Mar 27, 2019 Newsdesk Latest News, Top of the deck, World
Pacific island casino operator Imperial Pacific International Holdings Ltd reported a loss of almost HKD2.97 billion (US$377.7 million) for full calendar year 2018, it said in a Wednesday filing to the Hong Kong Stock Exchange.
Such loss compared to a profit of about HKD637.5 million in the prior year.
The adjusted loss before interest, taxation, depreciation and amortisation was HKD2.68 billion, compared to adjusted positive earnings of HKD2.0 billion in the prior-year period.
Imperial Pacific reported group-wide revenue of HKD3.25 billion for the 12 months to December 31, down 58.2 percent from a year earlier.
The Hong Kong-listed company operates the still-under-construction property Imperial Pacific Resort (pictured in an artist’s rendering) on Saipan, in the Commonwealth of the Northern Mariana Islands (CNMI), a United States jurisdiction.
VIP table games rolling – accounting for most of Imperial Pacific’s casino business – declined significantly in full-year 2018. Such rolling amounted to HKD126.26 billion, compared to HKD385.86 billion in 2017.
VIP gross gaming revenue for the latest reporting period was HKD2.91 billion, compared to almost HKD7.35 billion in 2017.
Imperial Pacific stated in its filing that the year-on-year decline in VIP table game rolling and gross revenue was “due to the impact of the FIFA World Cup, tightening marker credits and disruption caused by typhoon Yutu”. That was a reference to a global soccer tournament held in Russia in the summer last year. A number of investment analysts has said that such competitions can have a depressive effect on casino gambling particularly by Chinese players, as they migrate instead to non-casino sports gambling on the soccer matches.
Another adverse event in 2018 for the Saipan casino business according to Imperial Pacific, was Typhoon Yutu, which the island in October. The construction site of Imperial Pacific Resort “suffered some mild damage,” but work resumed “fast,” according to Imperial Pacific’s annual report. The firm added: “However, due to the damage of Yutu, Saipan international airport was closed for almost one month, [and] the operation at our casino was adversely affected.”
At the time, it was also reported by local media that the storm had led to the temporary closure of the Imperial Pacific Resort casino complex.
The firm noted in its 2018 annual report that gross trade receivables decreased to HKD9.67 billion in 2018, after it wrote off trade receivables of HKD4.69 billion from VIP gaming operations.
Gross trade receivables are typically associated in the casino industry with money owed by VIP gamblers for losses they incurred while playing on credit.
The provision for impairment of trade receivables due from the group’s 10 largest debtors amounted to HKD1.92 billion in 2018, said Imperial Pacific.
The filing added that – as of end 2018 – “approximately US$792 million” had been invested by Imperial Pacific in “design, consulting, engineering, construction material and labour” for its Saipan property.
The Imperial Pacific Resort is a delay-plagued project on Saipan undertaken by Imperial Pacific. The developer had at one stage pledged to the local authorities to open a portion of the hotel accommodation at the casino resort by March 2017.
Subsequently the promoter was permitted to open the casino on the resort site in July 2017, prior to the hotel being completed. The Saipan casino regulator issued in August last year a February 2021 deadline for what was termed the initial phase of the resort.
In February this year, the Saipan Tribune newspaper quoted the developer as saying building work on the “initial gaming facility” would be completed in 2019, although fewer than 300 construction workers were employed on the site.
“The lack of the labour situation has been ameliorated tremendously during the year, we have secured adequate labour supply from the Philippines and Taiwan to ensure the need of the construction,” the firm stated in Wednesday’s filing.
Imperial Pacific declared no dividend for 2018.
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