Macau-based electronic table game manufacturer and casino service provider Paradise Entertainment Ltd has announced its interim results for the six months to 30 June 2017, with reported revenue for the group falling 5.9% year-on-year to HK$489.3 million.
The decline was due in part to a change in Paradise Entertainment’s contractual arrangement with Macau Jockey Club Casino from the provision of casino management services to revenue sharing from Live Multi Game (LMG) terminals since 1 January 2017.
Paradise’s casino management services sector, which contributed 81.6% of total reported revenue compared to 77.5% in the same period 12 months earlier, recorded revenue of HK$399.1 million representing a slight decrease of 0.9% from HK$402.7 million last year.
“The group mainly focuses on the mass market segment which depends on same-day and short-stay visitation to Macau, the company said, adding, “Our casino management services performance has been progressively stabilized from a recovery market condition.”
Revenue from gaming systems management, representing 18.4% of total reported revenue compared with 22.5% over the same period in 2016, fell 23% to HK$90.2 million on the back of fewer EGM sales. The group deployed a total of 78 LMG terminals at casinos in Macau including Wynn Macau and Legend Palace Casino at the Macau Fisherman’s Wharf. It had previously deployed 120 for the six months to 30 June 2016.
Adjusted EBITDA for 2Q17 was HK$900 million, as compared to negative HK$1.4 million 12 months earlier, with Paradise attributing the turnaround to streamlining costs across casinos under management.
Loss for the period was HK$35.3 million compared to a loss of HK$410.5 million for the six months ended 30 June 2016.
“The significant decrease in loss of the group was mainly because the loss for the six months ended 30 June 2016 included a one-off non-cash loss arising from assignment of intangible assets of HK$334.8 million in relation to the assignment and license of patents and associated technology to IGT in April 2016,” it said. “Excluding this one-off loss, the group’s loss for the six months ended 30 June 2016 would be HK$75.7 million and based on such a figure, the group’s loss for the six months ended 30 June 2017 was reduced by 53.4% to HK$35.3 million.”
Paradise re-affirmed the value of its deal with IGT, signed in April 2016, which provides IGT exclusive rights to the company’s table game intellectual property for development, manufacture and distribution worldwide, outside of Macau.
“The group has been working closely with IGT on technology exchange and regulatory compliance on different gaming jurisdictions,” the company said. “The alliance with IGT has unlocked tremendous business development opportunity in the overseas market. This partnership will enable the group to expand its global presence and create long-term sustainable businesses to the group.”
Paradise, which is also in the process of acquiring Hotel Lan Kwai Fong from China Star Entertainment Ltd at a cost of HK$2.4 billion, added that it had seen a lag in the affects of Macau’s recovery at the satellite casinos it manages – Casino Waldo and Casino Kam Pek Paradise – but “after a slow performance in terms of gross gaming revenue of the casinos under our management in the first quarter of this year, we were gradually recovering from the second quarter of this year even though same-day visitor arrivals from China and Hong Kong all together registered a 2.4% year-on-year decline in the first half of this year.
“We have been seeing trend of improvement of foot traffic and patron quality to our casinos under management this year. This is attributable to management’s stringent focus on driving profitability through improving efficiencies combined with increase in higher margin electronic gaming revenue.”
