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June 22, 2021

Company recorded revenue of USD 19.0M in Q4

Iao Kun Group Holding Company Limited announces Q4 and full year 2015 financial results

Iao Kun Group Holding Company Limited announces Q4 and full year 2015 financial results
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, announced unaudited financial results for the fourth quarter and year ended December 31
China | 03/07/2016

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, announced unaudited financial results for the fourth quarter and year ended December 31, 2015.

F

ourth 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 December 31, 2015 was $1.2 billion, a decrease of 57%, compared to $2.9 billion for the three months ended December 31, 2014.

Net income, including gain from the change in fair value of contingent consideration of $15.4 million related to the King’s Gaming, Bao Li Gaming and Oriental VIP Room acquisitions, was $12.2 million, or $0.19 net income per share (basic and diluted), for the fourth quarter of 2015, compared to net income of $5.7 million, or $0.09 net income per share (basic and diluted), for the same period of 2014.

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 $0.9 million, or $0.01 earnings per share (basic and diluted), for the three months ended December 31, 2015, compared to non-GAAP income of $8.0 million, or $0.13 earnings per share (basic and diluted), for the three months ended December 31, 2014.

Fourth quarter 2015 results

For the three months ended December 31, 2015, IKGH recorded revenue of $19.0 million, a 64% decrease from the same period of 2014, primarily due to lower Rolling Chip Turnover during the quarter, as well as (i) a decrease of players for VIP baccarat, consistent with the overall decline of gaming revenue in Macau; (ii) the economic downturn and ongoing anti-corruption campaign in mainland China, where the majority of IKGH’s VIP gaming patrons reside; and (iii) the continued tightening of government policies in mainland China, including restrictions on credit card usage.

The improved net income for the three months ended December 31, 2015 compared to the prior-year period was primarily a result of the change in contingent consideration, which was a gain of $15.4 million for the fourth quarter of 2015 compared to a gain of $1.8 million for the same period of 2014, as well as lower commissions to junket agents for the three months ended December 31, 2015 as a result of lower Rolling Chip Turnover compared to the prior-year period. IKGH also incurred lower selling, general and administrative expenses for the three months ended December 31, 2015, primarily due to costs incurred in the prior-year period in connection with IKGH’s application to list on the Hong Kong Stock Exchange that did not recur in the fourth quarter of 2015, reduced management fees and lower overall VIP Gaming Room operating expenses.

“With a difficult 2015 behind us and with the expectation that 2016 will also be a challenging year for VIP gaming in Macau, we continue to prudently manage our capital to ensure we will be appropriately positioned when the market turns around,” said Mr. Lam Man Pou, Chairman of IKGH. “At the same time, we continue to source additional VIP opportunities in overseas markets to allow us to further diversify our revenue streams. We remain committed to finding suitable opportunities to expand our presence and ultimately generating long-term value for our shareholders.”

Full year 2015 highlights

Rolling Chip Turnover for the year ended December 31, 2015 was $6.4 billion, a decrease of 61%, compared to $16.6 billion for the year ended December 31, 2014.

Net income, including gain from the change in fair value of contingent consideration of $30.2 million related to the King’s Gaming, Bao Li Gaming and Oriental VIP Room acquisitions, was $5.1 million, or $0.08 net income per share (basic and diluted), for the year ended December 31, 2015, compared to a net loss of $60.1 million, or $0.99 net loss per share (basic and diluted), for the year ended December 31, 2014. During the year ended December 31, 2015, IKGH incurred a one-time $17.8 million impairment of goodwill.

Non-GAAP income was $9.0 million, or $0.14 earnings per share (basic and diluted), for the year ended December 31, 2015, compared to income of $17.2 million, or $0.28 earnings per share (basic and diluted), for the year ended December 31, 2014.

Outlook for 2016

For the first two months of 2016, IKGH’s Rolling Chip Turnover was US$0.81 billion (an average of $0.41 billion per month), down 44% year-over-year, compared to US$1.44 billion (an average of $0.72 billion per month) for the first two months of 2015.

The company is providing 2016 Rolling Chip Turnover guidance for its five existing VIP rooms in Macau of between US$3.5 billion and US$4.5 billion.

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