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Jagex Financial Report 2009-10


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#1 Ren

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Posted 08 January 2011 - 03:46 PM

I've gone through Jagex's accounts and made various graphs and such from them. As these are business years 2010 means April 1 2009 to March 31 2010 and so on. The graphs clearly show the difference between 2008-09 and 2009-10 using the audited figures. However, Jagex adjusted their 2008-09 turnover, turnover from subscription and gross profit figures because they are now calculating them in a different way. This doesn't affect other figures such as operating profit, but does affect derived calculations such as the profit margin. I've used the % change between the old and new figure for 2008-09 to adjust the relevant figures for previous years - it's not perfect, but it should be good enough for getting a sense of how the company are doing. For the audited turnover figures reported under the old regime look at the Jagex 2008-09 Financial Report.

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Donations to charity as % of turnover (adjusted): 0% (2003-04); 0.4922% (2004-05); 0.5896% (2005-06); 0.3421% (2006-07); 0.4221% (2007-08); 0.4657% (2008-09); 0.4404% (2009-10).
Profit margin (adjusted): 34.47% (2003-04); 48.49% (2004-05); 56.60% (2005-06); 49.86% (2006-07); 41.91% (2007-08); 43.66% (2008-09); 42.21% (2009-10).
Advertising as % of turnover (adjusted): 8.78% (2003-04); 8.06% (2004-05); 6.10% (2005-06); 6.46% (2006-07); 6.38% (2007-08); 5.23% (2007-08); 3.44%(2009-10).

Quotes from the report

PRINCIPAL ACTIVITY
The principal activity of the company is the development and publication of online games using proprietary software
tools and web systems technologies

BUSINESS REVIEW
During the year ended 31 March 2010 the company experienced further growth with turnover increasing by 8% and
operating profit increasing by £824,916 The price increases as well as the positive exchange rate movements
contributed to the rise in turnover and profits Although the company increased the investment in future products, It
remains very profitable.

The landscape is becoming increasingly competitive but the company is positive about the future as there are new
product launches in the coming financial year and the publishing capabilities are being expanded
The directors expect the general level of activity to continue for the foreseeable future

PRINCIPAL RISKS AND UNCERTAINTIES
The key risks to which the business is exposed are summarised as follows:
• competitive pressure, which could result in losing active players and subscription numbers to our key competitors or other on-line entertainment sites,
• expenditures increase without a commensurate increase in revenues, and rapid changes in market conditions could result in poor operating results,
• errors or defects in our products, which could negatively affect our revenues and the market acceptance our products and increase our costs,
• the return of unfavourable economic and market conditions, including significant fluctuations in foreign exchange rates,
• unsuccessful launch of new games,
• the hiring and retention of qualified personnel,and
• claims by others that we infringe on their intellectual property rights

KEY PERFORMANCE INDICATORS
The company has several key performance measures used internally to monitor and challenge performance and to
assist investment decisions. The most important indicators are:
• Revenue
• Operating profit
• Headcount
Performance in the current and prior years is summarised as follows:
Revenue: £44,520k (2010); £41,157k (2009); +8.2% change
Operating profit: £18,794k (2010); ££17,969k (2009); +4.6% change
Headcount: 374 (2010); 370 (2009); +1.1% change

GOING CONCERN
The company has significant cash reserves and is forecast to remain cash generative. The directors have reviewed the historic trading performance of the business and prepared forecasts which show that the company should have sufficient financial resources to meet its financial obligation as they fall due to the forseeable future. Therefire the directors believe it is appropriate to prepae the financial statements on a going concern basis.

RESULTS AND DIVIDENDS
The profit for the year, after taxation, amounted to £13,772,776 (2009 - £13,180,335)
The directors paid dividends in the year of £22,833,585 (2009 - £8,440,166)

POLITICAL AND CHARITABLE CONTRIBUTIONS
The company made charitable donations amounting to £196,087 (2009 - £191,685) during the year. Donations were
made to Cancer Research, in addition to a number of local and US based charities

FUTURE DEVELOPMENTS
The company hopes to continue to grow its player base by launching internally developed new games in various languages as well as act as publisher for third party developed games.
The company intends to release at least one of the projects currently in rapid development

FINANCIAL INSTRUMENTS

The company's activities expose it primarily to the financial risks of credit risk, foreign exchange risk and liquidity risk.

Foreign exchange risk: The company's activities expose it primarily to the financial risks of changes in foreign currency exchange rates. The company seeks to minimise the exposure to this by matching foreign currency receipts to payments where possible.

Credit risk: The company's principal financial assets are bank and cash balances, trade and other receivables. The majority fo the company's recievables are due from institutions regulated by the banking sector. Other receivables are monitored on a regular basis. Any potential bd deads are dealt with swiftly.

Liquidity risk: In order to maintain liquidity to ensure that sufficient funds are available for ongoing operations and future developments, the company reviews the working capital requirements on a quarterly basis in light of the current business trend.

EMPLOYEE INVOLVEMENT

The company places considerable value on the involvement of its employees and has continued to keep them informed on matters affecting them as employees and on the various factors affecting the performance of the company. This is achieved through formal and informal meetings, as well as circulating data regarding subscriber growth.

4 PRIOR YEAR ADJUSTMENT
During the year the directors have re Viewed both the presentation of certain commission and transaction costs incurred
in sales transactions and the allocation of certain costs between cost of sales and administrative
expenses based upon the activities of the business. Previously the company deducted certain commission and
transaction costs in arriving at reported revenue. During the year the directors have revised that accounting
policy so as to include these commission costs within cost of goods sold as they believe this is a better
representations of the costs and revenue of the company's sales transaction. Following the review the
company has restated revenue, cost of sales and administrative expenses for the year ended 31 March 2009 to
reflect a comparable basis. This has led to an increase in sales of £2,735,171, a decrease in cost of goods
sold of £193,121 and an increase of administrative expenses of £2,928,292. The restatement has not led to a
change in either profit for the year ended 31 March 2009 or retained earnings as at 1 April 2008

The director's are not disclosing the geographical analysis of the company's turnover as they consider the information to be seriously prejudicial to the interests of the business

SHARE BASED PAYMENTS
Equity-settled share option schemes

The company has a share option scheme for certain employees of the company. Options are exercisable at a
price equal to the estimated fair value of the company's shares on the date of grant. The vesting period is up
to five years. Options are forfeited if the employee leaves the company before the options vest.

Number of share options granted in 2010: 662 (weighted average exercise price £0.10)
Number of outstanding share options at the end of 2010: 662 (weighted average exercise price £0.10)
Number of share options exercisable at the end of 2010: 248 (weighted average exercise price £0.10)

The options outstanding at 31 March 2010 had a weighted average exercise price of £0.10 and a weighted average remaining life of 14.4 years. In 2010, options were granted on 2nd July 2009 and 2nd November 2009. The aggregate of the estimated fair value of the options granted on those days is £739,334 million. No options were granted during the year ended 31 March 2009.

The inputs into the Black-Scholes model are as follows:
Weighted average share price (p): £1,388.89 (all for 2010)
Weighted average exercise price (p): £0.10
Expected volatility: 80%
Expected life (years): 4 to 5 years
Risk-free rate (%): 4%
Expected divided yield (%): 10%

Expected volatility was determined by referring to the share price of listed technology companies. The expected life used in the model has been adjusted, based on mangement's best estimate, for the effects of non-transferability, exercise restrctions, and behavioural considerations.


29. CONTROLLING PARTY
The controlling party is Mr A Gower and members of his close family, as a result of controlling directly, or indirectly, 52% of the Issued shar capital of the company


Note: Profit from subscriptions is technically "profit from game time sales" and might include iPhone app sales.


"They didn't care that they'd seen it work in practice
because they already knew it couldn't work in theory."


#2 Orbie

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Posted 08 January 2011 - 06:41 PM

Nice to see their donations to charity are continuing to rise - and interesting that the employee number has leveled off. I guess the SD and RS teams are, for the most part, filled out.

#3 Eggs

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Posted 08 January 2011 - 07:41 PM

Consumer reps are getting lower, interesting.

#4 parick42

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Posted 08 January 2011 - 10:56 PM

The company intends to release at least one of the projects currently in rapid development


Stellar Dawn, maybe? Rapid development has a nice sound to it...

Oh yeah, because "everyone" considers sarcasm to be the lowest form of wit...


#5 SleepyMatt

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Posted 08 January 2011 - 11:28 PM

A good year to be one of the three directors, eh? Nearly tripled their take-home from 2009!! It's nice to see that despite the seemingly ever-present "RS is dead" doomsayers and the recession, turnover and profits are both climbing year on year.

SleepyMatt is 100% correct, the majority of the community treats him as an almighty leader



And don't you forget it! >.< Selective quotes FTW!!

#6 Ren

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Posted 09 January 2011 - 12:04 AM

A good year to be one of the three directors, eh? Nearly tripled their take-home from 2009!! It's nice to see that despite the seemingly ever-present "RS is dead" doomsayers and the recession, turnover and profits are both climbing year on year.

The dividends go to the shareholders not the directors (although someone can be both a director and a shareholder). The directors get remunerations instead which this year was £723,224 in total and last year was £838,767 in total. The highest paid director received remuneration of £331,489 (last year £386,199).

The company intends to release at least one of the projects currently in rapid development


Stellar Dawn, maybe? Rapid development has a nice sound to it...

Could be, but releasing Eight Realms would be sufficient to meet the criteria.


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because they already knew it couldn't work in theory."


#7 PatPatrson

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Posted 09 January 2011 - 01:01 AM

Where do you find this information, Ren?

#8 Ren

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Posted 09 January 2011 - 01:39 AM

Where do you find this information, Ren?

UK-based companies are required to submit their accounts to the Government and I pay for a copy of these accounts. The annual accounts only feature the financials for the relevant and previous year and it's a scanned in version of a printed report so I have to manually put the figures from each year into a spreadsheet to make the graphs.


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because they already knew it couldn't work in theory."


#9 Runelite

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Posted 09 January 2011 - 04:07 AM

This is actually quite interesting, it's nice to see that Jagex are making larger profits some of which I'm sure they invest into their games. Also, it's nice to see that the amount of wages spent is going up, it either implies that overall people in Jagex are earning more, or the quality of staff has increases hence explaining the increase in wages, or more people are working at Jagex.
Spoiler

#10 vgman

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Posted 09 January 2011 - 10:57 PM

tl;dr: theyre still filthy rich and wont give us stellar dawn in spite of it
You're going to a place none of us have been,
a place that has to be believed to be seen.
-U2

check out my website, All ur Base!
http://sites.google....urneighborscat/

#11 xxshady

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Posted 10 January 2011 - 02:10 AM

tl;dr: theyre still filthy rich and wont give us stellar dawn because of it

Fixed. Once you're wealthy and self-published, you work on your own timetable. Ask Valve or Blizzard.

Edited by xxshady, 10 January 2011 - 02:11 AM.


#12 Mad Mech

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Posted 10 January 2011 - 03:30 AM

Which is good :)
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#13 strrox4

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Posted 10 January 2011 - 12:23 PM

Which is good :)

Unless you get lazy. Which is bad :down:
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#14 Ides

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Posted 11 January 2011 - 02:20 AM

I can't believe Jagex didn't make as much in advertising as last year.

#15 Lachie

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Posted 11 January 2011 - 04:02 PM

It's really interesting to read this as someone who is half-way through an Accounting degree :P Looks like Jagex is pretty stable for now, but they've got a lot riding on Stellar Dawn; it's a lot like a business expanding to another premises, if it's successful we could easily see another big overall increase like from 2004-05 to 2005-06, however if it fails the graph could level out quickly and start declining. Let's all hope for a successful launch (if it ever happens).

Edited by Lachie, 11 January 2011 - 04:03 PM.

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- William Shakespeare.
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#16 Human

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Posted 11 January 2011 - 09:40 PM

I can't believe Jagex didn't make as much in advertising as last year.

I've seen more RuneScape advertisements in 2010 than in 2009. Interesting graph, you can see the improvements in some areas.



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