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Iao Kun Group announces second quarter and six-month financial results27 August 2015(PRESS RELEASE) -- Iao Kun Group Holding Company Limited, which operates through its subsidiaries and related promotion entities that act as VIP room gaming promoters and a collaborator, today announced unaudited financial results for the three and six months ended June 30, 2015. All currency amounts are stated in United States dollars. Please refer to the Form 6-K that will be filed with the Securities and Exchange Commission for the full unaudited financial statements and related disclosures for the three and six months ended June 30, 2015. Second Quarter 2015 Highlights —Rolling chip turnover (a metric used by casinos to measure the aggregate amount of players’ bets and overall volume of VIP gaming room business transacted, which is further defined below) for the three months ended June 30, 2015 was $1.7 billion, a decrease of 63%, compared to $4.7 billion for the three months ended June 30, 2014. —Net loss, including gain from the change in fair value of contingent consideration of $0.2 million related to the Bao Li Gaming and Oriental VIP Room acquisitions, was $23.8 million, or $0.38 net loss per share (basic and diluted), for the second quarter of 2015, compared to a net loss of $56.7 million, or $0.94 net loss per share (basic and diluted), for the same period of 2014. During the second quarter of 2015, IKGH incurred a one-time $17.8 million impairment of goodwill. —Non-GAAP loss, which is operating income before amortization of intangible assets, impairment of goodwill and the change in fair value of contingent consideration related to the acquisitions of King’s Gaming, Bao Li Gaming and Oriental VIP Room, was $2.2 million, or $0.03 loss per share (basic and diluted), for the three months ended June 30, 2015, as compared to a non-GAAP loss of $7.5 million, or $0.12 loss per share (basic and diluted), for the three months ended June 30, 2014. Six-Month Dividend Update IKGH’s board of directors previously authorized a regular dividend each year after the release of the Company's financial results for the six months ending June 30 (the “Six Month Dividend”). IKGH’s Six Month Dividend policy equates to: (i) 15% of IKGH’s non-GAAP net income for the most recently completed six months ended June 30, divided by (ii) the number of ordinary shares outstanding on the record date for such dividend. For the Six Month Dividend payable for 2015, this is expected to equate to a dividend of approximately $0.014 per share, a reduction of $0.012 per share from the prior-year period. IKGH’s annual dividend payment policy equates to an amount per outstanding ordinary share equal to (i) 15% of IKGH’s non-GAAP net income for the most recently completed fiscal year less the amount paid pursuant to the six month dividend, divided by (ii) the number of ordinary shares outstanding on the record date for such dividend (the “Annual Dividend”). IKGH is maintaining its Annual Dividend policy. Second Quarter 2015 Results For the three months ended June 30, 2015, IKGH recorded revenue of $21.9 million, a 56% decrease from the same period of 2014, primarily due to lower rolling chip turnover during the quarter. The decrease in revenue was also due to (i) a decreasing trend of VIP baccarat, consistent with the overall decline of gaming revenue in Macau; and (ii) the economic downturn and ongoing anti-corruption campaign in mainland China, where the majority of IKGH’s VIP gaming patrons reside, as well as the continued tightening of government policies in mainland China. The lower net loss for the three months ended June 30, 2015 as compared to the three months ended June 30, 2014 was primarily a result of the change in contingent consideration, which was a gain of $0.2 million for the three months ended June 30, 2015, compared to a loss of $45.1 million for the prior-year period, as well as lower commission to junket agents for the three months ended June 30, 2015 as a result of significantly lower rolling chip turnover compared to the prior-year period. IKGH also incurred lower selling, general and administrative expenses for the three months ended June 30, 2015, primarily due to the costs incurred in 2014 in connection with IKGH’s application to list on the Hong Kong Stock Exchange. IKGH does not anticipate additional listing costs. The lower net loss was partially offset by a one-time $17.8 million impairment of goodwill. “The overall VIP market in Macau continues to be affected by the ongoing macro environment, and as such we are continuing to prudently manage our capital,” said Mr. Lam Man Pou, Chairman of IKGH. “We continue to explore overseas alternatives, such as our recent acquisition of Australian profit interests, to expand our overall VIP presence and provide additional diversification to our current sources of revenue. We remain committed to finding these additional opportunities and ultimately generating long-term value for our shareholders.” Six-Month 2015 Highlights —Rolling Chip Turnover for the six months ended June 30, 2015 was $3.9 billion, a decrease of 58% compared to $9.4 billion for the six months ended June 30, 2014. —Net loss, including gain from the change in fair value of contingent consideration of $13.3 million related to the King’s Gaming, Bao Li Gaming and Oriental VIP Room acquisitions, was $6.7 million, or $0.11 net loss per share (basic and diluted), in the six months ended June 30, 2015, compared to a net loss of $53.5 million, or $0.89 net loss per share (basic and diluted), in the same period of 2014. During the six months ended June 30, 2015, IKGH incurred a one-time $17.8 million impairment of goodwill. —Non-GAAP income, which is operating income before amortization of intangible assets, impairment of goodwill and the change in fair value of contingent consideration related to the acquisitions of King’s Gaming, Bao Li Gaming and Oriental VIP Room, was $5.9 million, or $0.10 earnings per share (basic and diluted), for the six months ended June 30, 2015 compared to income of $10.3 million, or $0.17 earnings per share (basic and diluted), for the six months ended June 30, 2014. Outlook for 2015 For the first seven months of 2015, IKGH’s Rolling Chip Turnover was US$4.36 billion (an average of $0.62 billion per month), down 61% year-over-year, compared to US$11.03 billion (an average of $1.58 billion per month) for the first seven months of 2014. The Company is adjusting its 2015 rolling chip turnover guidance for its five existing VIP rooms in Macau to between US$6.0 billion and US$7.0 billion, from a previous range of US$7.0 billion and US$8.5 billion. Conference Call and Replay Information IKGH will conduct a conference call to discuss the financial results today at 8:30 a.m. EDT/8:30 p.m. Macau. To participate, please dial one of the following numbers at least 10 minutes prior to the scheduled start of the call: 1-877-397-0286 (United States/Canada) 10-800-714-1511 (North China) 10-800-140-1377 (South China) 800-968-835 (Hong Kong) 800-101-2323 (Singapore) 0808-101-7162 (United Kingdom) 1-719-325-4758 (Other International) Interested parties may also access the live call on the Internet at www.ikghcl.com (select Events and Presentations). Following its completion, a replay of the call can be accessed on the Internet at the above link or through September 10, 2015 by calling either 1-877-870-5176 (U.S. callers) or 1-858-384-5517 (International callers) and providing conference ID 7681883. |