Resilient business model reflected in revenue and gross
margin expansion
The summary provided below relates to the Q2 and
H1 2022 results of Azerion Holding B.V., which is the main
operational holding subsidiary of Azerion Group N.V.
Highlights of Q2 2022
- Net Revenue of EUR 104 million,
nearly doubling Q2 2021, driven by acquisitions and organic
growth.
- Adjusted EBITDA approaching EUR 12
million, up by 70% compared to Q2 2021, primarily boosted by
improved net revenue and gross profit margin.
- Accelerated the integration of
acquisitions, pointing to further synergies and productivity
upside; increased focus on operational efficiencies and costs to
strengthen our resilience.
- Partnership with ITV studios, with
Love Island opening a virtual villa in Hotel Hideaway.
- Partnerships with Cyberkongs,
Metaverse HQ and Metakey to increase the utility of NFTs within
Habbo.
- In July,
completed the acquisition of Madvertise’s subsidiaries in Germany
and France, bolstering in-app digital advertising
capabilities.
Highlights of H1 2022
- Net Revenue of over EUR 198
million, more than doubling H1 2021, mainly driven by acquisitions
and organic growth.
- Adjusted EBITDA
approaching EUR 18 million, up by more than 83% compared to H1
2021, primarily boosted by improved net revenue and gross profit
margin.
Selected Financial KPIs
Azerion Holding B.V. |
Q2 |
H1 |
EURm |
2022 |
2021 |
2022 |
2021 |
Net Revenue |
103.9 |
52.7 |
198.3 |
98.3 |
Gross profit |
41.9 |
20.8 |
74.8 |
35.8 |
Operating expenses |
(46.5) |
(15.9) |
(74.0) |
(29.3) |
Operating profit / (loss) |
(16.1) |
1.3 |
(28.1) |
(1.8) |
EBITDA |
(7.4) |
5.6 |
(11.3) |
6.9 |
Adjusted EBITDA |
11.7 |
6.9 |
17.6 |
9.6 |
Revenue growth % |
97.1% |
|
101.7% |
|
Gross profit margin % |
40.3% |
39.5% |
37.7% |
36.4% |
Adjusted EBITDA growth % |
69.6% |
|
83.3% |
|
Adjusted EBITDA margin % |
11.3% |
13.1% |
8.9% |
9.8% |
As of Q2 2022, proforma metrics are reported directly to the
agent as per terms and conditions of the senior secured callable
fixed rate bonds ISIN: SE0015837794.
Co-CEO
Umut Akpinar
said: “This quarter our delivery remained strong
and we are increasing our focus on costs to strengthen our
resilience in the evolving macroeconomic environment. At the same
time, our priority remains to offer the best service and products
to our customers, continuously improving our operational efficiency
and excellence. With a focus on value over volume, we are also
growing direct sales from our local offices to advertisers and
high-grading our publisher inventory. As we accelerate the
integration of acquisitions, we expect more value to be unlocked
for Azerion. We remain on track to deliver at least EUR 450 million
revenue this year.”
Co-CEO Atilla Aytekin said: “In
the second quarter we continued actively working on our acquisition
funnel to complement our organic growth with a strong forward
visible pipeline, which is demonstrated by the acquisitions we have
completed so far this year. We also raised capital and will
continue exploring options to fund acquisitions, including raising
more equity.”Azerion Holding B.V. - Financial overview Q2
2022
Revenue
Q2 2022 Net Revenue amounted to EUR 103.9
million, compared to EUR 52.7 million in Q2 2021. This reflects
higher revenue from both the Platform and Premium Games segments,
driven by acquisitions and organic growth.
Earnings
Adjusted EBITDA was EUR 11.7 million in Q2 2022,
compared to EUR 6.9 million in Q2 2021, reflecting improved net
revenue and gross profit margin.
The operating loss amounted to EUR 16.1 million,
which includes a charge of EUR 16.1 million related to De-SPAC
expenses, compared to an operating profit of EUR 1.3 million in Q2
2021.
Cash flow
Cash flow from operating activities in Q2 2022
was EUR 10.9 million, excluding the impact of employee SARs related
cash outflows associated with the De-SPAC transaction, which
amounted to EUR 5.9 million. Including those employee SARs related
cash outflows, cash flow from operating activities was EUR 5.0
million. Cash flow from investing activities was an outflow of EUR
41.6 million, mainly due to acquisitions. Cash flow from financing
activities totalled EUR 33.3 million.
Capex
We capitalize development costs related to asset
development, a core activity to support innovation in our platform.
These costs primarily relate to developers’ time devoted to the
development of games, platforms and other new features. In Q2 2022
we capitalized EUR 4.2 million, which is equivalent to 17.0% of
gross personnel costs.
Financial position and
financing
Our net interest-bearing debt1 amounted to EUR
183.7 million as at 30 June 2022, mainly comprising our outstanding
bond loan with a nominal value of EUR 200 million (part of an in
total EUR 300 million framework) and lease liabilities with a
balance of EUR 17.5 million less the cash and cash equivalents
position of EUR 39.0 million.
Azerion Holding B.V. - Segment
information Q2 2022
Platform
Our Platform segment includes casual games
distribution, advertising and e-commerce, which are fully
integrated through our technology. It generates revenue mainly by
displaying digital advertisements in both game and non-game
content, as well as selling and distributing AAA games through our
e-commerce channels. Platform is also integrated with our Premium
Games segment, leveraging inter-segment synergies.
Platform – Selected Financial
KPIs
|
Q2 |
H1 |
EURm |
2022 |
2021 |
2022 |
2021 |
Net Revenue |
82.0 |
41.4 |
154.6 |
75.6 |
Gross profit |
30.7 |
14.8 |
53.1 |
24.8 |
Operating expenses |
(26.0) |
(11.3) |
(46.8) |
(21.0) |
Operating profit / (loss) |
(3.1) |
1.3 |
(14.5) |
(2.0) |
EBITDA |
3.0 |
4.3 |
(3.5) |
4.5 |
Adjusted EBITDA |
7.8 |
5.2 |
9.8 |
6.4 |
Revenue growth % |
98.0% |
|
104.5% |
|
Gross profit margin % |
37.4% |
35.7% |
34.3% |
32.8% |
Adjusted EBITDA growth % |
50.0% |
|
53.1% |
|
Adjusted EBITDA margin % |
9.5% |
12.6% |
6.3% |
8.5% |
Financial data for Q2 and H1 2021 has been revised to reflect
reporting segments adopted as of Q3 2021. 2021 comparative
information has been updated to include the allocation of head
office costs to segments.
Platform Net Revenue was EUR
82.0 million in Q2 2022, an increase of 98.0% compared to Q2 2021,
mainly due to acquisitions and organic growth.
Adjusted EBITDA was EUR 7.8 million in Q2 2022,
increasing by 50.0% compared to Q2 2021. This reflected higher net
revenue and stronger gross profit margin, mainly driven by
increased direct sales from our local offices to advertisers, which
accounted for approximately 47% of total Platform revenue in Q2
2022, compared to some 35% in Q2 2021.
Results also benefited from increased user
engagement, with users spending more time playing casual games. In
addition, we have grown our casual games distribution portfolio
during Q2 2022, adding approximately 790 new titles and 36 new
publisher partners.
Advertising - Selected
Operational
KPIs
|
Q2 2022 |
Q1 2022 |
Q4 2021 |
Q3 2021 |
Q2 2021 |
Avg. Digital Ads Sold per Month (bn) |
8.3 |
8.8 |
9.9 |
6.1 |
5.3 |
Advertising auction platform (bn) |
3.8 |
3.9 |
4.4 |
3.6 |
3.2 |
Publisher monetisation services (bn) |
4.5 |
4.9 |
5.5 |
2.5 |
2.1 |
Avg. Gross Revenue per Million Ad Requests from advertising
auction platform (EUR) |
6.2 |
6.1 |
9.8 |
7.2 |
6.7 |
-
The Average number of digital ads sold per month
(paid impressions) increased to 8.3 billion from 5.3 billion in Q2
2021, reflecting higher user engagement from our owned and operated
content, as well as increased audiences for non-game content. This
was partly offset by a deliberate reduction in certain impressions,
driven by the continuous high-grading of our publisher inventory
and margin optimisation of digital advertisements.
- The
Average gross revenue per million ad requests was
EUR 6.2 in Q2 2022, compared to EUR 6.7 in Q2 2021, showing
relative stability in efficiency and profitability of our
advertising auction platform, which is continuously managed for
value.
Premium Games
Our Premium Games segment includes nine game
titles of social card games and metaverse, stimulating social
interaction among players and building communities. The segment
generates revenue mainly by offering users the ability to make
in-game purchases for extra features and virtual goods to enhance
their gameplay experience.
Premium Games – Selected Financial
KPIs
|
Q2 |
H1 |
EURm |
2022 |
2021 |
2022 |
2021 |
Net Revenue |
21.9 |
11.3 |
43.7 |
22.7 |
Gross profit |
11.2 |
6.0 |
21.7 |
11.0 |
Operating expenses |
(7.3) |
(4.6) |
(14.0) |
(8.3) |
Operating profit / (loss) |
0.2 |
0.0 |
(0.4) |
0.2 |
EBITDA |
2.8 |
1.3 |
5.4 |
2.4 |
Adjusted EBITDA |
3.9 |
1.7 |
7.8 |
3.2 |
Revenue growth % |
93.8% |
|
92.5% |
|
Gross profit margin % |
51.1% |
53.1% |
49.7% |
48.5% |
Adjusted EBITDA growth % |
129.4% |
|
143.8% |
|
Adjusted EBITDA margin % |
17.8% |
15.0% |
17.8% |
14.1% |
Financial data for Q2 and H1 2021 has been revised to reflect
reporting segments adopted as of Q3 2021. 2021 comparative
information has been updated to include the allocation of head
office costs to segments.
Premium Games Net Revenue was
EUR 21.9 million in Q2 2022, an increase of 93.8% compared to Q2
2021, primarily due to the acquisition of Whow Games and organic
growth.
Adjusted EBITDA was EUR 3.9 million in Q2 2022,
increasing by 129.4% compared to Q2 2021, mainly reflecting higher
contributions from Governor of Poker 3, which was primarily driven
by new features and events that enhanced the user gameplay
experience. This was partly offset by lower average daily
users.
Premium Games – Selected
Operational KPIs
|
Q2 2022 |
Q1 2022 |
Q4 2021 |
Q3 2021 |
Q2 2021 |
Avg. Time in Game per Day (min) |
80 |
81 |
80 |
79 |
79 |
Avg. DAUs (thousands) |
567 |
607 |
599 |
616 |
693 |
Avg. ARPDAU (EUR) |
0.40 |
0.38 |
0.42 |
0.37 |
0.34 |
Note: Whow Games included for the full
historical period for comparability purposes
- The
Average time in game per day from our Premium
Games players was at a similar level as in Q2 2021.
- The
Average daily active users (DAUs)
decreased by almost 18% compared to Q2 2021, reflecting the reset
in the number of users post Covid-19 elevated levels, partly offset
by new users in France, following a user acquisition campaign.
- The
Average revenue per daily active user (ARPDAU)
increased by over 17% compared to Q2 2021, primarily driven by new
features and events that enhanced the user gameplay
experience.
Other
Reporting segment Other only contains EUR 13.2
million De-SPAC related expenses not allocated to the Platform or
Premium Games segments. Those costs impact the reported operating
profit/loss, but are removed from Adjusted EBITDA.
Azerion Holding B.V. –
Other information
Interest Bearing Debt (EURm) |
30 June 2022 |
31 December 2021 |
Total non-current indebtedness |
229.8 |
213.3 |
Total current indebtedness |
10.6 |
11.5 |
Total
financial indebtedness |
240.4 |
224.8 |
Deduct Zero interest bearing loans |
(0.4) |
(0.7) |
Interest Bearing Debt |
240.0 |
224.1 |
Less: Cash and cash equivalents |
(39.0) |
(35.3) |
Net Interest Bearing
Debt |
201.0 |
188.8 |
Of which permitted Net Interest Bearing Debt under the bond
terms |
183.7 |
188.8 |
Interest Bearing Debt
References to the bond terms in the table above
refer to the senior secured callable fixed rate bond ISIN:
SE0015837794
Financial indebtedness increased by EUR 15.6
million from 31 December 2021, mainly due to the reclassification
of subordinated convertible loans from other equity instruments to
borrowings. These subordinated convertible loans include an equity
redemption option of outstanding loan balances, in addition to a
cash redemption option. Under the modified terms, the discretion to
redeem the loans in equity or cash lies with Azerion Holdings B.V.
Following the De-SPAC transaction, the loans are redeemable by
issuing shares in the capital of Azerion Group N.V. Since these
loans are no longer redeemable by issuing shares in the capital of
Azerion Holding B.V., they have been reclassified from other equity
instruments.
Reconciliation of net income to Adjusted
EBITDA
In millions of EUR |
Q2 |
2022 |
2021 |
Azerion Holding B.V. |
Premium Games |
Platform |
Other |
Azerion Holding B.V. |
Premium Games |
Platform |
Profit / (loss) for the period |
(22.1) |
(0.8) |
(10.3) |
|
(12.5) |
- |
- |
Income Tax
expense |
0.6 |
(0.1) |
(0.1) |
|
(0.1) |
- |
- |
Profit
/ (loss) before tax |
(21.5) |
(0.9) |
(10.4) |
|
(12.6) |
- |
- |
Net finance
costs |
5.4 |
1.1 |
7.6 |
|
13.9 |
- |
- |
Operating profit / (loss) |
(16.1) |
0.2 |
(3.1) |
(13.2) |
1.3 |
0.0 |
1.3 |
Depreciation
& Amortization |
8.7 |
2.6 |
6.1 |
- |
4.3 |
1.3 |
3.0 |
EBITDA |
(7.4) |
2.8 |
3.0 |
(13.2) |
5.6 |
1.3 |
4.3 |
|
|
|
|
|
|
|
|
Capital market
expenses |
- |
- |
- |
- |
1.0 |
- |
- |
De-SPAC related
expenses |
16.1 |
1.0 |
1.9 |
13.2 |
- |
- |
- |
Other |
(0.9) |
0.1 |
(1.0) |
- |
0.1 |
0.4 |
0.9 |
Acquisition
expenses |
2.6 |
- |
2.6 |
- |
0.2 |
- |
- |
Restructuring |
1.3 |
- |
1.3 |
- |
- |
- |
- |
Adjusted EBITDA |
11.7 |
3.9 |
7.8 |
- |
6.9 |
1.7 |
5.2 |
Breakdown of operating expensesIn millions of
EUR |
Q2 |
|
2022 |
2021 |
|
Personnel costs |
20.4 |
10.3 |
|
Other expenses |
26.1 |
5.6 |
|
Operating expenses |
46.5 |
15.9 |
|
Of
which: |
|
|
|
Platform |
26.0 |
11.3 |
|
Premium Games |
7.3 |
4.6 |
|
Other |
13.2 |
- |
|
|
|
|
|
|
Breakdown of operating expensesIn millions of
EUR |
H1 |
2022 |
2021 |
Personnel costs |
39.1 |
19.2 |
Other expenses |
34.9 |
10.1 |
Operating expenses |
74.0 |
29.3 |
Of
which: |
|
|
|
Platform |
46.8 |
21.0 |
Premium Games |
|
14.0 |
8.3 |
Other |
|
13.2 |
- |
Reconciliation Azerion Group
N.V. to Azerion Holding
B.V.
Set out below is a reconciliation of the
statement of financial position and the statement of profit or loss
and other comprehensive income of Azerion Group N.V. and Azerion
Holding B.V.
Reconciliation of
the statement of financial
position
|
30 June 2022 |
|
NV |
BV |
Variance |
Non-current assets |
335.4 |
335.4 |
0.0 |
Current assets |
149.9 |
138.6 |
11.3 |
Total assets |
485.4 |
474.0 |
11.3 |
|
|
|
|
Total equity |
26.2 |
8.0 |
18.2 |
Non-current liabilities |
251.8 |
269.0 |
(17.3) |
Current liabilities |
207.3 |
197.0 |
10.3 |
Total liabilities |
459.1 |
466.0 |
(6.9) |
Total equity and liabilities |
485.4 |
474.0 |
11.3 |
Notes:
- The variance of current assets is
mainly explained by EUR 9.8 million more cash and cash equivalents
in Azerion Group N.V.
- The variance of total equity and
related Current and Non-current liabilities are mainly explained
by:
- EUR 17.3 million shareholders loan
in Azerion Group N.V. reported as other equity movement and in BV
as Non-current liabilities borrowing as it can be settled with
Azerion Group N.V. shares
- EUR 5.9 million share appreciation
rights in NV reported as current liabilities in BV as those may be
settled with NV shares
- The capital contributions from NV
to BV reported in BV and the de-SPAC related transaction results
reported in NV are offsetting each other
Reconciliation of the
statement of profit or
loss and other comprehensive income
|
H1 2022 |
|
NV |
BV |
Variance |
Revenue |
198.3 |
198.3 |
0.0 |
Gross profit |
74.8 |
74.8 |
0.0 |
Operating profit / (loss) |
(137.9) |
(28.1) |
(109.8) |
Net Finance costs |
6.3 |
(10.9) |
17.2 |
Income Tax expense |
(1.3) |
(1.3) |
0.0 |
Profit / (loss) for the period |
(132.9) |
(40.3) |
(92.6) |
|
|
|
|
EBITDA |
5.4 |
5.4 |
0.0 |
Adjusted EBITDA |
7.8 |
7.8 |
0.0 |
Notes:
- The variance of
operating profit / (loss) is mainly explained by EUR 107.1 million
listing expense reported in Azerion Group N.V. due to the de-SPAC
transaction
- The variance of
Net Finance costs is mainly explained by EUR 17.2 million fair
value gain reported related due a decrease in value of the warrants
in Azerion Group N.V.
Azerion Group N.V. – Condensed
consolidated unaudited financial results for the six months period
ended 30 June 2022
Introduction
The principal activities of Azerion Group N.V.
(the ‘Company’) and its group companies (jointly, the ‘Group’) are
described in the Annual Report 2021 of Azerion Holding B.V. The
interim financial results for the six months period ended 30 June
2022 consists of the condensed consolidated financial statements,
the management report and responsibility statement by the Company’s
Management Board. The information in this interim financial report
has not been audited or reviewed by the Company’s external
auditor.
Responsibility statement
Pursuant to section 5:25d, paragraph 2(c), of
the Dutch Financial Supervision Act (Wet op het financieel
toezicht), the Management Board of the Company hereby declares that
to the best of its knowledge:
- the condensed
consolidated financial statements for the six-month period ended 30
June 2022 give a true and fair view of the assets, liabilities,
financial position and profit or loss of the Company and the
entities included in the consolidation taken as a whole; and
- the interim
report of the Management Board for the period ended 30 June 2022
gives a fair review of the information required pursuant to article
5:25d, paragraph 8 and 9 of the Dutch Financial Supervision Act
regarding the Company and the entities included in the
consolidation.
Schiphol-Rijk, 31 August 2022
Management Board
Mr. U. AkpinarMr. A. Aytekin
Management
Board report
half year 2022
Highlights of
half
year 2022
▪ Listed on Euronext Amsterdam in February 2022 through a
De-SPAC transaction.
▪ Net Revenue of over EUR 198 million, more than doubling
H1 2021, mainly driven by acquisitions and organic growth.
▪ Adjusted EBITDA approaching EUR 18 million, up by more
than 83% compared to H1 2021, primarily boosted by improved net
revenue and gross profit margin.
▪ The De-SPAC transaction included a net cash inflow of EUR
60 million and a non-cash listing expense of EUR 107 million.
Azerion Group N.V. - Selected Financial
KPIs
Azerion Group N.V. |
|
|
EURm |
2022 |
2021 |
Net Revenue |
198.3 |
98.3 |
Gross profit |
74.8 |
35.8 |
Operating expenses |
(75.3) |
(29.3) |
Operating profit / (loss) |
(138.0) |
(1.8) |
EBITDA |
(121.2) |
6.9 |
Adjusted EBITDA |
17.6 |
9.6 |
Revenue growth % |
101.7% |
|
Gross profit margin % |
37.7% |
36.4% |
Adjusted EBITDA growth % |
83.3% |
|
Adjusted EBITDA margin % |
8.9% |
9.8% |
Financial overview half year 2022
Revenue
Revenue for the half year amounted to EUR 198.3
million, an increase of EUR 100 million, or 101.7%, compared to H1
2021. This reflects higher revenue from both the Platform and
Premium Games segments driven by acquisitions and organic
growth.
Earnings
Azerion delivered EUR 17.6 million Adjusted
EBITDA for H1 2022, compared to EUR 9.6 million in H1 2021, an
increase of EUR 8.0 million.
The operating loss amounted to EUR 138.0 million
compared to an operating loss of EUR 1.8 million in H1 2021. The
increase in operating loss mainly related to the non-cash De-SPAC
listing expense of EUR 107.1 million and EUR 27.7 million of other
De-SPAC related expenses.
Cash flow
Our cash flow from operating activities in H1
2022 was an inflow of EUR 9.9 million (H1 2021: outflow of EUR 2.1
million), which included an outflow of EUR 7.1 million related to
the early exercised employee share appreciation rights related to
the De-SPAC transaction. Cash flow from investing activities was an
outflow of EUR 49.8 million, which included an outflow of EUR 39.2
million related to acquisitions (H1 2021: outflow of EUR 35.9
million, which included an outflow of EUR 30.4 million related to
acquisitions). Cash flow from financing activities was an inflow of
EUR 53.7 million, which included a EUR 60.0 million net inflow
related to the De-SPAC transaction (H1 2021: inflow of EUR 105.3
million, which included net proceeds from borrowings of EUR 119.5
million and an outflow of EUR 11.9 million related to an increase
of loans to shareholders).
Capex
We capitalize development costs related to asset
development, a core activity to support innovation in our platform.
These costs primarily relate to developers’ time devoted to the
development of games, platforms and other new features. In H1 2022
we capitalized EUR 8.1 million, equivalent to 17.2% of gross
personnel costs (H1 2021: we capitalized EUR 5.0 million,
equivalent to 20.8% of gross personnel costs).
Acquisitions
In April 2022 we completed the acquisition of
digital marketing company Infinia, bolstering our media platform
capabilities, sales force and volumes in Spain and Latin
America.
Financial position and financing
Our net interest-bearing debt amounted to EUR
173.9 million as at 30 June 2022, mainly comprising our outstanding
bond loan with a nominal value of EUR 200 million (part of an in
total EUR 300 million framework) and lease liabilities with a
balance of EUR 17.5 million less the cash and cash equivalents
position of EUR 48.8 million.
Segment information
Platform
Our Platform segment includes casual games
distribution, advertising and e-commerce, which are fully
integrated through our technology. It generates revenue mainly by
displaying digital advertisements in both game and non-game
content, as well as selling and distributing AAA games through our
e-commerce channels. Platform is also integrated with our Premium
Games segment, leveraging inter-segment synergies.
Platform –
Selected Financial
KPIs
H1 |
|
|
EURm |
2022 |
2021 |
Net Revenue |
154.6 |
75.6 |
Gross profit |
53.1 |
24.8 |
Operating expenses |
(46.8) |
(21.0) |
Operating profit / (loss) |
(14.5) |
(2.0) |
EBITDA |
(3.5) |
4.5 |
Adjusted EBITDA |
9.8 |
6.4 |
Revenue growth % |
104.5% |
|
Gross profit margin % |
34.3% |
32.8% |
Adjusted EBITDA growth % |
53.1% |
|
Adjusted EBITDA margin % |
6.3% |
8.5% |
Financial data for H1 2021 has been revised to
reflect reporting segments adopted as of Q3 2021 2021 comparative
information has been updated to include the allocation of head
office costs to segments.
Platform Net Revenue was EUR
154.6 million in in the first half of 2022, compared to EUR 75.6
million in the first half of 2021, primarily driven by acquisitions
and organic growth.
Adjusted EBITDA was EUR 9.8 million in the first
half of 2022, compared to EUR 6.4 million in the same period a year
before, mainly reflecting higher net revenue and stronger gross
profit margin, driven by increased direct sales from our local
offices to advertisers.
Premium Games
Our Premium Games segment includes nine premium
game titles of social card games and metaverse, stimulating social
interaction among players and building communities. The segment
generates revenue mainly by offering users the ability to make
in-game purchases for extra features and virtual goods to enhance
their gameplay experience.
Premium Games –
Selected Financial KPIs
H1 |
|
|
EURm |
2022 |
2021 |
Net Revenue |
43.7 |
22.7 |
Gross profit |
21.7 |
11.0 |
Operating expenses |
(14.0) |
(8.3) |
Operating profit / (loss) |
(0.4) |
0.2 |
EBITDA |
5.4 |
2.4 |
Adjusted EBITDA |
7.8 |
3.2 |
Revenue growth % |
92.5% |
|
Gross profit margin % |
49.7% |
48.5% |
Adjusted EBITDA growth % |
143.8% |
|
Adjusted EBITDA margin % |
17.8% |
14.1% |
Financial data for H1 2021 has been revised to
reflect reporting segments adopted as of Q3 2021 2021 comparative
information has been updated to include the allocation of head
office costs to segments.
Premium Games Net Revenue was
EUR 43.7 million in the first half of 2022, compared to EUR 22.7
million in the first half of 2021, mainly due to the acquisition of
Whow Games and organic growth.
Adjusted EBITDA was EUR 7.8 million in in the
first half of 2022, compared to EUR 3.2 million in the same period
a year before, mainly reflecting higher net revenue.
Condensed consolidated statement of
profit or loss and other
comprehensive income
|
Half year |
In millions of EUR |
2022 |
2021 |
|
|
|
|
Revenue |
198.3 |
98.3 |
|
Costs of services & materials |
(123.5) |
(62.5) |
Gross profit |
74.8 |
35.8 |
|
Personnel costs |
(40.0) |
(19.2) |
|
Depreciation |
(3.2) |
(2.2) |
|
Amortization |
(13.6) |
(6.6) |
|
Other gains and losses |
(120.7) |
0.5 |
|
Other expenses |
(35.3) |
(10.1) |
Operating profit / (loss) |
(138.0) |
(1.8) |
|
Finance income |
18.0 |
1.2 |
|
Finance costs |
(11.7) |
(17.1) |
Net Finance costs |
6.3 |
(15.9) |
|
Share in profit/(loss) of joint venture |
- |
- |
Profit / (loss) before tax |
(131.7) |
(17.7) |
|
Income Tax expense |
(1.3) |
0.1 |
Profit / (loss) for the period |
(133.0) |
(17.6) |
Attributable to: |
|
|
|
Owners of the company |
(132.8) |
(17.8) |
|
Non-controlling interest |
(0.2) |
0.2 |
Profit / (loss) for the period |
(133.0) |
(17.6) |
Exchange difference on translation of foreign operations |
(1.1) |
0.1 |
Remeasurement of net defined benefit liability |
0.0 |
0.0 |
Total comprehensive income for the period |
(134.1) |
(13.5) |
Total comprehensive (loss) / income attributable
to: |
|
|
Owners of the company |
(133.5) |
(18.1) |
Non-controlling interest |
(0.6) |
0.6 |
|
|
|
Loss per share for losses attributable to the ordinary
equityholders of the company: |
|
|
Basic profit/(loss) per share (in cents) |
(119) |
- |
Diluted profit/(loss) per share (in cents) |
(119) |
- |
|
|
|
Condensed consolidated statement of financial
position
In millions of EUR |
|
30 June 2022 |
31 December 2021 |
Assets |
|
|
|
|
|
Non-current assets |
|
335.5 |
323.8 |
|
Goodwill |
|
130.8 |
123.0 |
|
Intangible assets |
|
147.0 |
141.9 |
|
Property, plant and equipment |
|
17.9 |
18.5 |
|
Non-current financial assets |
|
36.5 |
36.1 |
|
Deferred tax asset |
|
3.2 |
4.2 |
|
Investment in joint ventures |
|
0.1 |
0.1 |
|
Current assets |
|
149.9 |
140.0 |
|
Trade and other receivables |
|
87.3 |
91.3 |
|
Contract assets |
|
12.8 |
12.1 |
|
Current tax assets |
|
1.0 |
1.3 |
|
Cash and cash equivalents |
|
48.8 |
35.3 |
Total assets |
|
485.4 |
463.8 |
|
|
|
|
|
|
Equity |
|
|
|
|
Shareholders' equity |
|
24.6 |
(8.6) |
Non-controlling interest |
|
1.6 |
1.7 |
Total equity |
|
26.2 |
(6.9) |
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
Non-current liabilities |
|
251.8 |
260.2 |
|
Borrowings |
|
200.0 |
199.0 |
|
Lease liabilities |
|
12.7 |
14.3 |
|
Provisions |
|
0.7 |
0.4 |
|
Employee benefits |
|
1.0 |
1.0 |
|
Deferred tax liability |
|
29.5 |
29.9 |
|
Other non-current liability |
|
7.9 |
15.6 |
|
Current liabilities |
|
207.4 |
210.5 |
|
Borrowings |
|
5.8 |
6.8 |
|
Lease liabilities |
|
4.8 |
4.7 |
|
Provisions |
|
1.3 |
1.0 |
|
Trade and other payables |
|
143.9 |
141.1 |
|
Other current liabilities |
|
46.9 |
53.5 |
|
Contract liabilities |
|
0.8 |
0.4 |
|
Current tax liabilities |
|
3.9 |
3.0 |
Total liabilities |
|
459.2 |
470.7 |
|
|
|
|
|
|
Total equity and liabilities |
|
485.4 |
463.8 |
Condensed consolidated statement of cash
flows
|
Half
year |
|
In millions of EUR |
2022 |
20211 |
|
Cash flows from operating activities |
|
|
|
|
Operating profit / (loss) |
(138.0) |
(1.8) |
|
|
|
Adjustments for non-cash operating profit / (loss): |
|
|
Depreciation and amortisation |
16.8 |
8.8 |
Movement in provisions and employee benefits |
1.5 |
1.9 |
Share-based payments expense |
12.5 |
0.4 |
De-SPAC related expenses |
14.5 |
- |
De-SPAC listing expense |
107.1 |
- |
Other items |
2.0 |
(0.1) |
|
|
|
Changes in working capital items: |
|
|
Decrease (increase) in net receivables |
8.5 |
1.0 |
Increase (decrease) in accounts payables and other payables |
2.7 |
(9.1) |
|
|
|
Utilization of provisions |
(0.7) |
- |
Income tax paid |
(0.5) |
- |
Interest paid |
(9.4) |
(3.2) |
Net cash provided by (used for) operating activities
excluding employee
SARs related cash
outflows |
17.0 |
(2.1) |
Employee SARs related cash outflows |
(7.1) |
- |
Net cash provided by (used for) operating
activities including
employee SARs related
cash outflows |
9.9 |
(2.1) |
|
|
|
Cash flows from investing activities |
|
|
Net capital expenditures |
(10.6) |
(5.5) |
Net cash outflow on acquisition of subsidiaries |
(39.2) |
(30.4) |
Net cash provided by (used for) investing
activities |
(49.8) |
(35.9) |
|
|
|
Cash flows from financing activities |
|
|
Other financing activities |
(6.3) |
(2.3) |
Proceeds from external borrowings |
- |
227.5 |
Repayment of external borrowings |
- |
(100.3) |
Increase in loans to related parties |
- |
(11.9) |
Early settlement of Senior Secured Callable Floating Rate
Bonds |
- |
(7.7) |
De-SPAC related expenses |
(33.2) |
- |
Proceeds from De-SPAC transaction |
404.1 |
- |
Settlement of De-SPAC transaction |
(310.9) |
- |
Net cash provided by (used for) financing
activities |
53.7 |
105.3 |
|
|
|
Effect of changes in exchange rates on cash and cash
equivalents |
(0.3) |
0.2 |
Effect of exchange rate changes & accounting
principles |
(0.3) |
0.2 |
|
|
|
Cash flow variation |
13.5 |
67.5 |
|
|
|
Cash and cash equivalents at the beginning of the
year |
35.3 |
10.4 |
Cash and cash equivalents at the end of the
period |
48.8 |
77.9 |
1Reclassifications have been made to the cash
flow statement that was previously published by Azerion Holding
B.V. in H1 2021 in order to achieve a fairer presentation
of the nature of the cash in and cash out flows of
such period. Reference is made to the note “Reclassifications” in
the notes of these condensed consolidated financial statements for
further information.
Condensed consolidated statement of changes in
equity
Half year 2022 In millions of EUR |
|
Share capital |
Share premium |
Legal reserves |
Share Based Payment Reserve |
Currency translation reserve |
Other equity instruments |
Retained earnings |
Attributable to parent |
Non-controlling interest |
Total equity |
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of 31 December
2021 |
|
0.0 |
0.5 |
19.6 |
1.8 |
0.6 |
34.0 |
(65.2) |
(8.6) |
1.7 |
(6.9) |
Profit/(Loss)
for the period |
|
- |
- |
- |
- |
- |
- |
(132.8) |
(132.8) |
(0.2) |
(133.0) |
Other
comprehensive income |
|
- |
- |
- |
- |
(1.2) |
- |
- |
(1.2) |
0.1 |
(1.1) |
Total comprehensive income |
|
- |
- |
- |
- |
(1.2) |
- |
(132.8) |
(134.0) |
(0.1) |
(134.1) |
Borrowings
converted to equity |
|
- |
- |
- |
- |
- |
0.4 |
- |
0.4 |
- |
0.4 |
Settlement of
share-based payments |
|
- |
13.0 |
- |
(1.8) |
- |
- |
- |
11.2 |
- |
11.2 |
Settlement of
Investor share appreciation rights |
|
- |
1.9 |
- |
- |
- |
(1.9) |
- |
- |
- |
- |
Settlement of
Acquisition related share appreciation rights |
|
- |
17.1 |
- |
- |
- |
(9.5) |
- |
7.6 |
- |
7.6 |
Withholding
wage taxes related to share-based payments |
|
- |
- |
- |
- |
- |
- |
(7.2) |
(7.2) |
- |
(7.2) |
Reverse
acquisition EFIC1 BV |
|
0.1 |
28.6 |
- |
3.7 |
- |
- |
107.1 |
139.5 |
- |
139.5 |
Issuance of
Azerion Founder Warrants |
|
- |
- |
- |
- |
- |
- |
(9.9) |
(9.9) |
- |
(9.9) |
Private
placement to sponsors and co-investors |
|
- |
23.1 |
- |
- |
- |
- |
- |
23.1 |
- |
23.1 |
Capital
restructuring |
|
1.0 |
(1.0) |
- |
- |
- |
- |
- |
- |
- |
- |
Shares issued
in new acquisitions |
|
- |
1.0 |
- |
- |
- |
- |
- |
1.0 |
- |
1.0 |
Issuance of
Call options |
|
- |
- |
- |
1.5 |
- |
- |
- |
1.5 |
- |
1.5 |
Exercise of
Call options |
|
- |
1.4 |
- |
(1.4) |
- |
- |
- |
- |
- |
- |
Other
movements |
|
- |
- |
- |
- |
- |
- |
(0.1) |
(0.1) |
- |
(0.1) |
Total transactions with owners |
|
1.1 |
85.2 |
- |
2.0 |
- |
(11.0) |
89.9 |
167.2 |
- |
167.2 |
Allocation/withdrawal legal reserves |
|
- |
- |
4.0 |
- |
- |
- |
(4.0) |
- |
- |
- |
Balance as of 30 June
2022 |
|
1.1 |
85.7 |
23.6 |
3.9 |
(0.6) |
23.0 |
(112.1) |
24.6 |
1.6 |
26.2 |
Half year 2021In millions of
EUR |
Share capital |
Share premium |
Legal reserves |
Share Based Payment Reserve |
Currency translation reserve |
Other equity instruments |
Retained earnings |
Attributable to parent |
Non-controlling interest |
Total equity |
|
|
|
|
|
|
|
|
|
|
|
Balance as of 31 December
2020 |
0.0 |
0.5 |
13.8 |
0.7 |
0.3 |
31.0 |
(42.2) |
4.1 |
2.1 |
6.2 |
Profit/(Loss)
for the period |
- |
- |
- |
- |
- |
- |
(17.8) |
(17.8) |
0.2 |
(17.6) |
Other
comprehensive income |
- |
- |
- |
- |
(0.3) |
- |
- |
(0.3) |
0.4 |
0.1 |
Total comprehensive income |
- |
- |
- |
- |
(0.3) |
- |
(17.8) |
(18.1) |
0.6 |
(17.5) |
Borrowings
converted to equity |
- |
- |
- |
- |
- |
1.4 |
- |
1.4 |
- |
1.4 |
Fair value
adjustment on shareholder loans |
- |
- |
- |
- |
- |
- |
(1.4) |
(1.4) |
- |
(1.4) |
Share-based
payments |
- |
- |
- |
0.4 |
- |
- |
- |
0.4 |
- |
0.4 |
Issuance of
Acquisition related share appreciation rights |
- |
- |
- |
- |
- |
1.0 |
- |
1.0 |
- |
1.0 |
Other
movements |
- |
- |
- |
- |
- |
- |
(0.5) |
(0.5) |
- |
(0.5) |
Total transactions with owners |
- |
- |
- |
0.4 |
- |
2.4 |
(1.9) |
0.9 |
- |
0.9 |
Allocation/withdrawal legal reserves |
- |
- |
2.1 |
- |
- |
- |
(2.1) |
- |
- |
- |
Balance as of 30 June
2021 |
0.0 |
0.5 |
15.9 |
1.1 |
- |
33.4 |
(64.0) |
(13.1) |
2.7 |
(10.4) |
Notes to the unaudited condensed consolidated
interim financial statements
General information
Azerion Group N.V. (the ‘Company’) is a listed
public company incorporated under Dutch law on 25 January 2021 and
registered at 30 Boeing Avenue, 1119 PE, Schiphol-Rijk, the
Netherlands. The Company’s number in the Trade Register at the
Chamber of Commerce is 81697244. The Company is a holding company
with its main operations situated in the Netherlands.
The company was originally known as European
FinTech IPO Company 1 B.V. (‘EFIC1’), a Special Purpose Acquisition
Company (‘SPAC’). The Company was formed for the purpose of
effecting a merger, capital stock exchange, asset acquisition,
stock purchase, reorganisation, or similar business combination
with or acquisition of a target business or entity.
The extraordinary general meeting of
shareholders of EFIC1 (‘EGM’) was convened for and took place on 31
January 2022. During the EGM, the shareholders of EFIC1 approved
(amongst other things) the proposed business combination
transaction (‘Transaction’) with Azerion Holding B.V.
This Transaction was completed on 1 February
2022 and EFIC1 B.V. changed in legal form into a limited company
(naamloze vennootschap) on 2 February 2022 and renamed from EFIC1
to Azerion Group N.V.
The first day of trading on Euronext Amsterdam,
post completion of the Transaction, of the Ordinary Shares and
warrants in the Company under the new name of Azerion Group N.V.
and the new ticker symbols AZRN and AZRNW respectively, was 2
February 2022.
Where in this report reference is made to EFIC1,
reference is being made to the Company before the Transaction.
Where in this report reference is made to Azerion Group N.V.,
reference is being made to the Company after the business
combination.
The comparative figures in the condensed
consolidated interim financial statements being compared to the 6
months period ended 30 June 2022 are those of Azerion Holding
B.V.
These condensed consolidated interim financial
statements comprise the Company and its subsidiaries and entities
it exercises control over (the ‘Group’ or ‘Azerion’).
Preparation basis
These condensed consolidated interim financial
statements were prepared in accordance with IAS 34 Interim
Financial Reporting of the International Financial Reporting
Standards (IFRS) as adopted by the European Union. They do not
include all of the information required for a complete set of
annual financial statements and should be read in conjunction with
the consolidated financial statements of Azerion Holding B.V. for
the year ended 31 December 2021.
The De-SPAC transaction has been accounted for
as a capital reorganisation, whereby Azerion Group N.V. is treated
as the acquired company and Azerion Holding B.V. as the accounting
acquirer. Operations prior to the Transaction are those of Azerion
Holding B.V. and the historical financial statements of Azerion
Holding B.V. became the historical financial statements of the
combined entity, upon the consummation of the Transaction.
Accordingly, the condensed consolidated statement of other
comprehensive income, the condensed balance sheet and the condensed
statement of cash flows for the half year ended 30 June 2022
includes the results of Azerion Group N.V. starting from the date
of completion of the Transaction.
Functional and presentation
currency
These condensed consolidated interim financial
statements are presented in euros (EUR), which is the Company’s
functional currency and rounded to the nearest hundred thousand
unless stated otherwise.
Reclassifications and
restatementsIn the condensed consolidated statement of
cash flows, reclassifications have been made to the cash flow
statement that was previously published by Azerion Holding B.V. in
H1 2021 in order to achieve a fairer presentation of the nature of
the cash in and cash out flows of such period. The
reclassifications mainly comprised a reclassification of EUR 12.0
million relating to the cash acquired from acquisitions from cash
flow from operating activities to cash flow from investing
activities (to nett against the consideration paid for
acquisitions), EUR 28.2 million reclassification from cash flow
from financing activities to operating activities relating to
deferred and contingent considerations resulting from acquisitions,
a reclassification of EUR 11.5 million relating to advances on
loans to related parties from cash flow from investing activities
to cash flow from financing activities. In addition, there was a
reclassification of approximately EUR 7.7 million associated with
costs of early settlement of bonds from cash flow from operating
activities to cash flow from financing activities.
In the condensed consolidated interim financial
statements for Q3 2022 and Q4 2022, the Company intends to restate
the comparative condensed consolidated statement of profit or loss
and other comprehensive income for Q3 2021, respectively, Q4 2021
in order to align such comparative information with the audited
2021 annual report and annual financial statements of the
Company.
In the condensed statement of profit or loss and
other comprehensive income the non-controlling interest not
attributable to the parent has been adjusted to reflect the
appropriate values for Q2 and H1 2021.
Use of estimates and
judgementsThe preparation of these condensed consolidated
interim financial statements in conformity with IFRS requires
management to make estimates, judgments and assumptions, which
affect the reported amounts in these condensed consolidated interim
financial statements. The estimates, judgments and assumptions made
in applying Azerion’s accounting policies and the key sources of
estimation uncertainty were the same as those described in Azerion
Holding B.V.’s consolidated annual financial statements for the
year ended 31 December 2021 apart from the below.
Special Shares and Conditional Special
Shares
In March 2021 EFIC1 issued Special Shares to its
Sponsors. The Special Shares are convertible into Ordinary Shares
in a business combination transaction. Management has exercised
judgement in determining whether these instruments should be
treated as financial instruments or as share-based payments (IFRS
2) and concluded that the instruments are in the scope of IFRS 2 as
equity-settled instruments.
The (originally issued) Special Shares were
fully vested on 31 January 2022, based on the considerations made
in 2021, given the expectation at that moment that the transaction
would take place. In the transaction the Special Shares were partly
cancelled, partly converted in Ordinary Shares and partly converted
into Conditional Special Shares. Management considered that the
Conditional Special Shares are to be treated as a modification of
the previous instruments and therefore as share based payments
under IFRS 2. Based on fair value calculations before and after the
modification, no amounts were recognised as additional
expenses.
Davey Call Option
In March 2021 EFIC1 issued Call Options to Mr.
B. Davey. These Call Options are in scope of IFRS 2 and their
granting is considered a share-based payment for the services
provided as a member of EFIC1’s leadership team. As the Davey Call
Option entitled only rights to Special Shares, which would
automatically and mandatorily convert into Ordinary Shares upon a
business combination, and as at such moment the Ordinary Shares
would no longer have any rights under the Share Repurchase
Agreement and qualify as equity, as such the share-based payment is
equity-settled. In 2021 the Davey Call Option was economically
considered as 1,012,560 individual options with an exercise price
of EUR 0.01 to a Special Share as underlying. Although the Davey
Call Option has an American feature, a Black-Scholes-Merton option
pricing model was used to calculate the value at grant date.
In the Transaction, 270,590 Davey Call Options
were cancelled and the remaining 739,790 were split into 628,974
unconditional Call Options (convertible into Ordinary Shares) and
110,996 Call Options which will solely become exercisable if the
share price of Ordinary Shares equals or exceeds EUR 12.00 per
share for any 20 trading days within any 30 trading-day period
within a period of five years after the business combination. The
(originally issued) Davey Call Options fully vested on 31 January
2022, based on the considerations made in 2021. Management
considered that the reduction of the Davey Call Options should be
treated as a modification of the previous IFRS 2 instruments. Based
on fair value calculations before and after the modification, no
amounts were recognised as additional expenses.
HTP Call Option
As a result of the Transaction, and on exactly
the same terms as the Davey Call Option, the HTP Sponsor received
145,634 unconditional call options and 25,700 conditional call
options which will solely become exercisable if the share price of
Ordinary Shares equals or exceeds EUR 12.00 per share for any 20
trading days within any 30 trading-day period within a period of
five years after the business combination. Management considered
that these call options are to be treated as newly issued, fully
vested equity-settled instruments under IFRS 2 – Share-based
Payment. Based on fair value calculations at grant date, the full
value was recognised as a share-based payment expense.
Capital Shares and Sponsor Call
Option
The Sponsors, excluding Mr. B. Davey, each have
an irrevocable right to call for 499 additional Capital Shares, 998
shares in total, at an exercise price of EUR 10,000 per share (the
‘Sponsor Call Option’). The Sponsor Call Option can be exercised
from the date of the agreement, 25 March 2021, up to and including
their tenth anniversary.
The Capital Shares and the Sponsor Call Option
to acquire additional Capital Shares are classified as liability
instruments as a result of their terms and conditions. The initial
measurement is at amortised cost, which approximates fair value at
the issuance date, being EUR 10,000 for one Capital Share and close
to zero for the Sponsor Call Option. Subsequently, their
measurement remains at amortised cost.
Public Warrants
The Public Warrants do not qualify as equity as
the ‘fixed-for-fixed’ test in IAS 32.16(b)(ii) is not met as the
conversion ratio is not fixed and various cashless settlement
options exist. As a result, they classify as financial liability
instruments. The Public Warrants are valued using the listed price
of the Public Warrants (a Level 1 valuation methodology).
Founder Warrants
The Founder Warrants are derivatives and,
because of their specific redemption features, the
‘fixed-for-fixed’ test in IAS 32.16(b)(ii) is not met. As a result,
they classify as financial liability instruments. The holders of
the Founder Warrants waived their right to retain the warrants in
case of a call by the issuer (now Azerion Group N.V.) against a
redemption price of €0.01 per Founder Warrant in the event that the
last trading price of the Ordinary Shares equals or exceeds €18.00
per Ordinary Share for any 20 trading days within a 30 consecutive
trading day period. Management considered that after the closing of
the Transaction, the terms and conditions of the Founder Warrants
are closely comparable to the Public Warrants and concluded
therefore that they should be valued using the listed price of the
Public Warrants without any amendment (a Level 2 valuation
methodology).
Azerion Founder Warrants
On completion of the Transaction, Azerion Group
N.V. issued 17,992,773 Azerion Founder Warrants to the founders of
Azerion Holding B.V.
These instruments are in scope of IAS 32 as they
are derivatives and, because of their specific redemption features,
the ‘fixed-for-fixed’ test in IAS 32.16(b)(ii) is not met. As a
result, they classify as financial liability instruments.
Management considered that, after the closing of the Transaction,
the terms and conditions of the Azerion Founder Warrants are
closely comparable to the Public Warrants and concluded therefore
that they should be valued using the listed price of the Public
Warrants without any amendment (a Level 2 valuation
methodology).
Significant accounting
policiesThe accounting policies applied in the preparation
of the condensed consolidated interim financial statements are
consistent with those applied in the preparation of Azerion Holding
B.V. annual consolidated financial statements for the year ended 31
December 2021 apart from the accounting policies listed below. A
number of new standards are effective from 1 January 2022, but they
do not have a material effect on the Company’s condensed
consolidated interim financial statements. The Company has not
early-adopted any standard, interpretation or amendment that has
been issued but is not yet effective and endorsed.
Accounting policy relating to Warrants
Classification
The Warrants consist of the Public Warrants, the
Founder Warrants and the Azerion Founder Warrants. The Warrants are
derivatives and because of their specific redemption features, the
‘fixed-for-fixed’ test in IAS 32.16(b)(ii) is not met. As a result,
they classify as financial liability instruments.
Subsequent measurement
Subsequent changes in the fair value of the
Warrants are recognised directly in the consolidated statement of
profit and loss.
Accounting policies relating to financial
liabilities
Derecognition
The Company derecognises a financial liability
when its contractual obligations are discharged, cancelled or
expired. On derecognition of a financial liability, the difference
between the carrying amount extinguished and the consideration paid
(including any non-cash assets transferred or liabilities assumed)
is recognized in the consolidated statement of profit and loss. The
Company also derecognises a financial liability when its terms are
modified and the cash flows of the modified liability are
substantially different, in which case a new financial liability
based on the modified terms is recognized at fair value.
Accounting policy relating to
restructuring provisionsThe provision for restructuring
mainly relates to the estimated costs of initiated restructurings,
the most significant provisions are approved by the Management
Board. When such restructurings require discontinuance and/or
re-organization of activities, the anticipated costs are included
in restructuring provisions. A liability is recognized for those
costs only when the Company has a detailed formal plan for the
restructuring and has raised a valid expectation with those
affected that it will carry out the restructuring by starting to
implement that plan or announcing its main features to those
affected by it. Before a provision is established, the Company
recognizes any impairment loss on the assets associated with the
restructuring.
Risk management
The consolidated annual financial statements
2021 of Azerion Holding B.V. describes certain risk categories and
risks (including risk appetite) which could have a material adverse
effect on Azerion’s financial position and results. Those
categories and risks remain valid and should be read in conjunction
with these half year financial results.
For the Financial Instruments assumed in the
Transaction two risk types are relevant, Liquidity Risk and Market
Risk.
Liquidity Risk
Liquidity risk is the risk that the Company will
encounter difficulty in meeting the obligations associated with its
financial liabilities that are settled by delivering cash or
another financial asset. The Company’s objective when managing
liquidity is to ensure, as far as possible, that it will have
sufficient liquidity to meet its liabilities when they are due,
under both normal and stressed conditions, without incurring
unacceptable losses or risking damage to the Company’s
reputation.The Company assesses the liquidity risk related to the
warrants as limited, based on the following considerations. On
exercising their warrants, the holders of the Public Warrants have
to pay the exercise price to the Company. The holders of the
Founder Warrants have a cashless exercise option, and the Azerion
Founder Warrants can be exercised cashlessly. The Company has
sufficient shares in Treasury to meet its obligations to issue
shares on exercise.
Market Risk
Market risk is the risk that changes in market
prices – e.g., interest rates and equity prices – will affect the
Group’s income or the value of its holdings of financial
instruments. The objective of market risk management is to manage
and control market risk exposures within acceptable parameters,
while optimising the return.
The Company is mainly subject to changes in the
market price of the Public Warrants and (Azerion) Founder Warrants
as movements in the fair value of these instruments are directly
recognised in profit and loss. As these instruments are directly
related to the listed ordinary shares of the Company, movements in
the value of the ordinary shares will have an impact on the value
of these instruments.
Seasonality
Azerion is subject to the seasonal nature of
gaming and advertising spending. Historically, Azerion’s results of
operations and cash flows have been subject to reasonably
predictable seasonality. There is no assurance that these patterns
will continue to be visible in future which may impact the
predictability of Azerion’s operating results and financial
position.
Gaming activity is usually highest during the
summer and end-of-year holiday periods and advertising activity is
generally highest during the winter holiday season (to reflect
consumer spending). We expect these patterns to continue over the
long-term but should also benefit from an increasingly scaled and
diverse customer and partner base and business model over time.
Segment information
Information reported to the Group’s Chief
Executive Officers (Chief Operating Decision Makers) for the
purposes of resource allocation and assessment of segment
performance is focused on the business activities which generate
certain classes of revenue and incur certain classes of expenses.
The principal business activities generate revenue through Premium
Games and Platform.
Management has presented the performance measure
Adjusted EBITDA because the Group’s Chief Executives monitors this
performance measure at a consolidated level as it is relevant for
the purpose of resource allocation and assessment of segment
performance.
Refer to the ‘Definition’ section where the
meaning of Adjusted EBITDA is explained. Adjusted EBITDA is not a
defined performance measure in IFRS Standards. The Group’s
definition of Adjusted EBITDA may not be comparable with similarly
titled performance measures and disclosures by other entities.
Reconciliation of profit/(loss) for the period to
adjusted EBITDA
In millions of EUR |
Half year |
2022 |
2021 |
Azerion Group N.V. |
Premium Games |
Platform |
Other |
Azerion Group N.V. |
Premium Games |
Platform |
Profit / (loss) for the period |
(133.0) |
|
|
|
(17.6) |
|
|
Income Tax
expense |
1.3 |
|
|
|
(0.1) |
|
|
Profit
/ (loss) before tax |
(131.7) |
|
|
|
(17.7) |
|
|
Net finance
costs |
(6.3) |
|
|
|
15.9 |
|
|
Operating profit / (loss) |
(138.0) |
(0.4) |
(14.5) |
(123.1) |
(1.8) |
0.2 |
(2.0) |
Depreciation
& Amortization |
16.8 |
5.8 |
11.0 |
- |
8.7 |
2.2 |
6.5 |
EBITDA |
(121.2) |
5.4 |
(3.5) |
(123.1) |
6.9 |
2.4 |
4.5 |
|
|
|
|
|
|
|
|
Capital market
transactions |
- |
- |
- |
- |
1.6 |
- |
0.0 |
De-SPAC
related expenses |
134.9 |
2.4 |
9.4 |
123.1 |
- |
- |
- |
Other |
- |
- |
- |
- |
0.8 |
0.8 |
1.9 |
Acquisition
expenses |
2.6 |
- |
2.6 |
- |
0.3 |
- |
- |
Restructuring |
1.3 |
- |
1.3 |
- |
- |
- |
- |
Adjusted EBITDA |
17.6 |
7.8 |
9.8 |
- |
9.6 |
3.2 |
6.4 |
Segment revenues
In the following tables, revenue is disaggregated by segment and
primary geographical market.
|
|
|
In millions of EUR |
30 June 2022 |
30 June 2021 |
Platform |
154.6 |
75.6 |
Premium Games |
43.7 |
22.7 |
Total revenue from contracts with customers |
198.3 |
98.3 |
|
|
|
In millions of EUR |
30 June 2022 |
30 June 2021 |
The Netherlands |
116.1 |
69.8 |
Other European countries |
77.4 |
27.5 |
Non-European countries |
4.8 |
1.0 |
Total revenue from contracts with customers |
198.3 |
98.3 |
Segment assets
Operating segments - AssetsIn millions of EUR |
30 June 2022 |
31 December 2021 |
Platform |
330.4 |
312.0 |
Premium Games |
102.7 |
111.3 |
Total segment assets |
433.1 |
423.3 |
Unallocated assets |
52.3 |
40.5 |
Consolidated total assets |
485.4 |
463.8 |
For the purposes of monitoring segment
performance and allocating resources between segments the Group’s
Chief Executives monitor the tangible, intangible and financial
assets attributable to each segment. Assets used jointly by
reportable segments are allocated on the basis of the revenues
earned by individual reportable segments. The unallocated assets
relate to current tax assets and non-current financial assets.
Information about Azerion’s segment current assets by
geographical location are detailed below:
In millions of EUR |
30 June 2022 |
31 December 2021 |
The Netherlands |
64.5 |
52.2 |
Other European countries |
76.6 |
83.3 |
Non-European countries |
8.8 |
4.5 |
Total current assets |
149.9 |
140.0 |
Information about Azerion’s segment non-current assets by
geographical location are detailed below:
In millions of EUR |
30 June 2022 |
31 December 2021 |
The Netherlands |
104.1 |
104.3 |
Other European countries |
227.2 |
215.1 |
Non-European countries |
4.2 |
4.4 |
Total non-current assets |
335.5 |
323.8 |
De-SPAC transaction
Accounting treatment
The Transaction between Azerion Group N.V. and
Azerion Holding B.V. resulted in a structure in which the former
shareholders of Azerion Holding B.V., although they sold a part of
their ownership, retained a majority share ownership of Azerion
Group N.V.
The structure of the Transaction has therefore
characteristics of a ‘reverse acquisition’ under IFRS 3, where
Azerion Holding B.V. is the accounting acquirer and Azerion Group
N.V. the acquired entity for accounting purposes. However, because
of the fact that Azerion Group N.V. was not a business according to
IFRS 3, the principles of IFRS 3 are not directly applicable. The
transaction therefore qualifies as a ‘share based payment’
transaction under IFRS 2.
Nevertheless, given the characteristics of the
Transaction, the presentation in the (semi-annual) financial
statements is, by analogy, based on the IFRS 3 principles for
reverse acquisitions. That implies that the condensed consolidated
financial statements are issued under the name of Azerion Group
N.V. (the legal parent) but are in substance the continuation of
Azerion Holding B.V. with one adjustment, which is to present the
legal capital of Azerion Group N.V. As a result of the application
of IFRS 3 by analogy to the transaction, and the application of the
reverse acquisition guidance, Azerion Holding B.V.’s operating
history and financial performance forms the basis for the
comparative financial information for the combined company. The
comparative financial year included herein are operations of
Azerion Holding B.V. prior to the transaction.
Listing expense calculation
The difference in the fair value of equity
instruments held by Azerion Group N.V’s. shareholders over the fair
value of identifiable net assets of Azerion Group N.V. represents a
service of listing of Azerion Holding B.V.’s shares and is
accounted for as a share-based payment analogous to IFRS 2. In
accordance, a one-time, non-cash impact of EUR 107.1 million has
been recognized in ‘Other gains and losses’ against retained
earnings.
The table below presents the specification of
the Listing Expense:
In millions of EUR |
Total fair value |
Listed shares of EFIC1 B.V. |
66.6 |
Special Shares |
65.2 |
Davey Call Option |
7.7 |
Total Consideration |
139.5 |
EFIC1 B.V. identifiable
net assets |
32.4 |
Value of IFRS 2 listing service |
107.1 |
The calculation of the consideration is as
follows:
- 6,981,516 EFIC1 B.V. shares, after
redemption, at the closing price on 1 February 2022, of EUR
9.54;
- 8,539,894 Special Shares, before
changes in the transaction, at a closing price on 1 February 2022
of EUR 7.63;
- 1,012,560 Davey Call Options,
before changes in the transaction, at a closing value on 1 February
2022 of EUR 7.63.
The specification of the EFIC1 B.V. Identifiable Net Assets in
the Transaction is as follows:
In millions of EUR |
|
Assets |
|
Trade and other receivables |
0.3 |
Cash and cash equivalents |
404.5 |
Total assets |
404.8 |
|
|
Liabilities |
|
Trade and other payables |
336.9 |
Other current liabilities |
35.5 |
Total value of the liabilities |
372.4 |
|
|
Identifiable Net assets |
32.4 |
Notes:
- Trade and other payables includes:
an amount of EUR 310.9 million which is the redemption to the
shareholders who decided not to continue as shareholders in the new
combination (which amount was paid on 3 February 2022); the sponsor
and co-investor commitment for an amount of EUR 23.15 million which
is reclassified to equity after the completion.
- Other current liabilities includes
the fair value of the Founder and Public Warrants, of in total EUR
23.5 million and the value of the Capital Shares of EUR 0.22
million.
Cash flows
The Transaction resulted in EUR 93.2 million of
net cash proceeds after redemption to shareholders including EUR
70.0 million of funds from the EFIC1 escrow account (net of
negative interest and after effectuation of the share repurchase
arrangement) supplemented by an additional sponsor and co- investor
commitment of EUR 23.15 million. These proceeds are offset by EUR
33.2 million De-SPAC related expenses paid.
Shares and Shareholder information.
Immediately after completion of the business combination the
issued share capital of Azerion Group N.V. was as follows:
Type of security |
Number 1 |
Total Ordinary Shares |
181,561,748 |
Of which shares in treasury 2 |
70,078,452 |
Ordinary Shares |
111,483,296 |
Capital Shares |
22 |
Conditional Special Shares |
1,152,886 |
(Public) Warrants 3 |
12,736,605 |
Notes:
1. Excluding any conditional
and unconditional option rights and Founder Warrants existing at
the date of the business combination, which in aggregate entitle
the holders to receive up to a maximum of 24,160,245 Ordinary
Shares.2. The Ordinary Shares in treasury can be
used for acquisitions, exercise of warrants and option rights and
other general funding purposes.3. The outstanding
Warrants listed on Euronext Amsterdam at the date of the business
combination entitle the holders to receive up to 12,736,605
Ordinary Shares.
The ownership percentages, immediately after the
completion of the business combination, were as presented in the
table below. These percentages may differ from the capital interest
and voting rights percentages as found in the register of
substantial interests of the AFM, due to the specific regulatory
requirements applicable to AFM notifications.
Shareholder |
Ownership in shares |
% in
ordinary |
Share capital 4 |
Former investors in Azerion Holding B.V. 5,6 |
82,787,492 |
74.3 |
Azerion Holding B.V., former depositary receipt holders |
8,382,903 |
7.5 |
Azerion former stock appreciation rights holders 7 |
4,483,367 |
4 |
Former EFIC1 converted Special Shares holders |
6,533,019 |
5.9 |
Other shareholders |
9,296,516 |
8.3 |
Total ordinary shares |
111,483,296 |
100 |
Notes:
4. Excluding treasury shares as
well as any conditional and unconditional option rights and Founder
Warrants existing at 2 February 2022, which in aggregate entitle
the holders to receive up to a maximum of 24,160,245 Ordinary
Shares.5. An entity controlled by Azerion's
co-founders and co-CEOs.6. Including shares held
for settlement of future acquisition-related earn out and other
obligations.7. Excluding shares held for
settlement of future acquisition-related earn out and other
obligations.
Supportive transaction information
As a result of the business combination the
following other changes to the capital structure of Azerion Group
N.V. were effectuated:
- The residual balance of the Escrow
account of EUR 70.3 million became unrestricted and was transferred
from the Escrow Foundation for the free use of Azerion Group
N.V.
- Cancellation of 853,989 Special
Shares and reclassification of 1,152,886 Special Shares into
Conditional Special Shares. (Conditional Special Shares are
convertible into Ordinary Shares subject to additional conditions
to be met within five years as of the Completion Date.) Conversion
of the remaining 6,533,019 Special Shares into Ordinary Shares of
Azerion Group N.V.
- Waiving of dividend and voting
rights relating to Conditional Special Shares.
- Amendment of the Davey Call Option
into an unconditional call option on a maximum of 628,974 Ordinary
Shares and a call option on 110,996 Ordinary Shares which will
solely become exercisable if the share price of Ordinary Shares
equals or exceeds EUR 12.00 per share for any 20 trading days
within any 30 trading-day period within a period of five years
after the business combination.
- Grant to HTP Sponsor of 145,634
unconditional call options and 25,700 conditional call options on
same terms as the Davey Call Option.
- Grant of 17,922,773 Azerion Founder
Warrants to both founders of Azerion Holding B.V., subject to the
same terms and conditions as the other Founder Warrants.
- The holders of the Founder Warrants
waived their right to retain the warrants in case of a call by the
issuer (now Azerion Group N.V.). As a result, the terms and
conditions of the Founder Warrants are now broadly equivalent to
the Public Warrants.
- Payment of deferred underwriting
fees and other costs in relation to the business combination for a
total amount of approximately EUR 36.0 million.
- As part of the capital
reorganisation Azerion Holding B.V.’s share capital was exchanged
for shares in Azerion Group N.V. of EUR 956,538, being the 95,7
million shares, at a par value of EUR 0.01. This capital
reorganisation was shown as an increase within share capital by EUR
955,362 from the old share capital (par value of EUR 0.01) before
Closing of EUR 1,176.
AcquisitionsInfinia Mobile
SL
On 4 April 2022 Azerion Holding B.V. (‘Azerion’)
acquired 100% of the share capital of Infinia Mobile SL
(‘Infinia’). Infinia is a digital marketing company founded in 2015
in Spain and has offices in USA, Mexico, Peru, Colombia, Brazil and
Chile. Infinia develops data management platforms which enables
advertising companies to extract data based on users’ habits.
Through the acquisition, Azerion gains a stronger foothold in the
Spanish market and expands reach in the LATAM markets.
The fair value purchase consideration for 100%
shares in the capital of Infinia is EUR 16.1 million, which
comprises of a cash payment at closing of EUR 6 million, deferred
consideration of EUR 4.2 million, contingent consideration of EUR
4.3 million, equity payments of EUR 1 million and transaction
bonuses of EUR 0.6 million.
The deferred consideration is to be paid within
12 months (EUR 2.2 million) and 24 months (EUR 2 million)
respectively after the acquisition date. The fair value of the
deferred consideration of EUR 4.2 million was estimated by
calculating the present value of the future expected cash flows.
The estimate is based on a discount rate of 1.6% and 1.9% per annum
respectively. Based on the share purchase agreement, Azerion issued
112.358 Azerion Group N.V. shares from treasury at the share price
of EUR 8.90 representing a total value of EUR 1.0 million.
Transaction bonuses are not subject to any
contingencies and will be paid bi-annually over a period of 2
years. The fair value of the transaction bonuses of EUR 0.6 million
was estimated by calculating the present value of the future
expected cashflows. The estimate is based on an average discount
rate of 1.6% per annum depending on the timeframe related to the
transaction bonus.
The fair value of acquired assets and
liabilities of Infinia has been determined. This resulted in a EUR
8.4 million net fair value of the acquired assets and liabilities
and EUR 7.7 million recognized goodwill. The fair value of
financial assets includes receivables with a fair value of EUR 4.9
million and a gross contractual value of EUR 5.6 million. The best
estimate at the acquisition date of the contractual cash flows not
to be collected is EUR 0.7 million.
Below is a summary of the fair value of the net
assets acquired, including consideration paid and goodwill:
|
|
In millions of EUR |
Infinia |
Property. plant and equipment (excl. IFRS16) |
0.1 |
Intangible assets |
9.3 |
Non-current financial assets |
0.0 |
Deferred tax assets |
0.2 |
Trade and other receivables |
5.2 |
Accrued income |
0.6 |
Taxes and social security premiums (incl. pensions) |
0.1 |
Cash and cash equivalents |
2.4 |
External borrowings |
(1.0) |
External borrowings - short term |
(1.3) |
Deferred tax liabilities |
(1.8) |
Trade and other payables |
(4.7) |
Loans from related parties |
- |
Deferred income |
(0.1) |
Taxes and social security premiums (incl. pensions) |
(0.1) |
Accruals and other liabilities |
(0.5) |
Total identifiable net assets and liabilities at fair
value |
8.4 |
Consideration paid at closing |
6.0 |
Cash and cash equivalents and bank overdrafts at acquired
subsidiary |
(2.4) |
Outflow of cash and cash equivalents net of cash
acquired |
3.6 |
Consideration paid at closing |
6.0 |
Deferred cash payment |
4.2 |
Contingent consideration |
4.3 |
Equity payment at fair value |
1.0 |
Transaction bonus |
0.6 |
Total consideration transferred or to be
transferred |
16.1 |
Minus: Total identifiable net assets and liabilities at fair
value |
(8.4) |
Goodwill |
7.7 |
Cashflows from investing
activities
The table below discloses the ‘Acquisition of subsidiaries, net
of cash’ line in the statement of cashflows:
In millions of EUR |
30 June 2022 |
30 June 2021 |
Payments, net of cash acquired |
3.6 |
30.4 |
Deferred considerations paid |
7.4 |
- |
Contingent consideration paid |
28.2 |
- |
Acquisition of subsidiaries, net of cash |
39.2 |
30.4 |
Goodwill
Goodwill increased by EUR 7.8 million compared
to 31 December 2021 mainly due to the acquisition of Infinia. Refer
to the ‘Acquisition of subsidiaries’ section above for more
information on the Infinia acquisition. Further, there is a
currency translation impact of EUR 0.3 million which is set-off
against an EUR 0.4 million increase which relates to additional
consideration paid in relation to the Inskin acquisition.
We have reviewed the impact on Azerion’s
business of global macro-economic developments such as high
inflation, rising interest rates and the conflict in Eastern Europe
and have concluded that there has been no material deterioration in
any of the key assumptions made during the last annual impairment
review based on current strategy and financial projections and that
there are no indicators of any impairment during the six months
ended 30 June 2022. Consistent with previous financial years, a
full annual impairment review will be undertaken at year-end.
Intangible assets
Intangible assets consist of games, software,
websites, client lists and trademarks. The balance increased by EUR
5.1 million compared to 31 December 2021 which is mainly due to the
acquisition of Infinia (refer to the ‘Acquisitions of subsidiaries’
section) and additions to capitalized internal development costs
totalling EUR 9.3 million and EUR 9.6 million respectively.
Amortization amounting to EUR 13.6 million was recorded in the
period January - June 2022. Amortization of the respective
intangible assets categories were as follow: games, software and
websites amounted to EUR 10.1 million, client lists amounted to EUR
2.6 million while trademarks amounted to EUR 0.9 million.
During the first half of 2022, the Group
accelerated its process to integrate into the Azerion Group
entities that were acquired during 2021. As part of the integration
process, management determined that the Inskin and Sublime
trademarks will be phased out by the end of 2022 due to the
integration of these businesses into Azerion. This resulted in a
re-assessment of the useful life of the Inskin and Sublime
trademarks. These trademarks, which management previously intended
to use for 10 years, are now expected to be used for 12 to 18
months from the acquisition date. As a result, the expected useful
life of the trademarks decreased. Consequently, additional
amortization of EUR 0.3 million was recorded in the 2022 interim
statement of other comprehensive income. The effect of these
changes on actual and expected amortization expense, included in
‘amortization’, is as follows:
In millions of EUR |
2022 H1 |
2022 H2 |
2023 |
2024 |
2025 |
2026 |
Later |
(Decrease) increase in amortization expense |
0.3 |
1.5 |
(0.2) |
(0.2) |
(0.2) |
(0.2) |
(1.0) |
Property, plant & equipment
Property, plant and equipment consists of right
of use assets, equipment and leasehold improvements. The balance
decreased by EUR 0.6 million compared to 31 December 2022, mainly
due to depreciation and disposals amounting to EUR 3.5 million,
which is offset by additions to right of use assets (new office
lease contracts in France and Germany) and additions to equipment
amounting to EUR 1.5 million and EUR 1.2 million respectively
EquityShare capital
As part of the recapitalisation, Azerion Group
N.V. issued shares in exchange for the shares in Azerion Holding
B.V. This capital reorganisation is shown as an increase within
share capital with EUR 1.1 million from the old share capital by
reducing share premium.
The total number of Ordinary Shares including and excluding
Treasury Shares as at 1 February 2022 and 30 June 2022 were as
follows:
|
Total number of Ordinary Shares |
Number of Ordinary Shares in Treasury |
Number of Ordinary Shares excluding Treasury |
As at 1 February 2022 |
181.561.748 |
70.078.452 |
111.483.296 |
|
|
|
|
Exercise of call option by HTP sponsor |
|
(145.634) |
145.634 |
Issued in the transaction to acquire Infinia |
|
(112.358) |
112.358 |
|
|
|
|
As at 30 June 2022 |
181.561.748 |
69.820.460 |
111.741.288 |
At the time of the IPO, EFIC1 issued 146,040,000
Ordinary Shares and 48,680,000 warrants for a total amount of EUR
1.5 million to two of the Sponsors, who subsequently sold these
back to EFIC1 for the same amount. As at 1 February 2022, Ordinary
Shares held in treasury amounted to 70,078,452.
Share premium
The obligations relating to all share
appreciation rights were assumed by Azerion Group N.V. by way of a
capital contribution as part of the De-SPAC transaction on 1
February 2022 which resulted in an EUR 32.1 million increase in
share premium.
The Sponsors and Co-investors contributed an amount of EUR 23.2
million to the equity of the Company, of which EUR 23.1 million is
in Share Premium.
Legal reserves
As at 30 June 2022, the legal reserve amounted
to EUR 23.6 million (2021: EUR 15.9 million). The legal reserve
comprises the amounts relating to capitalized development costs for
the Group’s developed technology and is not freely distributable to
shareholders.
Share based payment reserve
As at 1 February 2022 Azerion Holding B.V.’s
Employee Share Appreciation Rights program amounted to EUR 13.0
million (2021: EUR 1.1 million). As part of the De-SPAC transaction
Azerion Group N.V. assumed all the obligations related to the
Employee Share Appreciation Rights program of Azerion Holding B.V.
and settled them by issuance of shares in the capital of Azerion
Group N.V.
Furthermore, as part of the De-SPAC transaction
on 1 February 2022, the HTP sponsor was granted 145,634
unconditional call options fair valued at EUR 9.538 each and 25,700
conditional call options valued at EUR 6.424 each. This led to the
recognition of a share-based payment expense of EUR 1.6 million. On
21 March 2022 the HTP Sponsor exercised the 145,634 unconditional
call options at an exercise price of EUR 0.01 per ordinary share
which resulted in an EUR 1.4 million reclassification from
Share-Based Payments Reserve to Share Premium.
Currency translation reserve
As at 30 June 2022 the currency translation
reserve amounted to negative EUR 0.6 million (2021: EUR 0.0
million). The translation reserve comprises foreign currency
differences arising from the translation of the assets and
liabilities of foreign operations of Azerion Group N.V. (excluding
amounts attributable to non-controlling interests).
Other equity instruments
As at 30 June 2022 other equity instruments
amounted to EUR 23 million (2021: EUR 33.4 million).
Subordinated convertible loans
As at 30 June 2022 EUR 17.2 million (2021: EUR
16.4 million) loans from related parties were subordinated. These
loans include an equity redemption option of outstanding loan
balances, in addition to a cash redemption option. Under the
modified terms, the discretion to redeem the loans in equity or
cash lies with Azerion Holdings B.V. The loans are redeemable by
issuing 2,376,919 shares in the issued share capital of Azerion
Group N.V. (31 December 2021: 3,038 shares in the issued share
capital of Azerion Holding B.V.)
Investor and acquisition share appreciation rights
As at 1 February 2022, as a result of the
De-SPAC transaction investor and acquisition share appreciation
rights were fully exercised.
EUR 1.9 million (2021: EUR 1.9 million) relates
to share appreciation rights issued to investors. As at 1 February
2022, EUR 9.5 million (2021: EUR 9.3 million) relates to
acquisition related share appreciation rights issued as part of the
acquisitions that occurred during 2021 and 2020 and EUR 7.6 million
in other liabilities related to the same transactions.
The share appreciation rights granted as part of
acquisitions vest over periods ranging from 18 months to 5 years
from grant date. Unvested rights automatically vest upon defined
events such as a change in control or the listing of the group’s
shares on an exchange. Vested rights are exercisable by the holders
after approval of Company management. Share appreciation rights
issued to investors were vested at grant date and become
exercisable in certain defined events. All investor rights were
settled through issuing shares.
Share options
EUR 5.8 million (2021: EUR 5.8 million) relates
to the issuance of share options as part of the acquisition of the
remaining 49% in one of the Group’s subsidiaries. Based on the
share purchase agreement Azerion should settle the transaction by
31 December 2022. Azerion has the option to settle either in cash
or by issuing shares.
Movements in retained earnings
As at 30 June 2022 the retained earnings amounted to EUR 112.1
million negative (2021: EUR 64.0 million negative).
EUR 132.8 million negative relates to the total comprehensive
income for the half year.
EUR 4.0 million negative relates to the reclassification from
retained earnings to the legal reserve.
Based on the terms and conditions of the
Employee SAR program the Company paid wage taxes amounting to EUR
7.2 million on behalf of the employees upon settlement of the
program. This amount is therefore deducted from equity as a net
settlement of the share-based payment in accordance with
IFRS2.33E-33H.The opening balance amounts in equity, given the
various components in the transaction, contains the issue of new
shares, the value of the listing expense, the share-based payment
reserve which is included in the retained earnings and (as a
balance) the impact on share premium. The retained earnings include
the listing expense (EUR 107.1 million) and the issue of the
Azerion Founder Warrants (EUR 9.9 million) that are recognised as a
liability. The Azerion Founder Warrants are recognized directly in
retained earnings in line with the requirements of IAS 1 as it
relates to a transaction with shareholders/owners.
ProvisionsCommercial
litigation
As of 31 December 2021, a provision of EUR 0.4
million was recorded relating to a dispute on the termination of a
lease agreement for office spaces leased from a third party. During
Q2 2022, the courts reached a verdict on the matter which resulted
in a payment of EUR 0.4 million, although an appeal has been
filed.
Restructuring
As part of the process to accelerate the
integration of acquired companies into Azerion Group and further
realise synergies, we initiated a restructuring plan designed to
streamline our business, reduce our cost structure and focus our
resources on key strategic opportunities. This programme is
expected in aggregate to reduce our global workforce by
approximately 3%, for which aggregate charges of EUR 1.3 million
have been recognised in H1, consisting primarily of employee
contract termination costs. The restructuring plan was drawn up and
execution commenced in H1 2022 when the provision was recognised in
the financial statements. EUR 1.1 million of the provision remained
as at end H1 and is expected to be utilized over the next 12
months.
Other liabilities
Other liabilities mainly relate to warrants (Public, Founder and
Azerion Founder) as well as deferred and contingent consideration
liabilities relating to acquisitions in 2021 and 2022.
Public Warrants
The Public Warrants are classified as financial
liabilities and are measured at their fair value, and changes
therein are recognised in profit or loss.
The Public Warrants do not qualify as equity as
the ‘fixed-for-fixed’ test in IAS 32.16(b)(ii) is not met as the
conversion ratio is not fixed and various cashless settlement
options exist. The subsequent measurement of the Public Warrants is
at fair value with changes reflected directly in the consolidated
statement of profit and loss.
The movement in the value of the Public Warrants
in the period 1 February 2022 up to 30 June 2022 is specified as
follows:
|
# |
Price |
Total value |
Impact on result |
Fair Value as at 1 February 2022 |
12.736.605 |
0,55 |
7.005.133 |
|
Fair value on 30 June 2022 |
12.736.605 |
0,45 |
5.731.472 |
|
Fair value gain |
|
|
|
(1.273.661) |
Founder Warrants
The movement in the value of the Founder Warrants in the period
1 February 2022 to 30 June 2022 is specified as follows:
|
# |
Price |
Total value |
Impact on result |
|
|
|
|
|
Fair value as at 1 February 2022 |
5.256.167 |
3,14 |
16.504.364 |
|
Fair value gain due to the change in terms |
5.256.167 |
0,55 |
2.890.892 |
|
|
|
|
|
(13.613.473) |
Exercise of warrants in March 2022 |
|
|
|
|
|
5.256.167 |
0,45 |
2.365.275 |
|
Fair value on 30 June 2022 |
|
|
|
(525.617) |
Total fair value gain first half of 2022 |
|
|
|
(14.139.090) |
The value as at 1 February 2022 is based on a model valuation
(level 3). The impact of the change in terms is recognized after
the De-SPAC transaction.
Azerion Founder Warrants
On completion of the Transaction, Azerion Group
N.V. issued 17,992,773 Founder Warrants to the founders of Azerion
Holding B.V. Management considered that, after closing of the
Transaction, the terms and conditions of the Azerion Founder
Warrants are closely comparable to the Public Warrants and
therefore concluded that they should be valued using the listed
price of the Public Warrants without any amendment (a Level 2
valuation methodology).
|
# |
Price |
Total value |
Impact on result |
Fair Value as at 1 February 2022 |
- |
- |
- |
|
Issue after the transaction |
17.992.773 |
0,55 |
9.896.025 |
|
Fair value on 30 June 2022 |
17.992.773 |
0,45 |
8.096.748 |
|
Total fair value gain first half of 2022 |
|
|
|
(1.799.277) |
Deferred and contingent consideration
During the first half of 2022, deferred
consideration and contingent consideration positions amounting to
EUR 35.6 million were settled in line with the share purchase
agreements. The decrease in the other liabilities is offset by an
increase of EUR 9.1 million due to deferred consideration and
contingent consideration in line with the Infinia share purchase
agreement.
TaxIncome tax expense for the
period
Income tax expense is recognised at an amount
determined by multiplying the profit (loss) before tax for the
interim reporting period by management’s best estimate of the
weighted-average annual income tax rate expected for the full
financial year, adjusted for the tax effect of certain items
recognised in full in the interim period. As such, the effective
tax rate in the interim financial statements may differ from
management’s estimate of the effective tax rate for the annual
financial statements.
The Group’s consolidated effective tax rate in
respect of continuing operations for the six months ended 30 June
2022 was negative 0,9%. The main contributor to the effective tax
rate deviating from the Company’s tax rate is the non-recognition
of available tax losses and non-deductible expenses.
Related party
transactionsAgriBank
PLC
On 24 June 2022, the co-CEOs of the Group
completed the acquisition of an indirect majority stake in
AgriHoldings plc, the holding company of AgriBank PLC, via their
personal holding companies. During 2021 and 2022 certain
subsidiaries in the Group have entered into non-recourse factoring
agreements with AgriBank PLC. As a result of such factoring
agreements, the total amount of receivables factored and
derecognized is amounting to EUR 23.6 million and the related
expenses recognized in operating profit/loss and finance costs in
the condensed statement of other comprehensive income amounts to
EUR 0.8 million for the half year ended 30 June 2022. Other
receivables contain a EUR 3.9 million prepayment.
Subsequent eventsAcquisition of
Madvertise
Azerion and European AdTech company Madvertise
signed a binding share purchase agreement subject to certain
conditions on 5 July 2022 with the acquisition completed on 12 July
2022. Azerion acquired the German and French subsidiaries of
Madvertise for a total consideration of EUR 11.3 million (cash and
share consideration). With the acquisition of Madvertise's
extensive advertising network and proprietary ‘BlueStack’
ad-serving and mobile monetization technology, Azerion will
significantly strengthen its in-app digital offering for publishers
and advertisers, as well as its presence in the French and German
markets. The cash payment (combination of upfront and deferred
payments) amounts to at least EUR 4.8 million, or 42% of the total
consideration, while the share consideration represents up to circa
EUR 6.5 million, or 58% of the total consideration, with an initial
transfer of 384,614 Azerion treasury shares to the selling
shareholders at closing. At the date of authorisation of the
interim Financial Statements 2022, the purchase price allocation
for this acquisition has not been finalised due to the short period
of time between the announcement and the finalisation of the
Financial Statements 2021. Consequently, no further disclosures on
acquired assets and liabilities are made.
Equity capital raise
On 15 July 2022 Azerion announced an equity
capital raise of EUR 10.5 million in the form of a private
placement of existing ordinary treasury shares of Azerion,
predominantly to Azerion’s co-CEO’s investment vehicles. The price
of the private placement reflects a 5% discount to Azerion’s
closing share price of 13 July 2022. Azerion intends to use the net
proceeds from the placement to support growth opportunities and for
general corporate purposes, adding to the operating cash flows
generated by the business. As a result of this private placement,
Azerion will transfer to a limited group of investors a total of
1,442,307 existing ordinary shares held in treasury by Azerion for
EUR 7.28 per share. The participating investors will not be subject
to any lock-up arrangements.
Azerion Holding B.V. – Condensed
consolidated unaudited Financial Results for the six-month period
ended 30 June 2022
Introduction
The principal activities of Azerion Holding B.V.
(‘Azerion Holding’) and its group companies (jointly, the ‘Holding
Group’) are described in the Annual Report 2021. The interim
financial results for the six months period ended 30 June 2022
consist of the condensed consolidated financial statements. the
management report and responsibility statement by Azerion Holding’s
Management Board. The information in this interim financial report
has not been audited or reviewed by Azerion Holding’s external
auditor.
Responsibility statement
Pursuant to section 5:25d, paragraph 2(c), of
the Dutch Financial Supervision Act (Wet op het financieel
toezicht), the Management Board of Azerion Holding hereby declares
that to the best of its knowledge:
- the condensed
consolidated financial statements for the six-month period ended 30
June 2022 give a true and fair view of the assets, liabilities,
financial position and profit or loss of Azerion Holding and the
entities included in the consolidation taken as a whole; and
- the interim
report of the Management Board for the period ended 30 June 2022
gives a fair review of the information required pursuant to article
5:25d, paragraph 8 and 9 of the Dutch Financial Supervision Act
regarding Azerion Holding and the entities included in the
consolidation.
Schiphol-Rijk, 31 August 2022
Management Board
Mr. U. Akpinar Mr. A. Aytekin
Management Board
report
Highlights of half year
2022
▪ Net Revenue of over EUR 198 million, more than doubling
H1 2021, mainly driven by acquisitions and organic growth.
▪ Adjusted EBITDA approaching EUR 18 million, up by more
than 83% compared to H1 2021, primarily boosted by improved net
revenue and gross profit margin.
Azerion Holding B.V. - Selected
Financial KPIs
Azerion Holding B.V. |
|
|
EURm |
2022 |
2021 |
Net Revenue |
198.3 |
98.3 |
Gross profit |
74.8 |
35.8 |
Operating expenses |
(74.0) |
(29.3) |
Operating profit / (loss) |
(28.1) |
(1.8) |
EBITDA |
(11.3) |
6.9 |
Adjusted EBITDA |
17.6 |
9.6 |
Revenue growth % |
101.7% |
|
Gross profit margin % |
37.7% |
36.4% |
Adjusted EBITDA growth % |
83.3% |
|
Adjusted EBITDA margin % |
8.9% |
9.8% |
First half 2022 Net Revenue amounted to EUR 198.3 million,
compared to EUR 98.3 million in Q2 2021. This reflects higher
revenue from both the Platform and Premium Games segments, driven
by acquisitions and organic growth.
Adjusted EBITDA was EUR 17.6 million in H1 2022, compared to EUR
9.6 million in H1 2021, primarily reflecting higher net revenue and
gross profit margin.
The Operating loss before tax amounted to EUR 28.1 million
compared to a loss of EUR 1.8 million in H1 2021. This includes a
charge of EUR 16.1 million of de-SPAC related expenses
Platform
Our Platform segment includes casual games
distribution, advertising and e-commerce, which are fully
integrated through our technology. It generates revenue mainly by
displaying digital advertisements in both game and non-game
content, as well as selling and distributing AAA games through our
e-commerce channels. Platform is also integrated with our Premium
Games segment, leveraging inter-segment synergies.
Platform – Selected Financial
KPIs
H1 |
|
|
EURm |
2022 |
2021 |
Net Revenue |
154.6 |
75.6 |
Gross profit |
53.1 |
24.8 |
Operating expenses |
(46.8) |
(21.0) |
Operating profit / (loss) |
(14.5) |
(2.0) |
EBITDA |
(3.5) |
4.5 |
Adjusted EBITDA |
9.8 |
6.4 |
Revenue growth % |
104.5% |
|
Gross profit margin % |
34.3% |
32.8% |
Adjusted EBITDA growth % |
53.1% |
|
Adjusted EBITDA margin % |
6.3% |
8.5% |
Financial data for H1 2021 has been revised to
reflect reporting segments adopted as of Q3 2021 2021 comparative
information has been updated to include the allocation of head
office costs to segments.
Platform Net Revenue was EUR
154.6 million in in the first half of 2022, compared to EUR 75.6
million in the first half of 2021, primarily driven by acquisitions
and organic growth.
Adjusted EBITDA was EUR 9.8 million in the first
half of 2022, compared to EUR 6.4 million in the same period a year
before, mainly reflecting higher revenue and gross profit margin,
driven by increased direct sales from our local offices to
advertisers.
Premium Games
Our Premium Games segment includes nine game
titles of social card games and metaverse, stimulating social
interaction among players and building communities. The segment
generates revenue mainly by offering users the ability to make
in-game purchases for extra features and virtual goods to enhance
their gameplay experience.
Premium Games – Selected Financial
KPIs
H1 |
|
|
EURm |
2022 |
2021 |
Net Revenue |
43.7 |
22.7 |
Gross profit |
21.7 |
11.0 |
Operating expenses |
(14.0) |
(8.3) |
Operating profit / (loss) |
(0.4) |
0.2 |
EBITDA |
5.4 |
2.4 |
Adjusted EBITDA |
7.8 |
3.2 |
Revenue growth % |
92.5% |
|
Gross profit margin % |
49.7% |
48.5% |
Adjusted EBITDA growth % |
143.8% |
|
Adjusted EBITDA margin % |
17.8% |
14.1% |
Financial data for H1 2021 has been revised to
reflect reporting segments adopted as of Q3 2021 2021 comparative
information has been updated to include the allocation of head
office costs to segments.
Premium Games Net Revenue was
EUR 43.7 million in the first half of 2022, compared to EUR 22.7
million in the first half of 2021, mainly due to the acquisition of
Whow Games and organic growth.
Adjusted EBITDA was EUR 7.8 million in in the
first half of 2022, compared to EUR 3.2 million in the same period
a year before, mainly reflecting higher net revenue.
Condensed consolidated statement
of profit or loss and other
comprehensive income
|
Q2 |
H1 |
|
|
In millions of EUR |
2022 |
2021 |
2022 |
2021 |
|
|
|
|
|
|
|
|
|
|
Revenue |
103.9 |
52.7 |
198.3 |
98.3 |
|
|
|
Costs of services & materials |
(62.0) |
(31.9) |
(123.5) |
(62.5) |
|
|
Gross profit |
41.9 |
20.8 |
74.8 |
35.8 |
|
|
|
|
Personnel costs |
(20.4) |
(10.3) |
(39.1) |
(19.2) |
|
Depreciation |
(1.6) |
(1.2) |
(3.2) |
(2.2) |
|
Amortization |
(7.1) |
(3.1) |
(13.6) |
(6.6) |
|
Other gains and losses |
(2.8) |
0.7 |
(12.1) |
0.5 |
|
Other expenses |
(26.1) |
(5.6) |
(34.9) |
(10.1) |
Operating profit / (loss) |
(16.1) |
1.3 |
(28.1) |
(1.8) |
|
|
|
Finance income |
0.3 |
0.5 |
0.7 |
1.2 |
|
|
|
Finance costs |
(5.7) |
(14.4) |
(11.6) |
(17.1) |
|
|
Net Finance costs |
(5.4) |
(13.9) |
(10.9) |
(15.9) |
|
|
|
Share in profit/(loss) of joint venture |
- |
0.0 |
- |
0.0 |
|
|
Profit / (loss) before tax |
(21.5) |
(12.6) |
(39.0) |
(17.7) |
|
|
|
Income Tax expense |
(0.6) |
0.1 |
(1.3) |
0.1 |
|
|
Profit / (loss) for the period |
(22.1) |
(12.5) |
(40.3) |
(17.6) |
|
|
Attributable to: |
|
|
|
|
|
|
|
Owners of the company |
(22.2) |
(12.3) |
(40.1) |
(17.8) |
|
|
|
Non-controlling interest |
0.1 |
(0.2) |
(0.2) |
0.2 |
|
|
Profit / (loss) for the period |
(22.1) |
(12.5) |
(40.3) |
(17.6) |
|
Exchange difference on translation of foreign operations |
(0.7) |
(0.5) |
(1.1) |
(0.1) |
|
|
|
|
Remeasurement of net defined benefit liability |
0.0 |
0.0 |
0.0 |
0.0 |
|
|
|
|
Total comprehensive income for the period |
(22.8) |
(13.0) |
(41.4) |
(17.5) |
|
Total comprehensive (loss) / income attributable
to: |
|
|
|
|
|
|
|
|
Owners of the company |
(23.0) |
(12.8) |
(40.8) |
(18.1) |
|
|
|
|
Non-controlling interest |
0.2 |
(0.2) |
(0.6) |
0.6 |
|
|
|
|
Condensed consolidated statement of
financial position
In millions of EUR |
|
30 June 2022 |
31 December 2021 |
Assets |
|
|
|
|
|
Non-current assets |
|
335.4 |
323.8 |
|
Goodwill |
|
130.8 |
123.0 |
|
Intangible assets |
|
147.0 |
141.9 |
|
Property, plant and equipment |
|
17.9 |
18.5 |
|
Non-current financial assets |
|
36.5 |
36.1 |
|
Deferred tax asset |
|
3.1 |
4.2 |
|
Investment in joint ventures |
|
0.1 |
0.1 |
|
Current assets |
|
138.6 |
140.0 |
|
Trade and other receivables |
|
85.8 |
91.3 |
|
Contract assets |
|
12.8 |
12.1 |
|
Current tax assets |
|
1.0 |
1.3 |
|
Cash and cash equivalents |
|
39.0 |
35.3 |
Total assets |
|
474.0 |
463.8 |
|
|
|
|
|
|
Equity |
|
|
|
|
Shareholders' equity |
|
6.4 |
(8.6) |
Non-controlling interest |
|
1.6 |
1.7 |
Total equity |
|
8.0 |
(6.9) |
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
Non-current liabilities |
|
269.0 |
260.2 |
|
Borrowings |
|
217.2 |
199.0 |
|
Lease liabilities |
|
12.7 |
14.3 |
|
Provisions |
|
0.7 |
0.4 |
|
Employee benefits |
|
1.0 |
1.0 |
|
Deferred tax liability |
|
29.5 |
29.9 |
|
Other non-current liabilities |
|
7.9 |
15.6 |
|
Current liabilities |
|
197.0 |
210.5 |
|
Borrowings |
|
5.8 |
6.8 |
|
Lease liabilities |
|
4.8 |
4.7 |
|
Provisions |
|
1.3 |
1.0 |
|
Trade and other payables |
|
144.8 |
141.1 |
|
Other current liabilities |
|
35.5 |
53.5 |
|
Contract liabilities |
|
0.9 |
0.4 |
|
Current tax liabilities |
|
3.9 |
3.0 |
Total liabilities |
|
466.0 |
470.7 |
|
|
|
|
|
|
Total equity and liabilities |
|
474.0 |
463.8 |
Condensed consolidated
statement of cash flows
|
Q2 |
H1 |
In millions of EUR |
2022 |
20211 |
2022 |
20211 |
Cash flows from operating activities |
|
|
|
|
Operating
profit / (loss) |
(16.1) |
1.3 |
(28.1) |
(1.8) |
Adjustments for
operating profit / (loss) |
34.8 |
6.9 |
44.6 |
11.0 |
|
|
|
|
|
Changes in
working capital items: |
|
|
|
|
Decrease
(increase) in net receivables |
(9.2) |
(6.2) |
11.0 |
1.0 |
Increase
(decrease) in accounts payables and other payables |
6.3 |
(0.7) |
1.7 |
(9.1) |
|
|
|
|
|
Utilization of
provisions |
(0.7) |
- |
(0.7) |
- |
Income tax
paid |
(0.2) |
0.1 |
(0.5) |
- |
Interest paid |
(4.0) |
(1.1) |
(9.4) |
(3.2) |
Net cash provided by (used for) operating activities
excluding employee
SARs related cash
outflows |
10.9 |
0.3 |
18.6 |
(2.1) |
Employee SARs related cash outflows |
(5.9) |
- |
(7.1) |
- |
Net cash provided by (used for) operating
activities including employee
SARs related cash outflows |
5.0 |
0.3 |
11.5 |
(2.1) |
|
|
|
|
|
Cash
flows from investing activities |
|
|
|
|
Net capital
expenditures |
(5.1) |
(2.3) |
(10.6) |
(5.5) |
Net cash outflow on acquisition of subsidiaries |
(36.5) |
(30.4) |
(39.2) |
(30.4) |
Net cash provided by (used for) investing
activities |
(41.6) |
(32.7) |
(49.8) |
(35.9) |
|
|
|
|
|
Cash
flows from financing activities |
|
|
|
|
Capital
contributions |
53.3 |
- |
65.5 |
- |
De-SPAC related
expenses |
(16.9) |
- |
(16.9) |
- |
Other financing
activities |
(3.1) |
(1.6) |
(6.3) |
(2.3) |
Proceeds from
external borrowings |
- |
200.0 |
- |
227.5 |
Repayment of
external borrowings |
- |
(100.0) |
- |
(100.3) |
Increase in
loans to related parties |
- |
(11.9) |
- |
(11.9) |
Early settlement of Senior Secured Callable Floating Rate
Bonds |
- |
(7.7) |
- |
(7.7) |
Net cash provided by (used for) financing
activities |
33.3 |
78.8 |
42.3 |
105.3 |
|
|
|
- |
|
Effect of changes in exchange rates on cash and cash
equivalents |
(0.3) |
0.2 |
(0.3) |
0.2 |
Effect of exchange rate changes & accounting
principles |
(0.3) |
0.2 |
(0.3) |
0.2 |
|
|
|
- |
|
Cash flow variation |
(3.6) |
46.6 |
3.7 |
67.5 |
|
|
|
- |
|
Cash and cash equivalents at the beginning of the
period |
42.6 |
31.3 |
35.3 |
10.4 |
Cash and cash equivalents at the end of the
period |
39.0 |
77.9 |
39.0 |
77.9 |
1Reclassifications have been made to the cash
flow statement that was previously published by Azerion Holding
B.V. in H1 2021 in order to achieve a fairer presentation
of the nature of the cash in and cash out flows of
such period. Reference is made to the note “Reclassifications” in
the notes of these condensed consolidated financial statements for
further information.
Condensed consolidated statement of
changes in equity
Half year 2022 In millions of EUR |
|
Share capital |
Share premium |
Legal reserves |
Share Based Payment Reserve |
Currency translation reserve |
Other equity instruments |
Retained earnings |
Attributable to parent |
Non-controlling interest |
Total equity |
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of 31 December 2021 |
|
0.0 |
0.5 |
19.6 |
1.8 |
0.6 |
34.0 |
(65.2) |
(8.6) |
1.7 |
(6.9) |
Profit/(Loss) for the period |
|
- |
- |
- |
- |
- |
- |
(40.1) |
(40.1) |
(0.2) |
(40.3) |
Other comprehensive income |
|
- |
- |
- |
- |
(1.2) |
- |
- |
(1.2) |
0.1 |
(1.1) |
Total comprehensive income |
|
- |
- |
- |
- |
(1.2) |
- |
(40.1) |
(41.3) |
(0.1) |
(41.4) |
Borrowings converted to equity |
|
- |
66.5 |
- |
- |
- |
- |
- |
66.5 |
- |
66.5 |
Shareholder loans reclassified to borrowings |
|
- |
- |
- |
- |
- |
0.4 |
- |
0.4 |
- |
0.4 |
Share appreciation rights classified to other current
liabilities |
|
- |
- |
- |
- |
- |
(17.2) |
- |
(17.2) |
- |
(17.2) |
Capital contributions |
|
- |
- |
- |
- |
- |
(5.8) |
- |
(5.8) |
- |
(5.8) |
Settlement of share-based payments |
|
- |
13.0 |
- |
(1.8) |
- |
|
- |
11.2 |
- |
11.2 |
Settlement of Investor share appreciation rights |
|
- |
1.9 |
- |
- |
- |
(1.9) |
- |
- |
- |
- |
Settlement of Acquisition related share appreciation rights |
|
- |
18.0 |
- |
- |
- |
(9.5) |
- |
8.5 |
- |
8.5 |
Withholding wage taxes related to share-based payments |
|
- |
- |
- |
- |
- |
- |
(7.2) |
(7.2) |
- |
(7.2) |
Other movements |
|
- |
- |
- |
- |
- |
- |
(0.1) |
(0.1) |
- |
(0.1) |
Total transactions with owners |
|
- |
99.4 |
- |
(1.8) |
- |
(34.0) |
(7.3) |
56.3 |
- |
56.3 |
Allocation/withdrawal legal reserves |
|
- |
- |
4.0 |
- |
- |
- |
(4.0) |
- |
- |
- |
Balance as of 30 June 2022 |
|
0.0 |
99.9 |
23.6 |
0.0 |
(0.6) |
0.0 |
(116.5) |
6.4 |
1.6 |
8.0 |
Half year 2021In millions of
EUR |
Share capital |
Share premium |
Legal reserves |
Share Based Payment Reserve |
Currency translation reserve |
Other equity instruments |
Retained earnings |
Attributable to parent |
Non-controlling interest |
Total equity |
|
|
|
|
|
|
|
|
|
|
|
Balance as of 31 December
2020 |
0.0 |
0.5 |
13.8 |
0.7 |
0.3 |
31.0 |
(42.2) |
4.1 |
2.1 |
6.2 |
Profit/(Loss)
for the period |
- |
- |
- |
- |
- |
- |
(17.8) |
(17.8) |
0.2 |
(17.6) |
Other
comprehensive income |
- |
- |
- |
- |
(0.3) |
- |
- |
(0.3) |
0.4 |
0.1 |
Total comprehensive income |
- |
- |
- |
- |
(0.3) |
- |
(17.8) |
(18.1) |
0.6 |
(17.5) |
Borrowings
converted to equity |
- |
- |
- |
- |
- |
1.4 |
- |
1.4 |
- |
1.4 |
Fair value
adjustment on shareholder loans |
- |
- |
- |
- |
- |
- |
(1.4) |
(1.4) |
- |
(1.4) |
Share-based
payments |
- |
- |
- |
0.4 |
- |
- |
- |
0.4 |
- |
0.4 |
Issuance of
Acquisition related share appreciation rights |
- |
- |
- |
- |
- |
1.0 |
- |
1.0 |
- |
1.0 |
Other
movements |
- |
- |
- |
- |
- |
- |
(0.5) |
(0.5) |
- |
(0.5) |
Total transactions with owners |
- |
- |
- |
0.4 |
- |
2.4 |
(1.9) |
0.9 |
- |
0.9 |
Allocation/withdrawal legal reserves |
- |
- |
2.1 |
- |
- |
- |
(2.1) |
- |
- |
- |
Balance as of 30 June
2021 |
0.0 |
0.5 |
15.9 |
1.1 |
0.0 |
33.4 |
(64.0) |
(13.1) |
2.7 |
(10.4) |
Notes to the unaudited condensed
consolidated interim financial statements
General information
Azerion Holding B.V. (‘Azerion Holding’) is a
private limited liability company incorporated under Dutch law on
11 November 2013 and registered at 30 Boeing Avenue, 1119 PE,
Schiphol-Rijk, the Netherlands. Up until 1 February 2022,
Principion Holding B.V. was the ultimate parent company of the
Azerion Holding. Azerion Holding’s number in the Trade Register at
the Chamber of Commerce is 59272449. Azerion Holding is a holding
company with its main operations situated in the Netherlands.
Azerion Holding B.V. and European FinTech IPO
Company 1 B.V. (‘EFIC1’), a special purpose acquisition company
listed on Euronext Amsterdam, successfully completed a business
combination on 1 February 2022. The business combination was
announced on 13 December 2021. Amongst other matters, the business
combination was approved during the Extraordinary General Meeting
of Shareholders of EFIC1 on 31 January 2022.
On 1 February 2022, with the transaction
completing, EFIC1 obtained 100% ownership in Azerion Holding B.V.
and was changed in legal form into a limited company (naamloze
vennootschap) on 2 February 2022 and renamed from EFIC1 to Azerion
Group N.V.
Preparation basis
These condensed consolidated interim financial
statements were prepared in accordance with IAS 34 Interim
Financial Reporting of the International Financial Reporting
Standards (IFRS) as adopted by the European Union. They do not
include all of the information required for a complete set of
annual financial statements and should be read in conjunction with
the consolidated financial statements of Azerion Holding B.V. as at
and for the year ended 31 December 2021.
These condensed consolidated interim financial
statements were authorized for issue by the Management Board on 31
August 2022.
Functional and presentation currency
These condensed consolidated interim financial
statements are presented in euros (EUR), which is Azerion Holding’s
functional currency and rounded to the nearest hundred thousand
unless stated otherwise.
Reclassifications and
restatements
In the condensed consolidated statement of cash
flows, reclassifications have been made to the cash flow statement
that was previously published by Azerion Holding B.V. in H1 2021 in
order to achieve a fairer presentation of the nature of the cash in
and cash out flows of such period. The reclassifications mainly
comprised a reclassification of EUR 12.0 million relating to the
cash acquired from acquisitions from cash flow from operating
activities to cash flow from investing activities (to nett against
the consideration paid for acquisitions), EUR 28.2 million
reclassification from cash flow from financing activities to
operating activities relating to deferred and contingent
considerations resulting from acquisitions, a reclassification of
EUR 11.5 million relating to advances on loans to related parties
from cash flow from investing activities to cash flow from
financing activities. In addition, there was a reclassification of
approximately EUR 7.7 million associated with costs of early
settlement of bonds from cash flow from operating activities to
cash flow from financing activities.
In the condensed consolidated financial
statements for Q3 2022 and Q4 2022, the Company intends to restate
the comparative condensed consolidated statement of profit or loss
and other comprehensive income for Q3 2021, respectively, Q4 2021
in order to align such comparative information with the audited
2021 annual report and annual financial statements of the
Company.
In the condensed statement of profit or loss and
other comprehensive income the non-controlling interest not
attributable to the parent has been adjusted to reflect the
appropriate values for Q2 and H1 2021.
Use of estimates and judgements
The preparation of these condensed consolidated
interim financial statements in conformity with IFRS requires
management to make estimates, judgments and assumptions which
affect the reported amounts in these condensed consolidated interim
financial statements. These estimates are inherently subject to
judgement and actual results could differ from those estimates. The
estimates, judgments and assumptions in applying Azerion’s
accounting policies and the key sources of estimation uncertainty
were the same as those described in Azerion’s consolidated annual
financial statements for the year ended 31 December 2021.
Significant accounting policies
The accounting policies applied in the
preparation of the condensed consolidated interim financial
statements are consistent with those applied in the preparation of
Azerion’s annual consolidated financial statements for the year
ended 31 December 2021 apart from the accounting policies listed
below. A number of new standards are effective from 1 January 2022,
but they do not have a material effect on Azerion Holding’s
condensed consolidated interim financial statements. Azerion
Holding has not early-adopted any standard, interpretation or
amendment that has been issued but is not yet effective and
endorsed.
Accounting policy relating to restructuring
provisions
The provision for restructuring mainly relates
to the estimated costs of initiated restructurings and are approved
by the Management Board. When such restructurings require
discontinuance and/or re-organization of activities, the
anticipated costs are included in the restructuring provisions. A
liability is recognized for those costs only when Azerion Holding
has a detailed formal plan for the restructuring and has raised a
valid expectation with those affected that it will carry out the
restructuring by starting to implement that plan or announcing its
main features to those affected by it. Before a provision is
established, Azerion Holding recognizes any impairment loss on the
assets associated with the restructuring.
Risk management
The consolidated annual financial statements
2021 describe certain risk categories and risks (including risk
appetite) which could have a material adverse effect on Azerion’s
financial position and results. Those categories and risks remain
valid and should be read in conjunction with these half year
financial statements.
Seasonality
Azerion is subject to the seasonal nature of
gaming and advertising spending. Historically, Azerion’s results of
operations and cash flows have been subject to reasonably
predictable seasonality. There is no assurance that these patterns
will continue to be visible in future which may impact the
predictability of Azerion’s operating results and financial
position.
Gaming activity is usually highest during the
summer and end-of-year holiday periods and advertising activity is
generally highest during the winter holiday season (to reflect
consumer spending). We expect these patterns to continue over the
long-term but should also benefit from an increasingly scaled and
diverse customer and partner base and business model over time.
Segment information
Information reported to the Group’s Chief
Executive Officers (Chief Operating Decision Makers) for the
purposes of resource allocation and assessment of segment
performance is focused on the business activities which generate
certain classes of revenue and incur certain classes of expenses.
The principal business activities generate revenue through Premium
Games and Platform.
Management has presented the performance measure
Adjusted EBITDA because the Group’s Chief Executives monitor this
performance measure at a consolidated level as it is relevant for
the purpose of resource allocation and assessment of segment
performance.
Refer to the ‘Definition’ section where the
meaning of Adjusted EBITDA is explained. Adjusted EBITDA is not a
defined performance measure in IFRS Standards. The Group’s
definition of Adjusted EBITDA may not be comparable with similarly
titled performance measures and disclosures by other entities.
Reconciliation of profit/(loss) for the
period to Adjusted EBITDA
In millions of EUR |
H1 |
2022 |
2021 |
Azerion Holding B.V. |
Premium Games |
Platform |
Other |
Azerion Holding B.V. |
Premium Games |
Platform |
Profit / (loss) for the period |
(40.3) |
|
|
|
(17.6) |
|
|
Income Tax expense |
1.3 |
|
|
|
(0.1) |
|
|
Profit / (loss) before tax |
(39.0) |
|
|
|
(17.7) |
|
|
Net finance costs |
10.9 |
|
|
|
15.9 |
|
|
Operating profit / (loss) |
(28.1) |
(0.4) |
(14.5) |
(13.2) |
(1.8) |
0.2 |
(2.0) |
Depreciation & Amortization |
16.8 |
5.8 |
11.0 |
(0.0) |
8.7 |
2.2 |
6.5 |
EBITDA |
(11.3) |
5.4 |
(3.5) |
(13.2) |
6.9 |
2.4 |
4.5 |
|
|
|
|
- |
|
|
|
De-SPAC related expenses |
24.9 |
2.4 |
9.4 |
13.2 |
1.6 |
- |
0.0 |
Other |
- |
- |
- |
- |
0.8 |
0.8 |
1.9 |
Acquisition expenses |
2.6 |
- |
2.6 |
- |
0.3 |
- |
- |
Restructuring |
1.3 |
- |
1.3 |
- |
- |
- |
- |
Adjusted EBITDA |
17.6 |
7.8 |
9.8 |
- |
9.6 |
3.2 |
6.4 |
Segment revenues
In the following tables, revenue is disaggregated by segment and
primary geographical market.
|
|
|
In millions of EUR |
30 June 2022 |
30 June 2021 |
Platform |
154.6 |
75.6 |
Premium Games |
43.7 |
22.7 |
Total revenue from contracts with customers |
198.3 |
98.3 |
|
|
|
In millions of EUR |
30 June 2022 |
30 June 2021 |
The Netherlands |
116.1 |
69.8 |
Other European countries |
77.4 |
27.5 |
Non-European countries |
4.8 |
1.0 |
Total revenue from contracts with customers |
198.3 |
98.3 |
Segment assets
Operating segments - AssetsIn millions of EUR |
30 June 2022 |
31 December 2021 |
Platform |
330.4 |
312.0 |
Premium Games |
102.7 |
111.3 |
Total segment assets |
433.1 |
423.3 |
Unallocated assets |
40.9 |
40.5 |
Consolidated total assets |
474.0 |
463.8 |
For the purposes of monitoring segment
performance and allocating resources between segments the Group’s
Chief Executives monitor the tangible, intangible and financial
assets attributable to each segment. Assets used jointly by
reportable segments are allocated on the basis of the revenues
earned by individual reportable segments. The unallocated assets
relate to current tax assets and non-current financial assets.
Information about Azerion’s segment current
assets by geographical location are detailed below:
In millions of EUR |
30 June 2022 |
31 December 2021 |
The Netherlands |
53.2 |
52.2 |
Other European
countries |
76.6 |
83.3 |
Non-European
countries |
8.8 |
4.5 |
Total current assets |
138.6 |
140.0 |
Information about Azerion’s segment non-current assets by
geographical location are detailed below:
In millions of EUR |
30 June 2022 |
31 December 2021 |
The Netherlands |
104.1 |
104.3 |
Other European
countries |
227.2 |
215.1 |
Non-European
countries |
4.2 |
4.4 |
Total non-current assets |
335.5 |
323.8 |
Acquisitions of subsidiaries
Infinia Mobile SL
On 4 April 2022 Azerion Holding B.V. (‘Azerion’)
acquired 100% of the share capital of Infinia Mobile SL
(‘Infinia’). Infinia is a digital marketing company founded in 2015
in Spain and has offices in USA, Mexico, Peru, Colombia, Brazil and
Chile. Infinia develops data management platforms which enables
advertising companies to extract data based on users’ habits.
Through the acquisition, Azerion gains a stronger foothold in the
Spanish market and expands reach in the LATAM markets.
The fair value purchase consideration for 100%
shares in the capital of Infinia is EUR 16.1 million, which
comprises a cash payment at closing of EUR 6 million, deferred
consideration of EUR 4.2 million, contingent consideration of EUR
4.3 million, equity payments of EUR 1 million and transaction
bonuses of EUR 0.6 million.
The deferred consideration is to be paid within
12 months (EUR 2.2 million) and 24 months (EUR 2 million)
respectively after the acquisition date. The fair value of the
deferred consideration of EUR 4.2 million was estimated by
calculating the present value of the future expected cash flows.
The estimate is based on a discount rate of 1.6% and 1.9% per annum
respectively.
Based on the share purchase agreement, Azerion
issued 112.358 Azerion Group N.V. shares from treasury at a share
price of EUR 8.90, representing a total value of EUR 1.0 million.
The share consideration is classified as a liability and included
in the other liabilities.
Transaction bonuses are not subject to any
contingencies and will be paid bi-annually over a period of 2
years. The fair value of the transaction bonuses of EUR 0.6 million
was estimated by calculating the present value of the future
expected cashflows. The estimate is based on an average discount
rate of 1.6% per annum depending on the timeframe related to the
transaction bonus.
The fair value of acquired assets and
liabilities of Infinia has been determined. This resulted in a EUR
8.4 million net fair value of the acquired assets and liabilities
and EUR 7.7 million recognized goodwill.
The fair value of financial assets includes
receivables with a fair value of EUR 4.9 million and a gross
contractual value of EUR 5.6 million. The best estimate at the
acquisition date of the contractual cash flows not to be collected
is EUR 0.7 million.
Below is a summary of the fair value of the net
assets acquired, including consideration paid and goodwill:
|
|
In millions of EUR |
Infinia |
Property. plant and equipment (excl. IFRS16) |
0.1 |
Intangible assets |
9.3 |
Non-current financial assets |
0.0 |
Deferred tax assets |
0.2 |
Trade and other receivables |
5.2 |
Accrued income |
0.6 |
Taxes and social security premiums (incl. pensions) |
0.1 |
Cash and cash equivalents |
2.4 |
External borrowings |
(1.0) |
External borrowings - short term |
(1.3) |
Deferred tax liabilities |
(1.8) |
Trade and other payables |
(4.7) |
Loans from related parties |
- |
Deferred income |
(0.1) |
Taxes and social security premiums (incl. pensions) |
(0.1) |
Accruals and other liabilities |
(0.5) |
Total identifiable net assets and liabilities at fair
value |
8.4 |
Consideration paid at closing |
6.0 |
Cash and cash equivalents and bank overdrafts at acquired
subsidiary |
(2.4) |
Outflow of cash and cash equivalents net of cash
acquired |
3.6 |
Consideration paid at closing |
6.0 |
Deferred cash payment |
4.2 |
Contingent consideration |
4.3 |
Equity payment at fair value |
1.0 |
Transaction bonus |
0.6 |
Total consideration transferred or to be
transferred |
16.1 |
Minus: Total identifiable net assets and liabilities at fair
value |
(8.4) |
Goodwill |
7.7 |
Cashflows from investing activities
The table below discloses the 'Acquisition of subsidiaries, net
of cash’ line in the statement of cashflows:
In millions of EUR |
30 June 2022 |
30 June 2021 |
Payments in 2022, net of cash acquired |
3.6 |
30.4 |
Deferred
considerations paid in 2022 |
7.4 |
- |
Contingent
consideration paid in 2022 |
28.2 |
- |
Acquisition of subsidiaries, net of cash |
39.2 |
30.4 |
Goodwill
Goodwill increased by EUR 7.8 million compared
to 31 December 2021 due to the acquisition of Infinia. Refer to the
‘Acquisition of subsidiaries’ section above for more information on
the Infinia acquisition. Further, there is a currency translation
impact of EUR 0.3 million which is set-off against an EUR 0.4
million increase which relates to additional consideration paid in
relation to the Inskin acquisition.
We have reviewed the impact on Azerion’s
business of global macro-economic developments such as high
inflation, rising interest rates and the conflict in Eastern Europe
and have concluded that there has been no material deterioration in
any of the key assumptions made during the last annual impairment
review based on current strategy and financial projections and that
there are no indicators of any impairment during the six months
ended 30 June 2022. Consistent with previous financial years, a
full annual impairment review will be undertaken at year-end.
Intangible assets
Intangible assets consist of games, software,
websites, client lists and trademarks. The balance increased by EUR
5.1 million compared to 31 December 2021 which is mainly due to the
acquisition of Infinia (refer to the ‘Acquisitions of subsidiaries’
section) and additions to capitalized internal development costs
totalling EUR 9.3 million and EUR 9.6 million respectively.
Amortization amounting to EUR 13.6 million was recorded in the
period January - June 2022. Amortization of the respective
intangible assets categories were as follow: games, software and
websites amounted to EUR 10.1 million, client lists amounted to EUR
2.6 million while trademarks amounted to EUR 0.9 million.
During the first half of 2022, the Group
accelerated its process to integrate into the Azerion Group
entities that were acquired during 2021. As part of the integration
process, management determined that the Inskin and Sublime
trademarks will be phased out by the end of 2022 due to the
integration of these businesses into Azerion. This resulted in a
re-assessment of the useful life of the Inskin and Sublime
trademarks. These trademarks, which management previously intended
to use for 10 years, are now expected to be used for 12 to 18
months from the acquisition date. As a result, the expected useful
life of the trademarks decreased. Consequently, additional
amortization of EUR 0.3 million was recorded in the 2022 interim
statement of other comprehensive income. The effect of these
changes on actual and expected amortization expense, included in
‘amortization’, is as follows:
In millions of EUR |
2022 H1 |
2022 H2 |
2023 |
2024 |
2025 |
2026 |
Later |
(Decrease) increase in amortization expense |
0.3 |
1.5 |
(0.2) |
(0.2) |
(0.2) |
(0.2) |
(1.0) |
Property, plant & equipment
Property, plant and equipment consists of right
of use assets, equipment and leasehold improvements. The balance
decreased by EUR 0.6 million compared to 31 December 2022, mainly
due to depreciation and disposals amounting to EUR 3.5 million,
which is offset by additions to right of use assets (new office
lease contracts in France and Germany) and additions to equipment
amounting to EUR 1.5 million and EUR 1.2 million respectively
Equity
Share Capital
As at 30 June 2022, the authorized share capital
of Azerion Holdings B.V. comprised 117,563 ordinary shares with a
par value of EUR 0.01 per share in total amount of EUR 1,176
(December 2021: EUR 1,176) and zero preference shares with no par
value. All shares were issued and fully paid up.
Share premium
As at 30 June 2022, the share premium amounted
to EUR 99.9 million (2021: EUR 0.5 million). The increase in the
share premium is a result of the settlement of the SARs as part of
the De-SPAC amounting to EUR 32.9 million and capital contributions
from Azerion Group N.V. amounting to EUR 66.5 million. The capital
contributions of Azerion Group N.V. were EUR 65.5 million in cash
and EUR 1.0 million in equity. The EUR 1.0 million equity
contribution was for the purposes of the acquisition of
Infinia.
Legal reserve
As at 30 June 2022, the legal reserve amounted
to EUR 23.6 million (2021: EUR 15.9 million). The legal reserve
comprises the amounts relating to capitalized development costs for
the Group’s developed technology and is not freely distributable to
shareholders.
Share based payment reserve
As at 30 June 2022 the share-based payment
reserve amounted to EUR nil (2021: EUR 1.1 million). The parent of
the Group, which up until 1 February 2022 was Azerion Holding B.V.,
maintained a Share Appreciation Right (SAR) plan up to that date.
The plan was initiated in 2018 and provided SARs to employees,
consultants, and advisors of the Group. The plan was settled by way
of a capital contribution and issuance of shares in Azerion Group
N.V. as part of the De-SPAC transaction on 1 February 2022.
Currency translation
reserve
As at 30 June 2022 the currency translation
reserve amounted to negative EUR 0.6 million (2021: EUR 0.0
million). The translation reserve comprises foreign currency
differences arising from the translation of the assets and
liabilities of foreign operations of Azerion Holding B.V.
(excluding amounts attributable to non-controlling interests).
Other equity instruments
As at 30 June 2022, other equity instruments
amounted to EUR nil (2021: EUR 33.4 million).
Subordinated convertible loans
As at 30 June 2022, Azerion Holding had EUR nil
million (2021: EUR 16.4 million) loans from related parties
classified as other equity instruments. The subordinated
convertible loans that were included in other equity instruments as
of 31 December 201 have an equity redemption option on the
outstanding loan balances, in addition to a cash redemption option.
Under the modified terms, the discretion to redeem the loans in
equity or cash lies with Azerion Holdings B.V. As at 31 December
2021 the loans were redeemable by issuing 3,038 shares in the
issued share capital of Azerion Holding B.V.
Following the De-SPAC transaction, the loans are
redeemable by issuing shares in the capital of Azerion Group N.V.
Since these loans are no longer redeemable by issuing shares in the
capital of Azerion Holding B.V., they have been reclassified from
other equity instruments to borrowings.
Investor and acquisition share appreciation
rights
EUR nil (2021: EUR 11.2 million) relates to
share appreciation rights issued to investors and as part of the
acquisitions that occurred during 2021 and 2020.
The share appreciation rights granted as part of
acquisitions vest over periods ranging from 18 months to 5 years
from grant date. Unvested rights automatically vest upon defined
events such as a change in control or the listing of the group’s
shares on an exchange. Vested rights are exercisable by the holders
after approval of Azerion Holding’s management.
Share appreciation rights issued to investors
are vested at grant date and become exercisable in the event of
certain defined exit events, which include an initial public
offering of the group’s shares. When exercised all investor rights
shall be settled through issuing shares.
The obligations relating to all share
appreciation rights were assumed by Azerion Group N.V. by way of a
capital contribution and issuance of shares in Azerion Group N.V.
as part of the De-SPAC transaction on 1 February 2022.
Share options
EUR nil (2021: EUR 5.8 million) relates to the
issuance of share options as part of the acquisition of the
remaining 49% in one of the subsidiaries of the group. Due to the
De-SPAC transaction, if settled in shares, will be settled with
Azerion Group N.V. shares instead of Azerion Holding B.V. shares.
Since the options will no longer be settled in Azerion Holding
B.V.’s own equity instruments this amount is subsequently
reclassified to other current liabilities.
Movements in retained
earnings
As at 30 June 2022 the retained earnings
amounted to EUR 116.5 million negative (2021: EUR 64.0 million
negative).
EUR 40.1 million negative relates to the total
comprehensive income for the half year.
EUR 4.0 million negative relates to the
reclassification from retained earnings to the legal reserve.
Based on the terms and conditions of the
Employee SAR program Azerion paid wage taxes amounting to EUR 7.2
million on behalf of the employees upon settlement of the program.
This amount is therefore deducted from equity as a net settlement
of the share-based payment in accordance with IFRS2.33E-33H.
Borrowings
Borrowings increased by EUR 17.2 million from 31
December 2021 mainly due to the reclassification of the
subordinated convertible loans from other equity instruments to
borrowings. These subordinated convertible loans include an equity
redemption option of outstanding loan balances, in addition to a
cash redemption option. Under the modified terms, the discretion to
redeem the loans in equity or cash lies with Azerion Holdings B.V.
Following the De-SPAC transaction, the loans are redeemable by
issuing shares in the capital of Azerion Group N.V. Since these
loans are no longer redeemable by issuing shares in the capital of
Azerion Holding B.V., these have been reclassified from other
equity instruments to borrowings.
Lease liabilities
The lease liabilities decreased by EUR 1.6
million from 31 December 2021 which is mainly due to unwinding of
the lease liabilities.
Other liabilities
As at 30 June 2022 the other liabilities
(current and non-current) amount to EUR 43.4 million (31 December
2021: EUR 69.1 million) and mainly consist of deferred
consideration, contingent consideration, acquisition SARs and
postponed wage taxes. During the first half of 2022, deferred- and
contingent consideration positions amounting to EUR 35.6 million
were settled in line with the share purchase agreements. The
decrease in the other liabilities is offset by an increase of EUR
9.1 million due to deferred consideration and contingent
consideration in line with the Infinia share purchase agreement.
Furthermore, due to the De-SPAC transaction, share options with a
value of EUR 5.8 million issued as part of an acquisition will be
settled with Azerion Group N.V. shares instead of Azerion Holding
B.V. shares. Since the options will no longer be settled in Azerion
Holding’s own equity instruments this is subsequently reclassified
to other liabilities. Based on the share purchase agreement the
transaction should be settled by 31 December 2022.
Provisions
Commercial litigation
As of 31 December 2021, a provision of EUR 0.4
million was recorded relating to a dispute on the termination of a
lease agreement for office spaces leased from a third party. During
Q2 2022 the courts reached a verdict on the matter which resulted
in a payment of EUR 0.4 million, although an appeal has been
filed.
Restructuring
As part of the process to accelerate the
integration of acquired companies into Azerion Group and further
realise synergies, we initiated a restructuring plan designed to
streamline our business, reduce our cost structure and focus our
resources on key strategic opportunities. This programme is
expected in aggregate to reduce our global workforce by
approximately 3%, for which aggregate charges of EUR 1.3 million
have been recognised in H1, consisting primarily of employee
contract termination costs. The restructuring plan was drawn up and
execution commenced in H1 2022 when the provision is recognised in
the financial statements. EUR 1.1 million of the provision remained
as at end H1 and is expected to be utilized over the next 12
months.
Tax
Income tax expense for the
period
Income tax expense is recognised at an amount
determined by multiplying the profit (loss) before tax for the
interim reporting period by management’s best estimate of the
weighted-average annual income tax rate expected for the full
financial year, adjusted for the tax effect of certain items
recognised in full in the interim period. As such, the effective
tax rate in the interim financial statements may differ from
management’s estimate of the effective tax rate for the annual
financial statements.
The Group’s consolidated effective tax rate in
respect of continuing operations for the six months ended 30 June
2022 was negative 3%. The main contributor to the effective tax
rate deviating from Azerion Holding’s tax rate are tax losses that
are not recognized of EUR 7.9 million.
Related party transactions
AgriBank
PLC
On 24 June 2022, the co-CEOs of the Group
completed the acquisition of an indirect majority stake in
AgriHoldings plc, the holding company of AgriBank PLC, via their
personal holding companies. During 2021 and 2022 certain
subsidiaries in the Group have entered into non-recourse factoring
agreements with AgriBank PLC. As a result of such factoring
agreements, the total amount of receivables factored and
derecognized is amounting to EUR 23.6 million and the related
expenses recognized in operating profit/loss and finance costs in
the condensed statement of other comprehensive income amounts to
EUR 0.8 million for the half year ended 30 June 2022. Other
receivables contain a EUR 3.9 million prepayment.
Subsequent events
Acquisition of Madvertise
Azerion and European AdTech company Madvertise
signed a binding share purchase agreement, subject to certain
conditions, on 5 July 2022 with the acquisition completed on 12
July 2022. Azerion acquired the German and French subsidiaries of
Madvertise for a total consideration of EUR 11.3 million (cash and
share consideration). With the acquisition of Madvertise's
extensive advertising network and proprietary ‘BlueStack’
ad-serving and mobile monetization technology, Azerion will
significantly strengthen its in-app digital offering for publishers
and advertisers as well as its presence in the French and German
markets. The cash payment (combination of upfront and deferred
payments) amounts to at least EUR 4.8 million, or 42% of the total
consideration, while the share consideration represents up to circa
EUR 6.5 million, or 58% of the total consideration, with an initial
transfer of 384.614 Azerion treasury shares to the selling
shareholders at closing. At the date of authorisation of the
interim consolidated financial statements 2022, the purchase price
allocation for this acquisition has not been finalised due to the
short period of time between the announcement and the finalisation
of the interim consolidated financial statements 2022.
Consequently, no further disclosures on acquired assets and
liabilities are made.
Capital Contribution
On 26 July 2022 Azerion Holding B.V. received a capital
contribution of EUR 6.0 million from itsparent Azerion Group
N.V.
Definitions
Adjusted EBITDA means in
respect of the period the consolidated profit from ordinary
activities according to the latest Financial
Report(s):(a) before deducting any amount of tax
on profits, gains or income paid or payable by any
subsidiary;(b) before deducting any Net Finance
Costs;(c) before taking into account any
extraordinary items and any non-recurring items which are not in
line with the ordinary course of
business;(d) before taking into account any
Transaction Costs;(e) not including any accrued
interest owing to any subsidiary;(f) before taking
into account any unrealised gains or losses on any derivative
instrument (other than any derivative instruments which are
accounted for on a hedge account basis);(g) after
adding back or deducting, as the case may be, the amount of any
loss or gain against book value arising on a disposal of any asset
(other than in the ordinary course of trading) and any loss or gain
arising from an upward or downward revaluation of any asset;
and(h) after adding back any amount attributable
to the amortisation, depreciation or depletion of assets of any
subsidiary
Adjusted EBITDA Margin means
Adjusted EBITDA as a percentage of revenue
Average number of digital ads sold per
month (paid impressions) represents the number of digital
advertisements displayed to users of game and non-game content. The
numbers reported do not include volumes from past acquisitions that
are not yet fully integrated. As of this quarter, the reported
numbers include the following previous acquisitions: advertising
auction platform Improve Digital, as well as publisher monetisation
services Headerlift, Pubgalaxy, Sublime, Inskin, Strossle and
Keymobile.
Average gross revenue per million ad
requests from the advertising auction platform is
calculated by dividing gross advertising revenue by a million of
advertisement requests. Not all advertisement requests are
fulfilled and become an advertisement sold, therefore this metric
measures our efficiency and overall profitability of the digital
advertising auction platform, demonstrating that the revenue
generated by the advertisements that are sold also remunerate and
more than cover the costs of all the advertisement requests.
Average time in game per day
measures how many minutes per day, on average, the players of
Premium Games spend in our games. This demonstrated their
engagement with the games, which generates more opportunities to
grow the ARPDAU.
Average DAUs means average
daily active users, which is the number of distinct users per day
averaged across the relevant period.
ARPDAU means Average Revenue
per Daily Active User, which is revenue per period divided by days
in the period divided by average daily active users in that period
and represents average per user in-game purchases for the
period.
Azerion Holding means Azerion
Holding B.V. and Holding Group means Azerion
Holding and each of its subsidiaries from time to time and Holding
Group Company means any of them.
EBIT means, in respect of the
period, the consolidated profit from ordinary activities according
to the latest Financial Report(s):
(a) before deducting any amount
of tax on profits, gains or income paid or payable by any member of
the Group;(b) before deducting any Net Finance
Charges
EBITDA means in respect of the
period the consolidated profit from ordinary activities according
to the latest Financial Report(s):(a) before
deducting any amount of tax on profits, gains or income paid or
payable by any subsidiary;(b) before deducting any
Net Finance Costs;(c) before deducting any amount
attributable to the amortisation, depreciation, or depletion of
assets of any subsidiary.EFIC1 means European
FinTech IPO Company 1 B.V.
Financial Indebtedness means as
defined in the terms and conditions of the Senior Secured Callable
Fixed Rate Bonds ISIN: SE0015837794 any indebtedness in respect
of:
(a) monies borrowed or raised.
including Market Loans;(b) the amount of any
liability in respect of any Finance
Leases;(c) receivables sold or discounted (other
than any receivables to the extent they are sold on a non-recourse
basis);(d) any amount raised under any other
transaction (including any forward sale or purchase agreement)
having the commercial effect of a
borrowing;(e) any derivative transaction entered
into in connection with protection against or benefit from
fluctuation in any rate or price (and, when calculating the value
of any derivative transaction, only the mark to market value shall
be taken into account, provided that if any actual amount is due as
a result of a termination or a close-out, such amount shall be used
instead);(f) any counter indemnity obligation in
respect of a guarantee, indemnity, bond, standby or documentary
letter of credit or any other instrument issued by a bank or
financial institution; and(g) (without double
counting) any guarantee or other assurance against financial loss
in respect of a type referred to in the above paragraphs
(a)-(f).Gross Profit Margin means Gross Profit as
a percentage of revenue
Gross Profit means the profit
made after subtracting all (variable) costs that are related to
manufacturing of its products or services. The gross profit can be
calculated by deducting the cost of goods sold (COGS) from total
sales.
Net Interest Bearing
Debt as defined in the terms and conditions of the
Senior Secured Callable Fixed Rate Bonds ISIN: SE0015837794 means
the aggregate interest bearing Financial Indebtedness less cash and
cash equivalents of Azerion Holding B.V. and its subsidiaries from
time to time in accordance with the Accounting Principles (for the
avoidance of doubt, excluding any Bonds owned by the Issuer,
guarantee, bank guarantees, Subordinated Loans, any claims
subordinated pursuant to a subordination agreement on terms and
conditions satisfactory to the Agent and interest-bearing Financial
Indebtedness borrowed from any Azerion Holding Group Company) as
such terms are defined in the terms and conditions of the Senior
Secured Callable Fixed Rate Bonds ISIN: SE0015837794
Operating expenses are defined
as the aggregate of personnel costs and other expenses as reported
in the statement of Other comprehensive income. More details on the
cost by nature reporting can be found in the published annual
financial statements of 2021.
Transaction Costs means all
fees, costs and expenses, stamp, registration and other taxes
incurred by Azerion Holding or any other Holding Group Company in
connection with (i) the Bond Issue, (ii) any Subsequent Bond Issue,
(iii) the listing of the Bonds or any Subsequent Bonds, (iv)
acquisitions, mergers and divestments of companies and (v) an
Equity Listing Event, as such terms are defined in the terms and
conditions of the Senior Secured Callable Fixed Rate Bonds ISIN:
SE0015837794
Disclaimer and Cautionary Statements
This communication contains information that
qualifies as inside information within the meaning of Article 7(1)
of the EU Market Abuse Regulation.
This communication may include forward-looking
statements. All statements other than statements of historical
facts are, or may be deemed to be, forward-looking statements.
Forward-looking statements include, among other things, statements
concerning the potential exposure of Azerion to market risks and
statements expressing management’s expectations, beliefs,
estimates, forecasts, projections and assumptions. Words and
expressions such as aims, ambition, anticipates, believes, could,
estimates, expects, goals, intends, may, milestones, objectives,
outlook, plans, projects, risks, schedules, seeks, should, target,
will or other similar words or expressions are typically used to
identify forward-looking statements. Forward-looking statements are
statements of future expectations that are based on management’s
current expectations and assumptions and involve known and unknown
risks, uncertainties and other factors that are difficult to
predict and that could cause the actual results, performance or
events to differ materially from future results expressed or
implied by such forward-looking statements contained in this
communication. Readers should not place undue reliance on
forward-looking statements.
Any forward-looking statements reflect Azerion’s
current views and assumptions based on information currently
available to Azerion’s management. Forward-looking statements speak
only as of the date they are made and Azerion does not assume any
obligation to update or revise such statements as a result of new
information, future events or other information, except as required
by law.
The interim financial results of Azerion Holding
B.V. as included in this communication are required to be disclosed
pursuant to the terms and conditions of the Senior Secured Callable
Fixed Rate Bonds ISIN: SE0015837794.
This report has not been reviewed or audited by
Azerion’s external auditor.
Certain financial data included in this
communication consist of alternative performance measures
(“non-IFRS financial measures”), including EBITDA and Adjusted
EBITDA. The non-IFRS financial measures, along with comparable IFRS
measures, are used by Azerion’s management to evaluate the business
performance and are useful to investors. They may not be comparable
to similarly titled measures as presented by other companies, nor
should they be considered as an alternative to the historical
financial results or other indicators of Azerion Holding B.V. and
Azerion Group N.V.’s cash flow based on IFRS. Even though the
non-IFRS financial measures are used by management to assess
Azerion Holding B.V. and Azerion Group N.V.’s financial position,
financial results and liquidity and these types of measures are
commonly used by investors, they have important limitations as
analytical tools, and the recipients should not consider them in
isolation or as a substitute for analysis of Azerion Holding B.V.
and Azerion Group N.V.’s financial position or results of
operations as reported under IFRS.
For all definitions and reconciliations of
non-IFRS financial measures please also refer to
www.azerion.com/investors.
This report may contain forward-looking non-IFRS
financial measures. We are unable to provide a reconciliation of
these forward-looking non-IFRS financial measures to the most
comparable IFRS financial measures because certain information
needed to reconcile those non-IFRS financial measures to the most
comparable IFRS financial measures is dependent on future events
some of which are outside the control of Azerion. Moreover,
estimating such IFRS financial measures with the required precision
necessary to provide a meaningful reconciliation is extremely
difficult and could not be accomplished without unreasonable
effort. Non-IFRS financial measures in respect of future periods
which cannot be reconciled to the most comparable IFRS financial
measure are calculated in a manner which is consistent with the
accounting policies applied in Azerion Group N.V.’s and Azerion
Holding B.V.’s consolidated financial statements.
This communication does not constitute an offer
to sell, or a solicitation of an offer to buy, any securities or
any other financial instruments.
Contact
Investor Relations: ir@azerion.comMedia relations:
press@azerion.com |
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1 As defined in section 1.1 of the Terms & Conditions of the
Senior Secured Callable Fixed Rate Bonds ISIN: SE0015837794. Please
also refer to the Definitions section and the notes of this Interim
Report for more information.
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