On Friday, IKGH filed tis Q4 and FY15 earnings report, which showed Q4 net income of $12.2m, up from $5.7m in Q4 2014, despite VIP turnover falling 57% year-on-year to $1.2b.
However, IKGH’s income improvement was largely due to a $15.4m positive change in fair value of contingent consideration related to its acquisition of the King’s Gaming, Bao Li Gaming and Oriental VIP Room operations. Absent this impact, net income would have fallen from $8m to just $0.9m.
As previously reported, IGKH’s VIP turnover fell 61% to $6.4b in 2015. Net income for the year came to $5.1m compared to a net loss of $60.1m in 2014. However, excluding those pesky contingent consideration impacts, IKGH’s 2015 net income fell nearly by half to $9m.
IKGH chairman Lam Man Pou noted that 2015 had been “difficult” and warned that the company’s expectation was that 2016 “will also be a challenging year for VIP gaming in Macau.” Turnover in the first two months of 2016 was down 44% and the company is projecting total turnover at its five Macau VIP rooms will range from $3.5b to $4.5b in 2016.
To help offset Macau’s ongoing sluggishness, Lam said IKGH would continue to pursue VIP opportunities in markets beyond Macau. The company launched its first non-Macau operations in 2015 following a deal with Australian casino operator Crown Resorts last April.
However, IKGH declined to offer much in the way of specifics on its dealings at Crown Melbourne and Crown Perth, saying only that it continues to treat the business as “trial” meant to educate IKGH on the Aussie casino market. IKGH director James Preissler did reveal that the Aussie operations “generated nominal revenues equal to our costs[s].”