REG - Devolver Digital - Half Year Results
25/09/2023 07:00
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RNS Number : 4422N Devolver Digital, Inc. 25 September 2023
25 September 2023
The information contained within this announcement is deemed by the company to
constitute inside information stipulated under the Market Abuse Regulation
(EU) No. 596/2014 as it forms part of the domestic law of the United Kingdom
by virtue of the European Union (Withdrawal) Act 2018 (as amended) ("UK
MAR"). Upon the publication of this announcement via the Regulatory
Information Service, this inside information is now considered to be in the
public domain.
Devolver Digital, Inc.
("Devolver Digital", "Devolver" or the "Company", and the Company together
with all of its subsidiary undertakings "the Group")
Unaudited results for the six months ended 30 June 2023
Healthy pipeline for new releases in Q4 2023 and 2024
On track for EBITDA break-even in 2023 and return to growth in 2024
Devolver Digital, an award-winning digital publisher and developer of
independent ("indie") video games, announces its unaudited results for the six
months ended 30 June 2023. All figures relate to this period unless otherwise
stated.
Prioritising quality to unlock long-term value
o As announced in the trading update on 3(rd) August 2023, high potential
titles have been delayed to 2024 to ensure that they have the time, effort and
support to succeed.
o As a result, 1H 2023 was an unusually quiet release period with only 4
new titles, of which only one was a major title, Terra Nil (1H 2022: 7 title
releases).
o As also previously announced, Devolver declined subscription deal
proposals that undervalued the titles' value and revenue opportunities in 2023
and 2024, resulting in lower subscription revenues.
o Back catalogue revenues were up 10%, accounting for 87% of total revenues
(1H 2022: 64%), reflecting the lower new title contribution and the continued
strong performance of Cult of the Lamb.
o Average 79 Metacritic score for released titles year to date (76 average
score for 1H 2023).
o Steady recovery at Good Shepherd; announced tie-up with Rebellion for
2000 AD IP.
Financial performance reflects unusually quiet 1H release schedule, as
expected
o As flagged, 1H 2023 financial performance has been impacted by a quiet
release schedule: revenues down 17%; Normalised Gross Profit down 51%.
o As expected, Normalised Adjusted EBITDA loss of US$3.5m (1H 2022: US$6.8m
profit).
o Statutory net loss of US$10.1m(1) (1H 2022: US$16.6m loss).
o Cash of US$64.8m at 30 June 2023 (1H 2022: US$74.2m), following c.US$7.2m
purchase of shares in the market for the Employee Benefit Trust.
o Cost-saving initiatives underway to protect margin and strong net cash
position.
Current trading and outlook
o Back catalogue continues to be driven by Cult of the Lamb post 1H 2023
period-end.
o Targeted marketing and the full return of physical gaming events are
expected to help drive engagement and maintain quality for upcoming titles.
o 11 new titles expected in 2023, including nine titles published directly by
Devolver.
o Seven releases scheduled for 2H 2023 including major titles Wizard With A
Gun and The Talos Principle 2, as well
as Gunbrella, KarmaZoo and Hellboy: Web of Wyrd.
o On track to meet previous guidance of break-even profitability in 2023,
return to profitable growth in 2024 and acceleration in 2025.
o Healthy pipeline of more than 30 new titles due for release in the next
three years.
Harry Miller, Executive Chairman of Devolver, said:
"The first half of 2023 was a reset for Devolver, with delays to new releases
as we prioritise the quality and long-term potential of major titles scheduled
for the second half of 2023 and 2024. Devolver's DNA is to commit relatively
low spend on high quality titles that stand the test of time. We look
forward to returning to our normal cadence of releases in the rest of 2023 and
2024 with big titles to come such as Wizard With A Gun and The Talos
Principle 2, as well as The Plucky Squire and Baby Steps.
As a result of our busy upcoming release schedule, steps to improve our return
from our back catalogue and active management of our cost base, Devolver is on
track to meet its previous guidance of break-even EBITDA profitability in
2023, a return to profitable growth in 2024 and then an acceleration in 2025."
About Devolver Digital
Devolver is an award-winning video games publisher in the indie games space
with a balanced portfolio of third-party and own-IP. Devolver has an emphasis
on premium games and has published more than 100 titles, with more than 30
titles in the pipeline scheduled for release over the next three years.
Devolver has in-house studios developing first-party IP titles and a
complementary publishing brand. Devolver is registered in Wilmington,
Delaware, USA.
Notes:
(1) Including non-cash impact of US$3.9m of share-based payments.
Enquiries
Devolver Digital, Inc. ir@devolverdigital.com
Harry Miller, Executive Chairman
Douglas Morin, Chief Executive Officer
Daniel Widdicombe, Chief Financial Officer
Zeus (Nominated Adviser and Sole Broker) +44 (0)20 3829 5000
Nick Cowles, Jamie Peel, Alexander Craig (Investment Banking)
Ben Robertson (Equity Capital Markets)
FTI Consulting (Communications Adviser) devolver@fticonsulting.com
Jamie Ricketts / Dwight Burden / Valerija Cymbal / Usama +44 (0)20 3727 1000
Ali
OPERATING REVIEW
1H 2023 - fewer title releases than previous period
Devolver released 4 new titles in 1H 2023, including Devolver Tumble
Time, Sludge Life 2 and Terra Nil. Terra Nil was the only major release
in 1H 2023, and consequently revenue fell 17% in the first half compared to 1H
2022 which had 7 title releases. As a result, back catalogue accounted for an
unusually high 87% of total 1H revenues in the period.
Despite the revenue decline there have been several positive developments in
1H 2023, including our publishing subsidiary Good Shepherd (GSE) posting a
steady recovery following the restructuring it underwent early in the year, on
track to reach EBITDA break-even by 4Q. GSE recently announced a
ground-breaking partnership with Rebellion (Sniper Elite) to develop and
publish video game adaptations based on stories from the beloved 2000 AD
universe, the home of Judge Dredd, Rogue Trooper, ABC Warrior and more, as
well as Rebellion's other comic IP, including Roy of the Rovers and Battle
Action. Separately, Cult of the Lamb back catalogue sales have continued to
out-perform expectations from the start of 2023.
Several market events held in 1H 2023 have also added to the excitement about
our future releases for 2024 and 2025. Sony held its PlayStation Showcase 2023
in May, featuring 36 games in total including Devolver titles The Talos
Principle 2, The Plucky Squire and Neva. The Summer Games Fest 2023 included
Devolver Direct, in which several new titles were introduced or updated
including Baby Steps, Wizard with a Gun, The Talos Principle 2, and Human
Fall Flat 2, the highly anticipated sequel to Human Fall Flat which sold
over 40 million copies worldwide since release in July 2016. Devolver Direct
enjoyed record viewership numbers and was included in numerous broadcasts
archived on YouTube with a combined 4.68 million views just one week post
broadcast. Finally, Steam's Next Fest saw the Wizard with a Gun demo post
the 5(th) highest number of downloads by players out of over 1,000 demos
featured in the event. All these developments bode well for the outlook in
2024 and beyond.
2022 hit release supports back catalogue
The August 2022 hit release Cult of The Lamb has provided strong revenue
momentum continuing into 1H 2023, the only 2022 release to do so given that 1H
2022 releases did not perform as expected. The contribution from Cult of The
Lamb was the principal driver for a 10% increase in back catalogue revenues
in 1H 2023 compared to the previous year period. BAFTA-winning Inscryption,
an October 2021 release, also continued to perform well in the first six
months of 2023. Other back catalogue titles have seen weaker performance in 1H
2023 compared to 1H 2022. Devolver is working hard to stimulate back catalogue
sales through a combination of new ports, additional DLC, strategic marketing
and strategic pricing mechanisms.
Our back catalogue includes all titles released in or prior to the last
financial year (2022 or earlier). As of 31 December 2022, the back catalogue
consists of 109 titles, including numerous indie cult classics, supporting
highly diversified revenues.
Operating expense containment, selective co-funding on game development
A group-wide exercise to reduce overall expenses is under way. Rental
expenses, out-sourced professional fees and other operating and administration
fees are all being optimised for efficiency with continual assessment for cost
savings. Separately, as part of the directional move towards more
participation in the live services area, we will seek co-funding for larger
titles where partners can bring strategic value.
FINANCIAL REVIEW
Unaudited first half 2023 results to June 30 2023
The unaudited financial results included in this announcement cover the
Group's combined activities for the six months ended 30(th) June 2023
(prepared in accordance with applicable International Financial Reporting
Standards, "IFRS").
Normalised Adjusted results
The following refers to Normalised Adjusted results, as presented in the
financial statements contained within this release. Normalised Adjusted
results exclude any one-time exceptional items during the respective half-year
periods.
Normalised EBITDA and Normalised Adjusted EBITDA results are not intended to
replace statutory results and are prepared to provide a more comparable
indication of the Group's core business performance by removing the impact of
certain items including exceptional items (material and non-recurring), and
other, non-trading, items that are reported separately. These results have
been presented to provide users with additional information and analysis of
the Group's performance, consistent with how the Board monitors results.
Further details of adjustments are given in Notes 3 and 4 to the condensed
financial statements contained within this semi-annual results release.
P&L results and margins
Devolver Digital's first half 2023 performance was muted due to a lower number
of title releases (4) compared to the previous period (7). Revenues of US$43.9
million fell 17% year-over-year. Normalised gross profit was US$9.4 million, a
decline of 51% year-over-year. Normalised Adjusted EBITDA turned to a loss of
US$3.5 million from US$6.8 million profit in 1H 2022.
Normalised gross profit margin decreased to 21.4% in the first half of 2023,
down from 35.8% in the year-earlier period. Gross margin was compressed due to
the absence of first-party IP and other new releases in recoup during the
period, resulting in the royalty pay-out mix being heavily weighted towards
third party titles in 1H 2023. This compares to 1H 2022 when new first-party
IP and other releases were cushioned while the titles were still in recoup
(before royalties are usually paid out).
Normalised Adjusted EBITDA margins were depressed at negative 7.9% in the
first half of 2023, compared to positive margin of 12.9% the previous year.
The compression in 1H 2023 gross profit had a direct flow through effect to
impact Normalised Adjusted EBITDA, despite successfully containing cash
operating expenses at similar levels as the 1H of 2022.
Employee Benefit Trust (EBT)
Devolver established an Employee Benefit Trust (EBT) in May 2022 to facilitate
stock option exercise by employees and contractors who were awarded 2017 Stock
Option plan stock options and stock units vesting under the 2022 Long Term
Incentive Plan (LTIP). The EBT is a Jersey-incorporated Trust enabling option
exercise and share settlement off-market without impacting market liquidity.
Share purchases by the EBT are funded by way of a loan from Devolver which can
request settlement of the loan at any time in future. The shares held by the
EBT are consolidated within Devolver's share capital balance.
Cash Balances
Cash holdings at end of June 2023 were US$64.8 million, a reduction of
US$14.7 million compared to end of 2022's level of US$79.5 million. The
reduction in cash balances during the period was primarily due to: 1) lower
operating cash generation in the first half combined with the US$13.6 million
ongoing investment in game development during the period; 2) approximately
US$7 million provided to the EBT for the market purchase of c. 19m shares.
CURRENT TRADING OUTLOOK
As noted in our August 2023 update, expected performance for 2023 will be
impacted by three key factors: delays to new title releases, a reduction in
revenue from subscription deals and relative weakness from our back catalogue
with the exception of a few outperforming titles.
Our busy release schedule for Q4 2023 features major titles Wizard with a
Gun and The Talos Principle 2, among others. Waiting until titles are
ready has led to delays as we prioritise our strategy to maximise the appeal
and success of new titles by increasing investment on development, quality
control and marketing. Giving our titles every chance to succeed is critical
to our long-term growth. As previously indicated, titles such as The Plucky
Squire, which has been tracking well with audiences, will now be released in
2024 alongside other titles previously earmarked for release in 2023 such
as Anger Foot, Pepper Grinder and Stick It to the Stickman.
After a period of strong growth in subscription deals in 2021 and 2022, we
expect the trend of reduced revenues from subscription deals to continue into
2024. We expect to continue to turn down subscription deal proposals that
undervalue the titles' value and revenue opportunity in 2023 and 2024.
Back catalogue sales have been softer following the weaker performance of
three key title releases in 2022, except for Cult of the
Lamb and Inscryption which have continued to perform strongly, and a weaker
overall economic environment.
As previously indicated in August 2023, we expect Group Normalised Adjusted
EBITDA to be at least break-even in 2023, before a return to growth in 2024
and an acceleration in 2025.
Our momentum, robust balance sheet with US$65m in cash at June 2023, deep
pipeline and strong contribution from extensive back catalogue all support our
confidence of further progress in 2023 and in the future. We have a proven
strategy that has delivered success for the last 13 years. The Board believes
that we are well positioned for future success, and we look forward to
reporting on our progress in the year ahead.
Harry Miller
Chairman
Consolidated Statement of Profit or Loss
Unaudited Unaudited
6 months ended 6 months ended Year ended
30-Jun-23 30-Jun-22 31-Dec-22
US$'000 US$'000 US$'000
REVENUES
Revenues 43,877 53,003 134,565
TOTAL REVENUES 43,877 53,003 134,565
COST OF SALES
Royalty expense (22,167) (22,015) (61,448)
Development expense (2,878) (1,704) (3,856)
Marketing (3,354) (3,912) (9,148)
Amortisation of intangible assets (5,150) (7,112) (14,788)
Impairment of intangible assets (934) - (22,822)
TOTAL COST OF SALES (34,483) (34,743) (112,062)
GROSS PROFIT 9,394 18,260 22,503
ADMINISTRATIVE EXPENSES
Overhead expenses (12,612) (12,637) (25,523)
Stock compensation expense (3,905) (11,477) (19,621)
Amortisation of non-current assets (1,863) (3,761) (5,292)
Impairment of non-current assets - - (69,973)
TOTAL ADMINISTRATIVE EXPENSES (18,380) (27,875) (120,409)
Other (loss) / income (591) 5 (549)
OPERATING PROFIT/(LOSS) (9,577) (9,610) (98,455)
Interest income 897 26 364
Interest expense (198) - -
Foreign exchange gains / (losses) 239 (2,007) (673)
PRE-TAX PROFIT/(LOSS) (8,639) (11,591) (98,764)
Income tax (expense) / credit (1,426) (5,019) 7,264
Profit/(Loss) for the period (10,065) (16,610) (91,500)
Equity holders of the parent (10,042) (16,560) (91,475)
Non-Controlling Interests (23) (50) (25)
PROFIT/(LOSS) FOR THE PERIOD (10,065) (16,610) (91,500)
Basic earnings per share ($) (0.023) (0.037) (0.206)
Diluted earnings per share ($) (0.023) (0.037) (0.206)
6 months ended 6 months ended Year ended
30-Jun-23 30-Jun-22 31-Dec-22
US$'000 US$'000 US$'000
Non-IFRS measures
Adjusted EBITDA* (3,809) 5,627 (73,378)
Normalised Adjusted EBITDA (3,469) 6,818 13,914
Normalised Adjusted EBITDA excluding performance-related impairments (2,535) 6,818 23,210
* Adjusted EBITDA is a non-IFRS measure and is defined as earnings before
interest, tax, depreciation, amortisation (but not taking out amortisation of
capitalised software development costs) and share-based payment expenses.
Consolidated Statement of Comprehensive Income
Unaudited Unaudited
6 months ended 6 months ended Year ended
30-Jun-23 30-Jun-22 31-Dec-22
US$'000 US$'000 US$'000
Loss for the period (10,065) (16,610) (91,500)
Other comprehensive income/(loss): Items that will be reclassified
subsequently to profit or loss
Exchange differences on translation of foreign operations 33 (964) (477)
Total comprehensive income/(loss) for the period (10,032) (17,574) (91,977)
Total comprehensive income/(loss) is attributable to:
Equity holders of the parent (10,009) (17,524) (91,952)
Non-controlling interests (23) (50) (25)
(10,032) (17,574) (91,977)
Consolidated Statement of Financial Position
Unaudited Unaudited
6 months ended 6 months ended Year ended
30-Jun-23 30-Jun-22 31-Dec-22
US$'000 US$'000 US$'000
NON-CURRENT ASSETS
Goodwill 19,416 66,820 19,153
Intellectual property 24,734 49,640 25,782
Software development costs 47,622 52,960 40,136
Total intangibles 91,772 169,420 85,071
Tangible assets 91 237 174
Employee loans 456 537 995
Deferred tax assets 10,598 - 10,088
TOTAL NON-CURRENT ASSETS 102,917 170,194 96,328
CURRENT ASSETS
Accounts receivable 12,173 19,452 16,813
Employee loans 406 - -
Cash at bank and in hand 64,761 74,176 79,493
Prepaid income tax 3,905 4,705 2,185
TOTAL CURRENT ASSETS 81,245 98,333 98,491
TOTAL ASSETS 184,162 268,527 194,819
CURRENT LIABILITIES
Trade and other payables 17,699 13,956 19,149
Deferred revenue 2,402 5,047 2,091
Current tax payable 4,158 - 262
TOTAL CURRENT LIABILITIES 24,259 19,003 21,502
NON-CURRENT LIABILITIES
Deferred tax liabilities 1,046 9,316 1,045
Long-term liabilities - 1,567 -
TOTAL NON-CURRENT LIABILITIES 1,046 10,883 1,045
TOTAL LIABILITIES 25,305 29,886 22,547
CAPITAL AND RESERVES
Share capital 45 44 45
Share premium 146,062 120,061 146,044
Retained Earnings 49,966 120,942 56,259
Translation reserve - OCI (2,234) (2,433) (2,267)
Capital Redemption Reserve (34,857) - (27,707)
CAPITAL AND RESERVES TO OWNERS 158,982 238,614 172,374
Non-controlling interest (125) 27 (102)
TOTAL EQUITY 158,857 238,641 172,272
TOTAL EQUITY AND LIABILITIES 184,162 268,527 194,819
Consolidated Statement of Changes in Equity
Capital Redemption Reserve Total Devolver equity Non-
Share capital Share premium Translation Reserve Retained earnings controlling interest Total
equity
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Balance at 1 January 2022 44 121,588 - (986) 126,184 246,830 (77) 246,753
Prior year adjustment - - - - (159) (159) 154 (5)
Loss for the period - - - - (16,560) (16,560) (50) (16,610)
Currency translation differences - - - (1,447) - (1,447) - (1,447)
Transactions with owners in their capacity as owners:
Exercise of share options via EBT - (1,527) - - - (1,527) - (1,527)
Share-based payments - - - - 11,477 11,477 - 11,477
Total transactions with owners - (1,527) - - 11,477 9,950 - 9,950
Balance at 30 June 2022 44 120,061 - (2,433) 120,942 238,614 27 238,641
Balance at 1 January 2022 44 121,588 - (986) 126,184 246,830 (77) 246,753
Loss for the period - - - - (91,475) (91,475) (25) (91,500)
Currency translation differences - - - (1,281) - (1,281) - (1,281)
Other movements - 383 - - (1) 382 - 382
Transactions with owners in their capacity as owners
Issue of shares - 165 - - - 165 - 165
Exercise of share options 1 630 - - - 631 - 631
Reclassification of treasury shares b/f - 25,837 (25,837) - - - - -
Treasury share repurchase - - (2,500) - (2,500) - (2,500)
Share-based payments - - - - 19,622 19,622 - 19,622
Transfers - (2,559) 630 - 1,929 - - -
Total transactions with owners 1 24,073 (27,707) - 21,551 17,918 - 17,918
Balance at 31 December 2022 45 146,044 (27,707) (2,267) 56,259 172,374 (102) 172,272
Balance at 1 January 2023 45 146,044 (27,707) (2,267) 56,259 172,374 (102) 172,272
Loss for the period - - - - (10,042) (10,042) (23) (10,065)
Currency translation differences - - - 33 33 - 33
-
Transactions with owners in their capacity as owners
Share buyback transactions - - (7,150) - - (7,150) - (7,150)
Exercise of share options - 18 - - - 18 - 18
Share-based payments charge - - - - 3,905 3,905 - 3,905
Share-based payments recycle of charge - - - - (156) (156) - (156)
Total transactions with owners - 18 (7,150) - 3,749 (3,383) - (3,383)
Balance at 30 June 2023 45 146,062 (34,857) (2,234) 49,966 158,982 (125) 158,857
Statement of Cash Flows
Unaudited Unaudited
6 months ended 6 months ended Year ended
30-Jun-23 30-Jun-22 31-Dec-22
US$'000 US$'000 US$'000
Operating activities
Cash inflow / (outflow) from operations (7,367) (14,759) (100,780)
Amortisation, depreciation and impairments 7,947 10,873 112,376
Share based payments 3,905 11,477 19,621
Interest payable 198 - -
Net taxation payable (361) - (2,062)
Net cashflow from operating activities 4,322 7,591 29,155
Investing activities
Purchase of intangible assets (600) - -
Investment in software development (12,570) (15,631) (32,641)
Purchase of tangible assets - (5) (66)
Net cashflow from investing activities (13,170) (15,636) (32,707)
Financing activities
Net change in borrowings/ others - (510) -
Share capital issuance including option exercise 18 (1,527) 795
Share repurchase transactions (7,150) - (2,514)
Interest received 893 26 362
Interest paid - - (2)
Net cashflow from financing activities (6,239) (2,011) (1,359)
Net cashflow (15,087) (10,056) (4,911)
At 1 January / 1 July 79,493 86,239 86,239
FX 355 (2,007) (1,835)
Closing cash 64,761 74,176 79,493
Note 1: Basis of preparation and consolidation
These condensed financial statements have been prepared in accordance with the
recognition and measurement requirements of International Accounting Standard
34 Interim Financial Reporting. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for fair
presentation have been included. The condensed consolidated financial
statements as at and for the six months ended June 30, 2023 have been prepared
on the same basis as the audited annual financial statements.
In May 2022 Devolver established an Employee Benefit Trust (EBT) to facilitate
settlement of employee stock options granted under the 2017 Stock Option Plan
and stock awards granted under the 2022 Long Term Incentive Plan. The EBT is a
Jersey-based Trust and the Trustees act to the benefit of the employees. The
accounting treatment determined that Devolver controls the EBT and must
consolidate the EBT within its consolidated financial statements.
Most transactions eliminate upon consolidation, with the exception of the
purchase by the EBT of Devolver shares from employees and shares issued to
employees who are exercising options out of the Capital Redemption Reserve.
These are recognised at cost as "Issued shares held within the Group". These
shares are included within the Capital Redemption Reserve, a separate reserve
within equity. The Devolver shares held by the EBT are not revalued. When the
EBT sells the shares to a third party, any gains or losses are recognised
directly in equity.
Operating results for the six months ended 30 June 2023 are not necessarily
indicative of the results that may be expected for the year ending 31 December
2023. For further information, refer to the consolidated financial statements
and footnotes thereto included in the Group's annual report for the year ended
31 December 2022.
The Directors are confident that the Group will remain cash positive and will
have sufficient funds to continue to meet its liabilities as they fall due for
a period of at least 12 months from the date of this first half 2023
announcement and have therefore prepared this unaudited semi-annual
announcement on a going concern basis.
Tax charged within 6 months ended 30 June 2023 has been calculated by applying
the effective rate of tax which is expected to apply to the Group for the year
ending 31 December 2022 as required by IAS 34 'Interim Financial Reporting'.
The effective rate of (16.2)% varies from the statutory rate of 21% due to: a)
permanent book to tax differences related to stock compensation deductions for
foreign entities, which is not deductible for US income taxes, and; b) US
State tax liabilities.
The financial presentation in this release should be read in conjunction with
the notes to the consolidated financial statements as at and for the first
half ended 30 June 2023, as contained within this release.
These preliminary unaudited financial statements were approved by the Board of
Directors on 24 September 2023.
Note 2: Earnings Per Share
6 months ended 6 months ended Year ended
30-Jun-23 30-Jun-22 31-Dec-22
US$'000 US$'000 US$'000
Profit/(Loss) attributable to the owners of the company (10,042) (16,560) (91,475)
Weighted average number of shares 444,818,506 442,464,268 443,090,183
Basic earnings per share ($) (0.023) (0.037) (0.206)
Profit/(Loss) attributable to the owners of the company (10,042) (16,560) (91,474)
Weighted average number of shares 444,818,506 442,464,268 443,090,183
Dilutive effect of share options - - -
Weighted average number of diluted shares 444,818,506 442,464,268 443,090,183
Diluted earnings per share ($) (0.023) (0.037) (0.206)
Note 3: Normalised Adjusted Results*
6 months ended 6 months ended Year ended
30-Jun-23 30-Jun-22 31-Dec-22
US$'000 US$'000 US$'000
Revenue
Reported Revenue 43,877 53,003 134,565
Reported Revenue growth -17.2% 14.1% 37.1%
Gross Profit
Reported Gross Profit 9,394 18,260 22,503
Reported Gross Profit margin 21.4% 34.5% 16.7%
Normalised Gross Profit adjustment - 721 23,829
Normalised Gross Profit 9,394 18,981 46,332
Normalised Gross Profit margin 21.4% 35.8% 34.4%
Adjusted EBITDA
Reported Adjusted EBITDA (3,809) 5,627 (73,378)
Reported Adjusted EBITDA margin -8.7% 10.6% (54.5%)
Normalised Adjusted EBITDA adjustment 340 1,191 87,292
Normalised Adjusted EBITDA (3,469) 6,818 13,914
Normalised Adjusted EBITDA margin -7.9% 12.9% 10.3%
* Normalised Adjusted EBITDA makes the following adjustments: it excludes 1)
stock compensation (share-based payment) expenses and revaluation of
contingent consideration; 2) one-time expenses and other non-recurring items;
3) amortisation of IP (but does not exclude amortisation of capitalised
software development costs), and 4) impairment.
Note 4: Reconciliations to Adjusted EBITDA
6 months ended 6 months ended Year ended
30-Jun-23 30-Jun-22 31-Dec-22
US$'000 US$'000 US$'000
Operating Profit/(Loss) (9,577) (9,610) (98,455)
Share-based payment expenses 3,905 11,477 19,621
Amortisation and depreciation of non-current assets 1,863 3,761 5,456
Adjusted EBITDA (3,809) 5,627 (73,378)
6 months ended 6 months ended Year ended
30-Jun-23 30-Jun-22 31-Dec-22
US$'000 US$'000 US$'000
Adjusted EBITDA (3,809) 5,627 (73,378)
Net Exceptional income from IP disposal & sale of publishing rights - - (214)
Non-recurring, one-time expenses 340 470 1,616
Impairments & others - 721 85,890
Normalised Adjusted EBITDA (3,469) 6,818 13,914
Performance-related impairments 934 - 9,296
Normalised Adjusted EBITDA excluding performance related impairments (2,535) 6,818 23,210
Note 5: Intangible Assets
Intangible Assets Goodwill Intellectual Software Total
Property Development
US$'000 US$'000 US$'000 US$'000
Cost
As at 1 January 2022 66,820 59,817 61,396 188,033
Additions - - 32,641 32,641
As at 31 December 2022 66,820 59,817 94,037 220,674
Additions 263 815 13,570 14,648
As at 30 June 2023 67,083 60,632 107,607 235,322
Amortisation and impairment
As at 1 January 2022 - 6,435 16,955 23,390
Amortisation charge for the period - 5,293 14,788 20,081
Impairment 47,667 22,307 22,158 92,132
As at 31 December 2022 47,667 34,035 53,901 135,603
Amortisation charge for the period - 1,863 5,150 7,013
Impairment - - 934 934
As at 30 June 2023 47,667 35,898 59,985 143,550
Carrying amount
As at 1 January 2022 66,820 53,382 44,441 164,643
As at 31 December 2022 19,153 25,782 40,136 85,071
As at 30 June 2023 19,416 24,734 47,622 91,772
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