Serving Emerging Gaming Markets in Asia August 2015 NASDAQ Listed EGT
Disclaimer Safe Harbor Statement 2 Forward Looking Statements: This presentation contains forward-looking statements concerning Entertainment Gaming Asia Inc. (the Company ) within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Those forward-looking statements include statements regarding expectations for the Company s slot operations business model, growth of the gaming industry in Asia, the Company s ability to secure new gaming projects and fund those projects, expectations for the increasing profitability of the Company s gaming chips and plaques operations and expectations for expanding its business model to new gaming platforms and markets. Such statements are subject to certain risks and uncertainties, and actual circumstances, events or results may differ materially from those projected in such forward-looking statements. Factors that could cause or contribute to differences include, but are not limited to, risks related to the Company s ability to: place gaming machines at significant levels and generate the expected amount of net win from the gaming machines placed; identify and implement successful marketing and promotional strategies for the Company s gaming projects and identify and successfully develop additional projects; acquire additional capital as and when needed; identify and implement successful marketing and promotional strategies and obtain and fulfill significant purchase orders from the customers for the Company s gaming chips and plaques; successfully improve manufacturing processes and enhance production efficiencies for the Company s gaming chips and plaques; adapt to potential changes in gaming policies and political stability in the countries in which the Company operates and those other risks set forth in the Company s annual report on Form 10-K for the year ended December 31, 2014 filed with the SEC on March 26, 2015 and subsequently filed quarterly reports on Form 10-Q. The Company cautions readers not to place undue reliance on any forward-looking statements. The Company does not undertake, and specifically disclaims any obligation to update or revise such statements to reflect new circumstances or unanticipated events as they occur.
Who Are We? Company Profile 3 Gaming company focused on emerging gaming markets in Asia Listed on NASDAQ Capital Market under symbol EGT Market Capitalization of approximately $33 million (as of August 7, 2015) An indirect, majority-owned subsidiary of a leader in Asian gaming, Melco International Development Limited (HK:200), which through its subsidiaries owns interests in major gaming, hotel and resort properties and projects in Macau, the Philippines and Russia Headquartered in Hong Kong with gaming operations in Cambodia and Philippines and manufacturing facilities in Hong Kong
Who Are We? Increased Ownership by a Successful Group 4 Melco International Development Group (HKEx:200) 34.2% 64.8% 16.7% 40.7% 86.7% 5.0% Melco Crown Entertainment Limited (NASDAQ: MPEL) Entertainment Gaming Asia (NASDAQ: EGT) Mountain China Resorts (TSX.V: MCG) MelcoLot (HKEx:8198) Jumbo Kingdom Orient Regent City of Dreams Premium Mass Market Altira Macau VIP Market Russia Gaming Business Catering Business Mocha Grind Mass Market Planned Studio City Mass Market Slot Participation & Management and Gaming Products Ski Resort Business Lottery Business Melco Crown Philippines In November 2014, Melco increased its stake in EGT from 38.0% to 64.8% Gaming Business
Multiple Businesses to Drive Growth 5 Slot participation in Cambodia and the Philippines Over 1,550 slots in operation in a total of six venues Where permitted, slots operate under our Dreamworld brand Gaming Operations Multiple Divisions to: Best capitalize on opportunities & Ensure multiple revenue streams fuel growth Gaming Products Manufacture, sell and distribute Dolphin casino currency products to major casinos in Asia and Australia Distribute thirdparty gaming products in our markets New Businesses Exploring new business opportunities
Cambodia Gaming Operations 6 Indochina region (comprises Cambodia, Laos, Thailand and Vietnam) has combined population of over 180 million Favorable economic and tourism trends GDP Tourism 2015 2015-20 2014 2011-14 Country (in bns) CAGR (in mms) CAGR Cambodia $17.8 9.0% 4.5 16.0% Laos $12.8 8.8% 4.2 15.1% Thailand $386.3 5.5% 24.8 8.8% Vietnam $204.5 8.8% 7.9 9.4% Our operations Three venues with a total of over 1,000 slot machine seats in operation Dreamworld Poipet Thansur Bokor NagaWorld Average daily net win per seat for 1H 2015 of $147 Data sources: Population: IMF World Economic Outlook Database, April 2015, 2015 projections; GDP: IMF World Economic Outlook Database, April 2015 projections; Projections in current USD; Tourism: Respective countries departments of tourism projections
Cambodia Gaming Operations NagaWorld Hotel and Casino 7 7
Cambodia Gaming Operations 8 Property Description Owned by NagaCorp (HKEx:3918), NagaWorld is located in Cambodia s capital of Phnom Penh and is the largest integrated gaming resort in Indochina with consolidated revenues of $404 million in 2014 Caters to tourists and growing population of foreign passport holders in the area Contract Terms 670 slot machine seats in casino prime ground floor slot spaces Jointly manage our slots with NagaWorld and receive 25% of their average daily net win per seat and pay 25% share of the operating costs Daily cash collection of our revenue share Six-year duration, which commenced in March 2010
Cambodia Gaming Operations Thansur Bokor Resort and Casino 9 9
Cambodia Gaming Operations 10 Property Description Five-star resort developed by leading Cambodian hotelier, Sokha Hotels and Resorts, in the touristcentric Bokor Mountains in the Southern Kampot Province approximately three hours drive from Phnom Penh and two hours from the Vietnam border Contract Terms Approximately 70 EGM seats Jointly manage our slots with Sokha and receive 29% of their average daily net win per seat and pay 29% share of the operating costs Five-year duration, which commenced in May 2012
Cambodia Gaming Operations 11 Dreamworld Club Poipet
Cambodia Gaming Operations 12 Property Description Stand-alone slot hall (developed by us) to an existing casino in a prominent location in Poipet, a significant border crossing between Cambodia and Thailand approximately five hours from Phnom Penh and three hours from Bangkok by car Our casino owner partner is a division of ANCO Group, a major conglomerate in Cambodia with multiple hotel properties in the market Contract Terms Up to 300 slot seats Exclusive management control of the slot hall s development and business operation Receive 40% of the average daily net win per seat and pay 40% of the operating costs Five-year duration, which commenced in May 2013
Philippines Gaming Operations Population of over 101 million people and locals permitted to gamble Attractive economic and tourism growth GDP 2015: $308.0 billion 2015-2020 CAGR: 10.6% Tourism 2014: 4.8 million 2011-2014 CAGR: 7.3% Increasing competition due to development of integrated gaming resorts Focused on enhancing returns through targeted marketing programs to maintain and expand local customer base Our operations Three venues with total of over 500 slot machine seats in operation Average daily net win per seat in 1H 2015 of $67 13 Club Leisureworld, Pampanga Club San Pedro, Laguna Club Universal, Sta. Cruz Data sources: Population: IMF World Economic Outlook Database, April 2015, 2015 projections GDP: IMF World Economic Outlook Database, April 2015; Projections in current USD Tourism: Philippines Department of Tourism
Philippines Gaming Operations 14 Philippines Slot Clubs Property Descriptions Slot venues in greater Manila area targeting local players in their neighborhoods Venues owners typically local business men and government gaming regulator PAGCOR serves as the operator Typical Contract Terms Approximately 140 to 220 slot seats per location Revenue share of average daily net win per seat ranges from 15% to 35% Initial terms contract terms typically five years with renewal options
Gaming Products Operations Dolphin Products 15
Gaming Products Operations 16 Dolphin Products - One of a few manufacturers of traditional and RFID gaming chips and plaques Full suite of casino currency product offerings with leading-edge, currency grade security features Possess patents or patent applications for the manufacturing process of traditional and RFID gaming chips and plaques in certain countries including Australia, Macau and Singapore Expanding product line to provide incremental growth opportunities and ability to improve competitive positioning with customers High-security manufacturing facilities located in Hong Kong close to major customers and high-growth markets Dolphin is a highly-regarded brand in Southeast Asia and the Australia region with significant Company estimated market share and a prestigious customer base in markets including Macau, the Philippines, Cambodia, Australia and New Zealand
Gaming Products Operations 17 Future planned casino development in our markets presents opportunity Initial casino currency order for a new integrated gaming resort in Asia with approximately 200 table games to provide estimated revenue of approximately $2-3 million for traditional or $4-5 million with RFID plus recurring revenue from reorders Planned Casino Resort Projects Owner Country / Territory Total Investment (US$ Bil) Est. No. Tables* Expected Opening Melco Russia Summit Accent/Melco Int'l /Russian Investors Russia $0.7 65 Aug 2015 Studio City Melco Crown Entertainment Macau $3.2 150 Oct 2015 Wynn Cotai Wynn Macau Limited Macau $4.0 150-400 2016 Louis XIII Louis III Holdings Macau $1.1 60-70 2016 The Parisian Sands China Macau $2.7 150-400 2016 Manila Bay Resorts Tiger Resorts Leisure / Robinson's Land Corp. Philippines $2.0 500 2016 Crown Perth Expansion Crown Limited Australia $0.6 100 2016 MGM Grand Paradise MGM China Holdings Limited Macau $2.9 150-400 2017 SJM Cotai SJM Holdings Limited Macau $3.9 150-400 2017 Resorts World Manila Bayshore Travellers International Hotels / Genting HK Philippines $1.1 300 2018 NagaWorld Russia NagaCorp. Russia $0.4 100 2018 Crown Sydney Crown Limited Australia $1.3 120 2019 Sources: Respective company reports, news sources; Note: Bolded projects represent those developed by Melco/Crown group Note: Number of tables for Macau projects are subject to confirmation by the Macau government.
What s Next? Potential Growth Opportunities 18 Actively seeking new projects and growth opportunities Gaming operations Slot participation and gaming development as well as management contracts Targeting more established gaming markets in both existing markets where we have established relationships, market presence and brand equity and in new markets with high-growth potential Gaming products Initial orders for new casinos and gaming accessory distribution opportunities Exploring new business opportunities
Who s In Charge? Experienced and Respected Corporate Officers 19 Clarence Chung - Chairman and Chief Executive Officer Chairman and CEO since 2008 Strong financial and gaming industry experience Director of Melco International Development Limited (HKEx:200) and of Melco Crown Entertainment Limited (NASDAQ: MPEL) as well as chairman and president of Melco Crown (Philippines) Resorts Corporation (PM:MCP) Previously held positions of CFO, investment banker and M&A specialist Named in The Asian Gaming 50 in 2009-2010 and 2012-2014 by Inside Asian Gaming Major investor with 5.8% beneficial ownership Andy Tsui - Chief Accounting Officer Joined in July 2008 Over 12 years of financial accounting and management experience with U.S. listed companies
Who s In Charge? Industry Savvy Operations Team 20 Petrica Cozman Assistant Vice President, Cambodia Joined in December 2009 Brings extensive experience in slot machine technology and systems, surveillance systems and floor management, having held prior senior or management positions at Riviera Casino Bucharest, Carnival Corporation s Casino Division, Star Cruise Company and Bond Casino Panos Makridis - Senior Vice President, Gaming Products Joined in May 2013 Brings over 15 years of gaming experience, having held senior positions in various capacities at Crown Limited, Galaxy Entertainment Group and SHFL entertainment (Asia) Limited
How Have We Done? Financial Overview and Corporate Achievements 21 Progress in efforts to enhance the potential for our businesses Refined gaming operations strategy to focus on highestpotential opportunities Divested low-margin, non-gaming legacy business Removed overhang of long-time legacy litigation Restructured gaming products manufacturing facilities and initiated steps to improve production efficiencies Completed successful rights offering netting approximately $14 million in proceeds and making us an indirect majority-owned subsidiary of Asian gaming leader, Melco International Development Limited 1H 2015 FY 2014 FY 2013 Consolidated Revenue 15,919 22,362 21,555 Gaming Operations Revenue 8,924 16,364 18,131 Gaming Products Revenue 6,995 5,998 3,424 Adjusted EBITDA 5,699 5,080 7,127 Net Income/(Loss) from Continuing Ops 2,032 (2,506) (1,376) Period End Cash Balance 24,638 17,301 5,301 Period End Debt Balance - - - Note: Figures in US$ thousands and exclude discontinued operations
Why Invest? Betting on the Future 22 Operate in emerging Asian gaming markets Favorable economic trends and demographics Strong demand for gaming Multiple businesses to drive growth Slot operations offer recurring daily or monthly revenue model with attractive cash flow potential Gaming products business poised to capitalize on growth in casino development in our target markets Experienced management Respected senior management team with significant ownership Strong industry knowledge and relationships Improved financial flexibility Benefits of being a Melco subsidiary Substantially improved financial flexibility following successful rights offering in November 2014 Over $24 million in net cash as of June 30, 2015 Increased credibility in our markets Access to deep relationships and proven industry expertise Expanded potential pool of growth opportunities for existing operations and potentially for new businesses
Questions or Comments? We Want to Hear from You 23 Traci Mangini, SVP Corporate Finance Ph: (872) 802-4227 Email: tracimangini@egt-group.com