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Ubisoft posts half-year sales of €293m, net loss of €62.1m

Revenues up, but increased R&D widens bottom-line gap, year on year

Ubisoft has published its half-year financial figures, posting increased sales but a bigger net loss thanks to increased R&D costs.

Sales saw a five per cent increase over the same period last year, bringing in €293 million - an 8.2 jump at a current exchange rate. Second quarter sales showed an even bigger increase, leaping 46.6 per cent to €217 million from €148 million in the same quarter last year - a figure that exceeded Ubisoft's own guidance number of €200 million.

That increase has largely been attributed to healthy back catalogue sales of Assassin's Creed 3 and Far Cry 3, alongside significant growth in digital sales, which climbed 29 per cent to €71 million.

However, whilst all of these numbers contributed to an increase in gross profit, a €42.1 million rise in the R&D expense account means that the company's losses have actually increased since the same six-month period last year. IFRS losses for the publisher for the first half of FY 2013/2014 were €62.3 million.

"This year-on-year increase was due to higher R&D depreciation for titles released in the first half of 2013-14 as well as the cancellation of projects," Ubisoft's report reads. In addition, SG&A costs pushed the bottom line further up the graphs. "A €7.3 million increase in total SG&A expenses to €161.3 million from €154.0 million in first-half 2012-13. As a percentage of sales these expenses remained stable at 55 per cent."

Losses per share for the period are €0.60, but company boss Yves Guillemot is confident that the forthcoming generational switch will push the publisher back to profitability.

"The PS4 and Xbox One will be released in a few days' time and will be a new driving force for the industry," he writes in a personal statement at the end of the report. "We are confident in our capacity to rise to the short-term challenges posed by the transition phase, thanks to the very high quality of our games, which, combined with the upcoming arrival of the next-generation consoles and the traditional ramp-up of sales during the Christmas season will trigger positive momentum towards the end of the year.

"Open world games are becoming ever-more popular with gamers. These creations give gamers the freedom of expression and immersive experiences that are now central to their expectations. This deep-seated market trend - which Ubisoft has fully embraced - is going to move up another gear when the next-generation consoles arrive. At the same time, the ongoing growth in our digital business demonstrates the progress we have made in an area which is set to expand even further in the coming years.

"Consequently, we are continuing to make strides in the implementation of our strategy, by concentrating our resources on regular releases of our open world franchises, investing in digital expertise and increasing the visibility of our brands, notably through movies and TV series.

"This year, Ubisoft has constantly stood out for the very high quality of its creations. This will be a determining factor for ensuring our future success and enhancing our financial performance. In 2014-15, we intend to step up the level even further by launching a number of particularly ambitious titles under both new brands and established franchises, starting as of the first quarter of the fiscal year, with the release of Watch Dogs."

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