DIGITAL BROS S.P.A. PRESS RELEASE
The Board of Directors of Digital Bros Group approves the Half Year Financial Report at December
31st, 2021 (first half of the financial year 2021 - 2022)
FIRST HALF RESULTS:
- REVENUE AT €55.5 MILLION
- BACK CATALOGUE REVENUE +35%
- 95% OF REVENUE ON INTERNATIONAL MARKETS
- 85% DIGITAL REVENUE
- EBIT AT €12.2 MILLION, 22.1% OF NET REVENUE
- NET PROFIT OF €10.4 MILLION
- POSITIVE NET FINANCIAL POSITION OF €18.2 MILLION
- EBIT FOR THE FULL FISCAL YEAR EXPECTED TO BE IN EXCESS OF €30 MILLION
- Consolidated gross revenues of €55.5 million, down by 32.6% compared to €82.4 million on December 31st, 2020, when the launches of the best-selling games Death Stranding and the Steam version of Control occurred
- 95% of revenues realized on international markets and 85% on digital marketplaces
- Back catalogue revenue increased by 35%
- EBITDA at €19.7 million, compared to €35.6 million on December 31st, 2020
- EBIT of €12.2 million, 22.1% of consolidated net revenues, compared to €20 million on December 31st, 2020
- Profit before tax of €14.7 million, compared to €22.2 million on December 31st, 2020
- Net profit of €10.4 million, compared to €15.9 million on December 31st, 2020
- Net financial position positive of €18.2 million (€23.5 million gross of the IFRS 16 effect)
- Net operating margins for the full fiscal year expected to exceed the outstanding results (30 million EBIT) realized in the last fiscal, despite a small drop expected in revenues
Milan, March 8th, 2022 - The Board of Directors of Digital Bros Group (DIB:MI), which is listed on the Euronext STAR segment of Borsa Italiana and operates in the videogames market, today approved the Half Year Financial Report for the period ended December 31st, 2021 (first half of the fiscal year from July 1st, 2021 to June 30th, 2022).
RESULTS FOR THE FIRST HALF OF FINANCIAL YEAR 2021-2022 (AT 31.12.2021)
Euro thousand | 31.12.21 | 31.12.20 | Change | Change % |
Gross revenue | 55,518 | 82,381 | (26,863) | -32.6% |
Gross operating margin (EBITDA) | 19,717 | 35,605 | (15,888) | -44.6% |
Operating margin (EBIT) | 12,226 | 19,916 | (7,690) | -38.6% |
Profit before tax | 14,726 | 22,153 | (7,427) | -33.5% |
Net profit | 10,390 | 15,850 | (5,460) | -34.4% |
Digital Bros Group's key consolidated results for the first half of financial year 2021-2022, together with prior period comparatives, are as follows:
- Consolidated gross revenues of €55.5 million, compared to €82.4 million on December 31st, 2020 (-32.6%);
- EBITDA of €19.7 million, compared to €35.6 million on December 31st, 2020;
- EBIT of €12.2 million, compared to €20 million on December 31st, 2020;
- Profit before tax of €14.7 million, compared to €22.2 million on December 31st, 2020;
- Net profit increased to €10.4 million, compared to €15.9 million on December 31st, 2020.
RESULTS BY OPERATING SEGMENT
Revenue for the half year amounted to €55.5 million, decreasing by 32.6% compared to the previous fiscal year, when the best-sellingvideo game Death Stranding and the Steam version of Control were initially launched.
With no significant new releases, the first half year revenue were a mix of different but existing back catalogue products. The best-selling videogame has been the evergreen Assetto Corsa, IP owned by the Group, which realized €9 million during the period. Back catalogue sales grew by 35%, increasing by €6.9 million compared to the previous fiscal year.
Revenue from international markets were 95% of the total revenues in the period and digital revenue in the period were 85% of the total.
A breakdown by operating segment for the period ended December 31st, 2021 compared to the period ended December 31st,
2020 is provided below:
Euro thousand | Gross revenue | Net revenue | ||||||
2022 | 2021 | Change | 2022 | 2021 | Change | |||
Premium Games | 49,348 | 74,739 | (25,391) | -34.0% | 49,263 | 73,496 | (24,233) | -33.0% |
Free to Play | 3,670 | 4,483 | (813) | -18.1% | 3,670 | 4,483 | (813) | -18.1% |
Italian Distribution | 2,189 | 2,932 | (743) | -25.3% | 2,081 | 2,738 | (657) | -24.0% |
Other projects | 311 | 227 | 84 | 37.1% | 311 | 227 | 84 | 37.1% |
Total gross revenues | 55,518 | 82,381 | (26,863) | -32.6% | 55,325 | 80,944 | (25,619) | -31.7% |
The Premium Games operating segment represents 89% of the gross revenue.
Video games developed by the internal studios and intellectual properties fully owned by the Group accounted for 30% of the total revenue in the period. 45% of revenue came from the co-owned IPs and long-term agreements (more than ten years). A breakdown of Premium Games revenue by the type of rights held by the Group at December 31st, 2021 is provided below with comparative figures at December 31st, 2020:
H1 FY21 | H1 FY22 | |
21% | 25% | |
37% | 30% | |
42% | 45% | |
Owned Ips | Owned Ips | |
Co-owned IPs and long term agreements | Co-owned IPs and long term agreements | |
Publishing agreements | Publishing agreements |
The Free-to-Play operating segment showed a 18.1% decrease from € 4.5 million at December 31st, 2020 to €3.7 million. The main Free to Play product launch of the current year, Puzzle Quest 3, will be released globally in March 2022.
The Italian Distribution operating sector revenue decreased by 25.3% (from €2.9 million down to €2.2 million), due to the continuous decline of retail distribution in the market, and accelerated by the effects of the COVID-19 pandemic.
Digital Bros Group's revenues and earnings by operating segments for the period are as follows:
Euro thousand | Premium | Free to Play | Italian | Other | Holding | Total |
Games | Distribution | Activities | ||||
Gross revenues | 49,348 | 3,670 | 2,189 | 311 | 0 | 55,518 |
EBITDA | 22,538 | 1,109 | (377) | (113) | (3,440) | 19,717 |
EBIT | 16,369 | 212 | (501) | (137) | (3,717) | 12,226 |
The EBITDA realized in the first half of the year has been €19.71 million corresponding to 35.6% of the consolidated net revenue, a decrease of €15.88 million compared to the €35.61 million realized in the previous year.
Depreciation and amortization decreased by €7.81 million.
The EBIT amounted to €12.23 million decreasing by €7.69 million compared to €19.92 million as at December 31st, 2020. The EBIT stood at 22.1% of the consolidated gross revenue for the period.
Net income was positive for €2.5 million, compared to €2.24 million realized in the previous year.
Profit before tax for the period ended December 31st, 2021 amounted to €14.73 million, a decrease of €7.43 million compared to profit before tax of €22.15 million as at December 31st, 2020.
Net profit for the period amounted to €10.39 million compared to €15.85 million as at December 31st, 2020.
Net profit attributable to the shareholders of the Group was €10.63 million.
Basic profit per share and diluted profit per share were respectively €0.75 and €0.72 compared to the €1.11 and €1.09 profit per share as at December 31st, 2020.
NET FINANCIAL POSITION
The Net Financial Position amounted to €18.23 million. As expected, it decreased from €38.25 million as at June 30th, 2021
by €20.02 million in sync with the significant investment plan conducted by the Group during the fiscal year. The Net Financial Position gross of the IFRS 16 effect amounted to €23.5 million.
TREASURY SHARES
It is hereby disclosed that as at December 31st, 2021 Digital Bros S.p.A. did not hold any treasury shares, as no transactions have been performed in the period, pursuant to Art. 2428 paragraph 2.3 of the Italian Civil Code.
SIGNIFICANT EVENTS DURING THE PERIOD
The most significant events during the period were as follows:
- On October 27th, 2021, the Shareholders' Meeting of Digital Bros Group approved the Financial Statements for the fiscal year 2020-2021,a dividend distribution of €0.18 per share and appointed Ernest & Young S.p.A. as the new external auditor for the 2022-2030period, until the approval of the Financial Statements at June 30th, 2030;
- On November 30th, 2021, the Group announced the agreement between 505 Games S.p.A. and MercurySteam Entertainment S.L. for the co-publishing and development on a new videogame set for multiplatform release. The intellectual property (IP) of the game is co-owned by Digital Bros and MercurySteam Entertainment through the joint- venture MSE & DB S.L. set up under the Spanish Law. The initial development investment amounts to Euro 27 million.
SIGNIFICANT EVENTS OCCURRED AFTER DECEMBER 31ST, 2021
No significant event, even in relation to external factors, occurred after the end of the period.
BUSINESS OUTLOOK
The Group will invest over €78 million in 22 intellectual properties developed by external studios. Further investments are conducted through the seven internal studios.
Most of the videogames currently under development will hit the market starting from the fiscal year 2023 onwards. In respect with the previous full fiscal year outlook, the Group expects a small drop in revenue without any significant launch of new products, but higher net operating margin (EBIT) thanks to the higher profitability of the back catalogue sales and fully-owned intellectual properties.
A breakdown of back catalogue and new releases revenue expected for the full fiscal year is provided below with previous years comparisons:
Back catalogue and New releases revenues
808997101
14%
40%
46%
28% | |||
86% | |||
60% | |||
54% | |||
72% | |||
FY19 Act. | FY20 Act. | FY21 Act. | FY22 Fore. |
SKUS no. | New releases | Back catalogue | ||
In sync with the significant investments planned for the period, the net financial position, which was positive €18 million at the end of the period, is expected to further decrease during the third quarter. Positive cash flow expected in the last quarter.
ART. 154-BIS OF THE "T.U.F."
As required by paragraph 2, Art. 154-bis of the T.U.F., Digital Bros Group's Chief Financial Officer, Stefano Salbe, declares that the information contained in this press release corresponds to the Group's underlying documents, books, and accounting records.
This press release is available on the websites www.digitalbros.comand www.1info.it
DIGITAL BROS GROUP
Listed on the Euronext STAR segment of Borsa Italiana, Digital Bros Group is a global company that has been operating since 1989 as a developer, publisher and distributor of videogames through its brand 505 Games. The Group distributes its contents on both retail and digital channels. Digital Bros Group is active around the world through its own direct operations in Italy, United States, UK, France, Spain, Germany, Czech Republic, China, Japan, Australia and Canada with approximately 330 employees.
For further information:
Digital Bros S.p.A.
Stefano Salbe
CFO
Tel. + 39 02 413031 ir@digitalbros.com
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Digital Bros S.p.A. published this content on 08 March 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 08 March 2022 17:42:05 UTC.
