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Hong Kong-listed International Entertainment Corp expects its loss attributable to shareholders to widen to approximately HKD500 million, or US$63.8 million, for the 12 months ended June 30. The forecast compares with a loss of approximately HKD282.1 million during the preceding financial year.
The expected loss comes despite growth in gross profit driven by the company’s gaming operations. International Entertainment controls the Manila Bay casino hotel, formerly known as New Coast Hotel Manila and now promoted as LaVie Resort & Casino Manila.
Convertible Notes Create Accounting Charge
International Entertainment said the anticipated annual loss was mainly caused by a non-cash loss of approximately HKD425 million. The charge resulted from a change in the fair value of financial liabilities linked to HKD1.60 billion in convertible notes issued during the reporting period.
The notes were subscribed to by Philippines-listed online gaming operator DigiPlus Interactive Corp. If fully converted, they would give DigiPlus a 53.89% stake in International Entertainment based on the company’s enlarged share capital.
International Entertainment said the HKD425 million charge was a non-cash accounting item. It said the charge had no effect on normal business operations or operating cash flow.
Excluding the item, the company expects to record a smaller loss attributable to shareholders than in the previous financial year. The final result remains subject to the completion of the company’s financial reporting process.
Gaming Operations Support Gross Profit
The anticipated loss came despite what International Entertainment described as notable growth in gross profit. The increase resulted from higher gaming revenue generated by its land-based casino operation and from providing a gaming platform to other authorised gaming operators.
Selling and marketing expenses increased during the financial year. The company linked the rise mainly to higher spending on marketing campaigns and promotional activities intended to improve the appeal and competitiveness of its casino offerings.
The cost increase affected the financial period as the group continued to develop its casino business and promote its offerings. The company did not provide a separate figure for the increase in selling and marketing expenses.
Online Gaming Agreement Signed
In June, International Entertainment announced a cooperation agreement with Total Gamezone Xtreme Inc, or TGXI, a DigiPlus unit. The arrangement covers the integration, aggregation, provision, and operation of online gaming content connected to LaVie Resort & Casino Manila.
The cooperation remains subject to regulatory requirements. The agreement links the Manila casino property with online gaming content provided through the DigiPlus group.
LaVie Casino Upgrades Continue
International Entertainment is also upgrading its land-based casino offering. In July, gaming equipment supplier Velvix Corp announced an agreement for the initial deployment of 16 CurlX slot machines at LaVie Resort & Casino Manila.
The deployment forms part of the property’s casino equipment upgrades.
Final Results Due In August
International Entertainment is still finalising its unaudited consolidated financial results. The company expects to publish its interim results by the end of August.
The final report will determine the company’s reported loss for the 12 months ended June 30. For now, International Entertainment expects the HKD425 million fair-value charge to be the main reason for the wider loss, while gaming revenue and gross profit recorded growth.
Source: GGR Asia
