Codemasters’ (CDM) half-year results to September – its first since floating on Aim in June – may disappoint at first glance: as revenues declined, and the group – a publisher and developer of racing-focused video games – swung into the red. But these numbers require context. As per other publishing peers, Codemasters’ top line is partially reliant on the timing of game releases, and only two games were launched in the six months through to September 2018, against three at the 2017 half-year.
Encouragingly, digital revenues constituted the majority of total sales for the first time ever, at 53.4 per cent. The benefits of this digital shift are numerous: consumers can access games anytime, anywhere – enhancing the longevity of Codemasters’ back catalogue. Meanwhile, the group can also bypass traditional retailer intermediaries, controlling its sales and pricing directly. Accordingly, the overall gross margin climbed from 83.6 per cent to 88.5 per cent.
Adjusted cash profits came in at £10m, down from £16.9m – but with the anticipated releases in mind, management is confident of achieving full-year expectations. Meanwhile, reported pre-tax losses illustrated the knock-on effect of lower revenues, and the amortisation of capitalised development costs.
House broker Liberum forecasts pre-tax profits of £2.5m and EPS of 1.6p for the year to March 2019, against a loss of £2.5m and EPS of 0.6p in FY2018.
| CODEMASTERS (CDM) | ||||
| ORD PRICE: | 174p | MARKET VALUE: | £243m | |
| TOUCH: | 170-177p | 12-MONTH HIGH: | 276p | LOW: 133p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 27p* | NET CASH: | £16.7m | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 49.4 | 1.4 | na | nil |
| 2018** | 39.7 | -7.6 | na | nil |
| % change | -20 | - | - | - |
| Ex-div: | na | |||
| Payment: | na | |||
*Includes intangible assets of £26.8m, or 19p a share **Codemasters floated on Aim in June 2018 | ||||
