City of Dreams Q1 net revenue drops 9.7% on new accounting method

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Casinos soon under dirty-money watch
FILE photo of the City of Dreams Manila

CITY of Dreams Manila posted a 9.7% decline in first-quarter net revenue to $142.2 million after adopting a new accounting method for revenue recognition, its listed parent firm reported on Friday.

“The decrease was mainly due to higher commissions reported as a reduction in revenue upon the adoption of a new revenue recognition standard issued by the Financial Accounting Standards Board,” Melco Resorts and Entertainment (Philippines) Corp., a unit of which is one of the co-licensees that developed City of Dreams Manila, told the stock exchange.

It added that the decrease was “partially offset by improved casino revenue.”

The quarterly performance of the integrated hotel, gaming, retail and entertainment complex was contained in the report of Melco Resorts & Entertainment Ltd., the controlling shareholder of Philippine-listed Melco. Its American depository shares are listed on the NASDAQ Global Select Market.

Using the previous accounting method, City of Dreams Manila’s net revenue would have been $166.4 million, representing an increase of about 6% from a year earlier, the group said.

Melco said it had adopted the new revenue standard using the modified retrospective method from Jan. 1, 2018. It said results after that date are presented under the new method “while prior year amounts are not adjusted and continue to be reported in accordance with the previous basis.”

Earnings before interest, taxes, depreciation and amortization (EBITDA) came in at $58.8 million, down 3.8% year-on-year.

Rolling chip volume amounted to $2.8 billion, up 16.7% from a year earlier. The rolling chip win rate was at 2.9% during the period, lower than the 3.4% a year earlier. The company said the expected rolling chip win rate range is 2.7% to 3%.

Mass market table games drop rose by 22.3% to $188.2 million.

“The mass market table games hold percentage was 33.8% in the first quarter of 2018 compared to 28.7% in the first quarter of 2017,” Melco said.

Gaming machine handle for the quarter was $820.9 million, an increase of 12.5% year-on-year. This translates to a gaming machine win rate of 5.6% duing the period compared with 6.2% a year earlier.

Total non-gaming revenue at City of Dreams Manila rose 7.2% to $29.6 million.

In the Philippines, Melco’s subsidiary MCE Leisure (Philippines) Corp. is a co-licensee of the group that developed City of Dreams Manila, along with SM Investments Corp., Belle Corp., and PremiumLeisure Amusement, Inc. The gaming complex opened to the public in February 2015.

Shares in Melco were down 6.30% at P6.40 on Friday. — Victor V. Saulon