Annual Financial Results 2019/2020 : Atari delivers another financial year of profitable growth

ANNUAL FINANCIAL RESULTS 2019/2020
Press release - Paris, France - August 13, 2020 – 8:00 am

Atari delivers another financial year of profitable growth

• Revenue:                                     +16.5% to €24.0m
• Operating Income:                     +15.2% to €2.9m
• Net Income (Group share):       €2.3m

Launch of the Atari VCS and Atari Token in FY 2020/2021

             
During its meeting on August 11, 2020, Atari SA’s Board of Directors reviewed the financial information for the year ended March 31, 2020 and authorized its disclosure. The audit procedures on the consolidated accounts have been completed. The certification report will be issued once the management report and notes have been verified and all the necessary diligence measures required for the annual financial report have been finalized, which will be published by September 29, 2020 at the latest.

Frédéric Chesnais, Atari Group CEO and one of its leading shareholders: "The year ended March 31, 2020 was of course affected by Covid-19, with business progressing in line with expectations, but licensing agreement renewals and extensions deferred to subsequent periods. Our four business lines (Games, VCS, Casino, Partners) each have specific assets enabling them to develop in an environment that is continuing to be significantly marked by the considerable uncertainty surrounding the economic situation. In this context, our organization, with its low level of fixed costs, ensures that we are highly flexible and able to react quickly, which is expected to be a key factor to achieve our target of profitable growth”.

HISTORICAL FINANCIAL RESULTS – LONG-TERM STRATEGY

The table below summarizes the key figures of the Atari Group over the previous years (FY ended March 31):

(1)   Net cash excluding (i) the impact of the first application of IFRS 16 in the accounts for FY 2019-2020, and (ii) Legalist.

Since 2013, Atari has delivered significant growth in revenues and earnings, as illustrated in the table above.

• Over this period, revenue has been multiplied by more than 20(x).
• The Group has also further strengthened its equity Group share by +€63.4m, up from -€34.9m, leading to a positive position of +€28.5m.

Atari is positioned around four complementary business lines, aiming to ensure the long-term development of the Group and the brand:

• Atari Games: video games are part of the Group’s DNA and still represent its primary source of income;
• Atari Casino: online casino and lottery games;
• Atari VCS: multimedia equipment;
• Atari Partners: partnerships and investments in technology focused in priority on Atari brand licenses.

CONSOLIDATED INCOME STATEMENT AS OF MARCH 31, 2020

The detailed financial results as of March 31, 2020 are presented below. Operating Income is up +15.2% to €2.9m for FY 2019/20, from €2.5m for FY 2018/19.

KEY PROFIT AND LOSS ITEMS

Business overview and Revenue

As of March 31, 2020, Atari is reporting consolidated revenue of €24.0m, compared with €20.6m the previous year, up 16.5% at current exchange rates and 10.2% at constant exchange rates.

Atari Games continues to be the dominating business line, with a very good performance by the games catalogue and licensing business, which strongly contributed to the Group’s revenue.

The Atari Games business continues to be supported by the good performances of the mobile game RollerCoaster Tycoon Touch, which is regularly updated with new content and special events and has been installed more than 30 million times as of March 31, 2020. During the year, Atari launched the mobile games Citytopia and RollerCoaster Tycoon Story, targeting progressive and profitable growth. The licensing business has been active, with the Arcade 1 Up and Atari Flashback products.

Atari has also continued to develop its other business lines to help drive the Group’s long-term expansion in the world of video games, multimedia and technology. With regard to the Atari Token, the Atari Group has taken back operational control of this project and it will be launched in FY 2020/21.

Gross Margin

The gross margin reached 90.0% of revenue, compared with 81.1% the previous year. The gross margin is still dependent on changes in the product mix.

Research and Development Expenses

Research and development expenses totaled €9.8m, compared with €7.4m the previous year. This increase, net of the amounts recorded under current intangible assets, reflects the continued production of games.

Marketing and Selling Expenses

Marketing and selling expenses were €4.2m for FY 2019/20, compared with €3.7m for FY 2018/19. This increase reflects the development of the business and the new games launched.

General and Administrative Expenses

General and Administrative expenses represent €4.7m for the current year, compared with €3.9m the previous year. This change primarily reflects the change in exchange rates and the strengthening of the management teams.

Other Operating Income and Expenses

As of March 31, 2020, the amount of other operating income and expenses is not significant. For the previous year, other operating income and expenses included the sale of two non-strategic franchises for Atari (Alone in the Dark and Act of War), as well as the payment made to Atari concerning an Atari trademark infringement dispute.

Current Operating Income

During the period, the Group achieved its objective of profitable growth, recording €2.9m of current operating income for the year ended March 31, 2020, compared with €3.1m for the year ended March 31, 2019.

Other Income and Expenses

Other income and expenses are negligible. For the previous year, other income and expenses totaled -€0.6m, corresponding to expenses, net of compensation and legal fees, for various litigations against Atari.

Operating Income

Operating Income for the year ended March 31, 2020 amounted to €2.9m, compared with €2.5m for the year ended March 31, 2019, up 15.2%.

OTHER INCOME STATEMENT ITEMS

The Group’s cost of debt is nil. Moreover, it redeemed the final instalment of the 2003-2020 OCEANE bonds on April 1, 2020.

Other financial income and expenses primarily concern adjustments in the value of non-current financial assets.

Consolidated net income (Group share) for the year amounted to €2.3m, compared with €2.7m in the previous year.

KEY BALANCE SHEET AND CASH FLOW ITEMS

The detailed balance sheet, prepared in accordance with IFRS, is included as an appendix.

Shareholders’ Equity

Consolidated shareholders’ equity is positive, €28.1m at March 31, 2020, a significant improvement compared to the €22.2m recorded as at March 31, 2019, resulting mainly from Net Income and the capital increase of March 2020 of €3.2m, undertaken to accelerate the development of new games with partner studios.

The following table presents the changes in shareholders’ equity during the year:

Gross financial debt comprises the lease liability relating to the application of IFRS 16 and the 2003-2009 OCEANE bonds, fully redeemed at April 1, 2020.

As of March 31, 2020, the Group’s net cash position was -€1.3m, and it was +€1.1m after restatement due to the new IFRS 16 norm and the Legalist agreement. Atari is not obliged to make any reimbursement to Legalist if the trademark infringement proceedings prove unsuccessful.

(1)  Gross financial debt is restated for the Legalist amount of €0.9m, which was recorded as a financial liability under IFRS 9 but will be definitively retained by the Group.

OUTLOOK FOR 2020-2021

The Atari Group has set the following operational objectives for FY 2020-21:

• Launching new games: since April 1, 2020, the Group’s game launches include Missile Command Recharged (mobile, PC and Nintendo Switch), Pong Quest (PC and consoles) and Beat Legend Avicii (mobile); the Group is preparing to launch several mobile games over the coming months, including Mob Empire, Atari Combat: Tank Fury and Days of Doom. Atari Combat: Tank Fury is already in a soft launch phase in the UK and the Netherlands;
• Delivering the first Atari VCS units;
• Launching the Atari Token crypto-currency.

For 2020-21, as in previous years, the financial objective remains the increase of profitability, looking in priority to develop the value of the Atari brand and games portfolio. Taking into account the pandemic, the licensing business and profitability for the first half of the year will be lower than the previous year, with efforts focused primarily on the online gaming business and the Atari Token crypto currency.

2020 ANNUAL MEETING

The Annual Shareholders’ Meeting will be convened on November 2, 2020.

DISCLAIMER

The realization of the plans, and their operational budget and financing plan remain inherently uncertain, and the non-realization of these assumptions may impact their value.

RISK FACTORS / COVID-19

With regards to the Coronavirus (COVID-19), this virus is creating important disruptions in the whole world, especially in China where the Atari VCS is built. The Group is exposed to the same risks as all the other actors and remains extremely vigilant to these external events, which can have a temporary impact on the profitability of the operations. These disruptions may in fact have an impact, notably with regards to the timetable, on the sourcing, production and shipment of the Atari VCS and of other Atari licensed products commercialized by our partners, as well as on the renewals of these licensing agreements, generators of profits and royalties for the Group. The pursuit of production and deliveries of the Atari VCS remains dependent on the continuity of production activities and international transport flows. Atari will continue to keep its clients and shareholders informed as the situation evolves.

About Atari:

Atari, comprised of Atari SA and its subsidiaries, is a global interactive entertainment and multiplatform licensing group. The true innovator of the video game, founded in 1972, Atari owns and/or manages a portfolio of more than 200 games and franchises, including globally known brands such as Asteroids®, Centipede®, Missile Command® and Pong®. From this important portfolio of intellectual properties, Atari delivers attractive online games for smartphones, tablets, and other connected devices. Atari also develops and distributes interactive entertainment for Microsoft, Sony and Nintendo game consoles. Atari also leverages its brand and franchises with licensing agreements through other media, derivative products and publishing. For more information: www.atari.com and www.atari-investisseurs.fr/en/.  Atari shares are listed in France on Euronext Paris (Compartment C, ISIN Code FR0010478248, Ticker ATA), in Sweden on Nasdaq First North Growth Market as Swedish Depositary Receipts (ISIN Code SE0012481232, Ticker ATA SDB) and are eligible for the Nasdaq International program in the United States (OTC - Ticker PONGF).

Contacts

Atari - Philippe Mularski, CFO                                                       Calyptus - Marie Calleux
Tel +33 1 83 64 61 57 - pm@atari-sa.com                                Tel + 33 1 53 65 68 68 – atari@calyptus.net

Redeye AB (Certified Adviser)      
Tel: +46 8 121 576 90 – certifiedadviser@redeye.se         

This is information that Atari SA. is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out above, on August 13, 2020 at 8:00am CET.

APPENDICES

APPENDIX I

Consolidated profit and loss

APPENDIX II

Consolidated balance sheet

APPENDIX III

Consolidated Cash-Flow Statement

Attachment

• CP 2020 08 13 Resultats FY 2020 VEN