September 24, 2020

Codere loses 178 million until June after reducing its income by 55% due to the closure of rooms during confinement



The Spanish gambling group Codere lost 178 million euros in the first semester, which multiplies by 7.4 the red numbers of the same period of 2019. A good part of the losses were the consequence of the mandatory temporary closures of establishments due to the health crisis of the coronavirus, which caused a 55% cut in revenue in the first half, to 318 million, and a net loss of 80.5 million in the second quarter alone. The effect of the exchange rate against the dollar also weighed, with an impact of 46 million in the semester.

The Madrid multinational betting company explained this Wednesday to the National Securities Market Commission (CNMV) that until June its adjusted gross operating profit (Ebitda) decreased by 141 million (90%), to 17 million, “due to the closings temporary operations of face-to-face operations that affected all the company’s markets “.

“In terms of capacity, as of June 30, the company had 30% operating machines compared to 2019 (17,176 units). The number of operating gambling halls in the period was 13, along with 68 sports betting venues and 8,847 bars “.

Codere, which during the second quarter only had “some businesses open in May (Uruguay racetracks) and June (Italy and Spain venues)”, says that “it has already reopened all of its operations in Spain, Italy and Uruguay, and partially in Mexico and Colombia. ” “In most cases,” establishments are operating “above initial expectations,” says the group, which manages more than 57,000 slot machines, 30,000 bingo seats and about 8,500 betting terminals in Latin America, Spain and Italy through points of sale that include 148 gambling halls, 1,200 arcades, 9,200 bars, 245 betting halls and 4 racetracks.

Regarding the online business, Codere explains that “it kept revenues flat compared to the first half of 2019, due to the lack of relevant sporting events during this period.” This leg, whose first market is Spain, contributed 13.8 million in turnover, 7.3% less. The group acknowledges that it was “affected” by the ban on advertising for the game during the state of alarm.

In Spain, the group’s total net operating income plummeted in the second quarter, coinciding with the state of alarm, by 88.5%, to 5.5 million.

“Confidence in the improvement of the scenario”

Codere, which has adjusted the 2019 figures to correct the accounting inconsistencies confirmed in November 2019 in some of its Latin American markets, says it is “confident in the improvement of the international scenario” and acknowledges that the impact of COVID-19 on its business “has been very significant.” Faced with the health emergency, the group launched a contingency plan “to preserve its liquidity and guarantee business continuity, achieving a significant cost reduction of 74% in the second quarter”, with a cut in personnel expenses for the 56.1% in that period and the presentation in Spain of an ERTE that is still partially in force.

Likewise, Codere resorted to the search for additional liquidity to face the closures and in July it reached a refinancing agreement with more than 80% of its corporate creditors. As of June 30, 2020, Codere, whose debt is around 1,000 million, had 74 million in cash, improving its liquidity position at the end of July, after receiving the first 85 million euros of new financing.

The group recalls that the remaining 165 million “are subject to certain modifications to the existing bonds being fulfilled, and the company expects to receive them in October once the scheme of arrangement procedure initiated in the English Court on September 3 is completed.” With this agreement, it hopes to extend the current maturities of its debt by two years, until 2023.

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