VIP gambling room investor Iao Kun Group Holding Co Ltd said on Friday it had revised its second quarter results to include a non-cash US$21.5 million provision for doubtful accounts.
As a result, the firm’s net loss for the three months to June 30 – measured by U.S. generally accepted accounting principles (GAAP) – is now reported at US$125.8 million, or a US$1.99 net loss per share, compared to a net loss of US$23.8 million, or US$0.38 net loss per share, for the same period of 2015, Iao Kun said in a press release.
The net loss in the second quarter of 2016 includes a one-time US$97.3 million impairment of intangible assets, the firm added.
Nasdaq-listed Iao Kun had reported in September a second quarter net loss of US$104.4 million.
“After a further assessment by management of the collectability of markers receivable as of June 30, 2016, the company believes there are approximately US$21.5 million in markers receivable at an elevated risk of collectability,” Iao Kun said in Friday’s release.
In a separate filing to the U.S. Securities and Exchange Commission, the firm said it had taken into consideration factors such as “subsequent payment, nationality of junket agent, recent rolling record, past collection experience and fluctuation in the outstanding balance in the subsequent period”.
Iao Kun said the total of markers receivables in jurisdictions that may refuse to enforce such debts stood at US$52.3 million at the end of June. Three junket agents, individually, accounted for approximately 12 percent, 11 percent and 10 percent of markers receivable as of June 30, 2016, the firm added.
On a conference call on September 22 following the group’s second quarter results announcement, Iao Kun’s management said it had approximately US$159.3 million to collect in extended credit, including about US$40 million of doubtful accounts that were “over 180 days [old]”.
“It is reasonably possible that the company’s estimate of the allowance for doubtful accounts will change,” Iao Kun said in its Friday filing.
During the reporting period, Iao Kun’s VIP room gaming promoters and collaborators oversaw five VIP gaming facilities in Macau. But the firm announced on September 2 a “comprehensive strategic review” of its operations in Macau in order to “enhance its operating performance”.
Iao Kun has since shut down four of its promoted Macau VIP rooms. The junket group now only promotes a single VIP room in Macau, located at City of Dreams Macau, a property run by casino operator Melco Crown Entertainment Ltd.
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Amount that each Macau casino operator paid for the circa six-month extension of their respective contract