Silver Heritage Annual Losses

A nearly nine-month delay in casino rollouts at Silver Heritage Group's new Nepal gaming resort contributed to the company's 2017 annual loss, the chairman said in comments on its annual report filed on Thursday.

These group losses were $14.4 million, compared to just $4.6 million a year earlier.

Chairman David Green noted a casino glitch and a roughly six-month delay in the opening of a hotel at Nepal's Tiger Palace resort adjacent to the Indian state of Uttar Pradesh, which led to a $19 million "funding gap" due to qualification issues that were only fully acquired in July.

Tiger Palace, which only received a gaming licence at the end of December, contributed nominally $48,000 to the group's gross gaming revenue (GGR) in 2017, according to a summary of results filed with the Australian Stock Exchange.

"The casino at Tiger Palace, which opened on December 28, 2017, or the hotel that opened to paying guests in September, could not attract casino customers until the end of the year," Mr. Green said in his annual report.

He noted that the group caused "non-cash impairment and a total asset write-off of $6.86 million" in 2017.

He added: "This non-cash impairment represents the application of the Australian Accounting Standards, which governs the company's financial reporting."

Mr Green said the company faced "unexpected and unfounded hostile action" by Rajendra Vazgain, one of Nepal's local partners.

The report clarifies that a company called Silver Heritage Management Services Kathmandu Pvt Ltd holds the casino licenses of the millionaire club and the group's run Kathmandu, Tiger Palace's casino licenses, the group owns 90% of the local companies that hold the licenses, and Mr Bajgain and his brother Nabaraj Bajgain each own 5%.

Mr Green said in an annual report commentary: "For reasons only known to Mr [Rajendra] Bagain, following the opening of the Tiger Palace casino, he embarked on a clearly calculated set of actions to discredit the group in Nepal and thwart its operations at Tiger Palace."

The annual report said Rajendra Vazgain was dismissed as a director of the local unit in February, and despite the group's attempts to reach an agreement with him, "baseless and unreasonable allegations against the group have frustrated the discussion of a resolution to date." As of the date of the annual report, Rajendra Vazgain remains a shareholder of the local unit, the filing said.

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