Beam International Limited (ASX:BEM) today announced it is on track to achieve the Company's projections for the full financial year of an EBIT of $3 million with the announcement of its results for the first half of the 1997/98 financial year of an EBIT loss for the period of $508,443.
 The revenue of the company in the six months to 30th June 1998 will increase significantly with the release of the much anticipated KKnD 2: Krossfire, (the sequel to the very successful KKND), and the impact of the Company's new international distribution arrangements. (See below for details).
The Company intends to continue the growth in its revenue and EBIT performance through investing in new title developments (as reflected in the current value of work-in-progress of $4.4 million), and expanding the number of titles it releases in each subsequent year.
The summary of results is as follows:
| Results |
|
($'000s) |
| | |
| 31.12.97 | 31.12.96 |
| Total Revenue |
5,181 |
2,890 |
|
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Profit / (Loss) from trading
(EBITDA) |
(73) |
1,059 |
|
----- |
----- |
| Depreciation |
(262) |
(129) |
| Amortisation |
(173) |
(30) |
|
|
|
| Profit / (Loss) (EBIT) | (508) | 900 |
|
----- |
----- |
| Net Interest income / (expense)(1) |
(109) |
89 |
|
----- |
----- |
| Net Profit / (Loss) | (617) | 811 |
|
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Notes:
- (1) In order to maintain consistency with the information provided in the Prospectus, Interest Expense has been calculated as Interest Expenses Paid less Interest Received other than Interest Income from R & D Term Deposits.
Business
The Company is involved in the following major areas:
- development of computer entertainment titles for publishing under the Company's imprint, Melbourne House
- development of computer entertainment titles for third parties
- development and publishing of computer-based educational products, and
- development and marketing of 3-D animation technology
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The core business activity, budgeted to account for over 70% of revenues over the full year, continues to be the development and publishing of computer entertainment titles under the Melbourne House imprint. The revenue achieved in the half year reflects the lack of any major Melbourne House title being released in that period.
Projections for the full financial year
The Company's projections for the full financial year remain as stated in the Annual Report for an EBIT result of $3 million.
Development for the future
One of the problems that the Company has faced in the past is the seasonality or irregularity of sales due to an insufficient number of titles being released under the Melbourne House imprint through the year. In this financial year, for example, there is only one major title to be released (KKnD 2: Krossfire), and this release will be in the last quarter of the 1998 financial year.
The Company has addressed this issue by investing significantly in the development of additional titles, in order to allow the Company to release more titles in each future year. This emphasis on developing more titles is reflected in the value of work-in-progress ($4.4 million) as shown in the accounts.
New distribution arrangements
The Company has entered into discussions for new distribution arrangements for its Melbourne House titles. Agreement has been reached for all European territories and negotiations are being finalised for the North American territories.
Distribution of Melbourne House titles in Europe will be through Infogrames, Europe's leading publisher and distributor of computer entertainment titles. This arrangement gives Beam significantly better distribution and control over the distribution of its titles. (For more information, please refer to attached release on new distribution arrangements).
The Company is in final negotiation stage in respect to distribution for the North American territory with a major North American publisher and distributor, and these negotiations are expected to be completed within the next month. An announcement will be made at that time.
Financing of additional title development
The Company is currently involved in negotiations for a significant facility to enable additional title development. This facility will be secured by minimum purchase guarantees to be provided by Beam's distributors. It is expected that conclusion of these negotiations and signing of contracts will be completed in the next three months and an announcement will be made at that time.
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