REG - Gaming Realms PLC - Annual Results 2021
26/04/2022 07:16
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20220426:nRSZ2867Ja&default-theme=true
RNS Number : 2867J Gaming Realms PLC 26 April 2022
Gaming Realms plc
(the "Company" or the "Group")
Annual Results 2021
Strong performance underpinned by increased global presence
Licensing strategy delivering adjusted EBITDA 1 growth of 69% and adjusted
EBITDA of £5.7m 2
Gaming Realms plc (AIM: GMR), the developer and licensor of mobile focused
gaming content, announces its annual results for the year ended 31 December
2021 and Q1 highlights for 2022.
Gaming Realms' licensing strategy has enabled the Group to grow revenues at
high margins during FY21. The Group launched in several new regulated iGaming
markets which will provide continued growth in the coming year.
2021 Financial Highlights:
· Revenue increased by 29% to £14.7m (2020: £11.4m) for the year
o Licensing revenue increased 48% to £11.1m (2020: £7.5m)
o Social publishing revenue decreased 8% to £3.6m (2020: 3.9m). On a
constant currency basis, the decline was 1%
· Adjusted EBITDA before share option and related charges increased
71% to £5.7m (2020: £3.3m)
· EBITDA increased 146% to £5.0m (2020: £2.0m)
o Licensing segment generated £6.4m EBITDA (2020: £3.5m)
o Social publishing segment generated £1.1m EBITDA (2020: £1.4m)
o Head office costs were £2.5m (2020: £2.9m including £0.7m of
restructuring costs and impairment charges) due largely to the increase in
share option and related charges and growth in business activities
· Profit after tax for the year of £1.3m (2020: Loss of £1.5m)
· Year-end cash balance increased to £4.4m (2020: £2.1m)
2021 Operational Highlights:
· Increased portfolio to 53 proprietary games on the Group's remote
game server ("RGS") (2020: 44)
· Launched in 2 regulated iGaming markets in the U.S. in Michigan
and Pennsylvania
· Launched in European regulated iGaming markets in Italy, Romania
and the Netherlands
· Launched with 35 new partners for Slingo Originals content
including Wynnbet, Sisal, Aspire Global and Goldbet
· Signed inward brand licensing deals with Everi, Discovery
Channel, IGT, Play AGS, Pragmatic Play
· Increased unique players in licensing business by 48%
· Prepared for launch in the Ontario, Quebec and Spanish markets
· Extended brand licensing deal with Scientific Games for Slingo
branded lottery instant scratch cards
Q1 2022 Highlights:
· Increased licensing revenue 43% in Q1 2022 to £3.0m (Q1 2021:
£2.1m)
· Launched in Spain with Gamesys and Yo Bingo (part of Rank Group)
· Launched with Loto-Québec
· Obtained iGaming Supplier Licence from Ontario with subsequent
launch earlier this month
· Released four new Slingo games: Slingo Superspin, Slingo Fire
& Ice and Slingo Racing
1 EBITDA is profit before interest, tax, depreciation, amortisation and
impairment expenses and is a non-GAAP measure. The Group uses EBITDA and
adjusted EBITDA to comment on its financial performance. Adjusted EBITDA is
EBITA excluding non-recurring material items which are outside the normal
scope of the Group's ordinary activities. Adjusting items in the prior year
include management restructuring costs and impairment of financial assets.
2 Adjusted EBITDA before share option and related charges.
Outlook:
Gaming Realms continues to deliver on its strategy of expanding its game
portfolio and launching into new regulated markets. In 2021, the Group
launched in 5 new regulated markets, including Michigan and Pennsylvania in
the U.S., and will continue to grow its market share in these territories
during 2022. Since the beginning of 2022, the Group has launched its Slingo
portfolio in Spain and, more recently, Canada through the newly launched
market in Ontario and with Loto-Québec. With 10 new partners launched to date
in 2022, together with the launch of 4 new Slingo games, the Board is
confident in the Group's strategy and expectations for the current year.
Whilst still early in the year, the Company is currently trading ahead of
management expectations and therefore is confident in the outlook for the
year.
Commenting on the Group's performance, Michael Buckley, Executive Chairman,
said:
"2021 was another exceptional year for the Group as we expanded our Slingo
portfolio and entered new regulated iGaming markets, increasing revenue by 29%
and producing a maiden profit for the financial year of £1.3m.
"Our core licensing business continued to go from strength to strength as we
secured 35 new licensing and distribution partners throughout the year that
supported a 48% growth in the number of unique players enjoying our content
globally.
"The Group's commitment to increasing our global presence during the period
has provided us with a strong foundation on which to deliver further growth in
2022 as we remain focused on expanding our foothold in these territories.
Momentum has certainly continued into the year so far, having already released
four new games and launched in both Spain and Canada. With additional planned
launches in new markets and with new partners in the pipeline, we look forward
to providing further updates in due course."
An analyst briefing will be held virtually at 9:00am today. To attend, please
email gamingrealms@yellowjerseypr.com
(mailto:gamingrealms@yellowjerseypr.com) .
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
Annabel Atkins
Annabelle Wills
About Gaming Realms
Gaming Realms creates and licenses innovative games for mobile, with
operations in the UK, U.S., Canada and Malta. Through its unique IP and
brands, Gaming Realms is bringing together media, entertainment and gaming
assets in new game formats. The Gaming Realms management team includes
accomplished entrepreneurs and experienced executives from a wide range of
leading gaming and media companies.
Executive Chairman's Statement
Introduction
The Group made excellent progress during the year, increasing revenues by 29%
to £14.7m (2020: £11.4m), and adjusted EBITDA by 71% to £5.7m (2020:
£3.3m) before share options and related charges. We invested heavily in our
proprietary Remote Game Server "RGS" platform, and expanded into multiple
regulated markets. We also increased our Slingo Originals game portfolio to 53
with the addition of 10 new games, and licenced Slingo into adjacent markets
including our lottery deal for physical scratch cards in North America.
This resulted in revenue growth of 48% in our licensing business to £11.1m
(2020: £7.5m), and we are continuing to see strong momentum in this area with
increased international demand for our Slingo Originals portfolio. With
growing distribution via our RGS combined with control of overheads, we were
able to increase our EBITDA margin within the licensing division to 57% (2020:
50%).
Licensing business highlights:
· Increased library of proprietary games to 53 games in total at
year-end.
· Went live with 35 new partners during the year, all of whom have
licensed the Company's Slingo Originals content.
· Launched in 2 additional regulated iGaming markets in the U.S.
being Michigan and Pennsylvania.
· Launched in 3 regulated iGaming markets in Europe, being Romania,
Italy and the Netherlands.
· Increased unique players in the year by 48% to 3.36m (2020:
2.28m).
· Signed deals with IGT, Play AGS and Pragmatic Play as partners
for new branded Slingo games.
· With growth in New Jersey, together with launches in Michigan and
Pennsylvania in the second half of the year, U.S. content licensing revenues
grew 47% in 2021, and by 56% with constant currency conversion.
· Extended brand licensing deal with Scientific Games for Slingo
branded lottery instant scratch games.
We continue to operate our Social business as a partially integrated
division. This gives us an opportunity to rebrand our real money games for
social users, and monetise them further. It also keeps the Slingo brand
within the Group, and has the advantage of bringing our games to a wider
audience, many of whom play for real money as and when they are in a regulated
territory.
Revenue from Social decreased 8% to £3.6m (2020: £3.9m), but this decline
was marginal at 1% on a constant currency basis. EBITDA decreased to £1.1m
(2020: £1.4m), the decline again exaggerated by currency movements. However,
the Social business continued to provide a positive cash contribution to the
Group.
North America
The Group made significant progress during 2021 towards expanding its presence
in the U.S. iGaming market beyond New Jersey, being granted additional full
iGaming Supplier Licences in the U.S. states of Michigan and Pennsylvania. An
application process was started for a supplier license in Ontario, Canada,
which was subsequently granted in March 2022. Ontario is likely to be a larger
market than any of the currently regulated U.S. states.
Capitalising on these opportunities, we signed a number of direct integration
and multi-State deals, and the Group now has licensing agreements 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, Parx, Tropicana/Gamesys and
Caesars Entertainment. The Company also has direct integrations with BetMGM,
Draftkings, Rush Street Interactive, Fanduel, Golden Nugget, Gamesys, Wynn
Interactive and 888.
Europe
Gaming Realms continued to strengthen its position in the growing European
market having successfully launched in the Italian iGaming market with Goldbet
and Sisal in January 2021.
In November 2021, Gaming Realms entered the regulated Romanian iGaming market
through a partnership agreement with Superbet, the largest digital and retail
betting operator in Romania. Superbet now publishes many of the games from
the Slingo Original's portfolio.
Further bolstering its European presence, Gaming Realms went live in December
2021 with JVH gaming and entertainment group in the newly regulated Dutch
market under the Jack's Casino and Sports brand ("Jack's Casino").
Board and employees
Despite a number of Covid-19-related challenges during 2021, the Group's
senior management and staff demonstrated outstanding teamwork and resilience,
and the operational and financial outcomes achieved during the year owe much
to their skill and commitment. On behalf of the Board and shareholders, I
would like to pass on my sincere thanks to all of them.
After joining the Board in 2019, Chris Ash resigned as a Non-Executive
Director of the Company in September 2021 given conflicts of interest that
could arise from our third-party distribution agreement with 4ThePlayer.com,
of which he is a Director. On behalf of the Company, I would like to thank
Chris once again for the valuable guidance and strategic advice he provided in
scaling our licensing business.
Post Period End and Outlook
Gaming Realms continues to focus on the following areas:
· International expansion - particularly in the US and European
regulated markets
· Adding new distributors, operators and licensors
· Further penetration with existing distributors and operators
driven by new games
Momentum has continued into 2022, with Gaming Realms focusing on regulated
markets and North America in particular. In this regard, we launched our
game portfolio in Ontario on 4 April 2022, having already gone live with Loto
Quebec in March. With the increased number of states we are now in, together
with our multi-State deals with the largest operators, we are well placed to
gain market share in North America.
In January of this year, the Group entered the regulated Spanish market with
long-term strategic partner Gamesys (now part of Bally's Corporation) under
its Monopoly and Botamania brands and has since launched with Yo Bingo (part
of Rank Group). Looking to the future, we have recently signed a deal with
Microgaming, one of the largest distributors of content in the industry, and
hope to launch our game portfolio with some of their partners shortly.
We have already increased our games portfolio with 4 new games in 2022, and
during the course of this year we will introduce new marketing features on our
platform. These developments will maintain and drive stronger relationships
with our partners and players. The Company has made an excellent start to
the current year, with licensing revenues increasing by 43% year-on-year for
the first quarter of 2022, and unique players increasing by 39% to over 1.5
million in the same period. This strong performance in the first quarter,
combined with new markets and partners coming on stream, leads your Board to
believe the Company will continue to grow significantly following its proven
successful strategy.
Michael Buckley
Executive Chairman
Financial Review
Overview
The Group's financial results for the year ended 31 December 2021 reflect the
continued delivery of the core strategy of scaling the licensing business.
The Group delivered total revenue growth of 29% to £14.7m (2020: £11.4m),
driven by the performance of the licensing business.
For the year, the Group delivered adjusted EBITDA before share option and
related charges of £5.7m (2020: £3.3m) which has translated into the Group
recording a pre-tax profit of £1.0m compared with a £1.6m loss in the
previous year.
The £1.0m pre-tax profit represents a £2.6m increase on the previous year
(2020: £1.6m pre-tax loss). This is materially explained by; the £2.0m
increase in adjusted EBITDA generated in the current year, no adjusting items
in the current year (2020: £0.9m total charge for restructuring expenses and
an impairment against financial assets), offset by a £0.2m increase in the
current year amortisation charge and £0.1m higher net finance costs.
The table below sets out the split of revenue and adjusted EBITDA:
Licensing Social Publishing Head office Total
2021 £ £ £ £
Revenue 11,100,085 3,567,616 - 14,667,701
Marketing expense (20,348) (282,579) (76,303) (379,230)
Operating expense (1,209,530) (992,789) - (2,202,319)
Administrative expense (3,325,714) (1,228,709) (1,856,570) (6,410,993)
Share option and related charges (170,062) (7,441) (521,691) (699,194)
Adjusted EBITDA 6,374,431 1,056,098 (2,454,564) 4,975,965
Licensing Social Publishing Head office Total
2020 £ £ £ £
Revenue 7,515,114 3,885,971 2,401 11,403,486
Marketing expense (18,528) (242,667) (94,199) (355,394)
Operating expense (1,070,766) (1,161,266) - (2,232,032)
Administrative expense (2,610,275) (1,090,014) (1,803,905) (5,504,194)
Share option and related charges (70,764) (6,906) (294,674) (372,344)
Adjusted EBITDA 3,744,781 1,385,118 (2,190,377) 2,939,522
Performance
Year-on-year Group revenues increased 29% to £14.7m (£2020: £11.4m) due to
the strong performance of the licensing segment, offset by an 8% decline in
social publishing revenues in the year.
The overall Group generated adjusted EBITDA of £5.0m (2020: £2.9m) and
£5.7m before share option and related charges (2020: £3.3m). Adjusting
items in the prior year relate to management restructuring costs and
impairment of financial assets, while there were no such costs in the current
year.
Operating expenses incurred remained stable compared with the previous year at
£2.2m (2020: £2.2m). Between the segments this was split between a £0.1m
increase in revenue associated operational costs in the licensing segment
offset against £0.2m lower operational costs in the social publishing
division due to revenue driven costs falling in line with segmental revenues.
Adjusted administrative expenses increased to £6.4m (2020: £5.5m)
predominantly due to increased staff costs in the licensing segment required
to deliver the segments growth, along with other incremental business
expansion costs.
Licensing
Licensing segment revenues increased 48% to £11.1m (2020: £7.5m). This can
be split as:
· Content licensing revenue growth of 36% to £9.1m (2020: £6.7m);
and
· Brand licensing revenue increasing 137% to £2.0m (2020: £0.9m).
The segment delivered £6.4m adjusted EBITDA (2020: £3.7m).
Content licensing
Growth in the content licensing business remains the key focus of the Group.
The current year performance reflects the successful implementation of the
Group's strategy of growing the games portfolio and increasing the
distribution footprint to an increased number of operators in Europe and the
U.S.
During 2021 the Group began operating with partners in 5 new regulated
markets; Italy, Romania, the Netherlands, and the U.S. states of Michigan and
Pennsylvania. After the year-end, the Group was awarded an iGaming supplier
license within the Canadian province of Ontario and started trading in April
2022. The Group also started trading in the Spanish regulated market in
January 2022.
Outside of going live with partners in these newly entered regulated markets,
we also went live with a further 18 partners during 2021 in existing markets
in Europe and New Jersey. This has been further bolstered with an additional
10 partners going live in 2022 to date in these jurisdictions.
The strong operational leverage and largely fixed cost base of the segment's
content business model allowed total expenses (excluding share option and
related costs) to increase by 23% to £4.6m (2020: £3.7m) compared to the 36%
content licensing revenue increase.
The Group released 10 new Slingo games to the market during 2021, including
Slingo Starburst and Slingo Lucky Larry's Lobstermania. Due to the
popularity of Slingo as a genre amongst our partners and players, in addition
to these new Slingo games, a number of partner themed Slingo and table games
were released to the market during the year.
A key focus of the segment remains identifying and partnering with the leading
gaming brands in the market, in order to bring the best possible content to
players. During the year we released new Slingo game collaborations with key
partners including King Show Games, NetEnt and Pragmatic Play. Further
agreements were entered into during the year for the development of innovative
new Slingo collaborations, which will be released to the market in 2022.
Revenues from North America continue to be a focus for the segment, and in
2021 increased to £4.5m (2020: £2.4m), representing 40% of total licensing
revenues (2020: 32%). We anticipate this to increase further in 2022 with a
full year of trading in Michigan and Pennsylvania, as well as the impact of
the recent entry into the Ontario market and expected entry into the
Connecticut market later in 2022.
Brand licensing
The significant £1.1m increase in brand licensing revenues in 2021 compared
with the prior year is predominantly the result of a significant deal
completed in the year.
The Group's Slingo brand is well-known by consumers, which allows us to
license this brand into adjacent markets where the right opportunities arise.
Social publishing
The Group's social publishing business saw an 8% decline in revenues to £3.6m
(2020: £3.9m), largely as a result of currency headwinds experienced during
2021, with the majority of the segments transactions denominated in U.S.
Dollars. At constant currency, the revenue of the segment would have
decreased by 1% as opposed to the reported 8%.
Operational costs, which are largely driven by revenues, reduced by 15% from
the previous year to £1.0m (2020: £1.2m).
Marketing expenses of £0.3m were incurred (2020: £0.2m) with the aim of
driving player activity and revenues.
The 13% increase in segmental administrative expenses is due to investment in
the development and operational team. In recent years there has been a
successful implementation of cost controls, which has resulted in the segment
having a stable fixed cost base. Excluding staff costs, segmental
administrative expenses remained stable with the prior year, increasing 3%.
As a result, the segment delivered £1.1m adjusted EBITDA for the year, a 24%
reduction on the £1.4m in 2020.
Cashflow, Balance Sheet and Going Concern
Net cash increased by £2.3m in 2021 (2020: decreased by £0.5m) to £4.4m at
31 December 2021 (2020: £2.1m).
The current year increase in net cash was largely driven through the £5.0m
cash inflow from operating activities (2020: £2.0m) and £1.0m deferred
consideration received (2020: £Nil), offset by the £3.4m of development
costs capitalised in the year (2020: £2.4m).
The £1.0m increase in development costs capitalised in 2021 compared with the
previous year is a function of the Group investing in the development teams in
both the licensing and social publishing segments, to enable the delivery of
an expanded games portfolio in both segments, and to develop and enhance the
Group's proprietary RGS with new tools, features and capabilities to cater for
the demands of expanding partner and territory numbers.
During the year, the Group received £1.0m from River Tech plc ("River") for
full and final settlement of the deferred consideration receivable, certain
other receivable balances, and various legal proceedings and out of court
disputes between the parties.
Net assets totaled £13.1m (2020: £10.9m).
The prolonged COVID-19 pandemic has brought significant uncertainty to global
markets and economies, including the real money gambling sector. The Directors
have performed qualitative and quantitative assessments of the associated
risks facing the business and its ability to meet its short and medium-term
forecasts. The forecasts were subject to stress testing to analyse the
reduction in forecast revenues required to bring about insolvency of the
Company unless capital was raised. In such cases it is anticipated that
mitigation actions, such as reduction in overheads could be implemented to
stall such an outcome.
The Directors confirm their view that they have carried out a robust
assessment of the emerging and principal risks facing the business. As a
result of the assessment performed, the Directors consider that the Group has
adequate resources to continue its normal course of operations for the
foreseeable future.
Dividend
During the year, Gaming Realms did not pay an interim or final dividend. The
Board of Directors are not proposing a final dividend for the current year.
Corporation and deferred taxation
The Group received £0.1m (2020: £0.05m) in research and development credits
in Canada. A current year tax credit of £0.3m (2020: £0.05m) largely
relates to the unwind of deferred tax of £0.1m (2020: £0.1m) which arose on
prior year business combinations.
Mark Segal
Chief Financial Officer
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2021
2021 2020
£ £
Revenue 14,667,701 11,403,486
Marketing expenses (379,230) (355,394)
Operating expenses (2,202,319) (2,232,032)
Administrative expenses (6,410,993) (5,971,970)
Impairment of financial asset - (449,422)
Share option and related charges (699,194) (372,344)
Adjusted EBITDA 4,975,965 2,939,522
Impairment of financial asset - (449,422)
Restructuring expenses - (467,776)
EBITDA 4,975,965 2,022,324
Amortisation of intangible assets (3,064,299) (2,817,043)
Depreciation of property, plant and equipment (216,834) (216,323)
Impairment of property, plant and equipment - (22,876)
Impairment of goodwill (73,677) -
Finance expense (689,935) (882,032)
Finance income 26,496 333,664
Profit / (loss) before tax 957,716 (1,582,286)
Tax credit 296,436 48,229
Profit / (loss) for the financial year 1,254,152 (1,534,057)
Other comprehensive income / (loss)
Items that will or may be reclassified to profit or loss:
Exchange gain / (loss) arising on translation of foreign operations 39,153 (226,666)
Total other comprehensive income / (loss) 39,153 (226,666)
Total comprehensive income / (loss) 1,293,305 (1,760,723)
Profit / (loss) attributable to:
Owners of the parent 1,257,698 (1,527,964)
Non-controlling interest (3,546) (6,093)
1,254,152 (1,534,057)
Total comprehensive income / (loss) attributable to:
Owners of the parent 1,296,851 (1,754,630)
Non-controlling interest (3,546) (6,093)
1,293,305 (1,760,723)
Profit / (loss) per share Pence Pence
Basic 0.44 (0.54)
Diluted 0.42 (0.54)
Consolidated Statement of Financial Position
As at 31 December 2021
31 December 31 December
2021
2020
£ £
Non-current assets
Intangible assets 11,815,598 11,137,123
Other investments - 401,291
Property, plant and equipment 484,578 560,793
Other assets 150,646 150,528
12,450,822 12,249,735
Current assets
Trade and other receivables 3,260,687 2,343,739
Deferred consideration - 972,554
Finance lease asset - 140,058
Cash and cash equivalents 4,412,375 2,105,167
7,673,062 5,561,518
Total assets 20,123,884 17,811,253
Current liabilities
Trade and other payables 2,241,114 1,943,714
Lease liabilities 172,887 343,859
Other Creditors 3,489,278 -
Derivative liabilities 744,000 -
6,647,279 2,287,573
Non-current liabilities
Other Creditors - 3,304,870
Derivative liabilities - 627,000
Deferred tax liability 199,876 320,913
Lease liabilities 168,227 340,175
368,103 4,592,958
Total liabilities 7,015,382 6,880,531
Net assets 13,108,502 10,930,722
Equity
Share capital 28,970,262 28,664,731
Share premium 87,370,856 87,258,166
Merger reserve (67,673,657) (67,673,657)
Foreign exchange reserve 1,418,269 1,379,116
Retained earnings (36,977,228) (38,768,257)
Total equity attributable to owners of the parent 13,108,502 10,860,099
Non-controlling interest - 70,623
Total equity 13,108,502 10,930,722
Consolidated Statement of Cash Flows
For the year ended 31 December 2021
2021 2020
£ £
Cash flows from operating activities
Profit / (loss) for the financial year 1,254,152 (1,534,057)
Adjustments for:
Depreciation of property, plant and equipment 216,834 216,323
Impairment of property, plant and equipment - 22,876
Loss / (profit) on disposal of property, plant and equipment 2,125 (1,000)
Loss on disposal of intangible assets (2,004) -
Impairment of goodwill 73,677 -
Amortisation of intangible fixed assets 3,064,299 2,817,043
Impairment of financial asset - 449,422
Finance income (26,496) (333,664)
Finance expense 689,935 882,032
Income tax credit (296,436) (48,229)
Exchange differences 22,374 (54,940)
Share based payment expense 466,254 330,308
Increase in trade and other receivables (745,778) (463,237)
Increase / (decrease) in trade and other payables 208,400 (233,543)
Net cash flows from operating activities before taxation 4,927,336 2,049,334
Net tax received / (paid) in the year 40,439 (33,717)
Net cash flows from operating activities 4,967,775 2,015,617
Investing activities
Acquisition of property, plant and equipment (141,546) (30,143)
Acquisition of intangible assets (323,608) -
Capitalised development costs (3,435,308) (2,440,559)
Proceeds from disposal of property, plant and equipment - 1,000
Disposal of other investments 362,436 -
Interest received 145 47
Finance lease asset - sublease receipts 146,505 163,324
Net cash used in investing activities (3,391,376) (2,306,331)
Financing activities
Receipt of deferred consideration 972,554 -
Principal paid on lease liability (388,494) (300,086)
Issue of share capital on exercise of options 418,221 281,613
Interest paid (215,169) (225,516)
Net cash from / (used in) financing activities 787,112 (243,989)
Net increase / (decrease) in cash and cash equivalents 2,363,511 (534,703)
Cash and cash equivalents at beginning of year 2,086,785 2,608,455
Exchange (loss) / gain on cash and cash equivalents (37,921) 13,033
Cash and cash equivalents at end of year 4,412,375 2,086,785
Consolidated Statement of Changes in Equity
For the year ended 31 December 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 year - - - - (1,527,964) (1,527,964) (6,093) (1,534,057)
Other comprehensive income - - - (226,666) - (226,666) - (226,666)
Total comprehensive income for the year - - - (226,666) (1,527,964) (1,754,630) (6,093) (1,760,723)
Contributions by and distributions to owners
Share-based payment on share options - - - - 330,308 330,308 - 330,308
Exercise of options 221,857 59,756 - - - 281,613 - 281,613
31 December 2020 28,664,731 87,258,166 (67,673,657) 1,379,116 (38,768,257) 10,860,099 70,623 10,930,722
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 year - - - - 1,257,698 1,257,698 (3,546) 1,254,152
Other comprehensive income - - - 39,153 - 39,153 - 39,153
Total comprehensive income for the year - - - 39,153 1,257,698 1,296,851 (3,546) 1,293,305
Contributions by and distributions to owners
Share-based payment on share options - - - - 466,254 466,254 - 466,254
Exercise of options 305,531 112,690 - - - 418,221 - 418,221
Recycling of non-controlling interest - - - - 67,077 67,077 (67,077) -
31 December 2021 28,970,262 87,370,856 (67,673,657) 1,418,269 (36,977,228) 13,108,502 - 13,108,502
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
1. Accounting policies
General information
Gaming Realms Plc (the "Company") and its subsidiaries (together the "Group").
The Company is admitted to trading on the Alternative Investment Market (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, SE1 8QH.
The consolidated financial statements are presented in British Pounds
Sterling.
Basis of preparation
The Group financial statements have been prepared in accordance with UK
adopted international accounting standards in conformity with the requirements
of the Companies Act 2006 and on a basis consistent with those policies set
out in our audited financial statements for the year ended 31 December 2021.
The financial information set out in this document does not constitute the
Group's statutory accounts for the year ended 31 December 2021 or 31 December
2020.
Statutory accounts for the year ended 31 December 2020 have been filed with
the Registrar of Companies and those for the year ended 31 December 2021 will
be delivered to the Registrar in due course; both have been reported on by
independent auditors. The independent auditor's report for the year ended 31
December 2021 is unmodified.
The independent auditor's reports on the Annual Report and Accounts for the
year ended 31 December 2021 and 31 December 2020 were unqualified and did not
contain a statement under 498(2) or 498(3) of the Companies Act 2006.
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, and consider
that the Group will have sufficient cash resources available to meet its
liabilities as they fall due for at least the forthcoming 12 months from the
date of the approval of the financial statements.
Given the economic uncertainty resulting from the ongoing Covid-19 pandemic,
these cash flow forecasts have been subject to short- and medium-term stress
testing, scenario modelling and sensitivity analysis through to June 2023,
which the Directors consider sufficiently robust. Scenarios considered
include but are not limited to; failure to expand into planned new regulated
jurisdictions during the forecast period and a significant reduction in
trading cash flows compared to Group forecasts. The Directors note that in
an extreme scenario, the Group also has the option to rationalise its cost
base including cuts to discretionary capital, marketing and overhead
expenditure. The Directors consider that the required level of change to the
Group's forecast cash flows to give a rise to a material risk over going
concern are sufficiently remote.
Accordingly, these financial statements have been prepared on the basis of
accounting principles applicable to a going concern, which assumes that the
Group and the Company will realise its assets and discharge its liabilities in
the normal course of business. Management has carried out an assessment of
the going concern assumption and has concluded that the Group and the Company
will generate sufficient cash and cash equivalents to continue operating for
the next 12 months.
Adoption of new and revised standards
There were no new standards, amendments or interpretations that were relevant
to the Group for the year ended 31 December 2021.
There are a number of standards, amendments to standards, and interpretations
which have been issued by the IASB that are effective in future accounting
periods that the Group has decided not to adopt early.
The following amendments are effective for the period beginning 1 January
2022:
· Onerous Contracts - Cost of Fulfilling a Contract (Amendments to
IAS 37);
· Property, Plant and Equipment: Proceeds before Intended Use
(Amendments to IAS 16);
· Annual Improvements to IFRS Standards 2018-2020 (Amendments to
IFRS 1, IFRS 9, IFRS 16 and IAS 41); and
· References to Conceptual Framework (Amendments to IFRS 3).
The following amendments are effective for the period beginning 1 January
2023:
· Disclosure of Accounting Policies (Amendments to ISA 1 and IFRS
Practice Statement 2);
· Definition of Accounting Estimates (Amendments to IAS 8); and
· Deferred Tax Related to Assets and Liabilities arising from a
Single Transaction (Amendments to IAS 12).
The Group is currently assessing the impact of these new accounting standards
and amendments.
Business combinations
On acquisition, the assets, liabilities and contingent liabilities of a
subsidiary are measured at their fair values at the date of acquisition.
Any excess of the cost of acquisition over the fair values of the
identifiable net assets acquired, including separately identifiable intangible
assets, is recognised as goodwill. Any discount on acquisition, i.e. where the
cost of acquisition is below the fair value of the identifiable net assets
acquired, is credited to the Statement of Comprehensive Income in the period
of acquisition.
2. 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:
2021 2020
£ £
Impairment of financial asset - (449,422)
Restructuring costs - (467,776)
Adjusting items - (917,198)
Restructuring costs
Restructuring costs of £467,776 in the prior year related to a management
restructure following the change in focus to the licensing business. No such
costs were incurred in 2021.
Impairment of financial asset
In the prior year, an impairment provision of £449,422 was recorded in the
income statement following management's expected credit loss review performed
over its deferred consideration and trade and other receivables balances.
The provision was split between deferred consideration (£527,446) and other
receivables (credit of £78,024). No such impairments were recognised in
2021.
3. 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 2 reportable operating segments:
· Licensing - brand and content licensing to partners in Europe and
the US
· Social Publishing - providing freemium games to the US
Licensing Social publishing Head Office Total
2021 £ £ £ £
Revenue 11,100,085 3,567,616 - 14,667,701
Marketing expense (20,348) (282,579) (76,303) (379,230)
Operating expense (1,209,530) (992,789) - (2,202,319)
Administrative expense (3,325,714) (1,228,709) (1,856,570) (6,410,993)
Share option and related charges (170,062) (7,441) (521,691) (699,194)
Adjusted EBITDA 6,374,431 1,056,098 (2,454,564) 4,975,965
Impairment of financial asset -
Restructuring expenses -
EBITDA 4,975,965
Amortisation of intangible assets (3,064,299)
Depreciation of property, plant and equipment (216,834)
Impairment of goodwill (73,677)
Finance expense (689,935)
Finance income 26,496
Profit before tax 957,716
Licensing Social Head Office Total
publishing
2020 £ £ £ £
Revenue 7,515,114 3,885,971 2,401 11,403,486
Marketing expense (18,528) (242,667) (94,199) (355,394)
Operating expense (1,070,766) (1,161,266) - (2,232,032)
Administrative expense (2,610,275) (1,090,014) (1,803,905) (5,504,194)
Share option and related charges (70,764) (6,906) (294,674) (372,344)
Adjusted EBITDA 3,744,781 1,385,118 (2,190,377) 2,939,522
Impairment of financial asset (449,422)
Restructuring expenses (467,776)
EBITDA 2,022,324
Amortisation of intangible assets (2,817,043)
Depreciation of property, plant and equipment (216,323)
Impairment of property, plant and equipment (22,876)
Finance expense (882,032)
Finance income 333,664
Loss before tax (1,582,286)
4. finance income and expense
2021 2020
£ £
Finance income
Interest received 145 47
Fair value gain on other investments - 111,780
Interest income on unwind of deferred income 19,087 -
Interest income on unwind of finance lease asset 7,264 20,500
Interest income on unwind of deferred consideration receivable - 201,337
Total finance income 26,496 333,664
Finance expense
Bank interest paid 20,238 18,663
Fair value loss on other investments 38,855 -
Fair value movement on derivative liability 117,000 355,000
Effective interest on other creditor 468,339 437,050
Interest expense on lease liability 45,503 71,319
Total finance expense 689,935 882,032
5. tax credit
2021 2020
£ £
Current tax
Current tax credit / (charge) 38,310 (93,997)
Adjustment for current tax of prior periods 4,952 (34,232)
R&D tax credit for the year 130,878 46,127
Total current tax 174,140 (82,102)
Deferred tax
Unwind of deferred tax 122,296 130,331
Total deferred tax credit 122,296 130,331
Total tax credit 296,436 48,229
The reasons for the difference between the actual tax credit for the period
and the standard rate of corporation tax in the UK applied to profits for the
year are as follows:
2021 2020
£ £
Profit / (loss) before tax for the year 957,716 (1,582,286)
Expected tax at effective rate of corporation tax in the UK of 19.0% (2020: 181,966 (300,634)
19.0%)
Expenses not deductible for tax purposes 274,425 3,369
Effects of overseas taxation (38,310) 93,997
Adjustment for tax in respect of prior periods (4,952) 34,233
Research and development tax credit (130,878) (46,127)
Timing difference (136,257) 12,745
Relief for losses brought forward (781,569) -
Tax losses for which no deferred tax assets have been recognised 461,435 284,519
Unwind of deferred taxes recognised on business acquisitions (122,296) (130,331)
(296,436) (48,229)
6. EARNINGS / (LOSS) per share
Basic earnings / (loss) per share is calculated by dividing the result
attributable to ordinary shareholders by the weighted average number of shares
in issue during the year. The calculation of diluted EPS is based on the
result attributable to ordinary shareholders and weighted average number of
ordinary shares outstanding after adjusting for the effects of all dilutive
potential ordinary shares. The Group's potentially dilutive securities
consist of share options and a convertible loan. The convertible loan is
anti-dilutive and so is ignored in calculating diluted EPS.
2021 2020
£ £
Profit / (loss) after tax attributable to the owners of the parent Company 1,257,698 (1,527,964)
Number Number
Denominator - basic
Weighted average number of ordinary shares 288,496,688 285,165,652
Denominator - diluted
Weighted average number of ordinary shares 288,496,688 285,165,652
Weighted average number of option shares 13,140,665 -
Weighted average number of shares 301,637,353 285,165,652
Pence Pence
Basic earnings / (loss) per share 0.44 (0.54)
Diluted earnings / (loss) per share 0.42 (0.54)
7. Intangible assets
Goodwill Customer database Software Development costs Licenses Domain names Intellectual Property Total
£ £ £ £ £ £ £ £
Cost
At 1 January 2020 6,849,048 1,520,509 1,420,374 11,798,373 - 9,053 5,962,772 27,560,129
Additions - - - 2,440,559 - - - 2,440,559
Disposals - - - - - - - -
Exchange differences (151,829) (44,859) (36,151) (6,040) - (268) (176,593) (415,740)
At 31 December 2020 6,697,219 1,475,650 1,384,223 14,232,892 - 8,785 5,786,179 29,584,948
Additions - - 76,286 3,435,308 247,322 - - 3,758,916
Disposals (73,677) - (212,215) (198,043) - - - (483,935)
Exchange differences 50,382 14,886 14,122 - - 89 58,568 138,047
At 31 December 2021 6,673,924 1,490,536 1,262,416 17,470,157 247,322 8,874 5,844,747 32,997,976
Accumulated amortisation and impairment
At 1 January 2020 1,650,000 1,520,509 1,420,374 7,986,035 - 9,053 3,271,605 15,857,576
Amortisation charge - - - 2,050,390 - - 766,653 2,817,043
Disposals - - - - - - - -
Exchange differences - (44,859) (36,151) (5,680) - (268) (139,836) (226,794)
At 31 December 2020 1,650,000 1,475,650 1,384,223 10,030,745 - 8,785 3,898,422 18,447,825
Amortisation charge - - 31,978 2,269,464 43,469 - 719,388 3,064,299
Impairment 73,677 - - - - - - 73,677
Disposals (73,677) - (212,215) (200,047) - - - (485,939)
Exchange differences - 14,886 14,122 2,227 - 89 51,192 82,516
At 31 December 2021 1,650,000 1,490,536 1,218,108 12,102,389 43,469 8,874 4,669,002 21,182,378
Net book value
At 31 December 2020 5,047,219 - - 4,202,147 - - 1,887,757 11,137,123
At 31 December 2021 5,023,924 - 44,308 5,367,768 203,853 - 1,175,745 11,815,598
8. Deferred consideration
£
At 1 January 2020 1,298,663
Interest recognised as finance income on 2019 disposal 201,337
Impairment recognised (527,446)
At 31 December 2020 972,554
Deferred consideration received in the year (972,554)
At 31 December 2021 -
During 2019, the Group disposed of its B2C real money gaming CGU. As part of
this transaction the Group was due £1.5m deferred consideration on 31
December 2020, which was discounted at inception. During 2020, interest
income of £201,337 was recognised within finance income on the unwind of the
balance, while an impairment provision of £527,446 was recorded in the income
statement following managements impairment assessment.
During the current year, on 1 April 2021 the Group received £1.0m from River
for full and final settlement of the deferred consideration receivable,
certain other receivable balances, and various legal proceedings and other out
of court disputes between the parties.
9. 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 carries interest at 3-month
LIBOR plus 5.5%, which has been updated to a fixed 5.75% following the
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 at 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 31 December
2021 was £0.7m (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 cashflows was 14.1%, being the Group's incremental borrowing
rate. This 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 cashflows are based on
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 to provide free services.
Fair value of debt host Obligation to provide free services Fair value of derivative Liability Total
£ £ £ £
At 1 January 2020 2,925,673 201,000 272,000 3,398,673
Utilisation of free services - (52,000) - (52,000)
Effective interest 437,050 - - 437,050
Interest paid (206,853) - - (206,853)
Change in fair value - - 355,000 355,000
At 31 December 2020 3,155,870 149,000 627,000 3,931,870
At 1 January 2021 3,155,870 149,000 627,000 3,931,870
Utilisation of free services - (89,000) - (89,000)
Effective interest 468,339 - - 468,339
Interest paid (194,931) - - (194,931)
Change in fair value - - 117,000 117,000
At 31 December 2021 3,429,278 60,000 744,000 4,233,278
10. Share capital
Ordinary shares
2021 2021 2020 2020
Number £ Number £
Ordinary shares of 289,702,626 28,970,262 286,647,315 28,664,731
10 pence each
The increase of 3,055,311 ordinary shares relates to the exercise of share
options during the year. The total amount received by the Company for the
exercise price settlement was £418,221, which has been recorded as an
increase in share capital and share premium as follows:
£
Share capital 305,531
Share premium 112,690
418,221
11. POST BALANCE SHEET EVENTS
On 6 January 2022, 3,900,000 share options were granted to certain Directors
and employees of the Group. The options vest in tranches on 15 October 2022,
2023 and 2024. All options have an exercise price of 32.5 pence per share.
On 23 February 2022, Bally's Corporation (owner of Gamesys Group) exercised
their option to convert £500,000 of the £3,500,000 convertible loan into
Gaming Realms plc ordinary shares. This resulted in the issue of 2,170,817
new ordinary shares.
On 4 March 2022, the Group was awarded a full iGaming supplier license by the
Alcohol and Gaming Commission of Ontario to allow the Group to provide its
Slingo Original's game content to Ontario's licensed online casino
operators. Following this, the Group launched its content on 4 April 2022,
the first day the newly regulated market opened.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR DXGDSDXDDGDURecent news on Gaming Realms
See all newsREG - Gaming Realms PLC - Transaction in Own Shares
AnnouncementREG - Gaming Realms PLC - Transaction in Own Shares
AnnouncementREG - Gaming Realms PLC - Transaction in Own Shares
AnnouncementREG - Gaming Realms PLC - Transaction in Own Shares
AnnouncementREG - Gaming Realms PLC - Transaction in Own Shares
Announcement