) GS ENTERTAINMENT AB ' 7. lnt;9rim report Jt<1n Meir 2013

Transcription

1 ) GS ENTERTAINMENT AB ' 7 lnt;9rim report Jt<1n Meir 2013

2 January March Summary Consolidated revenue for the period is KSEK, up 58% compared to KSEK for the same period of This is in line with the previously communicated forecast of 27 MSEK. Operating result for the period is KSEK, up 53% compared to KSEK for the same period of Earnings per share for the period are 0.97 SEK. This result is in line with the previously communicated forecast. During the period, the group had positive cash flow of KSEK. Cash reserves on March 31 st 2013 amounted to KSEK. Current assets of the group as of March 31 st 2013 were KSEK. Current liabilities: KSEK. Working capital (CA-CL): KSEK. Current ratio (CA divided by CL): The group does not have any long-term liabilities, and has strong liquidity position. The Board of Directors of G5 Entertainment has decided to apply for a listing of the company's shares on NASDAQ OMX Stockholm in the second half of A listing on NASDAQ OMX Stockholm will increase opportunities for institutional investors to invest in G5 Entertainment and create better liquidity in the share. It is also a further seal of approval for the company in terms of its operations and information disclosures. G5 Entertainment has appointed Carnegie Investment Bank as its financial advisor and Delphi as legal advisor in connection with the listing process. Warrant Program 2012, as adopted by the Extraordinary General Meeting held on October 31st 2012, has been fully subscribed by managers and senior executives of G5 Entertainment group. Board members except CEO were not entitled to subscribe. Accordingly, G5 Entertainment AB has issued warrants. Each warrant entitles the holder to subscribe to one share in the company at an issue price of Kr. The period for the warrants is 3 years and 3 months, and it will be possible to exercise warrants after 3 years. Upon full exercise of the warrants, up to shares, which represents about two percent of the total number of outstanding shares, will be issued. On 30 th January 2013, G5 Entertainment AB (G5) has completed a directed share issue of shares, corresponding to 10 percent of the number of shares outstanding in the Company before the directed share issue. The directed share issue provided the Company with approximately SEK 37.6 million before deductions for issue expenses. There was a strong interest for the transaction and the directed share issue was oversubscribed. The Company retained Carnegie Investment Bank as placing agent in relation to the directed share issue, which was primarily directed towards institutional investors in the Nordic region. The subscription price was SEK 47 per share, corresponding to a discount of 2.3 percent to the closing price on January 29, As a result of the directed share issue, the total number of outstanding shares increased from shares to shares and the share capital increased from SEK to SEK The proceeds from the directed share issue will allow G5 to capitalize on a positive outlook of the mobile gaming app market and continue its strong historical growth, by increasing the number of external and internal development projects and focusing more on high-quality free-to-play games. The Secret Society, hidden object free-to-play game released in November 2012, continued gaining the audience and improving monetization as G5 rolled out the updates for the game. The game increased average daily revenue through the period and became the highest grossing among G5 games. During Q1, G5 continued releasing games every week. G5 released games for ios, Google Play, Mac, Kindle Fire and Nook stores. In addition to free-to-play games The Secret Society, Virtual City Playground and Doomsday Preppers, the highlights of the quarter included Abyss: the Wraiths of Eden (ios, Android, Mac), Spirit Walkers (Android), Where Angels Cry (ios). The total number of downloads of G5 games on ios and Android (not counting update downloads) surpassed 100 million. 2

3 This interim report has not been reviewed by company s auditor. Important Events After the End of The Period The Secret Society, a hidden object free-to-play game, has received updates much anticipated by players, featuring new content and features, and addressing a number of known issues with the game. As a result, the game went up in Top Grossing ranks worldwide considerably, entering Top 50 Grossing Games in USA on ipad, and becoming the highest grossing game in G5 s portfolio on a continuous basis. The group has 70 games (each for multiple platforms) in the development pipeline to be published in 2013 and This number also includes a number of free-to-play games to be released starting in In effort to strengthen the management team in the areas of disclosure, reporting, and investor relations in anticipation of the company s application to list shares on Nasdaq OMX Stockholm later this year, G5 Entertainment AB has appointed Odd Bolin to be Chief Financial Officer. Odd started his assignment on May 2 nd 2013, succeeding Sergey Shults, who took the position as VP Finance and continues his employment with G5 in this role. Odd Bolin s most recent assignment was at Cybercom Group, where he was Managing Director of Sweden, and before that CFO of the group. Before joining Cybercom, Odd Bolin held various positions in the field of Corporate Finance and equity research such as Head of H&Q Technology Research. Odd Bolin was also one of the founders and partners of Ceres Corporate Advisors ( ), an M&A advisory firm, working with listed technology, telecom and defense companies in the Nordic region. Odd Bolin is 49 years old, holds a M.Sc. in Engineering and Applied Physics and a Ph.D. in Plasma Physics at the Royal Institute of Technology in Stockholm, Sweden. The Company G5 Entertainment AB (publ) unites a group of companies: G5 Holdings Limited (Malta), G5 Entertainment, Inc. (USA), G5 Holding RUS LLC (Russia), and G5 Holding UKR LLC (Ukraine), all of which are wholly owned subsidiaries of G5 Entertainment AB (publ). G5 Entertainment AB (publ) is listed on Aktietorget exchange in Stockholm since November 19 th Before that, G5 Entertainment AB was listed on NGM Nordic MTF since 2 nd October G5 Entertainment AB acts as a holding company and provides managerial services to the rest of the group. Further, the parent company develops a number of the company s games and invoices almost all of the Groups external revenue. G5 Entertainment Group is a developer and publisher of high quality downloadable casual games for iphone, ipad, Android, and Mac. G5 Entertainment started as one of the world s leading mobile game development studios, developing games based on popular licenses for the largest mobile game publishers during Since 2009, G5 is developing and publishing downloadable games for iphone, ipad, Android, and Mac. G5 s portfolio includes popular casual games like Supermarket Mania, Special Enquiry Detail, Virtual City, Stand O Food, and Mahjongg Artifacts. G5 also develops games based on third party licenses, and publishes games developed by third party developers in both cases, on certain revenue share terms. G5 s development studio has extensive experience of development for smartphones and tablets. One of the group s main competitive advantages is its proprietary Talisman cross-platform technology, which allows effective development and deployment of games across numerous platforms and devices, including iphone, ipad, Android, Windows Mobile, Mac OS. Talisman technology, in combination with G5 s established processes for the development, porting, adaptation, and quality assurance of games, allows G5 to deploy high quality games to multiple platforms in reduced time. The creative and development teams at G5 are also capable of producing original intellectual property and best-selling casual and free-to-play games like Supermarket Mania 2, Stand O Food 3, Virtual City, and Virtual City Playground. 3

4 Accounting Principles G5 Entertainment AB s consolidated accounts have been prepared in accordance with International Financial Reporting Standards (IFRS). This report was prepared for the group in accordance with the IAS 34 Interim Financial Reporting and the Swedish Annual Accounts Act. The accounting and calculation principles used in the report for the group are identical to those used in the Annual Report None of the new and changed standards from IFRS, applicable from 1st of January 2012, has had any effect on the Financial Statements. Capitalized expenditure Capitalized expenditure consists of expenses related to the development of new games. Expenses are capitalized only if the expenses are expected to result in identifiable future financial benefits that are under the control of the group. Depreciation is calculated using the straight-line method during a period of two years after the release of the game. Additional Information Any forward-looking statements in this report are based on the management knowledge of the quantity, release dates, and anticipated sales of games which were already released and which are going to be released by the group in the future. Sales for the yet unreleased games are estimated based on historical sales patterns for released games of similar genre and quality level since 2009, also taking into account current market situation and trends. The accuracy of forecasts for yet unreleased games is affected by: a) game release delays due to 3 rd party (Apple, Google, Amazon, etc) reviews and approvals on the way to the market; b) game release delays due to group s when it s done approach to game development crucial to create high quality games with long tail of sales; c) low prediction accuracy when it comes to forecasting sales of games in new genres or on new platforms, when there is no accumulated statistics from similar previously released games; d) general difficulty with predicting sales of a particular game precisely; e) changes in the development plans because of new business opportunities, like new platform announcements, new API releases, and such other important events requiring immediate action and change of development plans. The Share The number of outstanding shares at the end of the period: shares. The average number of outstanding shares during the period: shares. Warrant Program 2012, as adopted by the Extraordinary General Meeting held on October 31st 2012, has been fully subscribed by managers and senior executives of G5 Entertainment group. Accordingly, G5 Entertainment AB has issued warrants. Each warrant entitles the holder to subscribe to one share in the company at an issue price of Kr. The period for the warrants is 3 years and 3 months, and it will be possible to exercise warrants after 3 years. Upon full exercise of the warrants, up to shares, which represents about two percent of the total number of outstanding shares, will be issued. On 30 th January 2013, G5 Entertainment AB (G5) has completed a directed share issue of shares, corresponding to 10 percent of the number of shares outstanding in the Company before the directed share issue. The directed share issue provided the Company with approximately SEK 37.6 million before deductions for issue expenses. There was a strong interest for the transaction and the directed share issue was oversubscribed. The Company retained Carnegie Investment Bank as placing agent in relation to the directed share issue, which was primarily directed towards 4

5 institutional investors in the Nordic region. The subscription price was SEK 47 per share, corresponding to a discount of 2.3 percent to the closing price on January 29, As a result of the directed share issue, the total number of outstanding shares increased from shares to shares and the share capital increased from SEK to SEK The proceeds from the directed share issue will allow G5 to capitalize on a positive outlook of the mobile gaming app market and continue its strong historical growth, by increasing the number of external and internal development projects and focusing more on high-quality free-to-play games. This report is published in Swedish and English. In the event of any difference between the English version and the Swedish original, the Swedish version shall prevail. 5

6 Consolidated Group Income Statement January-March 2013 GROUP INCOME STATEMENT 2013-Q Q1 Net turnover (revenue) Production cost * Gross Profit General and administrative expenses Other operating losses Operating Result before financial items Financial expenses Operating Result after financial items Taxes NET RESULT FOR THE PERIOD STATEMENT OF COMPREHENSIVE INCOME 2013-Q Q1 Income for the period Recalculation Difference Total other comprehensive income for the period TOTAL COMPREHENSIVE INCOME FOR THE PERIOD * Production cost consists of: 2013-Q Q1 Production expenses Royalty to developers Capitalized development costs Depreciation of Capitalized development costs ** Total production cost ** Capitalized development costs for the game are evenly depreciated over 2 years period following the day of commercial release of the game 6

7 Consolidated Group Balance Sheet January-March 2013 GROUP BALANCE SHEET ASSETS Fixed Assets Intangible fixed assets Capitalized development costs Goodwill Tangible fixed assets Equipment Total fixed assets Current assets Accounts receivable Developer Royalty Advance Other receivable Cash at bank Total Current assets TOTAL ASSETS Equity Share capital Other capital contribution Other reserves Profit\Loss Brought Forward Total equity Current liabilities Accounts payable Other liabilities Tax liabilities Accrued expenses Total current liabilities TOTAL EQUITY AND LIABILITIES

8 Consolidated Group Cash Flow Statement January-March 2013 GROUP CASH FLOW Operating activities Profit after financial items Adjusting items not included in cash flow Taxes paid Cash flow before changes in working capital Cash flow from changes in working capital Decrease in operating receivables Increase in operating liabilities Developer Royalty Advance Cash flow from operating activities Investing activities Purchase of property and equipment Capitalized development costs Cash flow from investing activities Financial activities New share issue Incentive Program 99 - Cash flow from financial activities CASH FLOW Cash at the beginning of the year Cash flow Exchange Rate diff CASH AT THE END OF THE PERIOD

9 Consolidated Group Changes in Equity Statement January-March 2013 GROUP CHANGES IN EQUITY Share Capital Other Capital Contribution Other Reserves Proft/loss brought forward Shareholders equity Shareholder s Equity as of Total comprehensive income Incentive Program Shareholder's Equity as of Total comprehensive income New Issue Shareholder's Equity as of Insiders Name Shares VLADISLAV SUGLOBOV (through company) SERGEY SHULTS (through company) ALEXANDER TABUNOV (through company) EIN STADALNINKAS 0 JOHAN WRANG 0 PÄR SUNDBERG JEFFREY ROSE 0 With the questions regarding this report please make contact by at investors@g5e.se G5 Entertainment will be publishing Q report on 15 th August 2013, Q report on 15 th November 2013, Q4 report on 24 th February

10 G5 Entertainment AB (publ) unites a group of companies: G5 Holdings Limited (Malta), G5 Entertainment, Inc. (USA), G5 Holding RUS LLC (Russia), G5 Holding UKR LLC (Ukraine). G5 Entertainment Group (G5) is a developer and publisher of high quality casual and free-to-play games for smartphones and tablets. The group distributes games through ios, Google Play, Kindle Fire, Nook, and Mac application stores. G5 develops and publishes games that are family-friendly, easy to learn, and targeted at the widest audience of experienced and novice players. G5 s portfolio includes popular games like Virtual City, Supermarket Mania, Special Enquiry Detail, Stand O Food, and Mahjongg Artifacts. G5 also develops games based on third party licenses, and publishes games developed by third party developers. G5 ENTERTAINMENT AB (publ) GREV TUREGATAN 14, STOCKHOLM SWEDEN PHONE: FAX: , CONTACT@G5E.SE ORG.NR