Financial

Półroczne Sprawozdanie Zarządu z Działalności Grupy Kapitałowej PCF Group S.A. i Spółki PCF Group S.A.: za okres 1.01.2023 – 30.06.2023

1 September 202352 pages21,213 words

Summary

PCF Group S.A. underwent a significant strategic transition during the first half of 2023, shifting its focus toward self-publishing and Game-as-a-Service models while maintaining a robust global presence across Poland, North America, and Europe. The primary objective of this period was to secure the capital necessary to fund an ambitious 2023–2027 growth strategy, which targets 3.0 billion PLN in revenue. This was largely achieved through the issuance of Series F and G shares, raising approximately 235 million PLN and attracting Krafton, Inc. as a strategic 10% anchor investor. Despite these capital inflows increasing total assets to 481.9 million PLN and bolstering cash reserves, the Group faced a challenging fiscal environment, reporting a net loss of 13.1 million PLN on revenues of 68.7 million PLN—a 24% year-over-year decline. The financial downturn was primarily driven by the conclusion of major development work on Outriders Worldslayer and the termination of a previous agreement with Take-Two Interactive. Revenue remains highly concentrated, with over 75% derived from a work-for-hire contract with Square Enix. Furthermore, the Group has yet to receive royalties for Outriders as net sales have not yet recouped publisher costs. To diversify its portfolio, the Group signed a production agreement with Microsoft for Project Maverick, a AAA title with a budget of $30–50 million, and increased its stake in VR developer Incuvo S.A. to 62.25%. Operational risks remain centered on high dependency on external publishers who retain ownership of key intellectual property, as well as significant key-man reliance on CEO Sebastian Wojciechowski, who maintains a 41.65% stake. While the Group faces rising administrative costs and wage pressures across its international studios, its strong liquidity position and the development of the proprietary PCF Framework are intended to support the transition toward a self-publishing model and the eventual release of internal titles such as Projects Gemini, Dagger, and Bifrost.

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Financial

Skonsolidowany Raport Półroczny za Okres 1.01.2023 - 30.06.2023

PCF Group S.A. reported a transition toward a self-publishing and "Game-as-a-Service" model during the first half of 2023, a period marked by significant capital restructuring and a shift from profitability to an operational loss. The Group recorded a consolidated net loss of PLN 13.1 million for H1 2023, compared to a PLN 25.5 million profit in the same period of 2022. This downturn was driven by a 24% year-over-year decrease in sales revenues to PLN 68.7 million and a sharp rise in operating costs, which reached PLN 136.9 million as the company expanded its development teams and internal publishing infrastructure. Despite the net loss, the Group’s financial position was bolstered by successful capital-raising activities. Through the issuance of Series E, F, and G shares, the Group raised approximately PLN 235 million, strengthening total equity to PLN 394.2 million and increasing cash reserves to PLN 165.4 million. A strategic partnership with Krafton, Inc., which acquired a 10% stake, and the entry of Nationale-Nederlanden OFE as a significant shareholder, provided the necessary liquidity to fund an ambitious project pipeline. This pipeline includes "Project Maverick" for Microsoft—a work-for-hire agreement valued between $30–50 million—alongside self-published titles such as Projects Dagger, Bifrost, and Victoria. The Group’s revenue remains heavily reliant on its "Production for Hire" segment, which accounted for over 75% of total income, primarily through ongoing collaborations with Square Enix and Microsoft. Notably, the Group has yet to receive royalties for *Outriders*, as sales have not yet recouped the publisher's development and promotion costs. Looking forward, the Group has set a total revenue target of PLN 3.0 billion for the 2023–2027 period and has suspended dividend payments until at least 2025 to prioritize the reinvestment of capital into its expanding portfolio of AAA titles and proprietary software frameworks.

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PCF GroupSept 2023

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PCF Group S.A. experienced a period of strategic transition and financial growth during the first half of 2022, characterized by a shift toward a dual-track business model of work-for-hire and self-publishing. Operating primarily out of Poland with an expanding international presence in North America and Europe, the group reported a 17% year-over-year increase in consolidated revenue to 90.6 million PLN. While the work-for-hire segment remained the dominant revenue driver—accounting for over 75% of income through partnerships with major publishers like Square Enix—the period was marked by the pivotal decision to transition Project Dagger to a self-publishing model following the termination of a development agreement with Take-Two Interactive. Financial performance remained robust, with net profit rising to 25.5 million PLN, supported by favorable exchange rate fluctuations and the utilization of "IP Box" tax relief. However, operating profit faced pressure from a 64% surge in administrative expenses as the group scaled its global back-office infrastructure. The group’s balance sheet reflected intensive investment in future growth, evidenced by a 161% increase in intangible assets stemming from self-funded R&D and the development of the proprietary PCF Framework. Despite these investments leading to negative investment cash flows, the group maintained high liquidity with 92.7 million PLN in cash reserves. Operational risks center on high revenue concentration and the inherent volatility of the AAA gaming market. The group remains heavily dependent on a limited number of publishing partners, and the lack of royalties from Outriders during this period underscores the challenge of recouping high production costs. Furthermore, the group faces significant wage pressures and competition for specialized talent. Governance is characterized by a high concentration of power, with the CEO and a small group of founding shareholders controlling over 70% of voting rights. While the conflict in Ukraine and currency volatility present ongoing macroeconomic uncertainties, management maintains that the group’s financial position is secure as it advances its multi-project pipeline toward 2024.

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PCF Group S.A. experienced significant corporate expansion and financial growth during the first half of 2021, driven by its transition into a global multi-studio entity. The Group expanded its footprint in North America through the acquisition of Game On Creative Inc. and the establishment of PCF Chicago. These strategic moves, supported by a successful Series B share issuance that raised 100.3 million PLN, increased total assets by 185% to 272.8 million PLN. While the Group reported a 47% year-over-year increase in sales revenue to 77.3 million PLN, net profit saw a 30% decline to 11.6 million PLN, primarily due to rising administrative costs, IPO-related expenses, and investments in back-office infrastructure. The production pipeline remains centered on the AAA segment, highlighted by the April 2021 launch of Outriders and the ongoing development of Project Gemini and Project Dagger. Despite the commercial release of Outriders, the Group did not receive royalties during this period as net revenues had not yet recouped the publisher’s production and promotion costs. This underscores a key operational risk: a high concentration of revenue and intellectual property rights held by external partners, specifically Square Enix and Take-Two. To mitigate these dependencies, the Group has initiated a strategic shift toward self-publishing and diversified its portfolio to include AA-segment titles, aiming for annual premieres starting in 2024. Financially, the Group maintains a strong liquidity position with a ratio of 3.54 and has optimized its fiscal obligations through the IP Box tax relief, significantly reducing its effective tax rate. Governance remains stable under the leadership of CEO Sebastian Wojciechowski, who retains a 49.76% stake. Looking forward, the Group’s performance will be driven by the execution of its multi-project development strategy, the management of wage pressures in international hubs, and the potential for future royalty streams from its established and upcoming titles.

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PCF GroupSept 2021

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Półroczne Sprawozdanie Zarządu z Działalności Grupy Kapitałowej PCF Group S.A. oraz Spółki PCF Group S.A.: 2024

PCF Group S.A. experienced a period of significant strategic realignment and financial volatility during the first half of 2024. Operating across international hubs in Poland, the UK, the US, and Canada, the Group reported revenues of 76.3 million PLN, an 11% year-over-year increase. This growth was primarily fueled by development fees from major work-for-hire partnerships, including Project Gemini with Square Enix, Project Maverick with Microsoft, and the newly initiated Project Echo with Krafton. Despite rising revenues, the Group’s net loss widened to 33.3 million PLN, a 155% increase from the previous year, driven by a 63% surge in operating costs and substantial non-cash write-offs. The reporting period was defined by a rigorous consolidation of the production pipeline. The Group canceled Project Dagger and Project Red following strategic re-evaluations, resulting in combined write-offs exceeding 76 million PLN. Furthermore, the renegotiation of the Project Gemini contract with Square Enix transitioned the project to a near-break-even margin, while the disappointing commercial performance of Bulletstorm VR led to the termination of its publishing agreement. These challenges have prompted a formal review of strategic options to secure new financial or strategic investors, as the Group estimates a need for 350 million PLN in new financing between 2025 and 2026 to sustain its self-publishing ambitions. Looking ahead, the Group’s long-term strategy targets 3.3 billion PLN in total revenue through 2028, anchored by the scheduled 2025 release of Project Bison and the 2026 early access launches of Project Bifrost and Project Victoria. While the Group maintains a stable equity-to-assets ratio of 0.80 and a current liquidity ratio of 1.76, it faces ongoing risks related to high wage pressures, dependency on external publishers who retain key intellectual property rights, and the inherent uncertainty of transitioning to a self-publishing model. Management has suspended dividends and incentive programs to prioritize liquidity as it navigates this capital-intensive development phase.

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PCF Group S.A. experienced a period of significant strategic realignment and financial volatility during the first half of 2025. While total sales revenue grew by 51% year-over-year to 115.3 million PLN, the Group recorded a net loss of 21.3 million PLN and a sharp 81% decline in cash reserves. This revenue growth was primarily driven by "work-for-hire" development fees from major international partners, including Microsoft for Project Maverick (revealed as Gears of War: E-Day), Krafton for Project Echo/Zulu, and Sony Interactive Entertainment for Project Delta. These partnerships have become the Group's primary financial stabilizer as it pivots away from more capital-intensive self-publishing and VR ventures. The reporting period was defined by the suspension of several high-profile projects and a subsequent reduction in workforce. Most notably, work on Project Gemini was halted on June 1, 2025, following a breakdown in communication and contract negotiations with publisher Square Enix, leading to the layoff of over 60 employees. Additionally, the self-published Project Bifrost was suspended due to cash flow constraints, resulting in significant non-cash write-offs totaling approximately 173 million PLN when combined with the impairment of the subsidiary Incuvo S.A. The Group also began a gradual withdrawal from the VR publishing market following the underperformance of Bulletstorm VR. To address liquidity challenges and a tightening immediate liquidity ratio, the Group successfully raised capital through the issuance of 6.67 million Series H shares in August 2025. Despite the contraction in its self-publishing pipeline, the Group launched Project Victoria (retitled Lost Rift) in Early Access on Steam in September 2025, though its long-term success remains uncertain. Moving forward, the Group faces ongoing risks related to its dependence on third-party publishers, currency fluctuations affecting its PLN-based cost structure, and the need to maintain high-skilled development talent in a competitive global market.

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The 2024 Management Board Report for PCF Group S.A. details a period of significant strategic pivoting and financial restructuring for the global AAA game developer. Operating across Poland, North America, and Europe, the Group reported a 27% increase in consolidated revenue to 190.4 million PLN, driven by work-for-hire fees from major partners including Square Enix, Microsoft, Krafton, and Sony. Despite this top-line growth, the Group incurred a substantial net loss of 175.3 million PLN, primarily due to 154.9 million PLN in non-cash write-downs following the cancellation of Project Dagger and Project Red, and the discontinuation of Project Bifrost. The Group’s thesis centers on achieving financial stabilization by balancing its ambitious self-publishing goals with a robust work-for-hire segment. This shift follows a failure to secure 350 million PLN in new financing, leading to a focus on "compact-AAA" titles and a gradual exit from the VR publishing market. While liquidity ratios declined significantly and working capital turned negative in 2024, management maintains that new agreements—such as Project Echo with Krafton and Project Delta with Sony—alongside ongoing major productions like Project Gemini and Project Maverick, provide a viable path toward a cumulative revenue target of 3.3 billion PLN through 2028. Corporate governance remains highly centralized, with CEO Sebastian Wojciechowski holding 41.71% of voting rights and maintaining personal rights to appoint the Board President. This "key man" dependency is noted alongside other operational risks, including high revenue concentration among a few publishers and the financial underperformance of recent releases like Bulletstorm VR. Moving forward, the Group intends to prioritize internal IP development, such as Project Victoria, while utilizing milestone-based external funding to manage its 716-person workforce and meet its long-term financial obligations.

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PCF GroupApr 2025

Półroczne Sprawozdanie Zarządu z Działalności Grupy Kapitałowej PCF Group S.A. i Spółki PCF Group S.A.: za okres 1.01.2023 – 30.06.2023

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