China’s temporary suspension of online sales has impacted DJI Holdings’ operating results and financial position in the first half of 2015.
UK-listed lottery technology supplier DJI Holdings plc has announced its unaudited interim results for the six months ending June 30, posting a 35.9% drop in net revenue to £2.1m from £3.4m in H1 2014.
The company also recorded gross sales of £86m, down 48% from £134.2m over the same period a year ago, with net loss up 47.8% year-on-year to £3.4m from £2.3m.
Despite the loss, DJI CEO Darren Mercer said that since the temporary suspension in March, the company has used the down-time to significantly improve its long term prospects by exploring new ways to work with provincial lottery partners to develop other revenue streams, both lottery and non-lottery; and to strengthen its position in the lottery sector to fully capitalize on the resumption of online lottery sales.
DJI has entered an agreement with Heilongjiang Sports Bureau (HSB) to establish a joint venture, which will include distribution of physical lottery products (via stores and scratch cards), the sale of online lottery products (B2B, B2C and mobile) and the sale of non-lottery services and products.
The new joint venture will be 40% owned by DJI and 60% by HSB, and intend to seek a listing on a New York stock exchange.
“The platform is scheduled for launch in November 2015, in partnership with three of China’s most popular websites with substantial customer bases, and is expected to make a significant contribution to the Group’s revenues before the end of 2015 and throughout 2016. As a result of this agreement, DJI is also now in discussions with a number of other provinces in China to enter into similar joint ventures and partnerships,” added Mercer.
DJI will provide funding of RMB20 million ($3.1m) cash to the joint venture and HSB will provide a further RMB 30 million.
“In addition to building a position where the Group is trading strongly outside of online lottery sales, we also continue to improve our technology and strengthen our ability to capitalize on the significant revenue opportunities that a better regulated Chinese lottery sector will bring when the temporary suspension of online trading is lifted and the market resumes,” added Mercer. “The progress that the Group has made in diversifying its activities and repositioning itself promises a very exciting six months ahead.”