Chinese lottery operator 500.com has reported its unaudited financial results for the second quarter ended June 30, 2020. The Q2 highlights show net revenues of RMB3.6m versus net revenues of RMB9.7m year-on-year. Operating loss was RMB52.3m compared with RMB138.3m year-on-year.
The firm also cited the impact of the temporary suspension of its Swedish business as a result of its Malta-based subsidiary The Multi Group (TMG) failing to renew its licence in the country.
TMG is, however, applying for a new licence and has submitted all of the relevant materials, said the firm.
All provincial sports lottery administration centres to which the company provided sports lottery sales services have suspended accepting online purchase orders for lottery products. The move was in response to the notice related to self-inspection and self-remedy of unauthorized online lottery sales, which was jointly promulgated by the Ministry of Finance, the Ministry of Civil Affairs and the General Administration of Sports of the People’s Republic of China on January 15, 2015.
In response to the self-inspection notice, on April 4, 2015, the company decided to voluntarily suspend all online lottery sales services. As a result of the provincial sport lottery administration centre’s decision to suspend accepting online lottery orders and the company’s voluntary suspension of all online sports lottery sales services in China, the company has not generated any revenue from these services since April 2015.
The company also reported that on July 1, 2020, it received an expected notice from the New York Stock Exchange Regulation stating that due to late filing it is not in compliance with the NYSE’s continued listing requirements under the timely filing criteria pursuant to Section 802.01E of the NYSE Listed Company Manual.
NYSE Regulation has notified the company that the NYSE will closely monitor the status of the company’s late filing and related public disclosures for up to a six-month period from the due date of the 2019 Annual Report. If the company fails to file its annual report and any subsequent delayed filings within six months from the filing due date, the NYSE may, in its sole discretion, allow the company’s securities to trade for up to an additional six months depending on specific circumstances, as outlined in Section 802.01E of the NYSE Listed Company Manual.
Net Q2 revenues of RMB3.6m represented a decrease of RMB6.1m or 62.9% from RMB9.7m year-on-year and a slight increase of RMB0.5m or 16.1% from RMB3.1m for the first quarter of 2020. Net revenues during the second quarter of 2020 primarily consisted of RMB3.m in revenue contribution from the company’s online lottery betting and online casino in Europe through TMG, which accounted for 83.3% of total net revenues.
The year-over-year decrease was mainly attributable to a decrease of RMB6.6m resulting from the temporary suspension of operations in Sweden.
The net loss attributable to 500.com was RMB86.3m for the second quarter of 2020, compared with net loss attributable to 500.com of RMB137.8m for the second quarter of 2019, and net loss attributable to 500.com of RMB36.8m for the first quarter of 2020.
The year-on-year decrease was mainly due to an impairment provision of RMB57.2m provided for goodwill during the second quarter of 2019, and a decrease of RMB37.1m in operating expenses due to cost reduction measures implemented by management. These were partially offset by a decrease of RMB6.1m in revenue and an impairment provision of RMB33.7m provided for the equity method investment in Loto Interactive Limited during the second quarter of 2020.
On the outlook 500.com said it does not expect to issue any earnings forecast until it receives clear instructions as to the resumption date of online sports lottery sales from the Ministry of Finance.