Iao Kun revises Q2 net loss to US$125.8 mln

By
Kam Leong

Local junket operator Iao Kun Group Holding Company Ltd has revised its second quarter results to include a non-cash US$21.5 million (MOP172 million) provision for doubtful accounts, expanding its net loss for the three months to US$125.8 million.
‘After a further assessment by management of the collectability of markers receivable as of June 30, 2016, the Company believes there are approximately $21.5 million in markers receivable at an elevated risk of collectability,’ the firm said in an announcement last Friday.
In late September, the junket operator announced it had reported a net loss of US$104.4 million for the second quarter of the year, an increase of 338.7 per cent compared to losses of US$23.8 million for the same period of 2015. The quarterly net loss also included a one-time impairment of intangible assets amounting to US$93.7 million, Iao Kun said at that time.
Adding the provision for doubtful accounts, the Nasdaq-listed junket operator’s net loss for the first half of the year amounted to US$129.3 million, compared to the US$107.9 million reported at the end of September. The revised interim net loss also represents an increase of 1,829 per cent compared to US$6.7 million for the first half of 2015.
The junket operator mentioned in the September announcement that the expansion of net loss was due to ‘a reduction of players for VIP baccarat, consistent with the overall decline of VIP baccarat gaming revenue in Macau’.
For the first six months of the year, the company saw its total rolling chip turnover down by 48 per cent year-on-year to US$2.1 billion, down from US$3.9 billion one year ago.
Review
In fact, as its business in Macau decreases, the company claims it is conducting ‘a strategic review of operations,’ having closed four of its VIP rooms in the city in less than one month.
Currently, the operator is only left with one VIP room in the Special Administrative Region, located inside the City of Dreams property – run by gaming operator Melco Crown Entertainment Ltd – in Cotai.
The company is eyeing overseas opportunities, running gaming businesses in two Australian casinos, namely: Crown Perth Casino in Perth and the Crown Melbourne Casino in Melbourne.
The junket operator had also planned to acquire the Jeju Sun Hotel & Casino in South Korea from Philippine casino operator Bloomberry Resorts Corporation, but it announced at the end of last month that the deal had lapsed.