Regulatory challenges pull down LWRC earnings

STRICTER regulations for gaming firms weighed on Leisure and Resorts World Corp. (LRWC)’s operations in the second quarter, pulling down its attributable profit by over 71% during the period.

In a regulatory filing, LRWC disclosed a net income attributable to the parent of P89 million, dropping from the P311 million it generated in the same period in 2016. Revenues fell by 11.5% to P2.53 billion.

Including first quarter results, the company’s attributable profit totalled P361 million, 40% lower than the P600 million it made in the comparable period in 2016, following a 7.5% decrease in revenues to P5.06 billion.

The operator of bingo parlors and eGames outlets attributed the decline to changes in the regulatory environment in the latter part of 2016, which led to significant losses in the operations of its subsidiary, First Cagayan Leisure and Resort Corp. (First Cagayan).

“Decline during the quarter are attributable to the significant loss of First Cagayan revenues when PAGCOR ( Philippine Amusement and Gaming Corp.) issued POGO (Philippine Offshore Gaming Operation) licenses and the decline experienced by ABLE due to challenges in the regulatory environment,” the company said, referring to its subsidiary AB Leisure Exponent, Inc.

First Cagayan saw a 94% drop in revenues during the first half to P18 million, as locators in the estate stopped reporting revenues, prompting the decline in hosting fees.

Earnings of the company’s retail arm also dipped 44% to P123 million, as the bingo operations of ABLE slid to P118 million or 45% from the P215 million in the first semester of 2016. The unit has over 9,700 electronic bingo games across the country, while LRWC’s wholly owned subsidiary Total Game Zone Xtreme has more than 1,900 eCasino terminals installed.

For the property division, the company noted that the second quarter was the first reporting period after which its unit AB Leisure Global, Inc. divested its economic interests in the City of Dreams Manila Integrated Resort and Casino. This resulted to net loss of P14 million for the quarter, from a previous profit of P69 million in the same period in 2016.

Wholly owned unit LR Land Developers, Inc., meanwhile, reported a net income of P2.9 million for the second quarter, boosted by the performance of its associate, Techzone Philippines, Inc.

Shares in LRWC dropped by two centavos or 0.48% to P4.12 each on Thursday.