Macau VIP investor Neptune Group has lost a second key junket partner in the space of two months after Hou Wan Entertainment Ltd had its promotion agreement with Venetian Macao Limited (VML) terminated on Monday.
Hou Wan received official written notice from VML on Monday that its gaming promotion agreement to operate 10 VIP tables at Sands Macao, dated 30 December 2016, would be terminated as of 30 August 2017.
It follows the termination of a similar agreement with Hao Cai Sociedade Unipessoal Ltd, which operated 14 VIP tables at the Venetian, in May.
According to a filing with the Hong Kong Stock Exchange overnight, revenue contributed by Hou Wan amounted to approximately HK$72.5 million, representing 26.0% of Neptune Group’s total revenue. Neptune Group had previously stated that Hao Cai had contributed approximately HK$115.1 million, representing 41.3% of total revenue.
The company said it is currently assessing the impact of the Termination Notice on the group, but that “based on the preliminary assessment of the management, it is expected that the intangible assets in respect of the junket business of Hou Wan would be fully impaired as a result of the Termination Notice.
“The company is also assessing the recoverability of the outstanding account receivables in relation to the junket business of Hou Wan and is currently in discussion with, among others, Hou Wan in respect of the settlement of the outstanding account receivables,” it added.
The news comes as Neptune Group announced expected losses totalling more than HK$400 million for the year ended 30 June 2017 stemming from Hao Cai’s termination.
“Basd on the preliminary review of the unaudited consolidated management accounts of the company for the year ended 30 June 2017, the Group would record an impairment of intangible assets in respect of the junket business of approximately HK$365.9 million,” it said. “In addition, the group is expected to record a loss on disposal of an associate of approximately HK$62.9 million for the year ended 30 June 2017. Based on the foregoing, it is expected that the Group would continue to record a net loss attributable to equity holders of the company for the year ended 30 June 2017.”
Neptune Group said it was still working with one other junket operator which currently runs eight VIP tables at Grand Lisboa, adding that, “So far as the directors are aware, and having made reasonable enquiries, the other junket operator is carrying out its business in the usual and ordinary manner.
“The group would continue to monitor closely the performance of the junket operator and it is intended to continue to engage in the gaming sector in Macau through the junket operator,” it said.
