TIDMGMR

RNS Number : 8136Z

Gaming Realms PLC

20 September 2022

20 September 2022

Gaming Realms plc

(the "Company" or the "Group")

Interim Results

Content licensing revenue grows by 57% to GBP6.4m

EBITDA[1] of GBP3.5m[2] with a 41% EBITDA margin

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 2022 (the "Period" or "H1'22").

Financial highlights:

 
                                   H1 2022   H1 2021    Change 
                                      GBPm      GBPm         % 
--------------------------------  --------  --------  -------- 
 Revenue (Content licensing)           6.4       4.1      +57% 
 Revenue (Brand licensing) *           0.3       1.7      -82% 
 Revenue (Social)                      1.8       1.9       -7% 
                                  --------  --------  -------- 
 Total revenue                         8.5       7.7      +10% 
                                  --------  --------  -------- 
 EBITDA before share option and 
  related charges                      3.5       3.1      +12% 
 EBITDA                                3.3       2.7      +25% 
 Profit before tax                     1.3       0.8      +66% 
 
 

* Brand licensing revenue decreased due to a significant, non-recurring deal positively impacting revenues in H1 2021.

-- Total revenue grew 10% from GBP7.7m in H1'21 to GBP8.5m in H1'22. Group EBITDA grew 12% to GBP3.5m(2) (H1'21: GBP3.1m), representing a 41% EBITDA margin (H1'21: 40%). Excluding brand licensing, revenue grew 36% from GBP6.0m in H1'21 to GBP8.2m in H1'22

-- Total licensing revenues grew 15% to GBP6.7m (H1'21: GBP5.8m), with content licensing revenue up 57% to GBP6.4m (H1'21: GBP4.1m)

   --      Revenues from North America of GBP4.7m representing 55% of total revenue 

-- Social revenue decreased 7% to GBP1.8m (H1'21: GBP1.9m), but with a reduction in related expenses, this segment increased its EBITDA by 13%

   --      Profit before tax increased 66% to GBP1.3m (H1'21: GBP0.8m) 

Operational highlights:

   --      Granted Online Gaming Service Supplier License in Connecticut with launch expected in Q4'22 
   --      Granting of iGaming Supplier License in Ontario and subsequent launch with 8 operators 
   --      Launched in additional regulated markets in Spain and Denmark 
   --      Launched Slingo content with WLA member Loto-Quebec 
   --      Launched games distribution business with 4ThePlayer in New Jersey 

-- Released 8 new games into the market, including Slingo Shark Week and Slingo DaVinci Diamonds. The Group now has 61 games in its portfolio (Dec'21: 53 games, Jun'21: 48 games)

Post period-end:

-- Licensing revenue increased 53% in the two months post period-end compared to the same period in 2021

   --      Launched Betway and Pokerstars in Europe 
   --      Released two new Slingo games: Slingo Stampede and Slingo Stinkin' Rich 

Outlook for FY22:

Gaming Realms has continued to progress during the first half of the year, with its core strategy of developing and licensing games globally to market-leading brands and operators delivering high margin revenues.

This growth is expected to continue into the second half of the year as the Company matures in its key markets. In addition, the Group is aiming to launch in Connecticut, Portugal and Greece, as well as forecasting growth from the recently launched markets of Michigan, Pennsylvania, Ontario, Spain and the Netherlands.

The European market continues to be the largest contributor to content licensing revenues and, with the launch of 8 games plus entry into new regulated markets, has grown 19% period on period. We have more direct integrations with partners, which improves margins and strengthens these relationships.

Our revenues from North American content licensing have increased 160% period on period, with the region accounting for 45% of content licensing revenue. New Jersey continues to be our leading market, but Pennsylvania and Michigan are growing strongly as we launch more games with new partners. At 30 June 2022, we were live with 7 games in Pennsylvania across 6 partners and 17 games across 7 partners in Michigan.

In total we have launched with 26 partners in H1 2022 (H1'21: 11). This growth is supported by the launch of premium games, including Slingo Shark Week and Slingo Da Vinci Diamonds. We are continuing to invest in our remote game server and in the period launched our aggregation business in New Jersey with 4ThePlayer.

The Group is continuing to deliver on its clear strategy, expanding into new markets and launching content which is proving popular with players. It has a strong pipeline of deals and integrations and the Board expects trading for FY'22 to be in line with market expectations.

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

"The Group has delivered another period of strong growth supported by our ongoing expansion into newly regulated markets in North America and Europe, with content licensing revenue increasing by 57%. Whilst brand licensing declined in the period under review, as a result of the significant contract in last year's comparative period, this was more than made up by increased income from our core content licensing. The growth in licensing income has continued into the second half of this year, with licensing revenues for July and August 2022 being 53% higher than the comparative months in 2021.

"We have also continued to expand on our existing partnerships, adding new content through our direct integration agreements, as well as signing new licensing deals and launching a series of new games.

"Whilst we are mindful of the impact of higher inflation throughout global markets, the outlook for the Group remains positive. The Group has a strong new business pipeline and will also see additional revenues coming from North America, as well as from the new market entries in Europe. As such we expect to deliver on market expectations for the full year."

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

The Company also notes that it will be hosting an online presentation to retail investors on Friday 23rd September at 1pm. Those wishing to join the presentation are requested to register via the following link: Meeting Registration .

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 
  Lalit Bose 
 
   Yellow Jersey                  07747 788 221 
 Charles Goodwin 
  Annabelle Wills 
 

Business review

The Group delivered overall revenue growth of 10% to GBP8.5m (H1'21: GBP7.7m), driven by the Group's core content licensing business. Total expenses increased 2%, which resulted in a 25% increase in total EBITDA generated across the Group to GBP3.3m (H1'21: GBP2.7m).

The Group recorded a profit before tax for the period of GBP1.3m, a 66% increase on the same period in 2021.

Licensing

Licensing segment revenues increased 15% to GBP6.7m (H1'21: GBP5.8m), which is broken down as:

   --      Content licensing revenue growth of 57% to GBP6.4m (H1'21: GBP4.1m); and 
   --      Brand licensing revenue reduced 82% to GBP0.3m (H1'21: GBP1.7m). 

The segment delivered GBP3.6m EBITDA in the period, an 8% overall uplift over the GBP3.4m in H1'21.

Content licensing

The core focus of the Group remains delivering growth in the content licensing business. Continued growth in the games portfolio and increasing the distribution footprint to an increased number of operators in Europe and North America underpins the current period's performance.

During the period, the Group began operating with partners in three additional regulated markets, Ontario, Spain and Denmark. Outside of going live with partners in these newly entered markets, we also went live with a further 18 partners during the period in existing markets in Europe and North America.

An additional 8 new Slingo games were released to the market during the period, bringing the Group's games portfolio to 61 games at the period end (H1'21: 48 games).

This all resulted in a 57% increase in content licensing revenues to GBP6.4m (H1'21: GBP4.1m).

Brand licensing

Revenues from the Group's brand licensing activities, which are non-core, fell 82% to GBP0.3m (H1'21: GBP1.7m). This is a result of a significant brand deal completed in the comparative period which did not repeat in the period.

Social

Revenues in the Group's social publishing business reduced 7% to GBP1.8m in the period (H1'21: GBP1.9m) as a result of a reduction in marketing during the period.

However, with total segment expenses (excluding share option and related charges) reducing by 16% to GBP1.1m (H1'21: GBP1.3m), the segment actually delivered EBITDA growth of 13% to GBP0.7m (H1'21: GBP0.6m).

The reduction in total segmental expenses comprises a 21% fall in operating costs, which are largely revenue driven, and a 99% reduction in marketing costs from the previous period.

Cashflow and balance sheet

The Group's cash balance at 30 June 2022 was GBP4.0m, a reduction of GBP0.4m from the GBP4.4m reported at 31 December 2021.

The current period fall in cash was largely driven by the GBP2.0m cash inflow from operations, offset by GBP2.1m development costs capitalised during the period and GBP0.2m acquisition of tangible and intangible assets.

Subsequent to the period end, the cash balance increased to GBP4.6m at 31 August 2022, with negative working capital movements in the first half of the year reversing.

The Group has a convertible loan of GBP3.0m owed to Gamesys Group plc (see Note 11), due for repayment in December 2022.

Net assets totalled GBP16.1m (31 December 2021: GBP13.1m).

Consolidated statement of comprehensive income

for the 6 months ended 30 June 2022

 
                                                                              6M                             6M 
                                                                         30 June 
                                                                            2022                   30 June 2021 
                                                                       Unaudited                      Unaudited 
                                             Note                            GBP                            GBP 
------------------------------------------  -----  -----------------------------  ----------------------------- 
  Revenue                                     2                        8,507,887                      7,745,982 
  Marketing expenses                                                    (53,274)                      (207,428) 
  Operating expenses                                                 (1,179,301)                    (1,185,859) 
  Administrative expenses                                            (3,795,212)                    (3,256,425) 
  Share option and related charges            10                       (162,819)                      (442,571) 
 
  EBITDA                                      2                        3,317,281                      2,653,699 
                                            -----  ----------------------------- 
 
  Amortisation of intangible assets           6                      (1,752,572)                    (1,461,832) 
  Depreciation of property, plant 
   and equipment                              5                        (124,071)                       (97,282) 
  Finance expense                             3                        (117,769)                      (302,221) 
  Finance income                              3                           13,038                         11,564 
------------------------------------------  -----  -----------------------------  ----------------------------- 
  Profit before tax                                                    1,335,907                        803,928 
  Tax credit                                                              44,719                         38,347 
------------------------------------------  -----  -----------------------------  ----------------------------- 
  Profit for the period                                                1,380,626                        842,275 
------------------------------------------  -----  -----------------------------  ----------------------------- 
  Other comprehensive income 
  Items that will or may be reclassified 
   to profit or loss: 
  Exchange gain / (loss) arising 
   on translation of foreign operations                                  713,266                       (84,998) 
------------------------------------------  -----  -----------------------------  ----------------------------- 
  Total other comprehensive income                                       713,266                       (84,998) 
------------------------------------------  -----  -----------------------------  ----------------------------- 
  Total comprehensive income                                           2,093,892                        757,277 
------------------------------------------  -----  -----------------------------  ----------------------------- 
  Profit / (loss) attributable to: 
  Owners of the parent                                                 1,380,626                        843,833 
  Non-controlling interest                                                     -                        (1,558) 
                                                   -----------------------------  ----------------------------- 
                                                                       1,380,626                        842,275 
------------------------------------------  -----  -----------------------------  ----------------------------- 
  Total comprehensive income attributable 
   to: 
  Owners of the parent                                                 2,093,892                        758,835 
  Non-controlling interest                                                     -                        (1,558) 
------------------------------------------  -----  -----------------------------  ----------------------------- 
                                                                       2,093,892                        757,277 
------------------------------------------  -----  -----------------------------  ----------------------------- 
 
  Earnings per share                                                       Pence                          Pence 
  Basic                                       4                             0.47                           0.29 
  Diluted                                     4                             0.46                           0.28 
------------------------------------------  -----  -----------------------------  ----------------------------- 
 

Consolidated statement of financial position

as at 30 June 2022

 
                                               30 June    31 December 
                                                  2022           2021 
                                             Unaudited        Audited 
                                   Note            GBP            GBP 
--------------------------------  -----  -------------  ------------- 
  Non-current assets 
  Intangible assets                 6       12,930,360     11,815,598 
  Property, plant and equipment     5          464,250        484,578 
  Other assets                                 138,798        150,646 
--------------------------------  -----  -------------  ------------- 
                                            13,533,408     12,450,822 
--------------------------------  -----  -------------  ------------- 
  Current assets 
  Trade and other receivables       7        4,680,813      3,260,687 
  Cash and cash equivalents                  3,995,382      4,412,375 
--------------------------------  -----  -------------  ------------- 
                                             8,676,195      7,673,062 
--------------------------------  -----  -------------  ------------- 
  Total assets                              22,209,603     20,123,884 
--------------------------------  -----  -------------  ------------- 
  Current liabilities 
  Trade and other payables          8        2,138,487      2,241,114 
  Lease liabilities                            157,794        172,887 
  Other creditors                   11       2,950,901      3,489,278 
  Derivative liabilities            11         638,000        744,000 
--------------------------------  -----  -------------  ------------- 
                                             5,885,182      6,647,279 
--------------------------------  -----  -------------  ------------- 
  Non-current liabilities 
  Deferred tax liability                       153,034        199,876 
  Lease liabilities                             95,886        168,227 
--------------------------------  -----  -------------  ------------- 
                                               248,920        368,103 
--------------------------------  -----  -------------  ------------- 
  Total liabilities                          6,134,102      7,015,382 
--------------------------------  -----  -------------  ------------- 
  Net assets                                16,075,501     13,108,502 
--------------------------------  -----  -------------  ------------- 
  Equity 
  Share capital                     9       29,200,676     28,970,262 
  Share premium                             87,653,774     87,370,856 
  Merger reserve                          (67,673,657)   (67,673,657) 
  Foreign exchange reserve                   2,131,535      1,418,269 
  Retained earnings                       (35,236,827)   (36,977,228) 
--------------------------------  -----  -------------  ------------- 
  Total equity                              16,075,501     13,108,502 
--------------------------------  -----  -------------  ------------- 
 

Consolidated statement of cash flows

for the 6 months ended 30 June 2021

 
                                                             30 June       30 June 
                                                                2022          2021 
                                                           Unaudited     Unaudited 
                                                  Note           GBP           GBP 
----------------------------------------------  ------  ------------  ------------ 
  Cash flows from operating activities 
  Profit for the period                                    1,380,626       842,275 
  Adjustments for: 
  Depreciation of property, plant and 
   equipment                                       5         124,071        97,282 
  Amortisation of intangible fixed assets          6       1,752,572     1,461,832 
  Finance income                                   3        (13,038)      (11,564) 
  Finance expense                                  3         117,769       302,221 
  Loss on disposal of property, plant 
   and equipment                                                   -           578 
  Income tax credit                                         (44,719)      (38,347) 
  Exchange differences                                         5,413        29,803 
  Share based payment expense                     10         253,775       271,859 
  Increase in trade and other receivables                (1,427,075)     (877,939) 
  (Decrease) / increase in trade and 
   other payables                                          (145,627)       185,621 
  Decrease in other assets                                    11,848             - 
----------------------------------------------  ------  ------------  ------------ 
  Net cash flows from operating activities                 2,015,615     2,263,621 
----------------------------------------------  ------  ------------  ------------ 
 
  Investing activities 
  Acquisition of property, plant and 
   equipment                                       5        (99,376)     (119,847) 
  Acquisition of intangible assets                 6        (83,143)      (98,473) 
  Capitalised development costs                    6     (2,088,552)   (1,614,370) 
  Proceeds from the sale of other investments                      -       362,435 
  Finance lease asset - sublease receipts                          -        78,840 
----------------------------------------------  ------  ------------  ------------ 
  Net cash used in investing activities                  (2,271,071)   (1,391,415) 
----------------------------------------------  ------  ------------  ------------ 
 
  Financing activities 
  Receipt of deferred consideration                                -       972,554 
  IFRS 16 lease payments                                   (103,282)     (203,878) 
  Issue of share capital on exercise 
   of options                                      9          13,332       318,221 
  Interest paid                                             (99,393)     (105,218) 
----------------------------------------------  ------  ------------  ------------ 
  Net cash (used in) / from financing 
   activities                                              (189,343)       981,679 
----------------------------------------------  ------  ------------  ------------ 
  Net (decrease) / increase in cash and 
   cash equivalents                                        (444,799)     1,853,885 
  Cash and cash equivalents at beginning 
   of period                                               4,412,375     2,105,167 
  Exchange gain / (loss) on cash and 
   cash equivalents                                           27,806      (35,417) 
----------------------------------------------  ------  ------------  ------------ 
  Cash and cash equivalents at end of 
   period                                                  3,995,382     3,923,635 
----------------------------------------------  ------  ------------  ------------ 
 

Consolidated statement of changes in equity

for the 6 months ended 30 June 2022

 
                                                                                            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 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 
   10)                      -            -              -           -        271,859      271,859                  -      271,859 
  Exercise of 
   options (Note 
   9)                 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 
----------------  -----------  -----------  -------------  ----------  -------------  -----------  -----------------  ----------- 
 
 
  1 January 2022   28,970,262   87,370,856   (67,673,657)   1,418,269   (36,977,228)   13,108,502                  -   13,108,502 
----------------  -----------  -----------  -------------  ----------  -------------  -----------  -----------------  ----------- 
  Profit for the 
   period                   -            -              -           -      1,380,626    1,380,626                  -    1,380,626 
  Other 
   comprehensive 
   income                   -            -              -     713,266              -      713,266                  -      713,266 
----------------  -----------  -----------  -------------  ----------  -------------  -----------  -----------------  ----------- 
  Total 
   comprehensive 
   income 
   for the 
   period                   -            -              -     713,266      1,380,626    2,093,892                  -    2,093,892 
----------------  -----------  -----------  -------------  ----------  -------------  -----------  -----------------  ----------- 
  Contributions 
  by and 
  distributions 
  to owners 
  Share-based 
   payment on 
   share 
   options (Note 
   10)                      -            -              -           -        253,775      253,775                  -      253,775 
  Exercise of 
   options (Note 
   9)                  13,332            -              -           -              -       13,332                  -       13,332 
  Conversion of 
   loan (Note 
   11)                217,082      282,918              -           -        106,000      606,000                  -      606,000 
  30 June 2022 
   (unaudited)     29,200,676   87,653,774   (67,673,657)   2,131,535   (35,236,827)   16,075,501                  -   16,075,501 
----------------  -----------  -----------  -------------  ----------  -------------  -----------  -----------------  ----------- 
 

Notes forming part of the consolidated financial statements

For the 6 months ended 30 June 2022

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 2022 and 30 June 2021 are unaudited.

Basis of preparation

The financial information for the year ended 31 December 2021 included in these financial statements does not constitute the full statutory accounts for that year. The Annual Report and Financial Statements for 2021 have been filed with the Registrar of Companies. The Independent Auditors' Report on the Annual Report and Financial Statement for 2021 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 19 September 2022. 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 2021 and which will form the basis of the 2022 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.

The Directors have reviewed forecast cash flows for the period to December 2024, which include the potential repayment of the convertible loan in December 2022 (see Note 11), and consider that the Group will 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.

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. EBITDA is considered to be a key performance measure by the Directors as it serves as an indicator of financial performance.

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 2022 revenue                   GBP            GBP      GBP         GBP 
--------------------------  -----------  -------------  -------  ---------- 
  Primary geographical 
   markets 
  UK, including Channel 
   Islands                      411,529              -   11,000     422,529 
  USA                         2,857,929      1,788,722        -   4,646,651 
  Isle of Man                   359,662              -        -     359,662 
  Malta                       1,224,280              -        -   1,224,280 
  Gibraltar                   1,208,956              -        -   1,208,956 
  Rest of the World             645,809              -        -     645,809 
--------------------------  -----------  -------------  -------  ---------- 
                              6,708,165      1,788,722   11,000   8,507,887 
--------------------------  -----------  -------------  -------  ---------- 
 
  Contract counterparties 
  Direct to consumers 
   (B2C)                              -      1,788,722        -   1,788,722 
  B2B                         6,708,165              -   11,000   6,719,165 
--------------------------  -----------  -------------  -------  ---------- 
                              6,708,165      1,788,722   11,000   8,507,887 
--------------------------  -----------  -------------  -------  ---------- 
 
  Timing of transfer of goods 
   and services 
  Point in time               6,708,165      1,788,722   11,000   8,507,887 
  Over time                           -              -        -           - 
--------------------------  -----------  -------------  -------  ---------- 
                              6,708,165      1,788,722   11,000   8,507,887 
--------------------------  -----------  -------------  -------  ---------- 
 
 
                                                Social 
                              Licensing     publishing    Other       Total 
  H1 2021 revenue                   GBP            GBP      GBP         GBP 
--------------------------  -----------  -------------  -------  ---------- 
  Primary geographical 
   markets 
  UK, including Channel 
   Islands                      381,898              -        -     381,898 
  USA                         2,533,481      1,930,171        -   4,463,652 
  Isle of Man                 1,228,087              -        -   1,228,087 
  Malta                         981,951              -        -     981,951 
  Gibraltar                     249,143              -        -     249,143 
  Rest of the World             441,251              -        -     441,251 
--------------------------  -----------  -------------  -------  ---------- 
                              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 
--------------------------  -----------  -------------  -------  ---------- 
 

EBITDA

 
                                                                    Social 
                                    Licensing                   publishing                 Head Office                       Total 
 H1 2022                                  GBP                          GBP                         GBP                         GBP 
-----------------  --------------------------  ---------------------------  --------------------------  -------------------------- 
  Revenue                           6,708,165                    1,788,722                      11,000                   8,507,887 
  Marketing 
   expense                           (13,081)                      (2,063)                    (38,130)                    (53,274) 
  Operating 
   expense                          (721,757)                    (457,544)                           -                 (1,179,301) 
  Administrative 
   expense                        (2,256,069)                    (646,386)                   (892,757)                 (3,795,212) 
  Share option 
   and 
   related 
   charges                           (77,067)                        (855)                    (84,897)                   (162,819) 
-----------------  --------------------------  ---------------------------  --------------------------  -------------------------- 
  EBITDA                            3,640,191                      681,874                 (1,004,784)                   3,317,281 
-----------------  --------------------------  ---------------------------  --------------------------  -------------------------- 
 
 
                                                                   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)                   (931,328)                (3,256,425) 
  Share option 
   and 
   related 
   charges                           (85,401)                     (4,745)                   (352,425)                  (442,571) 
-----------------  --------------------------  --------------------------  --------------------------  ------------------------- 
  EBITDA                            3,369,942                     604,687                 (1,320,930)                  2,653,699 
-----------------  --------------------------  --------------------------  --------------------------  ------------------------- 
 

3. Finance income and expense

 
                                                                     6M                            6M 
                                                                30 June                       30 June 
                                                                   2022                          2021 
                                                                    GBP                           GBP 
----------------------------------------   ----------------------------  ---------------------------- 
  Finance income 
  Interest received                                                   -                         6,306 
  Interest income on unwind of deferred 
   income                                                        13,038                             - 
  Interest income on finance lease 
   asset                                                              -                         5,258 
-----------------------------------------  ----------------------------  ---------------------------- 
  Total finance income                                           13,038                        11,564 
-----------------------------------------  ----------------------------  ---------------------------- 
 
  Finance expense 
  Bank interest paid                                              9,519                         8,743 
  Fair value loss on other investments                                -                        38,856 
  Effective interest on other creditor                           94,497                       228,575 
  Interest expense on lease liability                            13,753                        26,047 
-----------------------------------------  ----------------------------  ---------------------------- 
  Total finance expense                                         117,769                       302,221 
-----------------------------------------  ----------------------------  ---------------------------- 
 

4. 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 11). The convertible loan is anti-dilutive and so is ignored in calculating diluted EPS.

 
                                                       6M            6M 
                                                  30 June       30 June 
                                                     2022          2021 
                                                      GBP           GBP 
-------------------------------------------  ------------  ------------ 
 
  Profit after tax attributable to the 
   owners of the parent Company                 1,380,626       843,833 
 
                                                   Number        Number 
-------------------------------------------  ------------  ------------ 
  Denominator - basic 
  Weighted average number of ordinary 
   shares                                     291,309,072   288,157,560 
 
  Denominator - diluted 
  Weighted average number of ordinary 
   shares                                     291,309,072   288,157,560 
  Weighted average number of option shares      7,442,107    12,332,327 
-------------------------------------------  ------------  ------------ 
  Weighted average number of shares           298,751,179   300,489,887 
-------------------------------------------  ------------  ------------ 
 
                                                    Pence         Pence 
-------------------------------------------  ------------  ------------ 
  Basic earnings per share                           0.47          0.29 
  Diluted earnings per share                         0.46          0.28 
-------------------------------------------  ------------  ------------ 
 

5. 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 2022          771,690           62,835         311,325            63,609   1,209,459 
  Additions                        -                -          98,049             1,327      99,376 
  Disposals                        -                -               -                 -           - 
  Exchange differences        10,614              590           8,366             3,856      23,426 
  At 30 June 2022            782,304           63,425         417,740            68,792   1,332,261 
-----------------------  -----------  ---------------  --------------  ----------------  ---------- 
 
  Accumulated deprecation 
   and impairment 
  At 1 January 2022          457,574           32,555         179,656            55,096     724,881 
  Depreciation charge         75,851            6,718          37,337             4,165     124,071 
  Disposals                        -                -               -                 -           - 
  Exchange differences         8,916              496           6,212             3,435      19,059 
  At 30 June 2022            542,341           39,769         223,205            62,696     868,011 
-----------------------  -----------  ---------------  --------------  ----------------  ---------- 
 
  Net book value 
  At 31 December 
   2021                      314,116           30,280         131,669             8,513     484,578 
-----------------------  -----------  ---------------  --------------  ----------------  ---------- 
  At 30 June 2022            239,963           23,656         194,535             6,096     464,250 
-----------------------  -----------  ---------------  --------------  ----------------  ---------- 
 

6. 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 
   2022           6,673,924    1,490,536   1,262,416     17,470,157     247,322     8,874       5,844,747   32,997,976 
  Additions               -            -      54,229      2,088,552      28,914         -               -    2,171,695 
  Exchange 
   differences      677,911      165,041     133,003         54,241         309       985         649,699    1,681,189 
  At 30 June 
   2022           7,351,835    1,655,577   1,449,648     19,612,950     276,545     9,859       6,494,446   36,850,860 
---------------  ----------  -----------  ----------  -------------  ----------  --------  --------------  ----------- 
 
  Accumulated amortisation 
   and impairment 
  At 1 January 
   2022           1,650,000    1,490,536   1,218,108     12,102,389      43,469     8,874       4,669,002   21,182,378 
  Amortisation 
   charge                 -            -      28,052      1,310,340      33,558         -         380,622    1,752,572 
  Exchange 
   differences      127,503      165,041     133,003         14,398           -       985         544,620      985,550 
  At 30 June 
   2022           1,777,503    1,655,577   1,379,163     13,427,127      77,027     9,859       5,594,244   23,920,500 
---------------  ----------  -----------  ----------  -------------  ----------  --------  --------------  ----------- 
 
  Net book 
   value 
  At 31 
   December 
   2021           5,023,924            -      44,308      5,367,768     203,853         -       1,175,745   11,815,598 
---------------  ----------  -----------  ----------  -------------  ----------  --------  --------------  ----------- 
  At 30 June 
   2022           5,574,332            -      70,485      6,185,823     199,518         -         900,202   12,930,360 
---------------  ----------  -----------  ----------  -------------  ----------  --------  --------------  ----------- 
 

7 . Trade and other receivables

 
                                      30 June   31 December 
                                         2022          2021 
                                          GBP           GBP 
---------------------------------  ----------  ------------ 
  Trade receivables                 2,666,693     1,372,749 
  Other receivables                    31,280        41,957 
  Tax and social security             569,065       394,749 
  Prepayments and accrued income    1,413,775     1,451,232 
---------------------------------  ----------  ------------ 
                                    4,680,813     3,260,687 
---------------------------------  ----------  ------------ 
 

All amounts shown fall due for payment within one year.

8. Trade and other payables

 
                               30 June   31 December 
                                  2022          2021 
                                   GBP           GBP 
--------------------------  ----------  ------------ 
  Trade payables               633,140       531,939 
  Other payables               114,638       158,726 
  Tax and social security      274,052       236,491 
  Accruals                   1,116,657     1,313,958 
--------------------------  ----------  ------------ 
                             2,138,487     2,241,114 
--------------------------  ----------  ------------ 
 

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

9. Share capital

 
                         30 June      30 June   31 December   31 December 
                            2022         2022          2021          2021 
  Ordinary shares         Number          GBP        Number           GBP 
  Ordinary shares 
   of                292,006,775   29,200,676   289,702,626    28,970,262 
                    ------------  -----------  ------------  ------------ 
  10 pence each 
------------------  ------------  -----------  ------------  ------------ 
 

The increase of 2,304,149 ordinary shares relates to (i) the exercise of share options during the period and (ii) the GBP500,000 partial conversion of the convertible loan (see Note 11). The changes in share capital and share premium as a result of these events is shown below.

 
                                  Share 
                                 option                 Loan 
                              exercises           conversion                Total 
                                    GBP                  GBP                  GBP 
----------------  ---------------------  -------------------  ------------------- 
  Share capital                  13,332              217,082              230,414 
  Share premium                       -              282,918              282,918 
----------------  ---------------------  -------------------  ------------------- 
                                 13,332              500,000              513,332 
----------------  ---------------------  -------------------  ------------------- 
 

10. Share based payments

The share option and related charges income statement expense comprises:

 
                                      6M         6M 
                                 30 June    30 June 
                                    2022       2021 
                                     GBP        GBP 
-----------------------------  ---------  --------- 
  IFRS 2 share-based payment 
   charge                        253,775    271,859 
  Direct taxes related 
   to share options             (90,956)    170,712 
-----------------------------  ---------  --------- 
                                 162,819    442,571 
-----------------------------  ---------  --------- 
 

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 GBP253,775 (H1 2021: GBP271,859).

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 credit for the period was GBP90,956 (H1 2021: GBP170,712 charge).

On 6 January 2022, the following share options were granted:

-- The Group's 2 Executive Directors were granted 2,000,000 share options with an exercise price of 32.5 pence per share. The options lapse on the 3(rd) anniversary of grant and vest upon certain non-market-based conditions.

-- The Group's 2 Executive Directors and certain employees were granted 1,900,000 share options, which vest in three equal tranches on 15 October 2022, 15 October 2023 and 15 October 2024. The options all have an exercise price of 32.5 pence per share.

11. 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%, which has been updated to a fixed 5.75% following cessation of LIBOR on 31 December 2021. 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 2022 was GBP0.7m (31 December 2021: GBP0.7m) 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.

On 23 February 2022, Bally's Corporation (owner of Gamesys Group) exercised their option to convert GBP500,000 of the GBP3,500,000 convertible loan. The issue of 2,170,817 new ordinary shares to satisfy the conversion resulted in an increase in share capital of GBP217,082 and share premium of GBP282,918. As a result of the conversion, a GBP106,000 reclassification from the fair value of the derivative liability into retained earnings was made, being the 14.29% portion of the total loan converted.

Following conversion, the principal convertible loan balance is GBP3,000,000.

 
                              Fair                                Fair 
                             value        Obligation             value 
                           of debt        to provide     of derivative 
                              host     free services         Liability       Total 
                               GBP               GBP               GBP         GBP 
----------------------  ----------  ----------------  ----------------  ---------- 
  At 1 January 2022      3,429,278            60,000           744,000   4,233,278 
  Utilisation of free 
   services                      -          (43,000)                 -    (43,000) 
  Conversion of loan     (500,000)                 -         (106,000)   (606,000) 
  Effective interest        94,497                 -                 -      94,497 
  Interest paid           (89,874)                 -                 -    (89,874) 
----------------------  ----------  ----------------  ----------------  ---------- 
  At 30 June 2022        2,933,901            17,000           638,000   3,588,901 
----------------------  ----------  ----------------  ----------------  ---------- 
 

12. 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 $10,401 (H1 2021: $24,862) with $940 due at 30 June 2022 (30 June 2021: $12,668). Towards the end of the period the Group began distributing its content to certain North American partners via Pala's B2B platform distribution network, with platform fees of $108 being incurred (H1'21: $Nil) which were all owed at the period end (30 June 2021: $Nil).

Jim Ryan is a Director of Bally's Corporation ("Bally's") and was previously a Non-Executive Director of Gamesys Group prior to its acquisition by Bally's. 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 11).

During the period GBP75,000 (H1 2021: GBP75,000) of consulting fees were paid to Dawnglen Finance Limited, a company controlled by Michael Buckley. No amounts were owed at 30 June 2022 (30 June 2021: GBPNil).

[1] EBITDA is profit before interest, tax, depreciation and amortisation expenses and is a non-GAAP measure. The Group uses EBITDA to comment on its financial performance.

[2] EBITDA before share option and related charges is also discussed above which is EBITDA with the share option and related charge in the income statement added back on the basis it is a material non-cash charge.

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