With a threat from NASQ regarding its low share price hanging over it, a bleak first quarter could spell difficult time ahead for Entertainment Gaming Asia.
It reported first quarter of revenue of US$4.9m, a decrease of 29 per cent compared to $6.9m in the first quarter of 2013 due to declines in both the gaming operations and gaming products divisions.
Gaming operations revenue, which comprised slot and casino operations, came in at $4.1m for the first quarter of 2014, down 25 per cent from $5.5m in the first quarter of 2013. The company recorded $3.9m in revenue from slot operations in the first quarter of 2014, down 12 per cent from $4.4m in the first quarter of 2013. The decline in slot operations revenue was primarily due to lower average daily net wins from NagaWorld and the Philippines. This decline was partially offset by incremental revenue from Dreamworld Poipet, which officially opened in May 2013, and improvement in average daily net wins from Thansur Bokor.
Dreamworld Pailin contributed $216,000 to total gaming operations revenue in the first quarter of 2014 compared to $1.1m in the prior year period. The decline was due to the company’s decision to stop using high-cost tour group promoters and to begin operating under a lower-cost leasing model for its table games during the third quarter of 2013.
Revenue from gaming products was $811,000 in the first quarter of 2014, a decrease of 43 per cent compared to $1.4 million in the first quarter of 2013. This included a $2.2m net loss from discontinued operations related to the March 2013 sale of the portion of its subsidiary Dolphin Products.
Clarence Chung, Chairman and Chief Executive Officer of Entertainment Gaming Asia, said: “The decrease in gaming operations revenue for the first quarter of 2014 was largely due to the decline in revenue from Dreamworld Pailin. While Dreamworld Pailin posted lower revenue, it also experienced reduced operating losses in the quarter. The decline in gaming operations revenue was also due to lower player traffic and average daily net wins in NagaWorld as a result of protests in Phnom Penh following the July 2013 elections and in the Philippines due to increased competition in the market.
“Our gaming operations benefited from incremental revenue from Dreamworld Poipet. While performance for this property was dampened due to the political unrest in Thailand, we continue to implement targeted marketing programs which have resulted in improvements in the quality of our player base.
“We are focused on improving the performance of our gaming operations despite the political tensions that impact certain of our markets. In April, our operations in NagaWorld achieved approximately $200 in average daily net wins. For gaming products, we are focused on enhancing production efficiencies and expect to achieve a normalised cost structure for this business this year. We have recently announced two meaningful new gaming chip and plaque orders in the Philippines for a combined total of over $4m. We believe that this, along with normal reorders from existing customers, provide an attractive pipeline for this division for the second half of 2014.
“We remain committed to our gaming development strategy and are actively seeking new projects in Indo-China and other growing gaming markets in Asia that have the potential to drive meaningful long-term growth for the Company. We seek to leverage our established presence and relationships to capitalize on growth opportunities in our target markets.”