Macau concessionaire SJM Holdings says it will include an impairment charge of almost HK$1.21 billion (US$154 million) in its results for the year ending 31 December 2022 due to costs associated with past refurbishments made to peninsula property Jai-Alai and the closure of seven casinos previously operating under its gaming concession.
The company also warned that it expects to report a widened loss of HK$7.8 billion (US$994 million) when it releases its FY22 results on Wednesday, up from a loss of HK$4.14 billion (US$528 million) in 2021.
The wider loss and impairment charges were revealed by the company late Monday via an update on its efforts to rationalise its casino properties.
Of the HK$1.21 billion impairment, HK$1.205 billion is linked to Jai-Alai following last week’s signing of a new three-year deal under which SJM will lease the casino, retail and office spaces from Jai-Alai owner and SJM director Angela Leong. The impairment is due to the short-term nature of the new agreement, SJM explained, and equals the carrying value of the cost of refurbishments made to the Jai-Alai Building over a number of years so it could be operated as a casino. SJM has sub-lased the Jai-Alai property from Leong since 2012.
The remaining US$4.7 million impairment charge relates to the closure of seven properties since the Macau government flagged significant changes to the way satellite casinos would operate under the city’s new gaming law, which came into effect on 1 January 2023.
Specifically, five satellite casinos that had operated under SJM’s license – Casino Babylon, Casino Diamond, Casino Golden Dragon, Casino Million Dragon and Casino Royal Dragon – have closed down, as have two of SJM’s self-promoted casinos in Casino Eastern and Casino Taipa.
SJM said the decision to shutter so many of its smaller casinos was part of a program to “rationalize its portfolio of gaming properties with a view to improving its operational efficiency in preparation for the New Concession and the post-pandemic economy.”
There would, however, be no change to the company’s Adjusted EBITDA for the year, it added.
