TIDMCDM
RNS Number : 1156H
Codemasters Group Holdings PLC
13 November 2018
Codemasters Group Holdings Plc
("Codemasters" or the "Company")
Interim Results
Codemasters (AIM: CDM), the award winning British video game
developer and publisher specialising in high quality racing games,
announces unaudited results for the six months ended 30 September
2018 ("H1 2019").
Financial highlights
-- Revenues of GBP39.7m with two game releases in H1 2019 (H1
2018: GBP49.4m with three game releases).
-- Increased gross margin of 88.5% in H1 2019 (H1 2018: 83.6%),
with digital sales now representing 53.4% of total revenue in H1
2019 (H1 2018: 33.1%).
-- Adjusted EBITDA(1) of GBP10.0m in H1 2019, (H1 2018:
GBP16.9m), variance with comparative period reflecting fact that
all of FY18 games were released in H1 2018.
-- Adjusted earnings per share ("EPS")(2) of 7.1 pence (H1 2018: 12.0 pence).
-- Net cash of GBP16.7m at 30 September 2018 (30 September 2017: net debt of GBP113.5m).
Strategic and operational highlights
-- Successfully completed IPO on AIM on 1 June 2018.
o Raised GBP15m of new funding, providing capital to invest
further in the business and enhance the existing portfolio of
successful franchises.
o Repayment of shareholder loans in full through the IPO
process.
-- ONRUSH (own IP) was released on 5 June 2018 - has received
positive reviews and benefitted from an agreement with SUBOR for
exclusive distribution in China.
-- F1(R) 2018 (annual release of the F1(R) franchise) was
released on 24 August 2018 and is the highest rated PS4 racing game
of 2018.
-- The Company's back catalogue continues to contribute
significant sales, driven by growing digital demand.
Outlook
-- The Board is confident that the results for the full year
will be in line with its expectations.
-- Gross margins are expected to remain ahead of previous
periods, driven by the ongoing shift to digital sales.
-- DiRT Rally 2.0 will be released on 26 February 2019 (digital
deluxe version available on 22 February 2019). Early feedback from
the gaming press and community has been extremely positive,
development is on track and the Board looks forward to the launch
with confidence.
-- F1(R)Mobile Racing, a free to play iOS game, launched on 18
October 2018 and was featured on the top slot of Apple's App Store.
The Android version will be released shortly.
Notes:
1 - Adjusted EBITDA, is a non-GAAP measure used by the Company,
which is defined as profit before finance costs on borrowings, tax,
capitalisation of development costs, depreciation, amortisation and
non-recurring items.
2 - Adjusted earnings per share, (a non-GAAP measure) have been
presented as a meaningful comparison of earnings per share across
periods. It is defined as Net Income (cash) per share, where the
number of shares across each period is the current amount of
ordinary shares in issue. Given the significant variance in the
number of shares in issue pre and post IPO and the associated
impact on weighted average number of shares in issue between the
periods, an adjusted measure has been presented. Net Income (cash)
is defined as Adjusted EBITDA less cash interest and tax paid.
Frank Sagnier, CEO of Codemasters, commented:
"I am pleased to report our maiden half year results as a listed
company, following the share capital restructuring and repayment of
shareholder loans in full as part of the successful IPO in
June.
The quality of our AAA rated games and the loyal and passionate
fan bases of our long-established franchises are resulting in
growing and increasingly predictable revenue streams. This is
driven by increasing digital delivery which represented the
majority of sales for the first time, earlier than previously
expected.
The continuing move into digital distribution, together with the
evolution of games as a service model and the development of
streaming platforms, provide significant opportunities for
Codemasters. In addition, the usual sales boost expected over the
Black Friday and Christmas periods, combined with the strength of
our back catalogue and our planned new releases, gives us
confidence for the full year and beyond."
This announcement is released by Codemasters Group Holdings plc
and contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) 596/2014 (MAR, and is disclosed in
accordance with the Company's obligations under Article 17 of
MAR).
For the purposes of MAR and Articles 2 of Commission
Implementing Regulation (EU) 2016/1055, this announcement is being
made on behalf of the Company by Rashid Varachia, Chief Financial
Officer.
For further information please contact: and
Codemasters Group Holdings plc Via Alma PR
Frank Sagnier, CEO
Rashid Varachia, CFO
Liberum (Nominated Advisor and sole broker) +44 (0) 20 3100
2000
Neil Patel
Cameron Duncan
William Hall
Alma PR Limited 020 3405 0205
Josh Royston codemasters@almapr.co.uk
Rebecca Sanders-Hewett
Helena Bogle
Sam Modlin
About Codemasters
Codemasters (AIM:CDM) is an award winning British video game
developer and publisher with over 30 years of heritage. The Company
specialises in high quality racing games including DiRT, GRID,
ONRUSH and the BAFTA award-winning official F1(R) series of
videogames.
Codemasters LEI number is 213800NOITSDQVNP5W91
Chief Executive Officer's Review
Strategic progress
I am pleased to report maiden half year results following
admission to AIM in June. The Company delivered revenue of
GBP39.7m, in line with our expectations. This is lower than the
comparable period last year (H1 2018: GBP49.4m) as two new launches
were released in H1 2019 compared to three in H1 2018. However, the
Company will benefit from two further launches in H2 2019, being
F1(R) Mobile Racing and DiRT Rally 2.0, whereas there were no new
launches released in H2 2018.
Digital sales continued to improve and for the first time
represented the majority of total sales at 53.4% (H1 2018: 33.1%).
This led to an improved gross margin for the period of 88.5% (H1
2018: 83.6%) and this shift to digital is a trend that we expect to
see continue in the future.
The IPO in June was a milestone in the Company's history, and
the GBP15m raised has allowed us to further invest in the business
and in people in order to enhance our existing portfolio of
franchises. Since June, the Company has made considerable progress
and is successfully delivering against the strategy set out at the
time of the IPO. We are well positioned to take advantage of the
rapidly expanding market, the shift to digital distribution and
post launch services, as well as the new opportunities from
upcoming streaming platforms.
We continue to grow our consumer base through a wider range of
games and platforms. In June we released ONRUSH, a new own IP game
in the arcade racing genre. We have further engaged our F1(R)
players with the highly successful F1(R) ESports series created and
operated by Codemasters and will bring a new audience to the
franchise with the launch of our F1(R) Mobile Racing free to play
game. We also continue to invest in our propriety EGO engine in
anticipation of next generation platforms and to maintain our
competitive edge.
The Company is focused on growing the business organically but
will review acquisition opportunities when appropriate in order to
accelerate growth.
Operational review
Codemasters has a long history of developing high quality, AAA
rated games and over recent years has focused solely on the racing
segment for which it is best known. Its success to date has largely
focused around its three key franchises, GRID, DiRT and F1(R), with
the first two being fully owned IP, and F1(R) benefitting from
exclusive rights. As the Company has invested more in these
franchises and expanded its distribution agreements, their
performance has continued to improve and provide growing and
predictable revenue streams at increasingly profitable levels,
driven by the growing trend towards digital delivery. In June, the
Company released a new own IP game, ONRUSH.
The sales performance in the first half of this year has been
delivered largely due to the release of its latest annual
instalment of the F1(R) franchise (F1(R) 2018), ONRUSH (released in
June 2018) and through the Company's back catalogue of titles.
F1(R) 2018 was launched on 24 August 2018 and is the highest
rated PS4 racing game of the year according to reviews aggregator
site Metacritic.com (85%). This year's instalment included the
addition of two new circuits, Paul Ricard and Hockenheim, even more
classic cars and numerous new features. It also delivered the most
accurate simulation model to date, a key consideration for our
growing and dedicated fan base who strive to experience the same
performance as real-life drivers. The game is the centre of F1(R)
ESports series, which has been broadcast live on Facebook and Sky
TV, now including drivers representing nine of the official F1(R)
racing teams.
F1(R) 2018 reached number one in the sales charts in 11
different countries and has performed well across all
platforms.
Post period end, F1(R) Mobile Racing was released on iOS on 18
October 2018, with the Android version to follow. This free to play
mobile game will help to bring the franchise to a wider audience
and, in due course, provide additional revenue opportunities. At
launch, Apple featured the game in the top slot of its App Store.
F1(R) Mobile Racing has been released in 154 countries across all
major markets, with the exception of China.
The Company's back catalogue of games also performed well
through the first half and this is another trend that we expect to
continue, again largely driven by the increasing adoption of
digital delivery and the growth in distribution channels.
Codemasters' three key franchises are long established and each one
of them has built a passionate and growing fan base. Through
digital channels we can now engage with these fans constantly and
offer new content to existing games which will help to extend and
increase the commercial success of each instalment of our
franchises. This is further strengthened through our proprietary
RACENET technology, which helps to ensure that our game developers
are able to make the most informed decisions based on analysis of
player interactions with new features, content and products. Our
loyal community of gamers contribute towards the shaping and
marketing of Codemasters' games.
The fact that our games are of some of the highest quality in
the market also helps to secure new distribution opportunities. Our
industry is seeing unprecedented levels of investment, including in
streaming platforms, driven by ever improving network
infrastructure and increasing access to broadband. These platforms
will require high quality content in order to attract consumers and
we see this as a potential opportunity in the future.
ONRUSH is an arcade racing game which was released on 5 June
2018. It received good critical reviews (PS4 Metacritic rating of
76%) but made a smaller revenue contribution than the other recent
major releases. Whilst the Company has continued to support the
game with new content, micro transactions, price promotions and
access via subscription services to build brand awareness for the
future, ONRUSH is not expected to make a meaningful financial
contribution in the second half of the financial year and the
majority of the team are now focusing on building one of the
Company's future owned IP titles. The future trading expectations
of ONRUSH have led to a GBP2.6m impairment of the associated
capitalised development costs held as an intangible fixed asset as
at 30 September 2018. This is a non-cash adjustment that brings
forward amortisation costs that would have been incurred between
October 2018 and May 2019.
On 26 February 2019 we will release DiRT Rally 2.0, the sequel
to the successful and award-winning DiRT Rally, which was
originally launched in April 2015. A digital deluxe version of the
game containing additional features and priced at a premium when
compared to the standard version is now also available for
pre-order. The deluxe version will also be released four days
earlier than the standard version. Early feedback from the press
and community has been extremely positive, development is on track
and we are confident about the launch.
Outlook
Trading in the second half of the year has begun in line with
management's expectations. In the remainder of the financial year
we expect F1(R) 2018 to make a material revenue contribution,
particularly through digital sales, and we expect to benefit from
the normal promotions around the Black Friday and Christmas periods
which have historically delivered strong sales for prior versions.
We will also benefit from the much-anticipated launch of DiRT Rally
2.0, which is also expected to make a material revenue contribution
and expect the strong performance of our back catalogue to
continue. As such, the Board remains confident in meeting
expectations for the full year.
Frank Sagnier
Chief Executive Officer
12 November 2018
Chief Financial Officer's Review
Trading
The Company delivered GBP39.7m of revenue in H1 2019. The key
drivers of revenue are the timing of new releases, with two major
releases in this period (F1(R) 2018 & ONRUSH). In H1 2018
GBP49.4m of revenue was delivered following the release of three
titles (F1(R) 2017, DiRT 4 & Micro Machines World Series).
As noted above, the shift to digitally downloaded games in the
market continues with 53.4% of revenue being delivered from digital
channels (33.1% in the six months to H1 2018 and 41.2% in FY18). A
move to digital sales is beneficial to the Company both via
improvement of gross margin but also increasing the longevity of
the back catalogue in the market (games released prior to the start
of FY19).
With F1(R) Mobile Racing, released in October 2018 and DiRT
Rally 2.0 scheduled for release on 26 February 2019, it is expected
that the FY19 releases together with the consistent support from
the back catalogue will drive a significant revenue improvement
when comparing FY19 to FY18.
Gross margin of 88.5% in H1 2019 (driven by the increasing
proportion of digital sales) is approximately 5% higher than H1
2018, which achieved 83.6%. It is also ahead of the FY18 gross
margin of 84.6%. This is a trend that is expected to continue as
global sales move further towards digitally obtained content.
The Company's Board of Directors use Adjusted EBITDA as a key
trading performance indicator. This provides a meaningful measure
of the underlying operational cash generation of the Company. The
table below reconciles operating profit which is reported in the
income statement to Adjusted EBITDA, with the adjustments
representing non-cash items.
6 months 6 months Year
ended ended ended
30 Sep 30 Sep 31 Mar
2018 2017 2018
GBP000 GBP000 GBP000
Revenue 39,713 49,354 63,566
Gross profit 35,136 41,283 53,776
Gross Margin % 88.5% 83.6% 84.6%
Operating (loss)/profit (3,028) 6,394 8,058
- amortisation & impairment of development
costs and computer software 18,254 21,173 20,292
- less interest on unwinding of licensing
agreements (1,031) (1,414) (1,028)
- depreciation 685 641 1,084
- capitalisation of development costs (10,719) (9,886) (23,435)
- share based payments 5,795 - 6,762
Adjusted EBITDA 9,956 16,908 11,733
Adjusted EBITDA includes cost of sales, development costs and
sales, general and administrative costs. In H1 2019 Adjusted EBITDA
of approximately GBP10.0m was achieved (GBP16.9m in H1 2018). The
higher Adjusted EBITDA in H1 2018 reflects the timing of releases
and the associated revenue generation. The timing of releases led
to a profit in H1 2018 and a loss in H2 2018 at Adjusted EBITDA
level. With further releases in H2 2019 it is expected that H2 2019
in isolation will generate an Adjusted EBITDA profit and adjusted
EBITDA for the full year will be in line with expectations.
Commentary regarding the key reconciling items noted above is as
follows:
-- Share based payments in the period are a non-cash charge. A
GBP5.8m charge has been recognised in H1 2019. Of that amount
GBP5.5m relates to the grant of share options to executive
management prior to the IPO of the Company. The charge relating to
the pre-IPO share options reflects the accounting fair value of
those options at the time of grant and does not represent a cash
outflow to the business.
-- Amortisation includes long term amortisation of capitalised
development costs and long term contracts. The key component is
amortisation of capitalised development costs, whereby the
development costs of each title are released over a 12 month period
into the income statement, 65% in the first month and then equally
over the eleven remaining months. Amortisation is a non-cash
accounting entry and is dictated by the timing of releases.
-- The carrying values of all intangible assets are reviewed at
the end of each reporting period against the expected future
revenues from that title. In H1 2019 amortisation costs include a
GBP2.6m impairment of the ONRUSH asset. This title was released in
June 2018; the impairment represents a non-cash adjustment, with
the vast majority of the amortisation relating to this impairment
previously expected to be included within H2 2019. H1 2019 included
two major game releases, whereas H2 2019 will include only one
major release (in terms of capitalised development costs), being
DiRT Rally 2.0.
-- When comparing H1 2019 with H1 2018, there were GBP2.9m fewer
costs amortised in H1 2019. The variance is driven by the timing of
releases and a difference in the amortisation periods across the
two periods (offset by the impairment discussed above). In H2 2018,
the Company adjusted its estimate of the period to amortise
capitalised development costs, extending the period from three
months to 12 months for boxed releases. A reversal in the amount of
amortisation was recognised in H2 2018.
-- The timing of major releases in FY19, being weighted towards
H1 2019 and the accelerated timing of the impairment charge has
resulted in a greater proportion of the FY19 amortisation falling
in the first half of the current financial year. Amortisation in H2
2019 is therefore expected to be significantly lower, which will
have a positive impact in reported operating profit in H2 2019.
-- Capitalisation is the measure of development costs incurred
that are held as an intangible asset prior to release of the
applicable title. Certain long term licences entered into in the
period are also capitalised (and amortised upon release of the
title associated with the licence). Both are non-cash measures. In
H1 2019, GBP10.7m of development costs have been capitalised, this
is GBP6.9m lower than for H1 2018. However, in H1 2018 a long term
licence was entered into, which led to GBP7.6m being capitalised as
an intangible asset.
Operating loss of GBP3.0m is impacted by these non-cash timing
differences relating to capitalisation and amortisation in addition
to non-cash non-recurring charges relating to impairment and share
based payments incurred in the period.
Whilst reported operating loss/profit does not reflect the
underlying cash generation of the Company, the operating profit
figure is expected to increase significantly in the second half of
the current financial year due to the expected profile of releases
and the timing of amortisation of capitalised costs associated with
those releases.
Creative sector relief recognised in the period of GBP3.2m (H1
2018: GBP3.1m, FY18: GBP6.2m) represents the expected receivable
for H1 2019 based upon the qualifying costs incurred in the period.
In FY18 there were two claims made, one for each half of the year,
with cash received in FY18 comprising the cash from FY17 and the H1
2018 claim. In FY19 the cash received to date comprises the H2 2018
claim.
Non-Recurring items & Interest payable
The GBP1.5m non-recurring costs relate to associated costs of
the IPO.
Net interest payable of GBP3.1m in H1 2019 includes a GBP2.3m
foreign exchange movement on the US Dollar loans held at the start
of the period, which is non-cash in nature. Of the residual balance
of interest and finance charges, except for approximately GBP25,000
of expense, all of the costs incurred are non-cash in nature.
Interest and exchange movements on these loans led to a non-cash
charge of GBP5.0m in H1 2018.
The loans associated with those exchange rate movements have
been settled in H1 2019. Accordingly, interest and exchange rate
movements on borrowings going forward will be minimal.
Profit after tax
Corporation tax charges have been minimal in the year,
reflecting the Company's ability to utilise brought forward
losses.
H1 2019 loss was GBP7.7m (H1 2018: profit GBP1.4m).
Basic loss per share was 0.0 pence (H1 2018: earnings per share
0.0 pence).
H1 2019 Adjusted EPS was 7.1 pence (H1 2018: 12.0 pence). This
is a non GAAP measure presented as a meaningful comparison of
earnings per share across periods. It is defined as Net Income
(cash) per share, where the number of shares across each period is
the current amount of ordinary shares in issue. Given the
significant variance in the number of shares in issue pre and post
IPO and the associated impact on weighted average number of shares
in issue between the periods, an adjusted measure has been
presented. Net Income (cash) is defined as Adjusted EBITDA less
cash interest and tax paid.
Statement of Financial Position and Cash flow
The pre-IPO restructuring and the IPO included some key
transactions that have impacted the Company's statement of
financial position. The pre-IPO transactions are discussed in
further detail in this interim report, but are summarised
below:
-- The Company acquired some minority interest shareholdings in
Codemasters Software Company Limited and Codemasters Studios Sdn
Bhd from a related party. This led to GBP9.7m of the
non-controlling interest recognised in equity being re-classified
as distributable reserves. The only remaining shareholding any of
the Company's subsidiaries held externally is now 30% of the issued
share capital of Codemasters Studios Sdn Bhd (art studio based in
Kuala Lumpur).
-- Interest of GBP48.5m and principal of GBP68.2m on related
party loans of GBP121.6m were released (and recognised with profit
and loss reserves) or converted to equity as part of the pre-IPO
restructuring. In addition, a residual $5m balance on these loans
was repaid prior to the IPO on 1 June 2018.
-- A capital restructuring involving re-designation and
cancellation of the various classes of share capital and share
premium were completed prior to the IPO. The capital restructuring
led to a reduction in share capital of GBP117.7m and a reduction of
share premium of GBP82.5m. These balances were reclassified into
profit and loss reserves. Following the restructuring there were
132,500,000 1p Ordinary Shares in issue and no share premium.
-- All share premium recognised at 31 March 2018 was reclassified as distributable reserves.
-- On IPO 7,500,000 new Ordinary shares of 1p each were issued,
which generated GBP15.0m of gross proceeds, allocated between
called up share capital (GBP75,000) and the balance in share
premium.
-- IPO costs associated with the issue of the new ordinary
shares of GBP0.2m were recognised directly within share
premium.
-- The grant of options to executive management of the Company
pre-IPO led to a total charge of GBP13.2m in the period (offset by
a GBP7.75m release of previous share options that were replaced).
The crystallisation of the options has led to the associated
liability being recognised within reserves. The value reflects the
fair value of the options grants and not a cash outflow. The
residual GBP0.3m share based payments charge relates to new share
based payment schemes issued on IPO.
In addition to the related party loans of USD 5m that were
repaid, the other third party loans outstanding as at 31 March 2018
of approximately GBP2.2m were settled in H1 2019. With the
exception of a small number of finance leases, totalling less than
GBP0.3m, the Company is now debt free.
There were GBP6.8m trade and other receivables at 30 September
2018 (30 September 2017: GBP9.4m, 31 March 2018: GBP3.3m). The
variance when compared to 30 September 2017 is due to timing of
balances due to/from the Company's main distributor, but also
driven by USD 3.5m trade debtors at 30 September 2018. That balance
relates to receipts in advance for ongoing development work
associated with a particular contract, with USD 3m settled in
October 2018.
Within trade and other payables there is GBP5.8m that is payable
in a period greater than one year (30 September 2017 & 31 March
2018 GBP7.9m). One of the agreements outstanding at the end FY18
has become due in less than one year in H1 2019.
As at 30 September 2018, the Company held GBP17m in cash (30
September 2017: GBP5.8m, 31 March 2018: GBP9.1m). The increase in
cash held reflects the level of borrowings repaid in the period
(mostly pre-IPO) and the GBP15m gross proceeds from new shares
issued at IPO.
Rashid Varachia
Chief Financial Officer
12 November 2018
Unaudited condensed consolidated income statement
Note 6 months 6 months Year
ended ended ended
30 Sep 30 Sep 31 Mar
2018 2017 2018
GBP000 GBP000 GBP000
------------------------------------------ ------- --------- ------------------------- ---------
Revenue 39,713 49,354 63,566
Cost of sales (4,577) (8,071) (9,790)
------------------------------------------ ------- --------- ------------------------- ---------
Gross profit 35,136 41,283 53,776
Distribution costs (6,652) (8,411) (10,026)
Administrative expenses:
- research expenses, amortisation
and impairment of development
costs (26,260) (27,036) (28,922)
- creative sector relief 3,200 3,153 6,162
- other administrative expenses (2,657) (2,595) (6,170)
- share based payments (5,795) - (6,762)
Total administrative expenses (31,512) (26,478) (35,692)
------------------------------------------ ------- --------- ------------------------- ---------
Operating loss/(profit) (3,028) 6,394 8,058
------------------------------------------ ------- --------- ------------------------- ---------
Analysed as:
- Operating loss/(profit) (3,028) 6,394 8,058
- amortisation & impairment
of development costs and computer
software 18,254 21,173 20,292
- interest on unwinding of
licensing agreements (1,031) (1,414) (1,028)
- depreciation of tangible
fixed assets 685 641 1,084
- capitalisation of development
costs (10,719) (9,886) (23,435)
- share based payments 5,795 - 6,762
Adjusted EBITDA* 9,956 16,908 11,733
------------------------------------------ ------- --------- ------------------------- ---------
Non-recurring items** 4 (1,500) - -
Interest receivable and similar
income 9 - 24
Interest payable and similar
charges (3,060) (4,952) (9,564)
------------------------------------------ ------- --------- ------------------------- ---------
Net interest payable (3,051) (4,952) (9,540)
------------------------------------------ ------- --------- ------------------------- ---------
Profit/(loss) on ordinary activities
before taxation (7,579) 1,442 (1,482)
Tax (charge)/ credit on profit
on ordinary activities (123) - 2,384
------------------------------------------ ------- --------- ------------------------- ---------
Profit/(loss) on ordinary activities
after taxation (7,702) 1,442 902
Profit/(loss) attributable
to:
Owners of the parent (7,677) 201 (2,460)
Non-controlling interest (25) 1,241 3,362
------------------------------------------ ------- --------- ------------------------- ---------
Profit/(loss) for the financial
period (7,702) 1,442 902
------------------------------------------ ------- --------- ------------------------- ---------
Pence Pence Pence
Earnings per share 5
Basic earnings/(loss) per share (0.0) 0.0 (0.0)
Diluted earnings/ (loss) per
share (0.0) 0.0 (0.0)
*Adjusted EBITDA is a non-GAAP measure used by the Company,
which is defined as profit before finance costs on borrowings, tax
and capitalisation of development costs, depreciation, amortisation
and non-recurring items.
** Non-recurring items relate solely to the costs of the IPO.
These are one-off and non-operational in nature and have been
separately stated outside of operating costs accordingly.
Unaudited condensed consolidated statement of comprehensive
income
6 months 6 months Year
ended ended ended
30 Sep 30 Sep 31 Mar
2018 2017 2018
GBP000 GBP000 GBP000
------------------------------------ --------- --------- --------
Profit/(loss) for the financial
period (7,702) 1,442 902
Other comprehensive income/(loss):
Items that will be reclassified
subsequently to profit or loss:
Currency translation differences 155 2 1
------------------------------------- --------- --------- --------
Total comprehensive income/(loss)
for the period (7,547) 1,444 903
Total comprehensive income/(loss)
attributable to:
Owners of the parent (7,522) 2,685 (2,459)
Non-controlling interests (25) (1,241) 3,362
------------------------------------- --------- --------- --------
Total comprehensive income/(loss) (7,547) 1,444 903
------------------------------------- --------- --------- --------
Unaudited condensed consolidated statement of changes in
equity
Called Share Merger Other Profit Currency Total Non- Total
up premium reserve reserve and Translation attributable controlling equity
share account loss Reserve to owners Interest
capital account of the
parent
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------ -------------- ------------- -------- -------- ----------- ------------------ ------------------ ------------------- ----------
At 1 April 2017 43,687 82,524 8,816 - (221,619) (1,087) (87,679) (13,496) (101,175)
Profit for the
period - - - - 201 - 201 1,241 1,442
Share based - - - - - - - - -
payments
Net exchange
differences
on translation
of foreign
subsidiaries - - - - - 2 2 - 2
------------------ -------------- ------------- -------- -------- ----------- ------------------ ------------------ ------------------- ----------
Total
comprehensive
income for the
period - - - - 201 2 203 1,241 1,444
------------------ -------------- ------------- -------- -------- ----------- ------------------ ------------------ ------------------- ----------
At 30 September
2017 43,687 82,524 8,816 - (221,418) (1,085) (87,476) (12,255) (99,731)
------------------ -------------- ------------- -------- -------- ----------- ------------------ ------------------ ------------------- ----------
At 1 April 2018 43,687 82,524 8,816 - (224,079) (1,086) (90,138) (10,134) (100,272)
------------------ -------------- ------------- -------- -------- ----------- ------------------ ------------------ ------------------- ----------
Profit/(loss)
for the period - - - - (7,677) - (7,677) (25) (7,702)
Net exchange
differences
on translation
of foreign
subsidiaries - - - - - 155 155 - 155
------------------ -------------- ------------- -------- -------- ----------- ------------------ ------------------ ------------------- ----------
Total
comprehensive
income for the
period - - - - (7,677) 155 (7,522) (25) (7,547)
Cancellation of
deferred shares (8,198) - - - 8,198 - - - -
Exercise of
executive
share options - - - - 13,232 - 13,232 - 13,232
Charge for
post-IPO
share option
schemes - - - 313 - - 313 - 313
Issue of
150,010,000
Class 1 shares
of GBP0.0001 to
acquire
non-controlling
interests 15,000 - - - (24,681) - (9,681) 9,681 -
Capitalisation
of
GBP68,522,884.09
of loans into
685,228,840,900
Class 1 ordinary
shares of
GBP0.0001 68,522 - - - - - 68,522 - 68,522
Capitalisation
of interest on
related party
loans released - - - - 48,538 - 48,538 - 48,538
Pre-IPO capital
reduction (117,686) (82,524) - - 200,210 - - - -
Bonus issue of
21,000 Class 1
Ordinary Shares
of GBP0.00001
each - (0) - - - - (0) - (0)
Issue 7,500,000
ordinary shares
of 1p each 75 14,925 - - - - 15,000 - 15,000
Capitalisation
of IPO
transaction
costs - (174) - - - - (174) - (174)
------------------ -------------- ------------- -------- -------- ----------- ------------------ ------------------ ------------------- ----------
Transactions with
owners (42,287) (67,773) - 313 245,497 - 135,750 9,681 145,431
------------------ -------------- ------------- -------- -------- ----------- ------------------ ------------------ ------------------- ----------
At 30 September
2018 1,400 14,751 8,816 313 13,741 (931) 38,090 (478) 37,612
------------------ -------------- ------------- -------- -------- ----------- ------------------ ------------------ ------------------- ----------
Note that subsequent to Class 1 ordinary shares being issued to
facilitate the Company to acquire the non-controlling interests of
Codemasters Software Company Limited and 16.67% of the
non-controlling interest of Codemasters Studios Sdn Bhd all Class 1
ordinary shares of GBP0.0001 each were sub-divided and
re-designated into Class 1 Ordinary shares of GBP0.00001 each.
Following the issue of 21,000 bonus shares and the pre-IPO
capital reduction, the remaining share capital was re-designated as
Ordinary Shares of 1 pence each. Prior to the IPO there were
132,500,000 shares of 1 pence each in issue.
There were 7,500,000 ordinary shares of 1 pence each issued as
placing shares upon IPO, giving an overall total of 140,000,000
ordinary shares of 1 pence in issue.
Capitalisation of IPO transaction costs relates to the costs
incurred from the IPO that can be directly attributed to the issue
of new shares. These directly attributed costs have been recognised
as a debit balance within share premium.
Further details regarding the pre-IPO group restructuring are
provided at note 6.
Unaudited condensed consolidated statement of financial
position
Note 30 Sep 30 Sep 31 Mar
2018 2017 2018
GBP000 GBP000 GBP000
Non-current Assets
Intangible assets 3 26,762 22,364 36,457
Tangible assets 8,358 7,734 8,520
Deferred tax asset 2,356 - 2,409
------------------------------ ----- --------- ---------- ----------
37,476 30,098 47,386
------------------------------ ----- --------- ---------- ----------
Current assets
Inventories 583 629 182
Trade and other receivables 6,816 9,442 3,302
Creative Sector tax credit
receivable 3,200 3,487 2,947
Cash at bank and in hand 17,044 5,845 9,136
------------------------------ ----- --------- ---------- ----------
27,643 19,403 15,567
------------------------------ ----- --------- ---------- ----------
Total Assets 65,119 49,501 62,953
------------------------------ ----- --------- ---------- ----------
Non-current liabilities
Loans and borrowings (126) (46) (202)
Trade and other payables (5,766) (7,912) (7,912)
------------------------------ ----- --------- ---------- ----------
(5,892) (7,958) (8,114)
------------------------------ ----- --------- ---------- ----------
Current liabilities
Loans and borrowings (150) (119,342) (121,819)
Trade and other payables (17,801) (15,741) (21,081)
Share based payments accrual - (2,058) (8,820)
Provisions for liabilities (3,664) (4,133) (3,391)
------------------------------ ----- --------- ---------- ----------
(21,615) (141,274) (155,111)
Total Liabilities (27,507) (149,232) (163,225)
------------------------------ ----- --------- ---------- ----------
Net assets/ (liabilities) 37,612 (99,731) (100,272)
------------------------------ ----- --------- ---------- ----------
Capital and reserves
Called up share capital 1,400 43,687 43,687
Share premium account 14,751 82,524 82,524
Merger reserve 8,816 8,816 8,816
Other reserve 313 - -
Profit and loss account 13,741 (221,418) (224,079)
Currency translation reserve (931) (1,085) (1,086)
------------------------------ ----- --------- ---------- ----------
Total shareholders' deficit 38,090 (87,476) (90,138)
------------------------------ ----- --------- ---------- ----------
Non-controlling interest (478) (12,255) (10,134)
------------------------------ ----- --------- ---------- ----------
Capital employed 37,612 (99,731) (100,272)
------------------------------ ----- --------- ---------- ----------
Unaudited condensed consolidated cash flow statement
6 months 6 months Year
ended ended ended
30 Sep 30 Sep 31 Mar
2018 2017 2018
GBP000 GBP000 GBP000
-------------------------------------------- --------- --------- ---------
Cash flows from operating activities
Profit/ (loss) for the financial period
before taxation (7,579) 1,442 (1,482)
Adjustments for:
Amortisation of intangible fixed
assets 20,502 23,333 23,048
Depreciation of tangible fixed
assets 214 186 139
Creative sector relief recognised (3,200) (3,153) (6,162)
Share based payments 5,795 - 6,762
Interest charged 772 9,460 17,229
Exchange movement on loans & long term
contracts 2,279 (4,508) (7,689)
Exchange (gains)/losses 206 (38) 936
Amounts representing net changes in
working capital:
(Inc)/Dec in trade and other
receivables (3,576) (6,748) (545)
(Inc)/Dec in inventories (401) (478) (31)
Inc/(Dec) in trade and other
payables (8,903) (5,415) (354)
Inc/(Dec) in provisions 273 1,727 984
Cash from operations 6,382 15,808 32,835
Creative sector relief received 3,010 5,358 8,845
Income taxes received/(paid) (70) - -
-------------------------------------------- --------- --------- ---------
Net cash generated from operating
activities 9,322 21,166 41,680
Cash flow from Investing activities
Proceeds from sale of tangible 8 - -
fixed assets
Payments to acquire tangible
fixed assets (537) (615) (2,004)
Payments to acquire or develop intangible
fixed assets (10,323) (9,512) (22,829)
--------------------------------------------- --------- --------- ---------
Net cash used in investing activities (10,852) (10,127) (24,833)
Cash flow from financing activities
Proceeds from borrowings - 1,371 1,723
Loan repayments (5,720) (7,580) (10,237)
Interest received 9 - 24
Interest paid (6) (149) (380)
Proceeds from issue of share 15,000 - -
capital
Net cash generated from financing
activities 9,283 (6,358) (8,870)
Net increase in cash and cash
equivalents 7,753 4,681 7,977
Cash and cash equivalents at the beginning
of the period 9,136 1,162 1,162
Exchange gain/(loss) on cash and cash
equivalents 155 2 (3)
--------------------------------------------- --------- --------- ---------
Cash and cash equivalents at the end
of the period 17,044 5,845 9,136
--------------------------------------------- --------- --------- ---------
Cash and cash equivalents consist
of:
Cash at bank and in hand 5,035 5,845 9,136
Short term deposits 12,009 - -
-------------------------------------------- --------- --------- ---------
Cash and cash equivalents at the end
of the period 17,044 5,845 9,136
--------------------------------------------- --------- --------- ---------
Notes to the unaudited condensed consolidated interim financial
statements
1 Nature of operations and general information
Codemasters Group Holdings plc is a public limited company
incorporated in England. The Registered Number is 06123106 and the
Registered Office is Codemasters Campus, Stoneythorpe, Southam
Warwickshire, CV47 2DL.
Codemasters Group Holdings plc and its subsidiaries (the
"Group") is an award winning British video game developer and
publisher with over 30 years of heritage. The Company specialises
in high quality racing games including DiRT, GRID, ONRUSH and the
BAFTA award-winning official F1(R) series of videogames.
The Company successfully floated on the UK AIM stock market on 1
June 2018.
2 Basis of preparation
These interim condensed consolidated financial statements have
been prepared in accordance with the AIM rules and IAS 34 "Interim
Financial Reporting" as adopted by the European Union. The shares
in the Company were admitted to the UK AIM stock market on 1 June
2018.
The condensed consolidated financial statements for the six
months ended 30 September 2018 should be read in conjunction with
the Historical Financial Information ('HFI') of the Group for the
year ended 31 March 2018, which includes the financial results of
the Group prepared in accordance with International Financial
Reporting Standards ('IFRS') as adopted by the European Union
('EU'). The Historic Financial Information, which was included in
the Company's Admission document to AIM, was the first financial
information prepared under IFRS.
The report of the auditors for the HFI for the year ended 31
March 2018 was unqualified, did not contain an emphasis of matter
paragraph and did not include a statement under Section 498 of the
Companies Act 2006.
The Group's interim condensed consolidated financial statements
are not audited and do not constitute statutory financial
statements as defined in Section 434 of the Companies Act 2006. The
interim condensed consolidated financial statements are prepared
under the historical cost convention and is presented in Sterling,
which is the functional currency of the Group. The figures
presented are round to the nearest GBP000, except for earnings per
share.
The condensed consolidated interim financial statements were
approved for issue on 12 November 2018.
Going concern
The Directors are satisfied that the Group has adequate
resources to continue in operational existence for the foreseeable
future, being a period of at least 12 months from the date of
signing these condensed consolidated financial statements.
Accordingly, they continue to adopt the going concern basis in
preparing these condensed consolidated interim financial
statements.
Accounting policies
The Group's principal accounting policies used in preparing this
information are as stated in the HFI. There has been no change to
any accounting policy from the date of the HFI.
Prior to the Company's admission to AIM, the Group undertook a
pre-admission group restructuring, which took place in May 2018.
The group capital restructuring is summarised at note 6.
The requirements of IFRS - 9 - Financial Instruments and IFRS -
15 Revenue from contracts with Customers have been adopted in this
financial information (and were also adopted in the HFI).
As disclosed in the HFI, the Directors have identified only one
operating segment in the business, being the sale of internally
developed video games. The single operating segment is reported in
a manner consistent with the internal reporting to the Board for
monitoring and strategic decisions.
Accounting estimates and key judgements
When preparing these condensed consolidated interim financial
statements, the Directors make a number of judgements, estimates
and assumptions about the recognition and measurement of assets,
liabilities, income and expenses. The actual results may differ
from these estimates.
The judgements, estimates and assumptions applied in the
condensed consolidated interim financial statements, including the
key sources of estimation uncertainty, were the same as those
applied in the HFI.
3 Intangible fixed assets
Development Licences Computer Total
Costs Patents & Software
Trade Marks
GBP000 GBP000 GBP000 GBP000
-------------------------- ------------ ------------- ---------- ---------
Cost
At 31 March 2017 58,610 11,344 305 70,259
Additions 9,886 7,651 79 17,616
Disposals - - (8) (8)
-------------------------- ------------ ------------- ---------- ---------
At 30 September 2017 68,496 18,995 376 87,867
Additions 13,549 - 259 13,808
Disposals (16,600) - (1) (16,601)
-------------------------- ------------ ------------- ---------- ---------
At 31 March 2018 65,445 18,995 634 85,074
Additions 10,719 - 88 10,807
Disposals - - - -
-------------------------- ------------ ------------- ---------- ---------
At 30 September 2018 76,164 18,995 722 95,881
-------------------------- ------------ ------------- ---------- ---------
Accumulated amortisation
At 31 March 2017 36,609 5,461 108 42,178
Amortisation 21,122 2,160 51 23,333
Disposals - - (8) (8)
-------------------------- ------------ ------------- ---------- ---------
At 30 September 2017 57,731 7,621 151 65,303
Amortisation (1,106) 596 225 (285)
Disposals (16,600) - (1) (16,601)
-------------------------- ------------ ------------- ---------- ---------
At 31 March 2018 40,025 8,217 375 48,617
Amortisation 15,587 2,248 67 17,902
Impairment 2,600 - - 2,600
Disposals - - - -
-------------------------- ------------ ------------- ---------- ---------
At 30 September 2018 58,212 10,465 442 69,119
-------------------------- ------------ ------------- ---------- ---------
Net book amount
At 30 September 2018 17,952 8,530 280 26,762
-------------------------- ------------ ------------- ---------- ---------
At 31 March 2018 25,420 10,778 259 36,457
-------------------------- ------------ ------------- ---------- ---------
At 30 September 2017 10,765 11,374 225 22,364
-------------------------- ------------ ------------- ---------- ---------
At 31 March 2017 22,001 5,883 197 28,081
Note the credit to amortisation in H2 2018, represents the
adjustment in respect of amending the amortisation period from
three months to 12 months, the change took place in H2 2018 but
adjusting the full year amortisation charge.
4 Non-recurring items
6 months 6 months Year
ended ended ended
30 Sep 2018 30 Sep 2017 31 Mar 2018
GBP000 GBP000 GBP000
Professional and other IPO 1,500 - -
fees
Non-recurring costs 1,500 - -
Non-recurring items in the period relate to the costs of the
admission to AIM.
5 Earnings per share
Both the basic and diluted earnings per share have been
calculated using the profit attributable to shareholders of
Codemasters Group Holdings plc as the numerator. No adjustments to
profit were necessary.
The reconciliation of the weighted average number of shares for
the purpose of diluted earnings per share in the calculation of
basic earnings per share is as follows:
Weighted number of shares 30 Sep 2018 30 Sep 2017 31 Mar 2018
in issue
Ordinary shares (1p each) 100,532,787 - -
Class 1 (GBP0.0001 each) 3,543,121,743 12,713,554,491 12,713,554,491
Class 1 formerly Class 2A
(GBP0.0001 each) 2,321,908,629 8,331,554,491 8,331,554,491
Class 2B (GBP0.0001 each) 47,745,399 171,321,727 171,321,727
Class 2C (GBP0.0000001 each) 408,700,537 1,466,513,690 1,466,513,690
----------------------------------- -------------------------- ------------------------- -------------------------
Total of shares in issue 6,422,009,095 22,682,944,399 22,682,944,399
Kreos Warrants - 544,297,649 395,150,484
Replacement Plan Options
(granted) - 11,177,597 7,158,919
LTIP 925,683 - -
NED 370,273 - -
ESOP 829,511 - -
Warrants and options not
exercised 2,125,467 555,475,246 402,309,403
----------------------------------- -------------------------- ------------------------- -------------------------
Total diluted shares 6,424,134,562 23,238,419,645 23,085,253,802
----------------------------------- -------------------------- ------------------------- -------------------------
Adjusted earnings per share GBP000 GBP000 GBP000
Adjusted EBITDA 9,956 16,908 11,733
Tax (charge)/ credit on profit
on ordinary activities (123) - 2,384
Less non-cash tax items (deferred
tax charged to income statement) 54 - (2,409)
Cash interest 3 (149) (356)
----------------------------------- -------------------------- ------------------------- -------------------------
Net income (cash) 9,890 16,759 11,352
----------------------------------- -------------------------- ------------------------- -------------------------
Basic earnings/(loss) per
share (pence) (0.0) 0.00 (0.0)
Diluted earnings/ (loss)
per share (pence) (0.0) 0.00 (0.0)
Adjusted earnings per share
(pence) 7.1 12.0 8.1
For diluted earnings per share, the weighted average number of
shares in issue has been adjusted to assume conversion of all
potentially dilutive options and warrants for the applicable
period.
Given the variances in shares in issue across the presented
periods (as a result of the pre-IPO capital restructuring),
adjusted earnings per share is presented. Adjusted earnings per
share is Net income (cash) across the presented periods divided by
the number of shares in issue at 30 September 2018.
Deferred shares that were in issue in the prior year have not
been included in the calculation for weighted average number of
shares.
6 Admission to AIM
The table in note 5 highlights the number of shares in issue
during the previous financial year. In addition to this there were
also 819,839,142,440,000 Deferred Shares of GBP0.00000001 each. The
Deferred Shares were considered to have no benefit to the holders
of those shares as the articles of Association of the Company
permitted these to be bought back in aggregate for GBP1.
In a series of steps undertaken between 8 May 2018 and 21 May
2018 prior to the IPO, the Group undertook a group reorganisation
and debt restructuring whereby, inter alia:
-- the Deferred Shares in the Company were cancelled and extinguished;
-- the Company issued 150,000,000,000 Class 1 ordinary shares of
GBP0.0001 each in the Company, in consideration of acquiring 23,333
ordinary shares in Codemasters Studios Sdn Bhd and 333 ordinary
shares in The Codemasters Software Company Limited from Reliance
Big Entertainment (Singapore) Pte. Ltd ('Reliance') (immediate
parent company of the Company at that time);
-- aggregate initial principal loans due from the Group to
Reliance of GBP68,522,884.09 were converted to equity through the
issue of 685,228,840,900 Class 1 Ordinary Shares of GBP0.0001 each
in the Company to Reliance and all of the accrued interest on the
loans was waived by Reliance, as a result of which the aggregate
amount of the loans plus accrued interest subsequently payable by
the Group to Reliance was reduced to US$5,000,000;
-- the share capital was reduced through the cancellation of
794,499,302,609 Class 1 Ordinary Shares of GBP0.0001 each,
1,466,513,690 Class 2C Ordinary Shares of GBP0.00000001 each and
26,311,491 Preferred Shares of GBP1.00 each, and through the
reduction of the nominal value of each class of shares to one tenth
of their prior value and the cancellation of all except GBP0.21 of
the share premium;
-- the Preferred shares were subdivided and re-designated into
Class 1 Ordinary Shares of GBP0.00001 each and all Class 2B Shares
of GBP0.00001 each were re-designated as Class 1 Ordinary Shares of
GBP0.00001 each;
-- there was a bonus issue of 21,000 Class 1 Ordinary Shares of
GBP0.0001 each in the Company; and
-- all of the Class 1 Ordinary Shares of GBP0.0001 each in the
Company in issue as a result of the above steps were consolidated
and subsequently re-designated as Ordinary Shares of 1 pence each
in the Company.
As a result of the above steps, at 21 May 2018, the issued share
capital of the Company was GBP1,325,000, comprising of 132,500,000
Ordinary Shares of GBP0.01 each.
On 22 May 2018, the Company converted to a public limited
company and changed its name from Codemasters Group Holdings
Limited to Codemasters Group Holdings plc.
On 1 June 2018 the Company's shares were admitted to the AIM
stock market. Upon admission there were an additional 7,500,000
Ordinary Shares of GBP0.01 each placing shares issued. In total
140,000,000 Ordinary Shares of GBP0.01 each were admitted to
AIM.
In addition to the above, between 18 May 2018 & 21 May 2018,
cash-settled share-based incentive schemes awarded by the Company
to senior executives were cancelled, save for certain elements in
relation to one senior executive, and replaced with equity-settled
call share option agreements between the Group's majority
shareholder at the time and the senior executives concerned.
On 18 May 2018, the share option agreements were exercised by
the senior executives whereby, in total, they acquired 1,258,750
Preferred Shares of GBP1 each in the Company at a price of
GBP0.1339 per share. These preferred shares were included within
the pre-IPO capital restructuring. Following the restructuring the
number of shares held pre-IPO were 12,587,500 ordinary shares of 1
pence each. 40% of the shares were sold in IPO, leaving 7,552,500
held by the senior executives.
Post IPO the Group has granted share option agreements to senior
executives in the form of Long Term Incentive Schemes,
equity-settled share option agreements. A total of 1,400,000 share
options have been granted to the senior executives under this
scheme. There are both market and non-market conditions applicable
under the scheme governing how many shares will be awarded to these
individuals.
7 Financial instruments
30 Sep 30 Sep 31 Mar
2018 2017 2018
GBP000 GBP000 GBP000
-------------------------------------- ------------------ ------------------ --------------------
Financial assets held at amortised
cost:
Trade receivables 2,917 524 1,566
Cash and cash equivalents 17,044 5,845 9,136
-------------------------------------- ------------------ ------------------ --------------------
19,961 6,369 10,702
-------------------------------------- ------------------ ------------------ --------------------
30 Sep 30 Sep 31 Mar
2018 2017 2018
GBP000 GBP000 GBP000
-------------------------------------- ------------------ ------------------ --------------------
Financial liabilities held
at amortised cost:
Loans and borrowings (276) (119,389) (122,021)
Trade payables (870) (819) (2,628)
Amounts due to relating undertakings - (962) -
Other payables (13,261) (16,425) (18,393)
-------------------------------------- ------------------ ------------------ --------------------
(14,407) (137,595) (143,042)
-------------------------------------- ------------------ ------------------ --------------------
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR VLLFFVFFBFBZ
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