30 Apr 2014 07:00
GameAccount Network plc2013 Full Year Results
2013 a Transformational Year
Uniquely positioned for further growth
LSE: GAME ISE: GAME
GameAccount Network plc (“GameAccount Network” or the “Group”), a leading developer and supplier of enterprise-level B2B gaming software and online gaming content, is pleased to announce results for the year ended 31 December 2013.
Financial Highlights
Net Revenue increased by 123% to £12.3m (2012: £5.5m) Clean Ebitda1 increased by £3.8m to £4.1m (2012: £0.3m) Profit before tax for the year increased to £1.6m (2012: Loss of £1.0m) Earnings per share increased to £0.04 (2012: £0.01) Placing and admission to AIM and ESM raised £15m2 to accelerate growth Strong balance sheet: cash and cash equivalents increased to £16.9m (2012: £1.7m)Strategic & Operating Highlights
Launch of real money gaming platform in newly regulated New Jersey via Betfaircasino.com under the Trump Resorts International brand Partnered with Foxwoods Casino in Connecticut in advance of the launch of Simulated Gaming product in January 2014 Enhanced Simulated Gaming player economics exceeding internal projections and in excess of 3x published social casino gaming player values Game development and distribution deals with KONAMI Gaming, Multimedia Games, Reel Time Gaming and Gamomat launching in 2014 Significant growth in higher margin revenue streams including a major platform sale and increased third party game development deals Increased gross income from Italian market from the distribution of third party slots content Continued investment in Internet Gaming System software platform and in the US market through recruitment of US management and the opening of Las Vegas, Nevada office Post year-end, signed new partnerships with Net Entertainment for game distribution in Italy; and with Osage Casinos in Oklahoma and New York’s Empire City Casino in the United StatesDermot Smurfit, CEO of GameAccount Network commented:
“2013 was a transformational year for GameAccount Network. Net revenue has more than doubled and EBITDA increased from £0.3m to £4.1m. We have made real progress in delivering on our strategic initiative to develop sustainable higher margin revenue streams while positioning the Group for growth in regulating markets.
We also successfully raised £15 million2 through an institutional placing in November 2013 and listed on the AIM and ESM markets of the London and Irish Stock Exchanges. We have a strong balance sheet with almost £17 million in liquidity to accelerate our growth in 2014 and beyond.
We continue to invest significantly in recruitment to support increased product development and sales & marketing services capability in both the European and United States regulated markets.
During 2013 the Group invested heavily in product development resulting in enhanced mobile and reporting capability. We also completed our unique Simulated Gaming™ product offering designed to enable land-based casino operators in the United States to move online in advance of regulation of real money Internet gaming. Simulated Gaming™ combines the Company’s real money Internet gaming technology platform; recognisable Class III casino gaming content; and, the land-based casino operator’s brand.
In January 2014 the Group delivered Simulated Gaming™ into the United States for Foxwoods Resort Casino® in Connecticut and secured new casino operator customers including, Osage Casinos in Oklahoma and Empire City Casino in New York. In addition to regulated Internet gaming and Simulated Gaming™ in the United States we remain well placed in 2014 to deliver further growth in our core European content distribution business with new game titles for Konami Gaming, Multimedia Games, Reel Time Gaming and Gamomat coming to market in 2014 in both desktop and mobile formats.”
Notes
Clean EBITDA is a non GAAP company specific measure and excludes interest, tax, depreciation, amortisation, share based payment expense and other items which the directors consider to be non-recurring and one time in nature Before deduction of associated expensesNote regarding forward-looking statements
This announcement includes forward-looking statements, including statements concerning current expectations about future financial performance and economic and market conditions which GameAccount Network believes are reasonable. However, these statements are neither promises nor guarantees, but are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated.
| For further information please contact: | ||||
| GameAccount Network | FTI Consulting | |||
| Dermot Smurfit | Mark Kenny/Jonathan Neilan | |||
| Chief Executive Officer | ||||
| +44 (0) 20 7292 6262 | +353 1 6633686 | |||
| dsmurfit@GameAccountNetwork.com | gameaccount@fticonsulting.com | |||
| Davy | ||||
| John Frain / Roland French | ||||
| +353 1 679 6363 | ||||
GameAccount Network
GameAccount Network is a leading developer and supplier of enterprise-level Business to Business gaming software systems and online gaming content. GameAccount Network is listed on the ESM Market of the Irish Stock Exchange and the AIM Market of the London Stock Exchange under the ticker: GAME
Please visit www.gameaccountnetwork.com
GameAccount Network Plc
Chairman’s Report
Dear Fellow Shareholders
I would like to thank you all for your support since the inception of GameAccount Network in 2002. During the intervening eleven years we have come a long way from our origins of 4 employees operating from serviced offices. We have evolved from a developer and provider of pure games of skill into a leading enterprise-level technology solution provider for land-based casino operators in regulated Internet gaming markets.
We believe our vibrant innovative business mix will generate substantial shareholder value over the next few years. 2013 has been a momentous year for our company with admission to both the Aim and ESM markets, healthy profits and a strong balance sheet, which should expedite our expansion plans in the United States in particular.
We welcome regulatory changes in the United States, the United Kingdom, Spain and Italy where we believe we are well positioned to grow sustainable revenues.
GameAccount Network is committed to maintaining a Board composition that complies with the UK Corporate Governance Code and we have further strengthened our Board with the recent appointment of Seamus McGill as an independent non-executive director.
Finally the Board and I would like to thank all GameAccount Network employees for their work and commitment over the last year. Our people, culture and their commitment to excellence are among our greatest assets.
We look forward to the opportunities in 2014 and 2015 during which we believe we can be a substantial player on the world stage as regulation of Internet gaming continues to unfold.
David O ReillyCHAIRMAN
GameAccount Network Plc
Strategic Report
Chief Executive Officer’s report
Overview
GameAccount Network has made significant progress in delivering its enterprise software solution, gaming content and supporting services to major operators with a particular focus on the newly regulated intra-State markets emerging in the United States. During the year the Group signed a landmark agreement with Betfair and subsequently delivered its enterprise Internet gaming solution into New Jersey’s newly regulated Internet gaming market for Betfair operating in partnership with New Jersey casino operator Trump Resorts International. Throughout the year GameAccount Network continued delivering a diverse range of machine-based casino slot games online for casino equipment manufacturers. The group experienced strong organic growth in Italy’s newly regulated online casino slots market and continued to win new business in both Europe and the United States. During the year, the group achieved double-digit financial growth, with gross income up 67% to £29.6 million (2012: £17.7 million). Net revenues increased 123% to £12.3 million (2012: £5.5 million), driven by new business and organic growth. The business delivered strong organic growth in Europe, started receiving income derived from newly-regulated Internet gaming in the United States and made significant progress positioning the Group for continued growth in the United States.
Strategy
Expansion in the United States remains a strategic priority for the Group following the establishment of a dedicated sales and infrastructure support office in Las Vegas, Nevada during the year. During the year the Group entered into landmark agreements with both Betfair for regulated real money Internet gaming in New Jersey and with Foxwoods® Casino Resort, America’s largest casino, for Simulated Gaming™, in advance of potential regulation, being a compelling converged Internet gaming enterprise solution designed for land-based casinos seeking to move online ahead of anticipated regulation of real money Internet gaming. Regulated real money Internet gaming and Simulated Gaming™ remain the primary growth opportunities in the United States. Extending the convergence capabilities of the Group’s GameSTACK™ Internet gaming system (IGS) remains a strategic priority, extending GameAccount Network’s substantial lead in offering land-based US casino operators the ability to converge their customers’ experience across land, online and mobile. Mobile casino gaming in particular represents a continued strong growth opportunity with gross income derived from mobile casino gaming growing substantially in 2013. In Europe, the Group continues to prepare for growth opportunities consequent to newly regulated casino slot gaming in Spain and is consolidating its position in Italy’s regulated casino slot Internet gaming market by delivering an expanding breadth of casino slots content to its major Italian operator partners.
Products
During the year the Group completed the development of 10 online casino games for its casino equipment manufacturer clients including Aristocrat, Incredible Technologies and Ainsworth Game Technology bringing the Group’s total games portfolio inherent within the GameSTACK™ Internet gaming system to 135. In 2013 new casino equipment manufacturer clients of the Company’s game development services included Multi KONAMI Gaming in the United States, GamoMAT in Germany and Reel Time Gaming in Australia with online facsimiles of their machine-based casino slots scheduled for delivery in 2014.
By years end the Company completed development of the unique Simulated Gaming™ product offering designed to enable land-based casino operators in the United States to move online in advance of regulation of real money Internet gaming. Simulated Gaming™ combines the Company’s real money Internet gaming technology platform, recognisable Class III casino gaming content and the land-based casino operator’s brand. Augmented with a carefully constructed monetisation model, in 2014 US land-based casinos have the opportunity to launch online casinos embedded within their existing news & information websites and offering a legal Simulated Gaming™ entertainment experience online to residents anywhere within the United States.
GameAccount Network also continued to develop its industry-leading casino product and service offering with a particular focus on the Group’s SENSE3™ mobile solution comprising multi-game native Apps for iOS and Android, HTML5 casino games and responsive design websites. Major beneficiaries of this historic and continued investment in mobile capability includes the Group’s client casino equipment manufacturers today relying upon GameAccount Network to develop online-equivalents of their Class III machine-based slot games and distribute them online in Europe and the United States enabled for real money Internet gaming as well as Simulated Gaming™.
GameAccount Network Plc
Strategic Report
Chief Executive Officer’s report (continued)
Products (continued)
Throughout 2013 the Group delivered substantially extended convergence capability within the GameSTACK™ Internet gaming system by completing two incremental integrations with major land-based casino management systems being those employed by Foxwoods® Casino Resort in Connecticut and Trump Plaza in New Jersey. Convergence between a traditional land-based casino and a new online casino experience enables seamless customer journeys maximizing the casino operator’s ability to monetize their customer database and extend online beyond the typical geographic radius in which their traditional customers reside. The continued investment in convergence supports the Group’s proven ability to enable traditional land-based casinos to move online and deliver an Internet gaming experience which supports and accelerates their existing gaming business through increased on-property visitation and increased local market share.
Marketing & Support Services
Throughout 2013 the Group significantly expanded its support services capability for operator customers using the GameSTACK™ as their primary platform for Internet gaming. Services are an increasingly important component in delivering an enterprise gaming solution to land-based casino operators and include the provision of managed payment processing, predictive analytics, CRM and online acquisition marketing services across all major online acquisition channels together with expertise in converting and reactivating land-based patron databases into online players. The marketing, CRM and analytics capabilities of the GameSTACK™ back office and associated integrated reporting systems enable the provision of a turnkey service to land-based casinos seeking to move online consequent to or in advance of real money Internet gaming regulation. Income derived from services creates an incremental income opportunity for the Group and diversifies the business in a manner complementary to the core software licensing business.
Dermot S SmurfitChief Executive Officer
GameAccount Network Plc
Strategic Report
FINANCIAL AND OPERATIONAL REVIEW
Summary
GameAccount Network has delivered a record year in 2013 with Net Revenues increasing by 123% to £12.3M resulting in EBITDA of £4.1M compared to £0.3M in the comparative period. The strategy to diversify the Group’s revenue base has started to pay off and during the year the group recorded its first significant Internet Gaming System sale and continued to increase B2B revenues from the development of online versions of machine-based slots game content. Operating profit for the year was £1.6M compared to a loss in 2012 of £0.9M and profit after tax for the year was £1.1M, an increase of £1.0M from the £0.1M recorded in 2012.
In November of 2013 the Group raised £15M (before associated transaction expenses) in new capital as part of an initial public offering to place 11,111,111 new ordinary shares and was admitted to both the AIM market in London and the ESM market in Dublin. As a consequence of this the Group enters 2014 with a significantly strengthened balance sheet and together with an absence of debt financing is strongly positioned for future growth. The group ended the period with a cash balance of £16.9M compared to £1.7M for the year ended 31 December 2012 and Net Assets at 31 December 2013 of £17.7M, an increase of £15.8M during the period.
Revenue
Gross Income increased by 67% from £17.7M in the year ended 31 December 2012 to £29.6M in the current fiscal year. This increase has primarily been due to increased gross income from the distribution of slots content in the Italian market and increased gross income from the sale of an Internet Gaming System and game content development.
Net revenues for the year increased to £12.3M representing an increase of £6.8M compared to net revenue generated in the previous year of £5.5M. The increase has been primarily due to a major Internet Gaming System sale and increased game development and related revenues. Overall B2B revenues have increased from £3.9M to £11.3M offsetting a decline in the B2C business where revenues fell from £1.6M to £1.0M in the same period. Within the B2B revenue stream Game and Platform development revenues have increased from £1.3M to £8.7M while revenues from the European distribution network are consistent with prior year at £2.6M for the year ended 31 December 2013.
Expenses
Distribution costs include royalties payable to third parties, B2B and B2C direct marketing expenditure and the direct costs of operating the hardware platforms deployed across the business and have increased from £2.3M to £3.0M in the twelve months to 31 December 2013. The increase is due primarily to increased royalties payable to providers of third party games content and the incremental cost of operating hardware platforms due to expansion into the US regulated market.
Administration expenses include the costs of personnel and related expenditure for both the London and Nevada offices. Total administrative expenses have increased from £4.1M in 2012 to £7.7M in the year ended 31 December 2013 primarily due to expenses incurred in connection with the admission to AIM and ESM markets and increased headcount to support the groups continued investment in both the underlying Internet Gaming System and enhanced games team capability to develop online versions of existing offline slots game content. This investment has enabled expansion into the US market primarily to support the group’s efforts to capitalise on the opportunity presented by real money gaming in regulated states and simulated gaming in states across the US market.
EBITDA
Clean Earnings before interest, tax, depreciation and amortisation (Clean EBITDA) of £4.1M in 2013 has increased materially from £0.3M in the comparative period.
Clean EBITDA is a non GAAP company specific measure and excludes interest, tax, depreciation, amortisation, share based payment expense and other items which the directors consider to be non-recurring and one time in nature. The Directors regard Clean EBITDA as a reliable measure of profits that is not unduly subjective. During the year the Group incurred £1.7M of net costs included within administrative expenses that have not been included within the Clean EBITDA measure which include the costs of the group’s initial public offering in November and are regarded as non-recurring and one time in nature.
GameAccount Network Plc
Strategic Report
FINANCIAL AND OPERATIONAL REVIEW (continued)
Cashflow
The cash balance at 31 December 2013 was £16.9M (2012: £1.7M) representing an increase of £15.2M. Cash balances have been significantly bolstered from the proceeds of issuing new shares of £14.7M and cashflow generated from operations during the period of £1.9M. During the year £0.8M was spent related to the capitalisation of internal development time and £0.5M was spent on fixed assets including the acquisition of new hardware to establish a platform in the United States market.
KEY PERFORMANCE INDICATORS
The performance of the group during the year demonstrates the group’s strategy to both consolidate the core gaming content distribution business in Europe and to grow through higher margin revenue opportunities including IGS sales and Game Development in regulated markets. The directors regard clean earnings before interest, tax, depreciation and amortisation (“Clean EBITDA”) as a reliable measure of profits and the group’s key performance indicators are set out below:
| 2013 | 2012 | |||||||
| £000 | £000 | |||||||
| Gross income from gaming operations and services | 29,657 | 17,690 | ||||||
| Net revenue | 12,264 | 5,499 | ||||||
| Clean EBITDA | 4,109 | 305 | ||||||
| Net assets | 17,690 | 1,880 | ||||||
| Cash and cash equivalents | 16,895 | 1,668 | ||||||
The Board also monitor customer related KPIs, including no of active players, revenue by partner, business segment profitability and geographic split of turnover.
On behalf of the Board
Desmond GlassChief Financial Officer
GameAccount Network Plc
For the year ended 31 December 2013
Consolidated statement of comprehensive income
| Year ended | Year ended | |||||||||||
| 31 December | 31 December | |||||||||||
| 2013 | 2012 | |||||||||||
| Notes | £’000 | £’000 | ||||||||||
| Continuing Operations | ||||||||||||
| Gross income from gaming operations and services | 2.3 | 29,657 | 17,690 | |||||||||
| Net revenues | 4 | 12,264 | 5,499 | |||||||||
| Distribution costs | (3,039) | (2,316) | ||||||||||
| Administrative expenses | (7,671) | (4,121) | ||||||||||
| Total operating costs | (10,710) | (6,437) | ||||||||||
| Clean EBITDA | 4,109 | 305 | ||||||||||
| Depreciation | 11 | (289) | (280) | |||||||||
| Amortisation of intangible assets | 10 | (511) | (438) | |||||||||
| Loss on disposal of intangible assets | 10 | - | (119) | |||||||||
| Exceptional costs | 6 | (1,705) | (330) | |||||||||
| Employee share-based payment charge | (50) | (76) | ||||||||||
| Operating profit/(loss) | 6 | 1,554 | (938) | |||||||||
| Finance income | 8 | 15 | — | |||||||||
| Finance costs | 8 | — | (18) | |||||||||
| Profit/(Loss) before taxation | 1,569 | (956) | ||||||||||
| Tax (charge)/credit | 9 | (460) | 1,086 | |||||||||
| Profit for the year attributable to owners of the Company and comprehensive income for the year | 1,109 | 130 | ||||||||||
| Basic earnings per share attributable to owners of the parent during the year | ||||||||||||
| Basic (pence) | 17 | 4.14 | 0.53 | |||||||||
| Diluted (pence) | 17 | 2.41 | 0.30 | |||||||||
Clean EBITDA is a non GAAP company specific measure and excludes interest, tax, depreciation, amortisation, share based payment expenses and other items which the directors consider to be non-recurring and one time in nature. Where not explicitly mentioned, EBITDA refers to EBITDA from continuing operations.
Company Registration No. 3883658
GameAccount Network Plc
For the year ended 31 December 2013
Consolidated statement of financial position
| At 31 December | At 31 December | At 31 December | ||||||||||||||
| 2013 | 2012 | 2011 | ||||||||||||||
| Notes | £’000 | £’000 | £’000 | |||||||||||||
| Non-current assets | ||||||||||||||||
| Intangible assets | 10 | 912 | 664 | 750 | ||||||||||||
| Property, plant and equipment | 11 | 597 | 433 | 466 | ||||||||||||
| Deferred tax asset | 510 | 1,000 | — | |||||||||||||
| 2,019 | 2,097 | 1,216 | ||||||||||||||
| Current assets | ||||||||||||||||
| Trade and other receivables | 12 | 2,730 | 1,462 | 1,008 | ||||||||||||
| Cash and cash equivalents | 13 | 16,895 | 1,668 | 1,116 | ||||||||||||
| 19,625 | 3,130 | 2,124 | ||||||||||||||
| Total assets | 21,644 | 5,227 | 3,340 | |||||||||||||
| Non-current liabilities | ||||||||||||||||
| Borrowings | 14 | — | — | 100 | ||||||||||||
| — | — | 100 | ||||||||||||||
| Current liabilities | ||||||||||||||||
| Trade and other payables | 15 | 3,954 | 3,347 | 1,448 | ||||||||||||
| Borrowings | 14 | — | — | 120 | ||||||||||||
| 3,954 | 3,347 | 1,568 | ||||||||||||||
| Total liabilities | 3,954 | 3,347 | 1,668 | |||||||||||||
| Equity attributable to equity holders of parent | ||||||||||||||||
| Share capital | 16 | 557 | 434 | 433 | ||||||||||||
| Share premium account | 14,528 | 10,696 | 10,695 | |||||||||||||
| Retained earnings | 2,605 | (9,250) | (9,456) | |||||||||||||
| 17,690 | 1,880 | 1,672 | ||||||||||||||
| Total equity and liabilities | 21,644 | 5,227 | 3,340 | |||||||||||||
The financial statements on pages 8 to 34 were approved and authorised for issue by the Board of Directors on 29 April 2014 and were signed on its behalf by:
Desmond GlassChief Financial Officer
GameAccount Network Plc
For the year ended 31 December 2013
Consolidated statement of changes in equity
| Share | Share | Retained | Total | |||||||||||||
| capital | premium | earnings | equity | |||||||||||||
| £’000 | £’000 | £’000 | £’000 | |||||||||||||
| At 31 December 2011 | 433 | 10,695 | (9,456) | 1,672 | ||||||||||||
| Profit and total comprehensive income for the year | — | — | 130 | 130 | ||||||||||||
| Employee share-based payment charge | — | — | 76 | 76 | ||||||||||||
| Issue of equity share capital | 1 | 1 | — | 2 | ||||||||||||
| At 31 December 2012 | 434 | 10,696 | (9,250) | 1,880 | ||||||||||||
| Profit and total comprehensive income for the year | — | — | 1,109 | 1,109 | ||||||||||||
| Employee share-based payment charge | — | — | 50 | 50 | ||||||||||||
| Issue of equity share capital | 123 | 15,128 | — | 15,251 | ||||||||||||
| Issue costs | — | (600) | — | (600) | ||||||||||||
| Effect of capital reduction | — | (10,696) | 10,696 | — | ||||||||||||
| At 31 December 2013 | 557 | 14,528 | 2,605 | 17,690 | ||||||||||||
The following describes the nature and purpose of each reserve within equity:
| Share Capital | Represents the nominal value of shares allotted, called up and fully paid | |||
| Share Premium | Represents the amount subscribed for share capital in excess of nominal value | |||
| Retained Earnings | Represents the cumulative net gains and losses recognised in the consolidated statement of comprehensive income | |||
GameAccount Network Plc
For the year ended 31 December 2013
Consolidated statement of cash flows
| Year ended | Year ended | |||||||||||
| 31 December 2013 | 31 December 2012 | |||||||||||
| Notes | £’000 | £’000 | ||||||||||
| Cash flow from operating activities | ||||||||||||
| Profit/(Loss) for the year before taxation | 1,569 | (956) | ||||||||||
| Adjustments for: | ||||||||||||
| Amortisation of intangible assets | 10 | 511 | 438 | |||||||||
| Depreciation of property, plant and equipment | 11 | 289 | 280 | |||||||||
| Loss on disposal of intangible assets | 10 | — | 119 | |||||||||
| Share based payment expense | 50 | 76 | ||||||||||
| Net finance (income)/costs | 8 | (15) | 18 | |||||||||
| Foreign exchange | 238 | 31 | ||||||||||
| Operating cash flow before movement in working capital and taxation | 2,642 | 6 | ||||||||||
| Increase in trade and other receivables | (1,369) | (367) | ||||||||||
| Increase in trade and other payables | 612 | 1,880 | ||||||||||
| Taxation | 30 | — | ||||||||||
| Cash generated from operations | 1,915 | 1,519 | ||||||||||
| Cash flow from investing activities | ||||||||||||
| Purchase of intangible fixed assets | 10 | (759) | (471) | |||||||||
| Purchases of property, plant and equipment | 11 | (453) | (247) | |||||||||
| Net cash used in investing activities | (1,212) | (718) | ||||||||||
| Cash flow from financing activities | ||||||||||||
| Interest paid | 15 | (18) | ||||||||||
| Net proceeds on issue of shares | 16 | 14,651 | 2 | |||||||||
| Repayment of borrowings | — | (220) | ||||||||||
| Net cash generated from/(used in) financing activities | 14,666 | (236) | ||||||||||
| Net increase in cash and cash equivalents | 15,369 | 565 | ||||||||||
| Cash and cash equivalents at beginning of year | 13 | 1,668 | 1,116 | |||||||||
| Effect of foreign exchange rate changes | (142) | (13) | ||||||||||
| Cash and cash equivalents at end of year | 13 | 16,895 | 1,668 | |||||||||
GameAccount Network Plc
For the year ended 31 December 2013
Notes to the financial statements
1. Basis of preparation
The financial information set out in these preliminary results does not constitute the company’s statutory accounts for the year ended 31 December 2012 or 31 December 2013.
Statutory accounts for the year ended 31 December 2012 have been filed with the Registrar of Companies and those for the year ended 31 December 2013 will be delivered to the Registrar in due course; both have been reported on by independent Auditors. The independent auditors’ reports on the Annual Report and Accounts for the year ended 31 December 2012 and 31 December 2013 were unqualified, did not draw attention to any, matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.
The financial information in these preliminary results has been prepared using the recognition and measurement principles of International Accounting Standards, International Financial Reporting Standard and Interpretations adopted for use in the European Union (collectively Adopted IFRSs). The principal accounting policies adopted have been presented below.
The Group’s significant accounting policies under IFRS are detailed below. There were no material differences on transition to IFRS from UK GAAP. In accordance with the requirements of IFRS 1, the balance sheet as at 31 December 2011 has been presented.
Adoption of new and revised standards
In the current year the Group has adopted all of the new and revised standards and interpretations issued by the IASB and the International Financial Reporting Interpretations Committee (IFRIC) of the IASB, as they have been adopted by the European Union, that are relevant to its operations and effective for accounting years beginning on 1 January 2013.
New standards, amendments to standards and interpretations have been issued but are not effective (and in some cases had not yet been adopted by the EU) for the financial year beginning 1 January 2014. These have not been early adopted and directors do not expect that the adoption of these standards will have a material impact on the Financial Statements of the Group in future years.
2. Summary of significant accounting policies
The principal accounting policies adopted are set out below.
2.1 Basis of Consolidation
The consolidated financial information incorporates the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to 31 December 2013. Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.
The results of subsidiaries acquired or disposed of during the year are included in the consolidated statement of comprehensive income from the effective date of acquisition and up to the effective date of disposal, as appropriate.
Uniform accounting policies have been adopted across the Group. All intra- group transactions, balances, income and expenses are eliminated on consolidation.
GameAccount Network Plc
For the year ended 31 December 2013
Notes to the financial statements (continued)
2. Summary of significant accounting policies (continued)
Foreign currencies
(a) Functional and presentational currency
Items included in the financial statements are measured using the currency of the primary economic environment in which the Group operates (‘the functional currency’) which is UK Pound Sterling (£). The financial statements are presented in UK Pound Sterling (£), which is the Group’s presentational currency.
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in net profit or loss in the statement of comprehensive income.
Non monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
(c) Group companies
On consolidation, the results of overseas operations are translated at rates approximating to those ruling when the transactions took place. All assets and liabilities of overseas operations, including goodwill arising on the acquisition of those operations, are translated at the rate ruling at the reporting date. Exchange differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised in other comprehensive income and accumulated in the foreign exchange reserve.
Exchange differences recognised profit or loss in Group entities' separate financial statements on the translation of long-term monetary items forming part of the Group's net investment in the overseas operation concerned are reclassified to other comprehensive income and accumulated in the foreign exchange reserve on consolidation.
On disposal of a foreign operation, the cumulative exchange differences recognised in the foreign exchange reserve relating to that operation up to the date of disposal are transferred to the consolidated statement of comprehensive income as part of the profit or loss on disposal.
2.2 Revenue recognition
Net revenues comprise amounts earned from B2C and B2B activities. B2B activities include revenues derived from the use of the Group’s intellectual property in online gaming activities and revenues derived from the game and platform development and related services.
(a) B2C
Net revenue from ‘business to consumer’ (‘B2C’) activities represents the net house win, commission charged or tournament entry fees where the player has concluded his participation in a tournament. Net revenue is recognised in the accounting years in which the gaming transactions occur and is measured at the fair value of the consideration received or receivable, net of certain promotion bonuses and customer incentives.
GameAccount Network Plc
For the year ended 31 December 2013
Notes to the financial statements (continued)
2. Summary of significant accounting policies (continued)
2.2 Revenue recognition (continued)
(b) B2B
Revenue share and other services
Net revenue receivable from ‘business to business’ (‘B2B’) activities in respect of revenue share and other services comprises a percentage of the revenue generated by the contracting party from use of the Group’s intellectual property in online gaming activities and from fees charged for services rendered. Net revenue is recognised in the accounting years in which the gaming transactions occur or the services are rendered.
Game and platform development
Net revenue receivable from B2B activities in respect of game and platform development comprises fees earned from development of games for customers for use on GameAccount Network’s platforms and from the sale of platform software and related services.
Revenue in respect of game development and the sale of platform software is recognised when certification for the game has been obtained from the relevant regulatory authority, delivery has occurred and the fee is fixed, contractual or determinable and collectability is probable.
Services revenue principally relates to implementation services. Such services are generally separable from the other elements of arrangements. Revenue for such services is recognised over the period of the delivery of these services. Where an element of the fee is contingent on the successful delivery of the implementation project the revenue is not recognised until such time that it is probable that the requirements under that specific contract will be met.
2.3 Gross income from gaming operations and services
In order to provide further information to readers of the historical financial information and in particular to give an indication of the extent of transactions that have passed through the Group’s systems, the statement of comprehensive income discloses gross income from gaming operations and services arising through the use of the Group’s intellectual property in online gaming activities, which represents the total income of the Group, together with that derived by its contracting parties. This line item does not represent the Group’s revenue for the purposes of IFRS income recognition.
2.4 Distribution costs
Distribution costs represent the costs of delivering the service to the customer and primarily consist of technology infrastructure, promotional and advertising together with gaming and regulatory testing all of which are recognised on an accruals basis, and depreciation and amortisation.
2.5 Administrative expenses
Administrative expenses consist primarily of staff costs, corporate and professional expenses, all of which are recognised on an accruals basis, and impairment charges.
Exceptional items are disclosed separately in the financial statements where it is necessary to do so to provide further understanding of the financial performance of the group. They are material items of income or expense that have been shown separately due to the significance of their nature or amount.
GameAccount Network Plc
For the year ended 31 December 2013
Notes to the financial statements (continued)
2. Summary of significant accounting policies (continued)
2.6 Intangible assets
Externally acquired intangible assets
Externally acquired intangible assets are initially recognised at cost and subsequently amortised on a straight-line basis over their useful economic lives.
The significant intangibles recognised by the Group, their useful economic lives and the methods used to determine the cost of intangibles acquired in a business combination are as follows:
| Licences and trademarks | Shorter of licence term or 10 years | |||
Internally generated intangible assets (development costs)
Expenditure incurred on development activities including the Group’s software development is capitalised only where the expenditure will lead to new or substantially improved products, the products are technically and commercially feasible and the Group has sufficient resources to complete development.
Capitalised development costs are amortised over the years the Group expects to benefit from selling the products developed which is typically three to five years. The amortisation expense is included within the distribution cost line in the consolidated statement of comprehensive income.
Development expenditure not satisfying the above criteria and expenditure on the research phase of internal projects are recognised in the consolidated statement of comprehensive income as incurred.
Subsequent expenditure on capitalised intangible assets is capitalised only where it clearly increases the economic benefits to be derived from the asset to which it relates. All other expenditure, including that incurred in order to maintain an intangible assets current level of performance, is expensed as incurred.
2.7 Property, plant and equipment
Depreciation is calculated to write off the cost of fixed assets on a straight line basis over the expected useful lives of the assets concerned. The principal annual rates used for this purpose are:
| Fixtures, fittings & equipment | 33% straight line | |||
Subsequent expenditures are included in the assets carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits will flow to the Group and the cost of the item can be measured reliably. All repairs and maintenance are charged to the consolidated statement of comprehensive income during the financial period in which they are incurred.
Gains and losses on disposals are determined by comparing proceeds with carrying amount and are included in the consolidated statement of comprehensive income.
GameAccount Network Plc
For the year ended 31 December 2013
Notes to the financial statements (continued)
2. Summary of significant accounting policies (continued)
2.8 Impairment of property, plant and equipment and internally generated intangible assets
At each statement of financial position date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. An intangible asset with an indefinite useful life is tested for impairment at least annually and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell and value in use. 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 which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately.
2.9 Financial instruments
Financial assets and financial liabilities are recognised on the Group’s statement of financial position when the Group becomes party to the contractual provisions of the instrument. Financial assets are de-recognised when the contractual rights to the cash flows from the financial asset expire or when the contractual rights to those assets are transferred. Financial liabilities are de-recognised when the obligation specified in the contract is discharged, cancelled or expired.
Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method less provision for impairment. Appropriate provisions for estimated irrecoverable amounts are recognised in the statement of comprehensive income when there is objective evidence that the assets are impaired. Interest income is recognised by applying the effective interest rate, except for short term receivables when the recognition of interest would be immaterial.
Impairment provisions are recognised when there is objective evidence (such as significant financial difficulties on the part of the counterparty or default or significant delay in payment) that the Group will be unable to collect all of the amounts due under the net carrying amount and the present value of the future expected cash flows associated with the impaired receivable. For trade receivables, which are reported net; such provisions are recorded in a separate allowance account with the loss being recognised within administrative expenses in the statement of comprehensive income. On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, demand deposits, and other short-term highly liquid investments that have maturities of three months or less from inception, are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.
GameAccount Network Plc
For the year ended 31 December 2013
Notes to the financial statements (continued)
2. Summary of significant accounting policies (continued)
2.9 Financial instruments (continued)
Classification of shares as debt or equity instruments
Financial instruments issued by the Group are classified as equity only to the extent that they do not meet the definition of a financial liability. An equity instrument is a contract that evidences a residual interest in assets or an entity after deducting all of its liabilities. Accordingly, a financial instrument is treated as equity if:
There is no contractual obligation to deliver cash or other financial asset or to exchange financial assets or liabilities on terms that maybe unfavourable, and The instrument is a non-derivative that contains no contractual obligation to deliver a variable number of shares or is a derivative will be settled only by the Company exchanging a fixed amount of cash or other assets for a fixed number of the Company’s own equity instruments.When shares are issued, any component that creates a financial liability of the Group is presented as such in the statement of financial position, measured initially at fair value, net of transaction costs, thereafter at amortised cost until derecognised. Any corresponding dividends relating to the liability component are charged as interest expenses in the income statement. The initial fair value of the liability component is determined using a market rate for an equivalent liability without a conversion feature, or where relevant, the redemption amount of the instrument.
Equity instruments issued by the Group are recorded at the proceeds received, net of direct issue costs.
Trade and other payables
Trade payables are initially measured at their fair value and are subsequently measured at their amortised cost using the effective interest rate method; this method allocates interest expense over the relevant period by applying the ‘effective interest rate’ to the carrying amount of the liability.
Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the statement of comprehensive income over the period of the borrowings using the effective interest method.
2.10 Current and deferred tax
Taxation represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit reported in the statement of comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the statement of financial position date.
GameAccount Network Plc
For the year ended 31 December 2013
Notes to the financial statements (continued)
2. Summary of significant accounting policies (continued)
2.10 Current and deferred tax (continued)
Deferred tax
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled based upon tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax is charged or credited in the statement of comprehensive income, except when it relates to items credited or charged directly to equity, in which case the deferred tax is also dealt with in equity.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial information and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each statement of financial position date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is measured using tax rates that have been enacted or substantively enacted by the statement of financial position date and are expected to apply when the related deferred tax asset or liability is realised or settled.
2.11 Operating leases
All leases held by the Group are operating leases and, as such, are charged to the statement of comprehensive income on a straight-line basis over the lease term. Rent free periods or other incentives received for entering into a lease are accounted for over the lease term, so as to spread the benefit received.
2.12 Share-based payments
The Group issues equity settled share-based payments to certain employees (including Directors).
Equity settled share-based payments are measured at fair value at the date of grant and expensed on a straight-line basis over the vesting period, based upon the Group’s estimate of equity instruments that will eventually vest, along with a corresponding increase in equity. At each statement of financial position date, the Group revises its estimate of the number of equity instruments expected to vest as a result of the effect of non market based vesting conditions. The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to equity reserves.
The fair value of share options is determined using a Black Scholes model, taking into consideration management’s best estimate of the expected life of the option and the estimated number of shares that will eventually vest. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.
2.13 Pension costs
The Group operated a defined contribution scheme. The amount charged to the statement of comprehensive income in respect of pension costs and other post retirement benefits is the contributions payable in the period. Differences between contributions payable in the period and contributions actually paid are shown as either other liabilities or prepayments in the statement of financial position.
GameAccount Network Plc
For the year ended 31 December 2013
Notes to the financial statements (continued)
3. Financial risk management
3.1 Financial risk factors
The Group’s activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial performance.
Risk Management is carried out by management under policies approved by the Board of Directors. Management identifies and evaluates financial risks in close co-operation with the Group’s operating segments. The Board provides principles for overall risk management, as well as policies covering specific areas, such as, interest rate risk, non-derivative financial instruments and investment of excess liquidity.
3.2 Market risk
Market risk is the risk of loss that may arise from changes in market factors such as interest rates and foreign exchange rates.
3.3 Contractual risk
In the ordinary course of business the Group contracts with various parties. These contracts may include performance obligations, indemnities and contractual commitments. Management monitors the performance of the Group and any relevant counterparties against such contractual conditions to mitigate the risk of material, adverse non-compliance.
3.4 Credit risk
Credit risk is the financial loss to the Group if a customer or counterparty to financial instruments fails to meet its contractual obligation. Credit risk arises from the Group’s cash and cash equivalents and receivables balances.
3.5 Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. This risk relates to the Group’s prudent liquidity risk management and implies maintaining sufficient cash. Management monitors rolling forecasts of the Group’s liquidity and cash and cash equivalents on the basis of expected cash flow.
3.6 Capital risk management
The Group’s capital structure is comprised entirely of the share capital and accumulated reserves.
The Group’s objective when managing capital is to maintain adequate financial flexibility to preserve its ability to meet financial obligations, both current and long term. The capital structure of the Group is managed and adjusted to reflect changes in economic conditions.
The Group funds its expenditures on commitments from existing cash and cash equivalent balances. There are no externally imposed capital requirements.
Financing decisions are made by the Board of Directors based on forecasts of the expected timing and level of capital and operating expenditure required to meet the Group’s commitments and development plans.
3.7 Fair value estimation
The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values because of the short term nature of such assets and the effect of discounting liabilities is negligible.
GameAccount Network Plc
For the year ended 31 December 2013
Notes to the financial statements (continued)
3. Financial risk management (continued)
3.8 Critical accounting estimates and judgements
The preparation of consolidated financial statements under IFRS requires the Group to make estimates and judgments that affect the application of policies and reported amounts. Estimates and judgments are continually evaluated and are based on historical experience and other factors including expectations of future events that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.
Reference is made in this note to accounting policies which cover areas that the Directors consider require estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year. These policies together with references to the related notes to the financial statements can be found below:
| Note | |||||
| Revenue recognition | 4 | ||||
| Capitalisation and impairment of internally generated intangible assets | 10 | ||||
| Taxation, including deferred taxation | 9 | ||||
4. Net revenue
| Year ended | Year ended | |||||||
| 31 December | 31 December | |||||||
| 2013 | 2012 | |||||||
| £’000 | £’000 | |||||||
| B2C | 983 | 1,629 | ||||||
| B2B | ||||||||
| —Game and platform development | 8,714 | 1,310 | ||||||
| —Revenue share and other revenue | 2,567 | 2,560 | ||||||
| Total B2B | 11,281 | 3,870 | ||||||
| 12,264 | 5,499 | |||||||
GameAccount Network Plc
For the year ended 31 December 2013
Notes to the financial statements (continued)
5. Segmental information
Information reported to the Group’s Chief Executive, the strategic chief operating decision-maker, for the purposes of resource allocation and assessment of the Group’s segmental performance is primarily focused on the origination of the revenue stream. The Group’s principal reportable segments under IFRS 8 are therefore as follows:
• Business to business (“B2B”)
• Business to consumer (“B2C”)
Segment revenues and results
The following is an analysis of the Group’s revenue and results by reportable segment.
| B2C | B2B | Total | ||||||||||
| Year ended 31 December 2013 | £’000 | £’000 | £’000 | |||||||||
| Net revenue | 983 | 11,281 | 12,264 | |||||||||
| Distribution costs (excluding depreciation and amortisation) | (1,096) | (1,143) | (2,239) | |||||||||
| Segment result | (113) | 10,138 | 10,025 | |||||||||
| Administration expenses | (7,671) | |||||||||||
| Depreciation | (289) | |||||||||||
| Amortisation of intangible assets | (511) | |||||||||||
| Finance income | 15 | |||||||||||
| Loss before taxation | 1,569 | |||||||||||
| Taxation | (460) | |||||||||||
| Profit for the year after taxation | 1,109 | |||||||||||
| B2C | B2B | Total | ||||||||||
| Year ended 31 December 2012 | £’000 | £’000 | £’000 | |||||||||
| Net revenue | 1,629 | 3,870 | 5,499 | |||||||||
| Distribution costs (excluding depreciation and amortisation) | (1,027) | (571) | (1,598) | |||||||||
| Segment result | 602 | 3,299 | 3,901 | |||||||||
| Administration expenses | (4,002) | |||||||||||
| Depreciation | (280) | |||||||||||
| Amortisation of intangible assets | (438) | |||||||||||
| Loss on disposal of intangible assets | (119) | |||||||||||
| Finance costs | (18) | |||||||||||
| Loss before taxation | (956) | |||||||||||
| Taxation | 1,086 | |||||||||||
| Profit for the year after taxation | 130 | |||||||||||
The accounting policies of the reportable segments follow the same policies as described in note 2. Segment result represents the gross profit earned by each segment without allocation of the share of administration costs including Directors’ salaries, finance costs and income tax expense. This is the measure reported to the Group’s Chief Executive for the purpose of resource allocation and assessment of segment performance.
Administration expenses comprise principally the employment and office costs incurred by the Group.
GameAccount Network Plc
For the year ended 31 December 2013
Notes to the financial statements (continued)
5. Segmental information (continued)
Segment assets and liabilities
Assets and liabilities are not separately analysed or reported to the Group’s Chief Executive and are not used to assist in decisions surrounding resource allocation and assessment of segment performance. As such, an analysis of segment and liabilities has not been included in this financial information. All non-current assets are located in Europe and USA.
Geographical analysis of revenues
This analysis is determined based upon the location of the legal entity of the customer.
| Year | Year | |||||||
| ended | ended | |||||||
| 31 December | 31 December | |||||||
| 2013 | 2012 | |||||||
| £’000 | £’000 | |||||||
| UK and Channel Islands | 2,735 | 3,652 | ||||||
| Italy | 941 | 909 | ||||||
| USA | 1,314 | 505 | ||||||
| Australia | 7,007 | 90 | ||||||
| Rest of the World | 267 | 343 | ||||||
| 12,264 | 5,499 | |||||||
Information about major customers
During the year ended 31 December 2012 the Group had one customer which generated revenue greater than 10% of total revenue. This customer generated revenue of £858,000 representing 16% of net revenue, all of which was within the B2B segment.
During the year ended 31 December 2013 the Group had one customer which generated revenue greater than 10% of total net revenue. This customer generated revenue of £6,910,000 representing 56% of net revenue, all of which was within the B2B segment
Geographical analysis of non-current assets
| At | At | |||||||
| 31 December | 31 December | |||||||
| 2013 | 2012 | |||||||
| £’000 | £’000 | |||||||
| UK and Channel Islands | 1,425 | 1,049 | ||||||
| USA | 288 | - | ||||||
| Italy | 5 | 48 | ||||||
| 1,718 | 1,097 | |||||||
GameAccount Network Plc
For the year ended 31 December 2013
Notes to the financial statements (continued)
6. Operating profit/(loss)
6.1 Operating profit/(loss) has been arrived at after charging:
| Year | Year | |||||||
| ended | ended | |||||||
| 31 December | 31 December | |||||||
| 2013 | 2012 | |||||||
| £’000 | £’000 | |||||||
| Staff costs (note 7) | 3,949 | 2,739 | ||||||
| Auditor’s remuneration: | ||||||||
| Audit | 43 | 35 | ||||||
| Taxation | 10 | 3 | ||||||
| IPO advisory | 210 | - | ||||||
| Others | 2 | - | ||||||
| Foreign exchange losses | 238 | 31 | ||||||
| Rent payable under operating leases | 173 | 173 | ||||||
| Employee share-based payment charge | 50 | 76 | ||||||
6.2 Exceptional costs
| Year | Year | |||||||
| ended | ended | |||||||
| 31 December | 31 December | |||||||
| 2013 | 2012 | |||||||
| £’000 | £’000 | |||||||
| IPO transaction costs | 1,349 | - | ||||||
| Other transaction costs | 333 | 330 | ||||||
| Compensation for loss of office, redundancy and compromise costs, together with associated legal expenses | 214 | - | ||||||
| Other exceptional costs | 137 | - | ||||||
| Exceptional income (Remote Gaming Duty refund) | (328) | - | ||||||
| 1,705 | 330 | |||||||
GameAccount Network Plc
For the year ended 31 December 2013
Notes to the financial statements (continued)
7. Staff costs
| Year | Year | |||||||
| ended | ended | |||||||
| 31 December | 31 December | |||||||
| 2013 | 2012 | |||||||
| The average number of employees (including executive directors) employed was: | ||||||||
| Management | 6 | 6 | ||||||
| Administration and technical staff | 55 | 45 | ||||||
| 61 | 51 | |||||||
| Year | Year | |||||||
| ended | ended | |||||||
| 31 December | 31 December | |||||||
| 2013 | 2012 | |||||||
| £’000 | £’000 | |||||||
| The aggregate remuneration of the above employees comprised (including Directors): | ||||||||
| Wages and salaries | 3,543 | 2,431 | ||||||
| Social security costs | 402 | 286 | ||||||
| Pension costs | 4 | 22 | ||||||
| Employee share-based payment charge | 50 | 76 | ||||||
| 3,999 | 2,815 | |||||||
8. Finance income/(costs)
| Year | Year | |||||||
| ended | ended | |||||||
| 31 December | 31 December | |||||||
| 2013 | 2012 | |||||||
| £’000 | £’000 | |||||||
| Interest receivable | 15 | — | ||||||
| Interest payable | — | (18) | ||||||
9. Taxation
| Year | Year | |||||||
| ended | ended | |||||||
| 31 December | 31 December | |||||||
| 2013 | 2012 | |||||||
| £’000 | £’000 | |||||||
| Current tax (credit) | (30) | (86) | ||||||
| Deferred tax charge/(credit) | 490 | (1,000) | ||||||
| Tax charge/(credit) on loss on ordinary activities | 460 | (1,086) | ||||||
GameAccount Network Plc
For the year ended 31 December 2013
Notes to the financial statements (continued)
10. Intangible assets
| Licence and | ||||
| Development costs | ||||
| £’000 | ||||
| Cost | ||||
| At 31 December 2010 | 733 | |||
| Additions | 489 | |||
| At 31 December 2011 | 1,222 | |||
| Additions | 471 | |||
| Disposals | (141) | |||
| At 31 December 2012 | 1,552 | |||
| Additions | 759 | |||
| Disposals | (514) | |||
| At 31 December 2013 | 1,797 | |||
| Accumulated amortisation | ||||
| At 31 December 2010 | 160 | |||
| Charge for the year | 312 | |||
| At 31 December 2011 | 472 | |||
| Charge for the year | 438 | |||
| Disposals | (22) | |||
| At 31 December 2012 | 888 | |||
| Charge for the year | 511 | |||
| Disposals | (514) | |||
| At 31 December 2013 | 885 | |||
| Net book value | ||||
| At 31 December 2010 | 573 | |||
| At 31 December 2011 | 750 | |||
| At 31 December 2012 | 664 | |||
| At 31 December 2013 | 912 | |||
11. Property, plant and equipment
| Fixtures, | ||||
| fittings & | ||||
| equipment | ||||
| £’000 | ||||
| Cost | ||||
| At 31 December 2010 | 934 | |||
| Additions | 252 | |||
| At 31 December 2011 | 1,186 | |||
| Additions | 247 | |||
| At 31 December 2012 | 1,433 | |||
| Additions | 453 | |||
| At 31 December 2013 | 1,886 | |||
| Accumulated depreciation: | ||||
| At 31 December 2010 | 523 | |||
| Charge for the year | 197 | |||
| At 31 December 2011 | 720 | |||
| Charge for the year | 280 | |||
| At 31 December 2012 | 1,000 | |||
| Charge for the year | 289 | |||
| At 31 December 2013 | 1,289 | |||
| Net book value | ||||
| At 31 December 2010 | 411 | |||
| At 31 December 2011 | 466 | |||
| At 31 December 2012 | 433 | |||
| At 31 December 2013 | 597 | |||
12. Trade and other receivables
| At | At 31 | At 31 | ||||||||||
| 31 December | December | December | ||||||||||
| 2013 | 2012 | 2011 | ||||||||||
| £’000 | £’000 | £’000 | ||||||||||
| Trade receivables | 1,091 | 866 | 583 | |||||||||
| Other receivables | 275 | 301 | 240 | |||||||||
| Prepayments and accrued income | 1,279 | 209 | 185 | |||||||||
| Corporation tax receivable | 85 | 86 | — | |||||||||
| 2,730 | 1,462 | 1,008 | ||||||||||
Other receivables include amounts due from payment service providers and VAT recoverable
13. Cash and cash equivalents
| At 31 December | At 31 December | At 31 December | ||||||||||
| 2013 | 2012 | 2011 | ||||||||||
| £’000 | £’000 | £’000 | ||||||||||
| Cash in bank accounts | 16,895 | 1,668 | 1,116 | |||||||||
GameAccount Network Plc
For the year ended 31 December 2013
Notes to the financial statements (continued)
14. Borrowings
| At 31 December | At 31 December | At 31 December | ||||||||||
| 2013 | 2012 | 2011 | ||||||||||
| £’000 | £’000 | £’000 | ||||||||||
| Amounts falling due within one year | — | — | 120 | |||||||||
| Amounts falling due after more than one year | — | — | 100 | |||||||||
| — | — | 220 | ||||||||||
15. Trade and other payables
| At 31 December | At 31 December | At 31 December | ||||||||||
| 2013 | 2012 | 2011 | ||||||||||
| £’000 | £’000 | £’000 | ||||||||||
| Amounts falling due within one year | ||||||||||||
| Trade payables | 1,561 | 510 | 181 | |||||||||
| Other taxation and social security | 310 | 110 | 108 | |||||||||
| Other payables | 379 | 429 | 416 | |||||||||
| Amount owed to group undertakings | — | — | — | |||||||||
| Preference dividend (note 16) | — | 110 | 110 | |||||||||
| Accruals and deferred income | 1,704 | 2,188 | 633 | |||||||||
| 3,954 | 3,347 | 1,448 | ||||||||||
16. Share capital
| Preference | Ordinary | |||||||
| shares | shares | |||||||
| No. | No. | |||||||
| Allotted, issued and fully paid | ||||||||
| At 31 December 2010 | 747,113 | 582,994 | ||||||
| Issued during the year (i) | — | 400,000 | ||||||
| At 31 December 2011 | 747,113 | 982,994 | ||||||
| Issued during the year (ii) | — | 4,500 | ||||||
| At 31 December 2012 | 747,113 | 987,494 | ||||||
| Issued during the year (iii) | — | 3,500 | ||||||
| Re-designation of preference shares into ordinary shares | (747,113) | 747,113 | ||||||
| Sub-division of ordinary shares from £0.25 each into £0.01 each | — | 41,676,818 | ||||||
| Issued during the year (iv) | — | 11,111,111 | ||||||
| Issued during the year (v) | — | 1,140,022 | ||||||
| At 31 December 2013 | — | 55,666,058 | ||||||
GameAccount Network Plc
For the year ended 31 December 2013
Notes to the financial statements (continued)
16. Share Capital (continued)
| At | At | |||||||
| 31 December | 31 December | |||||||
| 2013 | 2012 | |||||||
| £’000 | £’000 | |||||||
| Ordinary shares | 557 | 247 | ||||||
| Preference shares | — | 187 | ||||||
| 557 | 434 | |||||||
Issue of shares
| (ii) | 400,000 ordinary shares of 25p each were issued as a rights issue for £2.50 each and paid in full during the year ended 31 December 2011. | |
| (ii) | 1,500 ordinary shares of 25p each were issued for £1.00 each and paid in full during the year ended 31 December 2012. 3,000 ordinary shares of 25p each were also issued at par during the year ended 31 December 2012. | |
| (iii) | 1,500 ordinary shares of 25p each were issued at par during the year ended 31 December 2013 and 2,000 ordinary shares of 25p each were issued for £1 each during the year ended 31 December 2013. | |
| (iv) | 11,111,111 ordinary shares of 1p each were issued at a premium of £1.34 during the year ended 31 December 2013. | |
| (v) | 1,140,022 ordinary shares of 1p each were issued at a premium of 21p during the year ended 31 December 2013. | |
On 30 October 2013, shareholders exercised their right to convert, on a one-for-one basis, their entire holding of preference shares into ordinary shares. Following this conversion, the entire ordinary shares of nominal value of 25p were subdivided into 43,413,425 shares by creation of 41,676,818 ordinary shares of 1p nominal value. On the same day shareholders approved a capital reduction whereupon the balance on share premium account was cancelled and the resulting reserve amounting to £10,696,000 credited to retained earnings.
17. Earnings per share
Basic earnings per share is calculated by dividing the profit attributable to equity shareholders of the company by the weighted average number of ordinary shares in issue during the year. The number of shares in issue has been restated for the share split that occurred in 2013.
Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares The company has share options and a calculation is done to determine the number of shares that could have been acquired at fair value (determined as the average market share price for the period) based on the monetary value of the subscription rights attached to the outstanding share options. The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the share options.
| Year | Year | |||||||
| ended | ended | |||||||
| 31 December | 31 December | |||||||
| 2013 | 2012 | |||||||
| Pence | Pence | |||||||
| Basic | 4.14 | 0.53 | ||||||
| Diluted | 2.41 | 0.30 | ||||||
GameAccount Network Plc
For the year ended 31 December 2013
Notes to the financial statements (continued)
17. Earnings per share (continued)
| Year | Year | |||||||
| ended | ended | |||||||
| 31 December | 31 December | |||||||
| 2013 | 2012 | |||||||
| Earnings | £’000 | £’000 | ||||||
| Profit for the year | 1,109 | 130 | ||||||
| Year | Year | |||||||
| ended | ended | |||||||
| 31 December | 31 December | |||||||
| 2013 | 2012 | |||||||
| Denominator—basic | Number | Number | ||||||
| Weighted average number of equity shares | 26,762,284 | 24,683,467 | ||||||
| Weighted average number of equity shares for diluted EPS | 45,968,929 | 43,361,292 | ||||||
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