Digital Bros

Earnings Release • Sep 27, 2021

PRESS RELEASE

Digital Bros Group's Board of Directors approves the Draft Financial Statements for the year ending June 30 th , 2021

FY2020-2021 FULL YEAR RESULTS:

• REVENUES AT €150.7 MILLION (+ 8.4%)
• 96% OF REVENUES REALIZED ON INTERNATIONAL MARKETS
• 88% OF REVENUES REALIZED ON DIGITAL MARKETPLACES
• EBIT AT €30.6 MILLION (+52.3%), 20.5% OF NET REVENUES
• NET PROFIT OF € 32 MILLION
• POSITIVE NET FINANCIAL POSITION OF € 38.2 MILLION
• DIVIDEND PROPOSAL OF €0.18 PER SHARE
• ✓ Consolidated gross revenues of €150.7 million compared to €139 million at June 30 th , 2020 (+8.4% YoY)
• ✓ EBITDA of €57.8 million compared to €34.7 million at June 30 th , 2020, 38.7% of consolidated net revenues
• ✓ EBIT of €30.6 million compared to €20.1 million at June 30 th , 2020 (+52.3% YoY), 20.5% of consolidated net revenues
• ✓ Profit before tax of €34.8 million compared to €20.7 million on June 30 th , 2020
• ✓ Net profit increased to €32 million, more than doubled compared to €15 million on June 30 th , 2020
• ✓ Positive net financial position of €38.2 million (€43 million excluding the IFRS 16 effect), increased by €35.6 million compared to the end of the previous period
• ✓ Dividend per share proposed of €0.18
• ✓ The Group expects revenues and operating margins in line with the current fiscal year

RESULTS FOR THE 2020-2021 FISCAL YEAR (AT 30.06.2021)
30.06.21 30.06.20 Change Change % Euro thousand
Gross revenues	150,703	139,033	11,670	8.4%
Gross operating margin (EBITDA)	57,796	34,678	23,119	66.7%
Operating margin (EBIT)	30,549	20,055	10,494	52.3%
Profit/(loss) before tax	34,814	20,683	14,131	68.3%
Net profit/(loss)	31,936	14,949	16,987	n.m.

Milan, September 27 th , 2021 - The Board of Directors of Digital Bros Group (DIB:MI), which is listed on the STAR segment of Borsa Italiana and operates in the videogames market, today approved the Draft Financial Statements for the 2020/2021 fiscal year (July 1 st , 2020 – June 30th , 2021).

Digital Bros Group's key consolidated results for the 2020-2021 fiscal year, together with prior year comparatives, are as follows:

• Consolidated gross revenues of €150.7 million, increased compared to €139 million on June 30th, 2020 (+8.4% YoY);
• EBITDA of €57.8 million (38.7% of consolidated net revenues), significantly increased compared to €34.7 million on June 30th, 2020 (+66.7% YoY);
• EBIT of €30.6 million (20.5% of consolidated net revenues), significantly increased compared to €20.1 million on June 30th, 2020;
• Profit before tax of €34.8 million, significantly increased compared to €20.7 million on June 30 th, 2020;
• Net profit increased to €21.9 million, more than doubled compared to €14.9 million on June 30th, 2020.

RESULTS BY OPERATING SEGMENT

Consolidated gross revenues amounted to €150.70 million, increased compared to the €139.03 million recorded in the previous year (+8.4%). Net revenues growth was +12% due to the increased portion of digital sales that do not require revenues adjustments. Digital revenues in the period represented 88% of the total consolidated revenues in respect of the 63% in the previous year.

International markets revenues were 96% of the total consolidated revenues in the period.

A breakdown by operating segment at June 30th, 2021 compared to prior fiscal year is provided below:

Euro thousand	Gross revenues				Net revenues
	2021	2020	Change		2021	2020	Change
Premium Games	134,648	122,287	12,361	10.1%	133,406	116,521	16.885	14.5%
Free to Play	10,679	7,476	3,203	42.8%	10,679	7,476	3.203	42.9%
Italian Distribution	4,774	8,653	(3,879)	-44.8%	4,493	8,609	(4.117)	-47.8%
Other Projects	602	617	(15)	-2.5%	602	617	(15)	-2.5%
Total gross revenues	150,703	139,033	11,670	8.4%	149,180	133,223	15.957	12.0%

The Premium Games operating segment gross revenues represented 89% of the total consolidated gross revenues, increasing by 10.1%, as a result of the sales of Death Stranding, the Steam and next-gen versions of Control, Ghostrunner and the longlasting performance of Assetto Corsa.

A breakdown of Premium Games revenues by type of rights held by the Group for the period ended June 30 th , 2021 is provided below:

Video games developed by the internal studios and intellectual properties owned by the Group accounted for 22% of consolidated revenues in the period. 46% of revenues came from the sale of co-owned and long-term agreements (more than ten years) split in five intellectual properties. Revenues from other products, shown above as Publishing agreements, accounted for 32% of consolidated revenues.

The Free to Play operating segment revenues showed a 42.8% increase, from €7.48 million to €10.68 million. Gems of War, a video game launched by the Group more than five years ago and constantly updated and improved, is continuously outperforming quarter after quarter. This game became part of the Group's IP portfolio as a result of the acquisition of the Australian studio – Infinity Plus Two - in January 2021.

The Italian Distribution operating segment revenues decreased by 44.8% (from €8.65 million down to €4.77 million) in sync with the continuing decline of the retail distribution and accelerated by the effects of the COVID-19 pandemic.

Digital Bros Group's revenues and earnings by operating segments for the 2020-2021 fiscal year are as follows:

Euro thousand	Premium Games	Free to Play	Italian Distribution	Other Projects	Holding	Total
Gross revenues	134,648	10,679	4,774	602	0	150,703
EBITDA	59,949	5,723	(994)	25	(6,907)	57,796
EBIT	34,813	4,766	(1,154)	(48)	(7,828)	30,549

Gross operating margin / EBITDA for the period amounted to €57.80 million, corresponding to 38.7% of the consolidated net revenues, considerably growing by €23.12 million from the €34.68 million realized in the previous year.

The significant growth of the digital revenues portion in respect of the total sales pushed the EBIT to €30.55 million compared to €20.06 million as at June 30th, 2020 (+52.3%). Digital sales show better profitability margins due to the shorter value chain, less operational complexity and better payment conditions by customers. EBIT stood at 20.5% of the consolidated gross revenues for the period, up from the 15.5% realized in the previous year.

Amortization and depreciation increased by €11.35 million compared to June 30th, 2020 due to higher costs associated with the amortization of an incremental number of intellectual properties published and owned by the Group.

Operating costs amounted to €35.72 million (in line with the previous year), due to lower advertising expenditure, and offset by higher payroll costs.

Net financial income was positive for €4.27 million, against the negative €0.63 million achieved in the previous year.

The profit before tax amounted to €34.81 million, an increase of €14.13 million compared to profit before tax of €20.68 million as at June 30th, 2020.

Net profit for the period amounted to €31.94 million compared to €14.95 million as at June 30th, 2020.

Net profit attributable to the shareholders of the Group was €32 million.

Basic profit per share and diluted profit per share were €2.25 and €2.21 respectively compared to the profit per share of €1.05 and €1.03 at June 30th, 2020.

NET FINANCIAL POSITION

The Net Financial Position amounted to €38.3 million, increasing by €35.7 million compared to €2.6 million as at June 30th, 2020. Net of the IFRS 16 effect, the Net Financial Position amounted to positive €43 million compared to positive €7.9 million as at June 30th, 2020.

NET EQUITY

The Group's net equity was above €110 million at June 30 th , 2021.

PARENT COMPANY DIGITAL BROS S.P.A.

On June 30th, 2021, the parent company Digital Bros S.p.A. realized gross revenues of €9.6 million, down by 31.1% compared to €13.9 million realized in the previous fiscal year. Net profit amounted to €8.4 million compared to the net loss of €273 thousand on June 30th, 2020.

The parent company Digital Bros S.p.A. expects to realize a significant net profit in the next fiscal year.

TREASURY SHARES

Pursuant to Art. 2428 paragraph 2.3 of the Italian Civil Code, it is hereby disclosed that at June 30th , 2021 Digital Bros S.p.A. did not hold any treasury shares, as no transactions have been performed in the period.

DIVIDEND PAYMENT PROPOSAL

The Board of Directors proposes to the General Shareholders' Meeting to distribute a dividend of €0.18 per share, corresponding to a total consideration of €2,567 thousand. Upon resolution of the shareholders' meeting, the dividend will have a payment date on December 8th, 2021, with the exclusion of treasury shares in the portfolio, by clipping coupon no. 11 on December 06th , 2021, in accordance with the Borsa Italiana calendar, and record date on December 07th, 2021. The Board of Directors proposes to bring to profit the difference of €5,866 thousand.

CALL OF THE ANNUAL GENERAL MEETING

The Board of Directors resolved to call the Annual Shareholders' Meeting on October 27th, 2021, at 9.00 a.m. (one and only call).

The Shareholders' meeting is called to approve the financial statements for the fiscal year 2020-2021, the Directors' Report, the Statutory Auditors Report, the Auditors' Report, the Remuneration and Fees paid Report pursuant art. 123 of the Legislative Decree no. 58/98 and art. 84-quater of the Issuers' Regulation, the proposal for the appointment of the new external auditor for the 2022-2030 (nine fiscal years period) as formulated by the CCIRC (Board of Statutory Auditors) and the authorization to purchase and dispose of treasury shares.

The documentation for the shareholders will be made available to the public within the terms provided by the current laws.

SIGNIFICANT EVENTS DURING THE PERIOD

The most significant events during the period were as follows:

• On October 28th, 2020, the Shareholders' Meeting of Digital Bros Group approved the Financial Statements for the fiscal year 2019-2020, a dividend distribution of €0.15 per share and appointed the new Board of Directors and the new Board of Statutory Auditors for the three-year period 2021-2023 (until the approval of the Financial Statements for the fiscal year ending June 30th, 2023);
• On January 7th, 2021, the Group acquired 100% of Infinity Interactive Pty. and Infinity Interactive Two Pty, the Australian companies that own the intellectual property of the Puzzle Quest and Gems of War video games and are responsible for their development. The transaction was carried out through the subsidiary 505 Games Australia Pty., recently established by the Group. The total fixed consideration amounts to USD 4.5 million, inclusive of a profit scheme for the key employees. In addition to the fixed consideration, an earn-out scheme has been agreed on: the earn-out may range between 0% and 9% of the revenues generated by the products developed by subsidiaries over the next 48 months;
• On February 11th, 2021 the Group announced the forthcoming worldwide publication of the video game Eiyuden Chronicle - Hundred Heroes on both personal computers and consoles. The release of the video game is scheduled for the financial year ending June 30th, 2023 and the Group expects to lifetime revenues in excess of € 30 million;
• on June 15th, 2021 Digital Bros Group Shareholders Meeting approved the Remuneration policy pursuant to art. 123 ter, co 3-bis of the TUF and the adoption of the 2021-2027 Medium-Long Term Monetary Incentives Plan based on non-financial instruments, in favor of the executive directors and the top management of Digital Bros Group. The plan shall be valid from FY2021 to FY2027;
• On June 29th, 2021 the Group announced the contract between the subsidiary 505 Games S.p.A. and the Finnish Remedy Entertainment Plc for the co-publishing and development of a new videogame that will be available on PC, PlayStation 5 and Xbox Series X|S. Codenamed "Condor" the new videogame is a multiplayer cooperative experience built on Remedy's proprietary Northlight® technology. Condor is a spin-off of the critically acclaimed and award-winning Control. Condor's initial development investment amounts to Euro 25 million and, as for the current agreement in place for Control, Condor's development costs, marketing expenses and future revenues will be equally split between Digital Bros Group and Remedy Entertainment. Alongside Condor, Digital Bros and Remedy Entertainment have planned to further expand the Control-franchise with another, bigger-budget Control-game, to be agreed in more details in the future.

SUBSEQUENT EVENTS

There were no significant subsequent events.

OUTLOOK

The significant investment plan implemented by the Group in the last few fiscal years will continue in the next few years: the Group has over €76 million outstanding investments on 22 intellectual properties already confirmed, on the top of these the incremental investments in internal productions as a result of the acquisition of the Australian developer Infinity Plus Two and the establishment of the development studios Chrysalide Jeux et Divertissement (Canada) and Supernova Games Studios (Italy).

In FY2022 the Group expects to achieve the revenues levels realized this year even if most of the investments will hit the market starting FY2023 onwards. Last year new video games were mostly launched in the first six months, compared to the current fiscal when the two most important Premium Games products' releases, as well as the worldwide launch of the Free to Play video games Puzzle Quest 3 and Portal Knights, are expected in the second half of the year.

Operating margins are expected to keep the outstanding results achieved last fiscal year and in line with the revenues trend. As at June 30th, 2021, the EBIT amounted to 20.5% of net revenues.

As a result of the significant investments expected in the period, the net financial position, which was positive for over €38 million at the end of the year, is expected to decrease during the first three quarters. It is expected to increase in the last quarter following the launch of the two most anticipated Premium Games products.

ART. 154-BIS OF THE CONSOLIDATED FINANCE ACT

As required by paragraph 2, Art. 154-bis of the Consolidated Finance Act, 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.com and

DIGITAL BROS GROUP

Listed on the 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 325 employees.

For further information: Digital Bros S.p.A. Stefano Salbe CFO Tel. + 39 02 413031 ir@digitalbros.com

FINANCIAL STATEMENTS

DIGITAL BROS GROUP

Consolidated statement of financial position at June 30th , 2021

	Euro Thousand	June 30th, 2021	June 30th, 2020	Change
	Non-current assets
1	Property, plant and equipment	8,198	8,837	(639)	-7.2%
2	Investment property	0	0	0	0.0%
3	Intangible assets	66,776	33,248	33,528	n.m.
4	Equity investments	11,190	5,488	5,702	n.m.
5	Non-current receivables and other assets	5,089	6,744	(1,655)	-24.5%
6	Deferred tax assets	11,644	3,482	8,162	n.m.
7	Non-current financial activities	18,840	17,251	1,589	9.2%
	Total non-current assets	121,737	75,050	46,687	62.2%
	Current assets
8	Inventories	5,708	7,989	(2,281)	-28.6%
9	Trade receivables	18,283	28,168	(9,885)	-35.1%
10	Tax credit	1,500	3,100	(1,600)	-51.6%
11	Other current assets	19,279	32,816	(13,537)	-41.3%
12	Cash and cash equivalent	35,509	8,527	26,982	n.m.
13	Other financial assets	0	0	0	0.0%
	Total current assets	80,279	80,600	(321)	-0.4%
	TOTAL ASSETS	202,016	155,650	46,366	29.8%
	Capital and reserves
14	Share capital	(5,704)	(5,704)	0	0.0%
15	Reserves	(23,016)	(20,960)	(2,056)	9.8%
16	Treasury shares	0	0	0	0.0%
17	Retained earnings (accumulated losses)	(82,181)	(52,288)	(29,894)	57.2%
	Equity attributable to Parent Company	(110,901)	(78,952)	(31,949)	40.5%
	Equity attributable to minority shareholders	(890)	(979)	89	-9.1%
	Total equity	(111,791)	(79,931)	(31,860)	39.9%
	Non-current liabilities
18	Employee benefits	(719)	(659)	(60)	9.1%
19	Non-current provisions	(81)	(81)	0	0.0%
20	Other non-current payables and liabilities	(5,415)	(469)	(4,946)	n.m.
21	Non-current financial liabilities	(11,694)	(6,369)	(5,325)	83.6%
	Total non-current liabilities	(17,909)	(7,578)	(10,331)	n.m.
	Current liabilities
22	Trade payables	(47,193)	(41,140)	(6,053)	14.7%
23	Taxes payable	(10,782)	(5,473)	(5,309)	97.0%
24	Current provisions	0	0	0	0.0%
25	Other current liabilities	(9,932)	(4,721)	(5,211)	n.m.
26	Current financial liabilities	(4,409)	(16,807)	12,398	-73.8%
	Total net working capital	(72,316)	(68,141)	(4,175)	6.1%
	TOTAL LIABILITIES	(90,225)	(75,719)	(14,506)	19.2%
	TOTAL NET EQUITY AND LIABILITIES	(202,016)	(155,650)	(46,366)	29.8%

DIGITAL BROS GROUP

Consolidated Income Statement at June 30th, 2021

	Euro thousand	June 30th, 2021		June 30th, 2020		Change
1	Gross revenue	150,703	101.0%	139,033	104.4%	11,670	8.4%
2	Revenue adjustments	(1,523)	-1.0%	(5,810)	-4.4%	4,287	-73.8%
3	Net revenue	149,180	100.0%	133,223	100.0%	15,957	12.0%
4	Purchase of products for resale	(5,598)	-3.8%	(16,743)	-12.6%	11,145	-66.6%
5	Purchase of services for resale	(10,528)	-7.1%	(8,857)	-6.6%	(1,671)	18.9%
6	Royalties	(41,322)	-27.7%	(34,600)	-26.0%	(6,722)	19.4%
7	Changes in inventories of finished products	(2,281)	-1.5%	(5,920)	-4.4%	3,639	-61.5%
8	Total cost of sales	(59,729)	-40.0%	(66,120)	-49.6%	6,391	-9.7%
9	Gross profit (3+8)	89,451	60.0%	67,103	50.4%	22,348	33.3%
10	Other income	4,060	2.7%	3,458	2.6%	602	17.4%
11	Costs for services	(9,617)	-6.4%	(13,559)	-10.2%	3,941	-29.1%
12	Rent and Leasing	(311)	-0.2%	(247)	-0.2%	(64)	26.0%
13	Payroll costs	(24,617)	-16.5%	(20,908)	-15.7%	(3,709)	17.7%
14	Other operating costs	(1,170)	-0.8%	(1,169)	-0.9%	(1)	0.1%
15	Total operating costs	(35,715)	-23.9%	(35,883)	-26.9%	168	-0.5%
16	Gross operating margin (EBITDA) (9+10+15)	57,796	38.7%	34,678	26.0%	23,119	66.7%
17	Depreciation and amortisation	(24,600)	-16.5%	(13,266)	-10.0%	(11,334)	85.4%
18	Provisions	0	0.0%	0	0.0%	0	0.0%
19	Asset impairment charge	(2,647)	-1.8%	(2,206)	-1.7%	(441)	20.0%
20	Impairment reversal	0	0.0%	849	0.6%	(849)	n.m.
21	Total depreciation, amortization and	(27,247)	-18.3%	(14,623)	-11.0%	(12,624)	86.3%
	impairment
22	Operating margin (EBIT) (16+21)	30,549	20.5%	20,055	15.1%	10,494	52.3%
23	Interest and finance income	7,666	5.1%	4,037	3.0%	3,629	89.9%
24	Interest expense and finance costs	(3,401)	-2.3%	(3,409)	-2.6%	8	-0.2%
25	Net interest income/(expense)	4,265	2.9%	628	0.5%	3,637	n.m.
26	Profit/ (loss) before tax (22+25)	34,814	23.3%	20,683	15.5%	14,131	68.3%
27	Current tax	(11,910)	-8.0%	(6,363)	-4.8%	(5,547)	87.2%
28	Deferred tax	9,032	6.1%	629	0.5%	8,403	n.m.
29	Total taxes	(2,878)	-1.9%	(5,734)	-4.3%	2,856	-49.8%
30	Net profit/loss	31,936	21.4%	14,949	11.2%	16,987	n.m.
	attributable to the shareholders of the Group	32,025	21.5%	14,970	11.2%	17,055	n.m.
	attributable to minority shareholders	(89)	-0.1%	(21)	0.0%	(68)	n.m.
	Earnings per share
33	Total basic earnings per share (in Euro)	2.25		1.05		1.20	n.m.
34	Diluted earnings per share (in Euro)	2.21		1.03		1.18	n.m.

DIGITAL BROS GROUP

Consolidated statement of comprehensive income at June 30th, 2021

Euro thousand	June 30th, 2021	June 30th, 2020	Change
Profit (Loss) for the period (A)	31,936	14,949	16,987
Items that will not be subsequently recycled through profit or loss (B)	0	0	0
Actuarial gain (loss)	1	11	(10)
Income tax relating to actuarial gain (loss)	0	(2)	2
Exchange differences on translation of foreign operations	77	(46)	123
Income tax relating to exchange differences on translation of foreign operations	0	0	0
Fair value measurement of shares designated as "available for sale"	2,170	(706)	2,876
Tax effect regarding fair value measurement of shares designated as "available for sale"	(521)	169	(690)
Items that will subsequently be recycled through profit or loss (C)	1,727	(574)	2,301
Total other comprehensive income D= (B)+(C)	1,727	(574)	2,301
Total comprehensive income (loss) (A)+(D)	33,663	14,375	19,288
Attributable to:
Shareholders of the Group	33,752	14,396	19,355
Minority shareholders	(89)	(21)	(68)

DIGITAL BROS GROUP

Consolidated Cash Flow Statement at June 30th, 2021

	Euro thousand	June 30th, 2021	June 30th, 2020
A.	Opening net cash/debt	8,527	4,767
B.	Cash flows from operating activities
	Profit (loss) for the period	31,936	14,949
	Depreciation, amortisation and non-monetary costs:
	Provisions and impairment adjustments	(2,600)	2,206
	Amortisation of intangible assets	22,829	11,400
	Depreciation of property, plant and equipment	1,771	1,866
	Net change in deferred tax assets	(8,162)	(737)
	Net change in employee benefit provisions	60	86
	Net change in other non-current liabilities	2,063	757
	SUBTOTAL B.	47,897	30,527
C.	Change in net working capital
	Inventories	2,281	5,920
	Trade receivables	9,867	(588)
	Current tax assets	1,600	2,976
	Other current assets	14,301	(4,768)
	Trade payables	6,053	16,509
	Current tax liabilities	5,309	4,335
	Current provisions	0	(856)
	Other current liabilities	5,211	960
	Other non-current liabilities	4,946	(454)
	Non-current receivables and other assets	1,655	2,578
	SUBTOTAL C.	51,223	26,612
D.	Cash flows from investing activities
	Net payments for intangible assets	(54,502)	(27,403)
	Net payments for property, plant and equipment	(1,132)	(7,119)
	Net payments for non-current financial assets	(5,702)	(3,782)
	SUBTOTAL D.	(61,337)	(38,304)
E.	Cash flows from financing activities
	Capital increases	0	0
	Changes in financial liabilities	(7,073)	(2,043)
	Changes in financial assets	(1,589)	(13,032)
	SUBTOTAL E.	(8,662)	(15,075)
F.	Changes in consolidated equity
	Dividends distributed	(2,139)	0
	Changes in treasury shares held	0	0
	Increases (decreases) in other equity components	0	0
	SUBTOTAL F.	(2,139)	0
G.	Cash flow for the period (B+C+D+E+F)	26,982	3,760
H.	Closing net cash/debt (A+G)	35,509	8,527

SEGMENT REPORTING

Consolidated Income Statement per Operating Segment at June 30th, 2021

	Euro Thousand	Premium Games	Free to Play	Italian Distribution	Other projects	Holding	Total
1	Gross revenue	134,648	10,679	4,774	602	0	150,703
2	Revenue adjustments	(1,242)	0	(281)	0	0	(1,523)
3	Net revenue	133,406	10,679	4,493	602	0	149,180
4	Purchase of products for resale	(3,169)	0	(2,429)	0	0	(5,598)
5	Purchase of services for resale	(9,121)	(1,404)	0	(3)	0	(10,528)
6	Royalties	(41,127)	(192)	0	(3)	0	(41,322)
7	Changes in inventories of finished products	(1,333)	0	(948)	0	0	(2,281)
8	Total cost of sales	(54,750)	(1,596)	(3,377)	(6)	0	(59,729)
9	Gross profit (3+8)	78,656	9,083	1,116	596	0	89,451
10	Other income	1,439	2,582	0	0	39	4,060
11	Cost of services	(6,658)	(406)	(695)	(184)	(1,674)	(9,617)
12	Rent and leasing	(99)	(53)	(28)	(1)	(130)	(311)
13	Payroll costs	(13,091)	(5,360)	(1,225)	(351)	(4,590)	(24,617)
14	Other operating costs	(298)	(123)	(162)	(35)	(552)	(1,170)
15	Total operating costs	(20,146)	(5,942)	(2,110)	(571)	(6,946)	(35,715)
16	Gross operating margin (EBITDA) (9+10+15)	59,949	5,723	(994)	25	(6,907)	57,796
17	Depreciation and amortisation	(22,552)	(957)	(160)	(73)	(858)	(24,600)
18	Provisions	0	0	0	0	0	0
19	Asset impairment charge	(2,584)	0	0	0	(63)	(2,647)
20	Impairment reversal	0	0	0	0	0	0
21	Total depreciation, amortization and impairment	(25,136)	(957)	(160)	(73)	(921)	(27,247)
22	Operating margin (EBIT) (16+21)	34,813	4,766	(1,154)	(48)	(7,828)	30,549

FINANCIAL STATEMENTS

DIGITAL BROS S.p.A.

Statement of financial position at June 30th, 2021

	Euro Thousand	June 30th, 2021	June 30th, 2020	Change
	Non-current assets
1	Property, plant and equipment	6,576	7,273	(697)	-9.6%
2	Investment property	0	0	0	0.0%
3	Intangible assets	163	196	(33)	-16.6%
4	Equity investments	29,416	23,635	5,781	24.5%
5	Non-current receivables and other assets	4,868	6,542	(1,674)	-25.6%
6	Deferred tax assets	31	613	(582)	-95.0%
7	Non-current financial activities	18,840	17,251	1,589	9.2%
	Total non-current assets	59,894	55,510	4,384	7.9%
	Current assets
8	Inventories	1,494	1,987	(493)	-24.8%
9	Trade receivables	893	1,866	(973)	-52.2%
10	Receivables from subsidiaries	27,094	14,455	12,639	87.4%
11	Tax credit	590	2,221	(1,631)	-73.4%
12	Other current assets	524	5,301	(4,777)	-90.1%
13	Cash and cash equivalent	1,038	858	180	20.9%
14	Other financial assets	0	0	0	n.m.
	Total current assets	31,633	26,688	4,945	18.5%
	TOTAL ASSETS	91,527	82,198	9,329	11.4%
	Capital and reserves
15	Share capital	(5,704)	(5,704)	0	0.0%
16	Reserves	(22,865)	(20,886)	(1,979)	9.5%
17	Treasury shares	0	0	0	0.0%
18	Retained earnings (accumulated losses)	(26,772)	(20,478)	(6,294)	30.7%
	Total equity	(55,341)	(47,068)	(8,273)	17.6%
	Non-current liabilities
19	Employee benefits	(391)	(429)	38	-8.9%
20	Non-current provisions	(81)	(81)	0	0.0%
21	Other non-current payables and liabilities	(505)	(469)	(36)	7.8%
22	Non-current financial liabilities	(7,549)	(4,941)	(2,608)	52.8%
	Total non-current liabilities	(8,526)	(5,920)	(2,606)	44.0%
	Current liabilities
23	Trade payables	(1,444)	(2,026)	582	-28.7%
24	Payables to subsidiaries	(16,437)	(13,646)	(2,791)	20.5%
25	Taxes payable	(5,421)	(159)	(5,262)	n.m.
26	Current provisions	0	0	0	n.m.
27	Other current liabilities	(957)	(1,205)	248	-20.5%
28	Current financial liabilities	(3,401)	(12,174)	8,773	-72.1%
	Total net working capital	(27,660)	(29,210)	1,550	-5.3%
	TOTAL LIABILITIES	(36,186)	(35,130)	(1,056)	3.0%
	TOTAL NET EQUITY AND LIABILITIES	(91,527)	(82,198)	(9,329)	11.4%

DIGITAL BROS S.P.A

Income statement at June 30th, 2021

	Euro thousand	June 30th , 2021		June 30th, 2020		Change
1	Gross revenue	9,569	103.0%	13,881	125.5%	(4,312)	-31.1%
2	Revenue adjustments	(281)	-3.0%	(2,821)	-25.5%	2,540	-90.0%
3	Net revenue	9,288	100.0%	11,060	100.0%	(1,772)	-16.0%
4	Purchase of products for resale	(2,428)	-26.1%	(5,515)	-49.9%	3,087	-56.0%
5	Purchase of services for resale	0	0.0%	0	0.0%	0	0.0%
6	Royalties	0	0.0%	0	0.0%	0	0.0%
7	Changes in inventories of finished products	(493)	-5.3%	(1,760)	-15.9%	1,267	-72.0%
8	Total cost of sales	(2,921)	-31.5%	(7,275)	-65.8%	4,354	-59.8%
9	Gross profit (3+8)	6,367	68.5%	3,785	34.2%	2,582	68.2%
10	Other income	174	1.9%	222	2.0%	(48)	-21.5%
11	Cost of services	(2,362)	-25.4%	(2,849)	-25.8%	487	-17.1%
12	Rent and Leasing	(134)	-1.4%	(125)	-1.1%	(9)	7.1%
13	Payroll costs	(5,459)	-58.8%	(4,890)	-44.2%	(569)	11.7%
14	Other operating costs	(570)	-6.1%	(538)	-4.9%	(32)	6.0%
15	Total operating costs	(8,525)	-91.8%	(8,402)	-76.0%	(123)	1.5%
16	Gross operating margin (EBITDA) (9+10+15)	(1,984)	-21.4%	(4,395)	-39.7%	2,411	-54.8%
17	Depreciation and amortisation	(941)	-10.1%	(935)	-8.5%	(6)	0.7%
18	Provisions	0	0.0%	0	0.0%	0	0.0%
19	Asset impairment charge	(79)	-0.8%	(190)	-1.7%	111	-58.6%
20	Impairment reversal	0	0.0%	591	5.3%	(591)	n.m.
	Total depreciation, amortization and
21	impairment	(1,020)	-11.0%	(534)	-4.8%	(486)	91.0%
22	Operating margin (EBIT) (16+21)	(3,004)	-32.3%	(4,929)	-44.6%	1,925	-39.0%
23	Interest and finance income	13,719	147.7%	5,466	49.4%	8,253	n.m.
24	Interest expense and finance costs	(1,575)	-17.0%	(1,388)	-12.5%	(187)	13.5%
25	Net finance income (expense)	12,144	130.7%	4,078	36.9%	8,066	n.m.
26	Profit/(loss) before tax (22+25)	9,140	98.4%	(851)	-7.7%	9,991	n.m.
27	Current tax	(644)	-6.9%	712	6.4%	(1,356)	n.m.
28	Deferred tax	(63)	-0.7%	(134)	-1.2%	71	-53.0%
29	Total income tax expense	(707)	-7.6%	578	5.2%	(1,285)	n.m.
30	Profit/(loss) for the period (26+29)	8,433	90.8%	(273)	-2.5%	8,706	n.m.

DIGITAL BROS S.P.A.

Cash flows statement at June 30th, 2021

	Euro thousand	June 30th, 2021	June 30th, 2020
A.	Opening net cash/debt	858	83
B.	Cash flows from operating activities
	Profit (loss) for the period attributable to the Group	8,433	(273)
	Depreciation, amortisation and non-monetary costs:
	Provisions and impairment losses	(79)	(190)
	Amortisation of intangible assets	132	151
	Depreciation of property, plant and equipment	809	784
	Net change in advace taxes	582	(31)
	Net change in other provisions	0	0
	Net change in employee benefit provisions	(38)	(7)
	Net change in other non-current liabilities	1,979	(198)
	SUBTOTAL B.	11,818	236
C.	Variazione del capitale circolante netto
	Inventories	493	1,760
	Trade receivables	973	(606)
	Receivables due from subsidiaries	(12,639)	13,681
	Current tax assets	1,631	2,271
	Other current assets	4,777	(4,298)
	Trade payables	(582)	1,110
	Payables from subsidiaries	2,791	4,558
	Current tax liabilities	5,262	14
	Current provisions	0	380
	Other current liabilities	(248)	584
	Other non-current liabilities	36	(453)
	Non-current receivables and other assets	1,737	2,584
	SUBTOTAL C.	4,231	21,585
D.	Cash flows from investing activities
	Net payments for intangible assets	(99)	(91)
	Net payments for property, plant and equipment	(112)	(5,240)
	Net payments for non-current financial assets	(5,765)	(7,113)
	SUBTOTAL D.	(5,976)	(12,444)
E.	Cash flows from financing activities
	Capital increases	0	0
	Changes in financial liabilities	(6,165)	6,708
	Changes in financial assets	(1,589)	(15,309)
	SUBTOTAL E.	(7,754)	(8,601)
F.	Changes in consolidated equity
	Dividends distributed	(2,139)	0
	Changes in treasury shares held	0	0
	Increases (decreases) in other equity components	0	0
	SUBTOTAL F.	(2,139)	0
G.	Cash flow for the period (B+C+D+E+F+G)	180	776
H.	Closing net cash/debt (A+H)	1,038	858