Iao Kun Group Holding Co Ltd fka IKGH

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Latest Update of Iao Kun Group Holding Company Limited's Application with The Hong Kong Stock Exchange

HONG KONG, Feb. 11, 2015 /PRNewswire/ -- Hong Kong - Iao Kun Group Holding Company Limited ("Company") received a letter from the Hong Kong Stock Exchange (the "Stock Exchange"). Based on the information we provided to the Stock Exchange and the media reports, the letter indicates that, due to the declining financial performance of the Company, the unpredictability of the Company's revenues, the overall market conditions and the near term industrial outlook in Macau, and certain related party payments made to Pak Si (as already disclosed in the Company's public filings), the Stock Exchange is unable to proceed further with the Company's listing application at this time.

Notwithstanding the decision of the Stock Exchange, the Company is financially sound, with a track record of profitability. In connection with its listing application, the Company's financial statements were audited by two well-known global auditors. The management is of the view that the declining financial performance is a temporary setback primarily resulting from slow economic growth in Mainland China, the tightening of our credit extension policy, and the anti-graft campaign launched by the Chinese government in 2014.

While the Group's Non-GAAP income decreased from US$76.1 million in 2011 to US$61.6 million in 2012 and further decreased to US$31.0 million in 2013, the Group's gross gaming revenue remained relatively constant throughout this period (approximately US$250.6 million in 2011, US$236.3 million for 2012 and US$236.9 million for 2013, with an estimate of US$230.0 million for 2014). Overall, Macau VIP gaming revenue decreased by 11% in 2014, and the Company only had a slight decrease in gross gaming revenues of approximately 3%. The Company is still committed to the Macau VIP gaming segment, is in compliance with all relevant laws and regulations and believes that it is among the most financially healthy gaming promoters in Macau.

The Company has sustainable cage capital and a track record of collecting markers receivable, with no record of bad debt expenses in respect of gaming credits granted by the Company. While our reported rolling chip turnover in the last quarter of 2014 decreased by 34.6% compared to the last quarter of 2013, this was mostly attributable to the win rate, which was 3.95%. If we use an industry average win rate of 3%, our normalized rolling chip turnover for the last quarter of 2014 would have increased by 7.9% and this compares favourably to a decrease of 29% for the overall VIP gaming sector in the last quarter of 2014 in Macau.

The management is committed to explore further business expansion opportunities, including but not limited to finding VIP rooms in new locations and strategic investments, in order to maximize the shareholders' return in due course.

Although we were hoping that listing on the Stock Exchange would increase and diversify our shareholder base, we are committed and will strive to achieving those objectives even without such a listing. We believe that our listing on the Nasdaq Stock Market provides us with a suitable platform for achieving those goals.

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