MTG to make annual savings and write down of assets
- MTG AB announces annual savings, redundancy costs and impairment charges as part of strategic review, operational efficiency programs and evaluation of gaming portfolio
- MTG AB to save approximately SEK 50 million annually at headquarter from earlier announced efficiency program. ESL to save approximately SEK 40 million from the implementation of a new operating model, that will be reinvested into its operations.
- The redundancy costs and write downs of assets in continued operations will amount to approximately SEK 190 million in its Q4 2019 results
- The cashflow impact of the charges are expected to be approximately SEK 52 million
- As part of discontinued operations MTG will report write downs amounting to SEK 165 million
STOCKHOLM, January 17th, 2020 01.30pm CET — Modern Times Group MTG AB (MTG) today announces annual savings and write down of assets. The company will book one-off charges related to redundancy costs and impairment charges at its headquarter and in group companies. This as an effect of the company’s ongoing strategic review, operational efficiency programs and evaluation of gaming portfolio.
The 29th of October 2019 MTG announced a strategic review of its gaming vertical. An operational efficiency program at the company’s headquarter was announced simultaneously and independent of the strategic review. During Q4 MTG has also reviewed its esport vertical. In total, this has resulted in the following one-off charges impacting the financial results for Q4 2019:
- ESL will report redundancy costs of SEK 35 million, as a result of the reduction on the overall workforce announced in December. The reduction is a part of the implementation of a new operating model to make ESL even more fit for purpose for the next phase of growth. Another part of the implementation has been to stop projects related to the former operating model, resulting in one-off costs of SEK 12 million. The new operating model will generate savings of SEK 40 million that will be reinvested into new ESL Pro Tours and new esport partnerships and products.
- As part of an internal review of ESL’s balance sheet, write off items of SEK 34 million have been concluded. The amount is related to accounts receivables and legacy items.
- As indicated in the Q3 2019 financial report, InnoGames has in Q4 conducted an assessment of their two games in soft-launch phase, Warlords and Godkings. As a result, the decision has been taken to partially write-down the mobile game Warlords and almost fully the mobile game GodKings. InnoGames continues to believe in the longer-term potential of Warlords but will operate the game differently going forward. Concerning GodKings, InnoGames will phase out the game completely while continuing to offer the game's services to the existing customer base. In total, the game impairment and write down of asset value at InnoGames will amount to SEK 93 million.
- The earlier announced MTG headquarter operational efficiency program will give rise to a one-off charge of SEK 17 million in Q4 2019. Expected annual savings amount to around SEK 50 million, of which approximately 75% will be realized in 2020 and 100% in 2021. The normalized targeted run rate for central operations cost will then be approximately SEK 100 million per year.
In total, MTG will report one-off charges, comprising redundancy costs and impairment charges, of approximately SEK 190 million as Items Affecting Comparability in its Q4 2019 financial results. This will in turn provide annual savings of approximately SEK 90 million of which 40 million will be reinvested into ESL's operations. The cashflow impact of the charge is expected to be approximately SEK 52 million.
As part of discontinued operations and in addition to the one-off charges mentioned above, MTG will report write downs amounting to SEK 165 million. The majority of this amount is related to the announced sale of Zoomin to Azerion announced and concluded October 28th 2019.
For more information:
Lars Torstensson, EVP Communications & Investor Relations
Direct: +46 (0)702-734 879, lars.torstensson (at) mtg.com
Oliver Carrà, Public Relations Director
Direct: +46 708 666 433, oliver.carra (at) mtg.com
Reach us: communications@mtg.com
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About MTG AB
MTG (Modern Times Group MTG AB (publ.)) (www.mtg.com) is a strategic and operational investment holding company in esports and gaming entertainment. Born in Sweden, the shares are listed on Nasdaq Stockholm (‘MTGA’ and ‘MTGB’).