Catena Media is anticipating 2019 fourth quarter declines, with an impairment of intangible assets, adoption of IFRS 9 accounting assumptions and an exceptional revenue adjustment in the US expected to impact figures.
The firm foresees operating revenue to drop slightly to €27.1m (2018: €27.3m), impacted by an exceptional adjustment of €500,000 related to previous periods. Reported revenue is estimated at €26.6m (2018: €27.3m), adjusted EBITDA is pencilled in at €11.8m (12m) and EBITDA is expected to finish at €8.5m (2018: €12m).
Operating loss is estimated to come in at €27.3m, as opposed to a profit of €9.4m a year earlier, affected by a non-cash effect from impairment testing of intangible assets, resulting in a write-down of €32.1m.
The total write down of intangible assets are €17.9m from Catena Media’s financial services sector, €13.2m from casino and €900,000 from sports.
Regarding the former, it is said that the financial assets, primarily conducting business within the European Union, were acquired during 2017–2018, with “several events” occurring since that has reduced trading opportunities across the region.
A €13.2m and €900,000 in casino and sports write downs follows a pair of strategic reviews, which saw assets, primarily consisting of revenue-share accounts, having been reclassified as inactive products where no further investments will be made.
Per Hellberg, CEO at Catena Media, 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.”
Regarding it’s 29.1 per cent EBITDA decline, Catena asserts contributing factors are:
- IFRS 9 requirements and the recognition of impairment losses, regarding which the company states it has taken “a conservative approach in relation to the assessment of bad debts,” resulting in an exceptional adjustment when implementing an assessment model during the period. Based on assumptions and judgements regarding relevant data points and the effect on future expected receivables, a negative effect of €2.7m in anticipated.
- Adjusted revenue numbers from one operator in the US in the state of Pennsylvania yielded an exceptional revenue adjustment related to previous periods, negatively affecting revenues and EBITDA by €500,000. In a media release it was said that the adjustment was related to one single operator adjusting historical numbers of qualified online leads due to customers already existing in the online registered database from previous land-based gaming activities.
