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euro adhoc: JoWooD Productions Software AG
preliminary annual result for 2003 (E)
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Group result increased to over EUR 3.6 million Restructuring successfully completed - sustainable strategic repositioning achieved
JoWooD Productions Software AG, a company quoted on the Vienna Stock Exchange has completed its turnaround following difficulties during the business year 2002. The positive result for 2003 confirms the companys successful restructuring and repositioning
The preliminary EBIT increased to EUR 7 million (2002: EUR -42.8 million). The preliminary group result after minorities increased to EUR 3.7 million (2002: EUR -28.6 million). JoWooD has, thus, managed to achieve a sustainable profitability increase through a successful strategic and structural reorganization of the company.
The decrease in preliminary sales from EUR 43.5 million in 2002 to EUR 23 million in 2003 is in line with the companys new business model. Last years sales included trading goods from third party suppliers as well as revenues from distribution. In the course of the strategic repositioning JoWooD refocused on its core competencies, development and publishing of top titles. The distribution function was outsourced to external distribution partners. In 2002, the business areas development and publishing contributed approx. EUR 16 million to group sales. In the relevant business area, JoWooD achieved a revenue increase of nearly 30 percent in 2003.
JoWooD has successfully re-established itself in the financial market during 2003 and is considered the first company to have managed a return to the Prime Market segment of the Vienna Stock Exchange.
"This years results confirm the viability of our new strategy - also with respect to our much larger industry peers. The primary objective for the business year 2004 is to reinforce JoWooDs strategic position and increase international sales of our products. In 2004 the company will also focus on expanding its console business. We are very proud of our result for 2003. It will serve as a solid foundation for future growth", said CFO, Michael Pistauer.
The percentage of foreign sales has risen significantly in comparison to previous years. In 2002 the percentages of foreign sales and foreign sales excluding German speaking countries amounted to 55 percent and 27 percent, respectively. In 2003 these percentages increased to 74 percent and 40 percent, respectively. A further internationalization of JoWooDs business is on the agenda for 2004.
JoWooD managed to establish and build several successful brands in 2003, in particular SpellForce and the Gothic Series. The continuation of this brand strategy will be a further success factor for 2004 and 2005. In addition to these company owned brands JoWooD will bolster its portfolio by games based on licensed film- and TV IPs such as Stargate SG1 in 2005 and another title based on a successful film IP scheduled for release in 2004 which is to be officially announced within the coming weeks.
JoWooDs accounting principles are significantly more conservative than those of its industry peers: Titles are depreciated within one year, minimum guarantee advance payments are not booked as profit-related advances, no "Percentage of Completion" is booked for titles under development. License payments for sales above contractual minimum guaranties during November and December 2003 will be booked in 2004.
The JoWooD Groups balance sheet total was reduced to approx. EUR 48 million in 2003. This corresponds to a reduction of approx. EUR 4 million compared to the previous year. The balance sheets asset side holds in excess of EUR 10 million cash position (2002: EUR 1 million). The equity ratio before minority interests is approx. 83 percent (2002: approx. 27 percent).
The Bank Agreement II, which includes a debt waiver of EUR 6.5 million before taxes, was successfully executed in 2003. The companys debt was reduced to approx. EUR 9 million (2002: approx. EUR 19 million) -EUR 8 million thereof being long term debt. Short term liabilities were reduced from EUR 34.3 million 2002 to EUR 8.1 million Long term liabilities are down at EUR 8.2 million from EUR 12.3 million in the previous year. The corresponding total reduction of liabilities amounts to approx. EUR 30 million
A debt equity swap scheduled for 2003 which was not recorded in the commercial register within the reporting period will be booked in 2004. This swap will lead to an equity increase of EUR 2 million with a similar decrease in debt.
A partial breach of the 2002 Bank Agreement by some of the signatory banks led to a substantial liquidity shortage and to profit problems in 2003. Total restructuring and one-time expenses amounted to EUR 13.7 million These expenses could be compensated through successful negotiations. However, lost profits caused, for example by emergency sales of titles and assets, could not be compensated. The corresponding damage amounts to several million EUR.
Similarly, accounted interest effects could not be compensated. Interest and currency expenses amounted to approx EUR 1.4 million and were strongly influenced by the present weakness of the US Dollar.
Because of the weak US Dollar lost profits of approx. EUR 1 million and currency expenses of EUR 364 thousand were incurred. A significant improvement of the result from financing operations is expected for 2004 as company debt has been reduced significantly and liquid funds have been increased.
The reported tax load of approx. EUR 1.9 million is almost completely non-cash.
The final group result for 2003 will be announced on February 25, 2004.
end of announcement euro adhoc 05.02.2004
Index: ATX Prime, ViDX, WBI
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