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Iao Kun Group Holding Company Limited Announces Third Quarter and Nine Month 2013 Financial Results

  Iao Kun Group Holding Company Limited Announces Third Quarter and Nine Month
  2013 Financial Results

Business Wire

HONG KONG -- November 13, 2013

Iao Kun Group Holding Company Limited (“IKGH” or the “Company”) (NASDAQ:IKGH),
formerly Asia Entertainment & Resources Ltd. (“AERL”), which operates through
its subsidiaries and related promoter companies that act as VIP room gaming
promoters, today announced unaudited financial results for the three and nine
months ended September 30, 2013. All currency amounts are stated in United
States dollars.

Third Quarter 2013 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
    September 30, 2013 was $4.1 billion, an increase of 2.2% compared to $4.0
    billion for the three months ended September 30, 2012.
  *Net income, including the change in fair value of contingent consideration
    of $0.9 million related to the King’s Gaming, Bao Li Gaming and Oriental
    VIP Room acquisitions, was $6.9 million, or $0.11 per share (fully
    diluted), in the third quarter of 2013 compared to net income of $22.6
    million, or $0.49 per share (fully diluted), in the same period of 2012.
  *Non-GAAP income, which is operating income before amortization of
    intangible assets and the change in fair value of contingent consideration
    related to the acquisitions of King's Gaming, Bao Li Gaming and Oriental
    VIP Room, declined 32.4% to $10.1 million, or $0.16 per share (fully
    diluted), for the three months ended September 30, 2013 as compared to
    income of $14.9 million, or $0.33 per share (fully diluted), for the three
    months ended September 30, 2012.
  *On September 20, 2013, the Company paid its 2013 Six Month Dividend of
    $0.08 per outstanding ordinary share.

For the three months ended September 30, 2013, IKGH recorded revenue of $61.0
million, a 12.8% increase from the same period of 2012. The increase in
revenue was a result of a higher than normal win rate of 3.22%, the change in
remuneration model from the fixed commission model of 1.25% on Rolling Chip
Turnover to the revenue sharing model in September 2012, the acquisition of
the profit rights derived by Bao Li Gaming in September 2012 and the Oriental
VIP Room in June 2013, and an increase in net services revenue related to
hotel and casino services charged to junket agents after the adjustment to
commission rates.

The decrease in net income and Non-GAAP income for the three months ended
September 30, 2013 was due primarily to higher commissions as a result of
greater non-marker commission paid, the upward adjustment to commission rates
as a result of the company compensating its junket agents for no longer
providing complimentary hotel and casino services, increased market
competition, and a smaller percentage of direct business. IKGH also incurred
higher selling, general and administrative expenses for the three months ended
September 30, 2013, including approximately $0,1 million of additional costs
related to Hong Kong Listing expenses, acquisition costs, additional
management fees paid as a result of the acquisition of Bao Li Gaming in
September 2012 and the Oriental VIP Room in July 2013 and an increase in the
number of employees due to direct employment of some employees from Pak Si and
the acquisitions of Bao Li and the Oriental VIP Room.

“The VIP market in Macau continues to evolve and we are taking the necessary
measures to best utilize our shareholders capital to grow our business while
at the same time prudently managing risk,” said Mr. Man Pou Lam (Mr. Lam),
Chairman of IKGH. “Our VIP room at Le Royal Arc Casino performed well for us
in the third quarter and has helped us expand our presence in the Macau VIP
gaming market. Further, we recently initiated a marketing campaign in Macau to
augment our non-marker agent base, which we believe will assist us in
increasing our Rolling Chip Turnover and market share while allowing us to
remain vigilant with our shareholders capital. Our strategy remains unchanged
– to increase our market share leading to growth in revenue and net income,
and to create long-term shareholder value.”

Nine Month 2013 Highlights

  *Rolling Chip Turnover for the nine months ended September 30, 2013 was
    $12.7 billion, a decrease of 10.1% compared to $14.1 billion for the nine
    months ended September 30, 2012.
  *Net income, including the change in fair value of contingent consideration
    of $14.5 million related to the King’s Gaming, Bao Li Gaming and the
    Oriental VIP Room acquisitions, decreased 81.8% to $10.9 million, or $0.21
    per share (fully diluted), in the nine months ended September 30, 2013
    from $60.6 million, or $1.31 per share (fully diluted), in the same period
    of 2012.
  *Non-GAAP income, which is operating income before amortization of
    intangible assets and the change in fair value of contingent consideration
    related to the acquisitions of King’s Gaming, Bao Li Gaming and the
    Oriental VIP Room declined 29.5% to $34.5 million, or $0.67 per share
    (fully diluted), for the nine months ended September 30, 2013 as compared
    to income of $49.0 million, or $1.07 per share (fully diluted), for the
    nine months ended September 30, 2012.

Outlook for 2013

For the first nine months of 2013, IKGH’s Rolling Chip Turnover was $12.7
billion (an average of $1.4 billion per month), down 10% year-over-year,
compared to US$14.1 billion (an average of $1.6 billion per month) for the
first nine months of 2012. Win rate for the first nine months of 2013 was
3.19%.

The Company maintains its 2013 Rolling Chip Turnover guidance range of US$16.5
billion to US$18 billion, and maintains its 2013 Non-GAAP income guidance
range of US$46 million to US$52 million (which includes extraordinary
expenses).

Conference Call and Replay Information

IKGH will conduct a conference call to discuss the financial results today at
9:00AM EST/10:00 PM Macau. To participate, please dial one of the following
numbers at least 10 minutes prior to the scheduled start of the call:

   1-888-455-2263 (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)
      1-719-457-2697 (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 8785389.

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 Iao Kun Group Holding Company Limited

IKGH 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. IKGH's
VIP room gaming promoters currently participate in the promotion of five 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
StarWorld 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
Sands Cotai Central and City of Dreams Macau, both in Cotai, and Le Royal Arc
Casino, located in NAPE, Downtown Macau.

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 IKGH’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 IKGH’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 IKGH’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 IKGH’s
Annual Report on Form 20-F filed on April 5, 2013, and other reports filed or
to be filed from time-to-time with the Securities and Exchange Commission.

                                                                                   
                                                                                   
IAO KUN GROUP HOLDING COMPANY LIMITED

F/K/A ASIA ENTERTAINMENT & RESOURCES LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME

(Unaudited)
                                                              
                   For the        For the
                   Three          Three            For the Nine      For the Nine
                                                   Months Ended      Months Ended
                   Months Ended   Months Ended
                   September      September        September 30,     September 30,
                   30,            30,              2013              2012
                   2013           2012
Revenue from
VIP Gaming         $ 60,961,364   $ 54,028,116     $ 186,624,728    $ 179,877,294
Operations
Total Revenues      60,961,364    54,028,116      186,624,728     179,877,294
                                                                                   
Expenses
- Commission         45,345,247     34,535,621       135,737,508       116,158,974
to Agents
- Selling,
General and          5,102,606      4,142,397        15,084,137        13,353,684
Administrative
Expenses
- Special            411,952        403,110          1,267,746         1,409,772
Rolling Tax
- Amortization
of Intangible       4,118,058     1,655,700       9,095,512       4,192,535
Assets
Total Expenses      54,977,863    40,736,828      161,184,903     135,114,965
                                                                                   
Operating
income
attributable
to ordinary
shareholders         5,983,501      13,291,288       25,439,825        44,762,329
before change
in fair value
of contingent
consideration
                                                                                   
Change in Fair
Value of
Contingent
Consideration
for the             945,943       9,352,152       (14,535,257 )    15,246,583
Acquisitions
of King's
Gaming, Bao Li
and Oriental
Net Income
Attributable        6,929,444     22,643,440      10,904,568      60,008,912
to Ordinary
Shareholders
                                                                                   
Other
Comprehensive
Income
Foreign
Currency
- Translation       38,762        66,291          (124,944    )    574,186
Adjustment
Total
Comprehensive      $ 6,968,206    $ 22,709,731     $ 10,779,624     $ 60,583,098
Income
                                                                                   
Net Income Per
Share
Basic              $ 0.11         $ 0.49           $ 0.21           $ 1.31
Diluted            $ 0.11         $ 0.49           $ 0.21           $ 1.31
Weighted
Average Shares
Outstanding
Basic               64,241,218    45,819,301      51,496,284      45,880,608
Diluted             64,364,928    45,819,301      51,697,772      45,880,608

                                                                           
                                                                             
IAO KUN GROUP HOLDING COMPANY LIMITED

F/K/A ASIA ENTERTAINMENT & RESOURCES LTD.

CONSOLIDATED BALANCE SHEETS
                                                      
                                    September 30, 2013     December 31,
                                                           2012*
                                    (Unaudited)
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents           $    31,634,935        $  20,644,296
Accounts Receivable, Net                 20,206,838           2,480,961
Markers Receivable                       227,878,999          241,706,663
Prepaid Expenses and Other              465,649             303,570
Assets
Total Current Assets                     280,186,421          265,135,490
                                                                             
Intangible Assets (net of
accumulated amortization of
$21,644,198 and $12,553,037 at           142,402,914          94,451,063
September 30, 2013 and December
31, 2012, respectively)
Goodwill                                 17,750,931           17,037,761
Property and Equipment (net of
accumulated depreciation of
$34,064 and $14,366 at                   59,088               13,698
September 30, 2013 and December
31, 2012, respectively)
Deferred Offering Costs                  -                    807,401
Other Assets                            23,423              21,592
TOTAL ASSETS                        $    440,422,777       $  377,467,005
                                                                             
LIABILITIES AND SHAREHOLDERS'
EQUITY
CURRENT LIABILITIES
Lines of Credit Payable             $    57,995,300        $  34,799,982
Accrued Expenses                         14,063,511           14,091,723
Oriental VIP Room
Acquisition-Contingent Purchase          10,000,000           -
Price Obligation
Bao Li Gaming
Acquisition-Contingent Purchase          17,822,223           -
Price Obligation
King's Gaming
Acquisition-Contingent Purchase          9,000,000            9,000,000
Price Obligation
Loan Payable, Shareholders,             872,750             2,214,078
current
Total Current Liabilities                109,753,784          60,105,783
                                                                             
Loan Payable, Shareholders               -                    60,000,000
Bao Li Gaming
Acquisition-Contingent Purchase          16,222,608           32,294,981
Price Obligation, net of
current portion
Oriental VIP Room
Acquisition-Contingent Purchase          37,589,838           -
Price Obligation, net of
current portion
King's Gaming
Acquisition-Contingent Purchase         -                   9,000,000
Price Obligation, net of
current portion
Total Liabilities                       163,566,230         161,400,764
                                                                             
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 500,000,000 shares;
60,039,724 issued and
outstanding at September 30,             6,003                4,118
2013, and
Authorized 200,000,000 shares;
41,177,217 issued and
outstanding at December 31,
2012, respectively.
Additional Paid-in Capital               128,625,096          69,670,922
Retained Earnings                        147,787,451          145,828,260
Accumulated Comprehensive               437,997             562,941
Income
Total Shareholders' Equity              276,856,547         216,066,241
TOTAL LIABILITIES AND               $    440,422,777       $  377,467,005
SHAREHOLDERS' EQUITY
                                                                             
* Derived from the audited financial statements for the year ended
December 31, 2012.

                                     
                                                                             
                                         Cash Flow Information For the Nine
                                         Months Ended September 30,
                                         (Unaudited )
                                         2013              2012
                                                                             
Net cash provided by operating           $ 54,547,063        $ 45,067,313
activities
Net cash (used in) investing             $ (10,065,083 )     $ (15,146,032 )
activities
Net cash (used in) financing             $ (33,474,790 )     $ (19,333,497 )
activities
Net increase in cash and cash            $ 11,007,190       $ 10,587,784  
equivalents
                                                                             

Non-GAAP Financial Measures

Our calculation of Non-GAAP income (operating income before amortization of
intangible assets and change in fair value of contingent consideration) and
Non-GAAP EPS for the three and nine months ended September 30, 2013 and 2012
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 complete picture
of our operations for the entire period and is more accurately comparable to
the prior-year period. Notwithstanding the foregoing, 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                    For
                                   the Three              the Three
                                   Months Ended           Months Ended
                                   September 30, 2013     September 30, 2012
                                                                             
Net income attributable to         $   6,929,444          $   22,643,440
ordinary shareholders
                                                                             
Amortization of intangible             4,118,058              1,655,700
assets
                                                                             
Change in fair value of               (945,943    )         (9,352,152  )
contingent consideration
                                                                             
Non-GAAP income (before
amortization of intangible
assets                             $   10,101,559        $   14,946,988  
and change in fair value of
contingent consideration)

                                                 
                             For the Three             For the Three
                             Months Ended              Months Ended
                             September 30, 2013        September 30, 2012
                             Basic      Fully         Basic      Fully
                                         Diluted                   Diluted
                                                                             
Earnings per share
attributable to              $ 0.11      $ 0.11        $ 0.49      $ 0.49
ordinary shareholders
                                                                             
Amortization of                0.06        0.06          0.04        0.04
intangible assets
                                                                             
Change in fair value
of contingent                 (0.01 )    (0.01 )      (0.20 )    (0.20 )
consideration
                                                                             
Non-GAAP Earnings per
share (before
amortization
of intangible assets         $ 0.16     $ 0.16       $ 0.33     $ 0.33  
and change in fair
value of
contingent
consideration)

                                                    
                                   For                    For
                                   the Nine               the Nine
                                   Months Ended           Months Ended
                                   September 30, 2013     September 30, 2012
                                                                             
Net Income attributable to         $    10,904,568        $  60,008,912
ordinary shareholders
                                                                             
Amortization of intangible              9,095,512            4,192,535
assets
                                                                             
Change in fair value of                14,535,257          (15,246,583  )
contingent consideration
                                                                             
Non-GAAP income (before
amortization of intangible
assets                             $    34,535,337        $  48,954,864   
and change in fair value of
contingent consideration)

                                             
                          For the Nine Months      For the Nine Months Ended
                          Ended                    September 30, 2012
                          September 30, 2013
                          Basic      Fully        Basic          Fully
                                      Diluted                      Diluted
                                                                             
Earnings per share
attributable to           $  0.21     $  0.21      $  1.31         $ 1.31
ordinary
shareholders
                                                                             
Amortization of              0.18        0.18         0.09           0.09
intangible assets
                                                                             
Change in fair
value of contingent         0.28       0.28        (0.33  )      (0.33 )
consideration
                                                                             
Non-GAAP Earnings
per share (before
amortization of
intangible assets         $  0.67     $  0.67      $  1.07        $ 1.07  
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