Dreamgate posts RM17.6m loss in 2Q09

Written by Isabelle Francis
Monday, 17 August 2009 22:42

KUALA LUMPUR: DREAMGATE CORPORATION BHD [ DGATE 0.190 -0.015 (-7.317%) Stock Summary
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] incurred a net loss of RM17.57 million in the second quarter ended June 30, 2009 (2Q09), versus a net profit of RM8.11 million a year earlier due to foreign exchange losses of RM6.7 million and lower contribution from all divisions.

Revenue was more than halved to RM41.4 million from RM84.69 million. No interim dividend was declared.

For the first half, the company posted a net loss of RM19.78 million versus a net profit of RM13.67 million a year earlier, while revenue fell 67% to RM76.97 million from RM128.32 million.

The sales and marketing division's revenue and pre-tax profit declined by 50% and 117% respectively as it sells fewer machines to casino operators, who prefer concession programmes rather than outright purchase of machines.

The division, which contributes 53% to total revenue, also saw assets and stock written off amounting to RM400,000. The technical support and management (TSM) division's revenue fell 59% partly due to the decrease in the number of machines under concession.

TSM division posted an operating loss of RM5.3 million due to high depreciation cost on machines, provision for doubtful debts of RM1.4 million and cost of removal and relocation of machines under the mobilisation plan to be completed by year-end.

The TSM division is the second largest revenue contributor and the largest pre-tax profit generator, accounting for 69% of Dreamgate's total profits.

On outlook, the company said it had to date secured orders for 400 machines for delivery by year-end.

Dreamgate said since the beginning of 3Q, it had placed an additional 700 machines and was expected to place a further 1,000 machines by year-end.

Meanwhile, it also expects its first casino client in Cambodia, Chateau Hotel and Casino, Bavet, which started operations Aug 1, to start contributing positive results soon.

It also noted its plans to increase resources in promoting and developing its proprietary brand RGBGames, which are well received in "certain" markets, adding that RGBGames is expected to release four new games by year-end.