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Genting Malaysia posts Q3 net loss of RM1.49b on impairments


KUALA LUMPUR: Genting Malaysia Bhd (GentM) posted net losses of RM1.49bil in the third quarter ended Sept 30, 2018 mainly due to impairment loss on the group’s investment in the promissory notes issued by the native American tribe for the development of an integrated gaming resort in the US on a piece of tribal land.

GentingM said on Friday it recorded an impairment loss of RM1.834bil in relation to the group’s total investment (including accrued interest) in the promissory notes issued by the Mashpee Wampanoag tribe.

The RM1.49bil net loss was in contrast with the net profit of RM193.77mil a year ago. It recorded a 15% growth in total revenue to RM2.598bil from RM2.269bil. 

The adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) increased significantly by 86% to RM814.8mil. However, the group registered loss before tax of RM1,267.1mil. 
 
It explained the impairment loss was due to the uncertainty of recovery of the group’s investment following the US Federal Government’s decision against the tribe for the proposed development.

“The decision concluded the tribe did not satisfy the conditions under the Indian Reorganisation Act that allow the tribe to have the land in trust for an integrated gaming resort development,” it said in a statement to Bursa Malaysia.

However, GentingM said the group would continue to work closely with the tribe on options which include a legislation being introduced in the US Congress which, if passed, will entail the US Federal Government to reaffirm the land in trust for the benefit of the tribe. 

“The impairment loss can be reversed when the promissory notes are assessed to be recoverable,” it said.

GentM said the Malaysian leisure and hospitality business recorded higher revenue by 26% to RM1.704bil while adjusted EBITDA improved by 91% to RM641.2mil. 

The increase was mainly driven by higher volume of business in the mass market segment following the opening of new facilities and attractions under the Genting Integrated Tourism Plan (GITP). 

Resorts World Genting (RWG) also reported a higher hold percentage in the mid to premium segment of the business. Additionally, the improvement in adjusted EBITDA was contributed by lower costs incurred in relation to the premium players business. 

The introduction of new dining, retail and entertainment offerings at the mid-hill and hilltop continue to record growth in visitations at RWG, welcoming over 6.4 million visitors this quarter. 

RWG’s hotels continue to outperform the industry with an average occupancy rate of 98%. 

As for the UK and Egypt operations, it said there were was a slight decline in revenue by 2% to RM505.7 million, primarily due to the unfavourable foreign exchange translation of the pound sterling against the ringgit.

Excluding the impact of the foreign exchange translation, revenue from the UK and Egypt operations increased by 2%, mainly due to higher contributions from Crockfords Cairo and its UK interactive business. Adjusted EBITDA improved by 12% to RM60.2mil during the period. 

In the US and Bahamas, the group registered lower revenue by 3% to RM350.7mil mainly due to foreign exchange translation losses from the weakening of US$ against Ringgit. 

Excluding the impact of the foreign exchange translation, the Group recorded marginally higher revenues compared to the same period last year. 

The increase in adjusted EBITDA by 20% to RM71.4mil was largely contributed by improved operational efficiencies at Resorts World Bimini which resulted in lower operating losses at the resort. 

“The group’s overall adjusted EBITDA was aided by higher forex translation gains on its US$ denominated assets in 3Q18 of RM37.4mil as compared to a forex translation loss of RM25.9mil recorded in the same period last year,” it said.

For the nine months ended Sept 30, 2018, the net loss was RM739.73mil compared with net profit of RM711.51mil a year ago. Its revenue rose by 9.3% to RM7.42bil from RM6.78bil.

In 9M18, the leisure and hospitality business in Malaysia registered growth in revenue and adjusted EBITDA by 18% and 42% to RM4.89bil and RM1.71bil respectively. 

The improved performance was primarily attributable to higher hold percentage in the mid to premium segment, coupled with an increase in business volumes from the mass market segment following the introduction of new attractions under the GITP. 

However, the increase in adjusted EBITDA was offset by higher operating costs incurred for the new facilities during the period. 

In the UK and Egypt, the Group reported a decline in revenue and adjusted EBITDA by 3% and 28% to RM1.35bil and RM120.3mil respectively. This was mainly due to the unfavourable foreign exchange translation of the pound against the ringgit.
 
In the US and Bahamas, the group recorded an 8% decline in revenue to RM1.04bil largely due to forex translation losses from the weakening of US$ against the ringgit. Excluding this impact, revenue from the group’s operations in the US and Bahamas increased by 1%.

Adjusted EBITDA was 10% higher at RM213.8mil, mainly driven by lower operating costs at Resorts World Bimini as a result of continued improvements in operational efficiencies at the resort. 




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