Imperial Pacific International (IPI) says the impairment of trade receivables from its VIP business sits at a massive HK$2.08 billion for the six months to 30 June 2017, including HK$1.27 billion from its 10 biggest customers. It represents a huge increase for the period, having previously announced impairment of trade receivables of HK$847 million for the full year in 2016. Impairment from its 10 biggest customers soared from HK$346 million in 2016.
In a filing to the Hong Kong Stock Exchange on Friday, IPI revealed the increase during the first half of the year was calculated “based on the management’s collective assessment on the recoverability of the customers’ outstanding trade receivables.
“The company’s management has taken into consideration the collectability of individual customers, debts’ aging profile, as well as experience with collection trends in the casino industry and current economic and business conditions and provided specific provision on certain customers’ trade receivables,” it said.
IPI added that customers are extended credit for 30 days for gaming operations with the group’s credit and collection department, along with representatives of the VIP marketing department, meeting monthly to determine prioritization of due debts.
“Once the receivables are overdue for repayment and if the customers still have not repaid the outstanding debts within six months of the programme end date, the group’s credit and collection department will then issue demand letters to the customers, along with its guarantors (if applicable), for demand of immediate payments,” it said. “If no responses were received thereafter, the group’s management may consider bringing legal actions against the customers in order to collect the outstanding debts.”
IPI announced in August that it has booked an 83.1% increase in gross revenue to HK$7.3 billion for the six months to 30 June 2017, of which HK$7.09 billion was generated from its VIP business. VIP rolling chip volume across its 16 tables reached HK$196.3 billion for the period, with each table averaging HK$443 million in revenue in the first half of the year.
“A significant portion of our VIP casino customers are sourced through the group’s own marketing avenues,” IPI said at the time. “Such high-spending VIP players generally receive commission and allowances based on a percentage of the rolling chip turnover. The group’s VIP players are also brought to us via intensive marketing campaigns. VIP gaming operations also include premium mass gaming operations that do not receive commissions from the group.
“In addition, a minor operation of the group’s VIP customers has been sourced via a new licensed junket operator since August 2016. The establishment of a new licensed junket incentive allowed the group to bring in new players which mitigated the group’s credit concerns.
“Geographically, most of our direct VIP patrons are from China, Hong Kong, Macau, Korea and Saipan.”
IPI recently relocated its casino operations from its temporary Saipan facility called Best Sunshine to the newly opened Imperial Pacific Resort.
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