Annual Report (ESEF) • Apr 26, 2023
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Download Source FileReport of the Board
Letter from the Chairman
When the Supervisory Board was established to support Azerion’s entry in the stock market, I had the privilege to become its chairperson. Our main goal is to support Azerion to build a track record as a public company.
Building a track record
2022 was a year of delivery, further building on a strong foundation created over previous years. Besides growing the organic business, Azerion completed new acquisitions and continued the integration of previous ones. Despite macroeconomic challenges, the company reported a strong set of results and generated healthy cash flows, which further funded growth. This encouraging performance is delivered by a strong management team. When meeting new challenges, they face these head on, bolstering their confidence to take the next steps in Azerion’s path to become the go-to-partner for advertisers.
During the year Azerion executed a capital raise of €10.5 million, predominantly supported by the co-CEOs and founders, demonstrating their commitment to Azerion’s growth.
Governance
The company undertook important steps in 2022 to institutionalise compliance, risk management and transparency. Azerion simplified its accounting systems, financial processes and reporting structure with the merger of Azerion Group N.V. and Azerion Holding B.V. Although I recognise that these are important steps, there are more improvements to strive for. In the Supervisory Board, we are driving corporate governance and guarding our boundaries, while appreciating Azerion’s entrepreneurial DNA, which is one of its key success factors. This is the balance that we are continuously striking in Azerion’s journey as a public company. We discuss the recent events relating to the investigation by the AFM in the Risk Management section of the Annual Report.
Outlook
The fundamentals for digital advertising are strong, with ever growing online audiences. For 2023, the Supervisory Board will support Azerion to keep the focus on its operational and financial performance, further simplification of legal structure and fund-raising activities.
My appreciation goes to all internal Azerion teams, thank you for all your hard work. Your capabilities make the company strong and resilient to face future challenges. Thank you as well to our partners, stakeholders and shareholders for your continued support.
Peter Tordoir
Chairman of Azerion’s Supervisory Board
Message from the CEO
2022 will go down in the Azerion history books as a milestone year. We listed on the stock market, delivered on our financial targets, broadened our products and services portfolio and reached even larger and more diversified audiences. Every year we witness larger online audiences fuelling the digital advertising market. We began as a game company and have evolved to a platform that connects content creators and audiences through advertisement. Using the online game industry as a bridge into the digital world, we have gained a strong understanding of how internet users behave online and have applied these learnings in non-game content, as we progressively grow our footprint in the digital advertisement world. As we continue to grow our platform, innovate and expand our technology, we become an increasingly valuable one-stop-shop for advertisers worldwide. In a rapidly growing and fragmented market, we are emerging as one of the key consolidators, particularly in Europe, by setting out a clear target to create an integrated advertising platform that is easy-to-use, competitively-priced and brand-safe.
Listing Azerion was an important milestone for our company, as this further strengthened our recognition amongst our clients, partners and peers. This is evident by the increasing number and quality of partnerships we have with advertisers and premium content publishers. The network effects of our business are clear, companies want to work with us to distribute and monetise their content and connect advertisers to engaged digital audiences. Last year we made several acquisitions to compliment our organic growth with new technologies, capabilities and reach. Our financial performance continued to improve, despite macroeconomic volatility as we further integrated our acquisitions and increased volumes across our owned and operated platform. 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 have grown direct sales from our local offices to advertisers and expanded our publisher monetisation services. As we accelerate the integration of acquisitions, we expect more value to be unlocked for Azerion. Together with the management team, I am excited to bring Azerion’s vision, mission and strategy into practice, and see all the progress we have achieved to deliver profitable organic growth. Our fundamentals for the digital advertising market are strong, as audiences move more and more to digital. Our value proposition to advertisers, digital publishers, game creators and consumers makes us a truly innovative and differentiated platform and as we gain market share, we are set to continue growing while improving our profitability.
Umut Akpinar
co-CEO and co-Founder of Azerion
Consolidated statement of financial position
| 2022 | 2021 | |
|---|---|---|
| ASSETS | ||
| Non-current assets | ||
| Property, plant and equipment | 36,987 | 30,615 |
| Intangible assets | 1,096,276 | 746,139 |
| Investments in equity accounted investees | 7,279 | 4,643 |
| Other non-current financial assets | 10,862 | 7,016 |
| Deferred tax assets | 15,433 | 13,807 |
| Total non-current assets | 1,166,837 | 802,220 |
| Current assets | ||
| Inventories | 20,442 | 14,782 |
| Trade and other receivables | 334,613 | 244,481 |
| Other current financial assets | 18,971 | 14,681 |
| Cash and cash equivalents | 195,422 | 164,388 |
| Total current assets | 569,448 | 438,332 |
| TOTAL ASSETS | 1,736,285 | 1,240,552 |
| EQUITY AND LIABILITIES | ||
| Equity | ||
| Issued capital | 3,411 | 3,161 |
| Share premium | 442,708 | 439,297 |
| Other reserves | 84,664 | 67,873 |
| Reserve of share-based payments | 17,400 | 14,117 |
| Reserve of exchange differences on translation | 3,970 | (4,688) |
| Other equity instruments | 11,118 | 11,118 |
| Retained earnings | 139,388 | 67,958 |
| Equity attributable to owners of parent | 702,659 | 598,826 |
| Non-controlling interests | 28,106 | 18,218 |
| Total equity | 730,765 | 617,044 |
| Non-current liabilities | ||
| Loans and borrowings | 193,970 | 124,478 |
| Lease liabilities | 24,587 | 21,628 |
| Provisions | 11,738 | 8,982 |
| Deferred tax liabilities | 25,695 | 12,950 |
| Total non-current liabilities | 256,990 | 168,038 |
| Current liabilities | ||
| Trade and other payables | 276,489 | 210,193 |
| Loans and borrowings | 356,410 | 185,915 |
| Lease liabilities | 9,198 | 8,026 |
| Provisions | 17,433 | 51,336 |
| Current tax liabilities | 19,000 | 0 |
| Total current liabilities | 678,530 | 455,470 |
| Total liabilities | 935,520 | 623,508 |
| TOTAL EQUITY AND LIABILITIES | 1,736,285 | 1,240,552 |
Consolidated statement of profit or loss and other comprehensive income
| 2022 | 2021 | |
|---|---|---|
| Revenue | 1,028,037 | 753,448 |
| Cost of sales | (543,385) | (390,280) |
| Gross profit | 484,652 | 363,168 |
| Other income | 2,158 | 1,275 |
| Selling and marketing expenses | (108,345) | (83,970) |
| General and administrative expenses | (76,796) | (59,381) |
| Research and development expenses | (17,063) | (11,967) |
| Other expenses | (1,342) | (4,603) |
| Amortisation and depreciation | (58,747) | (39,189) |
| Operating profit before finance income and costs | 234,412 | 170,449 |
| Finance income | 2,503 | 1,726 |
| Finance costs | (15,462) | (12,056) |
| Impairment losses on financial instruments | (1,401) | (1,319) |
| Profit before tax | 219,052 | 157,799 |
| Income tax expense | (33,332) | (26,828) |
| Profit for the year | 185,720 | 130,971 |
| Other comprehensive income | ||
| Items that will not be reclassified to profit or loss: | ||
| Other comprehensive income relating to investments in equity accounted investees | 1,743 | 62 |
| Items that may be reclassified subsequently to profit or loss: | ||
| Exchange differences on translation of foreign operations | 8,658 | (4,750) |
| Other comprehensive income for the year, net of tax | 10,401 | (4,688) |
| Total comprehensive income for the year | 196,121 | 126,283 |
| Profit attributable to: | ||
| Owners of the parent | 177,116 | 123,095 |
| Non-controlling interests | 8,604 | 7,876 |
| Total comprehensive income attributable to: | ||
| Owners of the parent | 187,795 | 121,358 |
| Non-controlling interests | 8,326 | 4,925 |
Consolidated statement of changes in equity
| Share capital | Share premium | Other reserves | Reserve of share-based payments | Reserve of exchange differences on translation | Other equity instruments | Retained earnings | Equity attributable to owners of parent | Non-controlling interests | Total equity | |
|---|---|---|---|---|---|---|---|---|---|---|
| Balance at 1 January 2021 | 3,161 | 439,297 | 67,873 | 14,117 | (4,688) | 11,118 | 67,958 | 598,826 | 18,218 | 617,044 |
| Profit for the year | 123,095 | 123,095 | 7,876 | 130,971 | ||||||
| Other comprehensive income for the year, net of tax | (4,750) | (4,750) | 4,925 | (4,688) | ||||||
| Total comprehensive income for the year | (4,750) | 123,095 | 118,345 | 12,801 | 126,283 | |||||
| Transactions with owners, recorded separately: | ||||||||||
| Issue of shares | 250 | 6,112 | 6,362 | 6,362 | ||||||
| Share-based payments | 2,965 | 2,965 | 2,965 | |||||||
| Dividends | (53,432) | (53,432) | (53,432) | |||||||
| Acquisition of non-controlling interests | (1,318) | (1,318) | ||||||||
| Balance at 31 December 2021 | 3,411 | 445,409 | 67,873 | 17,082 | (9,438) | 11,118 | 137,621 | 671,676 | 29,701 | 701,377 |
| Profit for the year | 177,116 | 177,116 | 8,604 | 185,720 | ||||||
| Other comprehensive income for the year, net of tax | 8,658 | 8,658 | 8,326 | 10,401 | ||||||
| Total comprehensive income for the year | 8,658 | 177,116 | 185,774 | 16,930 | 196,121 | |||||
| Transactions with owners, recorded separately: | ||||||||||
| Share-based payments | 3,283 | 3,283 | 3,283 | |||||||
| Dividends | (205,200) | (205,200) | (205,200) | |||||||
| Acquisition of non-controlling interests | (20,849) | (20,849) | ||||||||
| Balance at 31 December 2022 | 3,411 | 445,409 | 67,873 | 20,365 | (780) | 11,118 | 109,537 | 647,933 | 25,789 | 673,722 |
| Note: The equity figures in the previous table were incorrectly reported. The correct figures are as follows: | ||||||||||
| Balance at 31 December 2022 | 3,411 | 442,708 | 84,664 | 17,400 | 3,970 | 11,118 | 139,388 | 702,659 | 28,106 | 730,765 |
Consolidated statement of cash flows
| 2022 | 2021 | |
|---|---|---|
| Cash flows from operating activities | ||
| Profit before tax | 219,052 | 157,799 |
| Adjustments for: | ||
| Amortisation and depreciation | 58,747 | 39,189 |
| Impairment losses on financial instruments | 1,401 | 1,319 |
| Share-based payments | 3,283 | 2,965 |
| Gain on disposal of property, plant and equipment | (11) | (15) |
| Finance income | (2,503) | (1,726) |
| Finance costs | 15,462 | 12,056 |
| Interest income from lease liabilities | (401) | (371) |
| Changes in operating assets and liabilities: | ||
| Increase in trade and other receivables | (89,731) | (64,456) |
| Increase in inventories | (5,660) | (1,901) |
| Increase in trade and other payables | 65,578 | 50,451 |
| Increase in provisions | (26,705) | 42,354 |
| Other non-cash movements | 3,379 | 3,734 |
| Cash generated from operations | 237,254 | 297,614 |
| Interest paid | (14,470) | (11,282) |
| Income tax paid | (32,692) | (28,043) |
| Net cash from operating activities | 190,092 | 258,289 |
| Cash flows from investing activities | ||
| Purchase of property, plant and equipment | (12,607) | (8,231) |
| Purchase of intangible assets | (348,137) | (133,572) |
| Proceeds from disposal of property, plant and equipment | 11 | 15 |
| Acquisition of subsidiaries, net of cash acquired | (225,829) | (84,634) |
| Investment in associates | (2,636) | (4,617) |
| Repayment of loan to related parties | 7,883 | |
| Net cash used in investing activities | (581,105) | (231,039) |
| Cash flows from financing activities | ||
| Proceeds from issuance of shares | 10,500 | 6,362 |
| Proceeds from borrowings | 372,296 | 178,628 |
| Repayment of borrowings | (154,496) | (64,730) |
| Repayment of lease liabilities | (16,893) | (13,433) |
| Dividends paid | (205,200) | (53,432) |
| Acquisition of non-controlling interests | (20,849) | (1,318) |
| Net cash from financing activities | 18,058 | 76,485 |
| Net increase in cash and cash equivalents | (172,955) | 103,735 |
| Cash and cash equivalents at beginning of year | 164,388 | 60,653 |
| Cash and cash equivalents at end of year | 190,092 | 164,388 |
| Cash and cash equivalents include: | ||
| Restricted cash | 0 | 0 |
| Cash and cash equivalents | 190,092 | 164,388 |
| Reconciliation of cash and cash equivalents | ||
| Cash and cash equivalents | 195,422 | 164,388 |
| Less: Restricted cash | 0 | 0 |
| Total cash and cash equivalents | 195,422 | 164,388 |
| Changes in liabilities arising from financing activities | ||
| Beginning of year | ||
| Loans and borrowings | 310,393 | 193,358 |
| Lease liabilities | 29,654 | 21,862 |
| Total liabilities from financing activities | 330,047 | 215,220 |
| Changes from cash flows | ||
| Proceeds from borrowings | 372,296 | 178,628 |
| Repayment of borrowings | (154,496) | (64,730) |
| Repayment of lease liabilities | (16,893) | (13,433) |
| Changes from non-cash activities | ||
| Acquisition of subsidiaries | 110,995 | 32,356 |
| Foreign exchange differences | 6,071 | (2,942) |
| End of year | ||
| Loans and borrowings | 550,376 | 310,393 |
| Lease liabilities | 19,001 | 29,654 |
| Total liabilities from financing activities | 569,377 | 340,047 |
Notes to the Consolidated financial statements
1. Company information
Azerion Group N.V. (the "Company") is a public limited liability company incorporated in the Netherlands. The Company's registered office is located at Radarweg 10, 1043 NX Amsterdam, the Netherlands. The Company's shares are listed on Euronext Amsterdam.
2. Basis of preparation
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union.
3. Significant accounting policies
* Revenue recognition: Revenue is recognised on a gross basis for advertising sales and on a net basis for other services.
* Intangible assets: Intangible assets, including goodwill, are recognised at cost less accumulated amortisation and impairment. Amortisation is recognised on a straight-line basis over the estimated useful lives of the assets.
* Business combinations: Acquisitions of businesses are accounted for using the acquisition method.
4. Segment information
The Group operates in two main segments: Gaming and Advertising.
5. Revenue by segment
| 2022 | 2021 | |
|---|---|---|
| Gaming | 478,231 | 380,123 |
| Advertising | 549,806 | 373,325 |
| Total | 1,028,037 | 753,448 |
6. Employee benefit obligations
The Group operates defined contribution pension plans. Contributions made by the Group are recognised as an expense in the profit or loss.
7. Share-based payments
The Group operates equity-settled share-based payment plans. The fair value of options granted is recognised as an expense over the vesting period.
8. Financial instruments
The Group's financial instruments include trade receivables, trade payables, cash and cash equivalents, borrowings and leases. The Group assesses financial instruments for impairment at each reporting date.
9. Events after the reporting period
No significant events have occurred after the reporting period that require disclosure.
Company financial statements
Company statement of financial position
| 2022 | 2021 | |
|---|---|---|
| ASSETS | ||
| Non-current assets | ||
| Investments in subsidiaries | 781,879 | 781,879 |
| Other non-current financial assets | 61,556 | 58,323 |
| Total non-current assets | 843,435 | 840,202 |
| Current assets | ||
| Trade and other receivables | 22,838 | 17,195 |
| Other current financial assets | 5,000 | 5,000 |
| Cash and cash equivalents | 2,011 | 1,815 |
| Total current assets | 29,849 | 24,010 |
| TOTAL ASSETS | 873,284 | 864,212 |
| EQUITY AND LIABILITIES | ||
| Equity | ||
| Issued capital | 3,411 | 3,161 |
| Share premium | 442,708 | 439,297 |
| Retained earnings | (37,992) | (45,263) |
| Total equity | 408,127 | 397,195 |
| Non-current liabilities | ||
| Loans and borrowings | 160,000 | 130,000 |
| Total non-current liabilities | 160,000 | 130,000 |
| Current liabilities | ||
| Trade and other payables | 254,157 | 305,017 |
| Loans and borrowings | 51,000 | 32,000 |
| Total current liabilities | 305,157 | 337,017 |
| Total liabilities | 465,157 | 467,017 |
| TOTAL EQUITY AND LIABILITIES | 873,284 | 864,212 |
Company statement of profit or loss
| 2022 | 2021 | |
|---|---|---|
| Revenue | 0 | 0 |
| Other income | 3,007 | 2,559 |
| General and administrative expenses | (2,280) | (2,024) |
| Amortisation and depreciation | (1) | (1) |
| Finance income | 19,723 | 12,091 |
| Finance costs | (12,223) | (7,356) |
| Impairment losses on financial instruments | (1,401) | (1,319) |
| Profit/(loss) before tax | 6,825 | 4,950 |
| Income tax expense/(benefit) | 2,030 | 1,621 |
| Profit/(loss) for the year | 8,855 | 6,571 |
Notes to the Company financial statements
1. Basis of preparation
The Company financial statements have been prepared in accordance with IFRS.
2. Investments in subsidiaries
The carrying amount of investments in subsidiaries represents the cost of the investments, adjusted for any impairment losses.
3. Loans and borrowings
Loans and borrowings are recognised at amortised cost.
4. Dividends
The Company has not declared any dividends in the current or prior year.
Other information
Provisions of the Articles of Association relating to profit appropriation
Subject to the provisions of the law and of the Articles of Association, the distributable profits of the Company shall be at the disposal of the General Meeting of Shareholders.
Report of the independent auditor
[Auditor's report not included in the provided text.]# Annual Report 2022
Customers
Azerion
¹Total number of unique users that are reached through all our products, including through our digital publisher network; in September 2022.
²Average number of game titles in September 2022, as part of the GameDistribution portfolio.
³Average monthly number of advertisers placing >1 ad as of September 2022.
⁴Average number of publishers with >1 transaction as of September 2022.
⁵Number of active domains (websites and apps) where >1 paid impressions was shown as of September 2022.
⁶Number of active domains (websites and apps) exclusive to Azerion’s where >1 paid impressions was shown as of September 2022.
⁷Average number of game developers for which Azerion distributes the content, mix of external and internal creators, as of September 2022.
⁸Number of games per month that are activated for distribution in our Casual Distribution channel, mix of external and internal content, as of September 2022.
⁹Total headcount as of 31 December 2022, including this year’s M&A.
¹⁰Number of offices and country of operation as of 31 December 2022, including this year’s M&A.
Azerion is a technology company that operates a proprietary digital advertising platform that reaches consumers with both game and non-game content. It is a full stack provider of online digital advertising services, connecting advertisers with consumers through content providers. Our mission is to be the go-to-partner for advertisers for an easy to-use, competitively priced, brand-safe digital environment.
Increasing numbers of internet users, and their transition to digital forms of entertainment, are accelerating the growth of the digital advertising market. To engage audiences, brands will need to advertise where those audiences are, online. In a market that remains extremely fragmented, advertisers are required to connect with many different service providers to reach their target audience. Azerion is set to be a consolidator in this market and offer one integrated value proposition to advertisers, becoming their go-to-partner for easy-to-use, competitively priced and brand-safe digital environment.
Azerion has grown rapidly by integrating various technology and market leaders to create a platform of scale. Positioned across Europe, and strategically in the US and Asia Pacific, Azerion allows companies to create brand awareness at a global scale. Azerion’s integrated platform partners with digital publishers and game creators to bring content to consumers and connect them to advertisers.
Azerion’s business model was developed around engaging audiences, and initially games were the way into audiences’ hearts. That is why Azerion is proud of its Premium Games business, which has a loyal user base and generates valuable insights into consumer behaviour, unlocking a compelling extended value proposition to advertisers, who are seeking to engage with their audiences in the digital space.
Azerion offers a single service technology platform which allows advertisers, publishers and game creators to automate the purchase and sale of digital gaming and non-gaming content inventory. Azerion’s advertising auction platform is further enriched through the use of its publisher monetisation services, as well as local sales teams adding industry and geographic knowledge to the sale of ads. This unique combination of services and insights provides advertisers greater value of distribution whilst content publishers have more relevant ads displayed, creating an engaging experience for the consumer.
During 2022, Azerion has worked with more than 400,000 advertisers globally and over 300,000 digital publishers using omnichannel solutions across all formats, devices and platforms. Through its platform and taking into account all its products, as at September 2022 Azerion's reach extended to an audience of on average over 500 million unique monthly active users. On average Azerion sells approximately 9 billion digital advertisements on a monthly basis, publishes on average more than 250 new games per month and works with over 1,000 game creators. As at September 2022, Azerion’s platform had a portfolio of more than 20,000 game titles and more than 10,000 exclusive publisher websites. Within its games portfolio, Azerion has nine premium game titles, defined as games where revenue is generated mainly from users making purchases directly in-game.
| Year | Event |
|---|---|
| 2013 | Foundation |
| Focused on social and casual games | |
| 2015 | Expansion into digital goods distribution through Voidu |
| 2016 | Expansion of content offering via several acquisitions |
| 2017 | Content expansion |
| Expansion into ad segment via GameDistribution | |
| Tech expansion / ad network | |
| Geographical expansion | |
| 2018 | Entering into monetisation tech via Improve Digital |
| 2019 | Scale-up through partnerships |
| Launched partnerships with Ajax eSports and Monopoly | |
| 2020 | Integration and expansion |
| Continued integration and expansion of content and monetisation tech ecosystem offering | |
| 2021 | Significant scale up - organically and M&A |
| Further expanding / improving ecosystem with synergy potential | |
| Continued organic and M&A growth | |
| 2022 | Increased focus on integration and scaling of the Platform |
| Listed on Euronext Amsterdam |
Incorporated at the end of 2013, Azerion was active in 2014 with 45 employees. It has grown rapidly over the years through a combination of organic growth and strategic acquisitions. In 2022, Azerion became listed on the Euronext Stock Exchange on the 2nd of February. As of 31 December 2022 Azerion had 1,443 FTEs (2021: 1,242), across 31 offices in 24 countries. Azerion believes that its employees are key to the success of its business as they maintain and develop its relationships with consumers, advertisers, digital publishers, game creators as well as maintain and develop its proprietary technology platform, which is key to the operation of its business.
Azerion considers its platform to be at the center of the global digital advertising environment by providing consumers with scaled, diverse and engaging non-game and game content, whilst solving critical challenges for advertisers, digital publishers and game creators. The diagram below shows a visualisation of Azerion’s platform. Content, data and technology are at the core of Azerion’s platform and serve the needs of each of the stakeholders. There are four broad groups that engage with Azerion’s platform: (1) Advertisers; (2) Consumers; (3) Digital publishers; and (4) Game creators. These groups create, distribute and engage with content. The operations and solutions that Azerion offers to the various groups that interact within its ecosystem generate strong complementary network effects.
Azerion operates its own proprietary one-stop-shop advertising platform which connects advertisers to digital advertising opportunities across digital media channels globally and aims to cater for all the needs of all participants within its ecosystem. In the traditional online advertising value chain, there are many different layers and intermediaries that create a fragmented, complex and costly experience. By owning, operating, and consolidating the various layers into an efficient platform, Azerion is able to offer advertisers greater cost efficiencies and subsequently distribute a greater proportion of advertiser spend with publishers. This creates a competitive advantage for advertisers using Azerion’s technology as they can reach their target audience more efficiently and frequently.
Brands that want to engage with audiences through advertisement typically do so through self managed campaigns or via the services of a media agency that manages campaigns on their behalf. Through Azerion’s automatic auction sales platform and local direct sales teams that operate in numerous markets across the world, advertisers gain access to a global advertisement distribution network. Azerion operates the total programmatic advertisement supply chain, connecting advertisers campaigns via its demand side platforms (DSP), ad networks and supply side platform (SSP) to publisher inventory. Adverts are enriched through Azerion’s advertisement optimization services and allocated to Azerion owned, exclusive or contracted publisher inventory, as well as third party platforms through its SSP solutions.
Offering publisher monetisation services, Azerion enables publishers to optimise the revenue they receive for their inventory. Publishers benefit from Azerion’s advertisement optimization services by supporting them in filtering digital ad formats, target audiences, and other criteria from the advertiser, as well as set different rates for advertisement space for optimum monetisation of inventory. Publisher inventory that Azerion owns, have exclusive rights with or contracted to, that do not meet the criteria of the publisher, is offered to the open market for maximised publisher monetisation. The more captivating the ad is the more memorable and likely the user will engage with the ad. Azerion offers proprietary digital advertising formats for display, video, high impact, mobile, in-app, digital-out-of-home, audio, in-game and hyperlocal channels across all major devices and platforms, driving significantly more user engagement compared to standard digital advertisement formats.# Azerion Group N.V. Annual Report 2022
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Content is key to Azerion’s business and is at the center of its business model. Audiences seek engaging and quality content that is accessible across a variety of devices and platforms. Monitoring trends in the market it is evident that users are increasingly seeking content that is not only digital but is agnostic to desktop and mobile as well as web or app based. User experience needs to be consistent across platforms and devices and blend seamlessly together. At the same time users want to be entertained, with content needing to be engaging, fun and increasingly gamified whilst being reliable, safe, and trustworthy. However, ultimately consumers want to onboard for free. The freemium model is an attractive proposition for advertisers, as well as game and non-game content providers, as this allows greater access to a wider audience. Azerion partners with non-game and game content providers and operates its own game solutions through causal, game distribution and e-commerce platforms.
Through its casual games and free to play (F2P) portals, Azerion offers casual games targeted at a wide, mass-market global audience for mainly PC and mobile users. Casual games generally have an easy-to-understand gameplay with a user interface facilitating short gaming sessions. Although Azerion owns some of the casual games that it offers to its users, most of the casual games that are offered are owned by third parties, with whom a licensing agreement is entered into. F2P portals are web-based platforms through which casual and other F2P games are made available to users. Operating a number of F2P portals users have access to a vast number of F2P casual games. Azerion also develops F2P portals for third parties, such as Gameloft & Cocos. Azerion’s casual games and F2P portals business primarily generate revenue from advertisers paying for access to the users of those games and portals. Revenue generated from advertisements on Azerion’s F2P game portals are shared with the content owners. For F2P game portals that Azerion develops for third parties, revenue generated from advertisements are shared with the F2P operator and the content owners.
Game Distribution is a business-to-business platform for high-quality games targeted at a wide, mass-market audience. Game Distribution helps game developers and other content owners to monetise their games by connecting them with game publishers who can distribute the games to users. Game publishers form the link between the game developers and game users, marketing games to the gaming community and putting those games on the market for users to play. The games offered through Game Distribution primarily comprise casual games
Azerion Group N.V. Annual Report 2022
Company profile
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for PC and mobile. Game Distribution generates revenue predominantly from advertisers paying for access to the users of the games distributed through Game Distribution and, to a lesser extent, from users making in-game purchases. Revenue generated by Game Distribution is shared among the content owners, publishers and Azerion.
Through Azerion’s Fanzone technology, sports clubs are able to engage with their members on an intimate level providing updates on announcements on the team, purchasing game tickets and club merchandise to further stimulate the club community through forums, playing games and more. These branded experiences also present a strong opportunity for advertisers to reach target audiences at scale, utilising Azerion’s core expertise and portfolio of high-performing advertising technology. We leverage our experience in building businesses around audiences to expand into the world of sports, giving advertisers access to one of the most engaged consumer groups in the global market.
Azerion’s sales platforms, Voidu and Genba Digital, enable digital content owners to distribute their games and software content online both to users and to games and software retailers. These sales platforms focus on selling digital access to triple-A games. Voidu is a digital business-to-consumer and e-retailer distribution platform enabling publishers, developers and distributors of games to distribute their games directly to users. Voidu has an extensive catalogue of gaming titles across a wide range of genres for console, PC and mobile devices. It generates revenue from selling games directly to consumers and e-retailers and shares that revenue with the content owners. Genba is a business-to-business digital logistics platform connecting games and software content owners with sales channels around the world. Genba works with publishers distributing games and software products to multiple regions through a network of retailers. Genba generates revenue from selling content through its platform in business-to-business sales and shares that revenue with the content owners.
Azerion partners with hundreds of thousands of digital publishers of all types of content, including digital newspapers, magazines, blogs, websites or music. By way of example, Azerion works with the news media providers Telegraaph, Chicago Turbine, magazine titles such as the Stylist, auction and content sites Ebay and Vice as well as digital music.
Azerion operates nine premium game titles, defined as where it 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 the premium games is to stimulate social interaction among players by encouraging sharing, competing and cooperating with other players, as well as forming social bonds and networks offering an extended value proposition to advertisers and creating cross-selling opportunities with the Platform segment. Premium Games are higher margin businesses which predominantly generate revenue through in-game purchases. The premium games can be divided broadly into metaverse and social card games.
Azerion's social card games are predominantly played on mobile devices and consist of titles: Jackpot, Governor of Poker 3, Governor of Poker 2, Monopoly Poker and Poker World. These social card games are free to play and are driven by in-app purchases that enhance the players in-game experience. Contrary to the title of the games, these social card games do not constitute gambling as they do not facilitate cash out opportunities.
Azerion was one of the first companies to enter the metaverse and continues to be a front runner. Habbo Hotel was founded over 20 years ago and has developed a community of players from over 150 countries. This experience in developing, distributing and monetising the Web 3 has made us an attractive partner for advertisers for in-game branding opportunities and sale of virtual items. We help brands develop and sell digital collectables within the digital world to enhance the user gameplay and experience. The metaverse will continue to grow and offers many cross-selling opportunities for advertisers across our platform.
Azerion’s strategy is to continue its strong revenue and profitability growth in 2023 and onwards, which it will seek to achieve through a combination of organic growth opportunities and value accretive acquisitions. Azerion believes that its integrated platform and strong acquisition track record will enable it to execute and accelerate its buy-and-build strategy across its ecosystem. Azerion has identified four main drivers of continued growth: (i) structural
Azerion Group N.V. Annual Report 2022
Company profile
13
market growth; (ii) platform growth; (iii) platform synergies and (iv) M&A.
Azerion is well positioned to benefit from the anticipated future structural growth in the digital advertising and gaming markets. Ten years ago roughly two and half billion people had access to the internet and it has increased to five billion today. As an increasing amount of the population gain access to the internet the digital advertising market has grown significantly. In the coming years the cumulative average growth rate for the market is expected to grow by a CAGR of approximately 14% between 2022 and 2026, reaching a total market size of approximately $800bn (source: ResearchAndMarkets and “Datareportal – Digital 2022: Global overview report”).
Azerion’s organic growth strategy is centred around a number of drivers to capture market share as organic growth continues to increase in 2023 and onwards. These include, amongst others:
Azerion is focused on realising platform synergies and capturing network effects, including delivering the synergies available from past acquisitions. Azerion realises platform synergies in a number of different ways, including through content, its advertising sales capabilities and its operations and technology. Firstly, Azerion realises synergies through its content by applying enhanced distribution and generating an increased return on investment on user acquisition, which supports an increase in revenue and margin. Secondly, Azerion realises operational synergies through utilisation of its advertising sales teams generating synergies through Azerion’s proprietary technology and content.Lastly, Azerion realises synergies through its operations and technology, for example, by generating operational leverage with shared services, office space, back-office capabilities, hosting and development resources, which supports an increase in margin over time. M&A M&A has been a core element to Azerion's growth since inception with more than 50 acquisitions made in the last seven years. As the company moves forward it will continue to review acquisition opportunities appropriately in order to expand the demand side of its advertising network, geographical reach, quality content offering, margin improvement and synergies between its advertising and gaming platforms. Azerion maintains a visible pipeline of multiple, actionable acquisition targets with a broad range of annual revenue represented by the potential acquisition candidates within that pipeline.
Until 31 January 2022, Azerion Holding B.V. had a management board which comprised of executive directors Mr. Umut Akpinar acting as Co-Chief Executive Officer of Azerion Holding B.V. and Mr. Atilla Aytekin acting as Co-Chief Executive Officer of Azerion Holding B.V.. In addition, Azerion Holding B.V. had an Executive Committee that supported the members of the Management Board in the day-to-day management of Azerion Holding B.V.’s business.
Until 31 January 2022, the Executive Committee consisted of the members of the Management Board and the following additional members (“Executive Committee”):
On 1 February 2022, Azerion Holding B.V. and European FinTech IPO Company 1 B.V. (“EFIC1”), a special purpose acquisition company (SPAC) listed on Euronext Amsterdam, completed a business combination. Pursuant to this business combination, at the EGM of EFIC1 held on 31 January 2022, a two-tier board structure for Azerion Group N.V., the parent company of Azerion Holding B.V., was established comprising for the first time a Supervisory Board and the Management Board.
As of 2 February 2022, the Management Board board comprised of Mr. Umut Akpinar acting as Co-Chief Executive Officer of Azerion Group N.V. and Mr. Atilla Aytekin acting as Co-Chief Executive Officer of Azerion Group N.V. as well as Maria Del Dado Alonso Sanchez as Chief Financial Officer of Azerion Group N.V. The Management Board was supported by an Executive Committee ("Executive Committee") consisting of the following members:
As of 25 May 2022, Mr Ben Davey replaced Ms Maria del Dado Alonso Sanchez as Chief Financial Officer of Azerion Group N.V. and retained his position on the Executive Committee. For more detail on the Supervisory Board and the Corporate Governance proceedings of Azerion Group N.V. following the business combination with EFIC1, please refer to Supervisory Board report, starting on page 47.
The Dutch Corporate Governance Code applies to Dutch companies whose shares are listed on a regulated market or a comparable system. The Dutch Corporate Governance Code applies to Azerion Group N.V., as a result of its listing on Euronext Amsterdam. Azerion recognises the importance of good corporate governance and endorses the core principles of the Dutch Corporate Governance Code and is committed to following the Dutch Corporate Governance Code's best practices. However, considering its interest and the interests of stakeholders, Azerion deviates from a limited number of best practice provisions. A detailed comply-or-explain section in relation to the Dutch Corporate Governance Code, refer to Corporate Governance, starting on page 45.
In its first year as a listed company, the Investor Relations team at Azerion has worked to connect the business, namely senior management, with analysts, shareholders, and investor communities through publishing regular financial information and business updates. Through the continuous engagement with all the capital markets stakeholders, we were able to create greater visibility for the company and further enhance its recognition amongst clients, peers and partners. Across the year Azerion participated and organised various conferences and roadshows in order to increase its visibility in the capital markets. These efforts helped us better understand how our analysts, shareholders and potential investors perceive Azerion. We organised a Strategic Deep dive webcast in November 2022 creating a platform for senior management to clearly explain our business, our recent achievements and the path to delivering on our financial targets.
The business combination resulted in two financial reporting entities, namely Azerion Group N.V. as a listed parent company and Azerion Holding B.V. as a subsidiary with issued and outstanding bonds listed in Sweden. In order to simplify the reporting of financial information in our publications we merged Azerion Group N.V. as the surviving company, with Azerion Holding B.V. as the disappearing company. This legal merger was completed on 31 December 2022 and became effective as of 1 January 2023. This has allowed us to report in a more timely and accurate manner. For our analysts and investors this also created greater transparency as to the financial performance of the business.
Azerion's issued capital and voting rights are notified to the Dutch Authority for the Financial Markets (AFM) accordingly. This reporting can be found in the register issued capital on https://www.afm.nl. Shareholders owning 3% or more of the issued capital and/or voting rights of a listed company must report this to the AFM as soon as this and certain other thresholds are reached or exceeded or crossed. The obligation to notify changes in ownership when a threshold is reached, exceeded or crossed is the responsibility of the respective shareholder. This reporting by shareholders can be found in the ‘Register of substantial holdings and gross short positions' at https://www.afm.nl.
The following table sets out the notifications of substantial shareholdings with the AFM, as at 24 April 2023 :
| Majority shareholder information | in % of ownership | Number of ordinary shares¹ | Ownership percentage against number of ordinary shares outstanding² | Date of last notification at the AFM |
|---|---|---|---|---|
| Principion Holding B.V. | 48,099,992 | 40.1% | 23/05/2022 | |
| U.Akpinar³ | 13,593,750 | 11.3% | 23/05/2022 | |
| A.Aytekin³ | 13,593,750 | 11.3% | 23/05/2022 | |
| H.T.P Investments B.V. | 8,173,174 | 6.8% | 02/02/2022 | |
| Y.Erbas | 7,500,000 | 6.3% | 23/05/2022 |
¹ As recorded in the AFM Register of substantial holdings and gross short positions.
² Implied capital interest percentage based on number of Ordinary Shares outstanding (excl. Treasury) as at 15 February 2023, as presented on the Investor section of Azerion's website. As such, the implied percentages differ from the percentages shown in the AFM Register of substantial holdings and gross short positions, since the AFM percentages are based on all capital instruments (e.g. including Treasury Shares and not limited to Ordinary Shares alone).
³ Co-founders and Co-CEOs U. Akpinar and A. Aytekin have participated in an equity capital raise, both reporting an additional 686,813 acquired ordinary shares in Azerion Group N.V. on 19 July 2022. These additional shares are recorded separately in the AFM "Register notifications directors and members of the supervisory board".
Azerion has an Investor Relations page on our website where, among other information, our financial calendar, annual reports, press releases, presentations, webcasts, and shareholder information is readily available to the public. Investor Relations is the primary point of contact for all potential and current shareholders, bondholders, analysts, and other stakeholders. Azerion aims to always act with integrity and in compliance with all applicable laws, regulations, and best practices. To ensure compliance and transparency, the ‘Investor Relations Privacy Policy’ was adopted and is reviewed annually to remain current. This policy can be found published on our website.
Azerion is organised broadly by way of two different segments: Platform and Premium Games. The Platform segment contains our advertising, casual games, games distribution and e-commerce activities. The Premium Games segment contains our highest user engagement titles, monetised primarily through in-app purchases. The Dutch structure regime (structuurregime) is not applicable to Azerion.
Azerion has experienced rapid expansion since 2014, driven by both organic activities and strategic acquisitions. Azerion remained a highly active acquirer in 2022, completing a number of transactions as described more fully below:
These acquisitions served to expand and solidify Azerion’s European footprint in our Platform segment, while adding selected technological capabilities to our programmatic advertising solutions portfolio.# Azerion Group N.V. Annual Report 2022
The 2022 acquisitions supported our vision to deliver an entire end-to-end suite of solutions to our digital ecosystem of consumers, advertisers, publishers and game creators. The Azerion family is pleased to welcome these exciting businesses to the company, and are confident that they will bring added value to platform stakeholders. During 2022 Azerion completed two asset deals consisting of full monetization solutions for digital publishers in Italy (TakeRate) and France (Adverline). For further detail on the 2022 acquisitions, please refer to note 5: Acquisitions.
During 2022 the Company liquidated the legal entity HI-Media USA Holdings Corp., Hi-Media LLC and one other dormant legal entity.
On 1 February 2022, Azerion completed its business combination with special purpose acquisition company, EFIC1. As a result Azerion became listed on Euronext Amsterdam with trading in its shares commencing on 2 February 2022. As part of the business combination, Azerion received a net total primary cash proceeds of about €59 million. In July 2022 and to further support Azerion's growth, a small equity capital raise of €10.5 million was completed in the form of a private placement of existing ordinary treasury shares of Azerion, predominantly to Azerion’s co-CEO’s investment vehicles. The net proceeds from the placement were available to support growth opportunities and for general corporate purposes, adding to the operating cash flows generated by the business. On 31 December 2022, with effective date 1 January 2023, the legal merger of the legal entities Azerion Group N.V. and Azerion Holding B.V. was completed with approval by the bondholders, with Azerion Group N.V. being the surviving entity. The main objective of the merger was to simplify and streamline the financial reporting and other communications to the market.
(in million of €)
| FY 2022 | 2021 | |
|---|---|---|
| Net revenue | 452.6 | 308.1 |
| Gross profit | 166.3 | 120.8 |
| Operating profit / (loss) | (139.0) | 8.4 |
| Adjusted EBITDA¹ | 52.1 | 46.7 |
| Net revenue growth % | 46.9% | |
| Gross profit margin % | 36.7% | 39.2% |
| Adjusted EBITDA growth % | 11.6% | |
| Adjusted EBITDA margin % | 11.5% | 15.2% |
¹For reconciliation of operating profit to adjusted EBITDA please refer to note 30: Operating segments.
Revenue for the year amounted to € 452.6 million, an increase of € 144.5 million, or 46.9%, as compared to FY 2021 (€ 308.1 million). In relation to the total revenue for the year of € 452.6 million, Platform revenue increased 55% to € 363.5 million (2021: € 234.5 million), whereas Premium Games revenue increased 21.1% to € 89.1 million (2021: € 73.6 million). The segmental revenue split shifted to be more focused on Platform segment recognising the strategic efforts made by management, with Platform contributing 80.3% to total group revenue (2021: 76.1%) and Premium Games contributing 19.7% (2021: 23.9%).
The Group incurred operating loss of € (139.0) million in 2022 compared to operating profit of € 8.4 million in 2021. This was mainly caused by de-SPAC related expenses of € 144.5 million which mainly consists of listing expense of € 107.1 million, professional fees of € 13.2 million, transaction related Share-Based payment costs of € 22.7 million. Profit / (loss) for the year attributable to owners of the Company amounted to € (134.3) million loss, compared to € (19.6) million loss for the full year 2021. This is due to lower operating result described in the preceding paragraph, partly offset by favourable change in net finance costs of € (1.1) million (2021: € (26.6) million) and tax benefit in 2022 of € 7.0 million (2021 : € (2.0) million).
Azerion capitalizes its development costs, which are generated by continuous investments in asset development, a core activity to support innovation in its content and technology platforms. These costs primarily relate to developers’ time devoted to the development of games, platforms, and other new features. A total of € 21.2 million (2021: € 17.0 million) were additions due to development, of which € 16.6 million (2021: € 12.1 million) related to internally developed intangible assets, equivalent to 3.7% of revenue (2021: 3.9%). Any costs associated with research are expensed as they arise and only identifiable development costs are capitalised. See note note 7: Intangible assets for more information on capitalisation of Research and development.
Financial instruments include borrowings, trade and other receivables, cash items, trade payables and other amounts payable. During the normal course of business, the Group uses various financial instruments that expose it to market, currency, interest, cash flow, credit and liquidity risks. To control these risks, the Group has instituted policies and procedures that are intended to limit the risks of unpredictable adverse developments in the financial markets and thus for the financial performance of the Group. The business risk exposure is limited within financial instruments, due to the nature of the business. Contracts are generally short-term, and currency exposure is relatively limited but increases as the company grows internationally. The largest part of the Company’s revenue and external financing is denominated in Euros. For further information on financial instruments, please refer to note 28: Financial risk management
Azerion has a large R&D team that is responsible for the development of online games and advertising technologies. In 2022, we invested significant resources into enhancing our gaming portfolio expanding alongside existing high-quality titles such as L.o.l Surprise, Instant Party Games and Smiley World. In addition, we continued to invest in developing new features for our existing gaming portfolio in Habbo, Hotel Hideaway and Governor of Poker 3 to increase the gaming experience and monetisation potential. The development process, including software architecture design and planning is managed from the Company’s headquarters in Schiphol-Rijk.
Azerion managed significant growth in the financial year 2022, focusing on the execution of its growth and efficiency optimisation strategies. Profiting from the relative resilience in its business model throughout the year, underlying growth for both platform and premium games segments continued. The company expects to remain resilient to market conditions and grow the platform business during the course of the year 2023. Additional scale in the platform segment is expected due to acquisitions made in 2022, as the company aims to provide greater efficiencies to clients as it optimises its technology and operations. We currently expect to grow Net revenue to around € 560 million for the full year 2023 with adjusted EBITDA for 2023 expected to be at least € 75 million. The expected improvement in Adjusted EBITDA margin is primarily driven by gross profit margin optimisation, cost efficiencies and overall benefits of scale as the Azerion platform grows. This outlook does not include the impact of any new material acquisitions or divestments.
Our Platform segment includes advertising, casual games, games distribution 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 our Premium Games segment, leveraging inter-segment synergies.
(in million of €)
| FY 2022 | 2021 | |
|---|---|---|
| Net revenue | 363.5 | 234.5 |
| Gross profit | 121.4 | 78 |
| Operating profit / (loss) | (6.5) | 2.3 |
| Adjusted EBITDA | 35.0 | 26.6 |
| Net revenue growth % | 55.0% | |
| Gross profit margin % | 33.4% | 33.3% |
| Adjusted EBITDA growth % | 31.6% | |
| Adjusted EBITDA margin % | 9.6% | 11.3% |
Platform Net revenue for the year was € 363.5 million, an increase of 21.1% compared to 2021, mainly due to acquisitions as well as organic growth. Adjusted EBITDA for the year was € 35.0 million, increasing by 31.6% compared to 2021, primarily driven by higher Net revenue and increased platform efficiency. Revenue and profitability were supported by the acquisitions of Infinia Mobile, Madvertise, Vlyby Digital, Mmedia, Monolith Partners, Hybrid Theory Global, Radionomy Group and Adplay during 2022. These acquisitions have expanded Azerion's platform reach, in terms of advertisers, publishers, content producers and audiences globally. The focus of 2022 was to integrate these companies technically and commercially to provide customers greater scale and efficiencies. As the company continues to develop and integrate these technologies, the Azerion platform should grow in efficiencies providing an improved and expanded service to our clients.
Our Premium Games segment includes social games and metaverse, comprising of 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
(in million of €)
| FY 2022 | 2021 | |
|---|---|---|
| Net revenue | 89.1 | 73.6 |
| Gross profit | 44.9 | 42.8 |
| Operating profit / (loss) | 2.1 | 6.0 |
| Adjusted EBITDA | 17.1 | 19.8 |
| Net revenue growth % | 21.1% | |
| Gross profit margin % | 50.4% | 58.2% |
| Adjusted EBITDA growth % | (13.6)% | |
| Adjusted EBITDA margin % | 19.2% | 26.9% |
Premium Games Net revenue for the year was € 89.1 million, an increase of 21.1% compared to 2021, mainly due to organic growth. Adjusted EBITDA for the year was € 17.1 million, a decrease of (13.6)% compared to 2021, reflecting lower Net revenue margins, largely due to the absence of high margin NFT activities and subsequent trail commissions in 2022, as compared to 2021, coupled with marketing and user acquisition costs. Premium Games has been a solid contributor to revenue, growing year on year despite a challenging market with significant tailwinds easing. In 2022, we further developed our presence in the Metaverse and launched a new segment in Azerion Fanzone to develop new platforms that allow advertisers to connect with audiences through new channels.
Reporting segment Other contained in 2022 an operating loss of € (134.6) million, mainly related to 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. For details see note 30: Operating segments.
Azerion Group N.V. Annual Report 2022
Azerion Group N.V. Annual Report 2022
Risk management 23
The digital gaming and digital advertising industries are dynamic global markets. There are various risks and uncertainties that may have a material adverse effect on Azerion’s business, financial condition, results of operations and prospects. These risks include macro-economic circumstances and general economic and geo-political environments, changes in applicable legislation and regulations, governments, infrastructure and new, emerging technologies or existing technologies going out of style or use. There are also risks related to Azerion failing to source and integrate new acquisitions, or failure to source attractive content and attract sufficient advertisers and publisher partners. In addition, Azerion must be continuously technically competent and prepared for risks and uncertainties relating to fraud and deception on digital traffic and the internet. Failure of internet and infrastructure is an uncertainty. Although this type of major failure occurs rarely, it can have a significant effect if it were to materialise.
In achieving its long-term objectives, Azerion is inherently involved in taking certain risks and accepting selected uncertainties. The extent to which Azerion is prepared to take risks to achieve its objectives differs according to each objective and risk category. The table below, while not exhaustive, describes the principial material risks that may impact Azerion’s business and the industries it operates in and is reviewed periodically by the Management Board and Executive Committee. When considering making an investment in Azerion, you should read these risks and uncertainties. Other risks and uncertainties currently not known to Azerion may occur in future and could materially affect Azerion’s operating results and financial position adversely. As the De-SPAC Transaction between EFIC1 and Azerion Holding B.V. completed on 1 February 2022, Azerion complies with principle 1.4 of the Dutch Corporate Governance Code (‘Risk management accountability’) from 2022.
Azerion Group N.V. Annual Report 2022
Risk management 24
| Risk category | Risk appetite | Impact | Mitigants # Azerion Group N.V. Annual Report 2022
Medium | Medium
Azerion's games are mostly available to users for free, but Azerion generates revenue from the games when users make in-game purchases, as well as from in-game advertising. If Azerion fails to manage its gaming economies properly or fails to protect Azerion's games against cheats, inappropriate behaviour or malfunction, our reputation may be damaged and users may be less inclined to play and/or spend money in the games, which could have a material adverse effect on Azerion's operating results and financial position. Azerion invests significant resources in new feature development of its existing games as well as in new games in order to maintain its userbase and in ensuring its games are safe and reliable. Furthermore, in addition to in-app purchases, our games are monetised through advertising, providing revenue resilience.
Medium | Medium
There is a risk that Azerion fails to maintain good relationships with a sufficient number of owners/developers of relevant content and third party distribution partners, which could cause the number of games it can offer and distribute to decrease. This could have a material adverse effect on Azerion’s operating results and financial position. Azerion operates a dedicated developer and publisher relations teams, who are responsible for ensuring that engaging gaming and non-gaming content is accessible on our Platform. Azerion’s Platform benefits from scale as the larger the number of gaming and non-gaming content grows the more attractive and necessary it is for distribution partners to engage with it.
Low | Low
There is a risk that Azerion's failure to protect its IPR and expenses related thereto may have a material adverse effect on Azerion's operating results and financial position. Key IPs are protected by Azerion and our internal legal teams work with the business leadership to monitor and, if required, protect that IP, supported by external advisors if required. Monitoring is done with automated scans and vigilance by internal and external experts for IP infringements of our content.
Low | Medium/High
There is a risk of Azerion failing to prevent technological/infrastructure disruptions to its technology platform and/or third-party critical infrastructure and/or external threats through cyber attacks, which could have a material adverse effect on Azerion's operating results and financial position. Azerion has a specialised in-house Corporate IT team, working in partnership with the Legal and Data Protection teams, providing services including information security and cyber-security protection. A Cloud Centre of Excellence is used for the management of cloud security. In addition, Azerion has adopted and implemented both internal and externally provided technology tools and processes related to protection.
Medium | Medium
Although Azerion's overall levels of client concentration remain relatively low, in Azerion's client base there is a handful of large advertisers and publishers. In the advertizing market it is common practice to have short termination notice periods. If many large contracts are terminated simultaneously, this may have an adverse effect on Azerion's operating results and financial position. Azerion works with and maintains a diverse and broad client and contract base and invests significant resources into maintaining and expanding client relationships (including contract duration) as well as in the attractiveness of its product suite. The largest segment of the client population uses Azerion's own product and game distribution and monetization. These clients don't terminate easily due to Azerion's unique value proposition. A small segment of the client population, however, has more choice in the market and may terminate more easily. To promote customer loyalty, Azerion operates a significant network of client service management teams across European countries and continuously adds new features and products to its technology to keep providing maximum value and minimum friction to all of its clients.
Medium | Low
Industry-wide blocking, restriction on or deletion of cookies or other modifications to privacy settings on PCs and mobile devices including the development of ad blocking technologies could restrict or impair Azerion's data collection and the effectiveness of its products and services. Azerion strives to adhere to all relevant data and privacy-related laws and regulations. We have diversified revenue streams across products, operating systems and monetisation models. Industry-wide changes where consumer identity / behaviour cannot be revealed and tracking for advertisers becomes increasingly difficult, play to the strength of our business model of integrated content and advertising technology. Our available proprietary data allows informed decision-making and we do not materially rely on third parties to supply this data.
Medium | Medium
General economic, market and political conditions that negatively affect marketing and advertisement spend, may affect Azerion's operating results and financial position. We have designed our organisation in a lean, agile and flexible way and train employees to be comfortable with changing circumstances. We have a proven ability to adapt to and mitigate adverse market conditions and our diverse business model and client base provide a measure of resilience to market conditions.
Medium | Medium
Changes in the advertising network value chain, where programmatic buying reduces the intermediaries' importance or where other new models emerge, may result in a decrease in Azerion's margins, which may materially and adversely affect Azerion. A decrease in Azerion's margins may also result from a consolidation of publishers, advertisers or intermediaries along the value-chain as such shifting buying power across the industry. If for any other reason there is a shift in the buying power among the publishers, other intermediaries and the advertisers respectively, this could have a material adverse effect on Azerion's operating results and financial position. Azerion has diversified revenue streams across owned and operated gaming content, game distribution and advertising technology. In advertising technology, we consolidated services and products throughout the entire value chain, both organically and through M&A. Our extensive content portfolio and audience-related datasets provide us with a competitive advantage and, combined with our end-to-end technology stack, provides a level of protection against changing market power shifts.
Low | Medium
Our business activities across online gaming and digital advertising require a significant amount of data usage and data processing as well as associated hardware manufacturing and power usage, both contributing to global greenhouse gas emissions. Compliance with environmental regulations may lead to additional costs for Azerion, which may adversely affect Azerion's operating results and financial position. Azerion has multiple processes and policies in place to track and monitor its environmental impact, including promotion of climate awareness campaigns towards its employees, as well as various offset initiatives. In addition, energy reduction is an important vendor selection criterion.
Medium | Medium
Advertising creatives may contain malvertise and fraudulent scripts, which may cause reputational damage to our clients and it may have regulatory consequences for our clients and Azerion itself. Bot accounts generate fraudulent ad views. That makes advertising less effective and (prospective) advertisers may not be interested in selling ads through Azerion's technology solutions. All of the above could have a material adverse effect on Azerion's operating results and financial position. Azerion performs continuous automatic and manual scans on advertising creatives provided by demand side partners for malvertise and fraudulent scripts. Malvertise and fraudulent scripts are detected very quickly and removed immediately upon detection. Azerion has tools in place to automatically identify unusual behaviour in our publisher network - including tools to detect high numbers of bot account creation - and to block fraudulent activities.
Medium | Low
There is a risk of illegitimate in-game payments, illegitimate purchases in the app stores and illegitimate e-commerce purchases. That may cause products to be sold, without receiving payment, which could have a material adverse effect on Azerion's operating results and financial position. Azerion has systems in place that check in real time whether a sale is done legitimately. In the rare instances where real time checks cannot be done, post event checks are conducted to identify and block any fraudulent accounts. The occurrences of fraud on Azerion's e-commerce platforms are both small in amount and in duration, as unusual behavioural patterns are easily recognised by automatic controls and by the experienced sales team.The detection of fraudulent and bot activity is recognised almost instantaneously and blocked immediately. Phishing and social engineering Medium Medium - Phishing and social engineering activity sometimes target employees for personal or company details, occasionally in exchange for a reward. Whatsapp and e-mail scams sometimes target the employees to execute payments to illegitimate receivers. If processed, such payments could have a material adverse effect on Azerion's operating results and financial position. Within Azerion there is broad awareness of these phishing and social engineering risks and management continues to focus on ongoing training, systems and controls. Furthermore, in case of a social engineering event, IT is informed and the e-mail addresses are added to the blocking lists and spam filters. Additionally, Azerion conducts a periodic anti-phishing awareness campaign.
| Risk category | Risk appetite | Impact | Mitigants In addition, our recent stock market listing provides us with additional sources of financing to help meet early prepayments, if any.
Medium Low - Azerion's obligations towards the bondholders under the Bonds will be guaranteed. However, there is a risk that any enforcement of claims under the guarantees would be insufficient to satisfy all amounts owed to the bondholders at the time of enforcement. If the guarantors were to guarantee any other obligations, there is a risk that guarantees granted towards the current bondholders would be impaired. Azerion has a track record of Adjusted EBITDA-profitable growth and is continuing to grow its business aiming to increase its revenue, Adjusted EBITDA and cash generation from operating activities over time. Azerion seeks to employ and maintain a diversified, well-balanced funding structure including equity, bond financing, factoring and bank facilities.
Medium Low - Azerion's obligations towards the bondholders under the Bonds will be secured. However, there is a risk that the proceeds of any enforcement sale of the pledged shares or that the sums of money of the pledged intra-group loans will not be sufficient to satisfy all amounts owed to the bondholders. Azerion has a track record of Adjusted EBITDA-profitable growth and is continuing to grow its business aiming to increase its revenue, Adjusted EBITDA and cash generation from operating activities over time. Azerion seeks to employ and maintain a diversified, well-balanced funding structure including equity, bond financing, factoring and bank facilities.
Azerion Group N.V. Annual Report 2022 Risk management 34
The importance of effective risk management at Azerion is underlined in 2022, and for the future, following Azerion’s announcement on 13 March 2023 of an investigation by the Dutch Authority for Financial Markets (‘’AFM’’), related to compliance with article 15 of the Market Abuse Regulation. The AFM's investigation does not appear to focus on Azerion, but it does put us in the spotlight. To mitigate potential damage as a result, we took immediate action, which included ensuring effective ongoing management of the business.
On 7 March 2023, the AFM approached Azerion to obtain information. Azerion’s Supervisory Board and management team were subsequently informed about an investigation by the AFM, which according to AFM-information then made known to Azerion, appeared to be related to compliance with article 15 of the Market Abuse Regulation. Shortly after this notification, Azerion put together a Special Committee through a delegation of Supervisory Board members, supported by relevant staff of the company. The information provided by the AFM was relatively limited, but it did appear that while including Azerion, the investigation seemed to be focused on the shareholders of Principion Holding B.V., including Azerion co-CEOs Atilla Aytekin and Umut Akpinar. Principion is Azerion’s largest shareholder. In the following few days, the Supervisory Board obtained separate legal advice and support from a leading Dutch law firm. The Special Committee and the wider Supervisory Board discussed the fact pattern that had emerged and further legal advice was obtained on the matter.
On 12 March 2023, after careful consultation with the Supervisory Board, Atilla Aytekin decided to temporarily step down as Co-Ceo of Azerion, pending the AFM investigation. This was considered to be in the interests of Azerion and its stakeholders. In discussion with the Supervisory Board, it was agreed that the operational leadership of Azerion remained with Azerion’s Executive Committee and broader leadership team, with Umut Akpinar as CEO and Ben Davey as CFO. This was a de facto continuation of the current day-to-day practice for organic and inorganic activities. The team has remained focused on fulfilling Azerion’s strategy and dedicated execution of the business plan.
Very soon after the events took place, we proactively contacted a number of our key stakeholders to share with them the limited knowledge we had about the situation that had arisen. We also communicated as transparently and fully as possible to our colleagues. We thank all our stakeholders for their patience and are grateful to have these long-standing relationships supporting our business. Our business partners have appreciated that the AFM investigation appears to be focused on the shareholders of Principion. The Special Committee of the Supervisory Board continues to steer the process and to be kept fully informed. As management team, we are pleased to note that notwithstanding all the circumstances, we have been able to rely on our robust organisation and the commitment and motivation of our employees. At the same time, we are aware of the ongoing uncertainty surrounding the progress and lead-time of the investigation by the AFM. We will continue to evaluate this situation throughout 2023, so that we, in the best interests of Azerion and its stakeholders, are able to determine what is the right way to go forward with the interest of Azerion at heart. While the investigation is ongoing, based on the information known at this point in time, there is no indication that a material financial impact will arise for Azerion.
Azerion Group N.V. Annual Report 2022 ESG overview 35
Azerion has experienced significant growth since inception. But as we grow in revenue and profitability, so does our impact on the world around us. Therefore, we feel it is our duty as a company to grow responsibly, balancing financial performance with a positive impact on our planet, our community and our people. This is the bedrock of our vision around Environmental, Social, and Governance (ESG) principles.
Azerion has committed to implementing identified key aspects of the United Nations’ (UN) Sustainable Development Goals, as well as observing the guidance set out in the European Union Non-Financial Reporting Directive 2014/95/EU (EU NFRD). Taking note of the guidelines and recommendations set out in the NFRD, this section of the Annual Report 2022 first lays out Azerion’s overall ESG strategy and its relation to the UN’s Sustainable Development Goals, before specifically addressing the following areas of focus under the NFRD:
In 2022, we further built on the ESG framework we developed in 2021. In particular, we deepened our assessment of different business and non-business factors and their impact on Azerion and the matter in which they should be prioritized. This selection and prioritization continues to be the basis of our ESG strategy and will determine the focus of our reporting on the non-financial elements of our business.
Our assessment reinforced the importance of a number of factors, that are classified as high impact areas:
The foregoing is captured in our ESG framework, which consists of three pillars:
We believe it is important to consider how our people, products, concepts and ideas support these pillars and how they contribute to the UN’s Sustainable Development Goals. Our core pillars are supported by our company’s values, including those relating to inclusion and diversity, human rights, anti-corruption and anti-bribery. Our implementation and execution plan includes, among other things using resources and products for good, ensuring employee wellbeing and giving back to the community.
The strategy for Our Planet incorporates the UN Sustainable Development Goals 12.6 Responsible Consumption and Production, 13.2.2 Climate Action and 9.4 Industry, Innovation & Infrastructure. Our objectives include making a positive impact on our planet, incorporating a more sustainable approach to living and working by improving our energy efficiency, being more mindful of how we use resources and progressively monitoring the effect our business has on the environment.
As part of these efforts, we have initiated projects to reduce direct CO2 emissions by reducing corporate travel and encouraging and facilitating remote work across our workforce. In one specific example, we are equipping all our meeting rooms with time sensors and digital booking systems in order to make optimal and energy-efficient use of office space. Furthermore, we harness the power of our advertising business, encouraging the redirection of advertising budgets so as to generate meaningful, tangible environmental and social-economic impact Azerion Group N.V. Annual Report 2022 ESG overview 36 addressing the UN Sustainable Development Goal Climate Action through our advertising campaigns.# Azerion Group N.V. Annual Report 2022
Examples include: We continue to raise climate awareness through our partnership with IMPS/Lafig creating marine pollution themed games such as The Smurfs: Ocean Cleanup. We worked with Right Thing.Media to help Karl Lagerfeld deliver an impactful 'KARL CARES' campaign around its carbon capture and reforestation projects. For all our NFT drops and trading in Habbo X we use the exchange protocol 'Immutable X' on the Ethereum blockchain, reducing the carbon footprint of creating and trading NFTs.
Our community Our objectives include empowering, motivating and taking care of those around us, creating communities that are inclusive and in which all members are supported to create a bright future for the generations to come. And it includes our efforts to keep our customers and their online identities private and secure, by complying with the applicable regulatory frameworks, including GDPR and CPPA. Examples of our initiatives in these areas include the following: Our Woozworld community came together in 2022, showing support for the Ukrainian people by displaying Ukrainian flag furniture and tees, among others. We enabled E.ON's campaign to help local UK communities reduce their energy costs by providing home energy check-ups to lower income households. Azerion's Sulake (Habbo, Hotel Hideaway) is a supporter of Insafe's Safer Internet Day, supporting online safety by raising awareness of emerging online issues and current internet safety concerns.
Our vision around Inclusion and Well-being incorporates the UN Sustainable Development Goal 10 Reduced Inequalities. Our objectives include to provide a holistic employee vitality system that considers both mental and physical health, with the ambition of building a workforce that is inclusive, healthy, inspired and feels valued. We are very proud of our diverse workforce that includes 70 different nationalities and we have taken a clear stance about equal work opportunities regardless of gender identity, sexual orientation, disability, religion, age, race, ethnicity, origin, or other status. Our diversity policy and our code of conduct are available on our website (SDG 10.2). Examples of initiatives include: Supporting diversity and inclusivity is part of the rationale behind Azerion's involvement in Dutch professional women's football, including being the name partner of the Women's Dutch League. Pride month celebration in Habbo in collaboration with The Teletubbies, including through colourful streetwear and other cool accessories. Organisation of and participation in multiple sporting events, including with clients, business partners and minority groups.
Azerion Group N.V. Annual Report 2022 ESG overview 37
We set out below a visualization of Azerion’s high level impact model. The impact model helps us frame our ESG thinking within the context of our business operations and drives our NFRD reporting:
Azerion Group N.V. Annual Report 2022 ESG overview 38
Azerion strives to foster a welcoming community where our employees enjoy being in the work environment, feel part of the team and know that they will be treated with dignity and respect. To help deliver on these objectives, Azerion has put in place the principles and guidelines embedded in its Code of Conduct and Diversity Policies, both of which may be found on our website. The Code of Conduct is decentralized and subject to local variation to accommodate different legal and regulatory requirements in the countries in which we are based. The Code of Conduct is in place to ensure and communicate the formal channels available to employees for raising and resolving disputes and to address concerns and harmful behavior. Within Azerion, there is no place for harassment or bullying of any kind. The Human Resources team handles all complaints in a confidential and timely manner. Employees are encouraged to take an active role in combating all forms of harassment and discrimination and are promised that they will be adequately supported should they face harassment or discrimination at work. Azerion is a diverse and inclusive opportunity employer. We are committed to making every reasonable effort to ensure that there is no discrimination on the grounds of age, sex, gender, sexual orientation and gender reassignment, pregnancy and maternity, paternity, race (including as relating to colour, nationality, ethnic or national origin), religion or belief, disability or marital status in the recruitment, treatment, retention of employees, hiring of contractors, or the treatment of visitors to our campuses. This policy applies to all aspects of Azerion’s working practices and, therefore, applies to the recruitment and selection of employees, terms and conditions of employment, training, salary, work allocations, promotion, and the management of grievances and disciplinary procedures. Our recruitment, selection and promotion procedures and general policies will be periodically reviewed to ensure that Azerion’s equal opportunities policy is being implemented.
Diversity and inclusion are an integral part of the history, culture and identity of Azerion as a whole and are embedded in our company values. We believe that diversity fuels innovation and increases the connection with the customers and the communities we serve. As at the end of 2022, the Management Board consisted of 2 members, both of whom are male. More generally across Azerion, by the end of 2022 Azerion employees represented circa 70 nationalities, and 38% were female, 60% were men and the remainder were non-binary/undisclosed. Although Azerion believes that its gender diversity in its workforce is more balanced than the tech industry average as a whole, Azerion is committed to further increase the gender diversity across its organisation.
At Azerion, we strongly believe in the importance of protecting and upholding human rights. Our objective is for all our audiences to use our products freely and fairly and for our employees to work in an environment where they feel they are respected and their rights protected. To help ensure the respect of human rights at Azerion, we promote and observe the principles set out in our Code of Conduct and our Diversity Policy, both of which can be found on our website.
At Azerion, we are aware of and striving to meet the basic safeguards set out in the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights. Our priority is to operate in an ethical and straightforward manner. From an operational perspective, our ethical business strategy is embedded in our Code of Conduct and our Whistleblower Policy, which can be found on our website.
"Diversity and inclusion are an integral part of the history, culture and identity of Azerion as a whole and are embedded in our company values"
Under the Whistleblower Policy, Azerion has put down a single and uniform policy which is designed to meet corporate governance obligations and recommendations under Dutch law and international best practice. This policy provides every employee with an avenue to voice their concerns about alleged irregularities. Azerion respects employees who raise concerns about alleged irregularities and will not retaliate or allow retaliation against anyone who in good faith reports such alleged irregularities. The Azerion Group N.V. Annual Report 2022 ESG overview 39
Whistleblower Policy is central to our effort to establish and sustain an ethical workplace environment and sound business practices. We do not tolerate corruption in any form and as a company, Azerion will strive to combat and prevent incidents of a corrupt nature. Occurrences of bribery are uncommon in our industry but nevertheless, we remain alert to ensure that no such incidents arise within the Company. Our ambition is to embrace an ethical and transparent way of conducting our business.
Azerion notes with concern the climate challenges facing our planet and is focused on the impact we as a company can have on this issue. Sustainability is high on our executive agenda and we are supporting several initiatives aimed at protecting the environment. We are conscious of our carbon footprint, which is for the vast majority driven by the server capacity required for operations of our games and advertising technology solutions, which Azerion obtains mainly through outsourced cloud services. The carbon emissions and energy usage that result from running the data centers, and making use of cloud-based services, have a negative impact on the environment which cannot be ignored. These emissions, i.e. resulting from activities from assets not owned or controlled by Azerion, make up a significant part of our global carbon footprint. For this reason, we are currently working with AWS, our main data center provider, to lower those emissions through pilot projects and improvements in power usage efficiency. We have jointly worked on optimising traffic and energy usage through machine learning models. We are very pleased with AWS’ efforts in carbon reduction and offsetting that benefit this cause, including their ambition to use 100% renewable energy sources by 2025. Azerion believes in building awareness and mobilising our employees to support the environmental agenda. We encourage employees to consider the impact of their actions on the environment and take steps to make this impact positive. At a higher level, Azerion has also embraced localised environmental initiatives, including compensating employees for commuting by public transport, providing vegetarian and vegan lunch and/or dining options and electrifying our fleet of corporate cars. We are also aware of the impact our products and services can have as a force for good in this area.# ESG overview
One example in 2022 has been the start of our partnership with Right Thing.Media, via which we encourage and enable brands to deliver high social impact campaigns to audiences. Furthermore, in our offices we have worked on reducing emissions, for example through intensive usage of office plants, replacing existing lighting with LED sources, equipping meeting rooms with time sensors to minimize electricity usage, enhancing waste recycling programs and more. For a description of principal risks and uncertainties, including those related to ESG matters, please refer to our Risk Management chapter. It is important to us that Azerion continues to use its creativity to entertain, its impact to encourage a sense of responsibility and its resources to contribute to a more sustainable world and we will continue to develop our ESG strategy to positively impact the world we operate in.
The EU Taxonomy has been implemented as part of the European Green Deal, which was passed in 2019. The European Green Deal was adopted by the EU in relation to the Paris Agreement goals, and aims to reach a climate-neutral economy by 2050 and to reduce net greenhouse gas emissions by at least 55% by 2030 (as compared to 1990 levels). In order to meet the 2030 and 2050 targets, investments need to be directed towards sustainable projects and activities. The EU Taxonomy Regulation (EU 2020/852), including associated delegated acts, is a legislative act adopted by the European Union in 2020 aimed at establishing a framework for sustainable investment. The regulation sets out common criteria and guidelines to identify economic activities that can be classified as environmentally sustainable, in order to promote sustainable finance and transition towards a more sustainable economy.
The EU Taxonomy Regulation sets out the basis for the EU Taxonomy by setting out certain overarching conditions that an economic activity has to meet in order to qualify as environmentally sustainable. These include the condition that an economic activity has to make a substantial contribution to one or more of the following six environmental objectives:
Under the Taxonomy Regulation, the European Commission had to come up with the actual list of Azerion Group N.V. Annual Report 2022 ESG overview 40 environmentally sustainable activities by defining technical screening criteria for each environmental objective through delegated acts. On the date of publication of this report, only one delegated act has been published, relating to 1) Climate change mitigation and 2) Climate change adaptation. For 2022, the EU Taxonomy framework provisions require companies to report on their proportion of taxonomy-eligible activities and taxonomy-non-eligible activities in their total Turnover, CapEx and OpEx. This analysis and disclosure follows hereafter.
In the current EU Taxonomy framework, the European Commission has prioritized economic activities of sectors that can contribute most substantially to climate change mitigation and adaptation and, as such, focuses primarily on sectors with high greenhouse gas emissions. This includes such sectors as manufacturing, energy & utilities, transport, construction and real estate, among others, and economic activities enabling their sustainable contribution. Azerion’s business activities primarily include providing digital advertising solutions and production, publishing and distribution of digital entertainment content, which are at present not covered by the EU Taxonomy framework and therefore mostly out of scope. As a digital technology company Azerion produces, processes, analyzes and stores large amounts of data as part of its daily business operations. All of these activities are outsourced to third party infrastructure providers and are therefore not included in our eligibility analysis as no operational control or influence is exerted over these activities by Azerion.
Azerion welcomes the implementation of the EU Taxonomy framework and our analysis hereafter intends to assess the impact on our economic activities in line with the framework’s stated objectives. It should be noted, however, that the EU Taxonomy framework is new, very complex and leaves substantial room for interpretation. We expect the framework to develop further over time, with further guidance, clarification, and best practices to arise. We will continue to monitor future developments and to adapt and enhance our methodologies, analysis and disclosure in future. In our analysis we have used judgments and assumptions to best align with the framework’s ultimate goal. Changes to our interpretation, based on the foregoing, may occur in future.
We used the Commission Delegated Regulation (EU) 2021/2139 of 4 June 2021 to identify economic activities that were eligible to qualify as contributing substantially to climate change mitigation or climate change adaptation. However, based on our analysis of Azerion’s economic activities, there are currently no revenue-generating activities that match the EU Taxonomy framework, as the delegated act currently focuses mainly on sectors with high greenhouse gas emissions. We subsequently used the Commission Delegated Regulation (EU) 2021/2178 of 6 July 2021 to define and calculate the appropriate amounts and percentages in the table below. Considering Azerion’s 0% eligibility, we have included a short form table only, rather than the suggested extensive template from the delegated act for this KPI as including that would not provide additional information. The total amount of Azerion’s turnover in the financial year 2022 is € 452.6 million of which 0% are eligible activities and 100% are non-eligible activities. The regulation seeks to have companies provide alignment between the three applicable KPIs and the company’s financial statements, as presented. In this light, the KPI ‘Turnover’ includes ‘Revenue’ included in the Consolidated Statement of Profit or Loss and Other Comprehensive Income, refer to Consolidated statement of profit or loss and other comprehensive income, starting on page 56.
| Economic activities | In millions of € | Proportion of Turnover % |
|---|---|---|
| A. Taxonomy-eligible activities | ||
| A.1 Turnover of environmentally sustainable activities (taxonomy-aligned) | - | 0% |
| A.2 Turnover of taxonomy-eligible but not environmentally sustainable activities (non taxonomy-aligned activities) | - | 0% |
| Total A (A.1 + A.2) | - | 0% |
| B. Taxonomy-non-eligible activities | ||
| Turnover of taxonomy-non-eligible activities | 452.6 | 100% |
| Total (A + B) | 452.6 | 100% |
Azerion Group N.V. Annual Report 2022 ESG overview 41
Regulation (EU) 2020/852 of 18 June 2020 requires companies to disclose the proportion of their operating expenditure related to assets or processes associated with economic activities that qualify as environmentally sustainable. Azerion assessed its operating expenditures according to the definition provided in Annex I of the Commission Delegated Regulation (EU) 2021/2178 of 6 July 2021, which definition is narrower than Azerion's accounting definition. Azerion's in-scope OpEx (i.e. according to the Regulation's definition) is considered not material in relation to its total group OpEx and in relation to its business model. We therefore apply the exemption possibility provided for in article 1.1.3.2 of Annex I of the Commission Delegated Regulation (EU) 2021/2178 of 6 July 2021. The total amount of Azerion's EU Taxonomy OpEx for the financial year 2022 is € 1.6 million and we report 0% eligibility and 0% alignment based on our assessment.
The definition of OpEx under the EU Taxonomy regulation is as follows: "direct non-capitalised costs that relate to research and development, building renovation measures, short-term lease, maintenance and repair, and any other direct expenditures relating to the day-to-day servicing of assets of property, plant and equipment by the undertaking or third party to whom activities are outsourced that are necessary to ensure the continued and effective functioning of such assets." This is a narrower definition than Azerion's accounting policies. In-scope operational expenditures for Azerion are limited to its office building repair and maintenance costs and short term leases. This represents an insignificant proportion of total group OpEx.
| Economic activities | In millions of € | Proportion of OpEx % |
|---|---|---|
| A. Taxonomy-eligible activities | ||
| OpEx of environmentally sustainable activities (taxonomy-aligned) (A.1) | - | 0% |
| OpEx of taxonomy-eligible but not environmentally sustainable activities (non taxonomy-aligned activities) (A.2) | - | 0% |
| Total A (A.1 + A.2) | - | 0% |
| B. Taxonomy-non-eligible activities | ||
| OpEx of taxonomy-non-eligible activities | 1.6 | 100% |
| Total (A + B) | 1.6 | 100% |
Azerion's CapEx that would fall under the scope of the EU Taxonomy regulation consists of additions during the financial year 2022 to the following line items in Azerion's Consolidated Statement of Financial Position: note 5: Acquisitions note 6: Property, plant and equipment note 7: Intangible assets. We screened the asset groups against the economic activities described in the Commission Delegated Regulation (EU) 2021/2139 of 4 June 2021 to identify eligible activities for climate change mitigation and climate change adaptation. Based on our assessment we concluded that Azerion's EU Taxonomy-eligible activities with relation to CapEx are limited to additions related to electric car leases in line item note 6: Property, plant and equipment.# Azerion Group N.V. Annual Report 2022 ESG overview 42
Economic activities
In millions of €
| Codes | Absolute turnover | Proportion of CapEx % |
| :--- | :--- | :--- |
| A. Taxonomy-eligible activities | | |
| A.1 Environmentally sustainable activities (taxonomy-aligned) | - | - |
| CapEx of environmentally sustainable activities (taxonomy-aligned) (A.1) | - | - |
| A.2 Taxonomy-eligible but not environmentally sustainable activities (not taxonomy-aligned activities) | | |
| Transport by motorbikes, passenger cars and light commercial vehicles | 6.5 | 0.1% |
| CapEx of taxonomy-eligible but not environmentally sustainable activities (non taxonomy-aligned activities) (A.2) | 0.1 | 0.1% |
| Total A (A.1 + A.2) | 0.1 | 0.1% |
| B. Taxonomy-non-eligible activities | | |
| B. CapEx of taxonomy-non-eligible activities | 86.3 | 99.9% |
| Total (A + B) | 86.4 | 100% |
Schiphol-Rijk, 26 April 2023
Statement of Management Board's responsibilities
The Management Board is responsible for preparing the Company’s Annual Report. The Company’s Annual Report comprises the Report of the Management Board, the Company’s Financial Statements and other information.
The Management Board is responsible for preparing the Annual Report in accordance with applicable law and regulations. The Management Board has prepared the Annual Report in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the European Union and the relevant provisions of the Dutch Civil Code.
The Management Board must not approve the Annual Report unless they are satisfied that it gives a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.
In preparing the Annual Report, the Management Board is required to:
* select suitable accounting policies and then apply them consistently;
* make judgements and accounting estimates that are reasonable and prudent;
* state whether applicable IFRS as adopted by the European Union and the relevant provisions of the Dutch Civil Code have been followed, subject to any material departures disclosed and explained in the Annual Report;and
* prepare the Annual Report on the going concern basis, unless it is inappropriate to presume that the Company will continue in business.
The Management Board is responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose, with reasonable accuracy at any time, the financial position of the Company and enable them to ensure that the Annual Report complies with applicable law.
The Management Board has assessed whether the risk assessment executed showed any material failings in the effectiveness of the Company’s internal risk management and control systems. Though such systems are designed to manage and control risks, they can provide reasonable, but not absolute, assurance against material misstatements. Based on this assessment, to the best of our knowledge and belief, no material failings of the effectiveness of the Company’s internal risk management and control systems occurred and the internal risk and control systems provides reasonable assurance that the financial statements do not contain any errors of material importance.
With reference to section 5.25c paragraph 2c of the Dutch Act on Financial Supervision, each of the Management Board members, whose names and functions are listed below, confirm that, to the best of their knowledge:
* the Company’s financial statements and the consolidated financial statements, which have been prepared in accordance with IFRS as adopted by the European Union and the relevant provisions of the Dutch Civil Code, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company;
* the Report of the Management Board gives a true and fair view on the situation on the balance sheet date, the development and performance of the business and the position of the Company of which the financial information is included in the Report of the Management Board and includes a description of the principal risks and uncertainties that Azerion faces; and
* having taken all matters considered by the Management Board and brought to the attention of the Management Board during the financial year into account, the Management Board considers that the Annual Report, taken as a whole is fair,
balanced and understandable. The Management Board believes that the disclosures set out in the Annual Report provide the information necessary for shareholders to assess Azerion’s position, performance, business model and strategy.
After conducting a review of management analysis, the Management Board has reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. For this reason, the Management Board considers it appropriate to adopt the going-concern basis in preparing the Annual Report.
Schiphol-Rijk, 26 April 2023
On behalf of the Management Board of Azerion Group N.V.
Umut Akpinar
co-CEO and co-Founder of Azerion
Supervisory Board
This chapter reports the Company's Corporate governance structure, the duties and responsibilities of the various boards and committees performed in 2022. This report further discussed the Supervisory Board's compliance with the Dutch Corporate Governance Code. The Letter from the Chairman can be read earlier in this report under the section Letter from the Chairman, starting on page 4.
Azerion Group N.V. (the “Company”) (formally known as European FinTech IPO Company 1 B.V. (“EFIC1”)), is a result of the De-SPAC Transaction between EFIC1 and Azerion Holding B.V., which completed on 1 February 2022. The Company is a public company with limited liability under the laws of the Netherlands and its shares trade on Euronext Amsterdam. The Company has a two tier governance structure.
The management board of the Company (the “Management Board”) is, together with the Company’s executive committee, responsible for the management of the Company's operations, as well as the operations of the Company under the supervision of the Supervisory Board. The Management Board may perform all acts necessary or useful for achieving the Company's corporate purposes, except for those expressly attributed to the general meeting of shareholders of the Company (the “General Meeting”) or the Supervisory Board as a matter of Dutch law or pursuant to the Company’s articles of association (the “Articles of Association”).
The Company has an Executive Committee that supports the members of the Management Board in the day-to-day management of the Company's business. The Executive Committee consists of the Management Board and Ben Davey – Chief Financial Officer, Sebastiaan Moesman – Chief Revenue Officer and Joost Merks – Chief Investment Officer.
The Supervisory Board is responsible for the supervision of the policy of the Management Board and the general course of affairs in the Company and the business it operates. The Supervisory Board supports the Management Board with its advice. The Supervisory Board supervises the manner in which the Management Board implements the long-term value creation strategy of the Company and the general course of affairs in the Company and its affiliated business.
The Supervisory Board has appointed from among its members an Audit and Risk Committee (the “Audit Committee”) and a Selection, Appointment and Remuneration Committee (the “SAR Committee”).
The responsibilities of the Audit Committee focus on supervising and/or assisting the activities of the Supervisory Board with respect to the integrity and quality of the financial reporting and the effectiveness of the internal risk management and control systems, including supervising the enforcement of the relevant legislation and regulation and the effect of codes of conduct. The Audit Committee also supervises the financing of the Company and assesses the external audit process and the scope and approach of the external auditor. The relationship with the external auditor is evaluated annually. Together with the Management Board, the Audit Committee reviews half-year and full year financial statements and quarterly updates.
The SAR Committee is responsible for proposing the remuneration policy for the Management Board and Supervisory Board and the implementation thereof and assisting the Management Board and Supervisory Board with the establishment and review of the overall compensation strategy of the Company and ensuring that the compensation strategy is competitive. Furthermore, the SAR Committee shall assist the performance of the members of the Management Board as well as responsibilities connected thereto.
An Annual General Meeting is held within six months after the close of each financial year. The Management Board may convene an extraordinary General Meeting whenever the Company’s interests so require.In addition, a shareholder or group of shareholders representing in aggregate at least 10% of the issued and outstanding share capital may, pursuant to the Dutch Civil Code, Dutch law and the Articles of Association, request that a General Meeting be convened. The convocation of a General Meeting must be published through an announcement by electronic means. Notice of a General Meeting must be given at least forty two 42 calendar days in advance. Shareholders holding at least 3% of the Company’s issued and outstanding share capital may request that an item be added to the agenda. Such requests must be made in writing, must either be substantiated or include a proposal for a resolution with an explanation and must be received by the Company at least 60 calendar days in advance of the day of the General Meeting. The company's capital structure consists of ordinary shares, capital shares and conditional special shares. A complete overview of shares outstanding and the rights attached to these can be found in the note 13: Equity section.
The Company values diversity and believes that diversity of all kinds, including by way of example only gender, age, nationality, ethnicity and education is essential to its long-term success. In this respect, the Company aims to have a balanced composition of all its corporate bodies in line with Dutch legislation and the Company’s Diversity Policy. The Company's diversity approach is further set out in Chapter ESG overview, starting on page 35 of this Annual Report. On 1 January 2022, the act (Wet inzake Evenwichtiger man vrouw verhouding in de top van het bedrijfsleven) introducing stricter gender equality requirements for members of supervisory boards entered into force. The Company’s Supervisory Board is composed of two female members and four male members and is therefore in compliance with the gender diversity criteria of the new act.
The Company recognises the importance of good corporate governance, endorses the core principles of the Dutch Corporate Governance Code and is committed to following the Code’s best practices. Below, we list the principles and best practice provisions where we deviate from the Code.
Best Practice Provision 1.3.1 (Appointment of the senior internal auditor)
In deviation from provision 1.3.1 of the Code, no senior internal auditor has been appointed by the Management Board due to the size of the Company and limited complexity of transactions.
Best Practice Provision 2.2.1 (Appointment and Reappointment Period Management Board Members)
The Company does not comply with best practice provision 2.2.1, which provides that all members of the Management Board are appointed for a maximum period of four years and reappointed for a term of not more than four years at a time. The two co-CEOs of the Company have been appointed for an indefinite period of time, given their position as co-founders of the Azerion business.
Best Practice Provision 2.3.2 (Establishment of Committees)
The Company does not comply with best practice provision 2.3.2, which provides that if there are more than four Supervisory Board members, the Supervisory Board shall appoint an audit committee, a remuneration committee and a selection and appointment committee. The Company deviates from this best practice provision as it will only have an Audit and Risk committee and a Selection, Appointment and Remuneration Committee. The Company believes that in light of the size of the Supervisory Board, it is more efficient to have two committees and combine the functions and the responsibilities of the remuneration committee and the selection and appointment committee in one committee, the Selection, Appointment and Remuneration Committee.
Best Practice Provision 3.1.2 (Remuneration Policy)
The Company does not comply with best practice provision 3.1.2 sub (vi) and (vii), which provide that shares awarded to members of the Management Board should be held for at least five years after they are awarded and that members of the Management Board should not be able to exercise share options awarded to them during the first three years after they are awarded. Under the terms of the Company’s Long-term Incentive Plan, performance shares and the restricted shares can be sold upon vesting and Azerion Group N.V. Annual Report 2022 Supervisory Board 47 share options can be exercised upon vesting. Performance shares vest after three years of granting and restricted shares vest after one year of granting. Share options vest after one year of granting. Although the Company’s remuneration policy provides that members of the Management Board are encouraged to comply with best practice provision 3.1.2, there is no strict prohibition to ensure compliance with best practice provision 3.1.2. The Company believes that the terms of the Long-term Incentive Plan enable it to offer an attractive remuneration package which will incentivize the members of the Management Board and the Company’s employees.
The Corporate Governance Code requires companies to publish a statement regarding their approach to corporate governance and compliance with the Code. This is referred to in Article 2a of the Decree on the contents of management report (‘Besluit inhoud bestuursverslag’), as last amended on 29 August 2017. The information required to be included in this corporate governance statement as described in the Decree, is included in this Corporate Governance chapter as well as in the Management Board Report.
As of the date of this Annual Report 2022, the Supervisory Board of the Company is comprised of the following members:
| Members of the Supervisory Board | Name | Position/Committee | Starting date and end date term of office | Gender | Age | Nationality |
|---|---|---|---|---|---|---|
| Peter Tordoir | Member and Chair of the Supervisory Board | First term as of 1 February 2022 – AGM 2026 | Male | 70 | Dutch | |
| Member of the SAR Committee | ||||||
| Derk Haank | Member and Vice-Chair of the Supervisory Board | First term as of 1 February 2022 – AGM 2026 | Male | 70 | Dutch | |
| Chair of the SAR Committee | ||||||
| Klaas Meertens | Member and Vice-Chair of the Supervisory Board | First term as of 1 February 2022 – AGM 2024 | Male | 65 | Dutch | |
| Chair of the SAR Committee | ||||||
| Chris Figee | Member of the Supervisory Board | First term as of 1 February 2022 – AGM 2025 | Male | 50 | Dutch | |
| Chair of the Audit Committee | ||||||
| Florence von Erb | Member of the Supervisory Board | First term as of 1 February 2022 – AGM 2024 | Female | 63 | French | |
| Katrin Brökelmann | Member of the Supervisory Board | First term as of 1 February 2022 – AGM 2025 | Female | 53 | German | |
| Member of the Audit Committee |
Mr. Peter Tordoir is an experienced, international and results driven manager in consumer and B2B publishing. He focuses on data-based driven digital publishing models and solutions and e-commerce, particularly in the financial and marketing information services. Mr. Tordoir brings extensive experience in the media industry and has over 30 years of experience in various executive positions: he is former CEO of Keesing Media Group and NovaGraaf Group. He also spent 25 years at VNU Group where he held various executive positions from EVO at VNY business information in the US, to CEO of VNU Business and VNU Marketing and Information in Europe and Asia. Mr. Tordoir is currently Vice-chairperson of the Dutch Red Cross.
Mr. Derk Haank has thirty years of experience in the academic publishing and consumer media industry. He has served as Chief Executive Officer of research publisher SpringerNature and been Member of the Supervisory Council of the Dutch broadcast association AvroTros. Mr. Haank has also acted as Chief Executive Officer of Elsevier Science and sat on the Executive Board of Reed Elsevier PLC. Mr. Haank holds a degree in Economics and Business Administration from Vrije Universiteit Amsterdam and a Master’s degree in Economics and Business Administration from Universiteit van Amsterdam.
Mr. Klaas Meertens has led a successful career as an investor in the fields of investment banking and private equity. He is managing partner of the private equity firm HTP Investments in Amsterdam and also a founding partner of the multi-family office Novum Capital Partners in Geneva. In addition, he is a member of the supervisory board of Knaus Tabbert Azerion Group N.V. Annual Report 2022 Supervisory Board 48 AG, the Frankfurt listed European leisure vehicle producer. Prior to these positions, Mr. Meertens worked for J.P. Morgan in New York, Amsterdam and as of 1997 in London, where he first headed and built their TMT EMEA team and later became head of investment banking for the Benelux and Switzerland. He was also part of the EMEA Investment Banking Coverage management team. Mr. Meertens studied Physics at the University of Utrecht (BSc) and Management at the Interfaculty in Delft (MSc).
Mr. Chris Figee is an experienced public market CFO with a strong capital markets track-record and extensive experience in regulated environments. He has been a member of the Board of Management of KPN and Chief Financial Officer since 1 February 2020. Before his appointment at KPN, Chris was CFO of ASR Nederland NV. Mr. Figee is currently also a member of the Supervisory Board of UNICEF Netherlands and a member of the Economic Board Zuid-Holland. Mr. Figee graduated cum laude from the University of Groningen in Financial Economics and completed his studies as an investment analyst at EFFAS (European Federation of Financial Analysts). He also lectured in Risk Management at Stanford University.
Ms. Florence von Erb is the founder of Sure We Can Inc, a community-based not-for-profit i recyclable container redemption center in New York City. Ms. Von Erb has an extensive international career in finance and capital markets. She sits as an independent member in the Supervisory Board of Klépierre, a French real estate investment trust. Ms.Von Erb has also been serving as an independent director of global market research firm Ipsos SA since 2014. Ms. Von Erb began her finance career in 1980 working at JP Morgan’s Paris, London and New York offices specializing in international securities markets. She is member of the United Nations NGO Social Development Committee, the Commission on the Status of Women and the UN Family Committee. Ms. Von Erb graduated from HEC Paris, specializing in finance. Ms. Katrin Brökelmann has over 20 years of industry experience as an investment professional in Private Equity and Venture Capital, supporting high-growth technology-based companies, including SMEs, in the Technology, Media, Life Sciences and Business Services. In addition to her role at Azerion, Ms. Brökelmann is currently Partner and Member of the Agri FoodTech Investment Committee at Praesidium, a private investment office. Ms. Brökelmann holds a Master in International Management and Diplom-Kffr. from ESCP Europe and a BA from Vienna University of Economics and Business. Ms. Brökelmann is fluent in English, French, Italian and German.
As all members of the Supervisory Board have been appointed for their first term as of 1 February 2022, no mutations or reappointments are expected for the coming year.
As stated in the paragraph Corporate Governance, starting on page 45 in this Annual Report 2022, the current composition of the Supervisory Board is in compliance with gender diversity as required by Dutch law. All members of the Supervisory Board are independent in accordance with provision 2.1.7 and 2.1.8 of the Code.
Supervisory Board meetings were held regularly to discuss the Company’s progress and future plans, the functioning and composition of the Supervisory Board and the performance of the Management Board. During 2022, the Supervisory Board held 8 meetings. All Supervisory Board members were present at all meetings either in person or via conference call. Between meetings, there was regular contact between the Chairpersons of the Supervisory Board, SAR committee and Audit Committee and the Management Board. The Company’s quarterly results and annual accounts have been discussed along with related documents. In addition, the Supervisory Board mainly discussed the following topics in its meetings: the Company’s mid-term and long-term strategy, the cash flow for the year, acquisitions, M&A planning including funding for the year, M&A criteria and thresholds for approval obligations, annual incentive plan, the various acquisitions, capital raising and investor relations. All members of the Supervisory Board followed an induction program, including a strategic deep dive through which the members were introduced to all aspects of the Company’s platform and premium games segments. Furthermore, the members were introduced to the financial, social and legal and compliance affairs of the Company, including an introduction to the Dutch corporate governance rules.
The Supervisory Board had an extensive session with the members of the Executive team and senior management, discussing the various aspects of the Company’s long term value creation, focusing on Azerion Group N.V. Annual Report 2022 Supervisory Board 49 diverse aspects of the Company’s platform, its premium game segment, its plan for future technology development and its sales strategy.
For the first time, the Supervisory Board has assessed and discussed its performance during 2023 by means of a self-assessment. The assessment included reviews of the composition of the Supervisory Board, its competence and expertise, effectiveness of the meetings and the lessons learned from this first year of listing. The overall conclusion of the assessment was positive, with certain areas of improvement, such as improved timeliness for pre-circulation of pre-reading material, the wish to have more insight in comparable industry comparative data and to spend more time on discussion of the long term strategic direction of the Company. The Supervisory Board will try to maintain the practices that have been positively assessed in 2023 and pay extra attention to the areas of improvement.
The two committees: the Audit Committee and SAR Committee (the “Committees”) are responsible to support and assist the Supervisory Board with specific topics. These Committees are regulated by committee charters, available on the Company’s website.
The members of the Management Board and the Supervisory Board are entitled to a remuneration in accordance with the Remuneration Policy as adopted by the General Meeting on 31 January 2022. The Remuneration Policy aims to provide a remuneration structure that will allow the Company to attract, reward and retain highly qualified members of the Management Board and Supervisory Board and provide and motivate them with a balanced and competitive remuneration that is focused on sustainable results and is aligned with the long-term strategy of the Company. Given the business model and the structure of the Company, the remuneration of the Company is focused on performance-based elements, in particular long-term incentives. The Supervisory Board, shall upon the initiative of the SAR Committee, review the Remuneration Policy on a regular basis. Changes to the Remuneration Policy must be adopted by the General Meeting upon a proposal of the Supervisory Board in accordance with applicable law. The Remuneration Policy does not meet all the requirements of the Code, as the performance shares and restricted shares awarded to members of the Management Board, under the terms of the Company’s Long-term Incentive Plan, can be sold upon vesting and share options can be exercised upon vesting instead of having to be held for at least five or three years: Performance shares vest after three years of granting and restricted shares vest after one year of granting. Share options vest after one year of granting. Although the Company’s Remuneration Policy provides that members of the Management Board are encouraged to comply with best practice provision 3.1.2, there is no strict prohibition to ensure compliance with best practice provision 3.1.2. The Company believes that the terms of the Long-term Incentive Plan enable it to offer an attractive remuneration package which will incentivize the members of the Management Board and the Company’s employees.
The remuneration of each member of the Management Board may consist of a base salary, a variable annual bonus (short-term cash incentive), long-term incentive awards, pension and fringe benefits and severance arrangements. When determining the remuneration for member of the Management Board, the SAR Committee (and Supervisory Board) may consider, among other things, the requirements of the role, the needs of the Company’s business, the skills and experience of the individual and the market for talent both domestically and internationally. In the case of internal promotions, commitments made prior to the appointment as member of the Management Board may continue to be honored in addition to any new remuneration arrangements that will apply.
The base salary of the members of the Management Board aims to reflect the responsibility and scope of their role, taking into account their level of seniority and experience. The base salary for each member of the Management Board is a fixed cash compensation paid on a monthly basis. In light of the Company’s remuneration philosophy to have a remuneration package for the members of the Management Board that is more heavily weighted towards performance-based elements, the base salary is targeted to be at or below the median level of executives with similar roles in comparable companies.
Azerion Group N.V. Annual Report 2022 Supervisory Board 50
The base salary for the year 2022 is € 556 thousand for Mr. Aytekin (co-CEO), € 556 thousand for Mr. Akpinar (co-CEO). For Ms. del Dado Alonso Sanchez, who left the Company in the course of 2022, the base salary amounted to € 285 thousand on a full year basis.
The objective of the variable annual remuneration is to ensure that the members of the Management Board are well incentivised to achieve annual strategic goals and personal objectives to drive success in the long-term. It provides a focus on the key development areas for the Company, both financial and non-financial. The members of the Management Board are eligible to receive an annual bonus subject to the achievement of certain pre-determined financial, strategic and operational performance measures, supporting the overall focus on long-term value creation of the Company. For the year 2022, the members of the Management Board waived their entitlement to a bonus.
The members of the Management Board are eligible for long-term incentive awards as further described in the Remuneration Policy. The current members of the Management Board, Mr. Atilla Aytekin and Mr. Umut Akpinar do not participate in the LTIP.
The share based payment benefits of Ms D. Alonso relate to the settlement of Stock Appreciation Rights. Ms. Alonso participated in Azerion's SAR Employee Plan, and these SARS were settled in connection with the Business Combination with European Fintech IPO Company 1 B.V., which was completed on 1 February 2022. In connection with the Business Combination, her SARs have been net settled in 69,015 depositary receipts for ordinary shares in the capital of Azerion Group N.V.
In the De-SPAC Transaction, a total number of 17,992,773 Azerion Founder Warrants were granted to the personal Holding Companies of the two founding members in the Management Board.These warrants were granted as part of the De-SPAC transaction to balance out a potential future dilutive share effect of warrants granted to EFIC1 shareholders. The grant date fair value amounted to € 9.9 million.
The members of the Management Board may be given the opportunity to participate in a personal pension scheme. Furthermore, the members of the Management Board are entitled to certain customary fringe benefits such as expense allowances, reimbursements of costs, a company car, a mobile phone and reasonable tax advice and support or allowance in lieu of such benefits. Where appropriate, the Company may meet certain costs relating to relocations of members of the Management Board and, if necessary, expatriate benefits.
The total remuneration received by the Management Board in 2022 amounted to: € 12.9 million. The individual remuneration is set out below.
| Remuneration received by the members of the Management Board | In million of € | Atilla Aytekin | Umut Akpinar | Dado Alonso |
|---|---|---|---|---|
| Short-term employee benefits | 0.6 | 0.6 | 0.3 | |
| Post-employment benefits | - | - | - | |
| Share-based payment benefits | - | - | 1.4 | |
| Share-based payments (Azerion Founder Warrants) | 5.0 | 5.0 | - | |
| Other | - | - | - | |
| Remuneration of the Management Board | 5.6 | 5.6 | 1.7 |
By determining the Remuneration Policy for the members of the Management Board, the Supervisory Board also takes into account the pay-ratio between the pay of the members of the Management Board and the average employee within the Company. The calculation of the internal pay-ratio is based on the average 2022 remuneration of all employees vis-à-vis the remuneration of the co-CEO’s. This resulted in a first pay-ratio of 55.7 for 2022. The Supervisory Board will monitor the extent to which this pay-ratio changes over the years and take it into consideration when making remuneration decisions for the Management Board.
Azerion Group N.V. Annual Report 2022 Supervisory Board 51
The remuneration of the members of the Supervisory Board consists of a fixed annual payment. The level of this payment is based on benchmark assessment. Members of the Supervisory Board are also eligible to receive reimbursement of reasonable expenses incurred during their duties, including any applicable taxes. They are not eligible for an annual cash bonus or any other type of variable remuneration linked to the financial results of the Company.
For 2022, each member of the Supervisory Board receives a fixed annual fee of € 50 thousand. In addition, the chairperson of the Supervisory Board receives an additional annual fee of € 30 thousand, the chairpersons of the Audit Committee and the SAR Committee receive an additional annual fee of € 10 thousand each, and each committee member receives an additional annual fee of € 5 thousand.
The total remuneration received by the Supervisory Board in 2022 amounted to € 349 thousand. The individual remuneration is set out below:
| Remuneration received by the Supervisory Board | in thousands of € | Peter Tordoir | Christian Figee | Klaas Meertens | Florence von Erb | Derk Haank | Katrin Brökelmann |
|---|---|---|---|---|---|---|---|
| Short term employee benefits | 79 | 65 | 50 | 46 | 59 | 50 | |
| Remuneration of the Supervisory Board | 79 | 65 | 50 | 46 | 59 | 50 |
During 2022, the Audit Committee (AC) comprised two members: Mr. Chris Figee (Chair) and Mrs. Katrin Bröckelman. The AC held 9 formal meetings during 2022 in addition to regular (informal) update arranged through (video) calls. The Audit Committee mainly discussed the 2022 quarterly results, the 2022 (interim) financial statements, including the complexities relating to the SPAC-reporting requirements, the cash and capital strategy of the Company and its risk monitoring system. The external auditor was present at six of the AC meetings. During these meetings, the AC discussed, amongst others, the auditor’s report as well, its assessment of the internal risk management and control systems with the auditor. Moreover the AC had a discussion with the auditor without the Management Board present.
As Chairperson for the Audit Committee, I’m very pleased to look back at an eventful year. We’re satisfied with the continued strong revenue growth and solid gross margins Azerion has achieved, as well as a satisfactory EBITDA despite cost challenges, impacted both by a new cost base that comes with being listed and additional costs coming from acquisitions.
Life as a new member of the stock market had a profound effect on the amount of reporting and accounting requirements, as well as on Azerion’s pursuit of clarity and transparency. Azerion made full use of this transition and finalized the legal merger of its two reporting entities Azerion Group NV and Azerion Holding BV, to increase reporting transparency and provide a simplified reporting structure. The company demonstrated great effort towards transparency as well by publishing its revised Q4 numbers together with its yearly results of 2021. Being market-listed and acquired by special purpose acquisition company (SPAC) EFIC1 required a lot of the Financial Team. A huge thank you and appreciation goes out to them for improving the control framework and the delivery of the financial results in a timely manner.
As always, the collaboration between Azerion’s Finance Team and PWC, Azerion’s external auditor, was based on full transparency and cooperation. The Azerion Group N.V. Annual Report 2022 Supervisory Board 52 Finance Team did an excellent job liaising with PWC to provide them with all needed information. Going forward, 2023 will again be an interesting and challenging year for Azerion. How we manage priorities, risks, resources, and partnerships will be vital for laying the groundworks for the coming years. The Audit Committee holds a special position challenging the decisions taken and initiatives launched. However, with the knowledge and skills gained within the company, in the Supervisory Board, and in the Audit Committee in the last years, we look forward with confidence. The Audit Committee remains strongly committed to supporting all teams on Azerion’s path as a listed company and moving ahead in the creation of value.
Chris Figee
Chairperson of Azerion’s Audit Committee
Currently, no department for the internal audit functional has been established within the Company. In deviation from provision 1.3.1 of the Code, no senior internal auditor has been appointed by the Management Board due to the size of the Company and limited complexity of transactions.
As from the 31 January 2022, PwC is appointed as the Company’s external independent auditor (the “External Independent Auditor”). The appointment of PwC as External Independent Auditor for the Company aligned with the appointed external independent auditor for Azerion Holding B.V. The External Independent Auditor reports to the Audit Committee on the actions taken to comply with professional and regulatory requirements and with best practice designed to ensure its independence. The performance of the External Independent Auditor is reviewed by the Audit Committee on an annual basis through a qualitative assessment of the services provided against the agreed audit plan and taking account of feedback received from management. Following this review, the Audit Committee has proposed to the Supervisory Board to submit a proposal to the General Meeting to appoint PWC as auditor to audit the annual accounts for the financial year 2023.
During 2022, the SAR Committee comprised two members: Mr. Derk Haank (Chair) and Mr. Peter Tordoir. The SAR Committee held 1 formal meeting during 2022 in addition to regular (informal) updates arranged through (video) calls. The SAR Committee discussed the introduction of two new incentivization programs to serve as a tool to recruit, reward and retain critical talent, an executive annual incentive plan (“Executive Plan”) and a senior annual cash incentive plan (“Cash Plan”). Both plans are intended to serve as the foundation for the variable remuneration of the senior executives and other key senior employees of the Company and do not impact the remuneration of the Management Board. The Executive Plan is an annual plan with a cash component and a share component, with a split to be determined annually, with awards to be determined in the discretion of the Management Board taking into account certain Group KPI’s and considerations relating to personal performance. The Cash Plan is a cash plan only for key managers and individual contributors. Furthermore, the SAR Committee assessed the performance of the Co-CEO’s during the financial year under review in Q1 of 2023
The Annual General Meeting took place on 16 June 2022. The meeting discussed, among others, the annual report 2021, the remuneration report 2021 and adoption of the annual accounts 2021. Furthermore, the Dividend Policy was presented, which indicated that the Company does not intend to pay any dividends in the short to medium term as it wants to maintain financial flexibility to invest in its growth both organically and inorganically. The Annual General Meeting for 2023 shall be held on 15 June 2023. The meeting will amongst others discuss the annual results of the Company for 2022 and the proposal to approve the financial statements for the financial year 2022, the proposal to redeem the treasury shares as announced in February 2023 as well as the proposal to re-appoint PWC as auditor to audit the annual accounts over the financial year 2023.# Financial statements 2022
For 2022, the Management Board has prepared consolidated financial statements of the Company, which have been audited by PwC, whose independent auditor’s report is included in this report, and were reviewed and discussed on 26 April 2023 by the Supervisory Board members and the External Independent Auditor in the presence of the Management Board. The Supervisory Board believes the 2022 consolidated financial statements of the Company meet all requirements for correctness and transparency.
All members of the Supervisory Board and the Management Board have signed the 2022 Financial
Azerion Group N.V. Annual Report 2022 Supervisory Board 53
Statements pursuant to the statuary obligations under Dutch law. The Management Board will present the financial statements for 2022 and its report at the scheduled Annual General Meeting expected to be held on 15 June 2023. The Supervisory Board recommends that the Annual General Meeting adopts the 2022 Financial Statements and discharges the Management Board and the Supervisory Board from liability for their management and supervision in the year under review.
Schiphol-Rijk, 26 April 2023
The Supervisory Board
Peter Tordoir
Derk Haank
Klaas Meertens
Chris Figee
Florence von Erb
Katrin Brökelmann
Azerion Group N.V. Annual Report 2022
Azerion Group N.V. Annual Report 2022
In millions of €
| Notes | 31 December 2022 | 31 December 2021 |
|---|---|---|
| Assets | | |
| Non-current assets | 429.3 | 323.6 |
| Property, plant and equipment | 6 | 20.5 | 18.5 |
| Goodwill | 8 | 184.2 | 123.0 |
| Intangible assets | 7 | 186.2 | 141.8 |
| Non-current financial assets | 10 | 36.8 | 36.0 |
| Deferred tax asset | 24 | 1.5 | 4.2 |
| Investment in joint venture and associate | | 0.1 | 0.1 |
| Current assets | 209.2 | 140.1 |
| Trade and other receivables¹ | 11 | 157.3 | 103.5 |
| Current tax assets | | 1.0 | 1.3 |
| Cash and cash equivalents | 12 | 50.9 | 35.3 |
| Total assets | | 638.5 | 463.7 |
| Equity | | |
| Share capital | 13 | 1.2 | - |
| Share premium | 13 | 130.8 | 0.5 |
| Legal reserve | 13 | 25.2 | 19.6 |
| Share based payment reserve | 14 | 13.7 | 1.8 |
| Currency translation reserve | 13 | (1.3) | 0.6 |
| Other equity instruments | 13 | 29.0 | 34.0 |
| Retained earnings | 13 | (104.8) | (65.1) |
| Shareholders' equity | | 93.8 | (8.6) |
| Non-controlling interest | 13 | 2.4 | 1.7 |
| Total equity | | 96.2 | (6.9) |
| Liabilities | | |
| Non-current liabilities | 257.7 | 260.1 |
| Borrowings | 18 | 201.5 | 199.0 |
| Lease liabilities | 9 | 14.3 | 14.3 |
| Provisions | 15 | 1.6 | 1.4 |
| Deferred tax liability | 24 | 25.3 | 29.8 |
| Other non-current liability | 16 | 15.0 | 15.6 |
| Current liabilities | 284.6 | 210.5 |
| Borrowings | 18 | 7.9 | 6.8 |
| Provisions | 15 | 0.9 | 1.0 |
| Trade, other payables and accrued liabilities¹ | 17 | 221.9 | 141.5 |
| Current tax liabilities | | 5.4 | 3.0 |
| Lease liabilities | 9 | 4.9 | 4.7 |
| Other current liabilities | 16 | 43.6 | 53.5 |
| Total liabilities | | 542.3 | 470.6 |
| Total equity and liabilities | | 638.5 | 463.7 |
¹Contract assets and Contract liabilities have been reclassified to Trade and other receivables and Trade, other payables and accrued liabilities to reflect the appropriate accounting treatment. For more details see note 3: Significant accounting policies.
Azerion Group N.V. Annual Report 2022
In millions of €
| Notes | 2022 | 2021 |
|---|---|---|
| Revenue | 19 | 452.6 | 308.1 |
| Costs of services and materials | 21 | (286.3) | (187.2) |
| Personnel costs | 20 | (107.2) | (55.1) |
| Depreciation | 6 | (7.0) | (5.3) |
| Amortization | 7 | (31.0) | (17.6) |
| Impairment of non-current assets | 6, 7 | (0.5) | (1.9) |
| Other gains and losses | 22 | 1.4 | 0.7 |
| Other expenses | 21 | (161.0) | (33.3) |
| Operating profit / (loss) | | (139.0) | 8.4 |
| Finance income | 23 | 22.3 | 1.8 |
| Finance costs | 23 | (23.4) | (28.4) |
| Net Finance costs | | (1.1) | (26.6) |
| Share in profit/(loss) of joint venture and associate | | - | 0.3 |
| Profit / (loss) before tax | | (140.1) | (17.9) |
| Income tax expense | 24 | 7.0 | (2.0) |
| Profit / (loss) for the year | | (133.1) | (19.9) |
| Attributable to: | | |
| Owners of the company | | (134.3) | (19.6) |
| Non-controlling interest | | 1.2 | (0.3) |
| Items that may be reclassified to profit and loss, net of tax | | |
| Exchange difference on translation of foreign operations | | (2.6) | 0.2 |
| Total other comprehensive income | | (2.6) | 0.2 |
| Total comprehensive income / (loss) | | (135.7) | (19.7) |
| Attributable to: | | |
| Owners of the company | | (135.5) | (19.4) |
| Non-controlling interest | | (0.2) | (0.3) |
| Loss per share for losses attributable to the ordinary equity holders of the company: | | |
| Basic profit/(loss) per share (in €) | 31 | (1.2) | (0.2) |
| Diluted profit/(loss) per share (in €) | 31 | (1.2) | (0.2) |
Azerion Group N.V. Annual Report 2022
In millions of €
| | 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 |
|---|---|---|---|---|---|---|---|---|---|---|
| Notes | 13 | 13 | 13 | 14 | 13 | 13 | 13 | 13 | | |
| Balance as of 1 January 2021 | - | 0.5 | 13.8 | 0.6 | 0.3 | 31.0 | (42.1) | 4.1 | 2.1 | 6.2 |
| Profit for the year | - | - | - | - | - | - | (19.6) | (19.6) | (0.3) | (19.9) |
| Other comprehensive income / (loss) | - | - | 5.8 | - | 0.2 | - | (5.8) | 0.2 | - | 0.2 |
| Total comprehensive income / (loss) | - | - | 5.8 | - | 0.2 | - | (25.4) | (19.4) | (0.3) | (19.7) |
| Transactions with owners in their capacity as owners: | | | | | | | | | | |
| Share-based payments, net of tax | 14 | - | - | - | 1.2 | - | - | - | 1.2 | - | 1.2 |
| Changes in shareholder loans | 13, 10 | - | - | - | - | - | 1.8 | 3.5 | 5.3 | - | 5.3 |
| Issuance of investor share appreciation rights | 5 | - | - | - | - | - | 0.2 | - | 0.2 | - | 0.2 |
| Acquisition related share appreciation rights | 5 | - | - | - | - | - | 1.0 | - | 1.0 | - | 1.0 |
| Other movements | | - | - | - | 0.1 | - | (1.1) | (1.0) | (0.1) | (1.1) |
| Total other movements | | - | - | - | 1.2 | 0.1 | 3.0 | 2.4 | 6.7 | (0.1) | 6.6 |
| Balance as of 31 December 2021 | - | 0.5 | 19.6 | 1.8 | 0.6 | 34.0 | (65.1) | (8.6) | 1.7 | (6.9) |
| Profit for the year | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | (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) | 0.0 | 0.0 | 5.6 | 0.0 | (2.0) | - | (139.1) | (135.5) | (0.2) | (135.7) |
| Transactions with owners in their capacity as owners: | | | | | | | | | | |
| Changes in shareholder loans | 13 | - | (1.9) | - | - | - | - | - | (1.9) | - | (1.9) |
| Settlement of share-based payments | 14,13 | 0.0 | 13.1 | - | 11.3 | - | - | - | 11.3 | - | 11.3 |
| Settlement of Investor share appreciation rights | 14,13 | 0.0 | 1.9 | - | - | - | - | - | - | - | - |
| Settlement of Acquisition related share appreciation rights | 14,13 | 0.0 | 17.2 | - | 7.7 | - | - | - | 7.7 | - | 7.7 |
| Withholding wage taxes related to share-based payments | 13 | - | (6.6) | - | - | - | - | - | (6.6) | - | (6.6) |
| De-SPAC Transaction | 4,13 | 0.2 | 28.5 | - | - | - | 107.1 | - | 139.5 | - | 139.5 |
| Issuance of Azerion Founder Warrants | 4,16 | - | 9.9 | - | - | - | - | - | 9.9 | - | 9.9 |
| Private placement to sponsors and co-investors | 4 | - | 23.1 | - | - | - | - | - | 23.1 | - | 23.1 |
| Other private placement | 13 | 0.0 | 10.5 | - | - | - | - | - | 10.5 | - | 10.5 |
| Capital restructuring | 4,13 | 1.0 | (1.0) | - | - | - | - | - | - | - | - |
| Share considerations for new acquisitions | 5,13 | 0.0 | 35.5 | - | - | - | 8.3 | - | 43.8 | - | 43.8 |
| Issuance of HTP Call options | 4,13 | - | 1.6 | - | - | - | - | - | 1.6 | - | 1.6 |
| Exercise of HTP Call options | 14,4,13 | 0.0 | 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 |
Azerion Group N.V. Annual Report 2022
In millions of €
| Notes | 2022 | 2021 |
|---|---|---|
| Cash flows from operating activities | | |
| Operating profit / (loss) | | (139.0) | 8.4 |
| Adjustments for: | | |
| Depreciation and amortisation | 6, 7 | 38.0 | 22.9 |
| Impairment of tangible & intangible assets | 6, 7 | 0.5 | 1.9 |
| Movements in provisions per profit and loss | 15 | 3.0 | 0.5 |
| Share-based payments expense | 14 | 22.7 | 1.2 |
| De-SPAC related expenses | 4 | 14.8 | - |
| De-SPAC listing expense | 4 | 107.1 | - |
| Other non-cash items | | - | 0.8 |
| Changes in working capital items: | | |
| (Increase)/Decrease in trade and other receivables | 11 | (22.1) | (2.7) |
| Increase/(Decrease) in trade and other payables | 17 | 49.8 | 6.6 |
| Utilization of provisions | | (3.1) | (0.3) |
| Interest paid | | (18.7) | (14.0) |
| Income taxes paid | | (1.4) | (1.3) |
| Net cash provided by (used for) operating activities excluding SARs related cash outflows | | 51.6 | 24.0 |
| SARs related cash outflows | | (6.7) | - |
| Net cash provided by (used for) operating activities including SARs related cash outflows | | 44.9 | 24.0 |
| Cash flows from investing activities | | |
| Payments for property, plant and equipment | 6 | (1.5) | (1.4) |
| Payments for intangibles | 7 | (20.2) | (16.7) |
| Acquisition of subsidiaries, net of cash | 5, 16 | (54.1) | (64.3) |
| Decrease/ (Increase) in loans and other investments | 10 | - | (0.7) |
| Net cash outflow from investing activities | | (75.8) | (83.1) |
| Cash flows from financing activities | | |
| Proceeds from external borrowings | 18, 29 | 0.5 | 227.5 |
| Transaction costs | | - | (5.7) |
| Repayment of external borrowings | 18, 29 | (5.0) | (113.8) |
| Payment of principal portion of lease liabilities | 9, 29 | (7.6) | (4.1) |
| Increase in loan to related parties | 10, 25 | - | (12.4) |
| De-SPAC related expenses | 4 | (33.7) | - |
| Proceeds from De-SPAC transaction | 4 | 404.1 | - |
| Settlement of De-SPAC transaction | 4 | (310.9) | - |
| Early settlement of Senior Secured Callable Floating Rate Bonds | 23, 29 | - | (7.7) |
| Other inflows (outflows) from financing activities | | - | 0.2 |
| Net cash inflows from financing activities | | 47.4 | 84.0 |
| Net increase in cash and cash equivalents | | 16.5 | 24.9 |
| Effects of exchange rate changes on cash and cash equivalents | | (0.9) | - |
| Cash and cash equivalents at the beginning of the year | 12 | 35.3 | 10.4 |
| Cash and cash equivalents at the end of the year | 12 | 50.9 | 35.3 |
Azerion Group N.V.# Annual Report 2022
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 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 De-SPAC 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 De-SPAC Transaction.
The 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 statement of other comprehensive income, the balance sheet and the statement of cash flows for 2022 includes the results of Azerion Group N.V. starting from the date of completion of the Transaction. The comparative figures in the consolidated financial statements being compared to the 12 months period ended 31 December 2022 are those of Azerion Holding B.V.
These consolidated financial statements comprise the Company and its subsidiaries and entities it exercises control over (the ‘Group’ or ‘Azerion’).
Following the Transaction on 1 February 2022 a legal merger between Azerion Group N.V. and Azerion Holding B.V. was proposed. As no objections raised, this legal merger became effective as of 1 January 2023. This legal merger, under universal succession of title, implied that Azerion Group N.V., being the 100% shareholder of Azerion Holding B.V., absorbed all rights and obligations of Azerion Holding B.V. As Azerion Group N.V. filed a 403 statement for Azerion Holding B.V., the only financial statements to be published are those of Azerion Group N.V.
Azerion operates a high-growth digital entertainment and media platform. It is a content-driven technology and data company, serving consumers, advertisers, digital publishers, and game creators globally. Digital gaming and digital advertising have the potential to create a powerful force for good through their reach to large and significantly engaged audiences worldwide. Our ambition is to establish Azerion as the leading digital entertainment and media platform in Europe, becoming the digital gaming provider of choice for our consumers and preferred service partner for advertisers, digital publishers and game creators.
Positioned initially as a digital social and casual gaming company, in recent years Azerion has expanded further along the user engagement value chain into integrated advertising technology. Azerion is engaged in a number of interrelated operating activities including providing technology solutions to automate the purchase and sale of digital advertising inventory for advertisers, publishers and game creators as well as developing, publishing, distributing and operating online social and casual games and digital content.
As audiences continue to transition to digital forms of entertainment, gaming has established itself as one of the most engaging forms of content, attracting advertisers into the ecosystem. Azerion's owned and operated content reaches millions of highly engaged users globally, captures advertising spend across its platform and Azerion Group N.V. Annual Report 2022 Consolidated financial statements 62 generates revenues through in-game purchases in its premium games. By leveraging the platform, Azerion also receives a share of revenue generated through the placing of advertisements on the inventory of its digital publisher partners and a share of the advertisement revenue generated by the content of its game creator partners.
During 2022, Azerion has worked with more than 400,000 advertisers globally and over 300,000 digital publishers using omnichannel solutions across all formats, devices and platforms. Through its platform and taking into account all its products, as at September 2022 Azerion's reach extended to an audience of on average over 500 million unique monthly active users. On average Azerion sells approximately 9 billion digital advertisements on a monthly basis, publishes on average more than 250 new games per month and works with over 1,000 game creators. As at September 2022, Azerion’s platform had a portfolio of more than 20,000 game titles and more than 10,000 exclusive publisher websites.
Within its games portfolio, Azerion has nine premium game titles, defined as games where revenue is generated mainly from users making purchases directly in-game. Azerion is a highly diversified business generating revenue from a broad range of jurisdictions and verticals across its two segments, Platform and Premium Games. The two segments have their own management structures which report into the company management board.
Management prepared these consolidated financial statements on the going concern basis. The Group incurred a comprehensive loss of € (135.7)million (2021: € (19.7)million loss) for the year ended 31 December 2022 of which € (0.2) million loss is attributable to the non-controlling interest (2021: € 0.3 million loss). As of 31 December 2022, the Group had net assets of € 96.2 million (2021: € (6.9) million negative). Management believes that the application of going concern basis is appropriate as at 26 April 2023.
Overall, the revenue for 2022 was € 452.6 million, an increase of 46.9% as compared with the full year 2021 (2021: €308.1 million). Platform revenue increased by 55.0% to € 363.5 million (2021: € 234.5 million), whereas Premium Games revenue increased by 21.1% to € 89.1 million (2021: € 73.6 million).
Based on the current financial position and results, the Group expects to meet its covenant ratios for subsequent quarterly measurement dates in 2023. The main financial covenant is called the maintenance ratio which represents the ratio of the net interest-bearing debt to adjusted EBITDA which should be less than 4.50x. As at 31 December 2022, the Group is in compliance with the maintenance ratio.
The net primary cash proceeds, together with expected future operational cash flows and available debt facilities of the Company have been assessed by the Management Board and are considered to provide sufficient liquidity to the Company for the following 12 months. The liquidity position of the Company is further strengthened by not proposing to pay any dividends for the next 12 months.
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.
Annual Report 2022# Annual Report 2022
These consolidated financial statements were 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 consolidated financial statements have been prepared on the historical cost basis unless otherwise indicated.
The consolidated financial statements were authorized for issue by the Supervisory Board on 26 April 2023. These consolidated financial statements also include the financial information of the Company, Azerion Group N.V.
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 control 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 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, whereby shares are issued to substantially acquire a listing for the Group. The accounting of this transaction in these financial statements are identified as the ‘De-SPAC Transaction’ or ‘the Transaction’.
Nevertheless, given the characteristics of the Transaction, the presentation in the financial statements is, by analogy, based on the IFRS 3 principles for reverse acquisitions. That implies that the 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.
As a result of the De-SPAC Transaction, and therefore not included in the comparative information, the following other changes to the capital structure of Azerion Group N.V. were effectuated:
These consolidated financial statements were 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 consolidated financial statements have been prepared on the historical cost basis unless otherwise indicated.
The consolidated financial statements were authorized for issue by the Supervisory Board on 26 April 2023. These consolidated financial statements also include the financial information of the Company, Azerion Group N.V.
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 control 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 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, whereby shares are issued to substantially acquire a listing for the Group. The accounting of this transaction in these financial statements are identified as the ‘De-SPAC Transaction’ or ‘the Transaction’.
Nevertheless, given the characteristics of the Transaction, the presentation in the financial statements is, by analogy, based on the IFRS 3 principles for reverse acquisitions. That implies that the 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.
As a result of the De-SPAC Transaction, and therefore not included in the comparative information, the following other changes to the capital structure of Azerion Group N.V. were effectuated:
from Share Based Payments Reserve into Share Capital and Share Premium.
Refer to note 4: De-SPAC Transaction for further information's on the Transaction.
These consolidated financial statements are presented in millions of euros (€), which is the Company’s functional currency and rounded to the nearest hundred thousand unless stated otherwise.
The preparation of these consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions, which affect the reported amounts in these consolidated financial statements. Estimates are based on historical experience, where applicable, and other assumptions which management believes are reasonable under the circumstances. The Group evaluates its estimates on an ongoing basis. These estimates are inherently subject to judgement and actual results could differ from those estimates. Revisions to accounting estimates are recognized prospectively.
Information about significant judgements and estimates used are included in the relevant notes to the financial statements. The areas involving significant estimates and judgements are:
Azerion Group N.V.
These consolidated financial statements were 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 consolidated financial statements have been prepared on the historical cost basis unless otherwise indicated.
The consolidated financial statements were authorized for issue by the Supervisory Board on 26 April 2023. These consolidated financial statements also include the financial information of the Company, Azerion Group N.V.
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 control 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 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, whereby shares are issued to substantially acquire a listing for the Group. The accounting of this transaction in these financial statements are identified as the ‘De-SPAC Transaction’ or ‘the Transaction’.
Nevertheless, given the characteristics of the Transaction, the presentation in the financial statements is, by analogy, based on the IFRS 3 principles for reverse acquisitions. That implies that the 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.
As a result of the De-SPAC Transaction, and therefore not included in the comparative information, the following other changes to the capital structure of Azerion Group N.V. were effectuated:
from Share Based Payments Reserve into Share Capital and Share Premium.
Refer to note 4: De-SPAC Transaction for further information's on the Transaction.
These consolidated financial statements are presented in millions of euros (€), which is the Company’s functional currency and rounded to the nearest hundred thousand unless stated otherwise.
The preparation of these consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions, which affect the reported amounts in these consolidated financial statements. Estimates are based on historical experience, where applicable, and other assumptions which management believes are reasonable under the circumstances. The Group evaluates its estimates on an ongoing basis. These estimates are inherently subject to judgement and actual results could differ from those estimates. Revisions to accounting estimates are recognized prospectively.
Information about significant judgements and estimates used are included in the relevant notes to the financial statements. The areas involving significant estimates and judgements are:
Azerion Group N.V.
These consolidated financial statements were 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 consolidated financial statements have been prepared on the historical cost basis unless otherwise indicated.
The consolidated financial statements were authorized for issue by the Supervisory Board on 26 April 2023. These consolidated financial statements also include the financial information of the Company, Azerion Group N.V.
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 control 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 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, whereby shares are issued to substantially acquire a listing for the Group. The accounting of this transaction in these financial statements are identified as the ‘De-SPAC Transaction’ or ‘the Transaction’.
Nevertheless, given the characteristics of the Transaction, the presentation in the financial statements is, by analogy, based on the IFRS 3 principles for reverse acquisitions. That implies that the 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.
As a result of the De-SPAC Transaction, and therefore not included in the comparative information, the following other changes to the capital structure of Azerion Group N.V. were effectuated:
from Share Based Payments Reserve into Share Capital and Share Premium.
Refer to note 4: De-SPAC Transaction for further information's on the Transaction.
These consolidated financial statements are presented in millions of euros (€), which is the Company’s functional currency and rounded to the nearest hundred thousand unless stated otherwise.
The preparation of these consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions, which affect the reported amounts in these consolidated financial statements. Estimates are based on historical experience, where applicable, and other assumptions which management believes are reasonable under the circumstances. The Group evaluates its estimates on an ongoing basis. These estimates are inherently subject to judgement and actual results could differ from those estimates. Revisions to accounting estimates are recognized prospectively.
Information about significant judgements and estimates used are included in the relevant notes to the financial statements. The areas involving significant estimates and judgements are:
Azerion Group N.V.
These consolidated financial statements were 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 consolidated financial statements have been prepared on the historical cost basis unless otherwise indicated.
The consolidated financial statements were authorized for issue by the Supervisory Board on 26 April 2023. These consolidated financial statements also include the financial information of the Company, Azerion Group N.V.
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 control 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 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, whereby shares are issued to substantially acquire a listing for the Group. The accounting of this transaction in these financial statements are identified as the ‘De-SPAC Transaction’ or ‘the Transaction’.
Nevertheless, given the characteristics of the Transaction, the presentation in the financial statements is, by analogy, based on the IFRS 3 principles for reverse acquisitions. That implies that the 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.
As a result of the De-SPAC Transaction, and therefore not included in the comparative information, the following other changes to the capital structure of Azerion Group N.V. were effectuated:
from Share Based Payments Reserve into Share Capital and Share Premium.
Refer to note 4: De-SPAC Transaction for further information's on the Transaction.
These consolidated financial statements are presented in millions of euros (€), which is the Company’s functional currency and rounded to the nearest hundred thousand unless stated otherwise.
The preparation of these consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions, which affect the reported amounts in these consolidated financial statements. Estimates are based on historical experience, where applicable, and other assumptions which management believes are reasonable under the circumstances. The Group evaluates its estimates on an ongoing basis. These estimates are inherently subject to judgement and actual results could differ from those estimates. Revisions to accounting estimates are recognized prospectively.
Information about significant judgements and estimates used are included in the relevant notes to the financial statements. The areas involving significant estimates and judgements are:
Azerion Group N.V.
These consolidated financial statements were 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 consolidated financial statements have been prepared on the historical cost basis unless otherwise indicated.
The consolidated financial statements were authorized for issue by the Supervisory Board on 26 April 2023. These consolidated financial statements also include the financial information of the Company, Azerion Group N.V.
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 control 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 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, whereby shares are issued to substantially acquire a listing for the Group. The accounting of this transaction in these financial statements are identified as the ‘De-SPAC Transaction’ or ‘the Transaction’.
Nevertheless, given the characteristics of the Transaction, the presentation in the financial statements is, by analogy, based on the IFRS 3 principles for reverse acquisitions. That implies that the 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.
As a result of the De-SPAC Transaction, and therefore not included in the comparative information, the following other changes to the capital structure of Azerion Group N.V. were effectuated:
from Share Based Payments Reserve into Share Capital and Share Premium.
Refer to note 4: De-SPAC Transaction for further information's on the Transaction.
These consolidated financial statements are presented in millions of euros (€), which is the Company’s functional currency and rounded to the nearest hundred thousand unless stated otherwise.
The preparation of these consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions, which affect the reported amounts in these consolidated financial statements. Estimates are based on historical experience, where applicable, and other assumptions which management believes are reasonable under the circumstances. The Group evaluates its estimates on an ongoing basis. These estimates are inherently subject to judgement and actual results could differ from those estimates. Revisions to accounting estimates are recognized prospectively.
Information about significant judgements and estimates used are included in the relevant notes to the financial statements. The areas involving significant estimates and judgements are:
Azerion Group N.V.
These consolidated financial statements were 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 consolidated financial statements have been prepared on the historical cost basis unless otherwise indicated.
The consolidated financial statements were authorized for issue by the Supervisory Board on 26 April 2023. These consolidated financial statements also include the financial information of the Company, Azerion Group N.V.
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 control 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 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, whereby shares are issued to substantially acquire a listing for the Group. The accounting of this transaction in these financial statements are identified as the ‘De-SPAC Transaction’ or ‘the Transaction’.
Nevertheless, given the characteristics of the Transaction, the presentation in the financial statements is, by analogy, based on the IFRS 3 principles for reverse acquisitions. That implies that the 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.
As a result of the De-SPAC Transaction, and therefore not included in the comparative information, the following other changes to the capital structure of Azerion Group N.V. were effectuated:
from Share Based Payments Reserve into Share Capital and Share Premium.
Refer to note 4: De-SPAC Transaction for further information's on the Transaction.
These consolidated financial statements are presented in millions of euros (€), which is the Company’s functional currency and rounded to the nearest hundred thousand unless stated otherwise.
The preparation of these consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions, which affect the reported amounts in these consolidated financial statements. Estimates are based on historical experience, where applicable, and other assumptions which management believes are reasonable under the circumstances. The Group evaluates its estimates on an ongoing basis. These estimates are inherently subject to judgement and actual results could differ from those estimates. Revisions to accounting estimates are recognized prospectively.
Information about significant judgements and estimates used are included in the relevant notes to the financial statements. The areas involving significant estimates and judgements are:
Azerion Group N.V.
These consolidated financial statements were 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 consolidated financial statements have been prepared on the historical cost basis unless otherwise indicated.
The consolidated financial statements were authorized for issue by the Supervisory Board on 26 April 2023. These consolidated financial statements also include the financial information of the Company, Azerion Group N.V.
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 control 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 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, whereby shares are issued to substantially acquire a listing for the Group. The accounting of this transaction in these financial statements are identified as the ‘De-SPAC Transaction’ or ‘the Transaction’.
Nevertheless, given the characteristics of the Transaction, the presentation in the financial statements is, by analogy, based on the IFRS 3 principles for reverse acquisitions. That implies that the 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.
As a result of the De-SPAC Transaction, and therefore not included in the comparative information, the following other changes to the capital structure of Azerion Group N.V. were effectuated:
from Share Based Payments Reserve into Share Capital and Share Premium.
Refer to note 4: De-SPAC Transaction for further information's on the Transaction.
These consolidated financial statements are presented in millions of euros (€), which is the Company’s functional currency and rounded to the nearest hundred thousand unless stated otherwise.
The preparation of these consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions, which affect the reported amounts in these consolidated financial statements. Estimates are based on historical experience, where applicable, and other assumptions which management believes are reasonable under the circumstances. The Group evaluates its estimates on an ongoing basis. These estimates are inherently subject to judgement and actual results could differ from those estimates. Revisions to accounting estimates are recognized prospectively.
Information about significant judgements and estimates used are included in the relevant notes to the financial statements. The areas involving significant estimates and judgements are:
Azerion Group N.V.
These consolidated financial statements were 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 consolidated financial statements have been prepared on the historical cost basis unless otherwise indicated.
The consolidated financial statements were authorized for issue by the Supervisory Board on 26 April 2023. These consolidated financial statements also include the financial information of the Company, Azerion Group N.V.
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 control 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 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, whereby shares are issued to substantially acquire a listing for the Group. The accounting of this transaction in these financial statements are identified as the ‘De-SPAC Transaction’ or ‘the Transaction’.
Nevertheless, given the characteristics of the Transaction, the presentation in the financial statements is, by analogy, based on the IFRS 3 principles for reverse acquisitions. That implies that the 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.
As a result of the De-SPAC Transaction, and therefore not included in the comparative information, the following other changes to the capital structure of Azerion Group N.V. were effectuated:
from Share Based Payments Reserve into Share Capital and Share Premium.
Refer to note 4: De-SPAC Transaction for further information's on the Transaction.
These consolidated financial statements are presented in millions of euros (€), which is the Company’s functional currency and rounded to the nearest hundred thousand unless stated otherwise.
The preparation of these consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions, which affect the reported amounts in these consolidated financial statements. Estimates are based on historical experience, where applicable, and other assumptions which management believes are reasonable under the circumstances. The Group evaluates its estimates on an ongoing basis. These estimates are inherently subject to judgement and actual results could differ from those estimates. Revisions to accounting estimates are recognized prospectively.
Information about significant judgements and estimates used are included in the relevant notes to the financial statements. The areas involving significant estimates and judgements are:
Azerion Group N.V.
These consolidated financial statements were 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 consolidated financial statements have been prepared on the historical cost basis unless otherwise indicated.
The consolidated financial statements were authorized for issue by the Supervisory Board on 26 April 2023. These consolidated financial statements also include the financial information of the Company, Azerion Group N.V.
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 control 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 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, whereby shares are issued to substantially acquire a listing for the Group. The accounting of this transaction in these financial statements are identified as the ‘De-SPAC Transaction’ or ‘the Transaction’.
Nevertheless, given the characteristics of the Transaction, the presentation in the financial statements is, by analogy, based on the IFRS 3 principles for reverse acquisitions. That implies that the 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.
As a result of the De-SPAC Transaction, and therefore not included in the comparative information, the following other changes to the capital structure of Azerion Group N.V. were effectuated:
from Share Based Payments Reserve into Share Capital and Share Premium.
Refer to note 4: De-SPAC Transaction for further information's on the Transaction.
These consolidated financial statements are presented in millions of euros (€), which is the Company’s functional currency and rounded to the nearest hundred thousand unless stated otherwise.
The preparation of these consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions, which affect the reported amounts in these consolidated financial statements. Estimates are based on historical experience, where applicable, and other assumptions which management believes are reasonable under the circumstances. The Group evaluates its estimates on an ongoing basis. These estimates are inherently subject to judgement and actual results could differ from those estimates. Revisions to accounting estimates are recognized prospectively.
Information about significant judgements and estimates used are included in the relevant notes to the financial statements. The areas involving significant estimates and judgements are:
Azerion Group N.V.
These consolidated financial statements were 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 consolidated financial statements have been prepared on the historical cost basis unless otherwise indicated.
The consolidated financial statements were authorized for issue by the Supervisory Board on 26 April 2023. These consolidated financial statements also include the financial information of the Company, Azerion Group N.V.
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 control 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 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, whereby shares are issued to substantially acquire a listing for the Group. The accounting of this transaction in these financial statements are identified as the ‘De-SPAC Transaction’ or ‘the Transaction’.
Nevertheless, given the characteristics of the Transaction, the presentation in the financial statements is, by analogy, based on the IFRS 3 principles for reverse acquisitions. That implies that the 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.
As a result of the De-SPAC Transaction, and therefore not included in the comparative information, the following other changes to the capital structure of Azerion Group N.V. were effectuated:
from Share Based Payments Reserve into Share Capital and Share Premium.
Refer to note 4: De-SPAC Transaction for further information's on the Transaction.
These consolidated financial statements are presented in millions of euros (€), which is the Company’s functional currency and rounded to the nearest hundred thousand unless stated otherwise.
The preparation of these consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions, which affect the reported amounts in these consolidated financial statements. Estimates are based on historical experience, where applicable, and other assumptions which management believes are reasonable under the circumstances. The Group evaluates its estimates on an ongoing basis. These estimates are inherently subject to judgement and actual results could differ from those estimates. Revisions to accounting estimates are recognized prospectively.
Information about significant judgements and estimates used are included in the relevant notes to the financial statements. The areas involving significant estimates and judgements are:
Azerion Group N.V.
These consolidated financial statements were 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 consolidated financial statements have been prepared on the historical cost basis unless otherwise indicated.
The consolidated financial statements were authorized for issue by the Supervisory Board on 26 April 2023. These consolidated financial statements also include the financial information of the Company, Azerion Group N.V.
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 control 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 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, whereby shares are issued to substantially acquire a listing for the Group. The accounting of this transaction in these financial statements are identified as the ‘De-SPAC Transaction’ or ‘the Transaction’.
Nevertheless, given the characteristics of the Transaction, the presentation in the financial statements is, by analogy, based on the IFRS 3 principles for reverse acquisitions. That implies that the 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.
As a result of the De-SPAC Transaction, and therefore not included in the comparative information, the following other changes to the capital structure of Azerion Group N.V. were effectuated:
from Share Based Payments Reserve into Share Capital and Share Premium.
Refer to note 4: De-SPAC Transaction for further information's on the Transaction.
These consolidated financial statements are presented in millions of euros (€), which is the Company’s functional currency and rounded to the nearest hundred thousand unless stated otherwise.
The preparation of these consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions, which affect the reported amounts in these consolidated financial statements. Estimates are based on historical experience, where applicable, and other assumptions which management believes are reasonable under the circumstances. The Group evaluates its estimates on an ongoing basis. These estimates are inherently subject to judgement and actual results could differ from those estimates. Revisions to accounting estimates are recognized prospectively.
Information about significant judgements and estimates used are included in the relevant notes to the financial statements. The areas involving significant estimates and judgements are:
Azerion Group N.V.
These consolidated financial statements were 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 consolidated financial statements have been prepared on the historical cost basis unless otherwise indicated.
The consolidated financial statements were authorized for issue by the Supervisory Board on 26 April 2023. These consolidated financial statements also include the financial information of the Company, Azerion Group N.V.
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 control 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 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, whereby shares are issued to substantially acquire a listing for the Group. The accounting of this transaction in these financial statements are identified as the ‘De-SPAC Transaction’ or ‘the Transaction’.
Nevertheless, given the characteristics of the Transaction, the presentation in the financial statements is, by analogy, based on the IFRS 3 principles for reverse acquisitions. That implies that the 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.
As a result of the De-SPAC Transaction, and therefore not included in the comparative information, the following other changes to the capital structure of Azerion Group N.V. were effectuated:
from Share Based Payments Reserve into Share Capital and Share Premium.
Refer to note 4: De-SPAC Transaction for further information's on the Transaction.
These consolidated financial statements are presented in millions of euros (€), which is the Company’s functional currency and rounded to the nearest hundred thousand unless stated otherwise.
The preparation of these consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions, which affect the reported amounts in these consolidated financial statements. Estimates are based on historical experience, where applicable, and other assumptions which management believes are reasonable under the circumstances. The Group evaluates its estimates on an ongoing basis. These estimates are inherently subject to judgement and actual results could differ from those estimates. Revisions to accounting estimates are recognized prospectively.
Information about significant judgements and estimates used are included in the relevant notes to the financial statements. The areas involving significant estimates and judgements are:
Azerion Group N.V.
These consolidated financial statements were 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 consolidated financial statements have been prepared on the historical cost basis unless otherwise indicated.
The consolidated financial statements were authorized for issue by the Supervisory Board on 26 April 2023. These consolidated financial statements also include the financial information of the Company, Azerion Group N.V.
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 control 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 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, whereby shares are issued to substantially acquire a listing for the Group. The accounting of this transaction in these financial statements are identified as the ‘De-SPAC Transaction’ or ‘the Transaction’.
Nevertheless, given the characteristics of the Transaction, the presentation in the financial statements is, by analogy, based on the IFRS 3 principles for reverse acquisitions. That implies that the 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.
As a result of the De-SPAC Transaction, and therefore not included in the comparative information, the following other changes to the capital structure of Azerion Group N.V. were effectuated:
from Share Based Payments Reserve into Share Capital and Share Premium.
Refer to note 4: De-SPAC Transaction for further information's on the Transaction.
These consolidated financial statements are presented in millions of euros (€), which is the Company’s functional currency and rounded to the nearest hundred thousand unless stated otherwise.
The preparation of these consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions, which affect the reported amounts in these consolidated financial statements. Estimates are based on historical experience, where applicable, and other assumptions which management believes are reasonable under the circumstances. The Group evaluates its estimates on an ongoing basis. These estimates are inherently subject to judgement and actual results could differ from those estimates. Revisions to accounting estimates are recognized prospectively.
Information about significant judgements and estimates used are included in the relevant notes to the financial statements. The areas involving significant estimates and judgements are:
Azerion Group N.V.
These consolidated financial statements were 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 consolidated financial statements have been prepared on the historical cost basis unless otherwise indicated.
The consolidated financial statements were authorized for issue by the Supervisory Board on 26 April 2023. These consolidated financial statements also include the financial information of the Company, Azerion Group N.V.
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 control 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 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, whereby shares are issued to substantially acquire a listing for the Group. The accounting of this transaction in these financial statements are identified as the ‘De-SPAC Transaction’ or ‘the Transaction’.
Nevertheless, given the characteristics of the Transaction, the presentation in the financial statements is, by analogy, based on the IFRS 3 principles for reverse acquisitions. That implies that the 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.
As a result of the De-SPAC Transaction, and therefore not included in the comparative information, the following other changes to the capital structure of Azerion Group N.V. were effectuated:
from Share Based Payments Reserve into Share Capital and Share Premium.
Refer to note 4: De-SPAC Transaction for further information's on the Transaction.
These consolidated financial statements are presented in millions of euros (€), which is the Company’s functional currency and rounded to the nearest hundred thousand unless stated otherwise.
The preparation of these consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions, which affect the reported amounts in these consolidated financial statements. Estimates are based on historical experience, where applicable, and other assumptions which management believes are reasonable under the circumstances. The Group evaluates its estimates on an ongoing basis. These estimates are inherently subject to judgement and actual results could differ from those estimates. Revisions to accounting estimates are recognized prospectively.
Information about significant judgements and estimates used are included in the relevant notes to the financial statements. The areas involving significant estimates and judgements are:
Azerion Group N.V.
These consolidated financial statements were 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 consolidated financial statements have been prepared on the historical cost basis unless otherwise indicated.
The consolidated financial statements were authorized for issue by the Supervisory Board on 26 April 2023. These consolidated financial statements also include the financial information of the Company, Azerion Group N.V.
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 control 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 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, whereby shares are issued to substantially acquire a listing for the Group. The accounting of this transaction in these financial statements are identified as the ‘De-SPAC Transaction’ or ‘the Transaction’.
Nevertheless, given the characteristics of the Transaction, the presentation in the financial statements is, by analogy, based on the IFRS 3 principles for reverse acquisitions. That implies that the 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.
As a result of the De-SPAC Transaction, and therefore not included in the comparative information, the following other changes to the capital structure of Azerion Group N.V. were effectuated:
from Share Based Payments Reserve into Share Capital and Share Premium.
Refer to note 4: De-SPAC Transaction for further information's on the Transaction.
These consolidated financial statements are presented in millions of euros (€), which is the Company’s functional currency and rounded to the nearest hundred thousand unless stated otherwise.
The preparation of these consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions, which affect the reported amounts in these consolidated financial statements. Estimates are based on historical experience, where applicable, and other assumptions which management believes are reasonable under the circumstances. The Group evaluates its estimates on an ongoing basis. These estimates are inherently subject to judgement and actual results could differ from those estimates. Revisions to accounting estimates are recognized prospectively.
Information about significant judgements and estimates used are included in the relevant notes to the financial statements. The areas involving significant estimates and judgements are:
Azerion Group N.V.
These consolidated financial statements were 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 consolidated financial statements have been prepared on the historical cost basis unless otherwise indicated.
The consolidated financial statements were authorized for issue by the Supervisory Board on 26 April 2023. These consolidated financial statements also include the financial information of the Company, Azerion Group N.V.
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 control 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 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, whereby shares are issued to substantially acquire a listing for the Group. The accounting of this transaction in these financial statements are identified as the ‘De-SPAC Transaction’ or ‘the Transaction’.
Nevertheless, given the characteristics of the Transaction, the presentation in the financial statements is, by analogy, based on the IFRS 3 principles for reverse acquisitions. That implies that the 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.
As a result of the De-SPAC Transaction, and therefore not included in the comparative information, the following other changes to the capital structure of Azerion Group N.V. were effectuated:
from Share Based Payments Reserve into Share Capital and Share Premium.
Refer to note 4: De-SPAC Transaction for further information's on the Transaction.
These consolidated financial statements are presented in millions of euros (€), which is the Company’s functional currency and rounded to the nearest hundred thousand unless stated otherwise.
The preparation of these consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions, which affect the reported amounts in these consolidated financial statements. Estimates are based on historical experience, where applicable, and other assumptions which management believes are reasonable under the circumstances. The Group evaluates its estimates on an ongoing basis. These estimates are inherently subject to judgement and actual results could differ from those estimates. Revisions to accounting estimates are recognized prospectively.
Information about significant judgements and estimates used are included in the relevant notes to the financial statements. The areas involving significant estimates and judgements are:
Azerion Group N.V.
These consolidated financial statements were 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 consolidated financial statements have been prepared on the historical cost basis unless otherwise indicated.
The consolidated financial statements were authorized for issue by the Supervisory Board on 26 April 2023. These consolidated financial statements also include the financial information of the Company, Azerion Group N.V.
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 control 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 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, whereby shares are issued to substantially acquire a listing for the Group. The accounting of this transaction in these financial statements are identified as the ‘De-SPAC Transaction’ or ‘the Transaction’.
Nevertheless, given the characteristics of the Transaction, the presentation in the financial statements is, by analogy, based on the IFRS 3 principles for reverse acquisitions. That implies that the 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.
As a result of the De-SPAC Transaction, and therefore not included in the comparative information, the following other changes to the capital structure of Azerion Group N.V. were effectuated:
from Share Based Payments Reserve into Share Capital and Share Premium.
Refer to note 4: De-SPAC Transaction for further information's on the Transaction.
These consolidated financial statements are presented in millions of euros (€), which is the Company’s functional currency and rounded to the nearest hundred thousand unless stated otherwise.
The preparation of these consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions, which affect the reported amounts in these consolidated financial statements. Estimates are based on historical experience, where applicable, and other assumptions which management believes are reasonable under the circumstances. The Group evaluates its estimates on an ongoing basis. These estimates are inherently subject to judgement and actual results could differ from those estimates. Revisions to accounting estimates are recognized prospectively.
Information about significant judgements and estimates used are included in the relevant notes to the financial statements. The areas involving significant estimates and judgements are:
Azerion Group N.V.
These consolidated financial statements were 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 consolidated financial statements have been prepared on the historical cost basis unless otherwise indicated.
The consolidated financial statements were authorized for issue by the Supervisory Board on 26 April 2023. These consolidated financial statements also include the financial information of the Company, Azerion Group N.V.
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 control 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 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, whereby shares are issued to substantially acquire a listing for the Group. The accounting of this transaction in these financial statements are identified as the ‘De-SPAC Transaction’ or ‘the Transaction’.
Nevertheless, given the characteristics of the Transaction, the presentation in the financial statements is, by analogy, based on the IFRS 3 principles for reverse acquisitions. That implies that the 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.
As a result of the De-SPAC Transaction, and therefore not included in the comparative information, the following other changes to the capital structure of Azerion Group N.V. were effectuated:
from Share Based Payments Reserve into Share Capital and Share Premium.
Refer to note 4: De-SPAC Transaction for further information's on the Transaction.
These consolidated financial statements are presented in millions of euros (€), which is the Company’s functional currency and rounded to the nearest hundred thousand unless stated otherwise.
The preparation of these consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions, which affect the reported amounts in these consolidated financial statements. Estimates are based on historical experience, where applicable, and other assumptions which management believes are reasonable under the circumstances. The Group evaluates its estimates on an ongoing basis. These estimates are inherently subject to judgement and actual results could differ from those estimates. Revisions to accounting estimates are recognized prospectively.
Information about significant judgements and estimates used are included in the relevant notes to the financial statements. The areas involving significant estimates and judgements are:
Azerion Group N.V.
These consolidated financial statements were 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 consolidated financial statements have been prepared on the historical cost basis unless otherwise indicated.
The consolidated financial statements were authorized for issue by the Supervisory Board on 26 April 2023. These consolidated financial statements also include the financial information of the Company, Azerion Group N.V.
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 control 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 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, whereby shares are issued to substantially acquire a listing for the Group. The accounting of this transaction in these financial statements are identified as the ‘De-SPAC Transaction’ or ‘the Transaction’.
Nevertheless, given the characteristics of the Transaction, the presentation in the financial statements is, by analogy, based on the IFRS 3 principles for reverse acquisitions. That implies that the 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.
As a result of the De-SPAC Transaction, and therefore not included in the comparative information, the following other changes to the capital structure of Azerion Group N.V. were effectuated:
from Share Based Payments Reserve into Share Capital and Share Premium.
Refer to note 4: De-SPAC Transaction for further information's on the Transaction.
These consolidated financial statements are presented in millions of euros (€), which is the Company’s functional currency and rounded to the nearest hundred thousand unless stated otherwise.
The preparation of these consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions, which affect the reported amounts in these consolidated financial statements. Estimates are based on historical experience, where applicable, and other assumptions which management believes are reasonable under the circumstances. The Group evaluates its estimates on an ongoing basis. These estimates are inherently subject to judgement and actual results could differ from those estimates. Revisions to accounting estimates are recognized prospectively.
Information about significant judgements and estimates used are included in the relevant notes to the financial statements. The areas involving significant estimates and judgements are:
Azerion Group N.V.
These consolidated financial statements were 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 consolidated financial statements have been prepared on the historical cost basis unless otherwise indicated.
The consolidated financial statements were authorized for issue by the Supervisory Board on 26 April 2023. These consolidated financial statements also include the financial information of the Company, Azerion Group N.V.
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 control 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 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, whereby shares are issued to substantially acquire a listing for the Group. The accounting of this transaction in these financial statements are identified as the ‘De-SPAC Transaction’ or ‘the Transaction’.
Nevertheless, given the characteristics of the Transaction, the presentation in the financial statements is, by analogy, based on the IFRS 3 principles for reverse acquisitions. That implies that the 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.
As a result of the De-SPAC Transaction, and therefore not included in the comparative information, the following other changes to the capital structure of Azerion Group N.V. were effectuated:
from Share Based Payments Reserve into Share Capital and Share Premium.
Refer to note 4: De-SPAC Transaction for further information's on the Transaction.
These consolidated financial statements are presented in millions of euros (€), which is the Company’s functional currency and rounded to the nearest hundred thousand unless stated otherwise.
The preparation of these consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions, which affect the reported amounts in these consolidated financial statements. Estimates are based on historical experience, where applicable, and other assumptions which management believes are reasonable under the circumstances. The Group evaluates its estimates on an ongoing basis. These estimates are inherently subject to judgement and actual results could differ from those estimates. Revisions to accounting estimates are recognized prospectively.
Information about significant judgements and estimates used are included in the relevant notes to the financial statements. The areas involving significant estimates and judgements are:
Azerion Group N.V.
These consolidated financial statements were 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 consolidated financial statements have been prepared on the historical cost basis unless otherwise indicated.
The consolidated financial statements were authorized for issue by the Supervisory Board on 26 April 2023. These consolidated financial statements also include the financial information of the Company, Azerion Group N.V.
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 control 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 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, whereby shares are issued to substantially acquire a listing for the Group. The accounting of this transaction in these financial statements are identified as the ‘De-SPAC Transaction’ or ‘the Transaction’.
Nevertheless, given the characteristics of the Transaction, the presentation in the financial statements is, by analogy, based on the IFRS 3 principles for reverse acquisitions. That implies that the 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.
As a result of the De-SPAC Transaction, and therefore not included in the comparative information, the following other changes to the capital structure of Azerion Group N.V. were effectuated:
from Share Based Payments Reserve into Share Capital and Share Premium.
Refer to note 4: De-SPAC Transaction for further information's on the Transaction.
These consolidated financial statements are presented in millions of euros (€), which is the Company’s functional currency and rounded to the nearest hundred thousand unless stated otherwise.
The preparation of these consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions, which affect the reported amounts in these consolidated financial statements. Estimates are based on historical experience, where applicable, and other assumptions which management believes are reasonable under the circumstances. The Group evaluates its estimates on an ongoing basis. These estimates are inherently subject to judgement and actual results could differ from those estimates. Revisions to accounting estimates are recognized prospectively.
Information about significant judgements and estimates used are included in the relevant notes to the financial statements. The areas involving significant estimates and judgements are:
Azerion Group N.V.
These consolidated financial statements were 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 consolidated financial statements have been prepared on the historical cost basis unless otherwise indicated.
The consolidated financial statements were authorized for issue by the Supervisory Board on 26 April 2023. These consolidated financial statements also include the financial information of the Company, Azerion Group N.V.
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 control 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 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, whereby shares are issued to substantially acquire a listing for the Group. The accounting of this transaction in these financial statements are identified as the ‘De-SPAC Transaction’ or ‘the Transaction’.
Nevertheless, given the characteristics of the Transaction, the presentation in the financial statements is, by analogy, based on the IFRS 3 principles for reverse acquisitions. That implies that the 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.
As a result of the De-SPAC Transaction, and therefore not included in the comparative information, the following other changes to the capital structure of Azerion Group N.V. were effectuated:
from Share Based Payments Reserve into Share Capital and Share Premium.
Refer to note 4: De-SPAC Transaction for further information's on the Transaction.
These consolidated financial statements are presented in millions of euros (€), which is the Company’s functional currency and rounded to the nearest hundred thousand unless stated otherwise.
The preparation of these consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions, which affect the reported amounts in these consolidated financial statements. Estimates are based on historical experience, where applicable, and other assumptions which management believes are reasonable under the circumstances. The Group evaluates its estimates on an ongoing basis. These estimates are inherently subject to judgement and actual results could differ from those estimates. Revisions to accounting estimates are recognized prospectively.
Information about significant judgements and estimates used are included in the relevant notes to the financial statements. The areas involving significant estimates and judgements are:
Azerion Group N.V.
These consolidated financial statements were 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 consolidated financial statements have been prepared on the historical cost basis unless otherwise indicated.
The consolidated financial statements were authorized for issue by the Supervisory Board on 26 April 2023. These consolidated financial statements also include the financial information of the Company, Azerion Group N.V.
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 control 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 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, whereby shares are issued to substantially acquire a listing for the Group. The accounting of this transaction in these financial statements are identified as the ‘De-SPAC Transaction’ or ‘the Transaction’.
Nevertheless, given the characteristics of the Transaction, the presentation in the financial statements is, by analogy, based on the IFRS 3 principles for reverse acquisitions. That implies that the 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.
As a result of the De-SPAC Transaction, and therefore not included in the comparative information, the following other changes to the capital structure of Azerion Group N.V. were effectuated:
from Share Based Payments Reserve into Share Capital and Share Premium.
Refer to note 4: De-SPAC Transaction for further information's on the Transaction.
These consolidated financial statements are presented in millions of euros (€), which is the Company’s functional currency and rounded to the nearest hundred thousand unless stated otherwise.
The preparation of these consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions, which affect the reported amounts in these consolidated financial statements. Estimates are based on historical experience, where applicable, and other assumptions which management believes are reasonable under the circumstances. The Group evaluates its estimates on an ongoing basis. These estimates are inherently subject to judgement and actual results could differ from those estimates. Revisions to accounting estimates are recognized prospectively.
Information about significant judgements and estimates used are included in the relevant notes to the financial statements. The areas involving significant estimates and judgements are:
Azerion Group N.V.
These consolidated financial statements were 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 consolidated financial statements have been prepared on the historical cost basis unless otherwise indicated.
The consolidated financial statements were authorized for issue by the Supervisory Board on 26 April 2023. These consolidated financial statements also include the financial information of the Company, Azerion Group N.V.
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 control 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 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, whereby shares are issued to substantially acquire a listing for the Group. The accounting of this transaction in these financial statements are identified as the ‘De-SPAC Transaction’ or ‘the Transaction’.
Nevertheless, given the characteristics of the Transaction, the presentation in the financial statements is, by analogy, based on the IFRS 3 principles for reverse acquisitions. That implies that the 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.
As a result of the De-SPAC Transaction, and therefore not included in the comparative information, the following other changes to the capital structure of Azerion Group N.V. were effectuated:
from Share Based Payments Reserve into Share Capital and Share Premium.
Refer to note 4: De-SPAC Transaction for further information's on the Transaction.
These consolidated financial statements are presented in millions of euros (€), which is the Company’s functional currency and rounded to the nearest hundred thousand unless stated otherwise.
The preparation of these consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions, which affect the reported amounts in these consolidated financial statements. Estimates are based on historical experience, where applicable, and other assumptions which management believes are reasonable under the circumstances. The Group evaluates its estimates on an ongoing basis. These estimates are inherently subject to judgement and actual results could differ from those estimates. Revisions to accounting estimates are recognized prospectively.
Information about significant judgements and estimates used are included in the relevant notes to the financial statements. The areas involving significant estimates and judgements are:
Azerion Group N.V.
These consolidated financial statements were 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 consolidated financial statements have been prepared on the historical cost basis unless otherwise indicated.
The consolidated financial statements were authorized for issue by the Supervisory Board on 26 April 2023. These consolidated financial statements also include the financial information of the Company, Azerion Group N.V.
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 control 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 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, whereby shares are issued to substantially acquire a listing for the Group. The accounting of this transaction in these financial statements are identified as the ‘De-SPAC Transaction’ or ‘the Transaction’.
Nevertheless, given the characteristics of the Transaction, the presentation in the financial statements is, by analogy, based on the IFRS 3 principles for reverse acquisitions. That implies that the 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.
As a result of the De-SPAC Transaction, and therefore not included in the comparative information, the following other changes to the capital structure of Azerion Group N.V. were effectuated:
from Share Based Payments Reserve into Share Capital and Share Premium.
Refer to note 4: De-SPAC Transaction for further information's on the Transaction.
These consolidated financial statements are presented in millions of euros (€), which is the Company’s functional currency and rounded to the nearest hundred thousand unless stated otherwise.
The preparation of these consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions, which affect the reported amounts in these consolidated financial statements. Estimates are based on historical experience, where applicable, and other assumptions which management believes are reasonable under the circumstances. The Group evaluates its estimates on an ongoing basis. These estimates are inherently subject to judgement and actual results could differ from those estimates. Revisions to accounting estimates are recognized prospectively.
Information about significant judgements and estimates used are included in the relevant notes to the financial statements. The areas involving significant estimates and judgements are:
Azerion Group N.V.
These consolidated financial statements were 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 consolidated financial statements have been prepared on the historical cost basis unless otherwise indicated.
The consolidated financial statements were authorized for issue by the Supervisory Board on 26 April 2023. These consolidated financial statements also include the financial information of the Company, Azerion Group N.V.
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 control 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 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, whereby shares are issued to substantially acquire a listing for the Group. The accounting of this transaction in these financial statements are identified as the ‘De-SPAC Transaction’ or ‘the Transaction’.
Nevertheless, given the characteristics of the Transaction, the presentation in the financial statements is, by analogy, based on the IFRS 3 principles for reverse acquisitions. That implies that the 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.
As a result of the De-SPAC Transaction, and therefore not included in the comparative information, the following other changes to the capital structure of Azerion Group N.V. were effectuated:
from Share Based Payments Reserve into Share Capital and Share Premium.
Refer to note 4: De-SPAC Transaction for further information's on the Transaction.
These consolidated financial statements are presented in millions of euros (€), which is the Company’s functional currency and rounded to the nearest hundred thousand unless stated otherwise.
The preparation of these consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions, which affect the reported amounts in these consolidated financial statements. Estimates are based on historical experience, where applicable, and other assumptions which management believes are reasonable under the circumstances. The Group evaluates its estimates on an ongoing basis. These estimates are inherently subject to judgement and actual results could differ from those estimates. Revisions to accounting estimates are recognized prospectively.
Information about significant judgements and estimates used are included in the relevant notes to the financial statements. The areas involving significant estimates and judgements are:
Azerion Group N.V.
These consolidated financial statements were 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 consolidated financial statements have been prepared on the historical cost basis unless otherwise indicated.
The consolidated financial statements were authorized for issue by the Supervisory Board on 26 April 2023. These consolidated financial statements also include the financial information of the Company, Azerion Group N.V.
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 control 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 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, whereby shares are issued to substantially acquire a listing for the Group. The accounting of this transaction in these financial statements are identified as the ‘De-SPAC Transaction’ or ‘the Transaction’.
Nevertheless, given the characteristics of the Transaction, the presentation in the financial statements is, by analogy, based on the IFRS 3 principles for reverse acquisitions. That implies that the 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.
As a result of the De-SPAC Transaction, and therefore not included in the comparative information, the following other changes to the capital structure of Azerion Group N.V. were effectuated:
from Share Based Payments Reserve into Share Capital and Share Premium.
Refer to note 4: De-SPAC Transaction for further information's on the Transaction.
These consolidated financial statements are presented in millions of euros (€), which is the Company’s functional currency and rounded to the nearest hundred thousand unless stated otherwise.
The preparation of these consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions, which affect the reported amounts in these consolidated financial statements. Estimates are based on historical experience, where applicable, and other assumptions which management believes are reasonable under the circumstances. The Group evaluates its estimates on an ongoing basis. These estimates are inherently subject to judgement and actual results could differ from those estimates. Revisions to accounting estimates are recognized prospectively.
Information about significant judgements and estimates used are included in the relevant notes to the financial statements. The areas involving significant estimates and judgements are:
Azerion Group N.V.
These consolidated financial statements were 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 consolidated financial statements have been prepared on the historical cost basis unless otherwise indicated.
The consolidated financial statements were authorized for issue by the Supervisory Board on 26 April 2023. These consolidated financial statements also include the financial information of the Company, Azerion Group N.V.
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 control 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 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, whereby shares are issued to substantially acquire a listing for the Group. The accounting of this transaction in these financial statements are identified as the ‘De-SPAC Transaction’ or ‘the Transaction’.
Nevertheless, given the characteristics of the Transaction, the presentation in the financial statements is, by analogy, based on the IFRS 3 principles for reverse acquisitions. That implies that the 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.
As a result of the De-SPAC Transaction, and therefore not included in the comparative information, the following other changes to the capital structure of Azerion Group N.V. were effectuated:
from Share Based Payments Reserve into Share Capital and Share Premium.
Refer to note 4: De-SPAC Transaction for further information's on the Transaction.
These consolidated financial statements are presented in millions of euros (€), which is the Company’s functional currency and rounded to the nearest hundred thousand unless stated otherwise.
The preparation of these consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions, which affect the reported amounts in these consolidated financial statements. Estimates are based on historical experience, where applicable, and other assumptions which management believes are reasonable under the circumstances. The Group evaluates its estimates on an ongoing basis. These estimates are inherently subject to judgement and actual results could differ from those estimates. Revisions to accounting estimates are recognized prospectively.
Information about significant judgements and estimates used are included in the relevant notes to the financial statements. The areas involving significant estimates and judgements are:
Azerion Group N.V.
These consolidated financial statements were 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 consolidated financial statements have been prepared on the historical cost basis unless otherwise indicated.
The consolidated financial statements were authorized for issue by the Supervisory Board on 26 April 2023. These consolidated financial statements also include the financial information of the Company, Azerion Group N.V.
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 control 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 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, whereby shares are issued to substantially acquire a listing for the Group. The accounting of this transaction in these financial statements are identified as the ‘De-SPAC Transaction’ or ‘the Transaction’.
Nevertheless, given the characteristics of the Transaction, the presentation in the financial statements is, by analogy, based on the IFRS 3 principles for reverse acquisitions. That implies that the 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.
As a result of the De-SPAC Transaction, and therefore not included in the comparative information, the following other changes to the capital structure of Azerion Group N.V. were effectuated:
from Share Based Payments Reserve into Share Capital and Share Premium.
Refer to note 4: De-SPAC Transaction for further information's on the Transaction.
These consolidated financial statements are presented in millions of euros (€), which is the Company’s functional currency and rounded to the nearest hundred thousand unless stated otherwise.
The preparation of these consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions, which affect the reported amounts in these consolidated financial statements. Estimates are based on historical experience, where applicable, and other assumptions which management believes are reasonable under the circumstances. The Group evaluates its estimates on an ongoing basis. These estimates are inherently subject to judgement and actual results could differ from those estimates. Revisions to accounting estimates are recognized prospectively.
Information about significant judgements and estimates used are included in the relevant notes to the financial statements. The areas involving significant estimates and judgements are:
Azerion Group N.V.
These consolidated financial statements were 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 consolidated financial statements have been prepared on the historical cost basis unless otherwise indicated.
The consolidated financial statements were authorized for issue by the Supervisory Board on 26 April 2023. These consolidated financial statements also include the financial information of the Company, Azerion Group N.V.
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 control 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 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, whereby shares are issued to substantially acquire a listing for the Group. The accounting of this transaction in these financial statements are identified as the ‘De-SPAC Transaction’ or ‘the Transaction’.
Nevertheless, given the characteristics of the Transaction, the presentation in the financial statements is, by analogy, based on the IFRS 3 principles for reverse acquisitions. That implies that the 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.
As a result of the De-SPAC Transaction, and therefore not included in the comparative information, the following other changes to the capital structure of Azerion Group N.V. were effectuated:
from Share Based Payments Reserve into Share Capital and Share Premium.
Refer to note 4: De-SPAC Transaction for further information's on the Transaction.
These consolidated financial statements are presented in millions of euros (€), which is the Company’s functional currency and rounded to the nearest hundred thousand unless stated otherwise.
The preparation of these consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions, which affect the reported amounts in these consolidated financial statements. Estimates are based on historical experience, where applicable, and other assumptions which management believes are reasonable under the circumstances. The Group evaluates its estimates on an ongoing basis. These estimates are inherently subject to judgement and actual results could differ from those estimates. Revisions to accounting estimates are recognized prospectively.
Information about significant judgements and estimates used are included in the relevant notes to the financial statements. The areas involving significant estimates and judgements are:
Azerion Group N.V.
These consolidated financial statements were 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 consolidated financial statements have been prepared on the historical cost basis unless otherwise indicated.
The consolidated financial statements were authorized for issue by the Supervisory Board on 26 April 2023. These consolidated financial statements also include the financial information of the Company, Azerion Group N.V.
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 control 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 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, whereby shares are issued to substantially acquire a listing for the Group. The accounting of this transaction in these financial statements are identified as the ‘De-SPAC Transaction’ or ‘the Transaction’.
Nevertheless, given the characteristics of the Transaction, the presentation in the financial statements is, by analogy, based on the IFRS 3 principles for reverse acquisitions. That implies that the 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.
As a result of the De-SPAC Transaction, and therefore not included in the comparative information, the following other changes to the capital structure of Azerion Group N.V. were effectuated:
from Share Based Payments Reserve into Share Capital and Share Premium.
Refer to note 4: De-SPAC Transaction for further information's on the Transaction.
These consolidated financial statements are presented in millions of euros (€), which is the Company’s functional currency and rounded to the nearest hundred thousand unless stated otherwise.
The preparation of these consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions, which affect the reported amounts in these consolidated financial statements. Estimates are based on historical experience, where applicable, and other assumptions which management believes are reasonable under the circumstances. The Group evaluates its estimates on an ongoing basis. These estimates are inherently subject to judgement and actual results could differ from those estimates. Revisions to accounting estimates are recognized prospectively.
Information about significant judgements and estimates used are included in the relevant notes to the financial statements. The areas involving significant estimates and judgements are:
Azerion Group N.V.
These consolidated financial statements were 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 consolidated financial statements have been prepared on the historical cost basis unless otherwise indicated.
The consolidated financial statements were authorized for issue by the Supervisory Board on 26 April 2023. These consolidated financial statements also include the financial information of the Company, Azerion Group N.V.
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 control 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 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, whereby shares are issued to substantially acquire a listing for the Group. The accounting of this transaction in these financial statements are identified as the ‘De-SPAC Transaction’ or ‘the Transaction’.
Nevertheless, given the characteristics of the Transaction, the presentation in the financial statements is, by analogy, based on the IFRS 3 principles for reverse acquisitions. That implies that the 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.
As a result of the De-SPAC Transaction, and therefore not included in the comparative information, the following other changes to the capital structure of Azerion Group N.V. were effectuated:
from Share Based Payments Reserve into Share Capital and Share Premium.
Refer to note 4: De-SPAC Transaction for further information's on the Transaction.
These consolidated financial statements are presented in millions of euros (€), which is the Company’s functional currency and rounded to the nearest hundred thousand unless stated otherwise.
The preparation of these consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions, which affect the reported amounts in these consolidated financial statements. Estimates are based on historical experience, where applicable, and other assumptions which management believes are reasonable under the circumstances. The Group evaluates its estimates on an ongoing basis. These estimates are inherently subject to judgement and actual results could differ from those estimates. Revisions to accounting estimates are recognized prospectively.
Information about significant judgements and estimates used are included in the relevant notes to the financial statements. The areas involving significant estimates and judgements are:
Azerion Group N.V.
These consolidated financial statements were 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 consolidated financial statements have been prepared on the historical cost basis unless otherwise indicated.
The consolidated financial statements were authorized for issue by the Supervisory Board on 26 April 2023. These consolidated financial statements also include the financial information of the Company, Azerion Group N.V.
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 control 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 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, whereby shares are issued to substantially acquire a listing for the Group. The accounting of this transaction in these financial statements are identified as the ‘De-SPAC Transaction’ or ‘the Transaction’.
Nevertheless, given the characteristics of the Transaction, the presentation in the financial statements is, by analogy, based on the IFRS 3 principles for reverse acquisitions. That implies that the 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.
As a result of the De-SPAC Transaction, and therefore not included in the comparative information, the following other changes to the capital structure of Azerion Group N.V. were effectuated:
from Share Based Payments Reserve into Share Capital and Share Premium.
Refer to note 4: De-SPAC Transaction for further information's on the Transaction.
These consolidated financial statements are presented in millions of euros (€), which is the Company’s functional currency and rounded to the nearest hundred thousand unless stated otherwise.
The preparation of these consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions, which affect the reported amounts in these consolidated financial statements. Estimates are based on historical experience, where applicable, and other assumptions which management believes are reasonable under the circumstances. The Group evaluates its estimates on an ongoing basis. These estimates are inherently subject to judgement and actual results could differ from those estimates. Revisions to accounting estimates are recognized prospectively.
Information about significant judgements and estimates used are included in the relevant notes to the financial statements. The areas involving significant estimates and judgements are:
Azerion Group N.V.
These consolidated financial statements were 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 consolidated financial statements have been prepared on the historical cost basis unless otherwise indicated.
The consolidated financial statements were authorized for issue by the Supervisory Board on 26 April 2023. These consolidated financial statements also include the financial information of the Company, Azerion Group N.V.
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 control 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 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, whereby shares are issued to substantially acquire a listing for the Group. The accounting of this transaction in these financial statements are identified as the ‘De-SPAC Transaction’ or ‘the Transaction’.
Nevertheless, given the characteristics of the Transaction, the presentation in the financial statements is, by analogy, based on the IFRS 3 principles for reverse acquisitions. That implies that the 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.
As a result of the De-SPAC Transaction, and therefore not included in the comparative information, the following other changes to the capital structure of Azerion Group N.V. were effectuated:
from Share Based Payments Reserve into Share Capital and Share Premium.
Refer to note 4: De-SPAC Transaction for further information's on the Transaction.
These consolidated financial statements are presented in millions of euros (€), which is the Company’s functional currency and rounded to the nearest hundred thousand unless stated otherwise.
The preparation of these consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions, which affect the reported amounts in these consolidated financial statements. Estimates are based on historical experience, where applicable, and other assumptions which management believes are reasonable under the circumstances. The Group evaluates its estimates on an ongoing basis. These estimates are inherently subject to judgement and actual results could differ from those estimates. Revisions to accounting estimates are recognized prospectively.
Information about significant judgements and estimates used are included in the relevant notes to the financial statements. The areas involving significant estimates and judgements are:
Azerion Group N.V.
These consolidated financial statements were 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 consolidated financial statements have been prepared on the historical cost basis unless otherwise indicated.
The consolidated financial statements were authorized for issue by the Supervisory Board on 26 April 2023. These consolidated financial statements also include the financial information of the Company, Azerion Group N.V.
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 control 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 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, whereby shares are issued to substantially acquire a listing for the Group. The accounting of this transaction in these financial statements are identified as the ‘De-SPAC Transaction’ or ‘the Transaction’.
Nevertheless, given the characteristics of the Transaction, the presentation in the financial statements is, by analogy, based on the IFRS 3 principles for reverse acquisitions. That implies that the 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.
As a result of the De-SPAC Transaction, and therefore not included in the comparative information, the following other changes to the capital structure of Azerion Group N.V. were effectuated:
from Share Based Payments Reserve into Share Capital and Share Premium.
Refer to note 4: De-SPAC Transaction for further information's on the Transaction.
These consolidated financial statements are presented in millions of euros (€), which is the Company’s functional currency and rounded to the nearest hundred thousand unless stated otherwise.
The preparation of these consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions, which affect the reported amounts in these consolidated financial statements. Estimates are based on historical experience, where applicable, and other assumptions which management believes are reasonable under the circumstances. The Group evaluates its estimates on an ongoing basis. These estimates are inherently subject to judgement and actual results could differ from those estimates. Revisions to accounting estimates are recognized prospectively.
Information about significant judgements and estimates used are included in the relevant notes to the financial statements. The areas involving significant estimates and judgements are:
Azerion Group N.V.
These consolidated financial statements were 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 consolidated financial statements have been prepared on the historical cost basis unless otherwise indicated.
The consolidated financial statements were authorized for issue by the Supervisory Board on 26 April 2023. These consolidated financial statements also include the financial information of the Company, Azerion Group N.V.
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 control 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 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, whereby shares are issued to substantially acquire a listing for the Group. The accounting of this transaction in these financial statements are identified as the ‘De-SPAC Transaction’ or ‘the Transaction’.
Nevertheless, given the characteristics of the Transaction, the presentation in the financial statements is, by analogy, based on the IFRS 3 principles for reverse acquisitions. That implies that the 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.
As a result of the De-SPAC Transaction, and therefore not included in the comparative information, the following other changes to the capital structure of Azerion Group N.V. were effectuated:
from Share Based Payments Reserve into Share Capital and Share Premium.
Refer to note 4: De-SPAC Transaction for further information's on the Transaction.
These consolidated financial statements are presented in millions of euros (€), which is the Company’s functional currency and rounded to the nearest hundred thousand unless stated otherwise.
The preparation of these consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions, which affect the reported amounts in these consolidated financial statements. Estimates are based on historical experience, where applicable, and other assumptions which management believes are reasonable under the circumstances. The Group evaluates its estimates on an ongoing basis. These estimates are inherently subject to judgement and actual results could differ from those estimates. Revisions to accounting estimates are recognized prospectively.
Information about significant judgements and estimates used are included in the relevant notes to the financial statements. The areas involving significant estimates and judgements are:
Azerion Group N.V.
These consolidated financial statements were 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 consolidated financial statements have been prepared on the historical cost basis unless otherwise indicated.
The consolidated financial statements were authorized for issue by the Supervisory Board on 26 April 2023. These consolidated financial statements also include the financial information of the Company, Azerion Group N.V.
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 control 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 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, whereby shares are issued to substantially acquire a listing for the Group. The accounting of this transaction in these financial statements are identified as the ‘De-SPAC Transaction’ or ‘the Transaction’.
Nevertheless, given the characteristics of the Transaction, the presentation in the financial statements is, by analogy, based on the IFRS 3 principles for reverse acquisitions. That implies that the 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.
As a result of the De-SPAC Transaction, and therefore not included in the comparative information, the following other changes to the capital structure of Azerion Group N.V. were effectuated:
from Share Based Payments Reserve into Share Capital and Share Premium.
Refer to note 4: De-SPAC Transaction for further information's on the Transaction.
These consolidated financial statements are presented in millions of euros (€), which is the Company’s functional currency and rounded to the nearest hundred thousand unless stated otherwise.
The preparation of these consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions, which affect the reported amounts in these consolidated financial statements. Estimates are based on historical experience, where applicable, and other assumptions which management believes are reasonable under the circumstances. The Group evaluates its estimates on an ongoing basis. These estimates are inherently subject to judgement and actual results could differ from those estimates. Revisions to accounting estimates are recognized prospectively.
Information about significant judgements and estimates used are included in the relevant notes to the financial statements. The areas involving significant estimates and judgements are:
Azerion Group N.V.
These consolidated financial statements were 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 consolidated financial statements have been prepared on the historical cost basis unless otherwise indicated.
The consolidated financial statements were authorized for issue by the Supervisory Board on 26 April 2023. These consolidated financial statements also include the financial information of the Company, Azerion Group N.V.
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 control 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 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, whereby shares are issued to substantially acquire a listing for the Group. The accounting of this transaction in these financial statements are identified as the ‘De-SPAC Transaction’ or ‘the Transaction’.
Nevertheless, given the characteristics of the Transaction, the presentation in the financial statements is, by analogy, based on the IFRS 3 principles for reverse acquisitions. That implies that the 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.
As a result of the De-SPAC Transaction, and therefore not included in the comparative information, the following other changes to the capital structure of Azerion Group N.V. were effectuated:
from Share Based Payments Reserve into Share Capital and Share Premium.
Refer to note 4: De-SPAC Transaction for further information's on the Transaction.
These consolidated financial statements are presented in millions of euros (€), which is the Company’s functional currency and rounded to the nearest hundred thousand unless stated otherwise.
The preparation of these consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions, which affect the reported amounts in these consolidated financial statements. Estimates are based on historical experience, where applicable, and other assumptions which management believes are reasonable under the circumstances. The Group evaluates its estimates on an ongoing basis. These estimates are inherently subject to judgement and actual results could differ from those estimates. Revisions to accounting estimates are recognized prospectively.
Information about significant judgements and estimates used are included in the relevant notes to the financial statements. The areas involving significant estimates and judgements are:
Davey Call Option (note 14: Share-based payments)
In March 2021 EFIC1 issued Call Options to Mr. B. Davey. These Call Options are 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 the De-SPAC transaction, 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 € 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. The (originally issued) Davey Call Options fully vested on 31 January 2022, based on the considerations made in 2021. 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 € 12.00 per share for any 20 trading days within any 30 trading-day period within a period of five years after the De-SPAC transaction. Management considered that the reduction of the Davey Call Options should be treated as a modification of the previous instruments. Based on fair value calculations before and after the modification, no amounts were recognised as additional expenses.
HTP Call Option (note 14: Share-based payments)
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 € 12.00 per share for any 20 trading days within any 30 trading-day period within a period of five years after the De-SPAC Transaction. Management considered that these call options are to be treated as newly issued, fully vested equity-settled share based payments. For the valuation of these unconditional call options the share price on the stock exchange as at 1 February 2022 was used. For the Azerion Group N.V. Annual Report 2022 Consolidated financial statements 66 valuation of the conditional call options the share price was amended with a discount reflecting the marketability limitations at the date of issue.
Azerion Founder Warrants (note 14: Share-based payments)
On completion of the De-SPAC Transaction, Azerion Group N.V. issued 17,992,773 Azerion Founder Warrants to the founders of Azerion Holding B.V. For the assessment of the grant date fair value of the Azerion Founder Warrant, as equity-settled Share-Based payments under IFRS 2, 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).
Classification of share appreciation rights issued as part of acquisitions (note 5: Acquisitions)
As part of acquisitions up to 2021 the Company issued share appreciation rights as part of the consideration to the sellers. When the consideration will be settled by the Company delivering a fixed number of its own equity instruments in exchange for the financial asset, the share appreciation rights are classified as equity. Refer to where the terms and conditions of the share appreciation rights are disclosed.
Public Warrants (note 16: Other liabilities)
The Public Warrants do not qualify as equity as a cashless settlement option 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 (note 16: Other liabilities)
The Founder Warrants are derivatives and, because of their specific redemption features 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).
Business combination and purchase price allocation (note 5: Acquisitions)
While the Group employs experts to determine the acquisition date fair value of acquired intangibles, the fair values of assets acquired and liabilities assumed are based on significant management assumptions and estimates, which are inherently uncertain and highly subjective and as a result, actual results may differ from estimates. If different assumptions were to be used, it could materially impact the purchase price allocation. For certain entities which were acquired in 2021 and 2022 an earn-out has been included in the purchase consideration. When determining the fair value of the earn-out, several assumptions and judgments were made regarding the estimated future revenue and cash flows of these acquisitions and therefore the future cash-out for the earn-out.
Valuation of deferred tax assets and liabilities (note 24: Income tax)
Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Management’s assessment is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits, together with future tax planning strategies.
Azerion Group N.V. Annual Report 2022
Consolidated financial statements 67
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to 31 December each year. Control is achieved when the Company: has the power over the investee; is exposed, or has rights, to variable returns from its involvement with the investee; and has the ability to use its power to affect its returns. Subsidiaries are entities over which the Group has control. Subsidiaries are fully consolidated from the date on which control is transferred to the Group and are deconsolidated as soon as control ceases. All intercompany balances, transactions, income and expenses and profits and losses resulting from transactions between Group companies are eliminated. Accounting policies of subsidiaries are changed where necessary to ensure consistency with the policies adopted by the Group. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated statement of profit or loss, statement of comprehensive income, statement of changes in equity and statement of financial position respectively.
Non-controlling shareholders are equity participants of the group and transactions with non-controlling shareholders are therefore accounted for in equity and included in the statement of changes in equity, where the transaction does not result in the loss of control of a subsidiary. In transactions with non-controlling shareholders, the excess of the cost/proceeds of the transaction over the group’s proportionate share of the net asset value acquired/disposed is allocated to the ‘retained earnings’ in equity. Refer to section (3.15.8) for the group’s accounting policy regarding written put options over non-controlling interests.
Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the equity interest issued by the Group in exchange for control of the acquiree. Acquisition-related costs are recognised in profit or loss as incurred if the costs do not relate to the issuance of debt or equity instruments. At the acquisition date, the identifiable assets acquired, the liabilities and contingent liabilities assumed are recognized at their fair value at the acquisition date.# Azerion Group N.V. Annual Report 2022
The group recognises any non-controlling interest in the acquired entity on an acquisition-by-acquisition basis either at fair value or at the non-controlling interest’s proportionate share of the acquired entity’s net identifiable assets. Goodwill is measured as the excess of the sum of the consideration transferred and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) and the amount of any non‑controlling interest in the acquiree measured in accordance with this IFRS over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed.
When the consideration transferred by the Group in a business combination includes a contingent consideration arrangement, the contingent consideration is measured at its acquisition-date fair value and included as part of the consideration transferred in a business combination. Changes in fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments are adjustments that arise from additional information obtained during the ‘measurement period’ (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date.
The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Other contingent consideration is remeasured to fair value at subsequent reporting dates with changes in fair value recognised in profit or loss.
When a business combination is achieved in stages, the Group’s previously held interests (including joint operations) in the acquired entity are remeasured to its acquisition-date fair value and the resulting gain or loss, if any, is recognised in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognised in other comprehensive income are reclassified to profit or loss, where such treatment would be appropriate if that interest were disposed of.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period (see above), or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognised as of that date.
Goodwill is initially recognized and measured as set out above. Goodwill is not amortized but is reviewed for impairment at least annually. For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units (or groups of cash-generating units) expected to benefit from the synergies of the combination.
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognized for goodwill is not reversed in a subsequent period. On disposal of a business, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control.
The results and assets and liabilities of joint ventures are incorporated in these financial statements using the equity method of accounting. Under the equity method, an investment in a joint venture is recognised initially in the consolidated statement of financial position at cost and adjusted thereafter to recognise the Group’s share of the profit or loss and other comprehensive income of the associate or joint venture.
When the Group’s share of losses of an associate or a joint venture exceeds the Group’s interest in that associate or joint venture (which includes any long-term interests that, in substance, form part of the Group’s net investment in the joint venture), the Group discontinues recognising its share of further losses. Additional losses are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the joint venture.
The Group discontinues the use of the equity method from the date when the investment ceases to be a joint venture by accounting for its investment in accordance with IFRS 3 Business Combinations and IFRS 10 if the investment becomes a subsidiary.
Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the closing rate at the reporting date. Non-monetary items measured at historical cost in a foreign currency are translated at the exchange rate at the date of the transaction. Foreign currency differences are recognized in profit or loss and presented within other gain and losses.
The assets and liabilities of foreign operations are translated to Euros at closing rates at the reporting date. The income and expenses of foreign operations are translated into Euros at the year-to-date average exchange rates. Foreign currency differences are recognized in other comprehensive income (OCI) and accumulated in the foreign currency translation reserve in equity. When a foreign operation is disposed of in its entirety or partially, the cumulative amount in the foreign currency translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal.
Financial assets and financial liabilities are recognized when the Group becomes a party to the contractual provisions of the financial instrument. Financial assets are derecognized when the contractual rights to the cash flows from the financial asset expire or when the financial asset with substantially all the risks and rewards are transferred. A financial liability is derecognized when it is extinguished, discharged, cancelled or expires.
Except for the trade receivables that are measured at the transaction price, all financial assets are initially measured at fair value adjusted for transaction costs where applicable.
Financial assets are classified as either:
* amortized cost (including cash and cash equivalents, non-current financial assets (loans to shareholder), deposits, trade and most of other receivables fall into this category); or
* fair value through profit or loss (FVTPL) (including equity investments).
As at 31 December 2022 and 31 December 2021, the Group did not have any financial assets at fair value through profit or loss.
The classification is determined by considering both:
* the entity’s business model for managing the financial asset;
* the contractual cash flow characteristics of the financial asset.
All income and expenses relating to financial assets that are recognized in profit or loss are presented within finance costs and finance income, except for impairment of trade receivables which is presented within Trade and other receivables (note 11: Trade and other receivables). Fair value adjustments to financial assets in transactions with owners of the Group is recorded directly in equity.
After initial recognition, the assets are measured at amortized cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial. The amortized cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognized in profit or loss.
Assets in this category are measured at fair value with gains or losses, including any interest and dividend income, recognized in profit or loss. The fair values of financial assets in this category are determined by reference to active market transactions or using a valuation technique where no active market exists.
Azerion Group N.V.# Annual Report 2022 Consolidated financial statements 70
The Group uses the simplified approach in accounting for its financial assets (trade and lease receivables, loans to shareholders (non-current financial assets) and deposits) and records the loss allowance as lifetime expected credit losses (‘ECL’). The ECL are the expected shortfalls in contractual cash flows, considering the potential for default at any point during the life of the financial instrument.
The Group makes use of the practical expedient by which they can use a provision matrix as the basis to determine the expected loss for its trade accounts receivable. The expected credit loss is based on the historical observed default rates per trade accounts receivable ageing category over the expected life of the trade account receivables, updated for forward-looking adjustments.
The Group recognizes within other expenses in the statement of profit or loss, the amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognized. When a financial asset is uncollectable (in severe financial difficulty and there is no realistic prospect of recovery), it is written off against the allowance account.
Other equity instruments are recognised as equity instruments if, and only if, the instrument includes no contractual obligation to deliver cash or another financial asset, and, for a non-derivative instrument, no contractual obligation to deliver a variable number of its own equity instruments; or for a derivative instrument, it will be settled by the Group through a fixed amount of cash for a fixed number of its own equity instruments. The subordinated loans classified as equity will be settled through a fixed number of shares. The measurement is at amortised cost value on reclassification. The share appreciation rights and shares to be issued will be settled through a fixed number of shares. The valuation of the shares is derived from the date of the transaction.
The Warrants consist of the Public Warrants and the Founder Warrants. The Warrants are derivatives and because of their specific redemption features, a variable number of shares will be issued on exercise, they classify as financial liability instruments, at fair value through profit or loss. Subsequent changes in the fair value of the Warrants are recognised directly in the consolidated statement of profit and loss.
The Group’s financial liabilities include debt to shareholders, related parties and third parties, SARs granted to investors as part of acquisitions up to 2021 as well as accounts payable to suppliers and trade creditors, lease liabilities and contingent consideration and earn-out in business acquisitions. Except for liabilities to SAR holders, financial liabilities are initially measured at fair value and are adjusted for transaction costs where applicable. Subsequently, financial liabilities are measured at amortized cost using the effective interest rate method. All interest-related charges are recognized within finance costs in the statement of comprehensive income.
In the statement of financial position 2021 the liabilities related to SARs holders were classified as ‘at fair value through profit and loss’ and subsequently measured at fair value. Based on the contractual terms and conditions the SARs were exercised immediately before the Transaction.
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.
As at 31 December 2022 and 31 December 2021, the Group did not have any other financial liabilities designated at fair value through profit or loss (in accordance with IFRS9 paragraphs 4.2.2. or 6.7.1).
Azerion Group N.V. Annual Report 2022 Consolidated financial statements 71
Financial assets and financial liabilities are offset with the net amount reported in the consolidated statement of financial position if there is a currently enforceable legal right to offset the recognized amounts and the Group intends to settle on a net basis, to realize the assets and settle the liabilities simultaneously.
Refer to Note 3.3
Expenditure on research activities is recognized in profit or loss within other expenses and personnel costs as incurred. Development expenditure is capitalized only if the expenditure can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the Group intends to and has sufficient resources to complete development and to use or sell the asset. Otherwise, it is recognized in profit or loss as incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period.
Subsequent to initial recognition, development expenditure is measured at cost less accumulated amortization and any accumulated impairment losses. Amortization of the asset begins when development is complete and the asset is available for use. During the period of development, the asset is tested for impairment annually.
Other intangible assets, including Games and Software, that are acquired by the Group and have finite useful lives are measured at cost less accumulated amortization and any accumulated impairment losses. The cost of a separately acquired intangible asset comprises:
(a) its purchase price, including import duties and non‑refundable purchase taxes, after deducting trade discounts and rebates; and
(b) any directly attributable cost of preparing the asset for its intended use.
Capitalized development cost is based on management’s judgement that technological and economic feasibility is confirmed, usually when a product development project has reached a defined milestone according to an established project management model. In determining the amounts to be capitalized, management makes assumptions regarding the expected future cash generation of the project, discount rates to be applied and the expected period of benefits.
Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is recognized in profit or loss as incurred.
Amortization is calculated to write off the cost of intangible assets less their estimated residual values using the straight-line method over their estimated useful lives, and is generally recognized in profit or loss. The estimated useful lives for current and comparative periods are as follows:
| Assets | Years |
|---|---|
| Games and software | 5-10 |
| Client lists | 5-20 |
| Trademark, Patents and Brands | 5-10 |
| Websites | 7-10 |
Amortization methods and useful lives are reviewed at each reporting date and adjusted if appropriate. The internally generated Intangible assets useful lives are in line with those noted above.
General and specific borrowing costs directly attributable to the acquisition and construction of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets is substantially ready for their intended use or sale. During the year ended 31 December 2022, no borrowing costs have been capitalised resulting in all borrowing costs being recognised in profit or loss.
Azerion Group N.V. Annual Report 2022 Consolidated financial statements 72
The 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.
Items of property, plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses. If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted for as separate items (major components) of property, plant and equipment. Any gain or loss on disposal of an item of property, plant and equipment is recognized in profit or loss within other gains and losses. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset.
Subsequent expenditure is capitalized only if it is probable that the future economic benefits associated with the expenditure will flow to the Group and the cost of the item can be reliably measured.# Depreciation
Depreciation is calculated using the straight-line method over the estimated useful lives of property, plant and equipment. The estimated useful lives of property, plant and equipment for current and comparative periods are as follows:
Estimated useful life of property, plant and equipment in years
| Assets | Years |
|---|---|
| Right-of-Use Buildings | 1 – 5 years |
| Right-of-Use Vehicles | 1 – 5 years |
| Right-of-Use Equipment | 1 - 5 years |
| Equipment | 1 – 10 years |
| Renovations | 1 – 5 years |
Other leased assets (refer to Note 3.11) are depreciated over the shorter of the asset useful life or the lease term. Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.
Goodwill is not subject to amortization and is tested annually for impairment, or more frequently if events or changes in circumstances indicate that it might be impaired. Other non-financial assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Where an impairment indicator has been identified on an individual asset level, the impairment is assessed for that individual asset. Goodwill is reviewed for possible impairment at the end of each reporting period. Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period.
Azerion Group N.V. Annual Report 2022 Consolidated financial statements 73
The lease portfolio of the Group consists of real estate, vehicles and leases of office equipment. The Group recognizes a right-of-use asset and a lease liability at the commencement date. The right-of-use assets are presented as part of property, plant and equipment (refer to note 9: Leases). The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, less any lease incentives received. The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted at the incremental borrowing rate (‘IBR’), being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions. The Group applies a single IBR to a portfolio of leases with reasonably similar characteristics. The total lease payments include fixed payments, rent-free periods as well as variable lease payments that depend on an index or rate as at the commencement date. The Group determined the lease term of each lease as the non-cancellable period of a lease, together with periods covered by an option to extend and terminate the lease if the lessee is reasonably certain to exercise those options. The Group has several lease contracts that include extension and termination options. The Group applies judgement in evaluating whether it is reasonably certain whether or not to exercise the option to renew or terminate the lease. That is, it considers all relevant factors that create an economic incentive for it to exercise either the renewal or termination. After the commencement date, the Group reassesses the lease term if there is a significant event or change in circumstances that is within its control and affects its ability to exercise or not to exercise the option to renew or to terminate (e.g., construction of significant leasehold improvements). The lease liability is remeasured when there is a change in future lease payments arising from a change in an index or rate. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset. The Group accounts for lease modifications as a separate lease if the modification increases the scope of the lease by adding the right to use one or more underlying assets; and the consideration for the lease increases by an amount commensurate with the stand-alone price for the increase in scope and any appropriate adjustments to that stand-alone price to reflect the circumstances of the particular contract. For modifications that are not accounted for as a separate lease, the Group remeasures the lease liability by discounting the revised lease payments using a revised discount rate. The remeasurement is recognised as an adjustment to the right-of-use asset. The Group has not elected to account for the lease and non-lease components as a single lease component. The Group has also elected not to recognize right-of-use assets and lease liabilities for leases of low-value assets (€ 5 thousand individually) and short-term leases (with term less than 12 months). The lease payments associated with these leases are recognized as an expense within other expenses on a straight-line basis over the lease term.
When the Group acts as a lessor, it determines at lease inception whether each lease is a finance of an operating lease. To classify each lease, the Group makes an overall assessment of whether the lease transfers substantially all of the risks and rewards incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then it is an operating lease. As part of this assessment, the Group considers certain indicators such as whether the lease is for a major part of the economic life of the asset.
Azerion Group N.V. Annual Report 2022 Consolidated financial statements 74
When the Group is an intermediate lessor, it accounts for its interest in the head lease and the sub-lease separately. It assesses the lease classification of a sub-lease with reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset. When the Group enters into the operating sublease, it retains the lease liability and the right-of-use asset relating to the head lease in its statement of financial position. During the term of the operating sublease the Group: recognizes a depreciation charge for the right-of-use asset and interest on the lease liability; and recognises lease income from the sublease. Rental income from operating leases is recognized on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognized on a straight-line basis over the lease term. When the Group enters into a finance sublease, it: derecognizes the right-of-use asset relating to the head lease at the sublease commencement date and recognizes a lease receivable with respect to the sublease and evaluates it subsequently for impairment; recognizes any difference between the right-of-use asset and the lease receivable from the sublease in profit or loss; and retains the lease liability relating to the head lease in its statement of financial position which represents the lease payments owed to the head lessor. The Group uses the discount rate for the head lease (adjusted for any initial direct costs associated with the sublease) to measure the net investment in the lease if the interest rate implicit in the lease cannot be readily determined. During the periods presented, the Group did not have any finance leases or finance subleases, and therefor accounts for all subleases as operating subleases
Prepayments are carried at cost. If there is an indication that the assets, goods or services relating to a prepayment will not be received, the carrying value of the prepayment is written down and the corresponding impairment loss is recognized in profit or loss within other expenses.
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash at bank and on hand and deposits held at call with financial institutions.
Short-term employee benefits are expensed as the related service is provided. A liability is recognized for the amount expected to be paid if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.
The Group’s net obligation in respect of long-term employee benefits is the amount of future benefit that employees have earned in return for their service in the current and prior periods. That benefit is discounted to determine its present value. Remeasurements are recognised in profit or loss in the period in which they arise.
A defined-contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined-contribution pension plans are recognized as an employee benefit expense in the Consolidated statements of comprehensive income in the periods during which services are rendered by employees.
Azerion Group N.V.# Annual Report 2022
A defined-benefit plan is a post-employment benefit plan other than a defined contribution plan. Plans for which the company has no legal or constructive obligation to pay further amounts, but to which it does pay non-fixed contributions, are also treated as a defined-benefit plan. The net pension asset or liability recognized in the Consolidated statement of financial position in respect of defined benefit post-employment plans is the fair value of plan assets less the present value of the projected defined-benefit obligation at the balance sheet date. The defined-benefit obligation is calculated annually by qualified actuaries using the projected unit credit method. Recognized assets are limited to the present value of any reductions in future contributions or any future refunds. The net pension liability is presented as a long-term provision; no distinction is made for the short-term portion. Pension costs in respect of defined-benefit post-employment plans primarily represent the increase of the actuarial present value of the obligation for post-employment benefits based on employee service during the year and the interest on the net recognized asset or liability in respect of employee service in previous years. Remeasurements of the net defined-benefit asset or liability comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (excluding interest). The company recognizes all remeasurements in other comprehensive income.
Group’s net bonds liabilities pursuant to defined benefit plans are assessed separately for each plan in assessing the amount of future benefits acquired by personnel in exchange for services rendered during the current and previous periods. The benefit is discounted in order to determine the present value if the defined benefit obligation and the current service cost. The fair value of plan assets is then deducted. Calculations are made every year by a qualified actuary, using the projected unit credit method. The Group recognises immediately in other comprehensive income all actuarial gains and losses under defined benefit plans. Past service cost is recognised in profit or loss when the plan amendment or curtailment occurs, or when the Group recognises related restructuring costs or termination benefits, if earlier. Gains or losses on settlement of a defined benefit plan are recognised when the settlement occurs. Net interest is calculated by applying a discount rate to the net defined benefit liability or asset. Defined benefit costs are split into three categories: service costs, which includes current service cost, past service cost and gains and losses on curtailments and settlements; net interest expense or income; and remeasurements. The Group recognises remeasurements and service costs within other comprehensive income. Net interest expense or income is recognised within finance costs (see note 23: Net finance costs). The retirement benefit obligation recognised in the consolidated statement of financial position represents the deficit or surplus in the Group’s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the plans.
The 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.
The grant-date fair value of equity-settled share-based payment awards granted to employees and the holders of the Azerion Founder Warrants are recognized within personnel cost with a corresponding increase in equity in share-based payment reserve over the vesting period of the awards. This continues until the vesting period has expired. Upon expiration, the Group’s best estimate of the number of equity instruments that will ultimately vest is reflected.
Share capital represents the nominal (par) value of issued shares.
Share premium includes any premiums received on issue of share capital. Any transaction costs associated with the issuing of shares are deducted from share premium, net of any related income tax benefits.
Legal reserve is used to recognize the value of the capitalised development costs. These reserves are non-disputable in accordance with Dutch Law.
Share-Based payment reserve is used to recognise the value of equity-settled Share-Based payments provided to employees as part of their remuneration. It also includes grant date fair value of the Azerion Founder Warrants, that were assessed by Management as equity-settled Share-Based Payment transactions.
Currency translation reserve comprises foreign currency translation differences arising from the translation of financial statements of the Group’s foreign operations.
Relates to loans converted into equity and equity instruments (share appreciation rights) issued as purchase consideration as part of acquisitions. The share appreciation rights issued are deemed equity in accordance with IAS 32 since Azerion Group N.V. intends to settle these SARs through the issuance of a fixed number of equity instruments and the holders of the SARs can’t elect how the SARs should be settled.
Retained earnings includes all current and prior period retained profits.
The group recognises non-controlling interests in an acquired entity either at fair value or at the non-controlling interest’s proportionate share of the acquired entity’s net identifiable assets. This decision is made on an acquisition-by-acquisition basis.
Revenue is measured based on the consideration specified in a contract with a customer. The Group recognizes revenue when it transfers control over a good or service to the customer.
The following table provides information about the nature, timing and satisfaction of performance obligations in contracts with customers:
| Type of product/service | Nature and timing of satisfaction of performance obligations, including significant payment terms | Revenue recognition policies # Azerion Group N.V. Annual Report 2022
Consumables: Revenue from the sale of consumables is recognised at a point in time.
Durables: Revenue from the sale of durables is recognised over time, depending on the consumption period of the customer.
Memberships: Revenue is recognised evenly over the membership period.
NFT’s: See 3.16.2
Operating profit is the result generated from the continuing principal revenue-producing activities of the Group as well as other income and expenses related to operating activities. Operating profit excludes net finance costs, income taxes and the share of profit/results of joint ventures.
The Group’s finance income and finance costs include: interest income; interest expense; net interest expense on defined benefit obligation; and fair value change to the financial instruments. Interest income or expense is recognized using the effective interest method.
Income tax expense comprises current and deferred tax. It is recognized in profit or loss except to the extent that it relates to items recognized directly in equity or in other comprehensive income (OCI). The Company takes income tax positions that management believes are supportable and are intended to withstand challenge by tax authorities. Some of these positions are inherently uncertain and include the interpretation of income tax laws applied to complex transactions. The Company periodically reassesses its tax positions. Changes to the financial statement recognition, measurement, and disclosure of tax positions is based on management’s best judgment given any changes in the facts, circumstances, information available and applicable tax laws. Considering all available information, the Company believes that the ultimate resolution of such matters will not have a material effect on the Company’s financial position, statements of operations or cash flows.
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to tax payable or receivable in respect of previous years. The amount of current tax payable or receivable is the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to income taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting date. Current tax assets and liabilities are offset only if certain criteria are met.
Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax assets are recognized for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be used. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date. Deferred tax assets and liabilities are offset only if certain criteria are met. Deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that, at the time of the transaction, affects neither accounting nor taxable profit or loss. Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in foreign operations where the company is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future. The Group elected to apply the Initial-Recognition-Exemption on initial recognition as well as for subsequent measurement therefore the right-of-use asset and the lease liability are considered separately for deferred tax purposes.
A provision is recognised for those matters for which the tax determination is uncertain but it is considered probable that there will be a future outflow of funds to a tax authority. The provisions are measured at the best estimate of the amount expected to become payable. The assessment is based on the judgement of tax professionals within the Company supported by previous experience in respect of such activities and in certain cases based on specialist independent tax advice.
‘Fair value’ is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or, in its absence, the most advantageous market to which the Group has access at that date. The fair value of a liability reflects its non-performance risk. When available, the Group measures the fair value of an instrument using the quoted price in an active market for that instrument. A market is regarded as ‘active’ if transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. If there is no quoted price in an active market, then the Group uses valuation techniques that maximize the use of relevant observable inputs and minimize the use of unobservable inputs. The chosen valuation technique incorporates all of the factors that market participants would take into account in pricing a transaction.
The Group presents basic and diluted earnings per share (EPS) data for its shares. Basic EPS is calculated by dividing the profit attributable to owners of the company (excluding any costs of servicing equity other than ordinary shares) by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year and excluding treasury shares.
The Group’s consolidated financial statements have been prepared consistently with the previous period in order to give accurate trend analysis regarding the financial position and performance. Where necessary, comparative figures have been reclassified to agree to the presentation of the current period consolidated financial statements and significant changes are explained. During 2022 the Group discovered that contract balances had been erroneously presented under "Contract assets" while the performance obligations were fully satisfied and recognized. Only the invoices were not yet created and sent to customers, and under "Contract liabilities" while the campaigns have been fully delivered and recognized and the invoices not received yet from suppliers. As a consequence contract assets amounting to € 12.1 million which were presented under “Contract assets” have been classified into “Trade and other receivables” and Contract liabilities amounting to € 0.4 million which were presented under “Contract liabilities” have been classified into “Trade, other payables and accrued liabilities”. For comparability reasons the segment results of all quarters of 2022 will be updated to reflect the 2023 change in allocation keys related to central costs allocated to the segments Platform and Premium Games.
The new and amended standards that are issued but are not yet effective for 31 December 2022 are listed below:
| New standard |
|---|
| IFRS 17 Insurance Contracts |
| Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture |
| Amendments to IAS 1 Classification of Liabilities as Current or Non-current |
| Amendments to IAS 1 and IFRS Practice Statement 2 Disclosure of Accounting Policies |
| Amendments to IAS 8 Definition of Accounting Estimates |
| Amendments to IAS 12 Deferred Tax related to Assets and Liabilities arising from a Single Transaction |
For The Group the new standard IFRS 17 Insurance contracts will not be applicable. The Group will adopt the amended standards when they become effective. The amended standards are not expected to have a material impact on the Group’s financial statements, except for the following which are being assessed by management:
The amendments to IFRS 10 and IAS 28 deal with situations where there is a sale or contribution of assets between an investor and its associate or joint venture. Specifically, the amendments state that gains or losses resulting from the loss of control of a subsidiary that does not contain a business in a transaction with an associate or a joint venture that is accounted for using the equity method, are recognised in the parent’s profit or loss only to the extent of the unrelated investors’ interests in that associate or joint venture. Similarly, gains and losses resulting from the remeasurement of investments retained in any former subsidiary (that has become an associate or a joint venture that is accounted for using the equity method) to fair value are recognised in the former parent’s profit or loss only to the extent of the unrelated investors’ interests in the new associate or joint venture. The effective date of the amendments has yet to be set by the Board; however, earlier application of the amendments is permitted. The directors of the Company anticipate that the application of these amendments may have an impact on the Group's consolidated financial statements in future periods should such transactions arise.# Amendments to IAS 1 – Classification of Liabilities as Current or Non-current
The amendments to IAS 1 affect only the presentation of liabilities as current or non-current in the statement of financial position and not the amount or timing of recognition of any asset, liability, income or expenses, or the information disclosed about those items. The amendments clarify that the classification of liabilities as current or non-current is based on rights that are in existence at the end of the reporting period, specify that classification is unaffected by expectations about whether an entity will exercise its right to defer settlement of a liability, explain that rights are in existence if covenants are complied with at the end of the reporting period, and introduce a definition of ‘settlement’ to make clear that settlement refers to the transfer to the counterparty of cash, equity instruments, other assets or services. The amendments are applied retrospectively for annual periods beginning on or after 1 January 2023, with early application permitted.
Azerion Group N.V. Annual Report 2022 Consolidated financial statements 81
As stated in paragraph Accounting Treatment of the De-SPAC Transaction in note 2: Preparation basis, the De-SPAC Transaction between Azerion Group N.V. and Azerion Holding B.V. qualifies as a ‘share based payment’ transaction under IFRS 2 and the presentation in the financial statements is, by analogy, based on the IFRS 3 principles for reverse acquisitions. That resulted in the recognition of a 'Listing expense' in the consolidated statement of profit or loss with a corresponding amount in equity.
At the De-SPAC Transaction date, 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 and is accounted for as a share-based payment analogous to IFRS 2. In accordance, a one-time, non-cash impact of € 107.1 million has been recognized in ‘Other expenses’ against retained earnings.
The table below presents the specification of the Listing Expense:
Listing expense specification
| In millions of € | |
|---|---|
| Total fair value | |
| Listed shares of EFIC1 | 66.6 |
| Special Shares | 65.2 |
| Davey Call Options | 7.7 |
| Total Consideration | 139.5 |
| EFIC1 identifiable net assets (including share-based payment reserve) | 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 € 9.54;
8,539,894 Special Shares, before changes in the transaction, at a closing price on 1 February 2022 of € 7.63;
1,012,560 Davey Call Options, before changes in the transaction, at a closing value on 1 February 2022 of € 7.63.
More details can be found in the Company Financial Statements note 14: Share-based payments.
The specification of the EFIC1 B.V. Identifiable Net Assets at the De-SPAC Transaction date is as follows:
Specification of the EFIC1 B.V. Identifiable Net Assets in the Transaction
| In millions of € | |
|---|---|
| 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 (including share-based payment reserve) | 32.4 |
Trade and other payables includes: an amount of € 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
Azerion Group N.V. Annual Report 2022 Consolidated financial statements 82
2022); the sponsor and co-investor commitment for an amount of € 23.1 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 € 23.5 million and the value of the Capital Shares of € 0.22 million.
The Identifiable Net assets of EFIC1 including share-based payment reserve, resulted in an increase in equity presented as part of the De-SPAC Transaction line item in Consolidated statement of changes in equity, starting on page 57:
* € 0.2 million of increase in share capital (conversion of ordinary shares and special shares)
* € 3.7 million of Share-Based Payment granted by EFIC1
* € 28.5 million in share-premium related to the remaining net asset value after De-SPAC Transaction
The Transaction resulted in € 93.2 million of net cash proceeds which consists of : € 404.5 million of cash and cash equivalent, € 0.4 million of repaid interests and after redemption to shareholders of € 310.9 million of funds from the EFIC1 escrow account (net of negative interest and after effectuation of the share repurchase arrangement). These proceeds are offset by € 33.7 million De-SPAC related expenses paid.
Immediately after completion of the De-SPAC Transaction (1 February 2022) the issued share capital of Azerion Group N.V. was as follows:
Issued share capital after De-SPAC in number of shares
| Number1 | Total |
|---|---|
| Ordinary Shares | 181,561,748 |
| Of which shares in treasury2 | 70,078,452 |
| Ordinary Shares | 111,483,296 |
| Capital Shares | 22 |
| Conditional Special Shares | 1,152,886 |
| Public Warrants3 | 12,736,605 |
1Excluding any conditional and unconditional option rights and Founder Warrants existing at the date of the De-SPAC Transaction, which in aggregate entitle the holders to receive up to a maximum of 24,160,245 Ordinary Shares.
2In March 2021, EFIC1 issued Ordinary Shares to shareholders and immediately bought back these Ordinary Shares at the same price per share (€ 0.01). These Ordinary Shares in Treasury can be used for acquisitions, exercise of warrants and option rights and other general funding purposes.
3The outstanding Warrants listed on Euronext Amsterdam at the date of the De-SPAC Transaction entitle the holders to receive up to 12,736,605 Ordinary Shares.
The ownership percentages, immediately after the completion of the De-SPAC Transaction, 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.
Azerion Group N.V. Annual Report 2022 Consolidated financial statements 83
Shares ownership in number of shares
| Ownership in shares % in ordinary Share capital1 | |
|---|---|
| Former investors in Azerion Holding B.V.2,3 | 82,787,492 |
| Azerion Holding B.V., former depositary receipt holders | 8,382,903 |
| Azerion former stock appreciation rights holders4 | 4,483,367 |
| Former EFIC1 converted Special Shares holders | 6,533,019 |
| Other shareholders | 9,296,515 |
| Total ordinary shares | 111,483,296 |
1Excluding 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.
2An entity controlled by Azerion's co-founders and co-CEOs.
3Including shares held for settlement of future acquisition-related earn out and other obligations.
4Excluding shares held for settlement of future acquisition-related earn out and other obligations.
Azerion Group N.V. Annual Report 2022 Consolidated financial statements 84
Acquisition completed in 2022
| In millions of € | Notes | Infinia | Madvertise | Targetspot | Other1 | Total |
|---|---|---|---|---|---|---|
| Property, plant and equipment (including right-to-use assets) | 0.2 | 0.4 | 1.7 | 0.7 | 3.0 | |
| Intangible assets | 7 | 9.3 | 5.8 | 16.5 | 23.1 | 54.7 |
| Deferred tax assets | 0.2 | 0.7 | - | 1.1 | 2.0 | |
| Trade and other receivables | 5.8 | 5.8 | 13.6 | 14.0 | 39.2 | |
| Cash and cash equivalents | 2.4 | 0.4 | 1.9 | 2.2 | 6.9 | |
| Borrowings | 18 | (2.3) | (1.6) | (1.9) | (0.4) | (6.2) |
| Deferred tax liabilities | (1.8) | (1.4) | (3.4) | (5.5) | (12.1) | |
| Lease liabilities | 9 | - | (0.3) | (1.3) | (0.5) | (2.1) |
| Trade, other payables and accrued liabilities | (5.4) | (6.3) | (21.8) | (21.2) | (54.7) | |
| Total identifiable net assets and liabilities at fair value | 8.4 | 3.5 | 5.3 | 13.5 | 30.7 | |
| Consideration paid at closing | 6.0 | 1.9 | 2.3 | 9.7 | 19.9 | |
| Cash and cash equivalents and bank overdrafts at acquired subsidiary | (2.4) | (0.4) | (1.9) | (2.2) | (6.9) | |
| Outflow of cash and cash equivalents net of cash acquired | 3.6 | 1.5 | 0.4 | 7.5 | 13.0 | |
| Consideration paid at closing | 6.0 | 1.9 | 2.3 | 9.7 | 19.9 | |
| Deferred consideration2 | 4.8 | 6.2 | 3.9 | 3.8 | 18.7 | |
| Contingent consideration2 | 4.3 | - | 6.4 | 2.3 | 13.0 | |
| Other equity instruments | - | - | 0.2 | 8.1 | 8.3 | |
| Treasury shares at fair value | 3 | 1.0 | 3.1 | 17.3 | 10.7 | |
| Total consideration paid or to be paid at closing | 16.1 | 11.2 | 30.1 | 34.6 | 92.0 | |
| Minus: Total identifiable net assets and liabilities at fair value | (8.4) | (3.5) | (5.3) | (13.5) | (30.7) | |
| Goodwill | 8 | 7.7 | 7.7 | 24.8 | 21.1 | 61.3 |
1Others include the following acquisitions where the total balance of consideration paid or to be paid at closing is below € 10 million: Vlyby Digital GmbH (€ 7.2 million), Mmedia B.V. (€ 5.7 million), Hybrid Theory Global Ltd (€ 9.3 million), AdPlay S.r.l. (€ 6.3 million), Monolith Partners (€ 1.4 million), TakeRate S.r.l. (€ 2.8 million), Adverline SAS (€ 2.0 milllion).
2Refer to note 16: Other liabilities where the deferred considerations and Contingent considerations relating to the acquisitions are included.
35,248,310 Ordinary Shares issued in 2022
On 21 November 2022, Azerion Holding B.V. ("Azerion") acquired 100% of the share capital of Radionomy BV (“Radionomy”). Radionomy has been a leader and pioneer in digital audio since 2007. Radionomy connects brands to their target audiences via an inventory of leading publishers across all areas of digital audio. Through its proprietary technologies, Radionomy provides end-to-end integration between advertisers and publishers, for contextually targeted, cookie-free campaigns involving both direct and programmatic buying.Radionomy is also a leader in audio streaming, its Shoutcast brand enabling over 85,000 radio stations to be streamed online. Radionomy is operational in 9 countries and employs around 100 people worldwide. The purchase consideration for 100% shares in the capital of Radionomy is € 30.1 million, which comprises of a cash payment at closing of € 2.3 million, deferred consideration of € 3.9 million, contingent consideration of € 6.4 million, including guarantee of € 3.8 million, equity of € 17.3 million issued and classified in share premium and equity of € 0.2 million not issued yet and classified in other equity instruments as of 31 December 2022. The deferred consideration is to be paid within 5 months (€ 2.0 million) and 14 months (€ 1.9 million) respectively after the acquisition date. The fair value of the deferred consideration of € 3.9 million was estimated by calculating the present value of the future expected cash flows. The estimate is based on a discount rate of 4.5% per annum. Refer to note 16: Other liabilities where the deferred consideration relating to the acquisition of Targetspot as at 31 December 2022 is included. In the event that certain pre-determined, sales targets are achieved additional contingent consideration of up to € 2.6 million may be payable in cash. € 2.6 million contingent consideration is payable at the end of Earn-Out Azerion Group N.V. Annual Report 2022 Consolidated financial statements 85 Period (1 January 2023 – 31 December 2023). The Earn-out will be computed on a linear basis as from sales in 2023 of € 31 million, with the maximum amount of € 2.6 million corresponding to sales in 2023 of € 36 million. The earn out payment below pre-determined minimum sales target is zero. The fair value of the contingent consideration of € 2.6 million was estimated by calculating the present value of the future expected cash flows. The estimates are based on a discount rate of 12.6% per annum. Azerion also guarantees that its share price will increase to € 9.10 (20-day VWAP) at least once in the period from share purchase agreement signing to 31 December 2024. If this price target is not achieved, Azerion will pay out 70% of the shortfall between price at end of period and € 9.10 for each share (capped at € 5.1 million). At Azerion’s discretion, the shortfall can be compensated in cash or shares, the fair value of guarantee of € 3.8 million is determined using Monte Carlo simulation as of acquisition date. Based on the share purchase agreement, Azerion provided 2,782,644 shares at the share price of € 6.3 with a value of € 17.5 million. The issued shares of € 17.3 million are classified as share premiums and equity of € 0.2 million not issued yet are classified in other equity instruments as of 31 December 2022. The provisional fair value of acquired assets and liabilities of Radionomy has been determined. This resulted in a € 5.3 million provisional net fair value of the acquired assets and liabilities and € 24.8 million recognized goodwill. The goodwill of € 24.8 million mainly relates to the assembled workforce and other intangibles such as expected revenue sinergies. The fair value of financial assets includes receivables with a fair value of € 5.5 million and a gross contractual value of € 5.6 million. The best estimate at the acquisition date of the contractual cash flows not to be collected is € 0.1 million. No material acquisition related costs were incurred relating to the acquisition. Radionomy contributed € 2.9 million to the group revenue in 2022. If the acquisition had been completed on the first day of the financial year, Group revenue would have been € 24.6 million higher in total. Radionomy contributed a profit of € 0.4 million to the group's net profit and loss. If the acquisition had been completed on the first day of the financial year, net profit for the year would be € 3.2 million lower.
Acquisition of Infinia
On 4 April 2022 Azerion Group N.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 € 16.1 million, which comprises of a cash payment at closing of € 6.0 million, deferred consideration of € 4.8 million, contingent consideration of € 4.3 million, equity payments of € 1.0 million. The deferred consideration is to be paid within 12 months (€ 2.2 million) and 24 months (€ 2.0 million) respectively after the acquisition date. The fair value of the deferred consideration of € 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. Refer to note 16: Other liabilities where the deferred consideration relating to the acquisition of Infinia as at 31 December 2022 is included. 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 € 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. In the event that certain pre-determined sales targets are achieved additional contingent consideration of up to € 4.3 million may be payable in cash. € 2.3 million contingent consideration is payable at the end of Earn-Out Period 1 (1 January 2022 to 31 December 2022) and a further € 2.0 million payable at the end of Earn-Out Period 2 (1 January 2023 to 31 December 2023). Up to € 1.8 million would be paid to the Sellers if Infinia meets Earn-Out Period 1 targets. When 100% maximum target is met, 100% of the earn out is assigned to revenue (€ 8.5 million Azerion Group N.V. Annual Report 2022 Consolidated financial statements 86 revenue for Spain only, € 16.5 million revenue for consolidated). Up to € 1.7 million would be paid to the Sellers if Infinia meets Earn-Out Period 2 targets. When 100% maximum target is met, 100% of the earn out is assigned to revenue (€ 8.6 million revenue for Spain only, € 18 revenue million for consolidated). The earn out payment below 70% of the revenue targets is zero. For both earn out payments, the Spain revenue target is subject a to minimum consolidated gross margin of 38% and the earn out payment for consolidated revenue targets are subjected to minimum consolidated gross margin of 40%. The earn out payment below pre-determined minimum consolidated gross margin levels is zero. € 0.5 million in cash to be paid if at least 20% of total campaign volume of Infinia is delivered through Azerion product for 2022 as part of Earn-Out Period 1. € 0.4 million in cash to be paid if at least 40% of total campaign volume of Infinia is delivered through Azerion product for 2023 as part of Earn-Out Period 2. The fair value of the contingent consideration of € 4.3 million was estimated by calculating the present value of the future expected cash flows. The estimated are based on a discount rate of 9.8% per annum. Based on the share purchase agreement, Azerion issued 112,359 Azerion Group N.V. shares from treasury at the share price of € 8.90 representing a total value of € 1.0 million. The fair value of the acquired assets and liabilities of Infinia has been determined. This resulted in a € 8.4 million net fair value of the acquired assets and liabilities and € 7.7 million recognized goodwill. The goodwill of € 7.7 million mainly relates to the assembled workforce and other intangibles such as expected revenue sinergies. The fair value of financial assets includes receivables with a fair value of € 4.9 million and a gross contractual value of € 5.6 million. The best estimate at the acquisition date of the contractual cash flows not to be collected is € 0.7 million. No material acquisition related costs were incurred relating to the acquisition. Infinia contributed € 9.9 million to the group revenue during 2022. If the acquisition had been completed on the first day of the financial year, Group revenue would have been € 2.6 million higher in total. Infinia contributed a profit of € 1.4 million to the group's net profit and loss. If the acquisition had been completed on the first day of the financial year, net profit for the year would be € 0.3 million lower.
Acquisition of Madvertise
On 4 July 2022, Azerion Group N.V. ("Azerion") acquired 100% of the share capital of Madvertise Media SAS (“Madvertise FR”) and Madvertise Media GmbH (“Madvertise DE”), together Madvertise, based on two Share Purchase Agreements. Madvertise FR is a French technology company founded in 2011 in France while Madvertise DE is a German technology company founded in 2011 in Germany. Madvertise specializes in premium mobile advertising. Madvertise proprietary technology to optimize and maximize advertiser visibility. 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 market. The purchase consideration for 100% shares in the capital of Madvertise is € 11.2 million, which comprises of a cash payment at closing of € 1.9 million, deferred consideration of € 6.2 million, equity payments of € 3.1 million. The deferred consideration is to be paid within 3 months (€ 3.4 million) and 6 months (€ 2.8 million) respectively after the acquisition date.The fair value of the deferred consideration of € 6.2 million was estimated by calculating the present value of the future expected cash flows. The estimate is based on a discount rate of 6.5% per annum. Refer to note 16: Other liabilities where the deferred consideration payable relating to the acquisition of Madvertise as of 31 December 2022 is included. Based on the share purchase agreement, Azerion provided 384,614 shares at the share price of € 7.8 with a value of € 3.1 million. The fair value of the acquired assets and liabilities of Madvertise has been determined. This resulted in a € 3.5 million net fair value of the acquired assets and liabilities and € 7.7 million recognized goodwill. The goodwill of € 7.7 million mainly relates to the assembled workforce and other intangibles such as expected revenue sinergies. Azerion Group N.V. Annual Report 2022 Consolidated financial statements 87 The fair value of financial assets includes receivables with a fair value of € 1.2 million and a gross contractual value of € 1.3 million. The best estimate at the acquisition date of the contractual cash flows not to be collected is € 0.1 million. No material acquisition related costs were incurred relating to the acquisition. Madvertise contributed € 6.2 million to the group revenue during 2022. If the acquisition had been completed on the first day of the financial year, Group revenue would have been € 5.4 million higher in total. Madvertise contributed a loss of € 0.3 million to the group's net profit and loss. If the acquisition had been completed on the first day of the financial year, net profit for the year would be € 0.4 million higher.
Acquisition of Vlyby Digital
On 30 September 2022, Azerion Group N.V. ("Azerion") acquired 100% of the share capital of Vlyby Digital GmbH ("Vlyby"). Vlyby is a German company focusing on programmatic video advertising and self-service publisher solutions. Vlyby founded in 2017 in Munich, Germany. Vlyby’s product suite includes a header bidding wrapper for all relevant video demand partners, machine learning based yield optimization and a high performant video player solution combined with a self-service management and real-time reporting interface. The purchase consideration for 100% shares in the capital of Vlyby is € 7.2 million, which comprises of a cash payment at closing of € 1.1 million, deferred consideration of € 0.2 million, contingent consideration of € 1.4 million, equity payments of € 4.5 million. The deferred consideration is to be paid within 15 months (€ 0.2 million) after the acquisition date. The fair value of the deferred consideration of € 0.2 million was estimated by calculating the present value of the future expected cash flows. The estimate is based on a discount rate of 8.3% per annum. Refer to note 16: Other liabilities where the deferred consideration relating to the acquisition of Vlyby as of 31 December 2022 is included. In the event that certain pre-determined sales and EBITDA targets are achieved additional contingent consideration of up to € 1.4 may be payable in cash. € 1.4 million contingent consideration is payable at the end of Earn-Out Period (1 January 2022 to 31 December 2022). Up to € 1.4 million would be paid to the Sellers if Vlyby meets Earn-Out Period targets. When 100% maximum target is met, 100% of the earn out is assigned to revenue and EBITDA (€ 7.1 million revenue, € 1.1 million EBITDA). The earn out payment below 75% of the revenue and EBITDA targets is zero. For earn out payments, revenue and EBITDA targets are subject a to minimum EBITDA margin of 10%. The earn out payment below pre-determined minimum EBITDA margin level is zero. The fair value of the contingent consideration of € 1.4 million was estimated by calculating the present value of the future expected cash flows. The estimated are based on a discount rate of 12.6% per annum. Based on the share purchase agreement, Azerion provided 658,314 shares at the share price of € 7.0 with a value of € 4.5 million. The fair value of acquired assets and liabilities of Vlyby has been determined. This resulted in a € 1.3 million net fair value of the acquired assets and liabilities and € 5.9 million recognized goodwill. The goodwill of € 5.9 million mainly relates to the assembled workforce and other intangibles such as expected revenue sinergies. The fair value of financial assets includes receivables with a fair value of € 0.1 million and a gross contractual value of € 0.1 million. The best estimate at the acquisition date of the contractual cash flows not to be collected is zero. No material acquisition related costs were incurred relating to the acquisition. Vlyby contributed € 2.4 million to the group revenue during the fourth quarter of 2022. If the acquisition had been completed on the first day of the financial year, Group revenue would have been € 3.3 million higher in total. Vlyby contributed a profit of € 0.7 million to the group's net profit and loss. If the acquisition had been completed on the first day of the financial year, net profit for the year would be € 0.2 million higher. Azerion Group N.V. Annual Report 2022 Consolidated financial statements 88
Acquisition of Hybrid Theory
On 10 November 2022, Azerion Holding B.V. ("Azerion") acquired 100% of the share capital of Hybrid Theory Global Ltd ("Hybrid"). Hybrid is a data led programmatic agency and trading desk specialising in mid and lower funnel campaigns. Their technology delivers a hybrid approach that connects data intelligence with human nuance, understanding, and creativity, to power smarter advertising across the full customer journey. Headquartered in London and with offices in six other markets, this acquisition also opens a new footprint for Azerion in the US, and the broader APAC market. The purchase consideration for 100% shares in the capital of Hybrid is € 9.3 million, which comprises of equity of € 8.1 million not issued yet and classified in other equity instruments, and equity of € 1.2 million (220,101 shares) issued and classified in share premiums as of 31 December 2022. Equity of € 8.1 million was issued and classified in share premiums in February 2023. The fair value of acquired assets and liabilities of Hybrid has been determined. This resulted in a € 3.9 million net fair value of the acquired assets and liabilities and € 5.4 million recognized goodwill. The goodwill of € 5.4 million mainly relates to the assembled workforce and other intangibles such as expected revenue sinergies. The fair value of financial assets includes receivables with a fair value of € 0.8 million and a gross contractual value of € 0.8 million. The best estimate at the acquisition date of the contractual cash flows not to be collected is zero. No material acquisition related costs were incurred relating to the acquisition. Hybrid contributed € 3.8 million to the group revenue during the fourth quarter of 2022. If the acquisition had been completed on the first day of the financial year, Group revenue would have been € 15.7 million higher in total. Hybrid contributed a profit of € 0.4 million to the group's net profit and loss. If the acquisition had been completed on the first day of the financial year, net profit for the year would be € 1.2 million lower.
Acquisition of Adplay
On 9 November 2022, Azerion Group N.V. ("Azerion") acquired 100% of the share capital of Adplay S.r.l. (“Adplay”). Adplay is a tech media company focused on the development of proprietary solutions for Publishers and Brand advertisers and a strategic partner for the implementation of digital transformation and innovation plans, through its own technologies and tailored consulting services. Adplay will provide further growth of Azerion Platform in Italy through video player and distribution capabilities and its publisher relations. The purchase consideration for 100% shares in the capital of Adplay is € 6.2 million, which comprises of a cash payment at closing of € 2.0 million, contingent consideration of € 0.2 million, equity payments of € 4.0 million. In the event that certain pre-determined, sales, gross profit and EBITDA targets are achieved additional contingent consideration of up to € 0.2 may be payable in cash. € 0.2 million contingent consideration is payable at the end of Earn-Out Period (2 years after the completion). Up to € 0.2 million would be paid to the Sellers if Adplay meets Earn-Out Period targets (Sales € 10.6 million, gross profit: € 2.4 million, EBITDA: € 0.35 million). The earn out payment below pre-determined minimum sales, gross profit and EBITDA targets is zero. The fair value of the contingent consideration of € 0.2 million was estimated by calculating the present value of the future expected cash flows. The estimated are based on a discount rate of 12.6 % per annum. Based on the share purchase agreement, Azerion provided 580,470 shares at the share price of € 6.9 with a value of € 4.0 million. The fair value of acquired assets and liabilities of Adplay has been determined. This resulted in a € 3.1 million net fair value of the acquired assets and liabilities and € 3.1 million recognized goodwill. The goodwill of € 3.1 million mainly relates to the assembled workforce and other intangibles such as expected revenue sinergies. The fair value of financial assets includes receivables with a fair value of € 2.6 million and a gross contractual value of € 2.6 million. The best estimate at the acquisition date of the contractual cash flows not to be collected Azerion Group N.V. Annual Report 2022 Consolidated financial statements 89 is zero. No material acquisition related costs were incurred relating to the acquisition. Adplay contributed € 2.6 million to the group revenue during the last quarter of 2022. If the acquisition had been completed on the first day of the financial year, Group revenue would have been € 7.3 million higher in total. Adplay contributed a profit of € 0.2 million to the group's net profit and loss.# Business combinations
On 17 October 2022, Azerion Group N.V. ("Azerion") acquired 100% of the share capital of MMedia B.V. ("Mmedia"). Mmedia is a leading sales house, tech partner and intermediary for publishers and advertisers in the Dutch digital advertising space with a strong focus on sports, lifestyle and automotive audiences. Mmedia offers a selective collection of leading websites and apps in automotive, finance, lifestyle and sports. Together with multiple editorial-offices and video production teams, MMedia creates content for the advertisers. The purchase consideration for 100% shares in the capital of MMedia is € 5.7 million, which comprises of a cash payment at closing of € 3.8 million, deferred consideration of € 1.9 million. The deferred consideration is to be paid within 4 months (€ 1.9 million) after the acquisition date. The fair value of the deferred consideration of € 1.9 million was estimated by calculating the present value of the future expected cash flows. The estimate is based on a discount rate of 8.5% per annum. Refer to note 16: Other liabilities where the deferred consideration relating to the acquisition of MMedia as of 31 December 2022 is included. The fair value of acquired assets and liabilities of Mmedia has been determined. This resulted in a € 2.8 million net fair value of the acquired assets and liabilities and € 2.9 million recognized goodwill. The goodwill of € 2.9 million mainly relates to the assembled workforce and other intangibles such as expected revenue sinergies. The fair value of financial assets includes receivables with a fair value of € 1.5 million and a gross contractual value of € 1.5 million. The best estimate at the acquisition date of the contractual cash flows not to be collected is zero. No material acquisition related costs were incurred relating to the acquisition. MMedia contributed € 3.4 million to the group revenue during the fourth quarter of 2022. If the acquisition had been completed on the first day of the financial year, Group revenue would have been € 9.0 million higher in total. Mmedia contributed a profit of € 0.1 million to the group's net profit and loss. If the acquisition had been completed on the first day of the financial year, net profit for the year would be € 0.6 million lower.
On 26 September 2022, Azerion Group N.V. ("Azerion") acquired net assets from TakeRate SRL (“TakeRate”) through an asset purchase agreement. On this day TakeRate transferred all rights, assets, intellectual properties, contracts and employees relating to the assets. The purchase consideration for assets of TakeRate is € 2.8 million, which comprises of a cash payment at closing of € 0.7 million, deferred consideration of € 1.1 million, equity payments of € 1.0 million. The deferred consideration is to be paid within 6 months (€ 0.4 million) and 9 months (€ 0.7 million) after the agreement date. The fair value of the deferred consideration of € 1.1 million was estimated by calculating the present value of the future expected cash flows. The estimate is based on a discount rate of 6.5% per annum. Refer to note 16: Other liabilities where the deferred consideration relating to the acquisition of Takerate as of 31 December 2022 is included. Azerion Group N.V. Annual Report 2022 Consolidated financial statements 90 Based on the asset purchase agreement, Azerion provided 127,226 shares at the share price of € 7.86 with a value of € 1.0 million. The fair value of acquired assets and liabilities of TakeRate has been determined. This resulted in a € 1.3 million net fair value of the acquired assets and liabilities and € 1.5 million recognized goodwill. No material acquisition related costs were incurred relating to the acquisition.
On 15 November 2022, Azerion Holding B.V. ("Azerion") acquired 100% of the share capital of Monolith Partners ("Monolith"). Monolith’s business is the purchase and resale of advertising space. The purchase consideration for 100% shares in the capital of Monolith is € 1.4 million, which comprises of a deferred consideration of € 0.8 million, contingent consideration of € 0.6 million. The deferred consideration is to be paid within 4 months (€ 0.8 million) after the acquisition date. The fair value of the deferred consideration of € 0.8 million was estimated by calculating the present value of the future expected cash flows. The estimate is based on a discount rate of 8.5% per annum. Refer to where the deferred consideration relating to the acquisition of Monolith as of 31 December 2022 is included. In the event that certain pre-determined EBITDA target is achieved additional contingent consideration of up to € 0.6 million may be payable in cash. € 0.6 million contingent consideration is payable at the end of Earn-Out Period (1 January 2023 to 31 December 2023). € 0.6 million would be paid to the Sellers if Monolith meets Earn-Out Period targets (€ 0.2 million EBITDA). The earn out payment below EBITDA target is zero. The fair value of the contingent consideration of € 0.6 million was estimated by calculating the present value of the future expected cash flows. The estimated are based on a discount rate of 12.6% per annum. The fair value of acquired assets and liabilities of Monolith has been determined. This resulted in a € 0.1 million net fair value of the acquired assets and liabilities and € 1.3 million recognized goodwill. The goodwill of € 1.3 million mainly relates to the assembled workforce and other intangibles such as expected revenue sinergies. The fair value of financial assets includes receivables with a fair value of € 1.4 million and a gross contractual value of € 1.6 million. The best estimate at the acquisition date of the contractual cash flows not to be collected is € 0.2 million. No material acquisition related costs were incurred relating to the acquisition. Monolith contributed € 1.3 million to the group revenue during 2022. If the acquisition had been completed on the first day of the financial year, Group revenue would have been € 5.5 million higher in total. Monolith contributed a profit of € 0.2 million to the group's net profit and loss. If the acquisition had been completed on the first day of the financial year, net profit for the year would be € 1.1 million lower.
On 16 September 2022, Azerion Group N.V. ("Azerion") acquired assets from Adverline SAS (“Adverline”) through an asset purchase agreement. On this day Adverline transferred all rights, assets, intellectual properties, contracts and employees relating to the assets. The purchase consideration for assets of Adverline is € 2.0 million, which comprises of a cash payment at closing of € 1.3 million, deferred consideration of € 0.7 million. The deferred consideration is to be paid within 6 months (€ 0.7 million) after the agreement date. The fair value of the deferred consideration of € 0.7 million was estimated by calculating the present value of the future expected cash flows. The estimate is based on a discount rate of 6.5% per annum. Refer to note 16: Other liabilities where the deferred consideration relating to the acquisition of Adverline as of 31 December 2022 is included. Azerion Group N.V. Annual Report 2022 Consolidated financial statements 91 The fair value of acquired assets of Adverline has been determined. This resulted in a € 1.0 million net fair value of the acquired assets and € 1.0 million recognized goodwill. No material acquisition related costs were incurred relating to the acquisition.
In millions of €
| Strossle International AB | Genba Digital Limited | WHOW Games GmbH | Sublime Skinz Labs SAS | Inskin Media LTD | Others1 | Total | |
|---|---|---|---|---|---|---|---|
| Property, plant and equipment (excluding right-to-use assets) | 6 | - | 0.1 | 0.2 | 0.1 | - | 0.4 |
| Intangible assets | 6.3 | 10 | 43.6 | 8.5 | 12.1 | 20.5 | 101.0 |
| Deferred tax assets | - | - | - | - | - | 0.4 | 0.4 |
| Trade and other receivables | 2.3 | 10.6 | 4.0 | 10.6 | 5.8 | 7.3 | 40.3 |
| Cash and cash equivalents | 1.0 | 4.6 | 3.2 | 3.6 | 2.0 | 4.0 | 18.5 |
| Borrowings | (0.5) | (0.1) | (1.8) | (8.4) | (1) | (2) | (13.5) |
| Deferred tax liabilities | (1.3) | (1.8) | (13.1) | (2.1) | (2) | (2.4) | (22.9) |
| Trade, other payables and accrued liabilities | (2.5) | (12.5) | (5.8) | (8.7) | (5.9) | (5.3) | (40.6) |
| Loans from related parties | - | - | - | - | - | (1.9) | (1.9) |
| Total identifiable net assets and liabilities at fair value | 5.4 | 11.0 | 30.3 | 3.5 | 10.9 | 20.5 | 81.6 |
| Consideration paid at closing | 6.4 | 10.6 | 27.0 | 8.9 | 10.2 | 9.5 | 72.7 |
| Cash and cash equivalents and bank overdrafts at acquired subsidiary | (1.0) | (4.6) | (3.2) | (3.6) | (2) | (4) | (18.5) |
| Outflow of cash and cash equivalents net of cash acquired | 5.4 | 6.0 | 23.8 | 5.3 | 8.2 | 5.5 | 54.2 |
| Consideration paid at closing | 6.4 | 10.6 | 27.0 | 8.9 | 10.2 | 9.5 | 72.7 |
| Deferred consideration2 | 0.3 | 3.4 | 9.6 | - | 9.1 | 1.9 | 24.3 |
| Contingent consideration2 | 1.8 | 4.7 | 20.2 | 1.7 | 2.6 | 6.2 | 37.3 |
| SARs payment at fair value | 1.7 | 1.8 | - | - | - | 5.9 | 9.4 |
| Transaction bonus | - | - | - | 2.1 | - | - | 2.1 |
| Total consideration paid or to be paid at closing | 10.2 | 20.6 | 56.8 | 12.7 | 22.0 | 23.4 | 145.8 |
| Minus: Total identifiable net assets and liabilities at fair value | (5.4) | (11.0) | (30.3) | (3.5) | (10.9) | (13.2) | (74.5) |
| Goodwill | 4.8 | 9.6 | 26.5 | 9.2 | 11.1 | 10.1 | 71.2 |
1Others include the following acquisitions where the total balance of consideration paid or to be paid at closing is below € 10 million: Delta Projects AB (€ 9.0 million), KMobile AB (€ 5.7 million), Admeen B.V. (€ 4.5 million), Titan Gate AD (€ 4.1 million), Talpa Azerion Gaming (€ -).
2Refer to note 16: Other liabilities where the deferred considerations and Contingent considerations relating to the acquisitions are included.
Azerion Group N.V.# Consolidated financial statements 92
Property, plant and equipment
In millions of €
| Right-of-Use Buildings | Right-of-Use Vehicles | Right-of-Use Office Equipment | Equipment | Renovations | Total |
|---|---|---|---|---|---|
| As at 1 January 2021 | |||||
| Costs | 7.7 | 1.2 | - | 2.4 | 0.3 |
| Accumulated depreciation | (2.5) | (0.7) | - | (1.4) | - |
| Net book amount | 5.2 | 0.5 | - | 1.0 | 0.3 |
| Movements for the year ended 31 December 2021 | |||||
| Acquisitions of subsidiaries and businesses | 3.4 | - | 0.2 | 0.2 | 0.2 |
| Capital expenditures / additions | 13.6 | 1.1 | - | 1.4 | - |
| Cancellations/ Disposals | (0.9) | - | - | - | (0.1) |
| Depreciation | (3.8) | (0.7) | (0.2) | (0.5) | (0.1) |
| Impairment | (1.9) | - | - | - | - |
| Exchange differences | (0.4) | - | - | - | - |
| Reclassifications | - | 0.1 | - | (0.3) | 0.2 |
| As at 31 December 2021 | |||||
| Costs | 21.3 | 2.3 | - | 4.7 | 1.3 |
| Accumulated depreciation | (6.1) | (1.3) | - | (2.9) | (0.8) |
| Net book amount | 15.2 | 1.0 | - | 1.8 | 0.5 |
| Movements for the year ended 31 December 2022 | |||||
| Acquisitions of subsidiaries and businesses | 1.9 | 0.2 | - | 0.8 | 0.1 |
| Capital expenditures/ additions | 3.8 | 0.9 | 0.7 | 2.1 | - |
| Cancellation / Disposals | (1.0) | - | - | - | - |
| Depreciation | (4.8) | (0.7) | (0.4) | (1.0) | (0.1) |
| Impairment | - | - | - | (0.3) | - |
| Exchange rate differences | (0.3) | 0.1 | 0.1 | - | (0.1) |
| Balance as of 31 December 2022 | |||||
| Costs | 21.1 | 3.2 | 0.8 | 10.5 | 1.3 |
| Accumulated depreciation | (6.3) | (1.7) | (0.4) | (7.1) | (0.9) |
| Net book amount | 14.8 | 1.5 | 0.4 | 3.4 | 0.4 |
Azerion Group N.V. Annual Report 2022 Consolidated financial statements 93
Intangible assets
In millions of €
| Games, Software and Websites | Client Lists | Trademark, patents and brands | Other | Total |
|---|---|---|---|---|
| As at 1 January 2021 | ||||
| Cost | 50.7 | 7.3 | 3.8 | 10.0 |
| Accumulated amortization | (20.0) | (4.9) | (1.8) | (3.3) |
| Net book amount | 30.7 | 2.4 | 2.0 | 6.7 |
| Movements for the year ended 31 December 2021 | ||||
| Capitalised internal development | 11.3 | - | - | 0.8 |
| Additions | 4.4 | - | - | 0.5 |
| Acquisitions of subsidiaries and businesses | 47.0 | 47.3 | 5.2 | 1.5 |
| Disposals | (0.3) | - | - | (0.3) |
| Amortization | (14.0) | (2.7) | (0.7) | (0.2) |
| Exchange differences | 0.2 | 0.2 | (0.1) | (0.1) |
| Reclassification and other | 4.1 | (0.5) | 2.4 | (6.0) |
| As at 31 December 2021 | ||||
| Cost | 131.1 | 54.8 | 10.7 | 3.3 |
| Accumulated amortization | (47.7) | (8.1) | (1.9) | (0.4) |
| Net book amount | 83.4 | 46.7 | 8.8 | 2.9 |
| Movements for the year ended 31 December 2022 | ||||
| Capitalised internal development | 16.6 | - | - | - |
| Additions | 3.7 | - | - | 0.9 |
| Acquisitions of subsidiaries and businesses | 26.4 | 21.3 | 3.2 | 3.8 |
| Disposals | (0.2) | - | - | (0.1) |
| Impairment | (0.2) | - | - | - |
| Amortization | (21.9) | (5.5) | (3.3) | (0.3) |
| Exchange differences | (0.5) | (0.3) | - | (0.1) |
| Reclassification and other | 2.4 | (0.7) | 0.1 | (0.9) |
| As at 31 December 2022 | ||||
| Cost | 177.7 | 68.9 | 13.4 | 7.3 |
| Accumulated amortization | (68.0) | (7.4) | (4.6) | (1.1) |
| Net book amount | 109.7 | 61.5 | 8.8 | 6.2 |
Capitalised development costs are included in Games & Software and Other intangible assets. The full amount recorded as “Capitalised internal development costs” in Games & Software and Other relates to payroll related internal development costs incurred. Any costs associated with research are expensed as they arise and only identifiable development costs are capitalised. Net book value of internally generated intangible assets as at 31 December 2022 amounted to € 81.1 million (31 December 2021: € 67.3 million). The other intangible asset class mainly include products in development, licenses and IP rights and a revenue share agreement. The reclassifications during the year mostly consist of website related intangible assets that have been integrated within games and software. These amounts have been reclassified in order to more appropriately disclose the nature and classification of these assets. The reclassification from Other to Client lists and Trademarks was made in the current year to reflect more accurately the nature of the intangible assets identified from previous years acquisitions. The intangible assets included in the Other intangible assets class have finite useful lives.
Azerion Group N.V. Annual Report 2022 Consolidated financial statements 94
For the estimated useful lives of intangible assets, please see respective section of note 3: Significant accounting policies.
Azerion Group N.V. Annual Report 2022 Consolidated financial statements 95
Goodwill
In millions of €
| Goodwill |
|---|
| As at 1 January 2021 |
| Cost |
| Movements for the year ended 31 December 2021 |
| Additions |
| Acquisitions of subsidiaries and businesses |
| Disposals |
| Exchange differences |
| Reclassification and other |
| As at 31 December 2021 |
| Cost |
| Movements for the year ended 31 December 2022 |
| Acquisitions of subsidiaries and businesses |
| Exchange differences |
| Reclassification and other |
| As at 31 December 2022 |
| Cost |
For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units (CGUs), or groups of CGUs, that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquisition are assigned to those units or groups of CGUs. Goodwill is tested for impairment, annually or more frequently if there are indications that goodwill might be impaired. The Group identifies two operating segments as its groups of CGUs to which goodwill has been allocated, Platform and Premium Games. 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. Our Premium Games segment includes social 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.
Goodwill is allocated to the respective CGU’s as indicated below:
Goodwill allocated to CGUs
In millions of €
| Platform | Premium Games | Total |
|---|---|---|
| Carrying value as at 31 December 2022 | 156.4 | 27.8 |
| Carrying value as at 31 December 2021 | 95.2 | 27.8 |
The impairment test is based on cash flow projections for five years. CGU's are tested for impairment by comparing the carrying amount of each group of CGU to its recoverable amount.
Azerion Group N.V. Annual Report 2022 Consolidated financial statements 96
Premium Games
The recoverable amount of the Premium Games segment, which is the Gaming CGU, is determined based on a value in use calculation which uses cash flow projections based on financial forecasts approved by the directors covering a five-year period and a pre-tax discount rate of 10.6% per annum (2021: 7.9% per annum) calculated by the weighted average cost of capital method as derived through the Capital Asset Pricing Model. The key assumptions used by management in setting the financial forecasts for the initial five-year period were as follows:
Platform
The recoverable amount of the Platform segment as a group of CGU’s is determined based on a value in use calculation which uses cash flow projections based on financial forecasts approved by the directors covering a five-year period and a pre-tax discount rate of 12.5% (2021: 9.8%) per annum calculated by the weighted average cost of capital method. The key assumptions used by management in setting the financial forecasts for the initial five-year period were as follows:
The Group has conducted an analysis of the sensitivity of the impairment test to changes in the key assumptions used to determine the recoverable amount for each of the group of CGUs to which goodwill is allocated. The directors believe that any reasonably possible change in the key assumptions on which the recoverable amount of “Premium Games” and “Platform” is based would not cause the aggregate carrying amount to exceed the aggregate recoverable amount of the related CGUs.
Azerion Group N.V. Annual Report 2022 Consolidated financial statements 97
Based on the impairment analysis no impairment was recognized as at 31 December 2022 or 31 December 2021. At an adverse 10% movement in the Adjusted EBITDA growth the WACC can increase on average by 25 basis points before impairments are triggered for the Platform CGU. At an adverse 10% movement in the Adjusted EBITDA growth the WACC can increase on average by 5 basis points before impairments are triggered for the Premium Games CGU.
Azerion Group N.V. Annual Report 2022 Consolidated financial statements 98
The carrying amount of right-of-use assets related to leased buildings, leased vehicles and leased office equipment are included in property, plant and equipment (see note 6: Property, plant and equipment).
The Group cannot readily determine the interest rate implicit in the lease, therefore, it uses its incremental borrowing rate (“IBR”) to measure the present value of future lease payments. The IBR is determined as the sum of a reference rate, credit risk premium and country risk premium. The calculation of IBR considers the currency of the lease contract, the lease term, type of leased assets, the region of the lessee and the credit rating of the lessee. A single IBR is applied to a portfolio of leases, which are similar in nature and in lease term within a region. The weighted average IBR applied in 2022 to lease liabilities was 8.0% (2021: 8.4%).
The carrying amount of lease liabilities and the related movements during the period are as follows:
Lease liabilities
In millions of €
| 2022 | 2021 | |
|---|---|---|
| As at 1 January | 19.0 | 6.2 |
| Acquisition of subsidiaries and businesses | 2.1 | 3.6 |
| Additions | 3.9 | 14.6 |
| Repayments of the principal amount | (4.6) | (4.1) |
| Accrued interest | 1.5 | 1.4 |
| Interest paid | (1.5) | (1.4) |
| Cancellation | (0.9) | (0.8) |
| Exchange differences | (0.3) | (0.5) |
| Reassessments and modifications | - | - |
| As at 31 December | 19.2 | 19.0 |
| Non-current | 14.3 | 14.3 |
| Current | 4.9 | 4.7 |
The Lease Liabilities on 31 December 2022 amount to € 19.2 million (2021: € 19.0 million), which mainly consists of offices € 17.7 million (2021: € 17.9 million).
The following table sets out a maturity analysis of lease payments, showing the undiscounted lease payments to be paid after the reporting date:
Maturity analysis of lease payments
In millions of €
| 31 December 2022 | 31 December 2021 | |
|---|---|---|
| Less than 1 year | 5.6 | 5.9 |
| 1 to 2 years | 5.1 | 4.5 |
| 2 to 3 years | 4.6 | 3.6 |
| 3 to 4 years | 2.5 | 3.2 |
| 4 to 5 years | 1.9 | 1.7 |
| More than 5 years | 3.3 | 4.4 |
| Total undiscounted lease liability | 23.0 | 23.3 |
| Unpaid finance expense | (3.8) | (4.3) |
| Total lease liability | 19.2 | 19.0 |
Azerion Group N.V. Annual Report 2022 Consolidated financial statements 99
The Group holds the following financial assets:
Financial assets
In millions of €
| As at 1 January 2021 | Acquisitions of subsidiaries and businesses | Additions | Accrued interest | Repayments / disposals | Modification of shareholder loans | Fair value adjustment on shareholder loans | As at 31 December 2021 | Additions | Reclassification of deposits to cash and cash equivalents | Accrued interest | Others | As at 31 December 2022 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Loans and other receivables | 17.7 | 0.5 | 13.7 | 1.0 | (0.4) | 4.9 | (1.4) | 36.0 | 0.1 | (0.4) | 1.4 | (0.2) | 36.9 |
Loans and other receivables
Loan to shareholder Principion Holding B.V.
On 17 March 2020, the Group entered into a loan agreement with its shareholder Principion Holding B.V., lending its shareholder a total principal value of € 24.6 million (nominal value) against an interest rate of 1.0%. The maturity date of the loan is 31 March 2024. The loan, which is classified as subsequently measured at amortised cost, had a fair value on initial recognition of € 21.2 million. A further loan of € 12.4 million was advanced on the same terms during April and May 2021. During 2020 the difference between the market interest rate (4.0%) and the interest rate in the agreement (1.0%) resulted in a negative fair value adjustment of € 3.4 million on the initial recognition of the loan recognised directly in equity. Further fair value loss on initial recognition of € (1.4) million was recorded directly in equity on additional € 12.4 million advanced in 2021. During 2021 the interest rate on these loans was amended to 4.0% to reflect the market interest rate. This amendment gave rise to a modification of € 4.9 million positive recorded directly in equity. The shareholder repaid € 0 of the loan principals during 2022 (2021: € 0) and € 1.4 million of interest is accrued in 2022 (2021: € 1.0 million). The loan had an outstanding balance of € 34.7 million as of 31 December 2022 (2021: € 33.4 million).
Other
The remaining other non-current financial assets mainly relate to security deposits which included € 1.1 million rent deposit in Finland.
Azerion Group N.V. Annual Report 2022 Consolidated financial statements 100
Trade and other receivables
In millions of €
| 31 December 2022 | 31 December 2021 | |
|---|---|---|
| Trade receivables | 124.9 | 89.5 |
| Loss allowance | (4.9) | (2.6) |
| Receivables from related parties | 1.4 | 0.1 |
| Prepayments | 7.7 | 2.3 |
| Value added taxation | 16.1 | 9.3 |
| Other receivables | 12.1 | 4.9 |
| Total | 157.3 | 103.5 |
The increase in 2022 of Trade and other receivables of € 53.8 million mainly relates to the incoming acquisitions. Change in value-added taxation is also mainly related to 2022 acquisitions. See note 5: Acquisitions. The net carrying value of trade and other receivables is considered a reasonable approximation of fair value due to its short-term nature with a maturity of less than 12 months. Trade receivables are non-interest bearing and in principle payable on demand. Refer to note 25: Related parties for more details on receivables from related parties.
Movement in loss allowance
In millions of €
| 2022 | 2021 | |
|---|---|---|
| As at 1 January | (2.6) | (2.3) |
| Provision for loss allowance | (0.5) | (0.8) |
| Write-off | 0.6 | 0.4 |
| Exchange rate effect | (0.1) | (0.1) |
| Other | (2.3) | 0.2 |
| As at 31 December | (4.9) | (2.6) |
Trade receivables are shown net of an allowance for doubtful accounts determined based on insolvency risk and historical experience, adjusted for forward-looking factors specific to the receivables and economic environment performed on an individual receivable basis. € (2.3) million in other loss allowances is mainly related to a previous years' correction. Information about the loss allowance and write-off of trade receivables and the group’s exposure to credit risk can be found in note 28: Financial risk management.
Azerion Group N.V. Annual Report 2022 Consolidated financial statements 101
Cash and cash equivalents
In millions of €
| 31 December 2022 | 31 December 2021 | |
|---|---|---|
| Cash at bank and in hand | 50.6 | 34.1 |
| Cash equivalents | 0.3 | 1.2 |
| Total cash and cash equivalents | 50.9 | 35.3 |
The group had no restricted cash as of 31 December 2022 and 31 December 2021.
Azerion Group N.V. Annual Report 2022 Consolidated financial statements 102
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 control of Azerion Group N.V. Given the characteristics of the Transaction, the presentation in the financial statements is, by analogy, based on the IFRS 3 principles for reverse acquisitions. That implies that the 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.
In millions of €
| 31 December 2022 | 31 December 2021 | |
|---|---|---|
| Share capital | 1.2 | - |
| Share premium | 130.8 | 0.5 |
| Legal reserve | 25.2 | 19.6 |
| Share based payment reserve | 13.7 | 1.8 |
| Currency translation reserve | (1.3) | 0.6 |
| Other equity instruments | 29.0 | 34.0 |
| Retained earnings | (104.8) | (65.1) |
| Non-controlling interest | 2.4 | 1.7 |
| Total equity | 96.2 | (6.9) |
The movements of the respective components of equity, as stated in the Consolidated statement of changes in equity, starting on page 57, are disclosed as follows.
As at 31 December 2022, the share capital amounted € 1.2 million (2021: € 0.0 million). 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 of € 1.2 million, with : Capital restructuring : € 1.0 million of increase from the conversion of Azerion Holding B.V. share capital by reducing share premium De-SPAC Transaction : € 0.2 million of increase related to the conversion of special shares into ordinary shares and ordinary shares into equity.
The total number of Ordinary Shares as at 31 December 2022 and as at 31 December 2021 is as follow:
Share capital
| Ordinary shares | Preference shares | Total | ||||
| Total Shares | Total amount in millions of € | Total Shares | Total amount in millions of € | Total Shares | Total amount in millions of € | |
| 31 December 2022 | 181,561,748 | 1.2 | - | - | 181,561,748 | 1.2 |
| 31 December 2021 | 117,563 | - | - | - | 117,563 | - |
Immediately after completion of the De-SPAC Transaction, as at 1 February 2022, 111,483,296 shares were placed and paid up and 70,078,452 were held in Treasury, for further notice refer to note 4: De-SPAC Transaction.
Azerion Group N.V.# Annual Report 2022 Consolidated financial statements 103
In addition, 6,836,251 shares were transferred from Treasury shares with:
* 5,248,310 related to considerations for 2022 acquisitions (refer to note 5: Acquisitions)
* 1,442,307 related to other private placement
* 145,634 related to the exercise of the HTP call options.
As a result, the number of Treasury shares decreased from 70,078,452 shares after De-SPAC Transaction to 63,242,201 shares as at 31 December 2022. As at 31 December 2022, 118,319,547 shares were placed and paid up and 63,242,201 shares were held in Treasury.
As at 31 December 2022, Share premium amounted € 130.8 million (2021: € 0.5 million). Before 2022, the company granted share based payments to employees. The difference between the grant date fair value (included in the share based payments reserve) and the fair value on exercise date is included in equity (share capital and share premium) with the concurring amount in profit or loss.
In previous years the Company acquired several subsidiaries. In those transactions investor share appreciation rights and acquisition related share appreciation rights were issued to the sellers. It was contractually agreed that these instruments vested before an IPO (like) transaction. These rights were partly recognised in equity (Other equity instruments) and in other liabilities. The net increase in equity amounted to € 7.7 million. 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 € 32.2 million increase in share premium, with:
* € 13.1 million related to the settlement of employee related share-based payments
* € 1.9 million related to settlement of Investor share appreciation rights
* € 17.2 million related to the settlement of acquisition related share appreciation rights
For further information related to the share appreciation rights, refer to note 14: Share-based payments.
As part of the De-SPAC Transaction, the increase of € 28.5 million represents the remaining Identifiable Net assets of EFIC1, after conversion of ordinary and special shares refer to note 4: De-SPAC Transaction.
In addition, in March 2022, the HTP Sponsor exercised call options which resulted in an € 1.4 million reclassification from Share-Based Payments Reserve to Share Premium (refer to note note 14: Share-based payments). The private placement to sponsors and co-investors contributed an amount of € 23.1 million in Share Premium. In addition, other private placement of € 10.5 million was completed, in the form of a private placement of existing ordinary treasury shares of Azerion, predominantly to Azerion’s co-CEO’s investment vehicles. Furthermore, € 35.5 million of share considerations for new acquisitions were issued, refer to note 5: Acquisitions and note 16: Other liabilities for further details.
As of 31 December 2022, pursuant to Dutch law, certain limitations exist relating to the distribution of shareholders’ equity of € 93.8 million. These limitations relate to legal reserves required by Dutch law of € 25.2 million (2021 :€ 19.6 million). The legal reserve movement in 2022 comprises of €5.6 million relating to capitalized development costs for the Group’s developed technology and is not freely distributable to shareholders.
Azerion Group N.V. Annual Report 2022 Consolidated financial statements 104
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. In addition, the Share-Based payments issued by EFIC1 in 2021 and the grant of the Azerion Founder Warrants as equity-settled Share-Based Payments are included. For further information refer to note 14: Share-based payments.
As at 31 December 2022 the currency translation reserve amounted to € (1.3) million (2021: € 0.6 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).
As at 31 December 2022 other equity instruments amounted to € 29.0 million (2021: € 34.0 million).
As at 31 December 2022 € 14.9 million (2021: € 16.8 million) loans from related parties were subordinated with € (1.9) million of changes in shareholder loans related to an amendment to the nominal value of the loans. 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 2,376,919 shares in the issued share capital of Azerion Group N.V. The loans have a maturity date of 28th April 2024, the company has no obligation to pay interest.
As at 31 December 2022, as a result of the De-SPAC transaction investor and acquisition share appreciation rights were fully exercised:
* € (1.9) million related to settlement of Investor share appreciation rights
* € (9.5)million related to the settlement of acquisition related share appreciation rights
Share appreciation rights issued to investors up to 2021 were vested at grant date and became exercisable in the event of certain defined exit events, which include an initial public offering of the group’s shares. All investor rights settled through issuing shares. Based on the terms and conditions of the share appreciation rights agreements, all share appreciation rights became vested and were exercised immediately before the Transaction, just before 1 February 2022. The holders of the share appreciation rights received shares in Azerion Group N.V.
As at 31 December 2022, € 14.1 million (2021: € 5.8 million) of share options remain, with € 8.3 million of share considerations for new acquisitions were issued in 2022 (refer to note 5: Acquisitions). In 2021 € 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 settle the transaction by 31 December 2022 latest. The Company has the option to settle either in cash or shares. It should be noted that the counterparty in question disputes the right of Azerion to settle in shares. The dispute is likely to be subject to arbitration in 2023.
As at 31 December 2022 the retained earnings amounted to € (104.8) million (2021: € (65.1) million). € (139.1) million relates to the total comprehensive income for the year. Based on the terms and conditions of the Employee share-based program, the Company paid € (6.6) million of withholding wage taxes related to share-based payments, 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.
Azerion Group N.V. Annual Report 2022 Consolidated financial statements 105
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 De-SPAC Transaction listing expense (€107.1 million).
The non-controlling interest (NCI) relates to minority stakes held by third parties in Azerion Group N.V.'s consolidated subsidiaries. The total NCI as at 31 December 2022 amounted to € 2.4 million (2021: € 1.7 million).
Azerion Group N.V. Annual Report 2022 Consolidated financial statements 106
In 2022 the following plans were carried forward and/or exercised:
* Share Appreciation Right plan of Azerion Holding B.V.
* Share based payments granted by EFIC1 in 2021 and in the De-SPAC Transaction.
During 2022, the Group created the following plans:
* Management Board Long-Term Incentive Plan (LTIP)
* Executive Annual Incentive Plan
Azerion Holding B.V. maintained a Share Appreciation Right (SAR) plan up to the date of the Transaction, 1 February 2022. This plan was initiated in 2018 and provided SARs to employees, consultants and advisors of the Group. Plans were awarded to plan participants at the discretion of the Management board. The number of SARs available for issuance under the plan was determined by the Management Board on an annual basis. SARs were instruments similar to futures, without gearing, or forward contracts on the shares of Azerion Holding B.V.
During its establishment in 2021 EFIC1 issued two categories of instruments: Special Shares and an Option to acquire Special Shares (Davey Call Option). For both instruments management evaluated that these instruments are equity settled Share Based Payments in scope of IFRS 2. In the Transaction the Special Shares were partly cancelled, partly converted into Ordinary Shares and partly converted into Conditional Special Shares. As at 31 December 2022 only Conditional Special Shares remain. In the Transaction the Davey Call Option, was partly cancelled and the remaining number was split into a conditional and an unconditional part. In addition a re-allocation took place which, in effect, resulted in a number of Conditional and Unconditional Call Options issued to HTP, one of the sponsors of EFIC1.# In the De-SPAC Transaction, Azerion Founder Warrants were issued to balance out potential dilutive effects from possible future exercise of the Public Warrants and the Founder Warrants. Management evaluated that the Azerion Founder Warrants are equity settled Share-Based payments in the scope of IFRS 2.
The members of the Management Board are in principle eligible for long-term incentive awards as further described in the Remuneration Policy and as approved by the shareholders as part of the Transaction. The current members of the Management Board, Mr. Atilla Aytekin and Mr. Umut Akpinar do not participate in the LTIP and no share awards were granted during 2022 under the LTIP.
During 2022, the Management Board, in consultation with the Supervisory Board, developed an Executive Annual Incentive Plan for its senior leadership team under which, subject to certain performance targets, and at the discretion of the Management Board, members of the senior leadership team may be awarded shares in Azerion. No share awards were granted during 2022 under the Executive Annual Incentive Scheme.
Azerion Holding B.V. granted SARs to certain employees of the Group. These awards vest upon the satisfaction of service conditions. The service condition was generally satisfied over five years and awards begin to vest following the employees' three-year employment anniversary. Earlier vesting would occur if certain conditions related to an initial public offering (IPO) or change in control is met (defined as an “exit” event). Vested SARs become exercisable at an exercise price of €0.01 on the date an exit, as defined, occurs. Upon exercise, each SAR is settled in exchange for one share in the Company. Up to 2021 the fair value was determined on the grant date based on discounted cash flow with benchmark to market multiples with reference to an external valuation. The technique used is a discounted cash flow analysis using estimated future cash flows, weighted average cost of capital and a terminal growth rate as its major inputs. No future dividends were considered in the valuation of the SARs. The number of SARs unvested and outstanding at 31 December 2021 was 1,263. The settlement of the SAR plan occurs in actual shares with no cash option available to employees as alternative. All SARs under the previous plan were exercised immediately before the Transaction and the holders of the SARs received shares in Azerion Group N.V. No SARs were granted under this plan in 2022.
In March 2021 EFIC1 issued Special Shares to its Sponsors. The Special Shares are convertible into Ordinary Shares in a De-SPAC 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 share based payments. As there was no market price readily available for the Special Shares, the fair value of the Special Shares was estimated using a valuation technique to estimate what the price of the Special Shares would have been on the measurement date in an arm’s length transaction between knowledgeable, willing parties. The instruments are measured at their grant date fair value of € 1.95. The (originally issued) Special Shares fully vested on 31 January 2022, based on the considerations made in 2021, given the expectation at that moment that the De SPAC Transaction would take place. In the De-SPAC 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. As part of the De-SPAC Transaction, the Sponsors have agreed that the Conditional Special Shares are convertible into Ordinary Shares in accordance with the provisions of the Articles of Association and subject to the condition that the closing share price of the Ordinary Shares on Euronext Amsterdam equals or exceeds €12.00 for any 20 trading days within any consecutive 30-trading day period within a period of five years as of the Transaction date, 1 February 2022. Should this condition not been met after five years, these (or such number remaining at that time) Conditional Special Shares will be cancelled as per such date.
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 De-SPAC Transaction, they qualify as equity settled share-based payment. In 2021 the Davey Call Option was economically considered as 1,012,560 individual options with an exercise price of € 0.01 to a Special Share as underlying. As there was no market price readily available for the Davey Call Option at issuance in 2021, the fair value was estimated using a valuation technique that factors in the effect of market conditions. 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. The instruments are measured at their grant date fair value of € 1.94. In the De-SPAC 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 € 12.00 per share for any 20 trading days within any 30 trading-day period within a period of five years after the De-SPAC Transaction . The (originally issued) Davey Call Options fully vested before 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.
As a result of the De-SPAC 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 € 12.00 per share for any 20 trading days within any 30 trading-day period within a period of five years after the De-SPAC Transaction. 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. The unconditional and conditional call options are measured at their grant date fair values of € 9.54 and € 6.42 respectively. After the exercise of the unconditional part in the first half of 2022 the conditional Call Options remain as at 31 December 2022 (€ 0.2 million).
On completion of the De-SPAC Transaction, Azerion Group N.V. issued 17,992,773 Azerion Founder Warrants to the founders of Azerion Holding B.V. Management considered the characteristics the award of these instruments and concluded that the instruments are in the scope of IFRS 2 as equity-settled share-based payments. The Azerion Founder Warrants can be exercised during the exercise period, which ends at the close of trading on Euronext Amsterdam on the first Business Day after the fifth anniversary of the Completion Date. During the exercise period each Azerion Founder Warrant entitles the holder to subscribe for one Ordinary Share for the exercise price of €11.50. The Azerion Founder Warrants can only be exercised on a cashless basis. For the assessment of the grant date Fair value of the Azerion Founder Warrants Management considered that, after the closing of the De-SPAC 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).
In millions of €
| Share-based payment reserve | |
| Balance at 1 January 2021 | 0.6 |
| Credit to equity for equity-settled share-based payments | 1.2 |
| Balance at 31 December 2021 | 1.8 |
| Exercise of Share Based Payments as at 31 January 2022 | (1.8) |
| Recognition in the Transaction as at 1 February 2022 | 3.7 |
| Issuance of HTP Call Option as at 1 February 2022 | 1.6 |
| Grant of Azerion Founder Warrants as at 1 February 2022 | 9.9 |
| Exercise of unconditional HTP Call Option | (1.4) |
| Other movements | (0.1) |
| Balance at 31 December 2022 | 13.7 |
As at 31 December 2022 balance of share-based payments reserve amounts to € 13.7 million.# Share-based payment movement schedule
Share-based payment movement schedule in million of €, number of instruments and prices in €
| Share-Based payment reserve | Other equity instruments | Trade and other receivables | Other liabilities | Employee SARs | Conditional Special Shares | Davey Call Options | HTP Call Options | Azerion Founder Warrants | Total Investor SARs / shares | Acquisition SARs | Acquisition SARs |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Balance as of 1 January 2021 | 0.6 | - | - | - | 0.6 | 10.3 | - | - | - | - | - |
| Grant to employees | 1.2 | - | - | - | 1.2 | - | - | - | - | - | - |
| Issued in acquisitions | - | - | - | - | - | 1.2 | - | 8.8 | - | - | - |
| Balance as at 31 December 2021 | 1.8 | - | - | - | 1.8 | 11.5 | - | 8.8 | - | - | - |
| Acquired in the De-SPAC Transaction | 2.2 | 1.5 | - | - | 3.7 | - | - | - | - | - | - |
| Amounts through P&L: Accelerated vesting (net) | 11.2 | - | - | - | 11.2 | - | - | - | - | - | - |
| Issue of HTP Call Options | - | - | 1.6 | 1.6 | - | - | - | - | - | - | - |
| Grant in the De-SPAC Transaction | - | - | - | - | 9.9 | 9.9 | - | - | - | - | - |
| Fair value through P&L | - | (0.3) | - | - | - | - | - | - | - | - | - |
| Balance before exercise | 13.0 | 2.2 | 1.5 | 1.6 | 9.9 | 28.2 | 11.5 | - | 8.5 | - | - |
| Exercised through: | |||||||||||
| Share capital | - | - | - | (0.1) | (0.1) | - | - | - | - | - | - |
| Share premium | (13.0) | (1.4) | - | - | - | (14.4) | (11.4) | (0.9) | (6.8) | - | - |
| Cash | - | (0.8) | - | - | - | - | - | - | - | - | - |
| Issued in acquisitions 2022 | 8.3 | - | - | - | - | - | - | - | - | - | - |
| Fair value through P&L | 1.4 | - | - | - | - | - | - | - | - | - | - |
| Other movements | (0.1) | - | - | - | - | (0.1) | - | - | - | - | - |
| Balance as at 31 December 2022 | - | 2.2 | 1.4 | 0.2 | 9.9 | 13.7 | 8.3 | (0.9) | 2.2 | - | - |
Number of instruments
| Acquired in the De-SPAC Transaction | - | 1,152,886 | 739,970 | - | - | - | - | - | - | - | - |
| Issuance of HTP Call Options | 171,334 | - | - | - | - | - | - | - | - | - | - |
| Exercise of HTP Call Options | (145,634) | - | - | - | - | - | - | - | - | - | - |
| Grant in the De-SPAC Transaction | - | - | - | - | 17,992,773 | - | - | - | - | - | - |
| Balance as at 31 December 2022 | 1,152,886 | 739,970 | 25,700 | 17,992,773 |
Prices of the instruments (in €)
| Acquired in the De-SPAC Transaction | 1.95 | 1.94 | |||||||||
| Grant date fair value (conditional part) | 6.424 | ||||||||||
| Grant date fair value (unconditional part) | 9.538 | ||||||||||
| Grant date fair value in the De-SPAC Transaction | 0.55 | ||||||||||
| As at 31 December 2022 | 1.95 | 1.94 | 6.424 | 0.55 |
As part of the De-SPAC transaction on 1 February 2022, the HTP sponsor was granted 145,634 unconditional call options fair valued at € 9.538 each and 25,700 conditional call options valued at € 6.424 each. This led to the recognition of a share-based payment expense of € 1.6 million
Azerion Group N.V. Annual Report 2022 Consolidated financial statements 110
On 21 March 2022 the HTP Sponsor exercised the 145,634 unconditional call options at an exercise price of € 0.01 per ordinary share which resulted in an € (1.4) million reclassification from Share-Based Payments Reserve to Share Capital and Share Premium. The price of Azerion shares at this date was € 8.90.
Azerion Group N.V. Annual Report 2022 Consolidated financial statements 111
Provisions
In millions of €
| Commercial litigation | Restructuring | Employee benefit obligations | Other | Total | |
|---|---|---|---|---|---|
| Balance at 1 January 2021 | 0.4 | - | 0.7 | 1.4 | 2.5 |
| Acquisitions of subsidiaries and businesses | - | - | 0.2 | - | 0.2 |
| Additions | 0.5 | - | 0.1 | 0.3 | 0.9 |
| Utilizations | - | - | - | (0.3) | (0.3) |
| Releases | - | - | - | (0.4) | (0.4) |
| Exchange differences | - | - | - | (0.1) | (0.1) |
| Reclassifications | (0.3) | - | - | (0.1) | (0.4) |
| Balance at 31 December 2021 | 0.6 | - | 1.0 | 0.8 | 2.4 |
| Acquisitions of subsidiaries and businesses | - | - | 0.1 | - | 0.1 |
| Additions | 0.4 | 1.9 | 0.1 | 0.3 | 2.7 |
| Utilizations | (0.4) | (1.6) | (0.1) | (0.2) | (2.3) |
| Releases | - | - | - | (0.6) | (0.6) |
| Exchange differences | - | - | - | - | - |
| Reclassifications | (0.1) | - | (0.1) | 0.4 | 0.2 |
| Balance at 31 December 2022 | 0.5 | 0.3 | 1.0 | 0.7 | 2.5 |
| Balance at 31 December 2021 | |||||
|---|---|---|---|---|---|
| 0.6 | - | 1.0 | 0.8 | 2.4 | |
| Non-current | - | - | 1.0 | 0.4 | 1.4 |
| Current | 0.6 | - | - | 0.4 | 1.0 |
| Balance at 31 December 2022 | |||||
| 0.5 | 0.3 | 1.0 | 0.7 | 2.5 | |
| Non-current | - | - | 1.0 | 0.6 | 1.6 |
| Current | 0.5 | 0.3 | - | 0.1 | 0.9 |
Commercial litigation provisions
Commercial litigation provisions correspond to the best estimate of the outflow of resources, related to disputes or probable litigation arising from the Group activities. Individual information is not disclosed as it would cause prejudice to the position to the Group in on-going dispute with other parties.
Restructuring provisions
As part of the process to accelerate the integration of acquired companies into Azerion Group N.V. and further realise synergies, Azerion has initiated a restructuring plan designed to continue the integration of our businesses, improving efficiency and focusing our resources on key strategic opportunities. The cash outflows have taken place in Q1 2023.
Employee benefit obligations
Employee benefit obligations represent defined benefit pension plans which are in place in Italy, Belgium and France. Furthermore, by Belgian law, the employer is liable for a minimum guaranteed return. The Belgium pension plans are administrated by Baloise Insurance. In France employees are entitled to a lump sum payment at retirement which is administrated by the company.
Azerion Group N.V. Annual Report 2022 Consolidated financial statements 112
Other liabilities
In millions of €
| 31 December 2022 | 31 December 2021 | |
|---|---|---|
| Contingent consideration | 24.5 | 39.2 |
| Deferred consideration | 20.8 | 14.7 |
| Postponed Government payments | 6.3 | 5.7 |
| Warrants | 4.5 | - |
| Acquisition related share appreciation rights | 2.2 | 8.8 |
| Other liabilities | 0.3 | 0.7 |
| Total | 58.6 | 69.1 |
| Current | 43.6 | 53.5 |
| Non-current | 15.0 | 15.6 |
Contingent consideration
The contingent consideration decrease is mainly related to payments made in 2022 of € 31.2 million (2021: € 0.5 million), partly offset by new acquisitions during the year (Infinia, Targetspot Group, Vlyby, Adplay, Monolitih) of € 13.0 million (2021: € 37.3 million). The related unwinding of interest linked to contingent considerations can be found in note 23: Net finance costs.
Deferred consideration
The Deferred consideration increase is mainly related to new acquisitions (Infinia, Madvertise, Targetspot Group, Vlyby, Mmedia, TakeRate, Adverline, Monolith) for € 18.7 million (2021: € 24.3 million), partly offset by payments in 2022 made in cash of € 10.0 million and in treasury shares of € 3.4 million (2021: € 9.6 million). The related unwinding of interest linked to deferred considerations can be found in note 23: Net finance costs.
Postponed government payments
The postponed government payments consist of an arrangement with the Dutch Tax Authority to postpone the payment of these taxes due to COVID-19. The start date of the payment arrangement is 1 October 2022. The payment arrangement will be spread over 5 years. The arrangement consists of a maximum of 60 equal monthly payments with the last payment in September 2027. This payment arrangement includes all outstanding tax debts for which deferral of payment has been granted. To stimulate the repayment of the outstanding debts, the collection interest will be increased step by step.
Acquisition related share appreciation rights
At the end of 31 December 2022 the Company has an outstanding balance of SAR's of 438 (2021: 878). The outstanding balance will be issued in NV shares.
Azerion Group N.V. Annual Report 2022 Consolidated financial statements 113
In millions of €, number of shares and prices in €
| Public warrants | Founder warrants | Total | |
|---|---|---|---|
| Balance as at 1 January 2022 | - | - | - |
| Acquired in the De-SPAC Transaction | 7.0 | 16.5 | 23.5 |
| Issued related to the De-SPAC Transaction | - | - | 0.0 |
| Total De-SPAC Transaction | 7.0 | 16.5 | 23.5 |
| Fair value movements -- through profit or loss | (3.8) | (15.2) | (19.0) |
| Balance as at 31 December 2022 | 3.2 | 1.3 | 4.5 |
Number of instruments (in number of shares)
| Public warrants | Founder warrants | Total | |
|---|---|---|---|
| As at 1 January 2022 | - | - | - |
| Acquired in the De-SPAC Transaction | 12,736,605 | 5,256,168 | - |
| Issued related to the De-SPAC Transaction | - | - | - |
| Total De-SPAC Transaction | 12,736,605 | 5,256,168 | - |
| As at 31 December 2022 | 12,736,605 | 5,256,168 | - |
Prices (in €)
| Public warrants | Founder warrants | Total | |
|---|---|---|---|
| As at 1 January 2022 | - | - | - |
| Immediately before the De-SPAC Transaction | 0.55 | 3.14 | - |
| Immediately after the De-SPAC transaction | 0.55 | 0.55 | - |
| As at 31 December 2022 | 0.25 | 0.25 | - |
Azerion Group N.V. Annual Report 2022 Consolidated financial statements 114
Trade and other payables
In millions of €
| 31 December 2022 | 31 December 2021 | |
|---|---|---|
| Trade payables | 118.9 | 63.5 |
| Wage taxes and social securities | 8.0 | 9.7 |
| Other taxes | 17.2 | 11.0 |
| Other liabilities and accruals | 77.8 | 57.3 |
| Total | 221.9 | 141.5 |
Accrued liabilities
In millions of €
| 31 December 2022 | 31 December 2021 | |
|---|---|---|
| Accruals | 67.4 | 46.9 |
| Accrued holiday entitlement | 2.9 | 2.5 |
| Personnel costs | 3.5 | 2.4 |
| Other | 4.0 | 5.5 |
| Total | 77.8 | 57.3 |
The carrying values of trade and other payables are a reasonable approximation of fair value due to their short-term nature. The increase in 2022 of Trade payables of € 55.4 million (2021: €23.8 million) mainly relates to the acquisitions made throughout the year. See note 5: Acquisitions. The accruals balance of € 67.4 million (2021: €46.9 million) mainly represents accrued publisher fees of € 31.4 million (2021: € 28.7 million), commission & provider fees of €5.6 million (2021: € 4.6 million), professionals fees of € 4.3 million (2021: € 4.0 million). The increase in 2022 is mainly related to the incoming acquisitions. See note 5: Acquisitions. The decrease in 2022 in the other line item of accrued liabilities is mainly related to payments on the Whow Games virtual stock option (VSOP) program.
Azerion Group N.V. Annual Report 2022 Consolidated financial statements 115
Borrowings
In millions of €
| Subordinated loans | Senior secured bonds | Debt to credit institutions | Other | Total | |
|---|---|---|---|---|---|
| Balance at 1 January 2021 | 1.3 | 70.9 | 10.8 | 0.5 | 83.5 |
| Acquisitions of subsidiaries and businesses | - | - | 10.3 | - | 10.3 |
| Additions | - | 227.5 | - | - | 227.5 |
| Principal repayments / disposals | - | (100.0) | (13.3) | (0.4) | (113.7) |
| Loss on derecognition | - | 1.9 | - | - | 1.9 |
| Capitalised transaction cost | - | (5.7) | - | - | (5.7) |
| Interest accrued | 0.8 | 13.8 | - | - | 14.6 |
| Interest paid | (0.3) | (10.5) | - | - | (10.8) |
| Exchange differences | - | - | - | - | - |
| Reclassification to Equity | (1.8) | - | - | - | (1.8) |
| Balance at 31 December 2021 | - | 197.9 | 7.8 | 0.1 | 205.8 |
| Acquisitions of subsidiaries and businesses | - | - | 6.1 | - | 6.1 |
| Additions | - | - | 0.5 | - | 0.5 |
| Principal repayments / disposals | - | - | (5.0) | - | (5.0) |
| Loss on derecognition | - | - | - | - | - |
| Amortization of capitalized transaction cost | - | 1.9 | - | - | 1.9 |
| Interest accrued | - | 14.5 | - | - | 14.5 |
| Interest paid | - | (14.5) | - | - | (14.5) |
| Exchange differences | - | - | 0.1 | - | 0.1 |
| Reclassification to Equity | - | - | - | - | - |
| Balance at |
| December 2022 | |||||
|---|---|---|---|---|---|
| Balance at 31 December 2021 | - | 197.9 | 7.8 | 0.1 | 205.8 |
| of which (duration) < 1 year | - | 2.5 | 4.2 | 0.1 | 6.8 |
| ≥ 1 year ≤ 5 years | - | 195.4 | 3.6 | - | 199.0 |
| > 5 years | - | - | - | - | - |
| Balance at 31 December 2022 | - | 199.8 | 9.5 | 0.1 | 209.4 |
| of which (duration) < 1 year | - | 2.5 | 5.3 | 0.1 | 7.9 |
| ≥ 1 year ≤ 5 years | - | 197.3 | 4.1 | - | 201.4 |
| > 5 years | - | - | 0.1 | - | 0.1 |
The Group has issued senior secured callable fixed rate bonds for a total of € 200.0 million, within a total framework amount of € 300.0 million. The maturity date of the bonds is 28 April 2024. The bonds carry a fixed interest rate of 7.25% per annum. The Group has used the bond proceeds to fully redeem an outstanding bond of € 100.0 million on 8 April 2021. The security for the bonds is a share pledge in respect of all shares in the group companies Azerion Games and Content Holding B.V., a limited liability company incorporated in the Netherlands, Azerion Tech Holding B.V., a limited liability company incorporated in the Netherlands, Azerion International Holding B.V., a limited liability company incorporated in the Netherlands, and a pledge over any material intra-group loans. In addition, following group companies have entered into the Guarantee Agreement to guarantee the performance of obligations of the Issuer: Azerion Games and Content Holding B.V., a limited liability company incorporated in the Netherlands, Azerion Tech Holding B.V., a limited liability company incorporated in the Netherlands, Azerion International Holding B.V., a limited liability company incorporated in the Netherlands, Azerion Sweden SB AB, a limited liability company incorporated in Sweden, Youda Games Holding B.V., a limited liability company incorporated in the Netherlands, Voidu B.V., a limited liability company incorporated in the Netherlands, SPIL Games Group B.V., a limited liability company incorporated in the Netherlands, Azerion Sports B.V., a limited liability company incorporated in the Netherlands and Keygames Network B.V., a limited liability company incorporated in the Netherlands and Whow Games GmbH, a limited liability company incorporated in Germany.
There was an early settlement of Senior Secured Callable Floating Rate Bonds ISIN: SE0013774957. The amendment related to the bond terms' requirement that they be listed on a regulated exchange within 60 days of issue. The listing, however, required the Company to issue audited financial statements for 2020. The Company was in breach of the bond terms and requested the clause stating the deadline for listing the bond on a regulated exchange be amended to 31 December 2021. The redeemed bond had a maturity of 17 March 2023. The derecognition led to a loss of € 9.6 million consisting of the call premium of € 4.6 million, the make-whole interest of € 3.1 million (interest that would have been paid up to the first allowed date) and the remaining difference between repayment amount and amortised cost including accrued but unpaid interest.
Included in this balance as of 31 December 2022 are factoring agreements amounting to € 3.0 million (2021: € 2.6 million) and other debt to credit institutions amounting to € 6.6 million (2021: € 5.2 million). The trade receivables used as security by third parties are maintained within the Group’s assets as the risks and benefits associated with them are not transferred to such third parties. The factoring companies in particular do not accept the credit risks. The credit risk is the risk of non-recovery of trade receivables. Under contracts signed with the Group’s entities, the credit risk remains within the Group.
Next to the factoring agreements, Azerion acquired entities that had governmental aided loans. The total amount for the 3 governmental aided loans ending 2022 was € 2.6 million (2021: € 3.5 million). The interest rates range from 0.58% to 2.14% and the maturity dates are between 2023 and 2026. The total amount for other commercial loans ending 2022 was € 4.0 million (2021: € 0.7 million), with interest rates ranging from 0% to 5.29%. Refer to the loan schedule overview for further details.
In millions of €
| Issue Currency | Principal Amount | Date entered1 | Non-current | Current | Effective interest rate | Year of Maturity | In millions of issued currency | In millions of € |
|---|---|---|---|---|---|---|---|---|
| EUR | 200 | April 28, 2021 | 197.3 | 2.5 | 8.4% | 2024 | ||
| EUR | 2.4 | October 21, 2014 | - | 0.1 | 0.0% | 2023 | ||
| EUR | 0.4 | June 19, 2020 | 0.2 | 0.1 | 0.7% | 2025 | ||
| EUR | - | Various | - | 3.0 | - | - | ||
| SEK | 2 | April 1, 2015 | - | 0.1 | 5.3% | 2023 | ||
| EUR | 0.5 | June 23, 2020 | 0.1 | 0.1 | 3.0% | 2024 | ||
| EUR | 1 | May 9, 2020 | 1.1 | 0.5 | 0.8% | 2026 | ||
| EUR | 1 | May 18, 2020 | 0.1 | - | 0.6% | 2026 | ||
| EUR | 1.5 | September 1, 2015 | 0.5 | 0.4 | 2.1% | 2023 | ||
| EUR | 0.2 | March 31, 2017 | 0.1 | - | 3.4% | 2032 | ||
| EUR | 0.3 | September 7, 2022 | 0.2 | - | 1.3% | 2026 | ||
| EUR | 0.5 | December 13, 2021 | 0.4 | 0.1 | 2.7% | 2026 | ||
| EUR | 0.5 | May 1, 2021 | 0.4 | 0.1 | 0.7% | 2027 | ||
| EUR | 0.4 | March 2, 2021 | 0.3 | 0.1 | 1.6% | 2027 | ||
| EUR | 0.4 | April 17, 2020 | 0.2 | 0.1 | 0.7% | 2025 | ||
| EUR | 0.8 | October 29, 2019 | - | 0.2 | 1.5% | 2023 | ||
| EUR | 0.5 | February 6, 2022 | 0.2 | 0.2 | 1.4% | 2025 | ||
| EUR | 0.3 | December 31, 2020 | 0.2 | - | 2.5% | 2029 | ||
| EUR | 0.3 | December 13, 2021 | 0.2 | 0.1 | 3.6% | 2025 | ||
| EUR | - | 0.2 | ||||||
| Total | 201.5 | 7.9 |
1 Dates in question represent loan agreement start dates.
Azerion has a zero-interest financing loan in AdUX Group with balances of € 0.1 million at 31 December 2022 (2021: € 0.6 million). This loan is financing for innovation. As part of the measures put in place by the government following the COVID-19 crisis, the company Adysseum contracted a loan guaranteed by the State for an amount of € 0.4 million with BNP on 19 June 2020. This financing is a one-year cash loan for which the repayment of the principal and the payment of interest and accessories will take place at once on the due date. This loan offers the possibility of requesting amortization of amounts due on maturity over an additional period of 1 to 5 years. Following an agreement between the Ministry of the Economy and Finance and the banking profession on 14 January 2021, all companies wishing to do so, regardless of their activity and size, can also request a deferral of an additional year to start repaying their government guaranteed loan. The group requested to apply for such deferral and the loan expires in 2025.
The Group generates revenue primarily from the sales of 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 specialise in internet-related services and products, game creators and the gaming community. Refer to note 30: Operating segments for additional disclosures regarding revenue within the respective operating segments.
In the following table, revenue from contracts with customers is disaggregated by country of origin:
In millions of €
| 2022 | 2021 | |
|---|---|---|
| The Netherlands | 118.8 | 89.6 |
| Ireland | 62.4 | 51.8 |
| Germany | 55.1 | 34.7 |
| France | 32.0 | 22.4 |
| Great Britain | 30.8 | 18.2 |
| Sweden | 17.2 | 8.4 |
| Other European countries | 69.6 | 52.9 |
| United States | 55.3 | 24.7 |
| Other countries | 11.4 | 5.4 |
| Total revenue from contracts with customers | 452.6 | 308.1 |
| 2022 | 2021 | |
|---|---|---|
| Wages and salaries | (69.7) | (46.0) |
| Social charges | (11.7) | (8.5) |
| Pension costs | (1.5) | (1.0) |
| Share-based payment expense | (22.7) | (1.2) |
| Incentive compensation expenses | (4.7) | (6.3) |
| Other costs | (13.5) | (4.2) |
| Less: Capitalized development cost | 16.6 | 12.1 |
| Total | (107.2) | (55.1) |
In 2022, Other costs consists of other staff expenses of € 5.3 million (2021: € 1.0 million), contractor fees of € 6.5 million (2021: € 2.7 million) and restructuring expense of € 1.7 million (2021: € 0). Compared to 2021, there has been a total increase of € 9.3 million in Other costs, which is mainly explained by the increase in contractor fees in 2022 of € 3.8 million, restructuring expense in 2022 of € 1.7 million and a fair value adjustment gain in 2021 of € 1.2 million.
Share-Based payment expenses amount € (22.7) million in 2022 and are mainly due to the De-SPAC Transaction that led to € (11.2) million related to the early vesting and exercising of share appreciation rights and € (9.9) million related to the Azerion Founder Warrants granted in the De-SPAC Transaction. More details about share-based payments can be found in note 14: Share-based payments.
Defined contribution pension plans are in place in the Netherlands, Finland and Germany. In the Netherlands each subsidiary has its own pension plan. The pension plans apply to specific employee groups due to mergers and/or acquisitions in the past. The total expense for defined contribution pension plans in 2022 amounted to € (1.5) million (2020: € (1.0) million) and represents the contributions to these plans by the Group at rates specified in the rules of the plans. For description of the Group's defined benefit plans please refer to note 15: Provisions.The average headcount, representing number of employees per department is presented below:
Number of employees by department
| | 31 December 2022 | 31 December 2021 |
| :------------------- | :--------------- | :--------------- |
| Engineering & Product | 761 | 600 |
| Commercial | 272 | 246 |
| Corporate | 276 | 223 |
| Total | 1,309 | 1,069 |
An average total of 306 employees are based in the Netherlands (2021: 366 employees).
Azerion Group N.V. Annual Report 2022 Consolidated financial statements 120
In millions of €
| | 2022 | 2021 |
| :----------------------------- | :------ | :------ |
| Website expenses | (105.1) | (74.4) |
| Publisher fees | (161.3) | (96.7) |
| Advertising and email routing | (0.7) | (0.5) |
| Hosting fees | (12.5) | (12.4) |
| Other direct costs | (6.2) | (3.9) |
| Gains on cryptocurrency | - | 2.0 |
| Losses on foreign currency | (0.5) | (1.3) |
| Total | (286.3) | (187.2) |
Growth in Website expenses and Publisher fees is a direct consequence of scaling operations in the business. Other direct costs include mainly advertising technology costs, software license fees, and rental of IT equipment.
In millions of €
| | 2022 | 2021 |
| :------------------------- | :------- | :------ |
| Accommodation costs | (1.5) | (0.1) |
| Travel and representation costs | (4.7) | (2.3) |
| Accounts receivable loss allowance | (0.4) | (0.8) |
| Selling expenses | (10.7) | (5.8) |
| Listing expense | (107.1) | - |
| Professional services | (25.6) | (17.5) |
| Insurance costs | (1.1) | (0.4) |
| Operating costs | (4.9) | (2.8) |
| Other costs | (5.0) | (3.6) |
| Total | (161.0) | (33.3) |
Listing expense is the difference between the fair value of Azerion Group N.V. equity and the fair value of Azerion Group N.V. net assets. For more details see note 4: De-SPAC Transaction. Professional services mainly comprise legal, accounting, audit, and other consultancy services received. The increase in professional services compared to the previous year is attributable to additional consultancy services received related to the De-SPAC Transaction. The significant increase in accommodation costs is related to increased rental charges and utility costs caused by the growth of the Group in 2022. Other costs include bank charges, indirect taxes, and other general and administrative expenses, including business enhancements and subscriptions, software development and data warehouse costs, car rentals, and office maintenance costs.
Other expenses include, among others, independent auditor’s fees. PricewaterhouseCoopers Accountants N.V. served as the independent public accountants for the fiscal year ended 31 December 2022 and 31 December 2021. The following table presents the aggregate fees rendered by PricewaterhouseCoopers Accountants N.V. and other professional firms
Azerion Group N.V. Annual Report 2022 Consolidated financial statements 121
Independent Auditor's fee for the fiscal year ended 31 December 2022
In millions of €
| | PricewaterhouseCoopers Accountants N.V. | PricewaterhouseCoopers member firms | Other accounting firms | Total |
| :----------------------------------- | :-------------------------------------- | :---------------------------------- | :--------------------- | :---- |
| Audit of the financial statements | 1.3 | 0.1 | 0.8 | 2.2 |
| Other non-audit services | - | - | 0.1 | 0.1 |
| Other audit procedures | - | - | - | - |
| Tax services | - | - | - | - |
| Total | 1.3 | 0.1 | 0.9 | 2.3 |
Independent Auditor's fee for the fiscal year ended 31 December 2021
In millions of €
| | PricewaterhouseCoopers Accountants N.V. | PricewaterhouseCoopers member firms | Other accounting firms | Total |
| :----------------------------------- | :-------------------------------------- | :---------------------------------- | :--------------------- | :---- |
| Audit of the financial statements | 1.9 | 0.1 | 0.4 | 2.4 |
| Other non-audit services | - | - | 0.9 | 0.9 |
| Other audit procedures | 0.1 | - | - | 0.1 |
| Tax services | - | - | 0.3 | 0.3 |
| Total | 2.0 | 0.1 | 1.6 | 3.7 |
Azerion Group N.V. Annual Report 2022 Consolidated financial statements 122
In millions of €
| | 2022 | 2021 |
| :--------------------------------------- | :---- | :---- |
| Profit/(Loss) on the sale of property, plant and equipment | - | (0.1) |
| Profit/(Loss) on the disposal of intangible assets | (0.2) | (0.1) |
| Net foreign currency gain / (loss) | 0.2 | (0.5) |
| Profit/(Loss) on the liquidation of subsidiary | 2.3 | - |
| Other (losses)/gains | (0.9) | 1.4 |
| Total | 1.4 | 0.7 |
The Profit on the liquidation of subsidiary relates to the liquidation of Hi-Media U.S.A.
Azerion Group N.V. Annual Report 2022 Consolidated financial statements 123
In millions of €
| | 2022 | 2021 |
| :----------------------------- | :---- | :----- |
| Other finance income | 3.3 | 1.8 |
| Finance income | 22.3 | 1.8 |
| Interest expenses on related party loans | - | (0.8) |
| Interest expenses on third party balances | (21.1) | (17.7) |
| Interest on leases (IFRS16) | (1.5) | (1.4) |
| Other finance costs | (0.8) | (8.5) |
| Finance costs | (23.4) | (28.4) |
| Net Finance costs | (1.1) | (26.6) |
The fair value gain on warrants of € 19.0 million is explained in the note 16: Other liabilities Included in interest expense on third party balances is unwound interest accrued on contingent consideration of € 1.7 million (2021: € 0.5 million) and unwound interest accrued on deferred consideration of €0.4 million (2021: € 0.1 million). Higher Other finance costs in 2021 is mainly explained by € 7.7 million (call premium and make-whole interest) recorded due to the early settlement of Senior Secured Callable Floating Rate Bonds ISIN: SE0013774957 explained in note 18: Borrowings.
Azerion Group N.V. Annual Report 2022 Consolidated financial statements 124
Components of income tax expense
In millions of €
| | 2022 | 2021 |
| :--------------------------------------------------- | :--- | :--- |
| Current tax expense | | |
| Current year | (5.2) | (2.1) |
| Changes in estimates related to prior year | 0.7 | 0.6 |
| Deferred tax expense | | |
| Origination and reversal of temporary differences | 2.0 | 1.9 |
| Changes in estimates related to prior year | 1.7 | (1.1) |
| Recognition of previously unrecognised tax losses | 7.2 | - |
| De-recognition of recognized losses | (0.5) | (0.2) |
| Recognition of of current year losses | 0.9 | - |
| Use of recognized tax losses | - | (1.0) |
| Change in tax rate | 0.1 | (0.2) |
| Income tax expense reported in the Statement of Profit or Loss | 7.0 | (2.0) |
Reconciliation of income tax expenses
In millions of €
| | 2022 | 2021 |
| :--------------------------------------------------- | :------- | :------ |
| Profit / (Loss) before tax | (140.1) | (17.9) |
| Tax using the company's tax rate of 25.8% | 36.1 | 4.5 |
| Effect of different income tax rates other countries | (0.2) | 1.0 |
| Prior year adjustments | 2.8 | - |
| Non-taxable amounts | 2.3 | 3.2 |
| Non-deductible interest | - | - |
| Non-deductible other amounts | (30.6) | (4.2) |
| Recognition of non-recognized losses | 7.2 | 0.1 |
| De-recognition of recognized losses | (0.5) | - |
| Tax rate changes | 0.1 | (0.1) |
| Tax losses not recognized | (7.7) | (2.9) |
| Utilisation of previously non-recognised losses | 1.8 | 1.1 |
| Other non-recognized tax attributes | (4.4) | (4.7) |
| Utilisation of other non-recognized tax attributes | 1.3 | - |
| Other | (1.2) | - |
| Income tax expense at effective tax rate | 7.0 | (2.0) |
| Effective tax rate | 5.0% | (11.2)% |
Azerion Group N.V. Annual Report 2022 Consolidated financial statements 125
Movements in deferred tax asset balances
2022 In millions of €
| | Net balance at 31 December 2021 | Recognized in profit or loss | Recognized in OCI | Exchange rate effect | Other | Net balance at 31 December 2022 |
| :---------------------------------- | :------------------------------ | :--------------------------- | :---------------- | :------------------- | :---- | :------------------------------ |
| Property, plant and equipment | 0.7 | (0.1) | - | - | - | 0.6 |
| Intangible assets | 1.9 | 0.8 | - | - | (0.6) | 2.1 |
| Pensions | 0.1 | - | - | - | - | 0.1 |
| Tax loss carry forwards | 2.2 | 7.7 | - | - | 1.7 | 11.6 |
| Other | 0.1 | (0.4) | - | - | 0.4 | 0.3 |
| Netting DTA/DTL | (0.8) | - | - | - | (12.5) | (13.3) |
| Total deferred tax asset | 4.2 | 8.0 | - | 0.4 | (11.1) | 1.5 |
Movement in deferred tax liability balances
2022 In millions of €
| | Net balance at 31 December 2021 | Recognized in profit or loss | Recognized in OCI | Exchange rate effect | Other | Net balance at 31 December 2022 |
| :---------------------------------- | :------------------------------ | :--------------------------- | :---------------- | :------------------- | :---- | :------------------------------ |
| Intangible assets | (30.7) | 3.0 | - | - | 1.8 | (38.2) |
| Borrowings | - | - | - | - | - | - |
| Other | 0.1 | - | - | - | (0.5) | (0.4) |
| Netting DTA/DTL | 0.8 | - | - | - | 12.5 | 13.3 |
| Total deferred tax liability | (29.8) | 3.0 | - | 13.8 | (25.3) | |
| Net deferred tax asset / (liabilities) | (25.6) | 11.0 | - | 0.4 | 2.7 | (23.8) |
Movement in deferred tax asset balances
2021 In millions of €
| | Net balance at 31 December 2020 | Recognized in profit or loss | Recognized in OCI | Acquired in business combinations | Exchange rate effect | Other | Net balance at 31 December 2021 |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Property, plant and equipment | 0.1 | 0.6 | - | - | - | - | 0.7 |
| Intangible assets | 2.0 | (0.1) | - | - | - | - | 1.9 |
| Pensions | 0.1 | - | - | - | - | - | 0.1 |
| Tax loss carry forwards | 2.5 | (1.1) | - | 0.8 | - | - | 2.2 |
| Other | 0.1 | - | - | - | - | - | 0.1 |
| Netting DTA/DTL | (2.5) | - | - | - | 1.7 | (0.8) |
| Total deferred tax asset | 2.3 | (0.6) | - | 0.8 | 1.7 | 4.2 |
Movement in deferred tax liability balances
2021 In millions of €
| | Net balance at 31 December 2020 | Recognized in profit or loss | Recognized in OCI | Acquired in business combinations | Exchange rate effect | Other | Net balance at 31 December 2021 |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Intangible assets | (7.0) | 0.1 | - | (23.5) | - | (0.4) | (30.7) |
| Borrowings | (0.8) | - | 0.8 | - | - | - | - |
| Other | 0.1 | - | - | - | - | 0.1 | 0.1 |
| Netting DTA/DTL | 2.5 | - | - | - | (1.7) | 0.8 |
| Total deferred tax liability | (5.2) | 0.1 | 0.8 | (23.5) | (1.7) | (29.8) |
| Net deferred tax asset / (liabilities) | (2.8) | (0.5) | 0.8 | (22.7) | - | (0.4) | (25.6) |
A deferred tax asset is recognized to the extent that it is probable that sufficient and suitable future taxable profit will be available against which the deductible temporary differences and unused tax losses can be utilized.
Azerion Group N.V. Annual Report 2022 Consolidated financial statements 126
Relevant tax law is considered to determine the availability of the losses to offset against the taxable profits in the future. Recognition of deferred tax assets therefore involves judgement regarding the future financial performance of the entities for which the deferred tax asset has been recognized and is therefore inherently uncertain. Deferred tax assets are generally recognized for all deductible temporary differences and unused tax losses to the extent that it is probable that taxable profits will be available against which those deductible temporary differences and unused tax losses can be utilized. At this stage it is not considered probable that taxable profits will be available against which certain unused tax losses can be utilized. The company therefore only recognizes deferred tax assets on tax losses to the extent that taxable temporary differences will reverse, against which these losses can be utilized. The remaining tax losses are not recognised, and are disclosed below.# Unrecognized deferred tax assets
Deferred tax assets have not been recognized in respect of the following items, as it is not probable that future taxable profit will be available against which the Group can use the benefits there from:
| In millions of € | 31 December 2022 | 31 December 2021 |
|---|---|---|
| Tax losses | 249.6 | 233.8 |
| Unrecognized losses | 202.0 | 231.7 |
| Expire | 20.3 | 24.1 |
| Never expire | 181.7 | 207.6 |
| In million of € | 2023 | 2024 | 2025 | 2026 | 2027 | Later | Unlimited | Total |
|---|---|---|---|---|---|---|---|---|
| Total loss carried forward | - | - | - | - | 0.1 | 22.1 | 227.4 | 249.6 |
| Loss carried forward not recognized in deferred tax assets | - | - | - | - | 0.1 | 20.2 | 181.7 | 202.0 |
| Total recognized | - | - | - | - | - | 1.9 | 45.7 | 47.6 |
| In million of € | 2022 | 2023 | 2024 | 2025 | 2026 | Later | Unlimited | Total |
|---|---|---|---|---|---|---|---|---|
| Total loss carried forward | - | - | - | - | - | 24.1 | 209.7 | 233.8 |
| Loss carried forward not recognized in deferred tax assets | - | - | - | - | - | 24.1 | 207.6 | 231.7 |
| Total recognized | - | - | - | - | - | - | 2.1 | 2.1 |
As of 1 January 2022 the Dutch net operating losses can be used for an unlimited time. Note that this applies to net operating losses as of 2013.
Azerion takes income tax positions that management believes are supportable and are intended to withstand challenge by tax authorities. Some of these positions are inherently uncertain and include the interpretation of income tax laws applied to complex transactions. The Company periodically reassesses its tax positions. Changes to the financial statement recognition, measurement, and disclosure of tax positions is based on management’s best judgment given any changes in the facts, circumstances, information available and applicable tax laws. Considering all available information, the Company believes that the ultimate resolution of such matters will not have a material effect on the Company’s financial position, statements of operations or cash flows.
Azerion Group N.V. Annual Report 2022 Consolidated financial statements 127
The related parties of the Company are entities and individuals capable of exercising control, joint control or significant influence over the Company and companies belonging to Azerion Holding B.V. In addition, members of the Management Board, executives with strategic responsibilities and their close family members are also considered related parties. The Company carries out transactions with its related parties on commercial terms that are normal in the respective markets, considering the characteristics of the goods or services involved.
As at 31 December 2022, KMP consists of 2 members of the Management Board and 3 members of the Executive Committee (31 December 2021: 5) that form the leadership team and 6 members of the Supervisory Board (31 December 2021: 0). In the De-SPAC Transaction, a total number of 17,992,773 Azerion Founder Warrants were granted to the personal Holding Companies of the two founding members in the Management Board. The grant date fair value amounted to € 9.9 million. The total remuneration of key management personnel was as follows:
| In millions of € | 2022 | 2021 |
|---|---|---|
| Short-term employee benefits | 3.1 | 1.7 |
| Post-employment benefits | 0.1 | - |
| Share-based payment benefits | 1.5 | 0.1 |
| Grant of Azerion Founder Warrants | 9.9 | - |
| Other | 0.2 | 0.1 |
| Remuneration of directors and top executives | 14.8 | 1.9 |
On 17 March 2020, the Group entered into a loan agreement with its shareholder Principion Holding B.V., lending its shareholder a total principal value of € 24.6 million (nominal value) against an interest rate of 1.0%. The maturity date of the loan is 31 March 2024. A further loan of €12.4 million was advanced on the same terms during April and May 2021. During 2021 the interest rate on these loans was amended to 4.0% to reflect the market interest rate. The loan had an outstanding balance of € 34.7 million as of 31 December 2022 (2021: € 33.4 million). For further details see note note 10: Non-current financial assets.
As of 31 December 2022 Azerion Holding has € 2.2 million receivable from Principion Holding B.V. to cover the drop in the share price relating to the guaranteed value. In the SPA’s with Genba, Strossle and Admeen a guaranteed value of the shares has been agreed. If the share price drops, Azerion needs to give the sellers extra shares to make up for the difference which Principion will cover. At the end of 2022 Principion needs to issue 399,113 extra shares based on a share price on 30 December 2022 of 5.42 € to cover for this.
As at 31 December 2022 € 14.9 million (2021: € 16.8 million) loans from the shareholder Principion Holding B.V. are subordinated. These loans are reported in the note note 13: Equity.
In 2020 Azerion Holding B.V. entered into a lease agreement with Cornellia SR1 B.V., for the property located at Beechavenue 132. The lease agreement resulted in the following being recognised:
The lease agreement for the second floor is terminated as of 24 April 2023 via a settlement agreement. The lease agreement for the first floor is terminated via notification as of 30 June 2023.
In 2020 Azerion Holding B.V. entered into a lease agreement which came into effect from 1 May 2021 with Cornellia SR2 B.V. for the property located at Boeing Avenue 30 and it will terminate on 30 April 2026. The lease agreement resulted in the following being recognised:
Cornellia SR1 B.V. and Cornellia SR2 B.V. are companies owned and controlled by a shareholder of Principion Holding B.V. the ultimate parent company of the Group.
In 2021 Triodor Arastirma Gelistirme Yazlim Ve Bilisim Ticaret Ltd Sti, a wholly owned subsidiary of Azerion Holding B.V. entered into lease agreements with Brick Realestate Gayrimenkul Yatirim Ltd. Sti. a company controlled by Principion Holding B.V. the ultimate parent company of the group. The lease agreement will terminate on 31 December 2025. The lease agreements resulted in the following being recognised:
The weighted average IBR applied in 2022 to lease liabilities was 8.0% (2021: 8.3%). For further details see note 9: Leases.
The group have rental agreements for two apartments in the Netherlands to use as a temporary accommodation for new Azerion employees who are relocating to the Netherlands. One of the landlords of the apartments which rental agreement signed is key management personnel in the group and the other one is a family member of a key management personnel. Total amount of rent expense for both apartments was € 41 thousand for the year 2022 (2021: € 41 thousand).
During 2022 the co-CEOs of the Group acquired an indirect 90% shareholding in Agribank PLC. During 2021 and 2022 certain subsidiaries in the Group have entered into a non-recourse factoring agreement with Agribank PLC. As a result of such factoring agreement, the total amount of receivables factored and derecognized is amounting to € 32.2 million (2021: € 15.2 million) and interest expense recognized in profit and loss is amounting to € 1.8 million (2021: € 0.6 million) for the year ended 31 December 2022. The total amount of liabilities due to non-recourse factoring is amounting to € 8.3 million as of 31 December 2022.
The Dutch Dream Foundation (DDF), was established in 2006 and is controlled by the joint CEO’s of Azerion Group N.V. The DDF focuses on talented, entrepreneurial, and ambitious young people between 15 and 25 years old, with a multicultural background who want to realise their dreams faster and more consciously. Donations made to the DDF during the year ended 31 December 2022 amounted to € 0 (2021: € 0), but the foundation benefitted from the use of office space at Azerion headquarters and administrative and marketing support amounts deemed immaterial.
Azerion Group N.V. Annual Report 2022 Consolidated financial statements 129
On 13 May 2021 Principion Holding B.V. the ultimate parent company of the group acquired a 20% interest in Fortuna Sittard, a football club in Sittard, the Netherlands, which features in the Dutch premier league, the Eredivisie. In 2022, Principion Holding B.V.## 26. List of subsidiaries
The Group’s principal subsidiaries at 31 December 2022 are set out below. Unless otherwise stated, they have share capital consisting solely of ordinary shares that are held directly by the Group, and the proportion of ownership interests held equals the voting rights held by the Group. The registered office is also their principal place of business.
Azerion Group N.V. Annual Report 2022 Consolidated financial statements 131
| Entity name | Registered office | 31 December 2022 | 31 December 2021 |
|---|---|---|---|
| Adexpert SPRL | Ixelles (BE) | 55 | 55 |
| Admeen B.V.1 | Schiphol-Rijk (NL) | 100 | 100 |
| Admoove SAS | Paris (FR) | 55 | 55 |
| AdPlay S.r.l. | Milan (IT) | 100 | - |
| Adpulse SAS | Paris (FR) | 55 | 55 |
| AdUX Benelux SPRL | Ixelles (BE) | 55 | 55 |
| Adux Tunesie | Tunis (TU) | 55 | 55 |
| AdUX SA | Paris (FR) | 55 | 55 |
| Azerion Belgium (former Sellbranch Benelux BvbA) | Ixelles (BE) | 100 | 100 |
| Azerion Denmark Aps | Copenhagen (DEN) | 100 | 100 |
| Azerion Finland (Widespace) Oy | Helsinki (FI) | 100 | 100 |
| Azerion France SARL (former Adysseum SARL) | Paris (FR) | 55 | 55 |
| Azerion Games and Content Holding B.V.1 | Schiphol-Rijk (NL) | 100 | 100 |
| Azerion Gaming B.V.1 | Schiphol-Rijk (NL) | 100 | 100 |
| Azerion Holding B.V.1 | Schiphol-Rijk (NL) | 100 | 100 |
| Azerion International Holding B.V.1 | Schiphol-Rijk (NL) | 100 | 100 |
| Azerion IP B.V.1 | Schiphol-Rijk (NL) | 100 | 100 |
| Azerion Italy (Widespace) S.r.l. | Milan (IT) | 100 | 100 |
| Azerion Metaverse B.V.1 | Schiphol-Rijk (NL) | 100 | - |
| Azerion Media B.V.1 | Schiphol-Rijk (NL) | 100 | 100 |
| Azerion Nederland B.V. formely (Semilo B.V.)1 | Schiphol-Rijk (NL) | 100 | 100 |
| Azerion Norway AS | Oslo (NOR) | 100 | 100 |
| Azerion Portugal Lda | Lisbon (PT) | 100 | 75 |
| Azerion Productions Casual B.V.1 | Schiphol-Rijk (NL) | 100 | 100 |
| Azerion Productions E-Business B.V.1 | Schiphol-Rijk (NL) | 100 | 100 |
| Azerion Productions GD B.V.1 | Schiphol-Rijk (NL) | 100 | 100 |
| Azerion Productions PG B.V.1 | Schiphol-Rijk (NL) | 100 | 100 |
| Azerion Productions Services B.V. 1 | Schiphol-Rijk (NL) | 100 | 100 |
| Azerion Publisher Services B.V. 1 | Schiphol-Rijk (NL) | 100 | 100 |
| Azerion Services B.V. 1 | Schiphol-Rijk (NL) | 100 | 100 |
| Azerion Spain SL (former Hi-Media Espana Publicidad OnLine SL) | Madrid (ES) | 100 | 100 |
| Azerion Sports B.V. (former Yoki Network Holding B.V.) 1 | Schiphol-Rijk (NL) | 100 | 100 |
| Azerion Sweden AB | Stockholm (SE) | 99.1 | 99.1 |
| Azerion Sweden SB AB (former Sellbranch AB) | Stockholm (SE) | 100 | 100 |
| Azerion Tech Development B.V. 1 | Schiphol-Rijk (NL) | 100 | 100 |
| Azerion Tech Engineering B.V.1 | Schiphol-Rijk (NL) | 100 | 100 |
| Azerion Tech Holding B.V.1 | Schiphol-Rijk (NL) | 100 | 100 |
| Azerion Tech Productions B.V. 1 | Schiphol-Rijk (NL) | 100 | 100 |
| Azerion Technology B.V. (former Improve Digital B.V.) | Schiphol-Rijk (NL) | 100 | 100 |
| Collective Europe Ltd | London (UK) | 100 | 100 |
| Connect2 Media Ltd (MFORMA Ltd) | London (UK) | 100 | 100 |
| Delta Projects AB | Stockholm (SE) | 100 | 100 |
| Delta Projects Aps | Copenhagen (DEN) | 100 | 100 |
| Delta Projects AS | Oslo (NOR) | 100 | 100 |
| Delta Projects GmbH | Germany (DE) | 100 | 100 |
| Delta Projects Netherlands B.V.1 | Schiphol-Rijk (NL) | 100 | 100 |
| Funtomic Ltd | Ramat Gan (IL) | 100 | 100 |
| Genba Digital Ltd | London (UK) | 100 | 100 |
| Group Hi Media Inc. | US | 55 | 55 |
| Hi-Media Deutschland AG | Düsseldorf (DE) | 100 | 100 |
| Hi-Media Nederland B.V.1 | Schiphol-Rijk (NL) | 55 | 55 |
| Hybrid Theory BCN SL | Barcelona (ES) | 100 | - |
| Hybrid Theory Global Ltd. | London (UK) | 100 | - |
| Hybrid Theory Inc. | New York City (US) | 100 | - |
| Hybrid Theory Ltd. | Hong Kong (HK) | 100 | - |
| Hybrid Theory Pte Ltd. | Singapore (SG) | 100 | - |
| Hybrid Theory Pty Ltd. | Sydney (AUS) | 100 | - |
| Iluminata Holding B.V.1 | Schiphol-Rijk (NL) | 100 | 100 |
| Infinia Brazil Publicidade Digital LTDA | São Paulo (BR) | 100 | - |
| Infinia Mobile S.L. | Madrid (ES) | 100 | - |
| Infinia Mobile Peru S.R.L | Lima (PE) | 100 | - |
| Infinia Mobile Chile S.p.A. | Lima (PE) | 100 | - |
| Infinia Mobile Colombia, S.A.S. | Bogota (COL) | 100 | - |
| Improve Digital France SAS | Paris (FR) | 100 | 100 |
| Improve Digital UK Ltd. | London (UK) | 100 | 100 |
| Inskin Media Ltd | London (UK) | 100 | 100 |
| Inskin Media ASIA Ltd. | Hong Kong (HK) | 100 | 100 |
| Inskin Media Australia Pty Ltd. | New South Wales (AUS) | 100 | 100 |
| Inskin Media GmbH | Hamburg (DE) | 100 | 100 |
| Inskin Media Singapore PTE Ltd. | Singapore (SG) | 100 | 100 |
| KeyGames Network B.V.1 | Schiphol-Rijk (NL) | 100 | 100 |
| KMobile AB | Stockholm (SE) | 100 | 100 |
| LATINIA US Corp. | Miami (US) | 100 | - |
| Madvertise Media SAS | Paris (FR) | 100 | - |
| Madvertise Media GmbH | Berlin (DE) | 100 | - |
| Mmedia B.V.1 | Schiphol-Rijk (NL) | 100 | - |
| Monolith Partners SAS | Paris (FR) | 100 | - |
| OHH Experiences Omnia S.L.U. | Madrid (ES) | 100 | - |
| Playcade Interactive GmbH | Berlin (DE) | 100 | 100 |
| Plinga GmbH | Berlin (DE) | 100 | 100 |
| Quantum Advertising GmbH | Frankfurt (DE) | 55 | 55 |
| Quantum Belgium SPRL | Belgium (BE) | 55 | 55 |
| Quantum Native Solutions Italia SRL | Milan (IT) | 55 | 55 |
| Quantum Advertising Nederland B.V.1 | Schiphol-Rijk (NL) | 77 | 77 |
| Quantum Advertising Espana S.L. | Madrid (ES) | 55 | 55 |
| Quantum Publicidad S.L. | Madrid (ES) | 55 | 55 |
| Quantum SAS | Paris (FR) | 55 | 55 |
| Radionomy Group B.V. | Schiphol-Rijk (NL) | 100 | - |
| Radionomy SA | Brussel (BE) | 100 | - |
| Radionomy Inc. | New York City (US) | 100 | - |
| Right Audience SA de CV. | Mexico City (MEX) | 100 | - |
| Shoutcast SPRL | Brussel (BE) | 100 | - |
| sMeets Communications GmbH | Berlin (DE) | 100 | 100 |
| Spligames B.V.1 | Schiphol-Rijk (NL) | 100 | 100 |
| Spigames Group B.V.1 | Schiphol-Rijk (NL) | 100 | 100 |
| SpilGames Intangibles B.V.1 | Schiphol-Rijk (NL) | 100 | 100 |
| Strossle AB | Stockholm (SE) | 100 | 100 |
| Strossle Czech | Prague (CZ) | 100 | 100 |
| Strossle Denmark Aps | Copenhagen (DEN) | 100 | 100 |
| Strossle Finland Oy | Helsinki (FI) | 100 | 100 |
| Strossle International AB | Stockholm (SE) | 100 | 100 |
| Strossle Italy S.r.l. | Milan (IT) | 100 | 100 |
| Strossle Norge AS | Oslo (NOR) | 100 | 100 |
| Strossle Hungary kft | Budapest (HU) | 100 | 100 |
| Strossle Slovakia | Bratislava (SK) | 100 | 100 |
| Sublime SKINZ Asia Private Ltd. | Singapore (SG) | 100 | 100 |
| Sublime SKINZ LABS SAS | Paris (FR) | 100 | 100 |
| Sublime SKINZ SAS | Paris (FR) | 100 | 100 |
| Sublime SKINZ GmbH | Hamburg (DE) | 100 | 100 |
| Sublime SKINZ Ltd | London (UK) | 100 | 100 |
| Sulake Oy | Helsinki (FI) | 100 | 100 |
| Sulake Brasil Entretenimento Interativo LTDA | São Paulo (BR) | 100 | 100 |
| Sulake Spain S.L.U. | Madrid (ES) | 100 | 100 |
| Sulake UK Ltd. | Berkshire (UK) | 100 | 100 |
| TargetSpot Belgium S.r.l. | Brussel (BE) | 100 | - |
| TargetSpot Deutschland GmbH | Düsseldorf (DE) | 100 | - |
| TargetSpot Espana S.L. | Madrid (ES) | 100 | - |
| TargetSpot France Sarl | Paris (FR) | 100 | - |
| TargetSpot Inc. | New York City (US) | 100 | - |
| TargetSpot UK Ltd. | London (UK) | 100 | - |
| Titan Gate AD (trading as "PubGalaxy") | Varna (BGR) | 100 | 100 |
| Triodor Holding B.V.1 | Schiphol-Rijk (NL) | 100 | 100 |
| Triodor Arge TR | Istanbul (TR) | 100 | 100 |
| Veedley S.r.l. | Milan (IT) | 100 | - |
| View&Buy International S.L. | Madrid (ES) | 100 | - |
| Vlyby Digital GmbH | Münich (DE) | 100 | - |
| Voidu B.V.1 | Schiphol-Rijk (NL) | 100 | 100 |
| WHOW Games GmbH | Berlin (DE) | 100 | 100 |
| WHOW Marketing GmbH | Berlin (DE) | 100 | 100 |
| Widespace B.V.1 | Schiphol-Rijk (NL) | 100 | 100 |
| Widespace SAS | Paris (FR) | 100 | 100 |
| Widespace Bangladesh Ltd. | Dhaka (BD) | 100 | 100 |
| Widespace Ltd | London (UK) | 100 | 100 |
| Woozworld Inc | Toronto (CA) | 100 | 100 |
| Youda Games Holding B.V.1 | Schiphol-Rijk (NL) | 100 | 100 |
| Zoom.In B.V.1 | Schiphol-Rijk (NL) | 100 | 100 |
| Zoom.In Beijing Co Ltd. | Beijing (CHN) | 100 | 100 |
| Zoom.In Deutschland GmbH | Berlin (DE) | 100 | 100 |
| Zoom.In Concepts B.V.1 | Schiphol-Rijk (NL) | 100 | 100 |
| Zoom.In Group B.V.1 | Schiphol-Rijk (NL) | 100 | 100 |
| Zoom.In Italia S.r.l. | Milan (IT) | 100 | 100 |
| Zoom.in Mexico CV de SA | Mexico (MEX) | 100 | 100 |
| Zoom.In Nederland B.V.1 | Schiphol-Rijk (NL) | 100 | 100 |
| Zoom.In Brasil LTDA | São Paulo (BR) | 100 | 100 |
¹Azerion Group N.V. has issued a joint and several liability statement to the provisions of Section 403, Part 9, Book 2 of the Dutch Civil Code with respect to legal entities established in the Netherlands.
Azerion Group N.V. Annual Report 2022 Consolidated financial statements 134
The AdUX group represents a subsidiary with a material non-controlling interest which has a material impact on the results of the group. The AdUX group includes all the subsidiaries of the Group with non-controlling interest. Summary financial information relating to the activities of the AdUX group (and, as a result, all the subsidiaries with non-controlling interest) are presented below.
| In millions of € | 2022 | 2021 |
|---|---|---|
| Sales | 23.6 | 24 |
| Cost of sales | (13.2) | (14.3) |
| Gross profit | 10.4 | 9.7 |
| Purchases | (3.6) | (3) |
| Payroll costs | (3.8) | (4.5) |
| Depreciation and amortization | (1.2) | (1.2) |
| Stock based compensation | - | - |
| Other non-current income and charges | 2.4 | (0.4) |
| Operating profit | 4.2 | 0.6 |
| Cost of indebtedness | (0.1) | (0.1) |
| Other financial income and charges | - | (0.3) |
| Earning of the consolidated companies | - | - |
| Share in the earnings of the companies treated on an equity basis | - | 0.2 |
| Earnings before tax | 4.1 | 0.4 |
| Income Tax | - | (0.2) |
| Net income | 4.1 | 0.2 |
| Including minority interests | - | - |
| Including Group share | 4.1 | 0.2 |
Azerion Group N.V. Annual Report 2022 Consolidated financial statements 135
| In millions of € | 2022 | 2021 |
|---|---|---|
| Assets | ||
| Net Goodwill | 2.5 | 2.5 |
| Net intangible fixed assets | 0.5 | 0.6 |
| Net tangible fixed assets | 0.1 | 0.1 |
| Right-of-use assets related to leases | 0.2 | 0.1 |
| Non-current financial assets | 0.1 | 0.2 |
| Non-current assets | 3.5 | 3.5 |
| Customers and other debtors | 16.9 | 16.3 |
| Other current assets | 6.8 | 5.4 |
| Cash and cash equivalents | 2.0 | 1.9 |
| Current assets | 25.7 | 23.6 |
| Total assets | 29.2 | 27.1 |
| Equity and liabilities | ||
| Shareholders’ equity (Group share) | (3.5) | (5.4) |
| Minority interests | - | - |
| Shareholders’ equity | (3.5) | (5.4) |
| Long-term borrowings and financial liabilities | 0.2 | 0.5 |
| Long-term lease liabilities | - | - |
| Non-current Provisions | 0.7 | 0.8 |
| Non-current liabilities | 0.9 | 1.3 |
| Short-term financial liabilities and bank overdrafts | 1.3 | 2.3 |
| Short-term lease liabilities | 0.1 | 0.1 |
| Current provisions | 0.2 | 0.1 |
| Suppliers and other creditors | 21.8 | 20.3 |
| Other current debts and liabilities | 8.4 | 8.4 |
| Current liabilities | 31.8 | 31.2 |
| Total | ## 27.Fair value measurement |
IFRS 13 establishes a hierarchy that categorizes into three levels the inputs used to measure fair value by giving the highest priority to quoted prices (unadjusted) in active markets for identical assets and liabilities (level 1 inputs) and the lowest priority to unobservable inputs (level 3 inputs). In some cases, the inputs used to measure the fair value of an asset or a liability might be categorized within different levels of the fair value hierarchy. In those cases, the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy at the lowest level input that is significant to the entire measurement. Levels used in the hierarchy are as follows:
The majority of the Group financial assets and liabilities are carried at amortized cost using the effective interest method. The fair values of these instruments are not materially different from their carrying values, since the instruments are either short-term in nature or the interest rates are on market terms. There were no transfers between fair value hierarchy levels in 2022 and 2021.
Other equity instruments are measured at fair value upon the grant date. For the fair value measurement between 1 January 2021 – 13 December 2021, the Group retroactively used the implied growth from 30 June 2020 (last valuation date before the De-SPAC Transaction) to 13 December 2021 as the growth rate in the equity value by considering linear growth between these two periods. The technique used is a discounted cash flow analysis using estimated future cash flows, weighted average cost of capital (corrected for debt instruments) and a terminal growth rate as its major inputs. We sense-check the implied growth assumptions, and the resulting valuations with reference to the Market approach method, to ensure all values are within a reasonable range. After the Transaction, the grant date fair value of equity instruments - granted in acquisition transactions - is the fair value of the shares of Azerion Group N.V. on the stock market at the acquisition date.
All equity-settled Share-Based Payments are measured at fair value upon the grant date. For the fair value measurement of Share-Based Payments granted in 2021, EFIC1 applied a level 3 valuation method, this regards Conditional Special shares and Davey Call Options, which measurement did not change in the De-SPAC Transaction. The HTP Call Options were measured applying the fair value of the shares of Azerion Group N.V. on the stock market at the transaction date, for the Conditional HTP Call Options a discount was taken into account. This a level 2 valuation, no other inputs were applied. For the Azerion Founder Warrants, as the terms and conditions are closely comparable to those of the Public Warrants, the market price of the listed Public Warrants at grant date was applied. This is a Level 2 valuation technique. Besides the market price of the Public Warrants no other inputs are used.
For the fair value measurement between 1 January 2021 – 13 December 2021, the Group retroactively used the implied growth from 30 June 2020 (last valuation date before the De-SPAC Transaction) to 13 December 2021 as the growth rate in the equity value by considering linear growth between these two periods. The technique used is a discounted cash flow analysis using estimated future cash flows, weighted average cost of capital (corrected for debt instruments) and a terminal growth rate as its major inputs. We sense-check the implied growth assumptions, and the resulting valuations with reference to the Market approach method, to ensure all values are within a reasonable range. The Enterprise Value of € 1.3 billion. (€ 1.1 billion after net debt deduction) as mentioned in the Shareholder Circular, published by EFIC1 on 13 December 2021, reflects the result of the valuation technique. This value is applied for the measurement of the share appreciation rights classified as other liabilities. At the end of 2022 the (remaining) share appreciation rights are measured based on the price of the listed shares of Azerion Group N.V. at the Amsterdam Stock Exchange. No other inputs were used.
The liabilities on warrants include Public Warrants and Founder Warrants. The fair value measurement of these instruments 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 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. These valuation techniques were applied as from the date of the De-SPAC Transaction, 1 February 2022. There were no movements between the levels since the De-SPAC Transaction. For movement of warrants in 2022 please refer to note 16: Other liabilities.
This note explains the Group’s exposure to financial risks and how these risks could affect the Group’s future financial performance.
| Risk | Exposure arising from | Management |
|---|---|---|
| Market risk | Future commercial transactions | Part of the daily business management |
| – foreign currency exchange | Recognized financial assets and liabilities not denominated in Euros (€) | Sensitivity analysis |
| Credit risk | Cash and cash equivalents, trade and other receivables | Credit ratings Diversification of bank accounts. Part of the daily business management |
| Liquidity risk | Lease liabilities, contract liabilities, employee benefit obligations, other liabilities and trade and other payables | Maturity analysis Availability of committed credit lines and borrowing facilities |
| Capital risk | Equity and external debts | Ratio analysis Part of the daily business management |
Susceptibility of the Group to financial risks is monitored as a part of its daily management of the business.
The functional currency of the Company is the Euro. The Group faces currency risks related to the transactions carried out in the currencies other than the functional currency. The objective of the foreign currency risk management is to limit foreign currency exposure, as far as possible, by matching liabilities and cash outflows in foreign currency with respective assets and inflows in foreign currency. While conversion risk remains relatively low and selectively hedged in relation to certain aspects of the operation, the proportion of cashflows denominated in USD and GBP has increased compared to previous years. As a result, Azerion's business, finance and treasury teams work together to manage these evolving foreign exchange risks
The Group’s exposure to foreign currency risk at the end of the reporting period, expressed in Euro currency units, was as follows:
Exposure to foreign currency risk
In millions of €
| American Dollar | British Pound | Swedish Krona | Euro | Other | |
|---|---|---|---|---|---|
| 31 December 2022 | |||||
| Trade and other receivables | 9.9 | 11.4 | 0.8 | 11.4 | 5.3 |
| Other non-current assets | - | - | - | - | - |
| Cash and cash equivalents | 10.0 | 4.5 | 0.6 | 4.9 | 1.8 |
| External borrowings | - | - | - | - | - |
| Trade and other payables | (24.5) | (27.6) | (0.7) | (20.9) | (4.4) |
| Exposure | (4.6) | (11.7) | 0.7 | (4.6) | 2.7 |
Exposure to foreign currency risk
In millions of €
| American Dollar | British Pound | Swedish Krona | Euro | Other | |
|---|---|---|---|---|---|
| 31 December 2021 | |||||
| Trade and other receivables | 18.3 | 3.4 | 5.8 | 20.1 | 1.7 |
| Other non-current assets | - | - | - | - | - |
| Cash and cash equivalents | 2.2 | - | - | 3.3 | - |
| External borrowings | - | - | - | - | - |
| Trade and other payables | (14.5) | (8.3) | (16.2) | (8.8) | (3.0) |
| Exposure | 6.0 | (4.9) | (10.4) | 14.6 | (1.3) |
A possible strengthening (weakening) of the foreign currencies by +/- 10.0% against the local currency of the entities in the group at 31 December would have affected the measurement of financial instruments denominated in a foreign currency and affected equity and profit or loss by the amounts shown below. The analysis assumes that all other variables remain constant and ignores any impact of forecast sales and purchases.# Sensitivity analysis
In millions of €
| Currency | American Dollar | British Pound | Swedish Krona | Euro | Other |
| :------------------- | :-------------- | :------------ | :------------ | :--- | :---- |
| 31 December 2022 | | | | | |
| Currency strengthening by 10% | (0.5) | (1.2) | 0.1 | (0.5) | 0.3 |
| Currency weakening by 10% | 0.5 | 1.2 | (0.1) | 0.5 | (0.3) |
In millions of €
| Currency | American Dollar | British Pound | Swedish Krona | Euro | Other |
| :------------------- | :-------------- | :------------ | :------------ | :--- | :---- |
| 31 December 2021 | | | | | |
| Currency strengthening by 10% | 0.6 | (0.5) | (1.0) | 1.5 | (0.1) |
| Currency weakening by 10% | (0.6) | 0.5 | 1.0 | (1.5) | 0.1 |
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 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. Applying a sensitivity analysis of 10% the total of the Public and Founder Warrants measured at fair value based upon the public warrants share price have an absolute impact of € 0.5 million.
The objective of credit risk management is to minimize the risk of counterparties defaulting on their repayments that could adversely impact the cash flows and lead to losses. Credit risk arising from cash at bank is considered to be minimal. Majority of the cash at bank and deposits are held with high credit quality financial institutions with a credit rating of A or higher. With respect to trade and other receivables, the Group mitigates the credit risk through credit limits for each debtor on post-paid terms. These receivables are relatively short term in nature. The credit quality of the customer, considering its financial performance, liquidity ratios, past experience and other factors (e.g., funding rounds) is used to assess the credit risk relating to the customer. The compliance with credit limits is monitored regularly by management. The Group relies on a number of third parties to provide payment processing services (‘payment service providers’) to collect amounts due from end-users. Payment service providers are financial institutions or credit card companies that the Group believes are of high credit quality.
Azerion Group N.V. Annual Report 2022 Consolidated financial statements 140
Exposure to credit risk
In millions of €
| | 31 December 2022 | 31 December 2021 |
| :--------------------- | :--------------- | :--------------- |
| Trade and other receivables | 157.3 | 103.5 |
| Cash at bank | 50.9 | 35.3 |
| Exposure | 208.2 | 138.8 |
The Group's definition of default and write-off policy is based on market practice and by country of operation. The expected credit loss is determined using a combination of approaches, consisting of individual assessment, netting and provision matrix application. Azerion first assesses trade receivables to determine whether individual receivables have facts and circumstances that may cause it to be impaired. These facts (not exhaustive) include historical collectability issues as well as expected future collectability issues due to the nature of the trade receivables or economic conditions experienced. Prior to application of the provision matrix, the non-impaired trade receivables are adjusted for specific trade receivables where a payable position also exists. For these accounts Azerion settles based on the net position thereof (whether receivable or payable). The provision matrix is then applied to non-impaired trade receivables as at the balance sheet date. When estimating the expected credit losses on AR balances a probability-based provision matrix is typically used based on the Group’s historical credit loss experience, adjusted for factors that are specific to the debtor’s general economic conditions and an assessment of both the current as well as the forecast direction of conditions at the reporting date. Reasonable and supportable information that is available without undue cost or effort at the reporting date about past events, current conditions and forecasts of future economic conditions was used. Azerion’s current process in calculating a loss allowance on their trade receivables, which includes an assessment of the probability of default, is facilitated through robustly applying the following metrics per 3rd party debtor to identify debtors for which a doubtful debt allowance may have to be raised:
The Group's balance of loss allowance for trade receivables as at 31 December 2022 was mainly concentrated in the following countries of operation: France in amount of € 1.5 million, Netherlands in amount of € 0.9 million, Germany in amount of € 0.7 million, Mexico in amount of € 0.6 million, Spain in amount of € 0.4 million and Great Britain in amount of € 0.4 million. Changes in the loss allowances balance are recognized in profit or loss as an impairment gain or loss. The allowance is netted with the outstanding gross amount of the trade receivables as at the balance sheet date.
For details please refer to note 26: List of subsidiaries.
Azerion Group N.V. Annual Report 2022 Consolidated financial statements 141
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation. The liquidity risk management implies maintaining sufficient cash and committed credit facilities by continuously monitoring forecast and actual cash flows and by matching the maturity profiles of financial assets and liabilities. The table below analyses the Group’s financial liabilities by their remaining period to maturity based on the contractual maturity date. The amounts in the table are the contractual undiscounted cash flows (these amounts may not reconcile to the amounts disclosed on the statement of financial position for debt to shareholders, participants, related parties, lease liabilities, trade and other payables). The Group 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. As at 31 December 2022, the Company has sufficient shares in Treasury to meet its obligations to issue shares on exercise.
Exposure to liquidity risk
In millions of €
| | within the next 12 months | Between 1 and 5 years | Beyond 5 years |
| :---------------- | :------------------------ | :-------------------- | :------------- |
| 31 December 2022 | | | |
| Trade and other payables | 221.9 | - | - |
| Lease liabilities | 5.6 | 14.1 | 3.3 |
| Borrowings | 7.9 | 201.4 | 0.1 |
| Other liabilities | 43.6 | 15 | - |
| Exposure | 294.0 | 215.5 | 3.4 |
Exposure to liquidity risk
In millions of €
| | within the next 12 months | Between 1 and 5 years | Beyond 5 years | Total |
| :---------------- | :------------------------ | :-------------------- | :------------- | :---- |
| 31 December 2021 | | | | |
| Trade and other payables | 141.5 | - | - | 141.5 |
| Lease liabilities | 5.9 | 13.0 | 4.4 | 23.3 |
| Borrowings | 16.1 | 225.2 | - | 241.3 |
| Other liabilities | 53.5 | 15.6 | - | 69.1 |
| Exposure | 217.0 | 253.8 | 4.4 | 475.2 |
The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while maximising the return to shareholders through the optimisation of the debt and equity balance. The capital structure of the Group consists of net debt (borrowings disclosed in note 9: Leases, note 18: Borrowings and note 25: Related parties after deducting cash and bank balances) and equity of the Group (comprising issued capital, reserves, retained earnings and noncontrolling interests as disclosed in note 13: Equity and the statement of changes in Equity). The Group’s risk management committee reviews the capital structure on a semi-annual basis. As part of this review, the committee considers the cost of capital and the risks associated with each class of capital. The net debt to equity ratio at 31 December 2022 is 1.8 (see below):
Azerion Group N.V. Annual Report 2022 Consolidated financial statements 142
Exposure to capital risk
In millions of €
| | 31 December 2022 | 31 December 2021 |
| :--------------------- | :--------------- | :--------------- |
| Debt | (228.6) | (224.8) |
| Cash and cash equivalents | 50.9 | 35.3 |
| Net debt | (177.7) | (189.5) |
| Equity | (96.2) | 6.9 |
| Net debt to equity ratio | 1.8 | (27.5) |
Azerion Group N.V.# Annual Report 2022
| In millions of € | Subordinated loans | Senior secured floating rate bonds | Debt to credit institutions | Other | Borrowings sub-total | Lease liabilities | Total |
|---|---|---|---|---|---|---|---|
| As at 1 January 2021 | 1.3 | 70.9 | 10.8 | 0.5 | 83.5 | 6.2 | 89.7 |
| Cash movements: | - | - | - | - | - | - | - |
| New loans | - | 227.5 | - | - | 227.5 | - | 227.5 |
| Repayments | - | (100.0) | (13.3) | (0.4) | (113.7) | (4.1) | (117.8) |
| Interest paid | (0.3) | (10.5) | - | - | (10.8) | (1.4) | (12.2) |
| Capitalised transaction cost | - | (5.7) | - | - | (5.7) | - | (5.7) |
| Non-cash movements: | - | - | - | - | - | - | - |
| Additions due to acquisitions | - | - | 10.3 | - | 10.3 | 3.6 | 13.9 |
| New lease liabilities recognized | - | - | - | - | - | 14.6 | 14.6 |
| Loss on derecognition | - | 1.9 | - | - | 1.9 | - | 1.9 |
| Interest accrued | 0.8 | 13.8 | - | - | 14.6 | 1.4 | 16.0 |
| Non-cash settlements | (1.8) | - | - | - | (1.8) | - | (1.8) |
| Exchange differences | - | - | - | - | - | (0.5) | (0.5) |
| Cancellation | - | - | - | - | - | (0.8) | (0.8) |
| Reassessments and modifications | - | - | - | - | - | - | - |
| As at 31 December 2021 | - | 197.9 | 7.8 | 0.1 | 205.8 | 19.0 | 224.8 |
| Cash movements: | - | - | - | - | - | - | - |
| New loans | - | - | 0.5 | - | 0.5 | - | 0.5 |
| Repayments | - | - | (5.0) | - | (5.0) | (4.6) | (9.6) |
| Interest paid | - | (14.5) | - | - | (14.5) | (1.5) | (16.0) |
| Capitalised transaction cost | - | 1.9 | - | - | 1.9 | - | 1.9 |
| Non cash movements: | - | - | - | - | - | - | - |
| Additions due to acquisitions | - | - | 6.1 | - | 6.1 | 2.1 | 8.2 |
| New lease liabilities recognized | - | - | - | - | - | 3.9 | 3.9 |
| Loss on derecognition | - | - | - | - | - | - | - |
| Interest accrued | - | 14.5 | - | - | 14.5 | 1.5 | 16.0 |
| Non-cash settlements | - | 0.0 | 0.0 | - | - | - | - |
| Exchange differences | - | - | 0.1 | - | 0.1 | (0.3) | (0.2) |
| Cancellation | - | - | - | - | - | (0.9) | (0.9) |
| Reassessments and modifications | - | - | - | - | - | - | - |
| As at 31 December 2022 | - | 199.8 | 9.5 | 0.1 | 209.4 | 19.2 | 228.6 |
Refer to note 9: Leases and note 18: Borrowings where the nature of the movements within the period is disclosed. Refer to note 18: Borrowings for details on the factoring agreement.
Azerion Group N.V. Annual Report 2022 Consolidated financial statements 144
Products and services from which reportable segments derive their revenues 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 generates certain classes of revenue and incurs certain classes of expenses. The principal business activities generate revenue through Platform and Premium Games. Management has presented the performance measure Adjusted EBITDA because the Group’s Chief Executives monitors this performance measure as it is relevant for the purpose of resource allocation and assessment of segment performance. The Group’s reportable segments in 2022 under IFRS 8 are therefore as follows:
The following is an analysis of the Group’s revenue by reportable segment in 2022:
| In millions of € | Platform 2022 | Premium Games 2022 | Total 2022 |
|---|---|---|---|
| Revenue | |||
| External revenue | 364.4 | 88.2 | 452.6 |
| Inter segment revenue | (0.9) | 0.9 | - |
| Total revenue | 363.5 | 89.1 | 452.6 |
The following is an analysis of the Group’s revenue by reportable segment in 2021:
| In millions of € | Platform 2021 | Premium Games 2021 | Total 2021 |
|---|---|---|---|
| Revenue | |||
| External revenue | 234.2 | 73.9 | 308.1 |
| Inter segment revenue | 0.3 | (0.3) | - |
| Total revenue | 234.5 | 73.6 | 308.1 |
In 2022 the Group's platform segment had a customer that accounted for revenue in amount of € 58.5 million, which was more than 10% of the Group's total revenues.
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. Goodwill has been allocated to reportable segments as described in note 8: Goodwill. 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, deferred tax asset and non-current financial assets.
Azerion Group N.V. Annual Report 2022 Consolidated financial statements 145
| In millions of € | 31 December 2022 | 31 December 2021 |
|---|---|---|
| Platform | 496.1 | 312.0 |
| Premium Games | 103.0 | 111.3 |
| Total segment assets | 599.1 | 423.3 |
| Unallocated assets | 39.4 | 40.4 |
| Total assets | 638.5 | 463.7 |
The Group’s revenue from external customers by geographical location is detailed under note 19: Revenue from contracts with customers Information about its segment non-current tangible and intangible assets by geographical location are detailed below:
| In millions of € | 31 December 2022 | 31 December 2021 |
|---|---|---|
| The Netherlands | 117.5 | 67.6 |
| Germany | 84.8 | 77.0 |
| Great Britain | 56.1 | 45.9 |
| France | 49.5 | 36.6 |
| Sweden | 31.5 | 33.7 |
| Other European countries | 46.6 | 18.2 |
| Non-European countries | 5.0 | 4.4 |
| Total non-current assets | 391.0 | 283.4 |
The accounting policies of the reportable segments are the same as the Group’s accounting policies described in note 3: Significant accounting policies.
Adjusted EBITDA represents operating profit / (loss) excluding depreciation, amortization, impairment of non-current assets and restructuring and acquisition related expenses and other items at management discretion. This is the measure reported to the Group’s Chief Executives for the purpose of resource allocation and assessment of segment performance.
Azerion Group N.V. Annual Report 2022 Consolidated financial statements 146
| In millions of € | 2022 | 2021 |
|---|---|---|
| Azerion Group | Premium Games | |
| Profit / (loss) for the period | (133.1) | (19.9) |
| Income Tax expense | (7.0) | 2.0 |
| Profit / (loss) before tax | (140.1) | (17.9) |
| Net finance costs | 1.1 | 26.6 |
| Share in profit/(loss) of joint venture | - | (0.3) |
| Operating profit / (loss) | (139.0) | 2.1 |
| Depreciation, amortization & impairment | 38.5 | 12.1 |
| De-SPAC related expenses | 144.5 | 2.5 |
| Other | (0.6) | (0.1) |
| Acquisition expenses | 6.9 | 0.2 |
| Restructuring | 1.8 | 0.3 |
| Adjusted EBITDA | 52.1 | 17.1 |
The net finance costs, share in profit and loss on joint venture and income tax expense are managed on consolidated level and therefore is not split on segmental level.
Azerion Group N.V. Annual Report 2022 Consolidated financial statements 147
The comparative financial information consists of Azerion Holding B.V., which company had no listed shares in 2021. The earnings per share information is required only for listed companies. For earnings per share calculation, Azerion Holding B.V. shares for 2021 were converted to Azerion Group N.V. shares based on conversion ratio at the De-SPAC transaction date.
| Basic loss per share in € | 31 December 2022 | 31 December 2021 |
|---|---|---|
| From continuing operations attributable to the ordinary equity holders of the company | (1.2) | (0.2) |
| Total basic profit/(loss) per share attributable to the ordinary equity holders of the company | (1.2) | (0.2) |
| Loss attributable to equity holders in millions of € | 31 December 2022 | 31 December 2021 |
|---|---|---|
| Loss attributable to the ordinary equity holders of the company used in calculating basic earnings per share: | (134.3) | (19.6) |
| (134.3) | (19.6) |
| Weighted average number of shares | Number of shares | 31 December 2022 | 31 December 2021 |
|---|---|---|---|
| Weighted average number of ordinary shares | 113,106,382 | 89,552,204 |
| Diluted loss per share in € | 31 December 2022 | 31 December 2021 |
|---|---|---|
| From continuing operations attributable to the ordinary equity holders of the company | (1.2) | (0.2) |
| Total diluted profit/(loss) per share attributable to the ordinary equity holders of the company | (1.2) | (0.2) |
The dilutive potential common shares are not taken into account in the periods for which there is a loss, as the effect would be anti-dilutive.
| Weighted average number of shares | Number of shares | 31 December 2022 | 31 December 2021 |
|---|---|---|---|
| Weighted average number of diluted shares | 154,362,100 | 89,552,204 |
Difference between weighted average number of diluted shares and weighted average number of ordinary shares results from the following potentially dilutive shares:
| Number of shares | Number of Potentially Dilutive Shares | Theoretical Issue Date | Weighted Average Number of Shares |
|---|---|---|---|
| Convertible loan | 2,376,919 | 1-Feb-22 | 2,376,919 |
| Conditional special shares | 1,152,886 | 1-Feb-22 | 1,152,886 |
| HTP call options | 25,700 | 1-Feb-22 | 25,700 |
| Davey call options | 739,970 | 1-Feb-22 | 739,970 |
| Public warrants¹ | 12,736,605 | 1-Feb-22 | 12,736,605 |
| Founder warrants¹ | 5,256,167 | 1-Feb-22 | 5,256,167 |
| Azerion founder warrants¹ | 17,992,773 | 1-Feb-22 | 17,992,773 |
| Investor SARs - Hybrid Theory | 1,161,524 | 10-Nov-22 | 177,891 |
| Investor SARs - Target Spot | 38,298 | 21-Nov-22 | 4,600 |
| Investor SARs - Sulake | 792,207 | 1-Feb-22 | 792,207 |
| Total | 42,273,049 | 41,255,718 |
¹In case market value of Azerion shares is in excess of warrant exercise price, specific rules for conversion into ordinary shares are set out in corresponding agreements.
Azerion Group N.V. Annual Report 2022 Consolidated financial statements 148
Following the Transaction on 1 February 2022 a legal merger between Azerion Group N.V. and Azerion Holding B.V. was proposed during the fourth quarter of 2022. As no objections raised, this legal merger became effective as of 1 January 2023. This legal merger under universal succession of title implied that Azerion Group N.V., being the 100% shareholder of Azerion Holding B.V., absorbed all rights and obligations of Azerion Holding B.V.
Azerion Group N.V. Annual Report 2022 Consolidated financial statements 149# Azerion Group N.V. Annual Report 2022
151 Company statement of financial position
152 Company statement of profit or loss
153 Notes to the Company financial statements
Company statement of financial position
In millions of €
| Notes | 31 December 2022 | 31 December 2021 |
|---|---|---|
| Assets | ||
| Non-current assets | 88.9 | - |
| Financial fixed assets | B 88.9 | - |
| Current assets | 14.4 | 382.5 |
| Receivables, prepayments and accrued income | C 13.2 | 381.0 |
| Cash and cash equivalents | 1.2 | 1.5 |
| Total assets | 103.3 | 382.5 |
| Equity | ||
| Share capital | 1.2 | - |
| Share premium | 130.8 | - |
| Legal reserves | 25.2 | - |
| Share based payment reserve | 13.7 | 16.8 |
| Currency translation reserve | (1.3) | - |
| Other equity instruments | 29.0 | - |
| Retained earnings | (73.5) | - |
| Result for the financial year | (31.3) | (39.0) |
| Total equity | 93.8 | (22.2) |
| Liabilities | ||
| Non-current liabilities | 3.8 | - |
| Lease liabilities | 0.1 | - |
| Other non-current liability | E 3.7 | - |
| Current liabilities | 5.6 | 404.7 |
| Lease liabilities | - | - |
| Other current liabilities | E 5.6 | 404.7 |
| Total liabilities | 9.5 | 404.7 |
| Total equity and liabilities | 103.3 | 382.5 |
Company statement of profit or loss
In millions of €
| Notes | 2022 | 2021 |
|---|---|---|
| General and administrative expenses | (2.4) | (13.1) |
| Personnel costs | (2.3) | (0.1) |
| Share based payment costs | (13.3) | (16.8) |
| Operating profit / (loss) | (18.0) | (30.0) |
| Total finance income | 13.8 | - |
| Total finance costs | G (7.3) | (9.0) |
| Result before tax | (11.5) | (39.0) |
| Income taxes | - | - |
| Result from subsidiaries | (19.8) | - |
| Result from operations after tax and result from subsidiaries | (31.3) | (39.0) |
| Profit / (loss) for the year | (31.3) | (39.0) |
A. General information 154
B. Financial fixed assets 156
C. Receivables, prepayments and accrued income 157
D. Equity 158
E. Other liabilities 163
F. Off balance sheet commitments 165
G. Net financial result 166
H. Employees 167
I. Remuneration of directors 168
J. Other disclosure 169
Subsequent events 170
The Company financial statements were authorized for issue by the Supervisory Board on 26 April 2023. This annual report includes the Financial Statements regarding the financial year 2022 for Azerion Group N.V., formerly known as European FinTech IPO Company 1 B.V. (‘EFIC1’). EFIC1 changed in legal form into a limited company (naamloze vennootschap) on 2 February 2022 and renamed from EFIC1 to Azerion Group N.V. as a result of a De-SPAC Transaction between EFIC1 and Azerion Holding B.V. which completed on 1 February 2022 ('De-SPAC Transaction').
Up until 1 February 2022, EFIC1 was a private limited liability company incorporated under Dutch law (besloten vennootschap met beperkte aansprakelijkheid), with its statutory seat in Amsterdam, the Netherlands. EFIC1 was admitted to listing and trading on Euronext Amsterdam on 26 March 2021 pursuant to an initial public offering (by way of a private placement, “IPO”) in which, following the partial exercise of the overallotment option, it raised approximately € 382 million in gross proceeds.
Prior to the completion of its De-SPAC Transaction, EFIC1 was a special purpose acquisition company (‘’SPAC’’) formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganisation or similar business combination with or acquisition of an operating business or entity. Azerion Group N.V. is registered in the Netherlands under the Chamber of Commerce registration number 81697244.
Following completion of the business combination, Azerion Group N.V. is a public company incorporated under Dutch law (naamloze vennootschap), with its statutory seat in Schiphol-Rijk, The Netherlands. The first day of trading on Euronext Amsterdam, post completion of the business combination, of the Ordinary Shares and Public 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.
Following the resignation of the executive and non-executive members of the EFIC1 management board and the appointment of the members of the management and supervisory boards in the Extraordinary General Meeting of Shareholders on 31 January 2022, the Management Board and the Supervisory Board of Azerion Group N.V. are acting as the responsible bodies as of the 1 February 2022 of the Company, as a result of the De-SPAC Transaction between EFIC1 BV and Azerion Holding B.V. on that date. They are therefore the responsible bodies for the Company and the financial statements 2022.
The gross proceeds of the IPO could only be released upon strict requirements. EFIC1 entered into an escrow agreement with Intertrust Escrow and Settlements B.V., a private company with a corporate seat in Amsterdam, the Netherlands and having its address at Prins Bernhardplein 200, 1097 JB Amsterdam, the Netherlands, acting under its trade name Intertrust Escrow Services (the “Escrow Agent”) and Stichting EFIC1 Escrow with corporate seat in Amsterdam, the Netherlands and having its corporate address at Prins Bernhardplein 200, 1097 JB Amsterdam, the Netherlands (the “Foundation”). Under the escrow agreement, the amounts he1d in the escrow account were generally not to be released unless and until the earlier of a business combination or liquidation. The Foundation held the escrow amount on a designated bank account.
Following the completion of the Transaction between EFIC1 and Azerion Holding B.V. the amounts were released from the escrow account and paid to former shareholders and Azerion Group N.V. The Stichting EFIC1 Escrow ended its activities and was subsequently liquidated.
Following the De-SPAC Transaction on 1 February 2022 a legal merger between Azerion Group N.V. and Azerion Holding B.V. was proposed. As no objections raised, this legal merger became effective as of 1 January 2023. This legal merger, under universal succession of title, implied that Azerion Group N.V., being the 100% shareholder of Azerion Holding B.V., absorbed all rights and obligations of Azerion Holding B.V. As Azerion Group N.V. filed a 403 statement for Azerion Holding B.V., the only financial statements to be published are those of Azerion Group N.V.
Basis for the preparation
The Company financial statements of Azerion Group N.V. (formerly: European FinTech IPO Company 1 B.V.) have been prepared in accordance with Part 9, Book 2 of the Dutch Civil Code. In accordance with sub 8 of article 362, Book 2 of the Dutch Civil Code, the Company financial statements are prepared based on the accounting principles of recognition, measurement and determination of profit, as applied in the consolidated financial statements. These principles also include the classification and presentation of financial instruments, being equity instruments or financial liabilities.
All amounts in the Company financial statements are presented in millions of euros (€), which is the Company’s functional currency and rounded to the nearest hundred thousand unless stated otherwise. Azerion Group N.V. is the continuation of EFIC1 B.V. As a result, the comparative figures are those of EFIC1 B.V. This accounting treatment is contrary to the Consolidated financial Statements as the Consolidated financial statements are prepared by analogy to a reversed acquisition. For more detail on the treatment in the Consolidated financial Statements refer to note 2: Preparation basis.
Financial fixed assets
Azerion Group N.V. applies the equity method for the presentation and measurement of the investment in Azerion Holding B.V. No goodwill was recognised in this legal acquisition because that would essentially be own goodwill.
Share of result of participating interests
The share in the result of participating interests consists of the share of the Company in the result of these participating interests.
Corporate income tax
The Company is the head of the fiscal unity for corporate income tax purposes. The Company recognizes the portion of corporate income tax that it would owe as an independent taxpayer, taking into account the allocation of the advantages of the fiscal unity. Settlement within the fiscal unity between the Company and its subsidiaries takes place through current account positions.
Cash flow statement
No cash flow statement is included in these company financial statements as the Company's cash flows are included in the consolidated cash flow statement.
Financial fixed assets
In millions of €
| Participations in group companies | Total | |
|---|---|---|
| As at 31 December 2021 | - | - |
| Azerion Holding B.V. | ||
| Capital contribution 119.8 119.8 | ||
| Result from subsidiaries (19.9) (19.9) | ||
| Translation reserves from subsidiaries (2.0) (2.0) | ||
| As at 31 December 2022 88.9 88.9 |
Azerion Group N.V. has a 100% direct interest in Azerion Holding B.V. which it legally acquired 1 February 2022. The Capital contributions made in 2022 mainly related to funding of the De-SPAC Transaction (€ 28.4 million) and acquisitions acquired through Azerion Holding B.V. (€ 90.6 million). The result from subsidiaries contains the result of Azerion Holding B.V. for the period between 1 February 2022 and 31 December 2022.
Azerion Group N.V. Annual Report 2022
Company financial statements 157
| In millions of € | 31 December 2022 | 31 December 2021 |
|---|---|---|
| Trade receivables from group companies | 2.9 | - |
| Receivables from group companies | 9.4 | - |
| Receivables from other related parties | - | - |
| Receivables Stitchting EFIC1 Escrow | - | 380.7 |
| Taxes and social security premiums | - | 0.2 |
| Other receivables | 0.9 | 0.1 |
| Total | 13.2 | 381.0 |
Receivables from group companies are unsecured, denominated in Euro (€). The receivables from group companies and other receivables are all due within a period of one year from the balance sheet date. In 2021, the gross proceeds of the IPO were deposited in an escrow account held by the Escrow Foundation. These amounts would be released only in accordance with the terms of an escrow agreement between the Company, Intertrust Escrow and Settlements B.V. , acting under its trade name Intertrust EscrowServices and the Stichting EFIC1 Escrow. Immediately after the transaction between Azerion Group N.V. and Azerion Holding B.V. the amounts of the former shareholders of EFIC1 B.V. were repaid to the redeeming shareholders and Azerion Group N.V. The Stichting EFIC1 Escrow was liquidated after the finalisation of its obligations. The fair value of all receivables approximates the book value.
Azerion Group N.V. Annual Report 2022
Company financial statements 158
| In millions of € | Share capital | Share premium | Legal reserves | Share Based Payment Reserve | Currency translation differences | Other equity instruments | Retained earnings | Total equity |
|---|---|---|---|---|---|---|---|---|
| Balance at incorporation - 25 January 2021 | - | - | - | - | - | - | - | - |
| Profit/ (loss) for the period | - | - | - | - | - | - | (39.0) | (39.0) |
| Other comprehensive income (loss) | - | - | - | - | - | - | - | - |
| Total comprehensive income (loss) for the period | - | - | - | - | - | - | (39.0) | (39.0) |
| Transactions with shareholders | - | - | - | - | - | - | - | - |
| Conversion share capital | - | - | - | - | - | - | - | - |
| Share-based payments (special shares and call option) | - | - | - | 16.8 | - | - | - | 16.8 |
| Total other movements | - | - | - | 16.8 | - | - | - | 16.8 |
| Balance as of 31 December 2021 | - | - | - | 16.8 | - | - | (39.0) | (22.2) |
| Profit before the De-SPAC Transaction | - | - | - | - | - | - | (16.8) | (16.8) |
| Accelerated vesting of share-based payments | - | - | - | 1.9 | - | - | - | 1.9 |
| Cancellation of share-based payment reserves | - | - | - | (2.3) | - | - | 2.3 | - |
| Conversion of ordinary shares to equity | 0.1 | 69.4 | - | - | - | - | - | 69.5 |
| Conversion of special shares to ordinary shares | 0.1 | 12.7 | - | (12.7) | - | - | (0.1) | - |
| Balance at De-SPAC Transaction date | 0.2 | 82.1 | - | 3.7 | - | - | (53.6) | 32.4 |
| Capital issuance | 1.0 | - | - | - | - | - | - | 1.0 |
| Legal acquisition of Azerion Holding B.V. | 0.0 | (21.8) | 25.2 | - | (1.3) | 22.5 | (36.7) | (12.1) |
| Issuance of Azerion founder warrants | - | - | - | 9.9 | - | - | - | 9.9 |
| Issuance of HTP call options | - | - | - | 1.6 | - | - | - | 1.6 |
| Private placement to sponsors and co-investors | - | 23.1 | - | - | - | - | - | 23.1 |
| Profit after the De-SPAC Transaction | - | - | - | - | - | - | (14.5) | (14.5) |
| Exercise of HTP call options | 0.0 | 1.4 | - | (1.4) | - | - | - | - |
| Other Private placement | 0.0 | 10.5 | - | - | - | - | - | 10.5 |
| Changes in shareholder loans | - | - | - | - | - | (1.9) | - | (1.9) |
| Share considerations for new acquisitions | 0.0 | 35.5 | - | - | - | 8.3 | - | 43.8 |
| Other movements | - | - | - | (0.1) | - | 0.1 | - | - |
| Balance as of 31 December 2022 | 1.2 | 130.8 | 25.2 | 13.7 | (1.3) | 29.0 | (104.8) | 93.8 |
The Identifiable Net assets of EFIC1 including share-based payment reserve, resulted in an increase in equity of € 32.4 million presented as the Balance at De-SPAC Transaction date, for further information refer to note 4: De-SPAC Transaction. In relation to the legal acquisition of Azerion Holding B.V., the value of equity of Azerion Holding B.V. amounts to € (12.1) million.
Azerion Group N.V. Annual Report 2022
Company financial statements 159
As at 31 December 2022, the share capital amounted €1.2 million (2021: €0.0 million). As part of the recapitalisation, Azerion Group N.V. issued shares in exchange for the shares in Azerion Holding B.V. The Balance at De-SPAC Transaction date shows an increase within share capital of € 0.2 million, due to :
* conversion of ordinary shares to equity: € 0.1 million of increase related to the conversion of 6,981,516 ordinary shares to equity
* conversion of special shares to ordinary shares : € 0.1 million of increase related to the conversion of special shares into ordinary shares
In addition, € 1.0 million, presented as capital issuance, relate to the increase from the conversion of Azerion Holding B.V. share capital. Azerion Group N.V. issued various capital instruments, both at its establishment in March 2021 as well as in the De-SPAC Transaction. The instruments are classified differently based on the characteristics of the instruments.
| Instrument | Number | Nominal value | Carrying amount | Accounting classification |
|---|---|---|---|---|
| Ordinary shares (placed and paid up) | 118,319,547 | 1.2 | 1.2 | Equity, share capital |
| Capital Shares | 22 | 0.2 | 0.2 | Current liabilities |
| Conditional Special Shares | 1,152,886 | - | 2.2 | Equity, share based payments reserve |
| Call Options - HTP Conditional Call Options | 25,700 | - | 0.2 | Equity, share based payments reserve |
| - Davey Unconditional Call Options | 628,974 | - | 1.2 | Equity, share based payments reserve |
| - Davey Conditional Call Options | 110,996 | - | 0.2 | Equity, share based payments reserve |
| - Azerion Founder Warrants | 17,992,773 | - | 9.9 | Equity, share based payments reserve |
| Warrants (derivative instruments) | - | - | - | - |
| - Public Warrants | 12,736,605 | - | 3.2 | Current liabilities |
| - Founder Warrants | 5,256,167 | - | 1.3 | Current liabilities |
As part of the De-SPAC Transaction :
* € 69.5 million relate to the conversion of ordinary shares to equity, after redemption of shares, which were reclassified from non-current liabilities to Share Capital (€ 0.1 million) and Share Premium (€ 69.4 million)
* € 12.7 million relate to the conversion of special shares to ordinary shares, which were converted from Share-Based Payments Reserve to Share capital (€ 0.1 million) and Share Premium (€ 12.7 million), for further information refer to the share-based payment reserve table below.
The private placement to sponsors and co-investors contributed an amount of € 23.1 million in Share Premium. In addition, in March 2022, the HTP Sponsor exercised call options which resulted in an €1.4 million reclassification from Share-Based Payments Reserve to Share Premium. In addition, other private placement of € 10.5 million was completed, in the form of a private placement of existing ordinary treasury shares of Azerion, predominantly to Azerion’s co-CEO’s investment vehicles. Furthermore, € 35.5 million of Share considerations for new acquisitions were issued, refer to note 5: Acquisitions for further details.
Azerion Group N.V. Annual Report 2022
Company financial statements 160
As of 31 December 2022, pursuant to Dutch law, certain limitations exist relating to the distribution of shareholders’ equity of € 82.3million. These limitations relate to legal reserves required by Dutch law of € 25.2 million. The legal reserve of € 25.2 million was acquired through the Legal acquisition of Azerion Holding B.V.
Azerion Group N.V. Annual Report 2022
Company financial statements 161
The Share based payments reserve includes the amounts related to the Conditional Special Shares, Davey Call Options, the HTP Call Options and the Azerion Founder Warrants. The movements in 2021 and 2022 were as follows:
| ### Share based payments reserve in millions of € | Special Shares | Conditional Special Shares | Davey Call Option | Davey Call Option (Unconditional part) | Davey Call Option (Conditional part) | HTP Call Options Unconditional | HTP Call Options Conditional | Azerion Founder Warrants | Total | P&L impact (expenses) |
|---|---|---|---|---|---|---|---|---|---|---|
| Balance as of 1 January 2021 | - | - | - | - | - | - | - | - | - | - |
| Granted in 2021 | 15 | - | 1.8 | - | - | - | - | - | 16.8 | 16.8 |
| Balance as at 31 December 2021 | 15 | - | 1.8 | - | - | - | - | - | 16.8 | 16.8 |
| Accelerated vesting in January 2022 | 1.7 | - | 0.2 | - | - | - | - | - | 1.9 | 1.8 |
| Cancellation | (1.7) | - | (0.5) | - | - | - | - | - | (2.2) | - |
| Conversion into share capital | (0.1) | - | - | - | - | - | - | - | (0.1) | - |
| Conversion into share premium | (12.7) | - | - | - | - | - | - | - | (12.7) | - |
| Conversion into ordinary Conditional Special Shares | (2.2) | 2.2 | - | - | - | - | - | - | - | - |
| Conversion into (un)conditional Call Options | - | - | (1.4) | 1.2 | 0.2 | - | - | - | - | - |
| Grant in the De-SPAC Transaction | 9.9 | 9.9 | 9.9 | - | - | - | - | - | - | - |
| Issuance of HTP Call Options | - | - | - | - | - | 1.4 | 0.2 | - | 1.6 | 1.6 |
| Exercise of the unconditional HTP Call Options | - | - | - | - | - | (1.4) | - | - | (1.4) | - |
| Balance as at 31 December 2022 | - | 2.2 | 0.1 | 1.2 | 0.2 | - | 0.2 | 9.9 | 13.7 | (13.3) |
| Granted in 2021 | Balance as at 31 December 2021 | Cancellation | Conversion into ordinary shares | Conversion into ordinary Conditional Special Shares | Conversion into (un)conditional Call Options | Issuance of HTP Call Options | Grant in the De-SPAC Transaction | Exercise of the unconditional HTP Call Options | Balance as at 31 December 2022 | |
|---|---|---|---|---|---|---|---|---|---|---|
| Special Shares | 8,539,894 | 8,539,894 | (853,989) | (6,533,019) | (1,152,886) | (739,970) | - | - | - | - |
| Conditional Special Shares | 1,012,560 | - | (272,590) | - | 1,152,886 | 628,974 | - | - | - | 1,152,886 |
| Davey Call Option | - | 1,012,560 | - | - | - | - | - | - | - | - |
| Davey Call Option (Unconditional part) | - | - | - | - | - | 1.2 | - | - | - | 628,974 |
| Davey Call Option (Conditional part) | - | - | - | - | - | 0.2 | - | - | - | 110,996 |
| HTP Call Options Unconditional | - | - | - | - | - | - | 145,634 | - | (145,634) | - |
| HTP Call Options Conditional | - | - | - | - | - | - | 25,700 | - | - | 25,700 |
| Azerion Founder Warrants | - | - | - | - | - | - | - | 17,992,773 | - | 17,992,773 |
The Currency Translation reserve of € (1.3) million was acquired during the Legal acquisition of Azerion Holding B.V. and subsequently changed during 2022.
During 2022 Azerion Group N.V. has taken over € 22.5 million of other equity instruments', as part of the Legal acquisition of Azerion Holding B.V, consisting mainly of:
* € 14.9 million of subordinated loan
* € 5.8 million of share consideration related to previous acquisition
For further information on these instruments, please refer to Consolidated Financial Statements, note 13: Equity.
In addition, the following movements incurred after the De-SPAC Transaction:
* € (1.9) million of changes in shareholder loans related to an amendment to the nominal value of the loans
* € 8.3 million of share considerations for new acquisitions were issued in 2022 (refer to note 5: Acquisitions).
As at 31 December 2022 the retained earnings amounted to € (104.8) million, the movements in 2022 comprise:
* € (31.3) million related to the loss for the year, including € (16.8) million before the De-SPAC Transaction and € (14.5) million after the De-SPAC Transaction
* € (36.7) million related to the Legal acquisition of Azerion Holding B.V.
In millions of €
| Amount | Group |
|---|---|
| Profit/ (loss) for the year attributable to the parent for the year 2022 | (134.3) |
| Listing expenses excluded | 107.1 |
| Deducting Profit/ (loss) of Azerion Holding B.V. for January 2022 | 12.7 |
| Adding Profit/ (loss) of EFIC1 for January 2022 | (16.8) |
| Company stand-alone Profit / (loss) for the year | (31.3) |
In millions of €
| 31 December 2022 | 31 December 2021 | |
|---|---|---|
| Other non-current liability | 3.7 | - |
| Contingent consideration | 3.7 | - |
| Other current liabilities | 5.6 | 404.7 |
| Capital shares | 0.2 | 0.2 |
| Founder warrants | 1.3 | 8.7 |
| Public warrants | 3.2 | 9.6 |
| Ordinary shares | - | 373.5 |
| Trade payables | 0.4 | - |
| Wage taxes and social securities | 0.5 | 0.2 |
| Other payables | - | 12.5 |
| Total | 9.3 | 404.7 |
The 'Ordinary shares' at the end of 2021 were classified as 'Other liabilities' as a consequence of the applicable terms and conditions for these instruments. In the transaction between Azerion Group N.V. and Azerion Holding B.V. on 1 February 2022 the majority of the ordinary shares were redeemed to the former shareholders. An amount of € 69.5 million was attributable to the 'remaining shareholders' and was reclassified to equity.
In the establishment of EFIC1 ‘Capital Shares’ were issued to two of its sponsors, being two legal entities, with an attached Call Option of 499 Capital Shares per holder. Each Capital Share has a nominal value of € 10,000. As at 31 December 2021 and 1 February 2022 a total number of 22 Capital Shares were outstanding, representing a total value of € 0.2 million. Up to and including 1 April 2022 the holders of the Capital Shares were entitled to call additional Capital Shares at nominal value. The holders did not exercise their right to call additional Capital Shares. Therefore at 31 December 2022 the total number remains unchanged. In the Transaction the holders of the Capital Shares agreed not to exercise their voting rights and grant a right of pledge on their Capital Shares in favour of Azerion Holding B.V. and transfer all voting rights attached to the Capital Shares to Azerion Holding B.V. (as pledgee), effectively resulting in the situation that the voting rights attached to these Capital Shares cannot be exercised in the general meeting of the Company. The holders of the Capital Shares are annually entitled to 2% of the nominal value per Capital Share. For accounting purposes this implies that the Capital Shares are presented as ‘Other liabilities’.
Movement in warrants in millions of €, number of instruments and price in €
| Public warrants | Founder warrants | Total | |
|---|---|---|---|
| Balance as at 1 January 2021 | - | - | - |
| Initial Recognition | 9.6 | 7.9 | 17.5 |
| Fair value movements -- through profit or loss | - | 0.8 | 0.8 |
| Balance as at 1 January 2022 | 9.6 | 8.7 | 18.3 |
| Initial Recognition | - | - | - |
| Fair value movements -- through profit or loss | (6.4) | (7.4) | (13.8) |
| Balance as ot 31 December 2022 | 3.2 | 1.3 | 4.5 |
Number of instruments
| Balance as at 1 January 2021 | Initial Recognition | Total | |
|---|---|---|---|
| 12,736,605 | 5,256,167 | 17,992,772 | |
| As at 1 January 2022 | 12,736,605 | 5,256,167 | 17,992,772 |
| Issued related to the De-SPAC Transaction | - | - | - |
| As at 31 December 2022 | 12,736,605 | 5,256,167 | 17,992,772 |
Prices (in €)
| Balance as at 1 January 2021 | Initial Recognition | As at 1 January 2022 | Immediately after the De-SPAC transaction | As at 31 December 2022* | |
|---|---|---|---|---|---|
| Public warrants | - | 0.75 | 0.75 | - | 0.25 |
| Founder warrants | - | 1.5 | 1.65 | - | 0.25 |
On 31 December 2022, the Company is part of a fiscal unity for corporate income tax and value added tax purposes. Under the conditions of the Collection of State Taxes Act 1990 (Invorderingswet 1990) the members of the fiscal unity are jointly and severally liable for the payment of the corporate income tax and value added tax due by any member of the fiscal unity.
Azerion Group N.V. issued a declaration of joint and several liability pursuant to the provisions of Section 403, Part 9, Book 2, of the Dutch Civil Code with respect to Azerion Holding B.V.
In millions of €
| 2022 | 2021 | |
|---|---|---|
| Fair value gain on warrants | 13.8 | - |
| Other finance income | - | - |
| Finance income | 13.8 | - |
| Interest expenses on related party loans | - | - |
| Interest expenses on third party balances | - | (6.7) |
| Interest on debt and borrowings | (0.3) | (1.6) |
| Fair value loss on warrants | - | (0.8) |
| Interest on leases (IFRS16) | - | - |
| Settlement of ordinary shares | (7.0) | - |
| Other finance costs | - | - |
| Finance costs | (7.3) | (9) |
| Net finance costs | 6.5 | (9) |
The fair value gain on warrants consist of the movement in the fair values of the Public Warrants and the Founder Warrants, that were issued in March 2021 at the establishment of EFIC1. For the Company Only results the movement in fair value is taken into account as from 1 January 2022. The fair value gain on warrants amounts € 13.8 million is specified in the table in note E: Other liabilities. Because of the redemption of the Ordinary Shares on 31 January 2022 , related to the De-SPAC Transaction € (7.0) million of accrued interest included in the liability was fully amortised in January 2022.
During 2022 3 employees were employed by the company (2021: 3).
The emoluments (including pensions obligations) which were charged in 2022 amount to € 12.9 million for the members of the Management Board and € 0.3 million for the members of the Supervisory Board (31 December 2021: 0). In the De-SPAC Transaction, Azerion Founder Warrants were granted to the personal Management Holding Companies of two of the founders of Azerion, at a grant date fair value of € 9.9 million. In 2021 a total amount of € 10.4 million was granted to the persons who acted during 2021 as Key Management and Leadership Team, consisting of both executive and non-executive members. Their remunerations in 2021 consisted of short term benefits (€ 0.2 million) and long term benefits (share based payments and founder warrants € 10.2 million).
The consolidated and company financial statements have been prepared by the Management Board and shall be proposed by the Management Board for adoption to the general meeting of shareholders.
The Management Board proposes to add the full 2022 result to Retained earnings. The general meeting of shareholders will be asked to approve the appropriation of the 2022 result, this appropriation is already recognized in the financial statements.
Schiphol-Rijk, 26 April 2023
On behalf of the Management Board of Azerion Group N.V.
Following the Transaction on 1 February 2022 a legal merger between Azerion Group N.V. and Azerion Holding B.V. was proposed during the fourth quarter of 2022. As no objections raised, this legal merger became effective as of 1 January 2023. This legal merger under universal succession of title implied that Azerion Group N.V., being the 100% shareholder of Azerion Holding B.V., absorbed all rights and obligations of Azerion Holding B.V. As Azerion Group N.V. expressed a statement according to BW 2.9 article 403 for Azerion Holding B.V., the only financial statements to be published are those of Azerion Group N.V.
The events relating to the investigation by the AFM are summarised in the Risk Management section of the Annual Report. While the investigation is ongoing, based on the information known at this point in time, there is no indication that a material financial impact will arise for Azerion.# Annual Report 2022
Concerning the appropriation of profit, the following has been determined in article 27 of the Articles of Association: The profits remaining after application of article 27.2 shall be put at the disposal of the General Meeting, provided however that the General Meeting may only resolve on any reservation of the profits or the distribution of any profits pursuant to and in accordance with a proposal thereto of the Management Board, with the prior approval of the Supervisory Board.
The Articles of Association do not provide a special right of control to any person.
Azerion has no ordinary shares without profit rights and no non-voting shares. A complete overview of the shares outstanding, and the rights attached to these shares, can be found in the Equity section.
For an overview of Azerion's offices, please see Azerion at a glance, starting on page 6 in these Annual Accounts.
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Annual Report 2022
Other information
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To: the general meeting and the supervisory board of Azerion Group N.V.
In our opinion:
* the consolidated financial statements of Azerion Group N.V. together with its subsidiaries (‘the Group’) give a true and fair view of the financial position of the Group as at 31 December 2022 and of its result and cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union (‘EU-IFRS’) and with Part 9 of Book 2 of the Dutch Civil Code;
* the company financial statements of Azerion Group N.V. (‘the Company’) give a true and fair view of the financial position of the Company as at 31 December 2022 and of its result for the year then ended in accordance with Part 9 of Book 2 of the Dutch Civil Code.
We have audited the accompanying financial statements 2022 of Azerion Group N.V., Schiphol-Rijk. The financial statements comprise the consolidated financial statements of the Group and the company financial statements.
The consolidated financial statements comprise:
* the consolidated statement of financial position as at 31 December 2022;
* the following statements for 2022: the consolidated statement of profit and loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows; and
* the notes, comprising a summary of the significant accounting policies and other explanatory information.
The company financial statements comprise:
* the company statement of financial position as at 31 December 2022;
* the company statement of profit or loss for the year then ended; and
* the notes, comprising a summary of the accounting policies applied and other explanatory information.
The financial reporting framework applied in the preparation of the financial statements is EU-IFRS and the relevant provisions of Part 9 of Book 2 of the Dutch Civil Code for the consolidated financial statements and Part 9 of Book 2 of the Dutch Civil Code for the company financial statements.
We conducted our audit in accordance with Dutch law, including the Dutch Standards on Auditing. We have further described our responsibilities under those standards in the section ‘Our responsibilities for the audit of the financial statements’ of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We are independent of Azerion Group N.V. in accordance with the European Union Regulation on specific requirements regarding statutory audit of public-interest entities, the ‘Wet toezicht accountantsorganisaties’ (Wta, Audit firms supervision act), the ‘Verordening inzake de onafhankelijkheid van accountants bij assuranceopdrachten’ (ViO, Code of Ethics for Professional Accountants, a regulation with respect to independence) and other relevant independence regulations in the Netherlands. Furthermore, we have complied with the ‘Verordening gedrags- en beroepsregels accountants’ (VGBA, Dutch Code of Ethics).
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Annual Report 2022
Other information
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We designed our audit procedures with respect to the key audit matters, fraud and going concern, and the matters resulting from that, in the context of our audit of the financial statements as a whole and in forming our opinion thereon. The information in support of our opinion, such as our findings and observations related to individual key audit matters, the audit approach fraud risk and the audit approach going concern was addressed in this context, and we do not provide a separate opinion or conclusion on these matters.
Azerion Group N.V. is a media, entertainment and technology company that operates on a European scale. The Group is comprised of several components and therefore we considered our group audit scope and approach as set out in the section ‘The scope of our group audit’. We paid specific attention to the areas of focus driven by the operations of the Group, as set out below.
Azerion Group N.V. is a fast-growing company. This growth is partially realised through acquisitions. As a result, the scale of operations has increased significantly over the past years and is expected to continue to grow. These circumstances require adequate processes, internal control measures and a strong finance function. During the year 2022, these were not at the level required at all locations and therefore our audit primarily based on substantive audit procedures.
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. In particular, we considered where the management board made important judgements, for example, in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. In these considerations, we paid attention to, amongst others, the assumptions underlying the physical and transition risk related to climate change. In paragraph 2 of the financial statements, the Company describes the areas of judgement in applying accounting policies and the key sources of estimation uncertainty.
Given the significant estimation uncertainty and the related higher inherent, we identified the risks of material misstatement in the impairment assessment of goodwill as a key audit matter as set out in the section ‘Key audit matters’ of this report. Furthermore, we identified the accounting for the De-SPAC transactions as key audit matter because of the complexity of the accounting involved.
An area of focus, that was not considered a key audit matter, was the impact on our audit of the investigation started by the Authority for the Financial Markets (AFM) in relation to compliance with article 15 of the Market Abuse Regulation which is focused on Azerion N.V., Principion Holding B.V. (Azerion’s largest shareholder) and the shareholders of Principion Holding B.V., including Azerion’s co-chief executive officers. We refer to the paragraph “audit approach fraud risks” for more information.
Azerion Group N.V. assessed the possible effects of climate change on its financial position, refer to the section ‘ESG overview’ in the report of the management board. We discussed Azerion Group N.V.’s assessment and governance thereof with the management board and evaluated the potential impact on the financial position including underlying assumptions and estimates. The expected effects of climate change are not considered to impact the key audit matters.
We ensured that the audit teams at both group and component level included the appropriate skills and competences which are needed for the audit of a media- and technology company. We therefore included experts and specialists in the areas of amongst others, tax, valuations and IFRS accounting in our team.
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The outline of our audit approach was as follows:
| Materiality | Overall materiality: €4.5 million. |
|---|---|
| Audit scope | We conducted a full scope audit work at eighteen components and specific audit procedures at nine other components to achieve sufficient audit coverage. Site visits were conducted to four countries and five components. For thirteen components we used foreign component auditors. |
| Audit coverage | 86% of consolidated revenue, 86% of consolidated total assets. |
| Key audit matters | Accounting for the De-SPAC transaction Impairment assessment of goodwill |
The scope of our audit was influenced by the application of materiality, which is further explained in the section ‘Our responsibilities for the audit of the financial statements’. Based on our professional judgement we determined certain quantitative thresholds for materiality, including the overall materiality for the financial statements as a whole as set out in the table below. These, together with qualitative considerations, helped us to determine the nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures and to evaluate the effect of identified misstatements, both individually and in aggregate, on the financial statements as a whole and on our opinion.
| Overall group materiality | €4.5 million (2021: 3.1 million). |
We used our professional judgement to determine overall materiality. As a basis for our judgement, we used 1% of revenues.# Rationale for benchmark applied
We used revenues as the primary benchmark, a generally accepted auditing practice, based on our analysis of the common information needs of the users of the financial statements. On this basis, we believe that revenues are an important metric for the financial performance of the Company. We have not used profit before tax as a benchmark, as this benchmark was less representative of the scale of operations of the company.
Based on our judgement, we allocate materiality to each component in our audit scope that is less than our overall group materiality. The range of materiality allocated across components was between €450,000 and €3,000,000. Certain components were audited to a local statutory audit materiality that was less than the allocated group materiality. We also take misstatements and/or possible misstatements into account that, in our judgement, are material for qualitative reasons. We agreed with the supervisory board that we would report to them any misstatement identified during our audit above €225,000 (2021: €154,000) as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.
Azerion Group N.V. is the parent company of a group of entities. The financial information of this group is included in the consolidated financial statements of Azerion Group N.V. We tailored the scope of our audit to ensure that we, in aggregate, provide sufficient coverage of the financial statements for us to be able to give an opinion on the financial statements as a whole, taking into account the management structure of the Group, the nature of operations of its components, the accounting processes and controls, and the markets in which the components of the Group operate. In establishing the overall group audit strategy and plan, we determined the type of work required to be performed at component level by the group engagement team and by each component auditor.
Our audit primarily focussed on the significant components of the Group being Azerion Technology B.V. and Voidu B.V. We subjected eighteen components to audits of their complete financial information to obtain sufficient coverage, of which two are considered significant components, as those components are individually financially significant to the Group. We further subjected nine components to specific risk-focussed audit procedures and to achieve appropriate coverage on financial line items in the consolidated financial statements.
In total, in performing these procedures, we achieved the following coverage on the financial line items:
| Financial Line Item | Coverage |
|---|---|
| Revenue | 86% |
| Total assets | 86% |
None of the remaining components represented more than 1,5% of total group revenue or total group assets. For those remaining components we performed, among other things, analytical procedures to corroborate our assessment that there were no significant risks of material misstatements within those components.
The group engagement team performed the audit work for Azerion Group N.V., Azerion Holding B.V., Azerion Tech Holding B.V., Azerion Games en Content Holding B.V., Azerion Services B.V., Azerion Gaming B.V., Azerion Technology B.V., Voidu B.V., Youda Games Holding B.V., Keygames Network B.V., Azerion Netherlands B.V., Spil Games Group B.V, Azerion Sweden SB AB, and Delta Projects AS.
For components Adux SA, Sulake Oy, WHOW Games GmbH, Inskin Media Limited, Inskin Media Australia Pty Ltd, Genba Digital Limited, Hi-media Deutschland AG, Strossle Norg AS, Infinia Mobile SL, Collective Europe Ltd, Strossle AB, Madvertise Media GmbH, Madvertise Media SAS we used component auditors who are familiar with the local laws and regulations to perform the audit work.
Where component auditors performed the work, we determined the level of involvement we needed to have in their work to be able to conclude whether we had obtained sufficient and appropriate audit evidence as a basis for our opinion on the consolidated financial statements as a whole. We issued instructions to the component audit teams in our audit scope. These instructions included amongst others our risk analysis, materiality and the scope of the work. We explained to the component audit teams the structure of the Group, the main developments that were relevant for the component auditors, the risks identified, the materiality levels to be applied and our global audit approach.
We had individual calls with the majority of the in-scope component audit teams during the year and/or upon conclusion of their work. During these calls, we discussed the significant accounting and audit issues identified by the component auditors, their reports, the findings of their procedures and other matters, that could be of relevance for the consolidated financial statements.
The group engagement team visits the component teams and local management on a rotational basis. In the current year, the group audit team visited Adux SA in France, WHOW Games GmbH in Germany and Inskin Media Limited and Genba Digital Limited in the United Kingdom given their significant contribution in revenues to the group, as well as visiting in the United Kingdom and Sulake Oy in Finland. For each of these locations we reviewed selected working papers of the respective component auditors.
The group engagement team performed the audit work on the group consolidation, financial statement disclosures and a number of more complex items at the head office. These included the impairment of goodwill and intangible assets, share-based payments, leases and De-SPAC related accounting matters.
By performing the procedures outlined above at the components, combined with additional procedures exercised at group level, we have been able to obtain sufficient and appropriate audit evidence on the Group’s financial information, to provide a basis for our opinion on the financial statements.
We identified and assessed the risks of material misstatements of the financial statements due to fraud. During our audit we obtained an understanding of Azerion Group N.V. and its environment and the components of the internal control system. This included the management board’s risk assessment process, the management board’s process for responding to the risks of fraud and monitoring the internal control system and how the supervisory board exercised oversight, as well as the outcomes. We refer to section ‘risk management’ of the report of the board for management’s fraud risk assessment.
We evaluated the design and relevant aspects of the internal control system with respect to the risks of material misstatements due to fraud and in particular the fraud risk assessment, as well as the code of conduct, whistle blower procedures, incident registration, among other things. We evaluated the design and the implementation and, where considered appropriate, tested the operating effectiveness of internal controls designed to mitigate fraud risks. We asked members of the management board as well as legal affairs whether they are aware of any actual or suspected fraud. This did not result in signals of actual or suspected fraud that may lead to a material misstatement.
As part of our process of identifying fraud risks, we evaluated fraud risk factors with respect to financial reporting fraud, misappropriation of assets and bribery and corruption. We evaluated whether these factors indicate that a risk of material misstatement due to fraud is present.
We identified the following fraud risks and performed the following specific procedures:
We addressed the risk of fraud in revenue recognition. This relates to the presumed management incentive that exists to overstate revenue. We evaluated which types of revenue transactions give rise to the risk of fraud in revenue recognition and concluded that the risk is present for all material revenue streams. Where relevant to our audit, we evaluated the design and implementation of the internal control system in the processes related to revenue recognition. We identified several deficiencies in the internal control system with respect to the documentation and monitoring of controls. Our audit procedures were therefore primarily of a substantive nature. We performed specific substantive audit procedures on a sample of revenue transactions, including determining whether these transactions are based on deliveries that actually took place in the financial year. We tested, on a sample basis, the delivered performance and transaction prices of the revenue transactions based on sales agreements, sales invoices and cash receipts. Additionally, we performed specific audit procedures at the end of the year related to cut-off procedures to identify potential shifts in revenue from products delivered in the next financial year to the revenue reported in the current financial year. In addition, we performed audit procedures to determine whether credit invoices were registered in the next financial year that indicate incorrectly registered revenue in the current financial year. Our audit procedures did not lead to specific indications of fraud or suspicions of fraud with respect to revenue recognition.
Management is in a unique position to perpetrate fraud because of management’s ability to manipulate accounting records and prepare fraudulent financial statements by overriding controls that otherwise appear to be operating effectively.# Other Information
That is why, in all our audits, we pay attention to the risk of management override of controls in: the appropriateness of journal entries and other adjustments made in the preparation of the financial statements; estimates; significant transactions, if any, outside the normal course of business for the entity. Where relevant to our audit, we evaluated the design and implementation of the internal control system in the processes of generating and processing journal entries and making estimates. We also paid specific attention to the access safeguards in the IT system and the possibility that these lead to violations of the segregation of duties. We performed journal entry testing by selecting journal entries based on risk criteria such as top side entries, consolidation entries and unusual account combinations. We conducted specific audit procedures for these entries if they had not already been tested during other audit procedures. These procedures include, amongst others, inspection of the entries to source documentation. We assessed significant judgements and estimates made by management and paid specific attention to significant transactions outside the normal course of business, especially for the impairment analysis of goodwill and the accounting for the De-SPAC transaction. We refer to our key audit matters for further details. Our work did not reveal any specific indications of fraud or suspicion of fraud in respect of management override of controls.
The risk of possible lack of integrity by the co-CEO who temporarily stepped aside
The Authority for the Financial Markets (AFM) started an investigation in relation to compliance with article 15 of the Market Abuse Regulation which is focused on Azerion N.V., Principion Holding B.V. (Azerion’s largest shareholder) and the shareholders of Principion Holding B.V., including Azerion’s co-chief executive officers. As a consequence, one of the co-CEO’s temporarily stepped aside per 13 March 2023. We identified a fraud risk factor due to a possible lack of integrity by the co-CEO and we assessed the potential impact thereof on the financial statements as a fraud risk. We refer to paragraph ‘Events relating to the investigation by the AFM’ as part of the chapter risk management in the report of the board, where the management board has elaborated on the events in relation to the investigation of the AFM and the measures that the management board and supervisory board have taken. We evaluated the design and implementation of the internal control system in the processes related to: the avoidance of insider trading; the monitoring and evaluation of related party transactions outside the normal course of business. Our observations as a result of this evaluation have been shared with management. The supervisory board appointed an external expert to perform an independent investigation into the conduct of the co-CEO’s. We assessed the capacity, competence and objectivity of this external expert. Furthermore, we obtained an understanding of the work performed by the external expert through evaluating the nature and scope of the in collaboration with our forensic specialists. Management’s external expert has taken into account the suggestions of the audit team in expanding the scope of the investigation. Afterwards we reviewed the outcome of the investigation, asked questions and received further disclosure on the results of the investigation. Also, the preliminary conclusions have been discussed with us by management’s external expert. Requests for refinement and clarification have been incorporated into the final research report on the basis of discussion between us and the external experts. We concluded that the work of management’s external expert is appropriate as audit evidence. Additionally, we performed substantive audit procedures, including: Analyses of the rights to authorize contracts, invoices and payments by the co-CEO and the execution of those rights; Data analyses on the rights of the co-CEO in the ERP system concluding that no transactions were registered by the co-CEO; Analyses of the costs of the management board recorded at the cost center related to the board of management; Analyses of management expense claims; Analyses of transactions with related parties connected to the co-CEO for which the risk of conflict of interest may arise, specifically if it is outside the scope of normal business operations. Our work did not lead to material observations as a result of the conduct of the co-CEO. The outcome of the investigation by the AFM, however, cannot be predicted. We incorporated an element of unpredictability in our audit. During the audit, we remained alert to indications of fraud. We also considered the outcome of our other audit procedures and evaluated whether any findings were indicative of fraud or non-compliance of laws and regulations. Whenever we identify any indications of fraud, we re-evaluate our fraud risk assessment and its impact on our audit procedures.
The management board prepared the financial statements on the assumption that the entity is a going concern and that it will continue all its operations for at least twelve months from the date of preparation of the financial statements. This is disclosed in section ‘Going concern’ as part of section 1 ‘general information’ of the financial statements. Our procedures to evaluate management’s going-concern assessment included, amongst others:
Our procedures did not result in outcomes contrary to management’s assumptions and judgements used in the application of the going-concern assumption.
Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the financial statements. We have communicated the key audit matters to the supervisory board. The key audit matters are not a comprehensive reflection of all matters identified by our audit and that we discussed. In this section, we described the key audit matters and included a summary of the audit procedures we performed on those matters.
Our audit work and observations
Accounting for the De-SPAC transaction refer to footnote 2 preparation basis, footnote 4 De-SPAC transaction, footnote 13 Equity and footnote 14 Share-based payments
As of 1 February 2022, Azerion Group N.V. and Azerion Holding B.V. completed the De-SPAC transaction. The accounting for such a transaction is complex and requires significant judgements. As a result, we considered the accounting for the De-SPAC transaction a key audit matter. The following elements involve significant judgements and complexity and were assessed by management in collaboration with management experts. These areas are subject to higher risk of material misstatement due to fraud and error:
We performed our audit procedures on the impairment assessment with the support of our accounting specialists and valuation experts. Our audit procedures included, amongst others:
Finally, we evaluated whether the disclosures in respect of the De-SPAC transaction, including disclosures impacting share-based payments and equity were adequate. Our audit procedures outlined above, did not result in significant findings.
Our audit work and observations
Impairment assessment of goodwill refer to note 8 of the consolidated financial statements
As of December 2022, the Group’s goodwill amounted to €184.2 million in the consolidated financial statements. The value of the goodwill is of significant importance to the group’s financial position and an impairment could have a significant impact thereon. Therefore, combined with the significant judgements applied and inherent uncertainty of future events, we considered the impairment assessment of goodwill a key audit matter.
Azerion Group N.V. Annual Report 2022 Other information 180# Goodwill Impairment Testing
Goodwill is tested for impairment annually together with other assets of the respective cash generating units at the level on which they are monitored. In this case, the aggregated levels of cash generating units on which they are monitored are the operating segment levels, being the Gaming and the Monetization Technology segments (hereafter; CGUs). For each CGU, the recoverable amount was determined based on a value-in-use calculation. The calculation involved several key assumptions in determining the inputs to the model, including: revenue growth developments, operating margins, working capital requirements, discount rates, long-term growth rates, and forecasting models up to five years.
The impairment testing of goodwill is significantly impacted by these inputs and, therefore, this area is subject to a higher risk of material misstatement due to fraud and error. Based on the calculated value in use for each operating segment, management concluded that these values for each operating segment were higher than the net assets of that segment, and therefore, no impairment charge was recognized for the year 2022.
We performed our audit procedures on the impairment assessment with the support of our valuation specialists. Our audit procedures included, amongst others:
Our audit procedures outlined above did not result in significant findings.
The annual report contains other information. This includes all information in the annual report in addition to the financial statements and our auditor’s report thereon. Based on the procedures performed as set out below, we conclude that the other information:
Azerion Group N.V. Annual Report 2022 Other information 181
We have read the other information. Based on our knowledge and the understanding obtained in our audit of the financial statements or otherwise, we have considered whether the other information contains material misstatements. By performing our procedures, we comply with the requirements of Part 9 of Book 2 and section 2:135b subsection 7 of the Dutch Civil Code and the Dutch Standard 720. The scope of such procedures was substantially less than the scope of those procedures performed in our audit of the financial statements.
The management board is responsible for the preparation of the other information, including the report of the board and the other information in accordance with Part 9 of Book 2 of the Dutch Civil Code. The management board and the supervisory board are responsible for ensuring that the remuneration report is drawn up and published in accordance with sections 2:135b and 2:145 subsection 2 of the Dutch Civil Code.
We were appointed as auditors of Azerion Group N.V. on 31 January 2022 by the supervisory board. This followed the passing of a resolution by the shareholders at the annual general meeting held on 31 January 2022. Our appointment has been renewed annually by shareholders and now represents a total period of uninterrupted engagement of 2 years.
Azerion Group N.V. has prepared the annual report in ESEF. The requirements for this are set out in the Delegated Regulation (EU) 2019/815 with regard to regulatory technical standards on the specification of a single electronic reporting format (hereinafter: the RTS on ESEF).
In our opinion, the annual report prepared in XHTML format, including the (partially) marked-up consolidated financial statements, as included in the reporting package by Azerion Group N.V., complies in all material respects with the RTS on ESEF.
The management board is responsible for preparing the annual report, including the financial statements, in accordance with the RTS on ESEF, whereby the management board combines the various components into a single reporting package. Our responsibility is to obtain reasonable assurance for our opinion whether the annual report in this reporting package complies with the RTS on ESEF. We performed our examination in accordance with Dutch law, including Dutch Standard 3950N ‘Assuranceopdrachten inzake het voldoen aan de criteria voor het opstellen van een digitaal verantwoordingsdocument’ (assurance engagements relating to compliance with criteria for digital reporting).
Our examination included, amongst others:
To the best of our knowledge and belief, we have not provided prohibited non-audit services as referred to in article 5(1) of the European Regulation on specific requirements regarding statutory audit of public-interest entities.
The management board is responsible for:
As part of the preparation of the financial statements, the management board is responsible for assessing the Company’s ability to continue as a going-concern. Based on the financial reporting frameworks mentioned, the management board should prepare the financial statements using the going-concern basis of accounting unless the management board either intends to liquidate the Company or to cease operations or has no realistic alternative but to do so. The management board should disclose in the financial statements any event and circumstances that may cast significant doubt on the Company’s ability to continue as a going concern.
The supervisory board is responsible for overseeing the Company’s financial reporting process.
Our responsibility is to plan and perform an audit engagement in a manner that allows us to obtain sufficient and appropriate audit evidence to provide a basis for our opinion. Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high but not absolute level of assurance, which makes it possible that we may not detect all material misstatements. Misstatements may arise due to fraud or error.# Independent Auditor's Report
To the shareholders of Azerion Group N.V.
We have audited the consolidated financial statements of Azerion Group N.V. (the "Company") and its subsidiaries (collectively, "the Group") for the year ended December 31, 2022, which comprise the consolidated statement of financial position as of December 31, 2022, the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2022, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS-EU).
We conducted our audit in accordance with International Standards on Auditing (ISAs) and applicable legal requirements in the Netherlands. Our responsibilities under those standards are further described in the "Responsibilities of the Auditor for the Audit of the Financial Statements" section of our report.
We are independent of the Group in accordance with the International Ethics Standards Board for Accountants' International Code of Ethics for Professional Accountants (including International Independence Standards) (the "Code of Ethics") and the relevant requirements of the Netherlands, as supplemented by any prohibitions and restrictions on our independence. We have also complied with our responsibilities under the Code of Ethics in relation to independence. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. They do not constitute a limitation of our report.
We have determined that there are no key audit matters to communicate in our report.
The other information comprises the information included in the annual report, other than the consolidated financial statements and our auditor's report thereon. Based on our knowledge and understanding of the Group and its environment, we have considered whether the other information contains material misstatements, other than those that are a direct consequence of our audit of the consolidated financial statements.
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS-EU and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs and applicable legal requirements in the Netherlands will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.
As part of an audit in accordance with ISAs and applicable legal requirements in the Netherlands, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
We communicate with those charged with governance regarding, among other things, the planned scope and timing of the audit and significant findings of the audit, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence and to communicate with them all relationships and other matters that may reasonably be thought to have a bearing on our independence and, where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when we have determined that there is no public interest in communicating the matter in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public benefits of such disclosure.
Amsterdam, 26 April 2023
PricewaterhouseCoopers Accountants N.V.
Original has been signed by
W. Poot RA
Azerion Group N.V.
Annual Report 2022
© 2023 Azerion Group N.V. All rights reserved
https://www.azerion.com/reports
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