Catena Media expects that it will make an operating loss for the final quarter of 2019, it has revealed.
The super-affiliate said that this was due to the impact of intangible assets, adopting IFRS 9 accounting assumptions and exceptional revenue adjustments in the US.
The extent of losses
According to Catena Media, operating revenue is expected to drop to €27.1 million. In Q4 2018, this figure stood at €28.3 million. This is due to the impact of of an ‘exceptional adjustment’ amounting to €500,000, from previous periods.
Meanwhile, projected revenue is projected to hit €26.6 million (2018: €27.3 million). Adjusted EBITDA is expected to be €11.8 million (2018: €12 million) and EBITDA is foreseen to finish at €8.5 million (2018: €12 million).
But it’s the operating loss that is expected to be significant. Catena believes that this will be €27.3 million, compared to a €9.4 million profit in 2018. The figure will be affected by a write-down of €32.1 million, which was the result of a non-cash effect from the impairment testing of intangible assets.
Per Hellberg, Catena Media CEO, spoke about the predicted financial results in more depth. His words were as follows.
“The write-downs are related to earlier acquired assets that are not performing in line with the rest of our portfolio, as well as to past contractual decisions. Excluding the non-recurring items, our underlying business developed much like we expected for the fourth quarter.”
Explaining the EBIDTA drop
Catena Media explained what caused the likely EBIDTA decline of 29.1%. The company said the following.
IFRS 9 requirements and the recognition of impairment losses: “A conservative approach in relation to the assessment of bad debts”. This has resulted in an exceptional adjustment, when implementing an assessment model during Q4 2019. It’s expected to have a negative effect of €2.7 million.
Adjusted US revenue numbers: Compared to previous periods, one operator in Pennsylvania performed an exceptional revenue adjustment. This negatively affected revenues and EBIDTA by €500,000.
In an official media release, it was mentioned that this operator adjusted historical numbers of qualified online leads. This was because of customers already existing in the online registered database, due to previous land-based gaming activities.