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Clarification regarding the Control game sales revenue recognition

14.11.2019 klo 16:30 Clarification regarding the Control game sales revenue recognition

Remedy Entertainment Plc | Company announcement 4:30 pm (EET) 14 November 2019

Clarification regarding the Control game sales revenue recognition

On Wednesday 13th November 2019, Digital Bros S.p.A. – the publishing partner of Remedy Entertainment Plc – released their first quarterly report of the financial year that started in July 2019. The report also covered the revenue recognition regarding sales of the Remedy-developed game Control, which was released on 27th August 2019. Digital Bros S.p.A. disclosed €17.7M of Control game sales recognition during 1.7.–30.9.2019. Also prior to this, Digital Bros S.p.A. had reported a revenue recognition of €9.5M during the financial year 1.7.2018–30.6.2019 based on the exclusive agreement regarding the distribution of Control’s PC version on Epic Games Store.

On May 3rd 2017, Remedy announced the signing of a publishing agreement with Digital Bros S.p.A. regarding the Control game, and disclosed Remedy to receive 45% of game sales net revenue. The revenue share is calculated from net sales, which takes into account deductions such as retail and marketing costs of the game. Once the game starts to sell and before paying the game developer, the publisher is typically allowed to deduct upfront specific costs, such as manufacturing and distribution costs of physical game copies as well as marketing costs.

Additionally, revenue recognition practices differ between Remedy and Digital Bros S.p.A., as Remedy reports based on FAS and Digital Bros S.p.A. reports based on IFRS. Therefore, the figures reported by the companies are not comparable. Based on the aforementioned reasons and especially during the early phases of the game’s sales, Control’s revenue recognition to Remedy takes place with a delay and no direct conclusions can be drawn as to the recognition of net sales share based on the figures reported by Digital Bros S.p.A.

Remedy is commenting this matter with a company announcement as publicly available reports regarding the estimates of Control game sales revenue recognition do not – for the reasons described above – reflect the actual amount or timing of the 45 % net sales revenue to be recognised by Remedy.

Remedy’s outlook remains unchanged as the company expects its revenue and profit to grow during 2019, as mentioned in the half-year report released on August 13th 2019.

MORE INFORMATION
Tero Virtala, Chief Executive Officer
Phone: +358 9 435 5040
Email: tero.virtala@remedygames.com

Lauri Haavisto, Senior Manager, Investor & Talent Relations
Phone: +358 9 435 5040
Email: lauri@remedygames.com

Alexander Corporate Finance Oy
Certified Advisor
Phone: +358 50 520 4098

DISTRIBUTION
Nasdaq Helsinki Ltd
Key media
www.remedygames.com

REMEDY IN BRIEF
Remedy Entertainment Plc is a globally successful video game company known for story-driven and visually stunning console and computer games such as Control, Alan Wake and Max Payne. Remedy also develops its own Northlight game engine and game development tools.

Founded and based in 1995, Finland, the company employs over 260 game industry professionals from 27 different countries. Remedy is listed on the Nasdaq First North Growth Market Finland marketplace.

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