Macau Legend in deep financial woe, impacted by Cape Verde project

Macau Legend Development Ltd has forecasted a significant financial loss of up to HKD40 million for the year ending December 31, 2024.

This projected loss marks an increase from the previous year’s loss of HKD4.9 million, signaling deeper financial troubles for the company that operates Legend Palace and Macau Fisherman’s Wharf.

In a filing with the Hong Kong Stock Exchange earlier this week, Macau Legend attributed the sharp increase in losses to a significant impairment loss associated with deposits, property, equipment, and right-of-use assets tied to the group’s investment projects in Macau and Cape Verde.

Additionally, a HKD415 million provision for Macau complementary tax, previously recognized due to the disposal of a subsidiary, was reversed to profit or loss as disclosed in the 2023 Annual Report.

The company clarified that these impairment losses and the tax provision reversal are non-cash items, meaning they do not directly affect cash flow or daily business operations.

However, they significantly impact the group’s financial statements for the reporting period.

Despite these challenges, Macau Legend noted a 4.3% increase in revenue for FY24. Official financial results are expected to be released by the end of this month.

Outside of Macau, the company faced additional setbacks.

Its concession to develop a casino resort in Praia, the capital of Cape Verde, was canceled by the local government.

In November last year, the Cape Verde government announced the termination of its contracts with Macau Legend Development, citing repeated breaches of obligations tied to a USD264.7 million tourism and gaming project in Praia.

The ambitious project was first introduced in 2015, aiming to boost tourism and economic growth in the region.

However, progress stalled after initial construction began in 2016.

The lack of development led the Cape Verde government to accuse the local firm of not following the legal and contractual terms, resulting in a setback for Macau Legend, which has been facing financial and operational challenges.

The company also disclosed in August that it is grappling with material uncertainties regarding its ability to continue as a going concern.