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 second quarter and six-month periods ended June 30, 2012. All currency amounts are stated in United States dollars.
Second Quarter 2012 Highlights and Subsequent Events
- Rolling Chip Turnover for the three months ended June 30, 2012 in the Company’s VIP gaming rooms was $4.7 billion, up 8% year-over-year, compared to $4.3 billion in the same period of 2011.
- Net income, which includes a gain of $7.7 million for the change in fair value of contingent consideration related to the acquisition of King’s Gaming, grew 4% to $22.0 million, or $0.52 per share (fully diluted), in the three months ended June 30, 2012, from $21.1 million, or $0.54 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 was $15.6 million, or $0.37 per share (fully diluted), in the three months ended June 30, 2012 compared to $17.3 million, or $0.44 per share (fully diluted). for the three months ended June 30, 2011.
- On July 31, 2012, the Company announced that its Board of Directors established a new share repurchase program, which will expire on June 30, 2013. The share repurchase program authorizes the Company to purchase up to two million of its ordinary shares on the open market at prices to be determined by the Company’s management.
- On August 1, 2012, the Company announced that beginning on September 1, 2012, the Company would change its remuneration model to a revenue sharing model for all of its VIP rooms. Currently, all AERL rooms are under a fixed commission model of 1.25% of Rolling Chip Turnover.
- On August 6, 2012, the Company announced that it had entered into a non-binding memorandum of understanding whereby it would acquire Bao Li Gaming Promotion Limited (“BLGP”). The Company expects to close the transaction by September 30, 2012.
“For the year, the Chinese economy has experienced a gradual slowing, which caused us to tighten our credit to junket agents, thus affecting our results for the second quarter,” said Mr. Man Pou Lam (Mr. Lam), Chairman of AERL. “We believe that the Chinese government has been implementing policies that should result in renewed economic growth in the latter half of the year, which will allow us to return to a more normal credit policy, leading toward higher Rolling Chip Turnover. In addition, we believe our new revenue sharing model, which becomes effective September 1, will permit us to grow our commission base as a percentage of Rolling Chip Turnover and, with the impending acquisition of BLGP, further grow our Rolling Chip Turnover and help to reduce volatility. We are pleased to have the opportunity to add BLGP to the Asia Entertainment family and remain committed to growing our business presence in the Macau VIP gaming market and create value for our shareholders.”