January March 2012 - Summary Consolidated revenue for the period is 17 388 KSEK, up 82% compared to 9 548 KSEK for the same period of 2011. This is 1% above the previously communicated forecast of 17.2 MSEK. Operating result for the period is 5 753 KSEK, up 49% compared to 3 858 KSEK for the same period of 2011. This result is 3% above the previously communicated forecast of 5.6 MSEK. Earnings per share for the period are 0.58 SEK. During the period, the group had positive cash flow of 1 108 KSEK. Cash reserves on March 31 st 2012 amounted to 18 518 KSEK. Current assets of the group as of March 31 st 2012 were 33 110 KSEK. Current liabilities: 8 827 KSEK. Working capital (CA-CL): 24 283 KSEK. Current ratio (CA divided by CL): 3.75. The group does not have any long-term liabilities, and has strong liquidity position. The management announces its goal to turn G5 into a company with 300 MSEK annual revenue and 100 MSEK operating result in a couple of years. Going forward, the management aims to keep the group s long term average revenue growth at 2010/2011 levels. In connection with this announcement the management is changing quarterly forecast update policy and will not be providing quarterly guidance or updates in the future. The management confirms the previously announced goal for the period January-December 2012 of 87 MSEK revenue and 30 MSEK operating result with EPS of 3.2 SEK. This is a forward-looking statement, and the actual result can be both above and below these numbers, depending on the performance of the group s games and certain risk factors detailed further in this report. In Q1 2012, G5 released Magician s Handbook, Letters From Nowhere, Spirit of Wandering, Royal Trouble: Hidden Adventures, Treasure Seekers 4, The Island: Castaway, and other games for ios. The Island: Castaway, Treasure Seekers 4 and Royal Trouble: Hidden Adventures HD achieved notable success, with the latter becoming Top 10 most downloaded game in 73 countries, and achieving Top 10 grossing game status in 34 countries and Top 100 grossing game status in 87 countries. In March, G5 started releasing its games for Barnes & Noble Nook Color and Nook Tablet devices in USA, and so far has released five games: Virtual City, Mahjongg Artifacts, Stand O Food, The Mystery of the Crystal Portal, and The Island: Castaway. Also in March, G5 released Virtual City Playground the group s first free-to-play game for Kindle Fire through the Amazon Appstore. Preliminarily, the date for the Annual General Meeting is set for the 19th of June 2012. The Annual Report 2011 will be available on the group s web-site on 4th June 2012. The Board will propose paying no dividend in 2011. This interim report has not been reviewed by company s auditor. Important Events After the End of The Period In April and May, G5 released a number of new games for ios and Android platforms, including The Mystery of the Crystal Portal for Nook, The Island: Castaway for Google Play and Nook, Spirit of Wandering for Google Play, The Island Castaway for Nook, Fix-it-up: Kate s Adventures for Mac, and other games. Free-to-play game Virtual City Playground has been updated to include additional features and content. The multiplatform game has set new records, achieving #1 Top Grossing Game positions in Canada, China, Japan, and Brazil, and Top 10 Grossing Game positions in USA, Canada and most EU countries in Mac App Store. 2
The total number of downloads of G5 games on ios and Android (not counting update downloads) surpassed 50 million. The Company G5 Entertainment AB (publ) unites a group of companies: G5 Holdings Limited (Malta), G5 UA Holdings Limited (Malta), G5 Entertainment, Inc. (USA), and G5 Holding RUS LLC (Russia), 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 2008. Before that, G5 Entertainment AB was listed on NGM Nordic MTF since 2 nd October 2006. Game Development and Publishing G5 Entertainment 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, including EA and Disney. 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 mobile devices, Mac, PC, and game consoles. 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, Blackberry, Windows Mobile, PC, 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 social games like Supermarket Mania 2, Stand O Food 3, Virtual City, and Virtual City Playground. Additional Information The forecasts 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. 3
Accounting Principles During the period, G5 group applied international accounting standards IFRS according to EU regulations. G5 Entertainment AB holding company is applying Annual Accounts Act, RFR 2.0 accounting for legal entities and RFR 1.0 has been used for the group accounts. Revenue Recognition Revenues are license payments, advances and royalties paid by customers. Advances payments are accounted as revenue at the date when corresponding work was actually complete and approved by customer. License payments are accounted as revenue at the date when license rights are actually transferred to customer. Royalties are accounted as revenue at the date when royalty report was received from customer. Interest income is reported continuously and dividends received are reported after the right to the dividend is deemed secure. In the consolidated accounts, intragroup sales are eliminated. 4
Consolidated Group Income Statement January-March 2012 GROUP INCOME STATEMENT 2012-01-01 2012-03-31 2011-01-01 2011-03-31 Net turnover (revenue) 17,388 9,548 Production cost * -6,924-4,393 Gross Profit 10,464 5,155 General and administrative expenses -4,653-1,183 Other operating losses - -51 Operating Result before financial items 5,811 3,921 Financial income\expenses -58-63 Operating Result after financial items 5,753 3,858 Taxes -1,093-617 NET RESULT FOR THE PERIOD 4,660 3,241 * Production cost consists of: Production expenses -5,183-2,566 Royalty to developers -4,421-2,447 Capitalized development costs 4,954 1,695 Depreciation of Capitalized development costs ** -2,274-1,075 Total production cost -6,924-4,393 ** Capitalized development costs for the game are evenly depreciated over 2 years period following the day of commercial release of the game 5
Consolidated Group Balance Sheet January-March 2012 GROUP BALANCE SHEET 2012-03-31 2011-03-31 Fixed Assets Intangible fixed assets Capitalized development costs 20,056 9,348 Goodwill 2,320 2,272 22,376 11,620 Tangible fixed assets Equipment 1,698 965 1,698 965 Total fixed assets 24,074 12,585 Current assets Account receivable 5,904 4,003 Developer Royalty Advance 5,427 - Other receivables 3,261 1,717 Cash at bank 18,518 7,964 Total Current assets 33,110 13,684 TOTAL ASSETS 57,184 26,269 Equity Share capital 800 742 Other capital contribution 19,930 7,451 Other reserves -117-59 Profit\Loss Brought Forward 27,744 12,719 Total shareholders equity 48,357 20,853 Current liabilities Account payable 1,455 555 Other liabilities 789 1,191 Tax liabilities 5,902 2,737 Accrued expenses 681 933 Total current liabilities 8,827 5,416 TOTAL EQUITY AND LIABILITIES 57,184 26,269 6
Consolidated Group Cash Flow Statement January-March 2012 GROUP CASH FLOW 2012-01-01 2012-03-31 2011-01-01 2011-03-31 Operating activities Profit after financial items 5,753 3,858 Adjusting items not included in cash flow 2,499 1,267 8,252 5,125 Taxes paid 392 - Cash flow before changes in working capital 8,644 5,125 Cash flow from changes in working capital Decrease in operating receivables -1,674 288 Increase in operating liabilities 824-267 Developer Royalty Advance -1,240 - Cash flow from operating activities 6,554 5,146 Investing activities Purchase of property and equipment -492-320 Capitalized development costs -4,954-1,695 Cash flow from investing activities -5,446-2,015 CASH FLOW 1,108 3,131 Cash at the beginning of the year 17,513 4,892 Cash flow 1,108 3,131 Exchange Rate diff -103-59 CASH AT THE END OF THE PERIOD 18,518 7,964 7
Consolidated Group Changes in Equity Statement January-March 2012 GROUP CHANGES IN EQUITY Share Capital Other Capital Contribution Other Reserves Proft/loss brought forward Shareholders equity Shareholder s Equity as of 2012-01-01 800 19,930-78 22,476 43,128 Net result for the period 4,660 4,660 Exchange difference -39 608 569 Shareholder's Equity as of 2012-03-31 800 19,930-117 27,744 48,357 The Shares The number of outstanding shares at the end of the period: 8 000 000 shares. The average number of outstanding shares during the period: 8 000 000 shares. There are no outstanding convertibles or options in G5 Entertainment AB (publ). This interim report has not been reviewed by company's auditor. Insiders Name Shares Change since Dec 2011 VLADISLAV SUGLOBOV (through company) 721 000 0 SERGEY SHULTS (through company) 675 000 + 2 000 ALEXANDER TABUNOV (through company) 660 000 0 EIN STADALNINKAS 0 0 JOHAN WRANG 0 0 ÅSA ANDERSSON ENEBERG 0 0 PETER BENSON 7 000 0 JEFFREY ROSE 0 0 8
Stockholm 15 May 2012 G5 Entertainment AB (publ) With the questions regarding this report please make contact by email at investors@g5e.se G5 Entertainment will be publishing Q2 2012 report on 15 th August 2012, Q3 2012 report on 15 th November 2012, Q4 2012 report on 25 th February 2013. 9
G5 Entertainment AB (publ) unites a group of companies: G5 Holdings Limited (Malta), G5 UA Holdings Limited (Malta), G5 Entertainment, Inc. (USA), G5 Holding RUS LLC (Russia). 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. 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. G5 ENTERTAINMENT AB (publ) BOX 5339, 102 47 STOCKHOLM SWEDEN PHONE: +7 495 210 97 94 FAX: +46-8 545 075 49, +7 495 637 62 98 E-MAIL: CONTACT@G5E.SE ORG.NR. 556680-8878 HTTP://WWW.G5E.SE