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FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT

12 Months Ended

Dec. 31, 2023

FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT

FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT

21	FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT

The financial instruments measured at amortized cost are summarised below:

Financial Assets


		Financial assets as subsequently
		measured at amortized cost
		December 31,		December 31,
		2023		2022
Trade receivables		18,641		16,231

Financial Liabilities


		Financial liabilities as subsequently
		measured at amortized cost
		December 31,		December 31,
		2023		2022
Trade payables		7,504		4,327
Accrued liabilities		13,983		14,817
Convertible debt		2,445		6,648
Lease obligations on right of use assets		3,277		638
Other liabilities		347		405
Loans payable		—		109
		27,556		26,944

The carrying values of the financial instruments approximate their fair values.

Fair Value Hierarchy

The following table presents the fair values and fair value hierarchy of the Company’s financial instruments.


		December 31, 2023								December 31, 2022
		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Financial assets
Fair value through profit and loss:
Cash and cash equivalents		8,796		—		—		8,796		11,287		—		—		11,287

Financial liabilities
Fair value through profit and loss:
Derivative liability		—		471		—		471		—		1,320		—		1,320
Deferred consideration		—		2,939		—		2,939		—		3,297		—		3,297
Other liabilities		—		—		269		269		—		—		74		74

Fair value through other comprehensive income:
Other liabilities		—		—		104		104		—		—		160		160

There were no transfers between the levels of the fair value hierarchy during the periods.

21	FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (CONTINUED)

During the year ended December 31, 2023, a loss of EUR 440 (year ended December 31, 2022: gain of EUR 804), was recognized in the consolidated statements of loss and comprehensive income (loss) as gain (loss) on remeasurement of deferred consideration (Note 12) for financial instruments designated as FVTPL.

During the year ended December 31, 2023, a loss of EUR 3 (year ended December 31, 2022: gain of EUR 85), was recognized in the consolidated statements of loss and comprehensive income (loss) as remeasurement of employee obligations for financial instruments designated as FVOCI.

As a result of holding and issuing financial instruments, the Company is exposed to certain risks. The following is a description of those risks and how the exposures are managed.

Liquidity risk

Liquidity risk is the risk that the Company is unable to generate or obtain sufficient cash and cash equivalents in a cost-effective manner to fund its obligations as they come due. The Company will experience liquidity risks if it fails to maintain appropriate levels of cash and cash equivalents, is unable to access sources of funding or fails to appropriately diversify sources of funding. If any of these events were to occur, they could adversely affect the financial performance of the Company.

The Company has a planning and budgeting process in place by which it anticipates and determines the funds required to support its normal operating requirements. The Company coordinates this planning and budgeting process with its financing activities through its capital management process. The Company holds sufficient cash and cash equivalents and working capital, maintained through stringent cash flow management, to ensure sufficient liquidity is maintained. The Company is not subject to any externally imposed capital requirements.

The following are the undiscounted contractual maturities of significant financial liabilities and the total contractual obligations of the Company as at December 31, 2023:


		2024		2025		2026		2027		Thereafter		Total
Trade payables and other liabilities		21,846		—		—		—		—		21,846
Convertible debt		3,620		—		—		—		—		3,620
Lease obligations on right of use assets		739		732		696		713		731		3,611
Loans payable		—		—		—		—		—		—
Other non-current liabilities		1		3		3		7		778		792
		26,206		735		699		720		1,509		29,869

Foreign currency exchange risk

The Company’s financial statements are presented in EUR; however, a portion of the Company’s net assets and operations are denominated in other currencies, particularly Canadian and US dollars. Such net assets are translated into EUR at the foreign currency exchange rate in effect at the reporting date, and operations at the foreign currency exchange rates that approximate the rates in effect at the dates when such items are recognized. As a result, the Company is exposed to foreign currency translation gains and losses, which are recorded in accumulated other comprehensive loss.

21	FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (CONTINUED)

The Company is also exposed to risk on transaction in currencies other than its functional currency resulting in realized and unrealized foreign currency gains and loss which are recorded in other operational costs. The Company estimates that an appreciation of the EUR of 10% relative to other currencies would result in a decrease of EUR 1,405 in earnings before income taxes while a depreciating EUR will have the opposite impact (year ended December 31, 2022: EUR 1,443).

The Company has no derivative instruments in the form of futures contracts and forward contracts to manage its current and anticipated exposure to fluctuations in EUR exchange rates.

Credit risk

The Company is exposed to credit risk resulting from the possibility that counterparties could default on their financial obligations to the Company including cash and cash equivalents, other assets and accounts receivable. Failure to manage credit risk could adversely affect the financial performance of the Company.

The risk related to cash and cash equivalents is reduced by policies and guidelines that require that the Company enters into transactions only with counterparties or issuers that have a minimum long term “BBB” credit rating from a recognized credit rating agency. The Company mitigates the risk of credit loss relating to accounts receivable by evaluating the creditworthiness of new customers and establishes a provision for expected credit losses. The Company applies the simplified approach to provide for expected credit losses as prescribed by IFRS 9, Financial Instruments, which permits the use of the lifetime expected loss provision for all accounts receivable. The expected credit loss provision is based on the Company’s historical collections and loss experience and incorporates forward-looking factors, where appropriate.

The provision matrix below shows the expected credit loss rate for each aging category of trade receivable as at December 31, 2023:


				Aging (months)
		Note		<1		1 - 3		>3		Total
Gross trade receivable		16		17,711		1,275		1,714		20,700
Expected loss rate				2.36%		4.82%		92.23%		9.95%
Expected loss provision		16		417		61		1,581		2,059

The provision matrix below shows the expected credit loss rate for each aging category of accounts receivable as at December 31, 2022:


				Aging (months)
		Note		<1		1 - 3		>3		Total
Gross trade receivable		16		15,759		1,313		1,594		18,666
Expected loss rate				3.46%		40.21%		85.45%		13.05%
Expected loss provision		16		545		528		1,362		2,435

Gross trade receivable includes the balance of accrued income within the aging category of less than one month.

21	FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (CONTINUED)

Concentration risk

For the year ended December 31, 2023, one customer (year ended December 31, 2022: one customer) contributed more than 10% each to the Company’s revenues. Aggregate revenues from this customer totaled EUR 29,752 (year ended December 31, 2022: EUR 35,692).

As at December 31, 2023, one customer (December 31, 2022: one customer) constituted more than 10% to the Company’s accounts receivable. The balance owed by this customer totalled EUR 4,550 (December 31, 2022: EUR 6,138). The Company continues to expand its customer base to reduce the concentration risk.