Online casino gambling concept with smartphone

Exceeding management’s FY21 guidance

Aspire Global 10 November 2021 Update
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Aspire Global

Exceeding management’s FY21 guidance

Q321 results

Travel & leisure

10 November 2021

Price

SEK84.9

Market cap

SEK3,948m

€0.1/SEK

Net cash (€m) at 30 September 2021 (excluding IFRS 16 liabilities and client cash)

7.5

Shares in issue

46.5m

Free float

25.8%

Code

ASPIRE

Primary exchange

Nasdaq First North Premier Growth Market, Stockholm

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

15.0

34.1

136.8

Rel (local)

5.8

33.5

76.4

52-week high/low

SEK85

SEK35

Business description

Aspire Global is a leading B2B provider of iGaming solutions, offering partners all relevant products to operate a successful iGaming brand. It has announced the proposed disposal of the B2C online gaming brands, including Karamba. Aspire operates in 30 regulated markets across Europe, the United States, South America and Africa.

Next events

FY21 results

17 February 2022

Analysts

Russell Pointon

+44 (0)20 3077 5700

Sara Welford

+44 (0)20 3077 5700

Aspire Global is a research client of Edison Investment Research Limited

The strength of Aspire Global’s (AG’s) performance in the year to date is indicated by its last 12-months (LTM) revenue and EBITDA already exceeding management’s prior FY21 guidance. AG continues to enjoy strong revenue momentum from new client wins and geographic expansion. With a healthy pro forma net cash position assuming the imminent proposed disposal of B2C, the group is well placed to invest in its content and services to grow its client base and geographic coverage. We upgrade our FY21 and FY22 EBITDA forecasts by 2–3%, which feed through to an increase in our DCF-based valuation to SEK116/share.

Year end

Revenue** (€m)

EBITDA*
(€m)

EPS*
(€)

DPS
(€)

P/E
(x)

Yield
(%)

12/19

131.4

21.8

0.32

0.00

26.5

N/A

12/20

161.9

27.6

0.32

0.00

26.5

N/A

12/21e

218.0

37.6

0.58

0.21

14.6

2.5

12/22e

248.4

44.6

0.71

0.33

12.0

3.9

Note: *EBITDA and EPS (fully diluted) are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. **Includes VAT.

Q321: Revenue growth accelerated

In Q321 AG’s revenue increased c 46% year-on-year to €58.6m with EBITDA up 38% to €9.1m (15.5% margin). The revenue growth reflected strong organic growth year-on-year (c 39%), boosted by the first-time consolidation of Sports. Organic revenue growth accelerated from c 28% in H121. The EBITDA margin decline to 15.5% was solely attributable to higher gaming taxes in Germany after regulatory changes for online gaming companies. AG’s LTM revenue of c €207m and EBITDA of €36m have already exceeded management’s prior FY21 guidance for revenue of €200m and EBITDA of €32m.

FY21 and FY22 EBITDA forecasts upgraded by 2–3%

We upgrade our revenue forecasts for FY21 by c 1% to €218m and by 3% in FY22 to €248.4m, as we take a more optimistic outlook for Core. This represents year-on-year growth of c 35% and c 14%, respectively. We also increase our EBITDA forecasts in both years by 2–3%, giving year-on-year growth of c 37% and 19%, respectively. Based on the nine-month performance, we include higher EBITDA margin assumptions for both Core and Games, while taking a more cautious stance on the outlook for B2C’s profitability.

Valuation: DCF valuation increased to SEK116/share

Our upgraded forecasts and AG’s improved financial position lead to an increase in our DCF-based valuation, with a WACC of 9% and a terminal growth rate of 2%, to SEK116/share from SEK110. The shares continue to trade at a significant discount to peers and an EV/EBIT for CY21 of 12.2x is a discount of 43% to the adjusted peer average of 21.5x. Our analysis shows a relative de-rating to the peers once the proposed disposal of B2C is considered, which appears unwarranted given the expected improvement in AG’s growth prospects and profitability.

Improved revenue momentum in Q321

AG reported yet another all-time high quarterly revenue in Q321 as it continued to benefit from very strong year-on-year organic revenue growth of 39% and the first-time contribution of Sports (consolidated from Q420). AG’s LTM revenue of c €207m and EBITDA of €36m have already exceeded management’s prior FY21 guidance for revenue of €200m and EBITDA of €32m, which is impressive given the apparent momentum in the businesses that is likely to boost the full year’s outturn. Management highlights good momentum in sports and casino and reiterates a continued focus on geographic expansion, with Brazil being of note (see below).

The lower Q321 EBITDA margin of 15.5% versus 17.8% for H121 predominantly reflects higher gaming taxes following regulation changes in Germany, which dampened the margin for the first nine months of 2021 to 16.9%, still well ahead of the first nine months of 2020 margin of 16.0%.

The proposed disposal of B2C is expected to complete before the end of November and assuming a successful completion this will leave AG with a B2B focus and a strong pro forma net cash position. This will enable further investments in technology and content, and increase investment in all focus markets, notably in the United States and Brazil.

Management expects a phased regulation of the various parts of the Brazilian gaming market from here and has therefore positioned AG accordingly, by strengthening its local content with exclusive deals and adjusting the sport retail solution to suit the local market. AG is already partnering with four companies that are specifically targeting the Brazilian market.

Group performance

During Q321, AG’s revenue including VAT increased by 46% y-o-y to €58.6m, revenue excluding VAT rose 50% to €58.5m, EBITDA (AG’s definition) increased 38% to €9.1m (a 15.5% margin), PBT (excluding associates) increased c 79% to €7.0m and adjusted diluted EPS rose 50% to €0.13. The higher year-on-year revenue growth during Q321 led to an acceleration in the year-to-date revenue growth of c 38% versus 34% at the interim stage.

Exhibit 1: Summary income statement

€m

H120

Q320

9M20

Q420

FY20

Q121

Q221

H121

Q321

9M21

Revenue (inc VAT)

77.4

40.1

117.5

44.4

161.9

48.1

55.8

103.9

58.6

162.4

Growth y-o-y

17.4%

20.7%

18.5%

37.6%

23.2%

42.6%

27.7%

34.2%

46.0%

38.2%

Organic y-o-y

6.6%

8.8%

0.0%

30.8%

15.0%

35.6%

21.6%

27.7%

39.0%

31.5%

Two-year average organic

11.8%

21.4%

16.7%

23.0%

14.7%

Revenue (excl VAT)

74.8

39.0

113.8

43.1

156.8

46.5

54.3

100.9

58.5

159.4

Growth y-o-y

16.4%

21.2%

18.0%

38.4%

23.0%

42.8%

28.8%

34.9%

50.0%

40.1%

Gaming duties

(1.9)

(1.2)

(3.1)

(1.3)

(4.3)

(1.6)

(2.4)

(4.0)

(7.1)

(11.1)

% of revenue inc VAT

2.4%

2.9%

2.6%

2.8%

2.7%

3.3%

4.4%

3.9%

12.1%

6.8%

Distribution expenses

(52.4)

(27.4)

(79.7)

(28.7)

(108.4)

(31.4)

(36.2)

(67.6)

(37.0)

(104.6)

% of revenue inc VAT

67.6%

68.3%

67.8%

64.6%

67.0%

65.3%

64.9%

65.1%

63.1%

64.4%

Administration expenses

(8.3)

(3.9)

(12.1)

(4.9)

(17.0)

(5.0)

(5.8)

(10.8)

(5.4)

(16.2)

% of revenue inc VAT

10.7%

9.7%

10.3%

11.0%

10.5%

10.3%

10.4%

10.4%

9.2%

10.0%

EBITDA (AG definition)

12.3

6.6

18.8

8.3

27.1

8.6

9.9

18.4

9.1

27.5

Margin

15.8%

16.4%

16.0%

18.6%

16.7%

17.8%

17.7%

17.8%

15.5%

16.9%

Growth y-o-y

1.1%

25.7%

8.5%

189.9%

24.8%

64.2%

40.1%

50.3%

38.0%

46.0%

EBITDA (Edison definition)

12.4

6.7

19.2

8.5

27.6

8.8

10.1

18.9

9.2

28.1

Margin

16.6%

17.3%

16.9%

19.6%

17.6%

18.9%

18.6%

18.7%

15.7%

17.6%

Growth y-o-y

2.0%

28.3%

9.9%

192.9%

26.6%

68.3%

39.7%

51.7%

0.0%

0.0%

Operating income

9.6

4.9

14.5

6.3

20.8

6.5

9.9

14.3

6.8

21.1

Margin

12.4%

12.3%

12.3%

14.2%

12.9%

13.6%

17.7%

13.8%

11.7%

13.0%

Growth y-o-y

(7.3)%

15.5%

(0.6)%

14.2%

17.3%

66.3%

74.6%

49.3%

38.7%

45.7%

Net finance costs

(2.0)

(1.0)

(3.0)

(1.4)

(4.4)

0.1

(0.3)

(0.1)

0.1

0.0

PBT (excl associates)

7.6

3.9

11.5

4.9

16.4

6.7

9.6

14.2

7.0

21.2

Growth y-o-y

(21.7)%

(15.1)%

(19.6)%

98.2%

(3.0)%

137.2%

100.8%

86.6%

79.2%

84.1%

Tax

(0.6)

(0.1)

(0.7)

(0.7)

(1.4)

(0.6)

(0.6)

(1.2)

(0.6)

(1.8)

Effective rate

7.6%

2.4%

5.9%

14.6%

8.5%

8.5%

6.6%

8.5%

8.5%

8.5%

PAT

7.0

3.8

10.8

4.2

15.0

6.1

9.0

13.0

6.4

19.4

Associates

(0.5)

(0.3)

(0.8)

(1.1)

(1.9)

(0.1)

(0.5)

(0.6)

(0.4)

(1.0)

Net income

6.5

3.5

10.1

3.1

13.1

6.0

8.5

12.4

6.0

18.3

Normalised EPS (€)

0.14

0.09

0.22

0.09

0.32

0.13

0.18

0.27

0.13

0.40

Growth y-o-y

(18)%

(16)%

(18)%

0%

0%

161%

87%

89%

50%

80%

Source: Aspire Global

Please see our initiation note for commentary on AG’s disclosure of divisional/group revenue and minor differences in its definition of EBITDA versus ours. Management’s commentary on revenue and profitability, specifically EBITDA margin, is typically with reference to revenue including VAT, therefore we will be consistent with management’s narrative.

Q3 organic revenue growth of 39% accelerated from Q221’s c 22%. The two-year average growth rate also accelerated to c 23% from c 21% in Q2, highlighting the impressive momentum across the group.

We look at the divisional drivers to AG’s performance below. However, from a cost perspective, the total group continued to demonstrate good leverage of distribution and administration expenses, due to a combination of post-acquisition synergies and the natural leverage of the strong revenue growth. As already highlighted, the increase in gaming duties is due to the regulatory changes in Germany.

The effective tax rate of 8.5% was consistent with FY20 and our expectations.

Divisional performance

As previously highlighted, the lower group EBITDA margin of 15.5% in Q321 reflects a higher B2B EBITDA margin (20.5% versus 19.7% in Q320), with margin improvements at those businesses held in both periods (Core and Games) offset by a lower B2C margin (5.5% versus 8.8% in Q320), due to German taxes. For the nine months to September 2021, the group margin improved to 16.9% (first nine months of 2020: 16.0%), again due to the improvement in B2B’s total margin, a combination of higher margins for all business and the mix effects of a greater or new contribution from business with higher than average margins (Games and Sports), and the lower B2C margin.

Exhibit 2: Divisional financial performance

€m

H120

Q320

9M20

Q420

FY20

Q121

Q221

H121

Q321

9M21

Revenue* (inc VAT):

- Core

45.9

23.8

69.8

23.0

92.7

24.4

27.5

51.9

29.0

80.9

- Games

7.1

4.0

11.1

4.9

16.0

5.6

6.2

11.7

6.9

18.7

- Sports

2.2

2.2

2.4

2.7

5.0

2.8

7.8

- B2B total

53.1

27.8

80.8

30.1

110.9

32.3

36.3

68.7

38.7

107.4

- B2C

24.4

12.3

36.7

14.3

51.0

15.7

19.5

35.2

19.8

55.0

Total

77.4

40.1

117.5

44.4

161.9

48.1

55.8

103.9

58.6

162.4

Growth y-o-y:

- Core

17.8%

13.6%

16.3%

26.7%

14.3%

24.3%

4.5%

12.9%

21.8%

16.0%

- Games

N/M

N/M

N/M

61.7%

424.1%

79.0%

54.1%

65.0%

75.6%

68.8%

- Sports

N/M

N/M

N/M

N/M

N/M

N/M

N/M

N/M

N/M

N/M

- B2B total

36.1%

17.0%

19.7%

131.8%

36.7%

42.2%

19.8%

29.4%

39.6%

32.9%

- B2C

(12.4)%

0.7%

(8.4)%

29.8%

(0.1)%

43.5%

49.4%

46.7%

70.5%

54.8%

Total

17.4%

20.7%

18.5%

37.6%

23.2%

42.6%

27.7%

34.2%

46.0%

38.2%

EBITDA (AG definition)

- Core

7.5

4.4

11.9

4.3

16.1

4.4

5.0

9.3

5.5

14.8

- Games

1.8

1.1

2.8

1.3

4.2

1.8

2.2

4.1

2.0

6.1

- Sports

0.6

0.6

0.7

0.6

1.3

0.5

1.8

- B2B total

9.2

5.5

14.7

6.2

20.9

6.9

7.8

14.7

8.0

22.7

- B2C

3.0

1.1

4.1

2.0

6.2

1.6

2.1

3.7

1.1

4.8

Total

12.3

6.6

18.8

8.3

27.1

8.6

9.9

18.4

9.1

27.5

EBITDA margins*:

- Core

16.2%

18.6%

17.0%

18.6%

17.4%

18.0%

18.0%

18.0%

18.8%

18.3%

- Games

25.1%

26.6%

25.6%

26.8%

26.0%

32.9%

36.1%

34.6%

28.7%

32.4%

- Sports

29.0%

29.0%

30.2%

22.4%

26.1%

17.9%

23.1%

- B2B total

17.4%

19.7%

18.2%

20.7%

18.9%

21.4%

21.4%

21.4%

20.5%

21.1%

- B2C

12.4%

8.8%

11.2%

14.3%

12.1%

10.3%

10.8%

10.6%

5.5%

8.8%

Total

15.8%

16.4%

16.0%

18.6%

16.7%

17.8%

17.7%

17.8%

15.5%

16.9%

Source: Aspire Global. Note: *Revenues and EBITDA margin as shown include VAT but exclude inter-segment revenues.

The main operational and financial highlights for the divisions in Q321 were:

Core: management’s message is consistent: the recently launched CRM system, Engage and other enhancements are being well received by customers, leading to increased spend per partner and per brand; we estimate year-on-year growth rates of over 40% and c 20%, respectively during Q321. In aggregate, the number of platform partners at the period end fell to 39 from 41 at Q221, as AG focuses on higher-spending clients with greater growth potential, as evidenced by three new brand launches and signing two new platform deals covering the entire proprietary offering, which should stimulate future revenue growth. There was a sequential quarter-on-quarter improvement in Core’s revenue growth, reflecting different growth rates in the comparative period. Therefore, we highlight the relatively consistent two-year average revenue growth rates of c 18% Q3 versus Q2’s c 19% that indicate good momentum, which is helping improve profitability.

Games: revenue momentum improved, with a growth rate of c 13% in Q321 versus 10% in Q221 and its revenue of 6.9m was c 76% higher than the comparative in Q320 of 4.0m. Since being acquired in Q420, the business has benefited from consistent growth in the number of operators and revenue per operator, and investment in the games studio, which is driving growth in the number of proprietary games and should boost future profitability. During Q321, eight new operator deals were signed and geographic expansion increased with AG’s first entry into Brazil and expansion in Colombia. In addition, it gained a full iGaming Supplier License in West Virginia to complement the licence in New Jersey. The EBITDA margin of 28.7% in Q321 remained well above Q320’s margin of 26.6%, despite the higher investment in the studio, a greater revenue share from third-party (lower-margin) games, and higher taxes in Germany following regulatory changes.

Sports: Q321 represented the third consecutive period of sequential, quarter-on-quarter revenue growth since Sports was acquired at the start of Q420. The most significant event during the period was the first client going live with the sportsbook on the Core platform, with all larger brands expected to migrate by the end of 2021. The sequential decline in the EBITDA margin to 17.9% from 22.4% reflects a more favourable betting outcome for customers, which is consistent with the messages from other operators, bringing the nine-month margin to 23.1%.

B2C: the B2C division continued to produce high year-on-year revenue growth of c 71% due to widespread strength across the brands. The increased gaming taxes in Germany and higher marketing expenses led to a reduction in the EBITDA margin from 8.8% in Q320 to 5.5% in Q321.

Cash flow and balance sheet

Following the move to a net cash position (excluding leases and client cash) in Q221 of €2.3m, the free cash flow, post interest, of €4.8m generated during Q321 and minimal financing outflows of €0.4m increased the period end net cash position to €7.5m (excluding lease liabilities and client cash). Lease liabilities at the period end were €1.6m.

Operating cash flow of €8.0m was consistent with the prior quarter as a working capital outflow was partially offset by the expected corporation tax refund.

On a gross basis, the company’s cash position of €23.8m increased (H121: €19.4m) while the debt position was relatively unchanged at €10.6m (H121: €10.4m).

After the period end, AG announced the proposed sale of B2C with estimated gross proceeds of €65m, including cash of €50m, promissory notes of €10m and €5m equity investment in the acquiror. Based on the cash component this would give a pro forma net cash position of €57.5m.

Management has ambitions to add content and services in bingo and live dealer via M&A. The potential to pay a dividend is typically reviewed in Q4, therefore cash returns to shareholders will depend on near-term M&A opportunities.

Forecasts: Further upgrades

We upgrade our revenue forecasts for FY21 by c 1% to €218m and FY22 by 3% to €248.4m, which represent year-on-year growth of c 35% and c 14%, respectively. The main change to our forecasts is a more optimistic assumption for Core as a result of improving revenue generation per partner.

Further down the P&L, we are more optimistic about the EBITDA margin for both Core and Games, and take a more cautious stance on the outlook for B2C’s profitability, all as a result of the nine-month performances. Our forecasts for FY21 and FY22 EBITDA increase by 2–3%.

While the previous FY21 guidance for revenue of €200m and EBITDA of €32m is no longer in place, our revised forecasts are also ahead of the old guidance by 9% and 17%, respectively.

Exhibit 3: Forecast changes

€m

FY20

FY21e new

FY22e new

FY21e old

FY22e old

Change FY21e

Change FY22e

Revenue (inc VAT)

- Core

92.7

110.7

126.7

107.9

120.0

3%

6%

- Games

16.0

25.4

30.3

25.4

30.3

0%

0%

- Sports

2.2

11.7

16.2

11.7

16.2

0%

0%

- B2B total

110.9

147.8

173.2

145.0

166.5

2%

4%

- B2C

51.0

70.2

75.2

69.9

74.9

0%

0%

Total

161.9

218.0

248.4

214.9

241.4

1%

3%

Revenue (excl VAT)

- Core

91.2

108.9

124.5

106.0

117.8

3%

6%

- Games

16.0

25.4

30.3

25.4

30.3

0%

0%

- Sports

2.2

11.7

16.2

11.7

16.2

0%

0%

- B2B total

109.4

146.0

171.0

143.1

164.3

2%

4%

- B2C

47.5

67.4

72.1

65.0

69.6

4%

4%

Total

156.8

213.4

243.2

208.1

233.9

3%

4%

EBITDA

- Core

16.1

19.9

22.8

18.8

20.9

6%

9%

- Games

4.2

7.6

9.1

7.1

8.5

7%

7%

- Sports

0.6

3.2

5.4

3.2

5.4

0%

0%

- B2B total

20.9

30.7

37.3

29.0

34.8

6%

7%

- B2C

6.2

6.3

6.8

7.4

7.9

(15)%

(15)%

Total

27.1

37.0

44.1

36.5

42.7

2%

3%

EBITDA margin

- Core

17.4%

18.0%

18.0%

17.4%

17.4%

- Games

26.0%

30.0%

30.0%

28.0%

28.0%

- Sports

29.0%

27.0%

33.4%

27.0%

33.4%

- B2B total

18.9%

20.8%

21.5%

20.0%

20.9%

- B2C

12.1%

9.0%

9.0%

10.6%

10.6%

Total

16.7%

17.0%

17.7%

17.0%

17.7%

Source: Edison Investment Research. Note: *Revenues and EBITDA margin as shown include VAT but exclude inter-segment revenues.

Valuation: DCF-based valuation increased to SEK116/share

Our upgrade to forecasts and improved financial position leads to an increase in our DCF-based share price valuation to SEK116/share from SEK110.

At the current share price, AG continues to trade at a significant discount to its peers, the quoted B2B gaming platform companies, which have a wide range of multiples. AG’s EV/EBIT for CY21 of 12.2x is a discount of 43% to the adjusted peer average (ex Bragg and Gan) of 21.5x.

Exhibit 4: Peer valuations

Company

Share price (local ccy)

Ccy

Market cap (€m)

Sales growth CY21 (%)

Sales growth CY22 (%)

EBIT margin CY21 (%)

EBIT margin CY22 (%)

EV/ EBITDA CY21 (x)

EV/ EBITDA CY22 (x)

EV/ EBIT CY21 (x)

EV/ EBIT CY22 (x)

P/E CY21 (x)

P/E CY22 (x)

Bragg Gaming Group Inc

11.4

C$

157

20.1

8.5

N/A

(1.6)

23.9

20.0

N/A

N/A

N/A

43.8

Evolution AB (publ)

1,351.6

SEK

29,291

92.1

33.4

61.7

63.6

39.1

28.8

43.6

31.6

48.0

35.4

Gaming Innovation Group Inc

18.4

NOK

180

24.5

12.1

11.5

15.9

10.1

8.1

24.1

15.5

124.9

18.7

Gan Ltd

14.6

US$

530

271.4

30.7

(10.7)

(1.2)

56.1

22.3

N/A

N/A

N/A

N/A

International Game Technology PLC

30.3

US$

5,363

29.7

3.0

19.7

20.0

8.5

8.2

16.7

15.9

16.4

22.6

Kambi Group PLC

230.4

SEK

721

33.4

11.5

33.8

32.0

8.9

N/A

12.5

11.8

16.7

15.7

Playtech PLC

726.0

GBp

2,590

10.8

17.7

13.2

13.9

11.1

9.7

20.4

16.5

40.6

29.5

Scientific Games Corp

78.8

US$

6,552

17.9

7.4

17.0

20.3

12.7

11.9

29.0

22.6

50.3

34.3

Average

68.6

16.5

20.9

23.5

17.9

12.0

24.4

19.0

49.5

26.0

Average ex Bragg and Gan

71.6

15.9

12.9

16.2

19.8

13.0

21.5

16.6

58.1

24.6

Aspire Global

84.9

SEK

387

36.1

13.9

13.6

14.2

10.2

8.6

12.2

10.1

14.5

11.7

Premium/ (discount) to average ex Bragg and Gan

(50)%

(12)%

5%

(12)%

(48)%

(34)%

(43)%

(39)%

(75)%

(52)%

Source: Refinitiv, Edison Investment Research. Note: Priced at 9 November 2021.

The imminent proposed sale of B2C (due to complete in November) should lead to better growth prospects and profitability for the group and a significant improvement in the net cash position. We attempt to show the underlying valuation for AG’s B2B businesses.

As part of the proposed disposal of the B2C division to Esports Technologies (ET), ET has agreed to use AG’s Core platform and services for the operation of those brands with an estimated gross revenue to AG of €70m over four years. However, management has yet to provide any guidance for the estimated impact of the proposed sale on AG’s profitability.

For FY22, if we substitute the B2C revenue and EBITDA above for the ‘new’ revenue from ET at an average existing Core EBITDA of 18%, we derive a ‘rough’ estimate of AG’s post disposal financials as follows:

Exhibit 5: Potential effect of sale of B2C

€m

FY22e revenue – existing

248.4

Less 'old' B2C revenue

(75.2)

Add 'new' Core revenue

17.5

New FY22e revenue

190.7

FY22e EBITDA – existing

44.1

Less 'old' B2C EBITDA

(6.8)

Add 'new' Core EBITDA

3.2

New FY22e EBITDA

40.5

FY22e revenue – existing

Less 'old' B2C revenue

Add 'new' Core revenue

New FY22e revenue

FY22e EBITDA – existing

Less 'old' B2C EBITDA

Add 'new' Core EBITDA

New FY22e EBITDA

€m

248.4

(75.2)

17.5

190.7

44.1

(6.8)

3.2

40.5

Source: Edison Investment Research

With expected cash proceeds of €50m as per the company’s announcement dated 1 October 2021, AG’s pro forma net cash position would be €57.5m, giving an EV of c €329m at a market cap of c €387m at €0.1/SEK. For CY22, the resulting EV/EBITDA multiple, using our rough EBITDA estimate of €40.5m, would be 8.1x, lower than the current multiple of 8.6x and a greater discount to the peer average of 13.0x.

Exhibit 6: Financial summary

€m

2016

2017

2018

2019

2020

2021e

2022e

Year end 31 December

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

Revenue

 

 

61.0

71.9

104.6

131.4

161.9

218.0

248.4

VAT

(0.8)

(1.1)

(2.1)

(3.9)

(5.1)

(4.6)

(5.2)

Net revenue

 

 

60.2

70.8

102.5

127.5

156.8

213.4

243.2

Operating costs

(48.7)

(56.2)

(81.1)

(105.7)

(129.2)

(175.9)

(198.5)

EBITDA (Edison)

 

 

11.5

14.6

21.4

21.8

27.6

37.6

44.6

EBITDA

 

 

11.4

14.3

21.2

21.7

27.1

37.0

44.1

Normalised operating profit

 

 

10.6

13.3

19.5

18.7

22.8

31.2

37.4

Amortisation of acquired intangibles

0.0

0.0

0.0

(0.9)

(1.5)

(1.6)

(1.5)

Share-based payments

(0.1)

(0.3)

(0.2)

(0.1)

(0.5)

(0.5)

(0.5)

Reported operating profit

10.6

13.0

19.3

17.7

20.8

29.0

35.4

Net Interest

1.7

(0.0)

0.2

(0.8)

(4.4)

0.4

(0.1)

Profit Before Tax (norm)

 

 

12.3

13.3

19.7

17.9

18.4

31.5

37.3

Profit Before Tax (reported)

 

 

12.3

13.0

19.5

16.9

16.4

29.4

35.2

Profit Before Tax (incl associates)

 

 

12.3

10.6

17.2

15.4

14.5

27.4

34.2

Reported tax

(0.7)

(0.8)

(1.0)

(15.0)

(1.4)

(2.5)

(3.0)

Profit After Tax (norm)

11.6

12.6

18.7

16.5

17.0

29.1

34.3

Profit After Tax (reported)

11.6

12.3

18.5

1.9

15.0

26.9

32.2

Associates

0.0

(2.5)

(2.3)

(1.5)

(1.9)

(2.0)

(1.0)

Discontinued operations

3.6

1.3

0.0

0.0

0.0

0.0

0.0

Net income (normalised)

11.6

10.1

16.4

15.0

15.1

27.1

33.3

Net income (reported)

15.1

11.1

16.2

0.4

13.1

24.9

31.2

Average number of shares outstanding (m)

42.0

43.0

44.5

46.0

46.4

46.5

46.5

EPS - normalised (c)

 

 

27.7

23.5

36.8

32.7

32.6

58.2

71.7

EPS - diluted normalised (€)

 

 

0.27

0.22

0.35

0.32

0.32

0.58

0.71

EPS - basic reported (€)

 

 

0.36

0.26

0.36

0.01

0.28

0.54

0.67

Dividend (€)

0.27

0.28

0.09

0.00

0.00

0.21

0.33

Revenue growth (%)

N/A

17.9

45.4

25.7

23.2

34.7

13.9

EBITDA Margin (%)

18.7

19.8

20.3

16.5

16.7

17.0

17.7

Normalised Operating Margin

17.4

18.6

18.7

14.2

14.1

14.3

15.1

BALANCE SHEET

Fixed Assets

 

 

18.5

17.3

21.9

47.2

89.1

79.8

84.9

Intangible Assets and goodwill

2.8

5.0

7.0

25.6

67.4

74.8

81.0

Tangible Assets and Right-of-use assets

1.1

1.3

1.2

4.3

3.8

3.6

3.5

Investments & other

14.6

11.0

13.7

17.3

17.9

1.4

0.4

Current Assets

 

 

24.5

34.3

76.2

54.1

55.2

80.5

93.4

Debtors

10.7

20.1

21.7

24.6

26.2

30.5

32.9

Cash & cash equivalents including client cash

12.3

13.4

53.7

29.0

28.7

31.7

60.2

Other and restricted cash

1.5

0.9

0.8

0.4

0.3

18.3

0.3

Current Liabilities

 

 

(15.4)

(25.5)

(32.2)

(37.7)

(77.1)

(75.3)

(76.8)

Creditors

(6.8)

(11.5)

(13.7)

(16.6)

(24.2)

(33.1)

(37.9)

Tax and social security

(5.6)

(10.5)

(11.3)

(12.9)

(12.3)

(12.3)

(12.3)

Short term borrowings

0.0

0.0

(0.5)

(0.5)

(27.9)

(10.0)

0.0

Other

(3.0)

(3.5)

(6.7)

(7.6)

(12.7)

(19.9)

(26.6)

Long Term Liabilities

 

 

(0.7)

(0.7)

(27.5)

(29.4)

(19.2)

(21.0)

(21.0)

Long term borrowings

0.0

0.0

(26.9)

(27.2)

0.0

0.0

0.0

Other long term liabilities

(0.7)

(0.7)

(0.7)

(2.2)

(19.2)

(21.0)

(21.0)

Net Assets

 

 

26.8

25.4

38.5

34.2

47.9

64.0

80.4

Minority interests

0.2

0.2

0.2

0.2

(0.3)

(0.3)

(0.3)

Shareholders' equity

 

 

27.0

25.6

38.7

34.4

47.6

63.7

80.1

CASH FLOW

Normalised operating profit

10.6

13.3

19.5

18.7

22.8

31.2

37.4

Depreciation and amortisation

0.8

1.2

1.9

4.0

6.3

6.4

7.2

Working capital

(0.2)

0.8

4.5

(2.4)

5.9

6.7

3.5

Exceptional & other

2.5

0.8

(0.6)

(1.3)

(4.1)

(0.7)

(1.5)

Tax

(0.8)

(0.1)

(0.9)

(14.5)

(1.3)

(2.5)

(3.0)

Operating cash flow

 

 

13.0

16.0

24.5

4.5

29.6

41.1

43.6

Capex

(2.4)

(3.6)

(3.9)

(6.3)

(8.7)

(11.7)

(13.3)

Acquisitions/disposals

0.0

0.0

0.0

(12.8)

(15.6)

(4.9)

0.0

Associates

(0.4)

(4.0)

(2.8)

(2.2)

(2.1)

0.0

0.0

Net interest

0.0

0.0

(0.8)

(2.0)

(2.0)

(3.5)

(0.1)

Equity financing

0.0

4.8

0.0

0.0

0.0

0.0

0.0

Debt financing

0.0

0.0

26.9

0.0

0.0

(17.9)

(10.0)

Dividends

(11.5)

(12.0)

(3.8)

(5.4)

0.0

0.0

(9.8)

Other

(0.1)

(0.1)

0.4

(0.5)

(1.5)

(0.0)

18.0

Net Cash Flow

(1.432)

1.152

40.308

(24.685)

(0.325)

3.014

28.460

Opening net debt/(cash) ex client money

 

(10.7)

(9.2)

(9.9)

(19.7)

4.1

5.2

(14.8)

FX

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Other non-cash movements

0.0

(0.5)

(30.5)

0.9

(0.7)

17.0

9.1

Closing net debt/(cash)

 

 

(9.2)

(9.9)

(19.7)

4.1

5.2

(14.8)

(52.4)

Source: Aspire Global, Edison Investment Research

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Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

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Copyright: Copyright 2021 Edison Investment Research Limited (Edison).

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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

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London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

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United States of America

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Level 4, Office 1205

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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Aspire Global and prepared and issued by Edison, in consideration of a fee payable by Aspire Global. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2021 Edison Investment Research Limited (Edison).

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United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

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Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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