NagaCorp Reports 73% Increase in Net Profit

[HD videos below] NagaCorp, one of the largest leisure and entertainment gaming companies in Phnom Penh, Cambodia, has reported a net profit increase of 73% for the year ending 31 December 2010.

Net profit for the fiscal year 2010 rose by 73% to approximately US$44.1 million, compared to US$25.5 million in 2009. Gross profit margin rose to 71% from 60%; while net profit margin improved to 29%, from 22% for 2009. During the period, 64% of the group’s total revenues were derived from its non-junket business, compared to 55% in 2009.

The Board has resolved to declare a final dividend of US cents 0.77 per share (or equivalent to HK cents 6.00 per share).The proposed final dividend, together with the interim dividend paid is US cents 1.48 per share (or equivalent to HK cents 11.5 per share), representing a dividend payout ratio of 70% for the year ended 31 December, 2010. The total dividends of US cents 1.48 per share for 2010 represents an increase of 103% compared to 2009 dividends of US cents 0.73. Earnings per share for the year 2010 were up 72% to US cents 2.12 (or equivalent to HK cents 16.5 per share).

 The growth of the group’s gaming machine business was fueled by both a demand for the up-to-date gaming machines it offers, targeted marketing initiatives, and continued enforcement of the closure of other slot machine and sports betting station outlets in Phnom Penh. During the year, revenue from the gaming machine stations rose by 31% to US$44.9 million. As at 31 December, 2010, there were 1,032 slot stations (2009: 618).

During the review year, revenue from public floor gaming tables continued its growth, demonstrating that NagaCorp’s business strategy, revised to focus on the mass gaming market, was a step in the right direction. By concentrating on untapped markets, revenue of the segment rose by 69% to US$41.5 million in fiscal year 2010 from US$24.6 million in 2009. Win rates also improved to 20.4% from 16.3% in 2009.

For the group’s junket segment, revenue was US$54.1 million, compared to US$53.4 million in 2009. There were approximately 7,928 VIP players visited NagaWorld during 2010, and the win rate stood at 2.3%.

 Hotel and entertainment operations represent the non-gaming revenue of NagaWorld. During the year under review, revenue derived from this business segment was US$10 million, up 82% from US$5.5 million for the same period in 2009. The revenue was derived from providing hotel and entertainment services to both gaming and non-gaming patrons.

Tourist arrivals to Cambodia for the first 11 months of 2010 increased approximately 17% to 2.3 million visitors. The majority of these visitors to Phnom Penh also visited NagaWorld, making the hotel and entertainment complex one of the most visited sites in the Kingdom of Cambodia. The group believes that as long as the country’s tourist numbers continue to increase, the number of visitors to NagaWorld will increase proportionately. This important component of NagaWorld’s daily foot traffic is also a key to the growth of its mass market business.

Board and Management Changes

 Chen Yepern has been appointed to the Board of Directors as an Executive Director, and Chen Yiy Fon has resigned from his position as Non-executive Director on the company’s Board of Directors. Chen Yepern is the son of Tan Sri Dr Chen Lip Keong, the Chief Executive Officer, Executive Director and controlling shareholder of the company.

Philip Lee has been appointed as Chief Financial Officer and remains an Executive Director of the Board, and Eric Chan has been appointed as Chief Marketing Officer. Prior to these appointments, Philip Lee had been serving as Senior Vice President, Finance and Treasury in NagaWorld Ltd., (an indirect wholly-owned subsidiary of NagaCorp), while Eric Chan had been serving as Managing Director, Sales & Marketing in NagaWorld Ltd.

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