Q1’19 below ABGSCe

Efforts launched to manage risk in 2Entertain

IFRS 16 in effect

Q1’19 deviations vs. ABGSCe
Moment Group’s profitability in the quarter was pressured by 2Entertain’s venture in German language countries, the loss of Volvo Ocean Race as a customer, and by Kungsportshuset in Gothenburg. Pro rata sales were SEK 175m, which was 25.4% below our estimate of SEK 234.6m, and corresponded to a negative y-o-y growth rate of 24.9%. Reported EBIT was SEK -20m, corresponding to a negative EBIT margin of 11.4%. We had estimated an EBIT of SEK 5.4m and an EBIT margin of 2.3%. These results cause us to lower our estimates for upcoming years; please see the following pages for detailed estimate changes.

Focus on cost control
Moment is undergoing changes in order to address the pressured profitability in 2Entertain. 2Entertain’s operations in German language countries will now continue through a partnership with BB Promotion, which is one of Germany’s largest promoters and producers of musicals and shows. This will limit Moment’s overall exposure. A restructuring programme has been launched in order to lower fixed costs, specifically personnel and premises costs. This is expected to cut fixed costs by SEK 6m, or 14% of 2Entertain’s total fixed costs, and will be realised throughout 2019-20. A new programme for managing 2Entertain’s risk exposure has also been launched, explicitly to limit the risk in future musical and theatre productions.

IFRS 16 affecting reported figures
Moment adopted IFRS 16 as of 1 January 2019, and the new standard on accounting for leases affects several reported figures. IB debt increases by approximately SEK 439m, which in turn affects ND/EBITDA. This effect is somewhat offset by the increase in EBITDA, where management estimates an increase of SEK 50m for 2019 as depreciation of leased assets are recognised. Furthermore, the recognition of interest cost on the leased asset increases net financials. We believe that the changes are set to cause so
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