SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13A-16 OR 15D-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly period ended September 30, 1999
EIDOS plc
Wimbledon Bridge House
1, Hartfield Road
Wimbledon, London
SW19 3RU United Kingdom
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F
Form 20-F X Form 40-F
--------- ---------
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes No X
--------- ---------
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b):
82 - N/A
---------
<PAGE>
EIDOS plc
Form 6-K
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Consolidated Financial Statements (Unaudited):
Consolidated Balance Sheets as of September 30 and March 31, 1999 2
Consolidated Statements of Operations for the three and six months ended September 3
30, 1999
Statements of Recognised Gains & Losses for the three and six months ended 4
September 30, 1999 and 1998
Consolidated Statements of Cash Flows for the six months ended September 30, 1999 5
and 1998
Consolidated Statements of Changes in Shareholders' Equity for the six months ended 6
September 30, 1999
Notes to Unaudited Consolidated Financial Statements 7
Management's Discussion and Analysis of Financial Condition and Results of Operations for the 11
three and six months ended September 30, 1999
Exhibits
The following documents were filed as part of this Form 6-K:
Press release dated November 15, 1999 - Investment in Maximum
Holdings Inc E-1
UK press release dated November 24, 1999 - interim results for
the six months ended 30 September 1999 E-2
US press release dated November 24, 1999 - interim results for
the three and six months ended September 30, 1999 E-3
</TABLE>
<PAGE>
EIDOS plc
Consolidated Balance Sheets Reconciled to US GAAP
<TABLE>
<CAPTION>
UK GAAP September 30, 1999 March 31, 1999
------- (unaudited)
------------------------ --------------------
<S> <C> <C>
L000 L000
Fixed assets
Intangible assets (net of amortisation of L10,060,000;
March 31, 1999, L4,070,000) 35,041 25,939
Tangible assets 5,021 5,668
Investments 14,166 12,164
-------------- --------------
Total fixed assets 54,228 43,771
-------------- --------------
Current assets
Stocks 5,762 5,666
Debtors: amounts falling due within one year 54,488 57,737
Cash at bank and in hand 3,165 48,220
-------------- --------------
Total current assets 63,415 111,623
Creditors: amounts falling due within one year (49,090) (58,049)
-------------- --------------
Net current assets 14,325 53,574
-------------- --------------
Total assets less current liabilities 68,553 97,345
-------------- --------------
Creditors due after more than one year (133) (30,813)
-------------- --------------
Net assets 68,420 66,532
============== ==============
Capital and reserves
Called up share capital 2,000 1,728
Share premium account 77,769 50,165
Other reserves 707 707
Profit and loss account (12,056) 13,932
-------------- --------------
Shareholders' funds 68,420 66,532
============== ==============
Reconciliation to US GAAP
Shareholders' funds (prepared under UK GAAP) 68,420 66,532
Goodwill 19,052 19,449
Less in process research and development (2,368) (2,368)
Less amortisation (17,000) (16,856)
Deferred tax 1,993 1,993
-------------- --------------
Shareholders' funds in accordance with US GAAP 70,097 68,750
============== ==============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
EIDOS plc
Unaudited Consolidated Statements of Operations Reconciled to US GAAP
<TABLE>
<CAPTION>
Three months ended Six months ended
September 30, September 30,
------------------------- -------------------------
<S> <C> <C> <C> <C>
UK GAAP 1999 1998 1999 1998
- -------
----------- --------- ----------- ---------
L000 L000 L000 L000
Group turnover - continuing operations 27,250 21,785 44,060 47,586
Costs of goods sold (11,346) (11,325) (19,692) (22,503)
--------- --------- --------- ---------
Gross profit 15,904 10,460 24,368 25,083
--------- --------- --------- ---------
Selling and marketing (9,463) (6,593) (18,330) (12,451)
Research and development (11,779) (9,064) (23,558) (16,129)
General and administrative
Goodwill amortisation (3,476) - (5,990) -
Other (7,246) (6,122) (13,415) (10,123)
---------- ---------- --------- ---------
Operating expenses (31,964) (21,779) (61,293) (38,703)
---------- ---------- --------- ---------
Group operating loss - continuing operations (16,060) (11,319) (36,925) (13,620)
Amounts written off investments - (5,250) - (5,250)
Net interest and similar charges (897) (77) (982) (58)
---------- ---------- --------- ---------
Loss on ordinary activities before tax (16,957) (16,646) (37,907) (18,928)
Taxation 3,998 4,265 10,913 5,132
---------- ---------- --------- ---------
Net loss after tax (prepared under UK GAAP) (12,959) (12,381) (26,994) (13,796)
---------- ---------- --------- ---------
Loss per share (67.0p) (72.4p) (146.2p) (80.6p)
Reconciliation to US GAAP
Net loss after tax (prepared under UK GAAP) (12,959) (12,381) (26,994) (13,796)
Amortisation of goodwill 135 (1,647) (144) (3,276)
Amounts written off investments - 5,250 - 5,250
--------- --------- --------- ---------
Net loss in accordance with US GAAP (12,824) (8,778) (27,138) (11,822)
--------- --------- --------- ---------
Loss per share in accordance with US GAAP
Basic and diluted (66.3p) (51.3p) (147.0p) (69.1p)
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
EIDOS plc
Unaudited Consolidated Statements of Total Recognised Gains and Losses
<TABLE>
<CAPTION>
Three months ended Six months ended
September 30, September 30,
UK GAAP 1999 1998 1999 1998
- -------
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
L000 L000 L000 L000
Net loss after tax (12,959) (12,381) (26,994) (13,796)
Currency translation differences on foreign currency net
investments 939 94 609 166
----------- ----------- ----------- -----------
Total gains and losses in the period (12,020) (12,287) (26,385) (13,630)
----------- ----------- ----------- -----------
US GAAP
Net loss (12,824) (8,778) (27,138) (11,822)
Other comprehensive income:
Foreign currency translation adjustments 939 94 609 166
Unrealised depreciation of investments - (5,250) - (5,250)
----------- ----------- ----------- -----------
Total comprehensive net loss (11,885) (13,934) (26,529) (16,906)
----------- ----------- ----------- -----------
Cumulative translation differences
Balance brought forward (529) 462 (199) 390
Before tax translation differences 1,423 150 923 266
Tax benefit/(expense) (484) (56) (314) (100)
----------- ----------- ----------- -----------
After tax translation differences 939 94 609 166
----------- ----------- ----------- -----------
Balance carried forward 410 556 410 556
----------- ----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
EIDOS plc
Unaudited Consolidated Statements of Cash Flow
<TABLE>
<CAPTION>
Six months ended Six months ended
September 30, 1999 September, 30 1998
L000 L000
---------------- ----------------
<S> <C> <C>
Net cash outflow from operating activities (31,229) (6,554)
---------------- ----------------
Returns on investments and servicing of finance
Interest received 528 1,304
Bond interest paid (652) (951)
Interest paid on finance leases (26) (82)
Other interest paid (587) (208)
---------------- ----------------
(737) 63
---------------- ----------------
Taxation
Overseas tax paid (6,225) (6,316)
---------------- ----------------
Capital expenditure and financial investment
Purchase of tangible fixed assets (1,053) (1,387)
Sale of tangible fixed assets 3 70
Purchase of other investments - (1,498)
---------------- ----------------
(1,050) (2,815)
---------------- ----------------
Acquisitions and disposals
Purchase of subsidiary undertakings (14,327) -
Purchase of associated undertakings (17,728) -
---------------- ----------------
(32,055) -
---------------- ----------------
Net cash outflow before financing (71,296) (15,622)
Financing
Issue of ordinary share capital 2,317 3
Repayment of principal under finance leases (182) (420)
---------------- ----------------
2,135 (417)
---------------- ----------------
Decrease in cash in the period (69,161) (16,039)
================ ================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
EIDOS plc
Unaudited Consolidated Statement of Changes in Shareholders' Equity
For the six months ended September 30, 1999
<TABLE>
<CAPTION>
L000 (except share numbers) Ordinary shares Share Profit
premium Other and loss
UK GAAP No. of shares Amount account reserves account Total
------- -------------- ----------- ----------- --------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Balance as at April 1, 1999 17,282,280 1,728 50,165 707 13,932 66,532
Loss for the period - - - - (26,994) (26,994)
Translation adjustment - - - - 609 609
Arising on exercise of share options 388,451 39 2,278 - - 2,317
Arising on conversion of bond 2,337,294 233 25,326 - - 25,559
Goodwill written off on associated companies - - - - 397 397
-------------- ----------- ----------- --------- ------------ ----------
Balance as at September 30, 1999 20,008,025 2,000 77,769 707 (12,056) 68,420
-------------- ----------- ----------- --------- ------------ ----------
US GAAP
Balance as at April 1, 1999 17,282,280 1,728 79,691 707 (13,376) 68,750
Loss for the period - - - - (27,138) (27,138)
Translation adjustment - - - - 609 609
Arising on exercise of share options 388,451 39 2,278 - - 2,317
Arising on conversion of bond 2,337,294 233 25,326 - - 25,559
---------------- ----------- ----------- --------- ------------ ----------
Balance at September 30, 1999 20,008,025 2,000 107,295 707 (39,905) 70,097
---------------- ----------- ----------- --------- ------------ ----------
</TABLE>
Notes:
1. The accompanying notes are an integral part of these consolidated financial
statements.
2. The UK GAAP reserves at April 1, 1999 have been restated to reflect the
reclassification of the goodwill reserve required by Financial Reporting
Standard No. 10.
<PAGE>
EIDOS plc
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
The financial statements have been prepared in accordance with
applicable Accounting Standards in the United Kingdom.
a. Unaudited results
The interim consolidated financial statements are unaudited. In the
opinion of management, all adjustments considered necessary to present
fairly the consolidated financial position, results of operations and
cash flows for such interim periods have been made. In the opinion of
management, the unaudited interim consolidated financial statements
have been prepared on a basis consistent with Eidos' audited
consolidated financial statements at March 31, 1999.
b. Loss per share
The loss per share is calculated in accordance with Financial Reporting
Standard No.14 and based on a weighted average number of ordinary
shares in issue of 19,347,954 and 18,463,496 for the three and six
months ended September 30, 1999 respectively (1998: 17,110,873 and
17,110,856). None of the potential ordinary shares are dilutive and
hence a separate fully diluted loss per share is not given.
The weighted average number of shares used to calculate the basic
earnings per share under U.S. GAAP is the same as for U.K. GAAP.
c. Summary of differences between U.K. GAAP and U.S. GAAP
A summary of the most significant differences applicable to Eidos plc
and its subsidiaries (Eidos) is set out below:
(1) Business combinations
Under U.S. GAAP, goodwill arising on acquisitions accounted for under
the purchase method is amortized over the estimated useful life of the
goodwill, with amortized amounts being included in general and
administrative expenses. Each of the Company's acquisitions has been
accounted for using the purchase method for U.S. GAAP purposes. Each of
the businesses acquired by the Company was involved in the development
of computer games software. The Company acquired such businesses for
their established names in the computer games software market, for the
experience of their personnel in the development of computer games
software, and for an aggregate of in excess of 25 games (together with
underlying technologies) that were under development by or on behalf of
such businesses. Upon review of the acquired companies' technology, the
Company determined that a portion of such technology had neither
reached technological feasibility nor had alternative future uses and
that completion of the games under development would require
substantial additional effort and expenditure by the Company.
<PAGE>
EIDOS plc
Notes to Unaudited Consolidated Financial Statements continued.../
Accordingly, for U.S. GAAP purposes, the Company treated an aggregate
of L24.4 million as in-process research and development, all of
which was expensed in the periods in which the related acquisitions
were completed (fiscal year 1996: L8.2 million, fiscal year 1997:
L13.8 million and fiscal year 1999: L2.4 million).
The Company also has recorded L65.2 million of goodwill for U.S.
GAAP purposes in connection with acquisitions (fiscal year 1996:
L7.4 million, fiscal year 1997: L11.1 million, fiscal year
1998: L4.0 million fiscal year 1999: L26.9 million and
fiscal year 2000: L15.8m). The Company recognizes the fast
changing industry in which it is involved and believes the remaining
goodwill has a useful life of 3 years.
Under U.K. GAAP, goodwill arising on consolidation of acquisitions
(which represents the excess of the fair value of the consideration
paid in the acquisition over the fair value of the identifiable net
assets acquired) prior to April 1, 1998 was written-off immediately
against related reserves, and had no impact upon the Company's
statement of operations until disposal. Goodwill arising after April 1,
1998 is being capitalized and amortized in a method similar to U.S.
GAAP; however there is no charge for in-process research and
development. The Company is therefore recording different amounts of
capitalized goodwill and amortization under U.K. GAAP than it is under
U.S. GAAP. Currently the amortization charge under U.S. GAAP exceeds
that under U.K. GAAP because of the charges for companies acquired
prior to April 1, 1998. It is anticipated that in the future the
difference will decrease and eventually the U.K. GAAP charge will
exceed the U.S. GAAP charge because of the one-off in-process research
and development charges.
Additionally U.K. GAAP requires that on subsequent disposal or closure
of a previously acquired business, any goodwill previously taken
directly to shareholders' equity is reflected in the income or loss on
disposal. Under U.S. GAAP the appropriate balance to be written off on
the disposal of the business is the remaining unamortized balance of
goodwill.
For acquisitions prior to April 1, 1998, the benefit of acquired tax
losses, as they are recognised in periods subsequent to the
acquisition, are credited to goodwill for U.S. GAAP purposes and
credited to income under U.K. GAAP. There is no difference in treatment
for acquisitions after April 1, 1998.
(2) Deferred taxation
U.K. GAAP requires that no provision for deferred taxation should be
made if there is reasonable evidence that such taxation will not be
payable within the foreseeable future. U.S. GAAP requires full
provision for deferred taxation liabilities, and permits deferred tax
assets to be recognised if their realisation is considered to be more
likely than not.
(3) Investments
Unlike U.K. GAAP, which recognises gains and losses in the periodic
performance statements; U.S. GAAP requires unrealised changes in the
value of listed investments to be recognised as a separate component of
shareholders' equity until realised.
Eidos has an equity investment in Opticom ASA, a Norwegian listed
company. This is shown in the balance sheet at cost (L11.2
million). The market value at September 30, 1999 was L27.7
million.
<PAGE>
2. Segmental analysis
The analysis by class of business of turnover, loss before tax and assets for
Eidos on a consolidated basis is given below.
<TABLE>
<CAPTION>
Turnover Loss before taxation Gross assets
---------------------------------------------------------------------------------------
Six months ended Six months ended
September 30, September 30, September 30, March 31,
------------------------------------------------------------------------ --------------
1999 1998 1999 1998 1999 1999
-------------- ---------------------------- ---------------------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Class of business L'000 L'000 L'000 L'000 L'000 L'000
Computer software 41,842 45,819 (37,997) (18,632) 114,726 152,393
Video editing 2,223 1,900 90 (296) 2,918 3,000
-------------- ---------------------------- ---------------------------- --------------
44,065 47,719 (37,907) (18,928) 117,644 155,393
Inter segment (5) (133) -------------- ---------------------------- --------------
-------------- --------------
44,060 47,586
-------------- --------------
</TABLE>
The geographical analysis of the Group's turnover, loss before taxation and
gross assets is set out below.
<TABLE>
<CAPTION>
Turnover to unaffiliated customers
------------------------------------------------------------
By destination By origination
Six months ended Six months ended
September 30, September 30,
------------------------------------------------------------
1999 1998 1999 1998
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Geographical segment L000 L000 L000 L000
United Kingdom 9,450 7,969 14,891 13,024
Germany 3,599 4,711 4,960 6,722
France 5,151 9,037 6,053 10,137
Rest of Europe 6,174 6,680 - -
U.S. 16,979 16,756 17,462 17,703
Rest of World 2,707 2,433 694 -
-------------- -------------- -------------- --------------
44,060 47,586 44,060 47,586
-------------- -------------- -------------- --------------
</TABLE>
<PAGE>
2. Segmental analysis (continued)
<TABLE>
<CAPTION>
Inter-segment sales
------------------------------------------------------------
By destination By origination
Six months ended Six months ended
September 30, September 30,
----------------------------- -----------------------------
1999 1998 1999 1998
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Geographical segment L000 L000 L000 L000
United Kingdom 2,787 846 10,609 11,812
Germany 3,954 4,190 60 -
France 3,789 5,237 - -
U.S. 5,707 1,539 5,853 -
Rest of World 288 - 3 -
-------------- -------------- -------------- --------------
16,525 11,812 16,525 11,812
-------------- -------------- -------------- --------------
</TABLE>
<TABLE>
<CAPTION>
Net loss before tax Gross assets
--------------------------------------------- --------------
Six months ended
September 30, September 30, March 31,
----------------------------- -------------- --------------
1999 1998 1999 1999
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Geographical segment L000 L000 L000 L000
United Kingdom (21,147) (13,483) 59,847 63,441
Germany (1,341) (93) 11,127 17,102
France (850) 235 3,058 8,576
U.S. (14,058) (5,460) 42,974 64,471
Rest of World (511) (127) 638 1,803
-------------- -------------- -------------- --------------
(37,907) (18,928) 117,644 155,393
-------------- -------------- -------------- --------------
</TABLE>
3. Stocks
<TABLE>
<CAPTION>
September 30, March 31,
1999 1999
-------------- --------------
<S> <C> <C>
Raw materials 331 371
Finished goods 5,431 5,295
-------------- --------------
5,762 5,666
-------------- --------------
</TABLE>
Stocks are stated net of provisions of L1,072,000 at September
30,1999 and L764,000 at March 31, 1999.
<PAGE>
4. Borrowings
In April 1998, Eidos issued U.S.$50 million of 6.25% convertible bonds.
The bonds are convertible after August 31, 1998 and on or prior to July
24, 2002 into ordinary shares of 10p each of Eidos at an initial
conversion price of L10.95 per share and with a fixed rate of
exchange on conversion of $1.5965 = L1. The convertible bonds
have been stated net of issue costs. As at September 30, 1999, bonds
representing $41.0 million had been converted (March 31, 1999: $0.1
million).
<TABLE>
<CAPTION>
September 30, 1999 March 31, 1999
---------------------------------------------------------
Due within Due after Due within Due after
One year One year One year One year
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
L000 L000 L000 L000
Borrowings
Convertible bonds 5,479 - - 30,333
Bank loans and overdrafts 23,889 - - -
Obligations under finance leases 311 22 363 152
------------- ------------- ------------- -------------
29,679 22 363 30,485
------------- ------------- ------------- -------------
Other creditors
Trade creditors 6,760 - 9,692 -
Royalty creditors 1,253 - 4,968 -
Other creditors 1,687 111 20,371 328
Accruals and deferred income 9,711 - 8,967 -
Corporation tax - - 13,688 -
------------- ------------- ------------- -------------
19,411 111 57,686 328
------------- ------------- ------------- -------------
49,090 133 58,049 30,813
============= ============= ============= =============
</TABLE>
5. Commitments and contingencies
As at September 30, 1999 Eidos had contracts to make future payments
totalling L16.0 million to various licensors and developers
involved in providing games software for Eidos' use. Eidos also has
annual commitments under operating leases of L2.5 million,
L2.0 million relating to land and buildings and L0.5
million for motor vehicles and equipment. The principal leases for
office premises are as described in the Company's Annual Report on Form
20-F filed with the Securities and Exchange Commission on July 27,
1999. The largest office is in Menlo Park, California, which has an
eight year lease and annual commitment of $1.3 million.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS FOR THE THREE AND SIX MONTHS ENDED SEPTEMBER 30, 1999
The following Management's Discussion and Analysis of Financial Condition and
Results of Operations contains forward-looking statements that involve risks and
uncertainties. Eidos' actual results could differ materially from the results
discussed in the forward-looking statements. Factors that could cause or
contribute to such differences include, but are not limited to, those discussed
below and those discussed in the "Risk Factors" section of Eidos' Annual Report
on Form 20-F filed with the Securities and Exchange Commission on July 27, 1999.
The following discussion is based on the Unaudited Consolidated Financial
Statements of Eidos, which have been prepared in accordance with UK GAAP. See
the Unaudited Consolidated Financial Statements of Eidos for information on the
differences between UK GAAP and US GAAP that affect Eidos' net income and
shareholders' equity.
OVERVIEW
Fluctuating operating results
Eidos has experienced, and expects to continue to experience, significant
fluctuations in operating results due to a variety of factors including, among
others: (i) the timing and success of product introductions; (ii) the market
acceptance of Eidos' products; (iii) delays in product completion; (iv) order
cancellations; (v) product returns; (vi) projected and actual changes in
platforms; (vii) changes in pricing policies by Eidos and its competitors;
(viii) development and promotional expenses relating to the introduction of new
products or new versions of existing products; (ix) changes in the value of the
pound sterling in relation to other currencies; and (x) the size and rate of
growth of the interactive software market. In response to competitive pressures,
Eidos may take certain pricing or marketing actions that could materially
adversely affect Eidos' business, results of operations and financial condition.
Products are generally shipped as orders are received; accordingly Eidos
operates with little backlog. Furthermore, the interactive software business is
highly seasonal. Net revenues are typically significantly higher during the
second half of Eidos' financial year, due primarily to the increased demand for
interactive software products during the year-end holiday buying season. Net
revenues in other periods are generally lower and vary significantly as a result
of new product introductions and other factors. As a very significant percentage
of Eidos' total sales arise in the second half, Eidos has limited ability to
compensate for shortfalls in second half sales by changes in its operations or
strategies in the first half. Eidos' expense levels are based, in part, on its
expectations regarding future sales, and, as a result, operating results would
be disproportionately and adversely affected by a decrease in sales or a failure
to meet Eidos' sales expectations.
Eidos publishes its consolidated financial statements in pounds Sterling. A
significant portion of Eidos' assets and net revenues are generated in foreign
currency, primarily US dollars, French Francs and Deutschmarks. In translating
the results of its overseas operations Eidos is subject to fluctuations in the
exchange rates between pounds Sterling and the overseas currency. Accordingly,
depreciation in the weighted average value of the overseas currency against
pounds Sterling could decrease reported revenues and appreciation in the
weighted average value of the overseas currency against pound sterling could
increase reported revenues.
<PAGE>
As a result of the foregoing, results of operations can be expected to fluctuate
significantly from period to period.
RESULTS OF OPERATIONS
For the three months ended September 30, 1999 compared to the three months ended
September 30, 1998
Net revenue
Net revenue increased 25% from L21.8 million in the three months ended
September 30, 1998 to L27.3 million in the three months ended September
30, 1999. Three new titles were launched in the period, Legacy of Kain: Soul
Reaver on PC CD and PSX and Braveheart and Cutthroats on PC CD compared to two
titles in the corresponding period last year. Last year's net revenue was mainly
derived from continuing sales of the first quarter releases and back catalogue
with only 7% from the two new releases of that quarter. By contrast, this year
86% of the quarter's revenue was from the current releases, predominantly Legacy
of Kain: Soul Reaver (which has now shipped in excess of one million units).
31% of games revenue was from sales of PC products compared to 70% for the
corresponding period of last year. This has been distorted by the success of
Legacy of Kain: Soul Reaver (which was released on PC CD and PSX). Usually the
first and second quarters of the year have a higher proportion of PC sales than
PSX. In a quarter with relatively low sales (compared to the year as a whole),
high sales of a PSX product can distort the overall split.
The higher proportion of PSX sales is also reflected in the higher average
selling price (L13.97 compared to L12.87 last year). The total
number of units shipped in the quarter was 2.4 million compared to 1.7 million
in the corresponding period of 1998.
Cost of sales
Cost of sales includes manufacturing, distribution costs and royalties payable.
Royalties payable comprise three elements: royalties payable to third party
software licensors, royalties payable to third party developers and royalties
payable to internal development teams.
For the three months ended September 30, 1999, cost of sales was L11.3
million. This represented 41.6% of net revenue, compared to 52.0% of net
revenue, in the corresponding period last year. Gross margin for the quarter was
58.4% compared to 48.0% in the corresponding period last year. The increase in
margin results from a combination of factors; predominantly lower royalty costs
resulting from a higher proportion of internally generated products and a shift
in the sales mix for the quarter compared to the corresponding period last year
when there were fewer premium priced new releases as discussed above.
Selling and Marketing
Selling and marketing expenses comprise product marketing and advertising
expenditure as well as salaries, bonuses and commissions paid to sales and
marketing personnel. They consist of a variable element, product advertising and
commissions, and a fixed element,
<PAGE>
which includes amortisation costs of games-related licences, payroll and
associated expenses of the workforce.
Advertising costs for the three months ended September 30, 1999 were L3.9
million (14.5% of revenue) compared to L3.3 million (15.3% of revenue) in
the corresponding period. This reflects increased expenditure on catalogue
titles and the costs associated with building brand awareness through print
advertising, the internet and other interactive media. The fixed element of
selling and marketing costs was L5.5 million (1998: L3.3 million)
and reflects the costs of additional headcount and the amortisation of licence
fees.
Research and Development
Research and development primarily consists of software development costs. These
costs include:
* internal development costs,
* development fees paid under publishing agreements to external
developers; and
* advance royalties paid under licensing arrangements.
Research and development represents the Company's investment in product
development of L11.2 million for the three months ended September 30, 1999
(1998: L8.4 million). Also included in the category is pure research and
development of L0.6 million (1998: L0.6 million). The product
development charge for the quarter includes L8.0 million invested in a
pipeline of over 35 titles that have yet to be released. The increase partly
reflects the additional internal development resource now available to Eidos
following the acquisition of Crystal Dynamics in November 1998.
General and Administrative
General and administrative expenses comprise primarily personnel costs for
finance, administrative and general management as well as property, accounting
and legal expenses. It also includes goodwill amortisation charges.
General and administrative costs were L10.7 million or 39.3% of revenue
(1998: L6.1 million or 28.1%) for the three months ended September 30,
1999. The total excluding goodwill was L7.2 million (26.6%), reflecting
the increased administrative infrastructure required to run Eidos' expanded
operations.
Taxation
A tax credit of L4.0m has been applied to the loss on ordinary activities
of L17.0m. This reflects the projected underlying tax rate for the year to
March 31, 2000 of 34%.
For the six months ended September 30, 1999 compared to the six months ended
September 30, 1998
Net revenue
Net revenue decreased 7% from L47.6 million in the six months ended
September 30, 1998 to L44.1 million in the six months ended September 30,
1999. There were five (1998: seven) new games released in the six months ended
September 30, 1999. These were Legacy of Kain: Soul Reaver on PC CD and PSX, FA
Manager on PSX and Official Formula One Racing, Braveheart and Cutthroats on PC
CD. In addition, Warzone 2100 was launched on
<PAGE>
PSX (following the release on PC CD in March) and Tomb Raider 2 was released on
the Premier and Platinum labels. Legacy of Kain: Soul Reaver, developed by
Eidos' subsidiary, Crystal Dynamics, has shipped in excess of one million units
to date and is developing into a strong franchise.
43% of games revenue was from sales of PC products compared to 62% for the
corresponding period of last year. This has been distorted by the success of
Legacy of Kain: Soul Reaver (which was released on PC CD and PSX). Usually the
first and second quarters of the year have a higher proportion of PC sales than
PSX. In a period with relatively low sales (compared to the year as a whole),
high sales of a PSX product can distort the overall split.
Last year the premium price releases were concentrated in the first quarter
although these continued to sell well in the second quarter. This year there
were more premium price releases in the second quarter. Although the average
selling price in the second quarter was higher this year than last year the
average selling price for the period was L13.22 compared to L13.91
last year. The total number of units shipped in the period was 3.9 million
compared to 3.7 million in the corresponding period of 1998.
Cost of sales
Cost of sales includes manufacturing, distribution costs and royalties payable.
Royalties payable comprise three elements: royalties payable to third party
software licensors, royalties payable to third party developers and royalties
payable to internal development teams.
For the six months ended September 30, 1999, cost of sales was L19.7
million. This represented 44.7% of net revenue, compared to L22.5 million,
or 47.3% of net revenue, in the corresponding period. Gross margin was 55.3% for
the period compared to 52.7% for the corresponding period last year. The
increase in margin is largely due to lower royalty costs. Royalty costs in the
period were L4.8 million compared to L6.1 million last year. The
main releases this half year were internally developed and had lower royalties
payable.
Selling and Marketing
Selling and marketing expenses comprise product marketing and advertising
expenditure as well as salaries, bonuses and commissions paid to sales and
marketing personnel. They consist of a variable element, product advertising and
commissions, and a fixed element, which includes amortisation costs of
games-related licences, payroll and associated expenses of the workforce.
Advertising costs in the half year were L7.9 million (17.9% of revenue)
compared to L6.4 million (13.4% of revenue) in the corresponding period of
1998. This includes expenditure of L1.6 million in respect of titles to be
released in the second half of the year (1998: L1.9 million). The fixed
element of selling and marketing costs was L10.4 million compared to
L6.1 million in the prior year. This reflects the amortisation cost of
promotional licences and the world-wide departmental headcount increase of 20%.
Research and Development
Research and development primarily consists of software development costs. These
costs include:
<PAGE>
* internal development costs,
* development fees paid under publishing agreements to external
developers; and
* advance royalties paid under licensing arrangements.
Research and development represents the Company's investment in product
development of L22.1 million (1998: L15.0 million) and pure research
and development of L1.5 million (1998: L1.1 million). Product
development includes L15.7 million (1998: L12.3 million) invested in
a pipeline of over 35 titles to be released over the next two years. The
increase partly reflects the additional internal development resource now
available to Eidos following the acquisition of Crystal Dynamics in November
1998.
General and Administrative
General and administrative expenses comprise primarily personnel costs for
finance, administrative and general management as well as property, accounting
and legal expenses. It also includes goodwill amortisation charges.
General and administrative costs for the period were L19.4 million (44.0%
of revenue) compared to L10.1 million (21.3% of revenue) in 1998. The
total excluding goodwill of L6.0 million, was L13.4 million (30.4%
of revenue), reflecting the increased administrative infrastructure required to
run the expanded operations of the Group.
Taxation
A tax credit of L10.9m has been applied to the loss on ordinary activities
of L37.9m. This reflects the projected underlying tax rate for the year to
March 31, 2000 of 34%.
Liquidity and capital resources
At September 30, 1999 Eidos had cash and cash equivalents of L3.2 million
and bank loans and overdrafts of L23.9 million. Holders of U.S.$40.9
million of Eidos' US$50 million convertible bond converted to equity during the
period. On October 22, 1999 Eidos gave notice of its intent to redeem the
remaining 18% of the bond. Since that date the whole amount has been converted.
At September 30, 1999 the outstanding amount, L5.5 million, was included
within current liabilities. At September 30, 1999 Eidos' working capital was
L14.3 million (which includes the bank borrowings and the remainder of the
bond).
Eidos utilised cash of L31.2 million from its operating activities in the
six months ended September 30, 1999. The final instalment for Crystal Dynamics
(L14.3 million) was paid in April 1999. In addition Eidos paid L17.7
million to acquire its equity stakes in Pyro Studios and Proein in July 1999.
These, together with overseas tax payments of L6.2 million, represented
the only significant other outflows of cash in the period. Interest costs,
capital expenditure and finance costs of L2.0 million were offset by
L2.3 million received from employees exercising their share options in the
period.
Year 2000
The Year 2000 presents potential problems for all companies using computers,
software and other electronic equipment. At the Year 2000 issues may arise for
one of the following reasons. The use of "00" may imply that there is no current
date. Any system using date based functionality for processing may fail due to
calculation errors. Any interfaces using
<PAGE>
date based data storage must be unambiguous i.e. store all 4 digits of the date.
The Year 2000 must be recognized as a leap year. The following sections describe
what steps Eidos has taken to minimize the risk of exposure to these problems.
State of readiness
Eidos commenced its Year 2000 compliance project in late 1997. A co-ordinator
was appointed who liaised with local management and IT personnel across the
Group, and reported directly to the Board on progress made. A global strategy
and policy for the Group was developed and implemented. Responsibilities were
assigned to ensure timeliness of response and co-ordination of effort at all
levels.
The Company's systems. Testing and replacement of hardware at all sites
proceeded as planned and all business critical systems are now believed to be
compliant. Financial and operational software was inventoried, certified by the
suppliers and tested internally. The Company believes that game related
development software and tools, which comprise the majority of Eidos' systems,
are not adversely affected by Year 2000 problems. In addition the hardware used
is updated frequently because of rapid changes in technology and the computer
games industry.
The main financial and logistic system used in the U.K. and U.S. offices has
been fully tested internally. In addition the supplier has provided
certification of the system's compliance, and compliant Microsoft service packs
have been applied. Systems used within the other offices have been upgraded and
it is believed that they are now compliant. A final readiness checklist has been
distributed in November 1999 to all Eidos overseas offices to check that all
steps have been taken to ensure compliance. Responses will be in by mid-December
1999.
However comprehensive, no program of testing can provide absolute assurance that
problems will not be encountered, especially given the many inter-dependencies
on suppliers and developers. Eidos has made best endeavors to gain assurances
from key companies in the supply chain.
The Company's products. Eidos' products do not contain date-related processes
and therefore the Company believes that they do not pose significant Year 2000
problems. However the Company may be adversely affected if there are significant
problems with hardware used to run its products (in particular video games
consoles). Due to the broad range and location of personal computer vendors, the
Company does not believe that the supply of personal computers will be
significantly affected.
Third party compliance. Eidos began to contact all its major customers and
suppliers in order to ascertain the steps they had taken to minimize Year 2000
problems. In general the Company has limited control over the actions taken by
these third parties and not all have actually provided written guarantees that
they addressed all potential Year 2000 issues. However the Company has been in
regular contact with a number of key suppliers, including the fulfillment
warehouses used by the main manufacturing locations which have supplied written
confirmation of compliance. The Company uses a number of different suppliers for
its PC product and printed material and could switch suppliers at relatively
short notice if necessary. However the Company is currently dependent on Sony
for the manufacture of its PlayStation products as are all other game developers
for this platform. The final phase of compliance checks (following up with major
suppliers to collate their final Year 2000 positions) was completed in September
1999.
<PAGE>
Costs to the Company
To date the costs of implementing the Year 2000 compliance program have been
indistinguishable from the normal costs incurred by Eidos in the regular
maintenance and upgrading of all computer hardware and software. Some additional
marginal costs have been incurred (for example, purchasing specific testing
software and Year 2000 literature, travel expenses) but these have been
negligible (less than L50,000).
Risks to the Company
Eidos believes it has taken reasonable steps to ensure it is not adversely
affected by the Year 2000 problems however it would be impossible to give full
assurance that operations will be unaffected considering the supply chain it
operates within. Eidos is a very seasonal business and the majority of the
Company's sales occur in the period leading up to Thanksgiving and Christmas.
Therefore a disruption in business in January would not normally have a
significant impact on the Company's annual results. However the Company's
current release schedule has a relatively large number of titles due for release
in the first few months of 2000. Consequently delays in development completion,
manufacturing or despatch caused by Year 2000 problems (internal or third party)
may have an impact on the results for the year ended March 31, 2000. It is
likely that this would only be a timing difference unless there were found to be
irrevocable problems with any of the business critical systems or equipment. In
addition, at January 1, 2000 most of Eidos' customers will not have paid for the
stock they bought for the Christmas season and hence any Year 2000 problems they
experience may have an adverse affect on Eidos' cash flow in the early part of
2000.
Contingency plans
Eidos has developed a Business Continuity Plan with the help of an external
consultant. This includes risk management, physical security and disaster
recovery planning. A number of steps have be taken to ensure any disruption
caused by the year 2000 is minimized. This includes a complete rollover plan to
ensure that all major systems are tested over the New Year so that any problems
that may occur will be addressed before business resumes on January 4th, 2000.
These plans will be replicated in other overseas offices as appropriate for a
consistent response to testing and recovery.
The Euro
The Board is currently assessing the implications for the European operations of
the introduction of a common European currency ("The Euro"). The Euro was
launched on January 1, 1999 and now runs in parallel with the French Franc,
Deutschmark and other participating currencies until the local currencies are
phased out by January 1, 2001.
The financial information systems used in the European offices are all capable
of operating in multiple currencies including the Euro.
There have been negligible external costs relating to the introduction of the
Euro to date (less than L10,000). It is anticipated that once the Euro is
implemented there will be some costs involved in changing to the new currency
(for example, staff training and minor software and hardware changes). These are
not expected to be material.
One of the main issues for the Company is the possible erosion of margin
resulting from changes in the retail price point. As existing price points are
translated to the Euro they may be rounded down by the retailer who may seek to
pass this reduction on to the Company. At this stage it is not possible to
predict the impact of this but Eidos will seek to maintain its
<PAGE>
margin wherever it can. In addition, price transparency may erode margins in
certain countries; however, the fact that most games are translated to the local
language should help to reduce "gray imports" (games bought in one territory and
sold in another with a higher retail price) and minimize this risk.
Currently the offices in France and Germany remit Euros back to the Head Office
in the U.K. These receipts are translated to pounds Sterling and the currency
risk is hedged in accordance with Company policies. Should the U.K. convert to
the Euro this currency risk will be eliminated and the U.S. dollar will become
the only significant currency exposure.
Market Risk
A full discussion of Eidos' exposure to market risk is given in the Company's
Annual Report on Form 20-F filed with the Securities and Exchange Commission on
July 27, 1999. Since that date the only significant change in exposure has been
resulting from the conversion of 6.25% convertible bonds.
Foreign exchange risk
The Company's Sterling balance sheet was partially protected from the movements
in the U.S. dollar exchange rate by the hedging effect of the bond. Dollar
assets comprising cash and inter-company balances were matched against the bond
liability. Since March 31, 1999 the entire bond has been converted and the
Company has had to take other steps to hedge its exposure to the U.S. dollar.
Accordingly in July 1999 the Company took out a forward contract to sell U.S.
$50 million at a rate of $1.5637. This forward expires on March 31, 2000. The
exchange movement is calculated every month and set off against the movement in
U.S. dollar assets.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorised.
EIDOS plc
By: /S/ Jeremy MJ Lewis December 17, 1999
------------------- -----------------
Jeremy MJ Lewis
Chief Financial Officer
<PAGE>
FOR IMMEDIATE RELEASE
Eidos plc
Investment in Maximum Holdings Inc
- enables Eidos to progress with its Internet strategy
LONDON, November 15, 1999 -- Eidos plc (NASDAQ: EIDSY), one of the world's
leading developers and publishers of entertainment software, announces the
acquisition, on 12 November 1999, of 19.96% of the share capital of Maximum
Holdings Inc ("Maximum"), a US Internet company specialising in the interactive
video games industry. The total consideration of $55.0 million (L34.0
million) was financed from existing cash resources and banking facilities and
was paid in full on completion.
Summary
* Maximum is a Los Angeles based Internet company that is building a specific
entertainment portal encompassing interactive games, music and
entertainment. Maximum is the owner of GameCave.com, an e-commerce site
focused on video games, and the GameFan network of affiliated Internet
community sites. Maximum estimates that these sites currently are
attracting 3.5 million unique visitors per month. Maximum is also the
publisher of GameFan magazine, a leading US publication specialising in the
video games industry.
* The Directors of Eidos view the investment in Maximum as a key development
in progressing Eidos' Internet strategy. Eidos and Maximum intend to
co-operate to further Maximum's goal of creating the largest online
community for interactive entertainment targeting the Generation X and Y
demographic. Eidos intends to enter into a series of non-exclusive
commercial arrangements with Maximum covering a range of topics, such as
cross-promotion and advertising, to allow it to benefit from the growth in
the Internet as an electronic medium for the interactive video games
market.
* It is intended that, subsequent to Eidos' investment, Maximum will within
the next two weeks complete a merger with DVD Express Inc, a leading web
based retailer of DVD movies and videos in the US. It is anticipated that
the Maximum shareholders will own approximately 51% of the new company
giving Eidos approximately 10.2% of the whole.
Commenting on the acquisition, Charles Cornwall, CEO of Eidos, said:
"Eidos is a digital media publishing company whose products, interactive video
games, will be promoted and distributed increasingly through the Internet. As a
publisher and content owner, Eidos has limited scope to develop and implement an
Internet strategy on a stand-alone basis. After assessing and analysing
opportunities in the market place over the last 12 months, we have decided that
Maximum is the partner which will most effectively realise our objective of
combining "Content, Community and Commerce" in our approach to our target market
of 10 to 34 year old game players.
We believe that Maximum, with its extraordinary level of traffic and ability to
deliver multiple services to our demographic, has a substantial lead over its
competition in deploying an online strategy for the video games industry. We
anticipate our alliance with Maximum
<PAGE>
will enhance significantly the e-commerce strategies of both companies and our
investment will allow us to participate in any future capital growth."
David Bergstein, CEO and founder of Maximum, said:
"We at Maximum are dedicated to providing the young demographic with an
unparalleled entertainment destination, embodying cutting edge Internet
technology, content and commerce. Ultimately, we hope to serve the bulk of our
audience's Internet needs within our own community. Today, together with DVD
Express, our combined community is already the online leader in revenue and
traffic in two of the three entertainment categories - movies and games. It is
our intention to continue to rapidly enhance the entertainment experience in our
community, by expanding content and services. Eidos' proven commitment to
provide a rich entertainment experience to its audience, makes Eidos the perfect
partner for Maximum. We are honoured by Eidos' validation of our efforts to date
and plans for the future."
Contact:
Charles Cornwall, CEO: 011 44 181 636 3000
Mike McGarvey, COO: 011 44 181 636 3000
Jeremy Lewis, CFO: 011 44 181 636 3000
Ryan Barr/Lenny Santiago, Brainerd Communicators: 212 986 6667
Neil Camp, Binns & Co: 011 44 171 786 9600
<PAGE>
For Immediate Release
Eidos plc
Investment in Maximum Holdings Inc
- enables Eidos to progress with its Internet strategy
Introduction
LONDON, November 15, 1999 -- Eidos plc (NASDAQ: EIDSY), announces that on 12
November 1999, it entered into a sale and purchase agreement ("the Agreement")
with Maximum Holdings Inc ("Maximum"). The Agreement provides for the
acquisition of 19.96% of the outstanding capital stock of Maximum on a fully
diluted basis. The total consideration payable to Maximum of $55.0 million
(L34.0 million) before expenses was financed from existing cash resources
and banking facilities and was paid in full on completion.
Information on Maximum Holdings Inc
Maximum is the owner of GameCave, an online e-commerce site offering domestic
and imported video games, console players, DVDs, action figures, resin figures,
Japanese anime, game music, magazines and other collectibles. Maximum is also
the owner of the GameFan network of affiliated Internet community sites, which
includes GameFan Online, a site that delivers daily its own original content to
the video game player. Maximum estimates that its websites are already an online
destination for 3.5 million unique visitors per month. Game Fan magazine,
launched in 1992, ranks amongst the top selling video games magazines with,
according to Maximum, a sell-through of approximately 300,000 magazines per
month. Both GameFan Magazine and GameFan Online operate with a full, independent
editorial staff of writers, editors and graphic artists.
Maximum's objective is to become the premier online community for interactive
entertainment targeting the Generation X and Y demographic. Generations X and Y
encompass young men and women in the age group of 10 to 34. This age group is
differentiated by its interests in non-traditional forms of entertainment,
notably video games and online gaming. The US Census Bureau estimates that this
demographic currently has disposable annual income in the US of $280 billion and
purchases, within the US, 25% of all movie tickets, 65% of all music and 95% of
interactive entertainment
To achieve its objective, Maximum has created a vertical portal that will
provide gaming content and e-commerce, such as news, reviews, previews, game
demo downloads, game music down loads, online gaming and sales of games and
related products and potentially the direct distribution of games.
Maximum believes that most online game content sites operate as aggregators of
content and have a small number of content development staff. Maximum creates
original content specifically for its sites, which it believes gives it
credibility with its target demographic. Maximum believes this original content
based approach creates an interaction with its target market allowing it to
optimise sales, marketing and advertising opportunities.
<PAGE>
Summary Financial Information
The consolidated net liabilities of Maximum as at 31 December 1998 were $0.3
million (L0.2 million). Revenues for the year then ended were $2.8 million
(L1.7 million) and the loss before tax was $1.3 million (L0.8
million).
Proposed Merger of Maximum with DVD Express Inc
It is intended that subsequent to Eidos' investment, Maximum will, within the
next two weeks, complete a merger with DVD Express Inc ("DVD"). It is
anticipated that Maximum shareholders will own approximately 51% of the new
company giving Eidos approximately 10.2% of the whole.
DVD is a leading web based retailer of movies and videos in the US in the
rapidly emerging digital format of Digital Video Disks. DVD has developed
substantial expertise in the systems and fulfilment aspects of the e-commerce
business. DVD has recently moved into an expanded 66,000 square ft. warehouse in
Los Angeles. The company also has fulfilment and site translation facilities in
Amsterdam to enable it to take advantage of the expanding European market.
Information about Eidos
Eidos is one of the world's leading publishers and developers of entertainment
software. Eidos develops and publishes a diverse mix of titles for the Sony
PlayStation, Sega Dreamcast, Nintendo Colour Game Boy and multimedia PC markets
in the US, the UK, Europe and Asia. The Company's shares are traded on the
NASDAQ Stock Market under the symbol EIDSY.
On 27 May 1999, Eidos announced its results for the year ended 31 March 1999.
Sales for the year were L226.3 million (1998: 137.2 million) and profit
before tax was L37.9 million (1998: L16.5 million).
# # #
<PAGE>
This press release is not intended for and may not be distributed in the United
States, or to US persons
For Immediate Release 24 November 1999
Eidos plc
1999 Interim Results
Eidos plc ("Eidos"), one of the world's leading publishers and developers of
entertainment software, announces results for the six months ended 30 September
1999.
Mr Charles Cornwall, Chief Executive Officer, says:
"Following on from the quiet first quarter, Eidos' interim results reflect the
relatively fewer new releases in the period coupled with increased levels of
development and corporate activity. This has resulted in turnover of L44.1
million compared to L47.6 million in the same period last year and
operating losses of L36.9 million compared to losses of L13.6
million last time. Five new titles were released during the first half compared
to seven last year. Legacy of Kain: Soul Reaver from Crystal Dynamics has been
particularly successful having already sold in excess of one million units since
its launch and is developing into one of our key franchises.
We enter the Christmas selling season with a substantial, high quality product
line-up representing Eidos' most impressive winter release schedule ever. To
date Power Stone, The Nomad Soul, Revenant and Abomination have already been
released. Tomb Raider: The Last Revelation is released today in North America
and due on 3 December in Europe, with Fighting Force 2, Urban Chaos, Daikatana,
F1 World Grand Prix, Championship Manager Season 99/00 and Gex III on Game Boy
Color still to come. Furthermore, the integrity of our fourth quarter release
schedule is unprecedented with much anticipated titles such as Resident Evil 3,
UEFA Champions League 2000, Thief 2, Fear Affect, Deus Ex and Tomb Raider on
Game Boy Color amongst others, due for launch in this period".
Highlights of the Chairman's Statement
* Launched five new titles in the half year (1998: seven)
* Increased losses reflect heavy investment in new titles
* Content based publishing model strengthened by strategic investment
* Internet strategy substantially advanced by Maximum Holdings investment *
Abomination, Revenant, The Nomad Soul and Power Stone released in current
third quarter to date
* Strong release schedule for key selling season
* New Disney licence deal
* Stock split to be proposed to improve marketability
Results Highlights (for the six months to 30 September 1999)
* Turnover: L44.1m (1998: L 47.6m )
* EBITDA: L(29.3m) (1998: L(12.1m))
* Loss before tax and goodwill: L(31.9m) (1998: L(18.9m))
* Loss before tax L(37.9m) (1998: L(18.9m))
* Loss per share before goodwill: (113.8p) (1998: (80.6p))
* Loss per share: (146.2p) (1998: (80.6p))
Notes:
1. Eidos prepares financial statements in accordance with applicable UK
accounting standards (UK GAAP). The reconciliation to US GAAP is
available from Eidos on request.
<PAGE>
Regarding current trading and prospects Mr Ian Livingstone, Chairman, says:
"The year to date has been dominated by a number of strategic investments for
Eidos, including equity stakes in Pyro Studios, Proein, Elixir Studios and
Timeline Studios. In October we increased our holding in Top Cow Productions to
26% and took a 51% holding in the Dallas based developer, Ion Storm. In
November, we announced the acquisition of a 19.96% holding in the US based
Internet company, Maximum Holdings, as a key step in the unfolding of our
internet strategy for the Group. In addition, we recently signed an agreement
with the Disney Corporation to utilise three of their characters in games for
release next spring and beyond.
Eidos' core business remains strong despite only releasing five titles in the
first six months compared to seven last year. Gross margins have improved
although following increased development commitments, selling and administrative
costs and goodwill amortisation, Eidos reported an operating loss of L36.9
million.
In order to bring the share price more in line with the market and to improve
the marketability of our shares, we intend to seek the approval of shareholders
to split each existing 10 pence share into five 2 pence shares. An extraordinary
general meeting is to be called on 25 January 2000 and the split will take
effect from 26 January 2000. A circular will be sent to shareholders outlining
this proposal in more detail in due course".
Contact:
Charles Cornwall, CEO: 0181 636 3000
Jeremy Lewis, CFO: 0181 636 3000
Neil Camp, Binns & Co: 0171 786 9600
Ryan Barr, Brainerd Communicators: 001 212 986 6667
Issued by Binns & Co: 0171 786 9600
<PAGE>
CHAIRMAN'S STATEMENT
Results and Trading Review
Eidos reports a loss after tax of L27.0 million for the six months ended
30 September 1999 compared to a loss of L13.8m for the corresponding
period last year. This loss is after a goodwill amortisation charge of
L6.0 million. Turnover decreased from L47.6 million to L44.1
million. The loss per share was 146.2p or 113.8p excluding goodwill, compared to
80.6p. This is based on a weighted average number of shares outstanding in the
period of 18,463,496 (1998:17,110,856).
The net cash outflow from operating activities was L31.2 million compared
to L6.6 million in the corresponding period of 1998. This is after Eidos'
investment in product development and pure research and development of
L23.6 million (1998: L16.1 million).
On 22 October 1999 Eidos gave notice of its intent to redeem the remaining 18%
($9.0 million) of the US $ convertible bond. Since that date the whole amount
has been converted.
There were five (1998: seven) new games released in the six months ended 30
September 1999. These were Legacy of Kain: Soul Reaver on PC CD and PSX, FA
Manager on PSX and Official Formula One Racing, Braveheart and Cutthroats on PC
CD. In addition, Warzone 2100 was launched on PSX (following the release on PC
CD in March) and Tomb Raider 2 was released on the Premier and Platinum labels.
Legacy of Kain: Soul Reaver, developed by Eidos' subsidiary, Crystal Dynamics,
has shipped in excess of one million units to date and is developing into a
strong franchise.
Gross margin was 55.3% for the half year compared to 52.7% for the corresponding
period last year. The increase in margin is largely due to lower royalty costs.
Royalty costs in the period were L4.8 million compared to L6.1
million last year. The main releases this half year were internally developed
and had lower royalties payable.
Selling and Marketing
Advertising costs in the half year were L7.9 million (17.9% of revenue)
compared to L6.4 million (13.4% of revenue) in the corresponding period of
1998. This includes expenditure of L1.6 million in respect of titles to be
released in the second half of the year (1998: L1.9 million).
The fixed element of selling and marketing costs was L10.4 million
compared to L6.1 million in the prior year. This reflects the amortisation
cost of promotional licences and the world-wide departmental headcount increase
of 20%.
Research and Development
Research and development represents the Company's investment in product
development of L22.1 million (1998: L15.0 million) and pure research
and development of L1.5 million (1998: L1.1 million). Product
development includes L15.7 million (1998: L12.3 million) invested in
a pipeline of over 35 titles to be released over the next two years. The
increase partly reflects the additional internal development resource now
available to Eidos following the acquisition of Crystal Dynamics in November
1998.
General and Administrative
General and administrative costs for the period were L19.4 million (44.0%
of revenue) compared to L10.1 million (21.3% of revenue) in 1998. The
total, excluding goodwill of L6.0 million, was L13.4 million (30.4%
of revenue), reflecting the increased administrative infrastructure required to
run the expanded operations of the Group.
Taxation
A tax credit of L10.9 million has been applied to the loss on ordinary
activities of L37.9 million. This reflects the projected underlying tax
rate for the year to 31 March 2000 of 34%.
Acquisitions/Investments
On 29 July 1999, Eidos acquired 25% of the share capital of the Spanish
developer, Pyro Studios SL creator of the Commandos franchise. In addition, 75%
of the related Spanish distributor, Proein SA was also acquired securing our
position in the fast growing Spanish software market. The acquisitions are being
accounted for as joint ventures. This has not had a material impact on the
results to 30 September 1999.
In October, Eidos acquired a further stake in Top Cow Productions for $1.8
million bringing the total investment in the company to 26%. Also in October,
Eidos acquired 51% of the Dallas based developer, Ion Storm, for a nominal
consideration effecting our managerial control over that entity.
On 15 November, Eidos announced the acquisition for $55 million of a 19.96%
stake in Maximum Holdings. Maximum is a Los Angeles based internet company that
is building a specific entertainment portal encompassing interactive games,
music and entertainment. Eidos and Maximum intend to co-operate to further
Maximum's goal of creating the largest online community for interactive
entertainment. It is intended that Maximum will complete a merger with DVD
Express Inc ("DVD") shortly, giving Eidos approximately 10.2% of the combined
entity. DVD is a leading web based retailer of movies and videos in the rapidly
emerging digital format of Digital Video Disks.
Current Trading and Prospects
The year to date has been dominated by a number of strategic investments for
Eidos, these have included equity stakes in Pyro Studios, Proein, Elixir Studios
and Timeline Studios. In October we increased our holding in Top Cow Productions
to 26% and took a 51% holding in the Dallas based developer, Ion Storm. In
November, we announced the acquisition of a 19.96% holding in the US based
Internet company, Maximum Holdings, as a key step in the unfolding of our
internet strategy for the Group. In addition, we recently signed an agreement
with the Disney Corporation to utilise three of their characters in games for
release next spring and beyond.
Eidos' core business remains strong despite only releasing five titles in the
first six months compared to seven last year. Gross margins have improved
although following the increased development commitments, selling and
administrative costs and goodwill amortisation, Eidos reported an operating loss
of L36.9 million.
In order to bring the share price more in line with the market and to improve
the marketability of our shares, we intend to seek the approval of shareholders
to split each existing 10 pence share into five 2 pence shares. An extraordinary
general meeting is to be called on 25 January 2000 and the split will take
effect from 26 January 2000. A circular will be sent to shareholders outlining
this proposal in more detail in due course.
Ian Livingstone
Chairman
24 November 1999
EIDOS plc
<PAGE>
Unaudited Consolidated Profit and Loss Account
<TABLE>
<CAPTION>
Six months to Six months to
30 September 1999 30 September 1998
L000 L000
<S> <C> <C>
Group turnover - continuing operations 44,060 47,586
Costs of goods sold (19,692) (22,503)
---------- ----------
Gross profit 24,368 25,083
---------- ----------
Selling and marketing (18,330) (12,451)
Research and development (23,558) (16,129)
General and administrative
Goodwill amortisation (5,990) -
Other (13,415) (10,123)
---------- ----------
Operating expenses (61,293) (38,703)
---------- ----------
Operating loss - continuing operations (36,925) (13,620)
Amounts written off investments - (5,250)
Net interest and similar charges (982) (58)
---------- ----------
Loss on ordinary activities before tax (37,907) (18,928)
Taxation 10,913 5,132
---------- ----------
Net loss after tax (26,994) (13,796)
---------- ----------
Loss per share (146.2)p (80.6)p
Loss per share before goodwill (113.8)p (80.6)p
</TABLE>
Notes:
1. The loss per share is based on a weighted average number of ordinary shares
in issue of 18,463,496 for the six months ended 30 September 1999 (1998:
17,110,856).
<PAGE>
EIDOS plc
Unaudited Consolidated Balance Sheet
<TABLE>
<CAPTION>
30 September 1999 30 September 1998
L000 L000
<S> <C> <C>
Fixed assets
Intangible assets 35,041 -
Tangible assets 5,021 6,467
Investments 14,166 6,909
----------- -----------
Total fixed assets 54,228 13,376
----------- -----------
Current assets
Stocks 5,762 4,404
Debtors 54,488 33,617
Cash at bank and in hand 3,165 26,115
----------- -----------
Total current assets 63,415 64,136
Creditors: amounts falling due within one year (49,090) (21,144)
----------- -----------
Net current assets 14,325 42,992
----------- -----------
Total assets less current liabilities 68,553 56,368
=========== ===========
Creditors due after more than
one year (133) (28,892)
----------- -----------
Net assets 68,420 27,476
=========== ===========
Capital and reserves
Called up share capital 2,000 1,711
Share premium account 77,769 49,352
Other reserves 707 167
Profit and loss account (12,056) (23,754)
------------ ------------
Equity shareholders' funds 68,420 27,476
=========== ===========
</TABLE>
Notes:
1. Eidos plc is registered in England and Wales (number 2501949) and its
registered office is Wimbledon Bridge House, 1 Hartfield Road, Wimbledon,
London SW19 3RU.
<PAGE>
EIDOS plc
Unaudited Consolidated Statements of Cash Flow
<TABLE>
<CAPTION>
Six months to Six months to
30 September 30 September
1999 1998
L000 L000
<S> <C> <C>
Net cash outflow from operating activities (31,229) (6,554)
------------ -----------
Returns on investments and servicing of finance
Interest received 528 1,304
Interest paid on bond (652) (951)
Interest paid on finance leases (26) (82)
Other interest paid (587) (208)
----------- ----------
(737) 63
----------- ----------
Taxation
Overseas tax paid (6,225) (6,316)
----------- -----------
Capital expenditure and financial investment
Purchase of tangible fixed assets (1,053) (1,387)
Sale of tangible fixed assets 3 70
Purchase of other investments - (1,498)
----------- -----------
(1,050) (2,815)
----------- -----------
Acquisitions and disposals
Purchase of subsidiary undertakings (14,327) -
Purchase of associated undertakings (17,728) -
----------- -----------
(32,055) -
----------- -----------
Net cash outflow before financing (71,296) (15,622)
Financing
Issue of ordinary share capital 2,317 3
Repayment of principal under finance leases (182) (420)
----------- -----------
2,135 (417)
----------- -----------
Decrease in cash in the period (69,161) (16,039)
============= =============
</TABLE>
Notes:
1. Net cash outflow from operating activities is derived from an operating
loss of L36,925,000 (1998: L13,620,000) adjusted for
depreciation of L1,590,000 (1998: L1,564,000), loss on disposal
of fixed assets of L5,000 (1998: profit L6,000), goodwill
amortisation and write offs of L6,387,000 (1998: L325,000) and
an increase in working capital of L2,286,000 (1998: decrease
L5,183,000).
<PAGE>
FOR IMMEDIATE RELEASE
EIDOS PLC ANNOUNCES FINANCIAL RESULTS FOR THE SECOND QUARTER AND HALF YEAR
ENDED SEPTEMBER 30, 1999
Second quarter revenues increase 25% to L27.3 million ($45.0 million)
Second quarter loss before tax and goodwill L13.5 million ($22.2 million)
LONDON, November 24, 1999 -- Eidos plc (NASDAQ: EIDSY), one of the world's
leading publishers and developers of entertainment software, announced today
results for the three and six months ended September 30, 1999. Revenues for the
quarter were L27.3 million ($45.0 million), up from L21.8 million
for the corresponding period last year. On a US GAAP basis the Company's loss
before tax for the quarter ended September 30, 1999 was L16.8 million
($27.8 million), giving a net loss of L12.8 million ($21.2 million) and a
loss per share of 66.3 pence (109.4c), compared to a net loss of L8.8
million and a loss per share of 51.3 pence in the corresponding period last
year.
Revenues for the half year were L44.1 million ($72.7 million), compared to
L47.6 million for the corresponding period last year. On a US GAAP basis
the Company's loss before tax for the half year was L38.1 million ($62.8
million), giving a net loss of L27.1 million ($44.8 million) and a loss
per share of 147.0 pence (242.6c), compared to a net loss of L11.8 million
and a loss per share of 69.1 pence in the corresponding period last year.
Commenting on Eidos' current trading and prospects, Ian Livingstone, Chairman,
stated, "The year to date has been dominated by a number of strategic
investments for Eidos, including equity stakes in Pyro Studios, Proein, Elixir
Studios and Timeline Studios. In October we increased our holding in Top Cow
Productions to 26% and took a 51% holding in the Dallas based developer, Ion
Storm. In November, we announced the acquisition of a 19.96% holding in the US
based Internet company, Maximum Holdings, as a key step in the unfolding of our
internet strategy for the Group. In addition, we recently signed an agreement
with the Disney Corporation to utilise three of their characters in games for
release next spring and beyond.
Eidos' core business remains strong despite only releasing five titles in the
first six months compared to seven last year. Gross margins have improved
although following the increased development commitments, selling and
administrative costs and goodwill amortisation, Eidos reported an operating loss
of L36.9 million.
In order to bring the share price more in line with the market and to improve
the marketability of our shares, we intend to seek the approval of shareholders
to split each existing 10 pence share into five 2 pence shares. An extraordinary
general meeting is to be called on 25 January 2000 and the split will take
effect from 26 January 2000. A circular will be sent to shareholders outlining
this proposal in more detail in due course".
Charles Cornwall, Chief Executive Officer, added, "Following on from the quiet
first quarter, Eidos' interim results reflect the relatively fewer new releases
in the period coupled with increased levels of development and corporate
activity. This has resulted in turnover of L44.1 million compared to
L47.6 million in the same period last year and operating losses of
L36.9 million compared to losses of L13.6 million last time. Five
new titles were released during the first half compared to seven last year.
Legacy of Kain: Soul Reaver from Crystal Dynamics has been particularly
successful having already sold in excess of one million units since its launch
and is developing into one of our key franchises.
<PAGE>
Eidos plc: Announces Second Quarter and Half Year Results
We enter the Christmas selling season with a substantial, high quality product
line-up representing Eidos' most impressive winter release schedule ever. To
date Power Stone, The Nomad Soul, Revenant and Abomination have already been
released. Tomb Raider: The Last Revelation is released today in North America
and due on 3 December in Europe, with Fighting Force 2, Urban Chaos, Daikatana,
F1 World Grand Prix, Championship Manager Season 99/00 and Gex III on Game Boy
Color still to come. Furthermore, the integrity of our fourth quarter release
schedule is unprecedented with much anticipated titles such as Resident Evil 3,
UEFA Champions League 2000, Thief 2, Fear Affect, Deus Ex and Tomb Raider on
Game Boy Color amongst others, due for launch in this period".
<TABLE>
<CAPTION>
- ---------------------------------- ------------------------------------- ------------------------------------
US GAAP US GAAP
Three Months Ended September 30, Six Months Ended
September 30,
- ---------------------------------- ------------------------------------- ------------------------------------
1999 1998 1999 1998
- ---------------------------------- ------------------------ ------------ ------------------------ -----------
$000* L000 L000 $000* L000 L000
- ---------------------------------- ------------ ----------- ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Net sales 44,963 27,250 21,785 72,699 44,060 47,586
- ---------------------------------- ------------ ----------- ------------ ----------- ------------ -----------
EBITDA (18,939) (11,478) (10,513) (47,764) (28,948) (12,055)
- ---------------------------------- ------------ ----------- ------------ ----------- ------------ -----------
Loss before tax (27,756) (16,822) (13,043) (62,784) (38,051) (16,954)
- ---------------------------------- ------------ ----------- ------------ ----------- ------------ -----------
Net loss (21,160) (12,824) (8,778) (44,778) (27,138) (11,822)
- ---------------------------------- ------------ ----------- ------------ ----------- ------------ -----------
Loss per share (109.4c) (66.3p) (51.3p) (242.6c) (147.0p) (69.1p)
- ---------------------------------- ------------ ----------- ------------ ----------- ------------ -----------
Loss per share before goodwill (77.6c) (47.0p) (41.7p) (184.1c) (111.6p) (49.9p)
- ---------------------------------- ------------ ----------- ------------ ----------- ------------ -----------
- ---------------------------------- ------------------------ ------------ ------------------------ -----------
Weighted average shares 19,347,954 17,110,873 18,463,496 17,110,856
- ---------------------------------- ------------------------ ------------ ------------------------ -----------
</TABLE>
* The Company's financial statements are expressed in Pounds Sterling.
References to 'Pounds Sterling' or 'L' are to the currency of the United
Kingdom and references to '$', 'US dollars' or 'US$' are to United States
currency. Solely for convenience this press release contains translations of
certain Pounds Sterling amounts into US dollars at specified rates. These
translations should not be construed as representations that the Pounds Sterling
amounts actually represent such US dollar amounts or could be converted into US
dollars at the rate indicated or any other rate. Unless otherwise indicated, the
translations of Pounds Sterling amounts into US dollars have been made at the
rate of $1.65 to L1.00, the exchange rate published by Datastream for
September 30, 1999.
Recent developments
* Launched five new titles in the half year (1998: seven)
* Increased losses reflect heavy investment in new titles
* Content based publishing model strengthened by strategic investment
* Internet strategy substantially advanced by Maximum Holdings investment
* Abomination, Revenant, The Nomad Soul and Power Stone released in current
third quarter to date
* Strong release schedule for key selling season
* New Disney licence deal
* Stock split to be proposed to improve marketability
<PAGE>
Eidos plc: Announces Second Quarter and Half Year Results
Acquisitions/Investments
On July 29, 1999 Eidos acquired 25% of the share capital of the Spanish
developer, Pyro Studios SL creator of the Commandos franchise. In addition, 75%
of the related Spanish distributor Proein SA was also acquired securing our
position in the fast growing Spanish software market. The acquisitions are being
accounted for as joint ventures. This has not had a material impact on the
results to September 30, 1999.
In October, Eidos acquired a further stake in Top Cow Productions for $1.8
million bringing the total investment in the company to 26%. Also in October,
Eidos acquired 51% of the Dallas based developer, Ion Storm, for a nominal
consideration effecting our managerial control over that entity.
On November 15, Eidos announced the acquisition for $55 million of a 19.96%
stake in Maximum Holdings. Maximum is a Los Angeles based internet company that
is building a specific entertainment portal encompassing interactive games,
music and entertainment. Eidos and Maximum intend to co-operate to further
Maximum's goal of creating the largest online community for interactive
entertainment. It is intended that Maximum will complete a merger with DVD
Express Inc ("DVD") shortly, giving Eidos approximately 10.2% of the combined
entity. DVD is a leading web based retailer of movies and videos in the rapidly
emerging digital format of Digital Video Disks.
UK GAAP Financial Summary
Eidos reports a loss after tax of L27.0 million for the six months ended
September 30, 1999 compared to a loss of L13.8m for the corresponding
period last year. This loss is after a goodwill amortisation charge of
L6.0 million. Turnover decreased from L47.6 million to L44.1
million. The loss per share was 146.2p or 113.8p excluding goodwill, compared to
80.6p. This is based on a weighted average number of shares outstanding in the
period of 18,463,496 (1998:17,110,856).
The net cash outflow from operating activities was L31.2 million compared
to L6.6 million in the corresponding period of 1998. This is after Eidos'
investment in product development and pure research and development of
L23.6 million (1998: L16.1 million).
On October 22, 1999 Eidos gave notice of its intent to redeem the remaining 18%
($9.0 million) of the US $ convertible bond. Since that date the whole amount
has been converted.
There were five (1998: seven) new games released in the six months ended
September 30, 1999. These were Legacy of Kain: Soul Reaver on PC CD and PSX, FA
Manager on PSX and Official Formula One Racing, Braveheart and Cutthroats on PC
CD. In addition, Warzone 2100 was launched on PSX (following the release on PC
CD in March) and Tomb Raider 2 was released on the Premier and Platinum labels.
Legacy of Kain: Soul Reaver, developed by Eidos' subsidiary, Crystal Dynamics,
has shipped in excess of one million units to date and is developing into a
strong franchise.
Gross margin was 55.3% for the half year compared to 52.7% for the corresponding
period last year. The increase in margin is largely due to lower royalty costs.
Royalty costs in the period were L4.8 million compared to L6.1
million last year. The main releases this half year were internally developed
and had lower royalties payable.
<PAGE>
Eidos plc: Announces Second Quarter and Half Year Results
Selling and Marketing
Advertising costs in the half year were L7.9 million (17.9% of revenue)
compared to L6.4 million (13.4% of revenue) in the corresponding period of
1998. This includes expenditure of L1.6 million in respect of titles to be
released in the second half of the year (1998: L1.9 million).
The fixed element of selling and marketing costs was L10.4 million
compared to L6.1 million in the prior year. This reflects the amortisation
cost of promotional licences and the world-wide departmental headcount increase
of 20%.
Research and Development
Research and development represents the Company's investment in product
development of L22.1 million (1998: L15.0 million) and pure research
and development of L1.5 million (1998: L1.1 million). Product
development includes L15.7 million (1998: L12.3 million) invested in
a pipeline of over 35 titles to be released over the next two years. The
increase partly reflects the additional internal development resource now
available to Eidos following the acquisition of Crystal Dynamics in November
1998.
General and Administrative
General and administrative costs for the period were L19.4 million (44.0%
of revenue) compared to L10.1 million (21.3% of revenue) in 1998. The
total excluding goodwill of L6.0 million, was L13.4 million (30.4%
of revenue), reflecting the increased administrative infrastructure required to
run the expanded operations of the Group.
Taxation
A tax credit of L10.9 million has been applied to the loss on ordinary
activities of L37.9 million. This reflects the projected underlying tax
rate for the year to March 31, 2000 of 34%.
Eidos plc is one of the world's leading publishers and developers of
entertainment software. The Company develops and publishes a diverse mix of
titles for the Sony PlayStation, Sega Dreamcast, Nintendo Color Game Boy and
multimedia PC markets in the US, UK, Europe and Asia. The Company's shares are
traded on the NASDAQ Stock Market under the symbol EIDSY.
Certain statements contained in this press release may be deemed forward-looking
that involve a number of risks and uncertainties. The Company's actual results
may differ materially from the expectations expressed in such forward looking
statements. Among the factors that could cause actual results to differ
materially are world-wide business and industry conditions, including consumer
buying and retailer ordering patterns, products delays, changes in research and
development spending, company consumer relations, in particular, levels of sales
to mass merchants , retail acceptance of the company's published and third-party
titles, competitive conditions and other risks detailed, from time to time, in
the company's SEC filings, including, but not limited to, the Company's form
20-F for the period ended March 31, 1999.
# # #
Contact:
Charles Cornwall, CEO: 011 44 181 636 3000
Jeremy Lewis, CFO: 011 44 181 636 3000
Ryan Barr, Brainerd Communicators: 212 986 6667
Neil Camp, Binns & Co: 011 44 171 786 9600
<PAGE>
EIDOS plc
Unaudited Consolidated Statements of Operations Reconciled to US GAAP for the
three and six months ended September 30, 1999
<TABLE>
<CAPTION>
Three months ended Six months ended
September 30, September 30,
UK GAAP 1999 1999 1998 1999 1999 1998
$000 L000 L000 $000 L000 L000
<S> <C> <C> <C> <C> <C> <C>
Group turnover - continuing operations 44,963 27,250 21,785 72,699 44,060 47,586
Costs of goods sold (18,721) (11,346) (11,325) (32,492) (19,692) (22,503)
--------- --------- --------- --------- --------- ---------
Gross profit 26,242 15,904 10,460 40,207 24,368 25,083
--------- --------- --------- --------- --------- ---------
Selling and marketing (15,614) (9,463) (6,593) (30,244) (18,330) (12,451)
Research and development (19,436) (11,779) (9,064) (38,871) (23,558) (16,129)
General and administrative
Goodwill amortisation (5,735) (3,476) - (9,883) (5,990) -
Other (11,956) (7,246) (6,122) (22,135) (13,415) (10,123)
---------- ---------- ---------- --------- --------- ---------
Operating expenses (52,741) (31,964) (21,779) (101,133) (61,293) (38,703)
---------- ---------- ---------- --------- --------- ---------
Group operating loss - continuing operations (26,499) (16,060) (11,319) (60,926) (36,925) (13,620)
Amounts written off investments - - (5,250) - - (5,250)
Net interest and similar charges (1,480) (897) (77) (1,620) (982) (58)
---------- ---------- ---------- --------- --------- ---------
Loss on ordinary activities before tax (27,979) (16,957) (16,646) (62,546) (37,907) (18,928)
Taxation 6,597 3,998 4,265 18,006 10,913 5,132
---------- ---------- ---------- --------- --------- ---------
Net loss after tax (prepared
under UK GAAP) (21,382) (12,959) (12,381) (44,540) (26,994) (13,796)
---------- ---------- ---------- --------- --------- ---------
Loss per share (110.6c) (67.0p) (72.4p) (241.2c) (146.2p) (80.6p)
Loss per share before goodwill (80.9c) (49.0p) (72.4p) (187.8c) (113.8p) (80.6p)
Reconciliation to US GAAP
Net loss after tax (prepared
under UK GAAP) (21,382) (12,959) (12,381) (44,540) (26,994) (13,796)
Amortisation of goodwill 222 135 (1,647) (238) (144) (3,276)
Amounts written off investments - - 5,250 - - 5,250
--------- --------- --------- --------- --------- ---------
Net loss in accordance with US GAAP (21,160) (12,824) (8,778) (44,778) (27,138) (11,822)
--------- --------- --------- --------- --------- ---------
Loss per share in accordance
with US GAAP
Loss per share (109.4c) (66.3p) (51.3p) (242.6c) (147.0p) (69.1p)
Loss per share before goodwill (77.6c) (47.0p) (41.7p) (184.1c) (111.6p) (49.9p)
</TABLE>
Notes:
1. The Company's financial statements are expressed in Pounds Sterling.
References to 'Pounds Sterling' or 'L' are to the currency of the
United Kingdom and references to '$', 'US dollars' or 'US$' are to United
States currency. Solely for convenience this press release contains
translations of certain Pounds Sterling amounts into US dollars at
specified rates. These translations should not be construed as
representations that the Pounds Sterling amounts actually represent such US
dollar amounts or could be converted into US dollars at the rate indicated
or any other rate. Unless otherwise indicated, the translations of Pounds
Sterling amounts into US dollars have been made at the rate of $1.65
to L1.00, the exchange rate published by Datastream for September 30,
1999.
<PAGE>
EIDOS plc
Unaudited Consolidated Balance Sheets Reconciled to US GAAP
<TABLE>
<CAPTION>
September 30, 1999 March 31, 1999
UK GAAP
$000 L000 L000
<S> <C> <C> <C>
Fixed assets
Intangible assets (net of amortisation of L10,060) 57,817 35,041 25,939
Tangible assets 8,285 5,021 5,668
Investments 23,374 14,166 12,164
-------------- -------------- --------------
Total fixed assets 89,476 54,228 43,771
-------------- -------------- --------------
Current assets
Stocks 9,508 5,762 5,666
Debtors: amounts falling due within one year 89,905 54,488 57,737
Cash at bank and in hand 5,222 3,165 48,220
-------------- -------------- --------------
Total current assets 104,635 63,415 111,623
Creditors: amount falling due within one year (80,999) (49,090) (58,049)
-------------- -------------- --------------
Net current assets 23,636 14,325 53,574
-------------- -------------- --------------
Total assets less current liabilities 113,112 68,553 97,345
-------------- -------------- --------------
Creditors due after more than one year (219) (133) (30,813)
-------------- -------------- --------------
Net assets 112,893 68,420 66,532
============== ============== ==============
Capital and reserves
Called up share capital 3,300 2,000 1,728
Share premium account 128,319 77,769 50,165
Other reserve 1,166 707 707
Profit and loss account (19,892) (12,056) 13,932
-------------- -------------- --------------
Shareholders' funds 112,893 68,420 66,532
============== ============== ==============
Reconciliation to US GAAP
Shareholders' funds (prepared under UK GAAP) 112,893 68,420 66,532
Goodwill 31,436 19,052 19,449
Less in process research and development (3,907) (2,368) (2,368)
Less amortisation (28,050) (17,000) (16,856)
Deferred tax 3,288 1,993 1,993
-------------- -------------- --------------
Shareholders' funds in accordance with US GAAP 115,660 70,097 68,750
============== ============== ==============
</TABLE>
Notes:
2. Eidos plc is registered in England and Wales (number 2501949) and its
registered office is Wimbledon Bridge House, 1 Hartfield Road, Wimbledon,
London SW19 3RU.
<PAGE>
EIDOS plc
Unaudited Consolidated Statements of Cash Flow
<TABLE>
<CAPTION>
Six months ended Six months ended
September 30, 1999 September 30, 1999
$000 L000 L000
<S> <C> <C> <C>
Net cash outflow from operating activities (51,528) (31,229) (6,554)
-------------- -------------- ---------------
Returns on investments and servicing of finance
Interest received 871 528 1,304
Interest paid on bond (1,076) (652) (951)
Interest paid on finance leases (43) (26) (82)
Other interest paid (968) (587) (208)
-------------- -------------- ---------------
(1,216) (737) 63
-------------- -------------- ---------------
Taxation
Overseas tax paid (10,271) (6,225) (6,316)
-------------- -------------- ---------------
Capital expenditure and financial investment
Purchase of tangible fixed assets (1,738) (1,053) (1,387)
Sale of tangible fixed assets 5 3 70
Purchase of other investments - - (1,498)
-------------- -------------- ---------------
(1,733) (1,050) (2,815)
-------------- -------------- ---------------
Acquisitions and disposals
Purchase of associated undertakings (23,640) (14,327) -
Purchase of joint venture (29,251) (17,728) -
-------------- -------------- ---------------
(52,891) (32,055) -
-------------- -------------- ---------------
Net cash outflow before financing (117,639) (71,296) (15,622)
Financing
Issue of ordinary share capital 3,823 2,317 3
Repayment of principal under finance leases (300) (182) (420)
-------------- -------------- ---------------
3,523 2,135 (417)
-------------- -------------- ---------------
Decrease in cash in the period (114,116) (69,161) (16,039)
============== ============== ===============
</TABLE>
Notes:
1. Net cash outflow from operating activities is derived from an operating
loss of L36,925,000 (1998: L13,620,000) adjusted for
depreciation of L1,590,000 (1998: L1,564,000), loss on disposal
of fixed assets of L5,000 (1998: profit L6,000), goodwill
amortisation and write offs of L6,387,000 (1998: L325,000) and
an increase in working capital of L2,286,000 (1998: decrease
L5,183,000).
<PAGE>
Eidos plc Statistical Information for the Period Ended September 30, 1999
Geographical Revenue Mix
(unaudited)
Quarter
<TABLE>
<CAPTION>
September 30, 1999 September 30, 1998
L000s % of Total L000s % of Total
<S> <C> <C> <C> <C>
North America 12,425 45.6% 6,553 30.1%
UK/Europe 13,214 48,5% 14,443 66.3%
Rest of World 1,611 5.9% 789 3.6%
----------- ----------- ----------- -----------
Total net revenues 27,250 100.0% 21,785 100.0%
----------- ----------- ----------- -----------
Half Year
September 30, 1999 September 30, 1998
L000s % of Total L000s % of Total
North America 16,979 38.5% 16,756 35.2%
UK/Europe 24,374 55.3% 28,397 59.7%
Rest of World 2,707 6.1% 2,433 5.1%
----------- ----------- ----------- -----------
Total net revenues 44,060 100.0% 47,586 100.0%
----------- ----------- ----------- -----------
Percentage Change Percentage Change
Quarter Half Year
North America 89.6% 1.3%
UK/Europe (8.5%) (14.2%)
Rest of World 104.2% 11.3%
----------- -----------
Total net revenues 25.1% (7.4%)
----------- -----------
Platform Revenue Mix (Games Revenue only)
(Unaudited)
Quarter
September 30, 1999 September 30, 1998
L000s % of Total L000s % of Total
Console 17,743 68.5% 6,209 29.6%
PC 8,172 31.5% 14,757 70.4%
----------- ----------- ----------- -----------
Total net revenues 25,915 100.0% 20,966 100.0%
----------- ----------- ----------- -----------
Half Year
September 30, 1999 September 30, 1998
L000s % of Total L000s % of Total
Console 23,640 56.6% 17,374 38.0%
PC 18,126 43.4% 28,348 62.0%
----------- ----------- ----------- -----------
Total net revenues 41,766 100.0% 45,722 100.0%
----------- ----------- ----------- -----------
Percentage Change Percentage Change
Quarter Half Year
Console 185.8% 36.1%
PC (44.6%) (36.1%)
----------- -----------
23.6% (8.7%)
----------- -----------
</TABLE>
