Codere to investigate LatAm financial inconsistencies

8 October 2019

Codere has launched an investigation into inconsistencies in the financial reports of some of its Latin American subsidiaries for the first half of the year, which the operator has warned may reduce its full-year earnings by up to €20m (£17.9m/$22.0m).

A preliminary investigation has revealed that these unnamed subsidiaries may have overstated their reported results by between €13m and €18m, which would ultimately have an effect on its full-year earnings before interest, tax, depreciation and amortisation.

However, Codere added, it had not yet detected any additional impact on its liquidity position, nor had any inappropirate cash outflows been uncovered.

"[This] is believed to be an isolated incident that only affects the numbers of the year in these markets,” the company said.

An “independent and highly regarded” external advisor will conduct the investigation, the results of which Codere said “will be informed through the appropriate channels.”

In September, Codere saw its net loss for the first half of 2019 fall by 78% for H1, despite political uncertainty in Argentina — Codere’s largest market in 2018 — leading to a 36.4% fall in EBITDA in the country.

The company’s total EBITDA was €165m, of which €114.6m came from Latin America. Of the company’s Latin American EBITDA, €34.1m came from Argentina, €61.6m from Mexico, €5.8m from Panama, €10m from Uruguay and €3.1m from Colombia.

The company previously projected full-year EBITDA of between €280m and €290m, meaning the new expected figure would be in the range of €260m to €270m.

In unrelated news, Codere also announced the resignation of director Alberto Manzanares Secades.

The company’s announcement of his resignation quoted a portion of Manzanares’s resignation letter, in which he states the resignation was for “strictly personal reasons, mainly due to the difficulty of reconciling the dedication required by his position as a proprietary director of Codere with his other professional obligations.”

Manzanares also works as a senior associate at law firm Ashurst, a counsel in the corporate and finance area for law firm Ontier and is a professor of law at Madrid University and at IE Law School in Madrid.