REG - Devolver Digital - Half Year Results
26/09/2024 07:00
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RNS Number : 6837F Devolver Digital, Inc. 26 September 2024
26 September 2024
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 2024
Return to Adjusted EBITDA profitability as expected, on track to meet FY 2024
guidance
Devolver Digital, the award-winning digital publisher and developer of
independent ("indie") video games, announces its unaudited results for the six
months ended 30 June 2024. All figures relate to this period unless otherwise
stated.
A focused strategy driving return to growth
· 1H 2024 trading in line with expectations.
· Growth driven by strong back catalogue sales, contribution from new
releases and improvement in platform deals.
o 3 new titles released in 1H 2024 (1H 2023: 4), with record-matching
average Metacritic score of 80 (76 average for 1H 2023).
o Back catalogue revenues up 22%, accounting for 89% of game sales revenues
(1H 2023: 87%), reflecting the continued strong performance of Cult of the
Lamb and other key titles, plus the new contribution from System Era's
Astroneer title.
o Platform deals saw recovery from 2023's low level, being weighted to 1H
2024.
· System Era, acquired last year, is performing in line with
expectations and is integrating well, adding a full six-month contribution to
1H 2024 revenues.
Financial performance - return to EBITDA profit
· Revenues in line with FY24 expectations:
o 1H 2024 revenues up 18% to $51.6m; Adjusted Gross Profit up 62% to $15.3m.
· Strong execution and operational discipline leading to improved
Adjusted EBITDA profit, as previously guided:
o 1H 2024 Adjusted EBITDA profit of US$4.7m, pre non-cash impairment (1H
2023: US$2.5m loss).
· Non-cash impairment of US$1.7m recorded in 1H 2024 (1H 2023: US$0.9m)
relating to previous releases where sales have been softer than expected.
· Statutory net loss of US$4.5m(1) (1H 2023: US$10.1m loss).
· Cash of US$31.9m as of 30 June 2024 (year end 2023: US$42.7m), not
including $9.8m net proceeds from the primary issuance of shares in early July
2024.
Current trading and outlook
· 10 new titles expected for full year 2024, with 7 releases in 2H
2024: Anger Foot, The Crush House, Sumerian Six, Demon's Mirror, The Plucky
Squire, Neva and Stronghold Castles.
· System Era integration on track with full year contribution in FY
2024.
· Strong Balance Sheet boosted by $9.8m primary share placement in July
2024.
· On track to meet previous guidance: revenues over US$100m and
Adjusted EBITDA after non-cash impairments in the mid-single digit US$
millions. We continue to expect an improvement in 2025.
· Healthy pipeline of more than 30 new titles due for release in the
next three years.
Harry Miller, Executive Chairman of Devolver, said:
"As expected, the first half of 2024 saw a return to Adjusted EBITDA
profitability, driven by strong back catalogue revenues supplemented by new
releases, an improvement in platform deals and a solid first half contribution
from new acquisition System Era. We are pleased with the record high average
Metacritic ratings in 1H 2024, which we believe can bolster the longevity of
our games.
We are building momentum going into 2H 2024, with 6 new titles including the
highly anticipated release of Neva in October, on the back of the recent
success of The Plucky Squire. We reiterate our guidance for FY 2024, with
improvements expected through 2025 and 2026."
Notes
1. Including non-cash impact of US$2.4m of share-based payments.
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 120 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.
Enquiries
Devolver Digital, Inc. ir@devolverdigital.com (mailto:ir@devolverdigital.com)
Harry Miller, Chief Executive Officer
Daniel Widdicombe, Chief Financial Officer
Zeus (Nominated Adviser and Joint Broker) +44 (0)20 3829 5000
Nick Cowles, Kieran Russell (Investment Banking)
Ben Robertson (Equity Capital Markets)
Panmure Liberum (Joint Broker) +44 (0)20 3100 2000
Max Jones, Matt Hogg (Investment Banking)
FTI Consulting (Communications Adviser) devolver@fticonsulting.com (mailto:devolver@fticonsulting.com)
Jamie Ricketts / Dwight Burden / Valerija Cymbal / Usama Ali +44 (0)20 3727 1000
OPERATING REVIEW
1H 2024 - return to profit, with three new high Metacritic titles
Devolver released 3 new well-received titles in 1H 2024 - Dicefolk, Pepper
Grinder and Children of the Sun - with an average Metacritic rating of 80,
matching the record high average for a single six-month period. High
Metacritic scores and positive user ratings are important as they help to
bolster the longevity of releases.
The quiet release schedule mirrored that of 1H 2023 (4 titles), but 1H 2024
overall revenue benefitted from a significant contribution from platform deals
for front and back catalogue, as well as the addition of a full six-month
contribution from recent acquisition System Era. These two factors drove an
18% YOY increase in total group revenue in the first half of this year
compared to 1H 2023.
Hit releases support 22% growth in back catalogue
Fan favourite Cult of The Lamb provided strong revenue momentum in 1H 2024, a
trend continuing through this summer. The contribution from Cult of The Lamb,
in combination with a full six-month contribution from recent acquisition
System Era's Astroneer game, drove a 22% increase in back catalogue revenues
in 1H 2024 compared to the previous year period. BAFTA-winning Inscryption
also continued to perform well in the first six months of 2024, alongside
other evergreen titles in Devolver's back catalogue.
The strong growth in back catalogue revenues, coupled with a lighter release
schedule in 1H 2024, meant that back catalogue revenues accounted for 89% of
game sales revenues (1H 2023: 87%). Our back catalogue includes all titles
released in or prior to the last financial year (2023 or earlier). As of 1
January 2024, the back catalogue consists of over 120 titles, including
numerous indie cult classics, supporting highly diversified revenues.
Summer Game Fest 2024
Devolver marked June 2024 with celebrations in the summer showcase to
commemorate the company's 15(th) year anniversary of its founding. Devolver's
iconic live broadcast formed part of the Summer Game Fest 2024 in June,
featuring reveals of future new releases and expansions to fan favourites Cult
of the Lamb and The Talos Principle 2. New titles included Possessors, a slick
side-scrolling action game from developer Heart Machine, the creators of Solar
Ash and Hyper Light Drifter, and a reveal for Tenjutsu, the pending release
from Dead Cells lead developer Deepnight Games. The game puts players in the
role of a renegade yakuza fighting through the criminal underworld and mixes
pixel art visuals with some fast-paced action.
Recent releases Anger Foot and Crush House received attention, and we also
highlighted the Road to Elysium expansion from The Talos Principle 2,
introducing a host of new challenges spread across three chapters - Orpheus
Ascending, Isle of the Blessed, and Into the Abyss - each with their own look
and storyline. The broadcast also highlighted Cult of the Lamb's Unholy
Alliance expansion (rolled out on August 12(th)), which included some new
quests, gear and other items, and added a co-op gameplay mode, underscoring
our commitment to successful title expansion.
Disciplined Cost Control
Devolver successfully controlled operating expenses in 1H 2024, with growth in
revenues outstripping total operating expenses, resulting in margin expansion
in both gross profit and Adjusted EBITDA.
FINANCIAL REVIEW
Unaudited first half 2024 results to June 30 2024
The unaudited financial results included in this announcement cover the
Group's combined activities for the six months ended 30(th) June 2024
(prepared in accordance with applicable International Financial Reporting
Standards, "IFRS").
Adjusted results
The following refers to Adjusted results, as presented in the financial
statements contained within this release. Adjusted results exclude any
one-time exceptional items during the respective half-year periods.
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 Note 4 to the condensed financial statements contained within this
semi-annual results release.
P&L results and margins
Devolver Digital's first half 2024 performance was in line with expectations,
with 3 new title releases compared to 4 titles released in 1H 2023. Revenues
of US$51.6 million rose 18% year-over-year. Gross profit was US$15.3 million,
an increase of 62% year-over-year. Adjusted EBITDA after non-cash impairments
delivered a profit of US$3.0 million versus a US$3.5 million loss in 1H 2023.
Gross profit margin increased to 29.6% in the first half of 2024, up from
21.4% in the year-earlier period. Gross margin expansion was a result of
first-party IP contributions from late 2023 new releases, other new releases
in recoup in 1H 2024, and a full six-month contribution from Astroneer, System
Era's popular expandable game. This compares to 1H 2023 when the royalty
pay-out mix was heavily weighted towards third party titles.
Adjusted EBITDA margins before non-cash impairments improved to a positive
9.1% from a negative 5.7% in the first half of 2023. The expansion in 1H 2024
gross profit had a direct flow-through effect which benefitted Adjusted
EBITDA.
Statutory net loss for 1H 2024 was US$4.5m, improved from the US$10.1m loss in
1H 2023.
Cash Balances
Cash holdings at end of June 2024 were US$31.9 million, a reduction of US$10.8
million compared to end of 2023's level of US$42.7 million, on the back of
continued investment into game development. After the period end, a primary
share placement in July 2024 resulted in net proceeds of US$9.8m. Devolver has
no borrowings across the Group.
Appointment of Joint Broker
We are pleased to have Panmure Liberum join the Devolver family as Joint
Broker to assist in broadening our investor coverage and business scope.
CURRENT TRADING OUTLOOK
Our busy release schedule for 2H 2024 has already featured Anger Foot, The
Crush House, Sumerian Six and Demon's Mirror, as well as major title The
Plucky Squire. NEVA, from the developers of the award-winning Gris, will
release in October, alongside the mobile title Stronghold Castles from our
subsidiary Firefly. The Plucky Squire released with a Metacritic score of 81
and very positive user reviews. NEVA, slated for release in October, has had
very positive pre-release trailers, and has also built a healthy wishlist
ahead of launch.
Trading for the full year 2024 continues to be in line with consensus
expectations of revenues exceeding US$100 million and Adjusted EBITDA to be in
the mid-single digit US$ millions, with improvements expected through 2025 and
2026.
Our momentum, robust balance sheet, deep pipeline and strong contribution from
extensive back catalogue all support our confidence of further progress in
2025 and in the future. The Board believes that we are well positioned for
future success, and we look forward to reporting on our progress into 2025.
Harry Miller
Chief Executive Officer
Condensed Consolidated Statement of Profit or Loss
Unaudited Unaudited Audited
6 months ended 6 months ended Year ended
30-Jun-24 30-Jun-23 31-Dec-23
Note US$'000 US$'000 US$'000
Revenue 2 51,583 43,877 92,356
Cost of sales (36,327) (34,483) (67,838)
Gross profit 15,256 9,394 24,518
Administrative expenses (21,439) (18,141) (38,537)
Other income / (expenses) 1,134 (591) 1,011
Operating loss (5,049) (9,338) (13,008)
Finance costs (61) (198) (58)
Finance income 272 897 1,361
Loss before taxation (4,838) (8,639) (11,705)
Income tax benefit / (expense) 366 (1,426) (1,019)
Loss for the period (4,472) (10,065) (12,724)
Loss for the period is attributable to:
Equity holders of the parent (4,414) (10,042) (12,742)
Non-controlling interests (58) (23) 18
Loss for the period (4,472) (10,065) (12,724)
Basic and diluted loss per share ($) 3 (0.010) (0.023) (0.029)
Non-IFRS measures
Adjusted EBITDA* before performance- related impairments
4 4,713 (2,535) 1,677
Adjusted EBITDA* 4 2,967 (3,469) (458)
*Adjusted EBITDA is a non-IFRS measure and is defined as earnings before
interest, tax, depreciation, amortisation (but does not exclude amortisation
of capitalised software development costs), share-based payment expenses,
foreign exchange gains or losses and one-time non-recurring items and
non-trading items.
For the six months ended 30 June 2023, the Group distinguished between
Normalised Adjusted EBITDA and Adjusted EBITDA and presented both measures.
This distinction was removed post June 2023 for a simpler, clearer
presentation in line with industry peers, and therefore the Adjusted EBITDA
for the six months ended 30 June 2023 as previously reported is no longer
presented, and the Normalised Adjusted EBITDA previously reported is presented
as Adjusted EBITDA in the above table.
Condensed Consolidated Statement of Comprehensive Income
Unaudited Unaudited Audited
6 months ended 6 months ended Year ended
30-Jun-24 30-Jun-23 31-Dec-23
US$'000 US$'000 US$'000
Loss for the period (4,472) (10,065) (12,724)
Other comprehensive income: Items that may be reclassified
subsequently to profit or loss
Exchange differences on translation of foreign operations
(329) 33 1,673
Total comprehensive loss for the period
(4,801) (10,032) (11,051)
Total comprehensive loss is attributable to:
Equity holders of the parent (4,743) (10,009) (11,069)
Non-controlling interests (58) (23) 18
Total comprehensive loss for the period
(4,801) (10,032) (11,051)
Condensed Consolidated Statement of Financial Position
Unaudited Unaudited Audited
As at As at As at
30-Jun-24 30-Jun-23 31-Dec-23
Note US$'000 US$'000 US$'000
ASSETS
Non-current assets
Intangible assets
- goodwill 5 31,902 19,416 31,963
- other intangible assets 5 97,506 72,356 95,936
Property, plant and equipment 190 91 266
Right of use asset 845 - 953
Employee loans 594 456 320
Deferred tax assets 10,968 10,598 8,100
Total non-current assets 142,005 102,917 137,538
Current assets
Trade and other receivables 21,561 12,173 13,778
Cash and cash equivalents 31,926 64,761 42,651
Employee loans 227 406 487
Current tax asset 1,227 3,905 2,354
Total current assets 54,941 81,245 59,270
Total assets 196,946 184,162 196,808
EQUITY AND LIABILITIES
Equity
Share capital 45 45 45
Share premium 146,106 146,062 146,106
Retained earnings* 44,219 48,326 47,092
Translation reserve (923) (2,234) (594)
Capital redemption reserve (34,505) (34,857) (34,531)
Equity attributable to owners of the parent 154,942 157,342 158,118
Non-controlling interest (142) (125) (84)
Total equity 154,800 157,217 158,034
Non-current liabilities
Trade and other payables* 10,332 1,640 10,361
Deferred tax liabilities 238 1,046 259
Lease liability 782 - 873
Deferred revenue - - 1,309
Total non-current liabilities 11,352 2,686 12,802
Current liabilities
Trade and other payables 26,977 17,699 24,457
Lease liability 173 - 155
Deferred revenue 1,985 2,402 634
Current tax liability 1,659 4,158 726
Total current liabilities 30,794 24,259 25,972
Total liabilities 42,146 26,945 38,774
Total equity and liabilities 196,946 184,162 196,808
*Due to the identification of an additional tax liability for prior periods
relating to state income taxes, the reported financials for the period ended
30 June 2023 have been adjusted for a US$1.6 million increase in the
non-current Trade and other payables and a US$1.6 million decrease in opening
Retained earnings.
Condensed Consolidated Statement of Changes in Equity
Share capital Share premium Translation reserve Retained earnings Capital redemption reserve Total Devolver equity Non-controlling interest Total equity
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Balance at 31 December 2023 (audited) 45 146,106 (594) 47,092 (34,531) 158,118 (84) 158,034
Loss for the period - - - (4,414) - (4,414) (58) (4,472)
Currency translation differences
- - (329) - - (329) - (329)
Other movements - - - (150) 26 (124) - (124)
Fair value adjustment - - - (647) - (647) - (647)
Transactions with owners in their capacity as owners:
Other movements - - - (76) - (76) - (76)
Share-based payments - - - 2,414 - 2,414 - 2,414
Total transactions with owners - - - 2,338 - 2,338 - 2,338
Balance at 30 June 2024 (unaudited) 45 146,106 (923) 44,219 (34,505) 154,942 (142) 154,800
Share capital Share premium Translation reserve Retained earnings Capital redemption reserve Total Devolver equity Non-controlling interest Total equity
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Balance at 31 December 2022 (audited) 45 146,044 (2,267) 54,618 (27,707) 170,733 (102) 170,631
Loss for the period - - - (10,042) - (10,042) (23) (10,065)
Currency translation differences
- - 33 - - 33 - 33
Transactions with owners in their capacity as owners:
Issue of shares - - - - - - - -
Exercise of share options - 18 - - - 18 - 18
Treasury share repurchase transactions
- - - - (7,150) (7,150) - (7,150)
Share-based payments - - - 3,905 - 3,905 - 3,905
Share-based payments recycling of charge - - - (155) - (155) - (155)
Total transactions with owners - 18 - 3,750 (7,150) (3,382) - (3,382)
Balance at 30 June 2023 (unaudited) 45 146,062 (2,234) 48,326 (34,857) 157,342 (125) 157,217
Share capital Share premium Translation reserve Retained earnings Capital redemption reserve Total Devolver equity Non-controlling interest Total equity
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Balance at 31 December 2022 (audited) 45 146,044 (2,267) 54,618 (27,707) 170,733 (102) 170,631
Loss for the period - - - (12,742) - (12,742) 18 (12,724)
Currency translation differences 1,673
- - 1,673 - - - 1,673
Transactions with owners in their capacity as owners:
Issue of shares - - - - - - - -
Exercise of share options - 62 - (312) - (250) - (250)
Treasury share repurchase transactions
- - - - (6,824) (6,824) - (6,824)
Share-based payments - - - 5,528 - 5,528 - 5,528
Total transactions with owners - 62 - 5,216 (1,546) - (1,546)
(6,824)
Balance at 31 December 2023 (audited) 45 146,106 (594) 47,092 (34,531) 158,118 (84) 158,034
Condensed Consolidated Statement of Cash Flows
Unaudited Unaudited Audited
6 months ended 6 months ended Year ended
30-Jun-24 30-Jun-23 31-Dec-23
US$'000 US$'000 US$'000
Loss for the period before taxation (4,838) (8,639) (11,705)
Adjustments for:
Depreciation of tangible fixed assets 94 31 186
Depreciation of right of use assets 108 - -
Amortisation of intangible fixed assets 13,335 6,982 15,552
Impairment of intangible fixed assets 1,746 934 2,455
Finance income (326) (897) (1,361)
Finance costs 115 198 58
Share-based payment charge 2,398 3,905 5,528
Other non-cash movements (269) (239) 9
Movements in working capital:
Receivables (7,693) 1,616 3,692
Payables (115) 792 (2,095)
Cash inflow from operations 4,555 4,683 12,319
Taxation paid (83) (361) (778)
Taxation received - - 2,416
Net cash inflow from operating activities 4,472 4,322 13,957
Cash flows from investing activities
Purchase of intangible assets (15,009) (12,570) (27,883)
Purchase of tangible assets (56) - (51)
Acquisitions of businesses, net of cash acquired - (600) (18,033)
Net cash outflow from investing activities (15,065) (13,170) (45,967)
Cash flows from financing activities
Share capital issuance - 18 62
Share repurchase transactions - (7,150) (6,824)
Interest received 317 893 1,338
Interest paid (77) - (58)
Repayment of lease liabilities (72) - (22)
Net cash inflow/(outflow) from financing activities 168 (6,239) (5,504)
Cash and cash equivalents
Net decrease in the period (10,425) (15,087) (37,514)
At 1 January 42,651 79,493 79,493
Foreign exchange movements (300) 355 672
At 30 June / 31 December 31,926 64,761 42,651
Note 1: Basis of preparation
These condensed consolidated 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,
2024 have been prepared on the same basis as the audited annual financial
statements.
Operating results for the six months ended June 30, 2024 are not necessarily
indicative of the results that may be expected for the year ending December
31, 2024. For further information, refer to the consolidated financial
statements and footnotes thereto included in the Group's annual report for the
year ended December 31, 2023.
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 2024
announcement and have therefore prepared this unaudited semi-annual
announcement on a going concern basis.
Tax charged within 6 months ended 30 June 2024 has been calculated by applying
the effective rate of tax which is expected to apply to the Group for the year
ending 31 December 2024 as required by IAS 34 Interim Financial Reporting.
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 2024, as contained within this release.
These preliminary unaudited financial statements were approved by the Board of
Directors on 25 September 2024.
Note 2: Revenue
Unaudited Unaudited Audited
6 months ended 6 months ended Year ended
30-Jun-24 30-Jun-23 31-Dec-23
US$'000 US$'000 US$'000
Revenue analysed by class of business:
Game publishing 51,583 43,877 92,356
Revenue analysed by timing of revenue:
Transferred at a point in time 51,583 43,877 92,356
The Group does not provide any information on the geographical breakdown of
revenues, as game publishing revenue is earned via third-party distribution
platforms which hold the sales data of end consumers.
Note 3: Earnings Per Share
Unaudited Unaudited Audited
6 months ended 6 months ended Year ended
30-Jun-24 30-Jun-23 31-Dec-23
US$'000 US$'000 US$'000
Loss attributable to owners of the company (4,414) (10,042) (12,742)
Weighted average number of shares 444,832,441 444,818,506 444,825,531
Dilutive effect of share options - - -
Weighted average number of diluted shares 444,832,441 444,818,506 444,825,531
Basic and diluted loss per share ($) (0.010) (0.023) (0.029)
Note 4: Adjusted Results
Unaudited Unaudited Audited
6 months ended 6 months ended Year ended
30-Jun-24 30-Jun-23 31-Dec-23
US$'000 US$'000 US$'000
Revenue
Reported Revenue 51,583 43,877 92,356
Reported Revenue growth 18.0% (17.2%) (31.4%)
Gross Profit
Reported Gross Profit 15,256 9,394 24,518
Reported Gross Profit margin 29.6% 21.4% 26.5%
Performance-related impairments 1,746 934 2,455
Adjusted Gross Profit 17,002 10,328 26,973
Adjusted Gross Profit margin, pre performance-related impairment
33.0% 23.5% 29.2%
Adjusted EBITDA*
Adjusted EBITDA 2,967 (3,469) (458)
Adjusted EBITDA margin 5.8% (7.9%) (0.5%)
Performance-related impairments 1,746 934 2,135
Adjusted EBITDA pre performance-related impairment
4,713 (2,535) 1,677
Adjusted EBITDA margin, pre performance-related impairment
9.1% (5.8%) 1.8%
*Adjusted EBITDA is a non-IFRS measure and is defined as earnings before
interest, tax, depreciation, amortisation (but not excluding amortisation of
capitalised software development costs), share-based payment expenses, foreign
exchange gains or losses and one-time non-recurring items and non-trading
items.
For the six months ended 30 June 2023, the Group distinguished between
Normalised Adjusted EBITDA and Adjusted EBITDA and presented both measures.
This distinction was removed post June 2023 for a simpler, clearer
presentation in line with industry peers, and therefore the Adjusted EBITDA
for the six months ended 30 June 2023 as previously reported is no longer
presented, and the Normalised Adjusted EBITDA previously reported is presented
as Adjusted EBITDA in the above table.
A reconciliation from the operating loss to adjusted EBITDA is set out in the
table below:
Unaudited Unaudited Audited
6 months ended 6 months ended Year ended
30-Jun-24 30-Jun-23 31-Dec-23
US$'000 US$'000 US$'000
Operating Loss (5,049) (9,338) (13,008)
Share-based payment expenses 2,414 3,905 5,528
Amortisation of intellectual property 4,840 1,832 3,918
Depreciation of property, plant and equipment 94 31 150
Depreciation of right-of-use asset 108 - 36
Foreign exchange losses (gains)/losses (150) (239) 9
Impairment of capitalised software developments costs - - 320
Non-recurring, one time expenses 710 340 2,589
Adjusted EBITDA 2,967 (3,469) (458)
Performance-related impairments 1,746 934 2,135
Adjusted EBITDA pre performance-related impairments 4,713 (2,535) 1,677
Note 5: Intangible Assets
Software development cost Purchased intellectual property Subtotal other intangibles
Goodwill Total
US$'000 US$'000 US$'000 US$'000 US$'000
Cost
As at 31 December 2023 (audited) 121,920 79,959 201,879 79,630 281,509
Additions 16,652 - 16,652 - 16,652
Fair value adjustment - - - (61) (61)
As at 30 June 2024 (unaudited) 138,572 79,959 218,531 79,569 298,100
Amortisation and impairment
As at 31 December 2023 (audited) 67,990 37,953 105,943 47,667 153,610
Amortisation charge for the period 8,496 4,840 13,336 - 13,336
Impairment charge for the period 1,746 - 1,746 - 1,746
As at 30 June 2024 (unaudited) 78,232 42,793 121,025 47,667 168,692
Carrying amount
As at 31 December 2023 (audited) 53,930 42,006 95,936 31,963 127,899
As at 30 June 2024 (unaudited) 60,340 37,166 97,506 31,902 129,408
Software development cost Subtotal other intangibles
Intellectual property
Goodwill Total
US$'000 US$'000 US$'000 US$'000 US$'000
Cost
As at 31 December 2022 (audited) 94,037 59,817 153,854 66,820 220,674
Additions - business combinations - 815 815 263 1,078
Additions 13,570 - 13,570 - 13,570
As at 30 June 2023 (unaudited) 107,607 60,632 168,239 67,083 235,322
Amortisation and impairment
As at 31 December 2022 (audited) 53,901 34,035 87,936 47,667 135,603
Amortisation charge for the period 5,150 1,863 7,013 - 7,013
Impairment charge for the period 934 - 934 - 934
As at 30 June 2023 (unaudited) 59,985 35,898 95,883 47,667 143,550
Carrying amount
As at 31 December 2022 (audited) 40,136 25,782 65,918 19,153 85,071
As at 30 June 2023 (unaudited) 47,622 24,734 72,356 19,416 91,772
Software development cost Intellectual property Subtotal other intangibles
Goodwill Total
US$'000 US$'000 US$'000 US$'000 US$'000
Cost
As at 31 December 2022 (audited) 94,037 59,817 153,854 66,820 220,674
Additions - business combinations - 20,142 20,142 12,810 32,952
Additions 27,883 - 27,883 - 27,883
As at 31 December 2023 (audited) 121,920 79,959 201,879 79,630 281,509
Amortisation and impairment
As at 31 December 2022 (audited) 53,901 34,035 87,936 47,667 135,603
Amortisation charge for the period 11,634 3,918 15,552 - 15,552
Impairment charge for the period 2,455 - 2,455 - 2,455
As at 31 December 2023 (audited) 67,990 37,953 105,943 47,667 153,610
Carrying amount
As at 31 December 2022 (audited) 40,136 25,782 65,918 19,153 85,071
As at 31 December 2023 (audited) 53,930 42,006 95,936 31,963 127,899
Note 6: Impairment to Software Development Costs
The Group assessed software development costs for indicators of impairment,
considering both qualitative and quantitative factors. For the titles
exhibiting indicators of impairment, the Group recorded an impairment loss of
$1.7 million in Cost of Sales against the carrying value of software
development costs at 30 June 2024.
The impairment is related to titles published in 2023 by Devolver Digital Inc.
and Good Shepherd Entertainment. As a result of lower than expected sales and
future projections, these titles were impaired to their recoverable amounts,
being value in use.
In assessing value in use for games identified with indicators of impairment,
the Group has prepared a cash flow forecast reflecting management's
estimations of future performance of these titles. Key assumptions on which
this forecast was based includes title revenue generation and revenue decay
curves.
The cash flows were discounted to their present value utilising a pre-tax
discount rate of 21.9%, calculated based on the particular circumstances of
the Group and its CGUs, derived from its Weighted Average Cost of Capital.
Note 7: Events After the Reporting Date
On 1 July 2024, Devolver announced a successful placing of 23,917,151 new
common shares at a price of 33 pence per share, which represents a 10% premium
to the closing price on 1 July 2024.
The gross proceeds from the placing amounted to approximately £7.9 million
(circa US$10 million). The new shares represent approximately 5.4% of
Devolver's issued and outstanding share capital.
Following admission, Devolver's issued and outstanding share capital totalled
468,749,592 common shares.
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