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TheStreet Open House

Asia Entertainment & Resources Ltd. Announces Fourth Quarter And Full Year 2012 Financial Results

Asia Entertainment & Resources Ltd. (“AERL” or the “Company”) (NASDAQ: 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 months and year ended December 31, 2012. All currency amounts are stated in United States dollars. Please refer to the Annual Report on Form 20-F that will be filed with the Securities and Exchange Commission on or about March 28, 2013 for the full audited financial statements and related disclosures for the year ended December 31, 2012.

Fourth Quarter 2012 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 December 31, 2012 was $4.1 billion, a decrease of 27% compared to $5.6 billion for the three months ended December 31, 2011
  • Net income, including the change in fair value of contingent consideration of $0.1 million related to the King's Gaming and Bao Li Gaming acquisitions, decreased 38% to $10.1 million or $0.24 per share (fully diluted) in the fourth quarter of 2012 from $16.3 million or $0.38 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 acquisitions of King's Gaming and Bao Li Gaming was $12.6 million or $0.30 (fully diluted) for the three months ended December 31, 2012 as compared to income of $19.8 million or $0.46 (fully diluted) for the three months ended December 31, 2011. The decrease in Non-GAAP income was approximately 36%.
  • In the fourth quarter 2012, the Company repurchased and retired 1,011,600 shares at an average price of $3.15 per share. The Company purchased the maximum number of shares pursuant to its then-existing share repurchase program in the first quarter of 2013 and announced a new share repurchase program to purchase up to an additional four million of its ordinary shares on the open market at prices to be determined by the Company’s management. The program commences on the second business day after today’s release of the Company's financial results for the year ended December 31, 2012 and expires on December 31, 2013.

Full Year 2012 Highlights

  • Rolling Chip Turnover for the year ended December 31, 2012 in the Company’s VIP gaming rooms was $18.1 billion, a decrease of 9% compared to $19.9 billion for the year ended December 31, 2011.
  • Net income, including the change in fair value of contingent consideration of $15.2 million related to the King's Gaming and Bao Li Gaming acquisitions, decreased 9% to $70.1 million or $1.66 per share (fully diluted) in the year ended December 31, 2012 from $77.3 million or $2.00 per share (fully diluted) for the year ended December 31, 2011.
  • Non-GAAP income before amortization of intangible assets and the change in fair value of contingent consideration related to the acquisitions of King's Gaming and Bao Li Gaming was $61.6 million or $1.46 per share (fully diluted) for the year ended December 31, 2012, as compared to income of $76.1 million or $1.97 per share (fully diluted) for the year ended December 31, 2011. The decrease in Non-GAAP income was approximately 19%.

The decrease in net income and Non-GAAP income for the three months ended December 31, 2012 was due primarily to decreased Rolling Chip Turnover and a lower-than-average win rate for November and December of 2012. Revenue was previously generated by a fixed commission of 1.25% of Rolling Chip Turnover; however, beginning in September 2012, revenue began to be generated through sharing in wins and losses with the Casino Operators, which increases the volatility in the Company’s revenues.

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