Macau-based gaming product distributor Asia Pioneer Entertainment Holdings Ltd has issued a profit warning on expected losses of HK$32 million (US$4.1 million) for the year ended 31 December 2020.
According to a Friday announcement, Asia Pioneer’s final FY20 results will include a 51% year-on-year decline in revenue to HK$40.5 million (US$5.2 million) and a 63% fall in gross profit to HK$10.5 million (US$1.4 million).
The loss of HK$32 million is significantly wider than a loss of HK$1.7 million (US$220,000) reported in 2019, with the company pointing to a one-time write-off of finance lease receivables of approximately HK$22.8 million (US$2.9 million) after it was forced to terminate two finance lease agreements for the leasing of electronic gaming equipment (EGE) in May. The agreements were terminated after Siam Star Leisure Co, Ltd, which leased EGE from APE for use at a casino in Cambodia, and GLIMEX Inc, which did the same for a casino in the Philippines, failed to pay lease rental.
COVID-19 also played its part, with Asia Pioneer stating the global pandemic had “adversely affected the operations of land-based casinos, leading to a weaker demand for technical sales and distribution of electronic gaming equipment of the Group.
“It is expected that revenue from technical sales and distribution of EGE, consulting and technical services, and repair services of our Group for the year would decrease by approximately 51%, 42% and 61%, respectively, as compared to those for the Previous Year.”
The company did, however, reveal it expects to record positive net operating cash flow of approximately HK$800,000 (US$103,000) for FY20, improved from negative cash flow of HK$2.7 million (US$350,000) in 2019, due to better management of trade receivables.
Asia Pioneer last year outlined plans to diversify its income stream by branching into sports entertainment, including the sponsorship and promotion of sports events and operation of sports entertainment venues in Macau.
