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Funcom - Third quarter report 2007 - Things are Just Fine.
AmazingAvery
Age of Conan AdvocateMember UncommonPosts: 7,188
Q3-2007 - Third quarter report 2007 - The Funcom Group - Funcom N.V and subsidiaries
Official Forum Linkage: http://forums.ageofconan.com/showthread.php?t=43332
Summary
• In August, the launch of Age of Conan was rescheduled to March 25, 2008.
The Company decided to extend the development time of the game to
improve accessibility to the game and enhance some key game systems,
based on external feedback and internal analysis.
• The development of Age of Conan is on track for the revised launch date.
The planned changes to the game have so far been implemented on time.
• The Age of Conan game is currently in the Beta phase of development with
focus on external game play testing and technical stress testing in addition
to the development and implementation of the changes communicated in
August.
• Age of Conan continues to receive praise and positive feedback from press
and industry and won this year’s official price for `Best Online Game` at
Europe`s largest show for interactive entertainment, GC (Games Convention)
in Leipzig, Germany.
• Funcom launched in-game sales of virtual items in Anarchy Online. Funcom
believes sale of in-game virtual items will be an important additional revenue
source for some future Massively Multiplayer Online games (MMOs).
• Funcom started development of a casual MMO in Q3 2007, targeted at
younger and more casual MMO players.
Financials
Funcom revenues in Q3, 2007 were TUSD 1,764, down from TUSD 2,217 in
Q3, 2006. The higher revenues in Q3, 2006, were due to revenues from
Dreamfall, a game launched in Q2, 2006. Group operating profit (EBIT) was
TUSD –1,774 in Q3, 2007 compared to TUSD -353 in Q3, 2006, mainly due
to increased cost levels related to the build up for the Age of Conan launch
and exchange rate fluctuations. The Group’s financial position remains strong,
and as of September 30, 2007, Funcom had TUSD 58,533 in cash.
The cash flow for the first nine months of 2007 was TUSD -933 from perations
compared to TUSD - 878 in the first nine months of 2006. In the same period,
cash flow from investments, mainly in development of new games, was TUSD
–13,071 in 2007 compared to TUSD –8,662 in 2006.
Company highlights
• Based on external feedback and internal analysis, Funcom concluded that
more development time was required to reduce the entry barrier to Age of
Conan and make the game even more accessible during the first hours of
playtime. This implied making improvements in some core game systems.
The new release date was set to the 25th of March 2008.
• Funcom initiated development of a casual MMO, and is also evaluating
other possible expansion opportunities.
• Hosting centres for the Age of Conan game were set up in Amsterdam
and New Jersey in cooperation with IPSoft and will be expanded towards launch.
• Millennium Films acquired the rights to produce a new series of movies
based on Robert E. Howard`s Conan the Barbarian.
• In July, the Age of Conan game won the IGN award for
“Best PC Persistent Online Game” (MMO) at E3. Marketing materials
including the new CGI video
and retail box design for the game were presented to the market.
• The Secret World, Funcom’s second large scale MMO in development
progressed well and currently has a team size of 40 employees.
• Plutolife, Funcom’s mobile subsidiary, experienced positive development
in the US market, and secured and implemented contracts with several
UStelecom operators.
• Funcom, including Plutolife, grew from 274 employees at the start
of Q3, 2007, to 288 employees as of September 30, 2007.
Market highlights
• Perpetual Entertainment stopped the development of its Gods and Heroes
MMO planned to be released in Q1 2008.
• EA Mythic announced that the Warhammer Online beta servers would
be closed down for two months, starting October 10th 2007 resulting in
speculations regarding a possible delay of the current launch target in
early 2008
• Electronic Arts Inc. acquired BioWare Corp. and Pandemic Studios for
a total of 775 MUSD.
Bioware is recognized for creating some of the highest quality games in the industry,
and has one unannounced MMO title in development.
• ZeniMax Media, owner of Bethesda Softworks, announced that it
will receive $300 million in funding from Providence Equity Partners Inc
to "increase game development and publishing, facilitate acquisitions,
and finance MMOs".
Outlook
Funcom expects a reduction in revenues in the next quarter until the
launch of the Age of Conan game.
There have been no material events after balance sheet date of this
interim report.
The Supervisory Board of Funcom N.V.
Dübendorf, October 31, 2007
PROFIT AND LOSS ACCOUNT Full Year
(all numbers in the original report in the link at the top,)
NOTES TO THE INTERIM REPORT
1 Corporate information
Funcom N.V. is a limited company registered in The Netherlands,
and the shares are publicly traded on the Oslo Stock Exchange under
the ticker “FUNCOM”. The principle activity of the company is to develop
market and carry on business in computer games in the broadest sense.
The unaudited interim condensed consolidated financial statements of the
Group for the nine months ended 30 Sep 2007 were approved for issue
by the Funcom Supervisory Board on 31 October 2007.
2 Basis for preparation and selected significant accounting policies
The unaudited interim condensed consolidated financial statements of
the Group for the nine months ended 30 Sep 2007 have been prepared
in accordance with IFRS/IAS 34. This means that these interim financial
statements do not include all information and disclosures required in annual
financial statements but only selected significant information.
The principles applied are consistent to the ones used in the 2006 annual
report and we refer to this report for further details on applied accounting principles.
2.1 Basis of consolidation
The Group’s Interim consolidated financial statements comprise of
Funcom N.V. and companies in which Funcom N.V. has a controlling interest.
2.2 Intangible assets
Intangible assets are recognized in the balance sheet if it can be proven
that there are probable future economic benefits that can be attributed
to the assets which are owned by the Group, and the assets’ cost price
can be reliably estimated. Intangible assets are recognized at their cost
price and evaluated for impairment.
The amortization estimate and method is subject to an assessment based
on the pattern of consumption of future economic benefits. Amortization
of an intangible asset is normally carried out using the straight-line method
over the estimated useful life. Estimated useful lives will normally not
exceed five years.
2.3 Equity
Transaction costs relating to an equity transaction are recognized
directly in equity after deducting tax expenses.
2.4 Deferred revenues
Revenues from subscriptions are recognized over the subscription period
which is from the date of subscription purchase until subscription end,
normally 1 – 12 months. Up front payments for subscriptions and other
revenues are recognized in the balance sheet as a liability.
3 Operating expenses
The increase in operating expenses is mainly due to an increased activity
level prior to launch of Age of Conan. The significant exchange rate
fluctuations between US Dollars and Norwegian kroner have also
contributed to the increase.
4 Depreciation, amortization and write down
The Group amortizes capitalized game investment over the period of
the estimated future economic benefit.
5 Net financial items
Over 95% of Funcom’s cash and cash equivalents are denominated in
Norwegian kroner. Net financial items have been affected by the significant
exchange rate fluctuation between US Dollars and Norwegian kroner.
6 Taxes
Funcom’s assessment is that it will be able to utilize the Group’s accumulated
tax losses against future profits. The accumulated tax income is a result of
a revaluation of tax losses and changes in temporary differences.
7 Cash flows
The increased cash expenditures related to investing activities compared
to 2006 are mainly a result of more personnel working on developing
Age of Conan and The Secret World. Approximately TUSD 600 of the
increased investments is related to the exchange fluctuations between
Norwegian kroner and US Dollars.
During the second quarter 2007 Funcom N.V. issued new shares in
connection with the exercise of share options. The proceeds from this
issuance were TUSD 161. On June 26, 2007, Funcom completed a private
placement of approximately USD 30 million. The private placement was
contingent of an approval by the extraordinary general meeting held
July 16, 2007. The extraordinary general meeting approved the private
placement and Funcom included the proceedings in the accounts from
that day. During the first quarter 2006, Funcom N.V. issued new shares first
related to the green-shoe option from the IPO in 2005, with gross
proceeds of MUSD 3.5, and also through a secondary offering with gross proceeds of MUSD 19.0.
----------------------------------------------------------------------
Ostekake (from link)- Thats that and thats it - earlier a lot of speculations and discussions have come of the financial reports.
This time around it did not contain any goodies in the form of new images or new information that in
some way shape or form or the other have been discussed on the forums.
But maybe i'm missing something...
In any case we now have a forum post that may or may not pop up on
peoples searches and or be referred to in other posts as official information
Avery - waits for Battlekruse to come and post that Funcom are down to their last penny - with some silly reasoning that everything has failed.
Comments
I will take a look on it when I return from CERN
• Funcom launched in-game sales of virtual items in Anarchy Online. Funcom
believes sale of in-game virtual items will be an important additional revenue
source for some future Massively Multiplayer Online games (MMOs).
They have not confirmed or denied that they will be doing the "item mall" thing with regards to AoC. Then again, this is the future of MMOGs everywhere according to many industry experts that were in Austin for the GDC. That combined with the new ingame advertising their publisher is now doing, it will be interesting to see what the future holds for AoC in regards to both.
Fear not fanbois, we are not trolls, let's take off your tin foil hat and learn what VAPORWARE is:
http://en.wikipedia.org/wiki/Vaporware
"Vaporware is a term used to describe a software or hardware product that is announced by a developer well in advance of release, but which then fails to emerge after having well exceeded the period of development time that was initially claimed or would normally be expected for the development cycle of a similar product."
I reckon there is scope for item sales 18 months on after release, I don't think there will be in game adverts though.
It's definitely good for the investors to know that they are on track for their revised launch date. Of course, they were on track for their launch date before, right?
I think Jon Wood said it best in his weekly report:
But I'm happy, there has actually been an increase of employment at Funcom directly related to game production - No Layoffs like some other games when they announce delays lately, or "restructuring" that cast doubt on the original game design, especially making out original content was pretty flawed.
nice find thanx for the post