Starbreeze AB (publ) full year report and Q4 2018

Fourth quarter 2018

  • Net sales amounted to SEK 82.5 million (103.8). Of the total, OVERKILL’s The Walking Dead (OTWD) generated SEK 34.1 million (0.0) and PAYDAY generated SEK 20.4 million (20.4).
  • EBITDA* was SEK -73.7 million (6.3).
  • Depreciation, amortization and impairments totaled SEK 1,428.6 million (49.4).
  • The loss before tax amounted to SEK -1,264.7 million (-67.9).
  • Basic and diluted earnings per share were SEK -3.96 (-0.22).
  • The company has impaired assets in the amount of SEK 1,401.9 million.
  • As four of seven board members resigned from the board in the fourth quarter, the board does not hold quorum. As a consequence, this year-end report is published by the Acting CEO.
  • Mikael Nermark has been appointed Acting CEO and Claes Wenthzel has been appointed Acting CFO.
  • The Stockholm District Court has approved reconstruction of Starbreeze AB (publ) and its subsidiaries Starbreeze Publishing, Starbreeze Production, Starbreeze Studios, Enterspace and Enterspace International.
  • The company has decided to divide the operations in core and non-core. The decision entails that operational and financial resources will be focused to the core business.

Full year 2018

  • Net sales amounted to SEK 350.0 million (361.4). Of the total, OTWD generated SEK 34.1 million (0.0) and PAYDAY generated SEK 97.7 million (120.3).
  • EBITDA* was SEK -10.3 million (-53.6).
  • The loss before tax was SEK -1,347.2 million (-176.2).
  • Basic and diluted earnings per share were SEK -4.20 (-0.55).
  • Cash and cash equivalents at the end of the period amounted to SEK 72.4 million (233.8).
  • As the board does not hold quorum, proposal regarding dividend will be announced later.

After the end of the period

  • Shareholders in Starbreeze AB (publ) were notified that an extraordinary general meeting will be held March 7, 2019.
  • A distribution agreement was made with Universal Games and Digital Platforms for the Starbreeze mobile title PAYDAY: Crime War.
  • Starbreeze is selling back the publishing rights to System Shock 3 to OtherSide Entertainment.

* See pages 22 and 23 and Note 6 in the full year report concerning derivation of the key figure.

Acting CEO Mikael Nermark remarks on the report:

"Focus on the Core Business
The fourth quarter was a turbulent period for Starbreeze, with the parent company Starbreeze AB and a number of subsidiaries going into reconstruction. After having served as CEO for just over two months, I remain optimistic that we will come through this period in a good way and emerge stronger from the transformation. I feel confident about the strategic route we have taken. Going forward, we will focus on the core business: game development and publishing.

Quarterly results
Net sales in the fourth quarter were SEK 82.5 million (103.8). The decrease is due mainly to sales related to the publishing title Dead by Daylight in the fourth quarter of 2017. Those publishing rights were sold in March 2018. Net sales from PAYDAY 2 were SEK 20.4 million (20.4). Sales related to OVERKILL’s The Walking Dead (OTWD), released in November 2018, did not meet our financial expectations and amounted to SEK 34.1 million.

EBITDA amounted to SEK -73.7 million (6.3). The cost increase is attributable mainly to marketing in connection with the release of OTWD. Cash used during the quarter amounted to SEK -75.5 million (-197.7).

The value of the group’s assets was tested in connection with closing the annual accounts. This resulted in a non-cash impairment loss, taken for accounting purposes, of SEK 1,401.9 million. Most of the recent years’ investments have not been successful and have caused the current financial situation.

The future of the business
We have decided to streamline operations and are now focused entirely on the group’s core business: game development and publishing. The company has also commenced the process to find financial partners to finance all or parts of its future operations.

We signed an agreement in February with Universal Games and Digital Platforms on the distribution of the mobile game PAYDAY: Crime War. PAYDAY is Starbreeze most successful brand and we are now continuing to refine our core business.

We are seeking external collaborative partners to ensure that operations that do not constitute core business develop in a positive manner.

As the company is under reconstruction, it is naturally difficult to predict the future, but the plan we are devising is aimed at creating stable development of the core business and thus long-term share-holder value. I can guarantee that everyone at the company is doing their utmost to promote the favourable development of Starbreeze."

FOR MORE INFORMATION:
Pia Rosin
Interim Head of Investor Relations
Tel: +46 8 209 208
ir@starbreeze.com

Starbreeze AB is required to disclose this information under the EU Market Abuse Regulation and the Securities Market Act. The information was provided by the above contact person for publication on 20 February 2019 at 08:00 CET.

About Us

Starbreeze is an independent developer, creator, publisher and distributor of PC and console targeting the global market, with studios in Stockholm, Barcelona and Paris. Housing the smash hit IP PAYDAY, Starbreeze develops games based on proprietary and third-party rights, both in-house and in partnership with external game developers. Starbreeze shares are listed on Nasdaq Stockholm under the tickers STAR A and STAR B with the ISIN-codes SE0007158928 (A share) and SE0005992831 (B share). Starbreeze announced via a press release on December 3, 2018 that the company, including certain subsidiaries, entered into reconstruction. For more information, please visit starbreeze.com

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