Hong Kong-listed Summit Ascent Holdings Ltd said its 60 percent interest in the Tigre de Cristal casino resort in the Russian Far East generated adjusted earnings before interest, taxation, depreciation and amortisation of HKD14.3 million (US$1.8 million) in the period from October 8 to December 31.
The firm’s loss for the year widened to HKD85.4 million from HKD78.9 million, which it said was mainly due to the group’s portion of pre-opening expenses related to Tigre de Cristal. The property (pictured) had a soft launch on October 8.
“Management continues to work hard to ramp up the business at Tigre de Cristal. Thus far, the consistent month-on-month improvements have been encouraging,” Summit Ascent noted in its full-year 2015 results filed on Friday.
Rolling chip turnover from VIP table games at Tigre de Cristal’s casino increased sequentially in its first four months of operation, according to the document.
The firm, controlled by casino entrepreneur Lawrence Ho Yau Lung, has a 60 percent holding in Oriental Regent Ltd, which developed and operates the casino property.
The resort – in the Primorye Integrated Entertainment Zone (IEZ) near the Russian Pacific port of Vladivostok – had its official launch on November 11.
Friday’s filing from Summit Ascent said that VIP rolling chip turnover at Tigre de Cristal rose from nearly HKD258.20 million in November, to HKD312.28 million in December, then to HKD355.06 million in January and HKD382.41 million in February.
The figures for the latter two months are unaudited and occurred outside the reporting period of the filing, which covered Summit Ascent’s 12 months of trading to December 31.
The document said monthly net win to the house on VIP play after deduction of rebates was, respectively during the November to February period: HKD10.11 million; approximately HKD4.77 million; HKD4.35 million; and HKD8.83 million. Between eight and 10 VIP tables were in operation during those four months.
“It is our plan that fixed room junket operators will start to operate at Tigre de Cristal starting from May 2016 when we have fully ramped up our own casual VIP business,” noted Summit Ascent in its filing.
In the mass table games segment, total table drop at Tigre de Cristal in the stub month of October was RUB278 million (US$4.1 million) generated by 29 tables. Such drop in November was RUB434 million, from 24 tables; rising to RUB448 million from 23 tables in December; before easing to RUB407 million in January on the same number of tables and rising slightly again to RUB412 million in February.
The filing said monthly table net win in the mass segment during the October to February period was respectively: RUB59 million; RUB83 million; RUB101 million; RUB107 million; and RUB89 million.
It added that there were on average 612 registered mass players entering the casino daily for the period from the property’s “test launch” on October 8, to December 31, “of which approximately 50 percent were non-Russian (predominantly Asians)”.
“Despite the inability to legally advertise casinos in all of our target feeder markets and the onset of the Russian winter, the ramp-up of the mass table business in the initial months has been satisfactory,” said Summit Ascent.
It added: “Mass table drop did not show a meaningful improvement in January and February of 2016. We believe this is due to a seasonal factor. Traditionally, organised tour groups from China normally operate during the warmer months in Vladivostok.”
There is huge seasonal variation in the local climate. In January the mean daytime temperature in nearby Vladivostok is -9 degrees Celsius with mean nighttime temperatures plummeting to -16 C. In the month of July, the mean monthly daytime temperature in Vladivostok is 23 C, according to the state-run Hydrometeorological Centre of Russia.
Nonetheless monthly slot handle at Tigre de Cristal has been growing month-on-month even during the winter, said Summit Ascent. “As expected, the slot market is primarily a local market,” the firm stated.
In the October to February period monthly slot handle was respectively: RUB473 million; RUB778 million; RUB763 million; RUB1.01 billion; and nearly RUB1.06 billion.
Monthly slot net win for the period was, respectively: RUB36 million; RUB54 million; RUB56 million; RUB60 million; and RUB75 million.
Summit Ascent said that as of December 31, the casino property had 321 slot machines. As of February 29 the number of machines remained the same.
“We remain upbeat on the continuing ramp-up of our slots business over the rest of 2016,” stated the company.
Friday’s filing noted there had been “media reports of potential increases to the gaming tax rate, but none of them have been substantiated, and in our view the current tax regime will remain in place for the foreseeble future”.
On February 15 Eric Landheer, director of corporate finance and strategy at Summit Ascent, told GGRAsia said that any hike in taxes payable by Tigre de Cristal would be at odds with Russia’s Integrated Entertainment Resort policy, which he said aims to bring investment to targeted Russian regions.
Currently Tigre de Cristal’s tax payments are in the form of a levy per slot machine per month of RUB7,500. There is also a levy per table per month of RUB125,000.
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