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After a period of high growth and with listing on Nasdaq Stockholm accomplished, there now follows a consolidation phase

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INTERIM REPORT 1 January – 30 September 2018

ROLLING 12 MONTHS 01/10/2017 – 30/09/2018                    

  • Pro rata – sales: SEK 900.6 million (723.2)
  • Net sales: SEK 1,084 million (990.0)
  • Operating profit before depreciations (EBITDA): SEK 24.2 million (19.2)
  • Operating profit EBIT SEK 5.5 million (3.6)
  • Operating margin, pro rata: 0.6% (0.5%)
  • Operating margin: 0.5% (0.4%)
  • Earnings per share:  SEK -0.30 (0.18)

THIRD QUARTER 2018

  • Pro rata sales: SEK 148.8 million (130.9)
  • Net sales: SEK 170.2 million (146.1)
  • Operating loss before depreciations (EBITDA): SEK -25.3 million (-7.4)
  • Operating profit/loss EBIT: SEK -31.0 million (-11.3)
  • Operating margin, pro rata: -20.8% (-8.6%)
  • Operating margin: -18.2% (-7.7%)
  • Earnings per share: SEK -2.04 (-0.64)

A WORD FROM THE CEO

After a period of high growth and with listing on Nasdaq Stockholm accomplished, there now follows a consolidation phase

First of all, before presenting our statement for the third quarter, let us say how proud we are that the Moment Group share has been trading on Nasdaq Stockholm, Main Market since 18 October. Because such a listing is preceded by an extensive review process, our presence there is a seal of approval for the Group. It also increases Moment Group’s opportunities to participate in the market and drive ongoing efforts to becoming a leading player in its express goal of "Shaping the experience industry".

The Group’s third quarter

Because the third quarter is Moment Group’s low season with very limited operations, it is a quarter where losses are anticipated. However, this year the third quarter was weaker than usual in terms of earnings with an EBIT performance of SEK -31 million, which is SEK 19.7 million lower than the previous year. In principle, three factors explain the lower performance.

  • Increased exposure to seasonal variations: Compared to the previous year, the group has expanded and consists of three additional arenas – Ballbreaker, Kungsportshuset and Star. Arenas of this type have their low season during the third quarter and are closed for part of the period. Together, their operating losses affected performance by SEK -6 million during the third quarter.
  • Start-up costs for new businesses: During the year, the Group established operations in two new markets with 2Entertain in Germany and Wallmans Group in Gothenburg. These two operations are linked to start-up costs charged to the third quarter in the amount of SEK -6 million.
  • Furthermore, the exceptional summer weather in general subdued demand for the Group’s offerings in the units that were operating during the third quarter. Selling-in for the autumn season also got started later than anticipated, which creates challenging conditions for profitability in some of the autumn productions.

Adjusted for the above, the Group’s EBIT performance for comparable units is SEK 8 million lower than the previous year’s third quarter, of which a major part can be attributed to the effects of the above-mentioned weather.

We are now entering the fourth quarter where seasonal variations drive demand for our business and where the quarter’s performance will not be burdened by any start up costs. However, because we see certain challenges ahead concerning growth, we are taking a number of measures to improve profitability.

The Group’s growth presents challenges and contributes to profitability

Following a period of high growth during which Moment Group grew by a total of 28 per cent between the beginning of 2016 and the third quarter of 2018 on a rolling 12-month basis, our focus going forward will be to achieve profitability in our new establishments and develop implemented acquisitions:

  • New establishments take time and resources. The start-up of Kungsporthuset in Gothenburg is taking time as setting up a new arena in a new market is hard work. During the fourth quarter, Wallmans Group will carefully monitor developments to safeguard and evaluate the profitability in the start-up’s business model in order for it to achieve the same level of profitability as comparable arenas within VENUES. In LIVE ENTERTAINMENT, 2Entertain’s set-up in Germany is analysed on an ongoing basis, as it entails an exposure in a new market where 2Entertain does not yet have an established position. The first production in Germany is Flashdance, which is one of the biggest in 2Entertain’s autumn repertoire.
  • Acquisitions developing as anticipated Minnesota continues its excellent development and has exceeded the previous year’s outcome after three quarters. The recently acquired activity arenas, Star and Ballbreaker, will move to the IMMERSIVE EXPERIENCES business area to build on today’s strong positions and focus fully on developing to become the leading activity arenas in Sweden’s two biggest cities. In the 2017 financial year, the activity arenas had joint sales of SEK 110 million with an EBIT of SEK 18 million, which is an excellent platform for continued development.

Consolidation for increased efficiency

Seen on the basis of an adjusted rolling 12-month EBITDA performance it amounts to SEK 55 million, where the full effect of acquired profitability (pro forma) is included and pure start-up costs are excluded. In addition to the great attention the group pays to implemented new establishments, a number of other measures are being taken in our various business areas to increase efficiency.

Following Volvo’s announcement that it will no longer pursue the Volvo Ocean Race, the EVENT business area is reviewing Hansen’s operation, which will lead to an anticipated lower business volume moving forward. Also, the business area’s finance department will be coordinated and shared between Minnesota and Hansen, which will reduce overheads.

VENUES is being coordinated in a cost-effective joint structure in connection with the transfer of the activity arenas from the business area, which will entail a focus solely on dinner shows, night-life and major events. Furthermore, we will introduce investment limits in 2019, where only basic maintenance will be carried out in the arenas, as these are now in good condition after a period of investment backlogs. This will entail a significant reduction in assets.

The above changes entail cost savings totalling SEK 10 million on an annual basis and will also boost cash flow through the reduction in investments.

A position for continued development

Seen from the perspective of the latest rolling 12-months, the Group’s EBITDA performance was SEK 24.2 million (19.2), but as mentioned above, the adjusted EBITDA performance was SEK 55 million. We can note that Moment Group, on the basis of acquisitions performed, new establishments and the listing on the Nasdaq Main Market, has advanced its position in the industry. Together with the above-mentioned consolidation efforts with a focus on efficiency, good conditions are created overall for continued development within the Group in the experience industry.

Now we are looking forward to an autumn period during which the Group will work flat-out and I hope everyone makes sure they find occasions for shared experiences to enjoy in the murky winter darkness with family, friends and colleagues.

Gothenburg, 26 October 2018                                        

Pelle Mattisson
CEO Moment Group
pelle.mattisson@momentgroup.com

This disclosure comprises information that Moment Group AB is obliged to disclose according to the EU market abuse regulation. The information was submitted through the offices of the above-mentioned contact, for publication on 26 October 2018 at around 08:30 CET.

Moment Group is one of the leading players within the Nordic experience industry The Group creates experiences for more than 2 million guests every year. Moment Group operations are conducted in three business areas from offices in Gothenburg, Stockholm, Copenhagen, Oslo, Hamburg, Falkenberg and Växjö. The head office is located in Gothenburg. Moment Group is listed on Nasdaq Stockholm, Main Market and has bonds listed on the Corporate Bond List of Nasdaq Stockholm. Financial documentation, accounting policies, press releases, information about the operation and contact details are available at www.momentgroup.com.

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