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Nepal – Silver Heritage appoints new Chairman after ‘challenging’ year

By - 29 May 2018

Nepal casino operator Silver Heritage has appointed James Spenceley as its non-executive Chairman following the departure of former Chairman David Green after what it called a ‘challenging year’ for the company.

Mr. Spenceley is famed for founding Australia’s fourth largest telecommunications company Vocus Communications in 2007 which he turned into a AU$5bn business.

Silver Heritage Managing Director and CEO Mike Bolsover said: “This is a great addition to the board and James hits the ground running after multiple visits to Nepal and to Tiger Palace since the opening.”

The appointment came as Silver Heritage confirmed that three independent non-executive directors – Mr. Spenceley, Hunter and Robert Benussi – have agreed to waive half of their fees until the end of 2018, saving the company AU$375,000.

“The non-executive Directors’ agreement to waive 50% of their fees and the reduction from four to three Australian-based board members means we are now streamlined and cost-effective as we enter a new phase of growth.”

The company said that the 2017 financial year was a ‘challenging one for the company’ but listed the completion of construction of Tiger Palace, and the opening of the company’s first owned and operated Integrated Resort as being major highlights. Its other major asset, Phoenix International Club in Vietnam, reported a ‘record performance during the year.’

“We are now positioned with a portfolio of intrinsically valuable operating assets with positive long term trends and the challenge for us as a Company is to unlock this value. The key to this in the short term in particular is Tiger Palace. Tiger Palace is achieving steady growth in footfall, gaming and non-gaming revenue. However, the cash burn in start up phase, coupled with the underperformance of our two other operating businesses in Q1 this year means that there will be some pressure on liquidity in the second half of the year. The company is actively assessing various options to address this. The management team is implementing a range of cost reduction initiatives across the business, and the Board has contributed by agreeing to halve their cash remuneration. The company is also working through other transitional issues. It is clear that the relationship with our local partner in Nepal has run its course. Several high quality parties have expressed interest in partnering with us in Nepal. The company is actively engaged in discussions in this regard and will update the market as and when further progress has been made on this.”

Tiger Palace Resort is located in the flat lands of Southern Nepal adjacent to the Indian border, and the resort had its Casino Grand Opening on March 16 2018. The company added that it was ‘excited by the early performance and by the great potential of the platform we have established, and also of our new hires including Resort GM Brett Model and his team. We have a truly world class asset in a region and location with strong fundamentals, one from which Management as a whole will seek solid returns for our shareholders and an amazing experience for guests of Tiger Palace. We remain focused on each of our operations in both Nepal and Vietnam, all three of which are now in full operation and present significant opportunity, in countries where we have been operating for over six years.’

The first seven weeks of trading in Q2 2018 have been much stronger than Q1 2018, following a challenging first 90 days in the year at the mature properties of Phoenix in Vietnam and The Millionaires Club in Kathmandu, Nepal, and during the initial ramp-up at Tiger Palace. Total Adjusted EBITDA in the first quarter for the Group was negative US$1,943,000 (US$1,809,000 of this being cash drag from the ramp up at Tiger Palace), though April 2018 was a positive month of Operating Cashflow at Group level and the company has also had a strong May to date, particularly in Vietnam and in Kathmandu.

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