Financial · May 1, 2021

Quarterly Report of 11 Bit Studios S.A. for the First Quarter of 2021

Summary

During the first quarter of 2021, 11 bit studios S.A. transitioned into a phase of intensive internal development and portfolio scaling, following a period of high revenue generated by major content releases in the previous year. Revenue for the period reached PLN 14.84 million with a net profit of PLN 3.56 million, representing a significant year-on-year decline from the PLN 30.52 million in revenue and PLN 16.53 million in profit recorded in Q1 2020. This contraction was primarily due to the high comparative base set by the 2020 expansion of the Frostpunk franchise and the natural aging of the publishing portfolio, including titles such as Moonlighter and Children of Morta. Despite the decline in immediate earnings, the company maintained a robust financial position, ending the quarter with record liquidity. Total financial assets and receivables reached PLN 107.8 million, supported by a diverse investment portfolio of bonds and investment funds. The balance sheet remained strong with total assets of PLN 192.48 million, even as operating costs rose by 72.7% due to an expanding workforce and non-cash provisions for a new incentive scheme. Notably, the company utilized the "IP Box" tax relief for the first time, applying a preferential 5% corporate income tax rate to qualifying intellectual property revenue. The strategic focus has shifted toward long-term growth, with the company aiming to release one proprietary title annually. Development efforts are currently concentrated on three major internal projects—Project 8, Dolly, and Eleanor—while the publishing division manages a pipeline of third-party titles. To support this expansion, 11 bit studios is scaling its headcount toward a target of 250–300 employees and has implemented a 2021–2025 Incentive Scheme tied to ambitious financial goals, including a cumulative profit target of PLN 328 million. Ongoing revenue continues to be anchored by the long-tail sales of established hits and the anticipated mobile launch of Frostpunk in partnership with NetEase.

From the report

WARSAW, May 13th 2021 tr QUARTERLY REPORT OF 11 BIT STUDIOS S.A.<sub>FOR</sub> THE THREE MONTHS ENDED THE MARCH 31ST 2021 MARCH 31ST 2021 1 QUARTERLY REPORT OF 11 BIT STUDIOS S.A. FOR THE FIRST QUARTER OF 2021 nake

LETTER FROM THE MANAGEMENT BOARD Warsaw, May 13th 2021 Dear Shareholders and Investors, It is our pleasure to present to you this report of 11 bit studios S.A. for the first quarter of 2021. During the first three months of the year, 11 bit studios S.A. generated more than PLN 14.84m in revenue. Our EBITDA came in at PLN 6.38m, operating profit was PLN 3.44 m, and net profit reached almost PLN 3.56m. To note, the net profit figure would have been higher but for the non-cash provision recognised in connection with our 2021−2025 Incentive Scheme. It was PLN 1,039,104, and the same amount will be charged against our profits in the following quarters up until Q4 2025 (inclusive), starting from Q1 2021. As in previous periods, the solid figures for the three months ended March 31st 2021 were due to the very good monetisation of our entire proprietary game portfolio, supported by successful promotional campaigns on major sale platforms, including Steam. The revenue in the period also benefited from the release of the Mac version of Frostpunk (on February 24th). Other material positive contributors to our performance in the first months of 2021 were the games offered by the publishing division, led by Moonlighter and Children of Morta. Revenue from sale of third-party developed games accounted for 27% of the Company’s total revenue in the period. Although the results posted by 11 bit studios S.A.

formance in the first months of 2021 were the games offered by the publishing division, led by Moonlighter and Children of Morta. Revenue from sale of third-party developed games accounted for 27% of the Company’s total revenue in the period. Although the results posted by 11 bit studios S.A. for the three months ended March 31st 2021 were weaker year on year, which is explained by the very high base (a year ago we released the paid add-on for Frostpunk: Frostpunk: The Last Autumn, very well received by the market), it was yet another successive quarter when our financial condition measured by the size of cash resources improved. As at March 31st 2021, the total value of our financial assets (cash in bank accounts and secure financial instruments), plus trade receivables, totalled nearly PLN 107.8 million, a level previously unseen in the 11 bit studios S.A.’s over 11- year history. The first months of 2021 saw an acceleration of work on new proprietary productions (Project 8 and the Dolly and Eleanor projects), as well as further games in the 11 bit publishing’s portfolio, which will drive our performance in the coming years. Total expenditure on those projects reached PLN 7,928,100 in the first quarter of 2 021. It should be assumed that in future periods, with our increasing headcount (already approaching 180, with intensive recruitment process still ongoing) and expansion of our publishing portfolio, the capital expenditure on new games will continue to grow, which will have a positive effect on 11 bit studios S.A.’s future revenues and profits. Thank you once again for the trust you place in us. We invite you to read our report.

cess still ongoing) and expansion of our publishing portfolio, the capital expenditure on new games will continue to grow, which will have a positive effect on 11 bit studios S.A.’s future revenues and profits. Thank you once again for the trust you place in us. We invite you to read our report. QUARTERLY REPORT OF 11 BIT STUDIOS S.A. FOR THE THREE MONTHS ENDED 2

We also want to invite all interested parties to our annual Investor Conference, currently planned to be held on Thursday, June 10th. We hope that the information we will provide there will prove useful and interesting. More details of the event will be announced in due course. flidd Noubdi Przemystaw Marszat Grzegorz Miechow Michat Drozdowski Przemysław Marszał Grzegorz Miechowski Michał Drozdowski President of the Member of the Member of the Management Board Management Board Management Board 3 QUARTERLY REPORT OF 11 BIT STUDIOS S.A. FOR THE FIRST QUARTER OF 2021

TABLE OF CONTENTS LETTER FROM THE MANAGEMENT BOARD 2 TABLE OF CONTENTS 4 FINANCIAL HIGHLIGHTS 6 Statement of financial position 6 Statement of profit or loss 6 Statement of cash flows 7 FINANCIAL STATEMENTS OF 11 BIT STUDIOS S.A. FOR THE THREE MONTHS ENDED MARCH 31ST 2021 8 1. OVERVIEW 9 1.1. Company overview 9 1.2. Covered periods .9 1.3. Composition of the Company’s governing bodies as at March 31st 2021 10 1.4. Auditor 10 1.5. Shareholding structure as at the issue date of the report 11 1.6. Company shares held by members of its management and supervisory staff 12 1.7. Headcount 12 1.8. Functional and presentation currency 12 2. FINANCIAL STATEMENTS OF 11 BIT STUDIOS S.A. 13 2.1.

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Words: 18,644
Format: PDF
Type: Financial

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