TIDMGMR

RNS Number : 4817L

Gaming Realms PLC

13 September 2021

Gaming Realms plc

(the "Company" or the "Group")

Interim Results

Revenue growth of 50% generates adjusted EBITDA [1] of GBP3.1m [2] , up 144%

Continued U.S. expansion post period end with content launched in Pennsylvania

Gaming Realms plc (AIM: GMR), the developer and licensor of mobile focused gaming content, is pleased to announce its interim results for the six months to 30 June 2021 (the "Period" or "H1'21").

Financial highlights:

 
                                        H1 2021   H1 2020    Change 
                                           GBPm      GBPm         % 
-------------------------------------  --------  --------  -------- 
 Revenue (Licensing)                        5.8       3.4      +73% 
 Revenue (Social)                           1.9       1.8       +7% 
                                       --------  --------  -------- 
 Total revenue                              7.7       5.2      +50% 
                                       --------  --------  -------- 
 Adjusted EBITDA before share option 
  and related charges                       3.1      1.28     +144% 
 Adjusted EBITDA                            2.7       1.2     +116% 
 Profit / (loss) before tax                 0.8     (0.7) 
 Cash or cash equivalents                  3.92      0.85   +363.3% 
 

-- Total revenue grew 50% from GBP5.2m in H1'20 to GBP7.7m in H1'21. The Group's revenues generate high margins, and in combination with a stable fixed cost base, resulted in adjusted EBITDA growing from GBP1.28m to GBP3.1m, a rise of 144% over the previous Period.

   --      Licensing revenue grew 73% to GBP5.8m (H1'20: GBP3.4m) 

o This included content licensing revenue growing 39% to GBP4.1m (H1'20: GBP2.9m) due to an increase in distribution from an expanded games portfolio

o Brand licensing reflected a significant deal which positively impacted revenues, resulting in a 298% increase to GBP1.7m (H1'20: GBP0.4m)

-- Social revenue increased 7% to GBP1.9m (H1'20: GBP1.8m) from an increase in new Slingo content, as well as improved player management and new player engagement features.

-- Cash or cash equivalents grew from GBP0.85m to GBP3.92m due to strong cash conversion of operating profits.

Operational highlights:

-- Granted provisional iGaming supplier license in Michigan where we went live with BetMGM with a direct- integration agreement.

   --      Granted Interactive Gaming Manufacture Licence in Pennsylvania. 
   --      Launched Slingo content in the Italian regulated market with Goldbet and Sisal. 
   --      Signed several distribution deals including with GAN. 
   --      Signed content licensing agreement with IGT. 

-- Released four new games into the market, including Slingo Starburst and Slingo Lobstermania. The Group now has 48 games in its portfolio (Dec'20: 44 games, Jun'20: 40 games).

Post period-end:

-- Licensing revenue increased 28% in the two months post period-end compared to the same period in 2020 (with the significant deal reflected in the first half numbers not repeating in the second half) .

   --      Launched in Pennsylvania with BetMGM and Rush Street Interactive. 
   --      Launched further operators in Michigan with Draftkings and Rush Street Interactive. 
   --      Released two new Slingo games: Slingo Big Wheel and Redhot Slingo. 

Outlook for FY21:

Gaming Realms made exceptional progress during the first half of the year in developing and licensing games to market-leading brands and operators globally, expanding its footprint and delivering high margin revenues.

Momentum is set to continue into the second half of the financial year, with revenues from the Group's content launches in Michigan and Pennsylvania (in June and September, respectively) expected to grow substantially in H2'21. Despite being live with just three operators to date in Michigan, early appetite for Gaming Realms' full Slingo portfolio has been promising, and the Group will be launching imminently with additional operators across all its U.S. territories to fulfil strong market demand.

Whilst the European market continues to grow and be the largest contributor to Group results, we are excited about the growth prospects of the nascent U.S. market. The Company has direct integrations and multi-State deals with the majority of the U.S. iGaming market. These include multi-State deals with BetMGM, Draftkings, Fanduel, Rush Street Interactive, Golden Nugget, Poker Stars, Barstool/PNG, Kindred, Wynn Interactive, Twinspires, Parx, Tropicana/Gamesys and Caesars Entertainment. The Company also has direct integrations with BetMGM, Draftkings, Rush Street Interactive, Fanduel, Golden Nugget, Gamesys, Twinspires, Wynn Interactive and 888, with more in the pipeline.

Following the Group's successful launch in the Italian regulated market earlier this year, Gaming Realms has evaluated further European expansion opportunities and is preparing for launches in additional regulated markets in the second half of the year.

With a strong game development pipeline, a clear strategy to continue expanding its distribution internationally and with demand from the Group's customers expected to continue, the Board expects trading for FY21 to be in line with market expectations and remains confident in the strategic outlook for the business.

Commenting on the first half performance, Michael Buckley, Executive Chairman, said:

"The Group has delivered an excellent first half both in terms of significant earnings growth and new licensing and distribution agreements. Having recently launched in Michigan and Pennsylvania, the Group is now working to capitalise on the significant opportunities in these markets. We are also looking to strengthen our position in Europe through launches in other regulated markets following the encouraging response we have seen from players in Italy for our Slingo content.

"Looking further ahead, we are about to start the process for obtaining a license in Ontario, Canada. Ontario has announced its intention to regulate iGaming and has the potential to be a bigger market for Gaming Realms than any one of the U.S. states that have regulated so far. In addition, we will also pursue further licensing opportunities within the U.S. as new States announce their intention to regulate iGaming.

"This is an exciting time for the Company and we intend to continue to deliver further value by scaling our platform and bringing innovative content to new audiences worldwide. With more material impact expected from Michigan and Pennsylvania in the second half of this year, the Board is confident in the future performance of the business."

An analyst briefing will be held virtually at 9:30am today. To attend, please email gamingrealms@yellowjerseypr.com .

[1] EBITDA is profit before interest, tax, depreciation, amortisation and impairment expenses and is a non-GAAP measure. Adjusted EBITDA is EBITDA excluding non-recurring material items which are outside the normal scope of the Group's ordinary activities. The Group uses EBITDA and Adjusted EBITDA to comment on its financial performance. Adjusting items include costs arising from a fundamental restructuring of the Group's operations and redundancy costs. See Note 4 for further details.

[2] Adjusted EBITDA before share option and related charges.

Enquiries

 
 Gaming Realms plc                     0845 123 3773 
 Michael Buckley, Executive 
  Chairman 
  Mark Segal, CFO 
 
   Peel Hunt LLP - NOMAD and broker      020 7418 8900 
 George Sellar 
  Andrew Clark 
  Will Bell 
 
   Yellow Jersey                         07747 788 221 
 Charles Goodwin 
  Annabel Atkins 
  Annabelle Wills 
 

Business review

Overall Group revenues increased 50% from the previous Period, while total expenses (excluding share option and related charges) increased 19%. As a result, the Group delivered adjusted EBITDA for the Period of GBP2.7m (H1'20: GBP1.2m), while also reporting a pre-tax profit of GBP0.8m compared with a pre-tax loss of GBP0.7m for the comparative Period.

The high revenue growth from the previous Period was driven by the 73% growth in licensing revenues, supplemented by the continued modest growth in social publishing revenues.

Licensing

The licensing business continued to deliver strong growth, with revenue for the Period increasing 73% to GBP5.8m (H1'20: GBP3.4m). The 26 partners that went live through 2020 and further 11 partners going live in H1'21 helped drive this revenue growth, along with the release of four new Slingo games (H1'20: four games) to the market.

The overall GBP2.4m increase in licensing revenues was achieved through a mixture of a GBP0.5m organic increase in content license revenues from existing partners, a GBP0.6m increase in content license revenues from partners that went live after 30 June 2020 and a GBP1.3m increase in brand license revenue compared to the previous Period.

Social

The Group's social publishing business continued to deliver strong results in the Period, with revenue increasing 7% to GBP1.9m (H1'20: GBP1.8m).

Marketing costs of GBP0.2m (H1'20: GBP0.03m) were incurred in order to drive player activity and revenues.

Cash

The Company's cash position at 30 June 2021 was GBP3.9m, increasing GBP1.8m from the GBP2.1m reported at 31 December 2020.

The increase in cash during the period was largely driven through the GBP2.3m cash inflow from operating activities and GBP1.0m of deferred consideration received, offset by the GBP1.6m of development costs capitalised in the Period.

During the period, on 1 April 2021 the Group received GBP1.0m from River Tech plc for full and final settlement of deferred consideration receivable, certain other receivable balances and various legal proceedings and out of court disputes between the parties.

The Company has a convertible loan of GBP3.5m owed to Gamesys Group plc (see Note 14), due for repayment on 31 December 2022.

Consolidated statement of comprehensive income

for the 6 months ended 30 June 2021

 
                                                                                  6M                               6M 
                                                                        30 June 2021                     30 June 2020 
                                                                           Unaudited                        Unaudited 
                                             Note                                GBP                              GBP 
------------------------------------------  -----  ---------------------------------  ------------------------------- 
  Revenue                                     2                            7,745,982                        5,180,058 
  Marketing expenses                                                       (207,428)                        (101,408) 
  Operating expenses                                                     (1,185,859)                      (1,043,235) 
  Administrative expenses                                                (3,256,425)                      (3,007,154) 
  Share option and related charges            13                           (442,571)                         (40,075) 
 
  Adjusted EBITDA                             2                            2,678,699                        1,239,067 
  Restructuring expenses                      4                             (25,000)                        (250,881) 
  EBITDA                                      2                            2,653,699                          988,186 
                                            -----  --------------------------------- 
 
  Amortisation of intangible assets           7                          (1,461,832)                      (1,393,651) 
  Depreciation of property, plant 
   and equipment                              6                             (97,282)                        (108,464) 
  Finance expense                             3                            (302,221)                        (287,335) 
  Finance income                              3                               11,564                          108,686 
------------------------------------------  -----  ---------------------------------  ------------------------------- 
  Profit / (loss) before tax                                                 803,928                        (692,578) 
  Tax credit                                                                  38,347                           62,881 
------------------------------------------  -----  ---------------------------------  ------------------------------- 
  Profit / (loss) for the period                                             842,275                        (629,697) 
------------------------------------------  -----  ---------------------------------  ------------------------------- 
  Other comprehensive income 
  Items that will or may be reclassified 
   to profit or loss: 
  Exchange (loss) / gain arising 
   on translation of foreign operations                                     (84,998)                          489,466 
------------------------------------------  -----  ---------------------------------  ------------------------------- 
  Total other comprehensive income                                          (84,998)                          489,466 
------------------------------------------  -----  ---------------------------------  ------------------------------- 
  Total comprehensive income                                                 757,277                        (140,231) 
------------------------------------------  -----  ---------------------------------  ------------------------------- 
  Profit / (loss) attributable to: 
  Owners of the parent                                                       843,833                        (627,692) 
  Non-controlling interest                                                   (1,558)                          (2,005) 
                                                   ---------------------------------  ------------------------------- 
                                                                             842,275                        (629,697) 
------------------------------------------  -----  ---------------------------------  ------------------------------- 
  Total comprehensive income attributable 
   to: 
  Owners of the parent                                                       758,835                        (138,226) 
  Non-controlling interest                                                   (1,558)                          (2,005) 
------------------------------------------  -----  ---------------------------------  ------------------------------- 
                                                                             757,277                        (140,231) 
------------------------------------------  -----  ---------------------------------  ------------------------------- 
 
  Profit / (loss) per share                                                    Pence                            Pence 
  Basic                                       5                                 0.29                           (0.22) 
  Diluted                                     5                                 0.28                           (0.22) 
------------------------------------------  -----  ---------------------------------  ------------------------------- 
 

Consolidated statement of financial position

as at 30 June 2021

 
                                                     30 June    31 December 
                                                        2021           2020 
                                                   Unaudited        Audited 
                                         Note            GBP            GBP 
--------------------------------------  -----  -------------  ------------- 
  Non-current assets 
  Intangible assets                       7       11,495,250     11,137,123 
  Other investments                       8                -        401,291 
  Property, plant and equipment           6          583,722        560,793 
  Other assets                                       150,387        150,528 
--------------------------------------  -----  -------------  ------------- 
                                                  12,229,359     12,249,735 
--------------------------------------  -----  -------------  ------------- 
  Current assets 
  Trade and other receivables             9        3,015,377      2,343,739 
  Deferred consideration                                   -        972,554 
  Finance lease asset                                 64,469        140,058 
  Cash and cash equivalents               10       3,923,635      2,105,167 
--------------------------------------  -----  -------------  ------------- 
                                                   7,003,481      5,561,518 
--------------------------------------  -----  -------------  ------------- 
  Total assets                                    19,232,840     17,811,253 
--------------------------------------  -----  -------------  ------------- 
  Current liabilities 
  Trade and other payables                11       2,159,335      1,943,714 
  Lease liabilities                                  257,979        343,859 
--------------------------------------  -----  -------------  ------------- 
                                                   2,417,314      2,287,573 
--------------------------------------  -----  -------------  ------------- 
  Non-current liabilities 
  Deferred tax liability                             256,287        320,913 
  Other Creditors                         14       3,406,970      3,304,870 
  Derivative liabilities                  14         627,000        627,000 
  Lease liabilities                                  247,190        340,175 
--------------------------------------  -----  -------------  ------------- 
                                                   4,537,447      4,592,958 
--------------------------------------  -----  -------------  ------------- 
  Total liabilities                                6,954,761      6,880,531 
--------------------------------------  -----  -------------  ------------- 
  Net assets                                      12,278,079     10,930,722 
--------------------------------------  -----  -------------  ------------- 
  Equity 
  Share capital                           12      28,870,262     28,664,731 
  Share premium                                   87,370,856     87,258,166 
  Merger reserve                                (67,673,657)   (67,673,657) 
  Foreign exchange reserve                         1,294,118      1,379,116 
  Retained earnings                             (37,652,565)   (38,768,257) 
--------------------------------------  -----  -------------  ------------- 
  Total equity attributable to owners 
   of the parent                                  12,209,014     10,860,099 
--------------------------------------  -----  -------------  ------------- 
  Non-controlling interest                            69,065         70,623 
--------------------------------------  -----  -------------  ------------- 
  Total equity                                    12,278,079     10,930,722 
--------------------------------------  -----  -------------  ------------- 
 

Consolidated statement of cash flows

for the 6 months ended 30 June 2021

 
                                                                30 June       30 June 
                                                                   2021          2020 
                                                              Unaudited     Unaudited 
                                                     Note           GBP           GBP 
-------------------------------------------------  ------  ------------  ------------ 
  Cash flows from operating activities 
  Profit / (loss) for the period                                842,275     (629,697) 
  Adjustments for: 
  Depreciation of property, plant and equipment       6          97,282       108,464 
  Amortisation of intangible fixed assets             7       1,461,832     1,393,651 
  Finance income                                      3        (11,564)     (108,686) 
  Finance expense                                     3         302,221       287,335 
  Loss on disposal of property, plant and 
   equipment                                          6             578             - 
  Income tax credit                                            (38,347)      (62,881) 
  Exchange differences                                           29,803     (127,423) 
  Share option and related charges                   13         442,571        40,075 
  Increase in trade and other receivables                     (877,939)   (1,152,422) 
  Decrease in trade and other payables                           14,909     (293,848) 
  Increase in other assets                                            -         (840) 
-------------------------------------------------  ------  ------------  ------------ 
  Net cash flows from / (used in) operating 
   activities                                                 2,263,621     (546,272) 
-------------------------------------------------  ------  ------------  ------------ 
 
  Investing activities 
  Acquisition of property, plant and equipment        6       (119,847)      (18,891) 
  Acquisition of intangible assets                             (98,473)             - 
  Capitalised development costs                       7     (1,614,370)   (1,099,406) 
  Proceeds from the sale of other investments         8         362,435             - 
  Interest received                                                   -             1 
  Finance lease asset - sublease receipts                        78,840        83,700 
-------------------------------------------------  ------  ------------  ------------ 
  Net cash used in investing activities                     (1,391,415)   (1,034,596) 
-------------------------------------------------  ------  ------------  ------------ 
 
  Financing activities 
  Receipt of deferred consideration                             972,554             - 
  IFRS 16 lease payments                                      (203,878)     (167,193) 
  Issue of share capital on exercise of 
   options                                           12         318,221             - 
  Interest paid                                               (105,218)     (116,669) 
-------------------------------------------------  ------  ------------  ------------ 
  Net cash from / (used in) financing activities                981,679     (283,862) 
-------------------------------------------------  ------  ------------  ------------ 
  Net increase / (decrease) in cash and 
   cash equivalents                                           1,853,885   (1,864,730) 
  Cash and cash equivalents at beginning 
   of period                                                  2,105,167     2,608,455 
  Exchange (loss) / gain on cash and cash 
   equivalents                                                 (35,417)        84,686 
-------------------------------------------------  ------  ------------  ------------ 
  Cash and cash equivalents at end of period                  3,923,635       828,411 
-------------------------------------------------  ------  ------------  ------------ 
 

Consolidated statement of changes in equity

for the 6 months ended 30 June 2021

 
                                                                                            Total 
                                                                                        to equity 
                                                              Foreign                     holders 
                        Share        Share         Merger    Exchange       Retained           of    Non-controlling        Total 
                      capital      premium        reserve     Reserve       earnings      parents           interest       equity 
                          GBP          GBP            GBP         GBP            GBP          GBP                GBP          GBP 
----------------  -----------  -----------  -------------  ----------  -------------  -----------  -----------------  ----------- 
  1 January 2020   28,442,874   87,198,410   (67,673,657)   1,605,782   (37,570,601)   12,002,808             76,716   12,079,524 
----------------  -----------  -----------  -------------  ----------  -------------  -----------  -----------------  ----------- 
  Loss for the 
   period                   -            -              -           -      (627,692)    (627,692)            (2,005)    (629,697) 
  Other 
   comprehensive 
   income                   -            -              -     489,466              -      489,466                  -      489,466 
----------------  -----------  -----------  -------------  ----------  -------------  -----------  -----------------  ----------- 
  Total 
   comprehensive 
   income 
   for the 
   period                   -            -              -     489,466      (627,692)    (138,226)            (2,005)    (140,231) 
----------------  -----------  -----------  -------------  ----------  -------------  -----------  -----------------  ----------- 
  Contributions 
  by and 
  distributions 
  to owners 
  Share-based 
   payment on 
   share 
   options (Note 
   13)                      -            -              -           -         40,075       40,075                  -       40,075 
  30 June 2020 
   (unaudited)     28,442,874   87,198,410   (67,673,657)   2,095,248   (38,158,218)   11,904,657             74,711   11,979,368 
----------------  -----------  -----------  -------------  ----------  -------------  -----------  -----------------  ----------- 
 
 
  1 January 2021   28,664,731   87,258,166   (67,673,657)   1,379,116   (38,768,257)   10,860,099             70,623   10,930,722 
----------------  -----------  -----------  -------------  ----------  -------------  -----------  -----------------  ----------- 
  Profit for the 
   period                   -            -              -           -        843,833      843,833            (1,558)      842,275 
  Other 
   comprehensive 
   income                   -            -              -    (84,998)              -     (84,998)                  -     (84,998) 
----------------  -----------  -----------  -------------  ----------  -------------  -----------  -----------------  ----------- 
  Total 
   comprehensive 
   income 
   for the 
   period                   -            -              -    (84,998)        843,833      758,835            (1,558)      757,277 
----------------  -----------  -----------  -------------  ----------  -------------  -----------  -----------------  ----------- 
  Contributions 
  by and 
  distributions 
  to owners 
  Share-based 
   payment on 
   share 
   options (Note 
   13)                      -            -              -           -        271,859      271,859                  -      271,859 
  Exercise of 
   options (Note 
   12)                205,531      112,690              -           -              -      318,221                  -      318,221 
  30 June 2021 
   (unaudited)     28,870,262   87,370,856   (67,673,657)   1,294,118   (37,652,565)   12,209,014             69,065   12,278,079 
----------------  -----------  -----------  -------------  ----------  -------------  -----------  -----------------  ----------- 
 

Notes forming part of the consolidated financial statements

For the 6 months ended 30 June 2021

1. Accounting policies

General Information

Gaming Realms plc ("the Company") and its subsidiaries (together "the Group").

The Company is admitted to trading on AIM of the London Stock Exchange. It is incorporated and domiciled in the UK. The address of its registered office is Two Valentine Place, London, SE18QH.

The results for the six months ended 30 June 2021 and 30 June 2020 are unaudited.

Basis of preparation

The financial information for the year ended 31 December 2020 included in these financial statements does not constitute the full statutory accounts for that year. The Annual Report and Financial Statements for 2020 have been filed with the Registrar of Companies. The Independent Auditors' Report on the Annual Report and Financial Statement for 2020 was 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.

This interim report, which has neither been audited nor reviewed by independent auditors, was approved by the board of directors on 10 September 2021. The financial information in this interim report has been prepared in accordance with UK adopted international accounting standards. The accounting policies applied by the Group in this financial information are the same as those applied by the Group in its financial statements for the year ended 31 December 2020 and which will form the basis of the 2021 financial statements.

The consolidated financial statements are presented in Sterling.

Going concern

The Group meets its day-to-day working capital requirements from the cash flows generated by its trading activities and its available cash resources.

The Group prepares cash flow forecasts and re-forecasts at least bi-annually as part of the business planning process. A re-forecasting process has been completed for H2 2021 to 2023 in light of the economic uncertainty resulting from the ongoing COVID-19 pandemic. These forecasts have been reviewed by the Directors and show that the Group will continue to have sufficient cash resources available to meet its liabilities as they fall due.

Accordingly, these financial statements have been prepared on the basis of accounting principles applicable to a going concern, which assumes that the Group will realise its assets and discharge its liabilities in the normal course of business.

Adjusted EBITDA

EBITDA is a non-GAAP company specific measure defined as profit or loss before tax adjusted for finance income and expense, depreciation and amortisation.

Adjusted EBITDA excludes non-recurring material items which are outside the normal scope of the Group's ordinary activities. Adjusted EBITDA is considered to be a key performance measure by the Directors as it serves as an indicator of financial performance. The adjusting items are separately disclosed in order to enhance the reader's understanding of the Group's profitability and cash flow generation. Adjusting items include costs arising from a fundamental restructuring of the Group's operations and redundancy costs.

2. Segment information

The Board is the Group's chief operating decision-maker. Management has determined the operating segments based on the information reviewed by the Board for the purposes of allocating resources and assessing performance.

The Group has two reportable segments.

   --      Licensing - B2B brand and content licensing to partners in the US and Europe; and 
   --      Social publishing - provides B2C freemium games to the US and Europe. 

Revenue

The Group has disaggregated revenue into various categories in the following table which is intended to:

-- Depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic date; and

   --   Enable users to understand the relationship with revenue segment information provided below. 
 
                                                Social 
                              Licensing     publishing    Other       Total 
  H1 2021 revenue                   GBP            GBP      GBP         GBP 
--------------------------  -----------  -------------  -------  ---------- 
  Primary geographical 
   markets 
  UK, including Channel 
   Islands                      381,898              -        -     381,898 
  USA                         1,228,086      1,930,171        -   3,158,257 
  Isle of Man                 2,533,481              -        -   2,533,481 
  Rest of the World           1,672,346              -        -   1,672,346 
--------------------------  -----------  -------------  -------  ---------- 
                              5,815,811      1,930,171        -   7,745,982 
--------------------------  -----------  -------------  -------  ---------- 
 
  Contract counterparties 
  Direct to consumers 
   (B2C)                              -      1,930,171        -   1,930,171 
  B2B                         5,815,811              -        -   5,815,811 
--------------------------  -----------  -------------  -------  ---------- 
                              5,815,811      1,930,171        -   7,745,982 
--------------------------  -----------  -------------  -------  ---------- 
 
  Timing of transfer of goods 
   and services 
  Point in time               5,735,657      1,930,171        -   7,665,828 
  Over time                      80,154              -        -      80,154 
--------------------------  -----------  -------------  -------  ---------- 
                              5,815,811      1,930,171        -   7,745,982 
--------------------------  -----------  -------------  -------  ---------- 
 
 
                                                Social 
                              Licensing     publishing    Other       Total 
  H1 2020 revenue                   GBP            GBP      GBP         GBP 
--------------------------  -----------  -------------  -------  ---------- 
  Primary geographical 
   markets 
  UK, including Channel 
   Islands                      226,376              -        -     226,376 
  USA                         1,092,749      1,809,774    2,400   2,904,923 
  Isle of Man                 1,295,490              -        -   1,295,490 
  Rest of the World             753,269              -        -     753,269 
--------------------------  -----------  -------------  -------  ---------- 
                              3,367,884      1,809,774    2,400   5,180,058 
--------------------------  -----------  -------------  -------  ---------- 
 
  Contract counterparties 
  Direct to consumers 
   (B2C)                              -      1,809,774        -   1,809,774 
  B2B                         3,367,884              -    2,400   3,370,284 
--------------------------  -----------  -------------  -------  ---------- 
                              3,367,884      1,809,774    2,400   5,180,058 
--------------------------  -----------  -------------  -------  ---------- 
 
  Timing of transfer of goods 
   and services 
  Point in time               3,207,576      1,809,774    2,400   5,019,750 
  Over time                     160,308              -        -     160,308 
--------------------------  -----------  -------------  -------  ---------- 
                              3,367,884      1,809,774    2,400   5,180,058 
--------------------------  -----------  -------------  -------  ---------- 
 

Adjusted EBITDA

 
                                                                   Social 
                                    Licensing                  publishing                 Head Office                       Total 
 H1 2021                                  GBP                         GBP                         GBP                         GBP 
-----------------  --------------------------  --------------------------  --------------------------  -------------------------- 
  Revenue                           5,815,811                   1,930,171                           -                   7,745,982 
  Marketing 
   expense                           (12,389)                   (157,862)                    (37,177)                   (207,428) 
  Operating 
   expense                          (606,247)                   (579,612)                           -                 (1,185,859) 
  Administrative 
   expense                        (1,741,832)                   (583,265)                   (906,328)                 (3,231,425) 
  Share option 
   and 
   related 
   charges                           (85,401)                     (4,745)                   (352,425)                   (442,571) 
-----------------  --------------------------  --------------------------  --------------------------  -------------------------- 
  Adjusted EBITDA 
   - 
   continuing                       3,369,942                     604,687                 (1,295,930)                   2,678,699 
-----------------  --------------------------  --------------------------  --------------------------  -------------------------- 
  Restructuring 
   expenses                                                                                                              (25,000) 
  EBITDA - 
   continuing                                                                                                           2,653,699 
-----------------  --------------------------  --------------------------  --------------------------  -------------------------- 
 
 
                                                                   Social 
                                    Licensing                  publishing                 Head Office                       Total 
 H1 2020                                  GBP                         GBP                         GBP                         GBP 
-----------------  --------------------------  --------------------------  --------------------------  -------------------------- 
  Revenue                           3,367,884                   1,809,774                       2,400                   5,180,058 
  Marketing 
   expense                            (8,608)                    (34,051)                    (58,749)                   (101,408) 
  Operating 
   expense                          (515,894)                   (529,567)                       2,226                 (1,043,235) 
  Administrative 
   expense                        (1,112,048)                   (413,001)                 (1,231,224)                 (2,756,273) 
  Share option 
   and 
   related 
   charges                                  -                           -                    (40,075)                    (40,075) 
-----------------  --------------------------  --------------------------  --------------------------  -------------------------- 
  Adjusted EBITDA 
   - 
   continuing                       1,731,334                     833,155                 (1,325,422)                   1,239,067 
-----------------  --------------------------  --------------------------  --------------------------  -------------------------- 
  Restructuring 
   expenses                                                                                                             (250,881) 
  EBITDA - 
   continuing                                                                                                             988,186 
-----------------  --------------------------  --------------------------  --------------------------  -------------------------- 
 

3. Finance income and expense

 
                                                                     6M                              6M 
                                                                30 June                         30 June 
                                                                   2021                            2020 
                                                                    GBP                             GBP 
----------------------------------------   ----------------------------  ------------------------------ 
  Finance income 
  Interest received                                               6,306                               1 
  Interest income on finance lease 
   asset                                                          5,258                          11,642 
  Interest income on unwind of deferred 
   consideration receivable                                           -                          97,043 
-----------------------------------------  ----------------------------  ------------------------------ 
  Total finance income                                           11,564                         108,686 
-----------------------------------------  ----------------------------  ------------------------------ 
 
  Finance expense 
  Bank interest paid                                              8,743                           8,722 
  Fair value loss on other investments                           38,856                          26,575 
  Effective interest on other creditor                          228,575                         213,304 
  Interest expense on lease liability                            26,047                          38,734 
-----------------------------------------  ----------------------------  ------------------------------ 
  Total finance expense                                         302,221                         287,335 
-----------------------------------------  ----------------------------  ------------------------------ 
 

4. Adjusted EBITDA

EBITDA and Adjusted EBITDA are non-GAAP measures and exclude exceptional items, depreciation, and amortisation. Exceptional items are those items the Group considers to be non-recurring or material in nature that may distort an understanding of financial performance or impair comparability.

Adjusted EBITDA is stated before exceptional items as follows:

 
                                  6M          6M 
                             30 June     30 June 
                                2021        2020 
                                 GBP         GBP 
-------------------------  ---------  ---------- 
  Restructuring expenses    (25,000)   (250,881) 
-------------------------  ---------  ---------- 
  Adjusting items           (25,000)   (250,881) 
-------------------------  ---------  ---------- 
 

Restructuring expenses

Restructuring costs of GBP25k (H1 2020: GBP251k) were incurred relating to restructuring and redundancy costs.

5 . Earnings per share

Basic earnings per share is calculated by dividing the result attributable to ordinary shareholders by the weighted average number of shares in issue during the period. The calculation of diluted EPS is based on the result attributable to ordinary shareholders and weighted average number of ordinary shares outstanding after adjustment for the effects of all dilutive potential ordinary shares. The Group's potentially dilutive securities consist of share options and a convertible loan (see Note 14). The convertible loan is anti-dilutive and so is ignored in calculating diluted EPS.

 
                                                       6M            6M 
                                                  30 June       30 June 
                                                     2021          2020 
                                                      GBP           GBP 
-------------------------------------------  ------------  ------------ 
 
  Profit / (loss) after tax attributable 
   to the owners of the parent Company            843,833     (627,692) 
 
                                                   Number        Number 
-------------------------------------------  ------------  ------------ 
  Denominator - basic 
  Weighted average number of ordinary 
   shares                                     288,157,560   284,428,747 
 
  Denominator - diluted 
  Weighted average number of ordinary 
   shares                                     288,157,560   284,428,747 
  Weighted average number of option shares     12,332,327             - 
-------------------------------------------  ------------  ------------ 
  Weighted average number of shares           300,489,887   284,428,747 
-------------------------------------------  ------------  ------------ 
 
                                                    Pence         Pence 
-------------------------------------------  ------------  ------------ 
  Basic earnings per share                           0.29        (0.22) 
  Diluted earnings per share                         0.28        (0.22) 
-------------------------------------------  ------------  ------------ 
 

6. Property, plant and equipment

 
                                                            Computers            Office 
                           ROU lease        Leasehold     and related         furniture 
                              assets     improvements       equipment     and equipment       Total 
                                 GBP              GBP             GBP               GBP         GBP 
-----------------------  -----------  ---------------  --------------  ----------------  ---------- 
  Cost 
  At 1 January 2021          769,613           76,059         206,367            77,209   1,129,248 
  Additions                        -                -         119,189               658     119,847 
  Disposals                        -                -        (28,763)                 -    (28,763) 
  Exchange differences         1,736             (63)           1,056               435       3,164 
  At 30 June 201             771,349           75,996         297,849            78,302   1,223,496 
-----------------------  -----------  ---------------  --------------  ----------------  ---------- 
 
  Accumulated deprecation 
   and impairment 
  At 1 January 2021          304,667           29,717         172,932            61,139     568,455 
  Depreciation charge         75,105            7,968          10,221             3,988      97,282 
  Disposals                        -                -        (28,185)                 -    (28,185) 
  Exchange differences         1,037             (62)             717               530       2,222 
  At 30 June 2021            380,809           37,623         155,685            65,657     639,774 
-----------------------  -----------  ---------------  --------------  ----------------  ---------- 
 
  Net book value 
  At 31 December 
   2020                      464,946           46,342          33,435            16,070     560,793 
-----------------------  -----------  ---------------  --------------  ----------------  ---------- 
  At 30 June 2021            390,540           38,373         142,164            12,645     583,722 
-----------------------  -----------  ---------------  --------------  ----------------  ---------- 
 

7. Intangible assets

 
                                Customer                Development                Domain    Intellectual 
                   Goodwill     database    Software          costs    Licenses     names        Property        Total 
                        GBP          GBP         GBP            GBP         GBP       GBP             GBP          GBP 
                 ----------  -----------  ----------  -------------  ----------  --------  --------------  ----------- 
  Cost 
  At 1 January 
   2021           6,697,219    1,475,650   1,384,223     14,232,892           -     8,785       5,786,179   29,584,948 
  Additions               -            -      76,286      1,614,370     212,515         -               -    1,903,171 
  Exchange 
   differences     (59,611)     (17,612)    (14,194)        (2,371)           -     (105)        (69,333)    (163,226) 
  At 30 June 
   2021           6,637,608    1,458,038   1,446,315     15,844,891     212,515     8,680       5,716,846   31,324,893 
---------------  ----------  -----------  ----------  -------------  ----------  --------  --------------  ----------- 
 
  Accumulated amortisation 
   and impairment 
  At 1 January 
   2021           1,650,000    1,475,650   1,384,223     10,030,745           -     8,785       3,898,422   18,447,825 
  Amortisation 
   charge                 -            -      12,749      1,076,512      15,945         -         356,626    1,461,832 
  Exchange 
   differences            -     (17,612)    (14,194)        (2,295)           -     (105)        (45,808)     (80,014) 
  At 30 June 
   2021           1,650,000    1,458,038   1,382,778     11,104,962      15,945     8,680       4,209,240   19,829,643 
---------------  ----------  -----------  ----------  -------------  ----------  --------  --------------  ----------- 
 
  Net book 
   value 
  At 31 
   December 
   2020           5,047,219            -           -      4,202,147           -         -       1,887,757   11,137,123 
---------------  ----------  -----------  ----------  -------------  ----------  --------  --------------  ----------- 
  At 30 June 
   2021           4,987,608            -      63,537      4,739,929     196,570         -       1,507,606   11,495,250 
---------------  ----------  -----------  ----------  -------------  ----------  --------  --------------  ----------- 
 

8. Other investments

The other investment balance comprises a 6.6% interest in Ayima Group AB ("Ayima"). The shares of Ayima are quoted on AktieTorget, a Nordic stock exchange (www.aktietorget.se). The investment is remeasured each reporting period to fair value based on the quoted share price.

During the period the Group disposed of its entire shareholding in Ayima, generating cash proceeds on disposal of GBP0.4m bringing the investment balance to GBPNil (31 December 2020: GBP401,291).

9. Trade and other receivables

 
                         30 June   31 December 
                            2021          2020 
                             GBP           GBP 
  Trade receivables    1,383,856     1,319,769 
  Other receivables       35,337       216,207 
  Tax and social 
   security              179,507         5,288 
  Prepayments and 
   accrued income      1,416,677       802,475 
                       3,015,377     2,343,739 
 

All amounts shown fall due for payment within one year.

10. Cash and cash equivalents

 
                                      30 June   31 December    30 June 
                                         2021          2020       2020 
                                          GBP           GBP        GBP 
--------------------------------   ----------  ------------  --------- 
  Cash and cash equivalents         3,923,635     2,105,167    846,793 
  Restricted cash                           -      (18,382)   (18,382) 
---------------------------------  ----------  ------------  --------- 
  Cash and cash equivalents for 
   Statement of Cash Flows          3,923,635     2,086,785    828,411 
---------------------------------  ----------  ------------  --------- 
 

Restricted cash in previous periods relates to funds held in Swiss subsidiaries which are currently undergoing liquidation. The funds are restricted and are not included in the consolidated statement of cash flows.

11. Trade and other payables

 
                       30 June   31 December 
                          2021          2020 
                           GBP           GBP 
-----------------   ----------  ------------ 
  Trade payables       592,895       368,402 
  Other payables       139,605       290,543 
  Tax and social 
   security            175,259       122,533 
  Accruals           1,251,576     1,162,236 
------------------  ----------  ------------ 
                     2,159,335     1,943,714 
 -----------------  ----------  ------------ 
 

The carrying value of trade and other payables classified as financial liabilities measured at amortised cost approximates fair value.

12. Share capital

 
                         30 June      30 June   31 December   31 December 
                            2021         2021          2020          2020 
  Ordinary shares         Number          GBP        Number           GBP 
  Ordinary shares 
   of                288,702,626   28,870,262   286,647,315    28,664,731 
                    ------------  -----------  ------------  ------------ 
  10 pence each 
------------------  ------------  -----------  ------------  ------------ 
 

The increase of 2,055,311 ordinary shares relates to the exercise of share options during the period. The total amount received by the Company for the exercise price settlement was GBP318,221, which has been recorded as an increase in share capital and share premium as follows:

 
                       GBP 
  Share capital    205,531 
  Share premium    112,690 
----------------  -------- 
                   318,221 
----------------  -------- 
 

13. Share based payments

The share option and related charges income statement expense comprises:

 
                                      6M         6M 
                                 30 June    30 June 
                                    2021       2020 
                                     GBP        GBP 
-----------------------------  ---------  --------- 
  IFRS 2 share-based payment 
   charge                        271,859     40,075 
  Direct taxes related           170,712          - 
   to share options 
-----------------------------  ---------  --------- 
                                 442,571     40,075 
-----------------------------  ---------  --------- 
 

IFRS 2 (Share-based payments) requires that the fair value of equity settled transactions are calculated and systematically charged to the statement of comprehensive income over the vesting period. The total fair value that was charged to the income statement in the period in relation to equity-settled share-based payments was GBP271,859 (H1 2020: GBP40,075).

Where individual EMI thresholds are exceeded or when unapproved share options are exercised by overseas employees, the Group is subject to employer taxes payable on the taxable gain on exercise. Since these taxes are directly related to outstanding share options, the income statement charge has been included within share option and related charges. The Group uses its closing share price at the reporting date to calculate such taxes to accrue. The tax related income statement charge for the period was GBP170,712 (H1 2020: GBPNil).

On 5 January 2021, certain employees of the Group were granted a total of 350,000 share options, which vest in three equal tranches on 1 January 2022, 1 January 2023 and 1 January 2024. The options have an exercise price of 22.4 pence per share.

14. Arrangement with Gamesys Group plc

In December 2017 the Group entered into a complex transaction with Gamesys Group plc and Group companies (together 'Gamesys Group'). The transaction includes a GBP3.5m secured convertible loan agreement alongside a 10-year framework services agreement for the supply of various real money services. Under the framework services agreement the first GBP3.5m of services are provided free of charge within the first 5 years.

The convertible loan has a duration of 5 years and carried interest at 3-month LIBOR plus 5.5%. It is secured over the Group's Slingo assets and business. At any time after the first year, Gamesys Group plc may elect to convert all or part of the principal amount into ordinary shares of Gaming Realms plc at a discount of 20% to the share price prevailing at the time of conversion. To the extent that the price per share at conversion is lower than 10p (nominal value), then the shares can be converted at nominal value with a cash payment equal to the aggregate value of the convertible loan outstanding multiplied by the shortfall on nominal value payable to Gamesys Group plc. Under this arrangement the maximum dilution to Gaming Realms shareholders will be approximately 11% assuming the convertible loan is converted in full.

The option violates the fixed-for-fixed criteria for equity classification as the number of shares is variable and as a result is classified as a liability.

The fair value of the conversion feature is determined each reporting date with changes recognised in profit or loss. The initial fair value was GBP0.6m based on a probability assessment of conversion and future share price. This is a level 3 valuation as defined by IFRS 13. The fair value as at 30 June 2021 was GBP0.6m (31 December 2020: GBP0.6m) based on revised probabilities of when and if the option will be exercised. The key inputs into the valuation model included timing of exercise by the counterparty (based on a probability assessment) and the share price.

The initial fair value of the host debt was calculated as GBP2.7m, being the present value of expected future cash outflows. The initial rate used to discount future cash flows was 14.1%, being the Group's incremental borrowing rate. The rate was calculated by reference to the Group's cost of equity in the absence of reliable alternative evidence of the Group's cost of borrowing given it is predominantly equity funded. Expected cash flows are based on the directors' judgement that a change in control event would not occur. Subsequently the loan is carried at amortised cost.

The residual GBP0.2m of proceeds were allocated to the obligation of provide free services.

 
                              Fair                                Fair 
                             value        Obligation             value 
                           of debt        to provide     of derivative 
                              host     free services         Liability       Total 
                               GBP               GBP               GBP         GBP 
----------------------  ----------  ----------------  ----------------  ---------- 
  At 1 January 2021      3,155,870           149,000           627,000   3,931,870 
  Utilisation of free 
   services                      -          (30,000)                 -    (30,000) 
  Effective interest       228,575                 -                 -     228,575 
  Interest paid           (96,475)                 -                 -    (96,475) 
----------------------  ----------  ----------------  ----------------  ---------- 
  At 30 June 2021        3,287,970           119,000           627,000   4,033,970 
----------------------  ----------  ----------------  ----------------  ---------- 
 

15. Related party transactions

Jim Ryan is a Non-Executive Director of the Company and the CEO of Pala Interactive, which has a real-money online casino and bingo site in New Jersey. During the period, total license fees earned by the Group were $24,862 (H1 2020: $22,592) with $12,668 due at 30 June 2021 (30 June 2020: $7,599).

Jim Ryan is a Non-Executive Director of Gamesys Group plc. In December 2017 the Group entered into a 10-year framework services agreement and a 5-year convertible loan agreement for GBP3.5m with Gamesys Group plc (see Note 14).

During the period GBP75,000 (H1 2020: GBP48,333) of consulting fees were paid to Dawnglen Finance Limited, a company controlled by Michael Buckley. No amounts were owed at 30 June 2021 (30 June 2020: GBPNil).

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