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MTG takes hit from write-downs and redundancy costs

Nordic digital media outfit MTG is to write-down SEK165 million (€39 million) of discontinued assets and will take a SEK190 million hit from additional write-downs and costs associated with a cost-cutting and redundancy programme initiated at the end of last year in its Q4 results.

The SEK165 million relates to the sale of Zoomin to Azerion that was completed at the end of October.

The slashing of costs and write-downs followed a strategic review of the group’s gaming activities that kicked off last October, which was extended to encompass esports.

As a result, esports unit ESL reduced its workforce in December, with redundancy costs of SEK35 million as it adopted a new “fit for purpose” operating model. A number of projects were abandoned, resulting in one-off costs of SEK12 million. ESL has also written off the value of a number of accounts receivable and legacy items to the tune of SEK34 million.

A review of gaming unit InnoGames has meanwhile resulted in the partial write-down of mobile game Warlords and the complete writedown of mobile game GodKings. In total, the game impairment and write down of asset value at InnoGames will amount to SEK 93 million.

MTG is also taking a charge of SEK17 million related to an operational efficiency programme at its headquarters.

In total, the one-off charges, comprising redundancy costs and impairment charges, reported in the Q4 numbers will amount to approximately SEK 190 million. MTG said it will generate annual savings of approximately SEK 90 million of which SEK40 million will be reinvested into ESL’s operations. The cashflow impact of the charge is expected to be approximately SEK52 million.

Modern Times Group, which combined digital assets and pay TV and free TV channels, split in two in 2018 to create the current MTG and Nordic Entertainment (NENT), which inherited the group’s TV and streaming activities.