Australia-listed gaming operator Silver Heritage Group Ltd says it is likely to “fall short” of its 2016 forecasts for total revenue and adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) that were included in its initial public offering (IPO) prospectus. The company flagged that possibility in a progress report on Monday, citing lower revenues from its existing operations.
Silver Heritage began trading on the Australian Securities Exchange on August 29, following an AUD25-million (US$18.8-million) IPO.
The company has had operations in Nepal since 2012 and currently operates The Millionaire’s Club and Casino in Kathmandu. It also manages the Phoenix International Club (pictured) near Hanoi, in Vietnam.
In Monday’s report, Silver Heritage said its operations in Vietnam, Laos and Nepal “are all cash-flow positive”. The firm said however that total revenue has been lower than expected at the Phoenix International Club “due primarily to additional gaming tables not being installed on the main gaming floor by the owners of Phoenix International Club for management by Silver Heritage as anticipated”.
“In addition, the current 12 gaming tables have been experiencing a lower hold percentage (17.9 percent for second half 2016 to date versus 19.0 percent year-to-date and 22.0 percent long term average),” it said.
Silver Heritage additionally said that increased competition in Kathmandu “has resulted in a lower level of monthly revenues at The Millionaire’s Club and Casino than expected”.
“Assuming that the revenue at both Phoenix International Club and The Millionaire’s Club and Casino continues at levels experienced over the past six months for the remainder of the year, total revenue would be up to 13 percent or US$2.5 million below forecast and adjusted EBITDA would be up to 31 percent or US$1.4 million below forecast,” the firm said.
Despite the shortfall, Silver Heritage said savings in other expenses “should mean that the statutory net loss after tax disclosed in the prospectus remains within the forecast of US$5.3 million”.
In Monday’s report to the Australian Securities Exchange, Silver Heritage said it had cash on hand of US$24.99 million as of September 30, 2016. “This cash balance is sufficient to fund the completion of Tiger Palace Resort Bhairahawa and leave a working capital balance of at least US$4.33 million, which is to supplement cash flow from continuing operations,” it added.
Tiger Palace Resort Bhairahawa, a casino resort being constructed in Nepal on that country’s long border with India, is due to have a soft opening in February 2017, according to previous company information.
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Revised budget for Silver Heritage's Tiger Palace Resort Bhairahawa casino project in Nepal