Spanish gaming operator Codere is bidding buh-bye to its Latin American boss after determining that the ‘inconsistencies’ it recently uncovered in its LatAm operations were “intentional.”
Last month, the Madrid-based Codere warned investors that it would have to restate its H1 earnings after its internal control procedures “detected inconsistencies in the financial reporting of some of its Latam subsidiaries during 2019.”
Codere originally warned that its full-year earnings could fall by around €20m as a result of this hiccup. Last week, the company released its Q3 financial report, which clarified that the negative earnings impact over the first half of 2019 amounted to €16.5m, with Mexico responsible for €14.8m of this reduction, another €1.3m blamed on Colombia and €400k on Panama.
On Monday, Codere informed Spain’s Comisión Nacional del Mercado de Valores (CNMV) that “these inconsistencies were intentional, coordinated by a small number of people in Mexico.” The individuals at the heart of this knavery did their dirty deeds by overstating revenue and understating costs, all of which Codere insists was done “without the knowledge of the Madrid Corporate Office.”
Since uncovering this chicanery, Codere insists that it’s tightening its internal controls and is also planning “relevant corrective decisions in disciplinary matters” for those responsible, despite claiming that neither the company nor its third-party auditors had discovered “any evidence of inappropriate usage or loss of cash.”
In October, Codere temporarily suspended Carlos Villaseca, who formerly headed up the company’s Mexican operations but was given responsibility for all LatAm business in January 2018. Last week, Spanish media reported that Villaseca (pictured) had been offered a €1m payout over the next 2.5 years with a non-compete clause if he chose to pull the executive ejector lever but would be summarily dismissed if he held out for more.
CODERE Q3
Codere reported revenue of €343.4m in the three months ending September 30, down 3.6% year-on-year, while adjusted earnings were down 11.5% to €62.6m.
Codere’s formerly mainstay Argentina operations saw revenue slide 12.6% to €80.6m – although revenue would have risen nearly one-quarter to €122m absent the devaluation of the Argentine peso – while earnings were off 13.7% to €19.7m. Codere has been steadily reducing its Argentine profile, and now boasts the lowest exposure in the company’s history (27% of earnings).
Italy was the biggest contributor to Codere’s Q3, with revenue up 4.1% to €82.6m although earnings slid 16.2% to €5.4m as that country continues to put the squeeze on operators.
Codere’s Mexican operations saw revenue fall 6.5% to €75.9m while earnings fell by more than one-fifth to €19.8m. The Spain unit saw revenue fall 2.4% to €46m but earnings rose 19.3% to €9.7m. Revenue from Panama was down 8% to €19.7m while Uruguay broke the negative narrative, as revenue rose 3.7% to €14.1m.
Codere now breaks out its online operations as a distinct unit that reported revenue up more than one-third to €15.6m, of which Spain accounted for €10.7m, while earnings tripled to €3.5m. Sports betting accounts for over two-thirds of online revenue.
For the year-to-date, the ranks of active Spanish online sports bettors jumped 27.7% while online casino improved 36.3%. In Mexico, active sports bettors spiked 42% while online casino players more than doubled.
