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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END
IR SFWFLMEESEEU
(END) Dow Jones Newswires
September 20, 2022 02:00 ET (06:00 GMT)
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