(Alliance News) - Digital Magics Spa reported Wednesday that it closed 2023 with a loss of EUR5.3 million from a loss of EUR1.2 million in 2022, "mainly due to financial write-downs of EUR4.7 million," the company points out.

Revenues amounted to EUR5.0 million up 14 percent from EUR4.4 million in the previous year. The fair value of the portfolio stood at EUR31 million from EUR55 million as of December 31, 2022, compared to a carrying value of EUR10.8 million from EUR13.4 million as of December 31, 2022.

The change, the company explained in a note, "is due to a different, more conservative fair value measurement methodology, also to align with the accounting standards adopted by LVenture Group, and to some portfolio write-downs, in particular of the U.S. investee Hyperloop Transportation Technologies Inc. which is now conservatively valued at the historical cost of EUR385,000 compared to approximately EUR12 million as of December 31, 2022.

As of December 31, 2023, there were 135 operating companies in the portfolio, up from 120 companies as of December 31, 2022, including 75 Innovative Startups and 19 Innovative SMEs.

Adjusted Ebitda is negative EUR100,000 from a positive EUR200,000.

Net financial debt is net cash of EUR1.8 million from EUR2.0 million as of June 30, 2023.

As for the future, following the merger of LVenture Group Spa effective April 1, the new combined entity Zest Spa is expected to have revenues and miscellaneous income of between EUR11.5 million and EUR12.7 million in 2024-as cited in the 2024-2026 business plan; Ebitda of between EUR1.3 million and EUR1.9 million; and net debt of between EUR4.2 million and EUR5.1 million.

For the fiscal years 2025 and 2026, although disposals of portfolio investments are planned, the business plan "does not consider any net prospective change in the fair value of portfolio investments, assuming that the investment write-downs expected in those periods are offset by expected revaluations of the same amount," the statement reads.

"The conclusion of the long path of the merger between Digital Magics and LVenture Group, with the birth of Zest, gives birth to the first Italian player of European dimensions, focused on early-stage and seed investments, acceleration of innovative startups, open innovation and corporate venturing," the company points out.

Digital Magics' stock closed 3.3 percent in the red Wednesday at EUR2.06 per share.

By Chiara Bruschi, Alliance News reporter

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