RNS Number:1568Q
Empire Interactive PLC
25 September 2003
Embargoed until 0700 25 September 2003
EMPIRE INTERACTIVE PLC
("Empire" or the "Group")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2003
Empire, the leading AIM quoted UK computer games developer and
publisher, is pleased to announce its interim results for the
six-month period ended 30 June 2003.
Highlights
Six months Six months Year ended
ended ended 31 December
30 June 2003 30 June 2002 2002
#'000 #'000 #'000
Turnover 15,710 11,259 25,054
Operating profit/(loss) 223 (1,585) (1,895)
Profit/(loss) before tax 228 (1,515) (1,816)
Earnings/(loss) per share 0.34p (2.20p) (2.72p)
- Return to profitability
- Record half-year revenues, up 40% to #15.7 million
- Starsky & Hutch No 4 in UK Charts
- Big Mutha Truckers No 6 in US Charts
- Exciting pipeline of titles for H2 2003 and 2004
Ian Higgins, Chief Executive of Empire, commented: "These
figures show the progress the Group has made over the last
year. It is pleasing to have created two successful franchises
with Starsky & Hutch and Big Mutha Truckers as well as to have
secured major license wins with Bad Boys II, Starship Troopers
and Ford Racing 2.
"We now have an exciting portfolio of games and IP that we
strive constantly to improve. We are working with some
excellent development studios, both in-house and third party,
and continue to partner with the best distribution companies
to ensure every facet of the production process, from initial
concept to sales, is as good as it can be.
"We are confident that we are pursuing the correct operational
strategy to take the Group into 2004 and beyond."
For further information please contact:
Empire Interactive plc on 25 Sept 2003: 020 7067 0700
Ian Higgins, CEO after 26 Sept 2003: 020 8343 7337
Weber Shandwick Square Mile
Christian Taylor-Wilkinson 020 7067 0700
Christian San Jose
------
Embargoed until 0700 25 September 2003
EMPIRE INTERACTIVE PLC
("Empire" or the "Group")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2003
The Group has enjoyed a return to profitability for the half-
year, due mainly to the success of Starsky & Hutch and Big
Mutha Truckers, supported by the continued growth of its
Xplosiv budget software line.
In total, four new full-price titles across eight different
versions and 20 budget-price titles were released during the
period, with Starsky & Hutch reaching number 4 and remaining
prominent in the UK charts from its launch date in June.
Furthermore, Big Mutha Truckers reached number 6 in the North
American charts in its first full month.
Financial Results
Turnover for the first half of the year increased 40% to
#15.7m (2002: #11.3m), principally reflecting the successful
launch of Starsky & Hutch in Europe and Big Mutha Truckers in
North America at the end of June. Gross profit was #8.9m
(2002: #6.1m) and gross margin improved by 3% to 57% (2002:
54%) as strong retail demand for Starsky & Hutch kept margins
robust.
Sales & Marketing expense, whilst falling slightly as a
percentage of turnover to 21.2%, rose in absolute terms to
#3.3m (2002: #2.5m) due mainly to the terms of US and other
distribution contracts which match marketing to turnover.
Development costs at #4.9m (2002: #4.8m) decreased as a
percentage of turnover to 31.3% (2002: 42.4%) as there were no
exceptional costs in the half-year.
Group pre-tax profit was #228,000 (2002: loss of #1.5m),
whilst earnings per share improved by 2.54p.
Work-in-progress was unchanged at #3.1m (31 December 2002:
#3.1m) reflecting a steady level of titles under development.
Debtors increased by #1.2m to #4.9m (31 December 2002: #3.7m)
reflecting higher sales levels which included the successful
launch of Starsky & Hutch in June and consequently explained
the net cash outflow of #451,000 despite the profit of
#228,000.
Cash in bank was #1.5 million.
Operational Review
The main operational successes for the Group during the
reporting period were the release of Starsky & Hutch and Ghost
Master in Europe. Both games charted, with Starsky & Hutch
reaching number 4 in the UK charts and remaining in the top 20
for over eleven weeks on Sony Playstation 2 ("PS2"), and Ghost
Master reaching number 16 on PC.
Big Mutha Truckers was launched in North America at the end of
June and reached number 6 on both PS2 & Microsoft Xbox
("Xbox") and is selling well leading into the important US
holiday season.
Other releases were Warrior Kings: Battles, for PC in Europe
with its US launch this month and Bubble Bobble, Old and New
on the Nintendo GameBoyAdvance ("GBA").
Our Xplosiv range of budget titles continued to gain in
strength and reputation, with 14 new PC titles launched. The
division also successfully launched its first six titles on
the PS2. In total, four titles made the budget top 20 and
Xplosiv accounted for 21% of the European sales. PC sales were
almost double those in the same period last year. Key new PC
signings in the period included Aliens vs Predator and No One
Lives Forever.
The Group's music creation software division, eJay, released
two titles in the period, namely, Techno 4 and Sound Selection
3, which together represented 7% of the European turnover.
Last month saw the relaunch of the brand in North America.
Our revenues were almost equally split between North America
and Europe, again confirming the right product strategy to
develop titles based around American culture and/or licenses.
We continue to sign quality licences, including the rights to
Sony Picture's film, Bad Boys II, in February 2003. The movie
launched in North America on 18 July going straight to number
1, with a first weekend opening Box Office of over $46m and a
total of over $135m to date. In addition, the movie soundtrack
was number 1 in the music charts for 7 weeks. The movie
launches in Europe in October and is expected to experience
similar success.
In May, the Group negotiated the exclusive rights to Sony
Picture's Starship Troopers, a classic film for which a sequel
is being developed and a property which ideally lends itself
to both PC and console gaming.
We also continue to work with leading distributors in North
America to ensure high level penetration into the market. This
can be seen with THQ for Big Mutha Truckers and Take 2 for
Starsky & Hutch and Ford Racing 2. This strategy reduces the
risk the Group faces whilst allowing us to retain any upside.
The success of Big Mutha Truckers bears this out.
Games Pipeline
The Board is confident that it has the correct balance and
quality of titles in the pipeline to take the Group forward to
2004 and beyond. All games currently in development are based
on second or third iteration technology, allowing for quicker
development times, higher quality games and lower production
costs.
Our frontline release schedule for the next 18 months is as
follows:
Title Platform
--------------------------------------------------
Ghost Master PC in US
Starsky & Hutch PS2, Xbox and PC in the US
Starsky & Hutch GC* & GBA - global
VEGA$: Make It Big PC - global
Ford Racing 2 PS2, Xbox, PC - global
Bad Boys II PS2, Xbox, PC, GC - global
Ghost Master PS2 and Xbox - global
Bulletproof Monk PS2, Xbox and GC - global
Flat Out PS2, Xbox and PC - global
Starsky & Hutch 2 PS2, Xbox and PC - global
Starship Troopers PC, PS2 and XBox - global
(*GC = Nintendo GameCube)
Ford Racing 2 is the follow-up to our highly successful, Ford
Racing, which sold over 500,000 copies in 2000 on PlayStation
1. The sequel is being developed by our award-winning
Razorworks Studios and we expect it to be released in Q4 2003
on the PS2, Xbox and PC. The game is being distributed
exclusively by Take 2 Games in the US and by Empire in the UK
and Europe.
Starsky & Hutch has just been released in the US, where we are
hoping for a positive reaction, following on from its success
in the UK and Europe. This game also is being distributed by
Take 2 Games, who we believe are the best in the world for
marketing this particular game genre. It will also be released
on Gamecube and GBA in the UK and Europe during the second
half of 2003.
We announced yesterday the signing of the rights to develop a
sequel to Starsky & Hutch, so providing a great opportunity to
build this into an even bigger hit franchise particularly with
the new Hollywood movie next year.
The Group recently acquired the publishing rights to Flat Out,
a circuit-based rallycross style game, by the award-winning
Finnish developer, Bugbear Entertainment. The game employs a
ground-breaking graphics engine built to create atmospheric
and interactive landscapes, allied with immersive driving
effects. We plan to launch the title on all platforms in H2
2004.
Starship Troopers, the license acquisition we announced
earlier in the year, is currently being developed by our
internal Strangelite team for PC & Xbox. We are also planning
to develop a separate version for PS2.
Bulletproof Monk and Bad Boys II are both currently in
development and we are planning to release them in the first
half of 2004. The movie of Bulletproof Monk has recently been
released on DVD and reached number 2 in the US charts and
number 1 in the UK charts. Its success on this format is
encouraging for the release of the game.
Outlook
The Group is very conscious of sustaining its reputation as a
leading provider of quality video games and we understand the
importance of future vision. A major element of the work
carried out by the Board and the senior developers is to find
new projects to take the Group forward. We constantly review
potential new license acquisitions and other internal concepts
in an attempt to reward our customers and investors with the
best games in the market.
We have confidence in the pipeline of titles currently in
development and expect to announce further projects over the
next few months.
Finally, we would like to thank all of our staff for their
hard work and dedication to the Group during this challenging
period in the Empire's growth.
Ian Higgins, Chief Executive of Empire, commented: "These
figures show the progress the Group has made over the last
year. It is pleasing to have created two successful franchises
with Starsky & Hutch and Big Mutha Truckers as well as to have
secured major license wins with Bad Boys II, Starship Troopers
and Ford Racing 2.
"We now have an impressive portfolio of games and IP that we
strive constantly to improve. We are working with some
excellent development studios, both in-house and third party,
and continue to partner with the best distribution companies to
ensure every facet of the production process, from initial
concept to sales, is as good as it can be.
"We are confident that we are pursuing the correct operational
strategy to take the Group into 2004 and beyond."
-ends-
For further information please contact:
Empire Interactive plc on 25 Sept 2003: 020 7067 0700
Ian Higgins, CEO after 26 Sept 2003: 020 8343 7337
Weber Shandwick Square Mile
Christian Taylor-Wilkinson 020 7067 0700
Christian San Jose
Consolidated Summarised Profit and Loss Account
For the period ended 30 June 2003
6 Months to 6 Months to 12 Months to
30/06/03 30/06/02 31/12/02
Note #'000 #'000 #'000
Turnover 2 15,710 11,259 25,054
Cost of sales (6,782) (5,149) (10,197)
--------- -------- ---------
Gross profit 8,928 6,110 14,857
Sales and marketing expenses (3,328) (2,453) (5,420)
Development expenses (4,921) (4,774) (10,698)
Administrative expenses (456) (468) (634)
--------- -------- ---------
Operating profit/(loss) 223 (1,585) (1,895)
Net interest receivable 5 70 79
--------- -------- ---------
Profit/(loss) on ordinary
activities before taxation 228 (1,515) (1,816)
Tax on loss on ordinary activities - - (29)
--------- -------- ---------
Profit/(loss) on ordinary
activities after taxation 228 (1,515) (1,845)
Minority interest - equity - 28 -
--------- -------- ---------
Profit/(loss) attributable to
ordinary shareholders 228 (1,487) (1,845)
--------- -------- ---------
Basic earnings/(loss) per share 3 0.34 p (2.20p) (2.72)p
--------- -------- ---------
All the activities of the Group are classed as continuing.
There is no material difference between basic and diluted earnings per share.
Consolidated Summarised Balance Sheet
At 30 June 2003
At At At
30/06/03 30/06/02 31/12/02
#'000 #'000 #'000
Fixed assets
Intangible assets - goodwill 208 357 251
Tangible assets 680 846 719
---------- ---------- ----------
888 1,203 970
Current assets
Work-in-progress 3,089 3,290 3,139
Stock 362 572 557
Debtors 4,929 3,622 3,716
Cash at bank and in hand 1,533 2,122 1,984
---------- ---------- ----------
9,913 9,606 9,396
---------- ---------- ----------
Creditors: amounts falling due within
one year (5,461) (5,415) (5,235)
Net current assets 4,452 4,191 4,161
---------- ---------- ----------
Total assets less current liabilities 5,340 5,394 5,131
Creditors: amounts falling after more
than one year (17) (35) (17)
---------- ---------- ----------
5,323 5,359 5,114
---------- ---------- ----------
Capital and reserves
Called-up share capital 68 68 68
Share premium account 10,147 10,101 10,102
Shares to be issued, including premium 52 150 97
Profit and loss account (4,944) (4,953) (5,153)
---------- ---------- ----------
Shareholders' funds 5,323 5,366 5,114
Minority interest - equity - (7) -
---------- ---------- ----------
5,323 5,359 5,114
---------- ---------- ----------
Consolidated Summarised Cash Flow Statement
For the six months ended 30 June 2003
6 months to 6 months to 12 months to
30/06/03 30/06/02 31/12/02
Note #'000 #'000 #'000
Net cash outflow from operating
activities 4 (356) (3,585) (3,675)
Returns on investments and
servicing of finance (net) 4 70 80
Taxation (19) (14) (30)
Purchase of tangible fixed assets (59) (210) (262)
Sale of tangible fixed assets - - 53
--------- --------- ---------
Cash outflow before financing (430) (3,739) (3,834)
Management of liquid resources
Change in short term deposits (49) 3,700 4,323
Financing
Issue of minority shares in
subsidiary - 21 -
Capital element of finance
lease rentals (21) (21) (43)
--------- --------- ---------
Net cash outflow from financing (21) - (43)
--------- --------- ---------
(Decrease)/increase in cash 5 (500) (39) 446
--------- --------- ---------
Consolidated Statement of Total Recognised Gains and Losses
For the six months ended 30 June 2003
6 months to 6 months to 12 months to
30/06/03 30/06/02 31/12/02
#'000 #'000 #'000
Profit/(loss) for the period 228 (1,487) (1,845)
Currency translation differences on
opening net assets (17) (82) 76
---------- -------- ---------
Total gains and losses recognised
since last financial statement 211 (1,569) (1,769)
---------- -------- ---------
Notes to the Interim Report
For the six months ended 30 June 2003
1. Basis of Preparation
The interim financial statements, which have not been audited,
have been prepared in accordance with applicable accounting
standards and under the historical cost convention. The
financial information set out in this interim report does not
constitute statutory accounts as defined in section 240 of the
Companies Act 1985. The figures for the year ended 31
December 2002 have been extracted from the statutory financial
statements which have been filed with the Registrar of
Companies. The auditors' report on those financial statements
was unqualified and did not contain a statement under Section
237(2) of the Companies Act 1985.
The principal accounting policies of the Group have remained
unchanged from those set out in the Group's 2002 financial
statements. Certain of the Group's accounting policies are set
below:
Turnover
Turnover is the total amount receivable by the Group for goods
supplied and services provided, net of provisions for
discounts and returns. In the case of long-term contracts,
turnover and profit are recognised on delivery, unless the
outcome can be assessed with reasonable certainty, in which
case turnover and profit are recognised on the basis of the
proportion of attributable development costs incurred to the
anticipated total of such costs. All amounts are stated
net of VAT.
The excess of advances received under long-term contracts over
amounts that have been recognised in the profit and loss
account is disclosed separately as payments on account within
creditors.
Development Expenditure
Expenditure incurred in respect of research and development is
written off to the profit and loss account in the year
incurred except for those development costs which are included
within work-in-progress where there is reasonable likelihood
that they will be recovered within 12 months of the balance
sheet date. Where some of a product's revenues have been
recognised under a long-term contract, work-in-progress only
includes development costs on the basis of the proportion that
estimated future revenues bear to anticipated total revenues.
Expenditure on fixed assets for development purposes is shown
in the balance sheet in tangible fixed assets under
development equipment. These assets comprise computers and
associated hardware used in the development of products.
2.Turnover
All turnover and loss before tax are attributable to the
development and publishing of entertainment software and all
net assets are employed therein.
Turnover by geographical destination was as follows:
6 months to 6 months to 12 months to
30/06/03 30/06/02 31/12/02
#'000 #'000 #'000
North America 7,566 5,091 9,853
United Kingdom 4,153 1,444 3,726
Rest of Europe 3,711 4,423 10,936
Rest of World 280 301 539
------------ ----------- ------------
15,710 11,259 25,054
------------ ----------- ------------
3.Earnings Per Share
6 months to 6 months to 12 months to
30/06/03 30/06/02 31/12/02
Number Number Number
Based on the profit/(loss) for the
period divided by the weighted
average number of shares in issue
during the period of 67,787,160 67,719,722 67,721,028
----------- ---------- -----------
4.Reconciliation of Operating Profit/(Loss) to Net Cash Flow From
Operating Activities
6 months to 6 months to 12 months to
30/06/03 30/06/02 31/12/02
#'000 #'000 #'000
Operating profit/(loss) 223 (1,585) (1,895)
Depreciation 104 167 299
Amortisation of goodwill 44 53 106
Loss/(profit) on disposal of other
fixed assets 4 - (8)
Decrease in stock and
work-in-progress 245 132 297
Increase in debtors (1,213) (1,937) (2,031)
Increase/(decrease) in creditors
and payments on account 189 (359) (520)
Translation difference 48 (56) 77
--------- ---------- ---------
Net cash outflow from operating
activities (356) (3,585) (3,675)
--------- ---------- ---------
5.Reconciliation of Net Cash Flow To Movement in Net Funds
6 months to 6 months to 12 months to
30/06/03 30/06/02 31/12/02
#'000 #'000 #'000
(Decrease)/increase in cash in period (500) (39) 446
Increase/(decrease) in short-term
deposits 49 (3,700) (4,323)
---------- --------- ----------
(451) (3,739) (3,877)
Net cash outflow from finance leases 21 21 43
---------- --------- ----------
Movement of net funds in the period (430) (3,718) (3,834)
Net funds at 1 January 2003 1,928 5,762 5,762
---------- --------- ----------
Net funds at 30 June 2003 1,498 2,044 1,928
---------- --------- ----------
This information is provided by RNS
The company news service from the London Stock Exchange
END
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