Nasdaq-listed gaming supplier Entertainment Gaming Asia Inc reported consolidated revenue from continuing operations of US$357,000 for the fourth quarter of 2016, down 47.2 percent from the prior-year period. The company’s fourth-quarter revenue from continuing operations comprised only the Philippines gaming operations, the firm said in a filing on Monday.
The decrease in revenue was due to a reduced operating base of electronic gaming machines (EGMs) “as a result of the expiration of an EGM leasing agreement with Leisure World VIP Slot Club on June 30, 2016 and lower average daily net win per unit due to increased competition,” said Entertainment Gaming Asia.
Selling, general, administrative and research and development expenses totalled US$2.3 million in the three months to December 31, compared to US$1.4 million a year earlier.
Entertainment Gaming Asia reported a net loss of US$6.7 million for the fourth quarter of 2016, compared to a loss of US$2.7 million in the prior-year period. “The fourth quarter of 2016 net loss included a net loss of US$4.3 million from the discontinued Cambodia gaming operations,” the firm said.
Entertainment Gaming Asia’s business activities include leasing EGMs to the gaming industry in Asia. The firm has been restructuring its business and sold last year its assets related to the gaming products operations and all the gaming assets in Cambodia.
Entertainment Gaming Asia said in December it had sold all of its gaming assets in Cambodia to the owner of Dreamworld Club Poipet, a standalone slot hall in an existing casino property in Poipet.
In October, the firm sold its 71 EGMs in Thansur Bokor Highland Resort, also in Cambodia, for US$250,000 in cash. In July, the company said it was selling all of its EGMs placed in NagaWorld to a third party for a total consideration of US$2.5 million.
Entertainment Gaming Asia previously also manufactured and distributed gaming chips, gaming plaques and related products under the Dolphin brand. In May last year the firm sold that business to casino currency and table games equipment firm Gaming Partners International Corp.
The company reported consolidated revenue of approximately US$2.0 million for the full year of 2016, a decrease of 26 percent compared to US$2.6 million in the prior year. Entertainment Gaming Asia reported a net loss of nearly US$9.7 million for the 12 months ended December 31, compared to income of US$820,000 in 2015.
“During 2016, we disposed of all of our gaming assets in Cambodia, certain gaming assets in the Philippines and the principal assets of the gaming products business,” said Clarence Chung Yuk Man (pictured), chairman and chief executive of Entertainment Gaming Asia, in a statement included in the firm’s results announcement
He added: “These sales have provided cash proceeds of US$10.3 million and the potential for earn-outs on certain gaming chip and plaque sales related to the now discontinued gaming products business. To date, we have received US$8.1 million of the sales proceeds and no earn-outs on gaming chip and plaque sales.”
Mr Chung said the reduced base of operations and the expenses related to the development of social gaming operations “have a negative impact” on the firm’s cash flow. “We currently have approximately US$32 million in cash and are exploring avenues to apply these resources,” he added.
Casino investor Melco International Development Ltd – a company controlled by Lawrence Ho Yau Lung – holds approximately 65 percent of Entertainment Gaming Asia. Melco International is the controlling shareholder of Asian casino developer Melco Resorts and Entertainment Ltd.
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