CATENA MEDIA INTERIM REPORT Q2 2016

SECOND QUARTER OF 2016
• Revenues totalled EUR 9.58 million (3.02), an increase of 217 percent compared with the same quarter for the previous year and an increase of 28 percent when compared to the previous quarter.
• Adjusted operating profit excluding non-recurring IPO expenses amounted to EUR 5.01 million (2.28), corresponding to an adjusted operating margin of 52 percent (75). Operating profit increased to EUR 5.07 million (2.24) corresponding to an operating margin of 53 percent (74).
• Profit before tax amounted to EUR 4.87 million (2.24) and excluding non-recurring IPO expenses totalled EUR 4.94 million (2.28).
• New depositing customers (NDC) totalled 47,530 (15,326), an increase of 210 percent compared with the same quarter for the previous year and an increase of 47 percent when compared to the previous quarter.
• Earnings per share amounted to EUR 0.08913 (0.04755).

FIRST SIX MONTHS OF 2016
• Revenues totalled EUR 17.04 million (4.98), an increase of 242 percent compared with the same period for the previous year.
• Adjusted operating profit excluding non-recurring IPO expenses amounted to EUR 9.17 million (3.46), corresponding to an adjusted operating margin of 54 percent (70). Operating profit increased to EUR 8.25 million (3.42) corresponding to an operating margin of 48 percent (69).
• Profit before tax amounted to EUR 8.70 million (3.43) and excluding non-recurring IPO expenses totalled EUR 9.61 million (3.47).
• New depositing customers (NDC) totalled 79,851 (25,176), an increase of 217 percent compared with the same period for the previous year.
• Earnings per share amounted to EUR 0.16401 (0.07520).

SIGNIFICANT EVENTS DURING THE SECOND QUARTER
• On 3 April 2016, Catena Media acquired the acknowledged and highly regarded affiliate website AskGamblers.com for a consideration of EUR 15 million. The transaction is the largest in Catena Media’s history. AskGamblers operates one of the markets’ most highly visited web portals for player reviews and rankings of online casinos. The company also provides players with the unique opportunity of trying online casino-related disputes via the portal. Players across Europe utilise AskGamblers.com with the UK being the company’s largest market. The transaction comprises all affiliate accounts, domains, mobile apps and social media accounts.
• On 2 June 2016, Catena Media acquired the player accounts and domains of one of the leading iGaming affiliates in Germany. The purchase price, maximised at EUR 6.5 million, comprises an upfront payment of EUR 3.5 million and an earn-out, based on the first-year revenue performance, of a maximum of EUR 3.0 million. To achieve the maximum earn-out, the seller needs to generate substantial revenue growth.
• On 19 June 2016, with an effective date of 1 July 2016, Catena Media continued to pave the way in becoming the leading iGaming lead generation group through the acquisition of the player accounts and domains of a Swedish sportsbook affiliate Spelbloggare.se. The purchase price amounted to EUR 2.50 million, with an additional earn-out of a maximum of EUR 2.50 million. For the maximum earn-out to be reached, the seller needs to generate substantial revenue growth.
• Catena Media has in recent weeks also launched its own sportsbook affiliate product in the UK. Through this launch and the acquisition of Spelbloggare.se, Catena Media made an entry into the sportsbook segment – a new vertical for the Group. 
• During the quarter, Catena Media also recruited key expertise to the Board of Directors. Kathryn Moore Baker, with extensive experience in building successful companies from an active board and Chairperson position, has taken over as Chairperson, while Mathias Hermansson, CFO with MTG Group for many years, has been elected to the Board. After the quarter, the management team was further strengthened through the recruitment of Owe Laestadius (CTO). Owe Laestadius has 15 years of experience in the iGaming industry, mainly in leading engineering roles at Betsson Group. Other recruitments were Anne Rhenman Eklund as Head of IR/Communication, Louise Wendel as Head of Legal and Nikola Teofilovic as the new General Manager for Serbia.
• Furthermore, Catena Media has begun preparations for a move from Nasdaq First North Premiere to the Stockholm Stock Exchange’s main list (Mid Cap). The work is proceeding according to plan.

CEO COMMENT

We grow bigger and stronger, day by day

Continued aggressive expansion and successful integration of acquisitions generated strong growth and solid second quarter results.

During the second quarter of 2016, the focus has been on further expanding Catena Media, both in terms of geographies and products. It has been an exciting and eventful period that included several new acquisitions, a new venture in the sportsbook segment, entry into the large German market and further reinforcement of both the management team and the Board of Directors. The high growth rate that has distinguished the company since its start in 2012 continues to be evident, with the normal second quarter negative seasonal effect – mainly within Paid revenue – only barely notable. In the second quarter, sales grew 217 percent compared to the same period in 2015 and 28 percent compared with the first quarter this year.

From a market perspective, the second quarter mirrored the European Football Championship, where casino was somewhat overshadowed by sports betting – a vertical where we are currently, a small but fast-growing player. In Paid revenue, particularly in sports betting, we have increased the amount of players on revenue share giving an inherent delayed effect, with the result of our efforts remaining to be seen moving forward. Regarding the development in the UK (Brexit), with a weakening of the pound sterling, we have noted no impact on our revenues but some positive effects on our operating profit.

Strategically important acquisitions
During the quarter, we made several strategic acquisitions that have broadened Catena Media’s offering, and thus opened up substantial, new opportunities for growth. The acquisition of AskGamblers.com, a major international brand with a strong community, comprises our biggest acquisition to date and a strategically important step for Catena Media. AskGamblers.com has a strong mobile platform and creates considerable possibilities for us to build a development centre with an attractive cost base. Furthermore, we have entered the sizeable sports betting segment through the acquisition of Spelbloggare.se, which was consolidated on the 1 July. We also launched our own sportsbook affiliate product in the UK. In addition, we have acquired the essential assets of a German affiliate company, which means that we have established ourselves in the large and important German market. These initiatives have enabled us to further strengthen our position as one of the leading players in lead generation in iGaming. We are pleased to note that the acquisitions we have made during the year have been integrated according to plan, with a clear revenue boost generated by the Catena technical platform. We will continue to work toward our vision through our proven model of acquisition with rapidly realised synergies combined with organic expansion.

Growth ahead, top recruitments and preparation for the main list
The Catena Media growth story remains solid. We have a positive outlook for the third quarter, with indications of growth in line with our financial targets. As we grow, we also have an increasing need for talented and experienced people, as well as additional capital, that can help Catena Media take advantage of the opportunities ahead and to the next step in our development. We are therefore pleased with the recently announced new recruitments to the Board and to management. These appointments have an added dimension as Catena Media has begun preparations for moving to the Stockholm Stock Exchange’s main list (Mid Cap) in 2017, for which the work is proceeding according to plan. In addition, we have started review the possibility to raise capital through a bond issue to continue to support the long term strategy of the Group.

Robert Andersson, CEO