Catena Media plc

04/07/2017 | Press release | Distributed by Public on 04/07/2017 05:04

Catena Media publishes annual report for 2016

Annual report 2016

This is us!

  • Over 200,000 NDCs

    (New Depositing Customers)

  • Successfully listed on Nasdaq First North Premier

  • Seven acquisitions

  • New markets:

    Germany, Belgium and Italy

  • The number of employees increased from 70 to 190

This is Catena Media‌

Catena Media's markets are Sweden, Norway, Finland,

the Netherlands, the UK, Germany, Italy and Belgium in Europe,

and Nevada and New Jersey in the US.

Catena Media is a fast-growing online lead generation company within the iGaming industry, connecting online players to online casinos and sportsbooks.

The headquarters are located on Malta.

Contents

The year in brief 2

Comments from the CEO 4

Vision, business idea and targets 6

Market overview 8

Our strengths 14

Attractive and scalable business model 16

Extensive and wide customer base 18

Strong online asset base 19

Proven track record of successful

acquisitions 21

Advanced technical platform 22

Strong company culture 24

Corporate responsibility 26

The share 30

Risk management 32

Corporate Governance Report 34

System for internal control

and risk management 38

Board of Directors 40

Executive Management 42

Directors' Report 43

Statements of Comprehensive Income 47

Statements of Financial Position 48

Statements of Changes in Equity,

Consolidated 49

Statements of Changes in Equity,

Parent Company 50

Statements of Cash Flows 51

Notes to the consolidated

financial statements 52

Audit report 70

Definitions and glossary 76

Shareholder information 77

C AT EN A M ED I A A N N UA L REP O R T 2016

In figures

2012

Founded

3

Offices in the UK, Serbia and Malta

168%

Revenue growth 2016

38%

Women co-workers

190

Employees

28

Nationalities

The company owns and develops a multitude of content sites in different languages, includ- ing well-known portals such as AskGamblers, JohnSlots and RightCasino.

In 2016, Catena Media referred over 200,000 NDCs (New Depositing Customers) through our websites to more than 1,000 iGaming customer brands.

OUR VISION

To become the world's number one provider of high-value

iGaming leads.

Follow us!

Push the boundaries. Think creatively. Work passionately. Have fun.

At Catena Media, we believe a fun, collaborative and supportive environment sparks creativity, passion and inspiration.

The year in brief

Q1 Q2

  • The company's shares were admitted to trading on the First North Premier exchange. The subscription price was SEK 33 per share. Total proceeds from the issue amounted to SEK 240 million, corresponding to EUR 25 million.

  • Catena Media acquired a number of casino comparison websites that operate mainly

    in Italy and Belgium, which represent new markets for Catena Media.

  • Catena Media acquired the Swedish affiliate network Wonko Media AB.

  • Catena Media acquired the highly regarded affiliate website AskGamblers.com for

    EUR 15 million. The transaction was the largest in Catena Media's history.

  • Catena Media acquired the player accounts and domains of one of the leading iGaming affiliates in Germany.

  • By acquiring the Swedish sportsbook affiliate Spelbloggare.se, Catena Media entered into a new market vertical: sportsbetting.

  • Catena Media launched its own sportsbook affiliate product in the UK.

  • Catena Media recruited key expertise to the Board of Directors.

    A financial snapshot

    Revenue

    EUR

    Revenue growth

    Adj. Operating profit

    EUR

    Adj. Operating margin

    MEURO

    50

    40.05

    million

    %

    200

    168%

    MEURO

    25

    21.03 %

    million 70

    53%

    60

    40 20

    150

    50

    30 15 40

    100

    20 10 30

    20

    50

    10 5

    10

    0

    2014

    2015

    2016

    0

    2016

    0

    2014

    2015

    2016

    0

    2014

    2015

    2016

    # T H E Y E A R I N B R I EF

    On the next page, Comments from the CEO.

    Q3 Q4

    • A three-year secured bond loan of EUR 50 million was issued, maturing in September 2019. Interest in the bond was substantial. The bond is intended to be used primarily for acquisition financing.

    • A new visual design was launched for the Group.

    • A strategically important milestone was reached in September, when we reached 20,000 NDCs (New Depositing Customers) for the first time in a single month - solid proof of sustainable growth

at Catena Media.

  • Through the acquisition of SBAT, a UK-based social media sports news, betting and tips web- site, the company will strengthen its focus on sports as well as its social media know-how.

  • Acquisition in the UK - by acquiring casinouk.com, we are building an even stron- ger presence in the biggest iGaming market in Europe. Casinouk.com will strengthen the com- pany's offer in Paid media and Organic search.

  • Shortlisted in several categories at the iGaming Business Awards.

  • Catena Media took a leading position in the US market through an acquisition of regulated affiliate assets in that country. Following the acquisition, Catena Media adds three new verticals to its business. In addition to Poker, the company is also acquiring websites target- ing eSports and Daily Fantasy Sports.

Key figures

2016 2015 2014

Operating revenue (€ '000)

40,049

14,939

3,888

Operating profit (€ '000)

18,646

8,983

2,222

Operating profit margin (%)

47

60

57

Adjusted operating profit (€ '000)*

21,027

10,149

2,222

Adjusted operating margin (%)*

53

68

57

Adjusted profit before tax (€ '000)*

19,890

10,165

2,213

Adjusted profit before tax margin(%)*

50

68

57

Profit before tax (€ '000)

17,509

8,999

2,213

Earnings per share (€)

0.319

0.199

0.042

NDCs (New Depositing Customers)

204,633

69,331

29,661

Equity to asset ratio (%)

40

43

35

* Adjusted for non-recurring IPO and bond costs of total EUR 2.38 million (1.17).

Another year of success with strong growth and solid results

As I look back at 2016, I am truly impressed with what we have accomplished. It was by far the most eventful and successful year so far for Catena Media, with continued strong growth and solid results.

WE HAVE COMPLETED and integrated sev- en strategic acquisitions and entered three new markets, while simultaneously broaden- ing our offering, reaching over 200,000 NDCs (New Depositing Customers) and increasing the number of employees from 70 to 190.

Furthermore, we achieved two important milestones with the successful listing of Catena Media´s shares on NASDAQ First North Premiere and the issue of a three-year secured bond loan.

Bigger and stronger day by day

We started the year with another record- breaking quarter and ended with the Group's strongest ever fourth quarter, with top line growth of 108 percent compared with the same period last year and a solid operating margin of 50 percent. As a result of the heavy investment in Paid media, as well as our in- vestments in technology and the recruitment of new employees during the year, our margin declined slightly. This is a natural consequence of our current strategy, which is focused on

growth and increasing our market share. When we consider the pace at which Catena Media is growing, it is vital to be at the forefront of technology. We have therefore invested further in technical development by reinforcing our Technical department with two outsourced teams located in Budapest.

Strategic acquisitions, new markets and added verticals

In line with our strategy, we worked success- fully throughout the year to identify attrac- tive acquisition prospects that complement and strengthen our portfolio. Accordingly, we made our largest transaction so far by acquir- ing the award-winning affiliate, AskGamblers. The site is one of the best brands in the affiliate market and contributes to creating a better iGaming industry through its stringent requirements regarding certified casinos. We also entered the large sports betting vertical by acquiring the Swedish sportsbook affiliate, Spelbloggare.se

The high growth rate that has distinguished us since the start in 2012 continues to be evident. We have within just a few years created both a track record of profitability and earned confidence from investors.

C AT EN A M ED I A A N N UA L REP O R T 2016 5

# C O M M EN T S FRO M T H E C EO

By making several strategic acquisitions in the UK, we further advanced our market presence in the biggest iGaming market in Europe. Through the acquisition of SBAT, Catena will strengthen both its focus on sports and its social media know-how, while Casinouk.com offers us the opportunity to expand our offering in Paid media and Search.

In terms of new markets, we entered Belgium, Italy and the US. In line with our acquisition of regulated US affiliate assets, we will be targeting the Poker and Casino markets in New Jersey and Nevada. Following the transaction, Catena Media added three new verticals to its business. In addition to Poker, we also acquired websites targeting eSports and Daily Fantasy Sports. We are excited about this opportunity, which makes Catena Media the largest regulated casino affiliate in the US, and puts us in pole position to take advantage of further re-regulation in what has the potential to become the world's largest iGaming market. Following this acquisition, 50 percent of Catena Media´s revenue will derive from regulated markets.

We are also pleased to see continu-

ous growth in our acquired assets and the

sportsbook segment that we entered earlier

this year. In addition, during December, we reached a record of 24,000 NDCs in a single month on our different sites.

Constantly looking for new talent

Since we are growing at such a fast pace, we are constantly looking for new talent to join Catena Media´s exciting journey. We em- ployed 130 new co-workers in 2016. We will never compromise on quality, however, as it is crucial for us to grow in a sustainable way, meaning new employees should have the same high standards as current employees. Equally, we strive to build a strong and coher- ent corporate culture. We firmly believe that this will be part of our ability to retain our

co-workers and attract new talent.

We also strengthened our Board of Directors during the year. A new Chair of the Board was appointed, Kathryn Moore Baker, as well as new board members Mathias Hermansson and Mats Alders. At the same time, we continued to strengthen our Executive Management Team, adding new functions and roles to build an organisation prepared to exploit the growth opportunities ahead of us and to be well prepared for a change of listing.

Looking ahead

I feel highly positive and confident as we en- ter 2017. Our move to the NASDAQ Mid Cap list is progressing in line with the plan and we aim to finalise the transition within the first half of 2017. As previously mentioned, we will continue to focus on delivering in line with our financial targets and continuing to grow

in the same successful way, both through organic growth and acquisitions across existing and new geographic markets. We will also continue to generate value both for our customers and for our shareholders.

I am truly proud of what we have achieved in 2016, but this was only possible thanks to the great efforts and commitment of our outstanding team. Thank you all.

Catena Media is an extraordinary company with extraordinary people and together we will continue this exciting journey towards becoming the world´s number-one provider of high-value iGaming leads.

Malta, April 2017

ROBERT ANDERSSON

CEO

Vision, business idea and targets

Mission Vision Strategy

Business idea

To transform iGaming through the power of choice.

To become the world's number-one provider of high-value iGaming leads.

To focus on organic growth in combination with geographical expansion and acquisitions.

Catena Media operates in the iGaming industry and its business idea is to attract online players through various products and ser- vices and direct them to iGaming operators.

Growth strategy based on four pillars

Objectives

Continued organic growth

To be the leading provider of high-value iGaming leads with strong position in both organic traffic and paid media.

Growth from new markets

Geographic expansion in prioritised markets.

Europe has top priority.

Acquisitive growth

Consolidation backed by strong track record of acquisitions and integration.

Best place to work

Ensure continued growth by attracting top talent.

Strategic initiatives

  • Strong customer relationship with key iGaming operators.

  • Increase sales to existing customers.

  • Increase business intelligence through technical platform.

  • A close relationship with website visitors.

  • Prioritise regulated markets.

  • Prioritise relatively mature markets with growth.

  • Launch through acquisitions.

  • Closely monitor new potential acquisitions.

  • Pay a reasonable multiple for acquisitions.

  • Speed up integration of acquisitions.

  • Ensure a mix of smaller and larger acquisitions.

  • More recruitment activity in social media, industry events and conferences.

  • Establish a clear set of values.

  • Work actively on building strong culture and cohesion between offices.

    # V I SI O N, BU SINE S S ID E A A ND TA RG E T S

    Financial targets

    Growth

    MEURO

    15

    12

    9

    6

    3

    2016

    168%

    0

    Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

    2015 2016

    SHORT TO MEDIUM-TERM (2016 -2018)

    Average annual revenue growth to exceed 75 percent,

    incl. acquisitions.

    LONG-TERM

    Annual revenue growth to exceed 25 percent per year,

    incl. acquisitions.

    Margin, adjusted

    Example of activities in 2016

    • Improved content quality to convert more players.

    • Recruited more and well-known content writers/sportjournalists.

% 2016

80 53%

70

60

50

40

30

20

  • New markets during 2016:

Germany, Belgium, Italy.

10

0

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2015 2016

SHORT TO MEDIUM-TERM (2016 -2018)

Adjusted operating profit margin to exceed 50 percent.

Acquisitions

  • Seven acquisitions during 2016.

  • Several strategic acquisitions in the UK.

  • Biggest acquisition, EUR 15 million, and smallest EUR 1 million.

  • 130 new employees in 2016.

  • Measuring success in recruitment.

  • Company-wide gathering once per year, some employees

moved around offices, a new company newsletter was launched.

LONG-TERM

Operating profit margin to exceed 40 percent.

Dividend

LONG-TERM

Annual dividend up to 50 percent of

the company's net profit (after tax).

MARK E T OVERVIE W

Catena Media operates in a fast-growing market

Catena Media's core business - online casino - is expected to grow 6.6% annually between 2014-2018 in the company's key markets Sweden, Finland, Norway, Netherlands and the UK. The affiliate and lead generation market in which Catena Media operates is expected to develop faster than or in line with this underlying market.

The global online gaming market contin- ues to grow at a rapid pace. The structural growth of iGaming is supported by several mega trends, such as digitalisation, globalisa- tion and the fact that consumers - aided by digitalisation - compare alternatives online before they make a purchase decision.

Focus on online casino and sportsbetting

The iGaming market can be divided

into five different verticals: poker, sportsbet- ting, casino, lottery and bingo. Catena Media operates in the growing, European iGaming market generally, with a particular empha- sis on the online casino and sportsbetting market.

Increased internet penetration, techno- logical advances and mobile migration have greatly benefited the iGaming market. In

addition, the number of market participants has grown continuously as a result of iGaming becoming increasingly accepted as a main- stream leisure activity. As iGaming becomes increasingly established, many European countries are revising their iGaming regula- tions, resulting in new markets being opened to external players.

Gaming growth

In the key markets, the underlying iGaming market is estimated to amount to EUR 5.2 billion in 2016, and is expected to grow by a Compound annual growth rate (CAGR) of

6.6% during the period 2014-2018. In 2016, the online casino market was estimated to amount to EUR 1.6 billion and sportsbook to EUR 2.4 billion.

The online casino affiliate market

The online casino affiliate market is expected to grow slightly faster - by a CAGR of 7.1% during the same period.

According to an analysis by PwC, approx- imately 40% of the online casino market is estimated to be generated via affiliates.

The online Sportsbook affiliate market Catena Media entered the sportsbook affili- ate vertical in 2016. The company's exposure in terms of revenue towards this segment is, of course, still at a low level. However, the potential in this vertical is substantial as the online sportsbook market is somewhat bigger than casino and shows a similar growth pattern.

Source: H2GC, a PwC-report and the Market Report.

CAGR of

6.6%

10,000

2014-2018

5,000

8,000

6.6%

4,000

CAGR of 2014-2018

6,000

3,000

-0.1%

12,000

Gaming growth

Sweden, Finland, Norway, the Netherlands and UK

MEURO

6,000

Gaming growth

iCasino and iBetting

Sweden, Finland, Norway, the Netherlands and UK

MEURO

CAGR of 2014-2018

4,000

2,000

0

2014

2015

2016

2017

2018

CAGR of 2014-2018

1.1%

2,000

1,000

0

2014

2015

2016

2017

2018

CAGR of 2014-2018

8.5%

iGaming

Landbased gaming

iCasino iPoker iBetting

# M A RK E T OVERV I E W

Market drivers

Catena Media is exposed to underlying market drivers and trends within the iGaming market generally and the online casino and sportsbook market in particular.

iGaming

Market Examples of identified drivers Comments Outlook

Growing shift from land-

based gaming to iGaming

Online casino will represent an increasing proportion of the total casino market.

Mobile technology Mobile technology further enhances the availability of online casino offerings, thus driving the market.

6.6%

Increased internet penetration Access to computers and the internet is continuing to

iGaming increase, meaning internet penetration is rising globally.

market,

expected annual growth,

during 2014-2018

New laws and regulation

Tightening regulations for casino services, with both positive and negative effects for online casino. While re-regulation generally results in increased awareness of online casinos and sportsbooks, it also puts pressure on the iGaming operators.

Re-regulation increases overall demand for iGaming.

Online casino affiliated market

Market Examples of identified drivers Comments Outlook

Size and birth rate of

online casino operators

Catena Media's view is that competition is getting more intense amongst operators than amongst iGaming affiliates.

7.1%

Online casino

affiliated market, expected annual growth, during 2014-2018

Increased spending on

digital marketing

Stronger focus on

high-quality content

Business intelligence

The pay-per-performance commercial model is one of the fair-

est and most accountable acquisition models available.

High-quality content is very important for both search engine rankings and building trust among online players. In a market that continues to develop and expand, affiliates need to give users a reason to visit their sites.

The affiliates have started to develop different tools

that enable access to information about the online players and thus an enhanced decision-making basis when planning future marketing campaigns.

Markets and regulations

The gambling industry is regulated at the national level. Regulatory reviews are now taking place in several of Catena Media's markets to adapt these regulations for iGaming and to traditional gambling. Regulations and re-regulations in different markets, help iGaming become more socially and legally acceptable.

Although the provision of affiliate marketing services to online gambling operators is not typically an activity which is licensable by gambling regulators, with some notable ex- ceptions, such as New Jersey and Delaware, affiliate marketing providers are supporting a highly regulated industry. Furthermore, gam- bling regulation is evolving to impose obliga- tions on online gambling operators to ensure their affiliates act in a way that is consistent with operators' own regulatory obligations, for example to comply with various advertis- ing standards.

The Nordic markets

The major Nordic gambling markets, where the Group has derived, and continues to de- rive, revenues, provide an illustration of this. These markets typically have in force laws that seek to restrict the provision of gambling services only to state monopolies.

Offshore online gambling operators

and their service providers typically rely on arguments that these national laws have no applicability outside the relevant country's borders and that, where relevant, the restric- tion on providing gambling services without

a licence does not apply to an offshore operator lawfully supplying its services in re- liance on a licence held elsewhere in the EU. Supporting these arguments is the fact that it is typically not a criminal offence for local cit- izens to participate in online gambling prod-

ucts offered by offshore operators. Further- more, there have been limited enforcement attempts against offshore operators who operate without a local licence in these mar- kets. From time to time, the authorities have attempted to curb marketing by instigating proceedings against local media companies (such as newspapers) that advertise on behalf of offshore operators but such activities remain the subject of on-going legal proceed- ings and, hence, of legal uncertainty. In light of the above, there are generally considered to be coherent arguments for offshore opera- tors and their service providers to continue

to support key Nordic markets based on the lack of applicability and enforceability of the legislation.

The EU member states

A number of EU Member States have intro- duced local licensing regimes, notably France, Denmark, Italy, Spain and the United King- dom, the latter being a significant market for the Group. Local licensing regimes are in the process of being introduced or are anticipated in the near term in the Netherlands, Germany and various Eastern European countries.

However, in some instances laws appear to have been fully implemented by certain Member States in contravention of the various tests laid down through the jurispru- dence of the ECJ, and also in contravention of guidance given to Member States by the

European Commission following review and

comment on draft laws and regulations.

In contrast with the European countries which have introduced licensing regimes and from which the Group derives revenue, including those referred to above, other countries have adopted a different approach which have required online gambling opera- tors and service providers such as the Group to examine their legal position in order for them to adopt a coherent risk rationale to support their activities.

This involves online gambling operators and their service providers, including affiliate marketing companies such as the Group, examining laws and regulations which place restrictions on offering and/or marketing and promoting gambling services. Restrictions may be drafted in such a way as to apply to activities conducted both within and outside of a jurisdiction.

It is worth noting that companies pro- viding affiliate marketing services to online gambling operators do not typically vet or conduct checks in relation to players who may access gambling websites from links on their marketing websites. Reliance is placed therefore on the online gambling operator to assess the countries from which they are willing to accept players, typically by refer- ence to territories where online gambling is expressly prohibited, and in respect of age verification.

# M A RK E T OVERV I E W

Our focus markets

Catena Media's market is immature, rapidly changing and constantly evolving. Catena Media has a multitude of websites in different languages in its network, provid- ing online players with offers for bonuses, free spins, reviews and much more

NORWAY

  • Active since 2013

  • Example of sites: Casinomagasinet, Casino6000

    Norway is estimated to grow by a CAGR* of

    9.5%

    SWEDEN

    • Active since 2012

FINLAND

  • Active since 2013

  • Example of sites: Slottimania, Gamblegeneration

    Finland is estimated to grow by a CAGR* of

    THE UK

    • Established during 2015 and strengthened by Right Casino Media acquisition in Oct 2015

    • Example of sites: Askgamblers.com, SBAT.com and Rightcasino

      The UK is estimated to grow by a CAGR* of

      THE NETHERLANDS

    • New market since 2015

    • Example of sites: Gokoverzicht, Simbatgokkasten

The Netherlands

is estimated to grow by a CAGR* of

8.6%

  • Example of sites:

    JohnSlots, Freespins

    Sweden is estimated to grow by a CAGR* of

    9.2%

    9.5%

    5.5%

    BELGIUM

    • Recently entered through the acquisition of an affiliate network in Italy and Belgium in March 2016

    • Example of sites:

      Onlinecasinolijst

      GERMANY

    • Recently entered through the acquisition of a leading local iGaming affiliate

    • Example of sites:

Casinobonus360

THE US

  • Most recent geographical expansion

  • Entered in January 2017

  • Example of sites:

    playnj.com and uspoker.com

    ITALY

  • Recently entered through the ac- quisition of an affiliate network in Italy and Belgium in March 2016

  • Example of sites: Slotgallinaonline, Auraweb

* 2014-2018

C AT EN A M ED I A A N N UA L REP O R T 2016 11

# M A RK E T OVERV I E W

"

As a business-to-business provider to the iGam- ing industry, Catena Media is not directly affected by new regulations that affect industry operators. However, the company believes that regulations in general have a positive impact on the industry by:

  • Increasing awareness and demand for iGaming

  • Creating a clear legal framework to operate within

  • Making iGaming more legitimate and socially acceptable"

    Catena Media's position in the iGaming market

    Major obstacles to success enable Catena Media to be the leading consolidator in a fragmented market

    Barriers to entry

    First mover advantage

    Established in 2012, Catena Media has become one of Europe's fastest growing and largest affiliates. In addition, access to funding has started a consolidation process in the industry.

    Proprietary technology

    Catena Media continuously develops its proprietary technical platform, Catena Connect in-house. This results in enhanced business intelligence and greater efficiency in business decisions and enables smooth integration processes post-acquisition.

    Extensive knowledge within SEO and PPC marketing

    Catena Media has built up extensive knowl- edge in terms of how to structure content and websites to receive favourable rankings and rewards from search engines. This has been a long-term process that would be difficult for a new participant to duplicate.

    Long-standing and strong

    customer relations

    Catena Media has been able to position itself as a preferred partner for most large online casino operators in Europe. Catena Media has specially negotiated terms with over 1,000 partner brands.

    Competitive landscape among affiliates Given Catena Media's cooperation with over 1,000 well-known and established online casino and sportsbook brands, the company believes that it is one of the largest indepen- dent online lead generation companies with a focus on the online casino and sportsbook vertical.

    Key competitors

    The affiliate market is highly fragmented within the online casino- and sportsbook vertical.

    Catena Media competes with a variety of companies, many of whom are also active in other verticals or other geographical loca-

    tions. Many of these competitors focus pure- ly on either SEO, PPC or e-mail marketing.

    Catena Media competes primarily with large affiliates. Competitors such as XL Me- dia, RakeTech and Gaming Innovation Group all have similarities with Catena Media and are viewed as key competitors.

    The Nordic market is currently under- going a wave of consolidation, as large affiliates are being consolidated to increase their market shares.

    Other channels

    Catena Media also competes with other marketing channels such as TV, print and ra- dio. However, these marketing channels lack the ability to provide an efficient, perfor- mance-based pricing model, which is highly appreciated by iGaming operators.

    # M A RK E T OVERV I E W

    Casumo has been collaborating with Catena Media since early 2012. It has been a pleasure for us to watch Catena Media transform from a relatively small company run by a few enthusiasts into a major multinational company with the skills to direct everything from high-quality SEO traffic to advanced PPC traffic based on our search criteria.

    The contact people we have had at Catena Media have always been eager to help us as best they can with every possible issue, large or small, that may arise. I am ex- tremely grateful that we at Casumo have had the opportunity to grow together with Catena Media in a responsible manner, and am looking forward to facing future challenges together.

    Christian Ferreri, Head of Affiliates - Casumo

    C AT EN A M ED I A A N N UA L REP O R T 2016

    Mr Green has had a long and prosperous relationship with Catena Media, and

    as Catena Media has grown rapidly over

    the last few years we have always taken the opportunity to strengthen our cooperation with them. The reason for this has every- thing to do with how hard they work to maintain the highest professional standards and deliver quality all the time.

    I can't imagine a better account manager on

    the affiliate side than our contact person at Catena. She's always quick and quali- ty assures every step of the traffic funnel. Im looking forward to 2017 and continuing to develop our relationship while creating special campaigns with Catena's unique strengths in mind. Thank you for this year, Catena!

    Tobias Regnestam - Head of affiliates - Mr Green

    13

    # H I S TO RY A N D S T REN G T H

    Our strengths

    Catena Media's vision is to become the world's number-one provider of high-value iGaming leads. In order to achieve this, the company has built core strengths on which it heavily relies in order to reach its ambitious goals.

    1 2 3

    Attractive and scalable

    business model

    We have been able to scale up the company's business operations and grow its revenue significantly without having to increase its cost base at the same pace.

    Extensive and

    wide customer base

    We currently supply internet traffic to more than 1,000 iGaming brands. The company has a large number of customers in each of its key markets and is therefore not dependent on one or a few customers.

    Strong online asset base

    We own and operate a multitude of web- sites in different languages. The websites are designed to attract potential online players and direct them to customers.

    Read more on page 16

    Read more on page 18

    Read more on page 19

    # H I S TO RY A N D S T REN G T H

    4 5 6

    Proven track record of successful acquisitions

    We have successfully acquired several mar- keting affiliates in the past and have extensive experience in integrating the acquired assets in order to maximise synergies and increase revenue.

    Advanced technical platform

    We have, over the last few years, built a stable and easy-to-manage system allowing the company to handle its websites and con- tent on multiple websites from one central base: the Catena Core platform.

    Strong company culture

    Our success is largely dependent on these values and the company strives to build a dynamic and supportive working environ- ment to attract and retain top talent.

    Read more on page 21

    Read more on page 22

    Read more on page 24

    O UR S T REN G T H S

    Attractive and scalable business model

    Catena Media has been able to scale up its business operations and grow its revenue significantly without having to increase its cost base at the same pace. The larger Catena Media becomes, the more it can benefit from economies of scale.

    Email

    Catena Media's websites

    iGaming operators

    Search traffic

    Potential

    players

    AdWords

    Social media

    Fixed fees

    Hybrid

    Lead

    CPA

    Revenue share

    Depositing

    customer

    Player

    Player looking to change casino

    Strong position in terms of both organic traffic and paid media

    The key to successful lead generation is the management of search engine optimisation (SEO). Building a robust, trustworthy and qualitative SEO business requires expertise, consistency and true customer insight - and Catena Media has invested thousands and thousands of hours in becoming the best in the industry.

    Organic traffic - search traffic

    Search engine optimisation (SEO) is the process of optimising websites to rank higher and become more relevant in search queries on different search engines. A fundamental part of SEO is understanding how search engine algorithms are structured. SEO is structured around three key areas:

    Keyword research

    The optimisation of a website's texts and

    Content

    Content development is about providing and answering different search queries about cer- tain high value keywords by creating content that provides the visitor with the most rele- vant information in response to their query.

    Link development

    Link development is about connecting high authority articles and websites to each other. A website that is considered a high authority by Google and other search engines can raise the authority of another website by linking to it. The same applies to high authority articles on a specific website. This helps both search engines and visitors to find high-quality content.

    Paid media Pay-per-click

    Using PPC marketing allows the affiliate to buy a search position for a certain keyword

    or phrase, obtaining access to a large amount of traffic that is later directed to a site owned by an online casino or sportsbook operator. PPC marketing is therefore driven by the return on investment on the amount paid for the achieved traffic. The conversion rate of that traffic is, therefore, an important ratio for the PPC buyer to monitor.

    For an affiliate to improve and drive con- version of such traffic, testing and develop- ment of different combinations coupled with user behaviour allows the affiliate to offer a competitive and strong edge that receives higher click rates.

    Share of revenue

    codes is based on keyword research. The on-page optimisation is about investigating

    which volumes specific keywords have, how the value of one visitor differs from another, and how to present the answers to the spe- cific type of visitor each keyword represents. On-page optimisation then adapts the con- tent based on the keyword research.

    Pay-per-click (PPC) marketing refers to paid search results in the search engine algo- rithms. Keywords within the PPC market, such as Google's AdWords, are up for bidding in real time and allow the buyer to get access to instant results and rankings. PPC market- ing is highly data driven and monitored on a daily basis.

    Paid media 27%

    Organic traffic 73%

    # O UR S T RENG T HS

    Facts about search

    89%

    of customers begin their buying process using a search engine.

    (Biznology)

    Over 1.2 trillion global searches are conducted each month. (2016)

    91%

    of internet users use a search engine. (2016)

    Mobile internet usage surpassed desktop searches in 2016.

    Revenue model

    The commission-based fees are either revenue share contracts, CPA contracts or a hybrid of these two models.

    Revenue share

    The main revenue model is through reve- nue-sharing with customers. Revenue share

    is based upon Catena Media receiving a share of the revenue generated for an iGaming operator from an online player who was di-

    The customer agreements include a monthly settlement between the operator and Catena Media.

    Cost per acquisition (CPA) - a fixed fee Catena Media also has a model based on a fixed fee, referred to as Cost Per Acquisition (CPA) model. Under a CPA model, Catena Media is entitled to a lump sum for every end-user that creates a new profile and

    example when online casino or sportsbook operators pay a fixed fee to be listed or re- viewed on a Catena Media website, or when advertising space on a Catena Media website is sold to iGaming operators. These specific events are most often negotiated as part of a broader contract that also includes a variable fee component.

    Share of total revenue

    rected to the operator's casino or sportsbook via a Catena Media channel. In general, the company generates such revenue over the account lifetime of a player, notwithstanding a potential termination of the contract with the iGaming operator.

    makes a first deposit on the iGaming opera- tor's website.

    Other revenues

    Catena Media also generates revenue by charging a fixed fee for specific events, for

    Fixed up-front

    payment

    10%

    Up-front payment per net depositing player

    35%

    Share of

    operators' revenue

    55%

    Revenue share

    • Proportion of the casino's net gaming revenue for a given player account

    • No negative carry-over from player

losses

  • Contracts that guarantee Catena Media a share of the revenue over the players' account lifetime for each customer brand

Up-front payment (CPA)

  • Up-front fee from the iGaming oper- ator for each depositing player that Catena Media mediates

  • One-off revenue is an important con- tributor to building short-term cash flow needed within PPC marketing

    Other revenue

  • Fixed up-front fees for exposure on

    websites

  • Fixed up-front fees for top list place- ments on Catena Media's websites

  • Other fixed start-up fees payed by

iGaming operators

Extensive and broad customer base‌

Catena Media strives to be perceived as the preferred partner for online player traffic, and, from that position, to benefit from a stronger pricing power with a maintained high customer value.

Today, Catena Media supplies internet traffic to more than 1,000 iGaming brands, including well-known and established companies such as Unibet, Betsson, Bet365, Mr.Green and William Hill.

Value for iGaming operators

Catena Media offers a "one-stop-shop" for obtaining large amounts of valuable new players from all over Europe.

Through Catena Media websites, such

as AskGamblers, JohnSlots and Right Casino, the company is able to offer its customers high value leads which could otherwise be challenging and expensive for the online iGa- ming operators to attract themselves. Catena Media's strong ability to generate high-value leads and potential online players make it a preferred partner for user acquisition among online operators.

Increased quality of players

The company's ambition and promise to operators is to deliver high-quality leads.

An online player who actively searches for a specific offering is more likely to become a depositing customer than someone who is

a passive receiver of messages, for example someone watching a commercial for an on- line casino on TV. The size of Catena Media's

to attract potential players who are more

willing to play online.

Acquiring NDCs (New Depositing Cus- tomers) through Catena Media is therefore associated with lower risk compared to traditional marketing channels where the outcome on a given marketing investment is often uncertain.

The preferred partner

Catena Media continuously evaluates its portfolio of contracted customers and negotiates adjustments, additions or new contracts. In general, the company renegoti- ates the contracts every year. As of the date of this annual report, no customer has termi- nated any contract with us since the time the first contract was agreed.

Sales strategy

Catena Media's sales strategy is based on the following two pillars:

  • New customers; both recently established iGaming operators as well as well-estab- lished iGaming operators seeking affiliate services, for example when trying to enter new markets in which Catena Media al- ready is present.

  • Ongoing negotiation with existing custom- ers through add-on offers, customisation

Customer dependency

Catena Media is working actively to ensure a diversified revenue base and thereby limit dependency on a few customers. The number of customer brands available from operators in Catena Media's network has increased from 28 in 2012 to more than 1,000 as of December 2016. During 2016,

the largest customer in terms of revenue con- tributed to 9% of revenue while the top 3 and top 10 customers contributed 25% and 49% of revenue respectively.

Development of number of customer brands

Number

1,000

800

600

400

200

business and leading value proposition tends

and special campaigns.

0

2012

2013

2014

2015

2016

Strong online asset base

Catena Media owns and operates a multitude of content sites in different languages. The websites are designed to attract potential online players and refer them to customers. As a result of Catena Media's strong focus on delivering high-value content, and its distinct focus on SEO, many of the websites rank in top positions in search engine algorithms.

Catena Media's main offering is to provide high-value leads that convert into NDCs (New Depositing Customers). Through an extensive network of websites and a strong product offering, Catena Media is able to reach a

wide range of potential online casino and sportsbetting players who can be directed to iGaming operators.

Value for online players

Through Catena Media's websites, online players have access to high-quality content such as casino guides, top lists, reviews, newsletters, display banners and targeted bonus offers. The websites are continuously updated with the latest news and changes in the online casino and sportsbook market.

Catena Media's strong position and ability to

direct a large number of high value leads is reflected in the attractive offers the players receive from the online casino and sports- book operators, such as higher bonuses or more free spins, that will typically be exclu- sively for Catena Media-operated websites.

Catena Media's popularity among oper- ators is based on the company being able to supply 100% interested visitors with a strong intention to play.

What makes a good affiliate site?

The sites have to be highly relevant,

user-friendly and visitors should quickly and easily find what they were looking for. In addition, the visit to the operator needs to correspond to what was promised on our site for us to build trust and convert players.

Overview of product offering

  • Game reviews: offer players qualitative game reviews and guides to different games offered by the operators, helping the player to find the most relevant and preferred alternative.

  • Guides: give players an overview of differ- ent games and their specific value proposi- tion in terms of games, offers, professional- ism and more.

  • Top lists: ranking of operators, based on offering, casino games, professionalism, customer reviews and more.

  • Directed campaigns and offers: specific campaigns and offers promoted by custom- ers to attract players, typically bonuses and free spins.

  • Betting related odds with focus om sport:

    Also offer player's reviews and tips.

    Example sites from the Catena Media portfolio

    By gathering all the best gaming companies and deals together on one site, Catena Media attracts online players to a website which in turn is based on Catena Media's selection. Catena Media offers the player value they would not find anywhere else. The contents of the websites are written by professional writers and are continuously updated to provide players with the most relevant and up-to-date information.

    • Best Casino Website 2016 by iGaming business

    • Best Casino Affiliate 2012, 2013 and 2015 by iGaming Business

    • eGR's 50 Power Affiliates list 2011, 2012, 2013, 2014, 2015 and 2016

    • Monitors and certifies the reliability and fairness of each casino

    • Forum where members and casino sites can meet

    • Daily news articles from the industry

    • One of the biggest iCasino guides in Sweden

    • Over 800 game reviews

    • Daily news articles from the industry and the latest operator promotions

    • High number of returning visitors

    • Available in Swedish, Finn- ish, Norwegian and English. Soon to be launched in Dutch

    • The most visited casino blog

      in Sweden

    • Very social with an average of over 150-200 blog com- ments on every new post

    • Bonus-driven site where readers often discuss differ- ent casino offers with each other

    • Very high number of return- ing visitors

    • Easy-to-use online casino comparison website

    • Casinos pay a one-off fee to be in the comparison in addi- tion to the affiliate business model

    • Casino school for new players

    • Daily news articles from the industry and the latest opera- tor promotions

    • Available in 18 languages

# O UR S T RENG T HS

20 C AT EN A M ED I A A N N UA L REP O R T 2016

Proven track-record

of successful acquisitions

Catena Media has successfully acquired several marketing affiliates in the past and has extensive experience with integrating the acquired assets in order to maximise synergies and increase revenue. Acquisitions are a strong driver of further growth and Catena Media is well-positioned to acquire further marketing affiliates and to leverage increased scale advantages and incremental synergies.

An efficient acquisition and integration process

  • Acquisition of smaller competitors part of normal course of business.

  • Acquisitions executed efficiently, within a few weeks of the first contact.

  • Bread-and-butter acquisitions are a strong growth driver for Catena Media.

    -Improved pricing following an acquisition as traffic is moved to existing Catena Media contracts.

    -Improved marketing methodologies drive NDC (New Depositing Customers) volumes at the acquired site.

  • Track-record of increasing revenue from the first integration phase.

Identified acquisition target

Week 1

Initiate contact

Send offer

Conducting due

diligence

Closing of deal

Week 4-8

Consolidation opportunities

Small affiliates

~10% market share

Medium affiliates

~40% market share

Large affiliates

~50% market share

  • Between 500-2,000 very small companies

  • 1-2 person-operated affiliate sites

  • Less than 50 NDCs per month

  • Usually target a single market

    • +100 slightly larger companies

  • Closely monitored by the larger affiliate firms

  • Potential acquisition targets

  • Up to 1,000 NDC's per month

  • Usually target 2-3 markets

  • Few large, often international players, but still relatively small compared to iGaming operators

  • Present in several countries

  • 1,000+ NDC's per month

  • Preferred by operators

Advanced technical platform

Over the last couple of years, Catena Media has built a stable and easy-to-manage system allowing the company to manage its websites and content on multiple websites from one central base. The technology platform is centred on what is referred to as the Catena Core platform.

Catena Core merges three different parts and delivers them as a service to the web- sites:

  • Catena Connect

  • Catena Intellect

  • Catena Patterns

    It allows for constant improvement of the sites with ongoing integration and data- driven decision-making. See below.

    A robust technical platform

    For Catena Media, Catena Core is a source of

    competitive advantage and the

    reason why it is able to scale the business. Since acquisitive growth is a large part of Catena Media's strategy, it is important for it to be able to integrate a newly acquired company, and its assets, into Catena Media's platform smoothly. With Catena Connect,

    Catena Media is able to do that from day one.

    Increased use of mobile devices

    Mobile-optimised websites are of utmost importance for affiliates, and shifting from a one-device to a multi-device strategy is a key factor for the affiliates' future success.

    Catena Media launched a mobile plat- form through the platform developed by Askgamblers.com, acquired by Catena Media in 2016.

    Proprietary technical platform and mobile solution

    Catena Core - Main technical platform

    Catena Core is Catena Media's main technical platform in which the company has made substantial investments.

    The platform merges all parts of the sys- tem and delivers them as a service to Catena Media's websites. Catena Connect enables the company to efficiently integrate new

    acquisitions and also serves as a data-driven decision-making tool.

    The system is continuously developed

    and improved.

    • Sets standards and practices for the business

    • Centre of know-how and code libraries

      Catena Patterns

      Catena Core

      Catena Intellect

      Catena Connect

    • Main platform for account executives (create and edit operator partners' details)

    • Information on bonuses, free spins, rankings and top lists is controlled here

      • Responsible for data mining, analysis, custom reports and predictive analytics

        # O UR S T RENG T HS

        Catena Media's extensive expertise regarding affiliate marketing at many different levels makes it an obvious partner for LeoVegas. Catena Media has a broad offering of marketing channels to help drive and optimise the acqui- sition of new customers, thus making it possible to order everything from SEO-based traffic to High-Value PPC traffic with a favourable geographical distribution. This, in combination with Catena Media's extensive experience

        of directing traffic and new customers, and LeoVegas's data-driven marketing procedures, has led to a highly reward- ing collaboration.

        Philip Kellin, Director of Business Development

        - LeoVegas Gaming

        23

        Did you know…

        75%

        of users never scroll past the first page of search results

        93%

        of online experiences begin with a search engine

        C AT EN A M ED I A A N N UA L REP O R T 2016

        Strong company culture

        Catena Media's has a clear set of values that guide everything we do internally and towards our customer and stakeholders. These values are communicated to all employees and Catena Media places strict requirements on its managers to live and breathe the values.

        Gender distribution

        Passionate

        "We are inclusive - we care about each other's well-being and success. We have fun together! We are in the business to win - we strive for the best and we never give up. We excel when it comes to our clients' success, we always go

        ing how we can bring more value to our customers. Their needs are the driving force of our curiosity and improvement."

        The importance of

        a strong company culture

        Men 62%

        Women 38%

        that extra mile. We celebrate successes and support each other when life is hard."

        Professional

        "We are honest and accountable, we deliver

        For Catena Media, which has three offices spread over Europe, a strong corporate cul- ture is important when trying to synchronise efforts across different geographical loca- tions. It's equally important in terms of help-

        Division of roles

        on time and keep our promises. We speak our minds while representing the company and

        ing Catena Media attract new talent - the struggle to find the right skills is even tougher

        Finance/HR/Legal/ Managemet 23%

        Content 25%

        Tech 21%

        SEO & PPC 16%

        Sales & Marketing 15%

        maintaining the company 's standards. We are accessible, we react promptly and always respond to inquiries in a timely manner. We comply with laws and regulations and strive to exceed expectations in whatever we do."

        Curious

        "Our curiosity keeps us learning and invent-

        ing new ways to improve. We challenge the standards of today and always try to do things a little better. We encourage the

        'why?' and 'what if?'. We are always assess-

        when recruiting to a small island like Malta where most of the employees are based.

        Every competitive edge that Catena Me- dia can get is worth considering. When sourc- ing for new talent, the company's employees are Catena Media's ultimate ambassadors.

        Passionate, professional and curious, the message they convey is often more effective than that of a recruitment ad. And, thanks to these qualities, they in turn attract like-mind- ed employees to the organisation.

        CORE VALUES

        Passionate, professional and curious

        Recruitment

        Finding employees

        Catena Media is constantly on the lookout for new people to join the company. When it comes to attracting new talent, social media is a very important tool in Catena Media's recruitment process.

        The company's in-house recruitment team is constantly scouting various social me- dia channels for new talent, and have, over time, compiled a large talent pool.

        The Catena Media recruitment team is also a frequent visitor at various industry conferences, as this is an effective way to get face-to-face connections with potential candidates.

        To become even more relevant in the eyes of potential young talent, Catena Media is planning to launch an internship pro- gramme.

        # C O RP O R AT E RE SP O N SIB IL I T Y

        Measuring success in recruitment

        Since Catena Media is growing at such great speed, the company is in constant need of new talent. However, Catena Media would never compromise on quality. The company wants to grow in a sustainable way, mean- ing that new employees should have the same high standards and be as passionate, professional and curious as the current

        employees. The company's customers expect nothing less. For this reason, Catena Media has implemented a thorough recruitment process, consisting of assessments combined with interviews with several key stakeholders within the company.

        Catena Media considers welcoming each new employee to be a measure of success. Another measure of its recruitment success is staff turnover - Catena Media has a low rate of staff turnover compared to the rest of the

        200

        150

        100

        50

        0

        Number of employees

        31 December

        industry.

        2012

        2013

        2014

        2015

        2016

        130

        Total hires 2016

        190

        Employees

        32

        Average age

        38%

        Women

        co-workers

        28

        Nationalities

        Responsibility and ethics

        We believe in social responsibility when it comes to our business environment. Our ambition does not only involve our customers; we also want to be a positive force for players, employees, suppliers, shareholders and society at large.

      • Catena Media's responsibility in terms of responsible gaming

        Catena Media believes that online casino and sports betting games are about entertainment in a secure and reliable environment. With this in mind, the organisation continuously aims

        to educate its employees on how to manage online players who, according to a number of parameters, are displaying risky behaviour.

        The company's goal is to work with oper- ators with a high standard of CSR and, for this reason, the company aims to recommend cer- tain targets that the customers (the operators) and other business partners should follow.

        Gambling and betting can turn into an addiction for some people - an addiction that affects social, physical and psychological well-being. The Public Health Agency of Swe- den (2014) estimates that around 2% of the population aged between 16 and 84 experi-

        ence problems with gaming - and another 4% are in the risk zone for addiction.

        Catena Media is striving to be one of the most trustworthy and transparent affiliates within the iGaming industry. Even if Catena Media, as a B2B provider, does not have a direct business relationship with the online players - all revenues come from the opera- tors - the company works actively through its network of websites to educate online players about responsible gaming.

        Catena Media's main mission is to trans- form iGaming through the power of choice. This means that the company, through its websites and services, is working hard to provide online players with the best iGaming options. At the same time, it is also important that online players feel secure when using Catena Media's websites to find operators - and part of that involves promoting responsi- ble gaming.

      • Equality and diversity

      • Anti-discrimination

        Catena Media can proudly state that it is actively working to achieve an equal and diverse workplace. During 2016, the company made significant progress in terms of reaching a better gender balance within both manage- ment and across the organisation as a whole. Today, nearly 40% of the workforce is women,

        compared to 30% one year ago. In addition, Catena Media has a workforce of over 28 different nationalities spread across three offices. Although progress has been made in these two areas, there is still a lot to be done. In other words, Catena Media is proud, but not content in this regard.

        Catena Media provides equal opportunities irrespective of gender, sexual orientation, ethnicity, religion or other belief, disability, or age. This applies to all employees, applicants for employment or promotion, suppliers, cus-

        tomers and members of the public with whom the company comes into contact. The com- pany strongly believes that employees from varied backgrounds enrich Catena Media's culture and support its commercial success.

        # C O RP O R AT E RE SP O N SIB IL I T Y

      • Catena Media's effect on the environment

        Catena Media's digital native business model is a more environmentally friendly alterna- tive to traditional marketing companies that normally consume more resources. Catena Media takes environmental issues seriously, and focuses on environmental work within several areas.

        As far as possible, travel is avoided in favour of video or phone meetings, as this

        also supports the environmental and social efficiency and profitability of the business. Catena Media strives to be green via measures such as recycling, the reduction of paper, and disposables.

        In addition, the company is investing in new energy-efficient workstations and servers with the aim of reducing energy consumption.

      • Catena Media's measures for a good work environment

        Passionate, professional and curious employ- ees who feel good at work are crucial in the company's ability to reach its ambitious goals. Great results start with employees who thrive, develop and are challenged. Catena Media is, by way of different tools, constantly moni- toring the extent to which employees enjoy

        working at Catena Media, how they enjoy working in their teams, and how they view their own personal development.

        Once a year, the company gathers all employees from every office for a fun social event the company's culture and celebrate success.

      • Fraud, corruption and money laundering

        Catena Media is strongly committed to business ethics and combatting various forms of fraudulent behaviour. The company

        expects its employees to avoid any behaviour that is unlawful or could be seen as unethi- cal or inappropriate. Such behaviour could involve fraud, extortion, bribery, corruption, facilitation payments, kickbacks and money

        laundering activities. These examples or relat- ed activities are never tolerated, regardless of whether they were pursued actively or by way of negligence.

        Catena Media always complies with the applicable laws, standards and other legal pro- visions governing ethical business conduct of the countries in which it operates. The compa- ny is aware of the continuous development

        of laws, regulations and social standards, and adopts those that are relevant to its business. In the longer term, Catena Media is convinced that robust business ethics will lead to both higher shareholder value and a superior partnership structure, and will facilitate the recruitment of the best employees.

        # C O RP O R AT E RE SP O N SIB IL I T Y

        Catena Media's primary stakeholders are customers, players,‌

        employees, shareholders, investors, suppliers and society at large.

        Stakeholder dialogue

        Catena Media's primary stakeholders are customers, players, employees, shareholders, investors, suppliers

        and society at large. These groups are essential to Catena Media's long-term survival.

        Stakeholders Area of concern Actions and communication

        Customers

        Players

        Employees

        Investors

        Suppliers

        Society

        • Quality of directed traffic

        • Website quality

        • Player satisfaction

        • Ongoing dialogue

        • Improve business intelligence

        • Improve content quality on Catena Media websites

        • Increase number of content editors

        • Secure up-time on Catena Media websites

        • Product quality

        • Up-to-date and relevant offers

        • Safety

        • Improve analysis of consumer behavior

        • Improve content quality on Catena Media websites

        • Only corporate with professional and ethic operators

        • Promote responsible gaming

        • Developing professionally and personally

        • Diversity & equality

        • Health

        • Regular employee surveys

        • Team activities

        • Stimulating work tasks

        • Actively working to achieve balance in all aspects

        • Satisfying returns on investment

        • Business ethics in general

        • Constantly working to increase shareholder value

        • Financial and strategic communication

        • Promotion of sound business ethics

        • Ongoing dialogue

        • Supporting regulations

        • Supporting local society

        • Environmentally friendly

        • Welcoming and promoting regulations

        • Program for giving away computers to children in need

        • Recycling and trying to minimise air travel

        • Digital business model

        # C O RP O R AT E RE SP O N SIB IL I T Y

        How we create value

        Our business model and strategy aim to deliver value for our stakeholders. Catena Media creates value for both customers - the operators - and online players as well as for our employees and owners.

        Inflow

        • Financial capital

        • Intellectual capital

        • Relationship capital

          • Procedures

          • Technology

        Catena Media

        A multi-brand strategy with a diverse portfolio

        Catena Media acts as a link between online players and the online casino and sportsbook operators. The company's role is to provide high-value leads, consisting of potential play- ers, to customers.

        Player

        Search traffic

        Paid media

        Customer

        Value for online players

        • Helps players find the relevant casino

        • Up-to-date game guides and reviews

        • Access to special Catena Media unique offers

          Outflow

          Value for customers

          • Through our websites we can offer the operators high-value leads.

          • We attract potential players who are

            more willing to play online.

          • Catena Media generally apply a performance-based revenue share model, with no up-front costs.

            • High levels of online player satisfaction

              • High levels of customer satisfaction

                • An attractive workplace

                  • Sustainable growth

                • Long-term profitability

        The share

        Catena Media's shares were listed on the stock market on 11 February 2016 and are traded on NASDAQ Stockholm's First North Premiere list under the trading symbol CTM. The subscription price was SEK 33 per share. Based on the last price paid on 30 December 2016, which was SEK 87.50, Catena Media's market capitalisation was SEK 4,501.45 M.

        Share performance in 2016

        Catena Media's share price rose 165 percent in 2016, while the total index, OMX Stock- holm PI, went up 9.3 percent. The highest closing price quoted during the year was SEK

      • on 30 December, and the lowest clos- ing price was SEK 37.20, on 22 February.

        Trading volume

        In 2016, a total of 19,289,095 of Catena Me- dia shares were traded and the average daily trading volume was 86,846 shares on the NASDAQ First North.

        Share capital

        At year-end 2016, Catena Media's share cap- ital amounted to SEK 0.74M, divided among 51,445,152 shares. All shares carry equal enti- tlement to the company profit and equity.

        At the end of the period there were 273 825 warrants and 1 283 101 share options outstanding, no warrants or share options were exercisable per 31 December 2016. The effect on share capital if all out- standing warrants and share options vested would be 3 percent.

        Ownership structure

        The number of shareholders was 2,594 at year-end 2016. 66.26 percent of the shares are owned by the 10 largest shareholders.

        Dividend

        The Board of Directors has set a long term dividend policy that states, that up to 50 percent of profit after tax is to be paid out

        in dividends. For the 2016 financial year, the Board has proposed that no dividend is paid out.

        Catena Media, 11 February-31 December 2016

        SEK

        90

        80

        Volym

        1,800

        1,500

        ANALYST COVERAGE

        Carnegie: Mikael Laséen

        Swedbank: Mathias Lundberg

        701,200

        60900

        50600

        40300

        30

        FEB

        MAR

        APR

        MAY

        JUN

        JUL

        AUG

        SEP

        OCT

        NOV

        0

        DEC

        Catena Media

        OMX Stockholm_PI

        Number of shares traded, thousands

        Source: SIX

        # T HE SH A RE

        5 reasons to invest in Catena Media

        • Strong market fundamentals

        • First-mover advantage

        • Proprietary technology

        • Extensive knowledge of SEO and PPC marketing

        • Long-standing and strong customer relations

      • The ten largest shareholders according to

        Euroclear Sweden AB at December 31, 2016:

        Number of

        Share of

        capital

        Key data relating to Catena Media's share

        Shareholders

        shares

        and votes, %

        2016

        Optimizer Invest Ltd. 8,217,485 15.97

        Aveny Ltd. 5,110,934 9.93

        Pixel Wizard Ltd. 4,098,624 7.97

        Öresund Investment AB 3,030,303 5.89

        Swedbank Robur 3,030,303 5.89

        Carnegie Småbolagsfond 2,725,000 5.30

        Handelsbanken Fonder AB 2,359,877 4.59

        Knutsson Holdings AB 2,000,000 3.89

        LFJK Ltd 2,000,000 3.89

        Skandrenting AB (fully owned by Erik Selin) 1,515,151 2.95

        Total top 10 shareholders 34,087,677 66.26

        Other shareholders 17,357,475 33.74

        Total 51,445,152 100

        Earnings per share, (SEK) 0.319

        Outstanding shares at year end, thousands 51,445

        Average number of shares, thousands 50,611

        Last price paid 2016, SEK 87.50

        Highest price paid 2016, SEK 87.50

        Lowest price paid 2016, SEK 37.20

        Market capitalisation at year-end, SEK M 4,501

        Number of shareholders, 31 Dec 2016 2,594

        Risk management

        The purpose of Catena Media's risk manage- ment processes is to execute the business strategy whilst maintaining a high-level of risk awareness and control. The Board of Directors has approved the risk procedures framework which includes internal risk control assessments to be carried out on a

        monthly, quarterly or annual basis depending on the risk level and business area. This will create and uphold confidence in the company amongst the Group's stakeholders, thereby creating an environment that is conducive to achieving sustainable shareholder value.

        The Board has oversight for risk manage- ment with a focus on the most significant risks facing the Group, which comprise of strategic, operational, financial, legal and compliance risks.

        The Group's risk control reporting pro- cesses assist the Board and the CEO in contin- uously evaluating identified risks. The Group's risk appetite is determined by the Board and controlled through the risk reporting and risk procedures. By weighing potential returns against potential risks in the business plan, the Board can decide on an appropriate risk

        and return level for the Group's risk appe- tite. Throughout the year, the Board and the sub-committees, to which it has delegated responsibility, review and discuss specific risk topics by reference to the nature of the risks

        and potential impact on the Group. The Board will also consider how identified risks shall be monitored and controlled.

        Risk type

        Risk profile

        Compliance Risk

        Risk relating to regulation that could result in restrictions in our customers operations.

        Credit Risk

        Risk of a financial loss if a counter-party to a financial instrument fails to meet its contractual obligations.

        Market Risk

        Risk that changes in market prices, such as

        interest rates and foreign exchange rates, will affect

        the Group's income.

        Liquidity Risk

        Risk of difficulties in obtaining funding and the resulting inability to meet payment obligations when they fall due.

        Operational Risk

        The risk that revenues and or expenses are impacted

        due to internal and/or external operational factors.

        Compliance risk arises as a result of Catena Media's customers operating in markets that may become regulated, or are unlicensed.

        Credit risk arises principally from outstanding receiv- ables due by the Group's customers and cash and cash equivalents.

        The Group operates internationally and is exposed to currency risk on revenue, expenses and bank balances that are denomi- nated in a currency other than the entity's functional currency.

        The Group's exposure to cash flow interest rate risks arises mainly from the bond issued at variable rates.

        Liquidity risk is the risk that the Group will not be able to meet their financial obligations comprising trade and other payables as they fall due.

        Operational risk arises from the dependency of the Group's operations on the current operational capabilities.

        Risk management

        The majority of Catena Media's customers are operators in the iGaming industry and the Group is accordingly subject to risks relating to the introduction of new regulations or changes to existing regulations in relevant markets. Catena Media's revenues are currently 50% derived from regulated markets, the remaining portion being derived from markets which are currently not regulated. The customer base is sufficiently diverse to mitigate this risk. Catena Media embrace further regulated markets.

        Credit risk is regularly monitored by the Finance team, with a dedicated Accounts Receivable and Debt Collections team.

        The Group assesses the credit quality of its customers taking into account financial position, past experience and other factors. Credit limits and exposures are managed actively and in practicable manner.

        Cash and cash equivalents are held both with a leading local financial institution and other financial institutions based outside Malta. This spread reduces dependency on one financial institution as well as simultaneously mitigating country risk.

        Foreign exchange risk and exposure to currency fluctuations has not had a material impact on the Group's business, financial condition or results of operations. There is a natural hedge as most customers are billed in EUR, other larger currencies include GBP and USD. Smaller ones, including Bitcoin, NOK and SEK, remain less than 1% of the turnover. The bond was issued in EUR and most of the costs are in EUR and GBP. The Group regularly monitors its cash flow interest rate risk and considers it not to

        be significant in the context of the profits generated from its acquisitions and ongoing operations.

        The approach to managing liquidity is to ensure, as far as possible, that the Group will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group's reputation. Management also monitors rolling forecasts for Group's liquidity assets, which consist of cash and cash equivalents, on the basis of expected cash flows.

        Catena Media has significant liquidity reserve to cover operational outflows and any foreseeable earn-out payments.

        The business is dependent on its ability to maintain efficient Search Engine Optimization and Pay Per Click capabilities, however, search engines such as Google, Bing and Yahoo! could in the future implement strategies that makes it more difficult for the Group to operate. Otherwise the company has a low level of operational risk due to no inventory or onerous, long-term contracts with suppliers / partners.

        Corporate Governance Report

        Catena Media plc is a Maltese public limited liability company listed on NASDAQ First North Premier Stockholm

        since February 11th 2016, with its registered office and headquarters in Malta.

        Corporate governance refers to the de- cision-making systems via which owners directly or indirectly manage the Group. The purpose is to ensure decision-making that is effective and creates value through

        a clear division of roles and responsibilities. Governance, management and control are divided between shareholders, the board, the CEO and executive management. The

        decision-making system comprises principles, directives and processes.

        The following statement on pages 34 to 42 has not been audited by the company's auditor.

        For corporate governance within Catena Media, the company mainly applies the Memorandum & Articles of Association, the Maltese Companies Act, the Market Abuse Regulation1, the Swedish Market Abuse Penal Act2 and the Act on Reporting Obligations for Certain Holdings of Financial Instruments3, the practices of the Swedish Financial Superviso- ry Authority as well as the Swedish Code of Corporate Governance, found at www.bolagsstyrning.se.

        The company was listed on NASDAQ First North Stockholm in February 2016 and it is the company´s ambition to be listed on NASDAQ Stockholm in 2017. The company has contin- uously made adaptations with regard to this change and will apply the Swedish Corporate Governance Code as from 2018 and does not foresee any deviation from the Code. Any deviations will be included in the Corporate Governance report for the financial year 2018.

        In addition to external regulations and the Memorandum & Articles of Association, there are internal rules which provide a platform for corporate governance, such as the Instruction for the CEO, policy documents and the Code of Conduct which have been formulated to enhance and strengthen control, which are updated and approved by the board annually.

        Memorandum & Articles of Association The Memorandum & Articles of Associa- tion are adopted by the general meeting of shareholders and contain basic compulsory information about the company.

        The Articles of Association specify the type of business activities the company will operate, limits on share capital, the number of shares and the number of Board members

        allowed. The Memorandum & Articles of Asso- ciation are available in their entirety at www. catenamedia.com.

        Governance structure

        As of 31 December 2016, the total number of shares was 51,445,152 and the share capital was EUR 77,000. Each share carries one vote. The company had 2,594 shareholders at the end of the year. The ten (10) largest share- holders held an aggregate of 66.26 percent of total share capital at the close of 2016. Read more about the company's largest sharehold- ers at www.catenamedia.com.

        The Annual General Meeting (AGM) is Cat- ena Media's highest governing body at which shareholders exercise their influence in the company. Catena Media's financial year runs from 1 January to 31 December.

        Pursuant to the Memorandum & Arti- cles of Association, written notice must be given no fewer than twenty (20) days prior to the AGM. Notices shall be deemed to be validly served if published on the company's

        website in English and in Swedish. In addition, the company shall announce in the Swedish newspaper "Dagens Industri" that a notice to attend a general meeting of the shareholders has been issued and the notice of the AGM

        will subsequently be available on the company website.

        The AGM resolves on the adoption of the year's balance sheet and income statement, dividends, election of Board members and

        auditors, fees to Board members and auditors and other items of business as prescribed by the Swedish Companies Act and the Articles

        of Association. All shareholders listed in the shareholders' register on the day prior to the AGM who have provided timely notification of their participation are entitled to participate in the AGM, either in person or by proxy.

        1. Shareholders

          Every shareholder is entitled to request that a

          matter be addressed by the AGM. A share- holder who wishes to do so must submit a written request to the Board no later than one (1) week before the earliest date on which notice of the AGM is published (i.e. the request must be received no later than twen- ty-seven (27) days prior to the AGM).

          Decisions at the AGM are normally made by a simple majority of votes. However, cer- tain types of resolutions require approval by a higher proportion of the votes and shares represented at the meeting, in accordance with the Maltese Companies Act. Extraor- dinary General Meetings may be held as needed.

        2. 2017 Annual General Meeting

        The 2017 AGM will be held on Friday, 28 April at 8:30 am, 2017 at Birger Jarlsgatan 57A,

        113 81 Stockholm, Sweden. Notice of the meeting will be provided on the company's website (www.catenamedia.com) ahead of the meeting, along with required documents for the AGM.

        Among other things, the AGM will decide:

  • To approve the submitted, consolidated financial statement and the report of the Board of Directors and the report of the auditors.

  • Regulation (EU) No. 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse.

  • Financial Instruments Trading (Market Abuse Penalties) Act (2005:377).

  • Act concerning Reporting Obligations for Certain Holdings of Financial Instruments (2000:1087).

  • Catena Media

    Corporate Governance Structure

    6 Auditor

    Information

    Elect

  • Shareholders

    Vote

  • Annual General Meeting

    Elect 3

    Nomination Committee

    Proposal for Board, auditor

    and Nomination committee

    Information Assurances

    Elect

    4 Board of Directors

    Appoint

    7 CEO

    Appoint

  • Board Committees

  • Audit Committee

  • M&A Committee

  • 3 Remuneration Committee

  • Goals Strategies Policies Reports Internal control

    Appoint

    8 Group ExecutiveManagement

  • To adopt the balance sheet and income

    statement.

  • Regarding the suggestion from the Nom- ination committee to re-elect Kathryn Baker, André Lavold, Henrik Persson Ekdahl, Anders Brandt, Mats Alders and Mathias Hermansson as members of the Board of Directors for the period until the end of the next Annual General Meeting.

  • On fees for the Chairperson of the Board

    and other Board members.

  • To re-elect PricewaterhouseCoopers Malta ("PwC") as auditor for the period through

    to the next AGM and to authorise the Board of Directors to determine the fees of the auditor.

    AGM minutes will be available at www.

    catenamedia.com.

  • Nomination committee

    The Nomination Committee is composed of representatives of the three largest share- holders, as recorded in the shareholders' register as of the last business day in August of each year, and the Chairperson of the Board, who is also responsible for convening the committee's first meeting. If a sharehold- er who is ordered to serve on the Nomination Committee declines, the inquiry shall instead

    be offered to the next largest shareholder. The committee's composition will be changed to reflect any changes to the shareholder structure.

    The Nomination Committee submits proposals concerning the election of the AGM Chairman, members of the Board of Directors and Chairperson of the Board, as well as Board member compensation and the election of auditors. The committee conducts its work in the interest of all shareholders. Instructions for the Nomination Committee and options

    for submitting suggestions to the committee are available on the company's website, www. catenamedia.com

    The Nomination Committee is comprised of the following members: Kathryn Moore Baker (Chairperson of the Board of Catena Me- dia), Henrik Persson Ekdahl (representing Opti- mizer Invest Ltd), Erik Bergman (representing Aveny Ltd) and Öystein Engebretsen (repre- senting Öresund Investment AB). Following the AGM 2016 and until the end of the year, the committee held one recorded meeting. The Nomination Committee's proposals, report

    on committee work done in preparation for the 2017 AGM and information on proposed Board members are published in conjunction with the AGM notice.

  • Board of Directors

    Pursuant to the Memorandum & Articles of Association, Catena Media's Board of Direc- tors shall be comprised of at least three (3) and no more than six (6) members. Members of the Board are appointed by the AGM for

    a one-year term. In accordance with the resolution of the 2016 AGM, the Board of Di- rectors is comprised of Kathryn Moore Baker, Chairperson, Henrik Persson Ekdahl, André Lavold, Anders Brandt, Mats Alders and Mathias Hermansson. Kathryn Moore Baker, Henrik Persson Ekdahl, Andre Lavold, Mats Alders and Anders Brandt were re-elected, while Mikael Riese Harstad declined re-elec- tion. Mathias Hermansson was elected for the first time in 2016. Further details on members of the Board of Directors, such as experience, education, other assignments and shareholding are available on page 40.

    At year-end 2016, the Board had one female and five male members.

    Independence

    The Board of Directors is considered to meet

    independence requirements. All members

    of the Board are considered independent in relation to the company and its management, and all members of the Board apart from

    Henrik Persson Ekdahl and André Lavold are considered independent in relation to major shareholders.

    Board work in 2016

    The Board's rules of procedure describe which items shall be on the agenda at each Board meeting. In 2016, the Board of Directors held fourteen (14) meetings. All meetings held during the year followed an

    agenda which, together with the documen- tation for each agenda item, was provided to Board members ahead of the meetings. Also, present at Board meetings were the

    CEO and, from September, the Head of Legal in capacity as the secretary of the Board. The CEO reports on operational performance at each ordinary Board meeting, and the CFO reports on financial performance. In addition, the CFO and various senior executives, and auditors if needed, deliver presentations on various specialist topics.

    In 2016, three committees were created, Audit, Remuneration and M&A committee. The creation of committees has been a part of the company´s efforts to list the compa- ny on the NASDAQ Stockholm. Before the creation of Board committees, the board's

    members as a group took decisions regarding all matters.

    The Board has paid particular attention to acquisitions, and major investments during the year.

    Board remuneration

    At the 2016 Annual General Meeting, it was

    decided, in accordance with the Nomina-

    tion Committee's proposal, that the total remuneration for the Board would be EUR 220,000, with EUR 70,000 to the Chairperson and EUR 30,000 to each of the other direc- tors of the Board.

    In addition to Board remuneration, it was decided at the Extraordinary General Meet- ing held on 16 January 2017, that the follow- ing remuneration for committee work would be awarded; Audit Committee Chairperson, EUR 12,500 and Members of Audit Commit- tee EUR 6,250; M&A Committee Chairperson EUR 12,500 and Members of the M&A Com- mittee EUR 6,250; Remuneration Committee Chairperson EUR 6,250 and Remuneration Committee Member EUR 3,125.

    All Board members who are independent of major shareholders were granted warrants at the time of joining the Board. At the Extraordinary General Meeting held on 16 January 2017, it was resolved that the compa- ny shall enter into a warrant agreement with Mathias Hermansson on substantially similar terms to the existing warrant agreements with the other Directors.

    Chair of the Board

    Kathryn Moore Baker was elected Chair- person of the Board of Catena Media by the AGM held on 26 May 2016. Kathryn Moore Baker has served in this capacity since.

    The Chairperson of the Board supervises the Board's work and fulfilment of its duties, and has special responsibility for ensuring that the Board's work is well-organised, efficiently run and aligned with operational developments. The Chairperson of the Board

    serves as the Board's spokesperson to Catena Media's shareholders, ensures that the CEO provides sufficient information for Board decisions and oversees that Board decisions are executed.

  • Board committees

    The Board appoints committees. The commit- tees prepare issues arising and recommend the board proposals for decisions.

    Audit Committee

    The Audit Committee serves in an advisory capacity and prepares issues for consider- ation and decision by Catena Media's Board of Directors. The committee is responsible for overseeing and ensuring the quality of financial reporting and the effectiveness of the company's internal control including , Risk Control and Compliance functions. The committee also discusses valuation matters, such as the assessment of impairment and other assessments pertaining to the annual accounts.

    The Audit Committee reviews and oversees the company's external auditors' impartiality and independence, regardless of the board's other responsibilities and duties, regularly meets with and reviews reports from the company's external auditors to re- main informed about the focus and scope of the audit. The committee assists in the prepa- ration of proposals for the AGM's election of external auditors and decisions on auditors' fees. The committee is required to meet at least five (5) times per financial year.

    The Audit Committee shall be comprised

    Board of Directors 2016, for more information see page 40.

    Independent in relation to major

    Independent in

    relation to company Remuneration

    Audit

    M&A

    Fees

    Name Position Elected

    shareholders

    and its management

    Committee

    Committee

    Committee

    EUR

    Kathryn Moore Baker Chairperson 2015 Yes Yes Chairperson 76,250 Henrik Persson Ekdahl Member 2015 No Yes Member Member 39,375 Andre Lavold Member 2015 No Yes 30,000

    Anders Brandt Member 2015 Yes Yes Member 36,250 Mats Alders Member 2015 Yes Yes Chairperson 42,500 Mathias Hermansson Member 2016 Yes Yes Member Chairperson 48,750

    Attendance at Board and Committee Meetings

    Name

    Board Meetings

    Remuneration Committee

    Audit Committee

    M&A Committee

    Kathryn Moore Baker

    14/14

    1/1

    Henrik Persson Ekdahl

    14/14

    1/1

    1/2

    Andre Lavold

    14/14

    Anders Brandt

    14/14

    2/2

    Mats Alders

    14/14

    2/2

    Mathias Hermansson**

    8/8

    2/2

    2/2

    Mikael Riese Harstad*

    6/6

    * Elected at AGM 2016. **Did not make himself available for re-election at AGM 2016, 26th May 2016.

    of at least three (3) members. The members of the Audit Committee may not be employ- ees of the company. At least one (1) of the members shall have accounting or auditing competence. The Chairperson of the Board of Directors can be appointed as a member of the Audit Committee.

    Committee members in 2016 were Mats Alders (chair), Mathias Hermansson and Henrik Persson Ekdahl. The company's

    employees and auditors may be summoned to committee meetings to provide details on specific reports or issues. Committee

    meeting minutes are recorded and available to all Board members. The Chairperson of the committee reports to the Board at Board meetings concerning the issues discussed and proposed at committee meetings. The committee was set up during 2016 and held two meetings in 2016.

    Remuneration Committee

    The Remuneration Committee's primary task is to prepare the Board for making decisions on remuneration policies, benefits and other terms of employment for Executive Man- agement team members. The Committee monitors and evaluates ongoing variable remuneration program for senior executives and those completed during the year, as well as the application of the remuneration guide- lines for senior executives resolved on by the AGM and the Group's remuneration structure and remuneration levels.

    The Remuneration Committee has at least two (2) members appointed by the Board on an annual basis. All members must be independent in relation to the compa-

    ny and the company's management. The committee meets at least twice per financial year. In 2016, the committee was comprised of Kathryn Moore Baker (chair) and Henrik Persson Ekdahl. Company employees may be summoned to committee meetings to provide details on specific reports or issues. Committee meeting minutes are record-

    ed and available to Board members. The Chairperson of the committee reports to

    the Board at Board meetings concerning the issues discussed and proposed at committee meetings. The committee was set up during 2016 and held one meeting in 2016.

    The M&A Committee

    The M&A Committee's primary task is to in- dependently oversee the M&A process of the company for M&A targets to ensure that they are adequately explored and analysed before being presented to the Board of Directors.

    It then analyses and evaluates the financial, legal, tax, commercial and operational due diligence performed by advisors and the company to ensure that each transaction has

    been adequately explored and analysed. For the avoidance of doubt, the M&A Committee shall not decide whether an M&A transaction should be carried out or not, although the Committee makes recommendations to the board who makes the decision.

    Furthermore, the M&A Committee is a pre-acquisition committee and shall not

    evaluate the results of the M&A transactions completed by the company.

    The M&A Committee has at least two

    (2) members appointed by the Board on an annual basis. The committee meets as often as required to fulfil its assignment.

    The committee was set up during 2016 and comprised Mathias Hermansson (chair) and Anders Brandt.

    Company employees may be summoned to committee meetings to provide details about specific reports or issues. Committee meeting minutes are recorded and available to Board members. The Chairperson of the committee reports to the Board at Board meetings concerning the issues discussed and proposed at committee meetings. The committee was set up during 2016 and held two (2) meetings in 2016.

  • Auditors

    The AGM elects the company's auditors. At the AGM held on 26th of May 2016, PwC was re-elected as auditor for the period up to the 2017 AGM, with Authorised Public Accoun- tant Romina Soler as the Partner auditor. The auditor reports to the shareholders on the truth and fairness of the consolidated finan- cial statements in accordance with IFRS as adopted by EU, and the requirements of the Maltese Companies Act, 1995. PwC Malta is also engaged to review the quarterly report for the nine-month period in accordance with ISRE 2410.

    The 2016 AGM authorised the directors to approve the auditor's fees, for the period up to the next AGM. The Group may also refer to the auditors on ad-hoc advisory mat- ters subject to independence restrictions.

  • CEO and Executive Management Team, see also page 42

    The CEO is appointed by the Board and runs the business in accordance with instructions adopted by the Board. The CEO is respon- sible for the company and Group's day-to- day administration pursuant to the Articles of Association. The CEO also works with

    the Chairperson of the Board to decide on matters that will be dealt with at each Board meeting. The Board adopts instructions for the CEO each year and evaluates the CEO's duties on a regular basis.

    Robert Andersson has been CEO of Catena Media since February 2015. For additional information on the CEO and the CEO's shareholdings, see the presentation of the Board of Directors and Executive Management Team and the website www.catenamedia.com.

    The company's CEO heads, sets the meet- ing schedule for, and appoints the members of the Executive Management Team. The Executive Management Team's role is to prepare and implement strategies, manage corporate governance and organisational issues and monitor the company's financial development.

    The CEO is responsible for ensuring that Board members receive essential informa- tion and decision-making data by presenting reports and proposals at Board meetings on issues handled by management. The CEO keeps the Board and Chairperson updated on the company and Group's financial position and development. The CEO's work is evaluat- ed by the Board on a continuous basis.

  • Executive Management Team

  • The Executive Management Team (EMT) consisted of three (3) members during 2016 and was increased from 1st January 2017 to six (6) members, including the CEO, who hold the operational responsibility for the com- pany. For information on the CFO and other members of the Executive Management Team, see the section regarding the board and the EMT and the company's website www.catenamedia.com.

    The Board's proposal regarding principles for remuneration to executive management

    The Board's proposal regarding principles for remuneration to the management, consisting of the CEO and five (5) persons (executive management), is prepared by the Remuner- ation Committee. The Board takes a decision on the proposed principles. The principles are the adopted by the AGM.

    In handling matters related to remu- neration, external advice is sought where necessary.

    The main principle is to offer senior executives market-based remuneration and other terms of employment. Actual levels of remuneration are determined based on factors such as expertise, experience and performance.

    The board may deviate from these guidelines on an individual basis if particular reasons arise.

    System for internal control and risk management

    Introduction

    The purpose of internal control is to achieve an effective organisation that achieves goals set by the Board of Directors. This means to a reasonable extent ensure that the com- pany's business is conducted appropriately and effectively, that laws and regulations are complied with and to provide reasonable assurance in relation to the reliability of the

    financial reporting. Catena Media has chosen to describe the work on internal control in accordance with COSO's components: control environment, risk assessment, control activi- ties, information and communication as well as monitoring.

    The Board of Directors is responsible for

    internal control of the company.

    Control environment

    The control environment is based on the distribution of work between the Board of Directors and its committees and the CEO. The control environment also include the values that the Board of Directors and the management have communicated and are operating from.

    Governing documents are established and assessed on a continuous basis by man- agement and policies are approved by the Board of Directors.

    Policies, procedures and process de- scriptions are distributed to and signed for by each staff member using Catena Media's online compliance system. All employees

    have to formally sign off the Code of Conduct and Insider Policy, while specific departments also need to sign off on policies and proce- dures relevant to them.

    Governing documents are defined as follows

    Code of conduct

    Policies (what)

    Procedures (how)

    Risk assessment

    During 2016 Catena Media developed a pro- cess for risk management where the business

    annually carries out a risk analysis. Risks are

    identified in the following categories:

  • Strategic risks

  • Operational risks

  • Financial risks

  • Compliance risks

    The goal of the risk analysis is that the greatest risks that threaten the company's overall objectives and strategic direction are identified and evaluated in relation to the likelihood of the risk occurring during the planning period as well as its impact on the goal achievement. How well the risks are managed should be taken into consideration.

    Each risk has a designated risk owner in the line organisation with the mandate and responsibility to ensure that measures and controls for managing the risk have been implemented. The risk owner is also respon- sible for monitoring, follow-up and reporting of any changes to the risk exposure.

    Management reports the identified risks to the Audit Committee. Through the Audit Committee, the Board reviews the company's risk management framework and related pro- cesses, including risk assessments, the annual risk report and the top 10 risks in detail. This is to ensure that all significant risk areas are covered and that controls are implemented to mitigate the identified risks.

    Division of roles within Catena Media - Internal control and risk management

    Role Responsibility

    Board of Directors

    Ultimately responsible for reviewing risks and controls within the Catena Media Group of companies.

    Audit Committee

    Reporting results of audit meetings to the Board as well as initiating reviews where necessary.

    Remuneration Committee

    Preparing the Board's decisions regarding remuneration principles, remuneration and terms of employment of the CEO and guidelines for remuneration and terms of employment for group executive management position holders and the CEOs of subsidiaries. Additionally, the committee is tasked with preparing proposals for incentive programs.

    M&A Committee

    Reviewing potential acquisitions and making proposals to the Board of Directors.

    Group Management

    Operationally responsible for controls being put in place to mitigate identified risks. Ensuring there are policies and procedures in place, as well as ensuring that employees have sufficient knowledge of internal control.

    CFO

    Operationally responsible for the financial reporting including ensuring sufficient internal control in the financial

    reports.

    Country Managers

    Responsible for implementing and following-up on policies that apply to their markets.

    Employees

    Responsible for day-to-day as applicable to their specific roles and for reviewing the controls as applicable.

    Risk & Control yearly cycle

    1.Risk assessment

    5.Reports on status of risk management and internal control for the Board of Directors

    4. Evaluation

    of internal control (self- evaluation)

    2.Follow-up and

    updating of governing documents, controls

    6.Corporate governance report

    3. Implement updated

    governing documents

    The company's largest operational risks are related to the quickly changing environ- ment that characterises the gaming industry specifically and the rapidly evolving area of search engine optimisation in general.

    Control activities

    During 2016 Catena Media established a risk management procedure including a num- ber of key controls that serve as a basis for the minimum level of control that must be established in the business processes. The control requirements are important tools

    and instruments for the Board of Directors to be able to manage and evaluate information from the management and take responsibility in relation to the identified risks.

    Catena Media has placed special em- phasis on mapping and assessing the most significant risks relating to financial reporting to ensure correct reporting. As an example, intangible asset controls include the periodic impairment testing procedure in order to determine return and potential impairment.

    The effectiveness of each control is test- ed regularly through self-assessment.

    Information and communication

    Internal information and external commu- nication are regulated using the Communi- cation and Disclosures Policy as well as the Insider Policy. Internal communication to

    and from the Board and the CEO to the staff is conducted through the weekly newsletter and internal communication tools such as

    Slack and Jira. Formal policies and procedures are issued on the compliance portal.

    The Board of Directors regularly receives

    financial reports on the Group's position and earnings trend. Within the company meetings are held at the management level,

    then proceeding to the level each entity finds

    appropriate.

    Monitoring

    A control self-assessment is performed once a year. A summary report of the performed control self-assessment is presented to the Board yearly, which includes measures of both preventive and detective nature and highlights deficiencies to be addressed.

    The Board of Directors discusses all of the Group's quarterly reports, financial state- ments and annual reports before they are published. The Board of Directors receives monthly financial reports on the Group's position and earnings trend and at every board meeting the Group's financial situation is dealt with.

    Monitoring activities;

  • Annual review and approval policies by the

    Board of Directors.

  • Reporting of risk analysis once per year to the board of directors.

  • Reporting of control self- assessment yearly

  • Monthly / continuous follow-up and vari- ance analysis of financial reporting figures.

    Internal audit

    There is no formal internal audit function within the company, although Catena Media has implemented a risk management process including risk assessment, control require- ments and self-assessment process for controls. The framework and self-assessment results have been reviewed by management and reported to the Board. The head of each area and function within the company has

    a responsibility to carry out the self-assess- ment while the Audit committee bears the responsibility together with the Board to en- sure compliance with established principles of internal control.

    The Audit Committee has absolute free- dom to call for an external review of certain areas of the company should it be deemed necessary. For ad hoc assignments, external advisors can be commissioned to review particular areas for a second opinion to the Board, should this be considered necessary. Moreover, the company has a Compliance function within the legal team that liaises with the CEO and the Chairperson.

    Board of Directors

    Kathryn Moore Baker

    Chairman of the Board of Directors since

    17 June 2016. Board member since June 2015.

    Born: 1964

    Other assignments: Chaiman of the Board of Navamedic ASA. Board member of Norges Bank (the Central Bank of Norway), Akastor ASA, Sevan Marine Asa, DOF ASA and the American Chamber of Commerce in Norway. Member of European Advisory Board of the Tuck School of Business, Dartmouth College.

    Previous assignments held during the past five years: Partner of Reiten & Co AS. Chair- man of Agasti ASA, Kuddle AS, TheMOON AS. Board member of Bertel O. Steen Invest, Data Respons ASA, StormGeo AS.

    Education: Bachelor of Economics, Wellesley College. MBA, the Amos Tuck School of Busi- ness, Dartmouth College.

    Previous experience: McKinsey & Company, Morgan Stanley.

    Shares: 8,500 through Lakeside AS

    Warrants/options: 91,275 warrants through

    Lakeside AS.

    Independence:

    In relation to major shareholders: Yes In relation to the company and management: Yes

    Mats Alders

    Member of the Board of Directors 2015.

    Born: 1958

    Other assignments: Chairman and CEO of Anagram Produktion AB. Chairman of Anagram Sverige AB, Anagram Pocket AB, Anagram

    Live AB, Anagram Rights AB and Anagram Nöjesproduktion AB. Board member of Hantera i Stockholm AB. Deputy Board member and CEO of Alders Film & TV AB.

    Previous assignments held during the

    past five years: Chairman of Starbreeze AB, Starbreeze Production AB, Starbreeze Studios AB, Starbreeze Publishing AB, Mobivending AB, Mobile Payment Solutions, Stockholm AB, Netadmin System i Sverige AB, Bambora On Mobile AB. Board member and CEO of Dandy Invest AB.

    Education: MBA in Economics, Stockholm University. Advanced certificate in Business Administration, IHM Business School.

    Shares: -

    Warrants/options: 91,275 warrants.

    Independence:

    In relation to major shareholders: Yes In relation to the company and management: Yes

    Anders Brandt

    Member of the Board of Directors since 2015.

    Born: 1960

    Other assignments: Chairman of Idekapital AS, Play Magnus AS and Meshtech AS. Board member of Nimbus Direct AS, Cloudberry Mo- bile AS, Viken Fiber Holding AS, Viken Fiber AS, NVFT AS, Palos AS, Motimate AS, Wheelme

    AS, OMG AS, Tactic Real-Time Marketing AS and Guldværket Cirkumferens Gullgruvenes Venner. CEO of Best Consulting V/Anders Brandt. Deputy Board member of Hilvimed AS, Interjob AS and Spiralis AS.

    Previous assignments held during the past five years: Chairman of Easybring AS and Moreto EDB AS. Board member of EVRY ASA, Nimber AS, BC Kapital AS, Brand Invest AS, Mytos Systems AS, Brandmaster AS, NRK Aktivum AS, Teo Invest AS. Deputy board member of Globalgateways S.L.

    Education: Examen philosophicum and studies in law, University of Oslo. Studies in marketing Westerdals Reklameskole, Oslo.

    Shares: -

    Warrants/options: 91,275 warrants through

    Idekapital AS.

    Independence:

    In relation to major shareholders: Yes In relation to the company and management: Yes

    Henrik Persson Ekdahl

    Member of the Board of Directors since 2015.

    Born: 1980.

    Other assignments: Partner of Optimizer Invest Ltd. Board member of True Value Ltd, True Value International Ltd, Catena Invest, Valeo Invest Ltd & Okobay Ltd.

    Previous assignments held during the past five years: Chairman of Betit Holding Ltd including group companies. Board member of Optimizer Invest Ltd. Board member and CEO of Betsson Group Ltd including group compa- nies. Board member and CEO of Safepay Malta Ltd (Betsafe) including group companies.

    Education: BA in Business Administration, University of Wisconsin and BA in Business Administration, Hull Business School at Lincoln University. MBA, Gothenburg School of Eco- nomics.

    Shares: 8,217,485 shares through Optimizer

    Invest Ltd. Warrants/options: - Independence:

    In relation to major shareholders: No

    In relation to the company and management: Yes

    Mathias Hermansson

    Member of the Board of Directors since 27 May 2016.

    Born: 1972

    Other assignments: CEO NC Management AB. Board member of Interactive Advertising Bureau Sweden and Bitsec AB. Chairman of the Board of MTGx International AB,

    Previous assignments held during the past five years: Chief Financial Officer of Modern Times Group MTG AB, Non-executive Director of CTC Media, Inc, Chairman of the Board of Viaplay AB, Viasat AB, Viasat Sport AB, MTG TV AB, Nice Entertainment AB and MTG Radio AB, Board member of Turtle Entertainment GmbH, Splay AB and MTG eSports holding AB.

    Education: Business Administration at Gothen- burg School of Economics and The University of Edinburgh, Great Britain.

    Shares: -

    Warrants/options: 91,275 warrants.

    Independence:

    In relation to major shareholders: Yes In relation to the company and management: Yes

    Andre Lavold

    Member of the Board of Directors since 2015.

    Born: 1980.

    Other assignments: Co-Founder & Partner of Optimizer Invest Ltd. Founder and board

    member of Agito Holding AS, Lavon AS, Supero Holdings Limited and Optimus Invest Ltd.

    Board member of Gaming Innovation Group including group companies, Valeo Invest Ltd, Bergen Holding Ltd, Higher Holding Ltd and Sequra SA.

    Previous assignments held during the past five years: : Business development director of Betsson Group Ltd. Founder, board member and chief strategy officer of Betsafe (Safepay Malta Ltd). Board member of Optimizer Invest Ltd, Casumo AB and Tinitell AB.

    Education: Tromsdalen upper secondary school.

    Shares: 8,217,485 shares through Optimizer

    Invest. Warrants/options: - Independence:

    In relation to major shareholders: No

    In relation to the company and management: Yes

    Executive Management‌

    Robert Andersson

    Chief Executive Officer (CEO) since 2015

    Born: 1977

    Other assignments: Board member and CEO of Gorollsson AB. Deputy Board member of Imagination Studios i Stockholm AB.

    Previous assignments held during the past five years: External CEO of The Teroni Group AB, River Cresco AB, Matsuda Agency AB and ISBIT GAMES AB. Partner of Smillea HB.

    Education: Computer Science, Stockholm

    University and studies at Griffith University.

    Shares: 11,433 shares.

    Warrants/options: 450,000 options.

    Anne Rhenman Eklund

    Head of IR and Communications Member of the Executive Management since 2016

    Born: 1957

    Previous assignments held during the past five years: Head of IR and Communications at Hoist Finance AB and Director IR and Commu- nications at Axfood AB

    Education: Nordic Executive Investor Relations Program, Helsinki School of Economics and Berghs School of Communication.

    Shares: -

    Warrants/options: -

    Johannes Bergh

    Chief Operating Officer (COO)

    Member of the Executive Management since 2017

    Born: 1969

    Other assignments: Chairman of the board - Codesign AB. Chairman of the board - IPQ AB.

    Previous assignments held during the past five years: Chief Executive Officer Rewir AB, Chief Brand Officer Flir Systems Inc.

    Shares: -

    Education: Harvard Business School, RMI Berghs, Stockholm University.

    Warrants/Options: -

    Louise Wendel

    Head of Legal

    Member of the Executive Management since 2016

    Born: 1975

    Previous assignments held during the past five years: Head of Legal at Fyndiq AB and Head of Legal at Svensk Fastighetsförmedling AB.

    Education: Masters of Laws LLM, Lund Uni- versity.

    Shares: -

    Warrants/options: -

    Fiona Ewins Brown

    Human Resources Director

    Member of the Executive Management since 2015

    Born: 1973

    Previous assignments held during the past five years: HR Director and Talent Manage- ment Director at GFI Software Development Ltd. HR Director at Morgan Stanley.

    Education: Human Resources Management, Seaforth College of TAFE and Charles Sturt University.

    Shares: 2,883 shares.

    Warrants/options: 43,620 options.

    Claes Wenthzel

    Chief Financial Officer (CFO)

    Member of the Executive Management since 2017

    Born: 1962

    Other assignments: Board member of WenCon AB and PeWe International AB.

    Previous assignments held during the past five years: CFO at Kemetyl Group, Interim CFO at Pricer AB (publ.), Financial advisor Doro AB (publ.), M&A consultant Mycronic AB (publ.), Financial advisor Sprint Bioscience AB (publ.).

    Education: BSc. Business Administration,

    Stockholms University. Shares: 5,000 Warrants/options: -

    Directors' Report

    For the Year Ended 31 December 2016

    The Board of Directors present their annual report together with the consolidated and separate financial statements of Catena Media p.l.c (the "Group" and the "Compa- ny"), registration number C70858, for the financial year ended 31 December 2016.

    The Company has its head office and registered address at The Firs, Gorg Borg Olivier Street, Sliema in Malta. The Group has subsidiaries in Malta, London, Belgrade and on 15 January 2017 a new subsidiary was incorporated in Delaware, USA.

    "Catena Media" or the "Group" is used throughout this annual report when describ- ing the Group's affiliate marketing operations. This primarily includes the operations of our Malta based operation, but also our other subsidiaries as referred to above.

    Principal activity

    Catena Media's principal activity is to attract users through online marketing techniques, principally Search Engine Optimisation (SEO) and Pay-per-click advertising (PPC) and sub- sequently seek to channel these same users to online and mobile business clients, i.e

    i-gaming operators. For this purpose, Catena owns and operates more than 3,000 websites in various languages. Many of the websites rank in top positions in search engine algo- rithms, and together with a complementing PPC strategy and extensive knowledge of

    our specialists in the field, Catena Media attracts high value traffic of potential players. The contents of the websites are written by professional writers and are continuously updated to provide the players with the most relevant and up-to-date information.

    Business overview

    The Group has a strong focus on delivering high value content, and it primarily focuses on SEO. Catena Media holds a strong market position within the online casino segment, which is its core focus market. Whilst Catena Media continues to focus on the fast-grow- ing online casino market, during the current financial year, it has also entered the sports betting segment of the online market, as well

    as strengthening its social media know-how. Catena Media has reached the position it has today by building a portfolio of relevant websites combined with sophisticated key word research and content optimization techniques.

    Catena Media entered the US market in January 2017 by acquiring regulated affiliate assets targeting the Poker and Casino mar- kets in New Jersey and Nevada. Following this acquisition, Catena Media adds three new verticals to its business. In addition to Poker, eSports and Daily Fantasy Sports websites were also acquired. This acquisition makes Catena Media the largest regulated casino affiliate in the US, and puts the Group in pole position to take advantage of further re-reg- ulation in what has the potential to become the world's largest iGaming market.

    Catena Media utilizes a variety of busi- ness intelligence tools in order to track the flow of internet traffic to its websites and its customers. Analysing the quality and conversion of such traffic is crucial in order to be able to develop and improve website content. The investment in technology and business intelligence has increased Catena Media's competitiveness and has been an

    important factor in attaining its strong posi- tion in its core focus markets. This improves the Group's market position, especially on its efforts in PPC, as well as ensuring that Catena Media provides a high-quality product offer- ing to end-users and service to its customers.

    The Group has successfully acquired several marketing affiliates over the past two years and has extensive experience in integrating the acquired assets in order to maximize synergies and increase revenue.

    Acquisitions are believed to be a strong driver for further growth and the Directors believe that the Group is well positioned to acquire further affiliate marketing operations and to leverage on increased scale advantages and incremental synergies.

    Catena Media has been able to scale up its business operations and grow its revenues significantly without having to increase its cost base at the same pace. The in-house

    developed technology platform and busi- ness intelligence analysis, coupled with a flexible and fast moving organisation have enabled the Group to develop and provide a high-quality product and service offering.

    The AskGamblers and CasinoUK acquisitions provided Catena Media with variations to the affiliate business model and this has proven to be an excellent way to reach additional customer bases.

    Market development

    The online casino market in which Catena Media operates has reported strong growth in recent years. Catena Media's view is that the demand for lead generation and gam- bling affiliates will continue to grow because of this.

    Within the fragmented affiliate market, there are only a handful of players who can generate a substantial number of new depositing customers (NDC) to operators. The strongest competitors span the same geographical markets as Catena Media and

    there seems to be a steady trend for launches of new casino brands with their primary focus on the affiliate channel. This leaves opportu- nities for both geographic expansion as well as acquisitions.

    In Catena Media's core markets, namely Sweden, Finland, Norway, the Netherlands and the UK, iGaming is growing faster than land-based gaming. Both new online casino operators and old brands in new markets need visibility and, combined, the two-drive growth for the affiliate market through their increased spending on digital marketing, and the pay-per-performance commercial model, such as that offered by Catena Media, com- prises one of the fairest and most accounta- ble acquisition models available.

    Revenues

    The Group's revenues totalled EUR 40.05 million (2015: EUR 14.94) for the year, corre- sponding to an increase of 168 percent com- pared to the previous financial year. Search revenue represented EUR 29.42 million (2015: EUR 13.86) of total revenues for the

    period. The increase in Search revenue was driven in part by organic growth and in part through acquisitions made during the current and prior financial years.

    Paid revenue amounted to EUR 10.63 million (2015: EUR 1.08). This revenue prin- cipally related to pay-per-click (PPC) traffic. Revenues relating to the SBAT acquisition, which was finalised during the last quarter, were also included in Paid revenue.

    NDCs totalled 204,633 (69,331), an increase of 195 percent compared with the previous year.

    Expenses

    Operating expenses amounted to EUR 21.40 million (2015: EUR 5.96). Direct costs related to Paid revenue represented the more signif- icant expense component and amounted to EUR 7.21 million (2015: EUR 0.74). These costs predominantly related to AdWords (Google spend) costs.

    Personnel expenses amounted to EUR

    6.11 million (2015: EUR 2.02). The increase in personnel expenses was due to more employees, which was driven by the strong growth currently being experienced by the Group, as well as a result of the acquisitions made during the current financial year, in particular Askgamblers.com and SBAT. The headcount totalled 190 employees at the close of the current financial year compared

    to 70 employees at the close of the previous financial year. This also gave rise to the signif- icant increase in other operating expenses as a result of an increase in staff-related support costs such as increased office expenses, additional office rent, more software user licences, recruitment agency fees and other similar items included in other operating expenses.

    Further to the above, as a result of this rapid expansion, the Group also witnessed an increase in other operating expenses, which included domain renewal fees for SEO efforts, external consultancy fees and server hosting fees. Other operating expenses amounted to EUR 4.66 million (2015: EUR 1.89).

    Depreciation and amortisation amounted to EUR 1.04 million (2015: EUR 0.14). The increase in depreciation and amortisation was mainly attributable to the acquisition

    of competitor player databases during the

    current and prior years.

    Costs relating to the bond issue made by the Parent Company of EUR 1.18 million (2015: nil) and costs relating to the listing of

    EUR 1.2 million (2015: EUR 1.17) were includ- ed in operating expenses.

    Earnings

    Operating profit for the year amounted to EUR 18.65 million (2015: EUR 8.98), an

    increase of 108 percent compared to the previous year. Adjusted operating profit amounted to EUR 21.03 million (2015: EUR 10.15), corresponding to an adjusted operat- ing margin of 53 percent (2015: 68). Operat- ing profit includes IPO and bond related costs of EUR 2.38 million (2015: EUR 1.17). The decrease in operating margins was a result of the acquisition of Catena Media UK Limited

    in November 2015, as well as the increase in

    personnel expenses.

    Profit before tax amounted to EUR 17.51 million (2015: EUR 9.00), an increase of 95 percent compared with 2015.

    Profit for the year amounted to EUR 16.14 million (2015: EUR 8.31). Earnings per share amounted to EUR 0.319 (0.199).

    For the year ended 31 December 2016, the Group had an effective tax rate of 7.8 percent (2015: 7.6).

    Cash and cash flow

    Cash from operating activities amounted

    to EUR 11.07 million (2015: EUR 8.38). Cash flows used in investing activities were EUR 40.97million (2015: EUR 4.26) and were primarily attributable to the acquisitions that took place during the year. Cash flows from financing activities were EUR 72.44 million which include proceeds from the bond issued in September 2016, whilst the amount used

    in the comparative year was EUR 3.15 million.

    Cash and cash equivalents amounted to EUR

    44.71 million (2015: EUR 1.53) at the end of

    the year.

    Investments and financing

    Investments in intangible assets, which con- sist of acquired player databases, domains and websites, and other intellectual property, amounted to EUR 57.73 million (2015: EUR 13.40) during the current financial year. The acquisitions completed during the current financial year have been financed through funds obtained from the listing in February 2016, the bond issue made in September 2016 (as referred to below) and partly through internal financial resources.

    Shareholders' equity

    As at 31 December 2016, shareholders' equity in the Group amounted to EUR 53.84 million (2015: EUR 12.64), which corresponds

    to EUR 0.319 (2015: 0.199) per share.

    Significant events in 2016

    Quarter 1

    On 11 February 2016, the company's shares were admitted to trading on the First North Premiere exchange.

    Catena Media continued to consolidate its status as market leader in Sweden and continued to strengthen its position in lead

    generation through the acquisition of the Swedish affiliate network Wonko Media AB. It also acquired several casino comparison websites that operate mainly in Italy and Belgium, which comprise new markets for Catena Media.

    Quarter 2

    Catena Media acquired the acknowledged and highly regarded affiliate website AskGam- blers.com for a consideration of EUR 15 million. AskGamblers operates one of the markets' most highly visited web portals

    for player reviews and rankings of online casinos. The transaction comprises all affiliate accounts, domains, mobile apps and social media accounts.

    Catena Media further acquired the player accounts and domains of one of the leading iGaming affiliates in Germany and of a Swed- ish sportsbook affiliate Spelbloggare.se. With the acquisition of the latter, Catena Media made an entry into the sportsbook segment

    - a new vertical for the Group.

    Quarter 3

    Catena Media plc issued a three-year secured bond loan for EUR 50 million with a final maturity in September 2019. The proceeds from the bond issue will be used to further strengthen Catena Media's position as one

    of Europe's leading online performance mar- keting and lead generation companies within iGaming and sportsbook.

    Quarter 4

    Catena media continued to strengthen its position in the affiliate marketing industry through the acquisition of the assets of two affiliate marketing companies, namely SBAT and CasinoUK (both UK based) and signed an agreement to acquire the assets of a

    US based operation. CasinoUK and the US based acquisition focus on the online casino segment, whilst SBAT focuses on the on-line sports betting segment. Revenues relating to the US acquisition will be reflected in Catena Media's revenues as from 15 January 2017, the effective date of this agreement.

    Employees

    The Group's total number of employees at 31 December 2016 amounted to 190 (2015: 70),

    of which 72 (2015: 23) were women and 118 (2015: 47) were men. Expressed as percent- ages, women represented 38 percent (2015:

    33) of the total number of employees whilst men represented 62 percent (2015: 67). All employees are employed on a full-time basis. Due to its rapid growth, the Group is continu- ing to recruit new employees.

    Events after the end of the year

    On 9 January 2017, 440,669 new shares in Catena Media plc were issued with a nominal value of EUR 0.0015 per share and a share premium of EUR 7.9994 per share. These shares were issued to be utilised as part set- tlement of the upfront consideration due for the US acquisition (as referred to above).

    On 10 February 2017, Catena Media acquired the assets of the Swedish focused casino affiliate, Slotsia.com. The purchase price comprised of an upfront payment of EUR 3.58 million and additional earn-out pay- ments of a maximum of EUR 5 million, based on the revenue performance over a period of two years.

    Full-year outlook for 2017

    Both revenues and profit are expected to increase during 2017.

    Financial targets

    The target is to have an operating margin exceeding 50 percent and an average annual growth exceeding 75 percent during the period 2016-2018.

    Financial policy

    The aim of the policy is to clarify respon- sibilities and to describe general rules and guidelines for specific areas within Catena Media, with a view to supporting operations, reducing financial risk and allowing efficient use of capital and cash flow.

    Parent company

    In addition to Group management and financial functions, Catena Media p.l.c. is the ultimate holding company of the Group, and was incorporated in Malta on 29 May 2015 with the sole purpose of receiving dividend income from the main operational company, Catena Operations Limited.

    The Company´s revenue was nil during the current financial year (2015: EUR 2.60) since no dividends were received from its main operational subsidiary.

    Bond and IPO costs for the financial year ended 31 December 2016 amounted to EUR 0.92 million (2015: nil) respectively,

    whilst finance costs, also relating to the bond issue amounted to EUR 0.99 million (2015: nil). Bond finance costs are classified within "Interest payable on borrowings". During

    the year ended 31 December 2016, person- nel expenses amounted to EUR 0.15 million (2015: EUR 0.03), whilst operating expenses amounted to EUR 0.13 million (2015 EUR 0.02). The loss for the financial year ended 31 December 2016 amounted to EUR 2.17

    million (2015: profit of EUR 1.86).

    The Company's cash and cash equivalents

    amounted to EUR 31.65 million (2015: EUR

    0.10), borrowings comprised debt securities amounting to EUR 50.5 million (2015: nil) and equity amounted to EUR 25.21 million (2015: EUR 1.71) at the end of the year.

    Other group companies

    Catena Operations Limited

    Profit before tax amounted to EUR 17.39 million (2015: EUR 8.53). Profit after tax amounted to EUR 11.23 million (2015: EUR 5.53). Net equity as at year end amounted to EUR 20.15 million (2015: EUR 8.77). Subse- quent to year end, a dividend of EUR 2.35 million was distributed to Catena Media p.l.c.

    Molgan Ltd

    Profit before tax amounted to EUR 0.08 mil- lion (2015: EUR 0.11). Profit after tax amount- ed to EUR 0.05 million (2015: EUR 0.07). Net equity as at year end amounted to EUR 0.12 million (2015: EUR 0.06).

    Catena Media UK Limited

    Profit before tax amounted to EUR 2.20 mil- lion (2015: EUR 0.16). Profit after tax amount- ed to EUR 1.76 million (2015: EUR 0.14). Net equity as at year end amounted to EUR 1.78 million (2015: EUR 0.11).

    Catena Media doo Beograd

    Profit before tax amounted to EUR 0.06 million. Profit after tax for the year amounted to EUR 0.06 million. Net equity as at year end amounted to EUR 0.06 million.

    Significant risks and uncertainties Regulatory risk

    Although the Group does not conduct any online gambling operations, the Group is dependent on the online gambling industry which comprises most its customers. The laws and regulations surrounding the online gambling industry are complex, constantly evolving and in some cases also subject to uncertainty, and in many countries online gambling is prohibited and/or restricted. If enforcement or other regulatory actions are brought against any of the online gam-

    bling operators, which are also the Group's customers, whether current or future, the Group's revenue streams from such custom- ers may be adversely affected. Further, the authority concerned may also claim that the same or similar actions should be brought against any third party having promoted the business of such online gambling operator, including the Group. Accordingly, any such event, including future changes to laws and regulations, could have a material adverse effect on the Group's business, financial con- dition and results of operations.

    To manage this risk, the Group is active

    in regulated and unregulated markets and

    Catena Media's customer base is sufficiently

    diverse.

    Reliance on third parties

    Another risk faced by the Group relates to its reliance on its customers when determining the fees to be invoiced by the Group to its customers. Once a player directed by the Group has registered with one of its cus- tomers, the Group has no direct insight into the activities of such a player. Although the Group may request access to the net revenue calculations upon which the Group's fees are determined, there still remains a risk of mis- calculation, including fraudulent or negligent calculations made by its customers or as a result of human error. If such miscalculations occur without being detected and subse- quently remedied or retroactively adjusted, the Group could receive a lower fee than it is entitled to under its customer agreements, which in turn would result in less revenue.

    Accordingly, any such miscalculation could have an adverse effect on the Group's business, financial condition and results of operations.

    Other risks

    Apart from the above, the Directors further consider the below risks as being relevant to the Group.

  • Credit risk being the risk that customers do

    not pay for the services rendered.

  • Market risk being the risk arising from adverse movement in the foreign exchange rates and interest rates.

  • Liquidity risk being the risk of difficulties in obtaining funding to meet the Groups obligations when they fall due.

  • Operational risk being the risk that the Group loses its ability to maintain efficient SEO and PPC capabilities

    Further detail with respect to the above can be found on page 57 of this Annual Report.

    Legal disputes and proceedings

    This type of risk refers to the costs that may be incurred by Catena Media for pursuing various legal proceedings, as well as costs of third parties. During the year, Catena Media was not involved in any disputes that have affected or will affect the Group's position in a material manner.

    Remuneration to senior executives

    The Board's proposed guidelines for remu- neration of senior executives for 2017 essen- tially mean that salaries and other terms of employment for the management will be at market levels. In addition to the fixed basic salary, the management can also receive var- iable remuneration and bonuses which are to

    have a predetermined ceiling and are to be based on results achieved relative to estab- lished targets (and in certain cases other key performance indicators).

    An amount is to be set annually for the total cost for fixed and variable remu-

    neration. This amount must include all the Group's remuneration costs. If employment

    is terminated by the Group, senior executives may be entitled to severance pay; in which case, this shall have a predetermined ceiling.

    No severance pay is payable if employment is terminated by the employee. The Board has the right to deviate from the guidelines if there are particular reasons for this in indi- vidual cases. This proposal is in line with the guidelines adopted during the 2016 Annual General Meeting.

    Shares and ownership structure

    The ownership structure of Catena Media

    p.l.c at 31 December 2016 included the fol- lowing major shareholders; Optimizer Invest Ltd owning 15.97%, Aveny Ltd owning 9.93%, Pixel Wizard Ltd owning 7.97% and Ӧresund Investment AB owning 5.89% of the issued shares.

    On 11 February 2016, the Company's shares were listed on NASDAQ First North Premier, Stockholm, under the trading sym- bol 'CTM'. The offering, including the over-al- lotment option, was subscribed for in full and comprised a total of 29,580,990 shares, of which 7,273,000 shares were newly issued shares and 22,307,990 existing shares. The subscription price for the offering was SEK

    33 per share and Catena Media received SEK

    229.80 million corresponding to EUR 24.14 million in equity after issue costs.

    The authorised and issued share capital of the Company, together with details of shares allotted during the year are shown in note 19 to these financial statements.

    Annual general meeting

    The Annual General Meeting will be held at

    8.30 am on 28 April 2017 in Stockholm.

    Dividend

    The Company's long-term target is a dividend up to fifty percent of net profit. The Board has proposed to the 2017 Annual General Meeting that no dividend is paid for 2016.

    Proposed allocation of the Company's profits

    Funds of EUR 22.64 million available to the Annual General Meeting are carried forward.

    Board of directors

    The Board of Directors consists of: Kathryn Moore Baker (Chairperson of the Board)

    Andre Andersen Lavold

    Per Anders Henrik Persson Ekdahl Anders Brandt

    Mats Goran Alders

    Yong-Nam Mathias Hermansson (appointed 26 May 2016)

    Mikael Sven Tarald Riese Harstad

    (resigned 26 May 2016)

    The Group's Head of Legal Louise Wendel was co-opted onto the Board as secretary as from the 28 November 2016. The previous secretary Erik Bergman resigned on the same date.

    Statement of director's responsibilities for the financial statements

    The directors are required by the Companies Act, 1995 to prepare financial statements which give a true and fair view of the state of affairs of the Group and the Parent Company as at the end of each reporting period and of the profit or loss of that period.

    In preparing the financial statements, the directors are responsible for:

  • Ensuring that the financial statements have been drawn up in accordance with the International Financial Reporting Standards (IFRS) as adopted by the EU;

  • Selecting and applying appropriate account-

    ing policies;

  • Making accounting estimates that are rea- sonable in the circumstances;

  • Ensuring that the financial statements are prepared on the going concern basis, unless it is inappropriate to presume that the Group and the Parent Company will contin- ue in business as a going concern.

    The directors are also responsible for designing, implementing and maintaining internal control as the directors determine is necessary to enable the preparation of financial statement that are free from mate- rial misstatement, whether due to fraud or error, and that comply with the Companies Act, 1995. They are also responsible for

    safeguarding the assets of the Group and the Parent Company and hence for taking reason- able steps for the prevention and detection

    of fraud and other irregularities.

    The financial statements of Catena Media

    p.l.c for the year ended 31 December 2016 are included in the Annual Report 2016, which is published in hard-copy printed form and is available on the Company's website. The directors are responsible for the main- tenance and integrity of the Annual Report on the website in view of their responsibility for the controls over, and the security of the website. Access to information published on the Company's website is available in other countries and jurisdictions, where legislation governing the preparation and dissemina- tion of financial statements may differ from requirements or practice in Malta.

    Auditors

    PricewaterhouseCoopers have indicated their willingness to continue in office and a resolu- tion for their reappointment will be proposed at the Annual General Meeting.

    Approved by the Board of Directors on 4 April 2017, and signed on its behalf by:

    Kathryn Moore Baker

    Chairperson

    Per Anders Henrik Persson Ekdahl

    Director

    Group

    Jan-Dec

    Jan-Dec

    Company

    Jan-Dec

    29 May-

    EUR, 000'

    Notes

    2016

    2015

    2016

    31 Dec 2015

    Statements of Comprehensive Income

    Continuing operations

    40,049

    14,939

    -

    -

    Revenue 5

    Investment and related income 5

    -

    -

    -

    2,600

    Total revenue

    40,049

    14,939

    -

    2,600

    Direct costs related to Paid revenue

    -7,209

    -735

    -

    -

    Personnel expenses 6

    -6,113

    -2,024

    -147

    -29

    Depreciation and amortisation 12, 13

    -1,037

    -142

    -

    -

    IPO related costs

    -2,381

    -1,166

    -922

    -

    Other operating expenses 7

    -4,663

    -1,889

    -127

    -15

    Total operating expenses

    -21,403

    -5,956

    -1,196

    -44

    18,646

    8,983

    -1,081

    -10

    -500

    -

    444

    6

    -

    20

    17,509

    8,999

    -1,367

    -685

    16,142

    8,314

    -1,196

    2,556

    -1,015

    -

    -500

    -

    539

    -

    -

    -

    -2,172

    2,556

    -

    -700

    -2,172

    1,856

    Operating profit/(loss)

    Interest payable on borrowings Other losses on financial liability at fair value through profit or loss

    Finance income 8

    Other non-operating income

    Profit/(loss) before tax

    Tax expense 9

    -

    Profit/(loss) for the year/period from continuing operations

    Discontinued operations

    Loss for the year/period from discontinued operations

    -

    -82 -

    -79

    -1

    16,063

    8,231

    -

    -

    -2,172

    1,856

    Other comprehensive income

    Currency translation differences

    Profit/(loss) for the year/period -

    total comprehensive income

    0.319

    -

    0.201

    -0.002

    0.319

    0.199

    Earnings per share attributable to the equity holders

    of the parent during the year/period (expressed in Euro per share)

    Basic earnings per share

    From continuing operations

    From discontinuing operations

    From profit for the year/period 10

    Diluted earnings per share From continuing operations From discontinuing operations

    0.313

    -

    0.200

    -0.002

    From profit for the year/period 10

    0.313

    0.198

    The notes on pages 52 to 69 are an integral part of these financial statements.

    Statements of Financial Position‌

    Group Company

    EUR, 000' Notes

    31 Dec

    2016

    31 Dec

    2015

    31 Dec

    2016

    31 Dec

    2015

    ASSETS

    7,333

    7,333

    -

    -

    Non-current assets

    Goodwill

    12

    Other intangible assets

    12

    71,168

    14,342

    -

    -

    Property, plant and equipment

    13

    766

    416

    -

    -

    Investment in subsidiaries

    14

    -

    -

    214

    55

    Total non-current assets

    79,267

    22,091

    214

    55

    11,765

    4,296

    1,397

    1,127

    -

    291

    44,713

    1,529

    57,875

    7,243

    44,007

    1,562

    -

    -

    -

    -

    31,648

    97

    75,655

    1,659

    Current assets

    Trade and other receivables 15

    Deferred tax assets 22

    77

    66

    25,741

    1,000

    5,378

    5,073

    22,639

    6,497

    53,835

    12,636

    77

    66

    26,271

    1,000

    457

    62

    -1,596

    576

    25,209

    1,704

    Deferred listing costs

    Cash and cash equivalents 16

    Total current assets

    TOTAL ASSETS

    137,142

    29,334

    75,869

    1,714

    EQUITY AND LIABILITIES

    Capital and reserves

    Share capital 19

    Share premium 19

    Other reserves

    Retained earnings/(accumulated losses)

    Total equity

    Liabilities

    Non-current liabilities

    Borrowings 17

    Trade and other payables 18

    Deferred tax liabilities 22

    Total non-current liabilities

    Current liabilities

    Trade and other payables 18

    Current tax liabilities

    Total current liabilities

    Total liabilities

    TOTAL EQUITY AND LIABILITIES

    137,142

    29,334

    75,869

    1,714

    The notes on pages 52 to 69 are an integral part of these financial statements.

    50,500

    6,195

    2,171

    - 2,640

    1,032

    58,866

    3,672

    50,500

    -

    -

    -

    -

    -

    50,500

    -

    22,480

    1,961

    10,692

    2,334

    24,441

    13,026

    83,307

    16,698

    160

    -

    10

    -

    160

    10

    50,660

    10

    The financial statements on pages 47 to 69 were approved and authorised for issue by the Board of Directors on 4 April 2017, and signed on its behalf by:

    Kathryn Moore Baker

    Chairperson

    Per Anders Henrik Persson Ekdahl

    Director

    Statements of Changes in Equity - Group

    Attributable to owners of the parent

    Non-

    EUR, 000'

    Notes

    Share

    capital

    Other

    reserves

    Share

    premium

    Retained

    earnings

    controlling

    interest

    Total

    equity

    Balance at 1 January 2015

    1

    -5

    -

    1,261

    5

    1,262

    Comprehensive income

    Profit for the year

    -

    -

    -

    8,231

    -

    8,231

    Foreign currency translation movement

    -

    -1

    -

    -

    -

    -1

    Total comprehensive income for the year

    -

    -1

    -

    8,231

    -

    8,230

    Transactions with owners

    Issue of share capital (before reorganisation)

    19

    -

    5,000

    -

    -

    -

    5,000

    Issue of share capital (after reorganisation)

    19

    66

    -

    1,000

    -

    -

    1,066

    Dividends distributed during the year

    21

    -

    -

    -

    -2,995

    -

    -2,995

    Equity-settled share-based payments

    11

    -

    74

    -

    -

    -

    74

    Total transactions with owners

    66

    5,074

    1,000

    -2,995

    -

    3,145

    Adjustments relating to reorganisation

    Reorganisation of the Group

    20

    -1

    -

    -

    -

    -

    Disposal of subsidiary

    -

    5

    -

    -

    -5

    Total adjustments relating to reorganisation

    -1

    5

    -

    -

    -5

    Balance at 31 December 2015

    66

    5,073

    1,000

    6,497

    -

    Comprehensive income

    Profit for the year

    -

    -

    -

    16,142

    -

    16,142

    Foreign currency translation movement

    -

    -79

    -

    -

    -

    -79

    Total comprehensive income for the year

    -

    -79

    -

    16,142

    -

    16,063

    Transactions with owners

    Issue of share capital

    19

    11

    -

    24,741

    -

    -

    24,752

    Equity-settled share-based payments

    11

    -

    148

    -

    -

    -

    148

    Capital contribution

    -

    236

    -

    -

    -

    236

    Total transactions with owners

    11

    384

    24,741

    -

    -

    25,136

    Balance at 31 December 2016

    77

    5,378

    25,741

    22,639

    -

    53,835

    -1

    -

    -1

    12,636

    The notes on pages 52 to 69 are an integral part of these financial statements.

    Statements of Changes in Equity‌

    - Company

    EUR, 000'

    Notes

    Share

    capital

    Other reserves

    Share

    premium

    Retained

    earnings

    Total equity

    Comprehensive income

    Profit for the period

    -

    -

    -

    1 856

    1 856

    Total comprehensive income for the period

    -

    -

    -

    1 856

    1 856

    Transactions with owners

    Issue of share capital

    19

    66

    -

    1 000

    -

    1 066

    Dividends distributed during the period

    21

    -

    -

    -

    -1 280

    -1 280

    Equity-settled share-based payments

    11

    -

    62

    -

    -

    62

    Total transactions with owners

    66

    62

    1 000

    -1 280

    -152

    Balance at 31 December 2015

    66

    62

    1 000

    576

    1 704

    Comprehensive income

    Loss for the year

    -

    -

    -

    -2 172

    -2 172

    Total comprehensive income for the year

    -

    -

    -

    -2 172

    -2 172

    Transactions with owners

    Issue of share capital

    19

    11

    -

    25 271

    -

    25 282

    Equity-settled share-based payments

    11

    -

    159

    -

    -

    159

    Capital contribution

    -

    236

    -

    -

    236

    Total transactions with owners

    11

    395

    25 271

    -

    25 677

    Balance at 31 December 2016

    77

    457

    26 271

    -1 596

    25 209

    The notes on pages 52 to 69 are an integral part of these financial

    statements.

    Statements of Cash Flows

    Group Company

    EUR, 000' Notes

    Cash flows from operating activities

    Profit/(loss) before tax including discontinued operations

    Adjustments for:

    Loss on disposal/acquisition Depreciation and amortisation Impairment of receivables Unrealised exchange differences Interest expense

    Interest income

    Net losses on financial liability at fair value through profit or loss

    Share based payments

    Dividend income

    Tax refund receivable

    Jan-Dec

    17,509

    - 1,037

    89

    -553

    1,015

    - 500

    148

    -

    -

    8,916

    78

    142

    32

    - 10

    -6

    -

    -

    -

    -

    19,745

    9,172

    2016

    Jan-Dec

    2015

    Jan-Dec

    -2,172

    -

    -

    -

    -539

    1,015

    - 500

    -

    -

    -

    2,556

    -

    -

    -

    -

    -

    -

    -

    -

    -2,000

    -600

    -1,196

    -44

    2016

    29 May-

    31 Dec 2015

    -7,560

    -306

    -2,040

    1,238

    11,879

    8,370

    6

    -

    -

    -811

    11,068

    8,376

    -91

    1,982

    -671

    9

    695

    -706

    -

    -

    -

    -

    695

    -706

    Changes in:

    Trade and other receivables

    Trade and other payables

    Cash generated from/(used in) operating activities

    Interest received

    Taxation paid

    Net cash generated from/(used in) operating activities

    -408

    -375

    -40,563

    -3,863

    -

    -

    -

    -21

    -

    -

    -40,971

    -4,259

    -

    -

    -

    -

    -42,354

    -

    -

    -

    -

    2,000

    -42,354

    2,000

    Cash flows used in investing activities Acquisition of property, plant and equipment Acquisition of intangible assets

    Net payments on behalf of subsidiary Net cash upon disposal/acquisition

    Dividend received

    24,208

    66

    -

    -2,995

    49,100

    -

    -

    -223

    -

    -

    -

    17

    -873

    -10

    72,435

    -3,145

    24,208

    66

    -

    -1,280

    49,100

    -

    -

    -

    236

    -

    -

    17

    -873

    -

    72,671

    -1,197

    Net cash (used in)/generated from investing activities Cash flows from financing activities

    Issuance of share capital

    Dividends paid

    Net proceeds on issue of bond 17

    Repayment of loans Contribution from shareholders Proceeds from share warrants

    Interest paid

    Net cash (used in)/generated from financing activities

    42,532

    1,529

    652

    975

    554

    3

    44,713

    1,529

    31,012

    97

    539

    97

    -

    -

    31,648

    97

    Net movement in cash and cash equivalents

    Cash and cash equivalents at beginning of year/period

    Currency translation differences

    Cash and cash equivalents at end of year/period 16

    The notes on pages 52 to 69 are an integral part of these financial statements.

    Notes to the consolidated‌‌

    financial statements

    Note 1

    Reporting entity

    Act, 1995. They have been prepared under the historical cost conven- tion, apart from financial liabilities which are recognised at fair value through profit and loss.

    Catena Media p.l.c. (the "Company") is a limited liability company and

    is incorporated in Malta.

    The consolidated financial statements include the financial statements of Catena Media p.l.c and its subsidiaries, (together, the "Group" or "Catena Media").

    The preparation of financial statements in conformity with IFRSs

    as adopted by the EU requires the use of certain accounting estimates. It also requires the directors to exercise their judgement in the pro- cess of applying the Group's accounting policies (see Note 4 - Critical accounting estimates and judgements).

    The financial statements incorporate the results of Catena Oper- ations Limited and its subsidiaries Molgan Limited, Catena Media UK

    Note 2

    Summary of significant accounting policies

    Limited and Catena Media doo Beograd.

    Standards, interpretations and amendments to published

    The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been con- sistently applied to all periods presented, unless otherwise stated.

    Basis of preparation

    The Company was incorporated on 29 May 2015 under the terms

    of the Maltese Companies Act, 1995. On 1 June 2015, the Company acquired a 100% shareholding in Catena Operations Limited from its previous five shareholders. On 1 January 2015, Catena Operations Limited transferred its investment in Paxo Finans AB, a subsidiary in which it previously held a 95% interest, to Catena Invest Ltd, a related company which is not included in the Group.

    The substance of the above was that of a group restructuring by virtue of which the Company became the new parent company of Catena Operations Limited. Accordingly, the shareholders of the Company are identical to those of Catena Operations Limited, and

    the restructuring solely interposed an additional holding company as holder of the shares in Catena Operations Limited. This transaction has been accounted for in the consolidated financial statements as a restructuring, and these have been compiled as if Catena Media p.l.c, was the parent company of the Group from incorporation. Accord- ingly, in order to provide more meaningful information to potential investors, the comparative figures include the financial performance and position of the Group even though the new parent company

    was legally incorporated on 29 May 2015. The comparative figures therefore present the consolidated results for Catena Operations Limited, the previous parent, and adjustments to reflect the impact of the re-organisation have been reflected in the Statement of changes in equity.

    The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU and the requirements of the Maltese Companies

    standards effective in 2016

    In 2016, the Group adopted new standards, amendments and inter- pretations to existing standards that are mandatory for the Group's accounting period beginning on 1 January 2016. The adoption of these revisions to the requirements of IFRSs as adopted by the EU did not result in changes to the Group's accounting policies.

    Standards, interpretations and amendments to published standards that are not yet effective

    Certain new standards, amendments and interpretations to existing standards have been published by the date of authorisation for issue of these financial statements, that are mandatory for the Group's accounting periods beginning after 1 January 2016. The Group has not early adopted these revisions to the requirements of IFRSs as adopted by the EU and the Group's directors are of the opinion that, with the possible exception of IFRS 9, IFRS 15 and IFRS 16, there are no re- quirements that will have a possible significant impact on the Group's financial statements in the period of initial application.

    IFRS 9, 'Financial instruments', addresses the classification, meas- urement and recognition of financial assets and financial liabilities. The complete version of IFRS 9 was issued in July 2015. Amongst others,

    it replaces the guidance in IAS 39 that relates to the classification and measurement of financial instruments. There is a new expected credit losses model that replaces the incurred loss impairment model used in IAS 39. The standard is effective for accounting periods beginning on or after 1 January 2018. The Group is considering the implications of the standard and its impact on the Group's financial results and position, together with the timing of its adoption.

    IFRS 15, 'Revenue from contracts with customers' deals with revenue recognition and establishes principles for reporting useful in- formation to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an

    entity's contracts with customers. Revenue is recognised when a customer obtains control of a good or service and thus has the ability to direct the use and obtain the benefits from the good or service.

    The standard replaces IAS 18 'Revenue' and IAS 11 'Construction contracts' and related interpretations. The standard is effective for annual periods beginning on 1 January 2018 and earlier application is permitted. The Group is assessing the impact of IFRS 15.

    Under IFRS 16, 'Leases', a contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. IFRS 16 requires lessees to recognise a lease liability reflecting future lease payments and a 'right-of-use asset' for virtually all lease contracts; an optional exemption is available for certain short-term leases and leases of low-value assets. The standard is effective for annual periods begin-

    ning on 1 January 2019 and earlier application is permitted, subject to endorsement by the EU, and subject to the Group also adopting

    IFRS 15. The Group is assessing the impact of IFRS 16.

    Principles of consolidation Subsidiaries

    Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activi- ties of the entity. Subsidiaries are fully consolidated from the date on which the control is transferred to the Group. They are deconsolidat- ed from the date that control ceases.

    The acquisition method of accounting is used to account for busi- ness combinations by the Group.

    Intercompany transactions, balances and unrealised gains or transactions between group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset.

    Foreign currency translation Functional and presentation currency

    Items included in these financial statements are measured using the currency of the primary economic environment in which each of the Group's entities operate ('the functional currency'). The consolidated and separate financial statements are presented in Euro which is Catena Media p.l.c's functional and presentation currency.

    Transactions and balances

    Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are generally recognised in profit or loss. Non-mone- tary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated at the exchange rate at the date of the transaction. Foreign exchange gains and losses are presented in the statement of profit or loss on a net basis.

    Group companies

    Two of the group companies Catena Media UK Limited and Catena Media doo Beograd have a different functional and presentation currency. Catena Media UK Limited uses the Great Britain Pound as its functional and presentation currency whilst Catena Media doo Be- ograd uses Serbian Dinars as its functional and presentation currency. The results and financial position of the subsidiaries are translated as follows:

  • assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet

  • income and expenses for each statement of profit or loss and statement of comprehensive income are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions), and

  • all resulting exchange differences are recognised in other compre-

    hensive income.

    On consolidation, exchange differences arising from the translation of any net investment in foreign entities and of borrowings are recog- nised in other comprehensive income. When a foreign operation is sold or any borrowings forming part of the net investment are repaid, the associated exchange differences are reclassified to profit or loss, as part of the gain or loss on sale.

    Revenue

    The revenue of the Company mainly arises from the dividend earned

    from its subsidiaries.

    The Group's revenue is derived from online and affiliate marketing.

    The Group recognises revenue when the amount of revenue can be reliably measured, and it is probable that the economic benefits will flow to the entity.

    Dividend income

    Dividends are recognised in the statement of profit or loss and other comprehensive income when the Company's right to receive payment is established.

    Commission income

    The Group's revenue consists of revenue generated in the form of commission on players directed to gaming operators as well as adver- tising fees charged to gaming operators who want additional exposure on the Group's websites. The commission takes the form of:

    Revenue share

    For a revenue share deal the Group receives a share of the revenues that the gaming operator has generated as a result of a player playing on their iGaming site. Revenue is recognised in the month that it is earned by the respective gaming operator.

    Cost per acquisition

    For cost per acquisition deals, a client pays a one-time fee for each player who deposits money on the client's site. Cost per acquisition contracts consist of a pre-agreed rate with the client. Revenue from such contracts is recognised in the month in which the deposits are made.

    Fixed fees

    The Group also generates revenues by charging a fixed fee for new ca- sinos who would like to be listed and critically reviewed on the Group's sites as well as through advertising revenue whereby an advertising space is sold to gaming operators who wish to promote their brands more prominently on one of the many sites the Group has to offer.

    Such revenue is apportioned on an accruals basis over the whole term

    of the contract.

    Interest income

    Interest income is recognised as it accrues in profit or loss, using the effective interest method.

    Income tax

    The income tax expense or credit for the period is the tax payable on the current period's taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax as- sets and liabilities attributable to temporary differences and to unused tax losses.

    The current tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the Company's subsidiaries operate and gen- erate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

    Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred tax asset is real- ised or the deferred tax liability is settled.

    Deferred tax assets are recognised only if it is probable that future taxable amounts will be available to utilise those temporary differenc- es and losses.

    Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority.

    Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

    Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

    Business combinations

    The acquisition method of accounting is used to account for all busi- ness combinations, regardless of whether equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises the:

  • fair values of the assets transferred

  • liabilities incurred to the former owners of the acquired business

  • equity interests issued by the Group

  • fair value of any asset or liability resulting from a contingent consid- eration arrangement, and

  • fair value of any pre-existing equity interest in the subsidiary.

    Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, meas- ured initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquired entity on an acquisition-by-acquisition basis either at fair value or at the non-con- trolling interest's proportionate share of the acquired entity's net identifiable assets. Acquisition-related costs are expensed as incurred.

    The excess of the:

  • consideration transferred,

  • amount of any non-controlling interest in the acquired entity, and

  • acquisition-date fair value of any previous equity interest in the acquired entity over the fair value of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the subsidiary acquired, the difference is recognised directly in profit or loss as a bargain purchase.

    The Company and the Group account for business combinations using the acquisition method when control is transferred to the Group. The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired. Any goodwill that arises is tested annually for impairment. Any gain or bar- gain purchase is recognised in profit or loss immediately. Transaction costs are expensed as incurred, except if related to the issue of debt or equity securities.

    The contingent consideration is measured at fair value at the date of acquisition. The amounts payable in the future are discounted

    to their present value as at the date of the exchange. The discount rate used is the entity's incremental borrowing rate, being the rate at which similar borrowing could be obtained from an independent financier under comparable terms and conditions. If an obligation to pay contingent consideration that meets the definition of a financial instrument is classified as equity, then it is not re-measured and set-

    tlement is accounted for within equity. Otherwise subsequent changes in fair value of the contingent consideration are reflected in the state- ment of financial position against the contingent liability recognised.

    Reorganisations between Group entities

    Reorganisations between Group entities under common control are accounted for using the reorganisation method of accounting. Under the reorganisation method of accounting, assets and liabilities are in- corporated at the predecessor carrying values, which are the carrying amounts of assets and liabilities of the acquired entity as recognised and measured in that entity's pre-reorganisation financial statements. No goodwill arises in reorganisation accounting, and any difference between the consideration given and the aggregate book value of the assets and liabilities of the acquired entity, is included in equity. The financial statements incorporate the acquired entity's full year results, including comparatives, as if the post-reorganisation structure was already in place at the commencement of the comparative period.

    Goodwill and other intangible assets

    Recognition and measurement

    An intangible asset is recognised if it is probable that the expected future economic benefits that are attributable to the asset will flow to the Group and the cost of the asset can be measured reliably. Intan- gible assets are initially measured at cost. The cost of a separately ac- quired intangible assets comprises its purchase price and any directly attributable cost of preparing the asset for its intended use.

    Where the cost of acquisition includes contingent consideration, cost is determined to be the current fair value of the contingent con- sideration as determined on the date of acquisition. Any subsequent changes in estimates of the likely outcome of the contingent event are reflected in the statement of financial position. The cost of acquisition of intangible assets for which the consideration comprises an issue of equity shares is calculated as being the fair value of the equity instru- ments issued in the transaction.

    Goodwill represents the excess of the cost of an acquisition over the fair value of the Group's share of the net identifiable assets of the acquired subsidiary at the date of acquisition. Goodwill on acquisitions of subsidiaries is included in 'intangible assets'. Goodwill is tested annually for impairment and carried at cost less accumulated losses.

    Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

    Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose identified according to operating segment.

    The estimated useful lives are as follows:

  • Domains and websites indefinite

  • Player databases 3 years

  • Other intellectual property 3 - 4 years

    Other intangible assets are derecognised on disposal or when no fu- ture economic benefits are expected from their use or disposal. Gains or losses arising from derecognition represent the difference between the net disposal proceeds, if any, and the carrying amount, and are included in the statement of comprehensive income in the period of derecognition.

    Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it re- lates. All other expenditure is recognised in profit or loss as incurred.

    Amortisation

    Intangible assets with a finite useful life are amortised over their use- ful life and reviewed for impairment whenever there is an indication that the asset may be impaired. The amortisation period and the amortisation method for an intangible asset are reviewed at least at each year end.

    Intangible assets with indefinite useful lives are not systematically amortised and are tested for impairment annually or whenever there is an indication that the other intangible asset may be impaired. The useful life of these assets is reviewed annually to determine whether their indefinite life assessment continues to be supportable. If the events and circumstances do not continue to support the assessment, the change in the useful life assessment from indefinite to finite is ac- counted for prospectively as a change in accounting estimate and on that date the asset is tested for impairment. Commencing from that date, the asset is amortised systematically over its useful life. Goodwill however, is not amortised but assessed for impairment on an annual basis.

    Plant and equipment

    Recognition and measurement

    Items of plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset.

    Gains or losses on disposal of an item of plant and equipment

    are determined by comparing the proceeds from disposal with the carrying amount of plant and equipment, and are recognised in profit or loss.

    Subsequent costs

    The cost of replacing part of an item of plant and equipment is rec- ognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. The costs of the day-to-day servic- ing of plant and equipment are recognised in profit or loss as incurred.

    Depreciation

    Depreciation is calculated over the depreciable amount, which is the cost of an asset, or other amount substituted for cost, less its residual value.

    Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each part of an item of plant and equipment, since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset.

    The estimated useful lives are as follows:

  • Computer equipment 4 years

  • Furniture and fixtures 10 years

    Depreciation methods, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate.

    Financial instruments

    The Group classifies its financial assets as loans and receivables. Finan- cial liabilities are classified as financial liabilities at amortised cost and as financial liabilities at fair value through profit or loss.

    Financial assets and financial liabilities

    - recognition and derecognition

    The Group recognises loans and receivables on the date that they are originated and the Group becomes a party to the contractual

    provisions of the instrument. If collection of the amounts is expected in one year or less they are classified as current assets. If not, they are presented as non-current assets.

    The Group derecognises a financial asset when the contractual right to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a trans- action in which substantially all the risks and rewards of ownership of the financial asset are transferred, or it neither transfers nor retains substantially all the risks and rewards of ownership and does not retain control over the transferred asset.

    The Group recognises a financial liability in its statement of finan- cial position when it becomes a party to the contractual provisions of the instrument.

    Debt securities issued by the Company have been designated by management as a financial liability at fair value through profit or loss since this financial instrument contains an embedded derivative that may significantly modify the resulting cash flows. The fair value desig- nation, once made, is irrevocable.

    The Group derecognises a financial liability when its contractual obligations are discharged, cancelled or expire. If payments of the amounts is expected in one year or less they are classified as current liabilities. If not, they are presented as non-current liabilities.

    Financial assets and financial liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

    Financial assets - measurement

    Loans and receivables

    These assets are initially recognised at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, they are measured at amortised cost using the effective interest method. Loans and receivables comprise cash and cash equivalents and receiv- ables.

    Cash and cash equivalents

    For the purpose of presentation in the statement of cash flows, cash and cash equivalents include cash on hand, deposits held at call with financial institutions and cash held at financial intermediaries.

    Financial liabilities - measurement

    Financial liabilities at fair value through profit or loss are initially rec- ognised at fair value and transaction costs are expensed in the income statement. Subsequent measurement is at fair value and all gains/loss- es from the liability, are reported in the income statement as "Other losses on financial liability at fair value through profit or loss", whilst the related interest expenses are reported within "Interest payable on borrowings".

    Other financial liabilities are initially recognised at fair value less any directly attributable transaction costs. Subsequent to initial recog- nition these financial liabilities are measured at amortised cost using the effective interest method.

    Impairment of assets

    Non-derivative financial assets

    Financial assets are assessed at each reporting date to determine whether there is objective evidence of impairment. A financial asset

    is impaired if as a result of one or more events that occurred after the initial recognition of the asset (a 'loss event'), and that loss event(s) has an impact on the estimated future cash flows of that asset that can be estimated reliably.

    Objective evidence that financial assets are impaired can include default or delinquency by a debtor, restructuring of an amount due to the Group on terms that the Group would not otherwise consider, indications that a debtor or issuer will enter bankruptcy.

    An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset's original effective interest rate.

    Losses are recognised in profit or loss and reflected in an allow- ance account against loans and receivables. When the Group consid- ers that there are no realistic prospects of recovery of the asset, the relevant amounts are written off. When an event occurring after the impairment was recognised causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.

    Non-financial assets

    Non-financial assets with indefinite useful lives are reviewed at each reporting date to determine whether there is any impairment. The carrying amounts of the Group's non-financial assets with finite useful lives, as well as those with indefinite useful lives, are reviewed for impairment whenever there is an indication that the asset may be impaired. The asset's recoverable amount is estimated annually for intangible assets with indefinite useful lives, and is also estimated for all non-financial assets if an indication of impairment exists.

    For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or cash-generating units ('CGUs').

    The recoverable amount of an asset or cash-generating unit ('CGU') is the greater of its value in use and its fair value less costs to sell. Value in use, is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that

    reflects current market assessments of the time value of money and the risks specific to the asset or CGU.

    An impairment loss is recognised if the carrying amount of an as- set or its CGU exceeds its estimated recoverable amount. Impairment losses are recognised in profit or loss.

    An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

    Trade and other receivables

    Trade receivables are amounts due from customers for services performed in the ordinary course of business. If collection is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are presented as non-current assets.

    Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective in- terest method, less provision for impairment. The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in profit or loss. When a receivable is uncollectible, it is written off against the allowance account for trade and other receivables. Subsequent recoveries of amounts previously written off are credited against profit or loss.

    Trade and other payables

    Trade payables are obligations to pay for services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.

    Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

    Operating leases

    Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or loss on a straight-line basis over the period of the lease.

    Share capital

    Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduc- tion from equity, net of any tax effects.

    Dividends declared

    Final dividends are recognised when approved by the Company's shareholders and interim dividends are recognised when declared by the directors. Provision is made for the amount of any dividend de- clared, being appropriately authorised and no longer at the discretion of the entity, on or before the end of the reporting period but not distributed at the end of the reporting period.

    Share based payments

    The Group operates a number of equity-settled, share-based compen- sation plans, under which the entity receives services from employees as consideration for equity instruments of the Company. Through

    these equity settled schemes, eligible employees are granted share options, while directors are being granted share warrants.

    Equity-settled share based payment transactions are measured

    at the grant date fair value for employee services, which requires a

    Note 3

    Financial risk management

    valuation of the options and warrants. Once the fair value has been determined, the amount recognised as an expense is adjusted to re- flect the number of awards for which the related service and non-mar- ket performance conditions are expected to be met, such that the amount ultimately recognised is based on the number of awards that meet the related service and non-marketing performance conditions at the vesting date.

    At the end of each reporting period, the Group revises its esti- mates of the number of options that are expected to vest based on the non-market vesting conditions and service conditions. It recognis-

    es the impact of the revision to original estimates, if any, in the income

    statement, with a corresponding adjustment to equity.

    In the case of share warrants, eligible directors are immediately being granted the warrants and are entitled to the rights granted under the agreement. Accordingly, these are considered to vest imme- diately and therefore the Group recognises the cost in full on the date these warrants are granted.

    In addition, in some circumstances employees may provide servic- es in advance of the grant date and therefore the grant date fair value is estimated for the purposes of recognising the expense during the period between service commencement period and grant date.

    When the options are exercised, the Company issues new shares.

    The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium.

    The grant by the Company of options over its equity instruments to the employees of subsidiary undertakings in the Group is treated as a capital contribution. The fair value of employee services received, measured by reference to the grant date fair value, is recognised over the vesting period as an increase to investment in subsidiary under- takings, with a corresponding credit to equity in the parent entity accounts.

    The social security contributions payable in connection with the grant of the share options is considered an integral part of the grant itself, and the charge will be treated as a cash-settled transaction.

    Earnings per share

    Basic earnings per share

    Basic earnings per share is calculated by dividing profit attributable

    Risk management framework

    The Board of directors has overall responsibility for the establishment and oversight of the Group's risk management framework. The Board, together with the management of the Group, are responsible for de- veloping and monitoring the Group's risk management policies.

    The Group's risk management policies are established to identi- fy and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group's activities.

    The Group, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obli- gations.

    The Board oversees how the management monitors compliance with the Group's risk management policies and procedures, and re- views the adequacy of the risk management framework in relation to the risks faced by the Group.

    Financial risk factors

    The Group has exposure to the following risks:

  • credit risk

  • liquidity risk

  • market risk

    This note presents information about the Group's exposure to each of the above risks, the Group's objectives, policies and processes for

    measuring and managing risk, and the Group's management of capital.

    Credit risk

    Credit risk is the risk of a financial loss to the Group if a counterparty to a financial instrument fails to meet its contractual obligations and arises principally from outstanding receivables due by the Group's customers and cash and cash equivalents. The Group's exposure to credit risk at the end of the reporting period are analysed as follows:

    Group Company

    to equity holders of the parent by the weighted average number of

    ordinary shares in issue during the period.

    Diluted earnings per share

    Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume exercise of all dilutive potential ordinary shares.

    Loans and receivables Trade and other receivables (note 15)

    Cash and cash equivalents

    (note 16)

    11,765

    44,713

    4,296

    1,529

    Total loans and receivables

    56,478

    5,825

    EUR, 000'

    31 Dec

    2016

    31 Dec

    2015

    31 Dec

    44,007

    31,648

    1,562

    97

    75,655

    1,659

    2016

    31 Dec

    2015

    Prepayments and other receivables not subject to risk

    -1,293

    -649

    Net amounts exposed to credit risk

    55,185

    5,176

    -635

    -603

    75,020

    1,056

    The maximum exposure to credit risk at the end of the reporting period in respect of the financial assets mentioned above is equivalent to their carrying amount as disclosed in the respective notes to the fi- nancial statements. The Group does not hold any collateral as security in this respect.

    Cash and cash equivalents are held both with a leading local finan- cial institution and other financial institutions based outside Malta.

    Credit ratings as per international rating agency Fitch are as follows:

    Movements in the provision for impairment of trade receivables is as follows:

    Group Carrying amounts

    Credit Rating

    Carrying amounts

    EUR, 000'

    At 1 January

    31 Dec

    2016

    31 Dec

    2015

    EUR, 000'

    A+ BBB BBB-

    BBB+

    31 Dec

    32,156

    -

    12,193

    -

    73

    -

    -

    1,517

    44,422

    1,517

    2016

    31 Dec

    2015

    32

    89

    -

    32

    121

    32

    Provision for impairment recognised

    during the year

    At 31 December

    As at 31 December 2016, trade receivables of EUR 1.74 million were past due but not impaired. These related to a number of customers for whom there is no recent history of default. Categorisation of receivables as past due is determined by the Group on the basis of

    This spread reduces dependency on one financial institution as well as simultaneously mitigating country risk. Credit risk from cash held with financial intermediaries is not considered to be significant.

    The Group usually extends 30-day credit to its customers. The

    Group regularly monitors the credit extended to its customers and as-

    the nature of the credit terms in place and the credit arrangements

    actually utilised in the managing exposures with customers.

    The ageing analysis of these trade receivables is as follows:

    Carrying

    sesses the credit quality of its customers taking into account financial position, past experience and other factors. The Group monitors the performance of these financial assets on a regular basis to identify in-

    curred collection losses which are inherent in the Group's receivables,

    Group

    EUR, 000'

    amounts

    31 Dec

    2016

    taking into account historical experience in collection of accounts receivable.

    The Group manages credit limits and exposures actively and in practicable manner such that past due amounts receivable from customers are within controlled parameters. The Group's receivables, which are not impaired financial assets, are principally in respect

    of transactions with customers for whom there is no recent history of default. Management does not expect any material losses from non-performance by these customers.

    Trade and other receivables are assessed to determine whether

    1-60 days 716

    61-120 days 612

    More than 120 days 413

    1,741

    During the previous financial year, the Group's receivables which are not impaired financial assets are principally in respect of transactions with customers for whom there is no recent history of default. These were analysed as follows:

    Carrying

    there is objective evidence that an impairment loss has been incurred

    but not yet been identified. For these receivables the estimated im-

    pairment losses are recognised in a separate provision for impairment.

    Receivables for which an impairment provision was recognised

    Group

    EUR, 000'

    amounts

    31 Dec

    2016

    are written off against the provision when there is no expectation of recovering additional cash. Impairment losses are recognised in profit or loss within other expenses. Subsequent recoveries of amounts previously written off are credited against other expenses.

    Impaired trade receivables principally relate to customers for which reconciliations are in progress and to a much lesser extent to customers from which the Group has received limited response as at date of reporting. The Group, on the basis of historical patterns in

    such instances, expects that a significant portion of these receivables will be recovered and has recognised impairment losses of EUR 0.12 million (2015: EUR 0.03). The ageing of these impaired receivables is as follows:

    Carrying

    2 months 624

    3 months 310

    4 months 145

    5 months and over 173

    1,252

    Liquidity risk

    Liquidity risk is the risk that the Group and the Company will not be able to meet their financial obligations comprising trade and other payables as they fall due, within one year from the end of the report- ing period (note 18).

    Trade and other payables include amounts committed on acqui- sition amounting to EUR 26.94 million as at 31 December 2016 (2015:

    Group

    EUR, 000'

    amounts

    31 Dec

    2016

    EUR 10.82). A portion of the amounts committed on acquisition, amounting to EUR 14.97 million, depend on the achievements of target earnings and thus the directors consider that the liquidity risk

    1-60 days 703

    61-120 days 345

    More than 120 days 278

    1,326

    associated with these transactions is less significant.

    The approach to managing liquidity is to ensure, as far as possible, that the Group will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incur- ring unacceptable losses or risking damage to the Group's reputation. Management also monitors rolling forecasts for Group's liquidity assets, which consist of cash and cash equivalents, on the basis of expected cash flows.

    The table below analyses the Group's financial liabilities into relevant maturity groupings based on the remaining term at the end of the reporting period to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cashflows.

    Balances due within twelve months equal their carrying balances, as the impact of discounting is not significant.

    interest rate risk and considers it not to be significant in the context of the profits generated from its acquisitions and ongoing operations.

    The exposure of the Group's borrowing to interest rate changes at the end of the reporting period is as follows:

    Group Company

    EUR, 000'

    At 31 December 2016

    Less than

    1 year

    Between 1 and 2 years

    Between 2 and 4

    years Total

    EUR, 000'

    Variable rate borrowings (note 17)

    31 Dec

    50,000

    2016

    31 Dec

    2015

    -

    31 Dec

    50,000

    2016

    31 Dec

    2015

    -

    Borrowings 3,375 3,375 53,375 60,125

    Amounts committed on

    acquisitions 20,741 6,195 - 26,936

    Trade payables 969 - - 969

    25,085 9,570 53,375 88,030

    At 31 December 2015

    Amounts committed on

    acquisitions 8,182 2,640 - 10,822

    Trade payables 1,242 - - 1,242

    9,424 2,640 - 12,064

    Market risk

    Market risk is the risk that changes in market prices, such as interest rates and foreign exchange rates, will affect the Group's income. The objective of market risk management is to manage and control market risk expo- sures within acceptable parameters, while optimising the return.

    Currency risk

    The Group operates internationally and is exposed to currency risk on revenue, expenses and bank balances that are denominated in a currency other than the entity's functional currency, primarily the Swedish Kroner (SEK), Norwegian Kroner (NOK), United States Dollar (USD), Great Britain Pound (GBP) and Serbian Dinars (RSD).

    Exposure to currency risk

    Historically, foreign exchange risk and exposure to currency fluctua- tions has not had a material impact on the Group's business, financial condition or results of operations.

    The currency of the main operating entity is EUR. Foreign currency exposure for the operations in Malta is limited since more than 74% of the Group's revenue stream is attributable to EUR, and so is the main part of its costs. In the case of the UK operation, the revenue stream

    is predominately receivable in EUR but its costs are mainly incurred in GBP, whilst the Serbian operation's costs are incurred in Serbian Dinars. As a result, this exposes the Group to currency fluctuations between EUR and GBP and EUR and RSD.

    The net exposure to currency risk with respect to other foreign currencies is not considered to be material and accordingly a sensitivi- ty analysis for foreign exchange risk disclosing how profit or loss would have been impacted by changes in these foreign exchange rates is not deemed necessary.

    Cash flow interest rate risk

    Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group's exposure to cash flow interest rate risk

    arises mainly from non-current borrowings at variable rates. During 2016 (2015: nil) the Group's borrowings at variable rates were mainly denominated in Euros and comprised of debt securities issued during the current financial year. The Group regularly monitors its cash flow

    Capital risk management

    The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern whilst maximising the return to shareholders through the optimisation of the debt to equity ratio. Strategies are expected to remain unchanged in the foreseeable future. The Board's policy is to maintain a strong capital base so as

    to maintain investor, creditor and market confidence and to sustain future development of the business. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders or issue new shares.

    On 11 February 2016, 7,273,000 shares were issued on listing. The subscription price for the offering was SEK 33 per share and Catena Media received SEK 229.80 million corresponding to EUR 24.14 million in equity after issue costs.

    The capital structure of the Company and the Group consist of equity attributable to equity holders comprising issued share capital, other reserves and retained earnings.

    Fair values estimation

    The different levels of fair values of financial instruments have been defined as follows:

  • Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1)

  • Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2)

  • Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3)

    Debt securities issued during the current financial year have been designated as a financial liability at fair value through profit and loss. The bond's fair value has been designated as hierarchy Level 1 as at 31 December 2016.

    Contingent consideration arrangements relating to the purchase of intangible assets entered into by the Group are measured at fair

    value. These arrangements require the Group to pay variable amounts of consideration ('earn-outs') in addition to the amount payable on

    the date of purchase. The contingent amounts payable are depen- dent on the revenues generated by the underlying assets and vary by contract. The fair value of the contingent consideration is included in Level 3 of the fair value hierarchy and is disclosed in note 18 of these consolidated financial statements.

    The fair value is determined on the date of purchase and subsequent- ly, at each reporting date, by calculating the expected cash outflow on each purchase agreement. The expected cash flows are discounted to present value by utilising a discount rate of 6.75%, the Company's borrow- ing rate. Expectations of cash outflows are made by the directors for each asset acquisition on the basis of their knowledge of the industry and how the economic environment is likely to impact it. The maximum potential undiscounted amount that the Group may be required to make under such contingent consideration arrangements is disclosed in note 4.

    Had a higher/lower discount rate been used in the present value calculation, the resulting fair value of the contingent consideration would have been lower/higher. The directors are however of the view that a reasonable shift in the discount rate used in the calculation of the present value of future expected cash flows would not have a significant impact on the fair value of the contingent consideration.

    At 31 December 2016 and 2015, the carrying amounts of all other financial assets and liabilities reflected in the financial statements are reasonable estimates of their fair value in view of the nature of these instruments of the relatively short period of time between the origina- tion of the instruments and their expected realisation.

    Critical accounting estimates

    Impairment of other intangible assets and goodwill with an indefinite useful life

    IFRS requires management to undertake an annual test for impair- ment of intangible assets with an indefinite useful life as well as goodwill.

    Impairment testing is an area involving management judgement, requiring assessment as to whether the carrying value of assets can be supported by the net present value of future cash flows derived from such assets using cash flow projections that have been discounted at an appropriate rate. In calculating the net present value of the future cash flows, certain assumptions are required to be made in respect

    of highly uncertain matters, including management's expectation of

    growth in EBITDA. The Group prepares and approves management

    Note 4

    and judgements

    plans for its operations, which are used in the calculations.

    Having considered the Group's future plans, and the recent timing of the Group's acquisitions, management considers that the Group's

    Estimates and judgements are continually evaluated and based on his- torical experience and other factors including expectations of future events that are believed to be reasonable under the circumstances.

    In the opinion of the directors, the accounting estimates and judgements made in the course of preparing these financial state-

    intangibles assets are not impaired. Further disclosures on key as- sumptions is included in note 12.

    ments are not difficult, subjective or complex to a degree which would warrant their disclosure as critical in terms of the requirements of IAS 1 except for:

    Note 5

    Revenue

    Determination of contingent consideration on acquisition of intangible assets

    The Group enters into contractual obligations to purchase intangi- ble assets from third parties. The contractual terms differ between contracts; some have a pre-determined value, whilst others further include future payments the value of which can only be determined with the passage of time with reference to contracted targets.

    The Group exercises judgement in measuring and recognising liabilities where the consideration is contingent on target earnings. Included in amounts payable amounting to EUR 26.94 million is an amount of EUR 14.97 million relating to contingent consideration as at 31 December 2016 (2015: EUR 10.82). Out of the total contingent con- sideration, EUR 8.78 million (2015: EUR 8.18) falls due within one year. The maximum amount that could be payable in relation to contingent consideration is EUR 22.37 million.

    Due to the inherent uncertainty in the evaluation of related future earnings, actual amounts payable may differ from the liability estimat- ed at the point of the acquisition.

    Any changes in estimates will impact the carrying amount of the recognised contingent consideration, and the effect of any changes

    The Group attracts end users and generates revenue by using two primary online marketing methodologies:

  • Generating organic traffic by search engine optimisation (SEO), including acquisitions

  • Paid media by using pay-per-click (PPC) media channels

    The SEO traffic contributed to all of the Group's revenue up until end of October 2015. The paid media revenues were added in November 2015 following the strategic acquisition of Catena Media UK Ltd ("RCM").

    All revenue generated from the various acquisitions and through the different marketing methodologies is being treated as one cash generating unit and accordingly as one revenue segment.

    The revenue of the Company in the previous financial period mainly consisted of the dividend earned from its subsidiary Catena Operations Limited. No dividends were received during the financial year ended 31 December 2016.

    The revenue for the Group and the Company is further analysed as

    follows:

    Group Company

    29 May

    -31 Dec

    are offset against the related asset recognised in the statement of

    financial position. Estimates made in the current and preceding finan- cial year have been achieved and no adjustments have been made to the carrying amount of the recognised contingent consideration.

    Search revenue

    29,423

    13,862

    Paid revenue

    10,626

    1,077

    Investment and other

    related income

    -

    -

    40,049

    14,939

    -

    -

    -

    -

    -

    2,600

    -

    2,600

    EUR, 000' 2016 2015 2016

    2015

    Note 6‌‌‌‌

    Personnel expenses

    Note 7

    Other operating expenses

    Personnel expenses incurred during the year are analysed as follows:

    Group Company

    29 May

    -31 Dec

    The Company's and Group's other operating expenses consist of the following:

    Group Company

    29 May

    -31 Dec

    EUR, 000' 2016 2015 2016

    2015

    SEO support costs Professional fees

    HR and recruitment costs Rent

    Corporate and investor relations costs Movement in debtors'

    impairment provision

    General office and administration costs Other expenses

    1,060

    721

    632

    549

    320

    89

    387

    905

    328

    411

    280

    162

    105

    32

    89

    482

    4,663

    1,889

    -

    -

    22

    11

    -

    -

    -

    -

    -

    -

    -

    -

    -

    -

    105

    4

    127

    15

    EUR, 000' 2016 2015 2016

    2015

    Directors' emoluments

    147

    220

    Salaries and wages

    4,349

    1,225

    Social security

    contribution

    1,469

    512

    Share based payments

    148

    67

    6,113

    2,024

    147

    27

    -

    -

    -

    -

    -

    2

    147

    29

    Average number of employees by the Group and Company during the year was 139 (2015: 37) and 2 (2015: nil) respectively. The salaries

    and wages relating to the employees of the Company were borne by a subsidiary undertaking.

    CEO and other members of Executive management Remuneration to the CEO comprises fixed salary, variable salary, participation in the share option program and other benefits. The

    variable salary can amount to a maximum of 25% of fixed salary, based on the Group's revenue, earnings and other KPIs. The CEO was granted 450,000 share options during 2015.

    In the event of termination of employment at the initiative of the

    Fees charged by the auditor for services rendered during the financial period ended 31 December 2016 and the preceding period are shown in the table below.

    Group Company

    29 May

    -31 Dec

    Company, the period of notice is 12 months. Apart from the salary and other benefits during the period of notice, no severance pay will be issued to the CEO in the event of termination of employment at the initiative of the Company.

    The other members of Executive management during the current financial year were as follows:

  • Louise Wendel (Head of Legal) - employed on 5 September 2016

  • Anne Rhenman (Head of Investor Relations and Communications) - employed on 19 September 2016

Annual statutory audit

80

56

Tax advisory and

compliance services

22

116

Other assurance services

46

20

Other non-audit services

183

354

331

546

6

-

-

-

6

1

-

-

6

7

EUR, 000' 2016 2015 2016

2015

Total remu- neration

Note 8

Finance income

EUR, 000'

2016

Fixed salary

Variable salary

Other

benefits

and other

benefits

Finance income comprises foreign currency exchange differences.

249

91

Robert Andersson CEO 170 14 65

Other members of

Executive management 91 - -

131

-

2015

Robert Andersson CEO 111 - 20

Other members of

Executive management - - -

Note 9‌‌‌

Tax expense

Note 10

Earnings per share

The tax charge for the year/period is comprised of the following:

Group Company

29 May

-31 Dec

Basic earnings per share

Basic earnings per share is calculated by dividing profit attributable to equity holders of the parent by the weighted average number of ordinary shares in issue during the period.

Current tax expense Deferred tax expense

498

869

885

-200

1,367

685

-

-

700

-

-

700

EUR, 000' 2016 2015 2016

2015

Profit from continuing operations (€)

Loss from discontinuing operations (€)

Group

2016 2015

The tax on the Group's and Company's profit before tax differs from

the theoretical tax expense that would arise using the applicable tax rates as shown in the following table. The tax expense for the year/pe- riod and the result of the accounting profit multiplied by the effective tax rate applicable in Malta, are reconciled as follows:

Group Company

29 May

-31 Dec

0.319

-

0.201

-0.002

0.319

50,610,545

0.199

41,406,453

Total

Weighted average number of ordinary shares

in issue

Diluted earnings per share

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume exercise of all dilutive potential ordinary shares. The Group's potential dilutive ordinary shares comprise share options and share warrants. A cal-

EUR, 000' 2016 2015 2016

2015

culation is done to determine the number of shares that could have

been acquired at fair value (determined as the average annual market share price of the company's shares) based on the monetary value of the subscriptions rights attached to outstanding share options. The number of shares as calculated above is compared with the number of shares that would have been issued assuming the exercise of the share options.

Profit/(loss) before tax

Tax calculated at domestic rates applicable to profits in respective countries

Tax effect of:

  • expenses not deductible

  • income not subject to

  • adjustment to tempo- rary differences

  • impact of dividends prior to reorganisation

  • Other

for tax purposes

tax

17,509

1,206

200

-27

-

-

-12

8,999

455

10

-

-98

332

-14

1,367

685

-2,172

2,556

-760

895

949

15

-189

-210

-

-

-

-

-

-

-

700

Profit from continuing operations (€)

Loss from discontinuing operations (€)

Total

Group

0.313

-

0.200

-0.002

0.313

0.198

2016 2015

50,610,545

953,308

41,406,453

176,406

51,563,853

41,582,859

Weighted average number of ordinary shares

in issue

Adjustments for share options and warrants Weighted average number of ordinary shares

for diluted earnings per share

Note 11

Share-based payments

Share options and warrants are granted to directors and to select employees. In the preceding financial year the Company granted share warrants to three members of the Board to purchase a total

of 273,825 warrants. No further share warrants were granted during 2016. Furthermore, the Group also entered into share option agree- ments with six (2015: eight) of its employees, and committed a total of 145,000 shares (2015: 1,138,010).

The average exercise price of the granted warrants is equal to EUR

3.73. The average exercise price of options granted during the current financial year is equal to EUR 7.93 for 6 option arrangements. The av- erage exercise price of options granted in the preceding financial year was equal to EUR 1.57 for 8 option arrangements. Options are condi- tional on the employee completing 36 months of service (the vesting

period). Both share warrants and option agreements can be exercised after 36 months from the date in which they have been granted, and have a contractual term of 42 months. The Group has no legal or con- structive obligation to repurchase or settle the options in cash.

Movements in the number of share warrants outstanding and their related weighted average exercise prices are as follows:

2016 2015

Valuation of share options for the year ended 31 December 2015 The weighted average fair value of options granted during the period determined using the Black & Scholes valuation model was EUR 0.5320 per share under option. The significant inputs into the model were weighted average share price of EUR 1.834 at the grant date, exercise price shown above, volatility of 25%, an expected option life

At 1 January Granted

3.73

-

273,825

-

At 31 December

3.73

273,825

Average exercise price in € per warrant

Warrants

no.

Average exercise price in € per warrant

Warrants

no.

of 3 years and an annual risk-free interest rate of 2%. The volatility

assumption and the dividend yield assumption were based on the variables observed for listed companies in similar industries.

- 3.73

- 273,825

3.73

273,825

Share options outstanding at the end of the period have the following expiry date and exercise prices:

Exercise price in €

Share

Out of the 273,825 (2015: 273,825) outstanding warrants, none of the

Expiry date

per option

options

warrants were exercisable at 31 December 2016 (2015: nil).

Grant date

The weighted average fair value of warrants granted during the

preceding financial year determined using the Black & Scholes valua-

Jun 2015

Jan 2019

1.12

450,000

tion model was EUR 0.0325 per share under warrant. The significant

Jul 2015

Jan 2019

1.83

327,150

inputs into the model were weighted average share price of EUR 1.823

Sep 2015

Mar 2019

1.83

60,000

at the grant date, exercise price shown above, volatility of 25%, an

Sep 2015

Mar 2019

2.06

43,620

expected warrant life of 3 years, and an annual risk-free interest rate

Sep 2015

Mar 2019

1.83

60,000

of 2%. The volatility assumption and the dividend yield assumption

Sep 2015

Mar 2019

1.83

110,000

were based on the variables observed for listed companies in similar

Oct 2015

April 2019

2.06

43,620

industries.

Oct 2015

April 2019

1.83

43,620

Oct 2016

April 2020

7.93

145,000

Share warrants outstanding at the end of the year have the following

expiry date and exercise prices:

1,283,010

Grant date

Expiry date

Exercise price in € per

warrant

Share

warrants

From the 1,283,010 shares granted under option agreements, the Group estimates that 30% of these will not be vested, resulting in a total of 898,107 shares committed. The effect of this was also taken into account in the statement of comprehensive income.

June 2015 Jan 2019 3.56 182,550

September 2015 Mar 2019 4.08 91,275

273,825

Movements in the number of share options outstanding and their related weighted average exercise prices are as follows:

2016 2015

Note 12

Goodwill

Goodwill and other intangible assets

Group

At 1 January Granted

1.57

7.93

1,138,010

145,000

At 31 December

2.29

1,283,010

Average exercise price in € per option

Options

no.

Average exercise price in € per option

Options

no.

EUR, 000'

Year ended 31 December 2015

-

1.57

- 1,138,010

1.57

1,138,010

Balance at 1 January 2015 -

Acquisitions through business combinations (note 23) 7,333

Balance at 31 December 2015 7,333

Out of the 1,283,010 (2015: 1,138,010) outstanding options, no options (2015: nil) were exercisable at 31 December 2016.

Valuation of share options for the year ended 31 December 2016

The weighted average fair value of options granted during the period determined using the Black & Scholes valuation model was EUR 0.6293 per share under option. The significant inputs into the model were weighted average share price of EUR 7.80 at the grant date, exercise price shown above, volatility of 30%, an expected option life of 3 years and an annual risk-free interest rate of 2%. The volatility assumption and the dividend yield assumption were based on the variables ob- served for listed companies in similar industries.

Year ended 31 December 2016

Balance at 1 January 2016 7,333

Balance at 31 December 2016 7,333

Other intangible assets‌‌‌

The Group's acquisitions primarily comprise domains and websites, player databases and in certain instances other components of intellectual property. The consideration paid for player databases is determined on the basis of the average historical value of the NDCs

for the portfolio of the players acquired. In the instances where other components of intellectual property are identified, the allocation of the consideration was based on an estimate of the replacement value of the asset. The residual value is being allocated to domains and websites.

Domains and

Player

Other intellec-

Group

EUR, 000'

At 1 January 2015

websites

databases

tual property Total

1,114

12,497

900

14,511

57,733

72,244

Cost 1,071 43 -

Additions 11,950 547 -

Acquisitions through business combinations (note 23) - - 900

Balance at 31 December 2015 13,021 590 900

Additions 55,068 2,298 367

Balance at 31 December 2016 68,089 2,888 1,267

-68

-101

-169

-907

-1,076

Accumulated depreciation and impairment losses

At 1 January 2015 -65 -3 -

Amortisation charge 65 -116 50

Balance at 31 December 2015 - -119 50

Amortisation charge - -590 317

Balance at 31 December 2016 - -709 367

Carrying amounts

At 31 December 2015 13,021 471 850 14,342

At 31 December 2016 68,089 2,179 900 71,168

Amortisation and impairment

Management has concluded that the acquired domains and websites are a single cash-generating unit for the purposes of IAS 36. This conclusion is based on the fact that the performance and cashflows of the different assets is dependent on those generated by other assets.

Note 13

Property, plant and equipment

Computer

Group

Further, the discontinuing of one of the assets would not result in any

overall leakage of customers.

As at 31 December 2016, the directors have evaluated goodwill, domains and websites for impairment. The directors are of the view

EUR, 000'

Cost

equipment

and

software

Fixtures

and

fixtures Total

that the carrying amount of domains amounting to EUR 68.09 million

and goodwill amounting to EUR 7.33 million is recoverable on the basis that the cashflows generated from these assets are in line, or exceed, the estimated projections made prior to the acquisitions. The directors are satisfied that the judgements made are appropriate to the circumstances.

The fair value of goodwill acquired through the acquisition of Catena Media UK, amounting to EUR 7.33 million, was based on the market price of the ordinary shares which the Group held in Catena Media plc, used as consideration for the acquisition of these domains and goodwill.

The recoverable amount of the acquired goodwill, domains and websites was assessed on the basis of value-in-use calculations. A detailed assessment was performed at the end of the reporting period. The Group's conclusion is that the recoverable amount is well in excess of the carrying amount. The recoverable amount was based on the cash flow projections reflecting actual income from operations in 2016, the budget for 2017 as confirmed by the entity's Board, the business plan for year 2018 - 2021 and an annual growth rate of 2% beyond that.

The projected cashflows were discounted by 15% after tax. The ef-

86

374

-2

8

466

483

-4

945

At 1 January 2015 53 33

Additions 216 158

Disposals -2 -

Acquisitions through business

combinations (note 23) 8 -

Balance at 31 December 2015 275 191

Additions 347 136

Disposals -2 2

Balance at 31 December 2016 620 325

-9

-41

-50

-130

1

-179

Accumulated depreciation and

impairment losses

At 1 January 2015 -7 2

Depreciation -32 9

Balance at 31 December 2015 -39 - 11

Depreciation -113 17

Disposals - 1

Balance at 31 December 2016 -152 27

fective tax rate was estimated at 35%. The Group management's meth-

od for determining the values inherent to each significant assumption

Carrying amounts

is based on experience and expectations regarding the performance of

At 31 December 2015

236

180

416

the market. Consequently, the directors have assessed that there is no

At 31 December 2016

468

298

766

need to impair the goodwill and acquired domains and websites.

Note 14

Investment in subsidiaries

Company

EUR, 000'

Consider- ation for subscribed

capital

Capital contribu-

tion Total

On 1 January 2015, Catena Operations Limited, the previous parent

company, transferred its investment in Paxo Finans AB, a subsidiary in which it previously held a 95% interest, to Catena Invest Ltd, a related company which is not included in the Group.

On 1 June 2015, the Company acquired a 100% shareholding in Catena Operations Limited from its previous five shareholders.

The table below reflects the subsidiaries of the company at the

current and preceding year.

Year ended 31 December 2015

Opening net book amount - - -

Additions 1 54 55

Closing net book amount 1 54 55

Opening net book amount

1

54

55

Additions

-

159

159

Closing net book amount

1

213

214

Year ended 31 December 2016

The capital contribution relates to the cost of share options grant- ed to employees of Company's subsidiary undertakings. The cost is recognised over the vesting period as an increase to investment in subsidiary undertakings.

2016

2015

2016

2015

Catena Operations Limited

Malta

Ordinary shares

100

100

100

100

Molgan Ltd

Malta

Ordinary shares

99.9

99.9

-

-

Catena Media UK Limited

UK

Ordinary shares

100

100

-

-

Catena Media doo Beograd

Serbia

Ordinary shares

100

-

-

-

Subsidiaries

Country of

incorporation Class of shares held

Percentage of ownership and voting rights held by the

Group

Percentage of ownership and voting rights held direct- ly by the Company

Note 15

Trade and other receivables

Note 16

Cash and cash equivalents

Group Company

29 May

Cash and cash equivalents consist of cash in hand, balances with banks

EUR, 000'

31 Dec

2016

31 Dec

2015

31 Dec

2016

-31 Dec

2015

and cash held by payment processors. Cash and cash equivalents in-

cluded in the statement of cash flows reconcile to the amounts shown in the statement of financial position as follows:

Group Company

29 May

Trade receivables

9,616

3,603

Amounts owed by

subsidiary

-

-

Amounts owed by

other related parties

-

26

Prepayments and

accrued income

566

49

Other receivables

1,583

618

11,765

4,296

-

-

43,366

959

-

-

35

3

606

600

44,007

1,562

EUR, 000'

31 Dec

2016

31 Dec

2015

31 Dec

2016

-31 Dec

2015

Cash in hand

1

-

Cash at bank

44,422

1,517

Cash held by financial

intermediaries

290

12

44,713

1,529

- 31,648

-

- 97

-

31,648

97

The amounts owed by subsidiary and other related parties are

unsecured, interest free and repayable on demand.

Note 17‌‌‌‌‌

Borrowings

Note 19

Share capital

Borrowings comprise a three-year secured bond loan amounting to EUR 50 million, which matures in September 2019. The bond loan is secured by the shares of the Company in its material operating subsid- iaries and any other material subsidiaries that may be owned directly or indirectly from time to time by the Company. The debt securities bear a floating rate coupon of Euribor 3m + 6.75 percent. Euribor 3m is subject to a floor of 0 percent; additionally, the bond contains an early redemption option with the redemption price set in accordance with a mechanism as set out in the prospectus. These embedded derivatives may significantly modify the resulting cash flow.

The bond was issued on 16 September 2016 and was subsequently listed on NASDAQ Stockholm on 2 November 2016 at a price of €100. The fair value of the bond, which at the reporting date amounted to EUR 50.5 million, was determined by reference to the price quoted

on the NASDAQ Stockholm website. Accordingly, the bond's fair value which had been previously categorised within the IFRS 13 fair value hi- erarchy as Level 2, was transferred to Level 1 as at 31 December 2016.

On 11 February 2016, the Company's shares were listed on NASDAQ First-North Premier, Stockholm. The offering comprised of a total of 29,580,990 shares, of which 7,273,000 shares were newly issued. The nominal value of these shares was EUR 0.0015.

In the preceding financial year, during the period commencing

on 1 January 2015 to 28 May 2015, prior to the Group reorganisation disclosed in note 20, Catena Operations Limited issued 254 ordinary shares with a nominal value of EUR 1 each at a premium of EUR 4,999,746.

On 29 May 2015, the Company was incorporated having 43,620,000 ordinary shares with a nominal value of EUR 0.0015 each, and on 1 June 2015, the Company acquired a 100% shareholding in Catena Operations Limited from its previous five shareholders. Subse- quently, the Company issued 552,152 ordinary shares with a nominal value of EUR 0.0015 each at a premium of EUR 999,793 to a third party, in part consideration for the acquisition of intangible assets.

Details of share capital for the Company as at 31 December 2016:

31 Dec

Note 18

Trade and other payables

Group Company

EUR, 000'

Authorised, issued and fully paid

51,445,333 ordinary shares of €0.0015 each

77

2016

EUR, 000'

31 Dec

2016

31 Dec

2015

31 Dec

2016

29 May

-31 Dec

2015

Details of share capital for the Company as at 31 December 2015:

31 Dec

Current

Trade payables Amounts committed on acquisitions

Amounts owed to other

related parties VAT payable

Accruals and deferred income

Bond interest liability Other payables

969

20,741

- 116

476

141

37

1,242

8,182

26

70

1,172

-

-

Total current payables

22,480

10,692

13

-

-

-

6

141

-

6

-

1

-

3

-

-

160

10

EUR, 000'

Authorised, issued and fully paid

44,172,152 ordinary shares of €0.0015 each

66

2015

The holders of ordinary shares are entitled to receive dividends from time to time and are entitled to one vote per share at meetings of the Company.

Note 20

Group reorganisation

Non-current

Amounts committed on acquisition

6,195

2,640

Total non-current pay- ables

6,195

2,640

Total payables

28,675

13,332

-

-

-

-

160

10

The amounts owed to other related parties are unsecured, interest free and repayable upon demand.

Amounts committed on acquisitions consist of contractual obli- gations upon purchase of intangible assets from third parties. Some of the obligations have a pre-determined value, whilst others include future payments whose value depends on target earnings.

On 1 June 2015, the Company acquired 100% of the share capital of Catena Operations Limited for cash consideration of EUR 1,454. Catena Operations Limited's shareholders prior to this transaction became shareholders of the Company, and this reorganisation has

been recognised in accordance with the accounting policy applicable to such transactions.

The following table summarises the consideration paid by the Company and the amounts of assets acquired, and liabilities assumed, that were recognised in the consolidated statement of financial posi- tion as at 1 June 2015, being the date of the legal reorganisation:

EUR, 000'

Cash consideration 1

Total consideration transferred 1

Note 22

Deferred taxation

Recognised amounts of identifiable assets acquired and liabilities assumed

Intangible assets 6,643

Property, plant and equipment 133

Investment in subsidiary 1

Trade and other receivables 1,533

Deferred tax is calculated on all temporary differences under the lia- bility method using the tax rate that is expected to apply to the period when the assets/liabilities are settled, based on the tax rates expected in the tax jurisdictions concerned.

The movement in deferred tax balances is analysed as follows:

Cash and cash equivalents 398

Trade and other payables -2,290

Total net assets acquired 6,418

Group

EUR, 000'

Deferred tax assets

Balance at 1 Jan 2016

Recognised in profit and loss

Balance at 31 Dec

2016

Equity adjustment

Retained earnings -1,417

Share premium reclassified to other reserves

on re-organisation -5,000

1

Unremitted earnings of subsidiary -1,127 -6 -1,133

Unutilised tax losses - -264 264

Other - - -

-1,127 -270 -1,397

Deferred tax liabilities

Property, plant and equipment 10 -6 4

Intangible assets 1,022 1,151 2,173

Note 21

Dividends

Provision for bad debts - -6 6

1,032 1,139 2,171

The dividends paid in the preceding financial year are disclosed below.

Net movement -95 869 774

Dividends distributed prior to group reorganisation

Net

Shares entitled

to dividends

Group

Balance at

Recognised in profit

Balance at 31 Dec

Period

covered Date paid

dividend

paid

(€'000)

Dividend per share

(€)

during the

period

(no. of shares)

EUR, 000'

Deferred tax assets

1 Jan 2015

and loss

2015

Unremitted earnings of subsidiary - -1,127 -1,127

28 Feb 2015

23 Apr 2015

150

125.10

1,199

-

-1,127

-1,127

31 Mar 2015

05 May 2015

27 May 2015

1,000

687.76

1,454

Deferred tax liability

22 Jun 2015

Property, plant and equipment

3

7

10

Intangible assets

106

916

1,022

30 Apr 2015

19 May 2015

366

251.46

1,454

Other

-4

4

-

30 May 2015

22 Jun 2015

200

137.55

1,454

105

927

1,032

Total

1,716

Net movement

105

-200

-95

Dividends distributed after the group reorganisation

The dividends distributed below cover the period from 1 June 2015 to 31 December 2015, after the reorganisation disclosed in note 20:

Shares entitled

Period

covered Date paid

Net dividend

paid

(€'000)

Dividend per share

(€)

to dividends during the

period

(no. of shares)

30 June 2015 31 July 2015 730 0.0167 43,620,000

31 July 2015 1 Aug 2015 500 0.0113 44,172,152

30 Sep 2015 10 Dec 2015 50 0.001125 44,172,152

Total 1,280

Note 23‌‌‌

Business combinations

Note 24

Related party transactions

On 23 October 2015, the Group acquired 100% of the share capital of Right Casino Media Limited ("RCM") in the UK. RCM specialises in PPC (Pay Per Click), is based in London, focuses primarily on the UK market, and continued to operate under the name Catena Media UK Limited.

The Group acquired RCM for a cash consideration of USD 3 million (EUR 2.73 million) and a contingent consideration of USD 6 million (EUR 5.35 million). USD 1.5 million (EUR 1.37 million) was paid upon the contract date and USD 1.5 million (EUR 1.36 million) was paid on

1 March 2016.

In view of its shareholding structure, the Company and the Group have no ultimate controlling party. All companies forming part of the Group and other entities under common control are considered by the directors to be related parties.

The following transactions were carried out with related parties:

Group Company

29 May

-31 Dec

At the time of the acquisition the largest shareholders Optimizer,

Aveny and Pixel, the guarantors, agreed to unconditionally settle the second instalment of the purchase price of RCM, if Catena Media defaulted.

EUR, 000' 2016 2015 2016

-

-

  1. Sales of services

    - Entities under common

    2015

    Details of net assets acquired and goodwill are as follows:

    EUR, 000'

    On

    acquisition

    control

    1,360 -

    Group Company

    Purchase consideration:

    • Cash

    • Contingent consideration

    - Other

    EUR, 000' 2016 2015 2016

    147

    - 340

    -

    148

    147

    -

    -

    -

    159

  2. Key management

    personnel

    29 May

    -31 Dec

    2015

    2,726

    5,354

    173

    8,253

    -920

    7,333

    Total purchase consideration

    Fair value of net assets acquired (see below)

    Goodwill

    The determined fair value of assets and liabilities arising from the acquisition, are listed in the table below.

    EUR, 000' Fair value

    Player accounts and other intellectual property 950

    Property, plant and equipment 5

    Trade and other receivables 358

    Cash and cash equivalents 108

    Trade and other payables 462

    Tax payable 39

    Net liabilities acquired 920

    The determined fair value of the acquired trade and other receivables amounted to EUR 0.36 million. The gross contractual amounts are equal to their fair value. All the receivable amount was expected to be collected as at the date of the acquisition.

    • Directors' fees

    • Directors' remuneration

    • Executive management

    • Loan repayment to

    • Share based payments (note 9)

  3. Other related party transactions

  • Dividends distributed,

    net

  • Purchases of services

    • Entities under

      common control

    • Entities with significant shareholding*

  • Loan repayment from:

    • Entities under

common control

29

193

131

223

74

2,995

61

-

259

29

-

-

- 62

1,280

-

-

-

-

- 1,369

-

-

-

-

-

The revenue included in the consolidated statement of compre- hensive income since 1 November 2015, contributed by Catena Media UK Limited, was EUR 0.93 million and profit for the period amounted to EUR 0.16 million.

Based on the information provided from the predecessor owners, had Catena Media UK Limited been consolidated from 1 January 2015, the consolidated revenue would have approximately included an additional EUR 1.50 million in revenue and an additional EUR 0.17 million in profit.

* Purchases of services from entities with significant shareholding comprise consultancy, advisory and success fees payable to Optimizer Invest Limited. Fees relating to acqui- sitions reflect the amount paid during the periods and not the maximum amount that could be due in terms of contractual agreements in place which are dependent on the achievement of target earnings.

Note 25

Events after the reporting period

Note 26

Comparative information

On 9 January 2017, 440,669 new shares in the Company were issued with a nominal value of EUR 0.0015 per share and a share premium

of EUR 7.9994 per share. These shares were issued as part settlement of the upfront consideration due for the US acquisition, as referred to further in the directors' report.

On 10 February 2017, Catena Media acquired the assets of the Swedish focused casino affiliate, Slotsia.com. The purchase price amounted to an upfront payment of EUR 3.58 million which is being paid as a cash consideration in conjunction with the transfer of assets. Additional earn-out payments can amount to a maximum of EUR 5 million, and are based on the revenue performance over a period of two years.

Comparative figures disclosed in the main components of these finan- cial statements have been reclassified to conform with the current year's disclosure format for the purpose of compliance with require- ments of the Companies Act, 1995. An amount of EUR 0.80 million previously netted against deferred tax liability was reclassified to deferred tax assets during the current year. In addition, an amount of EUR 0.33 was reclassified to deferred tax assets from trade and other receivables, to conform with the current year's presentation.

Independent auditor's report

To the Shareholders of Catena Media p.l.c

Report on the audit of the financial statements

Our opinion

In our opinion:

  • Catena Media p.l.c's Group financial statements and Parent Company financial statements (the "financial statements") give a true and fair

    view of the Group and the Parent Company's financial position as at 31 December 2016, and of the Group's and the Parent Company's financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards ('IFRSs') as adopted by the EU; and

  • The financial statements have been prepared in accordance with the requirements of the Maltese Companies Act (Cap.386).

    What we have audited

    Catena Media p.l.c's financial statements, set out on pages 47 to 69, comprise:

  • the Consolidated and Parent Company statements of financial position as at 31 December 2016;

  • the Consolidated and Parent Company statements of comprehensive income for the year then ended;

  • the Consolidated and Parent Company statements of changes in equity for the year then ended;

  • the Consolidated and Parent Company statements of cash flows for the year then ended; and

  • the notes to the financial statements, which include a summary of significant accounting policies.

    Basis for opinion

    We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report.

    We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

    Independence

    We are independent of the Group and the Company in accordance with the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements of the Accountancy Profession (Code of Ethics for Warrant Holders) Directive issued in terms of the Accountancy Profession Act (Capt. 281) that are relevant to our audit of the financial statements in Malta. We have fulfilled our other ethical responsibilities in accordance with the IESBA Code.

    Our audit approach Overview

    Materiality

    Group scoping

    Key audit matters

    • Overall group materiality: €875 thousand, which represents 5% of profit before tax.

    • All audit work was conducted by the same audit team in Malta, given that the Group's accounting pro- cesses are primarily centralised at its head office in Malta.

    • Accounting for goodwill and intangible assets in the consolidated financial

      statements

    • Assessment of the impairment of receivables for the Group

      As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the consolidated financial state- ments. In particular, we considered where the directors made subjective judgements; for example, in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits, we also addressed the risk of management override of internal controls, including among other matters consideration of whether there was evidence of bias that represent- ed a risk of material misstatement due to fraud.

      Materiality

      The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance whether the finan- cial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the consolidated financial statements.

      Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall group materiality

      for the consolidated financial statements as a whole as set out in the table below. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and in aggregate on the financial statements as a whole.

      Overall group materiality €875 thousand

      How we determined it 5% of profit before tax

      Rationale for the materiality

      benchmark applied

      We chose profit before tax as the benchmark because, in our view, it is the benchmark against which the performance of the Group is most commonly measured by users, and is a generally accepted benchmark. We chose 5% which is within the range of acceptable quantitative materiality thresholds in auditing standards.

      We agreed with the Audit Committee that we would report to them misstatements identified during our audit above €44 thousand as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.

      Key audit matters

      Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of

      the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

      Key audit matter

      How our audit addressed the Key audit matter

      Accounting for goodwill and intangible assets in the consolidated financial statements

    • Assessment of impairment

      Goodwill with a carrying amount of €7.3 million, and other intangible assets, having a carrying amount of €71.2 million as at 31 December 2016, have arisen from a number of acquisitions made during the current and preceding financial years.

      An assessment is required annually to establish whether goodwill and intangible assets that have an indefinite useful life should continue

      to be recognised, or if any impairment is required. The assessment was performed at the lowest level at which Catena could allocate and assess goodwill, which is referred to as a cash generating unit ("CGU"). Management considers that the Group operates as one CGU.

      The impairment assessment relied on value-in-use calculations based on the estimated future free cash flow to be generated by Catena, discounted to present value at an appropriate discount rate based on Catena's estimated weighted average cost of capital. The cash flow projections were based on the Group's budget for 2017, the Group's

      We evaluated the suitability and appropriateness of the impairment methodology applied, including the determination of the CGU, and the discounted cash flow model prepared by management, by involving our independent valuation and accounting experts. The calculations

      underlying the impairment model were re-performed in order to check the model's accuracy. Furthermore, management's cash flow forecasts were critically assessed, and agreed to the most recent business plan approved provided by the Group.

      Our independent valuation experts also critically assessed the discount rate and long-term growth rate assumptions by benchmarking the un- derlying inputs in the calculation to market data and other estimates. We concluded that the parameters applied by Catena are reasonable. We also critically assessed whether or not a reasonable possible change in key assumptions could result in an impairment. In view of

      the extent of headroom available in the impairment assessment, a significant deterioration in performance, or variation to the discount

      Key audit matter

      How our audit addressed the Key audit matter

      business plan for 2018-2021, and an annual growth rate of 2% beyond that period. Further information is provided in notes 4.2 and 12 to the financial statements.

      The assumptions supporting the underlying forecast cash flows reflect significant judgements as these are affected by unexpected future market or economic conditions. The estimation of future cash flows and the level to which they are discounted is inherently uncertain and requires judgement. The extent of judgement and the size of the good- will and intangible assets, resulted in this matter being identified as an area of audit focus.

      factor or long-term growth rate, would need to occur for impairment to result. We determined that a movement in these key assumptions of this magnitude is unlikely.

      Our discussions with the Audit Committee in respect of this key audit matter focused on the identification of one CGU, the key assumptions, and the outcome of our sensitivity analysis. During these discussions, management confirmed their view that the forecasts remained appro- priate.

      The appropriateness of disclosures made in relation to the impairment assessment of goodwill and intangible assets was also reviewed.

    • Basis of accounting for acquisition of intangible assets

    • During the current financial year, the Group acquired intangible assets, primarily comprising competitor assets amounting to €57.72 million.

      Accounting for these asset acquisitions involves judgement on the allo- cation of the components of the assets acquired, as well as the estima- tion of contingent consideration. Transactions are typically significant on an individual basis, and as disclosed in note 4.1, the contractual terms differ across contracts. Although some have a pre-determined value, others include future payments the value of which can only be determined with the passage of time with reference to contracted targets. Any changes in recognised contingent consideration are re- flected in the statement of financial position.

      The Group's acquisitions primarily comprise domains and websites and player databases. As described in note 12.2 to the financial state- ments, management applies a valuation process in allocating the con- sideration paid to the asset components acquired. The value of player databases is determined with reference to traffic generated by players existing at the point of acquisition, and the value attributed to domains and websites is the residual. Where other less significant components were identified in certain transactions, these were based on estimated replacement value.

      Whereas player databases are assumed to have a finite life of three years, domains and websites have an indefinite useful life, and are assessed for impairment as described above.

      We assessed the appropriateness of the process utilised to identify assets acquired, and the liabilities assumed at the acquisition date, by reviewing the clauses laid out in the respective acquisition agree- ments.

      In respect of the allocation of the value of the acquired intangible assets, our procedures, which were carried out with the assistance of our valuation specialists, included discussions with management on the process undertaken to identify the underlying intangible assets, an evaluation of the suitability and appropriateness of the valuation approach and methodology applied, as well as re-performance of the underlying calculations.

      In respect of the determination of the contingent price payable on the acquisition of intangible assets, our work included the consideration of the forecast cash flows expected to be generated by the acquired intangible assets, based on forecast revenue metrics as well as actual revenues generated since acquisition. We further assessed the reliability of management's estimates by comparing amounts paid on acquisitions fully executed during the year against estimates originally

      reflected on recognition, and no material adjustments were identified.

      We further challenged the appropriateness of the useful economic life attributed to the acquired intangible assets with reference to market practices.

      Our discussions with the Audit Committee in respect of this key audit matter focused on the judgement applied in the assets valuation pro- cess, the methodologies applied as well as the determination of useful life. During these discussions, management and the Audit Committee confirmed their view on the bases for the assets recognised as well as the key assumptions and underlying methodologies.

      The appropriateness of disclosures made in relation to intangible

      assets acquired was also reviewed.

      Key audit matter

      How our audit addressed the Key audit matter

      Assessment of the impairment of receivables for the Group

      Trade receivables were significant as at 31 December 2016, represent- ing 18% of the Group's net assets. The assessment of the impairment of receivables is inherently uncertain, and the element of subjectivity

      is higher for a fast-growing Group with limited historical experience for collections. As disclosed in note 3.2.1 to the financial statements, trade receivables which were past due amounted to €3.07m as at the year- end. Judgement is applied in determining the basis for impairment

      and the appropriate parameters used to calculate the impairment provision, and therefore this assessment was identified as a key audit matter.

      Management's impairment assessment was primarily based on a cat- egorisation of receivables by credit risk, with reference to an analysis of overdue balances, operators' financial standing, correspondence with customers, and other qualitative factors. Management considers that the provision for impairment is adequate based on the detailed assessment that was undertaken.

      We evaluated the robustness of management's impairment exercise by selecting a sample of overdue receivables and examining supporting documentation that was available to justify management's credit risk assessment. The aged analysis used in management's impairment as- sessment was tested for appropriate allocation of invoices due to the relevant time buckets. As part of our broader work on revenue and re- ceivables, we tested underlying amounts billed to third party websites, and considered the results of the response to amounts circularised.

      Where such response was not forthcoming for the sample selected,

      alternative procedures were performed.

      We challenged management on the impairment risk provision attribut- ed to the respective categories of overdue balances, primarily with reference to discussions with the credit collection team, consideration of communications with customers and settlement patterns during and after the period, as well as the extent of write-offs or corrections made by the Group during the year.

      Our discussions with management and the Audit Committee in respect of this key audit matter focused on the subjectivity of the impairment assessment, and the results of the work that we carried out. During these discussions, management confirmed their view that the impair- ment assessment remained appropriate.

      Whilst acknowledging that this is a judgemental matter, we found that management were able to provide explanations, and where relevant appropriate evidence, to support the basis for their impairment assess- ment.

      We also evaluated the adequacy of the Group's disclosures regarding

      trade receivables and credit risk.

      How we tailored our group audit scope

      We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the consolidated financial statements as a whole, taking into account the structure of the Group, the accounting processes and controls, and the industry in which the Group operates.

      The parent company and its main subsidiary, Catena Operations Limited, are based in Malta, and the financial statements of these entities have been audited by the Group audit team. The Group includes another two subsidiaries, Catena Media UK Limited, registered in the

      United Kingdom, and Catena Media doo Beograd, registered in Serbia. These components were audited by the Group audit team by applying overall Group materiality, together with additional procedures performed on the consolidation. Molgan Limited, another Maltese registered company, was not considered to be material to the Group.

      This gave us sufficient appropriate audit evidence for our opinion on the Group financial statements as a whole.

      Other information

      The directors are responsible for the other information. The other information comprises management commentary and other information included on pages 1 to 42 and 76 to 77 and the Directors' report on pages 43 to 46 (but does not include the financial statements and our auditor's report thereon), which we obtained prior to the date of this auditor's report.

      Our opinion on the financial statements does not cover the other information, including the directors' report.

      In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

      With respect to the directors' report, we also considered whether the directors' report includes the disclosures required by Article 177 of the Companies Act (Cap. 386).

      Based on the work we have performed, in our opinion:

  • The information given in the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

  • the directors' report has been prepared in accordance with the Companies Act (Cap.386).

    In addition, in light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we are required to report if we have identified material misstatements in the directors' report and other information that we obtained prior to the date of this auditor's report. We have nothing to report in this regard.

    Responsibilities of the directors and those charged with governance for the financial statements

    The directors are responsible for the preparation of financial statements that give a true and fair view in accordance with IFRSs as adopted by the EU, and the requirements of the Maltese Companies Act (Cap 386), and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

    In preparing the financial statements, the directors are responsible for assessing the Group's ability to continue as a going concern, disclos- ing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.

    Those charged with governance are responsible for overseeing the Group's financial reporting process.

    Auditor's responsibilities for the audit of the financial statements

    Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstate- ments can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

    As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

  • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

  • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circum- stances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control.

  • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by

    the directors.

    Auditor's responsibilities for the audit of the financial statements - continued

  • Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as

    a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern.

  • Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

  • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

    We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

    We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

    From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to out- weigh the public interest benefits of such communication.

    Report on other legal and regulatory requirements

    Other matters on which we are required to report by exception

    We also have responsibilities under the Maltese Companies Act, 1995 to report to you if, in our opinion:

  • Adequate accounting records have not been kept, or that returns adequate for our audit have not been received from branches not visited by us.

  • The financial statements are not in agreement with the accounting records and returns.

  • We have not received all the information and explanations we require for our audit.

  • Certain disclosures of directors' remuneration specified by law are not made in the financial statements, giving the required particulars in our report.

We have nothing to report to you in respect of these responsibilities.

PricewaterhouseCoopers

78, Mill Street

Qormi Malta

Romina Soler Partner

4 April 2017

# D EFINI T I O N S

Definitions

Unless defined otherwise, in this report the terms below have the following meaning:

Adjusted earnings per share Profit/loss for the period in relation to the average number of shares

in issue and outstanding over the period.

Adjusted operating profit Operating profit for the year adjusted for non-recurring listing costs.

Adjusted operating profit margin Adjusted operating profit divided by revenue.

Adjusted profit before tax Profit before tax adjusted for non-recurring listing costs.

Adjusted profit before tax margin Adjusted profit before tax divided by revenue.

Board The Board of Directors of the company.

Catena Media UK Limited (previously known as RCM)

Catena Media UK Limited, a company incorporated in the UK under

the laws of England and Wales with registration number 07381409.

Company Catena Media PLC, a company registered under the laws of Malta

with registration number C 70858.

Earnings per share Profit/loss for the period in relation to the average number of shares

in issue over the period.

Equity/Assets ratio Equity at the end of period in relation to total assets at the end of period.

Group/Catena media The company and its subsidiaries.

NDC New depositing customers.

PPC 'Pay Per Click' Pay per click is a method for online marketing where search words are pur- chased from a search engine (e.g. Google) for a period of time, when a user searches for the term an advert is shown to the user.

Operating profit Revenue less total operating expenses.

Operating profit margin Operating profit divided by revenue.

ROI 'Return On Investment' Return on investment.

SEO 'Search engine Optimisation' Search engine optimization relates to creating and adjusting content and

search terms on the company's websites in order to enable higher ranking

on search engines.

Search revenues Revenue from SEO related service offering.

Paid revenue Revenue from pay-per-click (PPC) media channels.

# S h a rehol d er i n f o rm at io n

Annual General Meeting and other information

Annual General Meeting

The Annual General Meeting of Catena Media plc for the financial year January 1 - December 31, 2016 will be held in Stockholm on Friday 28 April 2017, 8:30 am at Konferens Spårvagnshallarna, Birger Jarlsgatan 57A. Notice of the Annual General Meeting is published on Catena Media´s web- site, www.catenamedia.com.

Other information

Catena Media intends to release financial reports on the dates below:

Date

Interim report January - March 2017 17 May, 2017

Interim Report January - June 2017 18 August, 2017

Interim Report January - September 2017 17 November, 2017

Year-end Report 2017 February 2018

Investor relations

Catena Media's Investor Relations department is responsible for providing relevant information to shareholders, investors, analysts, and the media. During the year, Catena Media conducted several international road shows and participated in numerous capital market activities. The Company also held regular analyst meetings.

Financial reports, press releases and other information are available from the date of publica- tion on Catena Media´s website, www.catenamedia.com where it´s also possible to subscribe to press-releases and reports. Printed copies of the annual report are sent upon request.

Production: Catena Media in collaboration with Addira.

Print: åtta45

C at en a m ed ia a n n Ua l re P o r t 2016 77

catenamedia.com

The Firs, Floor 6, Gorg Borg Olivier Street,

Sliema SLM1801,

Malta

Tel +356 21 310 325

[email protected]