Results of the first half of 2018-2019
Results of the first half of
2018-2019
Continued profitable growth, with strong
growth in revenues (+27%) and current operating income
(+87%)
- Turnover of 10.8 million euros
(+27% at current exchange rate, +31% at
constant exchange rate)
- Strong increase of current operating income (+87%) to
+2.2 million euros, representing an operating margin of 20% of
consolidated turnover
- Net cash position of +€8.1 million
- Confirmation of annual objectives for the year ended
March 31, 2019
The audit review of the consolidated financial
statements is being finalized. The Auditors’ report will be issued
after verification of the notes to the financial statements and of
the information set forth in the half-year financial report.
Paris, France – December 20,
2018. The Atari Group announces its consolidated results
for the first half ending September 30, 2018, of its 2018-2019
financial year. These consolidated results were approved by the
Board of Directors on December 18, 2018.
"We continue to deliver profitable growth by
exploiting our catalog of more than 200 globally known Atari
games", said Frederic Chesnais, CEO of Atari. "Our strategy is
centered around the development of our four divisions: Atari Games,
Atari Casino, Atari VCS and Atari Partners. Each of them operates
in a sector that is experiencing strong growth, which is a key
asset for the Group and long term value creation.”
- Highlights of the first half ended September 30,
2018:
- Continued performance of RollerCoaster Tycoon on mobile
platforms and consoles
- Strong contribution from licensing activities, including the
Atari Flashback hardware product, and extension of the AtGames
distribution agreement
- Sale of Alone in the Dark and Act of War to THQ Nordic
- $3 million pre-orders for the Atari VCS
through an Indiegogo campaign
- Operational projects for the second half of
2018-2019:
- Atari Games: Release of mobile games, in
particular Citytopia, Days of Doom, Food Truck Frenzy and Ninja
Golf; settlement agreement with a US company ($1.1 million net
contribution for Atari), 3 other ongoing infringement proceedings
could be completed in 2019-2020
- Atari Casino: Ongoing
development of direct operations with an anticipated contribution
starting in fiscal year 2019-2020
- Atari VCS: Continuation of work for shipment
during the 2019-2020 financial year with a contribution to the
results for the years 2019-2020 and thereafter
- Atari Partners: High selectivity of projects.
Continuation of the blockchain platform project
- Other highlights:
- April 2018: Capital increase of 7.5 million euros
- September 2018: Settlement of the dispute with Mr. Raynal over
the Alone in the dark franchise
- November 2018: Admission to the Nasdaq International
Program
- In light of the first half results, the Group
reiterates its annual objective of increased profitability with the
key priority of increasing the value of its portfolio of
intellectual properties.
|
First
application of IFRS15
As of April 1, 2018, the Group has for the first
time applied IFRS 15 - Revenue from Contracts with Customers. The
Group has chosen to apply the new standard retrospectively to
contracts that have not been completed as of April 1, 2018, by
additionally accounting for the cumulative effect of the initial
application at the date of first application through an adjustment
of the opening balance of shareholder’s equity on April 1, 2018.
The application of this standard to the financial statements closed
on September 30, 2018 did not have a significant impact on turnover
for the period and the same will apply to turnover for the year
ended 31 March 2019. The restatement of the accounts of each
balance sheet item is detailed in an appendix to this press
release.
Atari: pursuit
of profitable growth strategy
Revenue growth was strong (+31% at constant
currency exchange rates, +27% at current currency exchange rates),
with solid performance on mobile platforms and simulation/strategy
games.
For the period, there is strong improvement of
current operating income (+87%) to 2.2 million euros, a 20%
operating margin, compared with 1.2 million euros for the previous
half-year, or a 14% operating margin. This improvement is the
result of strong growth of the business, a favorable seasonality
factor for licensing activities in the first half of the current
fiscal year, combined with a control of development costs and
overhead costs. The sale of intellectual property rights (Alone in
the Dark, Act of War), non strategic for Atari, also contributes
0.5 million euros to this current operating result.
In keeping with its strategy, the Group favors
the partnership model of leveraging its brand and its assets, with
fixed costs borne by partners in exchange for revenue sharing.
|
(in millions of euros) |
2018/2019 (April - Sept.) |
2017/2018 (April - Sept.) |
Variation % |
|
Revenue |
10.8 |
8.5 |
|
27 |
% |
|
Current operating income |
2.2 |
1.2 |
|
87 |
% |
|
Net profit |
1.8 |
1.1 |
|
60 |
% |
|
Shareholders' equity Group share |
23.1 |
7.9 |
|
194 |
% |
|
Net cash / (Net debt) |
8.1 |
(0.9 |
) |
N/A |
Revenue for
the first half ended September 30, 2018: growth of 27%
|
Revenue in the 1st half-year |
2018/2019 (April - Sept.) |
2017/2018 (April - Sept.) |
Variation % |
|
In millions of US dollars |
12.7 |
9.7 |
31 |
% |
|
In millions of euros |
10.8 |
8.5 |
27 |
% |
The sales dynamics of the first half
mainly reflect:
- The good performance of the entire video game catalog including
RollerCoaster Tycoon Touch;
- The strong contribution of Atari Flashback hardware
products;
- The very good performance of other licensing activities.
Current
operating income for the first half of 2018/2019: 20% operating
margin
|
Summary income statement (in millions of
euros) |
09.30.2018 |
|
09.30.2017 |
|
|
Revenue |
10.8 |
|
8.5 |
|
|
Cost of sales |
(2.7 |
) |
(1.1 |
) |
|
GROSS PROFIT MARGIN |
8.1 |
|
7.3 |
|
|
Research and development costs |
(3.1 |
) |
(2.2 |
) |
|
Marketing and commercial expenses |
(1.5 |
) |
(1.9 |
) |
|
General and administrative expenses |
(1.7 |
) |
(1.7 |
) |
|
Other income and operating expenses |
0.5 |
|
(0.4 |
) |
|
CURRENT OPERATING INCOME |
2.2 |
|
1.2 |
|
|
% of turnover |
20.4 |
% |
13.9 |
% |
The good performance of the business is
reflected in a gross profit increase of 10%. It amounts to 8.1
million euros and represents 75% of turnover.
- Research and development costs
The Group favors the Atari and RollerCoaster
Tycoon franchises, with a strong focus on mobile platforms and
simulation/strategy games.
- Marketing and commercial expenses
Marketing and commercial expenses amounted to
1.5 million euros for the first half of the 2018/2019 financial
year. As of September 30, 2017, they amounted to 1.9 million euros.
The decrease is attributable to the optimization of RollerCoaster
Tycoon Touch's marketing expenses and the existence of launch costs
in the prior period.
- General and administrative expenses
General and administrative expenses were stable
at 1.7 million euros as of September 30, 2018, compared to 1.7
million euros as of September 30, 2017. This amount reflects the
focus on maintaining a low fixed cost base.
- Other income and operating expenses
As of September 30, 2018, other net operating
income amounted to +0.5 million euros, a contribution resulting
from the sale of the Alone in the Dark and Act of War franchises to
THQ Nordic. As of September 30, 2017, other net operating income
amounted to -0.4 million euros and corresponded to write-downs of
receivables to cover a possible risk of non-collection.
The Atari Group generated a current operating
profit of 2.2 million euros in the first half of 2018/2019,
compared to a profit of 1.2 million euros in the first half of
2017/2018. As of September 30, 2018, this operating profit
represents 20% of turnover compared with 14% in the previous
year.
Net income for
the first half of 2018/2019: +1.8 million euros
|
Summary income statement (in millions of
euros) |
09.30.2018 |
|
09.30.2017 |
|
| |
CURRENT OPERATING INCOME |
2.2 |
|
1.2 |
|
| |
Restructuring costs |
- |
|
- |
|
| |
Other operating income and expenses |
(0.2 |
) |
0.1 |
|
| |
OPERATING INCOME |
2.0 |
|
1.3 |
|
| |
Cost of financial debt |
(0.0 |
) |
(0.1 |
) |
| |
Other financial income and expenses |
0.0 |
|
(0.1 |
) |
| |
Income tax |
(0.2 |
) |
- |
|
| |
NET RESULT OF CONTINUED ACTIVITIES |
1.8 |
|
1.1 |
|
| |
Net income from discontinued operations |
- |
|
- |
|
| |
NET RESULT OF CONSOLIDATED SET |
1.8 |
|
1.1 |
|
| |
Share attributable to the Group |
1.8 |
|
1.1 |
|
| |
Share attributable to minority interests |
0.0 |
|
0.0 |
|
The cost of financial debt is nil given the net
cash position of the Atari Group.
Given its results and tax loss carryforwards,
the Group recorded a tax expense limited to 159 K€ for its US
entities.
In France, deferred tax assets on tax loss
carryforwards not recognized as of September 30, 2018 are in the
order of 245 million euros subject to the usual restrictions on
their use, i.e. approximately 0.96 euros per existing share as of
September 30, 2018, excluding treasury shares.
In the United States, tax loss carryforwards
amount to nearly 600 million US dollars, representing a potential
tax saving in the order of 200 million US dollars subject to the
usual restrictions in their use, or approximately 0.78 US dollars
per existing share as of September 30, 2018, excluding treasury
shares.
The amount of tax loss carryforwards charged to
income for the year ended March 31, 2018 amounted to $2.5 million
for US entities and 0.7 million euros for French entities.
The net result for the first half of 2018/2019
showed a profit of 1.8 million euros, without any non-recurring
items, an improvement of nearly 60% on the profit generated for the
period ended September 30, 2017 which showed a profit of 1.1
million euros.
Summary
balance sheet as of September 30, 2018
|
ASSETS (in millions of euros) |
09.30.2018 |
03.31.2018 |
|
Intangible assets |
11.7 |
9.2 |
|
Property, plant and equipment |
0.0 |
0.0 |
|
Non-current financial assets |
5.2 |
4.9 |
|
Deferred tax assets |
0.9 |
0.5 |
|
NON-CURRENT ASSETS |
17.8 |
14.6 |
|
Inventories |
0.2 |
0.2 |
|
Trade receivables |
6.5 |
3.9 |
|
Current tax assets |
0.0 |
0.0 |
|
Other current assets |
0.5 |
0.4 |
|
Cash and cash equivalents |
8.8 |
3.1 |
|
Assets held for sale |
- |
- |
|
CURRENT ASSETS |
16.0 |
7.6 |
|
TOTAL ASSETS |
33.8 |
22.2 |
|
EQUITY & LIABILITIES (in millions of
euros) |
09.30.2018 |
03.31.2018 |
|
|
Capital |
2.6 |
2.4 |
|
|
Share premium |
7.9 |
11.6 |
|
|
Consolidated reserves |
10.9 |
(2.5 |
) |
|
Net income Group share |
1.8 |
2.3 |
|
|
Shareholders' equity as Group share |
7.8 |
7.4 |
|
|
Minority interests |
0.0 |
0.0 |
|
|
SHAREHOLDERS’ EQUITY OF CONSOLIDATED
SET |
23.1 |
13.8 |
|
|
Provisions for non-current contingencies and losses |
0.0 |
0.0 |
|
|
Non-current financial liabilities |
0.6 |
0.6 |
|
|
Deferred tax liabilities |
- |
- |
|
|
Other non-current liabilities |
- |
- |
|
|
NON-CURRENT LIABILITIES |
0.7 |
0.7 |
|
|
Provisions for current contingencies and losses |
0.1 |
0.4 |
|
|
Current financial liabilities |
- |
- |
|
|
Trade payables |
5.4 |
5.4 |
|
|
Current tax liabilities |
- |
- |
|
|
Other current liabilities |
4.6 |
2.0 |
|
|
CURRENT LIABILITIES |
10.1 |
7.8 |
|
|
TOTAL EQUITY AND LIABILITIES |
33.8 |
22.2 |
|
The balance sheet highlights the actual
deleveraging of the Atari Group, with good working capital
management. Shareholders’ equity, which is positive, continued to
strengthen over the period.
Publication of
final accounts / Audit opinion
The half-year financial statements, including
the notes and the update of the Registration Document, will be
published after finalization by the auditors of all the required
limited review procedures.
The qualification as to the valuation of
Infinity Networks Limited Shares (0.4 M€) in the Statutory
Auditors' report for the year ended March 31, 2018 is maintained as
of September 30, 2018.
The qualification as to the valuation of the
receivable vis-à-vis Infinity Networks Limited (0.7 M€) in the
Statutory Auditors' report for the year ended March 31, 2018 is no
longer maintained as of September 30, 2018, since this receivable
no longer appears in the consolidated financial statements due to
restatements related to the introduction of IFRS15 in the accounts
for the period ended September 30, 2018.
Outlook for
2018/2019
The Group reiterates its objectives for the
2018/2019 financial year which will end on March 31, 2019. For this
financial year, the Group set itself the objectives of growing the
business, improving profitability and cash generation, all within a
seasonality similar to that of the 2017/2018 financial year.
The second half of the year will be
marked by several important projects, in particular:
Atari Games:
- Continued success of RollerCoaster Tycoon Touch, with
restaurant attractions (Jonathan Foodgod), Halloween events and new
water parks;
- RollerCoaster Tycoon Joyride for PlayStation 4 has been
approved in Europe and the United States by Sony®. The digital
version was released on October 26, 2018 in Europe (distributor:
Bigben Interactive). The digital and physical versions were
released on December 13, 2018 in the United States (distributor:
AtGames). This game offers Virtual Reality features.
- Launch of the mobile game Citytopia: this original simulation
game using the RollerCoaster Tycoon Touch engine was released in
Australia and New Zealand in December 2018 as planned and is
launched gradually, country by country;
- Food Truck Frenzy, a mobile game in partnership with Jonathan
Foodgod, is currently being reviewed by the latter and will be
released gradually over the coming weeks.;
- Days of Doom: developed in partnership with Phosphor Studios,
this is one of the first survival games on mobile platforms. It was
released as a private beta and is scheduled for worldwide release
on February 19, 2019 as planned; this game will allow players to
manage a vulnerable town in a zombie-infested world, strengthening
their defenses to survive onslaughts of increasingly powerful
hordes of zombies;
- Ninja Golf: this game developed in partnership with Alpha Dog
Studios will be released worldwide on February 26, 2019; it is
based on the famous original Atari game which manages to combine
touch-based golf with endless running beat’em up elements;
- RollerCoaster Tycoon Adventures for Nintendo Switch® is the
first version of the franchise on this flagship platform. The game
was released as announced in November 2018 in the first European
countries (distributor: Bigben Interactive) and was released in
advance in the United States during the week of December 10, 2018
(distributor: AtGames).
- Positive impact of a settlement agreement with a US company
($1.1 million earnings contribution), it being noted that the Atari
Group has initiated proceedings against 3 other similar
companies.
Atari Casino:
- Continued development of this new activity for which the Group
is in the process of acquiring expertise;
- Priority to investments and partnerships.
Atari VCS:
- Establishment of distribution channels and operations;
- Atari VCS has no impact on the 2018-19 financial year ended
March 31, 2019, and will contribute starting in the 2019-2020
fiscal year.
Atari Partners:
- Continued work on the blockchain platform. This platform
project, whose long-term vision and strategic importance for the
Group are undeniable, remains in the short-term subject to recent
changes in the economic and financial environment of the blockchain
industry as well as the evolution of the regulatory
environment.;
- Very selective review of partnership opportunities.
There are always inherent uncertainty in
achieving objectives, the operating budget and the financing plan,
and the non-realization of assumptions may have an impact on the
valuation of the Group's assets and liabilities.
About Atari
Atari, comprised of Atari SA and its
subsidiaries, is a global interactive entertainment and
multiplatform licensing group. The true innovator of the video
game, founded in 1972, Atari owns and/or manages a portfolio of
more than 200 games and franchises, including globally known brands
such as Asteroids®, Centipede®, Missile Command® and Pong®. From
this important portfolio of intellectual properties, Atari delivers
attractive online games for smartphones, tablets, and other
connected devices. Atari also develops and distributes interactive
entertainment for Microsoft, Sony and Nintendo game consoles. Atari
also leverages its brand and franchises with licensing agreements
through other media, derivative products and publishing. For more
information: www.atari.com and www.atari-investisseurs.fr Atari
shares are listed in France on Euronext Paris (Compartment C, Code
Isin FR0010478248, mnémo ATA) and are eligible for the Nasdaq
International program in the United States (OTC - Ticker PONGF).©
2018 Atari Interactive, Inc. All rights reserved. The Atari brand
and the Atari logo are trademarks of Atari Interactive, Inc.
RollerCoaster Tycoon® © 2018 Chris Sawyer.
RollerCoaster Tycoon® is a registered trademark
of Chris Sawyer. All other trademarks are the property of their
respective owners.
Contacts
Atari - Philippe Mularski,
CFO
Calyptus - Marie Calleux Tel +33 1 83 64 61 57 -
pm@atari-sa.com
Tel + 33 1 53 65 68 68 – atari@calyptus.net
APPENDIX:
IMPACT OF THE FIRST APPLICATION OF IFRS
15
As of April 1, 2018, the Group has for the first
time applied IFRS 15 - Revenue from Contracts with Customers. The
latter replaces IAS 18 - Revenue, and the corresponding
interpretations.
The principle of the new standard is as follows:
Revenue recognition should reflect the transfer of goods and
services promised to customers for an amount equal to the
remuneration expected to be payable by the seller.
In addition, the transfer of goods and services
is supposed to reflect the notion of transfer of control to the
customer. It can occur on a given date or over a period of
time.
IFRS 15 also introduces new revenue recognition
principles, including the identification of performance obligations
and the allocation of the transaction price for multi-component
contracts. It also modifies the analyzes to be carried out on the
notions of agent and principal, as well as on the consideration of
variable counterparties.
For the Group, the main change introduced by the
new standard concerns revenues associated with sales of
intellectual property licenses.
These licenses transfer to the customer:
- a right to use the intellectual property as it exists at the
precise moment when the license is granted (static license),
- a right of access to the intellectual property as it exists
throughout the period covered by the license (dynamic
license).
Revenue is recognized when the performance
obligation promised in the contract is satisfied (static license)
or as it is satisfied (dynamic license), that is, when the seller
has transferred the risks and benefits related to the right of
use/access of intellectual property and that the customer has taken
control of the use of/access to the license. Thus, the turnover of
static licenses is recognized at the precise moment when the
license is granted (mode known as “Point in time”) and when the
customer can use and withdraw the benefits of the license. The
turnover of dynamic licenses is progressively recognized (so-called
“Over time”), throughout the license term from the beginning of the
period in which the customer will be able to use and benefit from
the license
The Group has chosen to apply the new standard
retrospectively to contracts that have not been completed as of
April 1, 2018, by additionally accounting for the cumulative effect
of the initial application at the date of first application as an
adjustment of the opening date of April 1, 2018.
For the Group, game license agreements are
accounted for using "Point in time” and there is no difference in
accounting treatment between IAS 18 and IFRS 15. Brand licensing
agreements are accounted "Over time".
The following table presents the adjustments
recognized for each balance sheet item. Items that have not been
affected by these normative changes have not been included
therefore, subtotals and totals can not be calculated from the
figures provided.
|
(Numbers in millions of euros) |
03.31.2018 |
|
RestatementsIFRS 15 |
04.01.2018 |
|
|
Balance Sheet Assets |
|
|
|
|
Deffered tax assets |
0.5 |
|
0.4 |
|
0.9 |
|
|
Sub-total Non-current assets |
14.6 |
|
0.4 |
|
15.0 |
|
|
Trade receivables |
3.9 |
|
(0.6 |
) |
3.3 |
|
|
Sub-total Current
assets |
7.6 |
|
(0.6 |
) |
6.9 |
|
|
Total assets |
22.2 |
|
(0.3 |
) |
22.0 |
|
|
|
|
|
|
|
Balance sheet Equity and Liabilities |
|
|
|
|
Consolidated reserves |
(2.5 |
) |
(1.0 |
) |
(3.4 |
) |
|
Sub-total Equity |
13.8 |
|
(1.0 |
) |
12.8 |
|
|
Other current liabilities |
2.0 |
|
0.7 |
|
2.8 |
|
|
Sub-total Current liabilities |
7.8 |
|
0.7 |
|
8.5 |
|
|
Total equity and liabilities |
22.2 |
|
(0.3 |
) |
22.0 |
|
- CP 2018 12 20 Resultats semestriels VLAST_EN