G5 Entertainment — Earnings Release 2014

Feb 24, 2015

YEAR-END REPORT JANUARY – DECEMBER 2014

October-December 2014

• Consolidated revenue for the period is 57 718 (28 718) kSEK, an increase of 101% compared to the same period 2013.
• Operating result for the period is 2 352 (-20 518) kSEK. Excluding write-downs and re-listing expenses the operating result was 2 928 kSEK.
• Net result for the period is 3 255 (-19 299) kSEK.
• Earnings per share for the period before and after dilution is 0.37 (-2.19) SEK.
• Cash flow before financing activities during the period is -260 (-6 650) kSEK.

January-December 2014

• Consolidated revenue for the year is 182 116 (100 007) kSEK, an increase of 82% compared to 2013.
• Operating result for the year is 9 015 (-11 826) kSEK. Excluding write-downs and re-listing expenses the operating result is 13 812 kSEK.
• Net result for the year is 6 814 (-11 664) kSEK.
• Earnings per share for the year before and after dilution is 0.77 (-1.34) SEK.
• Cash flow before financing activities during the year is 5 090 (-20 343) kSEK. This includes fees of 2 354 kSEK to advisors in connection with the listing on Nasdaq Stockholm.
• The result for the year is affected by write-downs of capitalized development costs and advances to external developers in the amount of 2 443 kSEK.
• On June 10, the shares of G5 Entertainment AB (short name: G5EN) started trading on the main market of Nasdaq Stockholm.
• The Board of Directors will propose to the Annual General Meeting that no dividend is paid for 2014.

Important events during the fourth quarter

• G5 has during the quarter shown substantial and profitable growth, and generated record monthly and quarterly revenue.
• Revenue from free-to-play games grew 164% compared to 13Q4, and accounted for 84% of total revenue in 14Q4 (64% in 13Q4).
• The accumulated number of downloads of the group's games (not counting updates) surpassed 190 million.
• The group continued working on improving free-to-play games in its portfolio and working on new free-toplay games.
• On December 19, 2104, the company held an extra-ordinary general meeting that decided to issue a maximum of 176 000 warrants to managers and senior executives of the G5 group, in accordance with the previously decided warrant program.

Important events after the end of the period

• Two recently released games, both G5's intellectual property, Survivors: The Quest and Mahjong Journey, have been received well by the market.
• Martin Bauer has resigned from the Board of Directors.
• Beginning with the reporting period January-March 2015, G5 Entertainment AB will start reporting revenues and costs in a functional income statement format. Operational costs will be classified as Cost of

revenue, Research & development, Sales & marketing, and General & administrative costs.

• Simultaneously, G5 Entertainment AB will begin reporting revenues including commission to distributors. This will increase reported revenues by approximately 40% as compared to the present revenue recognition method.
• As the company currently undergoes a phase of fast top-line growth, exceeding the pace of the market expansion, the Board believes the management should focus on maintaining fast organic growth. The Board has therefore decided not to provide any financial targets with regard to the company's future profitability at this stage.
• The Group's CFO, Odd Bolin, has decided to resign from G5, in order take up a new position. The recruitment of a replacement has started, and in the mean time Odd Bolin will continue to perform his duties.
• After the extra-ordinary general meeting on December 19, 2014, the Board of G5 decided to allocate a total of 157 500 warrants to existing employees, keeping 18 500 warrants for potential new recruitments, etc. These 157 500 warrants have been fully subscribed.
• The group's office in Kharkov continues business as usual. It is the group's policy to keep critical code and materials backed up outside Ukraine, keep intellectual property rights in EU entities, and transfer funds to subsidiaries on as-needed basis.

Inquiries

Vlad Suglobov, CEO, investor@g5e.com

Odd Bolin, CFO, phone +46 84 11111 5

G5 Entertainment AB is a developer and publisher of high quality downloadable games for iOS, Android, Kindle Fire, Mac, and Windows devices. G5 develops and publishes games that are family-friendly, easy to learn, and targeted at the widest audience of experienced and novice players. G5's portfolio includes a number of popular games like Survivors: The Quest, Mahjong Journey, The Secret Society, Virtual City, Special Enquiry Detail, Supermarket Mania, and others. G5 Entertainment AB is listed on Nasdaq Stockholm since 2014.

Comments by the Chief Executive Officer

G5 reported record revenue in 2014, and set new records of quarterly revenue in every quarter of 2014. The growth of the company has accelerated substantially. G5 grew faster than the market, and it is a significant achievement to be able to increase market share in a very competitive market with much larger players. We achieved it organically, while also being cash flow positive, and not requiring additional investments. G5 ended 2014 with a profit, an improvement over 2013, showing positive results from the company's transition from unlockable to free-to-play games. The company's largest markets – North America (the largest) and EU (2nd largest) – together generated 80% of company's revenue in the period. The company's dedication to global sales strategy paid off during the year when currency exchange rates have seen sudden and dramatic changes. The operations of our Russian office in Moscow and Ukrainian office in Kharkov continue as usual and uninterrupted. It remains the group's policy that we keep critical code and materials backed up outside Ukraine, keep intellectual property rights in EU entities, and transfer funds to subsidiaries on as-needed basis.

G5's focus on effective marketing of its games portfolio continues to benefit the company. In previous years, the company has mastered effective cross selling between games, sharp focus on the needs of our audience, and continued re-engagement of the company's loyal players. In 2014, we added user acquisition (UA) as a marketing tool into our marketing toolset. Investment in UA enables faster growth, but it does put some pressure on our immediate profitability. We do not capitalize UA expenses and therefore UA expenses are taken immediately in the month in which they are incurred. Users acquired in a given month, however, will only generate a return on that UA investment over an extended period of time, usually for months and possibly years to come. Because of this lag, as long as we continue to substantially increase our UA investments, the associated expenses will run in front of the anticipated profits.

The UA investments we have made to date have proven to be fundamentally profitable. Acquired players consistently remain engaged in our games for many months. Using our proprietary analytics and tracking tools, we are able to see that we make substantial profit on every dollar invested in UA over time.

The increasing levels of UA investments do not require additional capital. We are committed to increasing our UA budget organically, using the reserves that the company has and the positive cash flow that the company is generating from operations.

To showcase the company's ability to produce higher profit margins, we could reduce UA spending, and this would immediately lead to substantial increase in profitability but at the expense of the future growth rate. Given the size of our UA investments and the pace of growth we deliver, we would argue there's a substantial range of possible reduction of UA investments, in which both healthy profit margins and continued (though slower) revenue growth are possible. We would still collect revenue from users acquired in previous months, for many months to come, and we would still be getting substantial organic downloads, but the pace of acquiring new users would slow down, affecting the growth dynamic negatively in the following months.

It is management's deliberate strategy for now to continue re-investing most of the profits into gaining more fundamentally profitable users, as long as fundamentals and the market situation allow it. Otherwise, we would be leaving the market share to our competitors. We need to use the opportunity while it's there. Before the management will focus on profits, we want to build G5 into a bigger company with larger market share. We are confident that by doing this we are acting in the best long-term interest of our shareholders. Increasing the size and the market share of the company, as long as it's possible organically, has many benefits including wider

audience, better revenue stability, and also higher possibility of achieving high profits and profit margins, as company's fixed costs in the current business model only need to grow much slower, if at all, than its revenue.

Question is, how long can G5 grow fast organically and profitably? There is no definite answer we can provide, but we'd like it to continue for as long as possible. Obviously, there are much larger companies in our space, so there is plenty of room for aspiring. Lifetime of successful games in our portfolio is a substantial factor. The lifetime of a game depends on a number of factors. G5's strategy is to track and analyze the underlying parameters on monthly basis in order to understand where the game is exactly in its life cycle. It is worth noting that potential addressable audience for G5 games is huge, and measured in tens of millions of households, both in USA and EU – company's most important markets.

The company therefore is in excellent position to further capitalize on its understanding of the market and the audience and its ability to acquire and retain the paying audience for a long time. G5 is cash flow positive and has enough resources to continue seizing the opportunity to get as big as it can before paying more attention to profitability. The management is confident in the company's ability to develop successful games and is satisfied with the early performance of the recent game releases Survivors: The Quest, and Mahjong Journey, both 1st party, i.e. both G5's wholly owned intellectual properties. The company is working on more own F2P games to come out during 2015.

Going forward, there will be several factors affecting the company's margins. The increased revenue will be a positive factor, as it will push our gross revenue to exceed our slow-growing fixed expenses more and more. Successful 1st party games can substantially contribute to higher margins. At the same time, continued growth of investment in UA – as long as the company can sustain the high pace of profitable growth – will put pressure on margins, especially during the periods of aggressive spending ramp up. The interplay of these factors will define our profits in the short term. Once again, in the long run, the management is committed to focusing on profits and reaching substantially higher profit margins.

Stockholm, February 24, 2015 Vlad Suglobov, Chief Executive Officer, co-founder

Revenue and operating margin

Revenue and operating margin 11Q1-14Q4

Financial key ratios

	14Q4	13Q4	2014	2013
Revenue (kSEK)	57 718	28 718	182 116	100 007
Revenue growth (%)	101%	39%	82%	24%
Gross profit (kSEK)	29 366	-5 436	80 026	21 082
Gross margin (%)	51%	-19%	44%	21%
Gross profit excl write-downs (kSEK)	29 366	10 150	82 469	39 090
Gross margin excl write-downs (%)	51%	35%	45%	39%
EBIT (kSEK)	2 352	-20 518	9 015	-11 826
EBIT-margin (%)	4%	-71%	5%	-12%
EBIT excl write-downs and re-listing expenses (kSEK)	2 928	-2 588	13 812	9 965
EBIT-margin excl write-downs and re-listing expenses (%)	5%	-9%	8%	10%

October-December

Year-on-year revenues grew by 101% during the period, driven by the strong growth for the group's free-to-playgames, to 57 718 (28 718) kSEK. G5 reports revenue net of the application stores' fees, which usually are 30% of the price that the end user pays. Revenue from free-to-play-games grew by 164% during 14Q4 compared to the same quarter 2013. Revenue from the unlockable games portfolio decreased somewhat compared to the previous quarter. Earnings before interest and taxes (EBIT) was 2 352 (-20 518) kSEK, corresponding to an EBIT-margin of 4%. Excluding write-downs and re-listing expenses, EBIT was 2 928 kSEK, corresponding to an EBIT-margin of 5%. The accumulated number of downloads of the group's games (not counting updates) surpassed 190 million.

January-December

Year-on-year revenues grew by 82% during the year, driven by the strong growth for the group's free-to-playgames, to 182 116 (100 007) kSEK. Revenue from free-to-play-games grew by 192% during the year compared to 2013.

Revenue share from free-to-play games and unlockable games 2012-2014

The group's production cost was 102 090 (78 925) kSEK during the year. Royalties to external developers were 65 968 (38 284) kSEK, corresponding to 36% (38%) of revenue. The gross profit for the year was 80 026 (21 082) kSEK, corresponding to a gross margin of 44% (21%).

Earnings before interest and taxes (EBIT) was 9 015 (-11 826) kSEK. The operating margin was 5% (-12%) for the year. Excluding write-downs and re-listing expenses, EBIT was 13 812 (9 965) kSEK, corresponding to an EBIT-margin of 8% (10%). The change in EBIT-margin compared to 2013, excluding write-downs and re-listing expenses, can primarily be explained by an increase in the level of user acquisition expenses. G5 continues to invest in acquisition of users, and the costs for marketing during the year were 37 724 (10 210) kSEK, corresponding to 21% (10%) of revenue.

The company's publishing strategy is based on having a certain number of different games in the portfolio, in order to maximize potential and reduce risk. Some of these games become very successful and profitable, while a few other games may fail in the market. Capitalized development expenses for unsuccessful games will then have to be written down or off. Over time, the company however expects such write-downs to be more than compensated for by the revenue and profits produced by very successful games in the portfolio.

During the third quarter, a number of unlockable games were cancelled due to a limited future potential. Another cancellation was an experimental F2P-game, Pet Zoometery, which was launched in 2013, and was licensed from a 3rd party development studio.

An impairment test of the entire game portfolio after the third quarter also resulted in a need for write-downs of a small number of older games. The total write-down amount was equal to 2 443 kSEK. This amount includes both a write-down of capitalized development costs, i. e. costs that arise from internal development activities, 1 549 kSEK, and a write-down of advances to external developers, 894 kSEK. Unlockable games constitute the absolute majority of the write-downs. The write-downs have no cash flow-effect. No write-downs were deemed to be needed due to the regular impairment test performed at the end of the year.

During the third quarter the company also carried out a sale of all remaining intellectual property rights from G5 Sweden to G5 Malta. The purpose was to create a clearer organizational setup, where G5 Malta procures all development work, while G5 Sweden is the group's distribution entity.

The parent company's revenue and profit development is explained by the same factors as for the group. Sales increased due to the strong growth of free-to-play-games, while costs increased primarily due to user acquisition expenses.

Liquidity and financial position

During the fourth quarter, the group had an operating cash flow before changes in working capital of 13 577 (2 350) kSEK and a cash flow of -260 (-6 650) kSEK.

During the year, the group had an operating cash flow before changes in working capital of 38 559 (22 489) kSEK and a cash flow of 5 090 (13 798) kSEK. The cash flow was affected negatively by fees of 2 354 kSEK to advisors in connection with the listing on Nasdaq Stockholm. The cash flow for 2013 includes the proceeds from the new share issues undertaken at the beginning of 2013. Excluding those proceeds, cash flow was -20 221 kSEK in 2013.

Cash flow from operating activities increased during the year compared to 2013 primarily due to a higher underlying profit.

G5 continues to invest in free-to-play-games. During the year, the group capitalized 32 358 (41 915) kSEK of direct development costs, while amortizations of capitalized development costs were 17 890 (20 094) kSEK. Total capitalized development costs at the end of the year were 71 680 (48 299) kSEK, while total outstanding advances to external developers were 6 659 (4 445) kSEK.

Available cash on December 31, 2014, amounted to 32 864 (27 433) kSEK.

The parent company's financial position is solid, in line with the group's.

New reporting format starting Q1 2015

Beginning with the reporting period January-March 2015, G5 Entertainment will start reporting revenues and costs in a functional income statement format. Operational costs will be classified as Cost of revenue, Research & development, Sales & marketing, and General & administrative costs. This change is being done both because a functionally divided lineup is expected to provide a more transparent picture of G5's profit developments, and to get a better comparability with other public companies in the industry in which the company operates. A number of such companies are using functional income statements.

Simultaneously, G5 Entertainment will begin reporting revenues including commission to distributors. G5 has until now been recognizing total revenue based upon the sums actually received by the company, after third party distributors (such as Apple for iPhone or Google for Android) have taken their commission. G5's Board of Directors have now decided to change the revenue recognition reporting so that it is in line with how most other public companies in this industry reports, and that it will reflect the economic substance of the current distributor agreements more accurately. This means that it is the revenue spent by G5's customers, the players, including commission to distributors, which will be reported as consolidated revenue going forward. This will increase reported revenues by approximately 40% as compared to the present revenue recognition method. Commission to distributors will be classified as Cost of revenue. There is no change as to the timing of when the revenue is recognized.

Financial targets

As the company currently undergoes a phase of fast top-line growth, exceeding the pace of the market expansion, the Board believes the management should focus on maintaining this fast organic growth. The focus on fast growth will require investments into marketing and user acquisition, which in the short term is going to put pressure on profitability.

The Board has therefore decided not to provide any financial targets with regard to the company's future profitability at this stage.

Outlook

G5 Entertainment does not publish forecasts.

Risk assessment

G5 Entertainment is, like all companies, exposed to various kinds of risk in its operations. Among the most notable are risks related to the dependency on certain strategic partners, delays in the release of new games, currency exchange risks, changes in technology, dependency on key employees, and tax as well as political risks due to the multi-national nature of the group's operations. Risk management is an integral part of G5 Entertainment's management and the risks are described in greater detail in the 2013 annual report.

The risks described for the group can also have an indirect effect on the parent company.

Related-party transactions

During the period no significant related-party transactions have taken place.

Dividend

The Board of Directors will propose to the Annual General Meeting that no dividend is paid for 2014.

Annual general meeting 2015

G5 Entertainment's annual general meeting 2015 will be held on May 20 in Stockholm. Shareholders wishing to have matters considered at the meeting must submit these to G5 Entertainment by March 25, 2015, to be included in the notice. Requests should be addressed to the board and be sent by mail to G5 Entertainment AB (publ), Riddargatan 18, 114 51 Stockholm, Sweden.

Nomination committee

G5 Entertainment's nomination committee consists of:

• Magnus Uppsäll, chairman (representing Proxima Limited)
• Petter Nylander (representing Wide Development Limited)
• Jeffrey Rose (representing Purple Wolf Limited)
• Christoffer Häggblom (representing Rite Internet Ventures)
• Marianne Flink (representing Swedbank Robur)

Shareholders wishing to submit proposals to G5 Entertainment's nomination committee may do so by mail to G5 Entertainment AB (publ), Riddargatan 18, 114 51 Stockholm, Sweden or by e-mail to nomination@g5e.se. Please note that proposals must be received by the nomination committee by March 1, 2015.

Upcoming report dates

Interim report, January-March 2015	May 8, 2015
Annual General Meeting 2015	May 20, 2015
Interim report, January-June 2015	July 24, 2015
Interim report, January-September 2015	November 6, 2015

Forward-looking statements

This report may contain statements concerning, among other things, G5 Entertainment's financial position and performance as well as statements on market conditions that may be forward-looking. G5 Entertainment believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions. However, forward-looking statements involve inherent risks and uncertainties and actual results or outcomes may differ materially from those expressed. Forward-looking statements relate only to the date they were made and, other than as required by applicable law, G5 Entertainment undertakes no obligation to update any of them in light of new information or future events.

Assurance

The Board of Directors and the CEO certify that the year-end report provides a true and fair view of the Group's operations, financial position, and earnings.

Stockholm, February 24, 2015

Petter Nylander

Chairman of the Board

Pär Sundberg	Jeffrey Rose	Vlad Suglobov
Board member	Board member	CEO & Board member

Note: G5 Entertainment AB (publ) is required to make the information in this year-end report public in compliance with the Swedish Securities Market Act. The information was submitted for publication on February 24, 2015 at 07.30.

This interim report has not been subject to review by the company´s auditors.

Note: This report is published in Swedish and English. In the event of any difference between the English version and the Swedish original, the Swedish version shall prevail.

Income statement - Group

G5 Entertainment group (kSEK)	2014-10-01 2014-12-31	2013-10-01 2013-12-31	2014-01-01 2014-12-31	2013-01-01 2013-12-31
Net turnover	57 718	28 718	182 116	100 007
Production cost (Note 1, 2)	-28 352	-34 154	-102 090	-78 925
Gross profit	29 366	-5 436	80 026	21 082
General and administrative expenses	-26 403	-17 099	-69 583	-34 342
Other operating income	192	1 742	1 803	2 046
Other operating expenses	-804	275	-3 231	-612
Operating result	2 352	-20 518	9 015	-11 826
Financial income	42	85	42	85
Financial expenses		-65	-439	-301
Operating result after financial items	2 394	-20 498	8 618	-12 042
Taxes (Note 3)	861	1 199	-1 804	378
NET RESULT FOR THE PERIOD	3 255	-19 299	6 814	-11 664
Attributed to:
Parent company's shareholders	3 255	-19 299	6 814	-11 664
Non-controlling interest	-	-	-	-
Earnings per share
Weighted average number of shares	8 800 000	8 800 000	8 800 000	8 711 111
Earnings per share (SEK) before and after dilution	0.37	-2.19	0.77	-1.34

Statement of comprehensive income - Group

G5 Entertainment group (kSEK)	2014-10-01 2014-12-31	2013-10-01 2013-12-31	2014-01-01 2014-12-31	2013-01-01 2013-12-31
Net result for the period Items that later can be reversed in	3 255	-19 299	6 814	-11 664
profit
Foreign currency translation	4 547	493	8 553	369
differences
Total other comprehensive income			8 553	369
for the period		4 547 493
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD	7 802	-18 806	15 367	-11 295
Attributed to:
Parent company's shareholders	7 802	-18 806	15 367	-11 295
Non-controlling interest	-	-	-	-

Balance sheet - Group

G5 Entertainment group (kSEK)	2014-12-31	2013-12-31
Fixed assets
Intangible fixed assets
Capitalized development costs (Note 2)	71 680	48 299
Goodwill	2 302	2 318
	73 982	50 617
Tangible fixed assets
Equipment	2 892	1 929
	2 892	1 929
Deferred tax receivable (Note 3)	1 025	2 105
Total fixed assets	77 899	54 651
Current assets (Note 6)
Accounts receivable	7 569	7 156
Tax receivable		4 437
Other receivables (Note 4)	7 327	6 915
Prepaid expenses and accrued income	21 536	10 916
Cash at bank	32 864	27 433
Total current assets	69 297	56 857
TOTAL ASSETS	147 195	111 508
Equity
Share capital	880	880
Other capital contribution	54 032	54 032
Other reserves	8 575	22
Profit/loss brought forward	40 871	34 058
Total shareholders' equity	104 359	88 992
Current liabilities (Note 5, 6)
Accounts payable	12 893	7 478
Other liabilities	1 593	464
Tax liabilities	2 326	6 505
Accrued expenses	26 025	8 069
Total current liabilities	42 837	22 516
TOTAL EQUITY AND LIABILITIES	147 195	111 508

Cash flow statement - Group

G5 Entertainment group (kSEK)	2014-10-01 2014-12-31	2013-10-01 2013-12-31	2014-01-01 2014-12-31	2013-01-01 2013-12-31
Cash flow from operating activities
Profit after financial items	2 394	-20 498	8 618	-12 042
Adjusting items not included in cash flow	10 312	22 279	31 286	39 114
	12 706	1 780	39 904	27 072
Taxes paid	871	570	-1 345	-4 583
Cash flow before changes in working capital	13 577	2 350	38 559	22 489
Cash flow from changes in working capital
Change in operating receivables	-10 082	-3 576	-19 216	-4 054
Change in operating liabilities	5 872	4 900	20 478	4 255
Cash flow from operating activities	9 367	3 674	39 821	22 690
Investing activities
Purchase of equipment	-754	-571	-2 373	-1 118
Capitalized development costs	-8 873	-9 753	-32 358	-41 915
Cash flow from investing activities	-9 627	-10 324	-34 731	-43 033
Financing activities
New share issue				34 019
Premium for issued warrants	0			122
Cash flow from financing activities	0	0	0	34 141
CASH FLOW	0 -260	0 -6 650	5 090	13 798
Cash at the beginning of the period	0 33 162	0 34 086	27 433	13 661
Cash flow	-260	-6 650	5 090	13 798
Exchange rate difference	-37	-3	342	-26
CASH AT THE END OF THE PERIOD	32 864	27 433	32 864	27 433

Statement of changes in shareholder's equity - Group

G5 Entertainment group (kSEK)	Share capital	Other capital contribution	Other reserves	Profit/loss brought forward	Shareholders' equity
Shareholders' equity as of 2013-01-01	800	19 971	-347	45 722	66 146
Net result for the period				-11 664	-11 664
Total other comprehensive income			369		369
Total comprehensive income for the period			369	-11 664	-11 295
Incentive program		122			122
New share issue	80	37 520			37 600
Cost of new share issue		-3 581			-3 581
Total transaction with the owners recognized directly in equity	80	34 061			22 846
Shareholders' equity as of 2013-12-31	880	54 032	22	34 058	88 992
Shareholders' equity as of 2014-01-01	880	54 032	22	34 058	88 992
Net result for the period				6 814	6 814
Total other comprehensive income			8 553		8 553
Total comprehensive income for the period			8 553	6 814	15 367
Shareholders' equity as of 2014-12-31	880	54 032	8 575	40 872	104 359

Note 1 – Accounting principles

G5 Entertainment's consolidated accounts have been prepared in accordance with International Financial Reporting Standards (IFRS). This report was prepared for the group in accordance with the IAS 34 Interim Financial Reporting and the Annual Accounts Act. The accounting and calculation principles used in the report for the group are identical to those used in the Annual Report 2013. None of the new and changed standards from IASB, applicable from 1st of January 2014, has had any material effect on the Financial Statements. For detailed information on the accounting principles, see Annual report 2013.

Note 2 – Capitalized development costs

Group (kSEK)	2014-10-01 2014-12-31	2013-10-01 2013-12-31	2014-01-01 2014-12-31	2013-01-01 2013-12-31
At the beginning of the period	62 537	55 767	48 299	40 429
Investments	8 873	9 753	32 358	41 915
Write-downs		-11 485	-1 591	-13 908
Amortization	-4 866	-6 206	-17 890	-20 094
Currency exchange differences	5 137	470	10 504	-43
At the end of the period	71 680	48 299	71 680	48 299

Parent company (kSEK)	2014-01-01 2014-12-31	2013-01-01 2013-12-31
At the beginning of the period	7 771	20 833
Investments	2 138	6 574
Write-off		-9 466
Amortization	-1 752	-10 170
Intra-group transfer	-8 157
At the end of the period	0	7 771

During the third quarter, all remaining intellectual property rights (IPRs) were transferred from G5 Sweden to G5 Malta, in accordance with the company's stated strategy of having all IPRs in G5 Malta. This is in line with a clearer organizational model, where G5 Malta procures all development work, while G5 Sweden is the group's distribution entity.

Note 3 – Tax

G5 Entertainment is active in a number of different jurisdictions, with different tax rates. The Group's effective tax rate consequently varies between periods depending on the distribution of revenues and costs. In 2014 the effective tax rate was influenced by a revaluation of deferred tax assets related to temporary differences.

The deferred tax asset for 2013 is related to loss carry-forwards in the parent company.

Note 4 – Other receivables

Other receivables include 6 659 (4 445) kSEK for prepaid royalties to third party developers. G5 publishes both proprietary games and games licensed from third-party developers. In connection with the conclusion of agreements with third party developers G5 sometimes pays an advance on royalties to fund game development. These advances are usually offset toward the third party developer's contractual share of the revenue that each game generates.

Note 5 – Pledged assets and contingent liabilities

Floating charge 3 000 (700) kSEK, pledged for cheque account with overdraft facility (400 kUSD). The overdraft facility was unused as of December 31, 2014.

Bank account 50 (50) kSEK, pledged for bank guarantee.

Different advisors consulted by the company have different views on a tax matter relating to payment of compensation to developers during previous years. The issue includes among others the interpretation of the applicable tax laws in countries where G5 operates. G5 considers the risk of additional tax to be small, but a certain risk exposure exists, with a maximum amount estimated to 3.5 MSEK.

Note 6 – Fair value

G5 group has no financial instruments that are accounted for at fair value. The carrying amount for financial instruments correspond to fair value.

Income statement – parent company

G5 Entertainment AB (kSEK)	2014-01-01 2014-12-31	2013-01-01 2013-12-31
Revenue	182 040	99 197
Production costs (Note 1, 2)	-115 762	-86 107
Gross profit	66 278	13 090
General and administrative expenses	-58 309	-25 471
Other operating income	4 123
Other operating losses	-3 198	-29
Operating profit	8 894	-12 410
Interest income and similar items	2 495	412
Interest expense and similar items	-267	-299
Profit after financial items	11 122	-12 297
Appropriations		2 680
Income tax expenses	-2 346	1 399
NET RESULT FOR THE PERIOD	8 776	-8 218

Statement of comprehensive income – parent company

G5 Entertainment AB (kSEK)	2014-01-01 2014-12-31	2013-01-01 2013-12-31
Net result for the period Items that later can be reversed in profit	8 776	-8 218
Foreign currency translation differences	7 771	649
Total other comprehensive income for the year	7 771	649
Total comprehensive income for the year	16 547	-7 569

Balance sheet – parent company

G5 Entertainment AB (kSEK)	2014-12-31	2013-12-31
Fixed assets
Intangible fixed assets
Capitalized development costs (Note 2)		7 771
	0	7 771
Financial fixed assets
Shares in group companies	570	630
Receivables from group companies	91 845	33 342
Deferred tax assets		2 101
	92 415	36 073
Current assets
Account receivables	8 015	6 185
Receivables from group companies		8 657
Other receivables	285	7 386
Prepaid expenses and accrued income	21 295	10 854
Cash and bank	27 817	23 203
	57 412	56 285
TOTAL ASSETS	149 826	100 129
Restricted equity
Share capital	880	880
Non-restricted equity
Share premium reserve	53 989	53 989
Fair value reserve	8 420	649
Profit\Loss carried forward	30 045	38 261
Net result for the period	8 776	-8 218
Total equity	102 109	85 561
Current liabilities
Accounts payable	4 064	1 584
Liability to group companies	39 543	4 956
Other liability	1 265	74
Accrued expenses	2 843	7 954
Total current liabilities	47 716	14 569
TOTAL EQUITY AND LIABILITIES	149 826	100 129
Memorandum items (Note 5)	7 876	7 771
Pledged assets	3 050	3 050
Contingent liabilities	3 500	-

G5 Entertainment AB is a developer and publisher of high quality downloadable games for iOS, Android, Kindle Fire, Mac, and Windows devices. G5 develops and publishes games that are family-friendly, easy to learn, and targeted at the widest audience of experienced and novice players. G5's portfolio includes a number of popular games like Survivors: The Quest, Mahjong Journey, The Secret Society, Virtual City, Special Enquiry Detail, Supermarket Mania, and others. G5 Entertainment AB is listed on Nasdaq Stockholm since 2014.

G5 ENTERTAINMENT AB (publ) RIDDARGATAN 18, 114 51 STOCKHOLM SWEDEN PHONE: +46 84 11111 5 FAX: +46 84 1111 65 E-MAIL: CONTACT@G5E.SE ORG.NR. 556680-8878 HTTP://WWW.G5E.SE