Alternative Performance Measures (APMs)

In compliance with ESMA directives about alternative performance measures ("APMs"), we are providing the additional information herein in order to enable comparability, reliability and overall improve the understanding of our reported financial information.

Our results are reported under IFRS accounting principles, but we believe that providing these metrics improves the ability to assess the company's performance. Moreover, these metrics are used internally to take financial, operating and planning decisions. W e believe these metrics reflect a more accurate image of the company's performance and its financial information.

Tables with reconciliation between IFRS and reported metrics are provided at the end of the document.

EBITDA: Operating Profit (EBIT) plus i) impairment charges, ii) gains / (losses) on asset disposals, iii) variation in provisions for trade transactions, and iv) depreciation & amortization.

  • Usage rationale: This metric is widely used in the financial community, as it helps understand operating results excluding depreciation and amortization, which are a non-cash item which can vary substantially between companies depending on their financing structure and accounting policies. EBITDA is the best proxy for operating cash flows before corporate income tax and capital expenditures.

Adjusted EBITDA: Consolidated EBITDA excl. all non-recurring items. This metric is used also at a country and business unit level. Adjusted EBITDA calculated applying IFRS 16 accounting standard that requires the capitalization of operating leases, being added to balance sheet and charged as expenses: depreciation and amortization and financial costs.

  • Usage rationale: We use this metric to adjust for extraordinary items which we do not expect to incur on a going forward basis in the ordinary course of business.

Capex: Investment in tangible and intangible asset additionally we disclose the distribution between Maintenance Capex which refers to all necessary investments made during a certain period of time aim to maintain the company's assets and Growth Capex that refers to the investment deployed in initiatives how objective is to deliver additional growth, including acquisition of entities.

  • Usage rationale: Capex provides a useful metric to better understand the investments made by the company in the normal course of business.

Total Financial Debt: Long and short term financial debt (borrowings)

  • Usage rationale: We use this industry standard metric to assess the company's total financial liabilities.

Total Net Financial Debt: Total Financial Debt as defined above minus Cash and Cash equivalents.

  • Usage rationale: We use this industry standard metric to assess the company's financial liabilities taking into account available cash.

Senior Financial Debt: Includes structurally senior OpCo debt (including Capital leases) plus drawn amounts outstanding under the EUR 95 mm, Super Senior Revolving Credit Facility ("SSRCF")

  • Usage rationale: We use this industry standard metric to assess the company's financial liabilities taking into consideration the seniority of the credits.

Total Adjusted Net Debt: Calculated as Total Net Financial Debt plus capitalized operating leases.

  • Usage rationale: We use this metric to assess the company's financial liabilities including capitalized operating leases.

Non-RecurringExpenses: operating expenses (or revenues) that we do not expect to incur on an ongoing basis. We may differentiate between non-recurring expenses related to the financial restructuring and other non-recurring expenses that we may incur as of a result of the different efficiency measures and adjustments in the business units.

  • Usage rationale: we provide this metric to be able to exclude it from EBITDA, as defined above, and have a better understanding of the business performance on a like for like basis, not being disrupted by extraordinary impacts.

Inflation Adjustment: impact that results from the application of IAS 29 (inflation accounting) since Q3 2018. Given that inflation in Argentina reached more than 100% cumulatively over the last 3 years in Q3 2018, IAS 29 began to be applied. Under this accounting standard, results are adjusted with end of period inflation and exchange rates. It has 3 impacts on our results (i) at the EBITDA level,(ii) as financial interest and (iii) as higher CIT. In this document and given the relevance, we only discuss (i).

  • Usage rationale: we add back the EBITDA impact resulting from the application of IAS 29 to EBITDA together with non-
    recurring items in order to calculate Adjusted EBITDA. The rationale is twofold: on the one hand it allows for comparability with prior period results (which are not adjusted retroactively) and on the other, the impact is purely an accounting non-cash one, which distorts the real cash EBITDA generated.

1

Leverage ratio: net financial debt, as defined above, divided by the last twelve months Total Adjusted EBITDA, as defined above.

  • Usage rationale: we use this industry standard ratio to assess the company's financial liabilities against its cash generation capability.

Adjusted Leverage ratio: Adjusted net financial debt, as defined above, divided by the last twelve months Adjusted EBITDA, as defined above.

  • Usage rationale: we use this ratio to provide an accurate comparison based on rating agencies methodology and in order to provide a reference as per the future implementation of the IFRS 16. Additionally this performance measure is useful for conducting multi-company comparisons with different capital structures

Total Liquidity: Cash and cash equivalents plus the undrawn capacity of the SSRCF (up to €95mm.) including both withdraw of cash or use of the surety bond facility.

  • Usage rationale: This metric provides a better understanding to the cash that the company has available use to run the business and provides a good proxy solvency of the group.

Working Capital Assets: The sum of accounts receivable, Taxes Receivable (excl. corporate income taxes receivable), prepaid expenses, inventory and other current assets (excluding security deposits).

  • Usage rationale: we use this metric in order to calculate net working capital, as defined below.

Working Capital Liabilities: The sum of accounts payable, S-T provisions for trade transactions, Taxes Payable (excl. corporate income taxes payable), Deferred Payments (excl. Capex Financing) and other current liabilities (excl. security deposits).

  • Usage rationale: we use this metric in order to calculate net working capital, as defined below.

Net Working Capital: The difference between Working Capital Assets and Working Capital Liabilities.

  • Usage rationale: Working capital is a measure of both a company's efficiency and its short-term financial health.

Free Cash Flow: Also referred to as Free Cash Flow ("FCF"): Adjusted EBITDA less corporate income taxes paid less total capital expenditures less/plus increases in Net Working Capital - Capitalized operating leases (as per IFRS 16)

  • Usage rationale: This metric provides the level of cash flow generation of the business after all obligations non-financial obligations have been met before servicing debt obligations (interest and debt amortization).

Capital Expenditures (Capex): Investment made on tangible and intangible assets. We break it down between maintenance capex, which is aimed at keeping existing operations running, and growth capex, which relates to discretionary investments to grow the business.

  • Usage rationale: Capex is a useful measure to understand investment patterns as well as investments required to run the business.

2

Alternative Performance Measures Reconciliation tables

Reported revenues

Figures in EUR mm, except where noted otherwise

Operating Revenue

Argentina

407.7

317.2

70.7

64.8

-

38.0

3.5

Mexico

317.3

307.7

97.8

60.4

1.8

22.1

41.2

Panama

88.7

78.3

22.6

14.6

-

5.8

12.5

Uruguay

70.7

74.2

52.2

17.0

11.3

11.3

7.7

Colombia

23.4

19.0

8.6

4.9

-

3.5

3.4

Brazil

-

-

-

-

-

-

-

Sub-Total - Latin America

907.9

796.6

252.3

161.8

13.2

80.7

68.3

Italy

336.5

343.3

154.8

60.2

6.6

-

12.1

Spain

186.7

189.8

116.4

40.5

5.5

26.6

38.6

Sub-Total - Europe

523.2

533.0

271.0

100.7

12.0

26.6

50.7

Online

44.5

59.8

71.4

16.1

13.8

19.8

20.1

1,475.5

1,389.4

594.6

278.6

39.1

127.2

139.1

Reported EBITDA, Adjusted EBITDA and Margins

Figures in EUR mm, except where noted otherwise

Reported EBITDA

312.4

284.6

(20.6)

39.7

(30.7)

(6.9)

9.3

(+) Non Recurring Expenses

42.7

32.1

42.6

7.7

6.7

10.6

9.1

(+) Inflation Adjustment

12.2

2.3

0.6

0.3

0.4

(0.2)

(0.3)

367.4

319.0

22.5

47.7

(23.7)

3.5

18.1

Reported EBITDA Margin

21.2%

20.5%

n.a

14.2%

n.a.

n.a

6.7%

Adjusted EBITDA Margin

24.9%

23.0%

3.8%

17.1%

n.a.

2.8%

13.0%

Free Cash Flow

Figures in EUR mm, except where noted otherwise

2021

367.4

319.0

22.5

47.7

(23.7)

3.5

18.1

(-) Capitalized Operating Leases

(84.5)

(70.0)

(61.9)

(17.0)

(15.3)

(14.7)

(14.7)

(-) CIT Paid

(51.8)

(40.8)

(9.1)

(5.4)

(1.0)

(1.6)

(1.0)

(-) Maintenance Capex

(82.1)

(72.9)

(31.4)

(11.4)

(6.6)

(4.3)

(7.5)

(-) Growth Capex

(81.3)

(17.9)

(6.2)

(2.4)

(0.6)

(0.1)

(0.7)

(-) Change in NWC

(7.5)

1.0

57.7

9.8

8.3

(10.2)

0.8

60.2

118.4

(28.4)

21.3

(38.9)

(27.4)

(5.0)

3

Net Debt, Adjusted Net Debt and Leverage

Figures in EUR mm, except where noted otherwise

2021

Capitalization

S-T Financial Debt

60.4

36.6

54.6

53.2

34.3

L-T Financial Debt

803.1

867.8

966.0

1,008.4

1,116.9

Total Financial Debt

863.4

904.4

1,020.6

1,061.6

1,151.2

(-) Cash & Equivalents

(81.8)

(103.1)

(110.3)

(51.9)

(93.1)

Total Net Financial Debt

781.6

801.3

910.3

1,009.7

1,058.1

(+) Capitalization of Operating Leases (IFRS 16)

316.6

251.1

208.3

208.1

197.3

Total Adjusted Net Debt

1,098.2

1,052.4

1,118.6

1,217.8

1,255.4

367.4

319.0

22.5

(21.7)

20.0

Total Adjusted Net Debt / LTM Adjusted EBITDA

3.0x

3.3x

49.7x

n.a

62.8x

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Codere SA published this content on 01 September 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 01 September 2021 06:31:04 UTC.