Eidos launches £50m rights issue after poor full-year results
We'll start making money again in 2002. Promise
Troubled games publisher Eidos has announced a £51.7 million rights issue, heavily discounted, in a bid to get some much-needed cash. The issue was announced at the same time as the company full-year results, which saw a pre-tax loss of £96.4 million from a profit of £49.3 million last year (£54.1 million went on goodwill) and turnover drop £34.4 million to £160.4 million.
Shares dropped on expectation of the results and rights issue but have recovered slightly today to rest currently at 276.50p - a long way from its all-time high of over £12 but also an improvement on its low of 163p last month.
The company behind Lara Croft has had a rough time of it this year what with two profit warnings, a new chief exec and collapsed takeover talks. But the bad times are all over, new CEO Mike McGarvey tried to persuade everyone.
The games industry has slowed because of the wait for new consoles etc etc he said, but it's on the up and up and Eidos will break back into profit by 2002. If you can stand the wordy repetition, this is it in his own words: "The group's financial results in the year to 31 March 2001 were adversely affected by a combination of the cyclical downturn in the market which has characterised the transition to the new generation platforms, margin pressure resulting from an over supplied retail channel and the write off of our investment in Express.com. In addition, we delayed the release of certain PlayStation 2 titles until the current financial year to allow the installed base of such consoles to increase.
"During the year, the group embarked upon a far-reaching strategic review of the group's operations. As a result of this we have implemented a wide-ranging cost-reduction programme which we anticipate will lead to further fixed cost reductions in the current financial year. We have also taken the decision to shift an increasing proportion of our development resources to in-house development teams and focus our efforts on new titles which we believe will generate substantial potential sales and on our proven franchise properties."
The rights issue is underwritten by Dresdner KW, which promptly changed its stock grading of Eidos from "add" to "buy". It's a one-for-three offer at 155p - about 45 per cent below share price. ®
Here's a summary of the financial figures:
- Pretax loss before exceptionals: £42.21 million from profit £49.27 million
- Pretax loss: £96.35 million from profit £49.27 million
- EBITDA loss before exceptionals: £20.9 million from £9.7 million
- Sales: £160.39 million from £194.80 million
- Loss per share before exceptionals and goodwill: 26.2 p from 17.5p
- Loss per share: 93.9p from earning per share of 25.9p