GGG 2020 Financial statements have been released - 40% increase in sales!

"

These were released 3 weeks ago, but I don't check that often. As always this is public information anyone can find on the NZ register - https://app.companiesoffice.govt.nz/companies/app/ui/pages/companies/1887410/documents?backurl=H4sIAAAAAAAAAC2LMQrDMAxFb%2BMlQ04gSqYuGQrtBYQlVEMtu7IcyO0rQrf%2FH%2B%2BtHYXHmlvtqCXWYLT8vtVGDMNRCY2Sn52B1YuHkr4gVpSKyiJhL4I1KNKBmpkeqPwBt8npKs5XxAO2ff%2F%2Fp6PPcbc2%2B4V%2F8EkNl4MAAAA%3D

Edit: I've been informed by someone more informed about these documents that the main point of interest is actually the increase in cash flow from customer receipts (basically mtx sales). This has gone up from $77m in the March 2019 statement, to $108m in the Sept 2020 statement, a 40% increase in sales.

I'm no expert but from the data it looks like POE hasn't grown one cent from 2019 until now in net profits, but revenue and expenses have gone up 10% or so, and taxes have gone up but I don't know much about that. Honestly not much growth at all but I guess that's expected in 2020 (although this was before the cyberpunk delays).

Here is the old statement release on august 2019, there was no statement since then until March 02 of this year, which includes march-september of 2019, and september 2019 to september 2020 due to a statement date change.

The main info is on page 5 but if you have any numbers background the rest is probably interesting too.

2019 March statement: https://app.companiesoffice.govt.nz/companies/app/service/services/documents/99185B9B06CD7AF83623EBDE8ED5902F

2019 Sept statement: https://app.companiesoffice.govt.nz/companies/app/service/services/documents/A23178E0C67CE83ACBE2FCC3485368F7

2020 Sept statement: https://app.companiesoffice.govt.nz/companies/app/service/services/documents/C1C22EAA76EA616D25B68F1B1B8A385E

"

I'm also not an expert, but I'd assume it's a lot of Covid related stuff:

1. Setting their staff up to work at home likely raised costs. That's unless every staff member is using their own equipment.

2. People lost their jobs, don't have as much money to spend on frivolous stuff like MTX.

3. Potential issues with staff working at home in relation to overall productivity, or just harder to be completely on the same page.

Edit, someone sent me this in PMs, seems like a pretty good explanation:

You're looking at the wrong number. Operating cash flow / Receipt from customers is the real number - i.e. how many supporter packs they sold. That number went from $77m to $108m. That's a HUGE jump.

The net profit line is just accounting games (very normal, not special to GGG) that companies use to smooth out earnings to reduce tax liabilities.

Happy to explain the accounting further if you're interested, but in essence - they can choose to recognize the supporter pack money as revenue pretty much whenever they want to (via the "Income Statement"). However, the cash flows tell you the real story of their success ("Cash Flow Statement").

2020 was a huge win for them. So big they dividended out $100m to Tencent and Chris (i.e. more than all the money they'd ever put into this business).

"

Quick glance at the statement, they had ~119m on hand in prior year, and ~56m on hand this year, that ~60m difference is probably largely due to the the dividend payout.

"

As they are audited by PWC, they cannot just recognise supporter pack revenue whenever they want to, as they are required to recognise the revenue in accordance with NZ IFRS 15.

Plus, the profit result isn't a "smoothing out", it just reflects non-cash movements that arise from differing accounting bases (accruals basis for the preparation of financial statements, cash basis effectively for the cash flow statement and very few other balances that I cannot see at a quick glance).

Just wanted to clarify as an accountant and a pedantic jerk.

The point on cash flow from operating activities is spot on though. It's generally one of the best non-obvious proxies for performance health in the business.

Ultimately, it's a bloody good result for GGG. Even if it does at first glance appear to be "in line" with the previous accounts.

"

Noble_Seiken wrote:

So is that like 40% INCREASE in sales, or 40% MORE sales?

So confused.

"

Noble_Seiken wrote:

So is that like 40% INCREASE in sales, or 40% MORE in sales?

So confused.

"

Noble_Seiken wrote:

So is that like 40% INCREASE in sales, or 40% MORE in sales?

So confused.