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Aviation History
People Can Fly (PCF) FY2023. Operating Loss 83,302 PLZ. Project Gemini (Square Enix) under strategic review. Letter to Shareholders
People Can Fly (PCF) Q1 FY2024. Operating Profit 3,996 PLZ. Bulletstorm VR 'unsatisfactory launch'. Internal greenlight on Project Bitfrost & Victoria
Preface: FINANCIAL HIGHLIGHTS TRANSLATED INTO THE EURO on page 3. See last post here for latest.
PCF in detention as its report wasn't available until today (despite saying September 30, 2024).
PCF GROUP SPÓŁKA AKCYJNA GROUP
Consolidated Half Year Financial Report for the period of January 1 2024 - June 30, 2024
(all amounts in PLN thousand, unless stated otherwise).
*1 złoty = approximately 0.23 euros or 0.26 dollar*
STATEMENT OF PROFIT OR LOSS
People Can Fly (PCF) FY2023. Operating Loss 83,302 PLZ. Project Gemini (Square Enix) under strategic review. Letter to Shareholders
People Can Fly (PCF) Q1 FY2024. Operating Profit 3,996 PLZ. Bulletstorm VR 'unsatisfactory launch'. Internal greenlight on Project Bitfrost & Victoria
Preface: FINANCIAL HIGHLIGHTS TRANSLATED INTO THE EURO on page 3. See last post here for latest.
PCF in detention as its report wasn't available until today (despite saying September 30, 2024).
PCF GROUP SPÓŁKA AKCYJNA GROUP
Consolidated Half Year Financial Report for the period of January 1 2024 - June 30, 2024
(all amounts in PLN thousand, unless stated otherwise).
*1 złoty = approximately 0.23 euros or 0.26 dollar*
STATEMENT OF PROFIT OR LOSS
| 1 Jan - 30 Jun 2024 | 1 Jan - 30 Jun 2023 |
|---|---|---|
| Revenue | 76,309 | 68,666 |
| Cost of Sales | 71,155 | 43,695 |
| Gross Profit (Loss) | 5,154 | 24,971 |
| Other expenses | 8,257 | 3,099 |
| Operating Profit (Loss) | (35,805) | (8,887) |
| Profit (Loss) Before Tax | (36,930) | (11,361) |
| Income Tax | (3,641) | 1,709 |
| Net Profit (Loss) | (33,289) | (13,070) |
2Q Results
| 1 Apr - 30 Jun 2024 | 1 Apr - 30 Jun 2023 |
|---|---|---|
| Revenue | 19,428 | 33,749 |
| Cost of Sales | 34,693 | 21,502 |
| Gross Profit (Loss) | (15,265) | 12,247 |
| Other expenses | 8,136 | 2,996 |
| Operating Profit (Loss) | (39,801) | (7,386) |
| Profit (Loss) Before Tax | (40,681) | (8,130) |
| Income Tax | (8,256) | 646 |
| Net Profit (Loss) | (32,425) | (8,776) |
(page 9)
Cash flows from financing activities | Proceeds from sale of other financial assets | 35,000 | - |
| Cash and cash equivalents at beginning of period: | 124,016 | 67,983 |
| Cash and cash equivalents at end of period: | 83,426 | 165,351 |
2Q Results
Cash flows from financing activities | Proceeds from sale of other financial assets | 20,000 | - |
| Cash and cash equivalents at beginning of period: | 118,354 | 60,866 |
| Cash and cash equivalents at end of period: | 83,426 | 165,351 |
(pages 13-14)
Going concern assumptionThe Parent’s Management Board is seeking additional sources of funding for the Group to ensure that it can continue its operations in a substantially unchanged scope beyond the fourth quarter of 2024, with the intention of continuing to implement the Group’s strategy focusing on the development of the self-publishing segment.
To secure such funding, on 7 August 2024, the Parent’s Management Board initiated a strategic options review, considering the potential acquisition of a financial or strategic investor, or another transaction that could lead to changes in the Parent’s shareholding structure or equity.
Another potential source of funding involves securing new work-for-hire projects through partnerships with external publishers, enabling the Company to obtain development fees with appropriate margins.
Failure to secure additional funding or securing funding that would be insufficient until the end of the fourth quarter of 2024 may necessitate scaling down the Group’s operations, adjusting its structure and business model, revising the project portfolio, or updating strategic objectives. The type, scope, and timing of these actions would be aligned with the funding sources available from time to time, with the primary goal of ensuring the Group’s liquidity in future periods.
(page 18)
3. Revenue and operating segmentsIn the six months to 30 June 2024, the contract development segment included mainly revenue from Project Gemini and Project Maverick, game development projects carried out by the Group in partnership with the publishers Square Enix Limited and Microsoft Corporation, respectively.
In addition, in connection with the execution of a master services agreement with Krafton Inc. along with a content rider to the master services agreement (Statement of Work) (described in more detail in Note 24), as a result of the settlement of preparatory work completed in part in the period prior to the execution of the above agreements, the Group began recognising revenue from the production of the Project Echo game.
Positive cash flows from this segment enabled the Group to partially cover expenditure on games that the Group intends to publish on its own in the self-publishing model.
(page 21)
January 1 - June 30, 2024 | Contract development of video games (development fee) | Copyrights to developed games (royalties) | Self - publishing | Other Activities | Total |
|---|---|---|---|---|---|
| Revenue from external customer | 54,006 | 971 | 21,332 | - | 76,309 |
| Total Revenue | 54,006 | 971 | 21,332 | - | 76,309 |
| Segment's Operating Profit (loss) | (19,550) | 645 | (16,900) | - | (35,805) |
2Q Results
April 1 - June 30, 2024... | Contract development of video games (development fee) | Copyrights to developed games (royalties) | Self - publishing | Other Activities | Total |
|---|---|---|---|---|---|
| Revenue from external customer | 18,337 | 672 | 419 | - | 19,428 |
| Total Revenue | 18,337 | 672 | 419 | - | 19,428 |
| Segment's Operating Profit (loss) | (18,891) | 346 | (21,256) | - | (39,801) |
(pages 23-24)
As of 30 June 2024, the Group conducted an analysis of indicators for potential impairment of intangible assets and identified components requiring impairment testing. As a result, an impairment loss of PLN 7,758 thousand was recognised as at 30 June 2024 for Project Red.*
(page 27)
Q2 contract development revenue is down (Square Enix only paying direct costs for Project Gemini?). The self-publishing division had a big drop off (Bulletstorm VR in Q1, bad word of mouth hurt its legs, patched & recently 50% off). To put that into perspective, it ended up being lower than the 'Copyrights to developed games (royalties)' category which includes the 2016 released Bulletstorm: Full Clip Edition. Rough quarter financial results for PCF, it's market cap is down -7.59% in one day (-53.71% this year at time of posting), falling below $120 million for the first time since being listed in Dec 2020. This is significantly down from a peak of $640 million back on February 26, 2021. (LATE EDIT: corrected $ figures in post & OP title).
*Current report No. 20/2024 has the full details on Project Red & my post last week offered an update on amendments to its strategy. Will post the Financial Results Presentation when it's published & any current reports with the latest between now & it's Q3 results due November 26, 2024. Much work to be done to win back shareholder & investor confidence with only Bison due in 2025. 2026 is when it expects to launch 3 games (Gemini as well as 2 self-published Early Access titles) so its a question of raising enough funds to continue with it's self-publishing initiative or secure a publishing deal for one or more of them. Alternatively it could seek out more work-for-hire contracts like the ECHO mode with KRAFTON.
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