SMG Technology Acceleration SE
Société européenne
CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE FINANCIAL PERIOD
FROM 7 AUGUST 2023 (DATE OF REGISTRATION)
TO 31 DECEMBER
2023
Registered office: 9, rue de Bitbourg
L - 1273 Luxembourg
R.C.S. Luxembourg: B279346
SMG Technology Acceleration SE
Consolidated financial statements for the period ended
31 December 2023
Index to the consolidated financial statements
Page(s)
Consolidated management report
1 - 5
Corporate governance statement
6
Independent auditor’s report
7 - 11
Consolidated statement of comprehensive income
12
Consolidated statement of financial position
13
Consolidated statement of changes in equity
14
Consolidated statement of cash flows
15
Notes to the consolidated financial statements
16 - 36
SMG Technology Acceleration SE
Consolidated Management Report
for the period ended 31 December 2023
The Management Board of SMG Technology Acceleration SE (hereafter the “Company”) submit its
management report with the consolidated financial statements of the Company and its subsidiaries (the
“Group”) for the period ended 31 December 2023.
1. Overview
The Company is a special purpose acquisition company (otherwise known as a blank cheque company)
incorporated in Luxembourg on 27 July 2023 and registered with the Luxembourg Trade and Companies
Register on 7 August 2023. The Company’s corporate purpose is the acquisition of one operating
business with a principal business operations in a member state of the European Economic Area, the
United Kingdom or Switzerland that is based in the technology sector, which shall encompass primarily
the following verticals: additive manufacturing/3D printing, software as a service (SaaS), and digital
infrastructure/blockchain-based technologies, through a merger, capital stock exchange, share
purchase, asset acquisition, reorganization or similar transaction (the “Business Combination”). The
Company intends to complete the Business Combination using cash from the proceeds of the private
placement of the class A shares and class A warrants (see below).
2. Review and development of the Group’s business and financial position
The Company completed its private placement (the “Private Placement”) on 27 October 2023 through
the issuance of 22,000,000 redeemable class A shares with a par value of EUR 0.00548 (the “Public
Shares”) and 11,000,000 class A warrants (the “Class A Warrants”). The Public Shares are admitted
to trading on the Frankfurt Stock Exchange under the symbol “7GG” since 27 October 2023. The Class
A Warrants are not admitted to trading or listed on the Frankfurt Stock Exchange. One Public Share and
one-half (1/2) of a Public Warrant (each, a “Unit”), were sold at a price of EUR 1 per unit representing
a total placement volume of EUR 22 million.
The sponsor of the Company, SMG Technology Holding S.à r.l. (the “Sponsor”), a wholly owned
subsidiary of SMG Holding S.à r.l., has subscribed to 21,900,000 class B shares amounting to EUR
120,000. On 26 October 2023, the Sponsor also subscribed to an aggregate 20,000,000 class B
warrants (the “Sponsor Warrants”) at a total price of EUR 3,000,000. The class B shares and Sponsor
Warrants are not publicly traded securities. The Sponsor has agreed to a lock-up period running at least
until the Business Combination, subject to customary exceptions described in the Company’s
prospectus (the “Prospectus”).
On 20 December 2023, the Company signed a Business Combination Agreement with BigRep GmbH
(“BigRep”), a producer of advanced 3D printing solutions which serves a wide range of industries e. g.
industrial, business solution and consumer products, automotive, transportation, aerospace and
logistics as well as government and education.
Financial performance highlights
As a blank cheque company, the Group currently does not have an active business. The Group did not
generate revenue during the period ended 31 December 2023 and is not expected to generate any
operating revenues until after the completion of the Business Combination. The Group’s activities for
the period ended 31 December 2023 were those necessary to prepare for the Private Placement and
the subsequent listing on the Frankfurt Stock Exchange, and after the listing, to identify a target company
for a Business Combination and the potential acquisition, described below. The Group incurred
expenses as a result of being a public company (for legal, financial reporting, accounting and auditing
compliance).
The net loss of the Group for the period ended 31 December 2023 was EUR 7,465,802 due to the
operating expenses, net finance costs and net result from changes in the fair value of warrants.
- 1 -
Financial position highlights
The Group’s main asset accounts refer to the cash in escrow which are the proceeds from the Private
Placement. Whereas on the liability section, the significant balances refer to redeemable class A shares
and class A and B warrants.
3. Principal risk and uncertainties
The Group has analysed the risks and uncertainties to which its business is subject, and the
Management Board of the Company has considered their potential impact, their likelihood, controls that
the Group has in place and steps the Group can take to mitigate such risks. The Group’s principal risks
and uncertainties can be summarised as follows:
Risk
Likelihood
Mitigating factors
Benefits not achieved
&
the Low
On 20 December 2023, the Company
liquidation of the Company
entered into a Business Combination
There is no assurance that the
Agreement with BigRep and expects to
Company will identify suitable
successfully complete the Business
Business Combination opportunities
Combination in Q2 2024. The
by the Business Combination
shareholders are expected to approve
Deadline, which would ultimately
the Business Combination on the
lead to the liquidation of the
annual/ extraordinary general meeting.
Company.
Going concern risk in case of no
The
Company
is
undertaking
Low
business combination
continuous control and monitoring of
The Company has incurred fees and
expenses incurred in view of its
expenses associated with preparing
available funding and has engaged
and completing the Business
reputable service providers to assist
Combination. The Company may
with this monitoring. The Board believes
need to arrange third-party financing
that the Company has sufficient funds to
and there can be no assurance that
meet the fees and expenditures required
it will be able to obtain such
for operating its business prior to the
financing, which could compel the
closing of the Business Combination.
Company to restructure or abandon
the Business Combination.
Legal and regulatory
Low
The
Company
is
undertaking
The Company may be adversely
continuous control and monitoring
affected by changes to the
measure of the ongoing legal and
regulations, law, account and
regulatory landscape. Moreover, the
general
tax
environment
in
Management and the Supervisory board
Luxembourg and Germany as well
is supported by leading service
as the jurisdiction which the target
providers on the respective legal,
business is subject to.
accounting and tax domains.
Market conditions
Low
The Company believes that external
Adverse
events
and
market
market conditions have not negatively
conditions, such as the conflict
disrupted in a material manner its
between Russia and Ukraine and
operations and objectives. But it will
rising interest rates environment,
continue to monitor external market
might prevent the completion of the
conditions and continue to assess on a
Business Combination.
timely basis their impact on its
operations and objectives.
- 2 -
The other risks surrounding the Group are further disclosed in the Prospectus.
4. Financial risk management objectives and policies
As at 31 December 2023, the Group had EUR 27,916 in cash and cash equivalents. The proceeds from
the Private Placement is presented as cash in escrow in the consolidated financial statements, for an
amount of EUR 22,060,816. Subsequently on 28 May 2024, the Company received repayment of
amounts owed by related parties for total amount of EUR 2.900.000,00.
The Group has a negative equity of EUR 6,595,802 as at 31 December 2023. The Management Board
believes that the funds available to the Group outside of the secured deposit account are sufficient to
pay costs and expenses incurred by the Group prior to the completion of the Business Combination.
The Group has financial instruments which are presented as non-current liabilities which does not
impose any liquidity issues to the Group. The class B warrants amounting to EUR 6,272,000 (See Note
13.1 to the consolidated financial statements) have no redemption rights or liquidation distribution rights
and will expire worthless in case of liquidation. Furthermore, the class A warrants amounting to
EUR 1,384,900 are redeemable at the option of the Company (See Note 13.2 to the consolidated
financial statements). Further, these class A warrants have no liquidation distribution rights and will
expire worthless in case of liquidation.
5. Related party transactions
Please see Note 17 to the consolidated financial statements.
6. Research and development
The Group did not have any activities in the field of research and development during the period ended
31 December 2023.
7. Corporate governance
As a Luxembourg governed company traded on the Frankfurt Stock Exchange, the Group is not required
to adhere to the Luxembourg corporate governance regime applicable to companies that are traded in
Luxembourg or to the German corporate governance regime applicable to listed companies in Germany.
As these regimes have not been designed for special purpose acquisition companies like the Company
but for fully operational companies, the Company has opted to not apply the Luxembourg or German
corporate governance regime on a voluntary basis either.
The Company’s articles of association (the “Articles”) are available on the website of the Company
(https://www.smg-spac.com/). The function of the audit committee shall be assumed by the Supervisory
Board as long as the Company qualifies as small and medium sized enterprises (SMEs) in accordance
with article 2 (1), (f) of the directive 2003/71/EC of the European parliament and of the Council of 4
November 2003 on the prospectus to be published when securities are offered to the public or admitted
to trading and amending Directive 2001/34/EC. If the criteria are no longer fulfilled, the Supervisory
Board will appoint an audit committee and adopt its terms of reference in accordance with applicable
laws.
The Management Board is composed of four members: Dr. Stefan Petrikovics (Chief Executive Officer),
René Geppert (Chief Operating Officer), George Aase (Chief Financial Officer) and Werner Weynand
(Chief Administration Officer). The Company is managed by the Management Board which exercises its
functions under the supervision of the Supervisory Board. The Management Board is vested with the
broadest powers to act in the name of the Company and to take any action necessary or useful to fulfil
the Company's corporate purpose, with the exception of the powers reserved to the Supervisory Board
or to the general meeting of shareholders by any laws or regulations or by the Articles of Association.
- 3 -
The Supervisory Board shall be in charge of the permanent supervision and control of the Company’s
management by the Management Board. It may in no case interfere with such management. The
Supervisory Board has an unlimited right of information regarding all operations of the Company and
may inspect any of the Company’s documents. It may request the Management Board to provide any
information necessary for exercising its functions and may directly or indirectly proceed to all
verifications which it may deem useful in order to carry out its duties. A member of the Management
Board cannot be a member of the Supervisory Board at the same time.
The Supervisory Board regularly advises and supervises the Management Board in its management of
the Company. It is involved in all decisions of fundamental importance for the Company. The rules of
procedures of the Management Board may provide for consent requirements of the Supervisory Board.
The Supervisory Board consists of Ewald Weizenbauer (Chairman), Rhett Oudkerk Pool, Benoît de
Belder and Dr. Geza Toth-Feher Lord of Kennal.
8. Internal control and risk management systems in relation to the financial reporting
process
The Group has implemented a system of internal controls over financial reporting. It aims to identify,
evaluate and control any risks that could influence the proper preparation of the consolidated financial
statements. As a core component of the accounting and reporting process, the system of internal
controls over financial reporting comprises preventive, detective, monitoring, and corrective control
measures in accounting and operational functions, which are designed to ensure a methodical and
consistent process for preparing the Group’s financial statements.
The control and risk management mechanisms include identifying and defining processes, introducing
layers of approval, and applying the principle of segregation of duties including the use of external
service providers diligently selected and monitored. The Group’s internal controls over financial
reporting include policies and procedures that pertain to the maintenance of records that, in reasonable
detail, are designed to accurately and fairly reflect the transactions and dispositions of the assets of the
Group, provide reasonable assurance that transactions are recorded as necessary to permit preparation
of financial statements in accordance with the applicable accounting standards, provide reasonable
assurance that the receipts and expenditures are being made only in accordance with authorisations of
the Group’s management and directors, and provide reasonable assurance regarding prevention or
timely detection of the unauthorised acquisition, use or disposition of our assets that could have a
material effect on the Group’s financial statements. Because of its inherent limitations, the Group’s
internal controls over financial reporting may not prevent or detect errors or misstatements in the Group’s
financial statements. The system of internal controls is reviewed annually.
9. Transactions in own shares
The Company did not acquire its own shares as at 31 December 2023.
10. Branches
The Group does not have any branches as at 31 December 2023.
11. Outlook
The Management Board is confident that the Business Combination with BigRep will be completed in
Q2 2024.
- 4 -
12. Events after the reporting period
Please refer to Note 19 to the consolidated financial statements.
Luxembourg, 03 June 2024
Dr. Stefan Petrikovics
George Aase
Chief Executive Officer
Chief Financial Officer
Member of the Management Board
Member of the Management Board
- 5 -
SMG Technology Acceleration SE
Corporate Governance Statement by the Management Board
for the period ended 31 December 2023
The Management Board of the Company reaffirm their responsibility to ensure the maintenance of
proper accounting records disclosing the consolidated financial position of the Group with reasonable
accuracy at any time and ensuring that an appropriate system of internal controls is in place to ensure
that the Group’s business operations are carried out efficiently and transparently.
In accordance with Article 3 of the law of 11 January 2008 on transparency requirements in relation to
information about issuers whose securities are admitted to trading on a regulated market, the Group
declares that, to the best of our knowledge, the consolidated financial statements for the period ended
31 December 2023, prepared in accordance with International Financial Reporting Standards as
adopted by European Union, give a true and fair view of the assets, liabilities, financial position as of
that date and results for the period then ended.
In addition, management’s report includes a fair review of the development and performance of the
Group’s operations during the year and of business risks, where appropriate, faced by the Group as well
as other information required by the Article 68ter of the law of 19 December 2002 on the commercial
companies register and on the accounting records and financial statements of undertakings, as
amended.
Luxembourg, 03 June 2024
Dr. Stefan Petrikovics
George Aase
Chief Executive Officer
Chief Financial Officer
Member of the Management Board
Member of the Management Board
- 6 -
SMG Technology Acceleration SE
To the Shareholders
R.C.S. Luxembourg B279346
9, rue de Bitbourg
L - 1273 Luxembourg
REPORT OF THE REVISEUR D’ENTREPRISES AGREE
Report on the Audit of the Consolidated Financial Statements
Opinion
We have audited the consolidated financial statements of SMG Technology Acceleration SE and its
subsidiaries (the “Group”), which comprise the consolidated statement of financial position as at 31 December
2023, and the consolidated statement of comprehensive income, consolidated statement of changes in equity
and consolidated statement of cash flows for the year for the period from 7 August 2023 (date of registration) to
31 December 2023, and the notes to the consolidated financial statements, including material accounting policy
information and other explanatory information.
In our opinion, the accompanying consolidated financial statements give a true and fair view of the consolidated
financial position of the Group as at 31 December 2023, and of its consolidated financial performance and its
consolidated cash flows for the year then ended for the period from 7 August 2023 (date of registration) to 31
December 2023 in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the
European Union.
Basis for Opinion
We conducted our audit in accordance with the EU Regulation N° 537/2014, the Law of 23 July 2016 on the audit
profession (“Law of 23 July 2016”) and with International Standards on Auditing (“ISAs”) as adopted for
Luxembourg by the “Commission de Surveillance du Secteur Financier” (“CSSF”). Our responsibilities under the
EU regulation No 537/2014, the Law of 23 July 2016 and ISAs as adopted for Luxembourg by the CSSF are
further described in the « Responsibilities of “réviseur d’entreprises agréé” for the Audit of the Consolidated
Financial Statements » section of our report. We are also independent of the Group in accordance with the
International Code of Ethics for Professional Accountants, including International Independence Standards,
issued by the International Ethics Standards Board for Accountants (IESBA Code) as adopted for Luxembourg by
the CSSF together with the ethical requirements that are relevant to our audit of the consolidated financial
statements, and have fulfilled our other ethical responsibilities under those ethical requirements. We believe that
the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Emphasis of Matter
We draw your attention to notes 3, 16 and 19 to the consolidated financial statements.
As of 31 December 2023, the Group has open receivables from related entities amounting to EUR 2.919.998 net
of valued adjustments of EUR 657.525.
Total liabilities due and payable within one year amount to EUR 3.283.576.
Due to the delay in completion of the intended business combination (Agreement signed on 20 December 2023),
the Group experienced a liquidity shortage, among others arising from significant costs already incurred in
connection with the Business Combination, and its listing.
On 28 May 2024, the Group received repayment of amounts owed by the following affiliated undertakings:
-
EUR 1.092.474,89 from SMG Holding S.à r.l.;
-
EUR 1.034.000,00 from SMG Hospitality; and
-
EUR 773.525,11 from SMG SPAC Investment S.à r.l.
The target Company was made aware of the Company’s liquidity situation and as a result of this the terms of the
business combination agreement were amended accordingly.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of
the consolidated financial statements of the current period. These matters were addressed in the context of the
audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
Based on the result of our audit procedures no Key Audit Matter was identified for the audit of the consolidated
financial statements as of 31 December 2022.
Other information
The Management Board is responsible for the other information. The other information comprises the information
stated in the consolidated annual report including the management report and the Corporate Governance
Statement but does not include the consolidated financial statements and our report of the “réviseur d’entreprises
agréé” thereon.
Our opinion on the consolidated financial statements does not cover the other information and we do not express
any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with the
consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially
misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report this fact. We have nothing to report in this regard.
Responsibilities of the Management Board and Those Charged with Governance for the Consolidated
Financial Statements
The Management Board is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with IFRS Accounting Standards as adopted by the European Union, and for such
internal control as the Management Board 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, the Management Board 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 the Management Board either intends to liquidate the Group
or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group’s financial reporting process.
The Management Board is responsible for presenting and marking up the consolidated financial statements in
compliance with the requirements set out in the Delegated Regulation 2019/815 on European Single Electronic
Format as amended (“the ESEF Regulation”).
Responsibilities of the “réviseur d’entreprises agréé” for the Audit of the Consolidated Financial
Statements
The objectives of our audit 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 a report of
the “réviseur d’entreprises agréé” that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with the EU Regulation N° 537/2014, the Law of 23
July 2016 and with ISAs as adopted for Luxembourg by the CSSF 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
these consolidated financial statements.
As part of an audit in accordance with the EU Regulation N° 537/2014, the Law of 23 July 2016 and with ISAs as
adopted for Luxembourg by the CSSF, we exercise professional judgment and maintain professional skepticism
throughout the audit. We also:
-
Identify and assess the risks of material misstatement of the consolidated financial statements, whether
due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
-
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group’s internal control.
-
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the Management Board.
-
Conclude on the appropriateness of Management Board’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in our report of the “réviseur
d’entreprises agréé” to the related disclosures in the consolidated financial statements or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence
obtained up to the date of our report of the “réviseur d’entreprises agréé”. However, future events or
conditions may cause the Group to cease to continue as a going concern.
-
-
Evaluate the overall presentation, structure and content of the consolidated financial statements, including
the disclosures, and whether the consolidated financial statements represent the underlying transactions
and events in a manner that achieves fair presentation.
-
-
Assess whether the consolidated financial statements have been prepared, in all material respects, in
compliance with the requirements laid down in the ESEF Regulation.
-
Obtain sufficient appropriate audit evidence regarding the financial information of the entities and
business activities within the Group to express an opinion on the consolidated financial statements. We
are responsible for the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, 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 communicate to them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, “related safeguards” or “actions taken
to eliminate threats or safeguards applied”.
From the matters communicated with those charged with governance, we determine those matters that were of
most significance in the audit of the consolidated financial statements of the current period and are therefore the
key audit matters. We describe these matters in our report unless law or regulation precludes public disclosure
about the matter.
Report on Other Legal and Regulatory Requirements
We have been appointed as “réviseur d’entreprises agréé” by the Shareholders upon resolutions on 27 July 2023
and the duration of our uninterrupted engagement, including previous renewals and reappointments, is 1 year,
The consolidated management report is consistent with the consolidated financial statements and has been
prepared in accordance with applicable legal requirements.
The accompanying Corporate Governance Statement is presented on page 6 of the consolidated financial
statements. The information required by Article 68ter paragraph (1) letters c) and d) of the law of 19 December
2002 on the commercial and companies register and on the accounting records and annual accounts of
undertakings, as amended, is consistent with the consolidated financial statements and has been prepared in
accordance with applicable legal requirements.
We have checked the compliance of the consolidated financial statements of the Group as of 31 December 2023
with relevant statutory requirements set out in the ESEF Regulation that are applicable to the financial statements.
For the Group, it relates to:
•
Financial statements prepared in valid xHTML format;
•
The XBRL markup of the Consolidated Financial Statements using the core taxonomy and the common rules
on markups specified in the ESEF Regulation.
In our opinion, the consolidated financial statements of the Group as of 31 December 2023, have been prepared,
in all material respects, in compliance with the requirements laid down in the ESEF Regulation.
We confirm that the audit opinion is consistent with the additional report to the audit committee or equivalent.
We confirm that the prohibited non-audit services referred to in the EU Regulation No 537/2014 were not provided
and that we remained independent of the Group in conducting the audit.
Luxembourg, 03 June 2024
For Forvis Mazars, Cabinet de révision agréé
5, rue Guillaume J. Kroll
L-1882 LUXEMBOURG
Fabien Delante
Réviseur d’entreprises agréé
SMG Technology Acceleration SE
Consolidated statement of comprehensive
income for the period
from 7 August 2023 to 31 December 2023
Period from
7 August to
31 December 2023
Note
EUR
Revenue
-
Other operating expenses
5
(2,538,832 )
Operating loss
(2,538,832 )
Fair value loss on class B warrants
13.1
(3,272,000 )
Fair value loss on class A warrants
13.2
(1,373,900 )
Finance income
7
Finance costs
6
(384,137 )
Other income
Loss before income tax
(7,465,802 )
Income tax
8
-
Loss for the period
(7,465,802 )
Other comprehensive income
-
Total comprehensive loss for the period,
net of tax
(7,465,802 )
Loss per share attributable to equity
holders of the parent:
9
Net earnings per share
(0.34 )
Diluted earnings per share
(0.34 )
The accompanying notes form an integral part
of these consolidated financial statements.
- 12 -
SMG Technology Acceleration SE
Consolidated statement of financial
position
as at 31 December 2023
31 December 2023
Note
EUR
ASSETS
Current assets
Cash in escrow
10
Receivable from related parties
17
Other receivables
Cash and cash equivalents
11
Total current assets
Total assets
EQUITY AND LIABILITIES
Equity
12
Share capital
Share premium
Accumulated deficit
(7,465,802 )
Total equity
(6,595,802 )
Current liabilities
Class B warrants at fair value
13.1
Class A warrants at fair value
13.2
Redeemable class A shares
14
Trade and other payables
15
Payable to related party
17
Total current liabilities
Total liabilities
Total equity and liabilities
The accompanying notes form an integral part
of these consolidated financial statements.
- 13 -
SMG Technology Acceleration SE
Consolidated statement of changes in
equity for the period from
7 August 2023 to 31 December 2023
Subscribed
Share
Accumulated
Total
capital
premium
deficit
equity
Note
EUR
EUR
EUR
EUR
Issuance of 21,900,000 class
B shares
12
-
-
Capital contribution without
issuance of shares
-
-
Issuance of 22,000,000 class
A shares
14
-
Reclassification of class A
shares from equity to liability
(IAS 32)
14
(120,560 )
(21,868,440 )
-
(21,989,000 )
Results for the financial period
-
-
(7,465,802 )
(7,465,802 )
Balance, 31 December 2023
(7,465,802 )
(6,595,802 )
The accompanying notes form an integral part
of these consolidated financial statements.
- 14 -
SMG Technology Acceleration SE
Consolidated statement of cash flows
for the period from
7 August 2023 to 31 December 2023
Period from
7 August to
31 December 2023
Note
EUR
Cash flows from operating activities
Loss before income tax
(7,465,802 )
Adjustments for non-cash items:
Finance cost
6
Finance income
7
(101,816 )
Fair value gain on class B warrants
13.1
Fair value gain on class A warrants
13.2
Changes in working capital:
Increase in receivables from related
parties
17
(2,919,998 )
Increase in other receivables
(4,212 )
Increase in trade and other payables
15
Increase in payable to related party
17
Interest received
7
Net cash flows used in operating
activities
(2,031,900 )
Cash flows from financing activities
Proceeds from issuance of class B shares
12
Proceeds from capital contribution
without issuance of shares
12
Proceeds from issuance of class B
warrants
13.1
Proceeds from issuance of class A
warrants
13.2
Proceeds from issuance of class A shares,
net of Private
Placement costs
14
Net cash flows from financing activities
Net increase in cash and cash
equivalents
Of which:
Increase in restricted cash (Cash in
Escrow)
10
(22,060,816 )
Cash and cash equivalents, beginning
-
Cash and cash equivalents at end of period
The accompanying notes form an integral part
of these consolidated financial statements.
- 15 -
SMG Technology Acceleration SE
Notes to the consolidated financial
statements for the period ended
31 December 2023
1. GENERAL INFORMATION
The share capital of the Company on 7
August 2023 was set to EUR 120,000, represented by 12,000,000 class B shares without nominal value. The
share capital has been fully paid up.
The founder and sponsor of the Company
is SMG Technology Holding S.à r.l. (the “Sponsor”), a wholly-owned subsidiary of SMG Holding S.à r.l. (the
“Ultimate shareholder”). As at 31 December 2023, the Sponsor owns 100% of the class B shares in
the Company.
The registered office of the Company is
located at
9, rue de Bitbourg, L-1273 Luxembourg
.
The Company’s governing bodies are the
Management Board, the Supervisory Board and the shareholders’ meeting. The Company is managed by its
Management Board under the supervision and control of the Supervisory Board. This two-tier
governance structure was resolved by an extraordinary shareholders’ meeting of the Company
held on 25 September 2023. The Management
Board is composed of Dr. Stefan
Petrikovics (Chief Executive Officer), René Geppert (Chief Operating Officer), George Aase (Chief Financial
Officer) and Werner Weynand (Chief Administration Officer). The Supervisory Board members appointed
consists of Ewald Weizenbauer (Chairman), Rhett Oudkerk Pool, Benoît de Belder and Dr. Geza
Toth-Feher Lord of Kennal (the “Supervisory Board”).
The Company has been established
for the purpose of acquiring one operating business with principal
business operations in a member state of the
European Economic Area (the “EEA Member States”), the United Kingdom or Switzerland that is based in
the technology sector, which shall encompass primarily the following verticals: additive
manufacturing/3D printing, software as a service (SaaS), and
digital infrastructure/blockchain-based
technologies, through a merger, capital stock exchange, share
purchase, asset acquisition, reorganization, or
similar transaction and forming a business combination with such operating business (the
“Business Combination”).
The Company will not conduct operations
or generate operating revenue unless and until the Company consummates the Business Combination. The
Company will have 12 months from the date of the admission to trading (the “Business Combination
Deadline”) to consummate a Business Combination. Otherwise, the Company will be liquidated
and distribute substantially all of its assets to its shareholders (other than the Sponsor).
Pursuant to article 2 of the current
articles of association, the Company’s purpose is the creation, holding, development and realization of a portfolio,
consisting of interest and rights of any kind and of any other form of investment in entities in the Grand
Duchy of Luxembourg and in foreign entities, whether such entities exist or are to be created,
especially by way of subscription, by purchase, sale,
- 16 -
SMG Technology Acceleration
SE
Notes to the consolidated financial statements for the period ended
31 December 2023
or exchange of securities or rights of any kind whatsoever, such as equity instruments, debt instruments as well as the administration and control of such portfolio.
The Company may further grant any form of security for the performance of any obligations of the Company or of any entity in which it holds a direct or indirect interest or right of any kind or in which the Company has invested in any other manner or which forms part of the same group of entities as the Company and lend funds or otherwise assist any entity in which it holds a direct or indirect interest or right of any kind or in which the Company has invested in any other manner or which forms part of the same group of companies as the Company.
The Company may borrow in any form and may issue any kind of notes, bonds and debentures and generally issue any debt, equity and/or hybrid securities in accordance with
Luxembourg
law.
The Company may carry out any commercial, industrial, financial, real estate or intellectual property activities which it may deem useful in accomplishment of these purposes.
Unlike other forms of companies, a Société Européenne only exists from the date of publication of its statutes with the RCS. Accordingly, the interim consolidated financial statements of SMG Technology Acceleration SE and its subsidiaries (collectively the “Group”) were prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union for the period from 7 August 2023 (date of registration of the Company with the RCS) to 31 December 2023 and were authorized for issue in accordance with a resolution of the Management Board on 30 April 2024. The consolidated financial statements are published in accordance with the European Single Electronic Format regulation on the Company’s website (https://www.smg-spac.com/).
2. SIGNIFICANT ACCOUNTING POLICIES
2.1. Basis of preparation
The Company’s financial year starts on 1 January and ends on 31 December of each year, with the exception of the first financial year which started on 7 August 2023 (date of registration with the RCS) and ended on 31 December 2023.
The consolidated financial statements have been prepared on a going concern basis (See Note 3) and in accordance with International Financial Report Standards (IFRS) published by the International Accounting Standards Board (IASB) as adopted by the European Union. They are also prepared in Euros (EUR) which is the Group’s presentation and functional currency and have been prepared under the historical cost convention, except for financial instruments that are measured at fair value.
2.2. Basis of consolidation
The consolidated financial statements comprise the financial statements of the Company and its subsidiaries (together referred as the “Group”) as at 31 December 2023.
Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if, and only if, the Group has:
•
Power over the investee (i.e., existing rights that give it the current ability to direct the relevant activities of the investee);
•
Exposure, or rights, to variable returns from its involvement with the investee; and
- 17 -
•
The ability to use its power over the investee to affect itsreturns.
Generally, there is the presumption that a majority of voting rights results in control. To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:
•
The contractual arrangements with the other vote holders of theinvestee;
•
Rights arising from other contractualarrangements; and
•
The Group’s voting rights and potential voting rights.
Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income are attributed to the equity holders of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with the Group’s accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.
2.3. Summary of significant accounting policies
International accounting standards include IFRS, IAS (International Accounting Standards) and their interpretations (Standing Interpretations Committee) and IFRICs (International Financial Reporting Interpretations Committee).
The repository adopted by the European Commission is available on the following internet site: https://finance.ec.europa.eu/capital-markets-union-and-financial-markets/company-reporting-and- auditing/company-reporting/financial-reporting_en#ifrs
a) New standards, amendments and interpretations that were issued but not yet applicable in
as at 31 December 2023 and that are most relevant to the Group
▪
Amendments to IAS 1 - not yet endorsed by the EU: Classification of Liabilities as Current or Non-current. In January 2020, the IASB issued amendments to paragraphs 69 to 76 of IAS 1 to specify the requirements for classifying liabilities as current or non-current. The amendments are effective for annual reporting periods beginning on or after 1 January 2024 and must be applied retrospectively.
▪
Amendments to IAS 1 - not yet endorsed by the EU: Non-current Liabilities with Covenants. In October 2022, the IASB issued Non-current Liabilities with Covenants, (Amendments to IAS 1), to clarify how conditions with which an entity must comply within twelve months after the reporting period affect the classification of a liability. The amendments are effective for reporting periods beginning on or after 1 January 2024.
Notes to the consolidated financial statements for the period ended
SMG Technology Acceleration SE
31 December 2023
- 18 -
▪
Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments - not yet endorsed by the EU: In May 2023, the IASB published 'Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 7)' to add disclosure requirements, and ‘signposts’ within existing disclosure requirements, that ask entities to provide qualitative and quantitative information about supplier finance arrangements. The amendments are effective for reporting periods beginning on or after 1 January 2024.
▪
Amendments to IAS 12 Income Taxes: International Tax Reform – Pillar Two model Rules: the amendments introduce a mandatory exception for the accounting for deferred taxes arising from the jurisdictional implementation of the Pillar Two model rules and disclosure requirements for affected entities to help users of the financial statements better understand an entity’s exposure to Pillar Two income taxes arising from that legislation, particularly before its effective date. The amendments are effective for reporting periods beginning on or after 1 January 2024.
The initial application of these standards, interpretations and amendments to existing standards is planned for the period of time from when its application becomes compulsory. Currently, the Management Board anticipates that the adoption of these Standards and Interpretations in future periods will have no material impact on the financial information of the Group.
b) New Standards Issued – effective from 1 January 2023
The Company applied for the first time certain standards, amendments and interpretations which are effective for annual periods beginning on or after 1 January 2022 (unless otherwise stated). The Company has not early adopted any other standard, amendment or interpretation that has been issued but not yet effective.
▪
Amendments to IAS 1 and IFRS Practice Statement 2: Disclosure of Accounting policies. In February 2021, the IASB issued amendments that are intended to help preparers in deciding which accounting policies to disclose in their financial statements. The amendments are effective for annual periods beginning on or after 1 January 2023.
▪
Amendments to IAS 8: Definition of Accounting Estimate. In February 2021, the IASB issued amendments to help entities to distinguish between accounting policies and accounting estimates. The amendments are effective for annual periods beginning on or after 1 January 2023.
▪
Amendments to IAS 12 : Deferred Tax related to Assets and Liabilities arising from a Single Transaction. In May 2021, the IASB amended the standard to reduce diversity in the way that entities account for deferred tax on transactions and events, such as leases and decommissioning obligations, that lead to the initial recognition of both an asset and a liability. The amendments apply for annual reporting periods beginning on or after 1 January 2023 and may be applied early.
The Group adopted these Standards and Interpretations in the current financial year and considered to have no material impact on the financial information of the Group.
c) Business combinations and goodwill
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, which is measured at acquisition date fair value, and the amount of any non-controlling interests in the acquiree. For each business
Notes to the consolidated financial statements for the period ended
SMG Technology Acceleration SE
31 December 2023
- 19 -
combination, the Group elects whether to measure the non-controlling interests in the acquiree at fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition-related costs are expensed as incurred and included in administrative expenses.
The Group determines that it has acquired a business when the acquired set of activities and assets include an input and a substantive process that together significantly contribute to the ability to create outputs. The acquiredprocess is considered substantiveif it is critical totheabilityto continue producing outputs, and the inputs acquired include an organised workforce with the necessary skills, knowledge, or experience to perform that process or it significantly contributes to the ability to continue producing outputs and is considered unique or scarce or cannot be replaced without significant cost, effort, or delay in the ability to continue producing outputs.
When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.
Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity. Contingent consideration classified as an asset or liabilitythat is a financial instrument and within the scope of IFRS 9 Financial Instruments, is measured at fair value with the changes in fair value recognised in the consolidated statement of comprehensive income in accordance with IFRS 9. Other contingent consideration that is not within the scope of IFRS 9 is measured at fair value at each reporting date with changes in fair value recognised in profit or loss.
When the amount of aggregate consideration transferred is in excess of the fair value of the net assets acquired a goodwill is recognized. Goodwill is initially measured at cost (being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interests and any previous interest held over the net identifiable assets acquired and liabilities assumed). If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the Group re-assesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to be recognised at the acquisition date. If the reassessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognised in profit or loss. After initial recognition, goodwill is measured at cost less any accumulated impairment losses. 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 that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.
d) Foreign currencies
These consolidated financial statements are presented in EUR, which is the Parent Company and subsidiaries’ functional currency and presentation currency.
Transactions denominated in currencies other than the EUR are recorded at the exchange rate at the transaction date.
e) Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. The Group recognises a financial asset or a financial
Notes to the consolidated financial statements for the period ended
SMG Technology Acceleration SE
31 December 2023
- 20 -
liability when it becomes a party to the contractual provisions of the instrument. Purchases or sales of financial assets that require delivery of assets within the time frame generally established by regulation or convention in the marketplace (regular way trades) are recognised on the trade date i.e. the date that the Group commits to purchase or sell the asset.
Financial assets: The Group classifies its financial assets as subsequently measured at amortised cost or measured at fair value through profit or loss on the basis of both:
•
The entity’s business model for managing the financial assets; and
•
The contractual cash flow characteristics of the financial asset.
The Group initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit and loss, transactioncosts.
Financial assets measured at amortised cost: This is the category most relevant to the Group. A debt instrument is measured at amortised cost if it is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Financial assets at amortised cost are subsequently measured using the effective interest rate (EIR) method and are subject to impairment. Gains and losses are recognised in profit and loss when the asset is derecognised, modified or impaired.
The Group includes in this category cash and cash equivalents, other receivables, receivable from sponsors and other related entities, loans receivable, and cash in escrow.
Financial liabilities: The financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss or financial liabilities at amortised cost.
The Group’s financial liabilities include trade and other payables, payable to sponsors and other related parties, redeemable class A shares, class A warrants at fair value and class B warrants at fair value.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transactioncosts.
Financial liabilities measured at amortised cost: This is the category most relevant to the Group. After initial recognition, trade and other payables, payable to sponsors and other related parties and redeemable class A shares are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the consolidated statement of comprehensive income.
Financial liabilities through profit or loss: Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by IFRS 9. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments.
Gains or losses on liabilities held for trading are recognised in the consolidated statement of comprehensive income.
Notes to the consolidated financial statements for the period ended
SMG Technology Acceleration SE
31 December 2023
- 21 -
Financial liabilities designated upon initial recognition at fair value through profit or loss are designated at the initial date of recognition, and only if the criteria in IFRS 9 are satisfied. The Group has not designated any financial liability as at fair value through profit or loss.
Derecognition: A financial asset is derecognised when the rights to receive cash flows from the asset have expired or the Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expired. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the consolidated statement of comprehensive income.
Impairment of financial assets: The Group has chosen to apply an approach similar to the simplified approach for expected credit losses (“ECL”) under IFRS 9 to its financial assets. Therefore, the Group recognises a loss allowance based on lifetime ECLs at each reporting date. The Group’s approach to ECLs reflects a probability-weighted outcome, the time value of money and 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
f) Cash and cash equivalents
Cash and cash equivalents in the consolidated statement of financial position comprise cash at bank and on hand and short-term highly liquid deposits with a maturity of three months or less, that are readily convertible to a known amount of cash and subject to an insignificant risk of changes in value. The carrying amounts of these approximate their fair value.
For the purpose of the consolidated statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Group’s cash management.
g) Fair value measurement
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. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
•
In the principal market for the asset or liability; or
•
In the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible to theGroup.
Notes to the consolidated financial statements for the period ended
SMG Technology Acceleration SE
31 December 2023
- 22 -
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the consolidated financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
•
Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities;
•
Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectlyobservable;
•
Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy, as explained above.
h) Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the Group expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the consolidated statement of comprehensive income net of any reimbursement.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
i) Taxes
Income tax recognized in the consolidated statement of comprehensive income includes current and deferred taxes.
Current tax
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the reporting date in the countries where the Group operates and generates taxable income.
Notes to the consolidated financial statements for the period ended
SMG Technology Acceleration SE
31 December 2023
- 23 -
Current income tax relating to items recognised directly in equity is recognised in equity and not in the consolidated statement of comprehensive income.
Deferred tax
Deferred tax is recognized on temporary differences between the carrying amount of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit.
Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized. Deferred tax assets are tested for impairment on the basis of a tax planning derived from management business plans.
Such deferred tax assets and liabilities are not recognized if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
j) Share-based payments
The Management Board is currently assessing whether certain class B shares and class B warrants issued to the Sponsor, Co-Sponsor and Supervisory Board Investors of the Company are to be considered as falling in the scope of IFRS 2. The Management Board will notably adopt its position based on market discussions and/or positions adopted by market players, supervisory authorities and/or standard setters.
In any case, the class B shares and class B warrants do not carry a specified service period, but would be forfeited or otherwise expire worthless if a business combination is not consummated. Therefore, the Sponsor, Co-Sponsor and Supervisory Board Investors only derive the value from the class B shares and class B warrants when they are converted into class A shares upon a successful business combination. Consequently, the grant date of these awards does not occur until the target is approved. As of 31 December 2023, irrespective of the conclusions of the ongoing assessment carried out by the Management Board, no amounts would have had to be accounted for provided that no such approval has occurred.
k) Equity-settled transactions
The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model. That cost is recognised in as part of other operating expenses in the consolidated statement of comprehensive income, together with a corresponding increase in equity, over the period in which the service and, where applicable, the performance conditions are fulfilled (the vesting period). The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group’s best estimate of the number of equity instruments that will ultimately vest. The expense or credit in the consolidated statement of comprehensive income for a period represents the movement in cumulative expense recognised as at the beginning and end of that period.
Service and non-market performance conditions are not taken into account when determining the grant date fair value of awards, but the likelihood of the conditions being met is assessed as part of the Group’s best estimate of the number of equity instruments that will ultimately vest. Market performance conditions are reflected within the grant date fair value. Any other conditions attached to an award, but without an associated service requirement, are considered to be non-vesting conditions. Non-vesting
Notes to the consolidated financial statements for the period ended
SMG Technology Acceleration SE
31 December 2023
- 24 -
conditions are reflected
in the fair value of an award and lead to an immediate expensing of an award unless there are also service and/or
performance conditions.
No expense is recognised for
awards that do not ultimately vest because non-market performance
and/or service conditions
have not been met. Where awards include a market or non-vesting
condition, the transactions are treated
as vested irrespective of whether the market or non-vesting condition is
satisfied, provided that all
other performance and/or service conditions are satisfied.
When the terms of an
equity-settled award are modified, the minimum expense recognised is the
grant date fair value of the
unmodified award, provided the original vesting terms of the award are
met. An additional expense, measured
as at the date of modification, is recognised for any modification that
increases the total fair
value of the share-based payment transaction, or is otherwise beneficial
to the recipient of the share-based
payment. Where an award is cancelled by the entity or by the
counterparty, any remaining
element of the fair value of the award is expensed immediately through
profit or loss.
The dilutive
effect of outstanding options is reflected as additional share
dilution in the computation of
diluted earnings per share.
3. SIGNIFICANT ACCOUNTING JUDGEMENTS,
ESTIMATES AND ASSUMPTIONS
The preparation of
these consolidated financial statements in conformity with IFRS
requires management to make judgements,
estimates and assumptions that affect the application of
accounting policies
and the reported amounts of assets, liabilities, income and
expenses.
Actual results and
outcomes may differ from management’s estimates and assumptions
due to risks and uncertainties, including
uncertainty in the current economic environment in light of the
ongoing military conflict
between Ukraine and Russia, or as a result of the current turmoil
in the Banking horizon due to the recent collapse of
several banks.
Estimates and
underlying assumptions are reviewed on an ongoing basis. Revisions
to accounting estimates are recognised in the
period in which the estimates are revised and in any future
periods affected.
As at 31 December
2023, the significant areas of estimates, uncertainty and critical
judgements in applying accounting policies that
have the most significant effect on the amounts recognised in
these consolidated
financial statements are:
•
Going concern:
Despite the EUR 6,595,802 negative equity of the Group as at
31 December 2023, the Management Board decided to
prepare these consolidated financial statements on a going
concern basis
for the following reasons:
On one hand, the
redeemable class A shares, amounting to EUR 20,623,769, that
are presented as current
liabilities (debt instruments) in accordance with IAS 32,
are true equity of
the Company
from a legal standpoint (see Note 14);
On the other
hand, the class B warrants amounting to EUR 6,272,000 (See
Note 13.1), which
are currently presented as
current liabilities, will not be required to be paid in
cash. These class B warrants have no redemption
rights or liquidation distribution rights and will expire
worthless in case of liquidation.
Furthermore, the
class A warrants amounting to EUR 1,384,900 (See Note 13.2)
are redeemable at the option of
the Company, hence, this does not pose any liquidity issues
to the
Notes to the consolidated financial statements for the period
ended
SMG Technology Acceleration SE
31 December 2023
- 25 -
Group. Further, these class A warrants have no liquidation distribution rights and will expire worthless in case of liquidation.
In addition, the Management Board underlying assumption to prepare the consolidated financial
statements is based on the anticipated successful completion of the Business Combination. On
28 May 2024, the Company also received repayment of intercompany receivables in total amount
of EUR 2,900,000 which provides sufficient liquidity to the Group to continue its operations.
•
Deferred tax asset: A deferred tax asset in respect of the tax losses incurred has not been recognised as the Management Board estimates uncertainty in terms of future taxable profit against which the Group can utilise the benefits therefrom (See Note 8).
•
Classification of Redeemable class A shares: The Management Board assessed the classification of redeemable class A shares in accordance with IAS 32 under which the redeemable class A shares do not meet the criteria for equity treatment and must be recorded as liabilities (See Note 14). The class A shares feature certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, the Company classifies the Redeemable class A shares as financial liabilities at amortised cost in accordance with IFRS 9. The transaction costs directly attributable to issuance of the redeemable class A shares which are subscribed via private placement (“Private Placement”) are deducted against the initial fair value.
•
Classification and measurement of warrants: The Management Board assessed the classification of warrants in accordance with IAS 32 under which the warrants do not meet the criteria for equity treatment and must be recorded as derivatives. Accordingly, the Company classifies the class A warrants and class B warrants as liabilities at their fair value and adjusts them to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the consolidated statement of comprehensive income. The fair value of class A warrants is determined using a combination of Monte Carlo and Binomial Tree valuation model for periods when there are no observable trades, as of each relevant date. Likewise, the class B warrants which are not listed to the stock exchange are also independently valued using a combination of Monte Carlo and Binomial Tree valuation model to determine its fair value.
•
Class B shares and warrants as share-based payments: The Management Board is currently assessing whether certain class B shares and warrants issued to the Sponsor of the Company are to be considered as falling in the scope of IFRS 2. The Management Board will notably adopt its position based on market discussions and/or positions adopted by market players, supervisory authorities and/or standard setters.
•
In any case, the class B shares and class B warrants do not carry a specified service period, but would be forfeited or otherwise expire worthless if a business combination is not consummated. Therefore, the Sponsor only derives the value from the class B shares and class B warrants when they are converted into class A shares upon a successful business combination. Consequently, the grant date of these awards does not occur until the target is approved. As of 31 December 2023, irrespective of the conclusions of the ongoing assessment carried out by the Management Board, no amounts would have had to be accounted for provided that no such approval has occurred.
Notes to the consolidated financial statements for the period ended
SMG Technology Acceleration SE
31 December 2023
- 26 -
4. GROUP INFORMATION
Subsidiaries
These consolidated accounts
include all the activities of the Group as at 31 December 2023.
Entities included in the
scope of consolidation are listed below:
| % of equity interest | |||
| Consolidated | Principal | Country of | As at 31 December |
| Entities | Activities | incorporation | 2023 |
| SMG Technology AccelerationSE | Special purpose | Luxembourg | Parent company |
| acquisition company | |||
| SMG | Support services to | ||
| Technology Advisors GmbH & Co. | SMG Technology | Germany | 100% |
| KG, hereby referred to as “SMG | Acceleration SE | ||
| Advisors KG” | |||
| SMG Technology | General partner of | ||
| Advisors Verwaltungs-GmbH, | SMG Advisors KG | Germany | 100% |
| hereby referred to as “SMG | |||
| Advisors GmbH” |
Segment information
The Group is currently organised as one reportable segment. The Group has been deemed to form
one reportable segment as the Parent and its subsidiaries have been established together for the
purpose of acquiring one operating business i.e. the Business Combination (Note 1).
5. OTHER OPERATING EXPENSES
The other operating expenses
consist of fees for accounting, legal and other services not related to
the Private Placement.
| From 7 August 2023 | |
| to 31 December 2023 | |
| EUR | |
| Other professional fees | 691,184 |
| Impairment of receivable from related parties | 657,525 |
| Audit fees | 404,264 |
| Directors fees | 385,473 |
| Legal fees | 234,390 |
| Accounting and corporate fees | 146,487 |
| Travel expenses | 12,679 |
| Bank charges | 791 |
| Other expenses | 6,039 |
| Total | 2,538,832 |
Notes to the consolidated financial
statements for the period ended
SMG Technology Acceleration SE
31 December 2023
- 27 -
The total audit fees paid breaks down as follows:
| From 7 August 2023 | |
| to 31 December 2023 | |
| EUR | |
| Statutory audit of the annual accounts | 128,320 |
| Audit-related fees (*) | 431,094 |
| Total | 559,414 |
(*) of which EUR 155,150 incurred in relation to the IPO and capitalized as part of redeemable class A shares.
The Company did not have any employees during the
period ended 31 December 2023.
6. FINANCE COSTS
For the period ended 31 December 2023, finance
costs in the amount of EUR 384,137 pertain to the
amortization of class A shares (see Note 14).
7. FINANCE INCOME
For the period ended 31 December 2023, finance income in the amount of EUR 101,816 pertains to
interest income earned on cash in escrow.
8. INCOME TAXES
The reconciliation between actual and
theoretical tax expense is as follows:
| From 7 August 2023 | |
| to 31 December 2023 | |
| Loss for the period beforetax | (7,465,802) |
| Theoretical tax charges, applying the tax rate of 22.80% | 1,702,203 |
| Tax effect of adjustments from local GAAP to IFRS1 | (742,458) |
| Non-deductible items | (87,888) |
| Tax effect of difference in tax rates | 26,455 |
| Unrecognized deferred tax assets | (898,312) |
| Income tax | - |
1
Income
taxes payable to / recoverable from the tax authorities are determined based
on the financial results of SMG Technology Acceleration SE and its subsidiaries as shown in
their stand-alone financial statements prepared in local GAAP. Hence
adjustments from local GAAP
to IFRS may lead to higher / lower taxable result in the consolidated
financial statements as compared to that determined based on the
stand-alone financial statements.
Notes to the consolidated financial statements for the period
ended
SMG Technology Acceleration SE
31 December 2023
- 28 -
The tax rate used in the reconciliation above is
the Luxembourgish tax rate (22.80%) as the Company is domiciled in Luxembourg. Deferred tax assets
have not been recognised in respect of the loss incurred for the period ended 31 December 2023,
because it is not probable that future taxable profit
will be available against
which the Group can utilise the benefits therefrom. Unused tax losses of the Company can be used within a period of 17 years as
per Luxembourg tax law.
| From 7 August 2023 | |
| to 31 December 2023 | |
| Loss for the period | EUR |
| (7,465,802) | |
| Weighted average number of ordinary shares for EPS | 21,900,000 |
| Basic and Diluted EPS | EUR (0.34) |
| From 7 August 2023 | |
| to 31 December 2023 | |
| Weighted average number of potential ordinary shares which are | |
| antidilutive: | |
| Redeemable class A shares | 9,750,000 |
| Warrants (class A and B) | 13,801,370 |
| Total | 23,551,370 |
There have been no other transactions involving
ordinary shares or potential ordinary shares between the reporting date and the date of
authorisation of these consolidated financial statements.
10. CASH IN ESCROW
Cash in escrow of
EUR 22,060,816 consists of the gross proceeds from the Private Placement (See Notes 13.2 and 14). The cash held in escrow
from the gross proceeds on the Private Placement is set aside to pay the following, in case of
Business Combination: i) payment of class A shares for
which the redemption right
was exercised, net of any interest, fees and taxes, ii) fixed deferred
listing commission (See Note 18),
and iii) any remaining amount will be returned to the Company.
If the Company does not
consummate a Business Combination, the amounts standing on the escrow
will be returned to the
Company, and eventually to the holders of class A shares for the portion
of the proceeds on the
Private Placement, net of any interest, fees and
taxes.
Notes to the consolidated financial statements for the period
ended
SMG Technology Acceleration SE
31 December 2023
- 29 -
9. EARNINGS/(LOSS) PER SHARE
Basic earnings/(loss) per share (“EPS”) is calculated
by dividing the profit/(loss) for the year by the weighted average number of ordinary shares outstanding
during the year.
The fair
value of cash in escrow approximates its carrying value as
at 31 December 2023 (level 3).
As at 31 December 2023,
the positive interest on the cash in escrow amounts to
EUR 101,816 presented as finance
income in the consolidated statement of comprehensive
income.
11. CASH AND CASH EQUIVALENTS
The amount of cash and cash equivalents was EUR
27,916 as at 31 December 2023.
The fair value of cash
and cash equivalents (level 3) approximate its carrying value as
at 31 December 2023.
12. ISSUED CAPITAL AND RESERVES
Share capital – class B shares
As at 31 December 2023, the
subscribed share capital amounts to EUR 120,000 consisting of
21,900,000 class B shares without nominal value.
Upon and following the completion
of the Business Combination, the class B shares existing at that
point in time shall convert into class A shares
in accordance with the conversion schedule (the “Promote Schedule” in the “Glossary” of the
Prospectus).
The class B shares will only have
nominal economic rights (i.e., reimbursement of their par value, at
best, in case of liquidation). The class B shares
were not part of the Private Placement and are not listed on a stock exchange.
Share capital – class A shares
On 26 October 2023, the Company
issued 22,000,000 redeemable class A shares with a par value
of approximately EUR 0.00548 per share, together
with class A warrants (together, a “Unit”) for an aggregate price of EUR 1 per Unit, the nominal
subscription price per class A warrant being EUR 0.001. The total proceeds allocated to class
A shares, with the share premium amounts to EUR 20,239,632 after Private Placement costs of
EUR 1,749,368. Because the class A shares are redeemable under certain conditions, the
Management Board concluded that the class A shares do not meet the definition of an equity instrument
as per IAS 32. Hence, the class A shares are considered as debt instruments (See Notes 3 and
14).
Other available reserve
On 25 October 2023, it was
resolved to raise additional funding to the Company in the form of an
equity contribution in cash without the issuance
of new shares (account 115 of the Luxembourg standard chart of accounts) for a total amount
of EUR 750,000 in order to cover for operating expenses.
Authorised capital
As at 31 December 2023,
the authorized capital, excluding the issued share capital, of the Company is set at EUR 10,839,440 consisting of
1,978,000,000 shares without nominal value.
Notes to the consolidated financial statements for the period
ended
SMG Technology Acceleration SE
31 December 2023
- 30 -
Legal reserves
The Company is required to
allocate a minimum of 5% of its annual net profit to a legal reserve, until this reserve equals 10% of the subscribed share
capital. This reserve may not be distributed.
13. WARRANTS
13.1 Class B warrants at fair value
The Sponsor has
subscribed for an aggregate of 20,000,000 Sponsor Warrants for a purchase price of EUR 0.15 per warrant or EUR 3,000,000
in total for the sponsor capital at-risk (the “Sponsor Capital
At-Risk”).
The Sponsor and the Company
agreed to set off the amount due under a loan agreement in the
amount of EUR 216,646.63, at
the time of the incorporation of the Company in order to finance the
Company’s working
capital requirements until the Private Placement, as amended (the “Shareholder Loan”) against part of the aggregate
subscription price payable by the Sponsor for these Sponsor
Warrants. The Shareholder
Loan was repaid during the period ended 31 December 2023.
The Sponsor Capital At-Risk
will, next to the additional purchase price for the Sponsor Shares, be
used to finance the
Company’s ongoing working capital requirements (including due diligence
costs in connection with the
Business Combination), Private Placement and Listing expenses, except
for the Deferred Listing
Commissions, that will, if and when due and payable, be paid from the
Escrow Account.
The Sponsor Warrants will
not be transferable, assignable or saleable (except to Permitted
Transferees) until the
consummation of the Business Combination. From the consummation of the
Business Combination, Public
Shares held by the Sponsor due to the exercise of Sponsor Warrants
and due to the
conversion of Sponsor Shares into Public Shares will be subject to the Sponsor Lock- Up.
On the issue date, the
fair value of class B warrants was determined to be EUR 0.2069 per
warrant using a combination of Monte Carlo
and Binomial Tree valuation model (level 3). Class B warrants
issued as Sponsor
Capital At-Risk are valued at EUR 4,138,000.
The above valuation resulted in the
recognition of a day-one gain of EUR 1,138,000.
As at 31 December
2023, the fair value of class B warrants was determined to be EUR
0.3136 per warrant using a combination of Monte
Carlo and Binomial Tree valuation model (level 3). Class B
warrants issued as
Sponsor Capital At-Risk are valued at EUR 6,272,000.
The above valuation
resulted in the recognition of fair value gain of EUR 3,272,000
for the period from the issue date to the closing
date, and a net fair value gain of EUR 2,134,000 for the period
from 27 October 2023 to 31
December 2023. The significant inputs to the valuation model
include the contractual terms of the warrants
(i.e. exercise price, maturity), risk-free rates of German
government bonds, volatility of the Company’s
potential target peers and volatility of the warrants by reference to
traded warrants issued by similar
listed special purpose acquisition companies.
The Sponsor Warrants have
substantially the same terms as the class A warrants, except that they
cannot be redeemed and they
may always be exercised on a cashless basis while they are held by
the Sponsor or its Permitted
Transferees. The Sponsor Warrants were not part of the Private
Notes to the consolidated financial statements for the period
ended
SMG Technology Acceleration SE
31 December 2023
- 31 -
Placement and neither the
Sponsor Warrants nor the class A warrants will be listed on a stock
exchange.
13.2 Class A warrants at fair value
On 27 October 2023, the
Private Placement resulted in issuance of 22,000,000 Public Shares and
11,000,000 class A warrants
(together, a “Unit”).
Each Unit has a Unit
Price of EUR 1.00 and consists of one Public Share with a subscription
right for one half of a Class A Warrant. Each whole
Class A Warrant entitles the holder thereof to purchase
one Public Share at a
price of EUR 1.15 per Public Share.
The Public Shares and Class
A Warrants comprising the Units will be separated upon issuance and
only the Public Shares
will trade.
Fractional Class A Warrants
will not be issued upon separation of the Units and may be neither
exercised nor redeemed for
cash. The Class A Warrants will not be admitted to trading or listed on
the Frankfurt Stock
Exchange.
On the issue date, the
fair value of class A warrants was estimated at EUR 953,700 (EUR
0.0867 per warrant) using a
combination of Monte Carlo and Binomial Tree valuation model
(level 3), resulting in the recognition of a
day-one gain of EUR 942,700.
As at 31 December
2023, the fair value of class A warrants was estimated to be EUR
1,384,900 (EUR 0.1259 per warrant) using a
combination of Monte Carlo and Binomial Tree valuation model
(level 3), resulting
in the recognition of fair value gain of EUR 1,373,900 for the
period from issue date to closing date and a net fair
value gain of EUR 431,200 for the period from 27 October 2023 to 31 December 2023. The significant
inputs to the valuation model include the contractual terms of the
warrants (i.e. exercise price,
maturity), risk-free rates of German government bonds, volatility
of the Company’s potential
target peers and volatility of the warrants by reference to traded
warrants issued by similar listed special purpose
acquisition companies.
Class A Warrant and each
whole Class A Warrant entitles the holder to subscribe for one Public
Share. The Class A Warrants
will become exercisable 30 days after the consummation of the
Business Combination. The
Class A Warrants expire five years from the consummation of the
Business Combination, or
earlier upon redemption or liquidation.
14. REDEEMABLE CLASS A SHARES
On 27 October 2023, the Company
issued 22,000,000 redeemable class A shares with a par value
of EUR 0.00548, International Securities
Identification Number (“ISIN”) LU2699152265, (each a “Public Share” or a “Class A Share”) and
11,000,000 class A warrants through a private placement. The Public Shares and Class A Warrants were
issued in the Private Placement in the form of units, each consisting of one Public Share with a par
value of EUR 0.00548 and one-half of a Class A Warrant (the “Unit”), at a price of EUR 1.00 per
Unit. Holders of class A shares are entitled to one vote for each share. On the issue date, the
redeemable class A shares are measured at amortised cost valued at EUR 20,239,632, net of transaction
costs amounting to EUR 1,749,368.
Notes to the consolidated financial statements for the period
ended
SMG Technology Acceleration SE
31 December 2023
- 32 -
Transaction costs,
which are incremental costs that are directly attributable to the
issuance of the class A shares and its subsequent
listing to the Frankfurt Stock Exchange, were deducted from its
initial fair value.
The transaction costs include Listing Fee (See Note 18), legal
fees, audit fees, accounting and administration fees,
and CSSF fees.
As at 31 December 2023, the
amortized cost of the redeemable class A shares amounts to EUR 20,623,769 after amortisation of EUR 384,137 calculated using the EIR method. This
amortization is presented as part of finance cost
in the consolidated statement of comprehensive income. As at 31 December 2023, the fair value of
Redeemable class A shares is estimated at EUR 23,980,000 which is the nominal value of the
redemption price of the shares (level 3).
The Company will have 12 months
from the date on which trading in the Public Shares formally
commences on the Frankfurt Stock Exchange to
consummate a Business Combination. If the Company fails to consummate a Business
Combination within the Business Combination Deadline or the Management Board formally acknowledges
that the Company will not be able to proceed with a Business Combination within that period, the
Company will be liquidated and distribute substantially all of its assets to its shareholders (other than
the Sponsor).
Class A Shareholders may request
redemption of all or a portion of their class A shares in connection
with the Business Combination, subject to the
conditions and procedures set forth in the Articles of Association. Class A shares will only be redeemed
under the following conditions, (i) the Business Combination is approved by the general meeting of
shareholders and subsequently consummated, (ii) a holder of class A shares notifies the
Company of its request to redeem a portion or all of its Class
A shares in writing by completing a form approved
by the Management Board for this purpose that will be included with the convening notice for
the general meeting of shareholders and such notification is received by the Company not
earlier than the publication of the notice convening the general meeting of shareholders for the approval
of the Business Combination and (iii) the holder of Class A shares transfers its class A shares to a
trust depositary account specified by the Company and/or blocked on the account of the redeeming
shareholder, (ii) and (iii) both not later than two business days prior to the date of the general
meeting of shareholders convened for the purpose of approving the Business Combination.
Each class A share that is
redeemed shall be redeemed in cash for a price equal to the aggregate
amount on deposit in the escrow account related
to the proceeds from the Private Placement of the class A shares and warrants, divided by the
number of the then outstanding class A Shares, subject to (i) the availability of sufficient amounts on
the escrow account and (ii) sufficient distributable profits
and reserves of the
Company.
Because the class A shares are
redeemable under certain conditions, the Management Board concluded that the class A shares do not meet the
definition of an equity instrument as per IAS 32. Hence, the class A shares are considered as debt
instruments (See Note 3).
15. TRADE AND OTHER PAYABLES
Trade and other payables amount to EUR 3,283,576 as
at 31 December 2023.
Trade and other
payables are related to legal and other services received by
the Group. The carrying
amounts of these approximate their fair
value (level 3) as at 31 December 2023.
Out of the total trade and other payables, the Company has EUR 1,079,170 of unpaid overdue
payables as at 31 December 2023, which break down as follows:
•
Overdue since more than 3 months (and less than 6 months) amounts to EUR 142,560;
•
Overdue since more than 1 month (and less than 3 months) amounts to EUR 936,610.
As of the date of approval of the financial statements these balances remain unpaid. The EUR 2.900.000 repayments received from affiliated undertakings post balance sheet date (see Note 19) will however allow the Company to settle these outstanding balances.
Notes to the consolidated financial statements for the period
ended
SMG Technology Acceleration SE
31 December 2023
- 33 -
16. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group
conducted no operations and currently generated no revenue.
The Group has no foreign currency transactions and no
interest bearing loans. Hence, currently the Group is not
exposed to foreign currency risks nor any
interest rate risks.
Liquidity risks
Liquidity risk is the risk that
the Group will encounter difficulty in meeting its financial obligations as
they fall due.
The Company has completed
its Private Placement and listing on the Frankfurt Stock
exchange. The proceeds from the Private Placement are deposited
in an escrow account. The amount held in the escrow account will only be released in
connection with the completion of the Business Combination or the Company’s liquidation. As at 31 December
2023, the Management Board believes that the funds available to the Group outside of the
secured deposit account are sufficient to pay costs and expenses incurred by the Group prior to the
completion of the Business Combination. Furthermore, the Group has financial instruments which are
presented as current liabilities which does not impose any liquidity issues to the Group. The class B
warrants related to Sponsor Capital At-Risk and amounting to EUR 6,272,000 (See Note 13.1) have no
redemption rights or liquidation distribution rights and will expire worthless in case of
liquidation. Furthermore, the class A warrants amounting to EUR 1,384,900 are redeemable at the option of
the Company (See Note 13.2) hence, does not pose
any liquidity issues to the
Group. Further, these class A warrants have no liquidation distribution rights
and will expire worthless in
case of liquidation.
The table below summarizes the
maturity profile of the Group’s liabilities based on
contractual undiscounted payments (excluding
warrants as discussed above):
| Less than3 | Total | ||
| months | 3 to 12 months | 31 December 2023 | |
| EUR | EUR | EUR | |
| Redeemable class A shares | - | 22,000,000 | 22,000,000 |
| Trade and other payables | 3,283,576 | - | 3,283,576 |
| Payable to related party | 44,499 | - | 44,499 |
| 3,328,075 | 22,000,000 | 25,328,075 |
As at 31 December 2023, the Group
has sufficient cash in escrow to cover for the redemption value
of the class A shares and it also has receivables
from related parties sufficient to cover for the other liabilities. On 28 May 2024, the Company received repayment of receivables from the related parties
in total amount of EUR 2,900,000 adding additional liquidity.
Capital management
The Management Board’s policy is
to maintain a strong capital base so as to maintain investor,
creditor and market confidence and to sustain
future development of the business. In order to meet the capital management objective described above,
the Group has raised funds through a Private Placement reserved to certain qualified
investors inside and outside of Germany, and had the class A
shares issued in the
context of this Private Placement admitted to listing and trading on the Frankfurt Stock Exchange. The above-mentioned financial
instruments issued as part of this Private Placement
Notes to the consolidated financial
statements for the period ended
SMG Technology Acceleration SE
31 December 2023
- 34 -
represent what the entity is managing as capital,
although these instruments are considered as debt instruments from an accounting standpoint.
Credit risk
Credit risk is the risk that a counterparty will
not meet its obligations under a financial instrument or customer contract, leading to a financial loss.
The Group is currently exposed to credit risk from its financing activities, including deposits with
banks and financial institutions as well as its receivables from related parties. No specific counterparty
risk is being assessed as cash and cash equivalents are mostly deposited with a P-1 (Moody’s) or A-2
(S&P’s) rated bank.
17. RELATED PARTIES DISCLOSURES
Parties are considered to be related if one party has
the ability to control the other or exercise significant influence over the other party in making
financial or operational decisions.
Terms and conditions of transactions with related
parties
As at 31 December 2023, receivables from related parties amounting to EUR 2,919,998 comprise of
short-term, interest-free advance to related parties in the amount of EUR 2,899,999 (please also
refer to note 19), and advance payment made to directors in the amount of EUR 20,000.
As at 31 December 2023, the payable to related parties
amounting to EUR 44,499 relate to payments,
short-term advances and overpayments made by related entities on behalf of the Company.
There have been no guarantees provided or received for
any related party receivables or payables as at 31 December 2023.
Commitments with related parties
There are no commitments with related parties as at 31
December 2023, except those already disclosed in these consolidated financial statements.
Transactions with key management personnel
The Company has a receivable from a director
amounting to EUR 20,000 pertaining to an advance payment made to directors. The amount is included
in the receivables from related parties.
Aside from the above, there are no advances or
loans granted to members of the Management Board as at 31 December 2023.
The Management Board and Supervisory Board members
received remuneration during the period ended on 31 December 2023 as disclosed in Note 5
under “Directors fees”.
Notes to the consolidated financial statements for the period
ended
SMG Technology Acceleration SE
31 December 2023
- 35 -
18. COMMITMENTS AND CONTINGENCIES
In accordance with the Prospectus, the Company will be liable to pay the below amounts which are contingent to certain events as follows:
•
A success fee of 2.5% of the gross proceeds from the Private Placement (which excludes Sponsor generated amounts) on the date of the consummation of the Business Combination;
•
A business combination completion fee of 0.5% of the gross proceeds from the Private Placement less any cancellations of subscriptions, split between the joint bookrunners; and
•
The success fee and business combination completion fee will be paid from the escrow account.
The Group has no other commitments and contingencies as at 31 December 2023.
19. EVENTS AFTER THE REPORTING YEAR
Due to the delay in completion of the intended business combination signed on 20 December 2023,
the Company experienced a liquidity shortage, among others from significant costs already incurred
in connection with the Business Combination and its IPO. Consequently on 27 May 2024, the Sponsor
sold 13.362.000 Class B shares of the Company to a third party, i.e. De Krassny GmbH, for an amount
of EUR 2.900.000. The cash proceed was advanced by the Sponsor to certain affiliated undertakings
which in turn repaid their amounts owed to the Company.
On 28 May 2024, the Company received repayment of amounts owed by the following related parties:
-
EUR 1.092.474,89 from SMG Holding S.à r.l.;
-
EUR 1.034.000,00 from SMG Hospitality SE; and
-
EUR 773.525,11 from SMG SPAC Investment S.à r.l..
BigRep, the target company, was made aware of the Company’s liquidity situation and as a result of
this the terms of the business combination agreement were amended accordingly in an agreement on
27 May 2024 and amendment to the business combination agreement that was signed on 28 May
2024.
There are no other events or conditions after the reporting year requiring disclosure in or adjustment
to the consolidated financial statements.
Notes to the consolidated financial statements for the period ended
SMG Technology Acceleration SE
31 December 2023
- 36 -