Starbreeze AB (publ) interim Q3 2019 report

Tue, Nov 05, 2019 08:02 CET

Third quarter 2019

Net sales amounted to SEK 21.1 million (33.9). PAYDAY accounted for SEK 17.5 million (20.9).
EBITDA amounted to SEK -10.9 million (-37.9).
Depreciation, amortization and impairments totalled SEK 94.9 million (49.5).
Costs related to the reconstruction amounted to SEK 4.5 million for the quarter.
The loss before tax was SEK -68.4 million (-102.3).
Basic and diluted earnings per share were SEK -0.21 (-0.26).
The Stockholm District Court ruled that the reconstruction of Starbreeze was permitted to continue through 3 December 2019.

After the end of the period

As a part of the reorganisation, the company has issued an estimate of future cash flows from operations for the business. In the company’s judgment, these cash flows will be positive, based on expected new publishing agreements for PAYDAY 3 and PAYDAY: Crime War in the first half of 2020 and the anticipated release of PAYDAY 3 in 2022–2023.
Also as a part of the reconstruction process, an external accounting firm has valued the company’s assets. The assets (mainly the IP rights to PAYDAY) were valued at SEK 1,600 million. Corresponding assets were recognized on the consolidated balance sheet in the amount of SEK 341 million as of 30 September 2019.

Nine-month period 2019

Net sales decreased by 14 percent to SEK 228.9 million (267.5). PAYDAY accounted for SEK 58.6 million (77.3)
EBITDA amounted to SEK -143.3 million (63.4).
The loss before tax was SEK -295.7 million (-82.5).
Basic and diluted earnings per share were SEK -0.92 (-0.15).
Cash and cash equivalents at the end of the period amounted to SEK 113.2 million (147.5).

Acting CEO Mikael Nermark remarks on the report:

PAYDAY – The Core Business

Our work to re-focus the business on games with in-house IP is continuing apace and PAYDAY – our biggest asset – is central to our efforts. In parallel, we can see that our cost savings across the Group have begun to have effects during the quarter. We have also determined that it will be possible to further reduce administrative expenses once we are out of reconstruction. Reconstruction efforts progressed with the same focus in the third quarter and we requested, and was granted, an additional extension in September up until December.

With the focusing of the business, and primarily on PAYDAY, our goal is clear. Our focused efforts are showing effect all over our organization, which is already shown in what is being produced. The work with PAYDAY 3, our most important future product, has intensified and we are reworking the design phase.

We are preparing to find a good publishing partner in 2020. The key word here is partner. We are looking for someone as committed to PAYDAY as we are, a company that can help us further develop the brand over the next ten years. Our contacts with potential publishing partners in recent years, and especially in the last 12 months, have demonstrated the strength of the brand and I am confident that we are going to find the right ally for the future.

Universal, our publishing partner for the mobile game PAYDAY: Crime War, decided during the quarter to discontinue its mobile game publishing business. We are now working together to end the collaboration in the best way possible. We have assessed whether Starbreeze should publish the game independently, but have determined that we are likely to achieve a better outcome with a partner that is adept at user acquisition for this type of mobile game.

Within the framework of the reconstruction process, a letter to creditors was sent in mid-October to all creditors of Starbreeze AB and the five subsidiaries that are under construction. In the letter we laid out a suggestion on how Starbreeze plans to repay the debt in full. I hope that all our creditors will accept the suggested terms.

The company’s future and further development is my continued primary focus. A publishing deal for PAYDAY 3 and PAYDAY: Crime War are key components, but also making sure that we deliver products with high quality. It will be achieved by creating an environment where the company can focus on its task, something which we are seeing the start of. After almost a year in reconstruction and as the CEO of the company, my colleagues and I are focusing on bringing the reconstruction to a close in a positive way. As we are nearing the end of this year I look towards the future with optimism. A future where PAYDAY is our top priority.

For more information, please contact:

Maeva Sponbergs, EVP Communication
Tel: +46(0)8-209 208, email: 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 November 5, 2019 at 08:00 CET.

About Starbreeze

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 including certain subsidiaries is, since December 3 2018, in reconstruction. For more information, please visit starbreeze.com