Review of the 2024 Pearl Abyss Iceland Report & Accounts - Part 2

I did a complete review of the 2024 Pearl Abyss Iceland Report & Accounts here.

In this post i wont to add a few additional items.

Are we due another impairment?

Each year Pearl Abyss has to check that the Goodwill held on the Balance Sheet can be jsutified.

Goodwill is the difference between the price paid for CCP back in 2018 less the value of the assets / liabilities of CCP in 2018.  This difference was $142m.

Each year CCP mush show that the value of the business they bought can cover this goodwill.

The value of the business bought = total cashflows that CCP will generate in the future = the sum of cashflows for the next 5 years + all cashflows in the future growing 2% pa.

In 2022 this failed and the goodwill was reduced by $50.9.

Since that time Pearl Abyss Iceland has generated losses of $39m.  Maybe this was known and so was accounted for - but i doubt it.  I suspect if we get 1 or 2 more years of this then Goodwill will need to be reduced again.

Will Eve Online go bust?

No.  Not at least in the next 12 months.

When a Report & Accounts are drawn up the assumption is that the business will trade as normal  i.e. as a "going concern".  And the management need to prove to the Auditors that this is the case.  If they cant, then all assets and liabilities need to be restated at current market value.

Pearl Abyss Iceland was drawn up assuming trading would continue as normal and management will have needed to convince the auditors.

This appears to have succeeded and i am pretty sure the Auditors would have required Pearl Abyss to demonstrate that they are will to add funds to CCP in Iceland if required.

EBITDA Trend

EBITDA (earnings before interest, tax, depreciation and amortisation) is a common metric used to asset companies.

I took a look at the last six years:

things were looking good in 2020 when EBITDA turned solidly positive at $8.3m but has then slide back into solid negative territory.  And showing no signs of improvement in 2023 and 2024.

Pearl Abyss Group Structure

To help visualise the relationship between CCP, Pearl Abyss Iceland, all their subsidiaries and Pearl Abyss - the below diagram should help.

Within Pearl Abyss Iceland there are 3 distinct groups:

CCP is the main one - but the Accounts of CCP only shows the numbers for CCP, it does not consolidate all its subsidiaries, that is all done at the Pearl Abyss Iceland level.

Angelice Prime Foundation - I need to do more work into this.

Pearl Abyss Iceland Investment. - this is relatively new and I will see what is going on here at some point.