Int Ent loss for year to June 30 widens to US$62mln, gaming revenue up 61pct

International Entertainment Corp, a Hong Kong-listed investor in a casino hotel and online gaming business in the Philippines, widened its loss to HKD486.4 million (US$62.0 million) for the 12 months to June 30. Its loss had been HKD282.1 million in the preceding financial year. International Entertainment controls the Manila Bay casino hotel in the Philippines formerly known as New Coast Hotel Manila, now promoted as LaVie Resort & Casino Manila (pictured). The company affirmed in a Friday filing its warning earlier in the month of a non-cash loss amounting to HKD424.9 million. That was due to a change in the fair value of financial liabilities linked to HKD1.60 billion in convertible notes issued during the reporting period. The firm said the situation with the convertible notes “does not introduce any material uncertainty or liquidity risk to the group’s ability to continue as a going concern”. The convertible notes were subscribed to by Philippines-listed online gaming operator DigiPlus Interactive Corp. If fully converted, they would give DigiPlus a 53.89-percent stake in International Entertainment, based on the latter’s enlarged share capital. International Entertainment said in its Friday filing that if the classification of the convertible notes were excluded from current liabilities, the company would maintain “a robust net current asset position” of just over HKD930.6 million as of June 30, “sufficient to comfortably cover all standard operating working capital and short-term commercial obligations of the group”. The firm said that “despite the macroeconomic challenges” including “softer discretionary spending” in the Philippines market, “triggered by Middle East geopolitical tensions and persistent inflationary pressures,” the group’s total revenue for the period increased by 50.6 percent year-on-year, to HKD852.5 million. Gaming biz improves Gaming-operation revenue for the reporting period went up 60.7 percent year-on-year, to HKD819.4 million. Due, however, to the temporary closure of certain hotel rooms for renovation at its Manila Bay casino hotel during the period, hotel revenue fell 41.2 percent year-on-year, to just under HKD33.1 million. Gross profit for the 12 months to June 30 rose 66.4 percent to HKD454.6 million, driven by “higher gaming revenue arising from both land-based casino operation and provision of gaming platform to other authorised gaming operators”. Gross profit margin was 53.3 percent, up 5.0 percentage points from 48.3 percent in the previous period, mainly due to an “increase in commission income with higher gross profit margin”. The filing noted that as of June 30, there were “taxes dispute” cases involving income tax and other taxes between Marina Square Properties Inc (MSPI), an indirect wholly-owned subsidiary of the company, and the Philippine Bureau of Internal Revenue. They amount to just under PHP5.01 billion, and refer to six years within a period spanning 2008 to 2019. International Entertainment said that – based on advice – the “most likely outcome is MSPI would have valid legal arguments to defend the above income and other tax disputes with no deficiency taxes liable”. On that basis, no accounting provision had been made in relation to the disputed taxes. In a separate filing on Friday, International Entertainment gave an update on the June agreement between an indirect Philippine subsidiary, New Coast Leisure Inc (NCLI), and Total Gamezone Xtreme Inc (TGXI), a unit of DigiPlus, to collaborate regarding online gaming content. International Entertainment clarified that NCLI had been accredited as a Gaming System Administrator by the Philippine Amusement and Gaming Corp (Pagcor) to operate electronic casino games; electronic bingo games; online poker games; and “specialty games”. “At the initial stage of the online gaming operations, the cooperation will focus on electronic casino games” with a random number generator; traditional table games “delivered in electronic or online visual format”; and arcade games, namely “non-traditional electronic games featuring simple mechanics and entertainment or skill-based gameplay,” the Hong Kong-listed firm said.