Macau VIP room gaming promoter Iao Kun Group Holding Co Ltd posted a sharp profit drop in the first quarter of this year. Net income went down to US$3.2 million, a fall of 54.3 percent from one year earlier, the Nasdaq-listed company said in a statement released on Thursday.
Iao Kun stated the decrease in net income was due primarily to “a net increase” to contingencies for some of its VIP rooms “due primarily to an increase in the forecasted rolling chip turnover performance”. Higher commissions, which jumped to US$55.1 million from US$42.7 million, also had a negative impact on the company’s bottom line.
Non-GAAP income – operating income before amortisation of intangible assets and the change in fair value of contingent consideration liability – was US$17.9 million, compared to US$15.3 million a year before.
Rolling chip turnover reached US$4.8 billion in the first three months of this year, an increase of 16 percent on year-on-year terms.
Iao Kun recorded revenue of US$79.9 million for the period, up by 24.2 percent. The growth was fuelled by a higher-than-normal win rate of 3.60 percent, as well as revenue derived from the acquisition of a new VIP room in June last year.
“Our overall strategy remains unchanged,” company chairman Man Pou Lam said in a statement. “We are committed to expanding our business presence in the Macau VIP gaming market and increasing our market share.”
The company is maintaining its 2014 rolling chip turnover guidance for its five existing VIP rooms of US$17 billion to US$19 billion. Iao Kun operates VIP rooms at StarWorld hotel-casino, Galaxy Macau, Sands Cotai Central, City of Dreams and Le Royal Arc casino.
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”Our own consensus is that any newcomers to this [junket] sector should be corporatised, and should be financially sound and able to commit a higher guarantee deposit”
Kwok Chi Chung
President of junket trade body, the Macau Association of Gaming and Entertainment Promoters