Nasdaq-listed Entertainment Gaming Asia Inc on Thursday reported second quarter revenue of US$2.3 million, down by 53.7 percent from US$4.9 million a year earlier. The firm posted a net loss of US$799,000 for the three months to June 30, compared to net income of US$1.4 million in the prior-year period.
Entertainment Gaming Asia reported adjusted earnings from continuing operations before interest, taxation, depreciation and amortisation of US$532,000 for the period, down 81.1 percent from the second quarter of 2015.
The company said the decline in revenue was due to “lower average revenue per unit per day” in the company’s electronic gaming machines (EGMs) deployed at NagaWorld, a casino resort in Cambodia’s capital Phnom Penh, operated by NagaCorp Ltd.
Entertainment Gaming Asia said it had amended the lease agreement with NagaWorld to a fixed fee compared to the prior revenue sharing arrangement. As such, average revenue per unit per day for the entire EGM leasing business stood at US$36 in the second quarter of 2016, compared to US$131 in the prior-year quarter.
The fixed lease operations at NagaWorld commenced on March 1, 2016, and ended on June 30. In July, Entertainment Gaming Asia announced it was selling all 670 of its EGMs placed in NagaWorld to a third-party for a total consideration of US$2.5 million.
Entertainment Gaming Asia’s business activities include leasing EGMs to the gaming industry in Asia. The firm said in July that it would continue its EGM leasing operations in two venues in Cambodia and two venues in the Philippines.
Until recently, the company also manufactured and distributed gaming chips, gaming plaques and related products. In May the firm sold that business to casino currency and table games equipment firm Gaming Partners International Corp.
“While our exit from the gaming products business in the second quarter and two EGM leasing contracts as of June 30, 2016 will have a negative impact on our near-term potential earnings, these transactions provide us a total of approximately US$10 million in cash, excluding the potential for earn outs on certain gaming chip and plaque sales,” said Clarence Chung Yuk Man (pictured), chairman and chief executive of Entertainment Gaming Asia, in a statement accompanying the firm’s results announcement.
Mr Chung said the company would now focus on developing an online social casino platform for the Asian market.
“We expect to commence initial testing in a single market in Asia in the third quarter of 2016,” said the firm’s chairman. “We have developed this free-to-play, mobile, social games app for the Pan-Asian market and intend to monetise it through the in-game-sale of virtual coins that allow players to extend play time or accelerate their progress,” he added.
Casino investor Melco International Development Ltd – a company controlled by Lawrence Ho Yau Lung – is the controlling shareholder of Entertainment Gaming Asia.
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