Olympic Entertainment Group freezes operations in Poland, exits market in Belarus (1)
The Polish subsidiary of listed Estonian casino group Olympic Entertainment Group AS (OEG), Casino Polonia-Wrocław sp. z o.o., halted its operations in Poland on Sept. 24 as the location-specific activity license of OEG's flagship casino in Warsaw expired on Sept. 23 and the casino had not received a new one.
"Due to the lack of a valid location-specific activity license, OEG is forced to freeze active operations in Poland from Sept. 24, but remains interested in continuing its operations on the Polish market and plans to participate in the upcoming public tenders for the licenses," the company told the stock exchange. "The main purpose of freezing the active operations is to minimize everyday costs and expenses."
Freezing the active operations of the Polish subsidiaries will result in an impairment of goodwill and assets in Poland with a book value in the range of 9-10 million euros and costs associated with freezing operations amounting to approximately one million euros.
The consolidated revenues and income of OEG's Polish subsidiaries amounted to 9.4 million euros and their operating profit to 500,000 euros in the first six months of 2016. In the first half of the year, the Polish operations made up 10 percent of the group's total revenue as well as four percent of its operating profit.
OEG will maintain up to 15 jobs in Poland during the period in which its operations are frozen. Current employees will be offered the chance to fill 50 vacant positions in the group's subsidiaries in other countries as well. Employment relationships with the remaining employees will be terminated in accordance with the law.
At the end of 2015, the company had one casino in Poland with 135 slot machines, 38 electronic roulette terminals, 25 gambling tables and four poker tables, and employed a workforce of 238.
OEG to exit Belarusian market
OEG is slated to exit the Belarusian market altogether due to inefficient operations caused by the macroeconomic situation as well as pooor prospects to increase profitability there.
The revenues and income of OEG's Belarusian subsidiary amounted to 200,000 euros and operating loss to 150,000 during the first half of 2016. During the same time period, Belarusian operations constituted 0.2 percent of the group's total revenue and income, the company told the stock exchange.
The liquidation of the Belarusian subsidiary will not cause the group any material impairment of assets or liquidation-related csts, which should amount to 100,000 to 200,000 euros.
OEG's revenue during the first six months of 2016 amounted to 92.4 million euros — 14 percent more than during the same period one year prior — while net profit decreased 17 percent to 9.8 million euros.