Hong Kong’s IEC reports doubling of net losses despite gaming operation uptick

Hong Kong-listed International Entertainment Corp (IEC) has disclosed a significant increase in net losses for the second half of 2023, despite witnessing improvements in its gaming operations.  

IEC experienced a substantial rise in losses, reaching approximately HK$42.2 million (€4.86 million) for the latter half of last year.   

This figure nearly doubled the losses incurred during the same period in the preceding year.   

Despite this setback, the company observed a noteworthy surge in revenue from its operations, marking an increase of around HK$11 million (€1.3 million).  

Factors Contributing to Revenue Uptick  

The positive revenue trajectory was primarily attributed to the recovery of the gaming industry in the Philippines.   

This recovery gained momentum following the reopening of international borders and the relaxation of capacity restrictions and lockdown measures in the first half of 2022.  

Revenue from hotel operations for the second half of 2023 remained relatively stable, standing at approximately HK$34.1 million (€3.94million), which mirrored the figures from the previous year.  

A notable improvement was recorded in the valuation of investment properties, with a fair value gain of approximately HK$7.1 million (€833,532) during the period.   

This contrasted sharply with the fair value loss of approximately HK$16 million (€1.8 million) reported in the preceding period.   

The gain reflects enhanced expectations for future cash flows.  

Rising Operational Expenses  

Despite the revenue uptick, IEC faced a substantial increase in general and administrative expenses, nearly doubling to HK$80.4 million (€ 9.4 million).   

These expenses included legal fees, staff costs, and other expenditures associated with the preparation for operating and managing the casino under the Provisional License granted in September 2023.  

Progress on Casino Development  

On September 27, 2023, IEC secured a provisional license agreement with the Philippine Amusement and Gaming Corporation (PAGCOR) to establish and operate a casino, along with developing an integrated resort in Manila.   

The agreement outlined stringent requirements, including a total gross floor area of at least 250,000 square meters and a minimum investment commitment of $1 billion (€9.1 million).  

Financial Arrangements for Project Development  

To finance the development, operation, and management of the casino, IEC obtained a bank loan of approximately HK$608.9 million (€77.4 million) during the latter half of 2023.   

This funding was necessitated, in part, by the deposit of US$50 million (€45.9 million) into an Escrow Account, as mandated by the Provisional License.  

Mitigating Factors and Foreign Exchange Losses  

While revenue improvements were noted, the company encountered additional losses, primarily stemming from net foreign exchange losses.   

Consequently, the Group recorded a net loss of approximately HK$12 million (€90.9 million) for the period, a stark contrast to the negligible losses reported in the preceding period.