9 March 2023
Management Board of Ten Square Games S.A. with its registered office in Wrocław (hereinafter referred to as the “Company”) informs that in the course of work on the standalone and consolidated financial statements of the Company and the Group for the financial year ended December 31 2022, the Company decided to write off part of the development costs incurred for the development of two games from the Company’s portfolio in total amount of PLN 14.5 million:
– the amount of PLN 9.2 million relates to the Magical District game and results from the decision to definitively close this project and focus solely on the further development of the second title of the Warsaw studio – Fishing Masters.
– the amount of PLN 5.3 million concerns the game Undead Clash and includes the costs of development work, the effects of which will not be utilized in the subsequent stages of the title’s development, due to the decision to change the gameplay and introduce a new element to it. At the end of 2022, the game was subjected to numerous marketing tests. Based on the conclusions from their analysis, a modification was introduced in the Undead Clash game, which, in the Company’s opinion, has the potential to increase player involvement, but requires additional work and expenditure. The game in the new formula will be subject to further marketing tests in mid-2023.
The costs of write-downs will be charged to the results of the fourth quarter of 2022 under position other operating costs. The write-down is non-cash and does not affect the Company’s cash and liquidity position. The write-down will be charged to the Company’s net result, but will not affect the Company’s and Group’s EBITDA or Adjusted EBITDA result.
After taking into account the above-mentioned write-downs, the estimated amount of “intangible assets under construction” as at December 31, 2022 is approximately PLN 21.9 million for both the consolidated and standalone financial statements and consists of capitalized costs of:
1) Undead Clash – PLN 12.5 million;
2) Fishing Masters – PLN 9.2 million;
3) costs of internally produced tools – PLN 0.3 million.
The Management Board of the Company also informs that the data presented in this current report are preliminary and may still change. The final information on the amount of “intangible assets under construction” will be provided by the Company in the annual report, which will be published on March 28, 2023.