534 4,478,320 765,326 427,566

135

Annual Report 2020


12. Staff Costs

Staff costs comprise:


2020 $’000

2019 $’000

2020 $’000

2019 $’000

Salaries and wages 1,275,778 1,198,904 88,021 99,094

Payroll taxes – employer’s portion 136,094 133,810 9,811 15,344

Pension costs – defined contribution 44,112 26,957 - 233

Long-term incentive plan 30,786 - - -

Allowances and benefits 132,914 144,781 3,076 7,830

Other 91,436 66,796 16,495 24,288

1,711,120 1,571,248 117,403 146,789

Included in allowances and benefits are staff meals, and health and life insurance costs.

13. Finance Costs

14. Taxation

Taxation is based on profit before tax and comprises:


2020 $’000

2019 $’000

2020 $’000

2019 $’000

Current tax 1,230,433 937,509 11,379 19,107

Deferred tax (Note 22) (52,309) 50,567 (39,109) 1,924

1,178,124 988,076 (27,730) 21,031

The Group

The Company

2020

2019

2020

2019

$’000

$’000

$’000

$’000

Interest on bank overdraft and long-term loans 159,892

39,936

154,269

36,172

Interest expense for leases 78,891 74,177 368 -

Net foreign exchange losses 31,089 31,684 45,523 1,258

269,872

145,797

200,160

37,430

Annual Report 2020

136136


14. Taxation (Continued) The tax on the profit before tax differs from the theoretical amount that would arise using the statutory tax rate as follows:


2020 $’000

2019 $’000

2020 $’000

2019 $’000

Profit before tax 3,599,071 3,461,710 1,732,546 2,526,695

Tax calculated at 25% 899,768 865,428 432,055 631,673

Expenses not deductible for tax purposes 86,177 28,439 67,998 18,160

Income not subject to tax - - (527,000) (635,269)

Tax in respect of prior years 11,380 5,490 11,380 7,555

Net employment tax credit (ETC clawback) 78,006 (51,685) - -

Tax losses not recognised: 90,627 77,948 - - Reconciliation differences due to difference in tax

rates 5,742 3,840 - -

Other charges and credits 6,424 58,616 (12,163) (1,088)

Tax charge 1,178,124 988,076 (27,730) 21,031

(a) Tax losses of the Group amounting to $1.18 billion (2019: $789 million) subject to agreement with tax authorities in Jamaica

and Guyana are available for set-off against future taxable profits of certain subsidiaries. Unutilised tax losses can be carried forward indefinitely and can be used to offset up to 50% of each year’s taxable profits.

(b) A deferred tax asset of $295.4 million (2019: $222.6 million) in certain subsidiaries has not been recognised, as directors

and management are of the view that the entities are in the development phase and the strategies initiated to utilise the deferred tax asset are still in progress.

137

Annual Report 2020


15. Net Profit and Retained Earnings

The net profit and retained earnings attributable to the shareholder of the Group are reflected in the accounts of the Company and its subsidiaries as follows:

Net profit

2020 $’000

2019 $’000

The Company 1,744,069 2,505,664

Less Dividend Income from subsidiaries (2,108,000) (2,541,078)

Less Management fee income from subsidiaries (476,141) (434,193)

Less Interest income from subsidiaries (92,047) (13,525)

Add Shared Service Charge expenses 109,045 -

The Company (823,074) (483,132)

Subsidiaries 3,200,568 2,924,948

2,377,494 2,441,816

2020 $’000

2019 $’000

Retained earnings

The Company 1,093,419 1,251,865

Subsidiaries 1,028,664 414,754

2,122,083 1,666,619

16. Earnings per Stock Unit

Earnings per stock unit is calculated by dividing the net profit attributable to shareholders, by the weighted average number of ordinary shares in issue during the year.

2020 $’000

2019 $’000

Profit for the year attributable to ordinary shareholders 2,377,494 2,441,816

Number of shares 2,637,255 2,637,255

Total earnings per share attributable to ordinary share holders 90.15 cents 92.59 cents

Annual Report 2020

138138

Pag

e 4

9

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7.

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pe

rty

an

d E

qu

ipm

en

t

Fre

eh

ol

d L

an

d

Fre

eh

old

Bu

ild

ing

s

Le

ased

Pro

pe

rty

Le

aseh

old

Imp

rovem

en

ts

Le

ased

To

te

Eq

uip

men

t

Vid

eo

Lo

ttery

Term

ina

l

Eq

uip

men

t

Fu

rnit

ure

,

Fix

ture

s,

Ma

ch

ine

ry

&

Eq

uip

men

t

Co

mp

ute

r

Eq

uip

men

t

Mo

tor

Veh

icle

s

Art

s &

Pain

tin

gs

Sig

ns

&

Po

ste

rs

Cap

ital

Wo

rk-i

n-

Pro

gre

ss

To

tal

$’000

$’000

$’000

$’000

$’000

$’000

$’000

$’000

$’000

$’000

$’000

$’000

$’000

Cost

Decem

ber

31, 2018

13,0

00

56,8

25

417,9

11

402,1

81

- 378,5

70

906,6

92

107,6

66

110,0

04

2,8

50

10,5

25

88,6

20

2,4

94,8

44

Additio

ns

- 1,8

78

247,9

46

42,9

21

- 43,5

20

107,9

95

51,4

62

50,9

18

- 12,6

43

68,1

48

627,4

31

Acquis

itio

ns

thro

ugh b

usin

ess

com

bin

atio

ns

- 121,9

61

222,2

28

29,4

99

- -

103,3

05

27,5

52

12,6

10

- 6,7

86

- 523,9

41

Tra

nsfe

rs (

i)

- 2,7

87

- 11,0

75

- -

43,6

82

22,9

78

-

- 792

(144,6

59)

(63,3

45)

Tra

nsfe

r pre

vio

usly

exis

ted f

inance

le

ases (

i)

- -

5,2

91

(5,2

91)

101,1

85

- (1

01,1

85)

-

-

- -

- -

Dis

posals

/Write

-offs

- -

- -

- -

(2,3

74)

(451)

(21,7

00)

- -

- (2

4,5

25)

Decem

ber

31,2

019

13,0

00

183,4

51

893,3

76

480,3

85

101,1

85

422,0

90

1,0

58,1

15

209,2

07

151,8

32

2,8

50

30,7

46

12,1

09

3,5

58,3

46

Additio

ns

- -

235,3

26

37,9

25

- -

299,0

66

45,3

73

62,6

35

- 1,0

79

703,2

26

1,3

84,6

30

Acquis

itio

ns

thro

ugh b

usin

ess

com

bin

atio

ns

- -

- -

- -

286,2

61

508

6,6

06

- -

- 293,3

75

Fo

reig

n e

xchange a

dju

stm

ent

- -

5,9

67

1,6

86

- -

2,7

73

1,1

74

262

- 569

56

12,4

87

Tra

nsfe

rs (

i)

- 9,6

20

- 20,1

81

- 262,6

78

3,0

07

4,2

93

-

- -

(494,0

61)

(194,2

82)

Dis

posals

/Write

-offs

- -

(16,9

01)

- -

- (9

3)

(528)

(10,0

41)

- -

- (2

7,5

63)

Decem

ber

31, 2020

13,0

00

193,0

71

1,1

17,7

68

540,1

77

101,1

85

684,7

68

1,6

49,1

29

260,0

27

211,2

94

2,8

50

32,3

94

221,3

30

5,0

26,9

93

Accu

mu

late

d d

ep

recia

tio

n

Decem

ber

31,2

018

- 10,2

93

25,5

39

314,7

90

- 310,1

76

474,4

69

68,1

67

49,0

57

- 3,1

91

- 1,2

55,6

82

Depre

cia

tio

n

- 3,0

36

118,8

35

33,8

53

20,2

37

28,4

37

87,7

22

25,8

92

21,3

00

- 2,6

78

- 341,9

90

Acquis

itio

ns

thro

ugh b

usin

ess

com

bin

atio

ns

- 254

21,1

76

19,7

72

- -

68,5

92

23,5

62

10,4

25

- 2,7

67

- 146,5

48

Tra

nsfe

r pre

vio

usly

exis

ted f

inance

le

ases

- -

882

(882)

8,4

32

- (8

,432)

- -

- -

- -

Dis

posals

/Write

-offs

- -

- -

-

(1,4

63)

(238)

(12,7

58)

- -

- (1

4,4

59)

Decem

ber

31, 2019

-

13,5

83

166,4

32

3

67,5

33

28,6

69

338,6

13

620,8

88

117,3

83

68,0

24

- 8,6

36

- 1,7

29,7

61

Depre

cia

tio

n

- 4,6

74

146,3

09

32,6

15

20,2

37

32,7

89

162,2

40

38,0

06

28,8

26

- 5,2

68

- 470,9

64

Fo

reig

n e

xchange a

dju

stm

ent

- -

869

181

- -

178

63

44

- 27

- 1,3

62

Dis

posals

/write

-offs

- -

(3,7

26)

- -

- -

(528)

(10,0

41)

- -

- (1

4,2

95)

Decem

ber

31,2

020

- 18,2

57

309,8

84

400,3

29

48,9

06

371,4

02

783,3

06

154,9

24

86,8

53

- 13,9

31

- 2,1

87,7

92

Net

bo

ok

valu

es

Decem

ber

31, 2020

13,0

00

174,8

14

807,8

84

139,8

48

52,2

79

313,3

66

865,8

23

105,1

03

124,4

41

2,8

50

18,4

63

221,3

30

2,8

39,2

01

Decem

ber

31, 2019

13,0

00

169,8

68

726,9

44

112,8

52

72,5

16

83,4

77

437,2

27

91,8

24

83,8

08

2,8

50

22,1

10

12,1

09

1,8

28,5

85

139

Annual Report 2020

Pag

e 5

0

Su

pre

me

Ven

ture

s L

imit

ed

N

ote

s to

the F

inancia

l S

tate

ments

31 D

ec

em

be

r 202

0

(exp

resse

d in

Jam

aic

an

do

llars

un

less o

the

rwis

e ind

ica

ted

)

17

. P

rop

ert

y a

nd

Eq

uip

me

nt

(Co

nti

nu

ed

)

Th

e C

om

pa

ny

Fre

eh

old

La

nd

Fre

eh

old

Bu

ild

ing

s

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ased

Pro

pe

rty

Le

aseh

old

Imp

rovem

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ts

Fu

rnit

ure

,

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ch

ine

ry &

Eq

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t

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mp

ute

r

Eq

uip

men

t

Mo

tor

Veh

icle

s

Art

&

Pain

tin

gs

Cap

ital

Wo

rk in

Pro

gre

ss

To

tal

$’000

$’000

$’000

$’000

$’000

$’000

$’000

$’000

$’000

$’000

Cost

Decem

ber

31,2

018

13,0

00

56,8

24

-

2,3

17

24,5

31

514

22,3

72

2,5

43

52,1

77

174,2

78

Additio

ns

- -

- -

1,2

15

494

- -

5,0

50

6,7

59

Tra

nsfe

rs

- 2,7

87

-

(2,3

17)

- -

- -

(57,2

27)

(56,7

57)

Dis

posal/W

rite

-offs

- -

- -

- (4

51)

(18,5

00)

- -

(18,9

51)

Decem

ber

31, 2019

13,0

00

59,6

11

-

- 25,7

46

557

3,8

72

2,5

43

- 105,3

29

Additio

ns

- 759

25,7

18

9,2

16

1,9

59

- -

- 191,5

50

229,2

02

Tra

nsfe

rs

- 9,6

20

-

- -

- -

- (1

91,0

55)

(181,4

35)

Dis

posal/W

rite

-offs

- -

- -

- -

(2,8

91)

- -

(2,8

91)

Decem

ber

31, 2020

13,0

00

69,9

90

25,7

18

9,2

16

27,7

05

557

981

2,5

43

495

150,2

05

Accu

mu

late

d

de

pre

cia

tio

n

Decem

ber

31, 2018

-

10,3

46

-

- 11,2

04

260

13,1

23

- -

34,9

33

Depre

cia

tio

n

- 1,4

90

-

- 3,1

53

47

307

- -

4,9

97

Dis

posal/W

rite

-offs

- -

- -

- (2

38)

(9,5

58)

- -

(9,7

96)

Decem

ber

31, 2019

-

11,8

36

-

- 14,3

57

69

3,8

72

- -

30,1

34

Depre

cia

tio

n

- 1,5

78

2,8

58

656

3,5

98

173

- -

- 8,8

63

Dis

posal/W

rite

-offs

- -

- -

- -

(2,8

91)

- -

(2,8

91)

Decem

ber

31

, 2020

- 13,4

14

2,8

58

656

17,9

55

242

981

- -

36,1

06

Net

bo

ok

valu

es

- -

-

- -

- -

-

Decem

ber

31, 2020

13,0

00

56,5

76

22,8

60

8,5

60

9,7

50

315

- 2,5

43

495

114,0

99

Decem

ber

31, 2019

13,0

00

47,7

75

-

- 11,3

89

488

- 2,5

43

- 75,1

95

Annual Report 2020

140140


17. Property and Equipment (Continued) Rights-of-use assets

(i) Amounts recognised in the statement of financial position

a) The statement of financial position shows the following amounts relating to leases:

The Group

Right-of-use assets

2020 $’000

2019 $’000

Buildings 807,884 726,944

Equipment 52,279 72,516

860,163 799,460

The Company

Right-of-use assets

2020 $’000

2019 $’000

Buildings 22,860 -

22,860 -

b) Capital Work in Progress was transferred during the year as follows:

The Group

2020

$’000 2019

$’000

Capitalized spend expensed - 205

Property Plant & equipment 299,779 81,314

Intangible Asset 194,282 63,140

Transferred Amount 494,061 144,659

The Company

2020

$’000 2019

$’000

Capitalized spend expensed - -

Property Plant & equipment 9,620 470

Intangible Asset 181,435 56,757

Transferred Amount

191,055 57,227

141

Annual Report 2020


17. Property and Equipment (Continued)

Rights-of-use assets (continued)

(ii) Amounts recognised in the statement of profit or loss

The statement of profit or loss shows the following amounts relating to leases:

Depreciation charge of right-of-use assets

2020 $’000

2019 $’000

Buildings 146,309 140,010

Equipment 20,237 20,237

166,546 160,247

Right-of-use assets are measured at cost comprising the following: - the amount of the initial measurement of lease liability - any lease payments made at the commencement date less any lease incentives received

Right-of-use assets are generally depreciated over the lease term on a straight-line basis. If the Group is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset’s useful life.

Annual Report 2020

142142


18. Investment Properties

(i) Non-current assets at fair value

2020 2019

$'000

$'000

Opening balance at 1 January 901,946 892,500

Net (Loss)/Gain from fair value adjustments (34,946)

9,446

Closing balance at 31 December 867,000

901,946

Investment properties include the Group’s interest in freehold land held by Jonepar Development Limited, a related party, amounting to $65.0 million (2019: $72.5 million). The properties were valued by independent valuators, Allison Pitter & Company as at November 16, 2020, who estimated a value of $867 million (2019: $901.9 million). This is categorised as level 3 in the fair value hierarchy. The Group has leased its investment property to Exodus Gaming and Entertainment Limited (Exodus) for an initial period of fifteen years commencing on August 11, 2015 with an option to renew the lease for a further fifteen years. Exodus also has the option to purchase the property at any time after the fifth anniversary of the commencement date at a price to be agreed between Exodus and PSJL within sixty days of the option notice being served. If no agreement is reached within the stipulated time, then the price will be the higher of US$4,500,000 or the market value on the date of the option notice, as determined by independent valuators. Rental income of $26 million (2019: $25 million) was earned from investment properties for the current reporting period. Direct operating expenses incurred during the year in relation to investment properties amounted to $ 3.92 million (2019: $4.38 million). The following table analyses the investment properties carried at fair value, by valuation method. Fair value

at December

2020 $’000

Fair value at

December 2019 $’000

Valuation Technique (s)

Unobservable inputs

Range of unobservable

inputs (Probability-

weighted average)

Relationship of unobservable inputs to fair

value

Sensitivity $’000

802,000 850,000

Investment approach Capitalization

rate • 7% - 9%

If the capitalization rate increases/decreases by 1%, the fair value will decrease/increase by

4,170

Discount rates • 6.5% -

7%

If the discount rate increases/decreases by 1%, the fair value will decrease/increase by

4,106

65,000 51,946

Market comparison approach with a residual approach

Capital value per square foot

• $32,400 - $40,000 capital value per square foot

If the capital value per square foot increases/decreases by 1%, the fair value will increase/decrease by

3,562

Basic building cost

• $14,750 per square foot

If the basic building cost increases/decreases by 1%, the fair value will decrease/increase by

1,248

867,000 901,946

143

Annual Report 2020


18. Investment Properties (Continued)

Lessor arrangements

The investment properties are leased to tenants under operating leases with rentals payable monthly. Lease payments for the contract include CPI increases of 2% annually, but there are no other variable lease payments that depend on an index or rate.

Although the Group is exposed to changes in the residual value at the end of the current lease, the current lease arrangement states that the original term of the lease is fifteen (15) years with an option to renew the lease for a further fifteen (15) years.

Expectations about the future residual values are reflected in the fair value of the properties

Minimum lease payments receivable on leases of investment properties are as follows

2020

$’000 2019 $’000

Within 1 Year 32,470 29,631

Between 1 and 2 years 32,120 30,224




Later than 5 years 178,451 184,393

346,428 338,594

Annual Report 2020

144144

Pag

e 5

5

Su

pre

me

Ven

ture

s L

imit

ed

N

ote

s to

the F

inancia

l S

tate

ments

31 D

ec

em

be

r 20

20

(e

xp

resse

d in

Jam

aic

an

do

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un

less o

the

rwis

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ica

ted

) 1

9.

Go

od

wil

l a

nd

In

tan

gib

le A

ss

ets

(i)

C

apitaliz

ed

sp

end

tra

nsfe

rre

d t

o e

xpe

nse

.

T

he

Gro

up

T

he

Co

mp

an

y

C

om

pu

ter

& G

am

ing

So

ftw

are

Tra

de

mark

s

& L

icen

ces

Bra

nc

h

Netw

ork

No

n-

Co

mp

eti

tive

Ag

reem

en

t

So

ftw

are

Usag

e

Rig

hts

G

oo

dw

ill

To

tal

Co

mp

ute

r

So

ftw

are

T

rad

em

ark

s

Go

od

will

To

tal

$’000

$’000

$’000

$’000

$’000

$’000

$’000

$’000

$’000

$’000

$’000

Co

st

Decem

ber

31, 201

8

105,4

45

450,5

58

-

- 80,5

58

189,9

53

826,5

14

6,2

56

141

189,9

53

196,3

50

Acquis

itio

n o

f subsid

iary

4,8

81

97,0

00

407,0

00

39,0

00

- 261,3

60

809,2

41

- -

- -

Additio

ns

7,2

60

423

- -

- -

7,6

83

- 98

- 98

Tra

nsfe

rs

63,1

40

- -

- -

- 63,1

40

56,7

57

- -

56,7

57

Adju

stm

ents

(i)

- (2

,946)

- -

- -

(2,9

46)

- -

- -

Dece

mb

er

31,2

019

180,7

26

545,0

35

407,0

00

39,0

00

80,5

58

451,3

13

1,7

03,6

32

63,0

13

239

189,9

53

253,2

05

Acquis

itio

n o

f subsid

iary

207,9

60

121,0

00

620,0

00

89,0

00

- 1,6

02,6

26

2,6

40,5

86

- -

- -

Additio

ns

34,8

72

344

- -

- -

35,2

16

456

10

- 466

Tra

nsfe

rs

194,2

82

- -

- -

- 194,2

82

181,4

34

- -

181,4

34

Fo

reig

n e

xchange

adju

stm

ent

32

- -

- -

- 32

- -

-

Dis

posals

/Write

-off

(4,9

10)

(59)

- -

- -

(4,9

69)

- (5

9)

- (5

9)

Decem

ber

31,2

020

612,9

62

666,3

20

1,0

27,0

00

128,0

00

80,5

58

2,0

53,9

39

4,5

68,7

79

244,9

03

190

189,9

53

435,0

46

Accu

mu

late

d A

mo

rtis

ati

on

Decem

ber

31, 201

8

83,5

95

381,4

69

-

- 64,4

48

-

529,5

12

4,3

37

23

- 4,3

60

Am

ort

isatio

n

21,0

51

18,7

62

18,4

98

6,5

00

16,1

10

80,9

21

6,1

75

7

- 6,1

82

Decem

ber

31,2

01

9

104,6

46

400,2

31

18,4

98

6,5

00

80,5

58

-

610,4

33

10,5

12

30

- 10,5

42

Am

ort

isatio

n

67,5

62

31,2

68

99,0

00

57,5

00

- -

255,3

30

7,1

87

19

- 7,2

06

Fo

reig

n e

xchange a

dju

stm

ent

7

-

-

- 7

- -

- -

Decem

ber

31,2

020

172,2

16

431,4

99

117,4

98

64,0

00

80,5

58

-

865,7

70

17,6

99

49

- 17,7

48

Carr

yin

g v

alu

es

Decem

ber

31, 2020

440,7

46

234,8

21

909,5

02

64,0

00

- 2,0

53,9

39

3,7

03,0

09

227,2

04

141

189,9

53

417,2

98

Decem

ber

31, 201

9

76,0

80

144,8

04

388,5

02

32,5

00

- 451,3

13

1,0

93,1

99

52,5

01

209

189,9

53

242,6

63

145

Annual Report 2020

Page 56

Supreme Ventures Limited Notes to the Financial Statements 31 December 2020 (expressed in Jamaican dollars unless otherwise indicated)

19. Goodwill and Intangible Assets (Continued) (a) The amortisation of computer software, trademarks and licences, branch network, non-competitive agreement and

software usage rights is included in operating expenses (note 11).

(b) Goodwill

The Group

2020 2019

$’000 $’000

Lotteries 189,953 189,953

Post to Post Betting Limited 261,360 261,360

Supreme Route Limited 1,602,626 -

2,053,939 451,313

The Company

2020 2019

$’000 $’000

Lotteries 189,953 189,953

The goodwill impairment test is carried out by comparing the recoverable amount of the Group’s cash-generating unit (CGU) to which goodwill has been allocated, to the carrying amount of that CGU. The CGU recognising goodwill for the Group are Lottery, Post to Post Betting Limited and Supreme Route Limited. Management has determined that goodwill at December 31, 2020 is not impaired based on an assessment of the recoverable amount of the CGU. The recoverable amount of the CGU was determined based on value-in-use calculations. Estimating the value in use requires the Group to make an estimate of the expected future cash flows from the CGU and also to choose an appropriate discount rate in order to calculate the present value of those future cash flows. These calculations use cash flow projections based on financial budgets approved by management covering a five-year period. Cash flows beyond the five-year period are extrapolated using the estimated growth rates stated below. The key assumptions used in the estimation of value-in-use were as follows:

(c) If the terminal value growth rate had been 1% (2019 - 1%) lower than management’s estimates for the Post to Post Betting Limited CGU, the Group would have an excess over the carrying value of goodwill and intangible assets of $50,579,000 (2019- $600,000) and therefore no impairment would have been recognised in 2020 but impairment of $600,000 would have been recognised in 2019. If the pre-tax discount rate had been 1% higher than management’s estimates, the Group would have impairment of $18,702,000 (2019- $17,047,000). If the EBITDA growth rate in terminal year had been 1% (2019 - 1%) lower than management’s estimates for the Post to Post Betting Limited CGU, the Group would have an excess over the carrying value of goodwill and intangible assets of $149,744,000 (2019- $21,400,000) and therefore no impairment would have been recognised.

(d) If the terminal value revenue growth rate had been 1% lower than management’s estimates for the Supreme Route Limited CGU, the Group would have an excess over the carrying value of goodwill and intangible assets of $852,000 and therefore no impairment would have been recognised. If the pre-tax discount rate had been 1% higher than management’s estimates, the Group would have impairment of $29,898,000. If the EBITDA growth rate in terminal year had been 1% (2019 - 1%) lower than management’s estimates for the Supreme Route Limited CGU, the Group would have an excess over the carrying value of goodwill and intangible assets of $15,216,000 and therefore no impairment would have been recognised.

The Group and the Company

Supreme Route Limited

Post to Post Betting Limited

Lottery

2020 2020 2019 2020 2019

Pre-tax discount rate 20.4% 21.1% 19.5% 27.1% 25.8%

Terminal value growth rate 2.0% 5.0% 2.0% 2.0% 4.7%

EBITDA growth rate in terminal year

3.0% 3.0% 4.0% 3.5% 4.7%

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20. Long-Term Receivables


2020 2019 2020 2019

$’000 $’000 $’000 $’000

(a) Island Holdings Limited 29,075 29,610 - -

(b) Supreme Ventures Racing &

Entertainment Limited - - 436,779 331,348

Less Provision for expected credit losses - - (16,207) -

29,075 29,610 420,572 331,348

(c) Prime Sports (Jamaica) Limited - - 649,032 -

29,075 29,610 1,069,604 331,348

Less: Current portion (1,117) (1,117) (4,326) -

27,958 28,493 1,065,279 331,348

(a) Island Holdings Limited (IHL)

On April 27, 2015, IHL purchased the shares of Exodus Gaming and Entertainment Limited (Exodus), which was incorporated by PSJL on February 20, 2015, for US$300,000. Payment of the sale proceeds commenced on February 1, 2016 and is to be paid in 121 instalments of US$750 per month for the first five years and US$1,500 for the next five years with a final lump sum payment of US$165,000. No interest is charged on the outstanding balance, but overdue payments attract interest at twelve (12) percent per annum from the due date of payment until the past due amount is settled. As the receivable is interest-free it has been re-measured in accordance with IFRS 9, with interest being imputed based on an appropriate market rate. The imputed interest is being amortised over the repayment period and the amount shown is net of the unamortised discount of $2.7 million (2019: $3.2 million) at the reporting date using the effective interest method. The balance outstanding is secured by a charge on the shares in Exodus. The sale agreement also requires an option to purchase in which IHL or its nominee was granted an option to purchase at an option price of US$1.00, PSJL’s interest in Jonepar Development Limited and a licence agreement permitting IHL or its nominee to use lands owned by Jonepar for parking purposes (note 18).

(b) Supreme Ventures Racing & Entertainment Limited This represents intercompany balance from subsidiary Supreme Ventures Racing & Entertainment Limited which was converted to a loan facility with interest accruing at a rate of 4% per annum. Principal payments are to be made on a quarterly basis and is expected to mature in 2046.

(c) Prime Sports (Jamaica) Limited This represents loan facility with subsidiary Prime Sports (Jamaica) Limited which was used support the acquisition of the majority shareholdings which was converted to a loan facility with interest accruing at a rate of 7.50% per annum. Principal payments are made on a quarterly basis and is expected to mature in 2029.

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21. Other Investments This represents cash invested by the Group to fund prize liabilities associated with the PayDay game. The Group has contracted with a licensed security dealer to act as the investment manager and paying agent to fulfil the prize liability stream consequent on PayDay wins. At the reporting date, the sums were invested in a resale agreement, the fair value of underlying securities of which was $16,896,000 (2019: $17,911,100).

22. Deferred Tax Balances


2020 2019 2020 2019

$’000 $’000 $’000 $’000

Deferred tax balances (59,398)

101,058

40,296

1,186

Deferred taxation is attributable to the following:

(a) Group

2020

2019

$’000

$’000

Property and equipment 101,387

96,323

Investment properties 36,257

37,188

Intangible assets (277,800)

(69,233)

Trade and other receivables (85)

(1,259)

Trade and other payables (805)

184

Tax losses 50,559

31,156

Other 31,089

6,699

Net asset (59,398)

101,058

(i) Net deferred tax is recognised in the Group Statement of Financial Position, as follows:

2020 2019

$’000 $’000

Deferred tax assets in Company 40,296 1,186

Deferred tax assets in subsidiaries 168,292 99,872

Total deferred tax assets 208,588 101,058

Set off of deferred tax liabilities in subsidiaries (267,986) -

Net deferred tax balances (59,398) 101,058

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22. Deferred Tax Balances (Continued)

(ii) Movement in net temporary differences during the yearas follows:

2020

1 January 2020

Acquisition of subsidiary

Recognised in profit/loss

Balance at December 31

$’000 $’000

Property and equipment 96,323 - 5,064 101,387

Investment properties 37,188 - (931) 36,257

Intangible assets (69,233) (207,500) (1,067) (277,800)

Trade and other receivables (1,259) - 1,174 (85)

Trade and other payables 184 - (989) (805)

Tax losses 31,156 - 19,403 50,559

Other 6,699 (5,265) 29,655 31,089

Total 101,058 (212,765) 52,309 (59,398)

2019 Balance at

January 1 Acquisition of

subsidiary Recognised

in profit/loss Balance at

December 31

$’000 $’000 $’000

Property and equipment 48,856 15,142 32,325 96,323

Investment properties 13,551 - 23,637 37,188

Intangible assets (2,054) (69,233) 2,054 (69,233)

Trade and other receivables (2,430) - 1,171 (1,259)

Trade and other payables 17,002 184 (17,002) 184

Tax losses 144,391 - (113,235) 31,156

Other (15,786) - 22,485 6,699

Total 203,530 (53,907) (48,565) 101,058

(b) Company 2020 2019

$’000 $’000

Property and equipment (5,859) (1,664)

Trade and other receivables (1,111) (867)

Tax losses 38,715 -

Other 8,551 3,717

Net asset 40,296 1,186

149

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22. Deferred Tax Balances (Continued)

Movements in net temporary differences during the year are as follows:

2020 Balance at

January 1 Recognised


December 31

$’000 $’000 $’000

Property and equipment (1,664) (4,195) (5,859)

Trade and other receivables (867) (244) (1,111)

Tax losses - 38,715 38,715

Other 3,717 4,834 8,551

Total 1,186 39,110 40,296

2019 Balance at

January 1 Recognised


December 31

$’000 $’000 $’000

Property and equipment 4,806 (6,470) (1,664)

Trade and other receivables (1,825) 958 (867)

Other 129 3,588 3,717

Total 3,110 (1,924) 1,186

23. Inventories

The Group

2020 2019

$’000 $’000

Pin codes 307,304 168,151

Operational inventory 25,027 19,683

Food and beverage 2,859 4,066

335,190 191,900

The cost of inventories recognised as direct expense during the year for the Group was $10.77 billion (2019: $10.5 billion).

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24. Trade and Other Receivables


2020 2019 2020 2019

$’000 $’000 $’000 $’000

Current assets

Trade receivables from contracts with

customers (Note a)

790,276

849,763 - -

Less: provision for credit losses (112,189)

(447,397) - -

678,087 402,366 - -

Other receivables and prepayments (Note b) 767,921 1,233,481 93,857 751,384

Accrued interest 7,880 5,075 4,446 3,469

1,453,888 1,640,922 98,303 754,853

(a) Included in trade receivables are amounts of $685 million (2019: $741 million) representing amounts receivable from

agents that support lottery and sports betting sales.

(b) Other receivables and prepayments for the Group and Company includes GCT recoverable and vendor prepayments totaling $563 million. In 2019, $723 million was paid towards the acquisition of Champion Gaming Limited. (refer to Note 36)

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25. Cash and Cash Equivalents


2020

2019 2020 2019

$’000 $’000 $’000 $’000

Cash in hand and at bank 4,264,868 2,850,176 1,941,742 339,601

Certificate of deposits 1,279,372 650,453 1,357,496 37,221

Resale agreements 711,383 91,836 - -

6,255,623 3,592,465 3,299,238 376,822

(a) As at December 31, 2020, the fair value of the underlying securities of resale agreements amounted to $711,383,000

(2019: $91,835,864.93).

(b) The weighted average interest rate on the Certificate of deposits at the year end is 2.76%.

(c) Special accounts for operational purposes to pay prizes includes the following:

(i) An amount of $20 million (2019: $20 million), which is the minimum regulatory requirement to fund the Lucky 5 and Top Draw game, was set aside as a reserve by Prime Sports (Jamaica) Limited (PSJL), a subsidiary.

(ii) As a condition of its lottery licence, PSJL is required to establish a dedicated bank account into which funds are

deposited to ensure that on a continuous basis throughout the term of the licence, the credit balance on that account is not less than 100% of the aggregate amount of its liabilities, which include prize liabilities, fees payable to BGLC, gaming taxes payable to the Government of Jamaica. At the reporting date, the balances in the dedicated bank accounts totalled $1.12 billion (2019: $914 million), which is in excess of the reserve requirement of $744 million (2019: $560 million).

(iii) An amount of $5.8 million (2019: $5.8 million) is required to facilitate a guarantee issued in favour of Jamaica Public

Service Company Limited for the provision of electricity services. (iv) An amount of $20.2 million (2019: $20.2 million) was set aside as a performance bond guarantee arrangement by

Prime Sports (Jamaica) Limited. This is a requirement of the Betting, Gaming and Lotteries Act granting a Bookmaker’s permit to PSJL.

(v) Cash and cash equivalents include $65.6 million (2019: $65.6 million) is managed by Supreme Ventures Racing &

Entertainment Limited on behalf of racehorse owners and are used to claim/buy horses from other owners.

Annual Report 2020

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26. Prize Liabilities

The Group

2020 2019

$’000 $’000

Local lottery games ((a) below) 183,316 195,361

Multi-jurisdictional lottery game ((b) below) 375,101 259,672

Horse-racing Dividends 3,299 76,346

Sports Betting 38,739 794

600,455 532,173

(a) This represents the prize liabilities associated with the local lottery games operated under licence by the subsidiary,

Prime Sports (Jamaica) Limited, including an amount accrued for the advertised jackpot of $69 million (2019: $45 million).

(b) The Super Lotto game is a multi-jurisdictional game with the following countries being a party to the Super Lotto agreement entered into by the Company on July 27, 2009: Anguilla, Antigua and Barbuda, Barbados, Bermuda, Jamaica, St. Kitts and Nevis, St. Maarten, United States Virgin Islands, Dominican Republic (up to February 27, 2015) and Paraguay (since April 7, 2014). Under the rules of the Super Lotto game, and as agreed by BGLC, jackpot contributions are calculated and accumulated based on a specified portion of every bet.

27. Trade and Other Payables The Group The Company

2020 2019 2020 2019

$’000 $’000 $’000 $’000

Trade payables 1,474,916 1,156,522 - -

Contributions payable to the BGLC

73,642

57,350

-

-

Government taxes payable

111,161

53,117

-

-

Accruals

460,232

502,809

45,203

25,686

Other payables

724,987

520,771

94,804

103,397

2,844,938

2,290,569

140,007

129,083

28. Share Capital

Authorised: 3,000,000,000 ordinary stock units at no par value

2020 2019

$’000 $’000

Stated capital:

2,637,254,926 ordinary stock units, issued and fully paid 1,967,183 1,967,183

29. Capital Reserve

This includes gains arising on the scheme of reorganisation and amalgamation of subsidiaries within the Group in 2008.

The reserve is stated net of costs associated with the reorganisation and amalgamation and capital distributions.

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30. Long-term Payables


2020 2019 2020 2019

$’000 $’000 $’000 $’000

(a) PayDay prize liability 16,341 17,140 -

-

(b) BM Soat Auto Sales Limited 2,240 2,262 - -

(c) Sagicor Bank Jamaica Limited 1,395,188 1,503,411 1,340,219 1,450,000 (d) Jamaica Central Services Depository (As

Trustees) 3,000,000

- 3,000,000

-

(e) Barita Investments Limited 500,000 - 500,000 -

4,913,769 1,522,813 4,840,219 1,450,000

Less: current portion (224,300) (94,120) (216,864) (89,571)

4,689,469 1,428,693 4,623,355 1,360,429

(a) PayDay prize liability – This liability represents the present value of a monthly prize annuity of $150,000 due and

payable for twenty (20) years, expiring 25 October 2036. It is stated net of an unamortised discount of $12 million (2019: $13 million).

(b) BM Soat Auto Sales Limited - Four year motor vehicle loan for Supreme Ventures Enterprise Incorporated from BM Soat Auto Sales Limited. The loan has interest accruing at a rate of 14.58% per annum. Payments are made monthly and is expected to mature in 2023.

(c) Sagicor Bank Jamaica Limited - This relates to four loan facilities as follows:

(i) A mortgage loan from Sagicor Bank Jamaica Limited to purchase building which houses Post to Post Betting Limited Head Office with interest accruing at a rate of 9.5% per annum, for 10 years with a maturity date of 31 December 2028. The property was used as a security for the facility.

(ii) Motor vehicle loan from Sagicor Bank Jamaica Limited. The loan facility has interest accruing at a rate of 7.25% per annum for three (3) years with a maturity date of 30 September 2023.

(iii) Unsecured credit facility of $450 million from Sagicor Bank Jamaica Limited, to support the Group’s acquisition

of Post to Post Betting Limited operations (note 39). The loan facility includes a moratorium of 12 months on principal payments, with interest accruing at a rate of 6.35% per annum, for five (5) years with a maturity date of 14 June 2024.

(iv) Unsecured Syndicated Loan facility of $1 billion administered by Sagicor Bank Jamaica Limited, to support the

Group’s plans for future acquisition. The loan facility includes a moratorium of 6 months on principal payments, with interest accruing at a rate of 6.5% for the first five (5) years and thereafter a variable rate with a ceiling of 9.5%, for five (5) years with a maturity date of 30 December 2029.

(d) Jamaica Central Services Depository (As Trustees)- Unsecured Bond facility of $3 billion arranged by Sagicor

Investments, to cover the Group’s costs for targeted acquisitions in Post to Post Betting Limited and Supreme Route Limited with a maturity date of 30 October 2025. These proceeds will also be used to fund targeted acquisitions that are being assessed for finalization. As part of the requirements of the bond facility, a special deposit of $52 million, equivalent to one month interest has been deposited to a cash reserve account.

(e) Barita Investments Limited - Senior secured bond facility of $500 million from Barita Investments, to support the

Group’s plan for the acquisition of a gaming entity and assets. The principal on the facility is due on maturity on 11 December 2025 with interest accruing at a rate of 6.50% per annum. As a condition of the Barita bond, the following Guarantees were executed:

i) First Legal Guarantor’s Mortgage (“Guarantor’s Mortgage”) endorsed on Certificate of Title for Coral Cliff property ii) Guarantee and Postponement of Claims Agreement issued by Prime Sports (Jamaica) Limited, an affiliate of the

Borrower (the “Guarantor”), in favor of the Lender (the “Guarantee”); iii) Deed of Assignment of Commercial All Risk Policy issued by the Borrower and/ Guarantor in favor of the Lender

for the full replacement value of the Mortgaged Premises (the “Assignment of Insurance”).

Annual Report 2020

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30. Long-term Payables (Continued)

The carrying amounts and fair value of the non-current borrowings are as follows:

Carrying Amounts Fair Values

2020 2019 2020

2019

$’000 $’000 $’000 $’000

Non-current borrowings 4,913,769 1,522,813 3,822,104 974,695

31. Lease Liabilities

(i) Amounts recognised in the statement of financial position

The balance sheet shows the following amounts relating to leases:


Lease liabilities

2020

$’000 2019 $’000

2020 $’000

2019 $’000

Current 181,986 104,814

7,917 -

Non-current 740,292 732,638 14,461 -

922,278 837,452 22,378 -

(v) Amounts recognised in the statement of profit or loss

The statement of profit or loss shows the following amounts relating to leases:


2020

$’000 2019 $’000

2020 $’000

2019 $’000

Interest expense (included in finance cost) 78,891 74,177

368 -

Expenses relating to short term leases (included

in selling, general and administrative expenses

27,290 44,086

4,899

-

106,181 118,263 5,267 -

The total cash outflow for leases in 2020 was $222,534,000 (2019: $135,489,000) for the Group and $2,313,000 (2019: nil).

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31. Lease Liabilities (Continued) (iii) Incremental borrowing rate

The incremental borrowing rate, the Group:

-where possible, uses recent third-party financing received by our bankers as a starting point, adjusted to

reflect changes in financing conditions since third party financing was received - makes adjustments specific to the lease, e.g. term, country, currency and security

(iv) Lease payments Payments associated with short-term leases of equipment and vehicles and all leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise IT equipment and small items of office furniture.

(v) Extension and termination options Extension and termination options are included in a number of property and equipment leases across the Group. These are used to maximise operational flexibility in terms of managing the assets used in the Group’s operations. The majority of extension and termination options held are exercisable only by the Group and not by the respective lessor. The lease term is reassessed if an option is actually exercised (or not exercised) or the Group becomes obliged to exercise (or not exercise) it. The assessment of reasonable certainty is only revised if a significant event or a significant change in circumstances occurs, which affects this assessment, and that is within the control of the lessee. During the current financial year, the financial effect of revising lease terms to reflect the effect of exercising extension and termination options was an increase in recognised lease liabilities and right-of-use assets of $26 million

32. Investment in Subsidiaries

The Company

2020 2019

$’000 $’000

Prime Sports (Jamaica) Limited 1,938,651 1,938,651

Supreme Ventures Racing and Entertainment Limited 150,000 150,000

Supreme Ventures Services Limited (formerly Big A Track 2003 Limited) 5,760 5,760

Post to Post Betting Limited 572,218 572,218

Supreme Group Incorporated 544,482

400,482

Transtel Jamaica Limited 1 1

3,211,112 3,067,112

(a) On January 2, 2020, the Group under its subsidiary Bingo Investments Limited, acquired 100% of the assets of

Champion Gaming Limited for a value of $2.78 billion. As a result of the transaction, a minority interest (Champion Gaming) has acquired 49% of the shares of Bingo Investments Limited. The consideration was paid by cash $1.42 billion and 49% equity in Supreme Route Limited valued at $1.36 billion. Bingo was renamed to Supreme Route Limited (SRL) effective January 17, 2020 (note 36).

(b) During the year, the Board of Directors approved an additional injection of US$1 million as capital advances to its subsidiary Supreme Guyana Incorporated as funding to cover operational and administrative expenses.

Annual Report 2020

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33. Related Party Transactions and Balances

The Company

2020 2019

$’000 $’000

(a) Long term receivables (Loans)

Supreme Ventures Racing and Entertainment Limited

416,247 331,348

Prime Sports (Jamaica) Limited 649,032 -

1,065,279 331,348

(b) Due from subsidiaries:

Supreme Ventures Enterprise Incorporated 14,432 -

Supreme Ventures Racing and Entertainment Limited - 61,276

Post to Post Betting Limited 529 -

Supreme Ventures Services Limited (formerly Big ‘A’ Track 2003 Limited) - 7,372

Supreme Venture Guyana Holdings Incorporated - 15,104

14,961 83,752

(c) Due to subsidiaries

Supreme Ventures Guyana Holdings Incorporated 5,040 -

Prime Sports (Jamaica) Limited 126,290 75,199

Supreme Ventures Services Limited (Big ‘A’ Track 2003 Limited) 72,239 -

203,569 75,199

(i) Identity of related parties

The Company has a related party relationship with its directors, subsidiaries and companies with common directors. “Key management personnel” represents directors of the Company and certain members of the Group’s executive management.

(ii)The consolidated and company income statements include the following transactions with related parties:


2020 2019 2020 2019

$’000 $’000 $’000 $’000

Subsidiaries -

Management fees - - 476,141 434,193

Interest income - - 92,047 13,525

Dividend income - - 2,108,000 2,541,078

Shared services recharge expense - - 109,045 -

Other related parties -

Interest and other income earned 47,810 56,518 - -

Other expenses 154,984 183,262 - -

157

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33. Related Party Balances and Transactions (Continued)

(d) Compensation of key management personnel

The remuneration of members of key management during the year was as follows:


2020 2019 2020 2019

$’000 $’000 $’000 $’000

Management remuneration 513,018 452,471 104,206 158,989

Post-employment benefits 19,530 4,195 - -

532,548 456,666 104,206 158,989

(e) The following have been charged in arriving at profit before income tax:

2020 2019 2020 2019

$’000 $’000 $’000 $’000

Directors’ emoluments -

Director’s Fees 113,171

106,966 81,483 80,732

Management remuneration 57,563

109,563 57,563 109,563

Pension contributions -

9,520 - 9,520

(f) Provisions or write-offs

No provisions or write-offs have been recognised for amounts advanced to key management or related parties.

Annual Report 2020

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34. Distributions

(a) Distributions to shareholders of the Parent Company 2020 2019

$’000 $’000

Final dividend for 2018 paid March 22, 2019 - 17¢ - 448,616

First interim dividend paid May 24, 2019 - 21¢ -

553,824

Second interim dividend paid September 6, 2019 - 22¢ -

580,196

Third interim dividend paid December 4, 2019 - 17¢ - 448,250

Final dividend for 2019, paid April 3, 2020 - 20¢ 527,451

-

First interim dividend paid June 12, 2020 - 25¢ 659,313

-

Second interim dividend paid September 4, 2020 - 7¢ 188,300 -

Third interim dividend paid December 4, 2020 - 20¢ 527,451 -

1,902,515 2,030,686

(b) Distributions to non-controlling interest

2020 2019

$’000 $’000

Special dividend paid December 1, 2019 - $5.23 -

33,479

(c) Proposed

At a meeting of the Board of Directors held on February 26th, 2021, a dividend of 26 cents per share was declared.

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35. Contingencies and Commitments

(a) Contingencies – litigations

EGE Limited (formerly Epsilon Global Equities Limited):

On December 15, 2008 a civil suit was filed by EGE Limited (then called Epsilon Global Equities Limited) against the Company and its founding stockholders. The matter was decided in 2011, with a judgement in favour of the founding stockholders and the Company. An appeal to the Court of Appeal was also dismissed on 30th May 2017 again in favour of the Company and stockholders. A further appeal has been made to the Judicial Committee of the Privy Council and the hearing is scheduled for the 27th and 28th of April, 2021. The attorneys representing the Company expect to succeed and that the appeal will not result in a financial liability to the Company. Talisman Capital Alternative Investment Fund and EGE Limited: In August 2012, a civil suit was filed in the Courts of Florida, USA, by Talisman Capital Alternative Investment Fund and EGE Limited citing as defendants the Company and certain of its stockholders. This suit is in respect of most of the same issues decided in the Supreme Court in Jamaica in favour of the Company and some of its stockholders (see above). In April 2013, the Federal Bankruptcy Court in Florida granted a motion by SVL and other defendants to dismiss the complaint. The plaintiffs then filed objections to the dismissal. Subsequently, the court granted a motion by SVL and other defendants to strike out the objections. The plaintiffs then moved for reconsideration of the order. The motions were heard and SVL and other defendants were successful on the motions and were either discharged from the proceedings or the plaintiffs were ordered to re-file the proceedings. The Plaintiffs have appealed the Order. The appeal has been heard and the decision is pending. The attorneys representing SVL expect SVL’s position to be upheld by the Appeal Court.

(b) Contingencies - Guarantees

Pursuant to the Articles of Incorporation of the Company and a resolution of the directors, the Company has issued a duly executed and stamped deed of debenture and a duly executed guarantee to the Betting, Gaming and Lotteries Commission (BGLC). The Company and the BGLC have agreed that the secured debenture and the guarantee constitute compliance by the subsidiary, Prime Sports (Jamaica) Limited (PSJL), with the requirements of the licence granted by BGLC that the equity capitalisation of PSJL be not greater than $500 million, and PSJL will accordingly be treated as having $500 million of stockholders’ equity for the purpose of the condition of the BGLC licence that refers to stockholders’ equity. Accordingly, BGLC will hold the Company responsible and liable for any breaches of the licence by its subsidiary, PSJL.

(c) Contingencies - Prime Sports (Jamaica) Limited

In accordance with the requirements of the Betting, Gaming and Lotteries Act granting a Bookmaker’s permit to Prime Sports (Jamaica) Limited (PSJL), a performance bond guarantee arrangement was executed with The Bank of Nova Scotia Jamaica Limited (BNS) for an amount of $20.2 million. Under the said performance bond covering the period December 24, 2019 to January 02, 2025, BNS would pay on demand any sums which may from time to time be demanded by the BGLC up to a maximum aggregate sum of $20.2 million. The bank guarantee is secured by a hypothecated term deposit in the amount of $20.2 million.

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35. Contingencies and Commitments (Continued)

(d) Contingencies - Super Lotto Jackpot Liability

As required under Condition 7 attached to the approval granted by the BGLC to promote the multi-jurisdictional game, ‘Super Lotto’, the Company, as the applicant, has made arrangements for a stand-by financing facility of $600 million from BNS. Under the said stand-by facility, which is renewable annually, BGLC has been identified as the beneficiary in order to ensure that a Super Lotto jackpot winner in Jamaica is settled with the prize money and also to ensure that the necessary taxes on such a prize payment are settled with the revenue authorities in Jamaica.

(e) Commitment - Licence fees to the Betting, Gaming and Lotteries Commission (BGLC)

In accordance with conditions attached to the lottery, sports betting and VLT licences granted by the BGLC, annual licence fees aggregating $44.41 million (2019: $49.6 million) fall due for payment each year.

(f) Capital commitments

The Group

2020 2019

$’000 $’000

Machinery and equipment 1,637 14,212

Leasehold improvements 1,725

30,284

Furniture, fixtures, machinery and equipment 500 152

Signs and posters 405 612

Computer equipment 6,943 2,726

Computer software 67,228 17,980

78,438 65,966

161

Annual Report 2020

Page 72


35. Contingencies and Commitments (Continued)

(g) Sponsorship commitments

Commitments pursuant to sponsorship agreements entered into by the Group are as follows:

The Group

2020 2019

$’000 $’000

2020 - 6,663

- 6,663

(h) Contingent commitment

The Group has a commitment to develop and modernize the Caymanas Park, which involves the following outlays:

Milestone Implementation period from commencement date $’000

Phase 1 Within two (2) years 200,000

Phase 2 Between year three (3) and year (5) 300,000

500,000

As of December 31, 2020, the Group has invested $468 million towards the development and modernization of Caymanas Park.

Annual Report 2020

162162

Page 73


36. Acquisition of Subsidiaries

(a) Acquisition of Champion Gaming Limited

On January 2, 2020 the Group through Supreme Route Limited (formerly Bingo Investments Limited) acquired selected assets of Champion Gaming Limited for a value of $2.78 billion. The consideration was paid by cash $1.42 billion and 49% equity in Supreme Route Limited (formerly Bingo Investments Limited) valued at $1.36 billion. The acquisition has increased the group’s market share in the industry and provides access to customers using Champion machines through the network of agents. Since the date of acquisition, the betting operations has contributed net revenue of $452 million and attributable post-acquisition net profit of $126 million to the Group’s results in the period to December 31, 2020. The following summarises the fair value of the identifiable assets and liabilities recognised by the Group at the date of acquisition:

(i) Identifiable assets acquired

2020 $’000

Property, plant and equipment 293,375

Computer software 207,960

Distribution network 620,000

Trademark- Champion 121,000

Non-competition agreement 89,000

Cash and cash equivalents 76,298

Deferred tax liability (207,500)

Trade and other payables (23,563)

Net identifiable assets acquired 1,176,570

Non-Controlling Interest 1,361,806

Cash Consideration transferred 1,417,390

Less net identifiable assets acquired (1,176,570)

Goodwill 1,602,626

None of the goodwill is expected to be deductible for tax purposes.

(ii) Cashflow on acquisition

Outflow of cash to acquire subsidiary, net of cash acquired 2020 $’000

Outflow of cash to acquire subsidiary, net of cash acquired

Cash consideration 1,417,390

Less:

Cash (76,298)


Advisory fees (5,920)

Net outflow of cash 1,311,609

163

Annual Report 2020

Page 74


36. Acquisition of Subsidiaries (Continued)

(a) Acquisition of Champion Gaming Limited (continued)

(iii) The fair value of certain material asset categories was established as follows:

1. Property and equipment: The value of property and equipment were assessed as net book values as at the date of acquisition.

2. Intangible assets:

The value of the distribution network was assessed through market benchmarking information provided by independent data specialists through the multi-period excess earnings method, performed by a qualified independent valuator. The value of trademark was assessed through market benchmarking information provided by independent data specialists through the relief from royalty method in estimating the value of tradename performed by a qualified independent valuator. The value of the non-compete agreement was assessed using the differential cash flows method. It derives its value based on the present value of the difference in cash flows associated with and without the non-compete agreement.

3. Gaming software and equipment

The purchase price allocation and the identification and valuation of the net assets acquired for gaming equipment and gaming software were done on a provisional basis, as allowed under IFRS 3. Finalisation of the purchase price allocation and the identification and valuation of the net assets within twelve months of acquisition date may require an adjustment to the financial statements, which, if material, may result in a prior year restatement.

(iv) Acquisition-related costs

In 2020 The Group incurred acquisition-related costs of $69.9 million which was fully incurred by the Company. These costs have been included in professional fees expenses’ in profit for the current period.

(v) Accounting policy choice for non-controlling interests

The Group recognises non-controlling interests in an acquired entity either at fair value or at the non- controlling interest’s proportionate share of the acquired entity’s net identifiable assets. This decision is made on an acquisition-by-acquisition basis. For the non-controlling interest in Supreme Route Limited, the Group elected to recognise the non-controlling interests at its fair value. See note 2(b)(i) for the Group’s accounting policies for business combinations.

Annual Report 2020

164164

Page 75



(b) Acquisition of Post to Post Betting Limited – In prior year

On July 1, 2019, the Group acquired 51% stake in Post to Post Betting Limited. Post to Post Betting Limited is licensed under the Betting, Gaming and Lotteries Act to carry out the main activities of sports betting, horseracing, slot machines and virtual gaming.

The following summaries the fair value of the identifiable assets and liabilities recognised by the Group at the date of acquisition.

(i) Identifiable assets acquired

2019

$’000

Property and equipment 176,341

Trade and other receivables 34,823

Cash and cash equivalents 129,609

Deferred tax asset 15,326

Intangible assets 547,881

Leased asset 201,052

Leased liability (206,067)

Deferred tax liability (69,233)


Tax payable (11,806)

Borrowings (55,248)

Net identifiable assets 680,861

Non-Controlling Interest 370,003

Cash Consideration transferred 572,218

Less net identifiable assets acquired (680,861)

Goodwill 261,360

165

Annual Report 2020

Page 76



(b) Acquisition of Post to post Betting (continued)

(ii) Cashflow on acquisition

Outflow of cash to acquire subsidiary, net of cash acquired 2019

$’000

Outflow of cash to acquire subsidiary, net of cash acquired

Cash consideration 572,218

Less:

Cash (129,609)

Net outflow of cash 442,609

(c) Acquisition related costs

In 2020 The Group incurred acquisition-related costs of $81 million (2019: $31 million) which was fully incurred by the Company. These costs have been included in professional fees expenses’ in profit for the current period.

(d) Accounting policy choice for non-controlling interests

The Group recognises non-controlling interests in an acquired entity either at fair value or at the non- controlling interest’s proportionate share of the acquired entity’s net identifiable assets. This decision is made on an acquisition-by-acquisition basis. For the non-controlling interest’s interests in Post to post Betting Limited and Supreme Route Limited, the Group elected to recognise the non-controlling interests at its proportionate share of the acquired net identifiable assets. See Note 2 for the Group’s accounting policies for business combinations.

Annual Report 2020

166166

P

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(4,8

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97)

167

Annual Report 2020

Page 78


38. Non-Controlling Interest

The table below shows the summarised financial information for Post to Post Betting Limited that has a non-controlling interest:

Statement of financial position 2020 2019

$’000 $’000

Total assets 540,942 555,964

Total liabilities (372,742) (352,520)

Net assets 168,200 203,444


Statement of comprehensive income

Revenue 1,274,698 845,495

(Loss)/profit for the period/total comprehensive income (19,846) 71,177

(Loss)/ Profit allocated to non-controlling interest (9,725) 34,876

Adjustment allocated to non-controlling interest (8,896) (3,059)

Accumulated non-controlling interest (18,621) 31,818

The table below shows the summarised financial information for Supreme Route Limited that has a non-controlling interest:

Statement of financial position 2020

$’000

Total assets 3,361,765

Total liabilities (455,674)

Net assets 2,906,091

Non-controlling interest 1,423,879

Statement of comprehensive income

Revenue 884,937

Profit for the period/ Total comprehensive income 126,680

Profit allocated to non-controlling interest 62,073

Annual Report 2020

168168

Page 79


39. Subsequent Event

a) Supreme Ventures Limited, as per agreement with Post to Post Betting Limited, has acquired a further 29% stake or 4.1 million shares of the company at an agreed price of $375 million. This will be reflected as an adjustment to Equity and non controlling interests and does not affect the fair value of assets previously acquired.

b) Supreme Ventures and certain of its subsidiaries and I.C.E. Jamaica have entered into an agreement dated May 12, 2020

for the purchase and sale of branded gaming machines and other assets in the amount of USD$3.5 million. The finalisation of the agreement was extended to February 2021 upon the completion of all due diligence requirements.

c) Supreme Ventures Limited, through its subsidiary Supreme Ventures Fintech Limited (formerly Supreme Ventures

Financial Services Limited) has acquired fifty-one (51%) per cent of the shares in McKayla Financial Services Limited on February 11, 2021.

169

Annual Report 2020

Page 80


40. Long Term Incentive Plan

The expense recognised in the profit and loss statement for share-based payments was $26,472,000. The establishment of the long term incentive plan was approved by the Board of Directors in June 2020. The plan is designed to provide long-term incentives for senior managers and above (excluding non-Executive Directors) to deliver long-term shareholder returns. Under the plan, participants are granted allotted shares which only vest if certain performance objectives are met. Participation in the plan is at the Board’s discretion, no individual has a contractual right to participate in the plan or receive any guaranteed benefits. The amount of allotted shares that will vest depends on the employee’s performance within the company each year based on the set predetermined objectives. The allotted shares will vest for a period of 2 years, with 50% due in April of the following year and the remaining 50% in Year 2. At the end of each financial year, the applicable shares will be purchased for the benefit of the specific senior managers as per the obligations outlined in employee contracts.

There were no options granted during the year.

No options expired during the period.

Share options outstanding at the end of the year have the following expiry dates and exercise prices:

Grant date

Share options

30 June 2020

April 1, 2021 882,105

April 1, 2022 1,884,210

April 1, 2023 2,004,210

April 1, 2024 1,242,105

Total 6,012,630

Weighted average remaining contractual life of options outstanding at end of period 3.67 years.

The fair value at grant date is independently determined using an adjusted form of the Black-Scholes model which includes a Monte Carlo simulation model that takes into account the exercise price, the term of the option, the impact of dilution (where material), the share price at grant date and expected price volatility of the underlying share, the expected dividend yield, the risk-free interest rate for the term of the option.

The model inputs for options granted during the year ended 31 December 2020 included:

(a) Options vest based on defined service period.

(b) Vested options are exercisable for a period of two years after vesting.

(c) Exercise price: $0

(d) Grant date: April 1

(e) Expiry date: April 1, 2023

(f) Share price: $15.12

(g) Expected price volatility: 57% (based on historic volatility)

(h) Expected dividend yield: 5.35%

(i) Risk-free interest rate: 1.78%

Annual Report 2020

170170

Page 81


41. Restricted Cash

As a condition of the $3 billion bond facility issued in October 2020, a special deposit of $52 million, equivalent to one month interest has been deposited to a cash reserve account. The account is held at Sagicor Bank and is an interest-bearing account.

42. COVID-19 Impact on Group Operations

Since the outbreak of COVID-19 in the first quarter of 2020, global financial markets have experienced, and may continue to experience significant volatility and there are significant consequences for the global and local economies from travel and border restrictions, quarantines, supply chain disruptions, lower consumer demand and general market uncertainty. The extent and duration of the impact of COVID-19 on the global and local economies and the sectors in which the Company and its customers and suppliers operate is uncertain at this time. The impact of the pandemic has contributed to a decline in revenue from non-fixed odd wagering games, horse racing and pin codes of 1.9% for the year ended 31 December 2020 compared to the same period in 2019. In the meantime, the Company has taken measures to preserve its operations and the health and safety of its employees and customers. Measures are being taken to reduce operating costs and non-business critical capital expenditures as well as optimize working capital. Management continues to believe that the going concern presumption remains appropriate for these financial statements and that the Company will continue to be able to meet its obligations as they fall due and its bank covenant compliance requirements.

43. Restatement of Segment Reporting

The format of the segment report was changed during the year to include Horseracing and Video Lottery Terminals as part of Sports Betting. This is due to a change in the way in which the business is monitored by the Chief Decision Maker including the reports used to facilitate management of the segments. Each area now has a General Manager with responsibility for tracking performance against targeted objectives and reporting such performance to the Executive Chairman.

171

Annual Report 2020

Annual Report 2020

172172

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