16 Apr 2015 07:00
GameAccount Network plc
2014 Annual Results
| LSE: GAME | ISE: GAME |
London & Dublin | 16 April, 2015: GameAccount Network plc (“GameAccount Network” or the “Group”), a leading developer and supplier of enterprise-level B2B gaming software and online gaming content, announces results for the twelve months ended 31 December 2014.
Financial Overview
Net Revenue of £7.5m (2013: £12.3m) Underlying Net Revenue increased 20% to £6.5m (2013: £5.4m) excluding system sales of £1.0m (2013: £6.9m) Clean Ebitda1 loss of £1.4m (2013: Earnings of £4.1m) Loss before tax of £2.6m (2013: Profit before tax of £1.6m) and loss per share of £0.05 (2013 EPS £0.04) Strong balance sheet: cash and cash equivalents at the end of the year of £10.8m (2013: £16.9m) Net Assets at the end of the year of £15.2m (2013: £17.7m)Strategic and Operating Developments
Launched Simulated Gaming™ in the US and signed three (3) new US casino clients Post period end signed two (2) further Simulated GamingTM clients in the US and launched Simulated Gaming™ for Parx Casino Pennsylvania and in Australia with a consortium of clubs Internet gaming platform delivered for Betfair in New Jersey Strategic patent awarded in support of Simulated Gaming™ Launched new iSight Back Office™ in US and Europe Invested in US and UK infrastructure: Technical, Licensing, People and PatentsDermot Smurfit, CEO of GameAccount Network commented:
“2014 has continued the period of investment for GameAccount, and, performance to date in 2015 is in line with our expectations.
Following a transformational year in 2013, GameAccount has continued to position its business to capture growth in online gaming markets, particularly in the US. 2014 saw the launch of key products across our offering, in particular Simulated Gaming™, together with a number of significant commercial and strategic developments.
Real-money Internet gaming in New Jersey and the pace of regulation in the US market has been slower than expected but we are confident in the long-term prospects for real-money gaming in the years ahead. For 2015 we believe that the opportunity for GameAccount Network with Simulated Gaming™ will substantially compensate for the slower than expected pace of the development of real-money Internet gaming in the US.
Furthermore, the State of Pennsylvania appears to be in the process of regulating Internet gaming with a number of legislative bills under active consideration. GameAccount Network has been selected as the exclusive platform for both Simulated Gaming™ and regulated real-money Internet gaming by Parx Casino, the leading casino operator in Pennsylvania, and is positioned in 2016 for substantial growth in regulated real-money Internet gaming in Pennsylvania should suitable legislation be enacted in 2015.
The 2014 launch of Simulated Gaming™ across the United States has been another innovative step for the business. Simulated GamingTM represents a US market opportunity estimated at $250m2 in 2015 which is immediately addressable and not contingent on the pace of regulation.
We contracted with Empire City Casino in the first half of 2014, which contributed to revenues in the second half of 2014. In 2014 we contracted with a further three casinos including Parx Casino which launched in the first quarter of 2015 and an undisclosed multi-State casino operator which will begin to contribute to revenues in the second half of 2015. Initial performance metrics for Simulated Gaming ™ are significantly ahead of expectations and the prospects for this business are exciting.
Our investment in the business continues and we have grown our team and expanded our technical expertise, US infrastructure and gaming content portfolio throughout 2014. Consistent with our commitment at IPO, we were also awarded a patent for our iBridge Framework™ which will protect and benefit the Simulated Gaming™ business as we grow in the US market.
Our full year revenue from gaming system sales was down year-on-year however we are actively engaging with multiple potential system buyers and we remain confident in our ability to continue to deliver on sales of our gaming system to casino equipment manufacturers although the timing of such sales remains uncertain.”
Notes
1. 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
2. Estimate from independent consultancy survey commissioned by GameAccount Network
Note 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 | ||||
Annual Results Conference Call Details
The GameAccount Network management team will host a conference call for analysts & institutional investors at 14.00 BST (09.00 EST).
Please use the following dial in numbers:
| UK/International Participants: | +44 203 139 4830 | ||||
| US Participants: | +1 718 873 9077 | ||||
| Ireland Participants: | +353 1 696 8154 | ||||
| Participant Pin Code: | 56150483# | ||||
The Annual Results Press Release and Presentation is available to download from the website, www.GameAccountNetwork.com
GameAccount Network Plc
Chairman’s Report
Dear Fellow Shareholders
Throughout 2014 the Group made significant investments preparing for the opportunities in the United States comprising both regulated real money Internet gaming on a State-by-State basis; and nationwide Simulated Gaming delivered to land-based casino operators.
As has been widely reported, regulated real money Internet gaming in New Jersey has been slow to attract consumers for a variety of reasons. Despite challenges, the Group has executed well and delivered operationally for Betfair Group plc in New Jersey, earning a well deserved reputation in the United States for technical competence reflecting the reputation already hard earned in Europe’s toughest regulated Internet gaming markets.
Your Board of Directors believes there is a significant opportunity for Simulated Gaming™ in the United States. It has outperformed initial expectations and, in the absence of further State-by-State real-money gaming regulation, Simulated Gaming™ has become the centrepiece of the Group’s growth strategy. We signed three major land-based US casinos as new clients in 2014 with two US casino clients commercially launched in the same period. Outside the United States, the Group also secured a consortium of six land-based gaming clubs in Queensland, Australia as clients of Simulated Gaming™ in a new geographic region for the Group which we believe will prove lucrative over time. We are excited about the prospects for Simulated Gaming™ and the performance we have achieved since its initial launch. We are also confident in the long-term potential for real-money gaming, however, we believe adoption in the US market will be slower than was originally anticipated.
Our consistent progress in 2014, in what was an investment year for GameAccount as we developed our business and our Simulated Gaming™ offering, would not have been possible without the dedicated and talented staff employed by the Group in both London and throughout the United States. I thank them for their continued efforts and believe the Group has now substantially completed the investment cycle required to become a major Internet gaming technology, infrastructure and services provider to land-based casinos in the United States, consistent with the strategy espoused during the Group’s Initial Public Offering completed in November 2013.
We look forward to exploring further opportunities in 2015 and 2016 and building on our position as a leading provider of online solutions to the land-based gaming industry.
David O’ReillyChairman, GameAccount Network Plc
GameAccount Network Plc
Chief Executive Officer’s report
Overview
Following our successful initial public offering in November 2013, GameAccount Network quickly established infrastructure in the US and has emerged as a leading provider of Simulated Gaming™ to major casino operators securing significant US market share throughout 2014. 2014 was a year of substantial investment, major opportunities and some challenges.
Substantial investment has been made in the US sales, marketing and operational structure to develop the Group’s US presence in both regulated real money and Simulated Gaming™ markets. In the UK further substantial investment has been made in the Group’s technology and hardware infrastructure.
While intra-State regulation of real money Internet gaming stalled in the US and regulated real money Internet gaming in New Jersey materially underperformed expectations in the latter half of 2014, Simulated Gaming™ materially outperformed every key performance indicator and is positioned for significant profitable growth in 2015 and beyond.
During the year the Group launched Simulated Gaming™ for two major US casinos located in Connecticut and New York, and signed additional landmark deals with Parx Casino in Pennsylvania and a multi-State US casino operator based in Michigan. Simulated Gaming™ has also been established in Australia and other International opportunities are being developed.
In New Jersey, the Group delivered strongly for Betfair’s regulated Internet casino gaming website providing over seventy-five incremental games across desktop and mobile devices and establishing BetfairCasino.com as a significant Internet casino operator in New Jersey’s regulated Internet gaming market. During the second half of 2014 the performance of BetfairCasino.com under-performed expectations principally due to the bankruptcy of Trump Resorts International, which had provided the New Jersey land-based casino licence to Betfair enabling BetfairCasino.com to operate online. I would like to take this opportunity to thank staff at GameAccount Network, the regulators at the New Jersey Division of Gaming Enforcement, the management of Betfair’s New Jersey operations and the operational management of Golden Nugget Atlantic City for all their support during Q4 2014 in assisting GameAccount Network to migrate Betfair’s technical infrastructure away from Trump Taj Mahal and establishing new technical infrastructure in Golden Nugget Atlantic City under the pressure of significant technical, regulatory and commercial deadlines.
During the year, the Group achieved strong financial growth in gross income derived from the United States, up 98.6% to £3.5m (2013: £1.8m) driven by Simulated Gaming™ nationwide across the US and gross income derived from regulated real money Internet gaming in New Jersey. The Group delivered a solid performance in Europe with gross income increasing by 1.6% to £19.9m (2013: £19.4m). Overall net revenue declined by 39% to £7.5m (2013: £12.3m) due primarily to the delay in securing a system sale in 2014.
Strategy
Expansion in the United States remains a continuing strategic priority for the Group with requisite increases in US infrastructure centred on Las Vegas comprising human resource, technical hardware and licensing investment in relevant US States including New Jersey, Pennsylvania and Michigan.
With the significant slowdown in regulation of real money intra-State Internet gaming the Group has increased its focus on delivering Simulated Gaming™ to land-based US casinos in advance of further regulation. The outperformance of key performance indicators support the Group’s internal focus on delivering Simulated Gaming™ to as many major US casino properties as possible during the now extended period prior to regulation of real money Internet gaming.
The Group continues to pursue further Internet gaming platform sales with casino equipment manufacturers in order to enable land based casino slots manufacturers to manage the distribution of their content online.
Investment in the Group’s technical capability in key areas such as back office, mobile and convergence with land-based casino management systems continued throughout 2014 with a significant growth opportunity identified in the expansion of the Group’s mobile gaming portfolio in HTML5 and native iOS and Android applications.
GameAccount Network Plc
Chief Executive Officer’s report (continued)
In Europe, the Group extended its market position in Italy with new clients signed including Bet365 Italia and Internet gaming content from NET Entertainment delivered via the Group’s technical platform located in Rome. Italy remains a crucial market for GameAccount Network as a comprehensively regulated Internet gaming market exhibiting continued growth throughout 2014 consequent to the regulation of Internet casino gaming in 2013.
Products
The Group’s new back office system iSight Back Office™ launched operationally in the first half of 2014 and major upgrades were released throughout the balance of 2014 delivering a state-of-the-art back office player management capability with unique convergence features designed to complement a land-based casino’s existing gaming operations.
The product related capabilities of Simulated Gaming™ took major strides in 2014 with a focus on monetisation of players and the introduction of gaming activity accelerants designed to extend player lifetimes, increase frequency of purchases and drive increased visitation to the US casino operators’ land-based properties. Leaderboard slot tournament capability and multiplayer games such as poker and bingo launched in the second half of 2014 resulting in a significant increase in both monetisation and stickiness.
The Group’s HTML5 casino gaming-specific framework was substantially revised with the first new look and feel HTML5 casino slot and casino table games scheduled for release in early 2015 together with a materially upgraded native casino gaming application consolidating games developed in both native application and HTML5 format within a single gaming App logically branded the single “Online Casino” App for land-based operator clients. This major evolutionary step for the Group’s SENSE3™ mobile gaming proposition will support the Group’s growth opportunity in mobile in 2015.
A wide portfolio of new casino games were converted for online exploitation for major casino equipment manufacturers throughout 2014 with over 40 individual game client applications developed and delivered online in 2014 (2013: 10) bringing the Group’s in-platform gaming content portfolio to 175 comprising simple casino slots and table games, complex multiplayer bingo and poker and a wide range of specialist games such as blackjack tournaments and region-specific card or dice games.
In 2014 the Group’s research & development function developed a comprehensive framework for delivering ‘freemium’ mobile casual games to land-based casino operator clients exploiting the deep skill and expertise in the Group for developing skill-based games. The first product, a mobile casual game based on solitaire with over 300 levels to explore and complete is scheduled for release in 2015 and relies entirely on in-App purchases to generate revenues from a minority of players who download the game for free and proceed to purchase in-game items designed to extend time-on-device. Variants of these mobile casual games, which can be played online or offline, will be released to the Group’s selected US casino operator clients in 2015 conjoined with the casino operator’s land-based gaming operations and existing loyalty programs.
Marketing & Support Services
Throughout 2014 the Group continued to invest in establishing a wide range of secondary and tertiary services for US land-based casino clients designed to support the land-based casino operator in managing customers and growing through external acquisition marketing and internal cross-sell marketing to existing patron databases and on-property human traffic.
Marketing and support services remain a crucial component of the Group’s service portfolio, ensuring any land-based casino operator can cost-effectively launch a turnkey managed Internet gaming service and, should they choose to, invest significant capital to grow profitably beyond its existing audience of casino patrons.
Dermot S SmurfitChief Executive Officer
GameAccount Network Plc
FINANCIAL AND OPERATIONAL REVIEW
Summary
2014 has been a significant year in the Group’s development. In January the group recorded its first revenues from the Simulated Gaming™ product launched in Connecticut with Foxwoods® casino resort followed in September by a second launch with Empire City Casino based in New York. Initial results have confirmed our view of the potential of this product and the Group continued to invest in headcount to strengthen its delivery capability and core Simulated Gaming™ product offering. 2014 also saw the first full year of revenues from regulated real money gaming in the US state of New Jersey and while the market has been challenging the Group has benefited from both incremental content revenue share and platform development fees through its relationship with Betfair Group plc.
Gross income of £26.1m is 12% less than the £29.7m recorded last year. Net revenue for the year was £7.5m compared to £12.3m in 2013. Clean EBITDA loss of £1.4m is £5.5m lower than the profit of £4.1m in 2013 and loss before taxation of £2.6m compared to a profit of £1.6m in 2013. Loss after taxation of £2.6m compares to a profit after taxation of £1.1m in 2013.
The results for 2013 benefited from the recognition of a material system sale which generated £6.9m in gross income and net revenue and while the Group continues to engage in system sale discussions the delay in securing a system sale in 2014 materially impacted the clean EBITDA performance for the year.
The Group invested heavily in the underlying Internet gaming system capability and US market opportunity primarily through increased headcount in the UK and the continued expansion of the US sales team. The Group believes this investment was necessary in order to ensure that it is in a position to capitalise on the immediate Simulated Gaming™ opportunity in the US and other markets.
The group ended the year with a cash balance of £10.8m compared to £16.9m for the year ended 31 December 2013 and net assets at 31 December 2014 of £15.2m compared to £17.7m in the previous year.
Revenue
Net revenue for the year of £7.5m is £4.7m less than the net revenue generated in the previous year of £12.3m. Revenue for 2013 was boosted by a major Internet Gaming System sale that accounted for £6.9m of net revenue in the prior year and £1.0m in 2014. On an underlying basis, net revenue excluding the impact of this system sale increased by 20% from £5.4m to £6.5m. This increase was generated primarily by additional game development fees for the conversion of existing offline slots titles to the online market and from both regulated real money gaming and Simulated Gaming™ revenues in the US market.
Game and platform development fees (excluding system sale) of £2.9m increased by £1.1m (2013: £1.8m). B2B revenue share and other revenues increased by 13% from £2.6m to £2.9m. B2B revenue share and other revenues include revenues from our European and US content distribution business, and Simulated Gaming™ revenues generated by our two operational casinos in the US market. B2C net revenue decreased from £1.0m to £0.7m.
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 which in total increased from £3.0m to £3.7m for the year ended 31 December 2014. The increase is due primarily to increased royalties payable to providers of third party games content in Europe and the US and an increase in B2B marketing expenditure to support the roll out of Simulated Gaming™ across the US and other International markets.
Administration expenses include the costs of personnel and related expenditure for both the London and Nevada offices. Total administrative expenses for the year ended 31 December 2014 of £6.5m are £1.2m less than those
GameAccount Network Plc
FINANCIAL AND OPERATIONAL REVIEW (continued)
incurred in 2013. The results for year ended 31 December 2013 included one-off and non-recurring costs of £1.7m in connection with the admission to AIM and ESM markets. For the year ended 31 December 2014, the group continued to invest in the underlying Internet gaming system, enhanced platform and games team capability in the UK and expanded sales presence in the US. This strategy has enhanced the delivery capability of the Group and enabled the group to secure additional Simulated Gaming™ casino properties in the US and Australian markets.
CLEAN EBITDA
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 as disclosed in note 6. The Directors regard Clean EBITDA as a reliable measure of profits that is not unduly subjective.
Clean EBITDA loss of £1.4m is £5.5m lower than the comparative figure (2013 earnings of £4.1m) reflecting predominantly the impact of the timing of system sales in the year ended 31 December 2013.
Cashflow
During the year the Group has continued to invest in the underlying Internet Gaming System deployment capability. The cash balance at 31 December 2014 was £10.8m (2013: £16.9m) representing a decrease of £6.1m. In addition to operating cash outflow before movements in working capital and taxation of £1.5m, cash outflows during the year include additional investment in working capital and taxation of £1.3m, £2.9m in incremental investment in intangible fixed assets primarily related to the capitalisation of internal development time and £0.6m invested in fixed assets including the acquisition of new hardware to establish a dedicated Simulated Gaming platform in Nevada to serve 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 EBITDA as a reliable measure of profits and the Group’s key performance indicators are set out below:
| 2014 | 2013 | |||||
| £000 | £000 | |||||
| Gross income from gaming operations and services | 26,123 | 29,657 | ||||
| Net revenue | 7,528 | 12,264 | ||||
| Clean EBITDA | (1,425) | 4,109 | ||||
| Net assets | 15,176 | 17,690 | ||||
| Cash and cash equivalents | 10,776 | 16,895 |
The Board also monitor customer related KPIs, including number of active players, revenue by customer, business segment profitability and geographic split of turnover.
GameAccount Network Plc
For the year ended 31 December 2014
Consolidated statement of comprehensive income
| Notes | Year ended31 December2014£’000 | Year ended31 December2013£’000 | ||||
| Continuing Operations | ||||||
| Gross income from gaming operations and services | 2.3 | 26,123 | 29,657 | |||
| Net revenues | 4 | 7,528 | 12,264 | |||
| Distribution costs | (3,728) | (3,039) | ||||
| Administrative expenses | (6,469) | (7,671) | ||||
| Total operating costs | (10,197) | (10,710) | ||||
| Clean EBITDA | (1,425) | 4,109 | ||||
| Depreciation | 10 | (360) | (289) | |||
| Amortisation of intangible assets | 9 | (777) | (511) | |||
| Exceptional costs | 6 | (67) | (1,705) | |||
| Employee share-based payment charge | (40) | (50) | ||||
| Operating (loss)/profit | 6 | (2,669) | 1,554 | |||
| Finance income | 7 | 67 | 15 | |||
| (Loss)/profit before taxation | (2,602) | 1,569 | ||||
| Tax credit/(charge) | 8 | - | (460) | |||
| (Loss)/profit for the year attributable to owners of the Company and total comprehensive income for the year | (2,602) | 1,109 | ||||
| Earnings per share attributable to owners of the parent during the year | ||||||
| Basic (pence) | 15 | (4.66) | 4.14 | |||
| Diluted (pence) | 15 | (4.66) | 2.41 |
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 2014
Consolidated statement of financial position
| Notes | At 31 December 2014£’000 | At 31 December 2013£’000 | |||||
| Non-current assets | |||||||
| Intangible assets | 9 | 3,026 | 912 | ||||
| Property, plant and equipment | 10 | 805 | 597 | ||||
| Deferred tax asset | 510 | 510 | |||||
| 4,341 | 2,019 | ||||||
| Current assets | |||||||
| Trade and other receivables | 11 | 2,823 | 2,730 | ||||
| Cash and cash equivalents | 12 | 10,776 | 16,895 | ||||
| 13,599 | 19,625 | ||||||
| Total assets | 17,940 | 21,644 | |||||
| Current liabilities | |||||||
| Trade and other payables | 13 | 2,764 | 3,954 | ||||
| Total liabilities | 2,764 | 3,954 | |||||
| Equity attributable to equity holders of parent | |||||||
| Share capital | 14 | 559 | 557 | ||||
| Share premium account | 14,574 | 14,528 | |||||
| Retained earnings | 43 | 2,605 | |||||
| 15,176 | 17,690 | ||||||
| Total equity and liabilities | 17,940 | 21,644 | |||||
GameAccount Network Plc
For the year ended 31 December 2014
Consolidated statement of changes in equity
| Sharecapital£’000 | Sharepremium£’000 | Retainedearnings£’000 | Totalequity£’000 | ||||||
| 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 | |||||
| Loss and total comprehensive income for the year | - | - | (2,602) | (2,602) | |||||
| Employee share-based payment charge | - | - | 40 | 40 | |||||
| Issue of equity share capital | 2 | 46 | - | 48 | |||||
| At 31 December 2014 | 559 | 14,574 | 43 | 15,176 | |||||
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 2014
Consolidated statement of cash flows
| Notes | Year ended 31 December 2014£’000 | Year ended 31 December 2013£’000 | |||||
| Cash flow from operating activities | |||||||
| (Loss)/profit for the year before taxation | (2,602) | 1,569 | |||||
| Adjustments for: | |||||||
| Amortisation of intangible assets | 9 | 777 | 511 | ||||
| Depreciation of property, plant and equipment | 10 | 360 | 289 | ||||
| Share based payment expense | 40 | 50 | |||||
| Finance income | 7 | (67) | (15) | ||||
| Foreign exchange | 41 | 238 | |||||
| Operating cash flow before movement in working capital and taxation | (1,451) | 2,642 | |||||
| Increase in trade and other receivables | (187) | (1,369) | |||||
| (Decrease)/increase in trade and other payables | (1,214) | 612 | |||||
| Taxation | 85 | 30 | |||||
| Net cash flows from operating activities | (2,767) | 1,915 | |||||
| Cash flow from investing activities | |||||||
| Interest received | 67 | 15 | |||||
| Purchase of intangible fixed assets | 9 | (2,892) | (759) | ||||
| Purchases of property, plant and equipment | 10 | (568) | (453) | ||||
| Net cash used in investing activities | (3,393) | (1,197) | |||||
| Cash flow from financing activities | |||||||
| Net proceeds on issue of shares | 14 | 48 | 14,651 | ||||
| Net cash generated from financing activities | 48 | 14,651 | |||||
| Net (decrease)/ increase in cash and cash equivalents | (6,112) | 15,369 | |||||
| Cash and cash equivalents at beginning of year | 12 | 16,895 | 1,668 | ||||
| Effect of foreign exchange rate changes | (7) | (142) | |||||
| Cash and cash equivalents at end of year | 12 | 10,776 | 16,895 | ||||
GameAccount Network Plc
For the year ended 31 December 2014
Notes to the financial statements
1. Basis of preparation
The financial information in this document has been prepared in accordance with International Financial Reporting Standards, International Accounting Standards and interpretations (collectively, “IFRS”) issued by the International Accounting Standards Board (IASB) as adopted by the European Union (“adopted IFRSs”).
The financial information set out in this document does not constitute the Group’s statutory accounts for the year ended 31 December 2013 or 31 December 2014.
Statutory accounts for the year ended 31 December 2013 have been filed with the Registrar of Companies and those for the year ended 31 December 2014 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 2013 and 31 December 2014 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.
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 2014. None of the new standards adopted had a material impact on the Financial Statements of the Group.
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 2015. These have not been early adopted and the Directors are still considering the potential impact of IFRS15: Revenue from Contracts with customers but do not expect that the adoption of other 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
Where the company has control over an investee, it is classified as a subsidiary. The company controls an investee if all three of the following elements are present: power over the investee, exposure to variable returns from investee and the ability of the investor to use its power to affect those variable returns. Control is reassessed whenever facts and circumstances indicate that there may be a change in any of these elements of control.
De-facto control exists in situations where the company has the practical ability to direct the relevant activities of the investee without holding the majority of the voting rights. In determining whether de-facto control exits the company considers all relevant facts and circumstances, including:
The size of the company’s voting rights relative to both the size and dispersion of other parties who hold voting rights Substantive potential voting rights held by the company and by other parties Other contractual arrangements Historical patterns in voting attendance.GameAccount Network Plc
For the year ended 31 December 2014
Notes to the financial statements (continued)
2. Summary of significant accounting policies (continued)
2.1 Basis of Consolidation (continued)
The consolidated financial statements present the results of the company and its subsidiaries (“the Group”) as if they formed a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the acquisition method. In the statement of financial position, the acquiree’s identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the consolidated statement of comprehensive income from the date on which control is obtained. They are deconsolidated from the date on which control ceases.
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.
GameAccount Network Plc
For the year ended 31 December 2014
Notes to the financial statements (continued)
2. Summary of significant accounting policies (continued)
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.
(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 or 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.
Simulated Gaming
Net revenue in respect of Simulated Gaming is recognised upon completion of purchase. Simulated gaming involves customers purchasing virtual credits at fixed price levels in order to experience established casino games in an online environment. Players are unable to monetise their virtual balances and revenues are recognised at the point of purchase and are non-refundable.
GameAccount Network Plc
For the year ended 31 December 2014
Notes to the financial statements (continued)
2. Summary of significant accounting policies (continued)
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 where the Group supplies its software directly to the online operator. 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
Sales and 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.
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 with their useful economic lives 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 and related overheads 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.
GameAccount Network Plc
For the year ended 31 December 2014
Notes to the financial statements (continued)
2. Summary of significant accounting policies (continued)
2.6 Intangible assets (continued)
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.
2.8 Impairment of property, plant and equipment and 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.
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.
GameAccount Network Plc
For the year ended 31 December 2014
Notes to the financial statements (continued)
2. Summary of significant accounting policies (continued)
2.9 Financial instruments (continued)
Trade and other receivables
Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method less provision for impairment.
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.
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.
Equity instruments issued by the Group are recorded at the time the proceeds are 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.
GameAccount Network Plc
For the year ended 31 December 2014
Notes to the financial statements (continued)
2. Summary of significant accounting policies (continued)
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.
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 statement of financial position 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.
GameAccount Network Plc
For the year ended 31 December 2014
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 and other 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 2014
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 as adopted by the EU 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 | 9 |
| Deferred taxation | 8 |
4. Net revenue
| Year ended31 December2014£’000 | Year ended31 December2013£’000 | ||||
| B2C | 678 | 983 | |||
| B2B | |||||
| —Game and platform development | 3,946 | 8,714 | |||
| —Revenue share and other revenue | 2,904 | 2,567 | |||
| Total B2B | 6,850 | 11,281 | |||
| 7,528 | 12,264 | ||||
GameAccount Network Plc
For the year ended 31 December 2014
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.
| Year ended 31 December 2014 | B2C£’000 | B2B£’000 | Total£’000 | ||||
| Net revenue | 678 | 6,850 | 7,528 | ||||
| Distribution costs (excluding depreciation and amortisation) | (1,051) | (1,540) | (2,591) | ||||
| Segment result | (373) | 5,310 | 4,937 | ||||
| Administration expenses | (6,469) | ||||||
| Depreciation on property, plant and equipment | (360) | ||||||
| Amortisation of intangible assets | (777) | ||||||
| Finance income | 67 | ||||||
| Loss before taxation | (2,602) | ||||||
| Taxation | - | ||||||
| Loss for the year after taxation | (2,602) | ||||||
| Year ended 31 December 2013 | B2C£’000 | B2B£’000 | Total£’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 | ||||||
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 2014
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.
Geographical analysis of revenues
This analysis is determined based upon the location of the legal entity of the customer.
| Yearended31 December2014£’000 | Yearended31 December2013£’000 | ||||
| UK and Channel Islands | 1,622 | 2,735 | |||
| Italy | 1,150 | 941 | |||
| Netherlands | 490 | - | |||
| USA | 2,780 | 1,314 | |||
| Australia | 1,162 | 7,007 | |||
| Rest of the World | 324 | 267 | |||
| 7,528 | 12,264 |
Information about major customers
During the year ended 31 December 2014 the Group had two customers which generated revenue greater than 10% of total net revenue. These customers generated revenue of £2,391,000 representing 32% of net revenue (of which the largest customer generated £1,325,900), 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
| At31 December2014£’000 | At31 December2013£’000 | ||||
| UK and Channel Islands | 3,583 | 1,216 | |||
| USA | 220 | 288 | |||
| Italy | 28 | 5 | |||
| 3,831 | 1,509 |
GameAccount Network Plc
For the year ended 31 December 2014
Notes to the financial statements (continued)
6. Operating (loss)/profit
6.1 Operating (loss)/ profit has been arrived at after charging:
| Yearended31 December2014£’000 | Yearended31 December2013£’000 | ||||
| Staff costs | 3,829 | 3,949 | |||
| Auditor’s remuneration: | |||||
| Audit | 60 | 43 | |||
| Taxation | 15 | 10 | |||
| IPO advisory | - | 210 | |||
| Others | 5 | 2 | |||
| Amortisation of intangibles | 777 | 511 | |||
| Depreciation on property, plant and equipment | 360 | 289 | |||
| Foreign exchange losses | 41 | 238 | |||
| Rent payable under operating leases | 203 | 173 | |||
| Employee share-based payment charge | 40 | 50 |
Staff costs and Rent payable under operating leases charged to the income statement, as shown in the table, above are less amounts capitalised in the year of £2,635,702 (2013: £726,704) as part of capitalised development costs reflected within note 10 of the financial statements.
Total wages and salaries related to research and development was £3,234,748 (2013: £1,934,753) of which £2,048,044 (2013: £641,686) was capitalised.
6.2 Exceptional costs
| Yearended31 December2014£’000 | Yearended31 December2013£’000 | ||||
| IPO transaction costs | - | 1,349 | |||
| Other transaction costs | - | 333 | |||
| Compensation for loss of office, redundancy and compromise costs, together with associated legal expenses | 67 | 214 | |||
| Other exceptional costs | - | 137 | |||
| Exceptional income (Remote Gaming Duty refund) | - | (328) | |||
| 67 | 1,705 |
GameAccount Network Plc
For the year ended 31 December 2014
Notes to the financial statements (continued)
7. Finance income
| Yearended31 December2014£’000 | Yearended31 December2013£’000 | ||||
| Interest receivable | 67 | 15 |
8. Taxation
| Yearended31 December2014£’000 | Yearended31 December2013£’000 | ||||
| Current tax (credit) | - | (30) | |||
| Deferred tax charge | - | 490 | |||
| Tax charge on loss on ordinary activities | - | 460 |
9. Intangible assets
| Development costs£’000 | Licence costs£’000 | Total Development and Licence costs£’000 | |||||
| Cost | |||||||
| At 31 December 2012 | 1,552 | - | 1,552 | ||||
| Additions | 642 | 117 | 759 | ||||
| Disposals | (514) | - | (514) | ||||
| At 31 December 2013 | 1,680 | 117 | 1,797 | ||||
| Additions | 2,751 | 141 | 2,892 | ||||
| At 31 December 2014 | 4,431 | 258 | 4,689 | ||||
| Accumulated amortisation | |||||||
| At 31 December 2012 | 888 | - | 888 | ||||
| Charge for the year | 507 | 4 | 511 | ||||
| Disposals | (514) | - | (514) | ||||
| At 31 December 2013 | 881 | 4 | 885 | ||||
| Charge for the year | 750 | 27 | 777 | ||||
| At 31 December 2014 | 1,631 | 32 | 1,662 | ||||
| Net book value | |||||||
| At 31 December 2012 | 664 | - | 664 | ||||
| At 31 December 2013 | 799 | 113 | 912 | ||||
| At 31 December 2014 | 2,800 | 226 | 3,026 |
GameAccount Network Plc
For the year ended 31 December 2014
Notes to the financial statements (continued)
10. Property, plant and equipment
| Fixtures,fittings &equipment£’000 | ||
| Cost | ||
| At 31 December 2012 | 1,433 | |
| Additions | 453 | |
| At 31 December 2013 | 1,886 | |
| Additions | 568 | |
| At 31 December 2014 | 2,454 | |
| Accumulated depreciation: | ||
| At 31 December 2012 | 1,000 | |
| Charge for the year | 289 | |
| At 31 December 2013 | 1,289 | |
| Charge for the year | 360 | |
| At 31 December 2014 | 1,649 | |
| Net book value | ||
| At 31 December 2012 | 433 | |
| At 31 December 2013 | 597 | |
| At 31 December 2014 | 805 |
11. Trade and other receivables
| Group At31 December2014£’000 | Group At31 December2013£’000 | ||||
| Trade receivables | 1,501 | 1,091 | |||
| Other receivables | 700 | 275 | |||
| Prepayments and accrued income | 622 | 1,279 | |||
| Corporation tax receivable | - | 85 | |||
| 2,823 | 2,730 |
Other receivables include amounts due from payment service providers and VAT recoverable.
12. Cash and cash equivalents
| Group At 31 December 2014£’000 | Group At 31 December 2013£’000 | ||||
| Cash in bank accounts | 10,776 | 16,895 |
GameAccount Network Plc
For the year ended 31 December 2014
Notes to the financial statements (continued)
13. Trade and other payables
| Group At 31 December 2014£’000 | Group At 31 December 2013£’000 | ||||
| Amounts falling due within one year | |||||
| Trade payables | 1,295 | 1,561 | |||
| Other taxation and social security | 188 | 310 | |||
| Other payables | 369 | 379 | |||
| Amount owed to group undertakings | - | - | |||
| Accruals and deferred income | 912 | 1,704 | |||
| 2,764 | 3,954 |
14. Share capital
| PreferencesharesNo. | OrdinarysharesNo. | ||||
| Allotted, issued and fully paid | |||||
| At 31 December 2012 | 747,113 | 987,494 | |||
| Issued during the year (i) | - | 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 (ii) | - | 11,111,111 | |||
| Issued during the year (iii) | - | 1,140,022 | |||
| At 31 December 2013 | - | 55,666,058 | |||
| Issued during the year (iv) | - | 216,478 | |||
| At 31 December 2014 | - | 55,882,536 |
| At31 December2014£’000 | At31 December2013£’000 | ||||
| Ordinary shares | 559 | 557 |
GameAccount Network Plc
For the year ended 31 December 2014
Notes to the financial statements (continued)
14. Share capital (continued)
Issue of shares
(i) 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.
(ii) 11,111,111 ordinary shares of 1p each were issued at a premium of £1.34 during the year ended 31 December 2013.
(iii) 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.
(iv) 216,478 ordinary shares of 1p each were issued at a premium of 21p during the year ended 31 December 2014.
15. 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.
| Yearended31 December2014Pence | Yearended31 December2013 Pence | ||||
| Basic | (4.66) | 4.14 | |||
| Diluted | (4.66) | 2.41 |
GameAccount Network Plc
For the year ended 31 December 2014
Notes to the financial statements (continued)
15. Earnings per share (continued)
| Earnings | Yearended31 December2014£’000 | Yearended31 December2013£’000 | |||
| (Loss)/ Profit for the year | (2,602) | 1,109 |
| Denominator—basic | Yearended31 December2014Number | Yearended31 December2013Number | |||
| Weighted average number of equity shares | 55,864,119 | 26,762,284 | |||
| Weighted average number of equity shares for diluted EPS | 55,864,119 | 45,968,929 |
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