Melco Crown incurs P1.01-B net loss on high expenses, casino pre-opening costs

High expenses and costs before the opening of its $1-billion gaming complex in the Entertainment City have led the Philippine unit of Melco Crown Entertainment Ltd. to incur a net loss of P1.011 billion in the first six months of the year.

In a filing with the Philippine Stock Exchange, Melco Crown (Philippines) Resorts Corp. said its consolidated comprehensive loss for the period was P1.011 billion primarily due to general and administrative expenses (GAEX), development costs, pre-opening costs, as well as the interest expenses as a result of continuous development of the project funding.

"We are currently in the development stage (of Belle Grande Manila), and as a result there is no revenue and cash provided by our intended operations," the company reported.

"Consequently, as is typical for a development stage company, we have incurred losses to date and expect these losses to continue to increase until we commence commercial operations with the planned opening of the project which is expected in mid-2014," it added.

In June, Melco Crown said it is on track to open its $1-billion Belle Grande Manila by mid-2014, the group's first casino project outside of Macau.

Melco Crown finalized its teamup with Belle Corp. of Filipino tycoon Henry Sy in March to develop and operate the casino resort.

Melco Crown will spend $600 million for the development of Belle Grande Manila, part of which will come from the $377-million share sale in April.

For the first half, Melco Crown said GAEX amounted to P103.5 million documentary stamp duty and Securities and Exchange Commission filing fee related to increase in the share capital of the MCE Holdings Group companies, legal and other professional fees incurred for the Project funding.

Pre-opening costs reached P193.8 million on project management fee charged from MCE, staff costs, rental charges on the Lease Agreement with Belle Corp., as well as legal and rofessional fee for pre-operating corporate matters incurred during the period.

Interest income was at P14 million comprising of bank interest income mainly generated from net proceeds from the offer and exercise of the over-allotment option.

Interest expenses were at P562.6 million, representing the interest on obligation under finance lease in relation to a lease agreement of the building with Belle effective March 13, 2013.
 
Meanwhile, foreign exchange loss reached P68.2 million from the translation the foreign currency denominated payables at the period end closing rate.

Melco Crown clarified that the comparative financial information as of June 30, 2012 has not been presented in the unaudited consolidated financial statements as all companies within the MCE Holdings Group were incorporated on or after August 13, 2012. — KBK, GMA News