IMPORTANT INFORMATION

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3 IMPORTANT INFORMATION LP No: LEC/OSA/01/2014 This document is issued by Lottotech Ltd ( Lottotech or the Company ), a company incorporated as a private company limited by shares in Mauritius on 8 April 2008 with file number and currently regulated by the Companies Act 2001 and the Gambling Regulatory Authority Act The Company was converted into a public company on 3 March This document is issued in the context of the listing of Lottotech on the Official List of the Stock Exchange of Mauritius Ltd ( SEM ) and for the purpose of providing information to potential investors and to the public in general. This document serves as a Prospectus in accordance with the Securities (Public Offers) Rules 2007 for the Offer for Sale of up to 85,000,000 ordinary shares of no par value and as Listing Particulars. It includes information given in compliance with Chapter 9 of the Listing Rules (the Listing Rules ) of the SEM in relation to the proposed listing of 340,000,000 ordinary shares of no par value of Lottotech by way of an Offer for Sale at a price of 10 per ordinary share. An application has been made to the SEM for the listing and permission to deal in the ordinary shares of Lottotech. This document has been given conditional approval by the Listing Executive Committee ( LEC ) of SEM in conformity with the Listing Rules on 10 April No other listing has been sought for the ordinary shares of Lottotech. A copy of this document, also deemed to be a Prospectus, has been filed with the Financial Services Commission ( FSC ). This document has been prepared in accordance with the Securities Act 2005 and the Securities (Public Offers) Rules For a full appreciation of this document, it should be read in its entirety. If you have any doubt as to the action you should take, please consult your banker, licensed investment dealer, legal advisor, accountant or other professional advisor immediately. This document is not to be redistributed, reproduced, or used, in whole or in part, for any other purpose. Neither the LEC of the SEM, nor the SEM, nor the FSC assumes any responsibility for the contents of this document. The LEC of the SEM and the FSC make no representation as to the accuracy or completeness of any of the statements made or opinions expressed in this document and expressly disclaim any liability whatsoever for any loss arising from or in reliance upon the whole or any part thereof. Certain statements contained in this document constitute forward-looking statements. Such forwardlooking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company to be materially different from any expected future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements in this document are made based upon the Directors expectations and beliefs concerning future events impacting the Company and therefore involve a number of known and unknown risks and uncertainties. Such forward-looking statements are based on numerous assumptions regarding the Company s present and future business strategies and the environment in which it will operate, which may prove to be inaccurate. The Company cautions that these forwardlooking statements are not guarantees and actual results could differ materially from those expressed or implied in these forward-looking statements. It is strongly recommended that prospective investors read the section titled Risk Factors set out in section 13 of this document for a more complete discussion of the factors that could affect the Company s future performance and the industry in which it operates. In light of these risks, uncertainties and assumptions, the forward-looking events described in this document may not occur. The forward-looking statements referred to above speak only as at the date of this document. Subject to any obligations under applicable law, including the Listing Rules, the Company undertakes no obligation to release publicly any revisions or updates to these forward-looking statements to reflect events, circumstances or unanticipated events occurring after the date of this document. All subsequent written and oral forward-looking statements attributable to the Company, Directors or senior management acting on behalf of the Company are expressly qualified in their entirety by this paragraph. 1

4 TABLE OF CONTENTS 1. Declaration by Directors 3 2. Salient features of the Offer for Sale 4 3. About Lottotech 5 4. Overview of the business 6 5. Shareholding structure of Lottotech 9 6. Key strengths Business strategy Rationale for the proposed listing Dividend policy Summary of the issue Independent valuation of Lottotech Pro forma financial information Risk factors Summary of corporate information Directors, senior management, corporate governance and risk management Reporting accountants report Historical financial information Summary of constitution Other matters Documents available for inspection List of licensed investment dealers Glossary of definitions and abbreviations 66

5 1. Declaration by Directors These Listing Particulars include particulars given in compliance with the Stock Exchange of Mauritius Ltd Rules Governing the Official Listing of Securities for the purpose of giving information with regard to the issuer. The Directors of Lottotech, whose names appear in Section 15.1, collectively and individually accept full responsibility for the accuracy and completeness of the information contained in this document and confirm, having made all reasonable enquiries that, to the best of their knowledge and belief, there are no facts, the omission of which would make any statement herein misleading. The Directors of Lottotech have, on 26 March 2014, approved the proposed listing, the salient features of which are provided in Section 2. Furthermore, the Directors of Lottotech declare that, to the best of their knowledge and belief and after having made reasonable inquiries, in relation to the period from 31 December 2013, the date to which the last audited financial statements of Lottotech have been prepared, to the date of this document: There has not been any material adverse change in the financial or trading position of Lottotech; The business of Lottotech has been satisfactorily maintained; There have been no circumstances adversely affecting the value of the assets of Lottotech; The current assets of Lottotech appear in the books at values believed to be realisable in the ordinary course of business; There have been no unusual factors affecting the reserves of Lottotech; and The working capital available to Lottotech is sufficient for at least twelve months from the date of the issue of this document and no change in the nature of the business of Lottotech is contemplated. If you are in any doubt about the content of this document, you should take independent professional advice in relation to the Listing Particulars. Approved by the Board of Lottotech (the Board ) on 26 March 2014 and signed on its behalf by: Chian Tat Ah Teck Director Paul Cyril How Kin Sang Director 3

6 2. Salient features of the Offer for Sale Issuer Offer Price of offer Application procedures Allotment Lottotech Ltd Offer for Sale of up to 85,000,000 ordinary shares of no par value to the public at an offer price of 10 each, fully payable on application, following which 340,000,000 ordinary shares of no par value will be listed on the Official List of the Stock Exchange of Mauritius Ltd. 10 per ordinary share. Applicants for the Offer for Sale should apply for the ordinary shares by filling in and signing the Application Form for the Offer for Sale. The respective form must be returned with the payment of 10 per ordinary share applied for to any licensed investment dealer not later than 4:00 pm on 16 May Acceptances are irrevocable and may not be withdrawn. Up to 20% of the ordinary shares on offer will be reserved to be allocated to retailers of Lottotech, directors and employees of the Gamma group of companies and The State Investment Corporation Ltd, with a discount of 5% on the offer price. The balance of the ordinary shares on offer will be allocated to the public. For the reserved shares, the Board of Lottotech will define the allotment criteria and retains the right to allocate the ordinary shares in such a manner as it deems appropriate. In the event of over-subscription of the ordinary shares allocated to the public, the Board will define the allotment criteria and retains the right to allocate the ordinary shares in such a manner as it deems appropriate. The above allotments are subject to the approval of the relevant regulatory authorities. First day of trading On the first day of trading, the existing shareholders of Lottotech prior to the Offer for Sale, will make available up to 50,000 ordinary shares at an indicative price of 10 per ordinary share. Timetable Opening of Offer for Sale 5 May 2014 Closing of Offer for Sale 16 May 2014 Allotment of fully-paid ordinary shares to shareholders 9 June 2014 Commencement of trading of ordinary shares on the Official List of the Stock Exchange of Mauritius Ltd 11 June 2014 Financial data All per ordinary share statistics have been computed on the basis of 340,000,000 ordinary shares of no par value in issue. Refer to Section for the share-split details. Key performance indicators Units EBITDA Pro forma basis m EBITDA Pro forma basis post Impact Analysis m n/a n/a EBITDA Audited accounts basis m EPS Pro forma basis EPS Pro forma basis post Impact Analysis n/a n/a EPS Audited accounts basis (0.03) P/E Multiple Pro forma basis Number P/E Multiple Pro forma basis post Impact Analysis Number n/a n/a P/E Multiple Audited accounts basis Number n/a Dividend per share Actual 0.74 Nil Nil Dividend per share Annualised 0.49 Nil Nil Dividend Yield Actual % 7.35 Nil Nil Dividend Yield Annualised % 4.90 Nil Nil Gearing ratio % Nil Nil Nil 1 Annualised figures. 4

7 3. ABOUT LOTTOTECH Lottotech was incorporated on 8 April 2008 by Gamma-Civic Ltd ( Gamma ) for the purpose of operating lotteries and generally to do all related activities. Following the Request for Proposal issued in March 2008 by The State Investment Corporation Ltd ( SIC ), Lottotech submitted its proposal and was selected in July 2008 as the preferred bidder for the implementation and operation of the Mauritius National Lottery (the Operator ) on behalf of the Government of Mauritius. The proposal by Lottotech included a structured game plan to launch games in the initial years of the licence. Under the Gambling Regulatory Authority Act 2007 ( GRA Act ), the Operator means a company promoted by the SIC and licensed to operate the Mauritius National Lottery and video lottery terminals. The GRA Act stipulates that there shall, at no time, be more than one operator holding a licence to operate the Mauritius National Lottery. In August 2008, Lottotech entered into agreements with GTECH as its exclusive technology partner for the implementation and operation of the Mauritius National Lottery. In April 2009, Gamma entered into a shareholders agreement with the SIC for Lottotech to implement and operate the Mauritius National Lottery and SIC became a shareholder of Lottotech. The agreement stipulates that the parties shall cause Lottotech to obtain the licence to operate the Mauritius National Lottery and they shall not directly or indirectly compete with Lottotech. In April 2009, the Gambling Regulatory Authority ( GRA ) issued an exclusive licence to Lottotech to operate the Mauritius National Lottery for a period of 10 years, renewable for further successive periods not exceeding 5 years each. In October 2009, Lottotech launched La Loterie Nationale in Mauritius and Rodrigues with the sale of lottery games through an initial network of 542 retailers, which has since been expanded to 895 retailers during the last quarter of Lottotech is a member of the World Lottery Association ( WLA ), the global authority on lottery business. 5

8 4. Overview of the business 4.1 Mission and vision Lottotech s mission is to operate La Loterie Nationale on behalf of the Government of Mauritius in a caring and socially responsible way through professional promotion and conduct of outstanding gaming experience, whilst pursuing success through partnerships with the community and through optimising sustainable shareholder return. Lottotech s vision is to be the trusted leading gaming brand for Good Causes a national brand that is fun, entertaining and where corporate social responsibility is at the heart of its approach. Lottotech promotes integrity, trustworthiness, customer care, innovation and responsible gaming. 4.2 Lottery games Lottotech currently offers two lottery games namely the weekly Loto game and Quick Win games (also known as scratch cards). Lottotech s games portfolio includes a number of well-known and highly recognisable products sold to date under key brands including: 4.3 Distribution network The Company s distribution network comprised of 542 retailers at the time of launch. This has since been expanded to 895 retailers during the last quarter of By the end of December 2014, Lottotech is expected to increase this number to 1,000 retailers. Lottotech s distribution network covers the whole of Mauritius as well as Rodrigues. 4.4 State of the art IT infrastructure Through its exclusive technology partnership with GTECH, a leading lottery operator and provider of technology solutions and systems to regulated gaming markets worldwide, Lottotech has built an extensive integrated state of the art IT infrastructure to support its gaming operations including a nationwide network of retailer terminals with appropriate back-up systems. 4.5 Management Lottotech has an experienced senior management team with a proven track record across the global and local gaming industry. The experienced senior management team combines the skills in product development, retail network development, marketing and communications, technology and risk management. The management of Lottotech is assisted by Gamma through A.S. Burstein Management Ltd ( ASB ) in the operation of the Mauritius National Lottery and in the strategy and business development of the Company. 4.6 Responsible gaming Lottotech has implemented a series of measures to build and maintain its credibility as a responsible gaming company, including a dedicated service for player protection that provides advice to those dealing with gambling addiction. In addition, Lottotech has implemented measures to prevent under-age play. Together with the GRA, Lottotech will lead an initiative to promote responsible gaming in Mauritius and Rodrigues in the future. Lottotech s most notable game is the Loto. There is no cap on the amount of times that a Loto jackpot can roll over, creating the potential for large jackpots, such as the Loto jackpot that reached 77m in December Lottotech has introduced a number of innovative Quick Win games since its launch. The Company carries out regular market studies and introduces new Quick Win games on a regular basis in line with market preferences. The combined player participation rate for Loto and Quick Win games is about 75% of the adult population, with an almost equal participation of men and women (source: Ipsos Reid, 2013). Unlike gambling, games offered by the Company provide its customers with a unique experience of play small, win big. 6

9 4. Overview of the business (contd.) 4.7 Good causes Lottotech contributes significantly to the Consolidated Fund of the Government of Mauritius. As per the GRA Act, any money paid into the Consolidated Fund is used to finance the implementation of projects relating to community development, the promotion of education, health, sports and culture and for reimbursement of public debt of the Government of Mauritius. Since the launch of the Mauritius National Lottery to 31 December 2013, Lottotech has contributed around 2.5bn directly to the Consolidated Fund. Lottotech also contributes to the National Solidarity Fund by handing over unclaimed prizes. Over the same period, the Company has contributed around 175m to this fund, which is used to improve the lives of the most vulnerable Mauritian citizens. Projects which have been or will be financed by the Government of Mauritius out of the proceeds of the Mauritius National Lottery through the Consolidated Fund include the following: Promotion of education - Multi-purpose halls and gymnasiums - Playfields - Improving school environment and facilities - Extension of pre-primary education grants to 3 year olds - Running expenses of 6 additional shelters for children - School IT program (computing device for Form IV students) - Crèche facilities for poor families Promotion of health - Mediclinics - Institute for Women s Health - Paediatric hospital - Awareness campaign against non-communicable diseases Promotion of sport, arts and culture - Multi sports complex - Construction of Galerie d Art Nationale - National History Museum - Trianon indentured labourers barracks - La Tour Koenig restoration works - Scheme for concerts - Schemes for performance arts groups - Beekrumsing Ramlallah Interpretation Centre (Aapravasi Ghat) - Covering ground and synthetic track (Anjalay Stadium) Community development - Water grants scheme - Extension of land drainage program - Setting up of Syndic for maintenance of housing estates 4.8 Turnover With a turnover of 3.9bn for the 18 months ended 31 December 2013, Lottotech runs a substantial and profitable gaming operation, despite it being a relatively young gaming company. 4.9 At a glance in numbers from start of operations to 31 December 2013 Gross ticket sales 11.52bn Gross Prizes to ticket winners sales 6.06bn 11.52bn Prizes to winners 6.06bn Contributions to Consolidated Fund 2.5bn Contributions to Consolidated fund 2.5bn Retailers 895 Retailers 895 Retailers Commissions 637m Retailers commissions 637m Loto jackpot winners 108 millionaires Number of Loto draw winners About 13.8m Contributions to National Solidarity Fund 175m Highest Loto jackpot 77m Loto jackpot 108 million Number of L draw winner About 13.8 Contributi to National Solidarity fun 175m Highest Loto Jackpot 77m 7

10 4. Overview of the business (contd.) 4.10 Gaming and gambling market in Mauritius The market in Mauritius for gaming and gambling is substantial. In 2013, Business Magazine estimated the total market to be worth 20bn per annum. Figure 1 Gaming and gambling market composition Market share of the Mauritius National Lottery Source: Business Magazine, World gaming market Figure 2 The worldwide gaming market trends (USDbn) Source: GBGC Analysis Data net of prizes, data relating to 2012 and subsequent years are estimates. Since 2007, the worldwide gaming market has registered a gradual increase in revenue. The role of interactive (i.e. internet-based) gaming is expected to grow at a proportionally greater rate than other types of gaming. There are two primary reasons for the growth of this sector on the global level and they are partially complementary. The areas in rapid expansion benefit from the growth of individual income and from a market that is not overly developed, which presents good long-term development opportunities. In 2012, interactive gaming, as a portion of the overall worldwide gaming market, represented a share of 8.9%, equivalent to a value of USD38bn net in prizes. 8

11 5. Shareholding structure of LOTTOTECh The shareholders of Lottotech prior to the Offer for Sale are the SIC with 25% shareholding and subsidiaries of Gamma with 75% shareholding of the Company. The SIC is the investment arm of the Government of Mauritius. The SIC was founded in 1984 and its main objective is to provide funds for the realisation of high growth entrepreneurial ventures and to assist businesses to develop to industry leadership positions. Over its 30 years of existence, the SIC has developed into a solid conglomerate with a strong and well-diversified portfolio. The SIC has a solid reputation and its endorsement of any project is considered a strength and key contributor to success. Throughout the years, the SIC has proven to be a valuable partner for local and foreign entrepreneurs and institutions desirous of setting up ventures in Mauritius, Rodrigues and the Indian Ocean region. Gamma is an investment holding company and a leading building materials, construction, property and lottery gaming group founded in 1987 and ranks amongst the Top 20 companies in Mauritius. Gamma has been listed on the Official List of the Stock Exchange of Mauritius Ltd since November 1994 and has a market capitalisation of 5.9bn as at 10 March Gamma is among the top 5 most performing stocks on the SEM from date of introduction to end of March 2014 (source: The Stock Exchange of Mauritius Ltd). Up to 85,000,000 existing ordinary shares will be sold by the current shareholders pursuant to this Offer for Sale. The shareholding structures prior to the Offer for Sale and post-listing are set out below: Figure 3 Shareholding structure of Lottotech prior to the Offer for Sale Gamma-Civic Ltd The State Investment Corporation Ltd 100% Gamma Leisure Ltd 100% 100% 99% Maurilot Investments Ltd Natlot Investments Ltd Glot Holdings (Mauritius) Ltd 25% 18.75% 18.75% 18.75% 18.75% LottotECH LTD Figure 4 Shareholding structure post listing of Lottotech Gamma-Civic Ltd The State Investment Corporation Ltd General Public 100% Gamma Leisure Ltd 100% 100% 99% Maurilot Investments Ltd Natlot Investments Ltd Glot Holdings (Mauritius) Ltd Minimum % Minimum % Minimum % Minimum % Minimum 18.75% Maximum 25% LottotECH LTD 9

12 6. Key strengths There are a number of key factors that give Lottotech a competitive advantage. They include: 6.1 Exclusive lottery licence Lottotech is the exclusive Operator of the Mauritius National Lottery on behalf of the Government of Mauritius. Under the GRA Act, the Operator means a company promoted by the SIC and licensed to operate the Mauritius National Lottery and video lottery terminals. The GRA Act stipulates that there shall, at no time, be more than one operator holding a licence to operate the Mauritius National Lottery. In April 2009, Gamma entered into a shareholders agreement with the SIC for Lottotech to implement and operate the Mauritius National Lottery and SIC became a shareholder of Lottotech. The agreement stipulates that the parties shall cause Lottotech to obtain the licence to operate the Mauritius National Lottery and they shall not directly or indirectly compete with Lottotech. In April 2009, the GRA issued an exclusive licence to Lottotech to operate the Mauritius National Lottery for a period of 10 years, renewable for further successive periods not exceeding 5 years each. 6.2 Gaming industry The gaming and gambling market in Mauritius is substantial and estimated to be worth 20bn per annum by Business Magazine. Despite a downturn in the economy, Lottotech s business has proven to be resilient. Lottotech s leading position in the gaming market, its trusted brands and its experience in operating within the Mauritian regulatory framework, have contributed positively to the development of the Company. Lottotech is in regular dialogue with the GRA to develop the industry further. Lottotech has built a solid foundation upon which to consolidate its market position in the gaming and gambling industry through product innovation in a regulated environment as opposed to gambling in the unregulated grey market. 6.3 Strong brands Although Lottotech is only in its fourth year of operations, it has in Loto one of the most trusted and highly recognisable brands in Mauritius and Rodrigues. According to a survey undertaken in 2013 by Ipsos Reid, a global market research company, Loto achieved a 100% score in both spontaneous brand awareness and aided brand awareness surveys. The survey also showed that Loto enjoys a very good reputation which gives it a competitive edge in the gaming and gambling market where attracting and retaining customers is key to the development of the business of the Company. Among its Quick Win games, Lottotech has other highly recognisable brands such as Millionaire, Diamants, Wingo and La Vie Douce. Player participation rate for Loto and Quick Win games combined is high and estimated to be around 75% of the adult population, with an almost equal participation of men and women (source; Ipsos Reid, 2013). Unlike gambling, the games offered by the Company provide its customers with a unique experience of play small, win big. Lottotech continues to invest in marketing activities to build customer awareness. Lottotech has geared its communication strategy towards educating the public about how to play and what they are playing for in a transparent manner, promoting responsible gaming, including the prevention of under-age play. Lottotech has built a strong brand heritage as a trusted provider of safe and responsible gaming and achieved national recognition. These have helped the Company to reach its current stage of development. 6.4 Integral distribution network The Company s distribution network comprised of 542 retailers at the time of launch. This has since been expanded to 895 retailers during the last quarter of Lottotech s distribution network covers Mauritius and Rodrigues. By the end of December 2014, Lottotech is expected to increase this number to 1,000 retailers. This will represent a ratio of one terminal per 1,286 inhabitants, which is in line with worldwide gaming industry best practice. Lottotech carefully selects its retailers in order to optimise its presence and the visibility of its products throughout Mauritius and Rodrigues. The Company evaluates the retailer s ability in managing the lottery business before appointing the retailer. All retailers have to be approved by the GRA. The Company continues to build a strong retailer network through shops and dedicated kiosks in high traffic areas such as shopping malls and an in lane presence at multi-lane large supermarket outlets. The retailers play a key role in the success of Lottotech, as they are a strategic source of information for Lottotech. The Company continuously reviews the performance of retailers and provides training to them to ensure that the customer service delivered by the retailers is of the required standard. In connection with this review process, Lottotech seeks to reward top performing retailers by presenting them with end of year awards and focuses on opening new points of sale and closing points of sale with lower revenue potential. The Company is proud to have long-standing relationships with its retailers, and it seeks ways to reinforce these relationships through on-going dialogue and training. The size and breadth of its retailer network provide Lottotech with a competitive edge in the gaming market in terms of brand recognition, economies of scale and capturing market share from the gambling sector, in particular the unregulated grey market. 6.5 GTECH, the leader in gaming technology worldwide GTECH is the exclusive technology partner to Lottotech and is a leading lottery operator and provider of technology solutions and systems to regulated gaming markets worldwide. GTECH is a company listed on the Milan Stock Exchange. GTECH has customers in over 100 countries and is a technology provider to well-known national lotteries including Camelot the UK National Lottery, La Francaise des Jeux and Singapore Pools. 10

13 6. Key strengths (contd.) 6.5 GTECH, the leader in gaming technology worldwide (Contd.) In August 2008, Lottotech entered into agreements with GTECH as Lottotech s exclusive technology partner namely: A Lottery Equipment Supply Agreement for the supply of retailer terminals, central system hardware and spare parts; and A Lottery Technology Supply and Support Agreement for the development of software applications, granting of software licences and the provision of on-going technical, marketing and management support services. 6.6 State of the art IT infrastructure Lottotech has invested significant resources to develop an extensive integrated state of the art IT infrastructure to support its gaming operations including a nationwide network of retailers. The IT operations are conducted from the Company s head office in Ebène CyberCity, together with back-up systems in a remote location at Beau Bassin. With a dual network mechanism operating both on the Emtel and Orange communication systems, Lottotech ensures seamless data transmission to ensure the proper functioning of its systems at all times. Lottotech has signed a technology supply and support agreement with GTECH to provide lottery technology services to the Company. GTECH has supplied, the Company, with proven technology and certified equipment in support of Lottotech s efficient and highly-secured gaming operations. Lottotech has also worked with IBM and Oracle to set up a seamless state of the art technology infrastructure with the highest level of data integrity in accordance with the GRA Act. The GRA has access to all of the data which resides on the Company s server. Lottotech also secured the ISO certification in 2013, which is currently the world s highest standard for information security management systems. Lottotech adopts internationally recognised best practices to enhance the security of its services to its customers. 11

14 6. Key strengths (contd.) 6.7 Management with extensive global and local gaming industry experience The Board is responsible for steering, monitoring and overseeing the business and activity of the Company in order to safeguard and enhance its total value and returns. It is the decision making body for all matters which are of significance to the Company as a whole because of their strategic, financial and reputational implications and/or consequences, whilst ensuring that management strikes the right balance between delivering short and medium term objectives, and promoting long-term growth. To ensure that the Board fulfils its responsibilities effectively, in 2009 it appointed ASB, a management company providing services to the lottery sector, to set up the appropriate management team and assist it in the operation of the Mauritius National Lottery and in the strategy and business development of the Company. ASB is a subsidiary of Gamma. Since its launch, Lottotech has assembled an experienced senior management team with a proven track record across the global and local gaming industry. The experienced senior management team has combined skills in product development, retail network development, marketing and communications, technology and risk management. Michelle Carinci, a Canadian national, was appointed in March 2012 as the Chief Executive Officer of the Company and has proven leadership in operations and innovation both locally and internationally, with over 35 years experience in the gaming industry. Prior to joining Lottotech, Michelle held the position of CEO at Atlantic Lottery Corporation. Prior to joining Atlantic Lottery Corporation, she was President of Gamescape, a wholly-owned subsidiary of GTECH and a Corporate Vice President in charge of marketing and customer relations at GTECH. She has also been recognised four times as one of the top 50 CEOs in Atlantic Canada and is an inductee into the Lottery Hall of Fame class of Lottotech also benefits from the industry knowledge and experience of its technology partner, GTECH. 6.8 Management agreement In November 2009, Gamma signed a management agreement with Lottotech through ASB to provide management services to the Company. Gamma has been a promoter of Lottotech since inception and assists and supervises management in the operation of the Mauritius National Lottery and in the strategy and business development of the Company. 6.9 Human capital and innovation The Human Resources department of the Company focuses on providing people solutions to the business through effective strategic recruitment, retention of talented individuals, developing essential skills of employees, sustaining engagement at work and helping to improve performance on the job. Through a well-established learning, training and development platform, opportunities are created for Lottotech s employees to develop new skills and experiences, helping them to achieve their career goals and ultimately creating value for the Company Integrity, transparency and responsible gaming Given the high profile nature of Lottotech s operations, values such as integrity and concepts such as transparency, good governance and social responsibility are fundamental in inspiring confidence and credibility as a lottery operator. In that respect, Lottotech has invested and implemented a series of measures to build and maintain its credibility as a responsible gaming company, including a dedicated service for player protection that provides advice to those dealing with gambling addiction. Lottotech works closely with authorities such as the GRA and La Police des Jeux to ensure compliance with the laws and regulations which govern the gaming industry. All games are approved by the GRA prior to launch. GRA officials are present during the weekly Loto draws as well as the Millionaire shows. In addition to responsible gaming, Lottotech has set a clear vision for its Corporate Social Responsibility initiatives. Together with the GRA, Lottotech will lead an initiative to promote responsible gaming in Mauritius and Rodrigues in the future Membership of the WLA Lottotech is a member of the WLA, the global authority on lottery businesses. As a member of the WLA, Lottotech s duties are not only to grow revenue and returns to good causes but also to facilitate responsible play. With that in mind, the WLA has adopted the Responsible Gaming Principles and a Responsible Gaming Framework with the aim of protecting lottery customers around the world. By adopting these principles, WLA members have committed their vigilance in making responsible gaming an integral part of their daily operations. This effort and commitment will ensure that the public is protected and revenues for the public good are sustained. The reputation of Lottotech among consumers as a trusted provider of safe and responsible gaming is integral to its success in the Mauritian gaming market. The following services are also provided by Gamma to the Company as per the management agreement: Marketing and sales and product development; Human resources and administrative support; Finance and procurement support; Management information systems and security; and Legal, accounting, information technology, secretarial and risk management services. 12

15 7. Business strategy One of Lottotech s main objectives is to deliver profitable and sustainable growth. The Company s strategy is set out below: 7.1 Opportunities in core activities The proposal submitted by Lottotech to implement and operate the Mauritius National Lottery included a structured game plan to launch a number of games in the initial years of the licence in Mauritius and Rodrigues. However, subsequently the GRA did not approve all the games as proposed in the structured game plan. This resulted in the Company instigating legal action in May 2012 against the GRA and the Ministry of Finance and Economic Development. The litigation was resolved before the Mediation Division of the Supreme Court in October 2012, whereby Lottotech was awarded a one-off compensation and a reduction in the contribution rate to the Consolidated Fund for not being able to launch new games in the initial years of the licence in accordance with the structured game plan submitted at the time of its proposal. It is the intention of Lottotech to re-discuss with the GRA the appropriate timing for the launch of these new games and its associated conditions in accordance with the structured game plan as submitted by the Company in its proposal to the SIC, which includes the following games: 7.2 Opportunities beyond core activities Lottotech will explore opportunities beyond its current core activities in Mauritius and Rodrigues, including the following: International diversification Due to its success in Mauritius and Rodrigues, Lottotech is regularly approached by third parties to manage, acquire or invest in existing or new lottery or sports betting operations internationally. Such opportunities will be evaluated by the Company in order to ensure that they make strategic and financial sense. Should the Company proceed with such opportunities, this will significantly grow the revenue of the Company. Services Lottotech has an advanced technology and IT infrastructure that can be leveraged to provide transaction processing of non-lottery commercial transactions. The Company s retailer terminals can be used, through software programming, to process a wide range of cash payments (including utility bills and certain taxes such as municipal and car registration fees) and to buy top-up prepaid phone cards and financial services products. The Directors believe that the convenience payment services market is worth exploring as this will potentially make the lives of Mauritian people easier. Second Loto weekly draw; daily game; KENO; Video Lottery Terminals ( VLTs ); and Mobile wagering and interactive games. These games are operated by well-known national lotteries including the UK National Lottery and La Francaise des Jeux. Should Lottotech proceed with the launch of any of these games, this will significantly grow the revenue of the Company. Following the examples of most regulated national lotteries worldwide, Lottotech is in the process of developing its digital road map in the area of online lottery and interactive gaming. With an increasing number of Mauritians having access to the internet, online lottery and interactive gaming will enable the Company to capture market share from the unregulated grey gambling sector and to significantly grow the revenue of the Company, should Lottotech proceed with these opportunities. In the meantime, Lottotech intends to introduce enhancements to its existing Loto game. These enhancements will add to the consumer experience of play small, win big. The experience of our senior management team indicates that these enhancements will significantly grow the revenue of the Company, should Lottotech proceed with these enhancements. Lottotech will also explore opportunities in the future in complementary activities such as sports games and betting. Sports games and betting are operated by well-known national lotteries including La Francaise des Jeux and Singapore Pools. These games will significantly grow the revenue of the Company, should Lottotech proceed with these opportunities. 13

16 8. RATIONALE for the proposed Listing 10. SUMMARY OF THE ISSUE The Directors believe that the Company has now reached a stage in its development where a listing on the Official List of the Stock Exchange of Mauritius Ltd is appropriate. The reasons for listing the Company are as follows: A listing will enhance the status of the Company and provide greater flexibility for the planning and financing of the future growth of the Company. The Company s ability to enter complementary gaming markets, both directly and by acquisition, will increase. Although no specific acquisition proposals are currently under consideration, the Company intends to expand its operations when suitable opportunities occur; It is the objective of the current shareholders of the Company to democratise the shareholding of the Company through a listing on the Official List of the Stock Exchange of Mauritius Ltd, to further integrate the Company into the economic life of Mauritius and Rodrigues to give an opportunity to Mauritian and foreign nationals to participate in the success and profits of the Company; To fulfil the wish and objective of the current shareholders of the Company For a listing on the Official List of the Stock Exchange of Mauritius Ltd, the Stock Exchange of Mauritius Ltd requires that the current shareholders of the Company reduce their respective shareholding from 100% to 75%; To enable the retailers of Lottotech and directors and employees of the Gamma group of companies and SIC to become shareholders of the Company The listing will help the Company to attract and retain high calibre staff and enhance management, employee and retailer motivation; and To enable the market value of the Company s ordinary shares to be readily ascertained. 9. Dividend policy As per Lottotech s constitution, the Company shall distribute a minimum of 75% of its annual net profit after tax as dividend, except as otherwise resolved by the shareholders by way of Ordinary Resolution. The Board has a target dividend policy whereby almost 100% of net profit after tax is declared as dividends, subject to the Company meeting the Solvency Test Nature and amount of the issue The Offer for Sale to the public of up to 85,000,000 ordinary shares of no par value at an issue price of 10 each, is fully payable on application. Following the Offer for Sale, 340,000,000 ordinary shares of no par value will be listed on the Official List of the Stock Exchange of Mauritius Ltd. Shareholders who successfully subscribe to the Offer for Sale will have their ordinary shares credited to their CDS accounts on 10 June 2014 before trading commences on 11 June Description of rights attached The ordinary shares rank pari passu in all respects with each other, including for voting purposes and in full for all dividends and distributions on ordinary shares declared, made or paid after their issue and for any distributions made on a winding up of the Company Voting Each ordinary share shall confer upon its holder the right to one vote on a poll at a meeting of the Company on any resolution Dividends Each ordinary share shall confer upon its holder the right to an equal share in dividends authorised by the Board Distribution on the winding up of the Company Each ordinary share shall confer upon its holder the right to an equal share in the distribution of surplus assets of the Company Redemption The ordinary shares on Offer for Sale are not redeemable. However, the Company may purchase or contract to purchase any of its ordinary shares, subject to the Listing Rules and the Companies Act Offer price The offer price per ordinary share is 10. This represents a discount of about 10% to the valuation as determined by the independent valuers, KPMG. As a general rule, it is expected that the Company will declare an interim dividend in or around August and a final dividend in or around March following the year-end. 14

17 10. SUMMARY OF THE ISSUE (contd.) 10.8 Timetable Event Date Opening of Offer for Sale 5 May 2014 Closing of Offer for Sale 16 May 2014 Allotment of fully-paid ordinary shares to shareholders 9 June 2014 Dispatch of allotment letters to shareholders and refund of unsuccessful applications, if any 9 June 2014 CDS accounts credited 10 June 2014 Commencement of trading of ordinary shares on the Official List of the Stock Exchange of Mauritius Ltd 11 June Application procedures Acceptance may only be made by filling in and signing the relevant application forms attached to these Listing Particulars. Applicants for the Offer for Sale should apply for the ordinary shares by filling in and signing the Application Form for the Offer for Sale. The respective form must be returned with the payment of 10 per ordinary share applied for to any licensed investment dealer (see Section 21) not later than 4:00 pm on 16 May Acceptances are irrevocable and may not be withdrawn Method of payment Crossed cheques drawn to the order of Lottotech Ltd for the total consideration with the properly completed and signed appropriate form(s) must reach the licensed investment dealers not later than 4:00 pm on 16 May Receipts will be issued thereon. Should a cheque in payment of an application for ordinary shares be dishonoured by the drawer s bank, the application will be considered as null / void and will not be considered. No cash payments will be accepted. No remittance should be sent by post except for non-residents, both Mauritians and non-mauritians, who should ensure that their application form and full remittance reach the licensed investment dealers, not later than 4:00 pm on 16 May Completion of the share transfer form Applicants for the Offer for Sale must complete the transferee sections of the Share Transfer Form attached in this document in order for their application to be valid. Up to 20% of the ordinary shares on offer will be reserved to be allocated to retailers of Lottotech, directors and employees of Gamma group of companies and SIC, with a discount of 5% on the offer price. The balance of the ordinary shares on offer will be allocated to the public. For the reserved shares, the Board of Lottotech will define the allotment criteria and retains the right to allocate the ordinary shares in such a manner as it deems appropriate. In the event of over-subscription of the ordinary shares allocated to the public, the Board will define the allotment criteria and retains the right to allocate the ordinary shares in such a manner as it deems appropriate. The above allotments are subject to the approval of the relevant regulatory authorities. Any confirmation of ownership and any monies returnable to the applicant may be retained pending clearance of the applicant s remittance. Such monies will not bear interest for the applicant s account. Therefore all documents in connection with the Offer for Sale and any returned monies will be sent to the applicant by bank transfer Minimum offer This Offer for Sale shall be withdrawn if the number of ordinary shares applied for is below 34,000,000 ordinary shares. In the event that this minimum offer is not met, Lottotech shall refund applicants the full amount paid for the purchase of the ordinary shares. Please note only the shaded sections should be completed by the applicant. The remaining sections will be completed by the Company Registrar Allotment of ordinary shares The allotment of ordinary shares will be effected by the 9 June Applicants for the Offer for Sale, who have been allotted ordinary shares will have their CDS accounts credited by 10 June A letter will be sent to confirm the number of ordinary shares credited. 15

18 11. Independent valuation of LOTTOTECH KPMG Advisory Services Ltd Telephone KPMG Centre Telefax Cybercity Internet Ebène BRN C Mauritius The Directors Lottotech Ltd HSBC Centre Cybercity Ebène Our ref HBB/ral/ February 2014 Dear Sirs Independent Valuation of Lottotech Ltd KPMG Advisory Services Ltd ( KPMG ) was appointed by Lottotech Ltd to perform an independent valuation of the shares of Lottotech Ltd. Scope of work Our scope and limitations are set out in our engagement letter to Lottotech Ltd. In arriving at our valuation conclusion, we applied generally accepted valuation procedures based upon economic and market factors as of the Valuation Date. Key valuation considerations In arriving at our valuation conclusion, we have undertaken the following procedures in the fair valuation of the equity of Lottotech Ltd: considered the historical performance of Lottotech Ltd with reference to its audited financial statements for the financial years ended 2010, 2011 and 2012, and representations made by management of Lottotech Ltd ( Management ); considered Lottotech Ltd s concession period and the risks associated with its renewal, game plan variations, licencing and regulatory conditions, and the stage at which the business is in its lifecycle; considered the unaudited management accounts of Lottotech Ltd as at 31 December 2013; held discussions with the directors and management of Lottotech Ltd around its strategy and outlook, and considered other matters as we consider necessary, including assessment of the prevailing economic, legal and market conditions in the industry; evaluated the risks and expected returns associated with Lottotech Ltd; reviewed Management s forecast (the Forecasts ) in respect of Lottotech Ltd and the basis of the assumptions therein including the prospects of the business. The review included an assessment of the historical performance as well as the reasonableness of the outlook assumed based on representations made by Management; reviewed the reasonableness of material assumptions in the Forecasts relating to revenue growth. Adjustments which we deemed to be appropriate were made to the Forecasts. KPMG Advisory Services Ltd, a Mauritian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. 16

19 11. Independent valuation of LOTTOTECH (contd.) Valuation The discounted cash flow methodology was the primary valuation methodology employed in undertaking this valuation. Lottotech Ltd is at an early stage in its life cycle, conducts its business on a cash basis and has a future growth potential which can be captured by the discounted cash flow method. Pursuant to our valuation exercise, we estimate the fair value of the equity of Lottotech Ltd, on a marketable controlling basis, to be 3.8 billion as at 31 December 2013 (the Valuation Date ). The valuation analysis is based on prevailing conditions and KPMG s view as at 24 February KPMG has not undertaken to nor shall KPMG be under any obligation to update the report or revise the information contained in its report for events or circumstances arising after the 24 February 2014 and the presentation or any information contained in the presentation shall not amount to any form of guarantee that KPMG have determined or predicted future events or circumstances. Limitations We have relied upon and assumed, without independent verification, the accuracy and completeness of any information provided to, and/or gathered by KPMG whether from public sources or otherwise, and accordingly we express no opinion or make any representation concerning the accuracy and completeness of any such information contained in this report. We have reviewed the information and have sought explanations for key trends and salient features identified by us. We have also satisfied ourselves, as far as possible, that the information presented is consistent with other information obtained by us in the course of the work undertaken to prepare this report. This engagement has not been performed by us in the capacity as a Licenced Auditor and does not constitute an audit or review, due diligence, or other assurance engagement or an agreedupon procedures engagement, performed in accordance with International Standards on Auditing (ISAs), International Standards on Review Engagements (ISREs), International Standards on Assurance Engagements (ISAEs) or International Standards on Engagements to perform Agreed-upon Procedures regarding Financial Information. Furthermore, prospective financial information used in the engagement will contain forwardlooking statements with respect to the Lottotech Ltd s business financial condition and results of operations. Such information is subject to risks and uncertainties that could cause actual results to differ materially from those forecasted since anticipated events frequently do not occur as expected, accordingly no assurance is expressed regarding the achievability of the forecast. The valuation is a function of the assumptions incorporated within the valuation methodology. In particular, the valuation assumes that the historical performance as indicated by management is sustainable or, as a minimum, understood by a potential investor who has a similar outlook of the projected level of cash flow. Independence We confirm that we have no direct or indirect material financial interest in Lottotech Ltd, nor have the right to subscribe for or to nominate persons to subscribe for shares in Lottotech Ltd. 17

20 11. Independent valuation of LOTTOTECH (contd.) Consent We consent to the inclusion of this letter and the reference to our valuation in the listing particulars to be issued by Lottotech Ltd in the form and context in which it appears and in any required regulatory announcement or documentation. Yours faithfully Huns Biltoo Partner 18

21 12. Pro Forma financial information Pro forma financial information has been prepared for Lottotech to illustrate the impact of significant events on the audited financial information of the Company, as if these events had occurred or the transactions had been undertaken at an earlier date than the one in which they were registered in the audited financial statements. The pro forma financial information disclosed in sections 12.1 to 12.2 reconcile with the entity s actual financial position as at 31 December The adjustments brought to arrive at the pro forma financial information are disclosed in section Pro forma income statements In 2013, Lottotech changed its financial year end from June to December. As such, the latest audited financial statements represent 18 months of operations compared to 12 months for the previous year s audited accounts. To ensure easier comparability of Lottotech s performance in 2013, the unaudited results for the 12 months to 2013 have also been disclosed. The audited financial statements for the years ended 2011 and 2012 and for the 18 months ended 31 December 2013 are set out in section 17. Please refer to section 12.3 for details on the adjustments to the financial performance and the reconciliation of these adjustments to the audited accounts. Table 1 Pro forma income statements for the years ended 2011, 2012, 2013 and 18 months to 31 December 2013 m Notes 18 months to 31 December 2013 FY13 Adjusted Audited 12 months to 30 June 2013 Adjusted Unaudited 12 months to 30 June 2012 FY12 Adjusted Audited 12 months to 30 June 2011 FY11 Adjusted Audited Gross ticket sales 1 3,876 2,550 2,597 3,161 Loto 3,028 2,023 1,940 1,835 Instant games ,326 Prizes (1,998) (1,313) (1,338) (1,704) Net proceeds 2 1,878 1,237 1,259 1,457 Adjusted contribution to Consolidated Fund 1 (867) (571) (608) (704) Contribution to Consolidated Fund as a % of net proceeds 46.17% 46.16% 48.29% 48.32% Cost of sales 2 (476) (313) (324) (397) Adjusted gross profit Gross profit margin 13.80% 13.84% 12.59% 11.26% Adjusted administrative expenses 3 (305) (198) (224) (266) Adjusted operating profit/(loss) Adjusted operating profit margin 5.93% 6.08% 3.97% 2.85% Finance income/(costs) (3) Adjusted profit before taxation ( PBT ) Adjusted PBT margin 6.22% 6.47% 4.16% 2.75% Adjusted income tax expense 4 (42) (28) (20) (12) Pro forma profit after taxation( PAT ) Adjusted PAT margin 5.13% 5.37% 3.39% 2.37% Pro forma EPS Actual contributions to the Consolidated Fund have been retrospectively adjusted following the ruling of the Mediation Division of the Supreme Court in October Refer to Section 12.3 for a full discussion of the adjustments made. 2 Stock provisions booked in the period to 31 December 2013, have been reallocated to prior periods on the basis of the launch date of the Quick Win games. Refer to Section 12.3 for a full discussion of the adjustments made. 3 A number of expenses were directly related to the contributions to the Consolidated Fund adjustment and have also been reallocated to prior accounting periods in line with the revenue adjustment. Refer to Section 12.3 for a full discussion of the adjustments made. 4 The consequential impact of the adjustments to the above figures has resulted in the recomputation of income tax for each relevant accounting period. Refer to Section 12.3 for a full discussion of the adjustments made. 5 Annualised figures. 19

22 12. Pro Forma financial information (contd.) 12.1 Pro forma income statements (Contd.) In FY13, Lottotech has taken a number of initiatives in terms of cost cutting and operational optimisation which the Board believes will bear fruit as from FY14. In order to provide a better picture of the potential of Lottotech, the Company carried out an impact analysis (the Impact Analysis ) to determine the annualised PAT for FY13 as if these measures have been fully implemented for a full year, as set out below. Table 2 Impact Analysis on annualised pro forma PAT m Notes Annualised FY13 Annualised pro forma PAT 133 Cost savings: Salary of Directors 4 13 Re-organisation costs 5 16 Renegotiation of advertising agencies fees 6 9 Retailer expansion expenses 7 8 Impact of cost savings before tax 46 Effective tax rate 17% Tax charge on cost savings at effective rate (8) Impact of cost savings after tax 38 Adjusted pro forma PAT post Impact Analysis 171 Adjusted pro forma EPS post Impact Analysis 0.50 Annualised pro forma PAT for FY13 works out at 133m. This represents a 51% increase in PAT over 2012, which can be mainly attributed to cost cutting measures. With the application of the cost cutting and operational optimisation measures, the annualised adjusted pro forma PAT works out to be 171m for FY13. Annualised pro forma EPS for FY13 amounts to 0.39 compared to 0.26 for FY12. When the cost optimisation plan is taken into account, the annualised adjusted pro forma EPS works out at 0.50 for FY13. 20

23 12. Pro Forma financial information (contd.) 12.1 Pro forma income statements (Contd.) The above pro forma income statements (Table 1) and the Impact Analysis on the annualised pro forma PAT (Table 2) are commented below: Note 1. For the 12 months ended 2013, Loto and Quick Win revenues decreased by 1.8% compared to the preceding 12 months; this is attributable to a 19.8% decline in revenue for Quick Win games while revenue for the Loto game grew by 4.3%. A new senior management team for the Company was appointed in 2012/13. The Board established a Quick Win Turnaround Committee to review the management strategy to improve Quick Win games revenue, following which a rejuvenation plan was implemented in the second half of FY13. This has already yielded significant improvements, with Quick Win revenue increasing by 32%. Note 7. As part of the Company s retail expansion to 895 retailers at 31 December 2013 and up to 1,000 retailers at the end of 2014, the Board approved additional non-recurring operating expenses of 7.6m, all of which were expensed in FY Pro forma financial position Set out below are the pro forma financial positions of Lottotech as at 2011, 2012 and as at 31 December Refer to Section 12.3 for details of the adjustments to the pro forma financial position. No consolidated accounts have been prepared as Lottotech was exempt from preparing consolidated financial statements under International Financial Reporting Standards ( IFRS ) 10 paragraph 4. Furthermore, it disposed of its investment in its 100% subsidiary, namely Gamlot Technologies Ltd at cost, i.e. 1,000 on 31 December Refer to Section for further information. Loto revenue increased slightly in the last 6 months of FY13. Loto revenue is driven by jackpot sizes and as jackpots roll over, revenue increases. In the 6 months to 31 December 2013, there were frequent jackpot winners thereby reducing jackpot rollovers, even though the highest ever Loto jackpot of 77m happened in that semester. Note 2. Net proceeds moved in line with gross ticket sales and prizes. Contributions to the Consolidated Fund represented 46.16% of net proceeds in FY13. Note 3. Note 4. Note 5. Gross profit margins as adjusted, remained stable throughout the period under review. Cost of sales includes retailers and other commissions, gaming systems and data communications costs. Since inception, the Chairman and the Executive Directors of Lottotech have been actively involved in the implementation and operation of the Mauritius National Lottery and in the strategy and business development of the Company. In view of the listing of the Company, the Chairman and the Executive Directors have decided to waive their salaries and fees. As from 1 January 2014, the Chairman, and the previous Executive Directors have voluntarily declined their remuneration rights. In FY13, Lottotech proceeded with a major restructuring of its activities including cost cutting and operational optimisation measures. The Company has a new organisation structure with reduced staff levels and redefined job descriptions. This restructuring resulted in a one-off ex-gratia payment of 2.4m. Additionally, this exercise will result in annual costs savings of 13.4m. Note 6. Since January 2014, Lottotech has renegotiated the contracts with its advertising agencies so that annual retainer fees have been reduced. This will result in annual cost savings of 8.9m. 21

24 12. Pro Forma financial information (contd.) 12.2 Pro forma financial position (Contd.) Table 3 Pro forma financial position m 31 December 2013 Adjusted Audited 2012 Adjusted Audited 2011 Adjusted Audited Assets Non-current assets Property, plant and equipment Investment in subsidiary Deferred income tax asset Current assets Inventories Trade and other receivables Cash and cash equivalent Total assets Equity and liabilities Capital and reserves Stated capital Accumulated profits/(losses) - 52 (35) Total equity Non-current liabilities Borrowings Gratuity obligations Deferred income tax liabilities Current liabilities Borrowings Bank overdraft Trade and other payables Dividend payable Current tax liabilities Total liabilities Total equity and liabilities During the period ended 31 December 2013, Lottotech declared a dividend for the first time since it commenced its operations. The Company declared dividends of 250m in the 18 months ended 31 December 2013, of which 40m was payable as at 31 December

25 12. Pro Forma financial information (contd.) 12.3 Adjustments made in arriving at the pro forma income statements and financial positions Lottotech is required to contribute a percentage of its net proceeds to the Consolidated Fund. As per its proposal to the SIC, Lottotech was to contribute 58.01% of its net proceeds to the Consolidated Fund on the basis that it will launch new games in line with the structured game plan as submitted in its proposal. However, subsequently the GRA did not approve all the games as per the structured game plan. This has resulted in the Company instigating legal action in May 2012 against the GRA and the Ministry of Finance and Economic Development. The litigation was resolved before the Mediation Division of the Supreme Court in October 2012, whereby Lottotech was awarded a one-off compensation and a reduction in the contribution rate to the Consolidated Fund to 46.16% as from 1 July 2012 for not being able to launch new games in the initial years in accordance with the structured game plan submitted at the time of its proposal. Until 2012, the date of the last audited financial statements prior to the ruling, Lottotech had nevertheless continued to provide, on a prudence basis, for contributions to the Consolidated Fund at the rate of 58.01%. The total provision made in the Table 4 Reconciliation of the audited PAT to the pro forma PAT financial statements of the Company at 2012 amounted to 394m. As part of the ruling, 132m were agreed to be paid by Lottotech to the Consolidated Fund for the periods prior to 30 June This resulted in a one-off compensation of 262m in FY13 as disclosed in the Company s audited and IFRS compliant financial statements. The additional agreed contribution of 132m for FY11 and FY12 explains the higher contribution rate to the Consolidated Fund at 48.30% compared to 46.16% as from 1 July Under IFRS, the correction of an accounting estimate is neither a fundamental error nor a change in an accounting policy and was therefore fully recognised in the accounting period to 31 December To illustrate the impact of this significant event and to present the financial information of Lottotech as if the event had occurred at the earlier relevant dates and to ensure a more meaningful analysis of the performance of Lottotech, the reversal of the above provision has been adjusted so as to show the financial performance of FY11, FY12 and FY13 had the Consolidated Fund contribution been as agreed at mediation. Set out below is the reconciliation of IFRS audited accounts to the pro forma financial statements as disclosed in these Listing Particulars. m Notes 18 months to 31 December 2013 FY13 12 months to months to 2012 FY12 12 months to 2011 FY11 Audited PAT (9) Adjustments 1 : Consolidated Fund adjustments due to a reduction in rate of contribution following judgment by the Mediation Division of the Supreme Court 1 (262) (262) Management fees adjustments due to a reduction in Consolidated Fund rate of contribution 2 18 (13) (8) (10) Reallocation of legal & professional fees in connection with settlement of GRA litigation (10) (11) Reallocation of consultancy fees in connection with settlement of GRA litigation (8) (10) Reallocation of staff bonus adjustments due to a reduction in Consolidated Fund rate of contribution (8) (9) Reallocation of stock write off in connection with Quick Win games rejuvenation plans (9) (6) Tax expense adjustments due to above adjustments 6 20 (28) (9) (11) Adjusted pro forma PAT Some of the adjustments do not net off to zero when comparing 18m FY13 to FY12 and FY11 as balancing adjustments have been reallocated to the 6 month period 1 July 2013 to 31 December m have been adjusted in FY10. 23

26 12. Pro Forma financial information (contd.) 12.3 Adjustments made in arriving at the pro forma income statements and financial positions (Contd.) Note 1. The FY13 adjustment of 262m has been reallocated to FY11 and FY12 proportionally to net proceeds for each of these years. Note 2. Management fees payable to ASB in FY13 (refer to section 19.8 for more details), have been adjusted to reflect the changes in the metrics driving the fees had the contribution to the Consolidated Fund been at the amount agreed at mediation. Note 3. Lottotech incurred legal, professional and consultancy fees in relation to the mediation case which was accounted for in the FY13 audited financial statements. These have been reallocated to FY11 and FY12 proportionately to net proceeds for each corresponding year. Note 5. Note 6. As part of the Quick Win rejuvenation plan, a total of 30m of stock was written off in FY13. This stock dated back to games which were launched during the period 2009 to As such, the amount written off was spread over the period from FY10 to FY13 in relation to the date of launch of the respective Quick Win games. This is in line with the stock provisioning approach adopted by Lottotech in FY13. The above mentioned adjustments directly impacted the profitability of the Company and the tax losses being carried forward. The tax expenses have therefore been adjusted to reflect these changes on the income statement. The impact of above adjustments on the Net Asset Value ( NAV ) is shown below: Note 4. The reduction of 262m to the Consolidated Fund contribution resulted in higher profits for FY13. This in turn increased the profit related bonuses to employees. The adjustment reflects what the bonuses would have been on the adjusted profit of the Company. Table 5 Reconciliation of the audited NAV to the pro forma NAV m 31 December Audited NAV (12) Adjustments: Change in opening NAV balance (9) Consolidated Fund adjustments due to a reduction in rate of contribution following judgment by the Mediation Division of the Supreme Court (262) Management fees adjustments due to a reduction in Consolidated Fund rate of contribution 18 (8) (10) Reallocation of legal & professional fees in connection with settlement of GRA litigation 21 (10) (11) Reallocation of consultancy fees in connection with settlement of GRA litigation 18 (8) (10) Reallocation of staff bonus adjustments due to a reduction in Consolidated Fund rate of contribution 17 (8) (9) Reallocation of stock write off in connection with Quick Win games rejuvenation plans 24 (9) (6) Tax expense adjustments due to above adjustments 19 (10) (9) Adjusted NAV

27 13. Risk factors Any investment in the Company is subject to a number of risks. Accordingly, prospective investors should carefully consider the risks and uncertainties associated with any investment in the ordinary shares, the Company s business and the industry in which it operates together with all other information contained in this document, prior to making an investment decision. The risks and uncertainties described below represent those the Directors consider to be material as at the date of this document. However, these risks and uncertainties are not the only ones facing the Company. Additional risks and uncertainties not presently known to the Directors, or that the Directors currently consider to be immaterial, may individually or cumulatively also materially and adversely affect the business, results of operations, financial condition and/or prospects of the Company. If any or a combination of these risks actually occurs, the business, results of operations, financial condition and/or prospects of the Company could be materially and adversely affected. In such cases, the market price of the ordinary shares could be adversely impacted. Investors should consider carefully whether an investment in the ordinary shares is suitable for them in the light of the information in this document and their personal circumstances. If in doubt, investors should consult their banker, licensed investment dealer, legal advisor, accountant or other professional advisor for any investment advice. There is a risk that this Offer for Sale shall be withdrawn if the number of ordinary shares applied for by investors is below 34,000,000 ordinary shares. In the event that this minimum offer is not met, Lottotech shall refund applicants the full amount paid for the purchase of the ordinary shares. Such monies refunded will not bear interest for the applicant s account. Lottotech s risk factors can be categorised as follows: Strategic and regulatory; Technological; Reputational; and Financial 13.1 Strategic and regulatory The industry in which Lottotech operates is regulated and changes to applicable laws and regulations, including the introduction of more stringent laws and regulations, could adversely affect its business, results of its operations, financial condition and/or its prospects. The laws and regulations for the Mauritius National Lottery are currently defined in the GRA Act. Any change thereto, including the introduction of more stringent laws and regulations, and failure by the Company to comply with the applicable laws and regulations may adversely affect its ability to operate the Mauritius National Lottery in the future, including its ability to retain or renew its licence. advantage of attractive market opportunities. The GRA may refuse to approve new games or Loto enhancements. This risk is mitigated by Lottotech holding regular discussions with the GRA on regulatory matters and approval of new games and Loto enhancements Lottotech operates in a competitive gaming and gambling environment and may face competition from the rest of the gaming and gambling industry. Lottotech faces competition from the rest of the gaming and gambling industry such as other lotteries, horse racing and sports betting shops and casinos. Competition may intensify, which could put downward pressure on the revenue of the Company. Gaming products are also susceptible to consumer trends and the improvement and expansion of product offerings by competitors may attract customers away from the products that Lottotech offers and reduce the Company s market share. In addition, operators in the unregulated grey market which are permitted to act outside the GRA regulatory regime may be able to obtain a competitive advantage against regulated operators like Lottotech. Illegal gaming and gambling drain volumes of business away from the regulated industry. The actions of gaming and gambling competitors and detractors may have a material adverse effect on Lottotech s business, results of its operations, financial condition and/or its prospects. This risk is mitigated by Lottotech focusing on product innovation, the GRA enforcing its regulations and the Company reinforcing its reputation as a provider of safe and responsible gaming products Technological Lottotech relies heavily on its IT infrastructure to continue to deliver an uninterrupted quality service to its consumers. Lottotech s operations depend to a large extent on the reliability, performance and security of its information technology system, software and network. Any major system failure including network, software, internet or hardware failure, arising from damage and interruption caused by human error, problems with the telecommunications network, natural disasters, sabotage, hacker intrusion, malicious viruses and other cybercrime attacks, which causes interruption in the business or affect the integrity of the Mauritius National Lottery, would have an adverse impact on the business of Lottotech. This risk is mitigated by Lottotech having devised control systems within its IT infrastructure. The IT operations are conducted from the Company s head office in Ebène CyberCity, together with back-up systems in a remote location at Beau Bassin. Additionally, Lottotech s network communications system functions on a dual network mechanism operating on both the Emtel and Orange communication systems. Should one network operator be down, it will automatically shift to the other network provider to ensure seamless data transmission to the data centres. Lottotech could also from time to time experience significant delays in the approval of new games and approval of Loto enhancements by the GRA and such delays could prevent the Company from taking 25

28 13. Risk factors (contd.) 13.2 Technological (Contd.) Lottotech relies heavily on its IT infrastructure to continue to deliver an uninterrupted quality service to its consumers. (Contd.) Lottotech has signed a technology supply and support agreement with GTECH to provide lottery technology services to the Company. GTECH has supplied the Company with proven technology and certified equipment in support of Lottotech s efficient and highlysecured gaming operations. Lottotech is compliant with ISO 27001:2005 which is the highest international standard with respect to information security management systems. On a regular basis, Lottotech commissions penetration testing carried out by professional firms with the relevant expertise Reputational Lottotech relies on its retailer network as a distribution channel for its lottery products and problems with the retailers could adversely affect the business. Lottotech relies on retailers to operate its distribution network. The Company does not control these retailers and relies on them to perform in accordance with the terms of their contracts. This increases the Company s vulnerability to problems with the service they provide. This risk is mitigated by a series of measures that Lottotech has implemented. A rigorous control system has been put in place by Lottotech to monitor its distribution network. Lottotech carefully selects its retailers in order to optimise its presence and the visibility of its products throughout Mauritius and Rodrigues. The Company evaluates the retailer s ability in managing the lottery business before appointing the retailer. The Company continuously reviews the performance of retailers and provides training to them to ensure that the customer service delivered by the retailers is of the required standard. In connection with this review process, Lottotech seeks to reward top performing retailers by presenting them with end of year awards and focuses on opening new points of sale and closing underperforming points of sale. Training courses are held on a regular basis to ensure that retailers are not deceitful towards both Lottotech and its customers. can become subject to increased regulation. Such an increase in regulation could adversely impact Lottotech s business. This is mitigated by the Company being actively involved in the promotion of responsible gaming. In addition, Lottotech ensures that the public understands the difference between gaming and gambling. Lottotech maintains internal monitoring systems under its compliance department to prevent any instance of bribery, fraud or corruption Lottotech relies on the integrity of its employees and systems. The real and perceived integrity and security of the Company s employees, executives and systems are critical to its ability to attract customers and comply with applicable regulations. Lottotech has set high standards of personal integrity for its employees and system security for the games that it provides to its customers. Accordingly, a finding of improper conduct on the Company s part, or on the part of one or more of its current or former employees or another related party, or a system security defect or failure, or an allegation of such conduct that impairs Lottotech s reputation, could result in civil or criminal liability. Any of the above factors could have a material adverse effect upon the business, its results of operations, its financial condition and/or its prospects. Should any instance of improper conduct on the part of its employees be found, Lottotech will take appropriate action immediately to remedy the situation. In addition, Lottotech invests a significant amount of resources to ensure the integrity of its systems Negative perceptions and publicity surrounding the gambling industry could adversely affect Lottotech s business. Lottotech may be exposed to negative publicity related to gambling behaviour, under-age play, risks related to online gambling and money laundering. Such negative perceptions, even if not directly connected to the Company and its products, could adversely impact the business, results of its operations, financial condition and/or its prospects. For example, if the perception develops that the GRA is failing to address such concerns adequately, the gambling industry 26

29 13. Risk factors (contd.) 13.4 Financial Financial risks to Lottotech are both external and internal by nature as explained below: External Natural disaster This external risk factor has a direct impact on business continuity and could have a significant adverse effect on Lottotech s revenues and overall profitability Credit risk arising from non-payment by retailers Retailers collect the cash and transfer it over to Lottotech on a weekly basis, net of their commissions. There is a risk that retailers do not pay over the appropriate amount to Lottotech. The Company has the ability to turn off a retailer terminal centrally such that this risk can be mitigated to one week s worth of takings. In addition, legal action will be taken by the Company to recover the debt. Internal Management of contributions to the Consolidated Fund Remittance to the Consolidated Fund is a statutory requirement of the GRA Act. A prescribed formula has been devised and Lottotech ensures that its calculations reconcile with those of the GRA to minimise the risk of under/overpayment to the Consolidated Fund Unclaimed prize monies A statutory requirement of the GRA Act is the remittance of all unclaimed prize monies to the National Solidarity Fund. For Loto, it is all unclaimed prizes aged more than 6 months and for Quick Win games, all prizes unclaimed greater than 3 months following the closure of the applicable Quick Win games. Lottotech continuously monitors the unclaimed prize balance such that it can be remitted on time to the National Solidarity Fund Reliance on certain key persons Lottotech s success depends on certain key persons, in particular members of its senior management team. A succession plan is in place to mitigate the impact of losing these key persons. In addition, training is provided on and off the job to ensure that the appropriate expertise is developed and spread across key persons Dependence on one bank to perform the sweep of cash from retailers into Lottotech s account Lottotech depends on one bank to effect the transfer of monies from retailers into Lottotech s bank account. The bank which Lottotech has chosen is one of the largest banks in Mauritius and to date it has provided an uninterrupted and effective service Logistics All of Lottotech s Quick Win games are imported from GTECH and shipped to Mauritius for distribution. The possibility of shipment delays might hamper inventory levels and revenue figures. This risk is mitigated by careful planning such that Quick Win games are ordered in advance and rolled out in accordance with an agreed plan. 27

30 14. Summary of corporate information Name of company Lottotech Ltd Business registration number C Principal office HSBC Centre 18 CyberCity Ebène, Mauritius Registered office Royal Road, Chapman Hill Beau Bassin, Mauritius Key licence Operator of the Mauritius National Lottery Licence Trademarks Loterie Nationale, Loto and Quick Win These are the property of the Government of Mauritius. They were created and are used for commercial purposes by Lottotech by virtue of its licence. Company Secretary Gamma Corporate Services Ltd Royal Road, Chapman Hill Beau Bassin, Mauritius Registrars Gamma Corporate Services Ltd Royal Road, Chapman Hill Beau Bassin, Mauritius Principal Banker State Bank of Mauritius Ltd SBM Tower, 1 Queen Elizabeth II Avenue Port Louis, Mauritius Auditors/Reporting Accountants PricewaterhouseCoopers Ltd 18 CyberCity Ebène, Mauritius Transaction advisors Independent valuers Legal advisors PricewaterhouseCoopers Ltd 18 CyberCity Ebène, Mauritius KPMG KPMG Centre 31 CyberCity Ebène, Mauritius Sir Hamid Moollan QC 6th Floor, PCL Building, Sir William Newton Street Port Louis, Mauritius 28

31 15. Directors, senior management, corporate governance and risk management 15.1 Biographies of existing Directors Chian Yew Ah Teck (also called Carl Ah Teck) Non-Executive Director and Chairman Carl holds a first class degree in Civil Engineering from Lancaster University and an MPhil. degree in Soil Mechanics from the University of Cambridge. After university, he joined consulting firm Sir Alexander Gibb and Partners in Mauritius. He is a registered professional engineer. He has also attended several executive management programs at NUS/Stanford University, London Business School and INSEAD. After 5 years with Sir Alexander Gibb and Partners, where he held various positions in both the design office and on site for major projects, he founded Gamma Construction Ltd in 1987 which was subsequently reorganised and called Gamma-Civic Ltd. From 1987 to 2011, he was the Chief Executive of the Gamma Group before becoming the Executive Chairman of Gamma-Civic Ltd in February During this time, Carl has also been a director and the Chairman of companies in the Gamma Group. Other directorships of listed companies Gamma-Civic Ltd, Morning Light Co. Ltd Business address Royal Road, Chapman Hill, Beau Bassin, Mauritius Nationality Mauritian Date of appointment 8 April 2008 Other directorships of listed companies Gamma-Civic Ltd, Morning Light Co. Ltd Business address Royal Road, Chapman Hill, Beau Bassin, Mauritius Nationality Mauritian Date of appointment 11 April 2008 Paul Cyril How Kin Sang Non-Executive Director Cyril studied accountancy at The University of West London and is a member of the Institute of Chartered Accountants in England & Wales. From 1985 to 1988, he trained and worked as a Chartered Accountant in the UK with a number of accounting firms including KPMG. He joined Gamma in 1989 and has occupied several posts within the Group, including Group Finance Director, Supervisory Executive Director of Lottotech and is involved in the business development of the Group. He was appointed as the Managing Director of Gamma in February Other directorships of listed companies Gamma-Civic Ltd, Morning Light Co. Ltd Business address Royal Road, Chapman Hill, Beau Bassin, Mauritius Nationality Mauritian Date of appointment 8 April 2008 Chian Luck Ah Teck (also called Patrice Ah Teck) Non-Executive Director Patrice holds a BA (Hons) Accounting and Finance from South Bank University. He worked as a Trainee Accountant with Nunn, Crick and Bussell in the UK, and in 1993 he joined the Gamma Group as Sales and Marketing Manager. He was appointed Sales and Marketing Director in 2000 and since 2011 he has occupied the post of Deputy Managing Director. Other directorships of listed companies Gamma-Civic Ltd, Morning Light Co. Ltd Business address Royal Road, Chapman Hill, Beau Bassin, Mauritius Nationality Mauritian Date of appointment 11 April 2008 Kune Foo Jean-Claude Lam Hung Non-Executive Director Jean-Claude is a Fellow of the Institute of Chartered Accountants in England and Wales. He was awarded the Edward Billington Scholarship to read BA (Hons) Business Studies at Liverpool John Moores University. He graduated with a first class honours degree. From 1998 to 2009, he trained and qualified as a Chartered Accountant with Ernst & Young (London) before assuming senior manager and director roles at Deloitte (London) and BDO (London) respectively. In November 2009, he became a partner at Mazars LLP (London) prior to joining Gamma as Group CFO in August Other directorships of listed companies Morning Light Co. Ltd Business address Royal Road, Chapman Hill, Beau Bassin, Mauritius Nationality Mauritian Date of appointment 8 October 2012 Chian Tat Ah Teck (also called Tommy Ah Teck) Non-Executive Director Tommy holds a BSc (Hons) Engineering from University of Westminster and an MPhil in Mechanical Engineering from Loughborough University of Technology. He worked as a Trainee Accountant with Griffin & Partners, Chartered Accountants in London, UK. He occupied the post of Managing Director of Gamma from 1987 to January He was appointed as CEO of Gamma as from February

32 15. Directors, senior management, corporate governance and risk management (contd.) 15.1 Biographies of existing Directors (Contd.) Muhammad Iqbal Mallam-Hasham Non-Executive Director Iqbal is a fellow of the Hubert H. Humphrey program and studied International Economy at Boston University. He is a Fellow of the Mauritius Institute of Directors. He holds a post-graduate degree in Management and Business from Institut d Administration des Enterprises, Université de Strasbourg. At present, he is the Managing Director of the State Investment Corporation Ltd. He has wide ranging experience in the financial services sector and has been a consultant in corporate management, financial services, training and legal matters. He was the Associate Professor, teaching graduate and postgraduate courses in Strategic Management and Negotiation Techniques at the two Universities in Mauritius as well as for Université de Poitiers/MCCI Program. He has formerly held important positions including Member of Parliament, Member of Public Accounts Committee and Member of the Joint ACP-EU Bureau. Other directorships of listed companies Caudan Development Limited, Constance Hotels Services Ltd, Sun Resorts Limited Business address Level 15, Air Mauritius Centre, President John Kennedy Street, Port Louis, Mauritius Nationality Mauritian Date of appointment 9 April 2009 Ishwurlal Golam Non-Executive Director Ishwurlal is a member of the Chartered Institute of Management Accountants and was a Gold medallist of the London Chamber of Commerce & Industry. He has served at the Ministry of Finance in important positions before his appointment as Director, Concession Projects Division. He has held the position of Group Administrator and Finance Manager at SIC since June Other directorships of listed companies Morning Light Co. Ltd Business address Level 15, Air Mauritius Centre, President John Kennedy Street, Port Louis, Mauritius Nationality Mauritian Date of appointment 9 April 2009 Alex S. Burstein Non-Executive Director Alex holds a BSc Electrical Engineering from Carnegie-Mellon University in Pittsburgh, Pennsylvania. He worked at GTECH, a leader worldwide in gaming technology including application software, firmware, communications processing, and central systems software, where he held top management posts. In 1998, he left GTECH and started his own company whereby he acted as a consultant and an advisor to a number of lottery companies around the world. Other directorship of listed companies None Business address Le Havre Drive, Palm Beach Gardens, FL 33410, United States. Nationality American Date of appointment 18 May Biographies of Directors who have been appointed effective 19 May 2014 Robert Chowvee Ip Min Wan Independent Non-Executive Director Robert is the Managing Director of Ip Min Wan Ltd and a Fellow of the Institute of Chartered Accountants in England and Wales. He holds a B.Com. (Hons) degree in Business Studies from the University of Edinburgh. He was a senior manager in Deloitte in London where he has accumulated more than 8 years of financial services audit and assurance experience, prior to joining Ip Min Wan Ltd. In June 2008, he joined the Boards of Mauritian Eagle Insurance Company Ltd ( MEI ), a listed company, and Mauritian Eagle Leasing Company Ltd ( MEL ) as an independent director. He chairs the Audit and Risk Committees of MEI and MEL. He is also an independent director of COVIFRA and Holiday Village Management Services Ltd. Other directorships of listed companies Mauritian Eagle Insurance Company Ltd, COVIFRA Business address 31 Queen Street, Port Louis, Mauritius Nationality Mauritian Anwar Moollan Independent Non-Executive Director Anwar pursued studies in law at Downing College, Cambridge and the University of Paris, Panthéon Sorbonne after studying Mechanical Engineering in France. He was ranked first at the Mauritian Bar Council examinations in 1995 and was awarded the Sir Raymond Hein QC Award. He joined the Chambers of Sir Hamid Moollan QC in 1995 and practises as a barrister. Anwar chairs the Audit Committee of Harel Mallac & Co. Ltd and is a director on Compagnie Immobilière Ltée. Other directorships of listed companies Harel Mallac & Co. Ltd, Compagnie Immobilière Ltée Business address PCL Building, Sir Newton Street, Port Louis, Mauritius Nationality Mauritian 30

33 15. Directors, senior management, corporate governance and risk management (contd.) 15.2 Biographies of Directors who have been appointed effective 19 May 2014 (Contd.) Ian Shepherd Independent Non-Executive Director Ian is a graduate of the Royal Military Academy Sandhurst (UK) and has a Master of Business Administration and a certificate in coaching from Henley Business School. Ian is retired and sits on the boards of several private media companies, incorporated in South Africa, namely Striata.com, FleishmanHillard SA, Trialogue Pty Ltd, The Performance Hub Pty Ltd and Community and Individual Development Trust. Ian has held a number of senior management roles namely Chairman at Grey Advertising (South Africa), Chief Executive at Connectivity and CIDA Learning, CIDA Investment Trust and Grey Advertising (South Africa), Regional Director at Grey Africa Network, Managing Director at Shepherd Advertising, BBDO (South Africa), BBDO Research (South Africa) and Market Research Africa (Zimbabwe), and Sales and Marketing Director at Schweppes Central Africa. Other directorships of listed companies None Business address Willowford Send, Woking, Surrey GU23 7AN, UK Nationality Zimbabwean Moorghen Veeramootoo Chief Operating Officer Moorghen holds a BSc European Studies & Technology and a Master degree in Marketing from Coventry University in the UK. He is also a holder of a Diplome Universitaire en Technologie from the Institut Universitaire de Technologie of Avignon in France. He has previously occupied the post of Marketing and Sales Manager and Business Unit Manager at Gamma from 2004 to He has also worked as Marketing Manager at Happy World Foods Ltd (now Innodis Ltd) from 1999 to 2004 and Cread & Co. Ltd in He joined Lottotech in 2009 and has occupied the post of Deputy General Manager and presently holds the post of Chief Operating Officer. Jean Marc Landry Chief Sales and Marketing Officer Jean Marc, a Canadian national, has a Bachelor degree in Business Administration (Finance) from the Université de Moncton, New Brunswick. Prior to joining Lottotech, he worked at Atlantic Lottery Corporation for 8 years where he most recently held the position of Director of Marketing (Retail). At Atlantic Lottery Corporation, he successfully led the implementation of the Quick Win rejuvenation plan to address declining sales. This plan resulted in three consecutive years of record sales, as well as all-time sales record for the regional and national lottery games Biographies of senior management Michelle J. Carinci Chief Executive Officer Michelle, a Canadian national, has proven leadership in operations and innovation both locally and internationally, with over 35 years experience in the gaming industry. Prior to joining Lottotech, Michelle held the position of CEO at Atlantic Lottery Corporation, which under her leadership was recognised three times as one of Canada s Top 100 Employers. As President and CEO of the Atlantic Lottery Corporation, she developed and implemented a corporate social responsibility framework which strives to promote integrity, transparency and responsibility. Prior to joining Atlantic Lottery Corporation, she was President of Gamescape, a wholly-owned subsidiary of GTECH and a Corporate Vice President in charge of marketing and customer relations at GTECH. She has also been recognised four times as one of the top 50 CEOs in Atlantic Canada and is an inductee into the Lottery Hall of Fame class of Michelle is also a strong promoter of responsible gaming having been one of the founding members of the Responsibility Program on behalf of the WLA. Michelle also aided in the creation of responsible gambling principles and its associated frameworks and standards which were unanimously approved by 140 organisations worldwide. Ansuya Seewooruthun Financial Controller Ansuya has a Bachelor of Commerce in Accounting and Finance from the University of Mauritius. She also completed the ACCA qualification and is currently doing a Master in Business Administration with the University of Bradford, UK. She has more than 10 years of experience in accounting and finance in both local and international organisations. She joined Lottotech in December 2010 and is presently the Financial Controller of Lottotech. Harikrishna Ramsamy Chief Technology Officer Harikrishna has a Master in Business Administration from Heriot Watt University. He has over 20 years experience in the IT profession and was appointed as Chief Technology Officer at Lottotech in He is responsible for the planning and execution of IT initiatives that support the Company s objectives. He also oversees and ensures the smooth and efficient running of the on-line lottery sales and IT services. 31

34 15. Directors, senior management, corporate governance and risk management (contd.) 15.3 Biographies of senior management (Contd.) Jerry Lim How Chief Procurement Officer Jerry studied BSc Computer Science with Business Studies at the University of Buckingham in the UK and has an MSc Business Systems Analysis and Design from City University in London. He worked as LPG Retail Supervisor and Planner from 1989 to 1997 and as Contracting and Procurement Manager from 1997 to 2002 at Shell Mauritius Ltd. He joined Gamma in 2002 and acted as Group Procurement Manager from 2002 to He transferred to Lottotech as Chief Procurement Officer in Richard Papie Security Manager Richard joined Lottotech in 2009 and has over 24 years of experience within the security profession. He worked as a police officer for 7 years, and held the position of security manager across a number of industries. Richard joined Lottotech in 2009 and he oversees, investigates and liaises with the relevant legal and enforcement authorities to authenticate any winning tickets that may be in dispute. Sivalingum Candassamy Compliance and Risk Manager Sivalingum holds an MSc in Computer Security and Forensics and a Master in Business Administration from the University Technology of Mauritius. He joined Lottotech in 2009 and is in charge of the risk and compliance aspects of Lottotech s operations. He assists management in identifying key risks to the business and ensures that appropriate controls are in place to mitigate these to an acceptable level Description of committees and respective responsibilities The Board has established three committees, namely the Audit Committee, the Corporate Governance Committee and the Games Committee (the Board Committees ). These Board Committees have been formed to efficiently manage the responsibilities of the Board and to facilitate efficient decision making of the Board. The Board Committees are a mechanism to assist the Board and its Directors in discharging their duties through comprehensive evaluation of specific issues, followed by well-considered recommendations to the Board. However, the Board remains ultimately accountable and responsible for the performance and the affairs of the Company Audit Committee The Audit Committee assists the Board in relation to its reporting of financial information, the appropriate application and amendment of accounting policies, the identification and management of risk, the implementation of internal control systems and internal audit, statutory and regulatory compliance. The Audit Committee provides a forum for effective communication between the Board and the internal and external auditors, both of whom report to the Audit Committee. The Audit Committee is composed of the following Directors: Ishwurlal Golam, Chairman Muhammad Iqbal Mallam-Hasham Tommy Ah Teck Patrice Ah Teck The Audit Committee holds quarterly meetings and its members scrutinise and share their views on all financial reports, the audited financial statements as well as reports from the internal and external auditors. The internal audit function is outsourced to Ernst & Young. The composition of the Audit Committee will be reviewed upon appointment of the Independent Non-Executive Directors Corporate Governance Committee The Corporate Governance Committee makes recommendations to the Board on all corporate governance matters relevant to the Company to ensure that the Board remains effective and complies with the Code of Corporate Governance and prevailing corporate governance principles. The Corporate Governance Committee is also responsible for remuneration and nomination matters. The remuneration philosophy is geared towards rewarding efforts and merits for individual and joint contribution to the Company s results, whilst having also due regards to market conditions, the financial wellbeing of the Company and the interest of the shareholders. The Corporate Governance Committee is composed of the following Board participants: Muhammad Iqbal Mallam-Hasham, Chairman Tommy Ah Teck Patrice Ah Teck Paul Cyril How Kin Sang The composition of the Corporate Governance Committee will be reviewed upon appointment of the Independent Non-Executive Directors. 32

35 15. Directors, senior management, corporate governance and risk management (contd.) Games Committee The Games Committee is composed of the following Board participants: Patrice Ah Teck, Chairman Paul Cyril How Kin Sang Jean-Claude Lam Hung Alex S. Burstein Muhammad Iqbal Mallam-Hasham The following management members are also asked to attend and contribute to each of the Games Committee meetings: Michelle Carinci Moorghen Veeramootoo Jean Marc Landry Ansuya Seewooruthun The Games Committee was initially set up as the Quick Win Turnaround Committee ( QWTC ) to review the management strategy to improve Quick Win games revenue. After the rejuvenation plan was presented and approved by the Board in July 2013 and achieved its first successes, the Board decided that the QWTC be renamed the Games Committee to review and implement future strategies for all of the games that Lottotech operates. The Games Committee meets around 4 to 6 times a year and always in advance of a Board in order to report on progress and any new initiatives that are being proposed for the Board to approve Supervisory Committee The Supervisory Committee is composed of the following Board participants: Paul Cyril How Kin Sang, Chairman Patrice Ah Teck Jean-Claude Lam Hung The Supervisory Committee is a Board Committee set up to specifically assist, monitor and supervise the CEO and management of Lottotech in the day to day management and operations of the Company, on behalf of the Board. It also monitors the performance of the CEO and management of Lottotech, if necessary, and makes necessary recommendation to the Board of Directors. The Supervisory Committee members may interact on a daily basis with the CEO and management of Lottotech and shall meet as often as may be required and formally at least once every quarter Statement of interests Statement of interests of Directors The figures presented in the table below correspond to the holdings of the Directors listed in this section before the Offer for Sale to the public. Director Shareholding Direct Indirect Carl Ah Teck % Tommy Ah Teck % Patrice Ah Teck % Paul Cyril How Kin Sang % Jean-Claude Lam Hung % Statement of interests of any person or Company, other than the Director of the Company, who holds more than 5% of the stated capital of the Company The figures presented in the table below correspond to holdings before the Offer for Sale to the public. Name of shareholder Shareholding Direct Indirect The State Investment Corporation Ltd 25.00% - Gamma Leisure Ltd 18.75% - Maurilot Investments Ltd 18.75% - Natlot Investments Ltd 18.75% - Glot Holdings (Mauritius) Ltd 18.75% - Gamma-Civic Ltd 74.81% Consolidated Holdings Ltd % Landcorp Ltd % JHD Holdings Ltd % Bluesilver Ltd % 15.6 Directors service contracts The Directors have no service contracts with the Company. 33

36 15. Directors, senior management, corporate governance and risk management (contd.) 15.7 Directors remuneration and benefits The table below sets out the remuneration received by each Director for the 18 months ended 31 December 2013 and the year ended Executive Directors FY13 FY12 Carl Ah Teck Chairman 4,075,107 3,255,460 Tommy Ah Teck 4,890,128 3,255,460 Patrice Ah Teck 4,890,128 3,255,460 Paul Cyril How Kin Sang 4,890,128 3,255,460 Jean Claude Lam Hung - - Non - Executive Directors FY13 FY12 Carl Ah Teck Chairman 815,021 - Muhammad Iqbal Mallan-Hasham 300, ,000 Ishwurlal Golam 300, ,000 Alex S. Burstein - - Alex Fon Sing - - As from 1 January 2014 Tommy Ah Teck, Patrice Ah Teck and Paul Cyril How Kin Sang have ceased to be Executive Directors of the Company. With the proposed listing of the Company, the Chairman and the previous Executive Directors have voluntarily declined their remuneration rights as from 1 January

37 16. Reporting ACCOuntants Report 17 March 2014 The Board of Directors Lottotech Ltd HSBC Centre 18, CyberCity Ebène Republic of Mauritius Dear Sirs, ACCOuntants report We report on the historical financial information set out on pages 37 to 60. This report has been prepared for inclusion in the Listing Particulars of Lottotech Ltd ( Issuer ), in relation to the Offer for Sale of up to 85,000,000 ordinary shares of no par value and the listing of 340,000,000 ordinary shares of no par value of Lottotech Ltd on the Official List of the Stock Exchange of Mauritius Ltd ( SEM ) by way of an Offer for Sale. Basis of preparation The historical financial information is based on the audited financial statements of the Issuer for the years ended 2011 and 2012, and the 18 month period ended 31 December Responsibilities of the directors for the historical financial information The directors of the Issuer are responsible for the compilation, contents and preparation of the Listing Particulars. The directors are also responsible for the fair presentation of the historical financial information as set out in the Listing Particulars in accordance with International Financial Reporting Standards and accounting policies used in the Issuer s audited financial statements for the years ended 2011 and 2012, and the 18 month period ended 31 December 2013 underlying the historical financial information. Scope of audit for the years ended 2011 and 2012, and the 18 month period ended 31 December 2013 Our responsibility is to express an opinion on the historical financial information included in the Listing Particulars based on our audits for each of the years ended 2011 and 2012 and the 18 month period ended 31 December We conducted our audits in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audits to obtain reasonable assurance about whether the Financial Statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the abovementioned Financial Statements. The procedures selected depend on the auditor s judgement, including the assessment of the risks of material misstatement of the Financial Statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the Financial Statements 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 entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the Financial Statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our accountants report. Statement of independence During the years ended 2011 and 2012 and the 18 month period ended 31 December 2013, we have not been an associate, as defined in the Listing Rules, of any directors or of any shareholders holding more that 5% of the issued share capital of the Issuer. Further, we do not audit any holding or subsidiaries of issuer. We have been the auditors of the Issuer for the years ended 2011 and 2012, and the 18 month period ended 31 December

38 16. Reporting ACCOuntants Report (contd.) Opinion on the historical financial information In our opinion, the historical financial information gives, for the purpose of the Listing Particulars, a true and fair view of the financial position of Lottotech Ltd and its financial performance and its cash flows for each of the years ended 2011 and 2012, and the 18 month period ended 31 December 2013, in accordance with International Financial Reporting Standards and accounting policies used in the Issuer s audited financial statements underlying the historical financial information. Other matter This report, including the opinion, has been prepared for and only for the directors and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. PricewaterhouseCoopers 36