The supplier’s expected loss for the year ended December 31, 2019, is compared to a loss before tax of HK$1.7m. This reflects a decrease in revenue from HK$82.0m to HK$40.5m year-on-year. The gross profit of the supplier has decreased by approximately 63% from HK$28.6m to HK$10.5m for the year. The expected loss, as well as the decrease in revenue and gross profit, are mainly due to the termination of two finance lease agreements in 2020 and the impact of the Covid-19 pandemic.
The termination of the two finance lease agreements caused a one-off impairment cost of approximately HK$22.9m. The closure of land-based casinos due to the pandemic has resulted in weaker demand for technical sales and distribution of electronic gaming equipment. It is expected that revenue from technical sales and distribution of electronic gaming equipment, consulting and technical services, and repair services will decrease by 51%, 42%, and 61%, respectively.
The board stated that the one-off impairment loss will not affect the supplier’s long-term financial stability. For 2020, the supplier expects to record a positive net operating cash flow of HK$800,000 compared to a negative net operating cash flow of HK$2.7m. This expected increase in operating cash flow is mainly due to better management of trade receivables.
The cash and cash equivalent of the company is also expected to increase by around 11%, from approximately HK$43.6m to HK$38.2m. The gross gambling revenue (GGR) in Macau faced a significant decline of close to 80% in 2020 due to enforced closures and travel restrictions prompted by the pandemic.
