Super group reports first quarter 2022 financial results
New york--(business wire)--super group (sghc) limited (nyse: sghc) (“sghc” or “super group”), the parent company of betway, a leading online sports betting and gaming business, and spin, the multi-brand online casino, today announced first quarter 2022 financial results for its operating subsidiary, sghc limited. super group completed a business combination on january 27, 2022, with sports entertainment acquisition corp. (“seac”) as a result of which all of the shareholders of sghc limited also exchanged their shares for shares of super group in a pre-closing reorganization. prior to january 27, 2022, sghc did not conduct any operations other than incurring costs to effect the reorganization and business combination. neal menashe, ceo of super group, commented: “during the first quarter of 2022, super group began operating as a u.s. publicly listed company and continued to expand in both existing and new markets in line with our growth strategy.” mr. menashe continued, “our team has become accustomed to navigating the business through changing and challenging environments, and we believe the strategies that we are executing on will enable us to continue doing so as we take super group from strength to strength.” alinda van wyk, cfo of super group commented, “the results for the first quarter of 2022 reflected revenue growth and strong cash generation but were challenged on a period over period comparative basis due to industry and economic headwinds and costs related to our business combination and listing as a public company in january. ms. van wyk stated, “despite tough period over period comparisons, super group experienced revenue growth and a period over period 39% increase in cash and cash equivalents.” financial highlights revenue increased 7% to €334.5 million for first quarter 2022 from €311.8 million in the same period from the prior year driven by growth in african and asia-pacific markets partially offset by adverse impacts from tightening regulation, and in some cases, ceasing in some european markets. revenue for the first quarter of 2021 was also impacted by continued shutdowns from the covid pandemic in many markets which resulted in increased gaming activity. loss after tax for the first quarter of 2022 was €163.2 million compared to a profit of €38.6 million in the same period of the prior year. loss for the first quarter of 2022 included €201.5 million of costs and adjustments related to the business combination and the listing on january 27, 2022, including €21.4 million of transaction costs incurred as well as €180.1 million of non-cash costs and adjustments as follows: €126.3 million for share listing expense; €29.4 million for a fair value adjustment of warrant liabilities; and €24.4 million for a fair value adjustment of earn out liabilities. €126.3 million for share listing expense; €29.4 million for a fair value adjustment of warrant liabilities; and €24.4 million for a fair value adjustment of earn out liabilities. the transaction fees and share listing expense are one-time costs. ebitda, a non-gaap measure, decreased to a loss of €138.2 million in the first quarter of 2022 compared to earnings of €64.1 million in the same period from the prior year. adjusted ebitda, which excludes transaction costs, share listing expense, changes in valuations of warrants and earn-out liabilities, gains on derivative contracts and bargain purchases, increased 14% to €61.5 million compared to €54.0 million in the same period from the prior year. monthly average customers for the quarter increased 10% to 2.6 million during the first quarter of 2022 from 2.4 million in the first quarter of 2021 despite closure and restrictions in certain european countries and the first quarter of 2021 benefiting from a resurgence of the covid pandemic. cash and cash equivalents was €272.7 million at march 31, 2022 and €293.8 million at december 31, 2021. the decrease was primarily the result of cash used to redeem shares in connection with closing the business combination, offset in part by cash released from seac’s trust account to super group upon the closing. cash and cash equivalents increased 40% to €272.7 million at march 31, 2022 from €196.2 million at march 31, 2021. business highlights during the first quarter of 2022, super group increased its regulated market presence through the launch of both a sports betting and casino offering in bulgaria. nine new partnerships were signed during the first quarter of 2022, including the milwaukee bucks, the stock car pro series brazil and the ghana women’s football league. as of march 31, 2022, super group had over 70 brand partnerships in over 20 jurisdictions. in ontario, registration has been awarded for the betway brand, and sghc anticipates imminent registration for the spin brands. currently, betway and spin continue to operate in ontario with the knowledge of the regulator. geographical information for the three months ended march 31 2022 2022 2022 betway spin total € '000s € '000s € '000s africa and middle east 63,786 1,337 65,123 asia and pacific 55,250 23,989 79,239 europe 30,192 2,525 32,717 north america 34,467 115,984 150,451 south/latin america 3,285 3,663 6,948 186,980 147,498 334,478 % % % africa and middle east 34% 1% 19% asia and pacific 30% 16% 24% europe 16% 2% 10% north america 18% 79% 45% south/latin america 2% 2% 2% 2021 2021 2021 betway spin total € '000s € '000s € '000s africa and middle east 40,624 1,591 42,215 asia and pacific 40,592 27,352 67,944 europe 37,771 8,697 46,468 north america 34,036 114,661 148,697 south/latin america 2,811 3,676 6,487 155,834 155,977 311,811 % % % africa and middle east 26% 1% 14% asia and pacific 26% 18% 22% europe 24% 6% 15% north america 22% 73% 47% south/latin america 2% 2% 2% disaggregation of revenue by product line for the three months ended march 31, 2022: betway spin total € '000s € '000s € '000s online casino 57,456 147,046 204,502 sports betting 109,037 452 109,489 brand licensing 19,890 ‐ 19,890 other 597 ‐ 597 total group revenue 186,980 147,498 334,478 for the three months ended march 31, 2021: betway spin total € '000s € '000s € '000s online casino 55,566 154,913 210,479 sports betting 82,905 1,064 83,969 brand licensing 17,363 ‐ 17,363 total group revenue 155,834 155,977 311,811 reorganization timeline over the last three years, the business conducted a restructuring by combining existing, stand-alone companies into the newly formed super group. the only acquisition affecting the periods presented in this press release is raging river, acquired on january 11, 2021. sghc limited was formed on july 6, 2020. the following transactions took place during 2019, 2020, 2021 and 2022 as part of the reorganization: pindus is the predecessor entity, and its results are reflected in the financial statements prior to july 31, 2019. july 26, 2019 - fengari was deemed to have been acquired. april 1, 2020 - pelion was deemed to have been acquired. may 4, 2020 - pelion acquired lanester. september 30, 2020 - yakira and gazelle were both acquired. january 11, 2021 - raging river was deemed to have been acquired. april 9, 2021 - webhost, partner media and buffalo were acquired. april 14, 2021 - digiproc consolidated was acquired. april 19, 2021 - raichu investments was acquired. september 2, 2021 - sghc purchased 100% of the outstanding shares of smart business solutions s.a. december 1, 2021 - sghc purchased 100% of the outstanding shares in haber investments, and red interactive. january 27, 2022 - business combination with seac. non-gaap financial information this press release includes non-gaap financial information not presented in accordance with the international financial reporting standards (“ifrs”). ebitda and adjusted ebitda are non-gaap company-specific performance measures that super group uses to supplement the company’s results presented in accordance with ifrs. ebitda is defined as profit before depreciation, amortization, financial income, financial expense and income tax expense/credit. adjusted ebitda is defined as ebitda less gain on derivative contracts and gain on bargain purchase plus transaction costs, share listing expense and fair value adjustments on warrant liabilities and earnout liabilities. super group believes that these non-gaap measures are useful in evaluating the company’s operating performance as they are similar to measures reported by the company’s public competitors and are regularly used by securities analysts, institutional investors and other interested parties in analyzing operating performance and prospects. management does not consider these non-gaap measures in isolation or as an alternative to financial measures determined in accordance with ifrs. the principal limitation of these non-gaap financial measures is that they exclude significant expenses that are required by ifrs to be recorded in super group’s financial statements. in order to compensate for these limitations, management presents non-gaap financial measures together with ifrs results. non-gaap measures should be considered in addition to results and guidance prepared in accordance with ifrs, but should not be considered a substitute for, or superior to, ifrs results. reconciliation tables of the most comparable ifrs financial measure to the non-gaap financial measures used in this press release are included below. super group urges investors to review the reconciliation and not to rely on any single financial measure to evaluate its business. in addition, other companies, including companies in our industry, may calculate similarly named non-gaap measures differently than we do, which limits their usefulness in comparing our financial results with theirs. reconciliation of profit to adjusted ebitda for the three months ended march 31: 2022 2021 € '000s € '000s profit (loss) for the period (163,222 ) 38,571 income tax expense 8,959 2,920 finance income (313 ) (338 ) finance expense 349 2,879 depreciation and amortization expense 15,990 20,022 ebitda (138,237 ) 64,054 transaction costs 21,405 ‐ gain on derivative contracts (1,712 ) ‐ share listing expense 126,252 ‐ fair value ‐ warrant liability 29,374 ‐ fair value ‐ earnout liability 24,385 ‐ gain on bargain purchase ‐ (10,047 ) adjusted ebitda 61,467 54,007 webcast details the company will host a webcast at 8:30 a.m. et today to discuss the first quarter 2022 financial results. for ease of year-over-year comparison and analysis the company may discuss pro-forma consolidated results, including adjusted ebitda, which pro-forma results are included in the 2022 earnings review presentation posted on investor relations section of sghc.com. participants may access the live webcast and supplemental earnings presentation on the events & presentations page of the super group investor relations website at: https://investors.sghc.com/events-and-presentations/default.aspx. about super group (sghc) limited super group (sghc) limited is the holding company for leading global online sports betting and gaming businesses: betway, a premier online sports betting brand, and spin, a multi-brand online casino offering. the group is licensed in multiple jurisdictions, with leading positions in key markets throughout europe, the americas and africa. the group’s sports betting and online gaming offerings are underpinned by its scale and leading technology, enabling fast and effective entry into new markets. its proprietary marketing and data analytics engine empowers it to responsibly provide a unique and personalized customer experience. for more information, visit www.sghc.com. forward-looking statements certain statements made in this press release are “forward looking statements” within the meaning of the “safe harbor” provisions of the united states private securities litigation reform act of 1995. these forward-looking statements include, but are not limited to, expectations and timing related to market entries and expansion, projections of market opportunity and growth, expected growth of super group’s customer base, expansion into new markets and receipt of regulatory approvals. these forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “pipeline,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. many factors could cause actual future events to differ materially from the forward-looking statements in this press release, including but not limited to: (i) the ability to implement business plans, forecasts and other expectations, and identify and realize additional opportunities; (ii) the ability to maintain the listing of super group’s securities on a national securities exchange; (iii) changes in the competitive and regulated industries in which super group operates; (iv) variations in operating performance across competitors; (v) changes in laws and regulations affecting super group’s business; (vi) super group’s inability to meet or exceed its financial projections; (vii) changes in general economic conditions, including as a result of the covid-19 pandemic; (viii) changes in domestic and foreign business, market, financial, political and legal conditions; (ix) future global, regional or local economic and market conditions affecting the sports betting and gaming industry; (x) changes in existing laws and regulations, or their interpretation or enforcement, or the regulatory climate with respect to the sports betting and gaming industry; (xi) the ability of super group’s customers to deposit funds in order to participate in super group’s gaming products; (xii) compliance with regulatory requirements in a particular regulated jurisdiction, or super group’s ability to successfully obtain a license or permit applied for in a particular regulated jurisdiction, or maintain, renew or expand existing licenses; (xiii) the technological solutions super group has in place to block customers in certain jurisdictions, including jurisdictions where super group’s business is illegal, or which are sanctioned by countries in which super group operates from accessing its offerings; (xiv) super group’s ability to restrict and manage betting limits at the individual customer level based on individual customer profiles and risk level to the enterprise; (xv) the ability by super group’s key executives, certain employees or other individuals related to the business, including significant shareholders, to obtain the necessary licenses or comply with individual regulatory obligations in certain jurisdictions; (xvi) protection or enforcement of super group’s intellectual property rights, the confidentiality of its trade secrets and confidential information, or the costs involved in protecting or enforcing super group’s intellectual property rights and confidential information; (xvii) compliance with applicable data protection and privacy laws in super group’s collection, storage and use, including sharing and international transfers, of personal data; (xviii) failures, errors, defects or disruptions in super group’s information technology and other systems and platforms; (xix) super group’s ability to develop new products, services, and solutions, bring them to market in a timely manner, and make enhancements to its platform; (xx) super group’s ability to maintain and grow its market share, including its ability to enter new markets and acquire and retain paying customers; (xxi) the success, including win or hold rates, of existing and future online betting and gaming products; (xxii) competition within the broader entertainment industry; (xxiii) super group’s reliance on strategic relationships with land based casinos, sports teams, event planners, local licensing partners and advertisers; (xxiv) events or media coverage relating to, or the popularity of, online betting and gaming industry; (xxv) trading, liability management and pricing risk related to super group’s participation in the sports betting and gaming industry; (xxvi) accessibility to the services of banks, credit card issuers and payment processing services providers due to the nature of super group’s business; (xxvii) the regulatory approvals related to super group’s acquisition of dgc; (xxviii) the integration of the dgc business; and (xxix) other risks and uncertainties indicated from time to time for super group including those under the heading “risk factors” in our annual report on form 20-f filed with the sec on april 20, 2022, and in super group’s other filings with the sec. the foregoing list of factors is not exhaustive. you should carefully consider the foregoing factors and the other risks and uncertainties described in other documents filed or that may be filed by super group from time to time with the sec. these filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. forward-looking statements speak only as of the date they are made. readers are cautioned not to put undue reliance on forward-looking statements, and super group assumes no obligation and does not intend to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise. super group does not give any assurance that it will achieve its expectations. sghc limited unaudited interim condensed consolidated statements of profit or loss and other comprehensive income for the three months ended march 31, 2022 and 2021 2022 2021 € '000s € '000s revenue 334,478 311,811 direct and marketing expenses (240,717 ) (214,449 ) other operating income 2,407 263 general and administration expenses (34,701 ) (43,618 ) depreciation and amortization expense (15,990 ) (20,022 ) transaction fees (21,405 ) ‐ profit from operations 24,072 33,985 finance income 313 338 finance expense (349 ) (2,879 ) gain on derivative contracts 1,712 ‐ share listing expense (126,252 ) ‐ change in fair value of warrant liability (29,374 ) ‐ change in fair value of earnout liability (24,385 ) ‐ gain on bargain purchase ‐ 10,047 (loss)/profit before taxation (154,263 ) 41,491 income tax expense (8,959 ) (2,920 ) (loss)/profit for the period attributable to owners of the parent (163,222 ) 38,571 other comprehensive income items that may be reclassified subsequently to profit or loss foreign currency translation 1,117 526 other comprehensive income for the period 1,117 526 total comprehensive (loss)/profit for the period attributable to owners of the parent (162,105 ) 39,097 weighted average shares outstanding, basic and diluted 488,324,769 460,395,838 (loss)/net profit per share, basic and diluted (0.33 ) 0.08 sghc limited unaudited interim condensed consolidated statements of financial position as at march 31, 2022 and december 31, 2021 2022 2021 assets € '000s € '000s non‐current assets intangible assets 165,904 172,954 goodwill 25,003 25,023 property, plant and equipment 13,707 12,498 right‐of‐use assets 13,887 14,541 deferred tax assets 29,422 24,108 regulatory deposits 8,980 8,594 loans receivable 7,500 25,516 financial assets 1,686 1,686 266,089 284,920 current assets trade and other receivables 167,154 169,252 income tax receivables 33,923 35,806 restricted cash 88,231 60,296 cash and cash equivalents 272,684 293,798 561,992 559,152 total assets 828,081 844,072 non‐current liabilities lease liabilities 10,938 10,896 deferred tax liability 9,634 9,248 interest‐bearing loans and borrowings 532 764 21,104 20,908 current liabilities earnout liability 274,340 ‐ warrant liability 76,489 ‐ lease liabilities 4,807 5,353 deferred consideration ‐ 13,200 shareholders’ repurchase payable 44,311 ‐ interest‐bearing loans and borrowings 3,294 3,008 trade and other payables 150,561 147,353 customer liabilities 52,883 51,959 provisions 47,920 47,715 income tax payables 47,708 40,524 702,313 309,112 total liabilities 723,417 330,020 equity issued capital 273,436 269,338 earnout reserve (249,955 ) ‐ foreign exchange reserve (977 ) (2,094 ) retained profit 82,160 246,808 total equity 104,664 514,052 total liabilities and sharholders' equity 828,081 844,072 sghc limited unaudited interim condensed consolidated statements of cash flows for the three months ended march 31, 2022 and 2021 2022 2021 € '000s € '000s cash flows from operating activities (loss)/profit for the period (163,222 ) 38,571 add back: income tax expense 8,959 2,920 loss on disposal of assets ‐ (7 ) fair value ‐ warrant liability 29,374 ‐ fair value ‐ earnout liability 24,385 ‐ share listing expense 126,252 ‐ depreciation of property, plant and equipment 1,323 587 waiver of loans ‐ 462 gain on bargain purchase ‐ (10,047 ) amortization of right‐of‐use assets 1,162 542 amortization of intangible assets 13,505 18,893 increase in provisions 387 255 finance income (313 ) (338 ) finance expense 242 2,770 unrealized foreign currency (loss)/gain (1,688 ) 2,483 changes in working capital: decrease in trade and other receivables 2,289 19,161 decrease in trade and other payables (20,128 ) (17,083 ) increase in customer liabilities 924 6,302 change in restricted cash (731 ) (1,169 ) cash from operating activities 22,720 64,302 dividends tax paid (5,461 ) (154 ) corporation tax rebates received 1,846 2,387 corporation tax paid (1,422 ) (3,292 ) net cash flows from operating activities 17,683 63,243 cash flows from investing activities cash received in interest 237 200 acquisition of intangible assets (6,252 ) (3,628 ) acquisition of property, plant and equipment (2,533 ) (524 ) acquisition of businesses, net of cash acquired - 10,301 restricted cash guarantee (27,204 ) ‐ receipts from loans receivable 17,541 1,041 issuance of loans receivable (6 ) (25 ) cash used in regulatory deposits (386 ) (463 ) net cash flows from investing activities (18,603 ) 6,902 cash flows used in financing activities shares repurchased (179,985 ) (10,733 ) capitalized transaction fees (1,488 ) - proceeds from shares issued 172,119 - cash paid for deferred consideration (13,200 ) ‐ repayment of interest‐bearing loans and borrowings (349 ) (1,932 ) repayment of lease liabilities ‐ interest (261 ) (352 ) repayment of lease liabilities ‐ principal (1,186 ) (1,027 ) net cash flows used in financing activities (24,350 ) (14,044 ) (decrease)/increase in cash and cash equivalents (25,270 ) 56,101 cash and cash equivalents at beginning of the period 293,798 138,540 effects of exchange rate fluctuations on cash held 4,156 1,553 cash and cash equivalents at end of the period 272,684 196,194 .
