RNS Number:2326V
Superscape Group PLC
20 April 2007
The following replaces the final results announcement released at 7.00am under
RNS number 2216V.
The website address for the investor presentation is www.superscape.com/
investors/financialreports.php and not as previously stated.
The full release appears below.
20 April 2007
SUPERSCAPE GROUP PLC
PRELIMINARY RESULTS
Superscape Group plc, a leading publisher of 2D and 3D mobile games, today
announces unaudited preliminary results for the year ended 31 January 2007.
Financial and operating highlights
- Total revenue more than doubled to #8.3m (2006: #4.0m)
- Publishing revenue increased by 145% to #7.1m (2006: # 2.9m)
- Gross margins increased to 73% (2006: 59%)
- Operating costs (excluding exceptional costs) reduced by 20%
- Loss before taxation and exceptional items reduced to #3.2m (2006:
#9.2m)
- Three out of four of Company's top selling games now based on
Superscape's own intellectual property
- Strong balance sheet with #7.1m cash at 31 January 2007
- Total cash outflow from operations reduced to #4.9m (2006: #10.6m)
Larry Quinn, Chairman of Superscape commented, "Superscape has achieved strong
growth this year whilst exercising rigid control over the Company's cost base.
The Company's status in the industry is growing and its position in the mobile
marketplace continues to strengthen as is evidenced by the Company now being
ranked in the top 10 of approximately 90 mobile game publishers in the North
American market."
For further information:
Superscape Group plc Tel: 01494 483674
Kevin Roberts, Chief Executive Officer
Dave Goodman, Chief Financial Officer
Maggie Templeman, Director of Communications
Hudson Sandler Tel: 020 7796 4133
Jessica Rouleau/Sandrine Gallien
An investor presentation will be available on the company's website:
www.superscape.com/investors/financialreports.php
Overview
Superscape has achieved strong growth in revenues this year, whilst exercising
rigid control over its cost base. The Board's decision, in the spring of 2006,
to focus sales activities on the US marketplace has been resoundingly endorsed
and in March 2007, Telephia, the world's largest provider of syndicated consumer
research to the telecom and mobile media markets, announced that Superscape is
one of the top ten mobile games publishers in North America, out of a total of
nearly ninety companies.
Results
For the year ending 31 January 2007, revenues more than doubled to #8.3 m (2006:
#4.0m). Revenue from publishing of our 2D and 3D mobile games was #7.1m (2006:
#2.9m), thus accounting for 85% (2006: 72%) of total revenues, and representing
a growth of 145% over the previous year.
During the year, 94% (2006: 77%) of our publishing revenue was generated from
Superscape's US operations. The significant investment in resources to boost our
in-house development facility in Moscow and thus avoid, as much as possible, the
need to use more costly external development companies, has had a positive
effect on the Company's cost structure. Gross margins have increased to 73%
(2006: 59%), as a result of a larger percentage of publishing revenue being
derived from mobile games based on the Company's own intellectual property (IP),
rather than licensed brands from other organisations and the increasing share of
revenue derived from 3D games (2007: 32%; 2006: 29%).
The re-organisation of the Company's operations in the current year, combined
with a major cost-reduction exercise, has enabled Superscape to achieve annual
cost savings in excess of #2m. Total operating expenses (excluding exceptional
costs associated with the previously announced restructuring of the Company's
operations) have decreased by 20% to #9.64 m (2006: #12.1 m). This decrease is
almost entirely due to the savings resulting from the restructuring combined
with significant savings from the internal development and testing of published
games.
Exceptional costs of #3.86 million were incurred as a result of the
restructuring of the Company's operations. These costs included redundancy
costs, costs associated with the closure of the office in Hook and the
renegotiation of the licensing agreement with GWE.
Sales and marketing costs (before exceptional costs) decreased year-on-year by
28% to #2.13 m (2006: #2.98 m) reflecting a decrease in IP licensing costs and
exhibition costs. Research and development expenses (before exceptional costs)
also decreased year-on-year by 27% to #4.25 m (2006: #5.79 m) as a result of the
investment in the Company's operations in Moscow which significantly reduced the
reliance on outside developers.
Operations
Our growth and success this year has been achieved against a backdrop of
significantly increased industry-wide interest in 3D mobile games. 3D games are
typically priced at a premium to 2D games and we have continued to develop
leading titles across a number of genres to cater to this market.
Superscape was a key player in the early development of these sophisticated
games and our experience over the last five years has been invaluable in
enabling us to exploit this rapidly developing marketplace. As a result,
Superscape has had the time to design and develop cutting edge technology to
significantly reduce the time to market for our titles, and to identify and then
create those genres of games, which are particularly well suited to the 3D
environment.
We have developed systems and specific software-based tools which not only allow
us to re-use the same game content across both Java and BREW platforms, but also
to handle the huge performance differences between low- and high-end handsets
without compromising the user's enjoyment of the game. These development and
porting tools, for both 2D and 3D games, have enabled us to streamline the
production of our mobile titles, reduce costs and hasten their time to market.
By the end of January 2007, we had seventy-two games live on networks throughout
the world. This compares with a figure of fifty-eight in the previous year. The
titles span a number of different genres including sports/racing, card/casino,
puzzle/strategy, movies, and action/adventure. Of the seventy-two titles, just
over 30% are based on Superscape's own IP. In addition, three out of four of our
top selling games for the year ended 31 January 2007 were Superscape's own IP.
At the beginning of February 2007, we had thirty-two new games under
development. Eleven of these are 3D titles, and include both new versions of
existing games plus a selection of brand new titles. More than 50% of our new
titles are based on Superscape's own IP. They embrace several different genres,
but show a clear trend towards casual and card-based games, which are proving to
be increasingly popular amongst mobile gamers.
Functional currency and reporting currency change effective 1 February 2007
More than 90% of the Company's revenues are generated from operations in the
United States. With the previously announced restructuring now complete,
executive management of the Company is now located in the United States and all
finance, treasury and investing functions are handled in that location. In an
effort to lower the Company's exposure to currency translation risk on revenues,
profits and equity, the Company has decided that with effect from 1 February
2007 both its reporting currency and functional currency will be changed to the
US Dollar.
Outlook
There are early signs in the industry that community games, based on 3D content,
will grow in popularity and in turn encourage a broader market of consumers to
play mobile games. In preparation for the growth in community gaming, we have
already expanded the infrastructure of our network gaming platform so that it
can host multiplayer tournaments, leaderboards and game promotions.
Our streamlined approach to the production of games - an increasing number of
which will be based on our own IP - is enabling us to rapidly expand our
portfolio, and ensure that we have a range of innovative new titles to offer to
the network operators.
We have established a solid position as a highly respected publisher of mobile
games. With the continuing expansion of our exciting 2D and 3D games portfolio
and a reduced cost base in place, we have created a robust foundation for future
growth. Superscape has achieved strong revenue growth this year, leaving us well
positioned to take full advantage of the rapid growth in demand for mobile
games.
CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 JANUARY 2007
Before Exceptional Total Before Exceptional Total
exceptional items exceptional items
items items
2007 2007 2007 2006 2006 2006
#000 #000 #000 #000 #000 #000
--------- -------- ------ --- -------- -------- -------
Revenue 8,320 - 8,320 4,025 - 4,025
Cost of sales (2,259) - (2,259) (1,665) - (1,665)
--------- -------- ------ --- -------- -------- -------
Gross profit 6,061 - 6,061 2,360 - 2,360
Research and
development
expenses (4,248) (386) (4,634) (5,791) (132) (5,923)
Sales and
marketing
expenses (2,133) (2,021) (4,154) (2,981) (155) (3,136)
Administrative
expenses (3,259) (1,450) (4,709) (3,345) (65) (3,410)
--------- -------- ------ -------- -------- -------
(9,640) (3,857) (13,497) (12,117) (352) (12,469)
--------- -------- ------ -------- -------- -------
Operating loss (3,579) (3,857) (7,436) (9,757) (352) (10,109)
Finance revenue 371 - 371 521 - 521
--------- -------- ------ -------- -------- -------
Loss from before
tax (3,208) (3,857) (7,065) (9,236) (352) (9,588)
Tax (212) - (212) 42 - 42
--------- -------- ------ -------- -------- -------
Loss for the year (3,420) (3,857) (7,277) (9,194) (352) (9,546)
--------- -------- ------ -------- -------- -------
Loss per share
Loss per share -
basic and diluted (4.0)p (5.7)p
------ -------
CONSOLIDATED BALANCE SHEET AS AT 31 JANUARY 2007
2007 2006
#000 #000
------ ---------
Non-current assets
Property, plant and equipment 155 224
Intangible assets 2,936 3,161
------ ---------
3,091 3,385
Current assets
Trade and other receivables 3,220 4,671
Cash and cash equivalents 7,127 12,723
------ ---------
10,347 17,394
------ ---------
Total assets 13,438 20,779
====== =========
Liabilities
Non-current liabilities
Provisions 503 -
------ ---------
503 -
------ ---------
Current liabilities
Trade and other payables 2,140 2,789
Provisions 318 -
------ ---------
2,458 2,789
------ ---------
Total liabilities 2,961 2,789
------ ---------
Equity
Called up share capital 18,300 17,998
Share premium account 67,415 67,359
Other reserves 157 433
Translation reserve (418) 116
Retained losses (74,977) (67,916)
------ ---------
Total equity shareholders' funds 10,477 17,990
------ --------
------ --------
Total equity and liabilities 13,438 20,779
====== ========
Approved by the Board of Directors on 17 April 2007 and signed on its behalf.
Dave Goodman
Company Secretary
CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 JANUARY 2007
2007 2006 *
#000 #000
------- -------
Cash flows from operating activities
Loss before tax (7,065) (9,588)
Adjustments for:
Depreciation of property, plant and equipment 167 158
Amortisation and impairment of intangible assets 938 394
Loss on disposal of property, plant and equipment 1 -
Share based remuneration 216 411
Finance revenue (371) (521)
------- -------
Operating cash flows before movements in working
capital (6,114) (9,146)
Decrease/(increase) in receivables 922 (1,364)
Increase/(decrease) in payables 302 (24)
------- -------
Cash used by operations (4,890) (10,534)
Income tax paid, net of income tax refunds
received of #182,000 (2006: nil) (4) (78)
------- -------
Net cash used in operating activities (4,894) (10,612)
Cash flows from investing activities
Interest received 373 552
Purchase of intangible assets (991) (1,850)
Purchase of property, plant and equipment (114) (202)
Adjustment for change in deferred consideration 21 -
------- -------
Net cash used in investing activities (711) (1.500)
Cash flows from financing activities
Gross proceeds from issue of share capital 103 20,155
Share issue costs - (1,188)
------- -------
Net cash generated from financing activities 103 18,967
Net (decrease)/increase in cash and cash
equivalents (5,502) 6,855
Effect of exchange rates on cash and cash
equivalents (94) 24
Cash and cash equivalents at beginning of period 12,723 5,844
------- -------
Cash and cash equivalents at end of period 7,127 12,723
======= =======
* Certain amounts reclassified for comparative purposes
Notes to the financial statements as at 31 January 2007
1. ACCOUNTING POLICIES AND BASIS OF PREPARATION
The financial information set out in this announcement does not constitute
the Group's statutory accounts for the years ended 31 January 2007 or 2006
within the meaning of section 240 of the Companies Act 1985 and are
unaudited. The statutory accounts for the year ended 31 January 2007 will
be filed with the registrar of companies following the annual general
meeting.
2. SEGMENTAL REPORTING
The directors consider that the Group operates in only one business segment,
being the provision of software and associated services. The operations are
monitored by the three geographic regions of Europe, Americas and Asia. The
segment information in respect of the regions is presented below.
For the year ending 31 January Europe Americas Asia Total
2007
#000 #000 #000 #000
---------------------- ------- --------- ----- --------------
Segment revenue 883 7,304 133 8,320
Segment result 868 529 89 1,486
Group research & development (4,248)
costs
Exceptional items (3,857)
Central costs (817)
---------------------- ------- --------- ----- --------------
Operating result (7,436)
---------------------- ------- --------- ----- --------------
Assets and liabilities
Segment assets 1,365 6,444 49 7,858
Unallocated assets 5,580
---------------------- ------- --------- ----- --------------
Total assets 13,438
---------------------- ------- --------- ----- --------------
Segment liabilities (1,557) (1,329) (15) (2,901)
Unallocated liabilities (60)
---------------------- ------- --------- ----- --------------
Total liabilities (2,961)
---------------------- ------- --------- ----- --------------
Other segment information
Capital expenditure 128 977 - 1,105
Depreciation and amortisation 319 786 - 1,105
Provisions - non cash 821 - - 821
For the year ending 31 January Europe Americas Asia Total
2006
#000 #000 #000 #000
---------------------- ------- --------- ----- --------------
Segment revenue 684 3,225 116 4,025
Segment result (2,089) (1,023) 75 (3,037)
Group research & development (5,923)
costs
Central costs (1,149)
---------------------- ------- --------- ----- --------------
Operating result (10,109)
---------------------- ------- --------- ----- --------------
Assets and liabilities
Segment assets 1,907 6,659 62 8,628
Unallocated assets 12,151
---------------------- ------- --------- ----- --------------
Total assets 20,779
---------------------- ------- --------- ----- --------------
Segment liabilities (773) (1,890) (19) (2,682)
Unallocated liabilities (107)
---------------------- ------- --------- ----- --------------
Total liabilities (2,789)
---------------------- ------- --------- ----- --------------
Other segment information
Capital expenditure 229 2,630 - 2,859
Depreciation and amortisation 208 344 - 552
3. EXCEPTIONAL ITEMS
2007 2006
#'000 #'000
------- ------- ------- ------- ------- ------- ------ --------- --------
Vacant property costs 766 -
Redundancy costs 1,274 352
Restructuring and business reorganisation
costs 1,817 -
----------------- ------- ------- ------- ------ --------- --------
Total exceptional items 3,857 352
----------------- ------- ------- ------- ------ --------- --------
In the years ended 31 January 2007 and 2006 the exceptional items arose as a
result of further restructuring and downsizing of the UK operations. These items
have been included in the operating expense lines of the income statement.
4. TAXATION
a) Tax charged in the income statement 2007 2006
Tax on profit on ordinary activities #000 #000
------------------------------------ ------- -------
Current tax
Overseas corporation tax 186 78
R&D tax credits in respect of current year (120)
R&D tax credits in respect of prior years 26 -
------------------------------------ ------- -------
212 (42)
------------------------------------ ------- -------
b) Reconciliation of the total tax charge
The tax for the period is lower (2006: lower) than the standard rate of
corporation tax in the UK (30%).
The differences are explained below:
------------------------------------ ------- -------
Profit on ordinary activities before tax (7,065) (9,588)
------------------------------------ ------- -------
Tax on ordinary activities at 30% (2,120) (2,876)
Effects of:
Adjustments in respect of foreign tax rates (252) 72
Expenses not deductible for tax purposes (684) 872
Overseas tax 186 -
Depreciation in excess of capital allowances (no deferred
tax provided) 53 (66)
R&D rate difference - 30
R&D tax credits in respect of prior years 26 -
Losses arising in the current year 2,996 2,056
Other temporary differences (no deferred tax provided) - 103
Temporary differences in relation to share options (no
deferred tax provided) 7 (233)
------------------------------------ ------- -------
Total taxation 212 (42)
------------------------------------ ------- -------
c) Deferred tax
Provided Unprovided Provided Unprovided
2007 2007 2006 2006
#000 #000 #000 #000
---------------------------------- --------- ------- ---------
---------
Depreciation in excess of
capital allowances - 451 - 381
Rolled over capital gain (7) - (7) -
Tax losses carried forward - 19,903 - 16,539
Short term temporary
differences in relation to
share options - 11 - 25
Other temporary differences - - - 103
----------------------------- ------- --------- ------- ---------
(7) 20,365 (7) 17,048
----------------------------- ------- --------- ------- ---------
Deferred tax liabilities have been recognised in respect of rolled
over gains. Deferred tax assets of #6.596m (2006:#5.506m) in respect
of trading losses in the US and deferred tax assets of #13.307m
(2006: #11.033m) in respect of trading losses in the UK have not
been recognised due to the uncertainty of the availability of future
profits against which to utilise them. There is no potential
deferred tax asset on the unremitted earnings of overseas
subsidiaries.
5. LOSS PER SHARE
From continuing operations
The calculation of the basic and diluted loss per share is based on the following data:
2007 2006
#000 #000
------- -------
Earnings for the purposes of basic loss per share being net loss (7,277) (9,546)
attributable to
equity holders of the parent
------- -------
Number of Shares (000) 2007 2006
------- -------
Weighted average number of ordinary shares for the purposes of basic and 180,327 166,433
diluted loss per share
------- -------
2007 2006
Per share amount (4.0)p (5.7)p
------- -------
Due to the loss making position of the Group, the exercise of share options and
shares to be issued do not increase the basic loss per share and therefore according
to IAS 33 the basic and diluted loss per share remain the same.
6. SHARE CAPITAL
2007 2006
#000 #000
------- -------
Authorised:
300,000,000 Ordinary 10p shares
(31 January 2006: 300,000,000) 30,000 30,000
----------------------------------- ------- -------
Allotted, called up and fully paid 2007 2006 2007 2006
#000 000 #000 000
----------------------------------- ------ ----- ----- -----
At 1 February 179,983 126,398 17,998 12,640
Issued on share placing - 39,474 - 3,947
Issued on share placing and open offer - 13,316 - 1,332
Issued on exercise of share options 1,030 695 103 69
Issued on acquisition of subsidiary 1,986 100 199 10
------------------------- ------ --- ------- -------
At 31 January 182,999 179,983 18,300 17,998
------------------------- ------ --- ------- -------
1,030,000 new Ordinary 10p shares were issued for cash consideration of #103,000
as a result of the exercise of share options at various times during the year.
On 6 December 2006 1,986,354 shares with aggregate nominal value of #198,635
were issued as part of the deferred consideration related to the Group's
purchase of certain assets and business interests of Penultimate Games.
7. RECONCILIATION OF MOVEMENTS IN EQUITY
Share Share Other Translation Retained Total
Capital Premium Reserves Reserve Losses
#000 #000 #000 #000 #000 #000
---------------------- ------- -------- ------- -------- -------- -------
At 1 February
2005 12,640 53,708 199 (46) (58,781) 7,720
Exchange
differences on
retranslation
of - - - 162 - 162
net assets of
subsidiary undertakings
Deferred
consideration
of acquisition - - 276 - - 276
Shares issued
on acquisition
of subsidiary 10 32 (42) - - -
Arising on
share issues 5,279 14,781 - - - 20,060
Share issue
costs - (1,188) - - - (1,188)
Exercise of
options 69 26 - - - 95
Share based
payments - - - - 411 411
Retained Loss
for the period - - - - (9,546) (9,546)
---------------------- ------- -------- ------- -------- -------- -------
At 31 January
2006 17,998 67,359 433 116 (67,916) 17,990
---------------------- ------- -------- ------- -------- -------- -------
Share Share Other Translation Retained Losses Total
Capital Premium Reserves Reserve
#000 #000 #000 #000 #000 #000
---------------------- ------- -------- ------- -------- -------- -------
At 1 February
2006 17,998 67,359 433 116 (67,916) 17,990
Exchange
differences on
retranslation
of - - - (534) - (534)
net assets of
subsidiary undertakings
Shares issued
on acquisition
of subsidiary 199 56 (276) - - (21)
Exercise of
options 103 - - - - 103
Share based
payments - - - - 216 216
Retained Loss
for the period - - - - (7,277) (7,277)
---------------------- ------- -------- ------- -------- -------- -------
At 31 January
2007 18,300 67,415 157 (418) (74,977) 10,477
---------------------- ------- -------- ------- -------- -------- -------
Translation reserve
The translation reserve is used to record differences arising from the
translation of the financial statements of foreign subsidiaries. Other
reserves
The balance in other reserves represents the premium on the shares issued
on acquisition of 3DWG.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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