International Entertainment Corporation expects its attributable loss to widen to approximately HK$500 million ($64.1 million) for the fiscal year ended June 30th, largely due to a non-cash accounting charge related to convertible notes issued to DigiPlus Interactive.
The projected loss compares with HK$282.1 million ($36.2 million) in the previous fiscal year, according to a profit warning filed with the Hong Kong Stock Exchange on Friday.
The company expects to recognize an approximately HK$425 million ($54.5 million) non-cash loss following a revaluation of the HK$1.6 billion ($205.1 million) convertible notes.
The revaluation increased the accounting value of the associated financial liabilities, with the difference recorded as a loss in the income statement. It does not represent an operating cash outflow or affect the HK$1.6 billion in investment proceeds received by International Entertainment.
Excluding the non-cash charge, the company expects its attributable loss to narrow from the previous year.
The group also reported notable gross profit growth, supported by higher gaming revenue from its land-based casino operations and the provision of gaming platforms to other authorized operators.
However, selling and marketing expenses increased due to additional campaigns and promotional activities intended to strengthen the competitiveness of its casino offerings.
International Entertainment is still discussing potential impairment losses with its auditor. Any impairment recognized would further increase the expected annual loss.
The company controls LaVie Resort & Casino Manila, formerly known as New Coast Hotel Manila. DigiPlus could obtain a 53.89 percent stake in International Entertainment if the convertible notes are fully converted.
International Entertainment expects to release its finalized annual results on August 28th.
