International Entertainment Corp (IEC), listed on the Hong Kong stock exchange, has recently disclosed its financial performance for the first half of the fiscal year ending on December 31, 2023. The report indicates a notable widening of losses attributable to the owners of the parent company, primarily attributed to the costs associated with assuming casino operations at its Manila-based hotel, New Coast Hotel Manila. Despite the increased losses, the company has outlined ambitious plans for expansion and transformation into an integrated resort, signaling a significant milestone in its strategic growth trajectory.
Financial Performance Overview:
In the six months leading up to December 31, 2023, IEC reported a loss of HK$36.1 million (US$4.6 million), marking a substantial increase from the HK$6.4 million (US$817,400) loss recorded during the same period in the previous year. This considerable loss expansion can be primarily attributed to the expenses incurred in readiness for assuming casino operations at New Coast Hotel Manila, as mandated by the Provisional Casino License granted by the Philippine Amusement and Gaming Corporation (PAGCOR) in September of the prior year.
Expansion Plans and Investment:
IEC’s strategic vision encompasses a comprehensive transformation of New Coast Hotel Manila into an integrated resort. With an investment commitment of up to US$1.2 billion, the company aims to elevate the property into a premier destination featuring 800 luxury hotel rooms, a fully-fledged casino, upscale dining options, recreational amenities, and upscale retail spaces. The envisioned integrated resort model aligns with the company’s broader goal of diversifying its revenue streams and enhancing its competitive positioning in the regional gaming and hospitality landscape.
Financial Factors Impacting Losses:
The reported widened loss also reflects several key financial factors. Firstly, a significant portion of the loss increase is attributed to a HK$50 million (US$6.4 million) deposit into an escrow account, as required by the terms of the Provisional License. Additionally, there was a substantial surge in general and administrative expenses, which surged by 91.9% to HK$80.4 million (US$10.3 million). These expenses primarily encompassed the preparatory activities essential for the assumption of casino operations under the Provisional License.
Revenue Growth and Source:
Despite the widened losses, IEC reported a notable uptick in revenues during the reporting period. Group-wide revenues surged to HK$105.1 million (US$13.4 million), marking an 11.7% year-on-year increase. This revenue growth was predominantly fueled by a 19.5% rise in income from gaming operations at New Coast Hotel Manila, amounting to HK$71.0 million (US$9.1 million). Concurrently, hotel revenues remained relatively stable year-on-year, standing at HK$34.1 million (US$4.4 million).
Strategic Significance of Provisional License:
The grant of the Provisional Casino License by PAGCOR represents a significant milestone for IEC. It signifies the company’s capability to independently operate and manage casino businesses and gambling activities. Moreover, IEC’s active involvement in the management committee alongside PAGCOR has facilitated valuable insights and expertise in casino operations, further bolstering its preparedness for assuming full responsibility upon the commencement of the Provisional License’s operations.
International Entertainment Corp’s financial report for the first half of the fiscal year ending December 31, 2023, reflects a notable widening of losses attributable to the costs associated with assuming casino operations at New Coast Hotel Manila. However, amidst these challenges, the company remains steadfast in its strategic vision for expansion and transformation into an integrated resort, underpinned by a significant investment commitment and strategic partnership with PAGCOR. As it progresses towards operationalizing the Provisional License, IEC aims to leverage its strengthened expertise and capabilities to capitalize on the immense growth opportunities within the regional gaming and hospitality sectors.