Empire Online Limited Reports Results for Six Month Period Ended 30 June 2006
On October 18, 2006 BVI-registered company Empire Online Ltd has announced the results for the six months ended 30 June 2006. The main operating and financial highlights have shown the significant decline in net gaming revenues, which made $38.2m for the first half of 2006, while for the same period of 2005 they were $49.7m.
Such amount in 2005 to much extent arose from the Playtech licencees acquired in the second half of 2005. Playtech Ltd., which is also incorporated in the BVI, provides software for the Empire Online; the last one, in its turn, specializes in marketing services to the online gaming industry. Both companies were touched by the crisis in the US online gambling industry, which happened in the end of September and led to the plunging of the shares of the leading companies having business in this sphere.
This amount in 2006 was reduced because of the diminishing of Poker revenues due to the termination of Empire Poker following the settlement agreement with Partygaming plc in February 2006. Total casino revenues for the first six months of 2006 rose to $30.2m ($10.7m for the same period of 2005), while poker revenues fell from $39.0m in the first half of 2005 to $8.0m in 2006.
Gross profit for the first half of 2006 was $17.6m and constituted 46.1% of revenue, while for this period of 2005 it was $21.1m, or 50.3% of revenue. Gross profit margin has reduced due to the change in product offer towards casino activities. The company’s chief executive has noted in his statement to the report, that the normal slow down in trading activity which was seen in the second quarter of 2006, have been more pronounced if compared to the previous years, and in connection to this earnings growth for 2007 may become challenging.
The decrease of some positions reflected in the company report may be explained with the regulatory uncertainty which was always faced by the online gaming industry and has even increased due to the recent events. However, Empire Online Ltd. is one of the major London-listed online gambling companies, so it can also benefit from the new Internet Gambling Law.