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Starbreeze Interim / Quarterly Report 2021
3204_10-q_2021-11-12_302a3e3b-1b1b-4297-8eff-9f19ab3d69cc.pdf
Interim / Quarterly Report
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2021
Third quarter 2021
- Net sales amounted to SEK 34.7 million (32.1). PAYDAY accounted for SEK 31.2 million (31.1).
- EBITDA* amounted to SEK 19.9 million (11.7).
- Amortization, depreciation and impairments amounted to SEK 15.0 million (7.8).
- Profit before tax was SEK -8.0 million (-8.2).
- Basic and diluted earnings per share was SEK -0.01 (-0.02).
Nine-month period 2021
- Net sales amounted to SEK 94.6 million (85.4). PAYDAY accounted for SEK 89.6 million (80.8).
- EBITDA* amounted to SEK -9.4 million (44.0).
- EBITDA**, adjusted for one-off effects related to PAYDAY Crime War license agreement amounted to SEK 59.3 million (44.0).
- Amortization, depreciation and impairments amounted to SEK 45.0 million (28.7).
- Profit before tax was SEK -92.3 million (-114.1).
- Basic and diluted earnings per share was SEK -0.12 (-0.30).
- Cash and cash equivalents amounted to SEK 108.4 million (193.2).
| KEY FIGURES | 2021 | 2020 | 2021 | 2020 | 2020 |
|---|---|---|---|---|---|
| SEKk | Q3 | Q3 | JAN-SEP | JAN-SEP | JAN-DEC |
| Net sales | 34,703 | 32,096 | 94,636 | 85,414 | 118,006 |
| EBITDA* | 19,890 | 11,651 | -9,364 | 43,987 | 49,317 |
| EBITDA adjusted ** | 19,890 | 11,651 | 59,308 | 43,987 | 49,317 |
| Profit (-loss) before tax | -7,980 | -8,194 | -92,260 | -114,117 | -130,473 |
| Earnings per share, SEK | -0.01 | -0.02 | -0.12 | -0.30 | -0.28 |
| Cash flow from operations | 23,571 | -33,446 | 61,422 | -19,121 | -24,640 |
| Net sales per employee | 251 | 263 | 706 | 694 | 959 |
- See page 19 for definitions of key figures.
** Adjusted for one-off effects related to PAYDAY Crime War license agreement.
Starbreeze in brief
Starbreeze is an independent developer, creator and distributor of games for PC and console with a global market focus and studios in Stockholm, Barcelona and Paris. Focusing on the successful PAYDAY brand, 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 (Class A) and SE0005992831 (Class B).
More information: starbreeze.com
Starbreeze Interim Report Q3 2021
CEO's comments
8 YEARS WITH PAYDAY 2
A strong quarter with the PAYDAY anniversary and our highest ever MAU.
I can report that the interest in PAYDAY remains strong and player activity is high. The number of monthly active users (MAU), reached 1.2 million in one of the months of the third quarter. This is the highest level since we started tracking the number of active players in PAYDAY 2 and 200 000 more players than in the third quarter of 2020. At the same time, we increased net sales on Steam, against a strong third quarter of the preceding year. Successful sales during Steam's summer sale made some contribution. During the quarter, sales of the base game increased by 10% and of DLC (add-on bundles) by 4%, and in the first nine months of the year, sales increased by 29% compared to the same period in 2020. In line with our development plan, we released further exciting content from the City of Gold season in the third quarter.
We also saw a substantial improvement in our financial performance in the third quarter. EBITDA was SEK 19.9 million, an increase of SEK 8.2 million on the same period of the preceding year. For the period to September, EBITDA, adjusted for one-off effects, amounted to SEK 59.3 million against SEK 44.0 million in the same period in 2020.
PAYDAY: The Heist was launched in 2011, and the sequel PAYDAY 2 was launched on PC in the third quarter of 2013. This means that so far we have had eight fantastic years with PAYDAY 2 and a full ten years with PAYDAY as a franchise. In August and October, we ran campaigns to mark these two anniversaries. In addition to the usual launch of new content for PAYDAY 2, we treated our fans to a much-appreciated four-part documentary series detailing key events in the life of the game. To date, PAYDAY has been installed by nearly 36 million players worldwide, and we have released over 220 add-on bundles. This is a tremendous level of development and a journey that is still ongoing, along with 7.6 million members of the PAYDAY 2 community on Steam – the highest number for any game on the platform. We are continuing to develop new content for PAYDAY 2 and are planning a series of new activities leading up to the launch of PAYDAY 3 in 2023. I see the high number of monthly active users and the increased sales as clear evidence that the team at Starbreeze has mastered the games-as-a-service model.
At the same time, the development of PAYDAY 3 is proceeding according to plan. We have strengthened and expanded our game development team and are continuously recruiting new staff for our studios in Stockholm and Paris. But we also have several new employees working in other locations and in other countries. Since the beginning of the year, we have welcomed 56 new employees from eight countries to our team.
In order to offer our players even more content and better service, while enabling us to tailor our communication to different customer segments, we launched the first version of our new customer portal - Starbreeze Accounts - in October. Through this system, we can offer our players exclusive in-game objects and incentives linked to current and future games regardless of the gaming platform. The community is the most important resource we have, and we will continue to offer them new and innovative ways to interact with us and other players.
PAYDAY 2
Source: PAYDAY 2 game data through Starbreeze telemetry
Peak number of monthly active users (MAU)
1,223,104
for PAYDAY 2 during Q3
Overall, we see continued strong growth for PAYDAY 2 and on-track development of PAYDAY 3. With the launch of our customer portal, we are working hard to create the best possible foundation for the successful launch of PAYDAY 3 and other future games. The fact that we are continuing to improve our finance performance demonstrates the strength of our strategy and the skills of our team. We are continuing to work on delivering on our long-term goals: to create games where players can collaborate and take part in creating their gaming experience, and to create a basis for launching additional games in the future.
Tobias Sjögren
CEO Starbreeze
Starbreeze Interim Report Q3 2021
SIGNIFICANT EVENTS DURING THE QUARTER
A summary of significant events during the quarter follows below. Please visit Starbreeze.com for detailed information about events during the quarter.
Impact of COVID-19
Starbreeze is continuously monitoring the impact of the ongoing COVID-19 pandemic on the business. Ongoing revenue-generating operations have not shown any disruption, because the majority of revenues are generated by a digital distribution model in which product availability and interaction among players is uninterrupted regardless of general public social distancing measures. All the employees continued to work from home during the third quarter but starting from October, all employees are welcome back to the office. The company's assessment that the short-term impact on ongoing projects will be minor still stands, but the long-term effects on future business and the impact on the efficiency of the project organizations may result in delayed deliveries. The impact on the company's revenues has so far been positive.
Starbreeze Interim Report Q3 2021
SIGNIFICANT EVENTS AFTER THE END OF THE PERIOD
On October 28, the company launched its new player platform under the working name Starbreeze Accounts.
No other significant events have occurred since end of the period.
Starbreeze Interim Report Q3 2021
SALES AND PROFIT
The comparative period for sales and profit is the corresponding period of the preceding year.
Third quarter 2021
Sales
Net sales for the third quarter of 2021 amounted to SEK 34.7 million (32.1), of which PAYDAY accounted for SEK 31.2 million (31.1). Net sales for PAYDAY increased by 0.4% compared to the corresponding period of the preceding year. Net sales was SEK 26.7 million (25.0) for PC and SEK 4.7 million (6.4) for Console. Net sales for the base game PAYDAY 2 on Steam increased by 10% (SEK 0.6 million) compared to the third quarter of 2020, and net sales of DLC (sale of add-on bundles) increased by 4% (SEK 0.7 million).
Console revenues are SEK 1.6 million lower than the corresponding period of the preceding year, related to lower sales volume in the period. The change in the exchange rate against the dollar had a negative impact on net sales of SEK 0.5 million compared to the average exchange rate for the corresponding period of the preceding year. Adjusted for exchange rate fluctuations, the increase in sales on Steam was about 8%.
In the period, SEK 3.3 million of net sales was related to sales revenue generated by previously released games defined as non-core activities, mainly related to the game Ten Crowns. In the corresponding period of the preceding year, this revenue amounted to SEK 0.7 million.
Expenses
Direct costs amounted to SEK 15.4 million (6.6) and consist of expenses related to game production and game development. Direct costs include depreciation and amortization of SEK 10.9 million (3.7). The increase is mainly due to increased amortization of intangible assets as the depreciation plan for the company's assets has been revised for 2021 onwards.
Capitalized development expenditure reduced direct costs by SEK 17.8 million (16.0) and relates to the games PAYDAY 2 and PAYDAY 3.
Selling and marketing expenses amounted to SEK 2.1 million (2.0) and relate mainly to employee expenses.
Administrative expenses amounted to SEK 14.7 million (14.4) and relate to items including office expenses and salaries of employees who do not work in game production or marketing, as well as external expenses.
Administrative expenses include amortization of SEK 4.1 million (4.2). Capitalized development expenditure reduced administrative expenses by SEK 7.3 million (5.2) and relates to the games PAYDAY 2 and PAYDAY 3.
Other revenue amounted to SEK 2.4 million (-5.4). This item consists mainly of currency effects due to changes in the USD and EUR exchange rates against SEK. The currency effect had a positive impact on the individual quarter.
Profit
Earnings before interest, taxes, depreciation and amortization (EBITDA) amounted to SEK 19.9 million (11.7).
Sales and profit
| SEKk | 2021 Q3 | 2020 Q3 | 2021 JAN-SEP | 2020 JAN-SEP |
|---|---|---|---|---|
| Net sales | 34,703 | 32,096 | 94,636 | 85,414 |
| EBITDA * | 19,890 | 11,651 | -9,364 | 43,987 |
| EBITDA adjusted ** | 19,890 | 11,651 | 59,308 | 43,987 |
| Profit (-loss) before tax | -7,980 | -8,194 | -92,260 | -114,117 |
| Net profit (-loss) for the | -8,049 | -8,053 | -88,920 | -113,686 |
| Earnings per share, SEK | -0.01 | -0.02 | -0.12 | -0.30 |
| Net sales growth, % | 8.1 | 52.0 | 10.8 | -62.7 |
| EBITDA margin, % | 57.3 | 36.3 | -9.9 | 51.5 |
| EBITDA margin, % adjusted** | 57.3 | 36.3 | 62.7 | 51.5 |
*See page 19 for the definitions of key figures
** Adjustment for on-off effects related to PAYDAY Crime War licence agreement
Starbreeze Interim Report Q3 2021
The share of profit and loss in the joint venture StarVR Corporation amounted to SEK 0.1 million (-0.4).
Net financial income/expense was reduced during the quarter by interest on lease liabilities of SEK 0.3 million (0.4), an effect of the reporting standard IFRS 16.
Net financial income/expense
Net financial income/expense amounted to SEK -12.9 million (-12.0). The expenses are attributable mainly to the company's convertible loan and associated liability of SEK -12.7 million (-10.7).
Profit before tax and net profit for the period
Profit before tax for the quarter amounted to SEK -8.0 million (-8.2). Net profit for the quarter amounted to SEK -8.0 million (-8.1). Basic and diluted earnings per share was SEK -0.01 (-0.02).
Nine-month period 2021
Sales
Net sales amounted to SEK 94.6 million (85.4), of which PAYDAY accounted for 89.6 million (80.8). Net sales was SEK 76.5 million (64.4) for PC and SEK 13.7 million (17.0) for Console.
Net sales for the base game PAYDAY 2 on Steam increased by 14% (SEK 2.4 million) compared to the corresponding period in 2020 and net sales of DLC (sale of add-on bundles) increased by 21% (SEK 8.4 million). Console revenues are SEK 3.3 million lower than the corresponding period of the preceding year, related to negative currency effects and lower sales volume in the period. In the period, SEK 4.2 million of net sales was related to sales revenue generated by previously released games defined as non-core activities, mainly related to the game Ten Crowns. In the corresponding period of the preceding year, this revenue amounted to SEK 3.6 million.
The change in the exchange rate against the dollar had a negative impact on net sales of SEK 7.6 million compared to the average exchange rate for the corresponding period of the preceding year. Adjusted for exchange rate fluctuations, the increase in sales on Steam was about 29%.
Expenses
Direct costs amounted to SEK 41.2 million (22.3) and consist of expenses related to game production and game development. The increase is mainly due to increased amortization of intangible assets of SEK 15.5 million as the depreciation plan for the company's assets has been revised for 2021 onwards. Direct costs include depreciation and amortization of SEK 31.6 million (16.1).
Capitalized development expenditure reduced direct costs by SEK 61.4 million (53.3) and relates to the games PAYDAY Crime War, PAYDAY 2 and PAYDAY 3.
Selling and marketing expenses amounted to SEK 7.4 million (6.3) and relate mainly to employee expenses.
Administrative expenses amounted to SEK 38.1 million (53.3) and relate to items including office expenses and salaries of employees who do not work in game production or marketing, as well as expenses related to external services. The decrease in administrative expenses is mainly due to lower costs of external services and the reconstruction process.
Administrative expenses include amortization of SEK 13.4 million (12.6). Capitalized development expenditure reduced administrative expenses by SEK 21.9 million (17.4) and relates to the games PAYDAY Crime War, PAYDAY 2 and PAYDAY 3.
Starbreeze Interim Report Q3 2021
Other revenue amounted to SEK 6.4 million (11.8). This item consists mainly of currency effects due to changes in the USD and EUR exchange rates against SEK. The comparative figure includes net profit attributable to divested subsidiaries of SEK 6.4 million.
Other expenses amount to SEK -68.7 million (0.0) and refers to previously capitalized development expenditure related to PAYDAY Crime War, which was reversed when a license agreement was signed with PopReach for launch of the game. These expenses are non-cash items.
Profit
Earnings before interest, taxes, depreciation and amortization (EBITDA) amounted to SEK -9.4 million (44.0). Adjusted for one-off effects related to the license agreement for PAYDAY Crime War, EBITDA was SEK 59.3 million (44.0).
The share of profit and loss in the joint venture StarVR Corporation amounted to SEK 0.2 million (-1.7). Net financial income/expense was reduced during the period by interest on lease liabilities of SEK 0.9 million (-1.2), an effect of the IFRS 16 reporting standard.
Net financial income/expense
Net financial income/expense amounted to SEK -37.9 million (-129.4). The expenses are attributable mainly to the company's convertible loan and associated liability of SEK -36.2 million (-30.7). In the corresponding period of the preceding year, we had a negative impact of SEK 90.9 million related to the renegotiation loss on convertible loan.
Profit before tax and net profit for the period
Profit before tax for the period was SEK -92.3 million (-114.1). Net profit for the period amounted to SEK -88.9 million (-113.7). Basic and diluted earnings per share was SEK -0.12 (-0.30).
Specification of net financial income/expense
| 2021 | 2020 | 2021 | 2020 | 2020 | |
|---|---|---|---|---|---|
| SEKk | Q3 | Q3 | JAN-SEP | JAN-SEP | JAN-DEC |
| Interest on convertible bonds | -7,185 | -6,116 | -20,497 | -16,397 | -22,766 |
| Net profit (-loss) from StarVR Corp. | 99 | -380 | 169 | -1,746 | -2,112 |
| Renegotion loss convertible bond | - | - | - | -90,934 | -90,934 |
| Implicit interest | -5,518 | -4,618 | -15,679 | -14,318 | -19,148 |
| Interest Nordea | - | 125 | -1,035 | -3,409 | -3,974 |
| Interest on lease liability | -267 | -366 | -874 | -1,169 | -1,509 |
| Interest on non-current liabilities according composition proposal | - | -800 | - | -1,563 | -1,563 |
| Other items | -32 | 143 | 12 | 161 | 658 |
| Total | -12,903 | -12,011 | -37,904 | -129,373 | -141,348 |
9 Starbreeze Interim Report Q3 2021
OTHER FINANCIAL INFORMATION
The comparison period for financial information is the corresponding period of the preceding year.
Third quarter 2021
Cash flow
Cash flow from operating activities before changes in working capital amounted to SEK 17.4 million (16.7), with an operating profit of SEK 4.9 million (3.8) and adjustments for non-cash items of SEK 12.9 million (13.3), of which depreciation of assets amounts to SEK 15.0 million and currency effects to SEK -2.0 million. The depreciation plan for the company's assets has been revised, with the result that depreciation for the period increased to SEK 15.0 million against SEK 7.8 million for the corresponding period of the preceding year.
Cash flow from operating activities after changes in working capital amounted to SEK 23.6 million (-33.4) in the period, the corresponding period of the preceding year was affected by the payment of reorganization-related accounts payable debt of SEK -63,0 million.
Cash flow from investing activities was SEK -24.9 million (-22.2), of which investments in proprietary game development amounted to SEK -25.1 million.
Cash flow from financing activities amounted to SEK -4.0 million (158.2), of which the effect of IFRS 16 Leases amounted to SEK -4.8 million.
Total cash flow for the period was SEK -5.3 million (102.5). Cash and cash equivalents at the end of the quarter amounted to SEK 108.4 million (193.2).
Investments
Consolidated investments in property, plant and equipment during the period amounted to SEK 0.1 million (0.4). Investments in proprietary game and technology development amounted to SEK 25.1 million (22.0).
Nine-month period 2021
Cash flow
Cash flow from operating activities before changes in working capital amounted to SEK 49.3 million (37.4), with an operating loss of SEK -54.4 million (15.3) and adjustments for non-cash items of SEK 109.4 million (22.5), of which depreciation amounted to SEK 45.0 million (28.7). This item also includes an accounting loss on sale of fixed assets of SEK 68.7 million, which relates to previously capitalized development expenditure on PAYDAY Crime War. In connection with the signing of a license agreements for PAYDAY Crime War, the rights to the game was transferred to the licensee, with the consequence that previously made investments in development was expensed.
Cash flow from operating activities after changes in working capital amounted to SEK 61.4 million (-19.1), the corresponding period of the preceding year was affected by the payment of reorganization-related accounts payable debt of SEK -63,0 million.
Cash flow from investing activities was SEK -80.4 million (-71.8), of which investments in proprietary game development amounted to SEK -
Cash and cash equivalents
at 30 September 2021
108.4
SEKm
Starbreeze
Interim Report Q3 2021
83.3 million. This item also includes the one-off revenue received by Starbreeze in connection with the signing of the PAYDAY Crime War license agreement of SEK 2.1 million.
Cash flow from financing activities amounted to SEK -30.2 million (201.3), and was mainly impacted by final repayment of loans to Nordea of SEK -55.9 million and financing received for game development from Koch Media Group of SEK 38.4 million. During the period, the company raised a new overdraft facility with Nordea with a limit of SEK 15 million, of which SEK 1.1 million had been drawn down at the end of the period. The effect of IFRS 16 Leases amounts to SEK -14.3 million (-14.0). In 2020, two new rights issues totaling SEK 301.3 million were carried out, which had a positive impact in the preceding year of SEK 271.0 million, and loans to Nordea of SEK -55.0 million were repaid.
Total cash flow for the period was SEK -49.2 million (110.4). Cash and cash equivalents at the end of the period amounted to SEK 108.4 million (193.2).
Investments
Group investments in property, plant and equipment during the period amounted to SEK 0.3 million (0.5). Investments in proprietary game and technology development amounted to SEK 83.3 million (70.7).
Financial position
Non-current assets
Goodwill at the end of the period amounted to SEK 41.4 million (42.2). Intangible assets, which consist primarily of IP rights, amounted to SEK 207.1 million (231.6).
Capitalized expenditure on proprietary game and technology development amounted to SEK 176.6 million (149.1).
Investments in publishing projects amounted to SEK 4.0 million (4.0).
Amortization and impairments of intangible assets amounted to SEK 29.0 million (12.2) during the period.
Current assets
Trade and other receivables amounted to SEK 25.3 million (14.9).
Prepaid expenses and accrued income at the end of the period amounted to SEK 32.9 million (32.4), of which SEK 14.5 million (13.6) relates to receivables for digital sales, primarily through Steam, PlayStation Store, Xbox Live and Switch.
Equity
Group equity amounted to SEK 137.9 million (237.4) at the reporting date.
Non-current liabilities
Non-current liabilities amounted to SEK 402.2 million (331.2), of which convertible loans and related liability amounted to SEK 306.3 million and liability to Koch Media for game financing received amounted to SEK 58.7 million. Non-current liability related to game financing will increase as financing is obtained and the liability will be credited in connection with future revenue sharing of PAYDAY 3 sale revenues. The non-current component of lease liability amounted to SEK 25.1 million (41.8). Deferred tax liability amounted to SEK 0.0 million (6.9).
Current liabilities
Current liabilities totaled SEK 112.4 million (175.0). Trade payables and other liabilities at the end of the period amounted to SEK 62.0 million (127.8). Repayment of loans to Nordea including interest was made during the period in an amount of SEK 59.1 million. Current liability for lease contracts amounted to SEK 18.1 million (19.6). Accrued expenses and deferred income at the end of the period amounted to SEK 32.2 million (27.6).
11 Starbreeze Interim Report Q3 2021
12 Starbreeze Interim Report Q3 2021
Leases
IFRS 16 Leases has been applied since 1 January 2019. The deposit paid for the premises in Stockholm is recognized as a financial asset on the balance sheet.
In discounting future lease payments, Starbreeze has used the marginal lending rate per country as a discount rate. The incremental borrowing rate is based on the lessee's financial strength, country and the term of the relevant lease.
The parent company has prepared its parent company in accordance with the Swedish Annual Accounts Act (SFS 1995:1554) and the Swedish Financial Reporting Board's recommendation RFR 2 Accounting for Legal Entities.
The interim report of the Parent Company has been prepared in accordance with the same accounting policies and methods of calculation as the annual report for 2020 (Note 2, pages 55-60).
Share capital
Share capital at the end of the period amounted to SEK 14,492,185 (14,492,185) divided into 724,609,266 shares (724,609,266), of which 166,373,988 Class A shares (169,443,708) and 558,235,278 Class B shares (555,165,558).
Risks and uncertainties
The preparation of interim reports and annual reports in accordance with generally accepted accounting practices requires management to make estimates, judgments and assumptions that affect the value of assets, liabilities and revenue reported in the financial statements. Actual outcomes may differ from these estimates and judgments.
The short-term effect on profit and loss from fluctuations in exchange rates can be positive or negative, depending on the current currency exposure from trade receivables, bank balances and other assets and liabilities in foreign currency. However, a declining dollar rate in the longer term always has a negative impact on profit margins. As the Group includes foreign subsidiaries, there is also translation exposure.
The largest risks and uncertainties are low revenues in connection with game releases and project delays. These and other risks such as copyright infringements, loss of key individuals and exchange rate fluctuations are described in Starbreeze's Annual Report 2020 in the Directors' Report on page 46, and in Note 3. Furthermore, the value of certain assets and liabilities is based on expected outcomes. Consequently, these items have to be regularly remeasured and thus may affect future profit and loss.
The company continuously monitors the Group's liquidity and capital requirement for the next twelve months. The Board of Directors has assessed whether the assumption of going concern is fulfilled. The factors underlying the Board's assessment are described below: The company has signed publishing agreements for PAYDAY 3 with Koch Media which mean that game development for PAYDAY 3 is funded until and after launch in 2023. The company will receive ongoing revenues from sales linked to PAYDAY 2. Based on the above, the assumption of going concern is judged to be fulfilled.
Parent company
The Group's business was conducted during the quarter in the parent company Starbreeze AB (publ) and the following subsidiaries: Starbreeze Production AB, Starbreeze Studio AB, Starbreeze Publishing AB, New Starbreeze Publishing PD IP AB, Starbreeze VR AB, Starbreeze USA Inc, Starbreeze LA Inc, Starbreeze IP LUX, Starbreeze IP LUX II Sarl, Starbreeze Barcelona SL, Starbreeze Paris SAS, New Starbreeze Studios AB, New Starbreeze Publishing AB and Enterspace AB.
Number of employees
| 2021 | 2020 | |
|---|---|---|
| Q3 | Q3 | |
| Employees | 138 | 122 |
| Men | 114 | 103 |
| Women | 24 | 19 |
138
employees at Starbreeze
The parent company's net sales during the quarter amounted to SEK 6.6 million (5.3). Sales relate primarily to allocation of management fees.
Profit before and after tax was SEK -12.0 million (-16.5).
Cash and cash equivalents at the end of the quarter amounted to SEK 8.6 million (17.2) and parent company's equity was SEK 745.5 million (794.2).
Non-current liabilities increased during the period to SEK 306.3 million (258.9).
Related-party transactions
There were no related party transactions during the period other than payment of salaries and other remuneration and intra-Group transactions.
Auditor's review
This interim report has been reviewed by the company's statutory auditors.
13 Starbreeze Interim Report Q3 2021
14 Starbreeze Interim Report Q3 2021
Investor relations contact
Up-to-date information about Starbreeze is available on the company's website at starbreeze.com. The company can be contacted by e-mail: [email protected], telephone: +46 (0)8-209 229 or mail: Box 7731, 103 95 Stockholm, Sweden.
For further information
Tobias Sjögren, CEO
Tel: +46 8-209 229
[email protected]
Mats Juhl, CFO
Tel: +46 8-209 229
[email protected]
The reports are published on the company's website, starbreeze.com.
The Board of Directors and the CEO offer their assurance that this interim report presents a true and fair view of the Group's and Parent Company's operations, financial position and results of operations and describes the significant risks and uncertainties facing the Group and the Parent Company.
Stockholm, November 12, 2021
Torgny Hellström
Chairman of the Board
Mike Gamble
Director
Anna Lagerborg
Director
Jan Benjaminson
Director
Thomas Lindgren
Director
Kerstin Sundberg
Director
Tobias Sjögren
Chief Executive Officer
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 persons for publication on November 12, 2021 at 8.00 am CET.
Financial calendar
Year-end Report 2021...February 16, 2022
Annual Report 2021...April 14, 2022
Interim Report Q1 2022...May 11, 2022
Interim Report Q2 2022...August 18, 2022
Interim -Report Q3 2022...November 17, 2022
Year-end Report 2022...February 16, 2023
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
| SEKk | NOTE | 2021 Q3 | 2020 Q3 | 2021 JAN–SEP | 2020 JAN–SEP | 2020 JAN–DEC |
|---|---|---|---|---|---|---|
| Net sales | 3 | 34,703 | 32,096 | 94,636 | 85,414 | 118,006 |
| Direct costs | 4 | -15,419 | -6,555 | -41,210 | -22,344 | -31,074 |
| Gross profit (-loss) | 19,284 | 25,541 | 53,426 | 63,070 | 86,932 | |
| Selling and marketing costs | -2,078 | -1,951 | -7,421 | -6,304 | -8,464 | |
| Administrative expenses | -14,698 | -14,370 | -38,072 | -53,318 | -69,428 | |
| Other revenue | 2,415 | -5,404 | 6,383 | 11,808 | 1,835 | |
| Other expenses | - | - | -68,672 | - | - | |
| Operating profit (-loss) | 4,923 | 3,816 | -54,356 | 15,256 | 10,875 | |
| Financial income | 14 | 102 | 46 | 328 | 628 | |
| Financial expenses | -13,016 | -11,732 | -38,119 | -127,955 | -139,864 | |
| Share in profit or loss of holdings accounted for using the equity method | 99 | -380 | 169 | -1,746 | -2,112 | |
| Profit (-loss) before tax | -7,980 | -8,194 | -92,260 | -114,117 | -130,473 | |
| Income tax | -69 | 141 | 3,340 | 431 | 193 | |
| Net profit (-loss) for the period | -8,049 | -8,053 | -88,920 | -113,686 | -130,280 | |
| Other comprehensive income that may subsequently be reclassified to profit and loss | ||||||
| Exchange differences | -788 | 482 | -1,641 | -2,801 | 246 | |
| Total comprehensive income for the period | -8,837 | -7,571 | -90,561 | -116,487 | -130,034 | |
| Total comprehensive income for the period attributable to: | ||||||
| Owners of the parent | -8,837 | -7,571 | -90,561 | -116,487 | -130,034 | |
| Earnings per share attributable to owners of the parent during the period (SEK): | ||||||
| - Basic | -0.01 | -0.02 | -0.12 | -0.30 | -0.28 | |
| - Diluted | -0.01 | -0.02 | -0.12 | -0.30 | -0.28 |
Starbreeze Interim Report Q3 2021
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
| SEKk | NOTE | 2021-09-30 | 2020-09-30 | 2020-12-31 |
|---|---|---|---|---|
| ASSETS | ||||
| Intangible assets | ||||
| Goodwill | 41,376 | 42,210 | 38,827 | |
| Other intangible assets | 207,050 | 231,565 | 228,514 | |
| Capitalized development cost for own games and technology development | 176,646 | 149,078 | 171,435 | |
| Investments in publishing projects | 3,974 | 3,974 | 3,974 | |
| Financial assets | ||||
| Financial assets | 7,767 | 7,867 | 7,683 | |
| Investments in joint ventures | 5 | 1,252 | 1,448 | 1,083 |
| Non-current lease receivable | 1,567 | 3,381 | 2,612 | |
| Deferred tax assets | 4,474 | - | 161 | |
| Property, plant and equipment | ||||
| IT equipment and other equipment | 2,153 | 7,886 | 6,704 | |
| Right-of-Use asset-Buildings | 37,740 | 52,623 | 48,866 | |
| Total non-current assets | 483,999 | 500,032 | 509,859 | |
| Current assets | ||||
| Trades and other receivables | 25,337 | 14,901 | 4,061 | |
| Current lease receivable | 1,972 | 3,063 | 2,627 | |
| Prepaid expenses and accrued income | 32,861 | 32,387 | 34,736 | |
| Cash and cash equivalents | 108,350 | 193,200 | 157,423 | |
| Total current assets | 168,520 | 243,551 | 198,847 | |
| TOTAL ASSETS | 652,519 | 743,583 | 708,706 | |
| EQUITY AND LIABILITIES | ||||
| Equity attributable to owners of the parent | ||||
| Share capital | 14,492 | 14,492 | 14,492 | |
| Other contributed capital | 1,979,111 | 1,974,428 | 1,979,111 | |
| Reserves | 20,005 | 18,599 | 21,646 | |
| Retained earnings including net profit or loss for the period | -1,875,671 | -1,770,157 | -1,786,751 | |
| Total equity | 137,937 | 237,362 | 228,498 | |
| Non-current liabilities | ||||
| Non-current liabilities, earnouts | - | 18 | - | |
| Deferred tax liability | - | 6,866 | - | |
| Non-current lease liability | 25,079 | 41,788 | 37,147 | |
| Other non-current liabilities | 377,092 | 282,543 | 292,702 | |
| Total non-current liabilities | 402,171 | 331,215 | 329,849 | |
| Current liabilities | ||||
| Current liabilities, earnouts | - | - | 18 | |
| Trade and other payables | 62,029 | 127,782 | 103,345 | |
| Current lease liability | 18,137 | 19,578 | 19,135 | |
| Accrued expenses and deferred income | 32,245 | 27,646 | 27,861 | |
| Total current liabilities | 112,411 | 175,006 | 150,359 | |
| TOTAL EQUITY AND LIABILITIES | 652,519 | 743,583 | 708,706 |
16 Starbreeze Interim Report Q3 2021
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
| SEKk | Share capital | Other contributed capital | Reserves | Retained earnings | Total equity |
|---|---|---|---|---|---|
| Balance at 1 January 2021 | 14,492 | 1,979,111 | 21,646 | -1,786,751 | 228,498 |
| Net profit (-loss) for the period | - | - | - | -88,920 | -88,920 |
| Other comprehensive income for the period | |||||
| Translation differences | - | - | -1,641 | - | -1,641 |
| Total comprehensive income | - | - | -1,641 | -88,920 | -90,561 |
| Balance at 30 September 2021 | 14,492 | 1,979,111 | 20,005 | -1,875,671 | 137,937 |
| Balance at 1 January 2020 | 6,587 | 1,711,334 | 21,400 | -1,733,163 | 6,158 |
| Net profit (-loss) for the period | - | - | - | -130,280 | -130,280 |
| Translation differences | - | - | 246 | - | 246 |
| Total comprehensive income | - | - | 246 | -130,280 | -130,034 |
| Transactions with shareholders: | |||||
| New issue | 7,905 | 293,368 | - | - | 301,273 |
| Issue costs recognized in equity | - | -30,273 | - | - | -30,273 |
| Shareholders’ contributions from composition proposal | - | - | - | 76,692 | 76,692 |
| Other | - | 4,683 | - | - | 4,683 |
| Total contribution from and value transfers to shareholders, recognized directly in equity | 7,905 | 267,777 | - | 76,692 | 352,374 |
| Balance at 31 December 2020 | 14,492 | 1,979,111 | 21,646 | -1,786,751 | 228,498 |
| 2021 | 2020 | ||||
| CHANGE IN NUMBER OF OUTSTANDING SHARES | JAN-SEP | JAN - DEC | |||
| Number of shares at the beginning of the period | 724,609,266 | 329,367,849 | |||
| New issue | - | 395,241,417 | |||
| Total shares outstanding at the end of the period | 724,609,266 | 724,609,266 |
Starbreeze Interim Report Q3 2021
CONSOLIDATED STATEMENT OF CASH FLOWS
| SEKk | NOTE | 2021 Q3 | 2020 Q3 | 2021 JAN-SEP | 2020 JAN-SEP | 2020 JAN-DEC |
|---|---|---|---|---|---|---|
| Operating activities | ||||||
| Cash flow from operations | 4,923 | 3,816 | -54,356 | 15,256 | 10,875 | |
| Adjustment for non-cash items | 12,949 | 13,314 | 109,405 | 22,492 | 37,053 | |
| Interest paid | - | -385 | -3,394 | -385 | -385 | |
| Income taxes paid | -461 | - | -2,307 | - | - | |
| Cash flow from (-used in) operating activities before changes in working capital | 17,411 | 16,745 | 49,348 | 37,363 | 47,543 | |
| Cash flow from changes in working capital | ||||||
| Increase (+)/decrease (-) in operating receivables | 2,107 | -15,684 | 3,177 | 58,116 | 66,851 | |
| Increase (+)/decrease (-) in operating liabilities | 4,053 | -34,507 | 8,897 | -114,600 | -139,034 | |
| Cash flow from (-used in) operating activities after changes in working capital | 23,571 | -33,446 | 61,422 | -19,121 | -24,640 | |
| Investing activities | ||||||
| Purchase of property, plant and equipment | -57 | -419 | -324 | -451 | -944 | |
| Sold non-current assets | -28 | 252 | 70 | 26 | 51 | |
| Sold intangible assets | - | - | 2,103 | - | - | |
| Divested subsidiaries | - | 5 | - | -475 | -472 | |
| Purchase of intangible assets | -53 | - | -91 | - | - | |
| Investments in other financial assets | - | 86 | - | - | - | |
| Change in other financial assets | 388 | - | 1,177 | - | - | |
| Investments in own games and technology | -25,109 | -21,952 | -83,314 | -70,676 | -94,541 | |
| Investments in publishing projects | - | -177 | - | -177 | -309 | |
| Cash flow from (-used in) investing activities | -24,859 | -22,205 | -80,379 | -71,753 | -96,215 | |
| Financing activities | ||||||
| New issue | - | 220,276 | - | 301,273 | 301,273 | |
| Costs related to new issues | - | - | - | -30,274 | -30,274 | |
| Increase in non-current liabilities | - | -2,318 | - | -714 | -1,598 | |
| Repayment of loans | - | -55,000 | -55,887 | -55,000 | -55,000 | |
| Financing game development | 780 | - | 38,853 | - | - | |
| Overdraft facility | - | - | 1,114 | - | - | |
| Effect of financial lease | -4,789 | -4,783 | -14,302 | -14,027 | -18,802 | |
| Cash flow from financing activities | -4,009 | 158,175 | -30,222 | 201,258 | 195,599 | |
| Cash flow for (-used in) the period | -5,297 | 102,524 | -49,179 | 110,384 | 74,744 | |
| Cash and cash equivalents at the beginning of the period | 113,581 | 90,891 | 157,423 | 82,787 | 82,787 | |
| Exchange difference in cash and cash equivalents | 66 | -215 | 106 | 29 | -108 | |
| Cash and cash equivalents at the end of the period | 108,350 | 193,200 | 108,350 | 193,200 | 157,423 |
18 Starbreeze Interim Report Q3 2021
KEY RATIOS, GROUP
| 2021 | 2020 | 2021 | 2020 | 2020 | |
|---|---|---|---|---|---|
| Q3 | Q3 | JAN-SEP | JAN-SEP | JAN-DEC | |
| Net sales, SEKk | 34,703 | 32,096 | 94,636 | 85,414 | 118,006 |
| EBITDA, SEKk | 19,890 | 11,651 | -9,364 | 43,987 | 49,317 |
| EBITDA adjusted, SEKk | 19,890 | 11,651 | 59,308 | 43,987 | 49,317 |
| EBIT, SEKk | 4,923 | 3,816 | -54,356 | 15,256 | 10,875 |
| Profit (-loss) before tax, SEKk | -7,980 | -8,194 | -92,260 | -114,117 | -130,473 |
| Profit (-loss) after tax, SEKk | -8,049 | -8,053 | -88,920 | -113,686 | -130,280 |
| EBITDA margin, % | 57.3 | 36.3 | -9.9 | 51.5 | 41.8 |
| EBITDA margin, % adjusted | 57.3 | 36.3 | 62.7 | 51.5 | 41.8 |
| EBIT margin, % | 14.2 | 11.9 | -57.4 | 17.9 | 9.2 |
| Profit margin, % | -23.0 | -25.5 | -97.5 | -133.6 | -110.6 |
| Equity to assets ratio, % | 21.1 | 31.9 | 21.1 | 31.9 | 32.2 |
| Closing price of A share for the period, SEK | 1.26 | 1.16 | 1.26 | 1.16 | 1.06 |
| Closing price of B share for the period, SEK | 1.21 | 1.23 | 1.21 | 1.23 | 1.09 |
| Basic earnings per share, SEK | -0.01 | -0.02 | -0.12 | -0.30 | -0.28 |
| Diluted earnings per share, SEK | -0.01 | -0.02 | -0.12 | -0.30 | -0.28 |
| Number of shares at end of period before dilution | 724,609,266 | 724,609,266 | 724,609,266 | 724,609,266 | 724,609,266 |
| Number of shares at end of period after dilution | 724,609,266 | 724,609,266 | 724,609,266 | 724,609,266 | 724,609,266 |
| Average number of shares before dilution | 724,609,266 | 445,004,604 | 724,609,266 | 384,182,351 | 469,754,144 |
| Average number of shares after dilution | 724,609,266 | 445,004,604 | 724,609,266 | 384,182,351 | 469,754,144 |
| Average number of employees | 138 | 122 | 134 | 123 | 123 |
| Number of employees at the end of the period | 138 | 121 | 138 | 121 | 124 |
Key ratios, Group
EBITDA
Earnings Before Interest, Taxes, Depreciation and Amortization.
EBITDA Adjusted
Operating profit before depreciation, amortization and impairment adjusted for one-off effects related to PAYDAY Crime War license agreements.
EBIT
Earnings Before Interest and Taxes.
EBITDA margin
Operating profit before depreciation, amortization and impairments as a percentage of net sales.
Adjusted EBITDA margin
Operating profit before depreciation, amortization and impairment as a percentage of net sales adjusted for one-off effects related to license agreements concerning PAYDAY Crime War.
Operating margin
Operating profit as a percentage of net sales.
Profit margin
Profit after net financial income/expense as a percentage of the sum of net sales.
Equity/assets ratio
Equity as a percentage of capital employed.
Earnings per share
Profit after tax divided by the average number of shares during the period.
Equity
Recognized equity including 78 percent of untaxed reserves.
19 Starbreeze Interim Report Q3 2021
RECONCILIATION OF ALTERNATIVE PERFORMANCE MEASURES
| 2021 | 2020 | 2021 | 2020 | 2020 | |
|---|---|---|---|---|---|
| Q3 | Q3 | JAN-SEP | JAN-SEP | JAN-DEC | |
| EBITDA | |||||
| Operating profit (-loss), SEKk | 4,923 | 3,816 | -54,356 | 15,256 | 10,875 |
| Amortization of intangible assets, SEKk | 10,031 | 2,737 | 29,016 | 12,151 | 16,628 |
| Depreciation of property, plant and equipment, SEKk | 4,936 | 5,098 | 15,976 | 16,580 | 21,814 |
| EBITDA | 19,890 | 11,651 | -9,364 | 43,987 | 49,317 |
| EBITDA adjusted, SEKk | 19,890 | 11,651 | 59,308 | 43,987 | 49,317 |
| EBITDA margin, % | |||||
| EBITDA, SEKk | 19,890 | 11,651 | -9,364 | 43,987 | 49,317 |
| EBITDA adjusted, SEKk | 19,890 | 11,651 | 59,308 | 43,987 | 49,317 |
| Net sales, SEKk | 34,703 | 32,096 | 94,636 | 85,414 | 118,006 |
| EBITDA margin, % | 57.3 | 36.3 | -9.9 | 51.5 | 41.8 |
| EBITDA margin, % adjusted | 57.3 | 36.3 | 62.7 | 51.5 | 41.8 |
| EBIT margin, % | |||||
| Operating profit (-loss), SEKk | 4,923 | 3,816 | -54,356 | 15,256 | 10,875 |
| Net sales, SEKk | 34,703 | 32,096 | 94,636 | 85,414 | 118,006 |
| EBIT margin, % | 14.2 | 11.9 | -57.4 | 17.9 | 9.2 |
| Profit margin, % | |||||
| Profit (-loss) before tax, SEKk | -7,980 | -8,194 | -92,260 | -114,117 | -130,473 |
| Net sales, SEKk | 34,703 | 32,096 | 94,636 | 85,414 | 118,006 |
| Profit margin, % | -23.0 | -25.5 | -97.5 | -133.6 | -110.6 |
| Equity to assets ratio, % | |||||
| Total equity | 137,937 | 237,362 | 137,937 | 237,362 | 228,498 |
| Total equity and liabilities, SEKk | 652,519 | 743,583 | 652,519 | 743,583 | 708,706 |
| Equity to assets ratio, % | 21.1 | 31.9 | 21.1 | 31.9 | 32.2 |
Alternative Performance Measures (APMs) are financial indicators of performance, financial position and cash flow not defined in the applicable reporting framework (IFRS). These are considered to be important additional key figures for the Group's performance. Since not all entities calculate financial measurements in the same way, they are not always comparable to those used by other entities.
Starbreeze Interim Report Q3 2021
PARENT COMPANY INCOME STATEMENT
| 2021 | 2020 | 2021 | 2020 | 2020 | |
|---|---|---|---|---|---|
| SEKk | Q3 | Q3 | JAN-SEP | JAN-SEP | JAN-DEC |
| Net sales | 6,569 | 5,326 | 16,903 | 22,452 | 29,762 |
| Other operating revenue | 2,394 | -1,559 | 5,088 | -635 | 8,542 |
| Total sales | 8,963 | 3,767 | 21,991 | 21,817 | 38,304 |
| Other external expenses | -1,900 | -4,504 | -7,972 | -20,264 | -24,374 |
| Employee benefit expense | -7,808 | -5,958 | -20,274 | -19,048 | -29,961 |
| Depreciation of property, plant and equipment | -44 | -46 | -184 | -142 | -188 |
| Other operating expenses | - | - | - | - | - |
| Operating profit (-loss) | -789 | -6,741 | -6,439 | -17,637 | -16,219 |
| Profit from holdings in group companies | - | 19 | 19 | 921 | - |
| Other financial income | 1,462 | 1,653 | 4,177 | 5,152 | 6,508 |
| Financial expenses | -12,703 | -11,381 | -36,753 | -123,043 | -134,561 |
| Profit (-loss) after net financial income/expense | -12,030 | -16,450 | -38,996 | -134,607 | -144,272 |
| Profit (-loss) before tax | -12,030 | -16,450 | -38,996 | -134,607 | -144,272 |
| Income tax | - | - | - | - | - |
| Net profit (-loss) for the period | -12,030 | -16,450 | -38,996 | -134,607 | -144,272 |
For the parent company, net profit or loss for the period corresponds to comprehensive income.
Starbreeze Interim Report Q3 2021
PARENT COMPANY BALANCE SHEET
| SEKk | 2021-09-30 | 2020-09-30 | 2020-12-31 |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Property, plant and equipment | |||
| Computers and other equipment | 169 | 312 | 268 |
| Financial assets | |||
| Investments in group companies | 322,685 | 322,702 | 322,702 |
| Investments in associates | 4,656 | 4,656 | 4,656 |
| Other financial assets | 2,612 | 2,683 | 2,594 |
| Total non-current assets | 330,122 | 330,353 | 330,220 |
| Current assets | |||
| Trade and other receivables | 1,434 | 1,981 | 933 |
| Receivables from group companies | 1,343,801 | 1,339,782 | 1,332,388 |
| Prepaid expenses and accrued income | 350 | 413 | 524 |
| Cash and cash equivalents | 8,604 | 17,169 | 10,906 |
| Total current assets | 1,354,189 | 1,359,345 | 1,344,751 |
| TOTAL ASSETS | 1,684,311 | 1,689,698 | 1,674,971 |
| EQUITY AND LIABILITIES | |||
| Equity | |||
| Share capital | 14,492 | 14,492 | 14,492 |
| Share premium reserve | 1,912,127 | 1,912,127 | 1,912,128 |
| Retained earnings | -1,142,087 | -997,816 | -997,816 |
| Net profit (-loss) for the period | -38,996 | -134,607 | -144,272 |
| Total equity | 745,536 | 794,196 | 784,532 |
| Non-current liabilities | |||
| Other non-current liabilities | 306,260 | 258,903 | 270,084 |
| Total non-current liabilities | 306,260 | 258,903 | 270,084 |
| Current liabilities | |||
| Trade payables | 508 | 12,301 | 1,013 |
| Liabilities to group companies | 621,870 | 567,681 | 576,994 |
| Other liabilities | 3,442 | 34,185 | 34,545 |
| Accrued expenses and deferred income | 6,695 | 22,432 | 7,803 |
| Total current liabilities | 632,515 | 636,599 | 620,355 |
| TOTAL EQUITY AND LIABILITIES | 1,684,311 | 1,689,698 | 1,674,971 |
22 Starbreeze Interim Report Q3 2021
NOTES
Note 1: Accounting and measurement policies
This interim report has been prepared in accordance with IAS 34, Interim Financial Reporting. The accounting policies and calculation methods are the same as those applied in 2020.
The report for the parent company has been prepared in accordance with the Swedish Annual Accounts Act and the Swedish Financial Reporting Board's recommendation RFR 2 Accounting for Legal Entities.
No new or revised IFRS regulations have entered into force that are expected to have any material impact on the Group. The carrying amount of all financial assets and liabilities is a good approximation of fair value.
Note 2: Pledged assets
Consolidated pledged assets and contingent liabilities
Consolidated pledged assets relate to rent guarantees and pledged shares in subsidiaries and bank accounts related to loans from Nordea.
| SEKk | 2021-09-30 | 2020-09-30 | 2020-12-31 |
|---|---|---|---|
| Pledged assets | 585 | 585 | 585 |
Starbreeze Interim Report Q3 2021
Note 3: Net sales by category
| SEKk Q3 2021 | Starbreeze Games | Other | Total |
|---|---|---|---|
| PC | 26,519 | 177 | 26,696 |
| Consoles, Digital | 4,632 | - | 4,632 |
| Consoles, Retail | 67 | - | 67 |
| VR parks | - | - | - |
| Licensing | 2 | 3,281 | 3,283 |
| Other | 25 | - | 25 |
| Total net sales | 31,245 | 3,458 | 34,703 |
| SEKk Q3 2020 | Starbreeze Games | Other | Total |
| --- | --- | --- | --- |
| PC | 24,754 | 270 | 25,024 |
| Consoles, Digital | 6,215 | 28 | 6,243 |
| Consoles, Retail | 118 | - | 118 |
| VR parks | - | - | - |
| Licensing | - | 700 | 700 |
| Other | 11 | - | 11 |
| Total net sales | 31,098 | 998 | 32,096 |
| SEKk JAN-SEPT 2021 | Starbreeze Games | Other | Total |
| --- | --- | --- | --- |
| PC | 75,794 | 751 | 76,545 |
| Consoles, Digital | 13,705 | -166 | 13,539 |
| Consoles, Retail | 166 | - | 166 |
| VR parks | 16 | 90 | 106 |
| Licensing | 224 | 3,963 | 4,187 |
| Other | 93 | - | 93 |
| Total net sales | 89,998 | 4,638 | 94,636 |
| SEKk JAN-SEPT 2020 | Starbreeze Games | Other | Total |
| --- | --- | --- | --- |
| PC | 63,828 | 573 | 64,401 |
| Consoles, Digital | 16,683 | 74 | 16,757 |
| Consoles, Retail | 284 | - | 284 |
| VR parks | 12 | 57 | 69 |
| Licensing | - | 3,831 | 3,831 |
| Other | 72 | - | 72 |
| Total net sales | 80,879 | 4,535 | 85,414 |
Starbreeze Interim Report Q3 2021
Note 4: Group depreciation and amortization by function
| 2021 | 2020 | 2021 | 2020 | 2020 | |
|---|---|---|---|---|---|
| SEKk | Q3 | Q3 | JAN-SEP | JAN-SEP | JAN-DEC |
| Depreciation and impairment of property, plant and equipment | |||||
| Direct costs | -891 | -986 | -2,792 | -4,147 | -5,302 |
| Selling and marketing costs | -1 | - | -6 | - | - |
| Administrative expenses | -4,044 | -4,112 | -13,178 | -12,433 | -16,512 |
| Total depreciation and impairment of property, plant and equipment | -4,936 | -5,098 | -15,976 | -16,580 | -21,814 |
| Amortization and impairment of intangible assets | |||||
| Direct costs | -9,961 | -2,668 | -28,809 | -11,945 | -16,353 |
| Administrative expenses | -70 | -69 | -207 | -206 | -275 |
| Total amortization and impairment of intangible assets | -10,031 | -2,737 | -29,016 | -12,151 | -16,628 |
| Total depreciation and amortization and impairment | -14,967 | -7,835 | -44,992 | -28,731 | -38,442 |
Note 5: Joint venture company StarVR Corporation
The company's joint venture with Acer, StarVR Corporation, is a sales and marketing company for the StarVR One headset. The company manages sales and marketing, primarily to the B2B market, as well as support and aftermarket support. Starbreeze owns the intellectual property rights, such as patents, source code and trademarks, related to StarVR, while Acer is responsible for manufacturing the product. Development and reference design work for headsets is carried out jointly by Starbreeze and Acer. StarVR Corporation bears all expenses for marketing and sale of the StarVR headset. Starbreeze was responsible for R&D-related expenses until September 2018, but these have been transferred to StarVR Corporation. Production expenses are borne by Acer, which is also an exclusive supplier to StarVR Corporation.
The reconciliation below reflects adjustments made by the Group on application of the equity method, including adjustments to fair value at acquisition date and adjustments for differences in accounting policies.
The table below provides condensed financial information for the holding in the joint venture (StarVR Corporation) that the Group has deemed material. The information shows the amounts recognized in the financial reports for the joint venture and not Starbreeze's share of these amounts. The reconciliation of Starbreeze's participation is shown above.
| SEKk | 2021-09-30 |
|---|---|
| Balance sheet in summary: | |
| Current assets | 11,602 |
| Non-current assets | 62 |
| Current liabilities | -7,871 |
| Net assets | 3,793 |
| Statement of comprehensive income in summary: | |
| Sales | 471 |
| Net profit (-loss) for the period | 335 |
| Total comprehensive income for the period | 335 |
| SEKk | 2021-09-30 |
| --- | --- |
| Reconciliation of net carrying amount: | |
| Balance of net assets at 1 January | 3,282 |
| Net profit (-loss) for the period | 335 |
| Exchange differences | 177 |
| Closing balance net assets | 3,794 |
| Group's share | 33% |
| Group's share in SEKk | 1,252 |
| Net carrying amount | 1,252 |
Starbreeze Interim Report Q3 2021
pwc
Auditor's report
Starbreeze AB (publ) corp. reg. no. 556551-8932
Introduction
We have reviewed the condensed interim financial information (interim report) of Starbreeze AB (publ) as of 30 September 2021 and the nine-month period then ended. The board of directors and the CEO are responsible for the preparation and presentation of the interim financial information in accordance with IAS 34 and the Swedish Annual Accounts Act. Our responsibility is to express a conclusion on this interim report based on our review.
Scope of Review
We conducted our review in accordance with the International Standard on Review Engagements ISRE 2410, Review of Interim Report Performed by the Independent Auditor of the Entity. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing, ISA, and other generally accepted auditing standards in Sweden. The procedures performed in a review do not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the interim report is not prepared, in all material respects, in accordance with IAS 34 and the Swedish Annual Accounts Act, regarding the Group, and with the Swedish Annual Accounts Act, regarding the Parent Company.
Disclosure of particular importance
Without affecting our statements above, we would like to draw attention to the section "Risks and uncertainties". If the future launch of Payday 3 does not become profitable, there is a risk of impairment of intangible assets, shares in subsidiaries and receivables from Group companies.
Stockholm, 12 November 2021
Öhrlings PricewaterhouseCoopers AB
Nicklas Kullberg
Authorized Public Accountant