Macau casino operator Galaxy Entertainment Group said it sank into the red with a net loss of HK$1.53 billion, largely due to the depreciation of its gaming licence, pre-opening costs of four casinos and higher interest expenses.
In 2005, the company made a profit of HK$2.39 billion, aided by a HK$3.03 billion revaluation gain in net assets acquired.
Earnings before interest, tax, depreciation and amortisation for last year was HK$437 million on turnover that rose 261.24 per cent to HK$4.66 billion.
Galaxy attributed the loss to HK$1.19 billion in depreciation and amortisation charges, including the HK$998 million depreciation of its gaming licence, which will expire in June 2022. The firm acquired the licence in July 2005, along with a 97.9 per cent interest in the gaming business, from the family of chairman Lui Che-woo for HK$18.4 billion.
During the year to December, pre-opening cost of four casinos was HK$268 million and interest expenses rose 341.99 per cent to HK$522.22 million. The company issued US$600 million worth of high-yield bonds in December 2005 to fund the development.
Galaxy booked HK$1.18 billion operating loss from the gaming and entertainment division as a result of HK$268 million in pre-opening expenses incurred for the City Club Casinos and the StarWorld Hotel and Casino, even as turnover in the segment rose to HK$3.38 billion, up from HK$66.21 million previously.
Galaxy said it paid HK$1.1 billion gaming tax and funds to the Macau government and HK$1.04 billion commission and allowances to promoters to lure VIP gamblers.
