Next Games Corporation Company Release 13 February 2019 at 13:00 EET
On January 10, 2019, Next Games published preliminary information prepared in accordance with the FAS standard concerning its financial performance for fourth quarter 2018 and announced that the company will transition from Finnish Accounting Standard (FAS) to International Financial Reporting Standards (IFRS) reporting. Previously Next Games has prepared its published financial statements in accordance with Finnish Accounting Standards (FAS).
Next Games has prepared the following unaudited IFRS financial information to provide its investors comparative information on Next Games’ previously published consolidated statement of comprehensive income, consolidated statement of financial position and key figures for the years ended December 31, 2016 and December 31, 2017 and the six month periods ended June 30, 2016, December 31, 2016, June 30, 2017, December 31, 2017 and June 30, 2018 as well as consolidated statement of financial position as at the transition date to IFRS January 1, 2016.
Key differences to the Finnish Accounting Standards resulting from the transition to IFRS are described in accompanying notes to this company release. For additional information on the historical financial information prepared in accordance with FAS, refer to the audited historical consolidated financial statements and the unaudited half year consolidated financial information of Next Games on the company's website at www.nextgames.com.
The financial information included in this release is unaudited except for the consolidated statement of financial position information for the year ended 2016 and 2017. As part of the accounting standard change, Next Games changed the presentation of expenses of the consolidated statement of comprehensive income from classification based on nature to classification based on function. Therefore, also the FAS income statement figures are unaudited from financial years 2016 and 2017.
Next Games publishes its full-year financial bulletin on February 15, 2019.
Key Financial Figures (IFRS)
| 1000 EUR | 1.1-31.12.2018 | 1.7-31.12.2018 | 1.1-30.6.2018 | 1.1-31.12.2017 | 1.7-31.12.2017 | 1.1-30.6.2017 | 1.1-31.12.2016 | 1.7-31.12.2016 | 1.1-30.6.2016 | |||||||||
| Revenue, gross bookings and gross Margin | ||||||||||||||||||
| Revenue | 35,245 | 24,768 | 10,477 | 32,466 | 13,014 | 19,452 | 31,112 | 18,326 | 12,786 | |||||||||
| Gross bookings | 35,788 | 25,339 | 10,449 | 30,930 | 12,641 | 18,289 | 33,594 | 19,828 | 13,766 | |||||||||
| Gross Profit | 21,294 | 15,260 | 6,034 | 19,308 | 8,118 | 11,190 | 16,870 | 9,828 | 7,043 | |||||||||
| Operating profit and adjusted Operating Profit | ||||||||||||||||||
| Operating profit (loss) | -16,914 | -11.961 | -4,954 | -5,072 | -4,202 | -870 | -2,192 | 1,593 | -3,785 | |||||||||
| Depreciation and amortisation (excluding IFRS 16) | 1,654 | -1,513 | 140 | 382 | 132 | 251 | 244 | 122 | 123 | |||||||||
| Adjusted operating profit (loss) | -15,261 | -10,447 | -4,814 | -4,690 | -4,070 | -619 | -1,948 | 1,714 | -3,662 | |||||||||
| As percentage of revenue | ||||||||||||||||||
| Gross Profit (%) | 60 | % | 62 | % | 58 | % | 59 | % | 62 | % | 58 | % | 54 | % | 54 | % | 55 | % |
| Operating profit margin (%) | -48 | % | -48 | % | -47 | % | -16 | % | -32 | % | -4 | % | -7 | % | 9 | % | -30 | % |
| Adjusted Operating Profit (%) | -43 | % | -42 | % | -46 | % | -14 | % | -31 | % | -3 | % | -6 | % | 9 | % | -29 | % |
2018
Consolidated statement of comprehensive income Jan 1 – Jun 30, 2018
| EUR thousand | FAS | Total IFRS adjustments | IFRS | ||
| Jan 1 – Jun 30, 2018 | Jan 1 – Jun 30, 2018 | ||||
| Revenue from contracts with customers | 10 477 | 10 477 | |||
| Cost of revenue | -4 382 | -60 | -4 443 | ||
| Gross profit | 6 094 | -60 | 6 034 | ||
| Other operating income | 45 | 45 | |||
| Research and development costs | -6 647 | 3 092 | -3 555 | ||
| Sales and marketing costs | -5 338 | -68 | -5 405 | ||
| Administrative costs | -2 145 | 72 | -2 073 | ||
| Operating profit | -7 990 | 3 036 | -4 954 | ||
| Finance income | 722 | 722 | |||
| Finance costs | -1 461 | 995 | -466 | ||
| Finance costs - net | -740 | 995 | 255 | ||
| Share of associates' profit/loss | -116 | -116 | |||
| Profit before taxes | -8 730 | 3 915 | -4 815 | ||
| Income taxes | |||||
| Change in deferred tax | 9 | -742 | -733 | ||
| Total income tax expense | 9 | -742 | -733 | ||
| Profit for the period | -8 721 | 3 173 | -5 547 | ||
| Total comprehensive income for the period | -8 721 | 3 173 | -5 547 |
Consolidated balance sheet June 30, 2018
| EUR thousand | FAS | Total IFRS adjustments | IFRS | ||
| June 30, 2018 | June 30, 2018 | ||||
| Assets | |||||
| Non-current assets | |||||
| Intangible assets | 6 664 | 3 229 | 9 893 | ||
| Goodwill | 790 | 2 554 | 3 344 | ||
| Property, plant and equipment | 232 | 1 434 | 1 666 | ||
| Investments | 63 | -63 | 0 | ||
| Share of associates | 393 | 393 | |||
| Long-term debtors | 669 | 669 | |||
| Deferred tax assets | 2 785 | -889 | 1 896 | ||
| Non-current assets total | 11 204 | 6 658 | 17 863 | ||
| Current assets | |||||
| Trade and other receivables | 6 368 | -9 | 6 359 | ||
| Cash and cash equivalents | 16 940 | 16 940 | |||
| Current assets total | 23 308 | -9 | 23 300 | ||
| Total assets | 34 513 | 6 650 | 41 162 | ||
| Equity and liabilities | |||||
| Shareholders’ equity | |||||
| Share capital | 80 | 80 | |||
| Invested non-restricted equity reserve | 53 307 | 589 | 53 897 | ||
| Retained earnings | -16 755 | 2 922 | -13 832 | ||
| Profit (loss) for the period | -8 721 | 3 173 | -5 547 | ||
| Shareholders’ equity | 27 912 | 6 685 | 34 597 | ||
| Liabilities | |||||
| Non-current liabilities | |||||
| Governmental agency loan | 663 | -35 | 628 | ||
| Non-current liabilities total | 663 | -35 | 628 | ||
| Current liabilities | |||||
| Governmental agency loan | 112 | 112 | |||
| Deferred revenue | 886 | 886 | |||
| Trade payables | 2 042 | 2 042 | |||
| Other liabilities | 192 | 192 | |||
| Accruals and deferred income | 2 705 | 2 705 | |||
| Current liabilities total | 5 937 | 5 937 | |||
| Liabilities total | 6 600 | -35 | 6 565 | ||
| Equity and liabilities total | 34 513 | 6 650 | 41 162 | ||
2017
Consolidated statement of comprehensive income Jan 1 – Dec 31, 2017
| EUR thousand | FAS | Total IFRS adjustments | IFRS | ||
| Jan 1 – Dec 31, 2017 | Jan 1 – Dec 31, 2017 | ||||
| Revenue from contracts with customers | 32 466 | 32 466 | |||
| Cost of revenue | -13 042 | -115 | -13 158 | ||
| Gross profit | 19 423 | -115 | 19 308 | ||
| Other operating income | 53 | 53 | |||
| Research and development costs | -9 274 | 2 240 | -7 034 | ||
| Sales and marketing costs | -12 579 | -135 | -12 714 | ||
| Administrative costs | -3 981 | -705 | -4 686 | ||
| Operating profit | -6 357 | 1 285 | -5 072 | ||
| Finance income | 37 | 37 | |||
| Finance costs | -507 | -34 | -541 | ||
| Finance costs - net | -470 | -34 | -504 | ||
| Share of associates' profit/loss | -455 | -455 | |||
| Profit before taxes | -6 827 | 797 | -6 031 | ||
| Income taxes | 0 | ||||
| Change in deferred tax | 469 | -574 | -105 | ||
| Total income tax expense | 469 | -574 | -105 | ||
| Profit for the period | -6 359 | 223 | -6 137 | ||
| Total comprehensive income for the period | -6 359 | 223 | -6 137 |
Consolidated statement of comprehensive income Jul 1 – Dec 31, 2017
| EUR thousand | FAS | Total IFRS adjustments | IFRS | |
| Jul 1 – Dec 31, 2017 | Jul 1 – Dec 31, 2017 | |||
| Revenue from contracts with customers | 13 045 | 13 045 | ||
| Cost of revenue | -4 841 | -55 | -4 896 | |
| Gross profit | 8 204 | -55 | 8 149 | |
| Other operating income | 16 | 16 | ||
| Research and development costs | -5 869 | 2 183 | -3 686 | |
| Sales and marketing costs | -6 786 | -31 | -6 817 | |
| Administrative costs | -1 946 | 81 | -1 865 | |
| Operating profit | -6 380 | 2 177 | -4 202 | |
| Finance income | 36 | 36 | ||
| Finance costs | -347 | -6 | -353 | |
| Finance costs - net | -311 | -6 | -317 | |
| Share of associates' profit/loss | -290 | -290 | ||
| Profit before taxes | -6 690 | 1 881 | -4 809 | |
| Income taxes | 0 | |||
| Change in deferred tax | 476 | -591 | -115 | |
| Total income tax expense | 476 | -591 | -115 | |
| Profit for the period | -6 215 | 1 290 | -4 924 | |
| Total comprehensive income for the period | -6 215 | 1 290 | -4 924 |
Consolidated statement of comprehensive income Jan 1 – Jun 30, 2017
| EUR thousand | FAS | Total IFRS adjustments | IFRS | |
| Jan 1 – Jun 30, 2017 | Jan 1 – Jun 30, 2017 | |||
| Revenue from contracts with customers | 19 452 | 19 452 | ||
| Cost of revenue | -8 201 | -60 | -8 262 | |
| Gross profit | 11 251 | -60 | 11 190 | |
| Other operating income | 6 | 6 | ||
| Research and development costs | -3 405 | 57 | -3 348 | |
| Sales and marketing costs | -5 794 | -103 | -5 897 | |
| Administrative costs | -2 035 | -785 | -2 821 | |
| Operating profit | 22 | -892 | -870 | |
| Finance income | 0 | 0 | ||
| Finance costs | -160 | -28 | -188 | |
| Finance costs - net | -160 | -28 | -187 | |
| Share of associates' profit/loss | -165 | -165 | ||
| Profit before taxes | -137 | -1 084 | -1 222 | |
| Income taxes | -1 | -1 | ||
| Change in deferred tax | -7 | 17 | 10 | |
| Total income tax expense | -8 | 17 | 9 | |
| Profit for the period | -145 | -1 068 | -1 212 | |
| Total comprehensive income for the period | -145 | -1 068 | -1 212 |
Consolidated balance sheet December 31, 2017
| EUR thousand | FAS | Total IFRS adjustments | IFRS | ||
| December 31, 2017 | December 31, 2017 | ||||
| Assets | |||||
| Non-current assets | |||||
| Intangible assets | 5 917 | 859 | 6 776 | ||
| Goodwill | 903 | 2 441 | 3 344 | ||
| Property, plant and equipment | 136 | 139 | 275 | ||
| Investments | 1 074 | -1 074 | 0 | ||
| Share of associates | 509 | 509 | |||
| Long-term debtors | 820 | 820 | |||
| Deferred tax assets | 2 776 | -147 | 2 629 | ||
| Non-current assets total | 11 626 | 2 727 | 14 353 | ||
| Current assets | |||||
| Trade and other receivables | 4 987 | -9 | 4 978 | ||
| Cash and cash equivalents | 26 377 | 26 377 | |||
| Current assets total | 31 364 | -9 | 31 356 | ||
| Total assets | 42 990 | 2 719 | 45 709 | ||
| Equity and liabilities | |||||
| Shareholders’ equity | |||||
| Share capital | 80 | 80 | |||
| Invested non-restricted equity reserve | 53 277 | 589 | 53 866 | ||
| Retained earnings | -10 395 | 1 958 | -8 437 | ||
| Profit (loss) for the period | -6 359 | 223 | -6 137 | ||
| Shareholders’ equity | 36 602 | 2 770 | 39 372 | ||
| Liabilities | |||||
| Non-current liabilities | |||||
| Governmental agency loan | 691 | -49 | 642 | ||
| Non-current liabilities total | 691 | -49 | 642 | ||
| Current liabilities | |||||
| Governmental agency loan | 84 | 84 | |||
| Lease liabilities | 224 | 224 | |||
| Deferred revenue | 914 | 914 | |||
| Trade payables | 1 162 | 1 162 | |||
| Other liabilities | 205 | 205 | |||
| Accruals and deferred income | 3 331 | -227 | 3 104 | ||
| Current liabilities total | 5 697 | -3 | 5 694 | ||
| Liabilities total | 6 388 | -51 | 6 337 | ||
| Equity and liabilities total | 42 990 | 2 719 | 45 709 | ||
Consolidated balance sheet June 30, 2017
| EUR thousand | FAS | Total IFRS adjustments | IFRS | |
| June 30, 2017 | June 30, 2017 | |||
| Assets | ||||
| Non-current assets | ||||
| Intangible assets | 6 427 | -1 768 | 4 660 | |
| Goodwill | 1 116 | 2 228 | 3 344 | |
| Property, plant and equipment | 150 | 289 | 439 | |
| Investments | 1 074 | -1 074 | 0 | |
| Share of associates | 800 | 800 | ||
| Long-term debtors | 258 | 258 | ||
| Deferred tax assets | 2 300 | 443 | 2 744 | |
| Non-current assets total | 11 326 | 919 | 12 245 | |
| Current assets | ||||
| Trade and other receivables | 5 250 | -14 | 5 236 | |
| Cash and cash equivalents | 32 003 | 32 003 | ||
| Current assets total | 37 253 | -14 | 37 239 | |
| Total assets | 48 580 | 904 | 49 484 | |
| Equity and liabilities | ||||
| Shareholders’ equity | ||||
| Share capital | 80 | 80 | ||
| Invested non-restricted equity reserve | 53 255 | 589 | 53 845 | |
| Retained earnings | -10 395 | 1 024 | -9 372 | |
| Profit (loss) for the period | -145 | -1 068 | -1 212 | |
| Shareholders’ equity | 42 795 | 545 | 43 341 | |
| Liabilities | ||||
| Non-current liabilities | ||||
| Governmental agency loan | 691 | -49 | 642 | |
| Non-current liabilities total | 691 | -49 | 642 | |
| Current liabilities | ||||
| Governmental agency loan | 84 | 84 | ||
| Lease liabilities | 408 | 408 | ||
| Deferred revenue | 1 316 | 1 316 | ||
| Trade payables | 873 | 873 | ||
| Other liabilities | 122 | 122 | ||
| Accruals and deferred income | 2 698 | 2 698 | ||
| Current liabilities total | 5 093 | 408 | 5 501 | |
| Liabilities total | 5 784 | 359 | 6 143 | |
| Equity and liabilities total | 48 580 | 904 | 49 484 |
2016
Consolidated statement of comprehensive income Jan 1 – Dec 31, 2016
| EUR thousand | FAS | Total IFRS adjustments | IFRS | ||
| Note | Jan 1 – Dec 31, 2016 | Jan 1 – Dec 31, 2016 | |||
| Revenue from contracts with customers | 31 112 | 31 112 | |||
| Cost of revenue | -14 106 | -135 | -14 241 | ||
| Gross profit | 17 005 | -135 | 16 870 | ||
| Other operating income | 1 238 | -147 | 1 091 | ||
| Research and development costs | -6 515 | 156 | -6 359 | ||
| Sales and marketing costs | -12 268 | -63 | -12 331 | ||
| Administrative costs | -1 020 | -443 | -1 463 | ||
| Operating profit | -1 560 | -632 | -2 192 | ||
| Finance income | 0 | 0 | |||
| Finance costs | -62 | -38 | -100 | ||
| Finance costs - net | -62 | -38 | -100 | ||
| Share of associates' profit/loss | -110 | -110 | |||
| Profit before taxes | -1 622 | -780 | -2 402 | ||
| Income taxes | 0 | ||||
| Change in deferred tax | 2 400 | 97 | 2 496 | ||
| Total income tax expense | 2 400 | 97 | 2 496 | ||
| Profit for the period | 778 | -683 | 94 | ||
| Total comprehensive income for the period | 778 | -683 | 94 |
Consolidated statement of comprehensive income Jul 1 – Dec 31, 2016
| EUR thousand | FAS | Total IFRS adjustments | IFRS | |
| Jul 1 – Dec 31, 2016 | Jul 1 – Dec 31, 2016 | |||
| Revenue from contracts with customers | 18 326 | 18 326 | ||
| Cost of revenue | -8 423 | -75 | -8 498 | |
| Gross profit | 9 902 | -75 | 9 828 | |
| Other operating income | 1 189 | -147 | 1 042 | |
| Research and development costs | -3 105 | 172 | -2 933 | |
| Sales and marketing costs | -5 422 | -30 | -5 452 | |
| Administrative costs | -572 | -319 | -892 | |
| Operating profit | 1 991 | -399 | 1 593 | |
| Finance income | 0 | 0 | ||
| Finance costs | 50 | -21 | 30 | |
| Finance costs - net | 50 | -21 | 30 | |
| Share of associates' profit/loss | -110 | -110 | ||
| Profit before taxes | 2 041 | -529 | 1 512 | |
| Income taxes | ||||
| Change in deferred tax | 2 400 | 76 | 2 476 | |
| Total income tax expense | 2 400 | 76 | 2 476 | |
| Profit for the period | 4 441 | -453 | 3 988 | |
| Total comprehensive income for the period | 4 441 | -453 | 3 988 |
Consolidated statement of comprehensive income Jan 1 – Jun 30, 2016
| EUR thousand | FAS | Total IFRS adjustments | IFRS | |
| Jan 1 – Jun 30, 2016 | Jan 1 – Jun 30, 2016 | |||
| Revenue from contracts with customers | 12 786 | 12 786 | ||
| Cost of revenue | -5 683 | -60 | -5 744 | |
| Gross profit | 7 103 | -60 | 7 043 | |
| Other operating income | 49 | 49 | ||
| Research and development costs | -3 422 | -16 | -3 438 | |
| Sales and marketing costs | -6 847 | -33 | -6 880 | |
| Administrative costs | -434 | -124 | -558 | |
| Operating profit | -3 551 | -233 | -3 785 | |
| Finance income | 0 | 0 | ||
| Finance costs | -112 | -18 | -130 | |
| Finance costs - net | -112 | -18 | -130 | |
| Share of associates' profit/loss | ||||
| Profit before taxes | -3 663 | -251 | -3 914 | |
| Income taxes | ||||
| Change in deferred tax | 20 | 20 | ||
| Total income tax expense | 0 | 20 | 20 | |
| Profit for the period | -3 663 | -231 | -3 894 | |
| Total comprehensive income for the period | -3 663 | -231 | -3 894 |
Consolidated balance sheet December 31, 2016
| EUR thousand | FAS | Total IFRS adjustments | IFRS | ||
| Note | December 31, 2016 | December 31, 2016 | |||
| Assets | |||||
| Non-current assets | |||||
| Intangible assets | 389 | 279 | 668 | ||
| Goodwill | 200 | 2 035 | 2 235 | ||
| Property, plant and equipment | 145 | 519 | 664 | ||
| Investments | 1074 | -1 074 | 0 | ||
| Share of associates | 964 | 964 | |||
| Long-term debtors | 258 | 258 | |||
| Deferred tax assets | 2400 | 30 | 2 430 | ||
| Non-current assets total | 4 465 | 2 753 | 7 219 | ||
| Current assets | |||||
| Trade and other receivables | 6413 | -269 | 6 144 | ||
| Cash and cash equivalents | 3 664 | 3 664 | |||
| Current assets total | 10 076 | -269 | 9 808 | ||
| Total assets | 14 542 | 2 485 | 17 027 | ||
| Equity and liabilities | |||||
| Shareholders’ equity | |||||
| Share capital | 3 | 3 | |||
| Invested non-restricted equity reserve | 15 783 | 1 927 | 17 710 | ||
| Retained earnings | -11 173 | 773 | -10 400 | ||
| Profit (loss) for the period | 778 | -683 | 94 | ||
| Shareholders’ equity | 5 390 | 2 017 | 7 407 | ||
| Liabilities | |||||
| Non-current liabilities | |||||
| Deferred tax liabilities | 0 | 0 | |||
| Governmental agency loan | 775 | -68 | 707 | ||
| Lease liabilities | 224 | 224 | |||
| Non-current liabilities total | 775 | 156 | 931 | ||
| Current liabilities | |||||
| Governmental agency loan | |||||
| Lease liabilities | 313 | 313 | |||
| Deferred revenue | 2482 | 2 482 | |||
| Trade payables | 1178 | 1 178 | |||
| Other liabilities | 125 | 125 | |||
| Accruals and deferred income | 4 592 | 4 592 | |||
| Current liabilities total | 8 377 | 313 | 8 689 | ||
| Liabilities total | 9 152 | 468 | 9 620 | ||
| Equity and liabilities total | 14 542 | 2 485 | 17 027 | ||
Consolidated balance sheet June 30, 2016
| EUR thousand | FAS | Total IFRS adjustments | IFRS | |
| June 30, 2016 | June 30, 2016 | |||
| Assets | ||||
| Non-current assets | ||||
| Intangible assets | 212 | 453 | 665 | |
| Goodwill | 467 | 1 768 | 2 235 | |
| Property, plant and equipment | 169 | 746 | 915 | |
| Investments | 0 | 0 | ||
| Long-term debtors | 257 | 257 | ||
| Non-current assets total | 1 105 | 2 968 | 4 072 | |
| Current assets | ||||
| Trade and other receivables | 2 329 | 2 329 | ||
| Cash and cash equivalents | 2 402 | 2 402 | ||
| Current assets total | 4 731 | 0 | 4 731 | |
| Total assets | 5 835 | 2 968 | 8 803 | |
| Equity and liabilities | ||||
| Shareholders’ equity | ||||
| Share capital | 3 | 3 | ||
| Invested non-restricted equity reserve | 15 777 | 1 973 | 17 750 | |
| Retained earnings | -11 163 | 529 | -10 634 | |
| Profit (loss) for the period | -3 663 | -231 | -3 894 | |
| Shareholders’ equity | 953 | 2 271 | 3 224 | |
| Liabilities | ||||
| Non-current liabilities | ||||
| Deferred tax liabilities | 58 | 58 | ||
| Governmental agency loan | 426 | -36 | 390 | |
| Lease liabilities | 408 | 408 | ||
| Non-current liabilities total | 426 | 429 | 855 | |
| Current liabilities | ||||
| Governmental agency loan | ||||
| Lease liabilities | 256 | 256 | ||
| Deferred revenue | 980 | 980 | ||
| Trade payables | 1 260 | 1 260 | ||
| Other liabilities | 103 | 103 | ||
| Accruals and deferred income | 2 114 | 12 | 2 126 | |
| Current liabilities total | 4 457 | 267 | 4 724 | |
| Liabilities total | 4 883 | 697 | 5 579 | |
| Equity and liabilities total | 5 835 | 2 968 | 8 803 |
Consolidated balance sheet January 1, 2016
| EUR thousand | FAS | Total IFRS adjustments | IFRS | ||
| January 1, 2016 | January 1, 2016 | ||||
| Assets | |||||
| Non-current assets | |||||
| Intangible assets | 48 | 639 | 688 | ||
| Goodwill | 623 | 1612 | 2 235 | ||
| Property, plant and equipment | 157 | 838 | 996 | ||
| Investments | 0 | 0 | |||
| Long-term debtors | 257 | 257 | |||
| Non-current assets total | 1 086 | 3 090 | 4 176 | ||
| Current assets | |||||
| Trade and other receivables | 3 032 | -12 | 3 021 | ||
| Cash and cash equivalents | 4 645 | 4 645 | |||
| Current assets total | 7 677 | -12 | 7 666 | ||
| Total assets | 8 763 | 3 079 | 11 842 | ||
| Equity and liabilities | |||||
| Shareholders’ equity | |||||
| Share capital | 3 | 3 | |||
| Invested non-restricted equity reserve | 15 776 | 1 973 | 17 750 | ||
| Retained earnings | -11 173 | 285 | -10 888 | ||
| Profit (loss) for the period | |||||
| Shareholders’ equity | 4 606 | 2 258 | 6 864 | ||
| Liabilities | |||||
| Non-current liabilities | |||||
| Deferred tax liabilities | 78 | 78 | |||
| Governmental agency loan | 426 | -46 | 380 | ||
| Lease liabilities | 537 | 537 | |||
| Non-current liabilities total | 426 | 569 | 995 | ||
| Current liabilities | |||||
| Lease liabilities | 251 | 251 | |||
| Trade payables | 1 833 | 1 833 | |||
| Other liabilities | 184 | 184 | |||
| Accruals and deferred income | 1 714 | 1 714 | |||
| Current liabilities total | 3 731 | 251 | 3 983 | ||
| Liabilities total | 4 157 | 821 | 4 978 | ||
| Equity and liabilities total | 8 763 | 3 079 | 11 842 | ||
The following table summarizes the impact of the adoption of the IFRS to the equity of Next Games for the periods presented below:
| EUR thousand | Note | June 30, 2018 | December 31, 2017 | June 30, 2017 | December 31, 2016 | June 30, 2016 | January 1, 2016 | ||
| Equity, FAS | 27 912 | 36 602 | 42 795 | 5 390 | 953 | 4 606 | |||
| IFRS adjustments | |||||||||
| Depreciation method | 9. | 16 | 17 | 24 | 32 | 36 | 40 | ||
| Licence acquisitions | 5. | 239 | 299 | 359 | 211 | 272 | 332 | ||
| Tekes loans | 9. | 28 | 39 | 39 | 55 | 20 | 27 | ||
| Business combinations and goodwill | 3. | 2 799 | 2 649 | 2 400 | 2 170 | 2 014 | 1 858 | ||
| IPO transaction costs | 6. | -1 201 | -1 562 | -1 983 | -203 | ||||
| Leasehold improvements | 9. | -28 | -14 | -12 | |||||
| Leases | 7. | 0 | 2 | -168 | -114 | -58 | |||
| GaaS platform | 2. | 1 213 | 654 | 323 | 137 | ||||
| Armada investment | 8. | 196 | -699 | -409 | -244 | ||||
| Bad debt provision | 9. | -7 | -7 | -11 | -11 | ||||
| Development expenses | 1. | 3 402 | 1 378 | ||||||
| Adjustments total | 6 685 | 2 770 | 545 | 2 017 | 2 271 | 2 258 | |||
| Equity, IFRS | 34 597 | 39 372 | 43 341 | 7 407 | 3 224 | 6 864 | |||
The following table summarizes the impact of the adoption of the IFRS to the profit of Next Games for the periods presented below:
| EUR thousand | Note | Jan 1 – Jun 30, 2018 | Jan 1 – Dec 31, 2017 | Jul 1 – Dec 31, 2017 | Jan 1 – Jun 30, 2017 | Jan 1 – Dec 31, 2016 | Jul 1 – Dec 31, 2016 | Jan 1 – Jun 30, 2016 | ||
| Profit for the period, FAS | -8 721 | -6 360 | -6 215 | -145 | 778 | 4 441 | -3 663 | |||
| IFRS adjustments | ||||||||||
| Depreciation method | 9. | -1 | -15 | -7 | -7 | -9 | -4 | -4 | ||
| Licence acquisitions | 5. | -60 | -121 | -60 | -60 | -121 | -60 | -60 | ||
| Tekes loans | 9. | -11 | -16 | -16 | 27 | 35 | -7 | |||
| Business combinations and goodwill | 3. | 134 | 384 | 222 | 162 | 277 | 139 | 139 | ||
| IPO transaction costs | 6. | 361 | 228 | 421 | -192 | -157 | -157 | |||
| Leasehold improvements | 9. | 14 | 28 | -14 | -14 | -2 | -12 | |||
| Leases | 7. | -2 | 116 | 171 | -54 | -114 | -56 | -58 | ||
| GaaS platform | 2. | 559 | 517 | 331 | 186 | 137 | 137 | |||
| Armada investment | 8. | 895 | -455 | -290 | -165 | -244 | -244 | |||
| Bad debt provision | 9. | 4 | 4 | -11 | -11 | |||||
| Development expenses | 1. | 2024 | 1378 | 1378 | ||||||
| Share-based payments | 4. | -725 | -1813 | -907 | -907 | -454 | -227 | -227 | ||
| Adjustments total | 3173 | 223 | 1290 | -1068 | -683 | -453 | -231 | |||
| Profit of the year, IFRS | -5547 | -6137 | -4924 | -1212 | 94 | 3988 | -3894 | |||
NOTES
SUMMARY OF EFFECTS OF IFRS TRANSITION ON EQUITY AND PROFIT
- Capitalization of game development expenses
Under FAS, Next Games has expensed all development costs as they have incurred. Under IFRS, it is mandatory to capitalize development costs once certain criteria in IAS 38 Intangible assets have been met. Therefore, Next Games has analyzed its game development projects and identified two projects, where the capitalization criteria were met during the financial years 2017 and 2018. As a result, the following adjustments were made:
- In the financial period, 2017 the expenses of R&D function were decreased by EUR 1.723 thousand and change in deferred taxes (expense) was increased by EUR 345 thousand.
- As at 31 December 2017, intangible assets were increased by EUR 1.723 thousand, retained earnings were increased by EUR 1.378 thousand and deferred tax liabilities were increased by EUR 345 thousand.
- In the financial period January 1, 2018 - June 30, 2018 the expenses of R&D function were decreased by EUR 2.530 thousand and change of deferred taxes (expense) was increased by EUR 506 thousand.
- As at 30 June 2018, intangible assets were increased by EUR 4.252 thousand, retained earnings were increased by EUR 3.402 thousand and deferred tax liabilities were increased by EUR 850 thousand.
As the development projects were not yet completed and the two games were not yet launched as at 30 June 2018, no amortization of the capitalized development costs was recognized.
- Game as a Service platform capitalization
Under FAS, Next Games has expensed all costs related to the development of the Game as a Service platform (‘GaaS platform’). Under IFRS, management has concluded that the IAS 38 criteria for capitalization of GaaS platform development costs were met during the financial year 2016, as the GaaS platform is controlled by Next Games, future economic benefits are expected in a form of cost savings and increased revenue from new games, and the cost can be measured reliably. As a result, the following adjustments were made:
- In the financial year, 2016, expenses of R&D function were decreased by EUR 171 thousand and change in deferred taxes (expense) was increased by EUR 34 thousand.
- As at 31 December 2016, intangible assets were increased by EUR 171 thousand, retained earnings (profit for the period) were increased by EUR 137 thousand and deferred tax liabilities were increased by EUR 34 thousand.
- In the financial year, 2017, expenses of R&D function were decreased by EUR 646 thousand and change in deferred taxes (expense) was increased by EUR 129 thousand.
- As at 31 December 2017, intangible assets were increased by EUR 817 thousand, retained earnings were increased by EUR 654 thousand and deferred tax liabilities were increased by EUR 163 thousand.
- In the financial period January 1, 2018 - June 30, 2018, expenses of R&D function were decreased by EUR 699 thousand and change in deferred taxes (expense) was increased by EUR 140 thousand.
- As at 30 June 2018, intangible assets were increased by EUR 1.516 thousand, retained earnings were increased by EUR 1.213 thousand and deferred tax liabilities were increased by EUR 303 thousand.
As the GaaS platform was still under development and not in use as at 30 June 2018, no amortization of the capitalized GaaS platform development costs were recognized.
- Business combinations and reversal of goodwill amortizations
Under IFRS, Next Games has elected to apply IFRS 3 Business combinations to a past business combination. Accordingly, the accounting of the acquisition of Helsinki Game Works Oy in October 2014 has been prepared in accordance with IFRS 3. Next Games did not have any other business combinations before the transition to IFRS as at 1 January 2016. Main adjustments compared to FAS consist of fair valuing Next Games’ shares given as consideration and identifying and fair valuing acquired intellectual property rights, which were not recognized under FAS. Component for post-combination services was separated from the acquisition cost, reflecting the employment obligation of the selling parties. This component is recognized as employee costs as the service is received by Next Games. Transaction costs were expensed instead of including them in the acquisition cost as treated under FAS. In addition, as goodwill is not amortized under IFRS, goodwill amortizations made under FAS were reversed. As a result, the following adjustments were made:
- As at 1 January 2016, goodwill was increased by EUR 1.612 thousand, intangible assets were increased by EUR 307 thousand, invested unrestricted equity reserve was increased by EUR 1.611 thousand, retained earnings were increased by EUR 247 thousand and deferred tax liabilities were increased by EUR 61 thousand.
- In the financial year 2016, expenses of R&D function were decreased by EUR 277 thousand.
- As at 31 December 2016, goodwill was increased by EUR 1.924 thousand, intangible assets were increased by EUR 307 thousand, invested unrestricted equity reserve was increased by EUR 1.611 thousand, retained earnings were increased by EUR 559 thousand and deferred tax liabilities were increased by EUR 61 thousand.
- In the financial period 2017 expenses of R&D function were decreased by EUR 172 thousand.
- As at 31 December 2017, goodwill was increased by EUR 2.124 thousand, intangible assets were increased by EUR 307 thousand, invested unrestricted equity reserve was increased by EUR 1.611 thousand, retained earnings were increased by EUR 759 thousand and deferred tax liabilities were increased by EUR 61 thousand.
- As at 30 June, 2018, goodwill was increased by EUR 2.124 thousand, intangible assets were increased by EUR 307 thousand, invested unrestricted equity reserve was increased by EUR 1.611 thousand, retained earnings were increased by EUR 759 thousand and deferred tax liabilities were increased by EUR 61 thousand.
Next Games acquired Lume Games Oy in February 2017 and prepared the acquisition accounting in accordance with IFRS 3. Main adjustments compared to FAS consist of fair valuing Next Games’ shares given as consideration, fair valuing acquired technology, separating a component for post-combination services and expensing transaction costs. In addition, as goodwill is not amortized under IFRS, goodwill amortizations made under FAS were reversed. As a result, the following adjustments were made:
- In the financial year 2017, expenses of R&D function were decreased by EUR 291 thousand, expenses of admin function were increased by EUR 61 thousand and change in deferred taxes (expense) was increased by EUR 18 thousand.
- As at 31 December 2017, goodwill was increased by EUR 206 thousand, intangible assets were increased by EUR 92 thousand, invested unrestricted equity reserve was increased by EUR 41 thousand, retained earnings were increased by EUR 239 thousand and deferred tax liabilities were increased by EUR 18 thousand.
- In the financial period January 1, 2018 - June 30, 2018, expenses of R&D function were decreased by EUR 143 thousand and change in deferred taxes (expense) was increased by EUR 9 thousand.
- As at 30 June 2018, goodwill was increased by EUR 319 thousand, intangible assets were increased by EUR 138 thousand, invested unrestricted equity reserve was increased by EUR 41 thousand, retained earnings were increased by EUR 389 thousand and deferred tax liabilities were increased by EUR 28 thousand.
- Share-based payments
Next Games has established several share option plans which give the employees the right to subscribe Next Games’ shares.
Under FAS, Next Games has not recognized employee benefit expenses from the plans. Under IFRS, the plans are classified as equity-settled share-based payment plans. The fair value of the employee services received in exchange for the grant of the options is recognized as an expense over the vesting period. As a result, the following adjustments were made:
- In the financial year 2016, expenses of R&D function were increased by EUR 175 thousand, expenses of sales and marketing function were increased by EUR 42 thousand , expenses of admin function were increased by 237 and retained earnings were credited with same total amount EUR 454 thousand. Therefore, the balance sheet as at 31 December 2016 was not affected.
- In the financial year 2017, expenses of R&D function were increased by EUR 698 thousand, expenses of sales and marketing function were increased by EUR 169 thousand, expenses of admin function were increased by EUR 946 and retained earnings were credited with same total amount EUR 1.813 thousand. Therefore, the balance sheet as at 31 December 2017 was not affected.
- In the financial period January 1, 2018 - June 30, 2018, expenses of R&D function were increased by EUR 280 thousand, expenses of sales and marketing function were increased by EUR 68 thousand , expenses of admin function were increased by 378 and retained earnings were credited with same total amount EUR 725 thousand. Therefore, the balance sheet as at 30 June 2018 was not affected.
- License acquisitions
Next Games has acquired two licenses from AMC Networks Ventures LLC (‘AMC’): first one in 2014 related to The Walking Dead: No Man’s Land (‘NML license’) and the second one in 2017 related to The Walking Dead: Our World (‘OW license’). As a consideration, Next Games issued its shares to AMC. Under FAS, the NML license was not recognized to the balance sheet but the OW license was recognized as an intangible asset and as an increase in equity.
Under IFRS, management has concluded that both licenses meet the IAS 38 criteria for an intangible asset. Furthermore, as Next Games received a license from AMC and AMC received shares of Next Games in return, the arrangement is considered as an equity-settled share-based payment transaction in the scope of IFRS 2 Share-based payment. As the arrangement does not include any specific vesting conditions, the shares are considered to be vested once AMC has provided the rights to the licenses to Next Games, i.e. the shares vest immediately at the date of the acquisition. As the fair value of the acquired unique licenses cannot be estimated reliably, Next Games shall measure their value indirectly, by reference to the fair value of the equity instruments granted. As a result, the following adjustments were made:
- As at 1 January 2016, intangible assets were increased by EUR 332 thousand, invested unrestricted equity reserve was increased by EUR 362 thousand and retained earnings were decreased by EUR 30 thousand.
- In the financial year 2016, cost of revenue was increased by EUR 121 thousand.
- As at 31 December 2016, intangible assets were increased by EUR 211 thousand, invested unrestricted equity reserve was increased by EUR 362 thousand and retained earnings were decreased by EUR 151 thousand.
- In the financial year, 2017, cost of revenue was increased by EUR 121 thousand.
- As at 31 December 2017, intangible assets were increased by EUR 299 thousand, invested unrestricted equity reserve was increased by EUR 571 thousand and retained earnings were decreased by EUR 272 thousand.
- In the financial period 1 January, 2018 - 30 June, 2018, cost of revenue was increased by EUR 61 thousand.
- As at 30 June 2018, intangible assets were increased by EUR 239 thousand, invested unrestricted equity reserve was increased by EUR 571 thousand and retained earnings were decreased by EUR 332 thousand
- Transaction costs related to the listing of Next Games’ shares
Next Games completed a listing of its shares on the First North Finland marketplace of Nasdaq Helsinki Ltd in March 2017. Under FAS, majority of incurred transaction costs were capitalized as prepayments and accrued income or intangible assets and amortized over three years. Other transaction costs were expensed as incurred. Under IFRS, transaction costs directly attributable to the issue of new equity instruments are not capitalized but rather deducted from equity as incurred. Other transaction costs directly attributable to the listing shall be allocated to the issue of new shares which are consequently deducted from equity and to the sale of old shares which are expensed as incurred. Next Games has made the allocation of such transaction costs based on the actual relative amounts of new and old shares. Other transaction cost not directly attributable to the listing were expensed as incurred. In addition, with respect to transaction costs eligible to be deducted from equity and incurred before 31 December 2016, management has chosen to deduct such costs from equity already as at 31 December 2016. As a result, the following adjustments were made:
- In the financial year 2016, expenses of admin function were increased by EUR 197 thousand and change in deferred taxes (income) was increased by EUR 39 thousand.
- As at 31 December 2016, prepayments and accrued income was decreased by EUR 254 thousand, deferred tax assets were increased by EUR 51 thousand, invested unrestricted equity reserve was decreased by EUR 46 thousand and retained earnings (profit for the period) were decreased by EUR 157 thousand.
- In the financial year 2017, expenses of admin function were decreased by EUR 284 thousand and change in deferred taxes (expense) was increased by EUR 56 thousand.
- As at 31 December 2017, intangible assets were decreased by EUR 1.954 thousand, deferred tax assets were increased by EUR 392 thousand, invested unrestricted equity reserve was decreased by EUR 1.633 thousand and retained earnings were increased by EUR 71 thousand.
- In the financial period January 1, 2018- June 30, 2018, expenses of admin function were decreased by EUR 451 thousand and change in deferred taxes (expense) was decreased by EUR 90 thousand.
- As at 30 June 2018, intangible assets were decreased by EUR 1.503 thousand, deferred tax assets were increased by EUR 302 thousand, invested unrestricted equity reserve was decreased by EUR 1.633 thousand and retained earnings were increased by EUR 432 thousand.
- Leases
Next Games has adopted IFRS 16 Leases retrospectively from 1 January 2016, however certain specific transition provisions as permitted under the IFRS 1 have been applied as described below.
On adoption of IFRS 16, Next Games recognized lease liabilities in relation to leases which had previously been classified as of balance sheet operating leases under FAS. Next Games has applied the exemptions of IFRS 1.D9B(a-b) and, therefore, the initial recognition is done by measuring the lease liability at the present value of the remaining lease payments at the date of transition to IFRS using the incremental borrowing rate at the date of transition as a discount rate. Right-of-use asset is measured as an amount which is equal with the lease liability. Next Games has also decided to apply recognition exemptions for short-term leases and leases of low-value assets, i.e. payments are recognized on a straight-line basis as an expense in the income statement. Short-term leases are leases with a lease term of 12 months or less and this exemption is used with property leases which contain the interim head office. Low-value assets contain certain IT-equipment.
Next Games has applied the exemption of IFRS 1.D9D(e) and used hindsight when determining the lease terms of certain property leases, which included extension or termination options. Therefore, the lease term of previous head quarter was not revised during the financial year 2017 when the lease was terminated. The termination penalties of the previous head quarter amounting to EUR 210 thousand has been included in the initial recognition of the lease liability and the right-of-use asset.
After the recognition exemptions, under IFRS Next Games has recognized lease liability and right-of-use asset from the lease contract of previous head quarter. As a result, the following adjustments were made:
- As at 1 January 2016, non-current lease liabilities were increased by EUR 537 thousand and current lease liabilities were increased by EUR 251 thousand. The right-of-use assets under buildings and structures were increased by EUR 788 thousand.
- In the financial year 2016, expenses of R&D function were increased by EUR 95 thousand, expenses of sales and marketing function increased by 17 thousand and expenses of admin function increased by 8 thousand. Financial expenses were increased by EUR 23 thousand and change in deferred taxes (income) was increased by EUR 29 thousand.
- As at 31 December 2016, non-current lease liabilities were increased by EUR 224 thousand and current lease liabilities were increased by EUR 313 thousand. The right-of-use assets under buildings and structures were increased by EUR 394 thousand. Deferred tax assets were increased by EUR 29 thousand and retained earnings (profit for the period) were decreased by EUR 114 thousand.
- In the financial year 2017, expenses of R&D function were decreased by EUR 107 thousand, expenses of sales and marketing function increased by EUR 35 thousand and expenses of admin function increased by EUR 18 thousand. Financial expenses were increased by EUR 14 thousand and change in deferred taxes (expense) was increased by EUR 29 thousand.
- As at 31 December 2017, current lease liabilities were increased by EUR 224 thousand. Accruals and deferred income were decreased by EUR 227 thousand. Deferred tax assets were increased by EUR 45 thousand, deferred tax liabilities were increased by EUR 45 thousand and retained earnings were decreased by EUR 2 thousand.
- In the financial year January 1, 2018 - June 30, 2018, Financial expenses were increased by EUR 3 thousand and change in deferred taxes (income) was increased by EUR 1 thousand.
- No adjustments for balance sheet June 30, 2018
- Armada investment
In the financial year 2015, Next Games made an investment in Armada Interactive Oy (‘Armada’), a Finnish mobile gaming company. The amount of this initial investment was immaterial. In December 2016, Next Games made an additional investment in Armada by assigning the intellectual property rights received in connection with the acquisition of Helsinki Game Works Oy in October 2014 to Armada. Under FAS, it was considered that part of the goodwill generated from the acquisition of Helsinki Game Works Oy was disposed of when the intellectual property rights were assigned to Armada and the additional investment to Armada was made. However, under IFRS, as the accounting of the acquisition of Helsinki Game Works Oy was made in accordance with IFRS 3 and the acquired intellectual property rights were fair valued, no goodwill was considered to be disposed when the intellectual property rights were assigned to Armada.
As at 31 December 2017 Next Games held approximately 9.5 % of the shares and voting rights of Armada. Under FAS, the shareholding in Armada is accounted for as an investment measured at cost.
However, under IFRS, management has concluded that despite the ownership interest of less than 20 %, Next Games has significant influence in Armada and, consequently, the investment shall be accounted for as an associate in accordance with IAS 28 Investments in associates and joint ventures. Next Games has a right to appoint one of the board members of Armada and there are material transactions between Next Games and Armada as Armada is developing a game which is primarily based on the intellectual property rights received from Next Games. As a result, the following adjustments were made:
- In the financial year 2016, other operating income was decreased by EUR 196 thousand and share of associates result was decreased by EUR 110 thousand. Change in deferred tax increase (income) EUR 61 thousand.
- As at 31 December 2016, goodwill was increased by EUR 111 thousand, intangible assets were decreased by EUR 307 thousand, investments were decreased by EUR 1.074 thousand, investments in associates were increased by EUR 964 thousand, retained earnings (profit for the period) were decreased by EUR 244 thousand and deferred tax liabilities were decreased by EUR 61 thousand.
- In the financial year 2017, share of associates result was decreased by EUR 455 thousand.
- As at 31 December 2017, goodwill was increased by EUR 111 thousand, intangible assets were decreased by EUR 307 thousand, investments were decreased by EUR 1.074 thousand, investments in associates were increased by EUR 509 thousand, retained earnings were decreased by EUR 699 thousand and deferred tax liabilities were decreased by EUR 61 thousand.
- In the financial period January 1, 2018 - June 30, 2018, share of associates result was decreased by EUR 116 thousand and amortization expenses of non-current investments were decreased by EUR 1.011 thousand euros
- As at 30 June 2018, goodwill was increased by EUR 111 thousand, intangible assets were decreased by EUR 307 thousand, investments were decreased by EUR 63 thousand, investments in associates were increased by EUR 393 thousand, retained earnings were increased by EUR 196 thousand and deferred tax liabilities were decreased by EUR 61 thousand.
- Other adjustments
Change in depreciation method:
Under IFRS, Next Games has depreciated machinery and equipment over its useful life and accordingly adjusted the depreciation based on the reducing-balance method that was applied under FAS. The change in the depreciation policy decreased the accumulated depreciation of machinery and equipment in the opening IFRS balance sheet and thereby increased the carrying amount of machinery and equipment by EUR 50 thousand. The corresponding amount, net of deferred liability of EUR 10 thousand, was debited to retained earnings. As a result of the change, expenses of R&D function increased EUR 9 thousand in 2016, sales and marketing function expenses increased EUR 2 thousand and admin functions’ expenses increased EUR 1 thousand. Change of deferred taxes (income) increased EUR 2 thousand. As a result of the change, expenses of R&D function increased EUR 12 thousand in 2017, sales and marketing function expenses increased EUR 4 thousand and admin functions’ expenses increased EUR 2 thousand. Change of deferred taxes (income) increased EUR 4 thousand. As a result of the change, expenses of R&D function increased EUR 0 thousand in January - June 2018, sales and marketing function expenses increased EUR 0 thousand and admin functions’ expenses increased EUR 0 thousand. Change of deferred taxes (income) increased EUR 0 thousand.
Leasehold improvements:
Under FAS, leasehold improvements have been classified as intangible assets. Under IFRS, leasehold improvements are classified as tangible assets, in accordance with their nature.
Next Games has incurred leasehold improvement costs during the financial year 2016 related to their old head quarter premises, which lease contract was terminated effective from 31 December 2017. As a result, EUR 103 thousand was reclassified from intangible assets to tangible assets as at 31 December 2016. Due to a reassessment of the depreciation period, R&D functions’ expenses were increased by EUR 14 thousand in the financial year 2016 and decreased by EUR 12 thousand in the financial year 2017. Sales and marketing functions’ expenses increased EUR 2 thousand in 2016 and decreased EUR 4 thousand in 2017. Admin functions’ expenses increased EUR 1 thousand in 2016 and decreased EUR 2 thousand in 2017. Deferred tax asset of EUR 4 thousand was recognized as at 31 December 2016 and subsequently derecognized in the financial year 2017.
In addition, Next Games has incurred leasehold improvement costs during the financial year 2017 related to their new head quarter premises, which were taken into use during the summer 2018. As a result, EUR 118 thousand was reclassified from intangible assets to tangible assets as at 31 December 2017 and EUR 1.413 thousand as at June 2018. As the premises were not yet in use, no depreciation was recognized.
Governmental loans:
Next Games has two outstanding loans from governmental agency Tekes. First loan was granted in 2014 and the total nominal amount of the loan is EUR 336 thousand. According to the original loan agreement the loan will be repaid annually in four instalments starting from March 2018. Hence, company made amendment to the agreement and repayments starts in March 2019. Last payment will be performed in March 2021. According to the loan agreement the interest rate of the loan is three percent points below the base interest, however, at least 1% per annum.
Second loan with total nominal amount of EUR 439 thousand was granted in two instalments, first EUR 90 thousand in September 2015 and second EUR 349 thousand in September 2016. According to the loan agreement the loan will be repaid annually in four instalments starting from September 2019. Last payment will be performed in September 2022. According to the loan agreement the interest rate of the loan is three percent points below the base interest, however, at least 1% per annum.
Due to low market interest rates during recent years, the actual interest rates of the loans have been 1% per annum. Therefore, there is a favorable interest rate element in the loans which has to be separately accounted for under IFRS. Next Games uses amortized cost method to calculate the valuation of the loan, which causes differences with nominal amount method, which is used in FAS.
The projects that governmental loans are directed to, had occurred in 2014 and 2016. Therefore the governmental grants have been recognized as other operating income in 2016 and retained earnings to opening balance sheet.
- As at 1 January 2016, IFRS loan balance was EUR 380 thousand (FAS: EUR 426 thousand). Other receivables were decreased by EUR 12 thousand. Retained earnings were increased by EUR 27 thousand. Deferred tax liabilities were increased by EUR 7 thousand.
- In the financial year 2016, other operating income was increased by EUR 49 thousand. Interest expenses were increased by EUR -15 thousand. Change in deferred taxes were EUR -7 thousand.
- As at 31 December 2016, IFRS loan balance was EUR 707 thousand (FAS: EUR 775 thousand). Retained earnings were increased by EUR 27 thousand. Deferred tax liabilities were increased by EUR 14 thousand.
- In the financial year 2017, IFRS interest expenses were increased by EUR -20 thousand comparing FAS. Change in deferred taxes was EUR 4 thousand.
- As at 31 December 2017, IFRS loan balance was EUR 726 thousand (FAS: EUR 775 thousand). Retained earnings were increased by EUR 55 thousand. Deferred tax liability was increased by EUR 10 thousand.
- In the financial period January 1 - June 30, 2018, IFRS interest expenses were increased by EUR 14 thousand and change in deferred taxes (income) EUR 3 thousand.
- As at 30 June 2018, IFRS loan balance was EUR 740 (FAS: EUR 775 thousand). Retained earnings were increased by EUR 28 thousand. Deferred tax liability was EUR 7 thousand.
Bad debt provision:
Under FAS, Next Games has not recorded any bad debt provisions in the financial statements. Under IFRS, Next Games adopts IFRS 9 standard, which requires the Company to continuously assess its financial assets. Next Games has assessed its accounts receivables and recorded a bad debt provision of EUR -14 thousand in 2016 financial statements. For 2017, Next Games recorded a bad debt provision of EUR -9 thousand.
Additional information:
Saara Bergström
CMO
investors@nextgames.com
+358 (0)50 483 3896
Certified Adviser: Danske Bank A/S, Finland branch, tel. +358 10 546 7938
About Next Games
Next Games (Helsinki Nasdaq First North: NXTGMS) is the first publicly listed mobile game developer and publisher in Finland, specializing in games based on entertainment franchises, such as movies, TV series or books. The developers of the critically acclaimed The Walking Dead games redefines the way franchise entertainment transforms into highly engaging service-based mobile games. In summer 2018, Next Games launched The Walking Dead: Our World, which utilizes cutting edge AR technology and is powered by Google Maps. Currently Next Games is working on multiple new games based on popular entertainment franchises including, Blade Runner Nexus, for the popular Blade Runner franchise. For more information head to www.nextgames.com