Consolidated net income for the six months ended 30 September 2008 amounted to HK$219 million, as compared to a loss of HK$51 million over the same period in the prior year. The Group recorded operating profit, excluding non-cash and non-operational charges, of HK$259 million from its continuing gaming and entertainment business for the six months ended 30 September 2008, as compared to an operating profit of HK$57 million in the comparable period of the prior year. An interim dividend of HK$1.5 cents per share was declared, representing a dividend yield of 7.5% of the current market value of the Company. These results are primarily attributable to the contributions of the junket aggregation business operated by AMA International Limited (“AMA”) in which the Company has an indirect 80% effective interest.

Highlights

* Total revenue increased 564% from the prior year six-month period to HK$300 million
* Consolidated net profit of HK$219 million compared to a loss of HK$51 million in the year ago period
* Excluding non-cash and non-operational charges, current period’s operating profit from continuing operations rose to HK$259 million from last period’s profit of HK$57
* Gaming aggregation business achieved EBITDA of HK$269 million in first full six-month period of operation on HK$215 billion of rolling chip volume
* Interim dividend of HK$1.5 cents per share was declared, representing a dividend yield of 7.5% of the current market value of the Company

Rolling chip volume (as defined below) generated by AMA totaled HK$215 billion (unaudited) for the six months ended 30 September 2008, including HK$95 billion (unaudited) of rolling chip volume for the three month period ended 30 September 2008. Amax’s rolling chip volume for the September 2008 three month period continued to represent market leading levels of VIP gaming volume achieved at an individual casino in Macau, but reflects the impact of recently enacted visa restrictions which have reduced travel of junket players, including primarily the lower tiers of Amax’s junket players, as well as a challenging consumer environment.

The significant year-over-year improvements in the Company’s operating results for the six month period ended 30 September 2008 and the declaration of an interim dividend are the direct reflection of the benefit derived from its junket aggregation business model. During the first full six-month period engaged in the gaming promotion business, Amax recorded net income of approximately HK$219 million by consistently delivering market leading levels of VIP rolling chip volume which drove increases in both revenue and operating profit of more than 300%.

Brian Cheung, Chairman of the Board of Amax commented, “The strength of our results is a testament to the competitive advantages of Amax’s unique business model. We maintain a strong capital structure that allows our development of the junket aggregation business while also serving as a barrier to new competition. In this regard, we believe that Amax’s competitive position and the need for our services has grown stronger given that it has become extremely difficult to raise the capital required to execute upon a junket aggregation business model. As a result of these factors, Amax maintains very solid relationships with all of our junket partners who recognize the benefits of the stability inherent in our operating and financial structure.

“The strength and long-term nature of Amax’s partnership with Crown Macau serve as additional competitive advantages to its business model. Crown Macau is broadly acknowledged as possessing one of the world’s leading VIP gaming facilities which provides a very strong draw for the Company’s junket partners’ players. In addition, Amax’s former Chief Executive Officer was recently named the President of Crown Macau and he continues to serve as a strong ally to the Company, reinforcing its solid relationship with the strategic partner.

“To more accurately reflect the leverage of its junket aggregation model, Amax took significant steps to enhance its operating and capital structure during the six months ended 30 September 2008. In August Amax divested its non-core, legacy LCD business, representing the final step in the transition of Amax’s operating structure to one that is solely focused on the gaming and entertainment business through its junket aggregation business in Macau and its promotion and management of the Greek Mythology Casino in Taipa, Macau. In August, Amax also effected a share premium cancellation that eliminated the Company’s previously accumulated losses, with the remaining balance credited to the contributed surplus account of the Company. As a result, the Company’s capital structure now more accurately reflects the leverage inherent in its gaming intermediary business model. The Company chose to utilize this available capital to enhance shareholder value by declaring an interim dividend of HK$1.5 cents per share was declared at the discretion of the Company’s Board of Directors, representing a dividend yield of 7.5% of the current market value of the Company.”

Mr. Brian Cheung continued, “Amax is committed to maintaining our operating strategy during this time of volatility in visitation rates and strong promotional activity from competitors ahead of the implementation of a commission cap of 1.25% of rolling chip volume in the market and as such we continue to extend liquidity to our junket partners to ensure the ability to generate an appropriate margin for the services we provide. We expect that, when effected, the implementation of a commission cap of 1.25% will further clarify Amax’s competitive advantages and provide a foundation for Amax and its partner, Crown Macau, to implement initiatives that mutually benefit the performance of our respective VIP operations.”

As such, the Company intends to revise its agreement in a manner that will immediately benefit all of its stakeholders. Late in 2007 Amax entered the gaming promotion business in Macau through AMA, whose business model differs from that of other junket operators in Macau. Instead of working directly with junkets and/or gaming customers, AMA aggregates the business of junket operators to whom commissions of 0.9% to 1.21% of rolling chip volume are payable.

“Looking forward, despite the overall decline in market-wide VIP play related to the difficult consumer environment and visa restrictions implemented in June and September that have curtailed the travel of some of the most frequent visitors to the region, we believe our strong operating characteristics have positioned Amax to maintain its role as the leading gaming intermediary in Macau and generate sustainable, long-term value for our shareholders,” Mr. Brian Cheung concluded.

Definition of Rolling Chip Volume

VIP Rolling Chip Turnover is used by casinos to measure the volume of VIP business transacted and represents the aggregate amount of bets players make. Bets are wagered with “non-negotiable chips” and winning bets are paid out by casinos in so-called “cash” chips. “Non-negotiable chips” are specifically designed for VIP players to allow casinos to calculate the commission payable to junket operators. Junket commissions are paid based on the total amount of “non-negotiable chips” purchased by each player. Junkets therefore require the players to “roll,” from time to time, their “cash chips” into “non-negotiable” chips for further betting so that they may receive their commissions (hence the term “Rolling Chip Turnover”).

Through the junket operators, “non-negotiable chips” can be converted back into cash at any time. Betting using rolling chips, as opposed to using cash chips, is also used by the DICJ (Macau Gaming Control Board) to distinguish between VIP table revenue and mass market table revenue.

Source | www.amaxhldg.com

Originally posted 2008-12-26 14:31:00. Republished by Blog Post Promoter

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