Digital Bros S.p.a. MIL:DIB
Digital Bros S p A : Consolidated Financial Statements as of June 30, 2024
Source: MarketScreener
Consolidated financial statements as of June 30th, 2024
Digital Bros S.p.A.
Via Tortona, 37 - 20144 Milan, Italy
VAT number 09554160151
Share Capital: Euro 6.024.334,80 of which Euro 5.706.014,80 subscribed
Milan Companies House no. 290680-Vol. 7394 Chamber of Commerce no. 1302132
This report is available on the Company's website www.digitalbros.comInvestor Relations /
Financial Documents section
Please consider that this is an Italian to English translation: the Italian version shall always prevail in
case of any discrepancy or inconsistency.
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Digital Bros Group Consolidated financial statements as of June 30th, 2024 | 2 |
Index | ||
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE STRUCTURE | ...............................................5 | |
DIRECTORS' REPORT | 7 | |
1. | GROUP ORGANIZATION | 7 |
2. | MAIN INTELLECTUAL PROPERTIES OWNED BY THE GROUP | 11 |
3. | THE VIDEO GAMES MARKET | 14 |
4. | ALTERNATIVE PERFORMANCE RATIOS | 17 |
5. | SEASONALITY EFFECTS | 18 |
6. | SIGNIFICANT EVENTS DURING THE REPORTING PERIOD | 19 |
7. CONSOLIDATED PROFIT AND LOSS STATEMENT FOR THE PERIOD ENDED JUNE 30TH, 2024 ..22
8. | CONSOLIDATED BALANCE SHEET AS OF JUNE 30TH, 2024 | 27 |
9. | FINANCIAL RATIOS | 29 |
10. | SEGMENT REPORTING | 30 |
11. | INTERCOMPANY AND RELATED PARTY TRANSACTION AND ATYPICAL/UNUSUAL | |
TRANSACTIONS | 45 | |
12. | TREASURY SHARES | 47 |
13. | RESEARCH AND DEVELOPMENT | 47 |
14. | OPERATIONAL RISKS, FINANCIAL RISKS AND FINANCIAL INSTRUMENTS | 48 |
15. | CONTINGENT ASSETS AND LIABILITIES | 53 |
16. | SUBSEQUENT EVENTS | 53 |
17. | BUSINESS OUTLOOK | 54 |
18. | OTHER INFORMATION | 55 |
19. | DISCLOSURE OF NON-FINANCIALINFORMATION | 56 |
20. | CORPORATE GOVERNANCE AND OWNERSHIP STRUCTURE REPORT | 56 |
21. | REPORT ON THE REMUNERATION POLICY AND FEES PAID | 56 |
Consolidated financial statements as of June 30th, 2024 - FINANCIAL STATEMENTS | 57 | |
Consolidated balance sheet as of June 30th, 2024 | 59 | |
Consolidated profit and loss statement for the period ended June 30th, 2024 | 60 | |
Consolidated comprehensive income statement as of June 30th, 2024 | 61 | |
Consolidated cash flow statement as of June 30th, 2024 | 62 | |
Consolidated statement of changes in equity as of June 30th, 2024 | 63 |
Digital Bros Group Consolidated financial statements as of June 30th, 2024 | 3 |
Consolidated financial statements as of June 30th, 2024 EXPLANATORY NOTES | 67 | |
1. | INTRODUCTORY NOTE | 66 |
2. | ACCOUNTING POLICIES | 68 |
3. | DISCRETIONARY ITEMS AND SIGNIFICANT ESTIMATES | 83 |
4. | CONSOLIDATION CRITERIA | 85 |
5. | INVESTMENTS IN JOINT-VENTURES AND ASSOCIATED COMPANIES | 88 |
6. | BUSINESS COMBINATIONS | 88 |
7. | RELATIONSHIPS WITH STARBREEZE | 88 |
8. RECONCILIATION OF CONSOLIDATED PROFIT FOR THE YEAR AND NET EQUITY TO THOSE
OF PARENT COMPANY | 91 | |
9. CONSOLIDATED BALANCE SHEET AS OF JUNE 30th, 2024 | 93 | |
10. | FINANCIAL INSTRUMENTS AND FINACIAL RISK MANAGEMENT (IFRS 7) | 119 |
11. | NON-RECURRINGITEMS | 129 |
12. INFORMATION BY OPERATING SEGMENT | 130 | |
13. | RELATED PARTY TRANSACTIONS | 135 |
14. | ATYPICAL OR UNUSUAL TRANSACTIONS | 139 |
15. | ASSET REVALUATION | 139 |
16. | LOANS GRANTED TO EXECUTIVES AND SUPERVISORY BODIES | 139 |
17. | AUDIT FEES | 140 |
STATEMENT PURSUANT TO ART. 154- BIS (5) OF THE T.U.F | 141 |
Digital Bros Group Consolidated financial statements as of June 30th, 2024 | 4 |
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE STRUCTURE
Board of Directors
Control and | Remuneration | Nomination | ||||
Name | Office | Risk | ||||
Committee | Committee | |||||
Committee | ||||||
Carlotta Ilaria D'Ercole | Director | I | M | M | P | |
Abramo Galante | Chairman and CEO | E | ||||
Davide Galante | Director | NE | ||||
Raffaele Galante | CEO | E | ||||
Susanna Pedretti | Director | I | M | P | M | |
Stefano Salbe (1) | Director | E | ||||
Laura Soifer (2) | Director | I | P | M | M | |
Dario Treves | Director | E | ||||
Key:
E: Executive Director | P: President of the Committee |
NE: Non-Executive Director | M: Member of the Committee |
- Independent Director
- Financial Reporting Manager pursuant to Art. 154 bis of Legislative Decree 58/98
- Lead Independent Director
Board of Statutory Auditors
Name | Office |
Maria Pia Maspes | Statutory auditor |
Pietro Piccone Ferrarotti | Statutory auditor |
Paolo Villa | Chairman |
Andrea Serra | Substitute statutory auditor |
Stefano Spiniello | Substitute statutory auditor |
The Shareholders' Meeting held on October 27th, 2023 appointed the Board of Directors and the Board of Statutory Auditors. The terms of the Directors and the Statutory Auditors will expire on the date of the Shareholders' Meeting for the approval of the financial statements as of June 30th, 2026. On January 24th, 2024, the Group's Director Lidia Florean passed away. On May 14th, 2024, The Board of Directors decided to abstain from the co-option of a new Board member. A consensus on a new nominee was not achieved and the Board assessed that the current structure of eight members allows for an effective management control of the Group in its current complexity. Further decision about the co-option was referred to the next Shareholders' Meeting.
Digital Bros Group Consolidated financial statements as of June 30th, 2024 | 5 |
On October 27th, 2023, the Shareholders' Meeting appointed Abramo Galante as Chairman of the Board of Directors. On November 9th, 2023, the Board of Directors appointed Abramo Galante and Raffaele Galante as Chief Executive Officers. The Chief Executive Officers received adequate powers of attorney. On November 9th, 2023 the Board also appointed Laura Soifer as Lead Independent Director and the members of the Board's committees.
On August 7th, 2007, the Board of Directors appointed the Executive Director Stefano Salbe as Financial Reporting Manager pursuant to Art. 154 bis of Legislative Decree 58/98 with appropriate powers.
Auditors
EY S.p.A.
On October 27th, 2021, the Shareholders' Meeting appointed EY S.p.A., based in Via Meravigli 12, Milan, as auditors of the Group's consolidated annual and half year financial statements and Digital Bros S.p.A. annual financial statements until the approval of the financial statements as of June 30th, 2030.
Other information
The publication of Digital Bros Group's draft consolidated financial statements as of June 30th, 2024 was authorized by a resolution of the Board of Directors on September 26th, 2024.
Digital Bros S.p.A. is incorporated and operating in Italy. The Company is listed on the Euronext STAR segment of the Euronext Milan market operated by Borsa Italiana S.p.A..
Digital Bros Group Consolidated financial statements as of June 30th, 2024 | 6 |
DIRECTORS' REPORT
1. GROUP ORGANIZATION
Digital Bros Group develops, publishes and distributes video games on international markets.
The Group is organized into five operational business segments:
Premium Games: main operations consist of the acquisition of video games intellectual properties from developers and the distribution of video games through an international retail sales network and digital marketplaces such as Steam, Sony PlayStation Network, Microsoft Xbox Live, Epic Game Store, etc..
A portion of the video games within the Group's portfolio have been developed by its internal development studios, while the others have been produced by independent development teams. The rights related to video games developed by external studios are either acquired through a long-term exclusive licensing agreement or acquired perpetually.
The label used for worldwide publishing is 505 Games. A second label, Hook, publishes budget video games.
During the period, Premium Games operations were conducted by the subsidiary 505 Games S.p.A. which coordinates the operating segment together with 505 Games Ltd. and 505 Games (US) Inc. which operate respectively in the UK and in the U.S. Hook S.r.l. publishes budget videogames. 505 Games Interactive (US) Inc. provides consultancy services on behalf of 505 Games S.p.A..
505 Games France S.a.s., 505 Games Spain Slu and 505 Games GmbH carried out marketing activities for their respective local markets during the first half of the fiscal year but, from Q3 of FY2024, they were closed as part of the reorganization process implemented during the fiscal year.
The following studios are also incorporated in the Premium Games segment:
- the Italian company Kunos Simulazioni S.r.l., which developed and published the Assetto Corsa and the Assetto Corsa Competizione video games;
- the Czech company Ingame Studios a.s. a Brno-based studio acquired in charge of the development of Crime Boss: Rockay City. In July 2021 Digital Bros first acquired 60% of the company, while in July 2023 the Group finalized the acquisition of the remaining 40%;
- the Italian company Avantgarden S.r.l., a development studio based in Milan;
- the Italian company Supernova Games Studios S.r.l., a development studio based in Milan;
- the Canadian company Chrysalide Jeux et Divertissement Inc. (75% held by the Group) which is currently developing a brand-new video game.
A Spanish joint venture, MSE & DB S.l., was set up together with the development studio MercurySteam Entertainment S.L. in order to jointly create a new intellectual property.
Digital Bros Group Consolidated financial statements as of June 30th, 2024 | 7 |
Free to Play: main operations consist of the development and publishing of video games and/or applications that are available for free on digital marketplaces, featuring in-app purchase features. Free to Play video games usually have lower technical complexity compared to Premium video games but, when successful, tend to have a longer life cycle. Free to Play video games are continuously upgraded after the launch in order to retain players and enhance the video game's life cycle.
Worldwide Free to Play publishing is operated by 505 Mobile S.r.l., together with the U.S. company 505 Mobile (US) Inc., which provides consultancy services to Group companies, the UK-based company DR Studios Ltd., which develops the Group's Free to Play video games.
The Australian companies 505 Games Australia Pty Ltd., and the development teams Infinite Interactive Pty. and Infinity Plus Two Pty, own the intellectual property of the video games Puzzle Quest and Gems of War and provide live support activities to such products.
In July 2022, 505 Games Mobile S.r.l. acquired 100% of D3Publisher of America Inc., now 505 Go Inc., an American publisher of Free to Play video games, including spin-offs of the Puzzle Quest series.
The labels used for Free to Play worldwide publishing are 505 Mobile and 505Go!.
Italian Distribution: consists of the distribution in Italy of video games purchased from international publishers. The operations are run by the Parent Company, Digital Bros S.p.A., under the Halifax brand.
Other Activities: all remaining activities of the Group are consolidated under the Other Activities operating segment for reporting purposes. This segment includes the operations of the subsidiary Digital Bros Game Academy S.r.l. which offers video game training and professional courses. The Group also holds a 60% stake in the UK company Seekhana Ltd..
Holding: management of HR, financial planning and business development carried out by the Parent Company, Digital Bros S.p.A.. The holding company was supported by Digital Bros China Ltd., Digital Bros Asia Pacific (HK) Ltd. and 505 Games Japan K.K. which have operated as business developers for the Asian markets. Digital Bros Holdings Ltd. was not active during the period.
All the companies mentioned above are 100% owned, except for Rasplata B.V. and Seekhana Ltd. which are controlled with a 60% interest and Chrysalide Jeux et Divertissement Inc. with a 75% interest. In August 2024 the Group acquired the remaining 40% stake in Rasplata B.V.
The organization chart of the operating companies as of June 30th, 2024 was as follows:
Digital Bros Group Consolidated financial statements as of June 30th, 2024 | 8 |
Digital Bros Group Consolidated financial statements as of June 30th, 2024 | 9 |
During the reporting period, the Group operated in the following locations:
Company | Address | Activity | |
AvantGarden S.r.l. | Via Tortona, 37 Milan | Offices | |
Chrysalide Jeux et Divertissement Inc. (2) | 300 Rue Saint Paul - Bureau 410, Quebec City, Canada | Offices | |
Digital Bros S.p.A. | Via Tortona, 37 Milan | Offices | |
Digital Bros S.p.A. | Via Boccaccio 95, Trezzano sul Naviglio (Milan) | Logistics | |
Digital Bros Asia Pacific (HK) Ltd. | 33-35 Hillier Street, Sheung Wan, Hong Kong | Offices | |
Digital Bros China (Shenzhen) Ltd. | Wang Hai Road, Nanshan district, Shenzhen, 518062, | Offices | |
China | |||
Digital Bros Game Academy S.r.l. | Via Labus, 15 Milan | Offices | |
DR Studios Ltd. | 403 Silbury Boulevard, Milton Keynes, U.K. | Offices | |
Game Entertainment S.r.l. | Via Tortona, 37 Milan | Offices | |
505 | Games S.p.A. | Via Tortona, 37 Milan | Offices |
505 | Games Australia Pty Ltd. | 333 Collins Street, South Melbourne Victoria, Australia | Offices |
505 | Games Japan K.K. | WeWork Jimbocho, 11-15, Kanda Jimbocho 2-chome | Offices |
Chiyoda-ku, Tokyo, Japan | |||
505 | Games Ltd. | 403 Silbury Boulevard, Milton Keynes, U.K. | Offices |
505 | Games (US) Inc. | 5145 Douglas Fir Road, Calabasas, California, U.S.A. | Offices |
505 | Games Interactive (US) Inc. | 5145 Douglas Fir Road, Calabasas, California, U.S.A. | Offices |
505 | Go Inc. | 5145 Douglas Fir Road, Calabasas, California, U.S.A. | Offices |
Hook S.r.l. | Via Tortona, 37 Milan | Offices | |
Ingame Studios a.s. | Moravské náměstí 249/8, Brno, Czech Republic | Offices | |
Kunos Simulazioni S.r.l. | Via degli Olmetti 39, Formello (Rome) | Offices | |
Infinite Interactive Pty Ltd. | 333 Collins Street, Melbourne Victoria, Australia | Offices | |
Infinity Plus Two Pty Ltd. | 333 Collins Street, Melbourne Victoria, Australia | Offices | |
505 | Mobile S.r.l. | Via Tortona, 37 Milan | Offices |
505 | Mobile (US) Inc. | 5145 Douglas Fir Road, Calabasas, California, U.S.A. | Offices |
Rasplata B.V. (1) | Churchill-laan 131 2, Amsterdam, Netherlands | Offices | |
Seekhana Ltd. (1) | 403 Silbury Boulevard, Milton Keynes, U.K. | Offices | |
Supernova Games Studios S.r.l. | Via Tortona, 37 Milan | Offices | |
- 60% consolidated
- 75% consolidated
Rasplata B.V. and Seekhana Ltd. are held at 60%. Chrysalide Jeux et Divertissement Inc. is held at 75%. They have been incorporated into the consolidated financial statements through the line-by-line consolidation method, acknowledging the portion of net equity and operating results belonging to minority shareholders.
Digital Bros Group Consolidated financial statements as of June 30th, 2024 | 10 |