LRWC H1 profit down 40%
Leisure and Resorts World Corp. saw its first half income nearly halved to P362 million, down 40 percent year-on-year.
The company lost around 60 online gaming companies under its First Cagayan Leisure and Resort Corp. (FCLRC) in Cagayan since regulator Philippine Amusement and Gaming Corp. (Pagcor) tightened its noose on the industry.
FCLRC reported lower income because of the decline in hosting fees.
“The changes in the regulatory environment particularly in the last quarter of 2016 leading to the first half of 2017 affected significantly FCLRC’s business and partly the retail business units as well,” it said in a regulatory filing.
Excluding the effects of the drop in FCLRC’s revenues, first half net income grew 10 percent, coming from the business units under the casino and property divisions which more than covered for the shortfall in its retail division.
For the second quarter alone, LRWC’s net income declined 72 percent to P88 million.
“Decline during the quarter is attributable to the significant loss of First Cagayan revenues when Pagcor issued POGO licenses,” LRWC said.
The decline was also attributed to the decline experienced by subsidiary AB Leisure Exponent Inc. due to challenges in the regulatory environment.
POGO or the Philippine Offshore Gaming Operation (POGO) is the offshore gaming rolled out by Pagcor last year as part of the Duterte administration’s war against gambling, effectively purging these international online sites licensed by First Cagayan.
Prior to POGO, LRWC subsidiary First Cagayan issued the licenses for these international online gaming sites that operate inside the Cagayan economic zone.
These locators are like BPOs but with gaming applications and they have back-end operations outside Cagayan. Some of these back-end operations are inside the Rizal Commercial Banking Corp. Tower in Makati.
Online gaming companies with back-end operations outside the economic zone are now required to get a POGO.
To cope with the challenges, LRWC is redeveloping its 10-hectare sprawling cyber estate within the Cayagan economic zone to attract new locators. It has successfully attracted a Macau-based gaming company,which is set to start operating in October.
The casino divisions’s first half contribution was P130 million, higher than the previous year’s P71 million.
The online division’s net income contribution, on the other hand, fell 74 percent to P84 millio while the retail division’s net income contribution declined 44 percent to P123 million.