Melco International Development Limited has revealed that it anticipates recording an asset impairment of approximately HK$838 million ($107.8 million) to HK$1 billion ($128.6 million), primarily related to its Studio City integrated resort in Cotai, Macau.
The Board of Directors reported that this expected impairment will lead to an increase in the net loss for the year of approximately HK$774 million ($99.4 million) to HK$956 million ($122.5 million).
Consequently, Melco International projects a net loss ranging from HK$1.5 billion ($192.2 million) to HK$1.7 billion ($218.1 million) for 2024, compared to a net loss of HK$3.4 billion ($436.5 million) reported for 2023.
‘It is important to note that the anticipated impairment is classified as a non-cash item, meaning it will not affect the Group’s cash flow, operations, or overall liquidity’, the group underlined in its dispatch.
The impairment testing is carried out regularly in accordance with Hong Kong Financial Reporting Standards (HKFRS), with the primary reason for the impairment linked to the longer-than-expected ramp-up of operations following the opening of Studio City Phase 2.
Interestingly, under United States Generally Accepted Accounting Principles, no impairment has been recorded for Melco Resorts & Entertainment Limited, a listed subsidiary, as its impairment testing is based on long-term undiscounted cash flows.
“At this early stage, Melco International’s audited consolidated financial statements for the year ended December 31st, 2024, are still in preparation,” the Group noted.
Final figures, including the actual impairment amount, will be included in the Group’s annual results announcement, which will be published ‘in due course’.
Melco International Development Ltd is the parent company of Macau’s Melco Resorts & Entertainment, which operates City of Dreams Manila in the Philippines and City of Dreams Mediterranean in Cyprus, and is a partner in City of Dreams Sri Lanka.
