DJ FOCUS ENTERTAINMENT: H1 2023/2024 results: strong growth in revenue and lower profitability
FOCUS ENTERTAINMENT
FOCUS ENTERTAINMENT: H1 2023/2024 results: strong growth in revenue and lower profitability
14-Dec-2023 / 17:45 CET/CEST
Dissemination of a French Regulatory News, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
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Paris, 14 December 2023, 5:45 p.m.
FOCUS ENTERTAINMENT
H1 2023/2024 results: strong growth in revenue and lower profitability
H2 releases of Banishers: Ghosts of New Eden and Expeditions: A MudRunner Game
PARIS, FRANCE - 14 December 2023 - FOCUS ENTERTAINMENT (FR0012419307 - ALFOC) announces its results for the first half
ended 30 September 2023 of the 2023/2024 financial year.
First semester highlights:
. Group revenue up 30%, driven by the back catalogue and the successful launch of several new games,
although tempered by the disappointing launch of Atlas Fallen
. EBITDA totals EUR23.9 million, up EUR5m compared to last year
. Gross margin totals EUR20.7 million and EBITA -EUR1.5 million, down sharply compared to last year, affected
by the disappointment over Atlas Fallen
. Launches of Banishers: Ghosts of New Eden on 13 February 2024 and Expeditions: A MudRunner Game on 5
March 2024
Preamble - change in estimate as at 1 April 2023 to better reflect the overall cost of gaming-related fixed assets and
their lifetime.
FOCUS ENTERTAINMENT has decided to include in the overall cost of fixed assets, in addition to the development
contributions paid to studios, external production expenses directly attributable to games from 1 April 2023. These
external production expenses include, in particular, the costs of localisation, labelling, quality control tests and
any other external service directly linked and necessary for finalising and optimising the development of a game before
its launch.
In addition, FOCUS ENTERTAINMENT has conducted an analysis of the lifetime of its gaming portfolio. Taking into account
the history of games and market trends, the Group has decided to change the amortisation period of intangible assets
related to games so that this period reflects the latest analyses carried out by the Group.
As such, from 1 April 2023, the amortisation period for games has been revised. It is now between 12 and 36 months
depending on the type of game, compared with 24 months previously. This update more accurately reflects the observed
lifetime of the Group's games and enables a better match between amortisation expenses and the income generated by
these assets.
CONSOLIDATED INCOME STATEMENT (half-year ended 30 September 2023) Audited - audit report currently being issued
PUBLISHED Equivalent estimate PUBLISHED
H1 2022
(EURm) H1 2023 2024 2023
(30/09/2023) (30/09/
2022)
Revenue 85.0 100% 85.0 100% 65.5 100%
Gross margin[1] 20.7 24% 21.2 25% 25.1 38%
Production costs (7.2) (9.4) (5.3)
Marketing & sale costs (10.8) (10.8) (4.9)
General and administrative expenses (6.5) (6.5) (4.4)
Other operating income & expenses (including Video Game Tax Credit/Research Tax Credit) 2.4 2.4 0.5
EBITA[2] (1.5) -2% (3.1) -4% 10.9 17%
Amortisation of goodwill and amortisation of intangible assets identified as part of a (5.9) (5.9) (5.0)
business combination
Net financial income (2.6) (2.6) (0.6)
Non-recurring profit/loss (0.0) (0.0) (0.1)
Income tax (excluding Video Game Tax Credit/Research Tax Credit) (1.1) (1.1) (2.2)
Profit (loss) of investments in associates (0.1) (0.1) 0.0
Consolidated net income (expense) (11.1) -13% (12.8) -15% 3.1 5%
Non-controlling interests (0.4) (0.3) (1.7)
Net income (Group share) (11.5) -14% (13.1) -15% 1.4 2%
EBITA (1.5) -2% (3.1) -4% 10.9 17%
Amortisation and impairment (25.4) (24.8) (8.0)
EBITDA[3] 23.9 28% 21.7 26% 18.9 29% Increase in revenue The Group's revenue is up by 30%. The back catalogue, at EUR58.6 million, up 70%, accounted for 69% of revenue in the first half of the year, driven by the titles launched in the previous financial year, primarily Teenage Mutant Ninja Turtles: Shredder's Revenge, as well as A Plague Tale: Requiem, Atomic Heart, SnowRunner and Insurgency: Sandstorm, launched over three years ago and regularly receiving additional content. There were more games launched during the period than last year (two launches last year in the first half, including Teenage Ninja Turtles: Shredder's Revenge, compared with nine launches in the first half) and these performed well overall, notably Aliens Dark Descent, Warhammer 40,000: Boltgun and Chants of Sennaar. In addition, the successful launch of Train Sim World 4, by the Dovetail Games group (98% owned by Focus since April 2023), showed the benefit of capitalising on strong franchises to generate recurring revenue, a long-term strategy of FOCUS ENTERTAINMENT. However, half-year activity was impacted by the disappointing launch of Atlas Fallen. Excluding the contribution from Dovetail Games and from the other acquisition in the second half of 2022, like-for-like revenue was EUR72.5 million. Over the half-year, 90% of sales were generated through digital partners and 95% internationally. Decline in profitability The Group's gross margin reached EUR20.7 million in the first half of the 2023/2024 financial year, at 24% of revenue, compared with 38% in the first half of 2022/2023. EBITA was -EUR1.5 million, down sharply compared with the first half of the previous year (EUR10.9 million). Disappointment on sales of Atlas Fallen impacted half-year profitability and the large number of launches this semester directly explains the significant increase in amortisations within the gross margin and the raise in gaming marketing costs compared to the same period last year. The Group's structural costs are also up, mainly reflecting the integration of the Dovetail teams into the scope since April 2023, as well as the scope effect of a company acquired in the second half of last year. Amortisation of goodwill and intangible assets identified in connection with acquisitions totalled -EUR5.9 million. Financial income of -EUR2.6 million is mainly due to financial expenses related to debt, compared with -EUR0.6 million over the 2022/2023 reference period, primarily reflecting the increase in the Group's financial debt over the period to EUR126.2 million as at 30 September 2023, compared with EUR83.1 million as at 31 March 2023. Net income, Group share fell to -EUR11.5 million, compared with EUR1.4 million in the first half of 2022/2023. EBITDA reached EUR23.9 million in the first half of 2023/2024, a 28% margin compared with 29% a year earlier. Significant investments supporting the Group's strategy and ambitions The level of investment in games in the first half of 2023/2024 was sustained, reaching EUR44 million compared with EUR37.5 million in the same period last year. This increase in investments, in line with expectations, should be seen in the context of the very ambitious line-up and FOCUS ENTERTAINMENT's emphasis on high-quality games. The Group also continued its strategy of generating recurring revenue by acquiring UK-based Dovetail Games in April 2023, both a developer and publisher, and a benchmark in rail simulation games. Over the period, the Group also paid an earn-out relating to a previous acquisition (recognised as a debt as at 31 March 2023). Debt on the rise but under control, renewed credit lines Cash stood at EUR10.4 million at end-September 2023, compared with EUR72.2 million at end-March 2023. Net debt, including cash and cash equivalents[4], financial debt and earn-outs considered highly probable, was EUR118.5 million, compared with EUR27.3 million at 31 March 2023. In addition, in November 2023, FOCUS ENTERTAINMENT secured EUR30 million in credit lines from the existing banking pool and EUR10 million from BPI. The Group still has a EUR15 million revolving credit facility. In the second half of the year, the Group plans to mobilise EUR25 million due to the postponements of Banishers: Ghosts of New Eden and Warhammer 40 000: Space Marine 2, while investments in the line-up continue. Outlook . H2 2023/2024 Revenue for Q3 2023/2024 will be published on 18 January 2024. No major game releases are
expected this quarter. Also note that this quarter will suffer from an unfavourable basis of comparison, as the third quarter of last year benefited from the successful launches of A Plague Tale: Requiem and Evil West. The final quarter of the 2023/2024 financial year will see the release of Banishers: Ghosts of New Eden, on 13 February 2024, on PlayStation 5, Xbox Series X|S and PC. This new franchise, co-owned with DON'T NOD, has already been praised for its narrative qualities and gameplay. An ambitious new trailer was unveiled at the Game Awards ceremony. Expeditions: A MudRunner Game, by Saber Interactive, will be launched on 5 March 2024 on PS5, PS4, XSX, Xbox One and PC. This new opus, developed by the creators of SnowRunner for the more than 15 million players worldwide, will revamp the gameplay of the famous MudRunner off-road experience. The next DLC (downloadable content) for Atomic Heart will be released on 6 February 2024. Regarding Atlas Fallen, the contribution to revenue will be very limited in the second half of 2023/2024 - an enhanced version and new content will be delivered in the first half of 2024/2025. While some players in the video game industry have been engaged in a process of reducing costs and staff numbers for several months, FOCUS ENTERTAINMENT will focus on strict control of recruitments. . 2024/25 financial year The 2024/2025 financial year will see the release of the improved version of Atlas Fallen in the first half of the year, as well as live-ops that will be offered to players throughout the year in Expeditions: A MudRunner game. Void Crew will receive updates, Atomic Heart will get additional content and lastly, The Arcade Crew, Dotemu's publishing label, will continue early access to Cross Blitz. For Dovetail Games, the year will see the launch of several new games and the continuation and growth of the award-winning Train Sim World and Train Simulator Classic series thanks to the delivery of additional content. Meanwhile, BlackMill will continue investing in Isonzo with a content-rich roadmap. Regarding new titles, the release date of the highly anticipated Warhammer 40,000: Space Marine 2, the iconic Games Workshop licence, was announced at the Game Awards on 9 September 2024. FOCUS ENTERTAINMENT intends to release a game of the highest quality that exceeds the expectations of the franchise's countless fans. At this stage, the game is on more than a million wish lists. The year will benefit from other major titles, including John Carpenter's Toxic Commando, developed by Saber Interactive, blending humour, chills and action from 80s Hollywood cinema. To continue enriching the game release schedule over the coming years, FOCUS ENTERTAINMENT will continue its strategy of IP and co-IP development partnerships, as already announced with the Afterburner studio, and revamps, such as with Asobo for a major new project. "The Group will continue its controlled and selective investment policy to support the deployment of its ambitious line-up for the coming years. The execution of this roadmap, backed by a proactive strategy of moving up the value chain, is driven by a Management and teams that are fully mobilised and passionate. All these strengths enable us to reassert our confidence, with the aim of putting the Group on a lasting performance trajectory in terms of growth and profitability," says Fabrice Larue, Chairman and CEO of FOCUS ENTERTAINMENT. Next release: Q3 2023/24 revenues: 18 January 2024 after the market closes About FOCUS ENTERTAINMENT FOCUS ENTERTAINMENT is one of the European leaders in video game publishing and development. Publisher of strong licenses such as A Plague Tale, Atomic Heart, Evil West, The Surge and SnowRunner, its mission is to support leading French and international studios in the development, production monitoring, marketing, sales and financing of their projects. FOCUS ENTERTAINMENT generates more than 95% of its sales internationally. The Group generated turnover of EUR194.1 million in 2022-2023. All financial information pertaining to FOCUS ENTERTAINMENT can be found at www.focusent.com For more information follow us on social media Twitter - LinkedIn - Instagram - YouTube - Facebook
Contacts
Investor Relations Press Relations
Laure d'Hauteville Clémence Bigeon
Tel: + 33 (0) 1 55 26 85 00 Tel: + 33 (0) 1 55 26 85 00
Email: IR@focusent.com Email: Clemence.BIGEON@focusent.com
Mathilde Guillemot Michael Scholze
Tel.: +33 (0) 1 78 94 87 35 Tel.: +33 (0) 1 56 88 11 14
Email: Email: michael.scholze@actifin.fr
mathilde.guillemot@seitosei-actifin.com APPENDICES - FRENCH ACCOUNTING STANDARDS Audited INCOME STATEMENT - audit report currently being issued
PUBLISHED Equivalent estimate PUBLISHED
H1 2023 2024 H1 2022 2023
(EURm) 30/09/2023 Published
30/09/2022
Revenue 85.0 100% 85.0 100% 65.5 100%
Cost of sales (38.8) (38.8) (32.9)
Game development costs (25.4) (24.9) (8.7)
Production costs (7.2) (9.4) (5.3)
Marketing & sale costs (10.8) (10.8) (4.9)
General and administrative expenses (6.5) (6.5) (4.4)
Other operating income and expenses 0.2 0.2 0.6
Operating result before amortisation of (3.5) -4% (5.2) -6% 9.7 15%
goodwill
Amortisation of goodwill (5.5) (5.5) (3.7)
Income from consolidated companies (9.0) -11% (10.6) -13% 6.0 9%
Net financial income (2.6) (2.6) (0.6)
Non-recurring profit (loss) (0.0) (0.0) (0.1)
Income tax 0.5 0.5 (2.2)
Profit (loss) of investments in associates (0.1) (0.1) (0.0)
Consolidated net income (expense) (11.1) -13% (12.8) -15% 3.1 5%
Non-controlling interests (0.4) (0.3) (1.7)
Net income (Group share) (11.5) -14% (13.1) -15% 1.4 2% Audited BALANCE SHEET - audit reports currently being issued
PUBLISHED Equivalent estimate PUBLISHED
(EURm) 30/09/2023 31/03/
ASSETS 2023
Intangible fixed assets 165.0 255.5 118.3
o/w Goodwill 92.2 92.2 71.8
Property, plant and equipment 1.7 1.7 0.7
Financial assets 1.9 1.9 1.2
FIXED ASSETS 260.9 259.2 192.0
Inventories and work in progress 1.0 1.0 0.9
Trade receivables and related accounts 23.3 23.3 27.4
Other receivables, prepayments and 25.7 25.7 14.2
accrued income
Financial futures and tokens held 0.6 0.6 0.5
Cash 10.4 10.4 72.2
CURRENT ASSETS 61.1 61.1 115.1
TOTAL ASSETS 322.0 320.3 307.1
PUBLISHED Equivalent estimate PUBLISHED
(EURm) 30/09/2023 31/03/
LIABILITIES 2023
Capital 7.8 7.8 7.8
Additional paid-in capital 90.3 90.3 90.3
Reserves 43.0 43.0 35.0
Profit/Loss (11.5) (13.2) 7.3
SHAREHOLDERS' EQUITY (GROUP SHARE) 129.5 127.9 140.3
MINORITY SHAREHOLDINGS EQUITY 6.3 6.3 5.7
Provisions 0.8 0.8 0.8
Borrowings and financial liabilities 126.2 126.2 83.1
Current trade liabilities 25.5 25.5 35.2
Forward financial instruments - - 0.0
Other payables, accruals and deferred 33.6 33.6 42.0
income
TOTAL LIABILITIES 322.0 320.3 307.1 CASH FLOW STATEMENT - audited - audit reports currently being issued
PUBLISHED Equivalent estimate PUBLISHED
Cash flow statement H1 2023/24 31/03/2023
(in millions of euros) 30/09/2023
Consolidated net income (expense) (11.1) (12.8) 10.3
Elimination of depreciation, amortisation and provisions 31.4 30.9 41.1
Elimination of capital gains or losses on disposals 0.0 0.0 0.1
Elimination of financial expenses 2.6 2.6 2.8
Acquisition of intangible fixed assets (44.0) (44.0) (65.1)
Elimination of change in deferred taxes 0.8 0.8 (0.3)
Change in WCR related to business operations (20.9) (18.7) 13.1
Cash flow from operating activities (41.2) (41.2) 2.1
Acquisitions of property, plant and equipment (tangible and financial assets) (1.0) (1.0) (0.4)
Disposals of property, plant and equipment and intangible assets (0.0) (0.0) (0.0)
Impact of changes in scope (56.5) (56.5) (5.5)
Cash flow from investment activities (57.4) (57.4) (5.9)
Dividends paid to minority shareholders (0.4) (0.4) -
Capital increases (reductions) 0.7 0.7 0.0
Issue of borrowings net of repayments 36.7 36.7 14.2
Net sale (purchase) of treasury shares (1.0) (1.0) (0.9)
Cash flow from financing activities 36.1 36.1 13.4
Effect of exchange rate fluctuation 0.0 0.0 0.0
CHANGE IN CASH POSITION (61.7) (61.7) 9.6
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[1] The Group defines its gross margin as the difference between sales, cost of sales and game development costs. It does not include the amortisation charge for intangible assets identified as part of a business combination. [2] The Group defines Adjusted EBIT ("EBITA") as recurring EBIT before goodwill amortisation and amortisation of intangible assets identified in a business combination, plus the research tax credit/video games tax credit. [3] EBITDA ("Earnings Before Interest, Taxes, Depreciation and Amortisation") is defined as EBITA before amortisation and operating provisions. [4] Cash and cash equivalents represent cash and treasury shares, up to a limit of 5% of the total number of shares in the Company, which are intended exclusively as consideration for acquisitions.
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Regulatory filing PDF file File: Focus Entertainment_H1-202324_EN
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Language: English
Company: FOCUS ENTERTAINMENT
11 rue de Cambrai, bâtiment 28, Le beauvaisis, Parc Pont de Flandre
75019 Paris
France
Internet: www.focus-entmt.com
ISIN: FR0012419307
Euronext Ticker: ALFOC
AMF Category: Inside information / News release on accounts, results
EQS News ID: 1797345
End of Announcement EQS News Service
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1797345 14-Dec-2023 CET/CEST
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December 14, 2023 11:45 ET (16:45 GMT)
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