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CCP drops into red, losing $21m in FY 2013

R&D expense spike thought to be written-off costs of World of Darkness

CCP Has recorded a loss of over $21 million for financial year 2013, a considerable drop from a profit of $4.6 million the previous year. Revenues for the company rose to $76.7 million from $56.3 million.

The predominant, if not only, factor in the sudden profit dip is a massively increased R&D budget, which shot up from $16.5 million in FY 2012 to $56.5 million in FY 2013. Whilst some of those costs are likely to relate to the development of Eve Universe properties Valkyrie, Online and Dust, a significant portion is thought to be attributable to the cancellation of World of Darkness, the Vampire MMO which ceased development earlier this week, resulting in the loss of 56 jobs.

A note in CCP's full financial presentation seems to support the theory that a large factor in this $40 million increase in R&D costs was the removal of asset value previously attributed to World of Darkness.

"During the year the company assessed its capitalized development assets and determined that a portion of those assets would likely not have future economic benefits," a statement accompanying the report explains. "IAS 38 requires that such assets should be derecognized and removed from the balance sheet. The expense related to the derecognized assets are presented as part of research and development expense in the statement of comprehensive income."

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Latest comments (2)

Alan Wilson Vice President, Tripwire Interactive4 years ago
So, for the last few years, they've been capitalizing the development of WoD, making their P&L look nice and rosy? Looking at their report, the R&D went up by $40m ($16m to $56m). Cost of Sales up $2m. Tey've taken $20m off the Balance Sheet under Development Cost ($88m down to $67m) as Assets and Cash is down $7m. For those who hadn't noticed, they raised a loan of almost $20m in the previous year. And they've specified nearly $47m as the cost of derecognition.

While I like EVE, the more I look at this company, the less I like them. Well, the less I like the management. They've got some really great people working for them. Or. more correctly, they DID have some really great people working with them.
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Eric Leisy VR Production Designer, Nike4 years ago
Oh, I agree with you Alan. I hate to but it so brutishly, but I think CCP has some real thugs running it at the top. Clearly, they have some talented developers and they have produced some beautiful experiences. I'm interested to try out Valkyrie - but CCP has never really been shy of participating in shady practices. They don't seem to have problems with cheating in their own game (EVE) and skewing the game world in the direction they desire - which I think is really wrong and I don't think I could stand for that if I was an actual player of EVE.
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