North Media writes off a development project in Bekey (Digital Services) and, as a result lowers its FY 2021 guidance. Digital Services business area lower ambitions for 2022.
Company announcement no. 25-2021
2 December 2021
In the period 2019-2021, Bekey (Digital Services) has invested substantially to develop IT architecture and to acquire and install digital access systems (SmartRelays) in multi-storey buildings in the Greater Copenhagen area. Bekey had capitalised DKK 19m of these development costs in the most recent quarterly interim report, and capitalised a further DKK 2m in October/November 2021. As a commercial breakthrough in new customer segments is still pending, prospects of positive cash flows from this business have become more distant. This situation has made the basis for capitalising these development costs more uncertain.
As a result, the Board of Directors resolved today to write off these capitalised development costs.
Accordingly, North Media is lowering its full-year 2021 guidance.
The Group's other subsidiaries - FK Distribution (Last Mile), BoligPortal and Ofir (Digital Services) - are all expected to deliver results in line with the most recent guidance provided on 3 November 2021.
As a result, the Group's FY 2021 guidance is updated as follows:
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Revenue still expected in the DKK 1,020m-1,035m range.
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EBIT is now expected in the DKK 235m-245m range (previous guidance: DKK 255m-265m).
Preliminary earnings forecast for 2022
The increased uncertainty regarding Bekey's commercial breakthrough changes the assumptions underlying the financial ambitions North Media announced in February 2021 for the 2022-2023 period.
BoligPortal and Ofir (Digital Services) are both expected to generate double-digit growth rates in 2022, but relative to their previously announced ambitions both companies have increased their spend on developing new services that will drive growth going forward. In addition, BoligPortal is feeling the effects of the market-driven decline in the supply of rental units that began in the third quarter of 2021.
As a result, the forecast for the Group is as follows:
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The 2022 revenue is assumed to be in line with the 2021 revenue.
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The 2022 EBIT is expected to be in the DKK 200m-220m range.
North Media will review its guidance for 2022 along with updated financial ambitions in connection with the release of the 2021 Annual Report.
For further information
Kåre Wigh, Group Executive Director & CFO, mobile +45 25 65 21 45.
This document is an unofficial translation of the Danish original. In the event of any inconsistencies, the Danish version shall apply.
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North Media A/S