Catalis SE / Half Year Results
31.08.2010 20:50
Dissemination of an Ad hoc announcement according to § 15 WpHG, transmitted by
DGAP - a company of EquityStory AG.
The issuer is solely responsible for the content of this announcement.
---------------------------------------------------------------------------
Eindhoven, August 31, 2010 - Catalis SE, the worldwide service provider
services for the digital media and entertainment industry, hereby announces
the launch of Doublesix as a separate Catalis division producing
downloadable self-published games and its 2010 second quarter and half year
unaudited results. It also announces a forecast return to profitability in
the second half of the year.
Launch of Doublesix as New Division for Catalis
As previously reported, Kuju was one of the very first international
development groups to spot the potential of downloadable, self-published
games (DSP games). Whilst market estimates vary, the games software market
in 2010 is approximately $35 billion world-wide, of which 72% is retail
(meaning boxed product bought in stores), 26% is online games ( including
massive multiplayer games and mobile) and approximately 2% (less than $1
billion) are DSP games. However, the DSP sector is forecast to experience
extremely rapid growth reaching some $10 billion by 2013. In contrast, the
retail sector is forecast to decline by 25% to 2013. Kuju's response was to
set up Doublesix, a dedicated studio to address the DSP market segment, in
2007.
Since its establishment, Doublesix has become a leader in the development
and digital distribution of games across all the main downloadable
platforms such as Xbox Live Arcade, PlayStation Network and PC distribution
platforms such as Steam. An early example was the very successful
production and self-publication of Burn Zombie Burn which was released on
the PlayStation Network in March 2009.
In doing so Doublesix gained invaluable experience in how to fund, develop,
publish and launch downloadable games. Doublesix now has considerable
expertise in co-operating closely with the platform holders and in
positioning and marketing such game offerings direct to consumers across
the full life cycle of the game. Doublesix has therefore become a centre of
excellence and is responsible for all such activities in the wider Catalis
Group.
DSP games have the advantage of allowing developers to develop, sell and
retain their own IP, as well as having better margins due to the shortened
distribution chain. Since DSP games are cheaper to produce than boxed
product (typically EUR500-800k as opposed to EUR15+m) they can be sold at
price points of around EUR8-15 (rather than a boxed product at EUR60+).
This is driving the rapid expansion of the DSP market as a much wider
demographic is attracted into purchasing video games for the first time.
In order to emphasise the importance of the self-published games segment
for the future strategy, Doublesix has been established as a new business
division in Catalis and therefore now sits alongside sister divisions Kuju
and Testronic. Nigel Robbins will drive Doublesix's development as a world
class leader in its field with the provision of additional studio
resources. Doublesix currently has a number of games in development based
on a range of new and established IP and due for publication by Doublesix
in the near future. Robbins will also continue to lead Kuju's growth
strategy.
Second Quarter and First Half Results
Current trading in both Testronic and Kuju is profitable and Catalis
Management expects both divisions to be profitable over the second half of
2010. However, the first half of the fiscal year 2010 was challenging. The
first two quarters have historically always been relatively weak and though
the general economic environment has developed more positively, customers
demand for outsourcing services in some of our most important markets was
still affected by the uncertain future development of consumer spending on
home entertainment products. Against this background, our results in the
first half year 2010 remained significantly below expectations.
In the first six months of the fiscal year 2010, revenues of Catalis Group
were down 29.8% from EUR 17.1m in 2009 to EUR 12.0m. In light of a still
difficult industry environment, both Testronic and Kuju experienced a
slowdown of their businesses and respective revenues although the majority
of the underperformance was in Kuju. The EBIT (operating profit) before
non-recurring costs, decreased from EUR 0.7m to EUR -1.9m, due to reduced
revenues. The non-recurring costs amounted to EUR -0.5m and were
attributable to structural and organisational adjustments at Kuju. EBIT
after these costs was EUR -2.4m (2009: EUR-0.7m). Earnings per share for
the six months period amounted to EUR -0.07 compared EUR -0.02 for the
first half of 2009.
Testronic has seen revenues for the second quarter of 2010 decrease from
EUR 2.9m to EUR 2.7m. This represents a decrease of 6.9% which is due to
the significant drop in DVD testing business. Testronic generated an EBIT
before non-recurring costs of EUR -0.2m (2009: EUR0.0m). As there were no
non-recurring costs incurred, EBIT after such costs was also EUR -0.2m
(2009: EUR-0.8m). For the first six months of 2010, revenues at Testronic
amounted to EUR 5.5m (2009: EUR 6.5m), a decrease of 15.4% from the
previous year. Testronic's EBIT before non-recurring costs for the first
half-year of 2010, amounted to EUR -0.2m (2009: EUR 0.4m). As there were no
non-recurring costs incurred, EBIT after such costs was also EUR -0.2m
(2009: EUR -0.4m).
In the second quarter of 2010, Kuju generated revenues of EUR 2.9m (2009:
EUR 5.4m), representing a decrease of 46.3%. EBIT before non-recurring
costs, for the period amounted to EUR -0.5m (2009: EUR 0.2m). Including
non-recurring costs of EUR 0.5m, resulting from structural and
organisational adjustments, EBIT was EUR -1.0m (2009: EUR 0.1m). In the
first six months of 2010, Kuju generated revenues of EUR 6.5m (2009: EUR
10.6m), representing a decrease of 38.7%. Kuju's EBIT before non-recurring
costs for the first half of the fiscal year 2010 amounted to EUR -1.2m
(2009: EUR 0.9m). Including non-recurring costs of EUR 0.5m, EBIT was EUR
-1.7m (2009: EUR 0.3m).
Having appointed Nigel Robbins as the new CEO of Kuju in April and Seth
Hallen as the new CEO of Testronic in July, we have found two renowned CEOs
for our business divisions to give new impetus to our business development
and to secure the continuation of our high quality service philosophy for
the digital media and entertainment industry.
Overall, Testronic's first half year of 2010 was affected by the ongoing
downturn in the US home entertainment business, especially in DVD testing.
Testronic's European activities actually showed progress against 2009 with
slightly improved revenues and profits however this was not enough to
counteract the downturn in the US market. On the positive side of the home
entertainment business, the Blu-ray segment continued its strong growth
while the installed base of Blu-ray players is increasing as prices fall.
Film studios are now putting out more of their back catalogue on Blu-ray to
benefit from its growing popularity.
Testronic is benefitting from increased digital distribution and Blu-ray
business, but the continuous drop in DVD production provides a significant
pressure on the company in the short-term. Though DVD testing schedules are
looking better for the second half of the year, pricing is an increasingly
crucial issue in this business. However, towards the end of the second
quarter, business started to pick up providing a positive sentiment for the
coming third quarter.
Recent highlights for Testronic include:
* Continued growth in hardware and consultancy work with Dutch and German
cable operators and various Digital TV customers
* Increasing work load in the area of digital distribution including for
major Hollywood studios
* Good growth in games testing
* New customers include digital agencies, cable operators and
video-streaming service providers
* Acceptance by influential trade bodies such as WiMedia Alliance, Digital
Entertainment Group and Entertainment Supply Chain Academy
* Tested new motion controller for major games platform customer
* Launched 3D testing facilities in US and UK for both 3D Blu-ray and 3D
games
* Seth Hallen appointed as new Testronic CEO
The market environment in the video games industry is still difficult.
Publishers are generally still cautious when it comes to committing to big
budget IPs and games in light of recent failures of certain flagship
releases. Thus, some bright spots in video games software sales such as Red
Dead Redemption cannot hide the fact that other big titles have
disappointed at retail and total software and hardware sales were still
challenging in key territories. Kuju itself suffered from the fact that a
major development contract that was expected to be received in Q2 was
cancelled by the publisher. This meant a sudden headcount reduction in that
studio was required and resulted in costs which negatively affected the
EBIT. Kuju's total headcount since the beginning of 2010 has been reduced
by 35% to 184.
Consumer demand in this segment is generally focused on the big budget AAA
titles for consoles on the one hand, and on downloadable games for consoles
in addition to handheld devices such as iPhone and games on social network
sites like Facebook. The mid-market for consoles has therefore experienced
considerably less demand for new titles and reduced work for developers.
This trend is confirmed by recent results from big players in the market,
where Disney has seen a 74% increase in revenues of its Interactive Media
unit for the third quarter on the back of higher self-published video game
sales and Activision reported a more than 20% increase in sales from
digital online channels in the second quarter.
Recent highlights for Kuju include:
* Completed four games all based on the well-known movies being Grease,
Sorcerer's Apprentice, Top Gun and Aragorn's Quest (Lord of the Rings)
* Completed Geometry Wars, one the first titles for the iPad
* Major critical and commercial success with the release two months ago of
Art Academy for the Nintendo DS/DSi. The game debuted in third place on the
Japanese All Formats Games Chart and has now sold 135,000 copies in Japan.
Backed by a Europe-wide high profile TV advert campaign by Nintendo, sales
in Europe are equally impressive. Since its launch in
August these have reached 70,000 and are growing strongly each week with
some retailers already selling out of stock. US launch is in October
* New development contracts have been signed in the last 6 weeks with
Disney, Sega,505 Games and a leading Japanese games company
* Kuju Entertainment was recently granted 3DS Developer status (for the new
DS handheld device that operates in 3D) by Nintendo following due diligence
visits by Nintendo to Kuju's Headstrong (London) and Zoë Mode (Brighton)
studios
* First social game for Facebook called Cube Rats is now nearing completion
* Games in production include those using the new Move motion controller
from Sony
* Vatra named by the Japanese publisher Konami as developer on PS3 and
Xbox360 of Silent Hill 8, the latest instalment from the popular
multi-million dollar Silent Hill franchise
* Fabric, the recently completed internally developed game engine
technology, is now being used to build a number of the current games in
development
* Nigel Robbins appointed as new Kuju CEO
Outlook for Second Half 2010
In terms of business development in the third and fourth quarter, Testronic
sees some opportunities in Europe and in the US but it expects a strong
recovery of the markets to start next year. While the home entertainment
business is currently heading to its seasonal peak and therefore business
will pick up in the second half of the year it is unlikely that we will be
able to recover the revenues that were lost in the first half year. Games
testing will be well ahead of last year's figures. Software and hardware
testing as well as consultancy are expected to move along well and hit
their original budget.
As for Kuju, there is goodwill from publishers around the group of studios
in the market, providing a sound foundation for future projects based on
positive long-term relationships. Following the recent adjustments in
headcount and reductions in other fixed costs as well as a refocusing of
sales efforts, management expects to make a small profit for the second six
months of the year and setting the foundations for a return to material
profit in 2011.
In the first half year 2010, some of our markets were still affected by the
impact of the 2009 economic downturn. However, towards the end of the
second quarter we have seen business picking up in many of our markets and
both of our business divisions have already returned to profitability in
July. Therefore, though our overall first half year financial results were
significantly below expectations, we expect better performance over the
rest of the year as our markets are heading to their seasonal peaks and
expect to post profits at the Group level for the second half of the fiscal
year.
We have recently updated our Catalis website. For the full 2010 second
quarter and half year report and further information on Catalis SE and its
wholly owned subsidiaries, Testronic, Kuju and Doublesix, please refer to
www.catalisgroup.com, www.kuju.com, www.doublesixgames.com and
www.testroniclabs.com.
For further questions please contact our Investor Relations team
directly:
Investor Relations Catalis SE
Investor Relations Team
t: +49 89 24 41 18 - 413
f: +49 89 24 41 18 - 499
info@catalisgroup.com
_______________________________________________________________________
About Catalis SE:
Catalis is a worldwide leading outsourcing provider focusing on high-end
technical services relating to the creation of digital content for the
film, video games and software industries. Catalis offers both testing and
development services. It operates through its wholly owned subsidiaries
Testronic, Kuju and Doublesix from ten locations throughout the US, the UK,
Poland, Belgium and the Czech Republic.
Forward-looking statements
This press release contains forward-looking statements. These statements
are based on current expectations, estimates and projections of Catalis SE
management and information currently available to the company. The
statements involve certain risks and uncertainties that are difficult to
predict and therefore Catalis SE does not guarantee that its expectations
will be realized. Furthermore, Catalis SE has no obligation to update the
statements contained in this press release.
31.08.2010 20:50 Ad hoc announcement, Financial News and Press Release distributed by DGAP. Medienarchiv at |[![CDATA[|[a href="http://www.dgap-medientreff.de"|]www.dgap-medientreff.de|[/a|]]]|] and |[![CDATA[|[a href="http://www.dgap.de"|]www.dgap.de|[/a|]]]|]
---------------------------------------------------------------------------
Language: English
Company: Catalis SE
Geldropseweg 26-28
5611 SJ Eindhoven
Niederlande
Phone: +31 (0)40 2135930
Fax: +31 (0)40 2135604
E-mail: info@catalisgroup.com
Internet: www.catalisgroup.com
ISIN: NL0000233625
WKN: 927093
Listed: Regulierter Markt in Frankfurt (General Standard);
Freiverkehr in München, Düsseldorf, Berlin, Stuttgart
End of News DGAP News-Service
---------------------------------------------------------------------------
DGAP-Adhoc: Catalis SE announces the launch of Doublesix as a new business division, 2010 second quarter and half year results and forecast return to profitability in second half of 2010
| Source: EQS Group AG