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Starbreeze AB (publ) interim report Q1 2019

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First quarter 2019

  • Net sales amounted to SEK 47.8 million (110.1). Of the total, SEK 2.1 million (0.0) was generated by OVERKILL’s The Walking Dead (OTWD) and SEK 26.7 million (25.1) by PAYDAY.
  • EBITDA amounted to SEK -106.7 million (48.8).
  • Depreciation, amortization and impairments totaled SEK 49.9 million (42.6).
  • Costs related to the reconstruction amounted to SEK 11.0 million for the quarter.
  • The loss before tax was SEK -167.3 million (-6.4).
  • Basic and diluted earnings per share were SEK -0.52 (-0.02).
  • The reconstruction of Starbreeze was extended through 3 June 2019 by order of the Stockholm District Court.
  • The extraordinary general meeting held 7 March 2019 elected Jan Benjaminson, Torgny Hellström and Kerstin Sundberg as new regular directors for a term ending at the close of the next annual general meeting. Torgny Hellström was elected chairman of the board.
  • The rights owner, Skybound, terminated the license agreement for the title Overkill’s The Walking Dead. Starbreeze disputes the termination.

After the end of the period

  • Starbreeze and some of its subsidiaries have been in reconstruction since December 3, 2018. The company currently lacks sufficient secured funds to continue operating for the coming 12 months and a liquidity shortfall is expected before mid-year 2019 if no additional funds are provided.
  • Acer Inc. called for conversion of the outstanding convertible bond loan.
  • Starbreeze sold back the publishing rights to the game “10 Crowns” to Mohawk Games.
  • Shareholders were notified of the annual general meeting to be held 4 June 2019.
  • The company has decided to reclassify certain non-current liabilities to current liabilities as per 31 December 2018.

Acting CEO Mikael Nermark remarks on the report:

Focus on games
We decided in December 2018 to streamline operations and are now focused exclusively on the core business: game development and publishing of own and third-party games.

Sales in the first quarter amounted to SEK 47.8 million (110.1), of which PAYDAY 2 accounted for SEK 26.7 million (25.1). EBITDA amounted to SEK -106.7 million (48.8). The decrease in earnings is due primarily to lower net sales, higher administrative costs related to the reconstruction and the negative accounting effect of the sale of System Shock 3 amounting to SEK 68.1 million.

My main task is to secure financing for the company’s future operations. This involves both long-term financing we can use to build the Starbreeze of the future, but also making sure that the assets we have determined are unrelated to the core business are managed in a commercially viable way. Once this financing has been secured, we will be able to look ahead and present a more detailed strategy for the future.

In order to clarify the company’s business and value a restructuring of the company's assets and simplification of the legal structure is in progress as par of the reconstruction. All assets have been valued by an external party and the majority of core business assets were consolidated into two new legal entities. One includes employees and the other includes assets and the publishing business for titles developed by Starbreeze and third-party developers.

We are in a challenging situation. I stand united with the entire Starbreeze team in the efforts to get the business in order. We have a very strong asset in Payday, which is the foundation upon which we will build Starbreeze future.

FOR MORE INFORMATION:

Pia Rosin, Interim Head of Investor Relations
Ph: +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 7 May 2019 at 08:00 CET.

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