Hong Kong-listed integrated resort operator Suncity Group slipped to a loss attributable to equity holders of the company of HK$258.3 million (US$33 million) in 2021, reversing a profit of HK$884.8 million (US$113 million) in 2020. Factors contributing to the loss are the COVID-19 pandemic and impairment losses on property and loans.
Releasing its FY21 financial results on Wednesday, Suncity – which is a joint venture partner at Hoiana in central Vietnam, majority owner of Tigre de Cristal in Vladivostok, Russia and is developing a US$1 billion hotel and casino in Manila’s Entertainment City precinct – also reported an Adjusted EBITDA loss of HK$70.8 million (US$9.0 million), narrowed from the loss of HK$134.1 million (US$17.1 million) in FY20.
This was despite revenue from continuing operations rising by 87% year-on-year to HK$340.4 million (US$43.5 million). Suncity said this increase was mainly attributable to the contribution from Summit Ascent, the majority owner of Tigre de Cristal, which Suncity acquired in 4Q20.
In 2021, Tigre de Cristal contributed revenue from gaming and hotel operations of HK$265.5 million (US$33.9 million), representing 78% of the group’s revenue for the year. By comparison, revenue from the company’s travel related products and services segment fell by 65.4% to HK$42.8 million (US$5.5 million), and from hotel and integrated resort general consultancy services by 62.9% to HK$3.3 million (US$422,000).
Detailing a variety of factors which led to its 2021 losses, Suncity outlined finance costs of HK$283.9 million (US$36.3 million); share of loss of a joint venture of HK$438.0 million (US$56.0 million), impairment loss on property, operating rights and equipment of HK$287.1 million (US$36.7 million); impairment loss on equity loans to a joint venture of HK$119.7 million (US$15.3 million) and impairment loss on loans to and amounts due from a joint venture of HK$217.1 million (US$27.7 million).
These were partially offset by a gain of HK$825.8 million (US$105.5 million) in respect of the change in fair value of derivative financial instruments, and profit from discontinued operations of HK$176.8 million (US$22.6 million).
In response to the result, the group’s auditor has issued a disclaimer of opinion on “multiple uncertainties” related to its ability to continue as a going concern. According to the auditor’s report, this disclaimer of opinion is primarily due to Suncity Group’s reliance on financial support from its former Chairman, Alvin Chau, who was arrested and detained by Macau authorities in late November.
Noting that Chau is no longer able to provide financial support to the Company, the auditor said, “In response to the above, the Directors have been actively implementing cost controls measures and commencing negotiation of the sale of certain assets of the Group, including but not limited to the parcels of land in Japan.
“The removal of the audit modification will be dependent on whether the Company can successfully sell its assets or obtain equity or debt financing in the future, which in turn will be affected by external factors not relating to the Group, including development of the Loan and impact of COVID-19 on market conditions, among other factors.”
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