Catena Media anticipates losses in the fourth quarter of 2019, with an impairment in intangible assets, the introduction of IFRS 9 accounting standards and an unusual change in sales projected to affect estimates in the US.
The organisation anticipates operating revenue to drop marginally to € 27.1 million (2018: € 27.3 million), affected by an unusual change of € 500,000 in relation to previous periods. The announced sales are projected at € 26.6 million (2018: € 27.3 million), the adjusted EBITDA is pencilled at € 11.8 million (12 million) and the EBITDA is expected to finish at € 8.5 million (2018: € 12 million).
The operating loss is estimated at € 27.3 million, compared with a profit of € 9.4 million a year ago, affected by a non-cash effect from impairment testing of intangible assets, resulting in a write-down of € 32.1 million.
The gross write-down in intangible assets is € 17.9 million from the financial services sector at Catena Communications, € 13.2 million from the casino and € 900,000 from sports.
About the former, it is said that the financial assets were acquired during 2017–2018, mainly conducting business within the European Union, with “several events” occurring since this has limited trade opportunities across the world.
A € 13.2 m and € 900,000 written down in casino and sports followed a pair of strategic evaluations that saw properties, consisting primarily of revenue-share accounts, being reclassified as inactive items where no more investments will be made.
Catena Media chief executive Per Hellberg explained: “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.”
With an EBITDA decline of 29.1 percent, Catena claims contributing factors are:
- IFRS 9 criteria and the identification of impairment losses, according to which the organisation has adopted a “conservative approach in relation to the assessment of bad debts,” resulting in an extraordinary change during the time of adopting an evaluation model. Based on assumptions and decisions about relevant data points and the impact on expected future receivables, the estimated negative effect is € 2.7 m.
- Adjusted revenue numbers from one US operator in the state of Pennsylvania yielded an exceptional revenue adjustment related to previous periods, which adversely affected revenues and EBITDA by € 500,000. In a media release it was said that the change was attributable to one single operator changing historical numbers of eligible online leads due to customers already existing from previous land based gaming activities in the online registered database.