Macau Legend dips into the red in H1

Macau Legend Development Ltd. has seen its interim results fall into the red as it has taken less from both the mass market gaming and outsourced VIP play in the period, the casino and hotel operator told the Hong Kong Stock Exchange.
Macau Legend reported a loss of HK$68.44 million (about US$8.77 million) in the first half of this year; this contrasts with a profit of HK$226.37 million which the firm earned a year ago.
Accounting for the loss, Macau Legend said it was primarily due to a decrease in revenue from gaming services as well as higher operating expenses – in particular regarding staff costs.
The loss was also due to an increase in overall depreciation and amortisation charges, particularly the depreciation of Harbourview Hotel which commenced operations on February 2 2015, and the amortisation charges related to New Legend since July 3 2014. New Legend refers to the firm’s self-run VIP operation.
Macau Legend’s adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) contracted by 70.4 per cent to HK$128.4 million.
The firm’s gaming revenue fell by 31.3 per cent to HK$449.9 million, resulting from less takings from mass market tables and outsourced VIP gaming tables.
In the period, the firm operated a total of 150 gaming tables at Pharaoh’s Palace Casino in the Landmark Macau and Babylon Casino in Macau Fisherman’s Wharf.
In the results filing, Macau Legend said that the 35 new-to-market tables that it was granted by the Gaming Inspection and Co-ordination Bureau (DICJ) in October last year have not yet been put into use during the interim period, although the firm did not explain why that was the case.
Macau Legend’s self-run VIP operation has contributed approximately HK$62.2 million of gaming revenue through the “VIE structure”.
Macau Legend shareholders approved in July last year a variable-interest-entity (VIE) agreement between wholly-owned subsidiary Hong Hock Development Co. Ltd. and VIP gaming promoter New Legend VIP Club Ltd., which enabled Macau Legend to ‘indirectly participate in the gaming promoting business’, and ‘have a greater control over the management and marketing of New Legend’.
While Macau Legend has announced its loss for the first half of this year, the firm does not share an entirely gloomy outlook for its business in the coming months.
‘Recently we have gradually seen a certain shift towards more supportive policies such as the easing of transit visa limitations in July 2015 which should help boost visitations to Macau, and we are optimistic that this and other upcoming measures will favour the VIP and premium mass businesses in the upcoming seasonally stronger months,’ Macau Legend stated in the filing.
The firm’s overall interim revenue declined by about 23.9 per cent to HK$698.2 million, as its non-gaming revenue was also down 5.4 per cent to HK$248.3 million when less earnings had been achieved from hotel and catering operations at Landmark Macau.