GGRAsia – CY Foundation’s loss increases on higher costs

CY Foundation’s loss increases on higher costs

May 27, 2015 Newsdesk Latest News, Macau, Top of the deck

Hong Kong-listed CY Foundation Group Ltd, the parent of Macau-based casino services provider CY Management Ltd, posted a net loss of HKD47.3 million (US$6.1 million) for the fiscal year ended March 31, 2015. That compares to a net loss of HKD19.5 million in the previous year.

The firm reported revenue of HKD180 million for the period, up by 104 percent year-on-year. The revenue gain “was mainly attributable to the gaming business in Macau,” the company told the Hong Kong Stock Exchange on Monday.

Cost of sales however jumped from HKD64.2 million to HKD131.6 million. Operational costs also increased from HKD52 million to HKD91.8 million.

“The current financial year is transformational,” CY Foundation said, explaining that the core business of the group has changed from manufacturing of packaging products to management of electronic gaming equipment in Macau.

The gaming segment contributed approximately 73.8 percent of the group’s revenue for the period, or HKD132.9 million. CY Management however posted a loss of HKD21.6 million for the year ended March 31, up from a loss of HKD9.7 million in the previous year.

CY Management is currently providing management services to three casinos in Macau and information technology services to two other casinos in the city, said the parent company.

“Despite the substantial growth in revenue, gaming business has performed below our original budget,” CY Foundation said, attributing the loss “to the significant amortisation and depreciation of investment cost”.

It added: “The recent negative impact of China’s anti-corruption drive on [the] gaming market environment in Macau hindered growth in the gaming business activities although the mass market segment of the industry is less affected.”

CY Management also recognised an impairment loss of approximately HKD10.8 million for the reporting fiscal year “due to changes in market conditions,” the parent company said, adding that the impairment is an accounting related adjustment and a non-cash item.

CY Foundation said in March that its expansion plans had been delayed because of “changes in market environment in Macau”.

In a separate filing on Tuesday, CY Foundation announced that it has entered into a share placing agreement to sell 220,700,000 shares at a price of HKD0.605 per unit.

The placing shares would represent approximately 16.65 percent of the enlarged issued share capital of the company. The net proceeds – estimated at HKD132.42 million – will be used for the expansion of the company’s business, investment and general working capital, said CY Foundation.