Interim Results
27 February 2009 - 6:01PM
UK Regulatory
TIDMEID
RNS Number : 9855N
Eidos plc
27 February 2009
Eidos plc half-yearly financial report for the six months ended 31 December 2008
Eidos plc ("Eidos" or the "Company"), creator of some of the world's leading
videogame properties including Tomb Raider, Hitman, Deus Ex and Championship
Manager, is today announcing its Interim Results for the six months to 31
December 2008.
Financial Highlights
* Revenue of GBP80.3m (2007: GBP63.4m) increased 26.7% primarily following the
launch of Tomb Raider: Underworld.
* Adjusted EBITDA1 of GBP1.5m (2007: Adjusted EBITDA Loss GBP73.0m) reflects the
completion of the first year of the Group's three-year strategic plan.
* Loss before tax of GBP9.8m (2007: GBP81.4m). Adjusted2 loss before tax of
GBP1.0m (2007: GBP75.1m loss).
* Basic loss per share of 3.0p (2007: 96.2p). Adjusted3 loss per share of 0.7p
(2007: 88.2p).
* Net debt of GBP3.2m (2007: GBP5.7m).
* Tomb Raider: Underworld sold in 2.6m units and at approximately 1.5m units sell
through is outselling the two most recent iterations of the game over the same
period, but lower than the initial plan set.
* Estimated full year revenue will be in the range of GBP160 - GBP180m.
Operational Highlights
* First year of the Group's three-year strategic plan complete.
* Studio-led model implemented with the Group now focused on key franchises.
* Enhanced product assessment Green Light process implemented across the Group for
all future projects.
Post period Highlights
* On 12th February 2009 the Board recommended an offer from Square Enix to acquire
the entire issued and to be issued ordinary share capital of Eidos at 32p per
ordinary share.
* Tomb Raider: Underworld now released on all planned formats worldwide, including
PlayStation 2. Tomb Raider: Underworld Premium Downloadable Content released on
24th February 2009 with additional content due for release in March.
* Reduced headcount at Crystal Dynamics and closure of Rockpool Games and Morpheme
Game Studios as part of reducing costs and improving operating mechanics.
* Further titles to be released in second half include the much
anticipated Batman: Arkham Asylum, Battlestations: Pacific and Championship
Manager 2009.
___________________
1 See note 7
2 See note 7
3 See note 5
Phil Rogers, Chief Executive of Eidos said,
"The first six months of trading this year were characterised by an incredibly
competitive and increasingly challenging retail environment. The changes made at
Eidos over the past year, coupled with the continued hard work and determination
of our employees and external partners, means we are well placed one year into
our three-year strategic plan to produce higher-quality, must-have games to
entertain our consumer."
For further information:
Eidos plc
Phil Rogers - Chief Executive Officer
Robert Brent - Chief Financial Officer
+44 20 8636 3000
Madano Partnership
Matthew Moth / Mark Way
+44 20 7593 4000
About Eidos
Eidos plc is the creator of some of the world's leading videogame properties.
The Group consists of several development studios including Crystal Dynamics, Io
Interactive, Beautiful Game Studios, Eidos Game Studios and Eidos Montreal as
well as sales and distribution offices in Europe and the US. The Group owns a
valuable portfolio of intellectual property including: Tomb Raider, Hitman, Deus
Ex, Championship Manager and Just Cause.
www.eidos.co.uk
Forward-looking statements
Certain statements made in this announcement are forward looking statements.
Such statements are based on current expectations and are subject to a number of
risks and uncertainties that could cause actual results to differ materially
from any expected future events or results referred to in these forward looking
statements. Eidos does not undertake any obligation to update or revise any
forward looking statements, whether as a result of new information, future
developments or otherwise.
CHIEF EXECUTIVE'S STATEMENT
Results overview
+---------------------------+-----------------+-----------------+---------------+
| | 6 months to 31 | 6 months to 31 | 12 months to |
| | December 2008 | December 2007 | 30 June 2008 |
+---------------------------+-----------------+-----------------+---------------+
| | GBPm | GBPm | GBPm |
+---------------------------+-----------------+-----------------+---------------+
| Revenue | 80.3 | 63.4 | 118.9 |
+---------------------------+-----------------+-----------------+---------------+
| Gross Profit | 47.6 | 30.9 | 56.1 |
+---------------------------+-----------------+-----------------+---------------+
| Gross Margin | 59.3% | 48.7% | 47.2% |
+---------------------------+-----------------+-----------------+---------------+
| Adjusted EBITDA4 | 1.5 | (73.0) | (99.4) |
+---------------------------+-----------------+-----------------+---------------+
| Adjusted loss before tax5 | (1.0) | (75.1) | (104.0) |
+---------------------------+-----------------+-----------------+---------------+
| Loss before tax | (9.8) | (81.4) | (136.0) |
+---------------------------+-----------------+-----------------+---------------+
| EPS (pence) | (3.0)p | (96.2)p | (136.3)p |
+---------------------------+-----------------+-----------------+---------------+
| Adjusted EPS6 | (0.7)p | (88.2)p | (100.6)p |
+---------------------------+-----------------+-----------------+---------------+
Revenue for the six months to 31 December 2008 increased 26.7% to GBP80.3m
(2007:GBP63.4m), driven primarily by the release of Tomb Raider:
Underworld. Monster Lab was the only other title released in the period (2007:
3 title releases). We also derived revenue from the continued sell through of
catalogue product, license income and distribution of third party titles. Our
gross profit margin improved 10.6 percentage points from 48.7% to 59.3%
reflecting our focus on core franchises.
Adjusted EBITDA7 was GBP1.5m (2007: loss of GBP73.0m). This excludes non-cash
items such as share based compensation and changes in the fair value of
derivative contracts: the latter is now unwound and will not impact the full
year. The demise of Entertainment UK Ltd, a subsidiary of the Woolworths
Group negatively impacted EBITDA by GBP0.9m.
Adjusted loss before tax8 was GBP1.0m (2007: loss of GBP75.1m). The loss before
tax was GBP9.8m (2007: 81.4m). Adjusted loss per share9 was 0.7p (2007: 88.2p)
while basic loss per share was 3.0p (2007: 96.2p).
In our trading update in January we informed the market that we had adjusted our
projections for the second half of the financial year, with our full year
revenue now expected to be in the range of GBP160 - GBP180m compared to our
previous guidance of GBP180 - GBP200m.
Debt position
We also informed the market in January that we retained sufficient headroom
within our committed banking facility and given revised revenue and profit
expectations we might need to enter into discussions with our lending bank
regarding our June 2009 covenants.
We currently anticipate operating within our existing covenants, albeit with
limited headroom, and our lending bank has given written assurances that it
would approach potential discussions with the Company positively.
______________
4 See note 7
5 See note 7
6 See note 5
7 See note 7
8 See note 7
9 See note 5
Dividend
There are no current plans to pay a dividend.
Tomb Raider overview
Tomb Raider: Underworld was released on the major gaming platforms on 18
November 2008 in North America and 21 November 2008 in the rest of the world. We
were pleased that in our key European territories the game charted in the Top 10
for the 6 weeks from launch to Christmas10 and performed well against both
competitive products and recent iterations of the franchise.
However, on a global basis our sell through to 31 December 2008,
at approximately 1.5 million units, was below our internal forecasts, primarily
due to a lower start in North America. In a difficult North American economy we
have seen retailers restricting inventory levels and price discounting AAA
products above our expectations. Consumer demand was focused on fewer titles (of
high quality) and competition was intense, which resulted in reduced consumer
interest in our game during the holiday period.
Despite challenges in the US market and a wider global recession, Tomb Raider:
Underworld is currently outselling the last two iterations of the game over the
same period and is expected to follow similar sales trends to Tomb Raider:
Legend, which has sold through over 4.5m copies to date. Tomb Raider:
Underworld's sustained sales lifespan will also be supported by two additional
downloadable content releases. This is a new initiative for the Group, looking
to extend the sales cycle and engage both the consumer and our retail partners
in new game levels after the main release.
Operations overview
We have completed the first year of our three-year strategic plan. Our
studio-led model is fully functional within our wholly-owned studios, each
benefitting from an infrastructure built around our cornerstone franchises, with
responsibility for brand and product marketing. Our studios are constantly
improving the way they work with our territory distribution offices and partners
to drive product campaigns.
We have revised our Green Light process, which monitors and assesses the
progress of videogame development within the Group. Our enhanced process is now
fully operational and is designed to materially improve the quality, cost and
timelines of our videogame development.
As part of our ongoing efforts to improve the mechanics of our business and
actively manage our cost base we have reduced headcount at Crystal Dynamics and
focused the studio solely on the Tomb Raider franchise. We have also closed
Rockpool Games and Morpheme Game Studios.
______________
10UK chart data is provided by Chart track, France is provided by internal
analysis. In Germany Tomb Raider: Underworld was Top 10 in the PLAYSTATION 3
charts for 6 weeks, in the All Formats charts for the first three weeks.
Recommended cash offer
Subsequent to the year end, the Eidos Board reached agreement with Square Enix
Holdings Co. Ltd ("Square Enix"), a Japanese company listed on the Tokyo Stock
Exchange, on the terms of a recommended takeover offer (the "Offer") under which
SQEX Ltd, a wholly-owned subsidiary of Square Enix, will acquire the entire
issued and to be issued ordinary share capital of Eidos. The Offer is to be
effected by means of a scheme of arrangement under the Companies Act 2006.
Under the terms of the Offer, Eidos shareholders will be entitled to receive 32
pence in cash for each Eidos share. The Offer values the entire existing issued
share capital of Eidos at approximately GBP84.3 million.
Eidos has a strong portfolio of established franchises, with highly talented
employees. Square Enix recognizes this and sees Eidos as both complementary to
their business as well as a valuable brand within videogames.
It is expected that the scheme document containing further details of the Offer
will be posted in early March, that the Offer will be put to Eidos shareholders
for their approval at a Court Meeting and at an Extraordinary General Meeting in
March 2009 and that, subject to the Offer becoming unconditional, the scheme
will become effective before the end of April 2009.
Board changes and name change
During this reporting period Robert Brent joined the Company as Chief Financial
Officer and two Non-executive Directors, Aaron Brown and Kevin Tsujihara, stood
down from the Board.
On 3 December 2008, the company changed its name to Eidos plc and the trading
(ticker) symbol changed to EID.
Outlook and risks
The Company is cautious about the near-term impact of the difficult global
economic environment on sales volumes and price discounting. The cost of games
development is also increasing and with it risk, particularly in respect of the
success and timing of product releases and the achievability of forecast sales
and margins. Therefore we believe that scale is required to develop, market and
sell AAA games and operationally we need stability to provide the appropriate
platform for our studios.
Strategically we shall continue to focus on our cornerstone franchises,
concentrating effort and resource on those high quality titles that will deliver
long-term value, whilst tactically exploring and investing in new franchise
opportunities that we believe hold the best chance of becoming our cornerstone
franchises of tomorrow.
In January we revised our sales assumptions for Tomb Raider: Underworld and
other products to be released and we continue to estimate that our full year
revenue will be in the range of GBP160 - GBP180m. Looking to the second half of
this financial year, we are encouraged by the positive reaction to the
forthcoming Batman: Arkham Asylum videogame. We continue to work closely with DC
Comics and Warner Bros. and benefit from cross-promotional opportunities such as
the inclusion of the first video trailer for Batman: Arkham Asylum on all DVDs
(excluding Blu-ray) of the movie The Dark Knight.
In addition, we will be releasing Battlestations: Pacific, the follow-up to the
highly acclaimed Battlestations: Midway and a brand new iteration of
Championship Manager in Championship Manager 2009.
Statement of Directors' responsibilities
The Directors' confirm to the best of their knowledge:
* The condensed set of financial statements has been prepared in accordance with
IAS 34 Interim Financial Reporting as adopted by the EU;
* The half-yearly management report includes a fair review of the information
required by DTR 4.2.7R being an indication of important events that have
occurred during the first 26 weeks of the financial year and their impact on the
condensed set of financial statements and a description of the principle risks
and uncertainties for the remaining 26 weeks of the year; and
* The half-yearly management report includes a fair review of the information
required by DTR 4.2.8R being disclosure of related party transactions and
changes therein since the last annual report.
On behalf of the Board
Phil Rogers (Chief Executive)
Robert Brent (Chief Financial Officer)
Tim Ryan (Chairman)
Independent Review Report to Eidos Plc
Introduction
We have been engaged by Eidos to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 31
December 2008 which comprises the Consolidated Income Statement, the
Consolidated Balance Sheet, the Consolidated Cashflow Statement, the
Consolidated Statement of Changes in Equity and related explanatory notes.
We have read the other information contained in the half-yearly financial report
and considered whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed set of financial
statements.
Directors' responsibilities
The half-yearly financial report is the responsibility of and has been approved
by the directors. The directors are responsible for preparing the half-yearly
financial report in accordance with the Disclosure and Transparency Rules of the
United Kingdom's Financial Services Authority.
As disclosed in note 1, the annual financial statements of the group are
prepared in accordance with International Financial Reporting Standards (IFRSs)
as adopted by the European Union. The condensed set of financial statements
included in this half-yearly financial report has been prepared in accordance
with International Accounting Standard 34, "Interim Financial Reporting", as
adopted by the European Union.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review.
Our report has been prepared in accordance with the terms of our engagement to
assist Eidos in meeting its responsibilities in respect of half-yearly financial
reporting in accordance with the Disclosure and Transparency Rules of the United
Kingdom's Financial Services Authority and for no other purpose. No person is
entitled to rely on this report unless such a person is a person entitled to
rely upon this report by virtue of and for the purpose of our terms of
engagement or has been expressly authorised to do so by our prior written
consent. Save as above, we do not accept responsibility for this report to any
other person or for any other purpose and we hereby expressly disclaim any and
all such liability.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity", issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly, we
do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe
that the condensed set of financial statements in the half-yearly financial
report for the six months ended 31 December 2008 is not prepared, in all
material respects, in accordance with International Accounting Standard 34, as
adopted by the European Union, and the Disclosure and Transparency Rules of the
United Kingdom's Financial Services Authority.
Emphasis of matter - going concern
Without qualifying our conclusion, we draw attention to the disclosures in note
2 of the condensed set of financial statements concerning the group's ability to
continue as a going concern. These include the following material uncertainties:
* the ongoing availability of the credit facility given the potential covenant
breaches; and
* the ability to obtain additional funding from alternative sources should it be
required; and
* the achievability of forecasts and key assumptions within the forecasts.
These events and conditions, along with other matters as disclosed in note 2,
indicate the existence of material uncertainties which may cast significant
doubt over the Group's ability to continue as a going concern. The condensed set
of financial statements does not include the adjustments that would result if
the Group were unable to continue as a going concern.
BDO Stoy Hayward LLP
Chartered Accountants and Registered Auditors
London
27th February 2009
Consolidated Income Statement for the six months ended 31 December 2008
+----------------------------+-------+--+------------+------------+-------------+
| |Notes | | 6 months | 6 months | 12 months |
| | | | to 31 | to 31 | to 30 June |
| | | | December | December | 2008 |
| | | | 2008 | 2007 | (Restated |
| | | | | (Restated | - see note |
| | | | | - see note | 1) |
| | | | | 1) | |
+----------------------------+-------+--+------------+------------+-------------+
| | | | Unaudited | Unaudited | Audited |
+----------------------------+-------+--+------------+------------+-------------+
| | | | GBPm | GBPm | GBPm |
+----------------------------+-------+--+------------+------------+-------------+
| | | | | | |
+----------------------------+-------+--+------------+------------+-------------+
| Revenue | 3 | | 80.3 | 63.4 | 118.9 |
+----------------------------+-------+--+------------+------------+-------------+
| Cost of sales | | | (32.7) | (32.5) | (62.8) |
+----------------------------+-------+--+------------+------------+-------------+
| | | | ---------- | ---------- | ---------- |
+----------------------------+-------+--+------------+------------+-------------+
| Gross Profit | | | 47.6 | 30.9 | 56.1 |
+----------------------------+-------+--+------------+------------+-------------+
| Development costs | | | (21.7) | (79.6) | (104.3) |
+----------------------------+-------+--+------------+------------+-------------+
| Advertising | | | (9.4) | (10.1) | (17.6) |
+----------------------------+-------+--+------------+------------+-------------+
| Administrative costs - | | | - | - | (6.2) |
| exceptional | | | | | |
+----------------------------+-------+--+------------+------------+-------------+
| * other | | | (25.6) | (22.6) | (63.2) |
+----------------------------+-------+--+------------+------------+-------------+
| Administrative expenses | | | (56.7) | (112.3) | (191.3) |
+----------------------------+-------+--+------------+------------+-------------+
| | | | ---------- | ---------- | ---------- |
+----------------------------+-------+--+------------+------------+-------------+
| Loss from operations | | | (9.1) | (81.4) | (135.2) |
+----------------------------+-------+--+------------+------------+-------------+
| Finance income | | | 0.2 | 0.3 | 0.5 |
+----------------------------+-------+--+------------+------------+-------------+
| Finance costs | | | (0.9) | (0.3) | (1.3) |
+----------------------------+-------+--+------------+------------+-------------+
| | | | ---------- | ---------- | ---------- |
+----------------------------+-------+--+------------+------------+-------------+
| Loss before taxation | 3 | | (9.8) | (81.4) | (136.0) |
+----------------------------+-------+--+------------+------------+-------------+
| Tax credit / (charge) | 4 | | 2.0 | (2.0) | (2.0) |
+----------------------------+-------+--+------------+------------+-------------+
| | | | ---------- | ---------- | ---------- |
+----------------------------+-------+--+------------+------------+-------------+
| Loss from continuing | | | (7.8) | (83.4) | (138.0) |
| operations | | | | | |
+----------------------------+-------+--+------------+------------+-------------+
| Post tax loss on | | | - | - | (5.0) |
| discontinued operations | | | | | |
+----------------------------+-------+--+------------+------------+-------------+
| | | | ------- | --------- | ---------- |
+----------------------------+-------+--+------------+------------+-------------+
| Loss for the period | | | (7.8) | (83.4) | (143.0) |
+----------------------------+-------+--+------------+------------+-------------+
| | | | ===== | ===== | ===== |
+----------------------------+-------+--+------------+------------+-------------+
| Loss per share | | | Pence | Pence | Pence |
+----------------------------+-------+--+------------+------------+-------------+
| Basic | 5 | | (3.0) | (96.2) | (136.3) |
+----------------------------+-------+--+------------+------------+-------------+
| Diluted | 5 | | (3.0) | (96.2) | (136.3) |
+----------------------------+-------+--+------------+------------+-------------+
| | | | | | |
+----------------------------+-------+--+------------+------------+-------------+
| Continuing operations | | | | | |
+----------------------------+-------+--+------------+------------+-------------+
| Basic | 5 | | (3.0) | (96.2) | (131.6) |
| | | | | | |
+----------------------------+-------+--+------------+------------+-------------+
| Diluted | 5 | | (3.0) | (96.2) | (131.6) |
+----------------------------+-------+--+------------+------------+-------------+
| | | | ===== | ===== | ===== |
+----------------------------+-------+--+------------+------------+-------------+
Consolidated Balance Sheet at 31 December 2008
+--------------------------+-------+-------------+-------------+---------------+
| |Notes | 31 December | 31 December | 30 June |
| | | 2008 | 2007 | 2008 |
+--------------------------+-------+-------------+-------------+---------------+
| | | Unaudited | Unaudited | Audited |
| | | | (Restated | (Restated |
| | | | - see note | - see note 1) |
| | | | 1) | |
+--------------------------+-------+-------------+-------------+---------------+
| | | GBPm | GBPm | GBPm |
+--------------------------+-------+-------------+-------------+---------------+
| Non current assets | | | | |
+--------------------------+-------+-------------+-------------+---------------+
| Property plant and | | 7.8 | 7.9 | 7.4 |
| equipment | | | | |
+--------------------------+-------+-------------+-------------+---------------+
| Goodwill | | 2.0 | 2.7 | 2.0 |
+--------------------------+-------+-------------+-------------+---------------+
| Other intangible assets | 8 | 69.3 | 97.3 | 75.4 |
+--------------------------+-------+-------------+-------------+---------------+
| Capitalised development | 9 | 58.7 | 37.9 | 49.7 |
| costs | | | | |
+--------------------------+-------+-------------+-------------+---------------+
| Investment in associates | | 0.2 | 0.2 | 0.2 |
+--------------------------+-------+-------------+-------------+---------------+
| Deferred tax assets | | - | 0.3 | - |
+--------------------------+-------+-------------+-------------+---------------+
| | | ----- | ----- | ------- |
+--------------------------+-------+-------------+-------------+---------------+
| | | 138.0 | 146.3 | 134.7 |
+--------------------------+-------+-------------+-------------+---------------+
| Current assets | | | | |
+--------------------------+-------+-------------+-------------+---------------+
| Inventory | | 7.6 | 6.6 | 3.5 |
+--------------------------+-------+-------------+-------------+---------------+
| Trade and other | 10 | 73.6 | 55.6 | 30.9 |
| receivables | | | | |
+--------------------------+-------+-------------+-------------+---------------+
| Cash and cash | | 19.8 | 12.0 | 25.9 |
| equivalents | | | | |
+--------------------------+-------+-------------+-------------+---------------+
| Assets classified as | | - | - | 5.5 |
| held for sale | | | | |
+--------------------------+-------+-------------+-------------+---------------+
| | | ------- | ------- | ------- |
+--------------------------+-------+-------------+-------------+---------------+
| | | 101.0 | 74.2 | 65.8 |
+--------------------------+-------+-------------+-------------+---------------+
| | | ------- | ------- | ------- |
+--------------------------+-------+-------------+-------------+---------------+
| Total assets | | 239.0 | 220.5 | 200.5 |
+--------------------------+-------+-------------+-------------+---------------+
| | | ==== | ==== | ==== |
+--------------------------+-------+-------------+-------------+---------------+
| Non-current liabilities | | | | |
+--------------------------+-------+-------------+-------------+---------------+
| Deferred consideration | | - | 1.4 | 1.4 |
+--------------------------+-------+-------------+-------------+---------------+
| Deferred tax liabilities | | 9.9 | 14.1 | 12.2 |
+--------------------------+-------+-------------+-------------+---------------+
| | | ------- | ------- | ------- |
+--------------------------+-------+-------------+-------------+---------------+
| | | 9.9 | 15.5 | 13.6 |
+--------------------------+-------+-------------+-------------+---------------+
| Current liabilities | | | | |
+--------------------------+-------+-------------+-------------+---------------+
| Bank overdraft | | 23.0 | 17.7 | - |
+--------------------------+-------+-------------+-------------+---------------+
| Trade and other payables | 10 | 38.7 | 32.9 | 29.8 |
+--------------------------+-------+-------------+-------------+---------------+
| Tax liabilities | | 6.1 | 2.7 | 5.5 |
+--------------------------+-------+-------------+-------------+---------------+
| Accruals and deferred | | 21.7 | 11.8 | 10.9 |
| income | | | | |
+--------------------------+-------+-------------+-------------+---------------+
| Provisions | 11 | 21.0 | 17.1 | 17.8 |
+--------------------------+-------+-------------+-------------+---------------+
| Liabilities held for | | - | - | 2.6 |
| sale | | | | |
+--------------------------+-------+-------------+-------------+---------------+
| | | ------- | ------- | ------- |
+--------------------------+-------+-------------+-------------+---------------+
| | | 110.5 | 82.2 | 66.6 |
+--------------------------+-------+-------------+-------------+---------------+
| | | ------- | ------- | ------- |
+--------------------------+-------+-------------+-------------+---------------+
| Total liabilities | | 120.4 | 97.7 | 80.2 |
+--------------------------+-------+-------------+-------------+---------------+
| | | | | |
+--------------------------+-------+-------------+-------------+---------------+
| Equity | | | | |
+--------------------------+-------+-------------+-------------+---------------+
| Share capital | 12 | 13.2 | 4.3 | 12.9 |
+--------------------------+-------+-------------+-------------+---------------+
| Share premium | 12 | 170.7 | 121.5 | 169.2 |
+--------------------------+-------+-------------+-------------+---------------+
| Merger reserve | 12 | 81.3 | 81.3 | 81.3 |
+--------------------------+-------+-------------+-------------+---------------+
| Capital reserve | 12 | 6.3 | 6.3 | 6.3 |
+--------------------------+-------+-------------+-------------+---------------+
| Foreign currency | 12 | 5.0 | 0.8 | 1.2 |
| translation reserve | | | | |
+--------------------------+-------+-------------+-------------+---------------+
| Share based compensation | 12 | 0.5 | 6.1 | 6.5 |
+--------------------------+-------+-------------+-------------+---------------+
| Employee benefit trust | 12 | (0.9) | (0.9) | (0.9) |
| share reserve | | | | |
+--------------------------+-------+-------------+-------------+---------------+
| Retained loss | 12 | (157.5) | (96.6) | (156.2) |
+--------------------------+-------+-------------+-------------+---------------+
| | | ------- | ------- | ------- |
+--------------------------+-------+-------------+-------------+---------------+
| Equity attributable to | 12 | 118.6 | 122.8 | 120.3 |
| equity holders of the | | | | |
| parent Company | | | | |
+--------------------------+-------+-------------+-------------+---------------+
| | | ------- | ------- | ------- |
+--------------------------+-------+-------------+-------------+---------------+
| Total liabilities and | | 239.0 | 220.5 | 200.5 |
| equity | | | | |
+--------------------------+-------+-------------+-------------+---------------+
| | | ==== | ==== | ==== |
+--------------------------+-------+-------------+-------------+---------------+
Consolidated Cash Flow Statement for the six months ended 31 December 2008
+-------------------------------+---------+--------------+------------+------------+
| | | 6 months to | 6 months | 12 months |
| | | 31 December | to 31 | to 30 June |
| | | 2008 | December | 2008 |
| | | | 2007 | (Restated |
| | | | (Restated | - see note |
| | | | | 1) |
| | | | - see note | |
| | | | 1) | |
+-------------------------------+---------+--------------+------------+------------+
| | | Unaudited | Unaudited | Audited |
+-------------------------------+---------+--------------+------------+------------+
| | | GBPm | GBPm | GBPm |
+-------------------------------+---------+--------------+------------+------------+
| Operating activities | | | | |
+-------------------------------+---------+--------------+------------+------------+
| Loss from continuing | | (9.8) | (81.4) | (136.0) |
| operations | | | | |
+-------------------------------+---------+--------------+------------+------------+
| Loss from discontinued | | - | - | (5.6) |
| operations | | | | |
+-------------------------------+---------+--------------+------------+------------+
| Share based compensation | | 0.5 | (0.5) | 0.1 |
+-------------------------------+---------+--------------+------------+------------+
| Depreciation on property, | | 1.8 | 2.1 | 3.6 |
| plant and equipment and | | | | |
| software amortisation charged | | | | |
| to the income statement | | | | |
+-------------------------------+---------+--------------+------------+------------+
| Amortisation of brands and | | 4.5 | 5.8 | 11.6 |
| technology | | | | |
+-------------------------------+---------+--------------+------------+------------+
| Impairment of brands and | | 1.6 | - | 16.3 |
| technology | | | | |
+-------------------------------+---------+--------------+------------+------------+
| Impairment of goodwill | | - | - | 0.2 |
+-------------------------------+---------+--------------+------------+------------+
| Financing income | | (0.2) | (0.3) | (0.5) |
+-------------------------------+---------+--------------+------------+------------+
| Foreign exchange | | (0.5) | - | 0.3 |
+-------------------------------+---------+--------------+------------+------------+
| Finance costs | | 0.9 | 0.3 | 1.3 |
+-------------------------------+---------+--------------+------------+------------+
| Loss on measurement of | | - | - | 3.5 |
| discontinued operations to | | | | |
| fair value less costs to sell | | | | |
+-------------------------------+---------+--------------+------------+------------+
| | | ------- | ------- | -------- |
+-------------------------------+---------+--------------+------------+------------+
| | | (1.2) | (74.0) | (105.2) |
+-------------------------------+---------+--------------+------------+------------+
| (Increase) / decrease in | | (34.8) | (14.3) | 7.9 |
| trade and other receivables | | | | |
+-------------------------------+---------+--------------+------------+------------+
| (Increase) /decrease in | | (4.1) | 0.6 | 2.2 |
| inventories | | | | |
+-------------------------------+---------+--------------+------------+------------+
| Release of capitalised | | 25.7 | 79.6 | 101.9 |
| development costs | | | | |
+-------------------------------+---------+--------------+------------+------------+
| (Decrease) /increase in trade | | 21.3 | 10.8 | 10.4 |
| and other payables, accruals, | | | | |
| deferred income and | | | | |
| provisions | | | | |
+-------------------------------+---------+--------------+------------+------------+
| | | ------- | ------- | -------- |
+-------------------------------+---------+--------------+------------+------------+
| Cash generated from | | 6.9 | 2.7 | 17.2 |
| operations | | | | |
+-------------------------------+---------+--------------+------------+------------+
| | | | | |
+-------------------------------+---------+--------------+------------+------------+
| | | | | |
+-------------------------------+---------+--------------+------------+------------+
| Income taxes repaid | | 0.2 | 0.2 | 0.2 |
| | | | | |
+-------------------------------+---------+--------------+------------+------------+
| | | ------- | ------- | -------- |
+-------------------------------+---------+--------------+------------+------------+
| Cash flows from operating | | 7.1 | 2.9 | 17.4 |
| activities | | | | |
| | | | | |
+-------------------------------+---------+--------------+------------+------------+
| Investing activities | | | | |
+-------------------------------+---------+--------------+------------+------------+
| Payment for subsidiary | | (1.7) | (2.2) | (1.0) |
| undertaking | | | | |
+-------------------------------+---------+--------------+------------+------------+
| Sale of subsidiaries | | 2.9 | - | - |
+-------------------------------+---------+--------------+------------+------------+
| Purchase of property, plant | | (2.0) | (3.7) | (5.4) |
| and equipment and intangible | | | | |
| software | | | | |
+-------------------------------+---------+--------------+------------+------------+
| Sale of fixed assets | | - | - | 0.2 |
+-------------------------------+---------+--------------+------------+------------+
| Interest received | | 0.2 | 0.3 | 0.5 |
+-------------------------------+---------+--------------+------------+------------+
| Expenditure on capitalised | | (34.7) | (35.7) | (69.8) |
| development costs | | | | |
+-------------------------------+---------+--------------+------------+------------+
| Sale of associated | | - | 0.4 | 0.4 |
| undertakings | | | | |
+-------------------------------+---------+--------------+------------+------------+
| | | ------- | ------- | -------- |
+-------------------------------+---------+--------------+------------+------------+
| Net cash used in investing | | (35.3) | (40.9) | (75.1) |
| activities | | | | |
+-------------------------------+---------+--------------+------------+------------+
| | | | | |
+-------------------------------+---------+--------------+------------+------------+
| Financing activities | | | | |
+-------------------------------+---------+--------------+------------+------------+
| Proceeds from issue of share | | - | 1.2 | 60.2 |
| capital | | | | |
+-------------------------------+---------+--------------+------------+------------+
| Share issue expenses | | - | - | (3.8) |
+-------------------------------+---------+--------------+------------+------------+
| Interest paid | | (0.9) | (0.3) | (1.6) |
+-------------------------------+---------+--------------+------------+------------+
| | | ------- | ------- | -------- |
+-------------------------------+---------+--------------+------------+------------+
| Net cash generated by | | (0.9) | 0.9 | 54.8 |
| financing activities | | | | |
+-------------------------------+---------+--------------+------------+------------+
| | | | | |
+-------------------------------+---------+--------------+------------+------------+
| Net decrease in net cash and | | (29.1) | (37.1) | (2.9) |
| cash equivalents | | | | |
+-------------------------------+---------+--------------+------------+------------+
| Cash and cash equivalents at | | 25.9 | 31.4 | 31.4 |
| beginning of period | | | | |
+-------------------------------+---------+--------------+------------+------------+
| | | ----- | ------- | -------- |
+-------------------------------+---------+--------------+------------+------------+
| Cash and cash equivalents at | | (3.2) | (5.7) | 28.5 |
| end of period | | | | |
+-------------------------------+---------+--------------+------------+------------+
| Less cash classified as held | | - | - | (2.6) |
| for sale | | | | |
+-------------------------------+---------+--------------+------------+------------+
| | | ------- | ------- | -------- |
+-------------------------------+---------+--------------+------------+------------+
| Reported cash and cash | | (3.2) | (5.7) | 25.9 |
| equivalents at end of period | | | | |
+-------------------------------+---------+--------------+------------+------------+
| | | ==== | ==== | ==== |
+-------------------------------+---------+--------------+------------+------------+
Notes:
1. Basis of preparation
This Interim Report has been prepared in accordance with the Disclosure and
Transparency Rules of the UK Financial Services Authority and International
Financial Reporting Standards (IFRS), as adopted by the European Union (EU). The
accounting policies applied are consistent with those described in the Annual
Report and Financial Statements 2008. The Interim Report has been prepared in
accordance with IAS 34 'Interim Financial Reporting' and should be read in
conjunction with the Annual Report and Financial Statements 2008.
The results for the half-year are unaudited. The financial information in this
interim announcement does not constitute statutory accounts within the meaning
of Section s434 of the Companies Act 2006.
The comparative financial information for the year ended 30 June 2008 does
not constitute statutory accounts within the meaning of Section 240 of the
Companies Act 1985. The statutory accounts of Eidos plc for the year ended 30th
June 2008 have been reported on by the Company's auditors and have been
delivered to the Registrar of Companies. The report of the auditors was
unqualified, did not include references to any matters to which the auditors
drew attention by way of emphasis without qualifying their report and did not
contain a statement under Section 237(2) or 272(3) of the Companies Act 1985.
The income statement comparatives for the 6 months to 31 December 2007 have
been restated to disclose separately the results of discontinued operations as
required by IFRS5. The income statement and cashflow comparatives for the 12
months to 30 June 2008 have been restated to reclass foreign exchange expense of
GBP0.3 million from within finance costs to administrative costs. The balance
sheets as at 30 June 2008 and 31 December 2007 have been restated to reclass
taxation and social security liabilities of GBP1.4 million and GBP2.9
million respectively from Tax Liabilities to Trade and Other Payables.
Copies of this Interim Report are available from the Company's registered office
at Wimbledon Bridge House, 1 Hartfield Road, Wimbledon, SW19 3RU.
2. Going concern
In determining the appropriate basis of preparation of the interim financial
statements, the Directors are required to consider whether the Group can
continue in operational existence for the foreseeable future.
The Group has funded its working capital using a bank credit facility of
GBP25 million which expires in April 2010. At 31 December 2008, the Group was in
full compliance with the financial covenants contained in the facility
agreement. In January 2009, it was announced in the trading update that the
Group had passed its peak net debt position and that there was sufficient
headroom within the committed banking facility but that given revised profit
expectations, the Company might need to enter into discussions with its lending
bank regarding the June 2009 covenants.
Management currently anticipates being able to operate within existing
covenants, albeit with limited headroom. The lending bank has given written
assurances that it would approach potential discussions with the Company
positively. Based on the discussions, and the written expressed intentions of
the bank, the Directors have concluded that it is reasonable to assume their
continued support however, without a formal commitment, this cannot be
guaranteed.
Management has prepared detailed cash flow projections for the remainder of this
financial year and for the following two financial years. These projections
indicate that the Group should be able to remain within its agreed facility for
the foreseeable future following the issuance of these interim financial
statements. However, the Directors consider that risks exist particularly in
respect of the success and timing of product releases and the achievability of
forecast sales and margins, and acknowledge that this could result in the need
for additional short term funding. The Directors believe there are a number of
options available to them to meet any additional funding requirement, including
strategic partnerships and the possible sale of assets.
Subsequent to the year end, the Eidos Directors reached agreement with the
Directors of Square Enix Holdings Co. Ltd ('Square Enix') on the terms of a
recommended offer under which SQEX Ltd, a wholly-owned subsidiary of Square
Enix, will acquire the entire issued and to be issued ordinary share capital of
Eidos. The offer is to be effected by means of a scheme of arrangement under the
Companies Act 2006.
Under the terms of the offer, Eidos Shareholders will be entitled to receive 32
pence in cash for each Eidos Share. The Offer values the entire existing issued
share capital of Eidos at approximately GBP84.3 million.
Having reviewed the cash flow projections and key assumptions, together with
assessing the position of the bank, the possible options for additional funding
and the recommended offer from Square Enix, the Directors have a reasonable
expectation that the Group will be able to meet its liabilities as they fall due
for the foreseeable future. It is on this basis that the Directors consider it
appropriate to prepare the Group's interim financial statements on a going
concern basis.
However for the reasons described above, the Directors recognise that there are
material uncertainties that may cast significant doubt on the Group's ability to
continue as a going concern, and therefore, that it may be unable to realise its
assets and discharge its liabilities in the normal course of business. These
material uncertainties comprise:
* the ongoing availability of the credit facility given the potential covenant
breaches; and
* the ability to obtain additional funding from alternative sources should it be
required; and
* the achievability of forecasts and key assumptions within the forecasts.
3. Segmental Analysis
+--------------------------------+--------------+---------------+--------------+
| | 6 months to | 6 months to | 12 months to |
| | 31 December | 31 December | 30 June 2008 |
| | 2008 | 2007 | (Restated) |
| | Unaudited | (Restated) | Audited |
| | | Unaudited | |
+--------------------------------+--------------+---------------+--------------+
| | GBPm | GBPm | GBPm |
+--------------------------------+--------------+---------------+--------------+
| | | | |
+--------------------------------+--------------+---------------+--------------+
| Revenue by destination | | | |
+--------------------------------+--------------+---------------+--------------+
| United Kingdom | 17.4 | 13.9 | 21.8 |
+--------------------------------+--------------+---------------+--------------+
| Europe | 40.1 | 23.6 | 48.2 |
+--------------------------------+--------------+---------------+--------------+
| United States of America | 18.2 | 21.7 | 40.2 |
+--------------------------------+--------------+---------------+--------------+
| Rest of World | 4.6 | 4.2 | 8.7 |
+--------------------------------+--------------+---------------+--------------+
| | ------ | ------ | -------- |
+--------------------------------+--------------+---------------+--------------+
| Total Revenue | 80.3 | 63.4 | 118.9 |
+--------------------------------+--------------+---------------+--------------+
| | === | === | ==== |
+--------------------------------+--------------+---------------+--------------+
| Loss before tax by destination | | | |
+--------------------------------+--------------+---------------+--------------+
| United Kingdom * | (7.6) | (77.0) | (129.4) |
+--------------------------------+--------------+---------------+--------------+
| Europe | (0.9) | (2.5) | (3.8) |
+--------------------------------+--------------+---------------+--------------+
| United States of America | (1.2) | (1.8) | (2.6) |
+--------------------------------+--------------+---------------+--------------+
| Rest of World | (0.1) | (0.1) | (0.2) |
+--------------------------------+--------------+---------------+--------------+
| | ------ | ------ | -------- |
+--------------------------------+--------------+---------------+--------------+
| Loss before tax | (9.8) | (81.4) | (136.0) |
+--------------------------------+--------------+---------------+--------------+
| | === | === | ==== |
+--------------------------------+--------------+---------------+--------------+
* Central costs have been included within the United Kingdom results.
4. Taxation
+--------------------------------+--------------+---------------+--------------+
| | 6 months to | 6 months to | 12 months to |
| | 31 December | 31 December | 30 June 2008 |
| | 2008 | 2007 | |
+--------------------------------+--------------+---------------+--------------+
| | Unaudited | Unaudited | Audited |
+--------------------------------+--------------+---------------+--------------+
| | GBPm | GBPm | GBPm |
+--------------------------------+--------------+---------------+--------------+
| | | | |
+--------------------------------+--------------+---------------+--------------+
| Current tax | | | |
+--------------------------------+--------------+---------------+--------------+
| UK corporation tax | - | (1.0) | (0.3) |
+--------------------------------+--------------+---------------+--------------+
| Overseas taxation | (0.6) | (0.2) | (2.6) |
+--------------------------------+--------------+---------------+--------------+
| | ----- | ----- | ----- |
+--------------------------------+--------------+---------------+--------------+
| | (0.6) | (1.2) | (2.9) |
+--------------------------------+--------------+---------------+--------------+
| Deferred Tax | | | |
+--------------------------------+--------------+---------------+--------------+
| Origination and reversal of | 2.6 | (0.8) | 0.9 |
| temporary differences | | | |
+--------------------------------+--------------+---------------+--------------+
| | ------ | ------ | -------- |
+--------------------------------+--------------+---------------+--------------+
| Taxation credit / (charge) | 2.0 | (2.0) | (2.0) |
+--------------------------------+--------------+---------------+--------------+
| | === | === | ==== |
+--------------------------------+--------------+---------------+--------------+
At 31 December 2008 the Group had substantial tax losses carried forward subject
to the agreement of the tax authorities in various jurisdictions.
5. Loss per share
+------------+------------+---------+--------+------------+---------+--------+------------+----------+---------+
| | 6 | | | 6 | | | 12 months | | |
| | months | | | months | | | to 30 | | |
| | to 31 | | | to 31 | | | June 2008 | | |
| | December | | | December | | | | | |
| | 2008 | | | 2007 | | | | | |
+------------+------------+---------+--------+------------+---------+--------+------------+----------+---------+
| | Continuing | Discon- | Total | Continuing | Discon- | Total | Continuing | Discon- | Total |
| | | tinued | | | tinued | | | tinued | |
+------------+------------+---------+--------+------------+---------+--------+------------+----------+---------+
| | | | | | | | | | |
+------------+------------+---------+--------+------------+---------+--------+------------+----------+---------+
| Loss for | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
| the period | | | | | | | | | |
| Basic | | | | | | | | | |
| | | | | | | | | | |
+------------+------------+---------+--------+------------+---------+--------+------------+----------+---------+
| Basic and | (7.8) | - | (7.8) | (83.4) | | (83.4) | (138.0) | (5.0) | (143.0) |
| diluted | | | | | | | | | |
+------------+------------+---------+--------+------------+---------+--------+------------+----------+---------+
| | | | | | | | | | |
+------------+------------+---------+--------+------------+---------+--------+------------+----------+---------+
| Adjusted | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
| loss for | | | | | | | | | |
| the period | | | | | | | | | |
| Basic | | | | | | | | | |
| | | | | | | | | | |
+------------+------------+---------+--------+------------+---------+--------+------------+----------+---------+
| Basic and | (1.8) | - | (1.8) | (76.5) | - | (76.5) | (103.3) | (2.2) | (105.5) |
| diluted | | | | | | | | | |
+------------+------------+---------+--------+------------+---------+--------+------------+----------+---------+
| | | | | | | | | | |
+------------+------------+---------+--------+------------+---------+--------+------------+----------+---------+
| Weighted | m | m | m | m | m | m | m | m | m |
| average | | | | | | | | | |
| number of | | | | | | | | | |
| shares | | | | | | | | | |
+------------+------------+---------+--------+------------+---------+--------+------------+----------+---------+
| Basic and | 261.9 | 261.9 | 261.9 | 86.7 | 86.7 | 86.7 | 104.9 | 104.9 | 104.9 |
| diluted | | | | | | | | | |
+------------+------------+---------+--------+------------+---------+--------+------------+----------+---------+
| | | | | | | | | | |
+------------+------------+---------+--------+------------+---------+--------+------------+----------+---------+
| | | | | | | | | | |
+------------+------------+---------+--------+------------+---------+--------+------------+----------+---------+
| Loss for | p | p | p | p | p | p | p | p | p |
| the period | | | | | | | | | |
| per share | | | | | | | | | |
+------------+------------+---------+--------+------------+---------+--------+------------+----------+---------+
| Basic and | (3.0) | - | (3.0) | (96.2) | - | (96.2) | (131.6) | (4.7) | (136.3) |
| diluted | | | | | | | | | |
+------------+------------+---------+--------+------------+---------+--------+------------+----------+---------+
| | | | | | | | | | |
+------------+------------+---------+--------+------------+---------+--------+------------+----------+---------+
| Adjusted | p | p | p | p | p | p | p | p | p |
| loss for | | | | | | | | | |
| the period | | | | | | | | | |
| per share | | | | | | | | | |
+------------+------------+---------+--------+------------+---------+--------+------------+----------+---------+
| Basic and | (0.7) | - | (0.7) | (88.2) | - | (88.2) | (98.5) | (2.1) | (100.6) |
| diluted | | | | | | | | | |
+------------+------------+---------+--------+------------+---------+--------+------------+----------+---------+
| | | | | | | | | | |
+------------+------------+---------+--------+------------+---------+--------+------------+----------+---------+
The number of potentially issuable shares that has not been included in the
diluted EPS calculation because they are anti dilutive is 12,696,960 (2007:
5,139,974) The weighted average number of shares has not been diluted for loss
making periods.
6. Dividends
No dividend has been declared for the six months ended 31 December 2008 (2007:
GBPNil).
7. Non-GAAP measures of performance
+--------------------------------+--------------+---------------+--------------+
| | 6 months to | 6 months to | 12 months to |
| | 31 December | 31 December | 30 June 2008 |
| | 2008 | 2007 | (restated) |
| | | (restated) | |
+--------------------------------+--------------+---------------+--------------+
| | GBPm | GBPm | GBPm |
+--------------------------------+--------------+---------------+--------------+
| Loss from operations | (9.1) | (81.4) | (135.2) |
+--------------------------------+--------------+---------------+--------------+
| Depreciation, amortisation and | 7.9 | 7.9 | 31.7 |
| impairment charged to income | | | |
| statement | | | |
+--------------------------------+--------------+---------------+--------------+
| Operating loss on discontinued | - | - | (2.2) |
| operations | | | |
+--------------------------------+--------------+---------------+--------------+
| Changes in fair value of | 2.2 | - | - |
| derivative contracts | | | |
+--------------------------------+--------------+---------------+--------------+
| Exceptional charges | - | - | 6.2 |
+--------------------------------+--------------+---------------+--------------+
| Share based compensation | 0.5 | 0.5 | 0.1 |
+--------------------------------+--------------+---------------+--------------+
| | ----- | ----- | ----- |
+--------------------------------+--------------+---------------+--------------+
| Adjusted EBITDA Profit/(Loss) | 1.5 | (73.0) | (99.4) |
+--------------------------------+--------------+---------------+--------------+
| | | | |
+--------------------------------+--------------+---------------+--------------+
| Depreciation charged to the | (1.8) | (2.1) | (3.8) |
| income statement | | | |
+--------------------------------+--------------+---------------+--------------+
| Net financing cost | (0.7) | - | (0.8) |
+--------------------------------+--------------+---------------+--------------+
| | ----- | ----- | ----- |
+--------------------------------+--------------+---------------+--------------+
| Adjusted Loss before tax | (1.0) | (75.1) | (104.0) |
| | | | |
+--------------------------------+--------------+---------------+--------------+
| Tax charge | (0.8) | (1.4) | (1.5) |
| | | | |
+--------------------------------+--------------+---------------+--------------+
| | ----- | ----- | ----- |
+--------------------------------+--------------+---------------+--------------+
| Adjusted loss for the period | (1.8) | (76.5) | (105.5) |
+--------------------------------+--------------+---------------+--------------+
| | ==== | === | === |
+--------------------------------+--------------+---------------+--------------+
8. Other Intangible Assets
+--------------------------------+--------------+---------------+--------------+
| | 6 months to | 6 months to | 12 months to |
| | 31 December | 31 December | 30 June 2008 |
| | 2008 | 2007 | Audited |
| | Unaudited | Unaudited | |
+--------------------------------+--------------+---------------+--------------+
| | GBPm | GBPm | GBPm |
+--------------------------------+--------------+---------------+--------------+
| | | | |
+--------------------------------+--------------+---------------+--------------+
| | | | |
+--------------------------------+--------------+---------------+--------------+
| At start of period | 75.4 | 102.7 | 102.7 |
+--------------------------------+--------------+---------------+--------------+
| Additions | 0.5 | 0.4 | 0.7 |
+--------------------------------+--------------+---------------+--------------+
| Amortisation | (5.0) | (5.8) | (11.7) |
+--------------------------------+--------------+---------------+--------------+
| Impairment | (1.6) | - | (16.3) |
+--------------------------------+--------------+---------------+--------------+
| | ------ | ------ | -------- |
+--------------------------------+--------------+---------------+--------------+
| At end of period | 69.3 | 97.3 | 75.4 |
+--------------------------------+--------------+---------------+--------------+
| | === | === | ==== |
+--------------------------------+--------------+---------------+--------------+
Included in the impairment charge is an amount of GBP1.6 million relating to the
brand of an underperforming title. The recoverability of Other Intangible Assets
was measured by reference to value in use, using cash flow projections based on
contribution forecasts. Growth rate assumptions were set at 3% and a discount
factor of 17% applied, being management's best estimate of the risks attached to
the underlying cash flows. The discount factor would need to increase to 22% to
result in an additional impairment greater than GBP1 million.
9. Capitalised Development Costs
+--------------------------------+--------------+---------------+--------------+
| | 6 months to | 6 months to | 12 months to |
| | 31 December | 31 December | 30 June 2008 |
| | 2008 | 2007 | Audited |
| | Unaudited | Unaudited | |
+--------------------------------+--------------+---------------+--------------+
| | GBPm | GBPm | GBPm |
+--------------------------------+--------------+---------------+--------------+
| | | | |
+--------------------------------+--------------+---------------+--------------+
| | | | |
+--------------------------------+--------------+---------------+--------------+
| At start of period | 49.7 | 81.8 | 81.8 |
+--------------------------------+--------------+---------------+--------------+
| Capitalised in the period | 34.7 | 35.7 | 69.8 |
+--------------------------------+--------------+---------------+--------------+
| Charged in the period to the | (25.7) | (79.6) | (101.9) |
| income statement | | | |
+--------------------------------+--------------+---------------+--------------+
| | ------ | ------ | -------- |
+--------------------------------+--------------+---------------+--------------+
| At end of period | 58.7 | 37.9 | 49.7 |
+--------------------------------+--------------+---------------+--------------+
| | === | === | ==== |
+--------------------------------+--------------+---------------+--------------+
10. Working Capital
+--------------------------------+--------------+---------------+--------------+
| | 31 December | 31 December | 30 June 2008 |
| | 2008 | 2007 | Audited |
| | Unaudited | Unaudited | |
+--------------------------------+--------------+---------------+--------------+
| | GBPm | GBPm | GBPm |
+--------------------------------+--------------+---------------+--------------+
| Trade debtors | 66.9 | 47.4 | 25.4 |
+--------------------------------+--------------+---------------+--------------+
| Prepayments and other income | 4.3 | 3.1 | 3.4 |
+--------------------------------+--------------+---------------+--------------+
| Other debtors | 2.4 | 5.1 | 2.1 |
+--------------------------------+--------------+---------------+--------------+
| | ----- | ------ | ------ |
+--------------------------------+--------------+---------------+--------------+
| Total trade and other | 73.6 | 55.6 | 30.9 |
| receivables | | | |
+--------------------------------+--------------+---------------+--------------+
| | ===== | ===== | ===== |
+--------------------------------+--------------+---------------+--------------+
+--------------------------------+--------------+---------------+--------------+
| | 31 December | 31 December | 30 June 2008 |
| | 2008 | 2007 | (Restated) |
| | Unaudited | (Restated) | Audited |
| | | Unaudited | |
+--------------------------------+--------------+---------------+--------------+
| | GBPm | GBPm | GBPm |
+--------------------------------+--------------+---------------+--------------+
| Trade creditors | 22.1 | 17.3 | 12.1 |
+--------------------------------+--------------+---------------+--------------+
| Royalty creditors | 5.2 | 10.0 | 12.9 |
+--------------------------------+--------------+---------------+--------------+
| Other creditors | 5.8 | 2.7 | 3.4 |
+--------------------------------+--------------+---------------+--------------+
| Sales and payroll taxes | 5.6 | 2.9 | 1.4 |
+--------------------------------+--------------+---------------+--------------+
| | ------ | ------- | ------ |
+--------------------------------+--------------+---------------+--------------+
| Total trade and other payables | 38.7 | 32.9 | 29.8 |
+--------------------------------+--------------+---------------+--------------+
| | ==== | ===== | ===== |
+--------------------------------+--------------+---------------+--------------+
11. Current provisions
+------------------------------+-------------+---------------+---------------+------------+
| | Returns | Restructuring | Deferred | Total |
| | Provision | provision | consideration | |
+------------------------------+-------------+---------------+---------------+------------+
| | GBPm | GBPm | GBPm | GBPm |
+------------------------------+-------------+---------------+---------------+------------+
| 31 December 2007 | 14.4 | - | 2.7 | 17.1 |
+------------------------------+-------------+---------------+---------------+------------+
| Charged to the income | 12.9 | 1.8 | - | 14.7 |
| statement in the period | | | | |
+------------------------------+-------------+---------------+---------------+------------+
| Utilised in the period | (12.5) | - | - | (12.5) |
+------------------------------+-------------+---------------+---------------+------------+
| Transferred to liabilities | (1.5) | - | - | (1.5) |
| classified as held for sale | | | | |
+------------------------------+-------------+---------------+---------------+------------+
| | ----- | ------- | ------ | ------- |
+------------------------------+-------------+---------------+---------------+------------+
| 30 June 2008 | 13.3 | 1.8 | 2.7 | 17.8 |
+------------------------------+-------------+---------------+---------------+------------+
| Charged to the income | 14.6 | - | - | 14.6 |
| statement in the period | | | | |
+------------------------------+-------------+---------------+---------------+------------+
| Utilised in the period | (7.9) | (1.8) | - | (9.7) |
+------------------------------+-------------+---------------+---------------+------------+
| Settled by cash and shares | - | - | (3.1) | (3.1) |
+------------------------------+-------------+---------------+---------------+------------+
| Transfer from non-current | - | - | 1.4 | 1.4 |
| provisions | | | | |
+------------------------------+-------------+---------------+---------------+------------+
| | ------ | ------ | -------- | --------- |
+------------------------------+-------------+---------------+---------------+------------+
| 31 December 2008 | 20.0 | - | 1.0 | 21.0 |
+------------------------------+-------------+---------------+---------------+------------+
| | ===== | ===== | ===== | ===== |
+------------------------------+-------------+---------------+---------------+------------+
12. Consolidated statement of changes in equity for the six months ended 31
December 2008
+---------------------+---------+--------+-------------+---------+---------+-------------+----------+----------+----------+--------+
| | Share | Share premium | Merger | Capital | Foreign | Share | Employee | Retained | Total |
| | capital | | reserve | reserve | Currency | based | benefit | Profit | |
| | | | | | translation | compens- | trust | | |
| | | | | | reserve | ation | share | | |
| | | | | | | | reserve | | |
+---------------------+---------+----------------------+---------+---------+-------------+----------+----------+----------+--------+
| | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+---------------------+---------+----------------------+---------+---------+-------------+----------+----------+----------+--------+
| 30 June 2007 - | 4.3 | 120.3 | 81.3 | 6.3 | (0.6) | 5.1 | (0.9) | (13.2) | 202.6 |
| Audited | | | | | | | | | |
+---------------------+---------+----------------------+---------+---------+-------------+----------+----------+----------+--------+
| | | | | | | | | | |
+---------------------+---------+----------------------+---------+---------+-------------+----------+----------+----------+--------+
| Loss for the period | - | - | - | - | - | - | - | (83.4) | (83.4) |
+---------------------+---------+----------------------+---------+---------+-------------+----------+----------+----------+--------+
| Foreign exchange | - | - | - | - | 1.4 | - | - | - | 1.4 |
+---------------------+---------+----------------------+---------+---------+-------------+----------+----------+----------+--------+
| | ------ | ------ | ------ | ------ | ------ | ------ | ------ | ------ | ------ |
+---------------------+---------+----------------------+---------+---------+-------------+----------+----------+----------+--------+
| Total recognised | - | - | - | - | 1.4 | - | - | (83.4) | (82.0) |
| income and expense | | | | | | | | | |
| for the period | | | | | | | | | |
+---------------------+---------+----------------------+---------+---------+-------------+----------+----------+----------+--------+
| | | | | | | | | | |
+---------------------+---------+----------------------+---------+---------+-------------+----------+----------+----------+--------+
| New shares issued | - | 1.2 | - | - | - | - | - | - | 1.2 |
+---------------------+---------+----------------------+---------+---------+-------------+----------+----------+----------+--------+
| Share based | - | - | - | - | - | 1.0 | - | - | 1.0 |
| compensation | | | | | | | | | |
+---------------------+---------+----------------------+---------+---------+-------------+----------+----------+----------+--------+
| | ------ | ------ | ------ | ------ | ------ | ------ | ------ | ------ | ------ |
+---------------------+---------+----------------------+---------+---------+-------------+----------+----------+----------+--------+
| 31 December 2007- | 4.3 | 121.5 | 81.3 | 6.3 | 0.8 | 6.1 | (0.9) | (96.6) | 122.8 |
| Unaudited | | | | | | | | | |
+---------------------+---------+----------------------+---------+---------+-------------+----------+----------+----------+--------+
| | ==== | ==== | ==== | ==== | ==== | === | ==== | ===== | ===== |
+---------------------+---------+----------------------+---------+---------+-------------+----------+----------+----------+--------+
| Loss for the period | - | - | - | - | - | - | - | (59.6) | (59.6) |
+---------------------+---------+--------+-----------------------+---------+-------------+----------+----------+----------+--------+
| Foreign exchange | - | - | - | - | 0.4 | - | - | - | 0.4 |
+---------------------+---------+--------+-----------------------+---------+-------------+----------+----------+----------+--------+
| | ------ | ------ | ------ | ------ | ------ | ------ | ------ | ------ | ------ |
+---------------------+---------+--------+-----------------------+---------+-------------+----------+----------+----------+--------+
| Total recognised | - | - | - | - | 0.4 | - | - | (59.6) | (59.2) |
| income and expense | | | | | | | | | |
| for the period | | | | | | | | | |
+---------------------+---------+--------+-----------------------+---------+-------------+----------+----------+----------+--------+
| | | | | | | | | | |
+---------------------+---------+--------+-----------------------+---------+-------------+----------+----------+----------+--------+
| New shares issued | 8.6 | 51.5 | - | - | - | - | - | - | 60.1 |
+---------------------+---------+--------+-----------------------+---------+-------------+----------+----------+----------+--------+
| Share issue costs | - | (3.8) | - | - | - | - | - | - | (3.8) |
+---------------------+---------+--------+-----------------------+---------+-------------+----------+----------+----------+--------+
| Share based | - | - | - | - | - | 0.4 | - | - | 0.4 |
| compensation | | | | | | | | | |
+---------------------+---------+--------+-----------------------+---------+-------------+----------+----------+----------+--------+
| | ------ | ------ | ------ | ------ | ------ | ------ | ------ | ------ | ------ |
+---------------------+---------+--------+-----------------------+---------+-------------+----------+----------+----------+--------+
| 30 June 2008 - | 12.9 | 169.2 | 81.3 | 6.3 | 1.2 | 6.5 | (0.9) | (156.2) | 120.3 |
| Audited | | | | | | | | | |
+---------------------+---------+--------+-----------------------+---------+-------------+----------+----------+----------+--------+
| | ==== | ==== | ==== | ==== | ==== | === | ==== | ===== | ===== |
+---------------------+---------+--------+-----------------------+---------+-------------+----------+----------+----------+--------+
| Loss for the period | - | - | - | - | - | - | - | (7.8) | (7.8) |
+---------------------+---------+--------+-----------------------+---------+-------------+----------+----------+----------+--------+
| Foreign exchange | - | - | - | - | 3.8 | - | - | - | 3.8 |
+---------------------+---------+--------+-----------------------+---------+-------------+----------+----------+----------+--------+
| | ------ | ------ | ------ | ------ | ------ | ------ | ------ | ------ | ------ |
+---------------------+---------+--------+-----------------------+---------+-------------+----------+----------+----------+--------+
| Total recognised | - | - | - | - | 3.8 | - | - | (7.8) | (4.0) |
| income and expense | | | | | | | | | |
| for the period | | | | | | | | | |
+---------------------+---------+--------+-----------------------+---------+-------------+----------+----------+----------+--------+
| | | | | | | | | | |
+---------------------+---------+--------+-----------------------+---------+-------------+----------+----------+----------+--------+
| New shares issued | 0.3 | 1.5 | - | - | - | - | - | - | 1.8 |
+---------------------+---------+--------+-----------------------+---------+-------------+----------+----------+----------+--------+
| Share based | - | - | - | - | - | 0.5 | - | - | 0.5 |
| compensation | | | | | | | | | |
+---------------------+---------+--------+-----------------------+---------+-------------+----------+----------+----------+--------+
| Transfer for | - | - | - | - | - | (6.5) | | 6.5 | - |
| expired options | | | | | | | | | |
+---------------------+---------+--------+-----------------------+---------+-------------+----------+----------+----------+--------+
| | ------ | ------ | ------ | ------ | ------ | ------ | ------ | ------ | ------ |
+---------------------+---------+--------+-----------------------+---------+-------------+----------+----------+----------+--------+
| 31 December 2008- | 13.2 | 170.7 | 81.3 | 6.3 | 5.0 | 0.5 | (0.9) | (157.5) | 118.6 |
| Unaudited | | | | | | | | | |
+---------------------+---------+--------+-----------------------+---------+-------------+----------+----------+----------+--------+
| | ==== | ==== | ==== | ==== | ==== | === | ==== | ===== | ===== |
+---------------------+---------+--------+-------------+---------+---------+-------------+----------+----------+----------+--------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR IIFFLFIIDFIA
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