Azerion publishes interim Q2 and H1 2023 results
Platform growth and integrations leading to increased
revenue and improved margins
Highlights of Q2 2023
- Increased earnings driven by revenue growth and ongoing cost
savings
- Net revenue of approximately € 122 million for Q2 2023, up from
€ 104 million in Q2 2022. Adjusted EBITDA of almost € 19 million,
up by approximately 58% compared to Q2 2022.
- Upgraded expected annualized cost savings to at least € 20
million from at least € 15 million, excluding any effects from
foreign exchange. The expected savings are compared to the
January 2023 baseline. Total operating expenses Q2 2023 of € 38.1
million (including restructuring costs) only € 1.9 million higher
than Q2 2022 notwithstanding 8 acquisitions in H2 2022.
- Sale of social card games portfolio completed 28 August 2023
for an initial cash consideration of € 81.3 million, subject to
customary adjustments, with an earnout based on the performance of
the acquired business that could take the total consideration up to
a maximum of € 150 million.
- At completion Azerion received close to € 67 million before
income tax and approximately 15 months after the completion date
Azerion will receive the remaining proceeds subject to the terms of
the asset purchase agreement. Gain on sale estimated at
approximately €70 million before income tax.
- Launch of Azerion Smart Bidding, Azerion’s improved
AI-integrated bidding system to further enhance Azerion’s pricing
in open market auctions.
- Launched Azerion Smart Content, integrating Vlyby technology
with Zoomin content, providing publishers with additional
contextual content for monetisation
- Launch of Habbo X: Alpha 2, a play to earn metaverse
environment which integrates blockchain technology, allowing brands
such as EMA, Miffy and Cool Cats to collaborate with audiences and
create lifetime engageable collectables, minted as an NFT
- Updated guidance for full year 2023 confirms Adjusted EBITDA
still expected to be at least € 75 million
Highlights of H1 2023
- Net revenue of approximately € 235 million for H1 2023, up from
€ 198 million in H1 2022.
- Adjusted EBITDA of approximately € 27 million, up by
approximately 55% compared to H1 2022.
Selected KPIs
Financial results - Azerion Group N.V. - Q2
in millions of €
|
Q2 2023 |
Q2 2022 |
|
|
|
Net revenue |
Operating profit / (loss) |
Adjusted EBITDA |
Net revenue |
Operating profit / (loss) |
Adjusted EBITDA |
Net revenue growth |
Adjusted EBITDA growth |
Group |
122.0 |
(2.9) |
18.5 |
103.9 |
(3.1) |
11.7 |
17.4% |
58.1% |
Platform |
99.6 |
(3.2) |
13.3 |
82.1 |
(3.0) |
7.9 |
21.3% |
68.4% |
Premium Games |
22.4 |
0.3 |
5.2 |
21.8 |
0.1 |
3.8 |
2.8% |
36.8% |
Other |
|
- |
- |
|
(0.2) |
- |
|
|
Financial results - Azerion Group N.V. - H1
in millions of €
|
YTD 2023 |
YTD 2022 |
|
|
|
Net revenue |
Operating profit / (loss) |
Adjusted EBITDA |
Net revenue |
Operating profit / (loss) |
Adjusted EBITDA |
Net revenue growth |
Adjusted EBITDA growth |
Group |
234.7 |
(10.6) |
27.2 |
198.3 |
(148.0) |
17.6 |
18.4% |
54.5% |
Platform |
188.9 |
(11.6) |
16.9 |
154.6 |
(14.4) |
9.9 |
22.2% |
70.7% |
Premium Games |
45.8 |
1.0 |
10.3 |
43.7 |
(0.6) |
7.7 |
4.8% |
33.8% |
Other |
|
- |
- |
|
(133.0) |
- |
|
|
Message from the CEO
"The Company has continued to grow in Q2 and H1 2023 and made
significant progress in integrating and consolidating previous
acquisitions. We are pleased with the progress made in simplifying
and optimising our operations and are seeing the benefits of that
work reflected in improved margins and profitability. We have also
successfully completed the divestment of our social card games
portfolio and remain focused on delivering synergies across the
platform and premium games segments.
In light of the achievements made in delivering our strategy, I
am pleased to be able to confirm that for full year 2023, after
excluding the social card games portfolio from completion of the
sale, we still expect Adjusted EBITDA to be at least € 75
million."
- Umut Akpinar
Financial overview
Net revenue
Net revenue for the quarter amounted to € 122.0 million an
increase of approximately 17%, compared to Q2 2022, mainly due to
growth in the Platform segment.
Net revenue for H1 2023 amounted to € 234.7 million an increase
of approximately 18%, compared to H1 2022, mainly due to growth in
the Platform segment.
Earnings
Adjusted EBITDA was € 18.5 million for the quarter compared to €
11.7 million in Q2 2022, an increase of approximately 58%, due to
increased revenue from Platform business at higher margins due to
efficiencies from integrations and consolidations.
Adjusted EBITDA was € 27.2 million for H1 2023 compared to €
17.6 million in H1 2022, an increase of approximately 54%, due to
increased revenue from Platform business at higher margins due to
efficiencies from integrations and consolidations.
The operating loss for the quarter amounted to € (2.9) million,
compared to a loss of € (3.1) million in Q2 2022 mainly explained
by higher gross profit offset by higher amortization and
restructuring costs in Q2 2023.
The operating loss for H1 2023 amounted to € (10.6) million,
compared to a loss of € (148.0) million in H1 2022 mainly explained
by € 144.7 million of De-SPAC related expenses incurred in H1
2022.
Cash flow
Cash flow from operating activities in Q2 2023 was an inflow of
€ 7.5 million. Cash flow from investing activities was an outflow
of € (12.7) million, mainly due to earnouts paid related to
acquired companies. Cash flow from financing activities totalled an
outflow of € (2.9) million.
Cash flow from operating activities in H1 2023 was an inflow of
€ 34.7 million. Cash flow from investing activities was an outflow
of € (37.6) million, mainly due to earnouts paid related to
acquired companies. Cash flow from financing activities totalled an
outflow of € (6.0) million.
Capex
Azerion capitalizes development costs related to internal
development of assets, a core activity to support innovation in its
platform. These costs primarily relate to developers’ time devoted
to the development of games, platforms, and other new features. In
Q2 2023 Azerion capitalized € 5.6 million, equivalent to 20.4% of
gross personnel costs. In H1 2023 Azerion capitalized € 10.2
million, equivalent to 16.2% of gross personnel costs.
Financial position and financing
Net interest bearing debt*) amounted to € 182.5 million as of 30
June 2023, mainly comprising outstanding bond loan with a nominal
value of € 200 million (part of a total € 300 million framework),
which became a current borrowing at April 2023 and lease
liabilities with a balance of € 17.8 million less the cash and cash
equivalents position of € 42.2 million.
Applying the information above at 30 June 2023 and the full year
2023 guidance of expected Adjusted EBITDA of at least € 75 million,
implies an illustrative Net interest bearing debt / Adjusted EBITDA
ratio of approximately 2.4.
*) 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.
Segment Platform
Our Platform segment includes our digital advertising activities
and e-Commerce, which are fully integrated through our technology.
It generates Net 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 parts of our Premium Games
segment, leveraging inter-segment synergies.
Platform – Selected Financial KPIs
Financial results - Platform
in millions of €
|
Q2 |
Q2 |
YTD |
YTD |
|
2023 |
2022 |
2023 |
2022 |
Net revenue |
99.6 |
82.1 |
188.9 |
154.6 |
Gross profit |
35.1 |
30.7 |
65.1 |
53.1 |
Operating profit / (loss) |
(3.2) |
(3.0) |
(11.6) |
(14.4) |
Adjusted EBITDA |
13.3 |
7.9 |
16.9 |
9.9 |
Net revenue growth % |
21.3% |
|
22.2% |
|
Gross profit margin % |
35.2% |
37.4% |
34.5% |
34.3% |
Adjusted EBITDA growth % |
68.4% |
|
70.7% |
|
Adjusted EBITDA margin % |
13.4% |
9.6% |
8.9% |
6.4% |
Platform Net revenue of € 99.6 million in Q2
2023, an increase of 21.3% compared to Q2 2022, driven by
integration of past acquisitions and global sales teams, combined
with the roll out of new ad formats on the platform.
Platform Net revenue of € 188.9 million in H1
2023, an increase of 22.2% compared to H1 2022, driven by
integration and consolidation of previously acquired
businesses.
Adjusted EBITDA was € 13.3 million in Q2 2023, increasing by
68.4% compared to Q2 2022 due to growth in higher margin direct
sales teams performance, lower personnel costs due to efficiency
efforts as well as developments of platform technology resulting in
lower operating costs. Adjusted EBITDA was € 16.9 million in H1
2023, increasing by 70.7% compared to H1 2022, as a result of
platform development and efficiency efforts.
A legal dispute related settlement resulted in a cash outflow of
€ 0.4 million, of which € 0.2 million was paid in Q2 2023 with an
expected € 0.2 million due in Q3 2023 and net release of provision
gain of about € 0.6 million.
Initiatives in Q2 and H1 2023 include:
- Launch of Azerion Smart Bidding, Azerion’s improved
AI-integrated bidding system to further enhance Azerion’s pricing
in open market auctions.
- Improved our Full Monetization Services, or FMS solution with
Performance by Azerion for semantic segmentation allowing for
better audience targeting.
- Launched Smart Content, integrating Vlyby technology with
Zoomin content, providing publishers with additional contextual
content for monetisation.
- Developed an internal campaign management solution for Azerion
ad ops teams, Azerion Marketplace, improving ad campaign
coordination efficiencies and margin contribution.
- Accelerated the production of puzzle and word web games by
Azerion Studio’s for news and media publishers resulting in
increased revenues at higher margins due to lower licensing
fees.
- Successfully rolled out new Fanzone platform technology across
current clients in the Netherlands, Belgium and Turkey, allowing
sport clubs to manage fan engagement, communication and
monetisation through advertisement.
Results also benefited from increased user engagement levels,
with users spending more time playing casual games, as well as
strong performance in e-Commerce. In addition, we have grown our
casual games distribution portfolio during Q2 2023, adding
approximately 472 new games and 61 new publisher partners.
Advertising - Selected Operational KPIs
Advertising - Operational KPIs
|
Q2 2022 |
Q3 2022 |
Q4 2022 |
Q1 2023 |
Q2 2023 |
Avg. Digital Ads Sold per Month (bn) |
9.5 |
9.6 |
10.7 |
12.2 |
13.0 |
Advertising auction platform (bn) |
4.3 |
4.3 |
5.4 |
5.1 |
6.1 |
Publisher monetisation services (bn) |
5.2 |
5.3 |
5.3 |
7.1 |
6.9 |
Avg. Gross Revenue per Million Processed Ad Requests from
advertising auction platform (€) |
22.7 |
23.9 |
32.8 |
30.0 |
36.3 |
Previous reported figures (€) |
9.1 |
11.2 |
16.7 |
11.2 |
15.6 |
Additional formats (€) |
13.6 |
12.7 |
16.1 |
18.8 |
20.8 |
The Average Digital Ads sold per Month (bn)
increased to 13.0 billion from 9.5 billion in Q2 2022, reflecting
the growth of the platform business through the integration of
previous acquisitions and increased ad format offering. As of Q1
2023 the reported number of average digital ads sold per month
include the following previous acquisitions: Adplay, Adverline,
Monolith, Hybrid Theory, MMedia, Takerate, Targetspot and
Vlyby.
The Average gross revenue per million processed ad
requests was € 36.3 in Q2 2023, compared to € 22.7 in Q2
2022, demonstrating our ability to grow and manage the advertising
auction platform efficiently and profitably whilst providing an
attractive proposition for advertisers and publishers. New ad
formats integrated into the platform have also contributed to
higher margins.
Previously reported figures of Avg. Gross Revenue per Million
Processed Ad Requests (€) were of advertising auction platform
Improve Digital. Additional ad formats: Headerlift, Pubgalaxy,
Sublime, Inskin, Strossle, Keymobile, Delta Projects, Admoove and
Quantum have been included from Q1 2022, Infinia was included in
figures as of Q2 2022 and Madvertise as of Q3 2022. Additional new
ad formats have been included as of Q1 2023, these include: Adplay,
Adverline, Monolith, Hybrid Theory, MMedia, Takerate, Targetspot
and Vlyby. In Q4 2022, Average gross revenue per million ad
requests was revised to exclude ad requests that are rejected
before entering our advertising auction platform. As a result this
KPI was renamed as Average gross revenue per million processed ad
requests.
Segment Premium Games
Our Premium Games segment includes social card and casino games
and metaverse, comprising nine premium game titles. 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. The aim of this segment is to stimulate
social interaction among players and build communities, offering an
extended value proposition to advertisers and generating
cross-selling opportunities with the Platform segment.
Premium Games – Selected Financial KPIs
Financial results - Premium Games
in millions of €
|
Q2 |
Q2 |
YTD |
YTD |
|
2023 |
2022 |
2023 |
2022 |
Net revenue |
22.4 |
21.8 |
45.8 |
43.7 |
Gross profit |
10.9 |
11.2 |
22.9 |
21.7 |
Operating profit / (loss) |
0.3 |
0.1 |
1.0 |
(0.6) |
Adjusted EBITDA |
5.2 |
3.8 |
10.3 |
7.7 |
Net revenue growth % |
2.8% |
|
4.8% |
|
Gross profit margin % |
48.7% |
51.4% |
50.0% |
49.7% |
Adjusted EBITDA growth % |
36.8% |
|
33.8% |
|
Adjusted EBITDA margin % |
23.2% |
17.4% |
22.5% |
17.6% |
Premium Games Net revenue was € 22.4 million in
Q2 2023, an increase of 2.8% compared to Q2 2022. Premium
Games Net revenue was € 45.8 million in H1 2023, an
increase of 4.8% compared to H1 2022, with both Q2 and H1 2023
results reflecting growth in social card and social casino games,
offset in part by metaverse.
Adjusted EBITDA was € 5.2 million in Q2 2023, an increase of
36.8% compared to Q2 2022, due to higher top line performance
combined with efficiency programmes reducing costs. Adjusted EBITDA
was € 10.3 million in H1 2023, an increase of 33.8% compared to H1
2022, due to higher top line performance combined with lower costs
due to efficiency programmes.
On August 1 2023, we announced that we entered into a definitive
agreement with Playtika for the sale of our social card games
portfolio. This transaction was completed on August 28 2023,
further information can be found in the section Sale of social card
games portfolio.
Premium Games – Selected Operational
KPIs
Premium Games - Operational KPIs
|
Q2 2022 |
Q3 2022 |
Q4 2022 |
Q1 2023 |
Q2 2023 |
Avg. Time in Game per Day (min) |
80 |
80 |
79 |
84 |
84 |
Avg. DAUs (thousands) |
569 |
556 |
559 |
601 |
558 |
Avg. ARPDAU (€) |
0.40 |
0.42 |
0.45 |
0.42 |
0.42 |
- The Average time in game per day increased in
Q2 2023 by 5% compared to Q2 2022 due to the development of new
features to stimulate user generated content in social
games.
- The Average daily active users (DAUs) remained
relatively stable in Q2 2023 compared to the previous year, this
was due to increased DAUs in social card games offset by decreasing
number of users in metaverse title as a result of reduced user
acquisition spend.
- The Average revenue per daily active user
(ARPDAU) increased by almost 5% compared to Q2 2022, due
to stable loyal user base spending in game.
Segment Other
Reporting Segment Other contained in H1 2023 an operating loss
of € - million (H1 2022: € (133.0) million). The variance is mainly
explained by the H1 2022 incurred De-SPAC related expenses of € 133
million. Segment Other reported an Adjusted EBITDA loss in H1 2023
of € - million (H1 2022: € - million).
Outlook
Taking into account the divestment of the social card games
portfolio as from 28 August 2023, the Company is sharing the
following updated outlook for full year 2023:
- Adjusted EBITDA for 2023 was previously expected to be at least
€ 75 million. After excluding the divested social card games
portfolio as from completion of the sale, Adjusted EBITDA for 2023
is still expected to be at least € 75 million.
- Annual Adjusted EBITDA margin thereafter was expected to grow
and be in the range of 14% to 16% in the medium term. Azerion
expects to be approaching the lower end of its guidance for full
year 2023 and maintains the upper end of its range in the medium
term. The expected improvement in Adjusted EBITDA margin is
expected to be primarily driven by gross profit margin
optimisation, cost efficiencies and overall benefits of scale as
the Azerion platform grows.
- Net revenue for 2023 was previously expected to be around € 560
million. After excluding the divested social card games portfolio
as from completion of the sale, Net Revenue for full year 2023 is
expected to be around € 540 million. Annual Net revenue growth
thereafter is expected to be around 15%.
This outlook does not include the impact of any future material
acquisitions or divestments.
Sale of social card games portfolio
Playtika Holding Corp and Azerion announced on 1 August 2023
that they had entered into a definitive agreement for Playtika to
acquire from Azerion its social card games portfolio.
The sale was completed on 28 August 2023, for an initial cash
consideration of € 81.3 million, subject to customary adjustments,
with an earnout based on the performance of the acquired business
that could take the total consideration up to a maximum of € 150
million. At completion Azerion received close to € 67 million and
approximately 15 months after the completion date Azerion will
receive the remaining proceeds relating to the performance based
earnout and other contractual terms, subject to the terms of the
asset purchase agreement.
The gain on sale before income tax is estimated at approximately
€ 70 million.
The earnout consideration is based on the Adjusted EBITDA, as
defined in the asset purchase agreement, of the social card games
portfolio for the period running from 1 October 2023 until 30
September 2024 (the “Earnout Period”), and calculated by
multiplying the incremental Adjusted EBITDA of the social card
games portfolio above the "Baseline" (as defined below) by a
multiple of between 6 and 7 (both inclusive); the specific multiple
to be applied is contingent upon the revenue growth of the social
card games portfolio achieved during the Earnout Period. The
"Baseline" is defined as the last twelve months Adjusted EBITDA on
a carve-out basis of approximately € 13.5 million.
The table below includes the Net Revenue and Adjusted EBITDA
from the social card games portfolio.
Net revenue and Adjusted EBITDA of the social sard games
portfolio
in millions of €
|
2022 |
2023 |
|
Q1 |
Q2 |
Q3 |
Q4 |
FY |
Q1 |
Q2 |
YTD |
Net revenue |
8.8 |
8.8 |
9.3 |
10.2 |
37.1 |
11.3 |
10.3 |
21.6 |
Adjusted EBITDA |
2.8 |
2.6 |
3.7 |
2.6 |
11.7 |
3.5 |
4.1 |
7.6 |
In the table above, Adjusted EBITDA includes a central cost
allocation for H1 2023 of approximately € 1.5 million. These costs
will be addressed as part of our ongoing cost management
programme.
Other information
Interest Bearing Debt
interest Bearing Debt
in millions of €
|
30 June 2023 |
31 December 2022 |
Total non-current indebtedness |
16.2 |
215.8 |
Total current indebtedness |
208.5 |
12.8 |
Total financial indebtedness |
224.7 |
228.6 |
Deduct Zero interest bearing loans |
- |
(0.1) |
Interest Bearing Debt |
224.7 |
228.5 |
Less: Cash and cash equivalents |
(42.2) |
(50.9) |
Net Interest Bearing Debt (Bond terms) |
182.5 |
177.6 |
References to the bond terms in the table above refer to the
terms as defined in the senior secured callable fixed rate bond
ISIN: SE0015837794
Reconciliation of net income to Adjusted
EBITDA
Reconciliation of net income to Adjusted EBITDA - Q2
In millions of €
|
Q2 |
|
2023 |
2022 |
|
|
|
|
|
Azerion Group |
Premium Games |
Platform |
Other |
Azerion Group |
Premium Games |
Platform |
Other |
|
|
|
|
Profit / (loss) for the period |
(9.7) |
|
|
|
(10.0) |
|
|
|
|
|
|
|
Income Tax expense |
2.4 |
|
|
|
0.6 |
|
|
|
|
|
|
|
Profit / (loss) before tax |
(7.3) |
|
|
|
(9.4) |
|
|
|
|
|
|
|
Net finance costs |
4.4 |
|
|
|
6.3 |
|
|
|
|
|
|
|
Operating profit / (loss) |
(2.9) |
0.3 |
(3.2) |
- |
(3.1) |
0.1 |
(3.0) |
(0.2) |
|
|
|
|
Depreciation & Amortization |
10.9 |
3.4 |
7.5 |
- |
8.7 |
2.6 |
6.1 |
- |
|
|
|
|
De-SPAC related expenses |
- |
- |
- |
- |
3.1 |
1.0 |
1.9 |
0.2 |
|
|
|
|
Other |
1.5 |
1.1 |
0.5 |
(0.1) |
(0.9) |
0.1 |
(1.0) |
- |
|
|
|
|
Acquisition expenses |
4.9 |
- |
4.8 |
0.1 |
2.6 |
- |
2.6 |
- |
|
|
|
|
Restructuring |
4.1 |
0.4 |
3.7 |
- |
1.3 |
- |
1.3 |
- |
|
|
|
|
Adjusted EBITDA |
18.5 |
5.2 |
13.3 |
- |
11.7 |
3.8 |
7.9 |
- |
|
|
|
|
Reconciliation of net income to Adjusted EBITDA - H1
In millions of €
|
YTD |
|
2023 |
2022 |
|
|
|
|
|
Azerion Group |
Premium Games |
Platform |
Other |
Azerion Group |
Premium Games |
Platform |
Other |
|
|
|
|
Profit / (loss) for the period |
(22.1) |
|
|
|
(144.8) |
|
|
|
|
|
|
|
Income Tax expense |
3.3 |
|
|
|
1.3 |
|
|
|
|
|
|
|
Profit / (loss) before tax |
(18.8) |
|
|
|
(143.5) |
|
|
|
|
|
|
|
Net finance costs |
8.2 |
|
|
|
(4.5) |
|
|
|
|
|
|
|
Operating profit / (loss) |
(10.6) |
1.0 |
(11.6) |
- |
(148.0) |
(0.6) |
(14.4) |
(133.0) |
|
|
|
|
Depreciation & Amortization |
21.2 |
6.6 |
14.7 |
(0.1) |
16.7 |
5.7 |
11.2 |
(0.2) |
|
|
|
|
De-SPAC related expenses |
- |
- |
- |
- |
144.7 |
2.3 |
9.4 |
133.0 |
|
|
|
|
Other |
1.5 |
1.0 |
0.5 |
- |
0.3 |
0.3 |
(0.2) |
0.2 |
|
|
|
|
Acquisition expenses |
7.7 |
- |
7.6 |
0.1 |
2.6 |
- |
2.6 |
- |
|
|
|
|
Restructuring |
7.4 |
1.7 |
5.7 |
- |
1.3 |
- |
1.3 |
- |
|
|
|
|
Adjusted EBITDA |
27.2 |
10.3 |
16.9 |
- |
17.6 |
7.7 |
9.9 |
- |
|
|
|
|
Operating expenses
Breakdown of Operating expenses - Q2
in millions of €
|
Q2 |
2023 |
2022 |
|
|
|
|
Personnel costs |
(26.0) |
(23.6) |
|
|
|
Includes: |
|
|
|
|
|
|
Restructuring related expenses |
(4.1) |
(1.3) |
|
|
|
|
Other expenses |
(12.1) |
(12.6) |
|
|
|
|
Operating expenses |
(38.1) |
(36.2) |
|
|
|
|
Of which: |
|
|
|
|
|
|
Platform |
(30.8) |
(27.3) |
|
|
|
|
Premium Games |
(7.1) |
(8.5) |
|
|
|
|
Breakdown of Operating expenses - H1
in millions of €
|
YTD |
2023 |
2022 |
|
|
|
|
Personnel costs |
(53.8) |
(63.1) |
|
|
|
Includes: |
|
|
|
|
|
|
Restructuring related expenses |
(7.4) |
(1.3) |
|
|
|
|
Azerion Founder Warrants, reported as share-based payment
expense |
- |
(9.9) |
|
|
|
|
De-SPAC early exercised share-based payment expense |
- |
(10.3) |
|
|
|
|
Other expenses |
(23.7) |
(142.1) |
|
|
|
|
Includes: |
|
|
|
|
|
|
De-SPAC transaction related expenses |
|
(121.4) |
|
|
|
|
Operating expenses |
(77.5) |
(205.2) |
|
|
|
|
Of which: |
|
|
|
|
|
|
Platform |
(62.1) |
(55.5) |
|
|
|
|
Premium Games |
(15.3) |
(16.6) |
|
|
|
|
Restructuring
In relation to ongoing consolidation and integration,
restructuring charges in Q3 2023 are expected to be around € 1
million. These costs impact the reported operating profit / loss,
but are removed from Adjusted EBITDA.
Bond Refinancing
On 8 April 2021, the Group issued senior secured callable fixed
rate bonds for a total of € 200 million, within a total framework
amount of € 300 million. The maturity date of the bonds is 28 April
2024 and the bonds carry a fixed interest rate of 7.25% per annum.
The management team are fully engaged in evaluating the options
available to refinance the bonds. Those options include, but are
not limited to, pursuing a similar repeat bond issuance, the
implementation of alternative external third-party financing
solutions and/or utilisation of other internally available
financial resources. The refinancing strategy and execution
planning will continue and be finalised in an appropriate timeframe
taking into account considerations relating to business
performance, strategic and operational requirements, internal cash
generation, any implied deleveraging and applicable market
conditions.
In relation to the above, Azerion has also mandated Pareto
Securities AB to conduct a series of fixed income investor meetings
and subject to, inter alia, market conditions, a bond issue may
follow (the “New Bonds”). The proceeds from the
New Bonds are intended to be used to refinance the Company’s
outstanding EUR 200 million bond (ISIN: SE0015837794) and to
finance general corporate purposes.
Condensed consolidated unaudited financial Results for the
six-month period ended 30 June 2023
Introduction
The principal activities of Azerion Group N.V. (‘the Company’)
and its group companies (jointly, the ‘Group’) are described in the
Annual Report 2022. The interim financial results for the six
months period ended 30 June 2023 consist of the condensed
consolidated financial statements. the management report and
responsibility statement by Azerion Group N.V. Management Board.
The information in this interim financial report has not been
audited or reviewed by Azerion Group N.V. 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 Group N.V. hereby declares that to the
best of its knowledge:
- the condensed consolidated financial statements for the
six-month period ended 30 June 2023 give a true and fair view of
the assets, liabilities, financial position and profit or loss of
Azerion Group N.V. 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 2023 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 Group N.V. and the entities
included in the consolidation.
Schiphol-Rijk, 31 August 2023
Management BoardMr. U. Akpinar
Condensed consolidated statement of profit or loss and other
comprehensive income
Condensed consolidated statement of profit or loss and other
comprehensive income
in millions of €
|
Note |
Q22023 |
Q22022 |
YTD2023 |
YTD2022 |
Net revenue |
|
122.0 |
103.9 |
234.7 |
198.3 |
Costs of services and materials |
|
(76.0) |
(62.0) |
(146.7) |
(123.6) |
Gross profit |
|
46.0 |
41.9 |
88.0 |
74.7 |
Personnel costs |
|
(26.0) |
(23.6) |
(53.8) |
(63.1) |
Depreciation |
|
(2.0) |
(1.6) |
(3.9) |
(3.2) |
Amortization |
|
(8.9) |
(7.1) |
(17.3) |
(13.5) |
Other gains and losses |
|
0.1 |
(0.1) |
0.1 |
(0.8) |
Other expenses |
|
(12.1) |
(12.6) |
(23.7) |
(142.1) |
Operating profit / (loss) |
|
(2.9) |
(3.1) |
(10.6) |
(148.0) |
|
|
|
|
|
|
Finance income |
|
2.5 |
(0.5) |
5.4 |
16.2 |
Finance costs |
|
(6.9) |
(5.8) |
(13.6) |
(11.7) |
Net Finance costs |
|
(4.4) |
(6.3) |
(8.2) |
4.5 |
|
|
|
|
|
|
Profit / (loss) before tax |
|
(7.3) |
(9.4) |
(18.8) |
(143.5) |
|
|
|
|
|
|
Income tax expense |
15 |
(2.4) |
(0.6) |
(3.3) |
(1.3) |
Profit / (loss) for the period |
|
(9.7) |
(10.0) |
(22.1) |
(144.8) |
|
|
|
|
|
|
Attributable to: |
|
|
|
|
|
Owners of the company |
|
(10.0) |
(10.1) |
(22.5) |
(144.7) |
Non-controlling interest |
|
0.3 |
0.1 |
0.4 |
(0.1) |
|
|
|
|
|
|
Exchange difference on translation of foreign operations |
|
(0.1) |
(0.7) |
- |
(1.3) |
Total other comprehensive income |
|
(9.8) |
(10.7) |
(22.1) |
(146.1) |
Attributable to: |
|
|
|
|
|
Owners of the company |
|
(13.0) |
(10.9) |
(25.2) |
(145.3) |
Non-controlling interest |
|
3.2 |
0.2 |
3.1 |
(0.8) |
|
|
|
|
|
|
Loss per share for losses attributable to the ordinary equity
holders of the company: |
|
|
|
|
|
Basic profit/(loss) per share (in €) |
16 |
|
|
(0.19) |
(1.30) |
Diluted profit/(loss) per share (in €) |
16 |
|
|
(0.19) |
(1.30) |
Condensed consolidated statement of financial position
Condensed consolidated statement of financial position
in millions of €
|
Notes |
30 June 2023 |
31 December 2022 |
Assets |
|
|
|
Non-current assets |
|
415.2 |
429.3 |
Goodwill |
10 |
184.9 |
184.2 |
Intangible assets |
9 |
172.1 |
186.2 |
Property, plant and equipment |
8 |
18.7 |
20.5 |
Non-current financial assets |
|
38.0 |
36.8 |
Deferred tax assets |
|
1.4 |
1.5 |
Investment in joint ventures |
|
0.1 |
0.1 |
|
|
|
|
Current assets |
|
180.5 |
209.2 |
Trade and other receivables |
|
127.9 |
157.3 |
Current tax assets |
|
1.8 |
1.0 |
Cash and cash equivalents |
|
42.2 |
50.9 |
Assets classified as held for sale |
7 |
8.6 |
- |
Total assets |
|
595.7 |
638.5 |
|
|
|
|
Equity |
|
|
|
Share capital |
|
1.2 |
1.2 |
Share premium |
|
140.3 |
130.8 |
Treasury shares at cost |
|
(0.8) |
- |
Legal reserve |
|
28.5 |
25.2 |
Share based payment reserve |
|
13.2 |
13.7 |
Currency translation reserve |
|
(1.3) |
(1.3) |
Other equity instruments |
|
20.7 |
29.0 |
Retained earnings |
|
(132.9) |
(104.8) |
Shareholders’ equity |
|
68.9 |
93.8 |
Non-controlling interest |
|
5.1 |
2.4 |
Total equity |
11 |
74.0 |
96.2 |
|
|
|
|
Liabilities |
|
|
|
Non-current liabilities |
|
57.3 |
257.7 |
Borrowings |
14 |
3.3 |
201.5 |
Lease liabilities |
|
12.9 |
14.3 |
Provisions |
12 |
1.3 |
1.6 |
Deferred tax liabilities |
|
27.9 |
25.3 |
Other non-current liability |
13 |
11.9 |
15.0 |
|
|
|
|
Current liabilities |
|
464.4 |
284.6 |
Borrowings |
14 |
203.6 |
7.9 |
Lease liabilities |
|
4.9 |
4.9 |
Provisions |
12 |
4.1 |
0.9 |
Trade, other payables and accrued liabilities |
|
226.0 |
221.9 |
Current tax liabilities |
|
6.9 |
5.4 |
Other current liabilities |
13 |
18.9 |
43.6 |
Total liabilities |
|
521.7 |
542.3 |
Total equity and liabilities |
|
595.7 |
638.5 |
Condensed consolidated statement of cash flow
Condensed consolidated statement of cash flow
in millions of €
|
2023 |
2022 |
2023 |
2022 |
|
Q2 |
Q2 |
YTD |
YTD |
Operating profit / (loss) |
(2.9) |
(3.1) |
(10.6) |
(148.0) |
|
|
|
|
|
Adjustments for |
|
|
|
|
Depreciation and amortisation |
10.9 |
8.7 |
21.2 |
16.8 |
Movements in provisions per profit and loss |
3.3 |
1.5 |
6.6 |
1.5 |
Share-based payments expense |
0.6 |
2.3 |
0.6 |
22.4 |
De-SPAC related expenses |
- |
2.0 |
- |
14.5 |
De-SPAC listing expense |
- |
- |
- |
107.1 |
Other non-cash items |
- |
2.6 |
- |
2.1 |
|
|
|
|
|
Changes in working capital items: |
|
|
|
|
(Increase)/Decrease in trade and other receivables |
3.9 |
(11.7) |
23.7 |
8.5 |
Increase (Decrease) in trade payables and other payables |
0.2 |
13.0 |
7.9 |
(4.4) |
|
|
|
|
|
Utilization of provisions |
(3.1) |
(0.7) |
(5.2) |
(0.7) |
Interest paid |
(4.8) |
(4.1) |
(8.9) |
(9.4) |
Income tax paid |
(0.6) |
(0.1) |
(0.6) |
(0.5) |
Net cash provided by (used for) operating activities |
7.5 |
10.4 |
34.7 |
9.9 |
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
Payments for property, plant and equipment |
(0.1) |
- |
(0.6) |
(0.9) |
Payments for intangibles |
(5.8) |
(5.0) |
(12.0) |
(9.7) |
Net cash outflow on acquisition of subsidiaries |
(6.8) |
(36.6) |
(25.0) |
(39.2) |
Net cash provided by (used for) investing activities |
(12.7) |
(41.6) |
(37.6) |
(49.8) |
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
Proceeds from external borrowings |
- |
(0.1) |
0.1 |
- |
Repayment of external borrowings |
(1.3) |
(1.3) |
(2.8) |
(3.2) |
De-SPAC related expenses |
- |
(7.5) |
- |
(33.2) |
Payment of principal portion of lease liabilities |
(1.6) |
(1.7) |
(3.3) |
(3.1) |
Proceeds from De-SPAC transaction |
- |
- |
- |
404.1 |
Settlement of De-SPAC transaction |
- |
- |
- |
(310.9) |
Net cash provided by (used for) financing activities |
(2.9) |
(10.6) |
(6.0) |
53.7 |
|
|
|
|
|
Net cash increase / (decrease) in cash and cash equivalents |
(8.1) |
(41.8) |
(8.9) |
13.8 |
Effect of changes in exchange rates on cash and cash
equivalents |
- |
(0.3) |
0.2 |
(0.3) |
Cash and cash equivalents at the beginning of the period |
50.3 |
90.9 |
50.9 |
35.3 |
Cash and cash equivalents at the end of the period |
42.2 |
48.8 |
42.2 |
48.8 |
Condensed consolidated statement of changes in equity
Condensed consolidated statement of changes in equity
In millions of €
|
Share capital |
Share premium |
Treasury shares at cost |
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 1 January 2022 |
- |
0.5 |
- |
19.6 |
1.8 |
0.6 |
34.0 |
(65.1) |
(8.6) |
1.7 |
(6.9) |
Profit for the year |
- |
- |
|
- |
- |
- |
- |
(134.3) |
(134.3) |
1.2 |
(133.1) |
Other comprehensive income / (loss) |
- |
- |
|
5.6 |
- |
(2.0) |
- |
(4.8) |
(1.2) |
(1.4) |
(2.6) |
Total comprehensive income / (loss) |
- |
- |
- |
5.6 |
- |
(2.0) |
- |
(139.1) |
(135.5) |
(0.2) |
(135.7) |
|
|
|
|
|
|
|
|
|
|
|
|
Transactions with owners in their capacity as owners: |
|
|
|
|
|
|
|
|
|
|
|
Borrowings converted to equity |
- |
- |
|
- |
- |
- |
(1.9) |
- |
(1.9) |
- |
(1.9) |
Settlement of share-based payments |
- |
13.1 |
|
- |
(1.8) |
- |
- |
- |
11.3 |
- |
11.3 |
Settlement of Investor share appreciation rights |
- |
1.9 |
|
- |
- |
- |
(1.9) |
- |
- |
- |
- |
Settlement of Acquisition related share appreciation rights |
- |
17.2 |
|
- |
- |
- |
(9.5) |
- |
7.7 |
- |
7.7 |
Withholding wage taxes related to share-based payments |
- |
- |
|
- |
- |
- |
- |
(6.6) |
(6.6) |
- |
(6.6) |
Reverse acquisitions Ef1C1 BV |
0.2 |
28.5 |
|
- |
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 |
Other private placement |
- |
10.5 |
|
- |
- |
- |
- |
- |
10.5 |
- |
10.5 |
Capital restructuring |
1.0 |
(1.0) |
|
- |
- |
- |
- |
- |
- |
- |
- |
Shares issued in new acquisitions |
- |
35.5 |
|
- |
- |
- |
8.3 |
- |
43.8 |
- |
43.8 |
Issuance of Call options |
- |
- |
|
- |
1.6 |
- |
- |
- |
1.6 |
- |
1.6 |
Exercise of Call options |
- |
1.4 |
|
- |
(1.4) |
- |
- |
- |
- |
- |
- |
Other movements |
- |
0.1 |
|
- |
(0.1) |
0.1 |
- |
(1.1) |
(1.0) |
0.9 |
(0.1) |
Total other movements |
1.2 |
130.3 |
- |
- |
11.9 |
0.1 |
(5.0) |
99.4 |
237.9 |
0.9 |
238.8 |
Balance as of 31 December 2022 |
1.2 |
130.8 |
- |
25.2 |
13.7 |
(1.3) |
29.0 |
(104.8) |
93.8 |
2.4 |
96.2 |
Profit for the year |
- |
- |
- |
- |
- |
- |
- |
(22.5) |
(22.5) |
0.4 |
(22.1) |
Other comprehensive income |
- |
- |
- |
3.3 |
- |
- |
- |
(6.0) |
(2.7) |
2.7 |
- |
Total comprehensive income / (loss) |
- |
- |
- |
3.3 |
- |
- |
- |
(28.5) |
(25.2) |
3.1 |
(22.1) |
|
|
|
|
|
|
|
|
|
|
|
|
Transactions with owners in their capacity as owners: |
|
|
|
|
|
|
|
|
|
|
- |
Dividends paid to non-controlling interests |
- |
- |
|
- |
- |
- |
- |
- |
- |
(0.4) |
(0.4) |
Grant of share-based payments |
- |
- |
|
- |
0.6 |
- |
- |
- |
0.6 |
- |
0.6 |
Vesting of share-based payments |
- |
0.6 |
|
- |
(0.5) |
- |
- |
(0.1) |
- |
- |
- |
Shares issued for last year’s acquisitions |
- |
8.3 |
|
- |
- |
- |
(8.3) |
- |
- |
- |
- |
Exercise of Call options |
- |
0.6 |
|
- |
(0.6) |
- |
- |
- |
0.0 |
- |
- |
Non-controlling interest transaction |
- |
- |
(0.8) |
- |
- |
- |
- |
0.8 |
- |
- |
- |
Other movements |
- |
- |
- |
- |
- |
- |
- |
(0.3) |
(0.3) |
- |
(0.3) |
Total other movements |
- |
9.5 |
(0.8) |
- |
(0.5) |
- |
(8.3) |
0.4 |
0.3 |
(0.4) |
(0.1) |
Balance as of 30 June 2023 |
1.2 |
140.3 |
(0.8) |
28.5 |
13.2 |
(1.3) |
20.7 |
(132.9) |
68.9 |
5.1 |
74.0 |
Notes to the condensed consolidated financial statements
1 General information
Azerion Group N.V. (the ‘Company’) is a listed public company
incorporated in the Netherlands under Dutch law on 25 January 2021
and registered at Boeing Avenue 30, 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 and the
domicile of the Company is in the Netherlands.
The comparative figures in the consolidated financial statements
being compared to the 6 months period ended 30 June 2023 are those
of Azerion Group N.V.
These condensed consolidated financial statements comprise the
Company and its subsidiaries (the ‘Group’ or ‘Azerion’).
2 Preparation basis
These condensed consolidated financial statements have been
prepared in accordance with International Financial Reporting
Standards (IFRS) as adopted by the European Union and in accordance
with Title 9, Book 2 of the Dutch Civil Code (“DCC”).
The condensed consolidated interim financial statements do not
present all the information required for a complete set of annual
financial statements and should be read in conjunction with the
consolidated financial statements of Azerion Group N.V. for the
year ended 31 December 2022.
The consolidated interim financial statements have been prepared
on the historical cost basis unless otherwise indicated. The going
concern basis has been used in preparing the condensed consolidated
interim financial statements as the Management board have a
reasonable expectation that the Group will continue as a going
concern for the foreseeable future.
The condensed consolidated interim financial statements have not
been audited nor reviewed by the Group’s external auditor. The
condensed consolidated interim financial statements were authorized
for issuance by the Management Board on 31 August 2023.
Functional and presentation currencyThese
condensed consolidated financial statements are presented in
millions of euros (€), which is the Group’s presentational currency
and rounded to the nearest hundred thousand unless stated
otherwise.
Comparative informationThe following
comparative figure changes have been and will be reflected in the
quarterly press releases of 2023:
- Headquarter costs allocation towards the segments Platform and
Premium Games have been updated to reflect Gross profit as
preferred allocation methodology
- The accounting for the Azerion Founder Warrants has been
updated to reflect the Annual Report 2022 accounting treatment
change towards Share based payment
- The results of the full year 2022 income tax calculation
finalised post Q4 2022 press release
- Listing expenses and share based payment expenses have been
updated to reflect the Annual Report 2022 applied reclassification
from Other gains and losses towards Other expenses and Personnel
costs respectively.
- Certain statement of financial position classifications have
been updated to reflect the changes applied in Annual Report
2022
Use of estimate 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. These
estimates are inherently subject to judgement and actual results
could differ from those estimates. The estimates, judgements, and
assumptions in applying Azerion Group N.V. accounting policies and
the key sources of estimation uncertainty were the same as those
described in Azerion Group N.V. consolidated annual financial
statements for the year ended 31 December 2022.
3 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
2022 apart from the accounting policies listed below.
Assets classified as held-for-sale
Non-current assets (or disposal groups) are classified as
held-for-sale if their carrying amounts are expected be recovered
principally through a sale transaction rather than through
continuing use. Non-current assets (or disposal groups) classified
as held-for-sale are measured at the lower of their carrying amount
or the fair value less costs of disposal; except for assets such as
deferred tax assets, assets arising from employee benefits,
financial assets that are carried at fair value and inventory which
are specifically exempt from this requirement. Depreciation or
amortisation of an asset ceases when it is classified as
held-for-sale.
New standards
A number of new standards are effective from 1 January 2023,
these are not identified to have a material impact on the Group’s
condensed consolidated interim financial statements. The Group has
not early-adopted any standard, interpretation, or amendment that
has been issued but is not yet effective and endorsed.
4 Risk Management
The consolidated annual financial statements as at 31 December
2022 describe the principal material risks that could impact
Azerion’s business and the industries it operates in. The risk
categories described therein remain valid and should be read in
conjunction with the condensed consolidated interim financial
statements.
5 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, advertising activity is generally
highest during the winter holiday season (to reflect consumer
spending). The Company expects these patterns to continue over the
long-term with Azerion benefitting from an increasingly scaled and
diverse customer and partner base business model over time.
6 Operating segments
Products and services from which reportable segments
derive their revenuesInformation 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 generates
certain classes of revenue and incurs certain classes of expenses.
The principal business activities generate revenue through Platform
and Premium Games. The Group’s reportable segments in 2023 under
IFRS 8 are therefore as follows:
Segment market revenues
The Group generates revenue from the sales generated by the
Platform and Premium Games segments.
Amongst the most important categories of customers and suppliers
are the global and independent advertising agencies, large and
small corporate advertisers, publishers of digital content,
multinational technology companies that is specialized in
internet-related services and products, game creators and the
gaming community.
Segment revenues
The following is an analysis of the Group’s revenue by
reportable segment in H1 2023:
Analysis of the Group’s revenue by reportable segment
in millions of €
|
Premium Games 2023 |
Platform 2023 |
Consolidated 2023 |
External revenue |
45.7 |
189.0 |
234.7 |
Inter segment revenue |
0.1 |
(0.1) |
- |
Total revenue |
45.8 |
188.9 |
234.7 |
Disaggregation of revenue from contracts with
customers
In the following table, revenue from contracts with customers is
disaggregated by country of origin:
Disaggregation of revenue from customers by country of
origin
in millions of €
|
2023 |
2022 |
The Netherlands |
43.8 |
33.1 |
Ireland |
30.1 |
26.2 |
Germany |
28.5 |
24.1 |
France |
16.2 |
13.1 |
Great Britain |
15.5 |
13.7 |
Sweden |
8.8 |
8.1 |
Other European countries |
37.4 |
32.8 |
United States |
28.5 |
24.1 |
Other countries |
25.9 |
23.1 |
Total revenue from contracts with customers |
234.7 |
198.3 |
7 Assets classified as held for
sale
1 August 2023 Azerion announced the divestment of the social
card games portfolio to Playtika Holding Corp. The sale was
completed on 28 August 2023.
The social card games portfolio is reported as a part of segment
Premium Games.
As of Q2 2023, the social card games portfolio has been
classified as held for sale.
Set out below are the ending balance values of the major classes
of assets of the social card games portfolio that will transfer to
Playtika Holding Corp. reported as held for sale as per 30 June
2023.
Assets classified as held for sale
in millions of €
|
30 June 2023 |
Intangible assets |
8.6 |
Assets classified as held for sale |
8.6 |
8 Property plant and
equipment
Property, plant and equipment consists of right of use assets,
equipment and leasehold improvements. At 30 June 2023, property
plant and equipment amounted € 18.7 million (31 December 2022: €
20.5 million).The balance decreased by € (1.8) million, mainly due
to € (3.9) million of depreciation offset by € 2.1 million of net
additions to Right of use Buildings.
9 Intangible assets
Intangible assets consist of games, software, websites, client
lists and trademarks. As at 30 June 2023, continued intangible
assets amounted to € 172.1 million (31 December 2022: € 186.2
million). The balance decreased by € (14.1) million, which is
mainly due to € (17.3) million of amortization, € (8.6) million of
assets reclassified into asset held for sale and € (1.4) million
due to updates in the fair value of 2022 acquisitions. This is
offset by € 10.2 million of capitalized internal development costs
and € 2.6 million of additions mainly related to Games and
Software.
Amortization amounted to € (17.3) million for the period January
- June 2023. Amortization of the respective intangible assets
categories were as follow: games, software and websites amounted to
€ (12.5) million, client lists amounted to € (3.3) million while
trademarks amounted to € (1.1) million.
10 Goodwill
Goodwill as at 30 June 2023 amounted to € 184.9 million (2022: €
184.2 million), an increase of € 0.7 million compared to 31
December 2022. This was mainly due to € 1.1 million updates in the
fair value of identifiable assets related to 2022 acquisitions
offset by € (0.4) million of currency translation impact, both in
the Platform segment.
At 30 June 2023 allocated goodwill to be reported part of the
gain on sale of the social card games portfolio amounted to € 18.2
million.
As a result of the strategic decision to sell the social card
games portfolio, the Group performed a review of goodwill for
impairment within the Premium Games groups of CGUs excluding the
social card games portfolio. The carrying amounts of the CGUs were
compared to their respective recoverable amounts with no impairment
identified. The recoverable amount of the Premium Games CGU was
determined through value-in-use calculations, discounting estimated
future cash flows using a pre-tax discount rate. Impairment tests
on assets held for sale were based on their fair value less costs
of disposal.
11 Equity
Share capitalAs at 30 June 2023, the authorized
share capital of Azerion Group N.V. comprised 181,561,748 ordinary
shares (31 December 2022: 181,561,748 ordinary shares) with a par
value of € 0.01 per share and zero preference shares with no par
value. As of June 2023, 120,185,493 were placed and paid up
amounting to a total of € 1.2 million share capital (31 December
2022: € 1.2 million).
Share premiumAs at 30 June 2023, the share
premium amounted to € 140.3 million (31 December 2022: € 130.8
million). The increase in the share premium is a result of the
issuance of share consideration related to 2022 acquisitions
amounting to € 8.3 million, the vesting of the SARs as part of the
Annual Executive Incentive Plan amounting to € 0.6 million, the
exercise of call options (Davey Call Option) for € 0.6 million.
Treasury shares at costIn February 2023, 49% of
the shares in Admeen B.V. (owned at 100% as at 31 December 2022)
were sold. Purchase consideration was 220,793 shares of Azerion
Group N.V. with a fair value of € 0.8 million at transaction
date.
Legal reserveAs at 30 June 2023, pursuant to
Dutch law, certain limitations exist relating to the distribution
of shareholders’ equity of € 68.9 million. These limitations relate
to legal reserves required by Dutch law of € 28.5 million (31
December 2022: € 25.2 million). The legal reserve movement in 2023
is comprised of € 3.3 million relating to capitalized development
costs for the Group’s developed technology and is not freely
distributable to shareholders.
Share-Based payment reserveIn 2023, the
following plans were carried forward:
- Share Based payment granted by EFIC1 in the De-SPAC Transaction
- (Conditional) Special shares
- Option to acquire Special Shares (Davey Call option)
- HTP Call Option
- Azerion founder Warrants
- Management Board Long-Term Incentive Plan (LTIP)
- Annual Executive Incentive Plan
As at 30 June 2023, the share-based payment reserve amounted to
€ 13.2 million (31 December 2022: € 13.7 million). The movement of
the period mostly relates to the exercise of € (0.6) million of
call options (Davey Call Option). Further, in April 2023, € 0.6
million of share-appreciation rights related to the Annual
Executive Incentive Plan were granted, of which € (0.5) million
vested at grant date.
Currency translation reserveAs at 30 June 2023
the currency translation reserve amounted to € (1.3) million (31
December 2022: € (1.3) million). The translation reserve comprises
foreign currency differences arising from the translation of the
assets and liabilities of non-Group currency reporting foreign
operations of Azerion Group N.V. (excluding amounts attributable to
non-controlling interests).
Other equity instrumentsAs at 30 June 2023,
other equity instruments amounted to € 20.7 million (31 December
2022: € 29.0 million).
Shareholder loans
As at 30 June 2023, Azerion Group N.V. had € 14.9 million (31
December 2022: € 14.9 million) of loans from related parties that
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 Group N.V. The loans are
redeemable by issuing 2,621,513 shares in the issued share capital
of Azerion Group N.V. The loans have a maturity date of 28 April
2024, the company has no obligation to pay interest.
Share consideration for acquisitions
As at 30 June 2023 € 5.8 million of share options (31 December
2022: € 14.1 million) remained outstanding. The decrease of € 8.3
million related to share consideration of 2022 acquisitions that
was issued in the first half of 2023 and resulted in an increase in
share premium.
The remaining € 5.8 million relates to the issuance of share
options as part of the acquisition of the remaining 49% in Sulake
during 2020. Based on the share purchase agreement the Company
should have settled the transaction by 31 December 2022 latest. The
Company had the option to settle either in cash or shares. However,
the counterparty in question disputed Azerion’s right to settle in
shares. The dispute is subject to arbitration in 2023.
Movements in retained earningsAs at 30 June
2023 the retained earnings amounted to € (132.9) million (31
December 2022: € (104.8) million). € (28.5) million relates to the
total comprehensive income for the half year attributable to the
owners of the company.
In February 2023, 49% of the shares from Admeen B.V. (owned at
100% as at 31 December 2022) were sold. Purchase consideration was
220,793 shares of Azerion Group N.V. with a total transaction date
fair value of € 0.8 million. The transaction resulted in Treasury
share at cost decrease of (0.8) million and recognition of € 2.7
million in non-controlling interests.
Further, based on the terms and conditions of the Executive
Annual Incentive Plan granted in April 2023 and vested at grant
date, the Company paid € (0.1) million of wage taxes related to
share-based payments. This amount is deducted from equity as a net
settlement of the share-based payment in accordance with
IFRS2.33E-33H.
12 Provisions
As at June 2023, provisions (current and non-current) amounted
to € 5.4 million (31 December 2022: € 2.5 million). The balance
increased by € 2.9 million and is mainly explained by the
following:
Commercial litigationAs of June 2023,
commercial litigation provisions amounted € 1.5 million (31
December 2022: € 0.5 million). The balance increased by € 1.0
million in the period mainly explained by:
A balance sheet reclassification made in Q1 2023 related to a
legal claim part of an acquired company in 2022 from Trade and
other payables to Provisions of € 1.1 million. The legal claim had
in first half year a € 0.1 utilization for legal fees incurred.
A legal claim settled in Q2 2023 for € 0.4 million with a
related release of € 0.6 million. As at 30 June 2023, € 0.2 million
of the settlement has been paid. The remaining € 0.2 million will
be paid in Q3 2023.
All commercial litigation provisions are expected to be paid
within one year.
RestructuringAs of June 2023, the restructuring
provision amounted € 2.7 million (2022 : € 0.3 million) an increase
of € 2.4 million. Azerion has initiated a restructuring plan
designed to continue the integration of acquired businesses,
improving efficiency and focusing on key strategic opportunities.
As a result, a restructuring provision in the amount of € 7.4
million was recorded in the first half of 2023 (2022: € 1.9
million) consisting primarily of employee contract termination
costs. Total provision utilization in the first half of 2023
amounted to € (5.0) million (2022: € (1.6) million), out of which €
0.3 million related to the 2022 restructuring plan and € 4.7
million to restructuring plans of 2023. The balance is expected to
be utilized in the second half year of 2023.
Other litigationAs of June 2023, other
litigation amounted € 0.3 million (2022 : € 0.7 million) and relate
to non-commercial litigation. The balance decreased by € (0.4)
million due to settlements concluded during the period.
13 Other liabilities
As at 30 June 2023, other liabilities (current and non-current)
amounted to € 30.8 million (2022: € 58.6 million) and mainly
consisted of deferred consideration, contingent consideration,
Public and Founder Warrants, postponed wage taxes and acquisition
SARs.
As at 30 June 2023, deferred and contingent consideration
positions amounted to € 24.0 million (2022 : € 45.3 million), the
movement was mainly due to pay out of the deferred and contingent
of acquired companies.
As at 30 June 2023, Public and Founder Warrants amounted € 0.4
million (2022: € 4.5 million), the movement of the period amounted
to a fair value gain of € 4.1 million, included in Finance
Income.
The Public and Founder warrants are classified as financial
liabilities and are measured at their fair value, and changes
therein are recognised in profit or loss. The fair value
measurement of warrants is as follows:
- The Public Warrants are listed at the Amsterdam Stock Exchange;
the listed warrant price at the end of a reporting period is
applied. This is a Level 1 valuation technique. The listed warrant
price moved from € 0.20 at 31 December 2022 to € 0.02 at 30 June
2023.
- The terms and conditions of the Founder Warrants are closely
comparable to those of the Public Warrants. The Group applies the
market price of the listed Public Warrants at the end of a
reporting period to measure the liability regarding the Founder
Warrants. This is a Level 2 valuation technique. Besides the market
price of the Public Warrants no other inputs are used.
Public and founder warrants
14 Borrowings
Borrowings as at 30 June 2023 are mainly comprised of Senior
secured bonds of € 200.8 million (31 December 2022: € 199.8
million) and Debt to credit institutions amounting to € 6.0
million (31 December 2022: € 9.5 million). As at 30 June 2023, the
Senior secured bonds have been reclassified from non-current to
current with a maturity date within the next 12 months.
During first half of 2023, increase in senior secured bonds is
related to amortisation of capitalized transaction cost. The
decrease in debt to credit institutions in the same period is due
to repayments in line with contractual terms.
Borrowings of the Group are carried at amortized cost using the
effective interest method. The fair values of these instruments are
not materially different from their carrying values.
15 Income tax
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 for the six months
ended 30 June 2023 was negative 23,8 %. The main contributors to
the effective tax rate deviating from the Company’s tax rate is the
non-recognition of available tax losses, non-deductible expenses
and an identified error related to previous year resulting in a
derecognition of a deferred tax asset of € 1.5 million.
The divestment of the social card games portfolio includes a €
1.3 million deferred tax liability, which materializes at the
moment of completion of the transaction.
16 Earnings per share
Basic loss per shareBasic profit/(loss) per
share
in €
|
30 June 2023 |
30 June 2022 |
Total basic profit/(loss) per share attributable to the ordinary
equity holders of the company |
(0.19) |
(1.30) |
Profit/(loss) in calculating profit/(loss) per share
in millions of €
|
30 June 2023 |
30 June 2022 |
Loss from operations as presented in the statement of profit or
loss |
(22.1) |
(144.8) |
Less: Loss from operations attributable to non-controlling
interests |
(0.4) |
0.1 |
Loss attributable to the ordinary equity holders of the company
used in calculating basic earnings per share: |
(22.5) |
(144.7) |
Weighted average number of shares used as the denominator
in number of shares
|
30 June 2023 |
30 June 2022 |
Weighted average number of ordinary shares used as the denominator
in calculating basic loss per share |
119,495,416 |
111,624,272 |
Diluted loss per shareThe dilutive potential
common shares are not taken into account in the periods for which
there is a loss as the effect would be antidilutive.
Diluted profit per share
in €
|
30 June 2023 |
30 June 2022 |
Total diluted profit/(loss) per share attributable to the ordinary
equity holders of the company |
(0.14) |
(0.95) |
Weighted average number of shares used as the denominator
in number of shares
|
30 June 2023 |
30 June 2022 |
Weighted average number of ordinary shares used as the denominator
in calculating diluted loss per share |
160,792,284 |
152,697,499 |
17 Subsequent events
Cancellation of Treasury sharesOn 23 August
2023 Azerion announced the completion of the cancellation of
58,690,961 of its ordinary shares held in treasury in line with the
resolution of the company’s shareholders at the Annual General
Meeting held on 15 June 2023.
After the cancellation, a total of 2,906,088 Azerion ordinary
shares will remain held in treasury for purposes including employee
bonus schemes, earn outs from previous acquisitions of the Company
and other general corporate purposes.
As of 25 August 2023 the number of shares listed and traded on
Euronext Amsterdam equates to 122,870,787, reflecting the cancelled
treasury shares.
Completion of the social card games portfolio
divestmentOn 28 August 2023 Azerion completed the sale of
its social card games portfolio to Playtika Holding Corp.
The sale has estimated total proceeds of approximately € 100
million with a potential maximum earnout up to € 150 million. The
gain on sale is estimated at approximately € 70 million before
income tax.
The initial cash consideration from the sale is € 81.3 million,
subject to customary adjustments. On 28 August 2023, Azerion
received approximately € 67 million. Subject to the terms and
conditions of the asset purchase agreement, the remaining cash
proceeds relating to the performance based earnout and other
contractual terms will be received in approximately 15 months’
time.
The earnout consideration is based on the Adjusted EBITDA, as
defined in the asset purchase agreement, of the social card games
portfolio for the period running from 1 October 2023 until 30
September 2024 (the “Earnout Period”), and calculated by
multiplying the incremental Adjusted EBITDA of the social card
games portfolio above the "Baseline" (as defined below) by a
multiple of between 6 and 7 (both inclusive); the specific multiple
to be applied is contingent upon the revenue growth of the social
card games portfolio achieved during the Earnout Period. The
"Baseline" is defined as the last twelve months Adjusted EBITDA on
a carve-out basis of approximately € 13.5 million.
Definitions
Adjusted EBITDA represents operating Profit /
(Loss) excluding depreciation, amortization, impairment of
non-current assets, restructuring and acquisition related expenses
and other items at management discretion.
Adjusted EBITDA Margin represents Adjusted
EBITDA as a percentage of Net revenue
Average gross revenue per million processed ad requests
from the advertising auction platform is calculated by
dividing gross advertising revenue by a million of advertisement
requests running through advertising auction platform Improve
Digital. Not all advertisement requests are processed and become
eligible to be fulfilled as an advertisement sold, therefore this
metric measures the 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
the games. This demonstrated their engagement with the games, which
generates more opportunities to grow the ARPDAU.
Average DAUs represents average daily
active users, which is the number of distinct users per day
averaged across the relevant period.
Average ARPDAU represents 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.
EBITDA represents operating Profit / (Loss)
excluding depreciation, amortization and impairment of non-current
assets
Financial Indebtedness represents as defined in
the terms and conditions of the Senior Secured Callable Fixed Rate
Bonds ISIN: SE0015837794 any indebtedness in respect of:
- monies borrowed or raised. including Market Loans;
- the amount of any liability in respect of any Finance
Leases;
- receivables sold or discounted (other than any receivables to
the extent they are sold on a non-recourse basis);
- any amount raised under any other transaction (including any
forward sale or purchase agreement) having the commercial effect of
a borrowing;
- 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);
- 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
- (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 represents Gross Profit as
a percentage of Net revenue
Gross Profit represents the profit made after
subtracting from Net revenue all (variable) costs that are related
to manufacturing of its products or services.
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
Group N.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 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 2022.
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 Group N.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 Group N.V.’s cash flow based on IFRS.
Even though the non-IFRS financial measures are used by management
to assess 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 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. The Company is 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 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.com Media relations:
press@azerion.com
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