GGRAsia – Impairment loss to hurt Success Dragon results: firm

Impairment loss to hurt Success Dragon results: firm

Jun 18, 2018 Newsdesk Latest News, Macau, Top of the deck

Gaming services firm Success Dragon International Holdings Ltd has warned investors its loss for the year ended March 31, 2018 is likely to be wider than initially forecast. That is a result of an impairment loss related with a revised valuation of its investment in an energy-related business based in the United States.

In March 2017 – and prior to a management reshuffle – Success Dragon acquired a 20.8-percent stake in Primus Power Corp for US$20 million. The latter firm is involved in the provision of energy storage systems.

In a Friday filing to the Hong Kong Stock Exchange, Dragon Success said that “based on the preliminary draft of a valuation report on Primus prepared by an independent valuer, it is expected that the group may record an impairment loss ranging from approximately US$10 million to approximately US$15 million (equivalent to approximately HKD78 million to approximately HKD117 million) in respect of the Primus shares.”

The document added: “As a result of the impairment loss, it is expected that the total comprehensive loss attributable to equity holders of the company for the year ended March 31, 2018 will be impacted accordingly.”

Dragon Success noted that since the impairment loss was “non-cash in nature, there will be no immediate effect on the operating cash flow of the group”.

Success Dragon reported a net loss of HKD28.0 million for the six months ended September 30, 2017. Around 91.8 percent of Success Dragon’s revenue in the reporting period came from the provision of services on management of electronic gaming equipment operations in Macau.

Success Dragon said in June last year it was terminating four agreements relating respectively to management services for greyhound racing and horse racing in Vietnam. It cited “adverse” regulatory conditions – including a cap on daily betting amounts for Vietnamese nationals, and a ban on international simulcast of races – as factors in the decision.