RNS Number:4263R
Superscape Group PLC
29 October 2003
29 October 2003
SUPERSCAPE GROUP PLC
INTERIM RESULTS FOR THE SIX MONTHS TO 31 JULY 2003
SUMMARY
* Transition to wireless business model complete
* Fundraising to raise #9.3m net of expenses to support future growth
and protect market leading position
* Considerable progress made in licensing 3D graphics technology to
major wireless industry players, Siemens, Samsung and Motorola
* Co-publishing agreement reached with Sony Mobile Pictures to develop a
new 3D game for mobile phones based on the motion picture, S.W.A.T.
* Revenue sharing agreement reached with Disney Corporation to initially
develop two 3D wireless games based on Disney's intellectual property
* Turnover of #94,000 (2002: #510,000)
* Operating loss before exceptional items reduced by 26% to #3.7m (2002:
#5.0m)
* Aggressive management of costs
* Loss per share reduced by 63% to 4.5p (2002: 12.0p)
John King, Non-executive Chairman of Superscape Group PLC, commented: "The
market for games on mobile phones is growing at a phenomenal rate.
Considerable progress has been made during this six month period in establishing
Superscape's Swerve technology in the global wireless marketplace and we have
received validation and endorsement from a number of leading global handset
manufacturers. We have also started to sign co-publishing contracts for the
development of innovative 3D games with major intellectual property holders that
will provide short-term revenue and aid the proliferation of Swerve-based
content."
Enquiries:
Superscape Group PLC 01256 745 769
Kevin Roberts, Chief Executive
Maggie Templeman, Director of Corporate Communications
Hudson Sandler 020 7796 4133
Andrew Hayes/Jessica Rouleau/Sandrine Boussard
CHAIRMAN'S STATEMENT
Summary of Financial Results
Turnover for the six months to 31 July 2003 amounted to #94,000 (2002: #510,000)
and the loss before taxation for the same period amounted to #4.1m (2002:
#4.9m). Both figures are in line with expectations as the Company continues to
negotiate and finalise sales, licensing and revenue-sharing contracts with
handset manufacturers, content and major brands organisations, and network
operators. The transition to the wireless sector has resulted in lower revenues
than in the same period last year although a significant proportion of the
previous year's revenue was non-wireless related. The continuing focus on
managing costs resulted in further exceptional restructuring and reorganisation
costs of #527,000 being incurred in the period. Despite the lower revenues and
the one-off exceptional costs, the operating loss of #4.3m marked an improvement
from the #5.0m loss in the corresponding period in 2002.
The loss per share for the period was 4.5p (2002: 12.0p). At the end of the
period, the Group had net cash balances and short-term deposits totalling #5.6m
(2002: #7.0m).
Review of the period
The Swerve Client
Validation of the Superscape/ARM product is being provided by a number of
licensing agreements which Superscape and ARM have won from major industry
players.
In May 2003 Superscape announced that SavaJe Technologies, developers of a
universal open Java applications platform and operating system (OS) for wireless
devices, has licensed the Swerve Client to embed into their technology platform.
In July 2003, Superscape announced that Siemens Information and Communications
Mobile Group (Siemens Mobile) has selected the Swerve Client. Under the terms of
a licensing agreement, the JSR 184 compliant Swerve Client will be integrated
into future Siemens' mobile phones for the delivery of 3D applications.
After the period end two additional licensing agreements were signed.
Samsung, the world's third largest mobile handset manufacturer, is licensing the
Swerve Client for a new series of Linux-based Samsung SmartPhones and future
mobile devices.
Motorola is licensing the Swerve Client to embed onto selected mobile devices.
Swerve Studio and Swerve Content
Whilst sales of the Swerve Client to global handset manufacturers are essential
in providing the foundation for delivery of interactive 3D applications on
mobile phones, the Board of Superscape believes that significant revenues can be
generated by the development and sale of Swerve-created content (using the
company's Swerve Studio product) particularly that which is based on well-known
and widely recognised brands.
To this end, considerable effort has been made during the period to identify and
reach agreement with holders of relevant IP (intellectual property) to develop,
under revenue-sharing schemes, innovative 3D mobile applications.
In August, Superscape announced a co-publishing agreement with Sony Pictures
Mobile, to develop a new 3D game for mobile phones based on the motion picture,
S.W.A.T.
In September 2003, Superscape announced a revenue sharing agreement with Disney
Corporation to initially develop two 3D wireless games based on IP (intellectual
property) from Disney. Both games will be developed by Superscape for Brew, Java
and Symbian platforms. Disney will work with global carriers to obtain
distribution for the two games.
A number of other applications are under development as part of the Swerve
Content Library. These include MotoGP, Jet Fighter, Astrosmash, Basketball and
Speedboat Race.
International Standards and Platforms
In the global wireless marketplace, international standards play a critical role
by ensuring interoperability, reducing market fragmentation and lowering costs
for developers. Superscape is committed to the development, adoption and
implementation of these standards.
As a founder member of the Expert Group for JSR 184 - the Java Specification
Request for 3D on mobile devices, led by Nokia - Superscape has been intimately
involved with all stages in the development of this internationally recognised
standard, which recently received the Java One/Sun Excellence Award for the most
innovative JSR.
Superscape is also an active member of the Khronos Group, responsible for the
development and promotion of the OpenGL ES standard for rendering technologies
and integration with hardware accelerators.
Board appointments
In May, 2003 Alastair Marsh was appointed as Superscape Group plc's Chief
Financial Officer and Company Secretary, taking over from David Harmes, who
resigned to pursue other interests.
In July, and endorsing ARM's ongoing commitment to its relationship with
Superscape, Mike Inglis, Executive VP Marketing at ARM Holdings plc, joined the
Superscape Group plc as a non-executive director.
After the period end, Superscape announced the appointment of a new
non-executive Chairman, Larry Quinn, who takes over from me when I retire on 5
November 2003.
Cost control
During the period, Superscape completed a round of redundancies and closed the
company's French office. Headcount has now been reduced to 51, compared with 90
for the prior year. The Board continues to maintain stringent control of costs.
Outlook
Considerable progress has been made during this six month period in establishing
Superscape's Swerve enabling technology in the global wireless marketplace.
We have received validation and endorsement from a number of leading global
handset manufacturers and have started to sign co-publishing contracts for the
development of innovative 3D games with major IP (intellectual property) holders
which will provide short-term revenue for Superscape and aid the proliferation
of Swerve-based content. We anticipate further agreements will be signed in the
forthcoming weeks and months.
The ratification of JSR 184 - the international Java standard for the delivery
of 3D applications on mobile devices - which is due to be completed in November
2003, will provide a further fillip to the take up of our technology. We believe
that Superscape's Swerve will be the first fully JSR 184 compliant solution to
be available in the marketplace. Our involvement with and commitment to the
development and introduction of international standards has undoubtedly
contributed towards our success in winning contracts - in some instances in the
face of strong competition - from global wireless players.
The market for games on mobile phones is growing at a phenomenal rate. The
mobile industry is now firmly of the opinion that 3D on mobile phones will
provide an additional source of revenue and significantly enhance the gameplay
experience for its consumers. The Board believes that Superscape is ideally
positioned to take advantage of this environment.
The company has successfully continued to aggressively manage costs throughout
the transition to a wireless business model. However the Board also continues to
recognise the need to ensure that sufficient funds are available to support the
future growth of the business and to protect its market leading position. I am
pleased to report that the Company will be carrying out a fundraising to raise
#9.3 million, net of expenses, the details of which have also been announced
today.
The directors and staff look forward with enthusiasm to the opportunities and
challenges for Superscape in the months ahead. May I take this opportunity to
wish every success to my successor, Larry Quinn, the Board and all the staff at
Superscape.
John AC King
Non-executive Chairman
29 October 2003
Consolidated profit and loss account
For the six months ended 31 July 2003
Six months Six months Year
ended ended ended
31 July 31 July 31 January
2003 2002 2003
Note (Unaudited) (Unaudited) (Audited)
#'000 #'000 #'000
Turnover
Continuing operations 94 77 855
Discontinued operations - 433 585
Group turnover 94 510 1,440
Cost of sales - 739 1,009
---- ---- ----
Gross profit/(loss) 94 (229) 431
Research and development 1,676 1,215 3,015
Sales and marketing expenses 1,305 1,941 3,527
Administrative expenses 1,373 1,598 3,112
---- ---- ----
Total operating expenses 4,354 4,754 9,654
---- ---- ----
Continuing operations (4,260) (4,899) (9,132)
Discontinued operations - (84) (91)
Group operating loss (4,260) (4,983) (9,223)
Share of operating loss of joint ventures - (58) (58)
---- ---- ----
Total operating loss: Group and share of joint venture (4,260) (5,041) (9,281)
Continuing operations:
Profit/(loss) on disposal of tangible fixed assets 3 (5) -
Discontinued operations:
Profit on disposal of investments 8 - -
Loss on disposal of subsidiary undertaking - - (210)
---- ---- ----
Loss on ordinary activities before interest and (4,249) (5,046) (9,491)
taxation
Interest receivable 123 162 293
---- ---- ----
Loss on ordinary activities before taxation (4,126) (4,884) (9,198)
Tax on ordinary activities 3 87 353 516
---- ---- ----
Retained loss for the period 6 (4,039) (4,531) (8,682)
========= ========= =========
Loss per share - basic and diluted (4.5)p (12.0)p (17.1)p
========= ========= =========
Consolidated statement of total recognised gains and losses
Six months Six months Year
ended ended ended
31 July 31 July 31 January
2003 2002 2003
(Unaudited) (Unaudited) (Audited)
#'000 #'000 #'000
Loss for the financial period attributable to members (4,039) (4,531) (8,682)
of the parent company
Exchange difference on retranslation of net assets of 10 (6) 2
subsidiary undertaking
---- ---- ----
Total recognised losses relating to the period (4,029) (4,537) (8,680)
========= ========= =========
Consolidated balance sheet
As at 31 July 2003
31 July 31 July 31 January
2003 2002 2003
(Unaudited) (Unaudited) (Audited)
Note #'000 #'000 #'000
Fixed Assets
Intangible assets 130 266 110
Tangible assets 277 496 359
Investments in joint venture
- share of gross assets - 32 -
---- ---- ----
407 794 469
Current assets
Debtors: Amounts falling due within one year 627 1,028 1,105
Cash at bank and in hand 5 5,628 6,988 9,343
---- ---- ----
6,255 8,016 10,448
Creditors:
amounts falling due within one year 731 1,393 957
---- ---- ----
Net current assets 5,524 6,623 9,491
---- ---- ----
Total assets less current liabilities 5,931 7,417 9,960
---- ---- ----
Capital and reserves
Called up share capital 8,954 3,775 8,954
Share premium account 47,679 46,172 47,679
Profit and loss account (50,702) (42,530) (46,673)
---- ---- ----
Total shareholders' funds 6 5,931 7,417 9,960
========= ========= =========
Consolidated cashflow statement
For the six months ended 31 July 2003
Six months Six months Year
ended ended ended
31 July 31 July 31 January
Note 2003 2002 2003
(Unaudited) (Unaudited) (Audited)
#'000 #'000 #'000
Net cash outflow from operating activities 4 (4,065) (4,457) (8,563)
Returns on investments and servicing of finance
Interest received 130 150 293
Taxation
Tax reimbursement 235 71 155
Capital expenditure and financial investment
Payments to acquire intangible fixed assets (34) (50) (105)
Payments to acquire tangible fixed assets (12) (33) (80)
Receipts from sales of tangible fixed assets 13 17 20
Receipts from sale of investments 8 - -
---- ---- ----
Net cash outflow for capital expenditure and financial (25) (66) (165)
investment
---- ---- ----
Acquisitions and disposals
Net cash in hand disposed of with subsidiary - - (96)
undertaking
---- ---- ----
Net cash outflow before management of liquid resources (3,725) (4,302) (8,376)
and financing
---- ---- ----
Management of liquid resources
Decrease in short-term deposits 3,648 4,209 1,659
Financing
Issue of ordinary share capital - - 7,000
Share issue costs - - (564)
---- ---- ----
Net cash inflow from financing - - 6,436
---- ---- ----
Decrease in cash (77) (93) (281)
========= ========= =========
Reconciliation of net cash flow to movement in net funds
Six months Six months Year
ended ended ended
31 July 31 July 31 January
Note 2003 2002 2003
(Unaudited) (Unaudited) (Audited)
#'000 #'000 #'000
Decrease in cash (77) (93) (281)
Cash outflow from short-term deposits (3,648) (4,209) (1,659)
Foreign exchange movement 10 (3) (10)
---- ---- ----
Change in net funds resulting from cash flows (3,715) (4,305) (1,950)
Net funds at start of period 9,343 11,293 11,293
---- ---- ----
Net funds at end of period 5 5,628 6,988 9,343
========= ========= =========
Notes to the interim financial statements
1. Basis of preparation of the interim financial information
The interim financial information has been prepared on the basis of the
accounting policies set out in the Group's statutory accounts for the year ended
31 January 2003.
2. Exceptional items
Six months Six months Year
ended ended ended
31 July 31 July 31 January
2003 2002 2003
(Unaudited) (Unaudited) (Audited)
#'000 #'000 #'000
Restructuring and reorganisation costs 527 - 335
---- ---- ----
Total exceptional items 527 - 335
========= ========= =========
3. Taxation
Six months Six months Year
ended ended ended
31 July 31 July 31 January
2003 2002 2003
(Unaudited) (Unaudited) (Audited)
#'000 #'000 #'000
Overseas corporation tax 4 26 12
Research and development tax credits in respect of current and prior (91) (379) (528)
years
---- ---- ----
Tax credit on loss on ordinary activities (87) (353) (516)
========= ========= =========
4. Reconciliation of Group operating loss to net cash outflow from operating
activities
Six months Six months Year
ended ended ended
31 July 31 July 31 January
2003 2002 2003
(Unaudited) (Unaudited) (Audited)
#'000 #'000 #'000
Group operating loss (4,260) (4,983) (9,223)
Amortisation charge 14 108 216
Depreciation charge 82 131 247
Decrease in debtors 325 116 172
(Decrease)/increase in creditors (226) 171 25
---- ---- ----
Net cash outflow from operating activities (4,065) (4,457) (8,563)
========= ========= =========
5. Analysis of net funds
At 1 Exchange Cash flow At 31 July
February difference 2003
2003
#'000 #'000 #'000 #'000
Cash at bank and in hand 305 10 (77) 238
Short-term deposits 9,038 - (3,648) 5,390
---- ---- ---- ----
9,343 10 (3,725) 5,628
========= ========= ========= =========
6. Reconciliation of movements in shareholders' funds
Six months Six months Year
ended ended ended
31 July 31 July 31 January
2003 2002 2003
(Unaudited) (Unaudited) (Audited)
#'000 #'000 #'000
Shareholders' funds at start of period 9,960 11,954 11,954
Exchange difference on retranslation of net assets of subsidiary 10 (6) 2
undertaking
Arising on share issues - - 7,250
Share issue costs - - (564)
Retained loss for the period (4,039) (4,531) (8,682)
---- ---- ----
Shareholders' funds at end of period 5,931 7,417 9,960
========= ========= =========
7. Publication of non-statutory accounts
The financial information contained in this interim statement does not
constitute statutory accounts as defined in Section 240 of the Companies Act
1985. The financial information for the preceding twelve month period is based
on the financial statements for the year ended 31 January 2003. Those accounts,
upon which the auditors issued an unqualified opinion, have been delivered to
the Registrar of Companies.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR FEASUUSDSEIS