Flagging and shareholder obligations
A: It is the responsibility of the person/company that holds the shares to notify the correct institution. In the case of Funcom SE, being a Dutch company, it is the Dutch corporate law that applies.
A: It means you need to acknowledge your responsibilities that goes with this fact and act accordingly.
A: The thresholds are as follows: 3%, 5%, 10%, 15%, 20%, 25%, 30%, 40%, 50%, 60%, 75% and 95%.
More information can be found here: http://www.digitaal.loket.afm.nl/en-US/Diensten/Effectenuitgevende-ondernemingen/Pages/substantiele-deelneming.aspx
A: It is the Dutch Authority for the Financial Markets (AFM) that should be notified together with the Oslo Stock Exchange (OSE) and Funcom SE
A: To notify AFM, you need to fill out the online form found here. For assistance contact AFM at firstname.lastname@example.org. In addition you need to notify Oslo Stock Exchange (email@example.com) and Funcom (firstname.lastname@example.org) and provide the following information: your holding before the opening of the trading day you passed the threshold, your holding after closing of the same day, and the percentage of your substantial holdings.
A: Go to this link and follow the instructions: http://www.digitaal.loket.afm.nl/en-US/Diensten/Effectenuitgevende-ondernemingen/Pages/substantiele-deelneming.aspx?tab=4
Alternatively: Use the following procedure which is self-explanatory and all in English:
- Go to: http://www.digitaal.loket.afm.nl/en-US/Pages/default.aspx
- In the case of a non-Dutch company, click on ‘Application form AFM ID for non Dutch companies’
- In the case of a non-Dutch individual, click on ‘Application form AFM ID for non Dutch individuals’
A: For OSE go to: www.newsweb.no. For AFM go to: https://www.afm.nl/en/professionals/registers/alle-huidige-registers.aspx
A: If a person or entity alone, or acting in concert together with other persons or entities, acquires "predominant control" in a Netherlands company listed on a regulated market in the EU/EEA they will be obligated to launch a public offer on all the outstanding shares and depository receipts of such listed company. "Predominant control" is deemed to occur when such acquiring person or entity is able to exercise 30% or more of the voting rights in the general meeting of shareholders of the company. For more information please see www.afm.nl
A: Bearded Dragon International Ltd is working with The Bearded Ladies Consulting. Their website is not up to date, but they are a small team of great game developers working out of Malmø Sweden.
A: Funcom is contributing with development support, while The Bearded Dragons and the Bearded Ladies does most of the development. Funcom main role will be to act as the Publisher under this agreement.
A: This cooperation is independent from the plans for games developed internally in Funcom.
A: Participating in a summer sale is a regular business activity and does not qualify for a stock notice or press release. Any investor in the gaming industry should expect companies to carry out normal business activities regularly without prior notice to all its shareholders. Funcom has participated in seasonal sales with all our games for many years, and as communicated previously, will also do so for Conan Exiles. Hundreds of games are on this particular Steam summer sale, and will have the advertisement and featuring that makes business sense considering this. The team is fully focused on delivering a great experience on August 16 with the new expansion and the Xbox One launch.
A: The Company does not report sales number on any product on a detailed level unless there is an extraordinary event that triggers such a report under the Company’s running obligations as a listed company. In such cases we will as always use the official reporting channels on Oslo Stock Exchange (Newsweb) and AFM in Holland. The financial report and presentation we conduct every quarter is a good opportunity for all shareholders and potential investors to ask any questions they may have.
A: As we launch our games on the Steam platform there are several good third party tools that gives an indication on games performance you can follow. Sales charts: http://store.steampowered.com/, On-line numbers: http://steamcharts.com/, Sales figures and more: http://steamspy.com/. Note that any information, or opinions on this information, regarding any game presented in any tools made by a third party are theirs alone and do not represent information, or opinions on this information, of Funcom SE, or its management. Funcom SE does not by its reference above or distribution of links to these third party tools imply its endorsement with information provided by these tools. The list presented in this message is not complete and shareholders, investors and press are encouraged to seek additional information from other sources.
A: No, there are no similar services for Xbox and Play Station that we are aware of.
A: In addition to the third party providers above Funcom is using social media to provide official information. https://twitter.com/funcom, https://www.youtube.com/user/Funcom and https://www.facebook.com/Funcom is good sources for official information in addition to www.funcom.com and special game-sites like www.conanexiles.com.
A: We do not plan to sell DLCs during the Early Access and Game Preview period.
A: We do not plan have an in-game store or other microtransaction mechanisms during the Early Access / Game Preview period.
A: Our pricing will be competitive to that of other games in this segment, both geographically and per platform, and taking into account the quality level we are aiming for. We recommend shareholders/investors to look at comparable survival games that have released on more than one platform for reference. (such as Ark: Survival Evolved)
A: As is common in the industry, detailed revenue information is not shared with the market as it depends on many factors, several of which are confidential as part of business agreements with stores, IP and platform holders. Revenue per customer is also a metric that changes over time and is impossible to predict as it's constantly adapted to the realities of the product and its reception by the target audience.
A: As explained under Note 2.8 of the Annual Report, the development costs are amortized from the date that the assets are available for use, normally over 5 years.
A: The exact details of how Conan Exiles and Age of Conan will connect are not decided yet, but it is our intention to cross promote and encourage players from each game to try out our other games, especially for games within the same IP.
A: The Company does not report individual game's earnings, but the revenues for The Park are in line with internal forecasts.
A: The time from Early Access to full launch isn't defined yet and it will depend on the reception the game gets. We will scale the investment based on reception and sales, but at this stage we do not expect it to take longer than one year between Early Access and Full Launch.
A: The only release currently scheduled for before Summer 2016 is the Console release of The Park.
A: Conan Exiles and future games will use the combination of Unreal Engine 4 (for the frontend/client) and DreamWorld Technology (for the backend/servers).
A: No, Funcom does not claim any revenue generated from ads on videos featuring the company’s games. The company believes this would severely limit the interest among content creators, which in turn would reduce word of mouth as well as reach and visibility of the company’s games in the various gaming communities.
A: Any license agreement currently in effect with any third parties is confidential information that cannot be shared with the market.
A: There are several factors an investor needs to be aware of when investing in the gaming industry. You can read more about this in the Funcom SE annual report for 2014 note 27 on page 89 you can find here. (http://www.newsweb.no/newsweb/search.do?messageId=378027). As a general note the Company encourages all investors to actively seek information about the gaming industry in general and the markets and segments Funcom SE operates in particular.
A: In accordance with the International Financial Reporting Standards (IFRS), the company records impairment losses on games and other intangible assets like the underlying Dreamworld Technology when the recoverable amount of these assets is likely to be lower than their current net book value. The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the “cash-generating unit”).
A: The expenses related to the development of games and of technologies are capitalized as an intangible asset on the balance sheet of the Company when they meet specific criteria’s because they represent a value for the company. Some of these specific criteria’s are that the asset will generate future economic benefits and that sufficient technical, financial and other resources are present for completing the project. The capitalized development expenditure is stated at cost less accumulated amortization and impairment losses in compliance with the International Financial Reporting Standards (IFRS).
Questions related to previous events
A: Below you will find both the mail from DN and Funcom’s reply. Only contact information has been removed.
Takk for henvendelsen.
Som vi har kommunisert tidligere har Conan Exiles så langt vært en stor suksess. Hvordan dette har slått ut finansielt blir presentert om få uker under fremleggelse av første kvartals rapport. Nå gleder vi oss til å fortsette å eksekvere på strategien og ikke minst til lansering av Secret World Legends nå i 2Q, Conan Exiles på Xbox i 3Q og full lansering av Conan Exiles på PC og PlayStation i 1Q 2018. Vi har stor tro på at vår langsiktige strategi vil bidra til å styrke selskapet sin posisjon nå i 2017 og i årene fremover.
EVP Business Operations
From: Stian Øvrebø Johannessen
Sent: Monday, April 24, 2017 12:35 PM
To: Ole Schreiner
Subject: Spørsmål fra DN
Vi skriver en sak om status på Funcom, etter resultatfremlegging i forrige uke, der vi ser blant annet på hvordan aksjen har utviklet seg siden lansering av Conan Exiles.
Har noen sitater under som dere får muligheten til å svare på:
– Jeg er ikke overrasket over aksjeutviklingen, om man ser på det i et historisk perspektiv. Igjen skapes det høye forventninger rundt lanseringen av et spill, og ser man i speilet tyder det på at forventningene var for høye også denne gangen, sier investeringsøkonom Tom Hauglund i Nordnet.
Siden den norske spillprodusenten Funcom slapp spillet Conan Exiles 31. januar, har svingningene i aksjekursen vært store.
Mandag sto Funcom-aksjen til 2,6 kroner per aksje på Oslo Børs.
Funcom-aksjen nådde sin foreløpige årstopp 7. februar på 5,37 kroner per aksje, etter en uke med sterke salgstall på spillplattformen Steam. Conan Exiles solgte 320.000 eksemplarer i løpet av den første uken det var tilgjengelig.
Samtidig var Funcom, som kun hadde en markedsverdi på litt over én milliard kroner, en av børsens mest omsatte aksjer.
Tidligere Funcom-utgivelser har også bidratt til at aksjekursen økte sterkt før og under lansering, før den falt tilbake etter en liten stund.
– På et generelt grunnlag tror jeg mange av investorene som hadde noe høye forventninger, glemmer kostnadssiden litt. Selskapet har faste kostnader hele veien, men jeg tror investorer fort kan bli for positive til inntektene, sier Hauglund.
Selskapet har meldt at produksjonskostnadene til Conan Exiles ble tjent inn i løpet av den første uken spillet var i salg. Derfor knytter det seg nå spenning til hvordan selskapets omsetning og resultat vil være når Funcom legger frem resultater for første kvartal 16. mai.
Funcom leverte rett før helgen reviderte tall for 2016. Selskapets omsetning falt 10,2 til 7,3 millioner dollar, men klarte å bremse det negative resultatet i et år der kostnadene til produksjon av Conan Exiles var sentrale. Funcom endte 1,7 millioner dollar i minus i 2016, mot 6,8 millioner dollar i minus året før.
Nordnets Hauglund mener selskapet må bevise at det kan ha en positiv inntektsstrøm over lengre tid.
– De må kunne vise til en positiv cashflow etter lanseringen, slik at man kan reinvestere de pengene i sitt eget selskap, fremfor å måtte hente egenkapital fra aksjonærene. Klarer man det, har selskapet fortsatt noe å gjøre på børsen, sier Hauglund.
Hvordan opplever dere utviklingen til Conan Exiles?
Hva synes dere om det Hauglund sier om viktigheten av en positiv cashflow?
Trenger eventuelle svar før 15.00 i dag om det skal med i morgendagens DN.
Stian Øvrebø Johannessen
Journalist i DN / Journalist at The Norwegian Business Daily
Q: Dere har vel kommunisert at målet er at spillet skal figurere på topp 10-listen til Steam et år etter lansering. For øyeblikket ligger dere på 9.plass med drøyt 19.000 spillere, og en topp hittil på 32.772. Hva tenker dere om denne initielle mottakelsen?
A: Vi har aldri kommunisert at vi skal være på Steam sin topp 10 liste over on-line spillere til enhver tid. Det vi har kommunisert er at vi etter 12 måneder har som målsetting å ligge på topp ti listen over solgte survival spill. Dette er presentert i våre kvartalsrapporter, se side ti i kvartalspresentasjonen for 3Q du finner her: http://cdn.funcom.com/investor/2016/Funcom3Q16Games_presentation.pdf
Den initielle mottagelsen er god, men blandet. Antall spiller har overgått våre forventningene nå i startfasen, noe som har medført initielle kapasitets-problemer som vi arbeider hardt med å løse. Dette har førsteprioritet nå!
Q: Full lansering skal jo skje i løpet av et år. Kan du si noe mer nøyaktig om når det blir?
A: Full lansering skjer senere. Vi forventer ikke at Early Access-perioden skal vare mer enn 12 måneder.
Q: Har dere noen konkrete tanker om hvor stort salg dere føler spillet bør oppnå?
A: Se punkt 1
Q: Kan du sammenligne forventningene dere har til Conan Exiles med spill som kanskje kan beskrives som tidligere suksesser, som Age of Conan, Anarchy Online og The Secret World?
A: Dette er veldig forskjellige typer spill og forskjellige betalingsmodeller. Conan Exiles er også lansert i Early Access, mens de nevnte spillene var full-lanseringer. Det går ikke an å sammenligne dette. Det eneste vi med sikkerhet kan si at det er umulig å vite på forhånd hvor mye et spill skal selge, og hva slags mottagelse det eventuelt får før etter at spillet er lansert. For referanse til hva Early Access er følg denne linken: http://store.steampowered.com/earlyaccessfaq/
A: There are no entities from the Jebsen group of companies that took part as an investor in the private placement. KGJI Investments SA SICAV-SIF converted a part of the convertible loan for a total amount of USD 7.7 mill.
A: Yes, see the stock notice on the topic: http://www.newsweb.no/newsweb/search.do?messageId=403057
A: Funcom and ABG Sundal Collier have been working for several months to secure investment, and have been in advanced talks with several international gaming companies about both investment and sale of assets, talks which unfortunately proved unsuccessful.
The company's advisors received this private placement offer from a specific group of investors, to subscribe to all the shares the company was allowed to issue at the time, for 0.55 nok, and with additional conditions on the debt of the company and the size of a subsequent rights offering. This offer was considered to be the best offer available to the company.
The company did consider a public rights issue but after discussions with advisors, it was considered that would not be able to raise enough capital due to the large amount of debt and negative equity position of the company.
You can view the full announcement on our investor relations page.
A: The company chose not to hold a live presentation due to the very limited interest for these presentations in the past, as well as the fact that there were no specific announcements that would necessitate such a presentation. Instead the company invited everyone to get in touch via e-mail should there be any follow-up questions or further clarification required. The company will evaluate every quarter if a live presentation is deemed necessary.
A: The new company strategy is to deliver multiple game titles per year in order to secure revenue streams, and to be less sensitive to the performance of individual game titles. For more information, please see the 2Q 2015 report and presentation you find here.(http://www.newsweb.no/newsweb/search.do?messageId=384215)
A: Yes, prototyping and concept development for new titles is underway and the company is expecting to announce a new game during early 2016, and two additional games later the same year. The company is aiming to have at least some of these games to start generating revenue during 2016. This is a forward looking statement and is thus subject to change.
Remuneration and Share Incentive Program for Employees
A: As one part of the remuneration for Funcom employees, managers and board members, Funcom has a share incentive program.
A: We cannot afford to compete with salaries in other Norwegian and US IT-companies, and we do not intend to contribute to an unsustainable salary level in the Norwegian gaming industry as this might hurt the industry as a whole. So to be able to attract and keep highly skilled and key employees a share incentive program has proven to be an effective and important tool. We also experience that having a stake in the company motivates the employees to create long term value for the company and its shareholders.
A: Employees in Funcom are granted stock options to a predetermined price, also called strike price. The predetermined price in Funcom is normally decided as the weighted average of the Funcom share price on the Oslo Stock Exchange five days prior to and five days exceeding the grant date. If the weighted average comes in at, let’s say 20 NOK, the strike price has been set to 20 NOK.
The employee can at any time in the future but no later than ten years from the grant date pay strike price (20 NOK in this example) and receive a share in the company. This action is called “Exercise options”. If the employee decides to “Exercise options” he/she has to pay the predetermined price to receive the shares. If for example the employee was granted 5.000 stock options, the price the employee has to pay to receive the 5.000 shares is 100.000 NOK.
Employees can chose to keep all shares, keep some shares or sell all shares. This is all up to the employee. If the share price has increased since the grant date the difference between the strike price and the price the employee got from selling the shares will be subject to income tax. If the share price is below strike price the options have no value as it will be cheaper to buy the shares in the market.
Example: Strike price is 20 NOK. Market price when exercising the options is 25 NOK. Number of options is 5.000. In this example the employee has to pay 100.000 to exercise the options and will get 125.000 from selling all the shares. Regardless if the person decides to sell or keep the shares, the employee has an immediate theoretical gain of 25.000 NOK at the moment he exercised the stock options, and those 25.000 NOK is now subject to income tax which will be deducted from his salary. In the case where the employee keep all or some shares and sell them at a later stage, the difference between the sale price and the market price on the day of the exercise is then subject to capital gains tax (or deduction of taxes if the share price has fallen).
Note1: A trade in any Funcom shares is by law not allowed if the employee is in possession of inside information. If the company has initiated a closed period in accordance with its insider trading regulation the employee is, by the company, not allowed to trade in Funcom shares.
Note2: The example above is based on Norwegian tax laws. Other rules might apply in different countries.
A: The information is publicly available on Newsweb, the official information portal for the Oslo Stock Exchange. Follow this link https://newsweb.oslobors.no/ , and use the search terms “Funcom” in the first search field and “Options” in the second one. You can also use “mandatory” as search term to see the trades done by management/board members. You can also have a look at the annual report, convening notice for General Meetings and the Prospectus you also can find on Newsweb or our own web site here: https://investors.funcom.com/financial-reports/
A: Exercising options and keeping shares is a significant investment for many employees that is difficult to finance with a salary. Furthermore options have expiry dates that might force employees to execute within certain deadlines. The options should be regarded as a bonus for the hard work employees put in to increase total shareholder value.
A: As this is part of the remuneration it must be expected that employees will sell options on a regular basis when an option execution period is arranged and as long as the options are “in the money”. Historically the option execution period has often been arranged right after quarterly reports. Please bear in mind that even though an option execution period has been arranged doesn't necessarily mean that employees will take advantage of the opportunity.
A: We have a service available through Equatex that administer our option program. To find out more about Equatex read here: https://www.equatex.com/en/ The company facilitates for the exercise of options on a regular basis as long as the options are “in the money”,