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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END
IR DKBBKKBKDQCD
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September 13, 2021 02:00 ET (06:00 GMT)
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