Company Announcements

Interim Results

Source: RNS
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 £3.1m[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

 

 £m

 £m

 %

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 £5.2m in H1'20 to £7.7m 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 £1.28m to £3.1m, a rise of 144% over the previous Period.

·      Licensing revenue grew 73% to £5.8m (H1'20: £3.4m)

This included content licensing revenue growing 39% to £4.1m (H1'20: £2.9m) due to an increase in distribution from an expanded games portfolio

Brand licensing reflected a significant deal which positively impacted revenues, resulting in a 298% increase to £1.7m (H1'20: £0.4m)

·      Social revenue increased 7% to £1.9m (H1'20: £1.8m) from an increase in new Slingo content, as well as improved player management and new player engagement features.

·      Cash or cash equivalents grew from £0.85m to £3.92m 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 £2.7m (H1'20: £1.2m), while also reporting a pre-tax profit of £0.8m compared with a pre-tax loss of £0.7m 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 £5.8m (H1'20: £3.4m). 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 £2.4m increase in licensing revenues was achieved through a mixture of a £0.5m organic increase in content license revenues from existing partners, a £0.6m increase in content license revenues from partners that went live after 30 June 2020 and a £1.3m 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 £1.9m (H1'20: £1.8m).

 

Marketing costs of £0.2m (H1'20: £0.03m) were incurred in order to drive player activity and revenues.

 

 

Cash

 

The Company's cash position at 30 June 2021 was £3.9m, increasing £1.8m from the £2.1m reported at 31 December 2020. 

 

The increase in cash during the period was largely driven through the £2.3m cash inflow from operating activities and £1.0m of deferred consideration received, offset by the £1.6m of development costs capitalised in the Period.

 

During the period, on 1 April 2021 the Group received £1.0m 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 £3.5m 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

 £

 £

 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
2021

31 December
2020

 

 

Unaudited

Audited

 

Note

 £

 £

 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
2021

30 June
2020

 

 

Unaudited

Unaudited

 

 Note

£

 £

 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

 

 

 

 Share capital

 Share premium

 Merger reserve

 Foreign Exchange Reserve

 Retained earnings

 Total to equity holders of parents

 Non-controlling interest

 Total equity

 

 £

 £

 £

 £

 £

 £

 £

 £

 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.

 

 

 Licensing

 Social
publishing

 Other

 Total

 H1 2021 revenue

 £

 £

 £

 £

 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

 

 

 

 

 

 Licensing

 Social
publishing

 Other

 Total

 H1 2020 revenue

 £

 £

 £

 £

 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

 

 

 Licensing

 Social publishing

 Head Office

 Total

H1 2021

 £

 £

 £

 £

 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

 

 

 

 

 Licensing

 Social
publishing

 Head Office

 Total

H1 2020

 £

 £

 £

 £

 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
30 June 2021

6M
30 June 2020

 

 

 £

 £

 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
30 June 2021

6M
30 June 2020

 

 £

 £

 Restructuring expenses

(25,000)

(250,881)

 Adjusting items

(25,000)

(250,881)

 

Restructuring expenses

Restructuring costs of £25k (H1 2020: £251k) 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
30 June 2021

6M
30 June 2020

 

 £

 £

 

 

 

 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

 

 

 ROU lease assets

 Leasehold improvements

 Computers and related equipment

 Office furniture and equipment

 Total

 

 £

 £

 £

 £

 £

 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

 

 

 Goodwill

 Customer database

 Software

 Development costs

 Licenses

 Domain names

 Intellectual Property

 Total

 

 £

 £

 £

 £

 £

 £

 £

 £

 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 £0.4m bringing the investment balance to £Nil (31 December 2020: £401,291).

 

 

9. Trade and other receivables

 

 

30 June
2021

31 December
2020

 

 £

 £

 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
2021

31 December
2020

30 June
2020

 

 

 £

 £

 £

 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
2021

31 December
2020

 

 

 £

 £

 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
2021

30 June
2021

31 December
2020

31 December
2020

 Ordinary shares

 Number

 £

 Number

 £

 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 £318,221, which has been recorded as an increase in share capital and share premium as follows:

 

 

£

 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
30 June 2021

6M
30 June 2020

 

 £

 £

 IFRS 2 share-based payment charge

271,859

40,075

 Direct taxes related to share options

170,712

-

 

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 £271,859 (H1 2020: £40,075).

 

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 £170,712 (H1 2020: £Nil).

 

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 £3.5m 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 £3.5m 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 £0.6m 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 £0.6m (31 December 2020: £0.6m) 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 £2.7m, 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 £0.2m of proceeds were allocated to the obligation of provide free services.

 

 

 

 Fair value of debt host

 Obligation to provide free services

 Fair value of derivative Liability

 Total

 

 £

 £

 £

 £

 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 £3.5m with Gamesys Group plc (see Note 14).

 

During the period £75,000 (H1 2020: £48,333) 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: £Nil).

 

 

 


 
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