The Neptune Group, one of Macau’s leading casino junket operators, has further delayed the release of its 2015-16 annual report as it struggles to collect outstanding gambling debts.
On October 3, Neptune suspended trading in its shares on the Hong Kong Stock Exchange (HKSE) while alerting investors that it had failed to publish its report for the 12 months ending June 30 by the September 30 deadline because some of the info was unavailable.
On Friday, Neptune informed the HKSE that it hoped to publish its annual report by November 30. In the meantime, it is maintaining the suspension of trading in Neptune shares on the HKSE “until further notice.”
Neptune says it has identified outstanding receivables totaling HKD 471m (US $60.7m) the company is owed from junket promotion profit streams. The company says it arrived at this figure after booking an impairment loss of HKD 117.3m through the six months ending December 31, 2015.
Neptune insists that it’s doing everything it can to collect “as much as possible” of the outstanding receivables while working out a repayment schedule with its junket partners and seeking security on the unpaid amount.
In addition, three short-term loans to junket partners totaling HKD 92m that were supposed to be repaid by March 2016 had been extended for another year, despite the borrowers failing to pay any interest on the loans through June 30, 2016.
Neptune now says that it has received interest payments on these loans, as well as post-dated checks from each of the junket partners, who have vowed to repay in full by the end of December 2016, January 2017 and March 2017, respectively. The borrowers have also procured a guarantor for the repayment of the loans (plus interest) although Neptune’s auditor is still reviewing these repayment deals. The auditors are also still trying to ascertain the true value of Neptune’s 20% stake in “an associate.”
Finally, Neptune says the Group has intangible assets of HK 950.3m (before the FY15-16 impairment provision) as of June 30, 2016. However, Neptune acknowledges that it may incur impairment losses on these assets.
Neptune previously revealed that it booked a net loss of HKD 257m ($33.1m) in the six months ending December 31, 2015. That followed a $103m loss in FY14-15 that had the company pessimistically musing about getting out of the junket business entirely, although they snapped out of this funk within a few weeks.
The past two years have seen Macau’s junket sector laid low by China’s crackdown on public officials gambling big at the baccarat tables. While Macau’s overall market has shown flickers of life over the past three months, the VIP market hit a record low in terms of gaming revenue share in Q3 and will likely never return to its former glories.
