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Financial instruments - fair values and risk management | 12 Months Ended
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Dec. 31, 2022
Financial instruments - fair values and risk management. |
Financial instruments - fair values and risk management | 29. Financial instruments - fair values and risk management
A. | Accounting classifications
The following table shows the carrying amounts of financial assets and financial liabilities as at December 31, 2022 and December 31, 2021. The Company’s trade and other receivables, prepaid tax, indemnification asset and related tax liabilities, cash and cash equivalents, 1.5% treasury notes recorded at amortized cost and trade and other payables approximate their fair value due their short-term nature. Company’s investments, current and non-current (other than the 1.5% treasury notes) are accounted at fair value (either through profit and loss or through OCI). Loans receivable current and non-current are a reasonable approximation of their fair value as they have been impaired to their expected return. Financial assets are as follows: Risks ​
​ | ​ | ​ | ​ | ​
​ |  | December 31, |  | December 31,
​ | ​ | 2022 | ​ | 2021
Financial assets at amortized cost | ​ |  | ​ |
Trade receivables |  | 41,874 |  | 41,675
Cash and cash equivalents |  | 86,774 |  | 142,802
Loans receivable |  | 3,834 |  | 123
Other investments - current | ​ | 35,547 | ​ | —
Total | ​ | 168,029 |  | 184,600
​
​ | ​ | ​ | ​ | ​
​ |  | December 31, |  | December 31,
​ |  | 2022 |  | 2021
Financial assets measured at fair value |  |  |  |
Other investments - current - fair value through profit or loss |  | 14,818 |  | —
Other investments - non-current - fair value through other comprehensive income |  | 2,969 |  | —
Other investments - non-current - fair value through profit or loss | ​ | 14,934 | ​ | —
Total |  | 32,721 |  | —
​ Financial liabilities are as follows: ​
​ | ​ | ​ | ​ | ​
​ |  | December 31, |  | December 31,
​ | ​ | 2022 | ​ | 2021
Financial liabilities not measured at fair value |  |  |  |
Trade and other payables |  | 30,521 |  | 26,573
Total | ​ | 30,521 |  | 26,573
​
​ | ​ | ​ | ​ | ​
​ |  | December 31, |  | December 31,
​ | ​ | 2022 | ​ | 2021
Financial liabilities measured at fair value |  |  |  |
Put option liability | ​ | 27,475 | ​ | —
Share warrant obligation |  | 13,035 |  | 22,029
Other non-current liabilities | ​ | 577 | ​ | —
Total |  | 41,087 |  | 22,029
​
B. | Financial risk management
The Company’s Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework. The Group’s risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and in the Group’s activities. The Group has exposure to the following risk arising from financial instruments:
| (i) | Credit risk
Credit risk arises when a failure by counterparties to discharge their obligations could reduce the amount of future cash inflows from financial assets on hand at the reporting date. The Group’s credit risk arises from Trade and other receivables, Loans receivable and Other investments. As at December 31, 2022 and December 31, 2021 the largest debtor of the Group constituted 41% and 30% of the Group’s Trade and other receivables, respectively, and the 3 largest debtors of the Group constituted 72% and 74% of the Group’s Trade and other receivables respectively. Credit risk related to trade receivables is considered insignificant, since almost all sales are generated through major companies, with consistently high credit ratings. These distributors pay the Group monthly, based on sales to the end users. Payments are made within 3 months after the sale to the end customer. The distributors take full responsibility for tracking and accounting of end customer sales and send to the Group monthly reports that show amounts to be paid. The Group does not have any material overdue or impaired accounts receivable. Credit risk related to Other investments is also insignificant due to the fact that they are represented by government bonds and US treasury notes which are rated AAA based on Fitch’s ratings. The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was: ​
​ | ​ | ​ | ​ | ​
​ |  | December 31, |  | December 31,
​ | ​ | 2022 | ​ | 2021
Loan receivables |  | 3,834 |  | 123
Trade receivables |  | 41,874 |  | 41,675
Cash and cash equivalents |  | 86,774 |  | 142,802
Other investments - current | ​ | 50,365 | ​ | —
Other investments - non-current | ​ | 17,903 | ​ | —
​ Expected credit loss assessment for corporate customers as at December 31, 2022 and December 31, 2021 The Group allocates each exposure a credit risk grade based on data that is determined to be predictive of the risk of loss (including but not limited to external ratings, audited financial statements, management accounts, and cash flows projections) and applying experienced credit judgment. Loan receivables Loan receivables are provided to associates and the Company’s employees. The Group considers that both of its loans provided to associates have increased credit risk based on the weak recent performance of associates due to general market conditions. As a result, the specific provisions for ECL were booked in respect of the loans to both associates. The ECL in respect of Loan receivables is 28,475 as at December 31, 2022 and 0 as at December 31, 2021. See Note 11 for the description of the methods used to estimate the ECL. Trade and other receivables The ECL allowance in respect of Trade and other receivables is determined on the basis of the lifetime expected credit losses (“LTECL”). The Group uses the credit rating for each of the large debtors where available or makes its own judgment as to the credit quality of its debtors based on their most recent financial reporting or the rating assigned to their country of incorporation. After assigning the credit rating to each of the debtors the Group determines the probability of default (“PD”) and loss given default (“LGD”) based on the data published by the internationally recognized rating agencies. The determined amounts of allowances for ECL for each of the debtors are then adjusted for the forecasted macroeconomic factors, which include the forecasted unemployment rate in each of the countries where the debtors are incorporated and forecasted growth rate of the global gaming market from publicly available sources. The amount of ECL in respect of trade and other receivables is 1,512 as at December 31, 2022 and is 102 as at December 31, 2021. Cash and cash equivalents The cash and cash equivalents are held with financial institutions, which are rated CCC- to BBB- based on Fitch’s ratings.
| (ii) | Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Group’s objective when managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions without incurring unacceptable losses or risking damage to the Group’s reputation. The Group monitors the level of expected cash inflows on trade and other receivables together with expected cash outflows on trade and other payables over the next 90 days. Excess cash is invested only in highly liquid triple A rated securities (mainly US treasury notes, bonds and ETFs). The following are the contractual maturities of financial liabilities at the reporting date. The amounts are gross and undiscounted and include contractual interest payments. ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Carrying | ​ | Contractual | ​ | 3 months | ​ | Between | ​ | Between
December 31, 2022 |  | amounts |  | cash flows |  | or less |  | 3 – 12 months |  | 1 – 5 years
Non-derivative financial liabilities |  |  |  |  |  |  |  |  |  |
Lease liabilities |  | 1,187 |  | 1,183 |  | 309 |  | 437 |  | 437
Trade and other payables |  | 30,521 |  | 30,521 |  | 30,521 |  | — |  | —
​ |  | 31,708 |  | 31,704 |  | 30,830 |  | 437 |  | 437
​ ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Carrying |  | Contractual |  | 3 months |  | Between 3‑12 |  | Between 1‑5
December 31, 2022 |  | amounts |  | cash flows |  | or less |  | months |  | years
Derivative financial liabilities |  |  |  |  |  |  |  |  |  |
Share warrant obligation |  | 13,035 |  | — |  | — |  | — |  | 13,035
Put option liability | ​ | 27,475 | ​ | — | ​ | — | ​ | — | ​ | 27,475
​ |  | 40,510 |  | — |  | — |  | — |  | 40,510
​ ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Carrying | ​ | Contractual | ​ | 3 months | ​ | Between | ​ | Between
December 31, 2021 |  | amounts |  | cash flows |  | or less |  | 3 – 12 months |  | 1 – 5 years
Non-derivative financial liabilities |  |  |  |  |  |  |  |  |  |
Lease liabilities |  | 1,934 |  | 1,942 |  | 313 |  | 453 |  | 1,176
Trade and other payables |  | 26,573 |  | 26,573 |  | 26,573 |  | — |  | —
​ |  | 28,507 |  | 28,515 |  | 26,886 |  | 453 |  | 1,176
​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Carrying |  | Contractual |  | 3 months |  | Between 3‑12 |  | Between 1‑5
December 31, 2021 | ​ | amounts | ​ | cash flows | ​ | or less | ​ | months | ​ | years
Derivative financial liabilities |  |  |  |  |  |  |  |  |  |
Share warrant obligation |  | 22,029 |  | — |  | — |  | — |  | 22,029
​ |  | 22,029 |  | — |  | — |  | — |  | 22,029
​ (iii) Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and/or equity prices will affect the Group's income or the value of its financial instruments. The Company is not exposed to any equity risk. The objective of the market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.
| a. | Currency risk
Currency risk is the risk that the values of and cash flows associated with financial instruments will fluctuate due to changes in foreign exchange rates. Currency risk arises when future commercial transactions and recognized assets and liabilities are denominated in a currency that is not the Company's functional currency. The Group is exposed to foreign exchange risk arising from various currency exposures primarily with respect to the Euro, the Russian Ruble, Armenian Dram and Kazakhstani Tenge. The Group's management monitors the exchange rate fluctuations on a continuous basis and acts accordingly. The Group’s exposure to foreign currency risk was as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
December 31, 2022 |  | Euro |  | Russian Ruble | ​ | Armenian Dram | ​ | Kazakhstani Tenge
Assets |  |  |  | ​ | ​ | ​ | ​ |
Loans receivable |  | 476 |  | — | ​ | 39 | ​ | —
Trade and other receivables |  | 9,411 |  | — | ​ | — | ​ | —
Cash and cash equivalents |  | 17,057 |  | 1,078 | ​ | 26 | ​ | 95
​ |  | 26,944 |  | 1,078 | ​ | 65 | ​ | 95
Liabilities |  |  |  | ​ | ​ | ​ | ​ |
Lease liabilities |  | (1,053) |  | — | ​ | (134) | ​ | —
Trade and other payables |  | (8,017) |  | — | ​ | (614) | ​ | (33)
​ |  | (9,070) |  | — | ​ | (748) | ​ | (33)
Net exposure |  | 17,874 |  | 1,078 | ​ | (683) | ​ | 62
​
​ | ​ | ​ | ​ | ​
December 31, 2021 |  | Euro |  | Russian Ruble
Assets |  |  |  |
Loans receivable |  | 123 |  | —
Trade and other receivables |  | 9,493 |  | 3,571
Cash and cash equivalents |  | 33,297 |  | 621
​ |  | 42,913 |  | 4,192
Liabilities |  |  |  |
Lease liabilities |  | (1,795) |  | (139)
Trade and other payables |  | (4,701) |  | (1,092)
​ |  | (6,496) |  | (1,231)
Net exposure |  | 36,417 |  | 2,961
​ Sensitivity analysis A reasonably possible 10% strengthening or weakening of the United States Dollar against the following currencies as at December 31, 2022 and December 31, 2021 would have (decreased)/increased equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant. ​
​ | ​ | ​ | ​ | ​
​ | ​ | Strengthening of US$ | ​ | Weakening of US$ by
December 31, 2022 |  | by 10% |  | 10%
Euro |  | (1,787) |  | 1,787
Russian Ruble | ​ | (108) | ​ | 108
Armenian Dram | ​ | 68 | ​ | (68)
Kazakhstani Tenge |  | (6) |  | 6
​ |  | (1,833) |  | 1,833
​
​ | ​ | ​ | ​ | ​
​ | ​ | Strengthening of US$ | ​ | Weakening of US$
December 31, 2021 |  | by 10% |  | by 10%
Euro |  | (3,642) |  | 3,642
Russian Ruble |  | (296) |  | 296
​ |  | (3,938) |  | 3,938
​ b.Interest risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group’s exposure to the risk of changes in market interest rates is minimal as it does not have long-term debt obligations with floating interest rates or material fixed-rate debt instruments carried at fair value. ​ C.Measurement of fair values There were no transfers from Level 2 to Level 1 in 2020 and 2021, the only transfer occurred in 2022 for the valuation of Public warrants which were valued using Level 3 inputs (versus Level 1 in 2021) after the Company’s securities were suspended for trading. The following table shows a reconciliation from the opening balances to the closing balances for financial liabilities based on Level 3 fair values. ​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Share warrant |  | Put option |  | Other non-
​ | ​ | obligation | ​ | liability | ​ | current
​ | ​ | (Note 4) | ​ | (Note 4) | ​ | liabilities
Balance at January 1, 2021 (August, 2021 for Share warrant obligation) |  | 32,109 |  | — |  | —
​ Change in fair value of share warrant obligation and other financial instruments included in profit or loss ​
​ | ​ | ​ | ​ | ​ | ​ | ​
Net change in fair value |  | (10,080) |  | — |  | —
Balance at December 31, 2021 |  | 22,029 |  | — |  | —
​ | ​ | ​ | ​ | ​ | ​ | ​
Balance at January 1, 2022 |  | 22,029 |  | — |  | —
Initial recognition |  | — |  | 23,309 |  | 2,555
​ Change in fair value of share warrant obligation and other financial instruments included in profit or loss ​
​ | ​ | ​ | ​ | ​ | ​ | ​
Net change in fair value |  | (8,994) |  | 3,800 |  | (1,978)
Gain included in finance cost |  |  |  |  |  |
Net change in fair value |  | — |  | 366 |  | —
Balance at December 31, 2022 |  | 13,035 |  | 27,475 |  | 577
​ The following table shows a reconciliation from the opening balances to the closing balances for financial assets based on Level 3 fair values. ​
​ | ​ | ​
​ |  | Other
​ | ​ | non-current
​ | ​ | current assets
Balance at January 1, 2022 |  |
Purchases |  | 4,422
Net change in fair value |  | (4,422)
Balance at December 31, 2022 |  | —
​

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