26th Sep 2013 15:39
LONDON (Alliance News) - Keywords Studios PLC, a company that provides testing and localisation services for the video-games industry, announced Thursday its first interim dividend after seeing an increase in revenue in its first half, in spite of concerns over the geographic scope and timing of the launch of the next generation of games consoles.
The company announced a maiden interim dividend of 0.33 pence per share, and it said in a statement that it expects to declare a final dividend of 0.67 pence per share in 2014.
For the 27 weeks ended July 8, Keywords posted revenues of EUR7.2 million, up from EUR6.4 million in the previous year. The company swung into pretax loss of EUR247,887, from a pretax profit of GBP1.2 million the previous year. The company said the loss was due to one-time costs associated with its transition to AIM in July, accounting for EUR64,000, and foreign-exchange losses of EUR17,000, as well as investment in expansion.
Despite the loss, the company is confident it would see profits going forward, "We're where we plan to be," Chief Financial Officer David O'Connor told Alliance News in an exclusive interview. As console video games are very seasonal and sell best during the winter holiday seasons, profits tend to be weighted towards the second half.
Overall revenues were boosted by growth in its localisation business, where revenues grew 24%. The company says it is working on many next-generation titles ahead of the launch of the new Playstation 4 and Xbox One, and it had seen marked increases in utilisation across its Localisation Testing division, which it expects to produce significantly strong margins in the second half of the year. Localisation revenues are not necessarily so seasonal, as they also handle mobile and social games which don't have holiday patterns, Chief Executive Officer Andrew Day told Alliance News.
The whole games industry is now gearing up for the launch of new Sony and Microsoft games consoles, but has been hit by the scaling back of the number of countries the Microsoft console will be launched into and by Sony's decision to delay the launch in its home market.
"We expected this be more of a hockey stick year," said O'Connor, who acknowledged that the strong second half would probably be softer this year. O'Connor said the company has a strong pipeline and expects the market will settle down once the PS4 and Xbox One hit stores.
The company cautioned that due to the scaling back of the number of next-generation launch territories by games manufacturers, and delays in earlier-generation game releases, it expects its full-year profits to be roughly in line with 2012.
Microsoft's Xbox One has scaled back its launch territories to 13 countries from 20, although Sony will still launch in 32 markets.
"We're much more effected by Microsoft than Sony," Day said, adding that Sony's decision not to release its Playstation 4 in Japan until next February had been a surprise as it is Sony's home territory.
The Japanese market is on the tail cycle of existing generation of consoles and Keywords is looking forward to a refresh, Day said, although he added that there is more activity in mobile games in Japan.
Developers have also delayed games that would have boosted revenues in the busy holiday period, Day explained, because they're either concerned their product will be lost in the noise of the console launches or they've had to prioritise their team to focus on launch titles for the new consoles instead.
"We've been strangely effected by good news," Day said, explaining the paradoxical nature of seeing negative effects of the new console generation. "It's had a knock of effect on the whole industry."
Despite these concerns, the new console generation gives Keywords confidence about its performance going forward.
"We're looking forward to a really strong 2014," Day said, "the business is going where its supposed to be."
"Notwithstanding the hiatus caused by the timing of the simultaneous launch of two new consoles in an unprecedented launch cycle, we have made considerable progress in strengthening our market share," the company said in a statement. "While it has proven difficult to predict the exact timetable of forthcoming launches, 2014 is expected to be a year of significant activity for the games industry, leaving us well placed for substantial growth in the market."
Shares in Keywords closed up 5.7% at 120.00 pence Thursday.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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