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Asia Entertainment & Resources Ltd. Announces Third Quarter and Nine Month 2012 Financial Results

  Asia Entertainment & Resources Ltd. Announces Third Quarter and Nine Month
  2012 Financial Results

Business Wire

HONG KONG -- November 19, 2012

Asia Entertainment & Resources Ltd. (“AERL” or the “Company”) (NASDAQ: AERL),
which operates through its subsidiaries and related promoter companies as VIP
room gaming promoters, today announced unaudited financial results for the
third quarter and nine-month periods ended September 30, 2012. All currency
amounts are stated in United States dollars.

Third Quarter 2012 Highlights

  *On September 12, 2012, the Company completed the acquisition of Bao Li
    Gaming Promotion Limited (“Bao Li”), a Macau-based VIP room gaming
    promoter that operates one room with five tables at City of Dreams Macau.
    As a result of the acquisition closing on September 12, and in accordance
    with the terms of the purchase agreement, AERL obtained the right to all
    of the profit interest of Bao Li dating back to September 1.
  *Rolling Chip Turnover for the three months ended September 30, 2012 in the
    Company’s VIP gaming rooms was $4.0 billion, down 32% year-over-year,
    compared to $6.0 billion in the same period of 2011.
  *Net income, which includes a gain of $9.4 million for the change in fair
    value of contingent consideration related to the acquisition of King’s
    Gaming and Bao Li, declined 16% to $22.6 million, or $0.53 per share
    (fully diluted), in the three months ended September 30, 2012, from $26.9
    million, or $0.68 per share (fully diluted). in the same period of 2011.
  *Non-GAAP income before amortization of intangible assets and the change in
    fair value of contingent consideration related to the acquisition of
    King's Gaming and Bao Li was $14.9 million, or $0.35 per share (fully
    diluted), in the three months ended September 30, 2012, a 34% decrease as
    compared to $22.5 million, or $0.57 per share (fully diluted), for the
    three months ended September 30, 2011.
  *In the third quarter 2012, the Company repurchased and retired 262,347
    shares at an average price of $3.67 per share. The share repurchase
    program, which expires June 30, 2013, authorizes the Company to further
    purchase up to an additional 1,737,653 of its ordinary shares on the open
    market at prices to be determined by the Company’s management.
  *On August 31, 2012, the Company paid its 2012 Six Month Dividend of $0.12
    per outstanding ordinary share.
  *Beginning September 1, 2012, the Company changed its remuneration model to
    a revenue sharing model for all of its VIP rooms.

“Despite the lower year-over-year results we believe we managed our business
appropriately to reduce exposure to undue risk that can impair longer-term
growth,” said Mr. Man Pou Lam (Mr. Lam), Chairman of AERL. “The tightening of
credit to junket agents had a near-term impact on our overall performance that
we expect will reverse over the mid-to-longer term. To that end, in the
quarter, we shifted our remuneration model away from a fixed commission
structure to a share of win/loss revenue model, which should allow us to grow
our Rolling Chip Turnover and hopefully help to reduce volatility as our base
of business broadens. We also implemented a new program for large VIP agents
who do not require credit from AERL to participate in our revenue sharing
model and thus incentivize them to partner with AERL. We remain committed to
growing our business presence in the Macau VIP gaming market and create value
for our shareholders.”

Nine Month 2012 Highlights

  *Rolling Chip Turnover for the nine months ended September 30, 2012 in the
    Company’s VIP gaming rooms was $14.1 billion, down 2% year-over-year,
    compared to $14.4 billion in the same period of 2011.
  *Net income, which includes a gain of $15.2 million for the change in fair
    value of contingent consideration related to the acquisition of King's
    Gaming and Bao Li, declined 1% to $60.0 million, or $1.41 per share (fully
    diluted), in the nine months ended September 30, 2012 from $60.9 million,
    or $1.61 per share (fully diluted), in the same period of 2011.
  *Non-GAAP income before amortization of intangible assets and the change in
    fair value of contingent consideration related to the acquisition of
    King's Gaming and Bao Li was $49.0 million, or $1.15 per share (fully
    diluted), for the nine months ended September 30, 2012, a 13% decrease as
    compared to Non-GAAP income of $56.3 million, or $1.49 per share (fully
    diluted), for the nine months ended September 30, 2011.

Outlook for 2012

For the first nine months of 2012, AERL's monthly average Rolling Chip
Turnover was $1.6 billion. The Company's Rolling Chip Turnover year-to-date
through October 31, 2012 in Macau was $15.6 billion, a decrease of 5%
year-over-year, compared to $16.5 billion for the first ten months of 2011.

“Given the volatility of our results and the broader macroeconomic trends over
the last few months, we are suspending our guidance on Rolling Chip Turnover
for the year but we are maintaining our previous Non-GAAP income guidance of
$68 million to $80 million for the full year,” concluded Chairman Lam.

Conference Call and Replay Information

AERL will conduct a conference call to discuss the financial results today at
10:00AM EST/11:00PM Macau. To participate, please dial one of the following
numbers at least 10 minutes prior to the scheduled start of the call:

1-888-389-5988 (United States/Canada)
10-800-714-0940 (North China)
10-800-140-0915 (South China)
800-968-149 (Hong Kong)
800-101-1739 (Singapore)
0800-404-7655 (United Kingdom)
1-719-457-2083 (Other International)

Interested parties may also access the live call on the Internet at
www.aerlf.com (select Events and Presentations). Following its completion, a
replay of the call can be accessed on the Internet at the above link or for
one week by calling either 1-877-870-5176 (U.S. callers) or 1-858-384-5517
(International callers) and providing conference ID 9724053.

Definition of Rolling Chip Turnover

Rolling Chip Turnover is used by casinos to measure the volume of VIP business
transacted and represents the aggregate amount of bets players make. Bets are
wagered with “non-negotiable chips” and winning bets are paid out by casinos
in so-called “cash” chips. “Non-negotiable chips” are specifically designed
for VIP players to allow casinos to calculate the commission payable to VIP
room gaming promoters. Commissions are paid based on the total amount of
“non-negotiable chips” purchased by each player. VIP room gaming promoters
therefore require the players to “roll,” from time to time, their “cash chips”
into “non-negotiable chips” for further betting so that they may receive their
commissions (hence the term “Rolling Chip Turnover”). Through the promoters,
“non-negotiable chips” can be converted back into cash at any time. Betting
using rolling chips, as opposed to using cash chips, is also used by the DICJ
(Macau Gaming Control Board) to distinguish between VIP table revenue and mass
market table revenue.

About Asia Entertainment & Resources Ltd.

AERL is a holding company which operates through its subsidiaries and related
promoter companies as a VIP room gaming promoter, and is entitled to receive
all of the profits of the VIP gaming promoters from VIP gaming rooms. AERL's
VIP room gaming promoters currently participate in the promotion of four major
luxury VIP gaming facilities in Macau, China, the largest gaming market in the
world. One VIP gaming room is located at the top-tier 5-star hotel, the Star
World Hotel & Casino in downtown Macau, and another is located in the luxury
5-star hotel, the Galaxy Macau™ Resort in Cotai, each of which is operated by
Galaxy Casino, S.A. Additional VIP gaming rooms are located at the Venetian
Macao-Resort-Hotel and City of Dreams Macau, both in Cotai.

Forward-Looking Statements

This press release includes forward-looking statements made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995
that involve risks and uncertainties. Forward-looking statements are
statements that are not historical facts. Such forward-looking statements,
based upon the current beliefs and expectations of AERL's management, are
subject to risks and uncertainties, which could cause actual results to differ
from the forward-looking statements. The gaming industry is characterized by
an element of chance. Theoretical win rates for AERL's VIP room gaming
promoters' VIP gaming room operations depend on a variety of factors,some
beyond their control. In addition to the element of chance, theoretical win
rates are also affected by other factors, including gaming patrons' skill and
experience, the mix of games played, the financial resources of gaming
patrons, the spread of table limits, the volume of bets placed by AERL's VIP
room gaming promoters' gaming patrons and the amount of time gaming patrons
spend on gambling — thus VIP gaming rooms' actual win rates may differ greatly
over short time periods, such as from quarter to quarter, and could cause
their quarterly results to be volatile. These factors, alone or in
combination, have the potential to negatively impact the VIP gaming rooms' win
rates. Investors and potential investors should consult all of the information
set forth herein and should also refer to the risk factors set forth in AERL's
Annual Report on Form 20-F filed on March 16, 2012, and other reports filed or
to be filed from time-to-time with the Securities and Exchange Commission.


ASIA ENTERTAINMENT & RESOURCES LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME
(Unaudited)
                                                            
                  For the         For the        For the         For the
                  Three Months    Three Months   Nine Months     Nine Months
                  Ended           Ended          Ended           Ended
                  September 30,   September      September 30,   September 30,
                  2012            30, 2011       2012            2011
Revenue from
VIP Gaming        $  54,028,116   $ 74,413,996   $ 179,877,294   $ 180,870,093
Operations
                                                                 
Expenses
- Commission to      34,535,621     47,198,390     116,158,974     111,481,366
Agents
- Selling,
General and          4,142,397      4,100,589      13,353,684      11,640,203
Administrative
Expenses
- Special            403,110        595,224        1,409,772       1,435,767
Rolling Tax
- Amortization
of Intangible       1,655,700     1,263,069     4,192,535      3,792,795
Assets
Total Expenses      40,736,828    53,157,272    135,114,965    128,350,131
                                                                 
Operating
income before
change in fair       13,291,288     21,256,724     44,762,329      52,519,962
value of
contingent
consideration
Change in Fair
Value of
Contingent
Consideration       9,352,152     5,606,357     15,246,583     8,377,040
for the
Acquisition of
King's Gaming
and Bao Li
Net Income          22,643,440    26,863,081    60,008,912     60,897,002
                                                                 
Comprehensive
Income
Foreign
Currency
- Translation       66,291        (153,735)     574,186        (256,495)
Adjustment
Total
Comprehensive     $  22,709,731   $ 26,709,346   $ 60,583,098    $ 60,640,507
Income
                                                                 
Net Income Per
Share
Basic             $  0.53         $ 0.69         $ 1.41          $ 1.63
Diluted           $  0.53         $ 0.68         $ 1.41          $ 1.61
Weighted
Average Shares
Outstanding
Basic               42,386,032    38,824,025    42,442,746     37,436,113
Diluted             42,386,032    39,229,556    42,442,746     37,910,394
                                                                   


ASIA ENTERTAINMENT & RESOURCES LTD.
CONSOLIDATED BALANCE SHEETS
                                                          
                                        September 30, 2012   December 31, 2011
                                        (Unaudited)
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents               $    27,343,699      $   16,718,565
Accounts Receivable, Net                     12,768,260          1,240,142
Markers Receivable                           237,749,378         240,131,089
Prepaid Expenses and Other Assets           363,000            292,559
Total Current Assets                         278,224,337         258,382,355
                                                             
Intangible Assets (net of accumulated
amortization of $10,117,927 and              96,837,876          54,983,937
$5,902,419 at September 30, 2012 and
December 31, 2011, respectively)
Goodwill                                     17,030,071          14,992,009
Property and Equipment (net of
accumulated depreciation of $11,046          17,006              26,855
and $1,101 at September 30, 2012 and
December 31, 2011, respectively)
Other Assets                                21,582             22,158
TOTAL ASSETS                            $    392,130,872     $   328,407,314
                                                             
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Lines of Credit Payable                 $    54,812,330      $   46,270,563
Accrued Expenses                             11,822,426          16,157,439
Payable-King's Gaming
Acquisition-Contingent Purchase Price        9,000,000           12,057,600
Obligation
Loan Payable, Shareholders, current         6,234,512          2,641,619
Total Current Liabilities                    81,869,268          77,127,221
                                                             
Loan Payable, Shareholders                   60,000,000          60,000,000
Bao Li Gaming Acquisition-Contingent         32,196,364          -
Purchase Price Obligation
King's Gaming Acquisition-Contingent
Purchase Price Obligation, net of           9,000,000          32,492,985
current portion
Total Liabilities                           183,065,632        169,620,206
                                                             
COMMITMENTS AND CONTINGENCIES
                                                             
SHAREHOLDERS' EQUITY
Preferred Shares, $0.0001 par value
Authorized 1,150,000 shares; none            -                   -
issued
Ordinary Shares, $0.0001 par value
Authorized 200,000,000 shares; issued
and outstanding 42,188,817 at                4,219               3,881
September 30, 2012 and 38,804,064 at
December 31, 2011
Additional Paid-in Capital                   72,875,073          52,581,098
Retained Earnings                            135,717,930         106,308,297
Accumulated Comprehensive Income            468,018            (106,168)
(Loss)
Total Shareholders' Equity                  209,065,240        158,787,108
TOTAL LIABILITIES AND SHAREHOLDERS'     $    392,130,872     $   328,407,314
EQUITY
                                                             


Cash Flow Information
For the Nine Months Ended September 30,
(Unaudited)
                                                             
                                               2012            2011
Net cash provided by (used in) operating      $ 45,067,313       $ (1,697,501)
activities
Net cash (used in) investing activities         (15,146,032)       -
Net cash (used in) financing activities        (19,333,497)      (864,367)
Net increase (decrease) in cash and cash      $ 10,587,784      $ (2,561,868)
equivalents


  *Condensed from financial statements
                                                                 

Non-GAAP Financial Measure

Our calculation of non-GAAP income (operating income before amortization of
intangible assets and change in fair value of contingent consideration) and
Non-GAAP earnings per share (“EPS”) for the three and nine months ended
September 30, 2012 and 2011, differs from EPS based on net income because it
does not include amortization of intangible assets and change in fair value of
contingent consideration. We use this information internally in evaluating our
operations and believe this information is important to investors because it
provides a more complete picture of our operations for the entire period and
is more accurately comparable to the prior-year period. Notwithstanding the
foregoing, however, Non-GAAP income and EPS should not be considered an
alternative to, or more meaningful than, net income and EPS as determined in
accordance with GAAP. The following is a reconciliation of our unaudited net
income to Non-GAAP income and GAAP EPS to our Non-GAAP EPS:

                                                          
                                         For the             For the
                                         Three               Three
                                         Months              Months
                                         Ended September     Ended September
                                         30, 2012            30, 2011
Net Income attributable to ordinary      $   22,643,440      $   26,863,081
shareholders
                                                                             
Amortization of intangible assets            1,655,700           1,263,069
                                                                             
Change in fair value of contingent          (9,352,152  )      (5,606,357  )
consideration
                                                                             
Non-GAAP income (before amortization
of intangible assets and change in       $   14,946,988      $   22,519,793
fair value of contingent
consideration)
                                                                             

                                                
                     For the Three Months          For the Three Months
                     Ended                         Ended
                     September 30, 2012            September 30, 2011
                                    Fully                        Fully
                     Basic           Diluted       Basic           Diluted
                                                                             
Earnings per share
attributable to      $  0.53         $  0.53       $  0.69         $  0.68
ordinary
shareholders
                                                                             
Amortization of         0.04            0.04          0.03            0.03
intangible assets
                                                                             
Change in fair
value of               (0.22  )       (0.22  )     (0.14  )       (0.14  )
contingent
consideration
                                                                             
Non-GAAP Earnings
per share (before
amortization of
intangible assets    $  0.35         $  0.35       $  0.58         $  0.57
and change in fair
value of
contingent
consideration)
                                                                             

                                                          
                                         For the Nine        For the Nine
                                         Months              Months
                                         Ended September     Ended September
                                         30, 2012            30, 2011
                                                                             
Net Income attributable to ordinary      $  60,008,912       $   60,897,002
shareholders
                                                                             
Amortization of intangible assets           4,192,535            3,792,795
                                                                             
Change in fair value of contingent         (15,246,583  )      (8,377,040  )
consideration
                                                                             
Non-GAAP income (before amortization
of intangible assets and change in       $  48,954,864       $   56,312,757
fair value of contingent
consideration)
                                                                             

                    For the Nine Months Ended    For the Nine Months Ended
                     September 30, 2012            September 30, 2011
                                    Fully                        Fully
                     Basic           Diluted       Basic           Diluted
                                                                             
Earnings per share
attributable to      $  1.41         $  1.41       $  1.63         $  1.61
ordinary
shareholders
                                                                             
Amortization of         0.10            0.10          0.10            0.10
intangible assets
                                                                             
Change in fair
value of               (0.36  )       (0.36  )     (0.22  )       (0.22  )
contingent
consideration
                                                                             
Non-GAAP Earnings
per share (before
amortization of
intangible assets    $  1.15         $  1.15       $  1.51         $  1.49
and change in fair
value of
contingent
consideration)
                                                                             

Contact:

Asia Entertainment & Resources Ltd.
James Preissler, +1 646-450-8808
preissj@aerlf.com
or
ICR
William Schmitt, 203-682-8294
william.schmitt@icrinc.com
 
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