Imperial Pacific International Holdings Ltd says it is in talks with investors with the aim of completing construction of its casino resort (pictured in a file photo) on the Pacific island of Saipan, as its annual profit narrowed by 31.9 percent, and its trade receivables account swelled by 59.9 percent.
Such profit was HKD637.5 million (US$81.2 million) compared to HKD935.6 million in 2016.
The firm stated in its annual results filed to the Hong Kong Stock Exchange on Thursday: “The management is in discussion with certain potential investors with a view to secure long-term financing principally to be used on the construction of the integrated gaming resort. As at the date of approval of this result announcement, memorandums of understanding have been signed with these investors which are subject to terms and conditions to be completed and fulfilled.”
It added that – outside the reporting period – from January onward, the group had obtained unsecured loans amounting to HKD870.5 million.
For 2017, basic and diluted earnings per share were HKD0.45 and HKD0.24 respectively, as compared with basic and diluted earnings per share of HKD0.66 and HKD0.34 respectively in the corresponding period of last year, it said in its filing.
Unaudited rolling chip turnover from VIP table games – the main gaming activity of the firm’s Saipan casino by volume – increased 53.6 percent, to nearly HKD385.86 billion, from HKD251.24 billion in 2016.
But trade receivables for 2017 – mostly related to money owed on losses by gambling customers using credit to play – were HKD8.53 billion, compared to HKD5.33 billion in 2016. Impairment losses on trade receivables for the 12 months to December 31 amounted on a net basis to just under HKD4.19 billion, compared to net impairment losses of HKD847.1 million in the prior-year period.
“At the end of the reporting period, the group has certain concentration of credit risk as 8 percent (2016: 12 percent) and 23 percent (2016: 33 percent) of the group’s trade receivables were due from the group’s largest customer and the five largest customers, respectively,” stated Imperial Pacific.
During the reporting period, the firm operated an average of 23 VIP tables, compared to 16 in the prior year, and 39 mass-market tables, compared to 32 in 2016. Imperial Pacific additionally operated 165 slot machines and electronic table games in 2017, compared to 141 such machines in 2016.
As a condition of its casino licence for Saipan – the largest island of the Commonwealth of the Northern Mariana Islands (CNMI), a U.S. jurisdiction – Imperial Pacific was required to complete an “initial gaming facility” at its Imperial Pacific Resort – including a minimum number of hotel rooms, a gaming area, food and beverage outlets, shops and meeting space – by no later than August 31 this year.
It had been reported previously in the Saipan media that U.S. authorities had conducted a number of enforcement actions against some contractors suspected of using illegal imported labour to build portions of the resort.
Imperial Pacific said its annual report had been compiled on a “going concern basis” in the belief that the local regulator would grant an extension on the August 31 construction deadline.
“Due to the termination of construction services by certain companies and drastic reduction and non-availability of sufficient construction labour locally in Saipan, as at the date of approval of these financial statements, the directors are of the opinion that the construction of the initial gaming facility will not be completed by August 31, 2018,” the group said in its annual report.
The Marianas Variety newspaper quoted on Thursday the Governor of CNMI, Ralph Torres, saying Imperial Pacific had not yet made an official request to extend the August deadline for the so-called “initial gaming facility”, but that he would consider it.
“But first, we will be strict with the new time frame to make sure that the project moves forward and to make sure we do our due diligence,” he was quoted as saying.
The company had previously sought and been granted an amendment to the terms of its casino licence. On July 31 last year it said it had reached an agreement for the August 31, 2018 deadline on the “initial gaming facility”.
At that time, Imperial Pacific’s deadline for completing the property’s phase one was pushed back to August 13, 2023. The conditions were that phase one include: an 800-room four- or five-star hotel; a US$100-million themed entertainment facility with amphitheatre; as well as additional restaurants, retail and meeting space. Phase one should also comprise an additional 10,000 square metres (107,639 sq feet) of gaming area, said the firm.
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