3 July 2002
For immediate release
Wednesday 3rd July 2002
('Warthog' or 'the Group')
WARTHOG ANNOUNCES PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MARCH 2002
• Turnover increased by 134% from £3.8 million (for 2001) to £8.9 million.
• Profit before tax increased by 55% from £314,000 (for 2001) to £488,000.
• 5 PC and console games successfully published with 24 PC and console and
3 GameBoy announced games in the pipeline.
• Warthog also announces today the signing of a contract for its original
intellectual property, 'X10', to Conspiracy, the North American publisher.
The game will be developed for PC, Xbox, GameCube and Playstation 2.
• The Group has expanded considerably through organic means and the
acquisitions of the complete development team of Infogrames' Manchester
studio and 42-Bit AB, a 24 man team based in south Sweden. Total workforce
has increased to 200, with 176 employees and 24 subcontractors.
• In January 2002 Warthog successfully raised £2.1 million (before expenses)
by way of an equity placing for cash to be used to provide further working
capital for organic growth and acquisitions.
• The Group was granted the Queen's Award for Enterprise in the
International Trade category in April 2002.
Commenting on the results, Ashley Hall, CEO of Warthog said:
'It has been another highly successful year for Warthog and we are delighted
with the progress we have made in becoming one of the leading games development
companies in Europe. The Group has matured to become a highly rated supplier of
choice to many of the games industry's major publishers. Our portfolio of
games, across a wide range of platforms, is impressive and the talent and
creativity of our team has been recognised with a number of awards for games.
The extensive experience of our staff combined now covers over 1,500 titles
gained from the leading studios in Europe. We have expanded considerably this
year, through both acquisition and organic means, and the integration of these
acquisitions and the management of our growth have been highly successful.
Warthog is well positioned to take advantage of the upturn in the dynamic games
industry and to exploit this we will continue our expansion.'
CEO - Warthog plc 0161 608 1200
Corporate Development - Warthog plc 0161 608 1200
David Simonson/ Clare Maciocia
Merlin Financial 0207 606 1244
Background to 'X10'
'X10' is a first person shooter for PC, Xbox, GameCube and PlayStation2.
Warthog has signed the publishing rights of 'X10', its own intellectual property
to Conspiracy Entertainment, a publisher, marketer and developer of
entertainment software in North America and Europe.
'X10' places a gamer as a soldier, who, under strict instructions, must explore
the world of 'X10' and tackle anything the environment throws at them, including
political intrigue, military factions and deadly predators.
Conspiracy has worked with Warthog before in creating games for The Warner Bros.
Licences Tiny Toons and Animaniacs, via Conspiracy's joint venture with SWING!
About Conspiracy Entertainment
Based in Santa Monica, CA., Conspiracy Entertainment Corporation
(www.conspiracygames.com) is a publisher, marketer and developer of
entertainment software in North America and Europe. The company develops and
licenses properties from several sources, including global entertainment and
media companies, and publishes software for DVD media, personal computers,
wireless devices and all major video game platforms including Sony
PlayStation(R) 1 and 2, Microsoft XboxTM, Nintendo GameCubeTM and Game
I am delighted to report that Warthog plc has had another highly successful
year, in which we have maintained our growth and delivered increased profits.
The Group has matured to become a highly rated supplier of choice to many of the
games industry's major publishers, with an impressive portfolio of games under
development and released into the market. We are well placed to continue to
grow shareholder value in this dynamic marketplace.
Our revenue increased by 134%, from £3.8 million to £8.9 million, as we
delivered eleven games over this period. Our profits before tax increased by
55% to £488,000. We raised approximately £2.1 million (before expenses) by way
of an equity placing for cash in January 2002, to provide further working
capital for our organic growth and acquisitions. In line with the policy
outlined in our flotation prospectus, the Directors do not propose the payment
of a dividend.
Warthog has expanded considerably this year, in line with our strategy to
exploit the burgeoning entertainment market which has been fuelled by the retail
success of the next generation of games platforms:- Sony's PlayStation 2 (PS2);
Nintendo's GameCube (GC) and Microsoft's Xbox. These new consoles enable
astonishing graphical realism and game playing complexity to be offered to the
customer, which in turn means games development projects are becoming bigger and
require higher investment in expertise and facilities. We have benefited
significantly from this trend, which has been difficult for the smaller
development organisations, who do not have the necessary size and scale to
satisfy the publishers who are funding the projects.
I am pleased to report that, despite the challenges that achieving such
significant growth brings, we are in better shape at the end of the past year.
We have delivered games that have delighted our customers and we have formed new
and improved existing relationships with the leading publishers. We have
implemented structures in the Group which have enabled us to become more
internally organised as well as ensuring that the welfare and professional
development of our staff is a key consideration. Our recent Queen's award for
Enterprise sealed a very satisfactory year's progress for the Group, its
management and staff.
The creativity and dedication of our staff in developing games is the heart of
our success, and I sincerely thank them for all their hard work. We have
committed considerable resources to retain and motivate our staff and it is
encouraging to learn that 93% of them reported that they enjoy their job in a
recent employee survey. However we are not complacent and constantly review
ways in which we can improve their skills, motivation and job satisfaction.
Staff numbers have doubled this year, through acquisition and organic growth,
without having to lower our standards. In November 2001, we acquired the
complete development team of Infogrames' Manchester studio, who are now an
integral part of our Cheadle Office. On the 5th April 2002, we completed the
acquisition of 42-Bit AB based in southern Sweden, taking our total workforce to
200, with 176 employees and 24 subcontractors. The availability of superb
development talent in Sweden, and their lower operating costs, made this an
ideal step in our expansion programme.
The strength of our management resources has paid dividends, ensuring we have
the appropriate structures and processes to enable us to grow at such a rapid
rate. In improving our Corporate Governance we have established a Risk
Management Committee, in addition to our Audit and Remuneration Committees, and
management have already addressed several key issues highlighted by this group.
The arrival of the new game-playing consoles has invigorated the industry and
ensured its dynamic growth for the foreseeable future. We have also invested,
albeit cautiously, in understanding the emerging Mobile and interactive-TV
markets and are now well placed to exploit these opportunities as and when they
achieve sufficient critical mass, but without having committed significant
resources ahead of tangible returns.
Warthog has demonstrated that we can manage growth both organically and through
acquisition and we will endeavour to continually add value to the Group as we
grow at a similarly rapid pace, going forward. While being ambitious in our
growth objectives, we will continue to apply the same stringent levels of
diligence and prudence in considering all opportunities.
Iain Macdonald 3rd July 2002
Chief Executive's Review
As has been widely reported in the media, the arrival of new hardware platforms
has energized the games market, expanding it rapidly. The PlayStation2 (PS2)
has now sold over 20 million units worldwide and Microsoft's Xbox and Nintendo's
GameCube (GC) have both firmly established their presence in the market. Recent
competitive pricing moves by these hardware vendors have stimulated this growth
The video and computer games industry has overtaken cinema, music and video in
value terms in Europe, and is forecast to do the same in the USA and Japan,
having a total value in excess of $20 billion per annum. The market is growing
rapidly in all areas and is forecast to rise to $30 billion by 2004.
Warthog has been successful in securing contracts with leading global
publishers, most notably THQ and BBC Worldwide. It is our strategy to work
more closely with an increasing range of top publishers as well as those we
already have an excellent working partnership with, including Activision, Crave,
Infogrames, SCi, SWING! and New Kid Co. An impressive eight out of ten of our
initial customers have already placed repeat business with us, which is
testament to the strength of our ongoing relationships.
Our staff are our principal asset and we see their welfare as a high priority.
I am continually delighted by the creativity and commitment to push the
boundaries of great quality games and I thank them for their continuing hard
work. The recent employee survey, from which we have already quoted, also
highlighted that these feelings are reciprocal with 90% saying they were proud
to work at Warthog, and 85% considering the company cares for its employees.
We acquired the Manchester studio of Infogrames in November 2001 and the full
development team moved into our offices, developing the 'Loons' game. We had
already been working with our new Swedish team for over a year, on a subcontract
basis, as they developed the 'Rally Championship' game on PS2 and a GameBoy
Advance (GBA) game. We completed the acquisition of this business a few days
after the end of our financial year, in early April 2002. The Swedish team are
now developing the next version of 'Rally Championship' and are operating well.
I welcome both these new Warthog teams to our fold.
We have also been able to recruit some excellent, highly experienced staff from
other games developers, which has enabled us to grow organically at a faster
rate without reducing our quality standards. The combined experience of our
staff now covers over 1,500 titles gained from the leading studios in Europe.
Our technology strategy is driven by three key aims: firstly, to increase the
quality of our games so that they are better than those of our competitors;
secondly, to reduce development project timescales to get our products into the
market faster; and finally, to deliver working games early in the development
cycle, facilitating visibility and early product assessment by publishers.
The latest version of our 'Tusk' game engine is being simultaneously developed
across four projects and is modular in design, enabling the production of PC,
Xbox, GC and PS2 games. 'Tusk' is complimented by its editor, 'Snout', which has
grown out of level editors, object editors, mission editors, productivity and
simulation tools and is used by artists, designers, musicians and programmers in
a what-you-see-is-what-you-get style. Artists, designers and musicians receive
a simulation of their work within the game, thus giving instant feedback.
Our driving engine, 'Hoof', developed for the 'Rally Championship' games, is
built specifically for outdoor racing games, which predominantly follow a linear
race. It utilises 'Tusk Physics', which enables extensive configurability for
the vehicles. 'Hoof' has now had its own editor developed, 'Kangaroo'.
Games released in 2001/2002
We have delivered three PC/console games, two GameBoy games and six mobile games
during this financial year. The consistent success of our games is shown by the
average unit sales; for PC and PlayStation games the average sales are now
260,000 units and 100,000 units for GameBoy games.
PC & Console Titles released in 2001/2 Platform Client
Rally Championship Xtreme PC Sci
Tiny Toons - Buster Saves The Day GBC Swing!
Tiny Toons - Plucky's Big Adventure PS1 Swing!
Tiny Toons - Wacky Stackers GBA Swing!
Quiz Show PC Digital Bros.
The PC version of 'Rally Championship' was released in November 2001 winning the
'PCZONE Award for Excellence'. The PS2 version hit the shops at the beginning
of June 2002. The game has received many accolades from the industry press
including 'the title to leave McRae fuming in second place' from PlayNation
magazine. The GC version is due out in August and will be the first Rally game
published on GC. Considering this was our first driving game, and was developed
for the new platforms we are delighted to have produced such a great game,
in-line with the best driving studios in the industry. The arrangement with SCi
Entertainment has been extended, and our Swedish office is now working on the
next version of 'Rally Championship' for PC, PS2, Xbox and GC.
We completed three 'Tiny Toon' games 'Buster Saves the Day' on GBC, 'Plucky's
Big Adventure' on PS1 and 'Wacky Stakers' on GBA for SWING! . 'Quiz Show' was
completed for a new publisher, Digital Bros., on PC. The PS1 version is due to
be completed early in the next financial year.
Games in production in 2002
We have announced twenty-four PC/console games, three GameBoy games and several
mobile games in production.
Announced PC & console titles in Platform Client Completes FY FY
development (Calendar) 2002/3 2003/4
H1 H2 H1 H2
Rally Championship 6 PS2 SCi Complete x
Rally Championship 6 GC SCi Q2 2002 x
Quiz Show PS1 Digital Bros. Complete x
Animaniacs - Pinky and the Brain, the GBA Swing! Complete x
Animaniacs - Hollywood Hijinx GC Swing! Q4 2002 x
Animaniacs - Hollywood Hijinx PS2 Swing! Q4 2002 x
Animaniacs - Hollywood Hijinx PC Swing! Q4 2002 x
Animaniacs - Hollywood Hijinx Xbox Swing! Q4 2002 x
Animaniacs - Lights Camera Action GBA Swing! Q2 2002 x
ET PS2 New Kid Co Q3 2002 x
Loons Xbox Infogrames Q2 2002 x
Mace Griffin Bounty Hunter PC Crave/EA Q4 2002 x
Mace Griffin Bounty Hunter Xbox Crave/EA Q4 2002 x
Mace Griffin Bounty Hunter PS2 Crave Q4 2002 x
Mace Griffin Bounty Hunter GC Crave Q4 2002 x
Wolverine's Revenge PS2 Activision Q1 2003 x
BattleBots PS2 THQ Q1 2003 x
BattleBots GC THQ Q1 2003 x
Robot Wars GBA BBC Q4 2002 x
Rally Championship 7 PC SCi Q4 2003 x
Rally Championship 7 Xbox SCi Q4 2003 x
Rally Championship 7 PS2 SCi Q4 2003 x
Rally Championship 7 GC SCi Q4 2003 x
X10 Xbox Conspiracy Q1 2004 x
X10 PS2 Conspiracy Q1 2004 x
X10 GC Conspiracy Q1 2004 x
X10 PC Conspiracy Q1 2004 x
We are developing six 'Animaniacs' games for SWING! on this children's cartoon
series. 'Animaniacs - Hollywood Hijinx' is being developed for the PC, Xbox,
PS2 and GC platforms simultaneously using the TUSK engine. 'Animaniacs - Pinky
and the Brain the masterplan' is Warthog's first 2D platform game on the GBA.
The second GBA game, 'Animaniacs - Lights Camera Action', has been developed in
our Swedish office and pioneers a new 2.5D isometric game engine.
Our second title with Publisher New Kid Co., 'ET The Extra Terrestrial' will now
be released at the same time as the new DVD re-release of the film during the
peak Thanksgiving/Christmas period.
The Warner Bros. Title, 'Loons', based on the 'Looney Tunes' characters, is
scheduled for publication later in 2002. We acquired this game with the
development team from Infogrames in November 2001 and have developed the game
under a normal publishing contract for Infogrames.
'Mace Griffin Bounty Hunter' is consistently receiving critical acclaim from the
games industry press, and was heavily promoted at the industry's premier
exhibition, E3, in May 2002, in Los Angeles receiving 'Runner-up' Awards in two
categories from IGN magazine. I do believe we have created a lasting
intellectual property that will be exploited in future years. Crave have
extended our contract to cover PS2 and GC versions as well as the PC and Xbox
platforms. Electronic Arts will publish the Xbox and PC versions in Europe and
the PC version in the USA.
Our X-men game, 'Wolverine's Revenge', for Activision on PS2 is progressing well
and has received good reviews from the games industry press. In line with the
delay in the release of the film, the game is now scheduled for release in the
second quarter of 2003. This game has been subcontracted to one of our partner
companies, an arrangement that is mutually beneficial.
We won our first contract with the premier publisher THQ for both the PS2 and GC
versions of 'Battlebots', the American version of 'Robot Wars'.
We secured a contract with BBC Worldwide for one of their premier titles, 'Robot
Wars', on GBA. We are pushing back the technical boundaries on the GBA and will
deliver a 'true' 3D game with real-time rendered robots later this year.
We have extended our partnership with SCi Entertainment to develop the next
version of 'Rally Championship, Version 7' for the PC, Xbox, PS2 and GC. SCi
will fund the development of the PC version and we will be self-funding the
Xbox, PS2 and GC versions in return for an increased royalty rate, in a similar
manner to 'Rally Championship 6'. Our Swedish office, following on from their
great success with the previous version, will undertake the development work for
In line with our stated strategy we have invested development time in creating
new characters, concepts and games. The fulfilment of this strategy is the
award of a contract for 'X10' an original concept with American publisher
Conspiracy. Following on from 'Mace Griffin Bounty Hunter' this is our second
original intellectual property to be signed-up. Although a new name to these
pages, we have worked well with Conspiracy for the last few years via their
previous joint venture with SWING!
Mobile & iTV
The Mobile entertainment market is beginning to gather momentum and the wireless
telephone network and service operators, who have had a turbulent year, are now
recognising that the transmission of data and entertainment will increase their
revenues. We have positioned ourselves well with relationships with Digital
Bridges and THQ without committing significant investment. Although the exact
timing and technologies are hard to predict, we are confident that we are poised
to exploit this market as and when it emerges.
Mobile Titles Platform Client Completes FY 2001/2 FY 2002/3
H1 H2 H1 H2
Pirate Adventure Unity Digital Bridges Complete x
Adventureland Unity Digital Bridges Complete x
Streetfighter Unity/SMS THQ Complete x
Streetfighter Unity THQ Complete x
Ghost Town Pecan Cash-U Complete x
Charm Pecan/SMS Cash-U Complete x
Love Bug Pedan/SMS Cash-U Q2 2002 x
'Pirate Adventure', our first Mobile game to be published, has now been released
in the UK, USA, Canada, New Zealand and the Philippines. We look forward to the
release of our other games in the near future.
This year's figures are affected by the acquisition of Infogrames' Manchester
Studio, as detailed in our half-year report. In January 2002 we raised
approximately £2.1 million before expenses by way of a placing for cash. This
funding allowed us to continue our growth at a very considerable pace, both
organically and through acquisition, as well as allowing us to invest in
creating new Intellectual Properties for games.
We have continued to invest in computers and infrastructure to support our
Equally we have continued to invest in our head office in Cheadle, Manchester
and subsequently increased our debt funding secured against the office in line
with the increase in value of the building. Our cash position remains strong,
at £2.8 million at the year-end.
We have established ourselves as one of the leading games development companies
in Europe, with good relationships with many of the top publishers and
credibility with our investors. We have improved our capabilities at a greater
rate to our growth, and integrated our acquisitions successfully.
The games market is expanding rapidly and to exploit this we will continue to
invest carefully in creating original intellectual property, advancing our
proprietary technology and selectively self-funding games.
The Mobile and iTV formats provide further opportunities to us and we will
continue to pursue these in a prudent manner.
Ashley Hall 3rd July 2002
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the year ended 31 March 2002
TURNOVER 8,858,117 3,782,386
Cost of sales 7,202,843 2,880,929
Gross profit 1,655,274 901,457
Other operating expenses (net) 1,206,428 606,896
OPERATING PROFIT 448,846 294,561
Profit on sale of fixed asset investments - 33,800
PROFIT ON ORDINARY ACTIVITIES BEFORE INTEREST 448,846 328,361
Investment income 77,536 34,135
Interest payable 38,591 48,346
PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 487,791 314,150
Taxation 182,437 102,172
RETAINED PROFIT FOR THE YEAR 305,354 211,978
Earnings per ordinary share - basic 0.72p 0.66p
Earnings per ordinary share - diluted 0.64p 0.65p
The operating profit for the year arises from the group's continuing operations.
No separate statement of Total Recognised Gains and Losses has been presented as
all such gains and losses have been dealt with in the profit and loss account.
CONSOLIDATED BALANCE SHEET
31 March 2002
Tangible assets 1,988,025 1,209,641
Investments - -
Intangible assets - -
Stock 1,470,342 633,813
Debtors 3,649,522 937,003
Cash at bank and in hand 2,828,801 3,560,409
CREDITORS: Amounts falling due within one year 1,306,618 606,209
NET CURRENT ASSETS 6,642,047 4,525,016
TOTAL ASSETS LESS CURRENT LIABILITIES 8,630,072 5,734,657
CREDITORS: Amounts falling due after more than one year (1,137,992) (550,034)
PROVISIONS FOR LIABILITIES AND CHARGES (25,011) -
CAPITAL AND RESERVES
Called up share capital 461,497 417,891
Share premium account 6,243,147 4,309,661
Merger reserve 52,463 52,463
Profit and loss account 709,962 404,608
SHAREHOLDERS' FUNDS 7,467,069 5,184,623
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 March 2002
Cash flow from operating activities (2,145,012) (821,265)
Returns on investments and servicing of finance 38,945 (14,211)
Taxation (105,862) (49,765)
Capital expenditure and servicing of finance (1,096,774) (307,954)
CASH OUTFLOW BEFORE FINANCING (3,308,703) (1,193,195)
Financing 2,577,095 4,722,646
INCREASE/(DECREASE) IN CASH IN THE PERIOD (731,608) 3,529,451
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN DEBT
Increase/(decrease) in cash in the period (731,608) 3,529,451
Change in net debt resulting from cash flows (587,958) 12,000
MOVEMENT IN NET DEBT IN YEAR (1,319,566) 3,541,451
NET FUNDS/(DEBT) AT 1 APRIL 2001 2,998,375 (543,076)
NET FUNDS AT 31 MARCH 2002 1,678,809 2,998,375
Notes to the Results
1. Publication of non-statutory accounts
The financial information contained in this preliminary statement does not
constitute statutory accounts as defined in Section 240 of Companies Act 1985.
The financial information for the year ended 31 March 2002 has been extracted
from the audited group financial statements on which the auditors report was
signed on 22 June 2002.
The following are extracts from the notes to the audited group financial
statements for the year ended 31 March 2002.
1. CASH FLOWS 2002 2001
A Reconciliation of operating profit to net cash inflow from operating
Operating profit 448,846 294,561
Depreciation and amortisation 318,390 191,939
Increase in stocks (836,529) (633,813)
Increase in debtors (2,716,268) (550,797)
(Decrease)/increase in creditors 640,549 (123,155)
Net cash flow from operating activities (2,145,012) (821,265)
B Analysis of cash flows for headings netted in the cash flow
Returns on investments and servicing of finance
Interest received 77,536 34,135
Interest paid (38,591) (48,346)
Net cash outflow from returns on investments and servicing of finance 38,945 (14,211)
Capital expenditure and financial investment
Purchase of tangible fixed assets (1,096,774) (377,954)
Payments to acquire investments - -
Disposal of fixed asset investment - 70,000
Net cash outflow from capital expenditure and financial investment (1,096,774) (307,954)
Issue of ordinary share capital 2,102,932 5,308,706
Issue costs (113,837) (574,060)
Repayment of other long term loans (12,000) (12,000)
New Loan 600,000 -
Net cash inflow from financing 2,577,095 4,722,646
CASH FLOWS (continued) At At
1 April 31 March 2002
2001 Cash flow £
C Analysis of net debt £ £
Cash in hand and at bank 3,560,409 (731,608) 2,828,801
Debt due within 1 year (12,000) - (12,000)
Debt due after 1 year (550,034) (587,958) (1,137,992)
(562,034) (587,958) (1,149,992)
Total 2,998,375 (1,319,566) 1,678,809
2 EARNINGS PER SHARE
Earnings and the number of shares used in the calculations of earnings per share
are set out below:
Profit after tax 305,354 211,978
Weighted average number of shares 42,593,312 31,913,249
EPS (pence) 0.72 0.66
Profit after tax 305,354 211,978
Weighted average number of shares 47,496,256 32,812,290
EPS (pence) 0.64 0.65
3. Annual Report
The annual report for the year ended 31 March 2002 will be mailed to
shareholders in due course.
This information is provided by RNS
The company news service from the London Stock Exchange